SWEDISH MATCH vs CA

SWEDISH MATCH, AB, JUAN ENRIQUEZ, RENE DIZON, FRANCISCO RAPACON, FIEL SANTOS, BETH FLORES,
LAMBRTO DE LA EVA, GLORIA REYES, RODRIGO ORTIZ, NICANOR ESCALANTE, PETER HODGSON, SAMUEL
PARTOSA, HERMINDA ASUNCION, JUANITO HERRERA, JACOBUS NICOLAAS, JOSEPH PEKELHARING (now
Representing himself without court sanction as JOOST PEKELHARING), MASSIMO ROSSI and ED
ENRIQUEZ, petitioners, vs. COURT OF APPEALS, ALS MANAGEMENT & DEVELOPMENT CORPORATION and
ANTONIO K. LITONJUA, respondents.
Petition for review on Decision of CA
October 20, 2004
Tinga, J.
Facts: Sometime in 1988, STORA, then parent company of Swedish Match, AB (SMAB), decided to sell SMAB of Sweden
and the latters worldwide match, lighter and shaving products operation to Eemland Management Services, now Swedish
Match NV of Netherlands (SMNV). SMNV initiated steps to sell the worldwide match and lighter businesses while
retaining for itself the shaving business. In line with this, Ed Enriquez was commissioned and granted full powers by
SMNV to negotiate with the prospective buyers. Enriquez was held under instructions that the sale of Phimco shares
should be executed on or before 30 June 1990. Several interested parties tendered offers to acquire the Phimco shares, one
of which was ALS Management and Development Corporation through its president and general manger Litonjua, herein
respondents. In his letter dated 3 November 1989, Litonjua submitted to SMAB a firm offer to buy all the latters shares in
Phimco and all of Phimcos shares for the amount of 75million. In response, Rossi, the CEO of SMAB, informed Litonjua
that the offer was too low. Thereafter, an exchange of correspondence ensued between petitioners and respondents
regarding the sale of the Phimco shares. In his letter dated 21 May 1990, Litonjua offered to buy the disputed shares,
excluding the lighter business for US$30.6 million which was later increased to US$36million. However, in said offer,
Litonjua stressed that the bid amount is still subject to adjustment. In an answer to said letter, Rossi made it clear that
ALS should submit its final offer not later than 30 June 1990. Due to the failure of ALS to meet the deadline for the
submission of offer, Rossi informed Litonjua that they have signed a conditional contract with a local group for the
disposal of Phimco. However, the said sale with the local group did not materialize. Enriquez invited Litonjua to resume
negotiations with SMAB. In response, Litonjua expressed objections to the totally new sets of terms and conditions for the
sale of Phimco.
Issues: WON the series of written communications between petitioners and respondents collectively constitute a
sufficient memorandum of their agreement under Article 1403 of the Civil Code. (NO)
WON there was a perfected contract of sale between petitioners and respondent with respect to the Phimco shares. (NO)
WON respondents plea for specific performance should fail. (YES)
Reasoning: The Statute of Frauds embodied in Article 1403, paragraph 2 of the Civil Code requires certain contracts
enumerated therein to be evidenced by some note or memorandum in order to be enforceable; it merely regulates the
formalities of the contract. When the law requires that a contract must be in certain forms in order that it may be valid or
enforceable, that requirement is absolute and indispensable. Consequently, the effect of non-compliance will render the
contract unenforceable; in other words, no action cab be enforced unless the requirement is complied.
For a note or memorandum to satisfy the Statute, it must be complete in itself; it must contain the names of the parties,
the terms and conditions of the contract, and the description of the property sufficient to render it capable of
identification. Such note or memorandum must contain the essential elements of the contract expressed with certainty
that may be ascertained from the note or memorandum itself, or some other writing to which it refers or within which it is
connected, without resorting to parol evidence.
Having stated so, the exchange of correspondence between the parties hardly constitutes the note or memorandum
contemplated under Art 1403. First, it does not indicate at what price the shares were being sold. Second, the letter does
not state the mode of payment.
A contract is defined as a juridical convention manifested in legal form, by virtue of one or more persons bind themselves
in favor of another, or others, or reciprocally, to the fulfillment of a prestation to give, to do or not to do. Contracts are
perfected by mere consent, which is manifested by the meeting of the offer and acceptance upon the thing and the cause
which are to constitute the contract.
In the case at bar, Litonjuas letter proposing the acquisition of the Phimco shares for US$36Million was merely an offer
which needs to be accepted for the contract to be perfected. Quite obviously, SMAB did not accept said offer, thus, no
contract was produced.
The acquisition audit and submission of a comfort letter, even if considered together, failed to prove the perfection of the
contract. Quite the contrary, they indicated that the sale was far from concluded. Respondents conducted the audit as part
of the due diligence process to help them arrive at and make their final offer. On the other hand, the submission of the
comfort letter was merely a guarantee that respondents had the financial capacity to pay the price in the event that their
bid was accepted by petitioners. The Statute of Frauds is applicable only to contracts which are executory and not to those
which have been consummated either totally or partially. If a contract has been totally or partially performed, the

exclusion of parol evidence [the parol evidence rule is a substantive common law rule in contract cases that prevents a
party to a written contract from presenting extrinsic evidence that contradicts or adds to the written terms of the contract
that appears to be whole. The supporting rationale is that since the contracting parties have reduced their agreement to a
single and final writing, the extrinsic evidence of past agreements or terms should not be considered when interpreting
that writing, as the parties had decided to ultimately leave them out of the contract] would promote fraud or bad faith, for
it would enable the defendant to keep the benefits already derived by him from the transaction in litigation, and at the
same time, evade the obligations, responsibilities or liabilities assumed or contracted by him thereby. This rule, however,
is predicated on the fact of ratification of the contract within the meaning of Article 1405 of the Civil Code either (1) by
failure to object to the presentation of oral evidence to prove the same, or (2) by the acceptance of benefits under them. In
the instant case, respondents failed to prove that there was partial performance of the contract within the purview of the
Statute.
DISPOSITIVE: Petition is in part GRANTED. The appealed Decision is hereby MODIFIED insofar as it declared the
agreement between the parties enforceable under the Statute of Frauds. The complaint before the trial court is ordered
DISMISSED insofar as the cause of action for specific performance is concerned. The case is ordered REMANDED to the
trial court for further proceedings with respect to the cause of action for damages as above specified.
CARBONNEL vs PONCIO
ROSARIO CARBONNEL, plaintiff-appellant, vs. JOSE PONCIO, RAMON INFANTE, and EMMA INFANTE, defendantsappellees.
Appeal from the Decision of lower court
May 12, 1958
Concepcion, J.
Facts: Rosario Carbonnel alleged that she bought from Jose Poncio a land of 195sqm at P9.50 per sqm; that she paid
P247.26 on account of the price and assumed Poncio's obligation with the Republic Savings Bank amounting to P1,177.48,
with the understanding that the balance would be payable upon execution of the corresponding deed of conveyance; that
one of the conditions of the sale was that Poncio would continue staying in said land for one year; BUT that he refused to
execute the deed of sale; and that Poncio later sold the same lot to defendants Ramon Infante and Emma Infante, who
knew, of the first sale to plaintiff. Defendants moved to dismiss the complaint alleging mainly that the claim was
unenforceable under the Statute of Frauds. This motion was denied. By their answer, the Infantes denied most of the
allegations that they bought the land in good faith and not knowing the sale to Carbonnel and that again, Carbonnels
claim was unenforceable under the Statute of Frauds. Poncio also denied some of the allegations that plaintiff offered to
buy the lot at P15 per sqm but that Poncio thought its worth P20 at least and so he consistently denied the offer; that the
Infantes also wanted to buy the lot at P15 per sqm; that Carbonnel then advised Poncio should she decide to buy the
property at P20 a square meter, she would allow him to remain in the property for one year; that Poncio signed it "relying
upon the statement of the plaintiff that the document was a permit for him to remain in the premises in the event that
defendant decided to sell the property to the plaintiff at P20 a square meter; that the Infantes improved their offer and so
he sold the lot to them; and again, Carbonnels claim was unenforceable under the Statute of Frauds. During trial, plaintiff
introduced Constancio Meonada, the witness to the document between plaintiff and Poncio regarding the latters staying
for one year in the premises; that he was the one who typed the said agreement in Batanes (Poncios) dialect; that he read
the contents of the same to Poncio and also gave the latter a copy; that the plaintiff and Poncio signed the agreement and
that he (Meonada) signed as witness. The agreement read as follows (in English): From this date, January 27, Jose Poncio
may stay in this lot that I bought from him until one year without payment. After that one year and he cannot find any
place where to transfer his house, he can also stay in this lot and he will pay according agreement. When it was plaintiffs
turn to testify, alleging that when Poncio came one day to tell her that she wanted to sell his property and that both of
them agreed on the price and the latter also telling her of his mortgage, the defense moved to strike out the statement of
the witness, invoking, in support of the motion, the Statute of Frauds. After an extended discussion, the parties agreed to
submit memoranda and the hearing was suspended. Later on, the lower court issued an order dismissing plaintiff's
complaint, without costs, upon the ground that her cause of action is unenforceable under the Statute of Frauds.
Issue: WON the Statute of Frauds apply to this case. (NO)
Reasoning: The Statute of Frauds is applicable only to executory contracts and not to contracts that are totally or
partially performed. In executory contracts there is a wide field for fraud because unless they be in writing there is no
palpable evidence of the intention of the contracting parties. The statute has precisely been enacted to prevent fraud.
However, if a contract has been totally or partially performed, the exclusion of parol evidence would promote fraud or
bad faith, for it would enable the defendant to keep the benefits already denied by him from the transaction in litigation,
and, at the same time, evade the obligations, responsibilities or liabilities assumed or contracted by him thereby.
It would be a fraud upon the plaintiff if the defendant were permitted to escape performance of his part of the oral
agreement after he has permitted the plaintiff to perform in reliance upon the agreement. In this sense, the Statute of
Frauds should not apply.

When the party concerned has pleaded partial performance, such party is entitled to a reasonable chance to; establish by
parol evidence the truth of this allegation, as well as the contract itself.
The Court should determine whether said allegation is true, bearing in mind that parol evidence is easier to concoct and
more likely to be colored or inaccurate than documentary evidence. If the evidence of record fails to prove clearly that
there has been partial performance, then the Court should apply the Statute of Frauds, if the cause of action involved falls
within the purview thereof. If the Court is, however, convinced that the obligation in question has been partly executed
and that the allegation of partial performance was not resorted to as a devise to circumvent the Statute, then the same
should not be applied.
Apart from this, there is also factual basis that plaintiffs claims were not entirely devoid of factual basis. For one thing,
there is Exhibit A the Batanes dialect agreement, which was uncontradicted by the defense. The belief that it "was a permit
for him to remain in the premises in the event" that "he decided to sell the property" to the plaintiff at P20 a sq. m." is, on
its face, somewhat difficult to believe especially when it specifically states that the plaintiff bought it from him (that I
bought from him).
The defense also questioned the P247.26 in Poncios bank book, alleged by plaintiff to be her payment to the bank, saying
mainly that it could have been anything other than payment. Then again, how shall the court know why Poncio's bank
deposit book is in plaintiff's possession or whether there is any relation between the P247.26 entry therein and the partial
payment of P247.26 allegedly made by plaintiff to Poncio on account of the price of his land, if we do not allow the plaintiff
to explain it on the witness stand? It is clear, therefore, that she is entitled, legally as well as from the viewpoint of equity,
to an opportunity to introduce parol evidence in support of the allegations of her second amended complaint.
DISPOSITIVE: Order appealed from is SET ASIDE and the case is REMANDED to the lower court for further
proceedings.
UBARRA V. MAPALAD
ATTY. MANUEL T. UBARRA, Complainant, vs. JUDGE LUZVIMINDA M. MAPALAD, Respondent
ADMINISTRATIVE MATTER in the Supreme Court.Grave Misconduct.
MARCH 22,1993
PER CURIAM
Facts: Complainant Atty. Manuel T. Ubarra, on behalf of his client Juanito A. Calderon, charges respondent, the
Presiding Judge of the MTC of Pulilan, Bulacan, with grave misconduct, knowingly rendering an unjust judgment, the
violation of the Canons of Judicial Ethics and the failure to decide within the mandated ninety-day period Criminal Case
No. 89-3905. Juanito A. Calderon, the offended party in said Criminal CaseNo. 89-3905 and Criminal Case No. 90-4056,
another action for Grave Threats.- Calderon alleges in his affidavit that in the course of the trialof Criminal Case No. 893905 before the MTC, he noted that accused Roberto Crude worked as a houseboy of the respondent; by that time, he
(Calderon) had already observed the latter's partiality in favor of the said accused- Criminal Case No. 89-3905 was
submitted for decision on 27March 1990; on 9 August 1991, Roberto Crude married Annabelle V Manlangit, respondent's
youngest sister; it was the respondent herself who solemnized that marriage at her office, as evidenced by the marriage
contract; despite such marriage, respondent did not inhibit herself from hearing Criminal Case No 89-3905 and instead
proceeded to render and promulgate, on 17 October 1991, a judgment acquitting Cruda, her brother-in-law.- The answer to
the letter-complaint, filed by the respondent was devoted mostly to a narration of her sincere and honest efforts to reform
and rehabilitate Roberto Cruda.- She denies having knowingly rendered an unjust judgment in favor of her brother-in-law
because she "was persuaded to dismiss the same not on account that the guilt of Cruda was not proven beyond reasonable
doubt but by the very reason that both the private complainant and the accused therein were in pari delicto."- The Court
referred the case to the Executive Judge of the RTC of Malolos, Bulacan who recommended that proper penalty be
imposed upon the respondent Judge.
Issue: WON the respondent had knowingly rendered an unjust judgment. (NO)
WON she is guilty of improper conduct. (YES)
Reasoning: Under the pari delicto doctrine, where the parties to a controversy are equally culpable or guilty, they shall
have no action against each other, and it shall leave the parties where it finds them. This doctrine finds expression in the
maxims ex dolo malo non oritur actio' and 'in pari delicto potior est conditio defendentis.
The Court found the application of the pari delicto theory in a criminal case to be strange, to say the least. In the first
place, the rule on pari delicto is a rule in civil law. It is principally governed by Articles 1411 and 1412 of the Civil Code
under the Chapter on Void or Inexistent Contracts, and presupposes a situation where the parties are in culpability
similarly situated, i.e., in eodem loco.- That this rule can by no means apply in a criminal ease is evidenced by the
aforesaid Article 1411 which provides in part that "When the nullity proceeds from the illegality of the cause or object of
the contract, and the act constitutes a criminal offense, both parties being in pari delicto, they shall have no action against
each other, and both shall beprosecuted." Secondly, in view of the broader grounds of public policy, the rule may not be
invoked against the State. Thirdly, in the prosecution of public crimes, the complainant is the State while the private
offended party is but a complaining witness. Any criminal act perpetrated by the latter on the occasion of the commission
of the crime, or which may have given rise to the criminal act imputed to the accused is not the act or conduct of the State
and can by no means bind it under the doctrine of pari delicto. To rule otherwise would be to establish a dangerous

doctrine which would irreparably weaken the very foundations of the criminal justice system and frustrate the
administration of justice. Whatever wrongful act may have been committed by the offended party may only be invoked to
justify the accused's own act or mitigate his liability.- In spite of all this, however, the respondent may not necessarily
be liable for rendering an unjust judgment as there is no convincing evidence on record to show that she knew such
judgment to be unjust and that she rendered the same with the conscious and deliberate intent to commit an injustice. She
could only be, as she is hereby found, guilty of gross ignorance of the law.
The Court noted with grave concern the respondent's revelation in her Answer that "she interceded in the settlement of the
cases pending against" Roberto Cruda. By such admission, it is clear that the respondent acted as counsel for the accused.
It is therefore evident that she is guilty of improper conduct, which could only serve to diminish
public confidence in the integrity and impartiality of the judiciary. Her behavior amounted to a violation of Rule
2.01,Canon 2 of the Code of Judicial Conduct.
DISPOSITIVE: For grave misconduct, gross inefficiency and neglect of duty, gross ignorance of the law and conduct
prejudicial to the best interest of the service, respondent JUDGE LUZVIMINDA M. MAPALAD was
DISMISSED from the service with forfeiture of all benefits, except for the monetary value of her accrued leaves, and
with prejudice to re-employment in any branch or service of the government, including government owned or controlled
corporations.