MMDA v.

JANCOM
Concurrence of offer and acceptance

FACTS:

President Ramos issued Presidential Memorandum Order no. 202 creating an Executive Committee to
oversee and develop waste-to-energy projects for the waste disposal sites in Rizal and Carmona.

JANCOM was the sole complying bidder for the Rizal Waste Disposal Site. Hence, JANCOM was awarded
a Contract for the implementation of the Solid Waste Management Project for the Rizal Site. This
contract was submitted for approval to President Ramos who subsequently endorsed it to then
incoming President Estrada.

However, because the residents of Rizal protested, Estrada ordered the closure of the San Mateo
landfill. The Greater Metro Manila Solid Waste Management Council (GMMSWMC) thereafter adopted a
Resolution not to continue the contract with JANCOM. Also, the MMDA called for the bids for and
authorized the forging of a new contract for the Metro Manila waste management.

JANCOM filed a petition with the RTC to declare the GMMSWMC Resolution and the acts of MMDA as
illegal, unconstitutional and void, and to enjoin them from implementing the Resolution and making
another award.

The RTC ruled in favor of JANCOM, and was affirmed by the CA.

The SC declared the contract as valid and perfected, although it is ineffective and unimplementable
pending the approval by President Estrada.

JANCOM then filed before the RTC an Omnibus Motion for a writ of execution (in order to enforce the
contract), but it was challenged by GMMSWMC and MMDA. RTC issued the writ of execution and CA
affirmed the RTC Order. Hence this petition.

ISSUES:

1. W/N there is a valid and perfected contract between the parties.

2. W/N contract is ineffective and unimplentable until and unless it is approved by the President.

HELD:

1. Yes.

Article 1315 of the Civil Code provides that a contract is perfected by mere consent. Consent, as
stated in Article 1319, is manifested by the meeting of the offer and the acceptance upon the
thing and the cause which are to constitute the contract.

When petitioners accepted private respondents’ bid proposal, there was, in effect, a meeting of
the minds upon the object (which is the waste management project) and the cause (the build-
operate-transfer scheme). Hence, the perfection of the contract.
 In City of Cebu vs. Heirs of Candido Rubi, the Supreme Court held that "the effect of an
unqualified acceptance of the offer or proposal of the bidder is to perfect a contract, upon
notice of the award to the bidder.

2. Yes.

While the Court recognizes that the garbage problem is a matter of grave public concern, it can
only declare that the contract in question is a valid and perfected one between the parties, but
the same is still ineffective or unimplementable until and unless it is approved by the President,
the contract itself providing that such approval by the President is necessary for its effectivity. In
issuing the alias writ of execution, the trial court in effect ordered the enforcement of the
contract despite this Court‘s unequivocal pronouncement that albeit valid and perfected, the
contract shall become effective only upon approval by the President.

HILL v. VELOSO
Deceit by third person

Veloso claimed that she was tricked by her son-in-law Franco into signing a blank document,
unknowingly binding her to a debt to Michael & Co. She thought that she was made to sign a document
acknowledging an obligation to pay for the guardianship of the minor children of her brother, and that
she learned of the true nature of the document (a promissory note to Michael & Co.) only after Franco’s
death. But, clearly her signatures on the promissory note were obtained by means of fraud.

ISSUE:

W/N the promissory note was valid despite the deceit by a third person?

HELD: Yes.

Granted there was deceit in executing the Promissory Note to Michael & Co., still the deceit and error
alleged could not annul the consent of Veloso nor exempt her from the obligation incurred. The deceit,
in order that it may annul the consent, must be that which the law defines as a cause.

Art. 1338 NCC - “There is deceit when by words or insidious machinations on the part of one of the
contracting parties, the other is induced to execute a contract which without them he would not have
made.”

Franco was not one of the contracting parties. (He is a third person, and so this case does not fall within
the deceit defined under Art. 1338.)

The deceit caused by a third person may produce effects and, in some cases, bring about the
nullification of the contract. This will happen when the third person causes the deceit in connivance
with, or at least with the knowledge, without protest, of the favored contracting party: the most
probable suppositions, in which the latter cannot be considered exempt from the responsibility.
 Moreover, and even without the attendance of that circumstance, the deceit caused by a third person
might lead the contracting party upon whom it was practiced into error, and as such, though it be not
deceit, may vitiate consent. In any case, this deceit may give rise to more or less extensive and serious
responsibility on the part of the third person, and a corresponding right of action for the contracting
party prejudiced"

(Otherwise said, the deceit by Franco only gives Veloso the right to go after Franco’s estate, but the
promissory note between Veloso and Michael & Co remains valid because Michael & Co.was neither in
connivance with Franco, nor did they know about Franco’s deceit.)

PANGADIL v. CFI
Simulation of Contracts

FACTS:

A parcel of land owned by Pangadil was conveyed in favor of the respondent Tandingan through a
verbal sale. After the death of Pangadil, his daughter Salandang executed the document called
"Ratificacion De Una Venta" wherein she acknowledged the verbal sale made by her deceased father
Pangadil over the parcel of land in favor of respondent Tandingan. The sale was approved by the
guardianship court.

21 years later, Salandang filed a civil case before the CFI seeking to annul the “Ratificacion De Una
Venta”. Salandang averred that she and her sister were made to sign the document on the
misrepresentation that it was merely to ratify a verbal mortgage executed by her father during his
lifetime, and not to confirm a verbal sale of the land.

CFI dismissed the case on the ground of prescription, and declared that the document "Ratificacion De
Una Venta" was legal, binding and effective, hence, the action to annul the sale which was filed more
than 21 years after the approval thereof is already barred by the statute of limitations.

In their present petition for review on certiorari, Salandang disputed the CFI’s ruling on the ground that
the document known as "Ratificacion De Una Venta" is inexistent and void and the action for a
declaration of its non-existence does not prescribe pursuant to Art. 1410 of the Civil Code.

ISSUE:

W/N the document known as "Ratificacion De Una Venta" is inexistent and void, and the action is
imprescriptible.

HELD: No.

There is less legal basis to hold that the questioned document is inexistent and void ab initio for being
supposedly a simulated or fictitious contract.
Under the law, the simulation of a contract may either be absolute or relative. It is only when the
contract is absolutely simulated or fictitious that it is deemed void. There is absolute simulation "when
the parties do not intend to be bound at all." In case the parties merely conceal their true agreement,
the simulation is relative, and the contract with that defect is binding upon the parties unless it
prejudices a third person and is intended for a purpose contrary to law, morals, good customs, public
order or public policy.

The document in question may not be deemed absolutely simulated or fictitious. By petitioners' own
admission, they intended to be bound thereby; they merely contend that they thought it was to ratify a
contract of oral mortgage, instead of an oral sale of land. In short, it is not a contract wherein the parties
do not intend to be bound at all which would thereby make it absolutely simulated and, therefore, void.

As for the issue on prescription, the imprescriptibility of an action to declare the inexistence of a
contract refers only to the contracts expressly enumerated in Article 1409 of the Civil Code (Void and
Inexistent Contracts).

Fraud would only make the contract voidable or annulable. If the action to annul a voidable contract is
based on fraud, it prescribes in four years from the time of the discovery of the fraud. (Art. 1391, Civil
Code.)

The petitioner’s inaction for 21 years reflects on the credibility of their pretense that they merely
intended to confirm a verbal mortgage, instead of a verbal sale of the land in question.