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Application of Payments

Sinambahan vs China Banking Corporation (G.R No. 193890) - Since

each loan, represented by each PN, was obtained under a single credit
line extended by Chinabank for the working capital requirements of the
spouses Manalastas rice milling business, which credit line was
secured also by a single REM over their properties, then each PN is
simultaneously covered by the same mortgage security, the
foreclosure of which will also benefit them proportionately. No PN
enjoys any priority or preference in payment over the others, with the
only difference being that the spouses Sinamban are solidarily liable
for the deficiency on two of them.

Solidary Obligations

Lafarge Cement vs Continental Cement Corp

In cases filed by the creditor, a solidary debtor may invoke defenses arising from the
nature of the obligation, from circumstances personal to it, or even from those personal
to its co-debtors. Article 1222 of the Civil Code provides:
thereofonlyasregardsthatpartofthedebtforwhichthelatterareresponsible.The act of
Respondent CCC as a solidary debtor that of filing a motion to dismiss the counterclaim
on grounds that pertain only to its individual co-debtors is therefore allowed.

Obligations with a Term

Araneta vs Philippine Sugar Estates Development Co., LTD

It must be recalled that Article 1197 of the Civil Code involves a two-
step process. The Court must first determine that "the obligation does
not fix a period" (or that the period is made to depend upon the will of
the debtor)," but from the nature and the circumstances it can be
inferred that a period was intended" (Art. 1197, pars. 1 and 2). This
preliminary point settled, the Court must then proceed to the second
step, and decide what period was "probably contemplated by the
parties" (Do., par. 3). So that, ultimately, the Court can not fix a period
merely because in its opinion it is or should be reasonable, but must
set the time that the parties are shown to have intended. As the record
stands, the trial Court appears to have pulled the two-year period set
in its decision out of thin air, since no circumstances are mentioned to
support it. Plainly, this is not warranted by the Civil Code

Essential Requisites of a contract

Malbarosa vs CA

Under Article 1319 of the New Civil Code, the consent by a party is
manifested by the meeting of the offer and the acceptance upon the
thing and the cause which are to constitute the contract. An offer may
be reached at any time until it is accepted. An offer that is not
accepted does not give rise to a consent. The contract does not come
into existence.[24] To produce a contract, there must be acceptance of
the offer which may be express or implied[25] but must not qualify the
terms of the offer. The acceptance must be absolute, unconditional and
without variance of any sort from the offer.[26]

The acceptance of an offer must be made known to the offeror.[27]

Unless the offeror knows of the acceptance, there is no meeting of the
minds of the parties, no real concurrence of offer and acceptance.[28]
The offeror may withdraw its offer and revoke the same before
acceptance thereof by the offeree. The contract is perfected only from
the time an acceptance of an offer is made known to the offeror. If an
offeror prescribes the exclusive manner in which acceptance of his
offer shall be indicated by the offeree, an acceptance of the offer in the
manner prescribed will bind the offeror. On the other hand, an attempt
on the part of the offeree to accept the offer in a different manner does
not bind the offeror as the absence of the meeting of the minds on the
altered type of acceptance.[29] An offer made inter praesentes must
be accepted immediately. If the parties intended that there should be
an express acceptance, the contract will be perfected only upon
knowledge by the offeror of the express acceptance by the offeree of
the offer. An acceptance which is not made in the manner prescribed
by the offeror is not effective but constitutes a counter-offer which the
offeror may accept or reject.[30] The contract is not perfected if the
offeror revokes or withdraws its offer and the revocation or withdrawal
of the offeror is the first to reach the offeree.[31] The acceptance by
the offeree of the offer after knowledge of the revocation or withdrawal
of the offer is inefficacious. The termination of the contract when the
negotiations of the parties terminate and the offer and acceptance
concur, is largely a question of fact to be determined by the trial court.
In this case, the respondent made its offer through its Vice-Chairman of
the Board of Directors, Senen Valero. On March 16, 1990, Da Costa
handed over the original of the March 14, 1990 Letter-offer of the
respondent to the petitioner. The respondent required the petitioner to
accept the offer by affixing his signature on the space provided in said
letter-offer and writing the date of said acceptance, thus foreclosing an
implied acceptance or any other mode of acceptance by the petitioner.
However, when the letter-offer of the respondent was delivered to the
petitioner on March 16, 1990, he did not accept or reject the same for
the reason that he needed time to decide whether to reject or accept
the same.[33] There was no contract perfected between the petitioner
and the respondent corporation.[34] Although the petitioner claims
that he had affixed his conformity to the letter-offer on March 28, 1990,
the petitioner failed to transmit the said copy to the respondent. It was
only on April 7, 1990 when the petitioner appended to his letter to the
respondent a copy of the said March 14, 1990 Letter-offer bearing his
conformity that he notified the respondent of his acceptance to said
offer. But then, the respondent, through Philtectic Corporation, had
already withdrawn its offer and had already notified the petitioner of
said withdrawal via respondents letter dated April 4, 1990 which was
delivered to the petitioner on the same day. Indubitably, there was no
contract perfected by the parties on the March 14, 1990 Letter-offer of
the respondent.

Capalla vs COMELEC

From the foregoing jurisprudential pronouncements, an option is only a

preparatory contract and a continuing offer to enter into a principal
contract. Under the set-up, the owner of the property, which is
Smartmatic-TIM, gives the optionee, which is the Comelec, the right to
accept the formers offer to purchase the goods listed in the contract
for a specified amount, and within a specified period. Thus, the
Comelec is given the right to decide whether or not it wants to
purchase the subject goods. It is, therefore, uncertain whether or not
the principal contract would be entered into. The owner of the property
would then have to wait for the optionee to make a decision. A longer
option period would mean that more time would be given to the
optionee to consider circumstances affecting its decision whether to
purchase the goods or not. On the part of Smartmatic-TIM, it would
have to wait for a longer period to determine whether the subject
goods will be sold to the Comelec or not, instead of freely selling or
leasing them to other persons or governments possibly at a higher
price. This is especially true in this case as the terms and conditions for
the exercise of the option including the purchase price, had been
included in the AES contract previously bidded upon. The parties are
bound to observe the limitations embodied therein, otherwise, a new
public bidding would be needed.

Capella vs COMELEC - Concurring of Chief Justice Sereno -

We have already ruled that the period to exercise the option to

purchase, under the principles of contract law, was extended by the
mutual agreement of the parties.

We have also posited that, even assuming that the period to exercise
the option has expired, the parties have agreed to revive the option,
and this revived option is valid. While this principle finds ready
application to private parties, it is also applicable to a government
contract, provided that other relevant laws are not violated, and
government is not placed at a disadvantage. We hold this to be so, and
because of the circumstances surrounding the revival of the option in
this case, the revival herein is valid.

We now also rule that the COMELEC did not commit grave abuse of
discretion in executing the Deed of Sale, and that the successful
bidding in 2009 satisfies the requirement of the GPRA; again, only
because of the unique circumstances of this case.


A contract is perfected by mere consent.In turn, consent is manifested

by the meeting of the offer and the acceptance upon the thing and the
cause which are to constitute the contract. The offer must be certain
and the acceptance seasonable and absolute. If qualified, the
acceptance would merely constitute a counter-offeras what occurred in
this case.

To reach that moment of perfection, the parties must agree on the

same thing in the same sense, so that their minds meet as to all the
terms. They must have a distinct intention common to both and
without doubt or difference; until all understand alike, there can be no
assent, and therefore no contract. The minds of parties must meet at
every point; nothing can be left open for further arrangement. So long
as there is any uncertainty or indefiniteness, or future negotiations or
considerations to be had between the parties, there is not a completed
contract, and in fact, there is no contract at all.
The Spouses Gironella's payments under its original loan account
cannot be considered as partial execution of the proposed
restructuring loan agreement. They were clearly made during the
pendency of the negotiations on the restructuring. Such pendency
proves, absence, not presence of an agreement ready for execution. At
the time of payments only petitioners' obligation under the original
credit agreements were in existence. Indeed, the payment scheme
under the proposed restructuring was outlined by PNB only in the letter
of 25 January 2000.

Further on this, negotiation begins from the time the prospective

contracting parties manifest their interest in the contract and ends at
the moment of agreement of the parties. Once there is concurrence of
the offer and acceptance of the object and cause, the stage of
negotiation is finished. This situation does not obtain in the case at bar.
The letter dated 25 January 2000 of PNB was qualifiedly accepted by
the Spouses Gironella as contained in their 7 February 2000 letter and
constituted a counter-offer which PNB ultimately rejected in its 8 March
2000 letter. The surrounding circumstances clearly show that the
parties were not past the stage of negotiation for the terms and
conditions of the restructured loan agreements. There was no meeting
of the minds on the restructuring of the loans. Thus, the Spouses
Gironella's original Php9,500,000.00 loan agreement subsists
Rosenstock vs Burke

To convey the idea of a resolution to purchase, a man of ordinary

intelligence and common culture would use these clear and simple
words, I offer to purchase, I want to purchase, I am in position to
purchase. And the stronger is the reason why the plaintiff should have
expressed his intention in the same way, because, according to the
defendant, he was a prosperous and progressive merchant. It must be
presumed that a man in his transactions in good faith uses the best
means of expressing his mind that his intelligence and culture permit
so as to convey and exteriorize his will faithfully and unequivocally. But
the plaintiff instead of using in his letter the expression, I want to
purchase, I offer to purchase, I am in position to purchase, or other
similar language of easy and unequivocal meaning, used this other, I
am in position and am willing to entertain the purchase of the yacht.
The word "entertain" applied to an act does not mean the resolution to
perform said act, but simply a position to deliberate for deciding to
perform or not to perform said act. Taking into account only the literal
and technical meaning of the word "entertain," it seems to us clear
that the letter of the plaintiff cannot be interpreted as a definite offer
to purchase the yacht, but simply a position to deliberate whether or
not he would purchase the yacht. It was but a mere invitation to a
proposal being made to him, which might be accepted by him or not.

Furthermore there are other circumstances which show that in writing

this letter it was really not the intention of the plaintiff to make a
definite offer. The plaintiff never thought of acquiring the yacht for his
personal use, but for the purpose of selling it to another or to acquire it
for another, thereby obtaining some gain from the transaction, and it
can be said that the only thing the plaintiff wanted in connection with
this yacht was that the defendant should procure its sale, naturally
with some profit for himself. For this reason the original idea of the
plaintiff was to organize a yacht club that would afterwards acquire the
yacht through him, realizing some gain from the sale. This is clearly
stated in the letter containing the option that the defendant gave him
on February 12, 1922. This accounts for the fact that the plaintiff was
not in a position to make a definite offer to purchase, he being sure to
be able to resell the yacht to another, and this explains why he did not
say in his letter of the 3d of April that he was in position to purchase
the yacht, but only to entertain this purchase.