i. Autonomy

Requisites in order that a Third Person may Demand the Fulfillment of the Contract

• The contracting parties must have clearly and deliberately conferred a favor upon the third person;
• The third person’s interest or benefit in such fulfillment must not be merely incidental; and
• Such third person communicated his acceptance to the obligor before the stipulations in his favor are revoked.

FREEDOM TO STIPULATE (AUTONOMY OF THE WILL) AND ITS LIMITATIONS

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. (Art. 1306, NCC)

If the stipulation which violates the limitations set forth in the foregoing provision constitute the cause, object, or purpose of the contract, such contract is denied legal existence, and thus, shall be deemed void from the beginning. (Casis, 2016)

Contracting parties may establish any agreement, term, and condition they may deem advisable, provided they are not contrary to law, morals, or public policy. The right to enter lawful contracts constitutes one of the liberties guaranteed by the Constitution. It cannot be struck down or arbitrarily interfered with without violating the freedom to enter into lawful contracts. (Gateway Electronics Corporation v. Land Bank, G.R. No. 155217 and 156393, 30 July 2003)

it is necessary for the existence of a contract that two distinct parties enter it (auto-contracts). The existence of a contract is not determined by the number of persons who intervene in it, but by the number of parties; not by the number of individual wills but by the number of declarations of will. A contract may be formed between two distinct parties even if one person represents both, provided the representative is duly authorized to act for each and the transaction violates no applicable prohibition. (Arts. 1306, 1868, 1878, and 1491(2), NCC)

NOTE: Courts cannot make for the parties better or more equitable agreements than they themselves have been satisfied to make, or rewrite contracts because they operate harshly or inequitably as to one of the parties, or alter them for the benefit of one party and to the detriment of the other, or by construction, relieve one of the parties from terms which he voluntarily consented to, or impose on him those which he did not. (Ka Kuen Chua v. Colorite Mktg. Corp., G.R. No. 193969-193970, 05 July 2017)

BINDING EFFECT OF A CONTRACT