Full 20% discount for senior citizens

Seniors are entitled to full 20% discount on top of a discount granted by a 3rd party. Lawyer Romulo Makalintal sued Sofitel after the latter refused to give a 70% discount based on the lawyer’s 20% senior discount and 50% discount via a contract with Accor (where he pays an annual membership fee of P8,000.00). By way of defense, Sofitel gave only a 30% discount (50 minus 20) on the ground that giving 70% discount would violate the rule on “double discounts”.

DTI ruled in favor of Makalintal: “The prohibition on double discounting is applicable only when the discount is for the establishment’s promotion, but only if a DTI permit is applied for and granted.” #businesslaw

Reformation of Instruments

When a written agreement does not reflect or express the true intentions of the parties, the contract may be reformed or changed. This is the right to reformation of instruments. This remedy is available so that the instrument may be accordingly revised to better manifest the agreement of the parties.

A party has the right to ask for the reformation of the instrument if it does not properly express the intent of the parties. This right is granted only to the extent that the true intentions may properly be reflected. Otherwise stated, it is only the provisions which are unclear and ambiguous which may be revised. If the parties agree to change clear and unambiguous provisions, they may be entering into a supplemental contract, a new contract, or a novation of the original contract.

Example 1: In a contract of sale of a condominium unit, the buyer obligated itself to pay the purchase price through a 24 monthly installments. On the other hand, the Realty Company selling the unit obligated itself to transfer and deliver ownership to the buyer upon full and complete payment of the purchase price. The transaction entered into by the parties is a contract to sell; however, they executed a contract of sale. As the intention of the parties is to enter into a contract to sell, their contract of sale may be modified accordingly to the extent that the will of the parties be shown.

Example 2: Using the same example above. If the parties later on agree to change the contract of sale such that the buyer will pay in full the purchase price and the Realty Company will transfer and deliver ownership of the condominium unit, they have entered into a novation of the original contract.

The grounds for invoking the right of reformation is due to the written instrument being unable to reflect the agreement or intentions of the parties by reason of: (a) mistake; (b) fraud; (c) inequitable conduct; or (d) accident. If the latter circumstances had actually prevented a meeting of the minds, the proper remedy is for the annulment of the contract. This is so as the consent of the parties may be defective or vitiated.

The remedy of reformation of the instrument is available even if there was a mutual mistake resulting in the failure of the instrument to reflect or disclose their agreement. Either party (or his successors-in-interest) may ask for the reformation of instrument. The party who was mistaken has the right to ask for reformation of the instrument, even if the other party knew or believed that there was a mistake and even concealed that fact to the other. If the mistake was due to one party, it is only the injured party (or his successors-in-interest) who can ask for reformation.

The remedy is not available to a party who acted fraudulently or inequitably in such a way that the instrument does not show their true intention. The erring party should not be rewarded for his unscrupulous behavior. If such conduct is permitted, it will wreak havoc on contracts as a party with evil intentions may simply ask for reformation if his plans do not work out.

Upon a complaint, the courts may order that the instrument be reformed if the instrument is defective due to ignorance, lack of skill, negligence or bad faith on the clerk, typist, or person who drafted the agreement. In so doing, the courts will factor in the principle of adhesion – wherein a contract will be construed against the party who prepared it.

A party who has already brought an action to enforce the contract cannot subsequently ask for its reformation. By filing a case, the said party declares that the contract reflects the intentions of the parties resulting in the waiver of the defects therein.

Notwithstanding the foregoing and what has been discussed, there cannot be any reformation in the following cases: (a) simple donations inter vivos wherein no condition is imposed; (b) wills; and (c) when the real agreement is void.

Form of Contracts

As a general rule, contracts are consensual. Hence, they are generally perfected by mere consent. Once perfected, contracts become obligatory regardless of whatever form they may have been entered into, so long as all the essential requisites for their validity are present.

Formal contracts – The condition requiring that a contract be in some form to be valid and enforceable is absolute and indispensable: (f) if there is a law requiring such, or (b) if a contract is only allowed to be proved in a certain way. Otherwise, a party cannot exercise his rights arising from the contract which does not comply with such a condition.

For instance, these contracts are required to appear in a public instrument:

(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 therein governed by the Statute of Frauds;

(2) The cession, repudiation, or renunciation of hereditary rights or of those of the conjugal partnership of gains;

(3) The power to administer property, or any other power which has for its object an act appearing or which should appear in a public document, or should prejudice a third person; and

(4) The cession of actions or rights proceeding from an act appearing in a public document.

On the other hand, a contract where the amount involve exceeds five hundred pesos is required to be in writing, even if it be in a private one.

A contracting party may require the other to observe or comply with the form required by law after the perfection of the contract. This right to specific performance may be exercised simultaneously with an action arising out of or in connection with the contract.

Essential Requisites to Perfect a Contract

In general, a contract is perfected only when all of the following requisites are present: (1) consent of the contracting parties; (2) object certain which is the subject matter of the contract; and (3) cause of the obligation which is established.

Consent is manifested by the meeting of the offer and the acceptance upon the thing and the cause which are to constitute the contract. The offer must be certain and the acceptance must be absolute. If a party offers a qualified acceptance, the same is considered a counter-offer.

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Concept and Principles of Contract

A contract is a meeting of minds between two persons whereby one binds himself, with respect to the other, to give something or to render some service.

The contracting parties are free to establish such stipulations, clauses, terms and conditions as they may deem convenient, provided they are not contrary to law, morals, good customs, public order, or public policy. This is the principle of autonomy.

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PHL lemon law test case

R.A. 10642 or the Philippine Lemon Law is put to the test by a businessman who filed a DTI complaint for a newly bought Audi A63.0 TDI.

The complaint stated that the new car “showed signs of defects as erratic and/or random error messages kept appearing on the dashboard which were very alarming and misleading.”

Philippine Lemon Law is a new piece of legislation signed last July 15.

Philippine Taxation on Online Sellers

For a quick understanding on how the Philippines taxes online sellers, you can check the following article:

Asian Briefing: Understanding How The Philippines Taxes Online Sellers

http://www.aseanbriefing.com/news/2014/10/10/understanding-how-the-philippines-taxes-online-sellers.html #businesslaw #ASEAN