Trillana v. Quezon College, Inc.
REITERATIONFacts
The Antecedents: Damasa Crisostomo sent a letter to the Board of Trustees of Quezon College, Inc. subscribing to 200 shares of capital stock with a par value of P100 each. She stated that she would pay the balance after catching fish ("babayaran kong lahat pagkatapos na ako ay makapagpahuli ng isda") and enclosed no initial payment. She also agreed to shoulder expenses and submit to the lawful demands of the College. Procedural History: Damasa Crisostomo died on October 26, 1948. Quezon College, Inc. presented a claim for P20,000 (the value of the subscription) in her testate proceeding. The administrator opposed the claim. The Court of First Instance of Bulacan dismissed the claim, holding that the subscription was not registered with nor authorized by the Securities and Exchange Commission. Quezon College, Inc. appealed. The Petition: The appellant, Quezon College, Inc., appealed the order of the Court of First Instance of Bulacan dismissing its claim for the subscription amount.
Issue(s)
Whether the subscription agreement constituted a valid and enforceable contract. Whether the condition for payment was valid under the Civil Code.
Ruling
The Supreme Court affirmed the appealed order dismissing the claim of Quezon College, Inc.
Ratio Decidendi
On the validity and enforceability of the contract: The Court found that Damasa Crisostomo's letter contained terms at variance with the general form used by Quezon College, Inc. Specifically, she did not enclose an initial payment and proposed a unique payment term: "babayaran kong lahat pagkatapos na ako ay makapagpahuli ng isda." The Court held that for this counter-offer to be binding, there was an absolute necessity for Quezon College, Inc. to expressly accept it. Since there was no showing of such acceptance, or that any acceptance came to her knowledge during her lifetime, the relation between Damasa Crisostomo and Quezon College, Inc. had only reached the preliminary stage and had not ripened into an enforceable contract. The Court emphasized that it would be unfair to obligate the College under Damasa's promise without its express agreement to her specific terms. On the validity of the condition for payment: The Court found the condition "babayaran kong lahat pagkatapos na ako ay makapagpahuli ng isda" to be facultative in nature, as its fulfillment depended upon the exclusive will of the debtor. Under Article 1115 of the Old Civil Code, a conditional obligation is void if the fulfillment of the condition depends upon the exclusive will of the debtor. The Court cited Taylor vs. Uy Tieng Piao, et al. (43 Phil., 873, 879) to support the principle that a condition, facultative as to the debtor, renders the whole obligation void. Therefore, the obligation to pay the subscription was void from the beginning due to this potestative condition.
Main Doctrine
A subscription agreement for shares of stock, where the payment is conditioned upon the exclusive will of the debtor (e.g., "babayaran kong lahat pagkatapos na ako ay makapagpahuli ng isda"), is void under Article 1115 of the Old Civil Code, as it constitutes a facultative condition. Furthermore, if the offer contains terms at variance with the standard form, the offeror's counter-offer requires express acceptance by the other party to ripen into an enforceable contract.