ii. Mutuality

Mutual Negligence

Where two automobiles, going in opposite directions, collide on turning a street corner, and it appears from the evidence and is found by the trial court that the drivers thereof were equally negligent and contributed equally to the principal occurrence as determining causes thereof, neither can recover of the other for the damages suffered. (Bernardo v. Legaspi, G.R. No. 9308, 23 Dec. 1914)

FORTUITOUS EVENT

Mutuality

Neither party may unilaterally evade his obligation in the contract, unless the contract authorizes it or the other party assents. (PINEDA 385 (2009))

Mutuality (2001, 2004, 2008 BAR)

The contract must bind both contracting parties; its validity or compliance cannot be left to the will of one of them. (Art. 1308, NCC)

The principle of mutuality is the essential equality of the parties. It is repugnant to bind one party, and yet leave the other free (Garcia v. Rita Legarda, Inc., L-20175, 30 Oct 1967)

Applicability to Contract Modifications

Contract changes must be made with the consent of the contracting parties. The minds of all the parties must meet as to the proposed modification, especially when it affects an important aspect of the agreement. Thus, any change must be mutually agreed upon; otherwise, it produces no binding effect. (Lara’s Gifts & Decors, Inc. v. Midtown Industrial Sales, Inc., G.R. No. 225433, 28 Aug. 2019)

GR: Any contract which appears to be heavily weighed in favor of one of the parties so as to lead to an unconscionable result is void. Any stipulation regarding the validity or compliance of the contract which is left solely to the will of one of the parties is likewise invalid. (Sps. Limso v. PNB, G.R. No. 158622, 27 Jan. 2016)

XPN: An agreed right of unilateral termination may be valid where it does not offend the parties’ essential equality; this does not permit either party to determine the contract’s validity or compliance at will. (GF Equity v Valenzona, G.R. No. 156841, 30 June 2005)

The determination of the performance may be left to a third party as long as:

• The decision has been made known to both contracting parties; (Art. 1309, NCC) and
• The determination is not evidently inequitable (Art. 1310, NCC). If it is inequitable, the court shall decide what is equitable under the circumstances.

If a party alleges defects in the contract so that it could be set aside, he must prove the existence of the defects by preponderance of evidence because the validity and fulfillment of the contract cannot be left to the will of one of the contracting parties. (Pineda, 2009; Rule 133, Sec. 1, Revised Rules on Evidence)

The binding effect of any agreement between parties to a contract is premised on two settled principles: (1) that any obligation arising from contract has the force of law between the parties; and (2) that there must be mutuality between the parties based on their essential equality. Any contract which appears to be heavily weighed in favor of one of the parties so as to lead to an unconscionable result is void. Any stipulation regarding the validity or compliance of the contract which is left solely to the will of one of the parties, is likewise, invalid. (Sps. Limso v. PNB, G.R. No. 158622, 27 Jan. 2016)

NOTE: A condition leaving the contract’s validity or compliance solely to one party’s uncontrolled will violates mutuality; an agreed unilateral termination right or resolutory facultative condition may nevertheless be valid. (GF Equity v Valenzona, G.R. No. 156841, 30 June 2005)

However, the termination of the contract does not necessarily require mutuality, and it can even be validly left to one party by agreement or under a resolutory facultative condition. (Vitug, 2006)]

PRIVITY OF CONTRACT