FORM OF CONTRACTS (Arts.

1356-1358)

Manner in which a contract is executed

or manifested
May be oral , in writing , or in
combination
Classification of contracts as to form:
(1) informal or common contract
(2) formal or solemn contract

Rules on Form
General: any form is valid as long as all the 3
essential requisites (consent,object,cause) are present
Exceptions:
1. law requires a contract to be in some form to be
valid
2. law requires a contract to be in some form to be
enforceable
3. law requires a contract to be in some form for the
convenience of the parties or for the purpose of
affecting 3rd persons

Form for validity of contract

Donation of real property- public instrument
Donation of personal property exceeding P
5,000 must be in writing
Sale of land trough an agent authority must
be in writing else the sale is void
Stipulation to pay interest must be in writing
Contract of partnership with immovables,
public instrument with attached inventory

Form for the convenience of parties (Art. 1357)

Compel parties to observe the form

once the contract has been perfected
Donation in public instrument
Sale of real property done orally valid
but unenforceable
Sale in private writing-valid and binding
as to parties

Contracts in public document (Art. 1358)

(1)

Acts and contracts which have for their object the

creation, transmission, modification or extinguishment of
real rights over immovable property
(2) The cession, repudiation or renunciation of hereditary
rights or of those of the conjugal partnership of gains;
(3) 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;
(4) The cession of actions or rights proceeding from an act
appearing in a public document.

Reformation of Instruments (Arts. 1359 to

1369)

Remedy: a written instrument is

amended or rectified so as to express or
conform to the real agreement of the
parties
Reason: equity
Principles of general law adopted in case
of conflict with the Civil Code (Art. 1360)

Requisites of Reformation
1. Meeting of the minds of the parties
2. Written instrument does not express the true
agreement/intention of the parties
3. Failure is due to mistake, fraud, inequitable
conduct or accident
4. Relief of reformation in issue by the pleadings
5. Clear and convincing evidence of the mistake,
fraud, inequitable conduct or accident

Reformation vs. Annulment

In reformation, there is meeting of the
minds
In annulment, there is NO meeting of the
minds (vitiated consent)

Mutual mistake as ground for reformation (Art.

1361)

1. Mistake must be of fact

2. Proved by clear and convincing
evidence
3. Must be mutual (common to both
parties)
4. Mistake cause the failure of the
instrument to express true intention

Mistake of one and fraud/inequitable conduct/

concealment of the other party (Arts. 1362-1363)

Mistake is not mutual

Right to ask reformation belongs to the
party who was mistaken in good faith

rd

Ignorance etc of 3 person (Art. 1364)

Person drafting/clerk/typist due to
ignorance, lack of skill, negligence, bad
faith
Court may order reformation

Reformation due to failure to state

mortgage/pledge (Art. 1365)
Real agreement is mortgage/pledge
Instrument states absolute sale or pacto
de retro
Reformation is proper

Reformation NOT allowed (Arts. 1365-1366)

(1) Simple donations inter vivos wherein no
condition is imposed;
(2) Wills;
(3) When the real agreement is void.
(4)By estoppel - When one of the parties has
brought an action to enforce the
instrument, he cannot subsequently ask for
its reformation

Party entitled to reformation (Art. 1368)

Either of the parties in case of mutual
mistake
The injured party
The heirs and successors in interest
Effect retroactive (from the time of
execution)


Interpretation of Contracts
(Arts. 1370 1379)

The determination of the meaning of the

terms or words used by the parties
Literal meaning controls when language
is clear
Evident intention of the parties prevails
over terms of the contract

Intention based on contemporaneous

and subsequent acts (Art. 1371)
Includes antecedent circumstances
Example : contract is by nature lease by
the contemporaneous/subsequent act of
parties is sale

Special intent vs. general intent (Art. 1372)

In case of conflict, special intent prevails

Stipulation with several meanings (Art. 1373)

understood as bearing that import which

is most adequate to render it effectual

Various stipulations of a contract (Art. 1374)

shall be interpreted together, attributing

to the doubtful ones that sense which
may result from all of them taken jointly
Example: a contract of lease provides:
Sub-lease is not allowed;
In case of violation, additional rent shall
be paid

usage or custom (Art. 1376)

Used in the interpretation of the
ambiguities of a contract, and shall fill
the omission of stipulations which are
ordinarily established

Obscure words (Art. 1377)

shall not favor the party who caused the
obscurity
Applicable in a contract of adhesion

Rules in doubts impossible to settle (Art. 1378)

Gratuitous contracts: the least

transmission of rights and interests shall
prevail
Onerous contracts: favor of the greatest
reciprocity of interests
Principal object of contract: if cannot be
resolved, the contract shall be null and
void