Importance of Adherence

to Contractual Obligations
0o0 …going LEGAL 0o0

by
ATTY. GERAMER V. DURATO
 What is a

• A voluntary, deliberate, and legally binding

AGREEMENT between two or more competent
parties.

Each party to a contract acquires rights and duties relative to the

rights and duties of the other parties.

Read more: http://www.businessdictionary.com/definition/contract.html

 What is a

• A contract is a MEETING OF MINDS between two

persons whereby one binds himself with respect to
the other, to give something or to render some
service.
-Art. 1305, CC
Did you remember that you have
signed a contract?

AICS
(Memorandum of Agreement)
 AICS: Roles and Responsibilities
The DSWD shall: The Service Provider shall:
• Secure a credit line from the • Provide a credit line to the
SECOND PARTY with a FIRST PARTY with a credit
credit limit of P300,000.00 limit of P300,000.00 upon
upon which the services which the cost of services
availed by qualified shall be charged;
beneficiaries shall be
charged
 AICS: Roles and Responsibilities
The DSWD shall:
• Determine and authorize
official signatories who will
represent the FIRST PARTY
to request and authorized
the availment of services of
the qualified beneficiaries
from the SECOND PARTY;
The Service Provider shall:
• Allow withdrawals/ service
requested from the credit
facility upon presenting the
valid identification of the
qualified beneficiary and
Guarantee Letter issued by the
authorized Officer-in-Charge
of the Crisis Intervention
Unit. Each transaction of the
FIRST PARTY shall be covered
by the SECOND PARTY’s
charge invoice and the terms
thereof shall form part of this
agreement.
 AICS: Roles and Responsibilities
The DSWD shall:
• Pay, on a 30-day basis, or
until such credit limit is
already reached, the
determined cost of services
withdrawn or received from
the SECOND PARTY upon
the lawful authority of the
FIRST PARTY’S Official
Signatories;
The Service Provider shall:
• Bill the FIRST PARTY, on a
monthly basis, or earlier if
the credit limit is already
reached on the cost of
services by qualified
beneficiaries of the FIRST
PARTY’s authorized
representative;
 Termination

1. Upon the lapse of the engagement period-

“automatic termination” unless the parties enter
into another Agreement 15 days prior to the
termination;

2. Pre-termination by either party serving written

notice at least 30 days prior to the intended date of
pre-termination;
 Termination
3. First Party determination that:

3.1 The Second party violates the “NO REFUND/

CASH-OUT POLICY”.

3.2 The Second party collects any amount from the

beneficiaries in a form of interest, facilitation fee, tax
charge, or whatsoever type of unwarranted fees
resulting to unlawful reduction of the amount of
Guarantee.
 Termination

3. First Party determination that:

3.3 The Second Party defrauds the First Party in

whatever means, machinations, or circumventions of the
processes, in order for the Second Party to unlawfully
profit causing thereby damage or injury to the First
Party, the government, and the beneficiaries.
 Accountability

• The agreement shall be implemented AS AGREED

upon in accordance with the terms and conditions
stipulated herein. FAILURE on the part of any party
to comply with the provisions of this agreement will
warrant its discontinuance and give rise to filing of
appropriate administrative and/ or criminal
actions against responsible officers and employees
of the erring party.
 ACKNOWLEDGMENT

“All known to me and to me known to be the

same persons who executed the foregoing
instrument and acknowledged to that the same
is their own FREE WILL and VOLUNTARY ACT and
DEED of the principal they represent.”
 To what extent the parties in a
contract may be bound to?

 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.
-Art. 1315, CC
What is the nature of obligations that
arise from contracts?

 It has the FORCE of LAW!

“Obligations arising from contracts have the

FORCE of LAW between the contracting parties and
SHOULD BE COMPLIED WITH in good faith.”
-Art. 1159, CC
 Are there LIABILITIES
in case of Breach?

 Definitely, YES!

“Those who in the performance of their

obligations are guilty of fraud, negligence, or delay,
and those who in any manner contravene the tenor
thereof, are liable for damages.”
-Art. 1170, CC
 Are liabilities DEMANDABLE?

 YES!

“Responsibility arising from negligence in the

performance of every kind of obligation is also
DEMANDABLE, but such liability may be regulated by
the courts, according to the circumstances.”
-Art. 1172, CC
 What one can do to keep him/her
from legal troubles?

 Observance of Ordinary Diligence

“Diligence of a good father of a family.”

…unless the law or stipulation of the parties requires

another standard of care.

-Art. 1172, CC
 “Mantra”
“Every person must, in the exercise of his
rights and in the performance of his duties,
act with justice, give everyone his due, and
observe honesty and good faith.”

[Art. 19 of Civil Code]