WEEK 11 ACTIVITIES

MODULE 5
FORMALITIES OF CONTRACTS

LEARNING ACTIVITY 5.1

Read Articles 1356-1358
Read also Chapter 3, Title II of the textbook of De Leon
Answer the following:
1. State General Rule on form of contracts & give 3 exceptions to the general rule.
ANSWER:
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 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)

1. The contract may be (a) parol or oral, or (b) in writing, or (c) partly oral and
partly in writing. If in writing, it may be in a public or a private instrument.
2. A contract need not be contained in a single writing. It may be collected from
different writings which do not conflfl ict with each other and which when
connected, show the parties, subject matter, terms and consideration, as in
contracts entered into by correspondence. (17 C.J.S. 727-728.)
3. A contract may be encompassed in several instruments even though every
instrument is not signed by the parties since it is sufficient if the unsigned
instruments are clearly identified or referred to and made part of the signed
instrument or instruments. (Ibid., p. 728.)

2. Enumerate the contracts that must be in written form

ANSWER:
To be valid
There are rare cases when the law requires that a contract be in a
certain form for the validity of the contract such as those mentioned
below.

1. Donation of real property. — It must be in a public instrument. (Art.

749.)
2. Donation of personal property the value of which exceeds P5,000.00.
— The donation and acceptance must be in writing. (Art. 748.)
3. Sale of land through an agent. — The authority of the agent must be in
writing; otherwise, the sale is void. (Art. 1874.)
4. Contract of antichresis. — The amount of the principal and of the
interest must be specified in writing. (Art. 2134.)
5. Stipulation to pay interest. — It must be in writing; otherwise, no
interest is due. (Art. 1956.)
 6. Contract of partnership. — If immovable are contributed, it must be in
a public instrument to which shall be attached a signed inventory of the
immovable property contributed. (Arts. 1771, 1773.)
7. Transfer or sale of large cattle. — It must be registered (so it must be
in a public instrument) and a certificate of transfer secured. (Act No.
1147, Sec. 22.) (8) Negotiable instruments. — They must be in writing.
(Act No. 2031, Sec. 1.)

To be enforceable
In the cases of contracts covered 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, upon the objection
of a party, it cannot be proved and, therefore, it cannot be enforced
unless it is ratified. (Art. 1405.)
Unenforceable contracts are discussed under Chapter 8.

For the convenience of 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
enforce ability 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
[1969].)

TOPIC 2 REFORMATION OF INSTRUMENTS

Reformation of instrument refers to rewriting or rephrasing or redrafting a written
instrument to enable it to express the true intent of the parties. This topic sets forth the
grounds for reforming a written instrument, the various situations when that ground is
present, the rules for reformation and instances when reformation is not allowed.

LEARNING ACTIVITY 5.2

Read Articles1359-1369
Read also Chapter 4, Title II of the textbook of De Leon
Answer the following:

1. discuss the concept of reformation of instrument and the underlying reason of the law
for allowing reformation of instruments
ANSWER:
Reformation is that remedy 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.

2. enumerate the grounds for allowing reformation of instruments

ANSWER:
3. give the requisites for reformation of instruments
ANSWER:
In order that reformation may be availed of as a remedy, the following requisites
must be present:
1. There is a 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, or accident;
4. The facts upon which relief by way of reformation of the instrument is
sought are put in issue by the pleadings; and
5. There is clear and convincing evidence1 (which is more than mere
preponderance of evidence) of the mistake, fraud, inequitable conduct,
or accident.
Both parties must have executed a writing that does not reflect their
actual agreement. Reformation is thus not available where no writing
exists, or a writing exists, but the parties do not intend it to express their
final agreement, or no attempt is made to show any vice of consent
therein.

4. When is reformation of instruments not allowed?

ANSWER:
1. Simple donations inter vivos where 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 accepts 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 donor’s death.
2. 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 which
cannot be left to the discretion of a third person (see Art. 784.); 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 and this right is not subject to
waiver or restriction. (see Art. 828.)
 3. Where the real agreement is void. — If the real agreement is void, there is
nothing to reform. Reformation would be useless because the real agreement
being void, it is unenforceable.
4. Where one party has brought an action to enforce the instrument. — Article
1367 is based on estoppel (Art. 1431.) or ratification. (see Arts. 1392, 1396.)
When a 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. There is no prohibition against joining in
one action the reformation of instrument and its enforcement as reformed.

LEARNING ACTIVITY 5.3 COLLABORATIVE WORK

Read and understand very well Articles 1359, 1361, 1362 1363, 1364 and 1368 to be
able to answer the question below. It would be most helpful to also read the explanatory
text of De Leon in his book relative to his comments under the provisions cited above.

What are the several situations provided For by law, by which the grounds for
reformation of instruments may exist.
ANSWER:

LEARNING ACTIVITY 5.4

Read Articles 1370-1379
Read also Chapter 5, Title II of the textbook of De Leon
Answer the following:
1. What is the basic principle in interpretation of contracts?
ANSWER:
Interpretation of the contract as a whole. Another basic principle of contract
interpretation is that the court will construe the contract as a whole. This means
the court will consider all the provisions of the contract and not just any one
specific provision to resolve an ambiguity.

2. What is the primary objective of the courts in applying the rules of interpretation
provided for by the law?
ANSWER:
3. Illustrate Article 1372 by way of an example
ANSWER:
 However, general the terms of a contract may be, they shall not be understood to
comprehend things that are distinct and cases that are different from those upon
which the parties intended to agree. (1283)
LEARNING ACTIVITY 5.5 COLLABORATIVE WORK
Discuss distinction between the concept of Doctrine of Least Transmission of Rights and
Doctrine of Greatest Reciprocity of Interest
ANSWER:
I really am sorry, ma’am. I have no idea about it.
Discuss the concept of “contracts of adhesion” and give at least three examples of
contracts that may be considered as contracts of adhesions
ANSWER:

 A contract of adhesion refers to a contract drafted by one party in a position of

power, leaving the weaker party to “take it or leave it.” Adhesion contracts are
generally created by businesses providing goods or services in which the customer
must either sign the boilerplate contract or seek services elsewhere.