Law on Oblicon

7/29/2019 Law on Oblicon

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Relativity of ContractsArticle 1311 of the Civil Code

By: Daniel Junior Domingo


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Paragraph 1

General Rule: contracts take effect only between the immediateparties

Illus. case: Integrated Packaging Corp. v. CA 333scra170

It is not a contract pour autrui. Aforesaid contracts couldnot affect third persons like private respondents because of thebasic civil law principle of relativity of contracts which providesthat contracts can only bind the parties who entered into it, andit cannot favor or prejudice a third person, even if he is aware of

such contract and has acted with knowledge thereof.


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Exception: the basic principle of relativity of contracts extendsto the principal parties assigns and heirs.

A. By law (even without agreement of the parties)

Example: by transfer of an interest in land, by marriage, deathIllus. case: DKH Holdings Corp. v. CA 329scra666 Contract of Lease

The sole heir must honor the contract because in inheriting theproperty, he acquired all the rights and obligations of the deceasedlessor with respect to the property. He only succeeds to what rights

his mother had and what is valid and binding against her is alsovalid and binding against him.


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Paragraph 1

# B. By agreement of the parties

Example: a stipulation in the contract that replaces thecontractor if the latter fails to finish the project on time

NOTE: If the transferee is the heir of the decedent, he shallnot be held liable beyond the value of the property hereceived from the decedent.


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Paragraph 1

Exception to the exception (extension to the assigns andheirs):

A. When the nature of the contract does not allow

transmission.Example: Where acts stipulated in a contract require the exercise of

special knowledge, genius, skill, taste, ability, experience,judgment, discretion, integrity.

The contract terminates on the death of the party who

is required to render such service.


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Paragraph 1

B. When the parties stipulate that no transmission of rightsshall be allowed.

Example: when a contract of lease provides that the property cannotbe subleased and the unauthorized sublease shall allow the lessorto terminate the contract of lease

C. When the law provides non transmission

Example: Article 1649 of the Civil Code.

the lessee cannot assign the lease without the consentof the lessor, unless there is a stipulation to the contrary.


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Paragraph 2

Art. 1311 Par. 2 is a restatement of a stipulation pour autrui

Stipulation pour autrui It is a stipulation in a contractclearly and deliberately conferring a favor upon a thirdperson who has a right to demand its fulfillment providedhe communicates his acceptance to the obligor before itsrevocation.


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Paragraph 2

Requisites of stipulation pour autrui.

1. there must be a stipulation in favor of a third person

2. the stipulation must be a part, not the whole of the contract;

3. the contracting parties must have clearly and deliberatelyconferred a favor upon a third person, not a mere incidental benefitor interest;

4. Neither of the contracting parties bears the legal representationor authorization of the third party;

5. The favored party must have communicated his acceptance of thestipulation to the obligor before its revocation.


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Paragraph 2

It is unnecessary that such third person be always named inthe contract.

It is not necessary as a general rule for the third party tomake a formal acceptance prior to bringing of the suit. Theassent of the beneficiary will be PRESUMED. Thecommencement of an action to enforce a promise issufficient as an acceptance.


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Paragraph 2

Illus. case: Mandarin Villa, Inc. v. CA 257scra538

The MERCHANT shall honor validly issued PCCCI credit cardspresented by their corresponding holders in the purchase of goodsand/or services supplied by it provided that the card expiration date hasnot elapsed and the card number does not appear on the latestcancellation bulletin of lost, suspended and canceled PCCCI credit cardsand, no signs of tampering, alterations or irregularities appear on the faceof the credit card.


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Paragraph 2

While private respondent may not be a party to the saidagreement, the above quoted stipulation conferred a favorupon the private respondent, a holder of credit card validlyissued by BANKARD. This stipulation is a stipulation pour

autrui and under Art. 1311 of the Civil Code private respondentmay demand its fulfillment provided he communicated hisacceptance to the petitioner before its revocation. In this case,private respondents offer to pay by means of his BANKARDcredit card constitutes only an acceptance of the saidstipulation but also an explicit communication of hisacceptance to the obligor.

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