Dauden Hernaez vs.

De Los Angeles

Facts: Marlene Dauden-Hernaez, a movie actress, filed a case against Hollywood Far East
Productions its President and General Manager, Ramon Valenzuela, to recover P14,700 allegedly the
balance due for her services as leading actress in two motion pictures. The complaint was dismissed
by Judge De Los Angeles mainly because her claim was not supported by a written document, public
or private in violation of Articles 1356 and 1358 of the Civil Code. According to Judge De Los
Angeles, the contract sued upon was not alleged to be in writing when Article 1358 requires it to be
so because the amount involved exceeds P500.

Issue: Whether a contract for personal services exceeding 500 pesos is invalid and unenforceable

Held: No. The contract is valid and enforceable even if compensation for services above 500 pesos
is not in writing.

Contracts are valid and binding from their perfection regardless of form, whether they be oral or
written. This is plain from Articles 1315 and 1356 of the present Civil Code.

“Article 1358. provides that the following must appear in a public document:

(1) Acts and contracts which have for their object the creation, transmission, modification or extinguishment of real
rights over immovable property; sales of real property or of an interest “

The contract sued upon by petitioner does not come under the exceptions in Article 1356 of the Civil
Code. It is true that it appears included in Article 1358, last clause, “all other contracts where the
amount involved exceeds five hundred pesos must appear in writing, even a private one.” Article 1358
nowhere provides that the absence of written form makes tagreement invalid or unenforceable. On
the contrary, Article 1357 clearly indicates that contracts covered by Article 1358 are binding and
enforceable by action or suit despite the absence of writing.

Hence, even if the contract’s form was incorrect. It is still enforceable between the parties.

Cenido vs. Spouses Amadeo

Facts: On May 22, 1989, respondent spouses Amadeo Apacionado and Herminia Sta. Ana filed a
complaint against petitioner Renato Cenido for “Declaration of Ownership, Nullity, with Damages.”

The spouses alleged that:

(1) they are the owners of a parcel of unregistered land, particularly described as follows:

Parcel of land located at Rizal, St., Layunan, Binangonan, Rizal, 123 square meters, bounded on the
North by Gavino Aparato;
East by Rizal St.,
South by Tranquilino Manuzon;
West by Simplicio Aparato, and a residential house
(2) this house and lot were purchased by the spouses from its previous owner, Bonifacio Aparato,
now deceased

(3) while he was alive, Bonifacio Aparato mortgaged the said property twice, one to the Rural Bank of
Binangonan and the other to Linda C. Ynares, as security for loans obtained by him;

(4) the loans were paid off by the spouses thereby securing the release and cancellation of said
mortgages;

(5) the spouses continued to pay the real estate taxes on the property;

(6) from the time of sale, they have been in open, public, continuous and uninterrupted possession
of the property in the concept of owners;

(7) that on January 7, 1987, petitioner Renato Cenido, claiming to be the owner of house and lot, filed
a complaint for ejectment against them

(9) ejectment case was dismissed by the MTC

Issue: Whether the contract (conveyance of land) is valid even if it was not in the proper form

Held: Yes. A certain form may be prescribed by law for validity, enforceability, or greater efficacy of
the contract.

The requirement of a public document in Article 1358 is for its efficacy. Although a conveyance of
land is not made in a public document, validity is not affected. Article 1358 does not require the
accomplishment of contracts in a public instrument to validate the contract but only to insure its
efficacy. After the contract’s existence has been admitted, the party bound may be compelled to
execute the proper document.

When enforceability is required, non-compliance will not permit, upon the objection of a party, the
contract, although otherwise valid, to be proved or enforced by action. Formalities intended for greater
efficacy to bind third persons would not adversely affect the validity or enforceability of the contract
between the contracting parties.

Hence, the conveyance of land between the parties are still enforceable among the parties even if it
was not made in the proper form, issuance in public instrument.

HDMF vs. CA

Facts: CONVIR Associates and Home Development Mutual Fund (HDMF) entered into a
CONSULTANCY AGREEMENT where it obligated itself to render medical services to the
employees of HDMF.

First clause:
“That this AGREEMENT takes effect on January 1, 1985 up to December 31, 1985, provided
however, that either party who desires to terminate the contract may serve the other party a written
notice at least thirty (30) days in advance.”

Second clause:

“written notice of termination should be served at least thirty (30) days in advance”

On December 16, 1985, Dra. Cora J. Virata (CONVIR) wrote petitioner Marilou O. Adea-Proctor,
then Deputy Chief Executive Officer of HDMF, to inform that HDMF’s silence implies renewal of
their contract. HDMF’s letter not renewing the agreement was actually received by the private
respondents only on January 9, 1986.

Respondents averred that petitioners’ unexpected termination of the Consultancy Agreement,

requiring written notice thirty (30) days in advance, was not done Consequently, private respondents
prayed for unrealized income of at least (P500,000.00) Pesos resulting from loss of business
opportunities

On January 14, 1986, petitioners and HDMF sought the dismissal of the Complaint; contending
private respondents’ insistence on the necessity of a notice of renewal of the contract is predicated on
an erroneous interpretation of its terms, conditions and duration which are clear.

Issue: Whether the contract has been properly terminated based from its terms and conditions

Held: No. Contract was not properly terminated as its provisions was not read together as a whole
but only jointly.

Article 1374 of the New Civil Code:

“The various stipulations of a contract shall be interpreted together, attributing to the doubtful ones
that sense which may result from all of them taken jointly.”

To ascertain the true meaning of this provision of Consultancy Agreement, its entirety must be
considered; not merely the first clause. Petitioners’ interpretation solely based on the first clause, and
which completely ignored the second clause under scrutiny, cannot be upheld.

Terminating a contract is determined by the stipulation of the parties. Requirements of contracts as

to notice—as to the time of giving, form, and manner of service thereof—must be strictly observed because
“In an obligation where a period is designated, it is presumed to have been established for the benefit
of both the contracting parties.” Also, unilateral termination of the contract in question by the herein
petitioners is violative of the principle of mutuality of contracts ordained in Art. 1308 of the New Civil
Code.

Hence, contract was not properly terminated as the contracted was not interpreted together as a whole
but was read individually.
Abad vs. Goldloop
Facts: The Abads were the owners of 13 parcels of land in Tanza, Cavite. On August 29, 1997,
Goldloop Properties Inc. entered into a Deed of Conditional Sale with petitioners. Thefollowing terms
of payment: a. an earnest money of Php1,000,000.00, PHP6,765,660.00 as first payment and c. the
remaining balance, as full and final payment of the total contract price, in the amount of
PHP27,049,640.00 shall be paid on or before Dec. 31 1997.

Paragraph 8 of the Deed:

“if the BUYER cannot comply his obligation for the balance of the total consideration, the BUYER shall forward a
formal request contract’s extension. If the BUYER fails to comply within the specified extension period, the earnest
money PHP1,000,000.00 given by the BUYER to the SELLER shall be forfeited in favor of the SELLER but
the first payment check shall be returned to the BUYER without any additional charges to the SELLER.”

Aug. 28, 1998 letter: respondent informed Henry Abad he would not object to the planned sale of the
properties, provided that 50% of the forfeitable amount of P1,000,000.00 would be returned in
addition to the P6,765,660.00 that the intended date of purchase had been adversely affected by
economic conditions which were never foreseen as a possible contingency.

Oct. 8, 1998 letter: respondent informed Enrique Abad that the negotiations with the banks had failed
due to "the continuing economic downturn" and consequently, the transaction would not be
consummated.

The trial court decreed that whether the contract was extended or not, the first payment of
Php6,765,660.00 shall be returned to the plaintiff. The requirement of a formal request for extension
of the contract was provided solely for the plaintiff to save the amount of Php1,000,000.00 from being
forfeited if it chooses instead the option of paying the balance on or before the stipulated periods.

Issue: Whether the written terms of the contract are vague as to make the court interpret said contract

Held: No. Contract’s written terms are not vague and must be interpreted plainly. Court interpretation
is not needed anymore.

Article 1370 of the Civil Code: “[i]f the terms of a contract are clear and leave no doubt upon the intention of the
contracting parties, the literal meaning of its stipulations shall control. (PLAIN MEANING RULE)

The rule is that where the language of a contract is plain and unambiguous, its meaning should be
determined without reference to extrinsic facts or aids. The intention of the parties must be gathered
from that language, and from that language alone.

Courts cannot make for the parties better or more equitable agreements than they themselves have
been satisfied to make, or rewrite contracts because they operate harshly or inequitably as to one of
the parties, or alter them for the benefit of one party and to the detriment of the other, or by
construction, relieve one of the parties from the terms which he voluntarily consented to, or impose
on him those which he did not.

Hence, the courts must not interpret the contract anymore because of the plain meaning rule.