SUBJECT2.

MATTER
SECTION - Object OR OBJECT CERTAIN
of Contracts

The 1347.
Art. objectAllofthings
a contract
which isareitsnot
subject-matter.
outside the
Object of every
commerce of men,contract is thefuture
including obligation created
things, may
butthe
be since contract
object of a cannot
contract.exist
All w/o anwhich
rights obligation
are
itintransmissible
not may be said that maythe alsothing present
be the or
object of
future (as in sale), right (as in assignment of
contracts.
credit)
No or service
contract may be (asentered
in agency)intoarising
upon from
futurea
contract orexcept
inheritance the object of the
in cases obligation
expressly is also
authorized
object
by law. of the contract

Hence,
All it is said
services that are
which undernot
the contrary
Code, thetoobject
law,
of the good
morals, contract
customs,and public
the order
objector ofpublic
the
obligation
policy createdbe
may likewise thereby are identical
the object of a contract.

Object
Art. 1348. Impossible
most fundamental and
things or indispensable
services cannot
requisite
be of aofcontract.
the object contracts.
- The thing, right or service which is the
Art. 1349. subject matterofofevery
The object the obligation whichbeis
contract must
determinatecreated or established.
as to its kind. The fact that the
- The
quantity is notwhat of the contract
determinate shall not be an RIGHTS AS OBJECT OF CONTRACT
obstacle to the existence of the contract, GR: All rights may be the object of a contract
Per se
provided it is possible
refers to the to determine
property (in athe same,
prestation XPN: When they are intransmissible by their
without the need of a new contract between the
to give) nature, stipulation or provision of law
parties.
It must be a property (USA)
a) Utility REQUISITES OF THINGS AS OBJECT OF
b) Substantivity CONTRACT
c) Capable of being appropriated 1) Must be within the commerce of men
It may also refer to the prestation - 2) Must not be impossible legally or
(to give, to do, not to do) which must be, among physically
others, lawful and possible. Otherwise, debtor 3) Must be in existence or capable of coming
is relieved from his obligation. into existence subsequent to the contract
4) Must be determinate as to its kind or
PRESTATION OF THIRD PARTY determinable w/o the need of a new contract
- The prestation promised in a contract between the parties
must be personal to the party. 5) It must be licit, or not contrary to law,
- A person can obligate only himself; he morals, good customs, public policy, or
cannot obligate a third person. public order
- Third does not mean that a contract in 6) Transmissible
which the prestation of a third person is
promised, is void; it is valid. Explanation of the Requisities:
- The third person, however, is not
bound; only the promisor is bound by MUST BE WITHIN THE COMMERCE OF
the contract to use all means so that MEN
the third person may perform the - it can legally be the subject of
prestation. commercial transactions
- must be susceptible of appropriation
REQUISITES OF SERVICES AS OBJECT OF and transmissible
CONTRACT
1) The service must be within commerce of Ex. Outside commerce of men
men - clings of public ownership such as
2) It must not be impossible physically or sidewalks, public places, bridges,
legally streets
3) It must be determinate or capabe of - things that are common to everybody
being made determinate such as air, sunlight, rain, etc
 - Things are impossible when they are
MUST NOT BE IMPOSSIBLE not susceptible of existing, or they are
Impossibility may be: (Art. 1348) outside the commerce of man.
- Personal services or acts are impossible
1) Physical when the thing or service in the when they are beyond the ordinary
very nature of the things cannot exist (ex. strength or power of man.
monkey that talks) or be performed. - The impossibility must be actual and
contemporaneous with the making of
Impossibility of Services: the contract, and not subsequent
a) Absolute thereto
- When the act or service in itself, without
considering the person of the obligor, The impossibility, therefore, must be
becomes impossible; absolute, not relative, and must be
- when act cannot be done in any case so determined objectively, and not in relation to
that nobody can perform it (ex. fly like a the debtor personally, with rare exceptions
bird)
- arises from the nature or essence of the Liability for Damages
act or service itself - When the object is impossible, the
- void contract contract is void and inexistent; hence,
it cannot give rise to any juridical
b) Relative relation
1. when it arises from the special - If the obligor/debtor knew of the
circumstances of the case impossibility, or could have known of it,
(Ex. to make payment to a dead his bad faith or negligence makes him
person) or liable for damages.
2. the special conditions or - The amount of damages, however, will
qualifications of the obligor/ be limited in this case to the losses the
when the act or service cannot be creditor may have suffered by having
done by the debtor himself, but it relied on the contract; he cannot
can be accomplished by others; recover all the damages arising from
(Ex. blind person to paint a portrait, non-performance of the contract
when the debtor becomes so - But if the debtor is also ignorant of the
seriously ill that he cannot perform impossibility, and his ignorance thereof
the stipulated act or service, is justifiable, or unavoidable, the reason
although it can be done by anybody for his responsibility ceases, and he
else cannot be held liable for the damages
suffered by the creditor
- If temporary impossibility not void - There is no liability for damages if both
contract, such as when a partner agrees parties have knowledge of the
to contribute to the partnership an impossibility
amount more than is permissible by his
means; Partial Impossibility
- if permanent impossibility void If the thing is partly possible and partly
contract, such as blindness in contracts impossible, the effect will depend upon the
which required the use of eyesight divisibility of the thing.
- If it is indivisible, by its nature or by the
2) Legal when thing or service is contrary to intention of the parties, there is no
morals, good customs, public order, public contract; the consent would be wanting,
policy. because it was either for the whole
a) forbidden by a penal law (ex. to sell obligation or for none at all.
shabu) or - If the thing is divisible, then the
b) rule of law makes it impossible to be contract is valid to the extent that it is
done (ex. to make valid donation of real possible
property w/o public instrument, to make
a valid will where testator is under 18) Difficulty of Performance
 Impossibility of performance should not be When the contract involves future things, it may
confused with mere difficulty. It is elemental either be:
that the law requires parties to do what they 1) conditional, or subject to the coming into
agreed to do. If a party charges himself with existence of the thing, or
an obligation difficult of performance, he 2) aleatory, or one of the parties bears the
must abide by it. A showing of mere risk of the thing never coming into
inconvenience, unexpected impediments, or existence
increased expenses is not enough to relieve
him of the obligation. Ex. Future things or rights
- The debtor who does not perform in - things to be manufactured, raised, or
such cases must be held liable for acquired after the perfection of the
damages contract such as wine that a vineyard
expected to produce
But if the obstacles to the performance of - rice to be harvested next harvesting
the prestation are so great that they can season
only be overcome with sacrifices which - wool that shall thereafter grow upon a
are absolutely disproportionate, the sheep, eggs that hens may lay, young
prestation must be considered impossible, animals not yet in existence
taking into account the rational, ethical, and - author may assign the royalty which he
economic considerations in the light of the expects to receive from his publisher
presumed intention of the parties and of XPN: Future inheritance any property or right
good faith in existence or capable of determination at the
time of the contract that a person may inherit in
Thus, one may not obligate himself to do the future, such person having only an
something which, when accomplished, will expectancy of a purely hereditary right. The
prove to be dangerous to life and inheritance ceases to be future upon the death
property. It is contrary to law and public of the deceased.
policy to force the performance of a contract
that is undesirable and harmful Requisites in order to fall in the prohibition:
1. that the succession has not yet been
Ex. Impossible opened,
- Fly like a bird 2. that the object of the contract forms part of
- Prohibited drugs ad all illicit objects the inheritance,
- To kill a person 3. that the promisor has, with respect to the
- To get soil from Jupiter object, an expectancy of a right is purely
- To construct a building in 1 day hereditary in nature

MUST BE IN EXISTENCE OR CAPABLE VOID BEC. FUTURE INHERITANCE-

OF COMING INTO EXISTENCE 1. An agreement for the partition of the
SUBSEQUENT TO THE CONTRACT estate of a living person, made between
those who, in case of death, would be in
The object of a contract should be in a position to inherit from him is VOID
existence at the moment of the 2. And a contract renouncing the right to
celebration of the contract, or at least, it inherit from one who is still alive is VOID
can exist subsequently or in the future.
After the death of a person, however, the
GR: Future Things can be Object of Contracts properties and rights left by him by way
- Future things - those which do not of inheritance can be the subject-matter
belong to the obligor at the time the of a contract among or by his heirs, even
contract is made; they may be made, before a partition thereof has been made,
raised, or acquired by the obligor after because the rights of the heirs are
the perfection of the contract transmitted to them from the moment of
- The term future things includes not death of the predecessor
only material objects but also future
rights. XPN TO THE XPN:
 1) Art. 130 of the Family Code - allows future determination must, however,
the future spouses to give or donate to depend upon circumstances already
each other in their marriage settlement provided in the contract itself
their future property to take effect upon - The fact that the quantity is not
the death of the donor and to the extent determinate shall not be an obstacle to
laid down by the provisions of the NCC the existence of the contract, provided it
relating to testamentary succession; is possible to determine the same,
2) Art. 1080 of the Code - allows a person without the need of a new contract
to make a partition of his estate among between the parties.
his heirs by an act inter vivos, provided - Ex. S sold to B all chickens in the
that the legitime of the compulsory heirs poultry. Object determinate but
is not prejudiced quantity not yet determined can be
ascertained w/o entering in new contract
When the object of the contract is not a part - S binds himself to deliver 1 of carabaos
of the inheritance, the prohibition does to B. Object is determinate w/o need of
not apply, even if the delivery of such object new contract. It becomes determineate
is dependent upon the death of one of the the moment it is delivered.
contracting parties. - If subject of agreement is parcel of land
- Thus, life insurance contracts, and owned by S but he owns many lands
stipulations providing for reversion of void contract if the particular land sold
property donated in marriage cannot be determined w/o new or further
settlements in the event of the death of agreement
the done, are valid
Ex. Determinable Things
MUST BE DETERMINATE AS TO ITS KIND - All cavans of rice in a bodega
OR DETERMINABLE W/O THE NEED OF - All the eggs in the basket
A NEW CONTRACT BETWEEN THE - My land with the smallest area
PARTIES - Land at the corner of the particular
street
Determination of Kind:
- The object of the contract need not be IT MUST BE LICIT, OR NOT CONTRARY
individualized; but it must be TO LAW, MORALS, GOOD CUSTOMS,
determinate as to its kind or species PUBLIC POLICY, OR PUBLIC ORDER
- But if the object is merely something or - The contract is void if at the time it is
an animal, the species is not entered into, the object is contrary to law
determined, and the contract would be or morals. The law violated need not be
void penal in nature; it is enough that it be
- The thing must have definite limits, not mandatory or prohibitive
uncertain or arbitrary
- the genus of the object should be GR: All things or services may be the object of
expressed although there might be no contracts.
determination of the individual specie XPNs:
- The fact that the quantity is not 1) Things outside the commerce of men
determinate shall not be an obstacle to - all kinds of things and interests
the existence of the contract, provided whose alienation or free
it is possible to determine the same, exchange is restricted by law or
without the need of a new contract stipulation, which parties cannot
between the parties. modify at will
2) Intransmissible rights;
Determination of Quantity 3) Future inheritance, except in cases
- Sufficient that it is possible to determine expressly authorized by law
the same w/o need of a new contract 4) Services which are contrary to law,
bet. parties morals, good customs, public order or
- The quantity of the object may be public policy;
indeterminate, so long as the right of the 5) Impossible things or services; and
creditor is not rendered illusory. Its
 6) Objects which are not possible of 2. Remuneratory contracts the service or
determination as to their kind. benefit remunerated or compensated;
3. Pure Beneficence/ Cause of gratuitous
EMPTIO SPEI contracts the mere liberality of the donor
- Sale of an expectancy or hope or benefactor.
- Validity of sale depends upon the object 4. Accessory identical with cause of
materializing principal contract, the loan which it derived
- If it does not materialize void because its life and existence (e.g.: mortgage or
it becomes contract without an object pledge)
- Object need not materialize for sale to
be valid ONEROUS CONTRACTS
The cause do not need to be adequate or an
EMPTIO REI SPERATI exact equivalent in point of actual value,
- Sale of a future thing especially in dealing with objects which have
- Distinguish between vain hope and one a rapidly fluctuating price.
which comes into existence - Thus, a consideration of P1 is just as
- If it will never materialize contract void effectual and valuable consideration, if
- Potential existence is an indispensable stipulated in good faith, and in the
requirement so that the validity of absence of fraud, as a larger sum
contract depends upon the object
coming into existence Cause:
Natural Obligation
SECTION 3. - Cause of Contracts - Where the cause is a natural obligation,
or one of conscience, there is a
Art. 1350. In onerous contracts the cause is sufficient cause to sustain an
understood to be, for each contracting party, the onerous contract; and the cause will
prestation or promise of a thing or service by the not be one of mere liberality
other; in remuneratory ones, the service or Moral obligation arising wholly from ethical
benefit which is remunerated; and in contracts considerations not constituting a natural
of pure beneficence, the mere liberality of the obligation, is not a sufficient cause for
benefactor. onerous contracts

CAUSE OR CONSIDERATION compelling GR: When a moral obligation arises wholly

reason that compelled you to enter into a from ethical considerations, unconnected with
contract any civil obligation and as such, is not
- The WHY of the contract demandable in law but only in conscience
- juridical reason why the parties entered NOT a sufficient cause or consideration
into the contract supporting an onerous contract.
- Essential reason which moves the
contracting parties to enter into a XPN: Moral obligation based upon a previous
contract. civil obligation which has already been barred
- Immediate, direct, or most proximate by the statute of limitations at the time when the
reason which explains & justifies the contract is entered into, it constitutes a
creation of the obligation through the will sufficient cause or consideration to support
of the contracting parties. said contract

REQUISITES OF A CAUSE (ELT) MUTUAL PROMISES

1. The cause should be in existence at the A promise made by one party, if made in
time of the celebration of the contract. accordance with the forms required by law,
2. The cause should be licit or lawful may be a good cause or consideration for a
3. the cause should be true promise made by the other party.
- In other words, the consideration or
KINDS OF CAUSE cause need not pass from one to the
1. Onerous contracts the prestation or other at the time the contract is entered
promise of a thing or service by the other. into
ACCESSORY CONTRACTS accommodation of a co-maker and a 3rd
A person may secure the performance of person and advances the face value of the
anothers contract, either by: note to the accommodated party at the time
a) Acting as surety on a bond of the creation of the note = the
GR: the cause or consideration, generally, is no consideration for the note, as regards both
other, as in all contracts of pure beneficence, makers, if the money was advanced to the
than the liberality of the benefactor. accommodated party; and it cannot be said
XPN: a bond may be given for some other that the note is lacking in consideration
consideration, according to the agreement and as to the accommodating party because
free stipulation of the parties, which may be, as he himself received none of the money. It
in onerous contracts, something remunerative is enough that value was given for the note
stipulated as an equivalent given by the at the time of its creation
beneficiary of the bond of to the bondsman or
surety REMUNERATORY CONTRACTS
Remuneratory contract - one where a party
b) By giving his property by way of mortgage gives something to another because of
to secure such persons contract. some service or benefit given or rendered by
- It has been held that, as a mortgage is the latter to the former, where such service
an accessory contract, its cause or or benefit was not due as a legal obligation
consideration is the very cause or One in which one of the contracting parties
consideration of the principal compensates the service or benefit rendered
contract, from which it receives its life, by the other party, although such service or
and without which it cannot exist as an benefit does not constitute a demandable
independent contract, although it may debt.
secure an obligation incurred by
another. GRATUITOUS CONTRACTS
Gratuitous contracts - essentially
COMPLEMENTARY CONTRACTS agreements to give donations.
CONSTRUED TOGETHER DOCTRINE - The generosity or liberality of the
- The cause of the accessory contract is benefactor is the cause in such
identical with that of the principal contracts.
contract. - For this reason, a voluntary
- An accessory contract must be conveyance, w/o any valuable
interpreted with its principal contract. consideration whatever, is good as
- The provisions must be construed between the parties and cannot be
together to arrive at their true meaning. set aside, unless made in fraud of
Certain stipulations cannot be existing creditors.
segregated and then made to control.
- This doctrine closely adheres to the
spirit of Art. 1374 of the Civil Code which Art. 1351. The particular motives of the parties
states that the various stipulations of a in entering into a contract are different from the
contract shall be interpreted together, cause thereof.
attributing to the doubtful ones that
sense which may result from all of them
taken jointly
CAUSE VS MOTIVE

ACCOMMODATION PARTIES; Motive: Something that is incidental; it has

nothing to do with the perfection or validity of the
Accommodation party - one who has
contract
signed the instrument as maker, drawer,
acceptor, or indorser, w/o receiving value Motive predetermines the contract
therefor, and for the purpose of lending his The motives of the contracting parties are as
name to some other person different or complex and as capable of
infinite variety as the individual
Where 1 of the signers of a joint and several circumstances which may move men to
promissory note affixes his signature for the acquire things or make money.
 The motives may be regarded as the causa the same for party
when the contract is conditioned upon the each
attainment of the motive of either contracting contracting
parties. party
Effect of Motive: Art. 1352. Contracts without cause, or with unlawful
cause, produce no effect whatever. The cause is
GR: the motives of a party do not affect the unlawful if it is contrary to law, morals, good
validity or existence of a contract. The motives customs, public order or public policy.
of a contracting party cannot be the basis for the
annulment of the contract Art. 1353. The statement of a false cause in
XPN: can be basis for annulment of the contracts shall render them void, if it should not be
contract if the realization of such proved that they were founded upon another cause
motives has been made a condition which is true and lawful.
upon which the contract is to depend.
Art. 1354. Although the cause is not stated in the
GR: Mere presence of motives cannot cure the contract, it is presumed that it exists and is lawful,
absence of consideration unless the debtor proves the contrary.
XPN: Motives of a party may affect the
juridical act, such as: Art. 1355. Except in cases specified by law, lesion
1) When the motive of a debtor in or inadequacy of cause shall not invalidate a
alienating property is to defraud his contract, unless there has been fraud, mistake or
creditors, the alienation is rescissible. undue influence.
2) When the motive of a person in giving
his consent is to avoid a threatened
injury, as in case of intimidation, the STATEMENT OF FALSE CAUSE
contract is voidable.
Where the cause stated in the contract is
3) When the motive of a person induced
false, the latter may nevertheless be
him to act on the basis of fraud or
sustained by proof of another licit cause.
misrepresentation by the other party,
the contract is likewise voidable.
Where a contract is a simulated or
fictitious contract of sale with a false
NOTE: While the GR is that the cause of a
consideration, it is NOT null and void per
contract should not be confused with the
se;
motives of the parties, the motive may be
- merely an annullable contract
regarded as cause when it predetermines the
purpose of the contract
PRESUMPTION OF LAWFUL CAUSE
Unless the contrary is proved, a contract is
CAUSE MOTIVE
presumed to have a good and sufficient
PROXIMATE Direct and Indirect or
consideration.
REASON most remote reasons
- Applies when no cause is stated in the
proximate
contract.
reason of a
- But if a cause is stated in the contract,
contract
and it is shown to be false, the burden
KIND OF Objective and Psychological or
of proving the legality of the cause is
REASON juridical purely personal
upon the party enforcing the contract
reason reason
NOTE: If the cause is partly legal and partly
of contract
unlawful, and there is no proof as to what part
LEGAL Legality or Legality or is supported by the lawful cause, there can be
EFFECT illegality of illegality of no recovery on the contract (Ex: Checks)
cause motive does not
affects the affect the
Even when the contract falls under the
existence or existence or
Statute of Frauds, it is not necessary that
validity of the validity of
the consideration for the agreement be
contract contract
stated in writing, because it is presumed.
PARTIES Cause is Motive differs for
always each contracting
 When it is alleged that the consideration or
cause of a promissory note is a debt DISTINGUISHED FROM OBJECT
incurred in a prohibited game or a game Object - Thing, service, or right one party
of chance, and no proof of the nature of expects to deliver or perform
the game, the law presumes that the cause Cause - That which the party expects to
or consideration is licit receive or enjoy
INADEQUACY OF CAUSE - No confusion between the object and
GR: contract is not subject to annulment; the cause in remuneratory and
XPN: in cases provided by law, such as Art. gratuitous contracts.
1381 (Rescissible Contracts) the lesion is a - But a confusion may arise in onerous
ground for rescission of the contract contracts, or contracts giving rise to
reciprocal or bilateral obligations
Gross inadequacy - naturally suggests fraud and
is evidence thereof, so that it may be sufficient to The subject-matter or object in:
show it when taken in connection with other Onerous contracts - the thing, service or act,
circumstances. which forms the basis of the entire contract,
- But the fact that the bargain was a hard the starting point of agreement, w/o which
one, coupled with mere inadequacy of the negotiations or bargaining between the
price, when both parties are in a portion parties would never even have begun.
to form an independent judgment
concerning the transaction, is not Thus, while the object of the onerous
sufficient ground for the cancellation contract is the same as to both parties and
of a contract. Where also, a determined irrespective of them, the cause
compromise of doubtful rights is is different with respect for it is the
voluntary and there is no fraud or impelling or essential reason for his
imposition, it will be upheld, however, entering into the contract
disadvantageous
DISTINGUISHED FROM CONSIDERATION
RULES RELATING TO CAUSE ON - Applied to contracts, cause represents,
CONTRACTS the why of contracts, the essential
reason which impels the contracting
1. Absence of cause parties to celebrate the contract.
- Confers no right and produces no legal
effect. Consideration - in its widest sense is the
2. Failure of cause reason, motive, or inducement, by which a
- Does not render the contract void man is moved to bind himself by an
3. Illegality or Unlawful cause agreement. It is not for nothing that he
- Contract is null and void. consents to impose an obligation upon
4. Falsity of cause himself, or to abandon or transfer a right
- Contract is void; unless the parties show - The concept of consideration is
that there is another cause which is true narrower than that of cause
and lawful.
5. Lesion or inadequacy of cause Cause - never rejects any cause as
GR: the contract is not subject to annulment insufficient. Whatever inducement is
XPN: sufficient to satisfy the parties, is sufficient to
a) there is fraud, mistake, or undue influence; satisfy the law, even though it is nothing
b) when the parties intended a donation or more than the causa liberalities of a
some other contract; or voluntary gift.
c) in cases specified by law
- (e.g. contracts entered by guardian when In other words, while consideration requires
ward suffers lesion of more than 25% and a legal detriment to the promisee which
with court approval, otherwise, if there is no must be more than a moral duty, cause
approval, the contract is void regardless of need not be material at all, and may
the amount of lesion). consist in a moral satisfaction for the
Voidable contract if any of the 3 is promissor
present
 FORM OF CONTRACTS

Art. 1356. Contracts shall be obligatory, in

whatever form they may have been entered into,
provided all the essential requisites for their validity
are present. However, when the law requires that a
contract be in some form in order that it may be
valid or enforceable, or that a contract be proved in ART. 1357
a certain way, that requirement is absolute and 1. Grants to each contracting party the power
indispensable. In such cases, the right of the to compel the other to execute the
parties stated in the following article cannot be formalities required by the law, as soon
exercised. as the requisites for the validity of the
contract are present.
Art. 1357. If the law requires a document or other - recognizes its enforceability by the mere
special form, as in the acts and contracts fact of granting to the contracting parties
enumerated in the following article, the contracting an adequate remedy whereby to
parties
FORM may compel
a mannereachinother which to aobserve
contractthatis compel the execution of a public
form, once the
executed contract has been perfected. This
or manifested writing, or any other special form,
right may be exercised
1) Informal simultaneously
may be entered with the
into whenever such form is necessary in
action uponwhatever
the contract.
form as long as there is order that the contract may produce the
consent, object and cause effect which is desired, according to
Art. 1358. The following
2) Formal must appear
required by lawin to a public
be in whatever may be its object.
document: certain specified form - equivalent to establishing as an
1) Acts and contracts which have for their object implied condition of every contract,
GR: Form is transmission,
the creation, not required modification
in consensual or that these formal requisites shall be
contracts.
extinguishmentA contract,of having rights
real the essential
over complied with, notwithstanding the
requisites
immovable provided
propert fory; insales
Art. 1318,
of real willproperty
be valid absence of any express agreement
as
or between the parties
of an interest whatever
therein the formbyit
a governed by the contracting parties to that
may have1403,
Articles beenNo.
entered
2, andinto 1405; effect,
2) The cession, repudiation or renunciation of - does not subordinate the
XPN: FORMALITIES
hereditary rights or REQUIRED
of those of BY theLAW;
conjugal principal action to the secondary
These formalities
partnership may be classified into three
of gains; action concerning the form.
3) groups:
The power to administer property, or any Such subordination would be
1. power
other VALIDITYwhich- required
has for for its the validity
object an actof unnecessary, as the cause of
appearingthe or
contract
which should appear in a public action would be the same in
2. CONVENIENCE/
document, or should prejudice EFFECTIVITY
a third person; - both cases, i.e., the existence of
4) The cessionrequired to make
of actions or rights the proceeding
contract a valid contract
from aneffective as against
act appearing thirddocument.
in a public parties, such
as those mentioned in Art. 1357 and Does not impose an obligation, but confers a
1358
All other contracts where the amount involved privilege upon both parties, and the fact
exceeds3.fiveENFORCEABILITY
hundred pesos must- appear required for the
in writing, that the plaintiff has not made use of the
even a privatepurpose of proving
one. But the existence
sales of goods, chattels orof same does not bar his action on the
the arecontract,
things in action governed by or Articles,
formalities
1403, No. ad contract. Does not require that the exercise
2 and 1405.probationem, such as those provided in of the action to compel the execution of the
the Statutes of Frauds in article 1403 deed must precede the bringing of the action
derived from the contract
NOTE: The parties may compel each other to - do not operate against the validity of the
reduce the verbal agreement into writing. contracts nor the validity of the acts
voluntarily performed by the parties for
EXECUTION OF INSTRUMENT the fulfillment thereof, even before the
Where the validity of a contract is made to execution of the corresponding public
depend upon a particular formality, an action instrument, yet from the moment when
under 1357 cannot be brought to compel any of the contracting parties invokes
the other party to execute such formality. said provisions it is evident that
Article 1357 presupposes the existence of a under them the question involving
valid contract and cannot possibly refer to the execution of the public
the form required to make it valid, but rather instrument must precede the
to that required simply to make it effective determination of the other obligations
- 1357 clearly indicates that contracts derived from the contract
covered by 1358 are binding and
enforceable by action or suit despite SURVIVAL OF ACTION;
the absence of writing
 When a party to a contract dies and is iii. If acceptance is in a separate
survived by his heirs - heirs may be instrument, the donor shall be
compelled to execute the proper documents. notified thereof in authentic form,
They are not 3rd parties, and they succeed to and this step shall be noted in both
whatever interest their predecessor may instruments (Art. 749, NCC).
have in the property covered by the contract.
All of the heirs, however, must be made 2. Partnership where real property
parties to such an action contributed
a) There must be a public instrument
WRITING NOT FOR VALIDITY; regarding the partnership;
Art. 1358 enumerates the certain contracts b) The inventory of the realty must be
that must appear in public or private made, signed by the parties and
documents. This provision does not require attached to the public instrument (Art.
such form in order to validate the act or 1773, NCC)
contract but to insure its efficacy.
The reduction to writing in a public or private 3. Antichresis - the amount of the principal
document, required by this article, is not an and interest must be in writing (Art. 2134,
essential requisite for an existence of the NCC)
contract, but is simply a coercive power
granted to the contracting parties by which 4. Agency to sell real property or an interest
they can reciprocally compel the therein - authority of the agent must be in
observance of these formal requisites. writing (Art. 1874,NCC).

GR: Contracts enumerated by Art. 1358 are, 5. Stipulation to charge interest - interest
therefore, valid as between the contracting must be stipulated in writing (Art. 1956,
parties, even when they have not been reduced NCC).
to public or private writings.
XPN: where public instruments and 6. Stipulation limiting common carrier's
registration are required for the duty of extraordinary diligence to
validity of the contract itself, the ordinary diligence:
legalization of a contract by means of a a. must be in writing, signed by shipper or
public writing and its entry in the register owner
are not essential solemnities or b. supported by valuable consideration
requisites for the validity of the contract other than the service rendered by the
as between the contracting parties, but common carrier
are required for the purpose of c. reasonable, just and not contrary to
making it effective as against 3rd public policy (Art. 1744, NCC).
persons
7. Chattel mortgage - personal property must
Note: Formality is an essential element, without be recorded in the Chattel Mortgage
which, the contract is void Register (Art. 2140, NCC).

FORMALITIES REQUIRED IN SPECIFIC

CONTRACTS CONTRACTS WHICH MUST BE IN WRITING
1. Donations TO BE VALID
a) Personal property- if value exceeds 1. Donation of personal property whose
5,000, the donation and acceptance value exceeds P5000 the donation and
must both be written (Art. 748, NCC). acceptance must be in writing
b) Real property: 2. Sale of a piece of land or any interest
i. Donation must be in a public therein through an agent (Art. 1874, NCC)
instrument, specifying therein the the authority of the agent shall appear in
property donated and value of writing
charges which donee must satisfy. 3. Agreements regarding payment of interest
ii. Acceptance must be written, either in contracts of loan (Art. 1956, NCC)
in the same deed of donation or in a 4. Antichresis the amount of the principal
separate instrument. and the interest shall be specified in writing
 purchasers and person on whose account
CONTRACTS WHICH MUST APPEAR IN A the sale is made, it is a sufficient
PUBLIC DOCUMENT memorandum
1. Donation of real properties (Art. 719, NCC); 5. An agreement for the leasing for a longer
2. Partnership where immovable property or period than one year, or for the sale of real
real rights are contributed to the common property or of an interest therein;
fund (Arts.1171 & 1773, NCC); 6. A representation to the credit of a 3rd
3. Acts and contracts which have for their person
object the creation, transmission,
modification or extinguishment of real
rights over immovable property; sale of RA 8792 (E-COMMERCE ACT)
real property or of an interest therein is - Formal requirements to make contracts
governed by Arts. 1403, No. 2, and 1405 effective as against 3rd persons and to
(Art. 1358 (1), NCC); establish the existence of a contract are
4. The cession, repudiation or renunciation deemed complied with provided that the
of hereditary rights or of those of the electronic document is unaltered and
conjugal partnership of gains (Art. 1358 (2), can be authenticated as to be useable
NCC); for future reference
5. The power to administer property or any
other power which has for its object an act
appearing or which should appear in a
public document or should prejudice a third
person (Art. 1358 (3), NCC);
6. The cession of actions or rights
proceeding from an act appearing in a public
document (Art. 1358 (4), NCC).

CONTRACTS THAT MUST BE REGISTERED

1. Chattel mortgages (Art. 2140, NCC)
NOTE: In accordance with Article 2125 of the
Civil Code, an unregistered chattel mortgage is
a valid and binding between the parties because
registration is necessary only for the purpose of
binding third persons
2. Sale or transfer of large cattle (Cattle
Registration Act)

STATUTE OF FRAUDS
1. An agreement made in consideration of
marriage, other than a mutual promise to
marry;
2. An agreement that by its terms is not to be
performed within a year from the making
thereof
3. A special promise to answer for the debt,
default or miscarriage of another
4. An agreement for the sale of goods,
chattels or things in action, at a price not
lower that P500, unless the buyer accepts
and receives part of such goods and
chattels, or the evidences, or some of them,
of such things in action, or pay at the time
some part of the entry is made by the
auctioneer in his sales book, at the time of
the sale, of the amount and kind of property
sold, terms of sale, price, names of the