Tag Archives: contract

Bough v. Modesto, 94 Phil, January 28, 1954.


Bruno Modesto, Bough and Restituto Anapo executed a private document whereby Modesto agreed that he would share to the latter-parties whatever property that he will receive by inheritance from his wife, who predeceased him eventually. It was proved in such private document that the properties were to be divided and proportioned. Bough and Restituto instituted the present action to secure judgment ordering Modesto to divide the properties left by his wife in the manner and form provided for in such private document.


Whether or not the contract which contains object of which is Modesto’s inheritance is valid and binding between the parties.



YES. The contract is valid. It is well settled that rights by inheritance are acquired and transmitted upon the death of the decedent. With this, it follows that it is perfectly legal for an heir to enter into a contract of the nature of the document. The contract becomes effective only when Modesto is declared as heir but his right over the inheritance accrues from the time his wife died.

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Posted by on July 25, 2017 in Case Digests, Civil Law, Succession


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Bañas Jr. v. Court of Appeals [G.R. No. 102967. February 10, 2000]


Petitioner entered into a deed of sale purportedly on installment. He discounted the promissory note covering the future installments for purposes of taxation.



Whether or not the promissory note should be declared cash transaction for purposes of taxation.



YES. A negotiable instrument is deemed a substitute for money and for value. According to Sec. 25 of NIL: “value is any consideration sufficient to support a simple contract. An antecedent or pre-existing debt constitutes value; and is deemed such whether the instrument is payable on demand or at a future time”. Although the proceed of a discounted promissory note is not considered part of the initial payment, it is still taxable income for the year it was converted into cash.


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Velarde vs. Court of Appeals (361 SCRA 57)

The private respondent executed a Deed of Sale with Assumption of Mortgage, with a balance of P1.8 million, in favor of the petitioners. Pursuant to said agreements, plaintiffs paid the bank (BPI) for three (3) months until they were advised that the Application for Assumption of Mortgage was denied. This prompted the plaintiffs not to make any further payment. Private respondent wrote the petitioners informing the non-fulfillment of the obligations. Petitioners, thru counsel responded that they are willing to pay in cash the balance subject to several conditions. Private respondents sent a notarial notice of cancellation/rescission of the Deed of Sale. Petitioners filed a complaint which was consequently dismissed by an outgoing judge but was reversed by the assuming judge in their Motion for Reconsideration. The Court of Appeals reinstated the decision to dismiss.

Whether or not there is a substantial breach of contract that would entitle its rescission.

YES. Article 1191 of the New Civil Code applies. The breach committed did not merely consist of a slight delay in payment or an irregularity; such breach would not normally defeat the intention of the parties to the contract. Here, petitioners not only failed to pay the P1.8 million balance, but they also imposed upon private respondents new obligations as preconditions to the performance of their own obligation. In effect, the qualified offer to pay was a repudiation of an existing obligation, which was legally due and demandable under the contract of sale. Hence, private respondents were left with the legal option of seeking rescission to protect their own interest.

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Posted by on January 14, 2013 in Case Digests, Civil Law


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Contract Agreement vs. Purchase Order

This should have been a non-debatable issue by this date. But for the purposes of discussion, can we really dispense Contract Agreement form in favor of the Purchase Order (PO) in our dealings with the supplier?

For all we know, PO is a Commission on Audit (COA) prescribed format equivalent to a contract. It has been incorporated as one of the documentary requirements for accounting and auditing matters.In practice, PO is indispensable. That means, even in the presence of any contract, a PO must be accomplished. So if that is the case, why not use PO alone?

Before we answer the question, we first seek the roots of the Contract Agreement form. The term “Contract Agreement” can be found under Sec.37.2.3 of the Revised IRR of RA 9184 (Government Procurement Reform Act):

37.2.3. The following documents shall form part of the contract:

a) Contract Agreement; (emphasis supplied)

x x x

Take note that Sec.37 is all about contract signing after a successfully completed procurement process undertaken thru Public Bidding. And it is not just from any manual or any directives. There is this statutory provision of requiring a Contract Agreement form. This can be found in the latter pages of Philippine Bidding Documents (PBDs) issued by the GPPB as “Bidding Forms”. And PBDs are also mandatory requisites of the same law as the Basis for Bidding Documents of the Procuring Entity:

17.1. The Bidding Documents shall be prepared by the procuring entity following the standard forms and manuals prescribed by the GPPB. The Bidding Documents shall include the following:

x x x

l) Form of Contract and General and Special Conditions of Contract. (emphasis supplied)

This means that likewise, a Contract Agreement form is a substantial requirement should the mode of procurement undertaken was public bidding. But what harm can non-adherence to the prescribed form cause the Procuring Entity in not following the provisions of the law? Suppose the PE complied with the Bidding Documents anyway. We can enumerate some of them as follows:

  1. There will be a great chance of missing out general conditions of the the contract as compiled by the GPPB in enforcing the PO instead;
  2. There will be a great chance of missing out special conditions of the contract as introduced by the Procuring Entity during the preparation of the Bidding Documents; and,
  3. There will be a lot to reconcile with if the bidder after have read the conditions of the contract before submitting the bid, finds out later after the award, that he is bounded by another set of conditions with the Purchase Order (PO) form.

We in the government procurement profession, in our pursuit and advocacy to institute real reforms, have already accepted the fact that a Contract Agreement and Purchase Order form may have to be accomplished both for compliance, although we are very much inclined to insist the former as in lieu of the latter. However, since the PO form is from COA, an independent commission under the constitution and the supreme audit institution, we leave to them the idea of pre-disposing the PO as part of the documentary requirements for public bidding. Besides, PO can still be used for Alternative Methods of Procurement provided for under Article XVI of RA 9184.

This is (also) the author’s stand. Let this opinion be heard for ratification or rebuttal.


Posted by on July 18, 2012 in Government Procurement


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