PART III

Chapter 1
CONTRACTS
Reporter:
EMELYN MAY C. ALMAZAN
Contract Defined
Article 1305 of the New Civil
Code has this definition: “A
contract is a meeting of the minds
between two persons whereby one
binds himself, with respect to the
other, to give something or to
render some service.”

2
Contract Defined

It is derived from
the Latin word
“contractus.”

2
 ELEMENTS OF A CONTRACT
Accidental Elements
Essential Elements Natural Elements
May be present or absent,
Without them, a contract Found in certain contracts and
depending upon whether or not
cannot exist, i.e., consent, presumed to exist, unless the
the parties have agreed upon
subject matter, and cause or contrary has been stipulated, i.e.,
them, i.e., stipulation to pay in
consideration warranty against hidden defects in
one (1) year or two (2) years, with
a contract of sale
interest

4
 Article 1306 of the New Civil
Code provides:
“The contracting parties may
establish such stipulations, clauses,
terms, and conditions as they may
deem convenient, provided they

Stipulations That are not contrary to law, morals,

good customs, public order, or
May Be Agreed public policy.”

Upon
 As a rule, contracts take effect only as between the parties, their assigns, and
heirs.

EXCEPTIONS:
Except in case where the obligations arising from the contract are not
transmissible by their nature, by stipulation, or by provision of law. (Art. 1311,
NCC)

Except if there is a STIPULATION POUR AUTRI. (Art. 1311, Ibid.)

Except if a third person includes another to violate his contract. (Art. 1314,
NCC)

Except where in some cases, third persons may be adversely affected by a

contract where they did not participate. (Art. 1312, NCC)
 Except where the law authorizes the creditor to sue on
a contract entered into by his debtor (accion directa).

Example:
The sublessee has an obligation to the sublessor, but the
sublessee is bound to the lessor for all the acts which refer
to the use and preservation of the thing leased in the
manner stipulated between the lessor and the lessee.
EXAMPLES OF
CONTRACTS
USUALLY
REQUESTED
BY CLIENTS

Contracts of Sale
A. Sale of Real Property

Form No. 50 - Ordinary Deed of

Sale of Land Registered Under
Act 496
A. Sale of Real Property

Form No. 51 - Deed of Sale of

Unregistered Land

Form No. 52 - Deed of

Conditional Sale
A. Sale of Real Property

Form No. 53 - Deed of Absolute

Sale
A. Sale of Real Property

Form No. 54 - Sale With

Assumption of Mortgage
A. Sale of Real Property

Form No. 55 - Sale of Subdivision

Lot Payable in Installments for a
period of 15 Years

Form No. 56 - Contract to Sell

A. Sale of Real Property

Form No. 57 - Sale Made by the

Owner of the Land Represented by
His Duly Authorized Attorney-In-
Fact
A. Sale of Real Property

Form No. 58 - Sale of Land (There

is Partial Payment and the
Property is Mortgaged to the
Vendor to Secure Payment of
Balance)
 y o u !
h a nk
T
az a n
.A l m
ay C
l y n M
Em e
M s .
PART III
Chapter 1
CONTRACTS
Reporter:
JERIEL T. ARENDAIN
B. Sale of Personal Property

Form No. 59 - Sale of Vehicle

Form No. 60 - Sale of Appliance

Payable in Installments
 y o u !
h a nk
T
d a i n
A r e n
l T.
J e ri e
M r.
PART III
Chapter 1
CONTRACTS
Reporter:
MARIA THERESA BALANZA
 A Construction Contract Agreement is a
:
written agreement that specifies the
scope and parameters of a construction
project. It is a contract between the
construction contractor and the person or
company who employs them to conduct
the work.

2
  Project Description
Contents:
 Contract Price
 Payment basis
 Calendar or Schedule
 Construction Scope
 Construction conditions and
obligations
 List of Documents
 Contract Laws

2
Article 1624 of the New Civil Code provides:
“An assignment of credits and other incorporeal rights shall be perfected in
accordance with the provisions of Article 1475.”

Assignment of Credits and Rights

It is the process of transferring gratuitously or onerously the right of the assignor
to the assignee, who would then be allowed to proceed against the debtor.
Employment contract
Employment contract is an agreement whereby an employee would render services in exchange for

compensation to be paid by the employer.

Employment is generally a consensual contract (as opposed to a formal or written contract).

Meaning, mere consent by the employer and the employee will create an employment relationship. The

law does not require a form or a written employment contract to prove an employer-employee relationship.

EXCEPTION: By way of exception, DOLE Department Order No. 174, series of 2017, requires that

contractors and subcontractors provide for a written employment contract to their deployed personnel.
Presumption favors regular employment
Notwithstanding the fact that an employment contract is consensual, it is strongly recommended to have a

written employment contract. The reason being is that an employment is presumed to be regular employment unless

proven otherwise via a written employment contract. Meaning, an employee is presumed to be a regular employee unless

there is a written employment contract showing that he is a non-regular employee, such a probationary, casual, project,

seasonal, or fixed-term. Without proof via a written employment contract that an employee is a non-regular, he/she shall be

presumed as a regular employee.

In addition, the written employment contract will be a reference to the stipulations that the employer and the

employee agreed on during the job offer, such as compensation, benefits, bonuses, incentives, commissions, and similar

thereto.
 Contract of Labor
ARTICLE 1700. The relations between capital and labor are not merely contractual. They are so impressed

with public interest that labor contracts must yield to the common good. Therefore, such contracts are

subject to the special laws on labor unions, collective bargaining, strikes and lockouts, closed shop, wages,

working conditions, hours of labor and similar subjects.

ARTICLE 1701. Neither capital nor labor shall act oppressively against the other, or impair the interest or

convenience of the public.

ARTICLE 1702. In case of doubt, all labor legislation and all labor contracts shall be construed in favor of

the safety and decent living for the laborer.

ARTICLE 1703. No contract which practically amounts to involuntary servitude, under any guise

whatsoever, shall be valid.

 Contract of Labor
ARTICLE 1700. The relations between capital and labor are not merely contractual. They are so impressed

with public interest that labor contracts must yield to the common good. Therefore, such contracts are

subject to the special laws on labor unions, collective bargaining, strikes and lockouts, closed shop, wages,

working conditions, hours of labor and similar subjects.

ARTICLE 1701. Neither capital nor labor shall act oppressively against the other, or impair the interest or

convenience of the public.

ARTICLE 1702. In case of doubt, all labor legislation and all labor contracts shall be construed in favor of

the safety and decent living for the laborer.

ARTICLE 1703. No contract which practically amounts to involuntary servitude, under any guise

whatsoever, shall be valid.

 Contract of Labor
ARTICLE 1704. In collective bargaining, the labor union or members of the board or committee signing the contract shall

be liable for non-fulfillment thereof.

ARTICLE 1705. The laborer’s wages shall be paid in legal currency.

ARTICLE 1706. Withholding of the wages, except for a debt due, shall not be made by the employer.

ARTICLE 1707. The laborer’s wages shall be a lien on the goods manufactured or the work done.

ARTICLE 1708. The laborer’s wages shall not be subject to execution or attachment, except for debts incurred for food,

shelter, clothing and medical attendance.

ARTICLE 1709. The employer shall neither seize nor retain any tool or other articles belonging to the laborer.

ARTICLE 1710. Dismissal of laborers shall be subject to the supervision of the Government, under special laws.
 Quitclaims
Quitclaims are contracts in the nature of a compromise where parties make concessions, a lawful device to avoid litigation.

It is a valid and binding agreement between the parties, provided that it constitutes a credible and reasonable settlement

and the one accomplishing it has done so voluntarily and with a full understanding of its import. (F.F. Cruz & Co. Inc. v.

Galandez, G.R. No. 236496, 08 July 2019).

Requisites of a valid quitclaim:

1) The employee executes the deed of quitclaim voluntarily.

2) That there is no fraud or deceit on the part of any of the parties;

3) That the consideration for the quitclaim is credible and reasonable; and,

4) That the contract is not contrary to law, public order, public policy, morals or good customs, or prejudicial to a third

person with a right recognized by law.

SURETYSHIP
may be defined as a relation which exists where one person (principal or obligor) has undertaken an

obligation and another person (surety) is also under a direct and primary obligation or other duty to a third

person (obligee), who is entitled to but one performance, and as between the two who are bound, the one

rather than the other should perform. (see Agro Conglomerates, Inc. vs. Court of Appeals, 348 SCRA 450

[2000].)

ART. 2047. By guaranty a person, called the guarantor, binds himself to the creditor to fulfill the obligation of

the principal debtor in case the latter should fail to do so.

If a person binds himself solidarily with the principal debtor, the provisions of Section 4, Chapter 3, Title I of

this Book shall be observed. In such case the contract is called a suretyship.
 EASEMENT OF RIGHT OF WAY

Art. 649. The owner, or any person who by virtue of a real right may cultivate or use
any immovable, which is surrounded by other immovables pertaining to other persons and
without adequate outlet to a public highway, is entitled to demand a right of way through the
neighboring estates, after payment of the proper indemnity.
Should this easement be established in such a manner that its use may be continuous
for all the needs of the dominant estate, establishing a permanent passage, the indemnity
shall consist of the value of the land occupied and the amount of the damage caused to the
servient estate.
 In case the right of way is limited to the necessary passage for the cultivation of the
estate surrounded by others and for the gathering of its crops through the servient estate
without a permanent way, the indemnity shall consist in the payment of the damage caused
by such encumbrance.
This easement is not compulsory if the isolation of the immovable is due to the
proprietor’s own acts.
 ‘Easement of Right of Way’ Defined

This is the easement or privilege by which one person or a particular class of

persons is allowed to pass over another’s land, usually thru one particular path or line. (See
Ballard v. Titus, 157 C 673). The term “right of way,” upon the other hand, may refer either
to the easement itself, or simply, to the strip of land over which passage can be done.
(Anderson v. Wilson,48 CA 289, 191 P 1016).
 Republic Act No. 4726 “The Condominium Act”

Section 4. The provisions of this Act shall apply to property divided or to be divided into

condominiums only if there shall be recorded in the Register of Deeds of the province or city in which the

property lies and duly annotated in the corresponding certificate of title of the land, if the latter had been

patented or registered under either the Land Registration or Cadastral Acts, an enabling or master deed

which shall contain, among others, the following:

(a) Description of the land on which the building or buildings and improvements are or are to be located;

(b) Description of the building or buildings, stating the number of stories and basements, the number of

units and their accessories, if any;

(c) Description of the common areas and facilities;

(c) Description of the common areas and facilities;

(d) A statement of the exact nature of the interest acquired or to be acquired by the purchaser in the separate

units and in the common areas of the condominium project. Where title to or the appurtenant interests in the

common areas is or is to be held by a condominium corporation, a statement to this effect shall be included;

(e) Statement of the purposes for which the building or buildings and each of the units are intended or

restricted as to use;

(f) A certificate of the registered owner of the property, if he is other than those executing the master deed, as

well as of all registered holders of any lien or encumbrance on the property, that they consent to the

registration of the deed;

(g) The following plans shall be appended to the deed as integral parts thereof:

(1) A survey plan of the land included in the project, unless a survey plan of the same property had previously bee filed

in said office;

(2) A diagrammatic floor plan of the building or buildings in the project, in sufficient detail to identify each unit, its

relative location and approximate dimensions;

(h) Any reasonable restriction not contrary to law, morals or public policy regarding the right of any condominium

owner to alienate or dispose of his condominium.

The enabling or master deed may be amended or revoked upon registration of an instrument executed by the

registered owner or owners of the property and consented to by all registered holders of any lien or encumbrance on

the land or building or portion thereof. The term "registered owner" shall include the registered owners of

condominiums in the project. Until registration of a revocation, the provisions of this Act shall continue to apply to

such property.
Section 5. Any transfer or conveyance of a unit or an apartment, office or store or other space therein, shall include the

transfer or conveyance of the undivided interests in the common areas or, in a proper case, the membership or

shareholdings in the condominium corporation: Provided, however, That where the common areas in the condominium

project are owned by the owners of separate units as co-owners thereof, no condominium unit therein shall be

conveyed or transferred to persons other than Filipino citizens, or corporations at least sixty percent of the capital stock

of which belong to Filipino citizens, except in cases of hereditary succession. Where the common areas in a

condominium project are held by a corporation, no transfer or conveyance of a unit shall be valid if the concomitant

transfer of the appurtenant membership or stockholding in the corporation will cause the alien interest in such

corporation to exceed the limits imposed by existing laws.

Section 18. Upon registration of an instrument conveying a condominium, the Register of Deeds shall, upon payment of

the proper fees, enter and annotate the conveyance on the certificate of title covering the land included within the project

and the transferee shall be entitled to the issuance of a "condominium owner's" copy of the pertinent portion of such

certificate of title. Said "condominium owner's" copy need not reproduce the ownership status or series of transactions in

force or annotated with respect to other condominiums in the project. A copy of the description of the land, a brief

description of the condominium conveyed, name and personal circumstances of the condominium owner would be

sufficient for purposes of the "condominium owner's" copy of the certificate of title. No conveyance of condominiums or

part thereof, subsequent to the original conveyance thereof from the owner of the project, shall be registered unless

accompanied by a certificate of the management body of the project that such conveyance is in accordance with the

provisions of the declaration of restrictions of such project.

 y o u !
h a nk
T
a n z a
B a l
r e s a
T h e
a ri a
M s .M
PART III
Chapter 1
CONTRACTS
Reporter:
MELODY GUIDO BETEZ
 y o u !
h a nk
T
e t e z
i d o B
y G u
e l o d
s . M
M
PART III
Chapter 1
CONTRACTS
Reporter:
JANELLE M. BLANCAFLOR