John C. Robb made a business trip to Shanghai as per request by the board of directors of the Philippine Greyhound Club, Inc. to study the operation of a dog racing course. The defendant stayed at American Club where he became acquainted with Fisher. Upon knowing the purpose of the defendant the plaintiff himself asked the defendant if he could be part of the stockholder. The defendant agreed to it, and the plaintiff then paid the first installment.
The defendant went back to Manila and the board of directors of PGCI issued a call for the payment of the second installment in which the plaintiff answered that he had already paid the same. The PGCI was then replaced by The Philippine Racing Club. The defendant then sends letters to plaintiff informing him of the critical condition of the PGCI to reimburse the second installment out of moral responsibility.
Whether or not there was sufficient consideration to justify the promise made by the defendant-appellant in his letters
No. The Supreme Court held that the promise made by an organizer of a dog racing course to a stockholder to return to him certain amounts paid by the latter in satisfaction of his subscription upon the belief of said organizer that he was morally responsible because of the failure of the enterprise, is not the consideration required by article 1261 of the Civil Code as an essential element for the legal existence of an onerous contract which would bind the promisor to comply with his promise.
ART. 1261. There is no contract unless the following requisites exists:
- The consent of the contracting parties;
- A definite object which is the subject-matter of the contract;
- A consideration for the obligation established.
In the present case, while the defendant-appellant told the plaintiff-appellee that he felt morally responsible for the second payments which had been made to carry out his plan, and that Mr. Hilscher and he would do everything possible so that the stockholders who had made second payments may receive the amount paid by them from their personal funds because they voluntarily assumed the responsibility to make such payment as soon as they receive from the Philippine racing Club certain shares for their services as promoters of said organization, it does not appear that the plaintiff-appellee had consented to said form of reimbursement which he had directly paid to the Philippine Greyhound Club, Inc., in satisfaction of the second installment. The first essential requisite required by the cited article 1261 of the Civil Code for the existence of a contract, does not exists.
* Case digest by Aileen B. Buenafe, LLB-1, Andres Bonifacio Law School, SY 2017-2018