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

MUST NOT BE IMPOSSIBLE
Impossibility may be: (Art. 1348)
1) Physical when the thing or service in the
very nature of the things cannot exist (ex.
monkey that talks) or be performed.
Impossibility of Services:
a) Absolute
- When the act or service in itself, without
considering the person of the obligor,
becomes impossible;
- when act cannot be done in any case so
that nobody can perform it (ex. fly like a
bird)
- arises from the nature or essence of the
act or service itself
- void contract
b) Relative
1. when it arises from the special
circumstances of the case
(Ex. to make payment to a dead
person) or
2. the special conditions or
qualifications of the obligor/
when the act or service cannot be
done by the debtor himself, but it
can be accomplished by others;
(Ex. blind person to paint a portrait,
when the debtor becomes so
seriously ill that he cannot perform
the stipulated act or service,
although it can be done by anybody
else
- If temporary impossibility not void
contract, such as when a partner agrees
to contribute to the partnership an
amount more than is permissible by his
means;
- if permanent impossibility void
contract, such as blindness in contracts
which required the use of eyesight
2) Legal when thing or service is contrary to
morals, good customs, public order, public
policy.
a) forbidden by a penal law (ex. to sell
shabu) or
b) rule of law makes it impossible to be
done (ex. to make valid donation of real
property w/o public instrument, to make
a valid will where testator is under 18)
- Things are impossible when they are
not susceptible of existing, or they are
outside the commerce of man.
- Personal services or acts are impossible
when they are beyond the ordinary
strength or power of man.
- The impossibility must be actual and
contemporaneous with the making of
the contract, and not subsequent
thereto
The impossibility, therefore, must be
absolute, not relative, and must be
determined objectively, and not in relation to
the debtor personally, with rare exceptions
Liability for Damages
- When the object is impossible, the
contract is void and inexistent; hence,
it cannot give rise to any juridical
relation
- If the obligor/debtor knew of the
impossibility, or could have known of it,
his bad faith or negligence makes him
liable for damages.
- The amount of damages, however, will
be limited in this case to the losses the
creditor may have suffered by having
relied on the contract; he cannot
recover all the damages arising from
non-performance of the contract
- But if the debtor is also ignorant of the
impossibility, and his ignorance thereof
is justifiable, or unavoidable, the reason
for his responsibility ceases, and he
cannot be held liable for the damages
suffered by the creditor
- There is no liability for damages if both
parties have knowledge of the
impossibility
Partial Impossibility
If the thing is partly possible and partly
impossible, the effect will depend upon the
divisibility of the thing.
- If it is indivisible, by its nature or by the
intention of the parties, there is no
contract; the consent would be wanting,
because it was either for the whole
obligation or for none at all.
- If the thing is divisible, then the
contract is valid to the extent that it is
possible
Difficulty of Performance
 Impossibility of performance should not be
confused with mere difficulty. It is elemental
that the law requires parties to do what they
agreed to do. If a party charges himself with
an obligation difficult of performance, he
must abide by it. A showing of mere
inconvenience, unexpected impediments, or
increased expenses is not enough to relieve
him of the obligation.
- The debtor who does not perform in
such cases must be held liable for
damages
But if the obstacles to the performance of
the prestation are so great that they can
only be overcome with sacrifices which
are absolutely disproportionate, the
prestation must be considered impossible,
taking into account the rational, ethical, and
economic considerations in the light of the
presumed intention of the parties and of
good faith
Thus, one may not obligate himself to do
something which, when accomplished, will
prove to be dangerous to life and
property. It is contrary to law and public
policy to force the performance of a contract
that is undesirable and harmful
Ex. Impossible
- Fly like a bird
- Prohibited drugs ad all illicit objects
- To kill a person
- To get soil from Jupiter
- To construct a building in 1 day
MUST BE IN EXISTENCE OR CAPABLE
OF COMING INTO EXISTENCE
SUBSEQUENT TO THE CONTRACT
The object of a contract should be in
existence at the moment of the
celebration of the contract, or at least, it
can exist subsequently or in the future.
GR: Future Things can be Object of Contracts
- Future things - those which do not
belong to the obligor at the time the
contract is made; they may be made,
raised, or acquired by the obligor after
the perfection of the contract
- The term future things includes not
only material objects but also future
rights.
When the contract involves future things, it may
either be:
1) conditional, or subject to the coming into
existence of the thing, or
2) aleatory, or one of the parties bears the
risk of the thing never coming into
existence
Ex. Future things or rights
- things to be manufactured, raised, or
acquired after the perfection of the
contract such as wine that a vineyard
expected to produce
- rice to be harvested next harvesting
season
- wool that shall thereafter grow upon a
sheep, eggs that hens may lay, young
animals not yet in existence
- author may assign the royalty which he
expects to receive from his publisher
XPN: Future inheritance any property or right
in existence or capable of determination at the
time of the contract that a person may inherit in
the future, such person having only an
expectancy of a purely hereditary right. The
inheritance ceases to be future upon the death
of the deceased.
Requisites in order to fall in the prohibition:
1. that the succession has not yet been
opened,
2. that the object of the contract forms part of
the inheritance,
3. that the promisor has, with respect to the
object, an expectancy of a right is purely
hereditary in nature
VOID BEC. FUTURE INHERITANCE-
1. An agreement for the partition of the
estate of a living person, made between
those who, in case of death, would be in
a position to inherit from him is VOID
2. And a contract renouncing the right to
inherit from one who is still alive is VOID
After the death of a person, however, the
properties and rights left by him by way
of inheritance can be the subject-matter
of a contract among or by his heirs, even
before a partition thereof has been made,
because the rights of the heirs are
transmitted to them from the moment of
death of the predecessor
XPN TO THE XPN:
 1) Art. 130 of the Family Code - allows
the future spouses to give or donate to
each other in their marriage settlement
their future property to take effect upon
the death of the donor and to the extent
laid down by the provisions of the NCC
relating to testamentary succession;
2) Art. 1080 of the Code - allows a person
to make a partition of his estate among
his heirs by an act inter vivos, provided
that the legitime of the compulsory heirs
is not prejudiced
When the object of the contract is not a part
of the inheritance, the prohibition does
not apply, even if the delivery of such object
is dependent upon the death of one of the
contracting parties.
- Thus, life insurance contracts, and
stipulations providing for reversion of
property donated in marriage
settlements in the event of the death of
the done, are valid
MUST BE DETERMINATE AS TO ITS KIND
OR DETERMINABLE W/O THE NEED OF
A NEW CONTRACT BETWEEN THE
PARTIES
Determination of Kind:
- The object of the contract need not be
individualized; but it must be
determinate as to its kind or species
- But if the object is merely something or
an animal, the species is not
determined, and the contract would be
void
- The thing must have definite limits, not
uncertain or arbitrary
- the genus of the object should be
expressed although there might be no
determination of the individual specie
- The fact that the quantity is not
determinate shall not be an obstacle to
the existence of the contract, provided
it is possible to determine the same,
without the need of a new contract
between the parties.
Determination of Quantity
- Sufficient that it is possible to determine
the same w/o need of a new contract
bet. parties
- The quantity of the object may be
indeterminate, so long as the right of the
creditor is not rendered illusory. Its
future determination must, however,
depend upon circumstances already
provided in the contract itself
- The fact that the quantity is not
determinate shall not be an obstacle to
the existence of the contract, provided it
is possible to determine the same,
without the need of a new contract
between the parties.
- Ex. S sold to B all chickens in the
poultry. Object determinate but
quantity not yet determined can be
ascertained w/o entering in new contract
- S binds himself to deliver 1 of carabaos
to B. Object is determinate w/o need of
new contract. It becomes determineate
the moment it is delivered.
- If subject of agreement is parcel of land
owned by S but he owns many lands
void contract if the particular land sold
cannot be determined w/o new or further
agreement
Ex. Determinable Things
- All cavans of rice in a bodega
- All the eggs in the basket
- My land with the smallest area
- Land at the corner of the particular
street
IT MUST BE LICIT, OR NOT CONTRARY
TO LAW, MORALS, GOOD CUSTOMS,
PUBLIC POLICY, OR PUBLIC ORDER
- The contract is void if at the time it is
entered into, the object is contrary to law
or morals. The law violated need not be
penal in nature; it is enough that it be
mandatory or prohibitive
GR: All things or services may be the object of
contracts.
XPNs:
1) Things outside the commerce of men
- all kinds of things and interests
whose alienation or free
exchange is restricted by law or
stipulation, which parties cannot
modify at will
2) Intransmissible rights;
3) Future inheritance, except in cases
expressly authorized by law
4) Services which are contrary to law,
morals, good customs, public order or
public policy;
5) Impossible things or services; and
 6) Objects which are not possible of
determination as to their kind.
EMPTIO SPEI
- Sale of an expectancy or hope
- Validity of sale depends upon the object
materializing
- If it does not materialize void because
it becomes contract without an object
- Object need not materialize for sale to
be valid
EMPTIO REI SPERATI
- Sale of a future thing
- Distinguish between vain hope and one
which comes into existence
- If it will never materialize contract void
- Potential existence is an indispensable
requirement so that the validity of
contract depends upon the object
coming into existence
SECTION 3. - Cause of Contracts
Art. 1350. In onerous contracts the cause is
understood to be, for each contracting party, the
prestation or promise of a thing or service by the
other; in remuneratory ones, the service or
benefit which is remunerated; and in contracts
of pure beneficence, the mere liberality of the
benefactor.
CAUSE OR CONSIDERATION compelling
reason that compelled you to enter into a
contract
- The WHY of the contract
- juridical reason why the parties entered
into the contract
- Essential reason which moves the
contracting parties to enter into a
contract.
- Immediate, direct, or most proximate
reason which explains & justifies the
creation of the obligation through the will
of the contracting parties.
REQUISITES OF A CAUSE (ELT)
1. The cause should be in existence at the
time of the celebration of the contract.
2. The cause should be licit or lawful
3. the cause should be true
KINDS OF CAUSE
1. Onerous contracts the prestation or
promise of a thing or service by the other.
2. Remuneratory contracts the service or
benefit remunerated or compensated;
3. Pure Beneficence/ Cause of gratuitous
contracts the mere liberality of the donor
or benefactor.
4. Accessory identical with cause of
principal contract, the loan which it derived
its life and existence (e.g.: mortgage or
pledge)
ONEROUS CONTRACTS
The cause do not need to be adequate or an
exact equivalent in point of actual value,
especially in dealing with objects which have
a rapidly fluctuating price.
- Thus, a consideration of P1 is just as
effectual and valuable consideration, if
stipulated in good faith, and in the
absence of fraud, as a larger sum
Cause:
Natural Obligation
- Where the cause is a natural obligation,
or one of conscience, there is a
sufficient cause to sustain an
onerous contract; and the cause will
not be one of mere liberality
Moral obligation arising wholly from ethical
considerations not constituting a natural
obligation, is not a sufficient cause for
onerous contracts
GR: When a moral obligation arises wholly
from ethical considerations, unconnected with
any civil obligation and as such, is not
demandable in law but only in conscience
NOT a sufficient cause or consideration
supporting an onerous contract.
XPN: Moral obligation based upon a previous
civil obligation which has already been barred
by the statute of limitations at the time when the
contract is entered into, it constitutes a
sufficient cause or consideration to support
said contract
MUTUAL PROMISES
A promise made by one party, if made in
accordance with the forms required by law,
may be a good cause or consideration for a
promise made by the other party.
- In other words, the consideration or
cause need not pass from one to the
other at the time the contract is entered
into
ACCESSORY CONTRACTS
A person may secure the performance of
anothers contract, either by:
a) Acting as surety on a bond
GR: the cause or consideration, generally, is no
other, as in all contracts of pure beneficence,
than the liberality of the benefactor.
XPN: a bond may be given for some other
consideration, according to the agreement and
free stipulation of the parties, which may be, as
in onerous contracts, something remunerative
stipulated as an equivalent given by the
beneficiary of the bond of to the bondsman or
surety
b) By giving his property by way of mortgage
to secure such persons contract.
- It has been held that, as a mortgage is
an accessory contract, its cause or
consideration is the very cause or
consideration of the principal
contract, from which it receives its life,
and without which it cannot exist as an
independent contract, although it may
secure an obligation incurred by
another.
COMPLEMENTARY CONTRACTS
CONSTRUED TOGETHER DOCTRINE
- The cause of the accessory contract is
identical with that of the principal
contract.
- An accessory contract must be
interpreted with its principal contract.
- The provisions must be construed
together to arrive at their true meaning.
Certain stipulations cannot be
segregated and then made to control.
- This doctrine closely adheres to the
spirit of Art. 1374 of the Civil Code which
states that the various stipulations of a
contract shall be interpreted together,
attributing to the doubtful ones that
sense which may result from all of them
taken jointly
ACCOMMODATION PARTIES;
Accommodation party - one who has
signed the instrument as maker, drawer,
acceptor, or indorser, w/o receiving value
therefor, and for the purpose of lending his
name to some other person
Where 1 of the signers of a joint and several
promissory note affixes his signature for the
accommodation of a co-maker and a 3rd
person and advances the face value of the
note to the accommodated party at the time
of the creation of the note = the
consideration for the note, as regards both
makers, if the money was advanced to the
accommodated party; and it cannot be said
that the note is lacking in consideration
as to the accommodating party because
he himself received none of the money. It
is enough that value was given for the note
at the time of its creation
REMUNERATORY CONTRACTS
Remuneratory contract - one where a party
gives something to another because of
some service or benefit given or rendered by
the latter to the former, where such service
or benefit was not due as a legal obligation
One in which one of the contracting parties
compensates the service or benefit rendered
by the other party, although such service or
benefit does not constitute a demandable
debt.
GRATUITOUS CONTRACTS
Gratuitous contracts - essentially
agreements to give donations.
- The generosity or liberality of the
benefactor is the cause in such
contracts.
- For this reason, a voluntary
conveyance, w/o any valuable
consideration whatever, is good as
between the parties and cannot be
set aside, unless made in fraud of
existing creditors.
Art. 1351. The particular motives of the parties
in entering into a contract are different from the
cause thereof.
CAUSE VS MOTIVE
Motive: Something that is incidental; it has
nothing to do with the perfection or validity of the
contract
Motive predetermines the contract
The motives of the contracting parties are as
different or complex and as capable of
infinite variety as the individual
circumstances which may move men to
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
incurred in a prohibited game or a game
of chance, and no proof of the nature of
the game, the law presumes that the cause
or consideration is licit
INADEQUACY OF CAUSE
GR: contract is not subject to annulment;
XPN: in cases provided by law, such as Art.
1381 (Rescissible Contracts) the lesion is a
ground for rescission of the contract
Gross inadequacy - naturally suggests fraud and
is evidence thereof, so that it may be sufficient to
show it when taken in connection with other
circumstances.
- But the fact that the bargain was a hard
one, coupled with mere inadequacy of
price, when both parties are in a portion
to form an independent judgment
concerning the transaction, is not
sufficient ground for the cancellation
of a contract. Where also, a
compromise of doubtful rights is
voluntary and there is no fraud or
imposition, it will be upheld, however,
disadvantageous
RULES RELATING TO CAUSE ON
CONTRACTS
1. Absence of cause
- Confers no right and produces no legal
effect.
2. Failure of cause
- Does not render the contract void
3. Illegality or Unlawful cause
- Contract is null and void.
4. Falsity of cause
- Contract is void; unless the parties show
that there is another cause which is true
and lawful.
5. Lesion or inadequacy of cause
GR: the contract is not subject to annulment
XPN:
a) there is fraud, mistake, or undue influence;
b) when the parties intended a donation or
some other contract; or
c) in cases specified by law
- (e.g. contracts entered by guardian when
ward suffers lesion of more than 25% and
with court approval, otherwise, if there is no
approval, the contract is void regardless of
the amount of lesion).
Voidable contract if any of the 3 is
present
DISTINGUISHED FROM OBJECT
Object - Thing, service, or right one party
expects to deliver or perform
Cause - That which the party expects to
receive or enjoy
- No confusion between the object and
the cause in remuneratory and
gratuitous contracts.
- But a confusion may arise in onerous
contracts, or contracts giving rise to
reciprocal or bilateral obligations
The subject-matter or object in:
Onerous contracts - the thing, service or act,
which forms the basis of the entire contract,
the starting point of agreement, w/o which
the negotiations or bargaining between the
parties would never even have begun.
Thus, while the object of the onerous
contract is the same as to both parties and
determined irrespective of them, the cause
is different with respect for it is the
impelling or essential reason for his
entering into the contract
DISTINGUISHED FROM CONSIDERATION
- Applied to contracts, cause represents,
the why of contracts, the essential
reason which impels the contracting
parties to celebrate the contract.
Consideration - in its widest sense is the
reason, motive, or inducement, by which a
man is moved to bind himself by an
agreement. It is not for nothing that he
consents to impose an obligation upon
himself, or to abandon or transfer a right
- The concept of consideration is
narrower than that of cause
Cause - never rejects any cause as
insufficient. Whatever inducement is
sufficient to satisfy the parties, is sufficient to
satisfy the law, even though it is nothing
more than the causa liberalities of a
voluntary gift.
In other words, while consideration requires
a legal detriment to the promisee which
must be more than a moral duty, cause
need not be material at all, and may
consist in a moral satisfaction for the
promissor
 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
survived by his heirs - heirs may be
compelled to execute the proper documents.
They are not 3rd parties, and they succeed to
whatever interest their predecessor may
have in the property covered by the contract.
All of the heirs, however, must be made
parties to such an action
WRITING NOT FOR VALIDITY;
Art. 1358 enumerates the certain contracts
that must appear in public or private
documents. This provision does not require
such form in order to validate the act or
contract but to insure its efficacy.
The reduction to writing in a public or private
document, required by this article, is not an
essential requisite for an existence of the
contract, but is simply a coercive power
granted to the contracting parties by which
they can reciprocally compel the
observance of these formal requisites.
GR: Contracts enumerated by Art. 1358 are,
therefore, valid as between the contracting
parties, even when they have not been reduced
to public or private writings.
XPN: where public instruments and
registration are required for the
validity of the contract itself, the
legalization of a contract by means of a
public writing and its entry in the register
are not essential solemnities or
requisites for the validity of the contract
as between the contracting parties, but
are required for the purpose of
making it effective as against 3rd
persons
Note: Formality is an essential element, without
which, the contract is void
FORMALITIES REQUIRED IN SPECIFIC
CONTRACTS
1. Donations
a) Personal property- if value exceeds
5,000, the donation and acceptance
must both be written (Art. 748, NCC).
b) Real property:
i. Donation must be in a public
instrument, specifying therein the
property donated and value of
charges which donee must satisfy.
ii. Acceptance must be written, either
in the same deed of donation or in a
separate instrument.
iii. If acceptance is in a separate
instrument, the donor shall be
notified thereof in authentic form,
and this step shall be noted in both
instruments (Art. 749, NCC).
2. Partnership where real property
contributed
a) There must be a public instrument
regarding the partnership;
b) The inventory of the realty must be
made, signed by the parties and
attached to the public instrument (Art.
1773, NCC)
3. Antichresis - the amount of the principal
and interest must be in writing (Art. 2134,
NCC)
4. Agency to sell real property or an interest
therein - authority of the agent must be in
writing (Art. 1874,NCC).
5. Stipulation to charge interest - interest
must be stipulated in writing (Art. 1956,
NCC).
6. Stipulation limiting common carrier's
duty of extraordinary diligence to
ordinary diligence:
a. must be in writing, signed by shipper or
owner
b. supported by valuable consideration
other than the service rendered by the
common carrier
c. reasonable, just and not contrary to
public policy (Art. 1744, NCC).
7. Chattel mortgage - personal property must
be recorded in the Chattel Mortgage
Register (Art. 2140, NCC).
CONTRACTS WHICH MUST BE IN WRITING
TO BE VALID
1. Donation of personal property whose
value exceeds P5000 the donation and
acceptance must be in writing
2. Sale of a piece of land or any interest
therein through an agent (Art. 1874, NCC)
the authority of the agent shall appear in
writing
3. Agreements regarding payment of interest
in contracts of loan (Art. 1956, NCC)
4. Antichresis the amount of the principal
and the interest shall be specified in writing

CONTRACTS WHICH MUST APPEAR IN A
PUBLIC DOCUMENT
1. Donation of real properties (Art. 719, NCC);
2. Partnership where immovable property or
real rights are contributed to the common
fund (Arts.1171 & 1773, NCC);
3. Acts and contracts which have for their
object the creation, transmission,
modification or extinguishment of real
rights over immovable property; sale of
real property or of an interest therein is
governed by Arts. 1403, No. 2, and 1405
(Art. 1358 (1), NCC);
4. The cession, repudiation or renunciation
of hereditary rights or of those of the
conjugal partnership of gains (Art. 1358 (2),
NCC);
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).
purchasers and person on whose account
the sale is made, it is a sufficient
memorandum
5. An agreement for the leasing for a longer
period than one year, or for the sale of real
property or of an interest therein;
6. A representation to the credit of a 3rd
person
RA 8792 (E-COMMERCE ACT)
- Formal requirements to make contracts
effective as against 3rd persons and to
establish the existence of a contract are
deemed complied with provided that the
electronic document is unaltered and
can be authenticated as to be useable
for future reference

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