Professional Documents
Culture Documents
Natural Elements Art 1309 The determination of the performance may be left
• Exist as part of the contract even if the parties do to a third person, whose decision shall not be binding until it
not provide for them, because the law, as suppletory to has been made known to both contracting parties.
the contract, creates them. Both contracting parties must be bound by the stipulations
• Derived from the nature of the contract, not expressly of the contract, even if in disparate proportions. (Labitag)
stated in the contract. The decision of the third party may only bind the parties
• Examples: Warranties against hidden defects or eviction in once it has become known to them.
the contract of sale. Not stated in the contract but just Example: Parties agreed on a compromise agreement
because it is not stated, it doesn't mean that you don't where one will send land to other and other agreed he will
have any right. They are deemed to exist in the contract. buy, but the problem is that they have not determined
• Parole Evidence Rules: Every agreement, terms of what the purchase price is, so they have to constitute a
condition, stipulation you agree is reduced into writing; if committee to determine the fair price This should be
not expressly stated, they are deemed not agreed upon. part of the contract that determination would be left to a
Exception to this are: natural elements like warranty committee.
against eviction, hidden defects, and the law which are Can contract be invalidated since determination is
deemed incorporated into the contract. left to committee?
No, because of Art. 1309
Accidental Elements Another example: Arbitration in a barangay where the
• Agreed upon by the parties and which cannot exist pangkat tagapagkasundo under lupong tagapamayapa will
without being stipulated. resolve disputes or arbitrate between parties.
• Unlike natural elements, the parole evidence rule applies
here.
Art 1310 The determination shall not be obligatory if it is and the new president of AFPSLAI did not intend to rescind the
evidently inequitable. In such case, the courts shall decide contract and hence, the former remains entitled to her
what is equitable under the circumstances. commission.
This article is a disqualification to Art. 1309. PAPI Sales associate Crisostomo negotiated with AFPSLAI
and received commission for the initial MOA contracted,
Art. 1473. The fixing of the price can never be left to the involving educational plans.
discretion of one of the contracting parties. However, if the When the MOA was amended, PAPI stopped her
price fixed by one of the parties is accepted by the other, the commission, alleging the termination of the first MOA and
sale is perfected. hence, Crisostomo’s lack of right to said commissions.
CONTRACT OF ADHESION: A contract in which one party Crisostomo demanded for continued payment of her 2%
has already prepared a form of a contract containing commission and proposed to resign for P5M or to resign
stipulations desired by him and he simply asks the other but continue receiving the commission as royalty until the
party to agree to them if he wants to enter into the contract with AFPSLAI exists.
contract. PAPI denied her proposal, preventively suspended her and
subsequently terminated her services.
GSIS vs. CA Crisostomo filed a suit for sum of money and damages
Summary: GSIS increased the purchase price stipulated in the (January 21, 1993) amounting to P183,867.34 as
Deed of Conditional Sale with the spouses involving one of its commission of AFPSLAI’s payment worth P9,193,367.20
house and lots in its village after the final construction costs. as of October 2, 1992.
Because the Deed did not subject the price to change, where CONTENTIONS OF PAPI: (1) Crisostomo failed to complete
the marginal notation of such effect was only inserted, the 100 new paid plans; (2) Crisostomo’s right to commission
agreement was only to pay the original price, which obligation was subject to the existene of a contrace and the Amended
the spouses had already complied with and which necessitates MOA with AFPSLAI was a new contract with the old one
the execution of a Final Deed of Sale. rescinded; (3) Crisostomo was not entitled to commission
GSIS conducted a lottery draw for the allocation of lots and but was given only because those entitled were
housing units. disqualified (as terminated and as an employee)
Esperanza Leuterio won and was issued a Certificate of RTC: Held in favor of Crisostomo
Acknowledgment to purchase the subject house and lot. CA Upheld since (1) no cancellation of the first MOA that
The parties entered into a Deed of Conditional Sale was only modified; (2) the requirement of 100 new paid
evidencing the conveyance of the subject property and all plans was amended by the Memorandum which reduced
improvements thereon to the Leuterio spouses for the the commission to 2%.
purchase price of Php 19,740 payable over a fifteen-year CA: The second MOA was only a modification of the first
period. since the abandonment of contracts must be mutual
GSIS's Board of Trustees increased the purchase price between the contracting parties. Crisostomo and the new
indicated in the Deeds of Conditional Sale covering houses president of AFPSLAI did not intend to rescind the contract
and lots therein. and hence, the former remains entitled to her commission.
On the face of the Leuterio's Conditional Deed of Sale is
the marginal notation "subject to adjustment pending Supreme Court Ruling:
approval of the Board of Trustees." The first moa not cancelled but only modified by the
The Leuterio spouses alleged that this wasn't in the Deed second
when they signed it. The trial court found that the Letter of new AFPSLAI President only signified the
appended words were inserted without the knowledge of suspension of the acceptance of new applications under
the spouses. the first MOA, until such time that a new agreement
mutually beneficial to both parties was entered into ~ Only
Supreme Court Ruling inconsistent provisions were rescinded or modified.
Article 1473 of the Civil Code provides that "the fixing of Abandonment must be (1) Actually intended; (2) Mutually
the price can never be left to the discretion of one of the assented to by both contracting parties ~ 1308
contracting parties." Non-participation of Crisostomo in the negotiations is
The purchase price mutually agreed upon is Php 19,740. immaterial because the commission was granted as an
The spouses Leuterio didn't give their consent for GSIS to incentive to the one who initiated and successfully
make a unilateral upward adjustment of the price negotiated the contract given that the agent remains
depending on the final cost of construction of the subject connected with PAPI and that the commission was non-
house and lot. transferable
This conclusion is also confirmed by the petitioner GSIS in Crisostomo was still with PAPI and hence entitled to the
the instant Petition for Review on Certiorari where it's commission even under the second MOA
alleged that "the respondent- spouses Leuterio were not No moral damages for absence of bad faith in the breach
required to sign a new contract as provided in Resolution of contract
No. 996." No exemplary damages due to absence of finding of moral,
temperate or compensatory damages
Professional Academic Plans, Inc. vs. Crisostomo
Summary: Sales associate Crisostomo negotiated with 3. Relativity
AFPSLAI and received commission for the initial MOA a. Contracts take effect only between parties, their
contracted, involving educational plans. When the MOA was assigns, and heirs
amended, PAPI stopped her commission, alleging the Art. 1311. Contracts take effect only between the parties,
termination of the first MOA and hence, Crisostomo’s lack of their assigns and heirs, except in case where the rights and
right to said commissions. However, the second MOA was only obligations arising from the contract are not transmissible by
a modification of the first since the abandonment of contracts their nature, or by stipulation or by provision of law. The heir
must be mutual between the contracting parties. Crisostomo
is not liable beyond the value of the property he received from b. No one may contract in the name of another
the decedent. Art. 1317. No one may contract in the name of another
If a contract should contain some stipulation in favor of a third without being authorized by the latter, or unless he has by law
person, he may demand its fulfillment provided he a right to represent him.
communicated his acceptance to the obligor before its A contract entered into in the name of another by one who has
revocation. A mere incidental benefit or interest of a person is no authority or legal representation, or who has acted beyond
not sufficient. The contracting parties must have clearly and his powers, shall be unenforceable, unless it is ratified,
deliberately conferred a favor upon a third person. expressly or impliedly, by the person on whose behalf it has
been executed, before it is revoked by the other contracting
Intransmissible contracts party.
Purely personal e.g. partnership and agency • Where a contract is entered into in behalf of another who
The very nature of obligation that requires special personal has not authorized it, such contract is not valid and binding
qualifications of the obligor against him, unless he ratifies the transaction and is
The payment of money debts is not transmitted to the estopped to question its legality.
heirs, but to the estate • The mere lapse of time cannot give efficacy to such a
The death of a partner dissolves a partnership and his heirs contract.
cannot automatically substitute the deceased partner • The ratification retroacts to the moment of its celebration.
F. Stages
1. Preparation - period of negotiation and bargaining,
ending at the moment of agreement of the parties
2. Perfection - moment when the parties come to agree on
the terms of the contract
3. Consummation or death - fulfillment or the performance
of the terms agreed upon in the contract