Sentidos, Maneras y Cambios de la Minga por la Memoria

Art. 1315. Contracts are perfected by mere consent, and from that moment the parties are bound not only to the fulfillment of what has been expressly stipulated but also to all the consequences which, according to their nature, may be in keeping with good faith, usage and law.

 General Rule: Contracts are perfected by mere consent – the principle of consensuality (Article 1315)

 Exception: Real contracts, such as deposit, pledge, and commodatum are not perfected until the delivery of the object of the obligation (Article 1316)

 Obligations arising from contracts have the force of law between the parties and should be complied with in good faith (Article 1159)

Art. 1314. Any third person who induces another to violate his contract shall be liable for damages to the other contracting party.

 It is not clear whether Article 1314 is a tortious liability or a contractual liability. Professor Balane considers it as only a tortious liability so it is not violative of the rule on relativity of contracts.

 Article 1314 is really a quasi-delict.

 Requisites

i. Existence of a valid contract

LECTURE NOTES ON CIVIL LAW

Professor Ruben F. Balane

ii. Knowledge by the 3^rd person of the existence of the contract

iii. Interference by the 3^rd person in the contractual relation without legal justification

b. Mutuality

Art. 1308. The contract must bind both contracting parties;

its validity or compliance cannot be left to the will of one of them.

Art. 1309. The determination of the performance may be left to a third person, whose decision shall not be binding until it has been made known to both contracting parties.

Art. 1310. The determination shall not be obligatory if it is evidently inequitable. In such case, the courts shall decide what is equitable under the circumstances.

 An example of a determination made by a 3^rd person (Article 1309) is the fixing of the price by the 3^rd person.

 The contract may be revoked if there is mutual dissent.

c. Relativity

Art. 1311, ¶1. Contracts take effect only between the parties, their assigns and heirs, except in case where the rights and obligations arising from the contract are not transmissible by their nature, or by stipulation or by provision of law. The heir is not liable beyond the value of the property he received from the decedent.

 General Rule: The contract is binding only upon the parties and their successors (Article 1311). However, if the contract is purely personal (intuitu personae), then the contract will not bind assigns and heirs.

 Exception: 3 parties are affected by the contract in the following instances and can take appropriate action

i. Accion pauliana (Article 1177)

Art. 1177. The creditors, after having pursued the property in possession of the debtor to satisfy their claims, may exercise all the rights and bring all the actions of the latter for the same purpose, save those which are inherent in his person; they may also impugn the acts which the debtor may have done to defraud them.

 An rescissory action involving a contract in fraud of creditors.

Art. 1313. Creditors are protected in cases of contracts intended to defraud them.

ii. Accion directa

LECTURE NOTES ON CIVIL LAW

Professor Ruben F. Balane

 A direct (not subrogatory) action by the creditor against his debtor’s   debtor,   a   remedy   which   gives   the   creditor   the   prerogative to act in his own name, such as the actions of the lessor against the sublessee (Article 1652^), the laborer of an independent contractor against the owner (Article 1729^), the principal against the subagent (Article 1893^), and the vendor-a-retro against the transferee of the vendee (Article 1608^).

iii. Article 1312

Art. 1312. In contracts creating real rights, third persons who come into possession of the object of the contract are bound thereby, subject to the provisions of the Mortgage Law and the Land Registration Laws.

iv. Stipulation pour autrui – stipulation in favor of a 3^rd person

Art. 1311, ¶2. If a contract should contain some stipulation in favor of a third person, he may demand its fulfillment provided he communicated his acceptance to the obligor before its revocation. A mere incidental benefit or interest of a person is not sufficient. The contracting parties must have clearly and deliberately conferred a favor upon a third person.

 Requisites

1. There must be a stipulation in favor of a 3^rd person

2. That stipulation in favor of a 3^rd person should be a part and not the whole of the contract

 Art. 1652. The sublessee is subsidiarily liable to the lessor for any rent due from the lessee.

However, the sublessee shall not be responsible beyond the amount of rent due from him, in accordance with the terms of the sublease, at the time of the extra-judicial demand by the lessor.

Payments of rent in advance by the sublessee shall be deemed not to have been made, so far as the lessor's claim is concerned, unless said payments were effected in virtue of the custom of the place.

 Art. 1729. Those who put their labor upon or furnish materials for a piece of work undertaken by the contractor have an action against the owner up to the amount owing from the latter to the contractor at the time the claim is made. However, the following shall not prejudice the laborers, employees and furnishers of materials:

(1) Payments made by the owner to the contractor before they are due;

(2) Renunciation by the contractor of any amount due him from the owner.

This article is subject to the provisions of special laws.

 Art. 1893. In the cases mentioned in Nos. 1 and 2 of the preceding article, the principal may furthermore bring an action against the substitute with respect to the obligations which the latter has contracted under the substitution.

 Art. 1608. The vendor may bring his action against every possessor whose right is derived from the vendee, even if in the second contract no mention should have been made of the right to repurchase, without prejudice to the provisions of the Mortgage Law and the Land Registration Law with respect to third persons.

LECTURE NOTES ON CIVIL LAW

Professor Ruben F. Balane

3. A clear and deliberate intent to confer a benefit on a 3^rd person and not merely incidental

 In the case of Mandarin Villa vs. CA, the credit card holder was held to have a right to sue under the contract between the establishment and the bank. The Supreme Court   said   that   it’s   a   stipulation   pour autrui to confer benefit on the customer to purchase on credit.

 However, Professor Balane believes that it is debatable whether an agreement between a credit card company and establishment is a clear and deliberate conferment of benefit on a third party. He would have concurred with the decision in Mandarin Villa if the basis was quasi-delict.

4. That the favorable stipulation should not be conditioned or compensated by any kind of obligation whatever

5. Neither of the contracting parties bears the legal representation of authorization of the 3^rd parties

 If the 3^rd parties is represented, then the principles of agency apply.

6. The 3^rd person must have communicated his acceptance to the obligor before its revocation

d. Autonomy of will

Art. 1306. The contracting parties may 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.

3. Elements of a Contract