CHAPTER III

FORM OF CONTRACTS

Prepared by: Rhea Mae Concepcion

BSBA-Student

ARTICLE 1356
Contracts shall be obligatory, in whatever
form they may have been entered into, provided
all these 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 a certain way, that requirement is
absolute and indispensable. In such cases, the
right of the parties stated in the following article
cannot be exercised. (1278a)

MEANING OF CONTRACTS
The form of a contract refer to the manner
in which a contract is executed or manifested.
The contract may be oral, or in writing, or
partly oral and partly writing. If in writing, it may
be in public or a private instrument.

WHEN CONTRACTS CONSIDERED

IN WRITING FORM
It is generally recognized that to be a written
contract, all its terms must be in writing. So a
contract partly in writing and partly in oral is, in
legal effect, an oral contract. (12 Am. Jur. 550;
Manuel vs. Rodriguez, 109 Phil.)

CLASSIFICATION OF CONTRACTS
ACCORDING TO FORM
they are:
1. Informal or Common contract or that
which may be entered into in whatever form
provided all the essential requisites for their
validity re present. (Art. 1356.) This refers
only to consensual contracts (Art. 1356.),
such as the contracts of sale. An informal
contract may be oral or written; and
2. Formal or solemn contracts or that which
is required by law its efficacy to be in a
certain specified form.

RULES REGARDING FORM OF

CONTRACTS.
1.

General rule contracts are binding and,

therefore, enforceable reciprocally by the
contracting parties, whatever may be the
form in which the contract has been entered
into, provided all the three essential
requisites (consent, object, and cause) for
their validity are present.

2. Exceptions.- the form, however , is required in the

following cases:
a. when the law requires that a contract be in some
form to be valid.
b. when the law requires that a contract be in some
form to be enforceable or provide in a certain way; or
c. when the law requires that a contract be in some
form for the convenience of the parties or for the
purpose of affecting third person. (Art. 1356)

FORM FOR VALIDITY OF

CONTRACTS
There are rare cases when the law requires
that a contract be in a certain form for the
validity of the contract.
EXAMPLES:
1. Donation of real property. I must be in
public instrument. (art. 749.)
2. Donation of personal property the
value of which exceeds 5,000.00.- donation
and acceptance must be in writing. (art. 748.)

3. Stipulation to pay interest.- it must be in

writing otherwise, no interest is due. (Art. 1956.)
4. Contracts of partnership.- if immovable
are contributed, it must be in public instrument
to which shall be attached a signed inventory of
the immovable property contributed. (Art, 1771,
1773.)

FORM OF ENFORCEABLE OF
CONTRACTS
In the cases of contracts by the statute of
Frauds, the law requires that they be in writing
subscribed by the party charged or by his agent.
(Art. 1403[2].) If the contract is not in writing, the
contract is valid (assuming all the essential
elements are present) but it cannot be proved and,
therefore, it cannot be enforced unless it is ratified.
(Art. 1405.)
Unenforceable contracts are discussed under
Chapter 8.

ARTICLE 1357
If the law requires a document or other
special form, as in the acts and contracts
enumerated in the following article, the
contracting parties may compel each other
to observe that form, once the contract has
been perfect. This right may be exercised
simultaneously with the action upon the
contract. (1279a)

FORM FOR THE CONVENIENCE

OF THE PARTIES
In certain cases, a certain form (e.g., public
instrument) is required for the convenience of
the parties in order that the contract may be
registered in the proper registry to make
effective, as against third persons, the right
acquired under such contract. Non- compliance
with the required form would not adversely
affect the validity nor the enforceable of the
contract between the parties themselves.

As between the parties, the form is not

indispensable since they are allowed by law to
compel the other to observe the proper form
and this right may be exercised simultaneously
with the action to enforce the contract. It is
essential, however, before a party may be
compelled to execute the required form, that
the contract be both valid and enforceable.
(see Dauden Hernaez vs. De Los Angeles, 27
SCRA 1276.)

EXAMPLES:
1. R donated real property to E in a private
instrument. The donation is void because a
donation of real property is required to be in a
public instrument to be valid.
Hence, Article 1357 does not apply.

2. Suppose the contract is a sale of real property

but it is entered into orally. The contract is valid
but is unenforceable because the law requires
that it be in writing to be enforceable. (Art.
1403[2, e].)
Hence, Article 1357 ill not also apply.
If the price has been paid or the property has
been delivered, the contract is valid and
enforceable because the statute of frauds (ibid.)
applies only to executory contracts.
An exchange of land is valid although not in
writing.

3. If the contract of sale is in private writing, then it

is valid and binding, although it is still executory,
but only as between the parties and not as
against third persons without notice until the sale
is registered in the Registry of Property.
If E is the vendee, he has a right to compel R
to put the contract in a public instrument so that it
can be registered to affect third persons, event in
the absence of express agreement between them
to the effect. In as much as the contract is both
valid and enforceable, the execution of a public
instrument becomes a mere matter of form and
convenience.

ARTICLE 1358
The following must appear in a public
document:
1. Acts and contract which have for their
object,
the
creation,
transmission,
modification or extinguishment of real rights
over immovable property; sales property or
of an interest therein are governed by
articles 1403, No. 2, and 1405.

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. All cession of actions or rights proceeding
from act appearing in a public document.

All other contracts where the amount

involved exceeds Five hundred pesos must
appear in writing, even a private one. But
sales of goods, chattels or things in action
are governed by articles 1403 No. 2 and 1405
(1280a)

CONTRACTS WHICH MUST APPEAR

IN THE PUBLIC DOCUMENT
The contracts covered by this article are valid
and enforceable though not contained in a public
document or instrument or in writing. The public
document is required only for the convenience
and greater protection of the parties and to make
the contract binding as against third person.
In other words, the law does not require
accomplishment of certain acts or contracts in
public instrument in order to validate the acts or

Contract but only to insure its efficacy so that

after the existence of the act or contract has been
admitted, the party bound may be ordered by the
court in which the action or suit is field to execute
the document.

EXAMPLES:
1.

2.

Creation, etc., of real rights over immovable

property. As security of his debt, d mortgaged
his land to C. This mortgage must appear in a
public document. The extinguishment of the
mortgage, upon payment of the debt by D, must
likewise appear in a public document. Sales of
real property or an interest therein are governed
by the Statute of Frauds. (Art. 1403[2].)
Cession or renunciation of hereditary rights
or those of conjugal partnership of gains. X
and Y are the heirs of Z, their deceased father X,
being financially stable, renounces his share in
the inheritance. This renunciation must appear in
a public instrument.

3.

4.

Power of administer property. P is

leaving for the United State to study for two
years. He appoints A, agent, to manage his
property. In this case, the authority of A to
administer the property of P must appear in a
public instrument.
Cession of actions of rights. D mortgage
his land to C to secure the payment of a
debt. This mortgage appears in a public
document. The decision by C of his right, as
mortgagee, to T must also be in a public
document.

CHAPTER IV
REFORMATION OF
INSTRUMENT

ARTICLE 1359
When, there having been a meeting of the
minds of the parties to a contract, their true
intention is not expressed in the instrument
purporting to embody the agreement, by reason of
mistake, fraud, inequitable conduct or accident
one of the parties may ask for the reformation of
the instrument to the end that such true intention
may be expressed.
If mistake, fraud, inequitable conduct, or
accident has prevented a meeting of the minds of
the parties, the proper remedy is not reformation
of the instrument but annulment of the contract.

MEANING OF REFORMATION
Reformation is the remedy allowed by law by
means of which a written instrument is
amended or rectified so as to express or
conform to the real agreement or intention of
the parties when by reason of mistake, fraud,
inequitable conduct, or accident, the instrument
fails to express such agreement or intention.

REASON FOR REFORMATION

Equity order the reformation of an instrument in order
that the intention of the contracting parties may be
expressed.
The courts doo not attempt to make another contract
for the parties. The rationale of the doctrine is that it would
be unjust and inequitable to allow the enforcement of a
written instrument which does not reflect or disclose the
real meeting of the minds of the parties. The rigor of the
legalistic rule that the written instrument should be the
final and inflexible criterion and measure of the rights and
obligations of the contracting parties is thus tempered, to
forestall the effects of mistake, fraud, inequitable conduct
or accident.

REQUISITES
REFORMATION

OF

In order that reformation may be availed of

as remedy, the following requisites must be
present.
1. There is meeting of the minds of the parties
to the contract.
2. The written instrument does not express the
true agreement or intention of the parties.
3. The failure to express the true intention is
due to mistake, fraud, inequitable conduct
(i.e., any act or omission which is unjust or
unfair), or accident;

4.

5.

The facts upon which relief by way of

reformation of the instrument is sought are
put in issue by the pleadings; and
There is clear and convincing evidence
(which is more than mere preponderance or
evidence) of the mistake, fraud, inequitable
conduct, or accident.

REFORMATION DISTINGUISHED
FROM ANNULMENT
In reformation, there has been a meeting of
the minds of the parties (Art. 1359, par. 1.);
hence, a contract exists but the written
instrument purporting to embody the contract
does not express the true intention of the
parties by reason of mistake, fraud, inequitable
conduct, or accident.
In annulment, there has been no meeting of
the minds, the consent of one of the parties
being vitiated by mistake, etc. (ibid., par. 2.)

EXAMPLE:
S sold his land to B. It was agreed that the sale will
include all the improvement. However, the contract as
signed by the parties, states that land is being sold
excluding the improvements thereon. In this case, the
remedy is reformation because there has been a
meeting of the minds.
If S was selling his land excluding the
improvements and B was buying his land including
the improvements, then, there has been no meeting
of the minds and the remedy, therefore, is annulment.
Reformation cannot be the remedy because, either
way, it would not make the instrument express the
real intention of the both parties.

ARTICLE 1360
The principles of the general law on the
reformation of instruments are hereby
adopted insofar as they are not in conflict
with the provisions of this code.

PRINCIPLES OF THE GENERAL

LAW OF REFORMATION
In case of conflict between the provisions of
the New Civil Code and the principles of the
general law on reformation, the former prevails.
The latter have only suppletory effect.

ARTICLE 1361
When a mutual mistake of the parties
causes the failure of the instrument to
disclose
their
real
agreement,
said
instrument may be reformed.

MUTUAL MISTAKE AS BASIS

FOR REFORMATION
Mutual mistake is mistake of fact that is
common to both parties of the instrument which
causes the failure of the instrument to express
their true intention.

To justify reformation under this article, the

following requisites must concur:
1.
2.
3.
4.

The mistake must be of fact ( see Art. 1331.);

Such mistake must be proved by clear and
convincing evidence;
The mistake must be mutual, that is, common
to both parties to the instrument; and
The mistake must cause the failure of the
instrument to express their true intention.

If the mutual mistake is of law, the remedy is

annulment. ( see Art. 1334.)

EXAMPLE:
S and B entered into a contract whereby S
sold to B his horse named Silver. By mistake,
the contract as written and signed by the parties
states that the horse sold is Golden.
Here, the instrument may be reformed on
the ground of mutual mistake.

ARTICLE 1362
If one part was mistake and the other
acted fraudulently or inequitable in such a
way that the instrument does not show their
true intention, the former may ask for the
reformation of the instrument.

MISTAKE ON ONE SIDE, FRAUD OR

INEQUITABLE CONDUCT ON THE
OTHER

Under Article 1362, the right to ask for

reformation is granted only to the party who was
mistake in good faith. Here, the mistake is not
mutual.

ARTICLE 1363
When one party was mistake and the
other knew or believed that the instrument
did not state their real agreement, but
concealed that fact from the former, the
instrument may be reformed.

CONCEALMENT OF MISTAKE
BY THE OTHER PARTY
The remedy of reformation may be availed of
the party who acted in good faith. The
concealment mistake by the other party
constitutes fraud.

ARTICLE 1364
When through the ignorance, lack of skill,
negligence or bad faith on the part of the
person drafting the instrument or of the
clerk or typist, the instrument does not
express the true intention of the parties, the
courts may order that the instrument be
reformed.

IGNORANCE, ETC. ON THE

PART OF THIRD PERSON
Under the above Article, neither party is
responsible for the mistake. Hence, either party
may ask for reformation.

ARTICLE 1365
If two parties agree upon the mortgage or
pledge of real or personal property, but the
instrument states that the property is sold
absolutely or with a right or repurchase,
reformation of the instrument is proper.

MORTGAGE OR PLEDGE
STATED AS A SALE
Under this Article, the reformation of the
instrument is proper; otherwise, the true
intention of the parties would be frustrated.
Such true intention must prevail for the contract
must be complied with in good faith. (Art. 1159)

ARTICLE 1366
There shall be no reformation in the
following cases:
1.
2.
3.

Simple donations inter vivos wherein no

condition is imposed;
Wills;
When the real agreement is void.

ARTICLE 1367
When one of the parties has brought an
action to enforce the instrument, he cannot
subsequently ask for its reformation.

CASES WHEN REFORMATION

NOT ALLOWED
1.

Simple donations inter vivos no

condition is imposed Donation is an act
of liberality whereby a person disposes
gratuitously of a thing or right in favor of
another, who accept it. (Art. 725.) When the
donor intends that the donation shall take
effect during his lifetime, it is a donation inter
vivos. It is distinguished from donation
mortis causa in that this kind of donation
takes effect after the donors death.

a.

b.

In donation, the act is essentially gratuitous

and the donee has, therefore, no just cause
for compliant. The donor is not bound to
correct a mistake or defects in the deed of
donation which in the first place he was not
bound to make. Of course, the donor may
ask for the reformation of a deed of
condition.
If the donation is conditional or is onerous in
character, the deed may be reformed so that
the true conditions imposed by the donor or
the real intention of the parties might be
expressed.

Wills A will is an act whereby a person is

permitted with the formalities prescribed by
law to control to a certain degree the
disposition of his estate, to take effect after
his death. (Art. 783.)
Like a donation, the making of a will is a
strictly personal and a free act (Art. 784, 839.);
hence, upon the death of the testator, the right
to reformation is lost. Furthermore, a will may
be revoked by the testator any time before his
death. (Art. 820.)
2.

3.

4.

When the agreement is void If the real

agreement is void, there is nothing to
reformed. Reformation would be useless
because the real agreement being void, it is
unenforceable.
When the party has brought an action to
enforce the instrument Article 1367 is
based on estoppel (Art. 1413) or ratification.
(see Arts. 1392, 1396.) When the party
brings an action to enforce the contract, he
admits its validity and that it expresses the
true intention of the parties. The bringing of
the action is thus inconsistent with
reformation.

ARTICLE 1368
Reformation may be ordered at the
instance of either party or his successors in
interest, if the mistake was mutual;
otherwise upon petition of the injured party,
or his heirs and assigns.

PARTLY ENTITLED TO
REFORMATION
The above article enumerates the persons who
can bring an action to reform an instrument.
1.

2.

3.

Either of the parties, if the mistake is mutual

under Articles 1361, 1364, and 1365;
In all other cases, the injured party, under Articles
1362, 1363, 1364 and 1365; and
The heirs or successors in interest, in lieu of the
party entitled. (Art. 1368.)

The effect of reformation is retroactive from the

time of the execution of the original contract.

ARTICLE 1369
The procedure for the reformation of
instruments shall be governed by rules of
court to be promulgated by the Supreme
Court.

PROCEDURE FOR
REFORMATION
The rules of Court governed procedure.
However, the Supreme Court has not as yet
promulgated the procedure for the reformation
of instrument. (see Sec. 7, Rule 130, Rules of
Court.)