Contracts are agreements but not all agreements are contracts

Agreement is meeting of the minds

A mere agreement will not necessary constitute a contract
A Contract is one of the sources of obligation
1305 one binds himself with respect to the other to give something or to render some service

Obligations arising from the agreement
Dacion enfago is not a contract
- Is the delievey of the things by a debtor to his creditor in satisfaction of his debt
- Walang delivery walang dacion enfgao
- Mode of extinguishing an obligation while contract creates an onligation
- Obligation is not a contract
- Contract is one of the sources of obligation

Modes of extinguishing of the obligations

Contract of sale
-

Sources of an obligation
Salugada vs FEU
2008 case
A student of FEU was shot by a SG
He survives he sued FEU
What possibilities will wrise
- Quasi Delict employer of the SG
- Can the FEU be held liable as Quasi Delict no
- They are not the employer of the SG
- FEU is liabl;e under a contract
- When a students enrolls in a school or university a contract is entered into
- To maintain a peaceful environment conducive to learning

(Qualifications of the Security Guard)

A liability may arise not only in one source but in other source as well.

The right to make a will is a statury right

This right is protected under constituton
Non impairment clause not even the state cant violate the right of the parties to the contract.

In the exercise of the police power

Marriage is a special contract.

FC: consider it as a special contract

Who may be the parties of the contract

Marriage Male/Female
Contract it doesnt matter
Govern the law contract stipulations and the terms and condition of the parties subject to
limitations not conttreacy to law, morals etc

Marriage law ot the stipulations except property relations
Termination marriage (death/annulment)

The law defines a contract as a meeting of minds bet 2 persons
May a person contract with himself.
YES AUTO CONTRACT
A person may contract with himself
In one capacity representing himself and the other representing others
- When a person is authorized to borrow money can he himself be the lender
- YES the interest must me a market trade
He will be signing as the representative of the borrower and also signing as the lender .
This maybe a valid contract

There are auto contracts which are prohibited by law
Law on sale 1491 a guardian is prohibited by acquiring by purchase the property of his ward.

Whereby one binds himself


Contracts is bilateral both parties are obligated


May an obligation not to do arise from the contract ?
YES
No Honda TAXI CAB

Stipulation the buyer cannot use the car as a taxi cab.
Some stores can only sell certain products.

Fundamental Characteristics

Autonomy 1306 the contracting pqrties may establish such stipualtions, clauses, terms and
condiction as may deem convenient. (Liberty or freedom of contract)

Contract of partnership of the propfits of the partnership 50% will go to A and the other will
be given to B:

This stipulation is void

The stipulation is not contrary to law, moral, good customs, public order or public policy.

A Forfeiture Clause:
MAceda Law

Waivers may be a valid waiver if all the requisites are present
Sales: if there is a waiver as against the seller in case of eviction that is a void waiver if the seller
is in bad faith

Other stipulations such as ang mga factum ay void

Leonina stipulation of the contract of the parties excluded the other party from
receiving/sharing the profits
Commisorium stipulation in a contract of mortgage upn default of the principal debtor the
property wil;l automaticall be owned by the mortgagee

Nol aliendo prohibiting the debtor from alientating his property withut the consent of the
mortgagee


Jul1 1, 1998

Incase of devaluation /inflation of the peso to the dollar

Will the action prosper?

Involving a contract of lease

Find the issue

Will the action prosper?
(1250)
Nothing in the problem will tell you tha the parties required extra ordinary inflation.
STiuplations of the parties agreed upon the parties which will bind the parties.


Del Rosario vs Shell
SC recognized the validity of the stipulations

Escalation Clause upon the happening of the certain contingency the bank will increase the
rate of the interest

For evey 1 pero increase I the minimum wage there is a corresponsing increase in the

Contract of Lease the rental will increase


May the escalation Clause can be voided?
Contract of loan
There is no de escalation clause
There is money bank resolution





Acceleration Clause -


Consensuality
Mutualiy
Obligatory
relativity

once a year lang ang increase ng bank

non-involvement clause in the employment contract
daisy chu vs platinum plans
non-involvement provision
during his engagement with the employer he she shall not for the new two years in any invol
engaged in the same business
any breach of the foregoing provision will held the employee liable.

Is this a valid clause, non-involvement clause
This is not a valid clause because htat is it the right of the person in case of livelihood
Unreasonable restraint of trade.


Daisy Chu resigned Plaitnum plans anjoin another company
This clause is not a void clause this is not
In relation to the trade, period and area.

2 years lang naming ang nkaalagay
She just cannot join another corporation engaged in the same usiness
Pertain only to the Philippines

Reasonable protection to the rights of the employer.

Asst VP of the Paltinum Plans
Her position is so important she would kow the strategy of the company
To protect the employer this riviison was condiserd a limited providion


The Clause w/n applicable should not depend only the whim of one of the parties
Valid standard and reasonable

Contrary to law

Contrary to Morals

For every every delayed there is a corresponding 5/day
It depends on the Principal amount
465
Penalty is 5/day
The stipulation sis immoral, contrary to moral, excessive, unconscionable
400% ang penalty

Solongon vs solongon
5% interest per month


Macalinao vs BPI
9/17/2009

A stipulation
An agreement involving a credit card (BPI)
Which provided an interest 3% per month
Penalty of 3% incase there is a failure to pay on the date agreed upon
36% PA only
SC that his interest and penalty is void
Unconscioinable, excessive, unequitous
Contrary to morals if not against the law
Excessive

What is the effect kapag void ang stipulation

Reduce the interest to 1% per month
Effectively that is 12% PA that is the legal rate as far as the loan is concerned


Contrary to morals

Contrary to public policy
- How would you know and where will you find the Public Policy
- If the law is passed there is a public policy behind the law
- Fundamental law of the land nsa constitution

Alma was hired as the DH in Hongkong
Napalitan ang contract sa HK

$1000/month approved by the POAE
600$ a month
Alma signed a contract but when she returned to the Phils
She asked for the difference to her local agency


The claim is not correct
It cannot be enforced the stipulation is contrary to our public policy
Under the constitution full protection to labor


Arellano School of law vs CUI
Shcolarship grants are granted on the basis of merit
And it should not be granted in order to bolster the reputation of the school
Thus if the student want to transfer he is not required to reimburse the tuition fee


An agreement of 2 erson vying fo rhte official nomintation as a candidate of the party

Void stipulation contrary to public policy
2 public policies
A mere agreement of 2 persons cannot limit the right of the person t present himself to the contest

An agreement of 2 persons not limit the right of the electorate to choose which among the candidate
is best fit or qualified to run for public office.

Consensuality of the contract
To be a contract to be valid
Consent must be freely given

No one can be compelled to compel anyone to enter into a contract

Expropriation of properties

There is a contract which is claimed to be void
The contract is prepared by only one party
The contract is presented to the other part for his adhesion
No negoatiation as to the terms and condition

This is known a contract of adhesion.

Ong yu VS CA

Contract of Adhession is a valid contract
He has a choice if he bought a contract it means that he accept the terms and agreement of the
contract.

Jimmy Go
w/N the trust receipt is valid
the SC held that the contract is valid
if there is ambiguity the rule will be decided against the metro bank
when the obligation to deliver the goods arose
contract of adhesion and there is ambiguity
the stipulation is to be construed against the metrobank
it starts on the date it was demanded


He must communicate his acceptance before the revocation of the benefits
What if one of the parties in a contract revoke the contrac informing the beneficiary
Is already been revoked.

Revocation to be effective
Consented by two parties
If only one will revoke the benefit in favor of the party
Is contrary to the principle of mutuality

Bind both parties

Revocation of only one is against the principle of mutuality

Escalation clause
Can invoke by the party of his
Contrary to mutuality principle


Termination of the contract by one of the parties is violative of the
Will that contrary to mutuality principle

Philbanking

Contract of lease


Obligatory Force of the contract
Obligations arising from the contract has the force of law bet the contracting parties
It should be complied with in good faith

When would a contract has the force of law
Meeting of the minds as to the object subject matter

Perfected
At the time of the perfection of the contract
Contract of sale
There is a meeting of the mind
1403
An enforceable contract

A contract has the force of the law

In relation to mutuality and autonomy contract



Monetary Board Resolution has the force of law but it is not a law.

Void waiver contrary to law which provides the protection of minors.

Relativity of the contracts the question in relation to this
A sold an item to B thereafter sold the same item to C
Would a has the cause of action against c?
NONE there is no privityof contract bet a and c
A & B
B&C

Who would be bound to the contract
Parties
Who will be affected
Benefited


Assign and heirs will be bound to a contract
Parties assign and heirs

Relativity of Contract

Intransmissible

1. When the law so provides
2. If there is stipulations
3. Nature of the rights and obligations would not allow the transmicity

Intransmissible

The death of the lessee the contract is extinguished
Instransmissible by the
A lease contract is not purely a contract

Instransmissibility of the right
Law of usufruct

If ther e

A partner cannot assign his property without the knowledgeof the other partners cannot transmit his
right by assignee


Nature of the righr and obligations

Privity of Contract
Only the parties, assign and heirs will be affected
A 3
rd
person may be bound to a contract
A 3
rd
person may be held liable to the contract
A 3
rd
person may have a cause of action in relation to the contract

He may be prejudice


Relativity of contract

1. Where a 3
rd
person may be bound to a contract
Contracts creating a real right
3
rd
person who would take possession of the subject matter of the contract will be bound to
such contract subject to mortgage law, registration law etc

A real state mortgage involving a parcel of land entered into bet a and b

A mortgagor
b- mortgagee

A sells this land to C
if A the principal debtor he defaulted
can the mortgagee forceclosed the land
with the sell and the land delivered to C
C may already be the owner of the land
May there be a valid foreclosure ov er the land even the land is no longer owned by the
mortgagor
Yes
Is it possible
The rights of the mortaggee attaches to the property
Where ever may be the owner of the property may be bound to this mortagee
Kahit na siya na ang may ari the property is subject
Contract creates the real right
The owner
Subject to the qualification of the law
For c to be bound to the contract
C is not a party to the contract
If the contract is registered
Or c has actual knowledge
Actual knowledge has the same effect as registrations

Contract in fraud of creditor
A sold a parcel of land to B
The sale is in fraud of the creditor like x
Para wlaang mahabol ang creditor binenta ang property

The law grants him the right to rescind
1381
Contract in fraud of the creditor will be discussed in detailed when we discuss the 1381

A person who is not a party to contract cannot be held liable to such contract
He is not privy to the contract
1314 when a third person intereferes to the contract

1. There must be malice


Entice him

What is the basis of his responsibility

Xyz corporation may be held liable under 1314
If this can be proven that he m aliciously induce the person to violate his contract
Interference by a third person
Xyz corporation entice him by offering more advantageous terms

3
rd
person must have knowledge of the fact
Entice

1314 interfernce by a third person
XYZ Corporation may be held liable under 1314
Party himself can be held liable

What is the nature of liability
Solidarily liable
SC: consider this act as a torteous act against the party
2194 two or more persons liable under quasi deliect shall be held liable.

May the liability of the 3
rd
person
Be more than the liability of the party himself who violated the contract

Contract shall have the force of law bet the contractivn parties thus it might be complied with good
faith


Doctrine of common knowledge

Interference of the 3
rd
person

Nature of the concepts

If A and B has an agreement that each of them will contribute 1 million each to C in a monthly
installement basis

50,000/month to give to C

The agreement of A and B is the benefit in favor of C
A contract of load bet a and B
As to the interest will have to be paid by a to B
Agree interest 12% PA

Gratuitous benefit wlang kapalit bait lang.

Another requirement

The beneficiary must communicate his acceptance to the

The revocation must be