The determination if there is a valid contract and what kind of contract was entered into between Betty and Al is foremost necessary before it is possible to evaluate whether such contract is enforceable

PROBLEM

Betty is a physician. One of her patients was an elderly man named Al. Betty treated Alfor Alzheimers disease, but since she believed he was destitute, she never charged him for her services.

One day Al said to Betty, I want to pay you back for all you have done over the years. If you will care for me for the rest of my life, I will give you my office building. Im frightened because I have no heirs and you are the only one who cares for me. I need to know now that I can depend on you. Betty doubted that Al owned any office building, but said nothing in response and just completed her examination of Al and gave him some medication.Two years passed. Als health worsened and Betty continued to treat him. Betty forgot about Als statement regarding the office building.One day Betty learned that Al was indeed the owner of the office building. Betty immediately wrote a note to Al stating, I accept your offer and promise to provide you with medical services for the rest of your life. Betty signed the note, put it into a stamped envelope addressed to Al, and placed the envelope outside her front door to be picked up by her mail carrier when he arrived to deliver the next days mail.Al died in his sleep that night. The mail carrier picked up Bettys letter the following morning and it was delivered to Als home a day later. The services rendered by Betty to Al over the last two years were worth several thousand dollars; the office building is worth millions of dollars.Does Betty have an enforceable contract for the transfer of the office building? Discuss.ANSWERThe determination if there is a valid contract and what kind of contract was entered into between Betty and Al is foremost necessary before it is possible to evaluate whether such contract is enforceable.

A valid contract was entered into

Contract as defined in Article 1305 of the New Civil Code (NCC) is defined as the meeting of the minds between two persons whereby one binds himself to give something or to render service. Another well accepted definition of contracts under this jurisdiction was provided for by Sanchez Roman stating, that contracts is a juridical connection by virtue of which one or more persons bind themselves in favor of another the fulfillment of a prestation to give, to do and not to do. In this regard, Al, who claims to be without heirs and is apprehensive that nobody will care for him in the years to follow, offered Betty his office building if the latter will continue to take care of him for the rest of his life. From this, one cannot declare otherwise that there is no oral contract formed between Al and Betty. Al bound himself to give Betty his office building and the absence of Bettys affirmative response cannot derogate the obligation Al imposed upon himself. A contract of onerous/conditional donation was entered to between Al and Betty

The next inquiry is on the kind of contract that exists between them. Scrutiny of their oral contract shows that Al is donating his office building to Betty thus stating: I will give you my office building. Donation is an act of liberality wherein a person disposes a thing either gratuitously (Art. 725, NCC) or onerously upon the imposition of a burden less than the value of the thing given (Art. 726, NCC). What was provided for in Article 726 are called conditional or modal donations which collectively classifies those kinds of donations where the donor imposes upon the donee a burden inferior in value to that of the thing donated. One particular form of conditional donation is remuneratory condition (Art. 733, NCC), which in most proper sense are donations which remunerate past services which do not constitute a demandable debt.

In this case, Al himself recognized that Berry has rendered past services by saying, I want to pay you back for all that you have done over the years. Moreover, the facts indicated that Berry has been treating Al without charging him for her services. This shows that the services rendered by Betty did not produce an obligation demandable against the donor. Bettys past services produced no demandable debt. The situation where Al gives his property to Betty thus far can be considered as a remuneratory donation under the purview of Article 726 of the New Civil Code.

In then case at bar, despite the lack of affirmative actions showing acceptance to the oral donation made by Al does not make the contract invalid. The purpose of the formal requirement for acceptance of a donation is to ensure that such acceptance is duly communicated to the donor. Als actual knowledge and experience of the continued care and services provided by Betty coupled with the fact that he made no further acts showing conveyance of the property to another or revoking said donation fulfilled the legal requirement that the acceptance of the donation by the donee be communicated to the donor.

Importance of the distinction between

inter vivos and mortis causa

At this juncture, a determination whether such modal donations is a donation mortis causa or inter vivos becomes relevant. A simple distinction between the two is on effectivity of the donation: that which becomes effective upon the death of the donor is donation mortis causa while those which become effective independent of the death of the donor are classified as inter vivos. The validity of the donation depends upon its nature, whether inter vivos or mortis causa hence its relevancy in this case. If the donation is inter vivos, it must be executed and accepted with the formalities prescribed by Article 748 and 749 of the New Civil Code, except when it is onerous, in which case the rules of contracts will apply.The conveyance of the office building made by Al is a donation inter vivos

It is established from the cases of Laurente vs Mata and Bautista vs Sabiniano, that a donation is considered mortis causa if the donor not only postpones the execution of the donation until his death but also reserves the right to revoke said act at his pleasure or when he makes acts of ownership upon the subject property that will prevent its conveyance to the donee either in his lifetime or after his death, such as mortgaging the property right after he orally donated the same. From the statements of Al, it can be inferred that he has no intentions to neither revoke his donation nor alienate his office building during his lifetime to the effect that Betty will not be able to acquire the same. From the facts, Al specifically gave the donation as a form of remuneration or payment for the services and care Betty has given Al for the past years; moreover, he specifically expressed his uneasiness that since he has no heir not only was he worried that nobody will care for him, but that more importantly, he is quite certain that no one will inherent his property. These shows that Al has no intention to alienate or convey said office building because his intentions, was not to give the office building to Betty gratuitously in payment of his kindness, care and services. The phrase, If you will care for me for the rest of my life.. serves as a condition but will not determine the validity of the oral donation. Moreover, the Supreme Court, in the case of Puig et al. vs. Penaflorida, et al. has declared that in case of doubt, the conveyance should be deemed a donation inter vivos rather than mortis causa, in order to avoid uncertainly as to the ownership of property subject of the deed. As stated in the preceding paragraph, such onerous donation which is inter vivos need not abide with the formalities mandated for in Article 749 in order to make such oral donation valid. The last question left to be determined is on the enforceability of the valid contract between Al and Betty. The oral donation is not specifically enumerated in Article 1403, hence it is enforceable

An enforceable contract is one which cannot be enforced unless it is first ratified in the manner provided for by law. It is distinguished from the rescissble and annullable contracts in that the latter two produces legal effects unless they are set aside by a competent court, while an enforceable contract does not produce legal effects.

Article 1403 of the New Civil Code provides: The following contracts are unenforceable, unless they are ratified:(1) Those entered into in the name of another person by one who has been given no authority or legal representation, or who has acted beyond his powers;(2) Those that do not comply with the Statute of Frauds as set forth in this number. In the following cases an agreement hereafter made shall be unenforceable by action, unless the same, or some note or memorandum, thereof, be in writing, and subscribed by the party charged, or by his agent; evidence, therefore, of the agreement cannot be received without the writing, or a secondary evidence of its contents:(a) An agreement that by its terms is not to be performed within a year from the making thereof;(b) A special promise to answer for the debt, default, or miscarriage of another;(c) An agreement made in consideration of marriage, other than a mutual promise to marry;(d) An agreement for the sale of goods, chattels or things in action, at a price not less than five hundred pesos, unless the buyer accept and receive part of such goods and chattels, or the evidences, or some of them, of such things in action or pay at the time some part of the purchase money; but when a sale is made by auction and entry is made by the auctioneer in his sales book, at the time of the sale, of the amount and kind of property sold, terms of sale, price, names of the purchasers and person on whose account the sale is made, it is a sufficient memorandum;(e) An agreement of the leasing for a longer period than one year, or for the sale of real property or of an interest therein;(f) A representation as to the credit of a third person.(3) Those where both parties are incapable of giving consent to a contract.

The oral, onerous and inter vivos donation by Al to Betty does not fall to any of the situations contemplated in this article. The enumeration set forth in this Article is exclusive, suggesting those not within the specific account cannot be fall under the category unenforceable contract.

Hence, the contract entered into between Al and Betty is enforceable. Pajarillo vs. Intermediate Appellate Court

Art. 748. The donation of a movable may be made orally or in writing.

An oral donation requires the simultaneous delivery of the thing or of the document representing the right donated.

If the value of the personal property donated exceeds five thousand pesos, the donation and the acceptance shall be made in writing, otherwise, the donation shall be void.(632a)

Art. 749. In order that the donation of an immovable may be valid, it must be made in a public document, specifying therein the property donated and the value of the charges which the donee must satisfy.

The acceptance may be made in the same deed of donation or in a separate public document, but it shall not take effect unless it is done during the lifetime of the donor.

If the acceptance is made in a separate instrument, the donor shall be notified thereof in an authentic form, and this step shall be noted in both instruments.(633)