RUCHELLE ANN A.

GALAMGAM
 To begin with, our laws defined Contracts as “a meeting of minds between two persons whereby
one binds himself with respect to the other, to give something or to render some service. It is the
agreement of two or more persons for the purposes of creating, modifying, or extinguishing a juridical
relation between them.

However, it is important to know that not all agreement may be considered as valid and binding
contracts. For a contract to be valid, the essential elements provided by law must be exist. In other
contracts, the law requires form for its validity, enforceability and for the convenience of the parties
and to bind third persons and it is called as Solemn Contracts.

The form of a contract, its substantial purposes, its effects and other concepts of a contract will
be tackled in this Paper.
 In the matter of formalities, the contractual system of our civil code still follows that of Spanish
Civil Code of 1889 and of the “Ordenamiento de Alcala” of upholding the spirit and intent of the parties
over formalities; hence, in general, contracts are valid and binding from their perfection regardless of
form whatever they be oral or written. This is plain from articles 1315 and 1356.

Art. 1315. Contracts are perfected bey mere consent, and from that moments the parties are
bound not only to the fulfillment of what has been expressly stipulated but also to all the consequences
which, according to their nature, may be in keeping with good faith, usage and law.

Concordantly, the first part of the 1356 provides:

Art. 1356. Contracts shall be obligatory in whatever form they the y may have been entered
into, provided all the essentials requisites for their validity are present.

Under Article 1358 of the Civil Code, the essential requisites of a contract are normally (1) Consent (2)
Proper Subject matter (3) Consideration or Causa for the obligation assumed.

Moreover, Under the case of Cenido vs. Sta. Ana, Generally, contracts are obligatory, in
whatever form such contracts may have been entered into, provided all the essential requisites for
their validity are present. When, however, the law requires that a contract be in some form for it to be
valid or enforceable, that requirement must be complied with.

The Civil Code admits exception, stated in the second paragraph of Article 1356, which provides:

“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. xxx”

Thus, the general rule that the form (oral or written) is not essential to the binding effect of the
contract between the contracting parties that complies with the three elements however there are
three exceptions establishes by the law.

a) Contracts for which the law itself requires that they be in some particular form in
order to make them valid and enforceable, the “so called solemn contracts”. Of these
the typical examples are:
i. Donation of Immovable property that the law requires to be embodied in
public instrument in order “that donation may be valid,” i.e., existing or
binding.
ii. Other instances are the donation of movables worth more than P5,000 which
must be in writing, other wise the donation shall be void.
iii. Contracts to pay interest on loans (mutuum) that must be “expressly
stipulated in writing”;
 iv. Transfer of large cattle. This requires the transfer of the certificate of
registration.
v. Sale of land thru an agent. Here the authority of the agent must be in writing;
otherwise, the sale is null and void.
vi. Contracts of antichresis. Here the principal loan, and the interest, must be
specified in writing, otherwise. The contract is void.

Under the case of the Shopper’s Paradise Reality & Development Corp. vs. Roque, in
donations of Immovable property, the law requires for validity that is should be
contained in a public document, specifying therein the property donated and the
value of the charges with the done must satisfy. The Civil Code provides, that
however, that “titles and ownership, or the rights over immovable property, which
are not duly inscribed or annotated in the Registry of Property (now Registry of Land
Titles and Deeds) shall not prejudice third persons.” It is enough, between the parties
to a donation of an immovable property, that the donation be made in a public
document but, in order to bind third persons, the donation must be registered in the
registry of Property.

Thus, the failure to put in a public or private document or writing the transactions or matters
enumerated in Article 1358 of the Civil Code will not render the agreement void or invalid. They shall
still be effective as between the parties. The requirement to put the agreement referred under Article
1358 in a public instrument is only for the purpose of greater efficacy of convenience or of binding 3rd
persons.

The Court ruled in the case of Manotok Inc. vs. Court of Appeals, that Article 1358 does not
invalidate the acts or contracts enumerated therein if they are not embodied in public documents. As
one noted civilian has said:

This Article enumerates 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 insure its efficacy. It is
limited to an enumeration of the acts and contracts which should be reduced to writing in a public or
private instrument. The reduction to writing in a public or private document, required in this article, is
not an essential requisite for the existence of the contract, but simply a coercive power granted to the
contracting parties by which they can reciprocally compel the observance of these formal requisites.
Contracts enumerated by this article are, therefore, valid as between the contracting parties, even
when they have not been reduced to public or private writings. Except in certain cases where public
instruments and registration for the validity of the contract itself, the legalization of a contract by
means of a public writing and its entry in register are not essential sometimes, but are require for the
purpose of making it effective as against third persons.
 b) Contracts that the law requires to be proved by some writing (memorandum) of its
terms, as in those covered by the old Statute of Frauds, now Article 1403(2) of the
Civil Code. Their existence not being provable by mere oral testimony, unless wholly
or partly executed), these contracts are exceptional in requiring a writing embodying
the terms thereof for their enforceability by action in court.

Statute of Frauds in Article 1403, Paragraph 2 of the Civil Code requires that certain contracts
be in writing, and that they be signed by all parties to be bound by the contract. Under the case of Diwa
vs. Donato, it is settled that the Statute of Frauds applies only to executory and not to completed,
executed or partially executed contracts. Thus, as early as 1925, the court held that where the land has
been delivered under the oral contract of sale, and the vendees have already Paid part of the purchase
price, the heirs of the vendor cannot invoke that status of frauds in a proceeding where the vendees
seek to have the land registered in their names. Agreements for the sale of real property shall be
unenforceable by action unless the same or some note or memorandum thereof be in writing and
subscribed by the part charged or by his agent. Non-compliance with this provision, while not
invalidating the contract which is not in writing, makes ineffective the action for specific performance.

However, under Article 1403, Contracts infringing the Statute of Frauds are not void; they are
merely unenforceable. The court ruled in the case of Wang vs. Dy, its application is limited. It makes
only effective actions for specific performance of the contracts covered by it; it does not declare them
absolutely void and of no effect. Asp explicitly provided under the Second paragraph of Article 1403 of
the Civil Code, the contracts concerned are simply “unenforceable” and the requirement that they or
some note or memorandum thereof be in writing refers only to the manner they are to be proved. It
goes without saying then, as held in the early case of Almirol, et al. vs Monserret, that the Statute of
Frauds will apply only to executory rather than executed contracts. Partial execution is even enough to
bar the application on the statute.

In other words, a party to a contract that would otherwise be invalid under a Statute of Frauds
will nonetheless be able to enforce it, on the basis of partial performance. Where partial performance
exists, a party who has accepted partial performance by another party under the contract will typically
be barred from asserting the Statute of Frauds in order to avoid meeting its own contractual obligations.

In the case of heirs of Cecilio Claudel, et al. vs Court of Appeals, It held that a sale of land, once
consummated, is valid regardless of the form it may have been entered into. Nowhere does law and
jurisprudence prescribe that the contract of sale be put in writing before such contract can validly cede
or transmit rights over a certain real property between the parties themselves. But if a third party
disputes the ownership of the property, the person against whom that claim is brought cannot present
any proof of such sale and, hence, has no means to enforce the contract. Thus, the statute of frauds
was precisely devised to protect the parties in a contract of sale of real property so that no such contract
is enforceable unless certain requisites, for purposes of proof, are met.
To sum up, Contracts are binding upon the contracting parties in whatever form they may have been
entered into as long as all the essential requisites for their validity are present. The perfection of a
contract is already considered absolute in the sense of consensual contracts. But there are two
exceptions, first, when the law requires that a contract be in some form for validity, secondly, when
the law requires under the Statute of Frauds that contract be in some form to be enforceable. It is noted
in the previous case that the contract falls under Art. 1358 are binding and enforceable by action or suit
despite the absence of any writing because said article nowhere provides that the absence of written
form will make the agreement invalid or unenforceable. If the form is not complied with, Art. 1457 of
the Civil Code cannot be availed of. Under Article 1403, Contracts infringing the Statute of Frauds are
not void, they are merely unenforceable. Moreover, the Statute of Frauds is a personal defense that is,
cannot be assailed by third person. Lastly, statute of frauds applies only to executory contracts and not
partially or completely executed.
Footnote:

1. The Civil Code of the Philippines

2. Sta. Maria. Book IV, Obligations and Contracts. Second edition, 2003.
3. Paras. Book IV, Obligations and Contracts, 2011.
4. Marlene Dauden-Hernaez vs. Hon. Walfrido, delos Angeles, Judge of the CIF of Quezon City,
Holly wood Far East Productions. Inc. and Ramon Valenzuela. G.R. no. L-27010, April 30, 1969
5. Renato Cenido vs. spouses Amadeo Aficionado and Hermita Sta. Ana, G.R. no. 132474,
November 19, 1999
6. Shopper’s Paradise Realty & Development Corporation vs. Efren P. Roque, G.R no.148775,
January 13,2004
7. Heirs of Cecilio Claudel namely, Modesta Claudel et., al vs. Hon. Court od Appeals, Heirs of
Macario Esperdiona, Raymundo and Celistina, all surnames Claudel,Gr. No. 8240, July 12,
1991.
8. Manotoc Inc. vs Hon. Court of Appeals
9. Asia Production Co. Inc., Wang Ta Peng And Winston Wang vs. Hon. Erani Cruz Pano, G>R no.
L-51058, January 27, 1992