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CHAPTER 3 – Form of Contracts (Articles 1356-1358)

CHAPTER 3
FORM OF CONTRACTS
(Arts. 1356-1358)

STUDY GUIDE : (WEEK 13)

1. What is the meaning of “form of a contract”?

 The “form of a contract” refers to the manner in


which a contract is executed or manifested.
 The form of a contract may be oral or in writing, or
partly oral and partly in writing. If in writing, it may be in a
public or a private instrument.

2. What is the form required for the validity of contracts?


(Art. 1356)

(a) General Rule : Contracts shall be obligatory, in


whatever from they may have been entered into,
provided all the essential requisites for their validity are
present. In other words, the contract is valid as long as
there is :
Consent
Consensual Contracts Object
Real Contracts
subject matter
Delivery

(b) Special Rule : However, when the law requires


that a contract be in some specified form, that requirement is
absolute and must be complied with. Thus, the law may

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CHAPTER 3 – Form of Contracts (Articles 1356-1358)

require a specific form for any one of the following three (3)
substantial purposes :

Status of the contract


that fails to comply with EXAMPLES
PURPOSE the required form

1. The donation of real


property, and the acceptance
of the donee, must be in a
public instrument in order to
be valid, even between the
donor and the donee.
 (Art. 749, NCC)
FOR 2. A stipulation to pay
VALIDITY VOID
interest must be in writing;
OF THE otherwise, no interest is due.
CONTRACT (Art. 1956, NCC)
3. In the sale of land thru
an agent, the authority of the
agent must be in writing;
otherwise, the sale is null and
void. (Art. 1874, NCC)

 UNENFORCEABLE
, i.e., cannot be
The contracts enumerated
under Article 1403, No. 2, (a)
FOR
ENFORCEABILIT enforced even to (f), are unenforceable by
Y OF THE between the parties action unless they are made
CONTRACT unless ratified in writing.

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CHAPTER 3 – Form of Contracts (Articles 1356-1358)

These refers to all the


 Valid and enforceable
contracts enumerated under
Article 1358 which are
FOR as between the
CONVENIENCE required to appear in a public
parties ONLY, BUT
OF THE PARTIES document, NOT for their
not binding on third
AND TO BIND validity or enforceability, but
persons
THIRD PERSONS merely for the convenience of
the parties.

3. What are the contracts which are required under Article


1358 to appear in a public instrument as a precondition
for their registration in the proper recording office, so that
they may be binding and enforceable even against third
persons?

(a) Acts and contracts which have for their object the
creation, transmission, modification or extinguishment of real
rights over immovable property.
Examples: D owes C P5M. To secure the loan, D
mortgaged his lot to C. The constitution of the real estate
mortgage, which results in the creation of a real right over
immovable property, is required to appear in a public
document.
Later, if D pays his loan to C on maturity date, the
mortgage over the lot will be extinguished. In this case, the
extinguishment of the mortgage is likewise required to appear
in a public document.

(b) The assignment, repudiation or renunciation of


hereditary rights (inheritance) or of rights in the conjugal
partnership of gains or in the community of property between
husband and wife.

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CHAPTER 3 – Form of Contracts (Articles 1356-1358)

Example: A and B are the only heirs of D. After D dies, A


renounces his share in the inheritance in favor of B. The
renunciation by A of his share must be in a public document.

(c) Powers of attorney to administer property or to


perform an act requiring a public instrument, or to perform an
act which is to affect third persons; and

Examples:  P authorized A to manage his business or


property. The authority given to A must be in
a public document.

 P authorized A to mortgage the lot of P.


Since the mortgage is required to be in a
public document, the authority given by P to
A to mortgage the lot must also be in a
public document.

(d) The assignment of actions or rights arising from an


act or contract contained in a public document.
Example: D mortgaged his lot to secure his debt to C. C
assigned his credit right together with the real estate mortgage
to T. Since the mortgage is required to be in a public
document, its cession or assignment from C to T must also be
in a public document in order to bind third persons.

NOTE: All other contracts where the amount involved


exceeds P500.00 must appear in writing, even a private one.
But sales of goods, chattels, or things in action are governed
by Articles 1403 and 1405. (Art. 1358, par. 2)

Example: D leased his delivery truck to C at P10,000.00 per


month for 2 years. Lease of of movable property is neither one
of the contracts that must be in a public document (Art. 1358),
nor required to be in writing for its enforceability (Art. 1403, No.
2[e]). However, since the contract involves movable property

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CHAPTER 3 – Form of Contracts (Articles 1356-1358)

and the consideration for the contract exceeds P500.00, this


lease contract (while already binding as between the parties to
the contract) is required to be in writing, even a private one,
BUT only for the convenience of the parties and to bind third
persons.

4. TO REITERATE, the enumeration under Article 1358,


whereby a public instrument is required, is only for the
convenience of the parties, and NOT for the validity or
enforceability of the enumerated contracts. In other words,
the contracts enumerated under Article 1358 remain to be valid
and enforceable as between the contracting parties thereto
even if they do not appear in a public instrument, BUT the said
contracting parties are given the right to compel each other to
execute the needed public document for their convenience and
to bind third persons (Art. 1357).

Thus, under Article 1357, before a party (the active


subject) can exercise his right to compel the other contracting
party (the passive subject) to execute the REQUIRED FORM,
their contract as entered into must already be:
(a) VALID and
(b) ENFORCEABLE (Art. 1403).

Example: S orally agreed to sell his lot to B for P10M. The


contract of sale here, even if orally made, is valid. This is
because a contract of sale is a consensual contract which is
perfected by mere consent. While valid though, this contract is
unenforceable under Article 1403, No. 2(e), which requires
sales of immovable property to be in writing (private or public)
in order for the sale to be enforceable even as between the
contracting parties. In this case then, because the contract of
sale of real property between S and B as orally entered into is
unenforceable by action, B will have no right under Article
1357 to compel S to execute a public document so he (B) can

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CHAPTER 3 – Form of Contracts (Articles 1356-1358)

have the sale registered in the Registry of Property to make


the sale binding against the whole world.

 READ THESE CASES IN THEIR


ORIGINAL TEXT:

(1) Yaneza vs. CA, G.R. No.


149322,
November 28, 2008.
(2) Agasen vs. CA, G.R. No.
115508,
February 15, 2000.

APPLICATION/PROBLEMS :

1. How do you distinguish between a private and a


public document?

2. On January 15, 2015, D and C entered into a verbal


contract of loan for the amount of P100,000.00. It was agreed
by the parties that D was to pay C the amount of the loan on
June 15, 2015, plus 10% interest in the amount of P10,000.00.
Is the parties’ contract valid? Can C, on due date, demand
from D payment of the loan and the interest agreed upon? 
Art. 1356 in relation to Art. 1956.

3. On September 15, 2015, Quintin verbally sold his


300 square-meter lot in Manila to Melania for P5M. It was
agreed by the parties that delivery of the lot as well as
payment of the purchase price will be made on October 15,
2015. On September 25, 2015, Melania requested Quintin to
execute a Deed of Sale in her favor, so she can have the

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CHAPTER 3 – Form of Contracts (Articles 1356-1358)

instrument notarized and later registered with the Register of


Deeds of Manila. Quintin refused Melania’s request. Under
the facts, can Melania legally compel Quintin to execute a
public document of sale in her favor?  Arts. 1356 & 1357,
in relation to Art. 1403, No. 2(e)

4. Alfred donated his lot to Kristine. The donation and


and acceptance were made in a private instrument. Kristine
wants to have the donation registered. Can Kristine compel
Alfred to execute a public instrument of donation?  Art.
1356 in relation to Art. 749

5. Cheche obtained a loan from Tsutsu in the amount of


P5M. To secure the loan, Cheche mortgaged her lot to Tsutsu.
Both the contracts of loan and the mortgage were entered into
orally. On maturity date, Cheche failed to pay the obligation
despite repeated demands from Tsutsu. Considering that the
contract of mortgage was not embodied in a public instrument,
can Tsutsu foreclose on the mortgage? Will your answer to the
foregoing question be the same if Cheche was able to sell the
property to Bembem, who is now the owner of the mortgaged
lot and has been in possession of the lot even before Cheche’s
obligation matured?  Art. 1358 (1)

6. Kokoy and Mimi are husband and wife, respectively.


In a complaint for legal separation filed by Mimi against Kokoy,
the court declared the judicial separation of the properties of
the spouses. Kokoy renounced his share in the properties in
favor of Mimi. Will Kokoy’s renunciation of his share in the
conjugal properties be valid and enforceable if it is not
embodied in a public instrument but is merely made verbally?
 Art. 1358 (2)

*** END ***

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CHAPTER 3 – Form of Contracts (Articles 1356-1358)

FOOD FOR THOUGHT

“The good Lord gave you a body


that can stand most anything.
It’s your mind you have to convince.”
Vince
Lombardi

“We are what we repeatedly do.


Excellence then is not an act, but a
habit.”
Vince
Lombardi

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