Formalities of a Contract of Sale
In General
Article 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.
Article 1483. Subject to the provisions of the
Statute of Frauds and of any other
applicable statute, a contract of sale may be
made in writing, or by word of mouth, or
partly in writing and partly by word of mouth
or may be inferred from the conduct of the
parties.
JUDYBETH ANGULO-LLOREN
General rule: Contracts shall be obligatory, in whatever form they may
have been entered into, provided all the essential requisites for their
validity are present.
Exceptions: when is form important?
1. Validity – a contract needs to be in a particular form in order for
said contract to be valid. A contract does not exist if certain
solemnities and formalities are not observed.
Examples:
• Contract of donation.
• Sale by parents of the property belonging to their minor
child. (it needs judicial approval, without such the sale is
void.)
2. Enforceability – the law requires that certain contract must
observe a particular form in order that they may be proved in a
certain way. If a contract does not follow this form, you cannot
prove them. (This is found under Article 1356 paragraph 2)
What is the effect of unenforceable contract? What is an
unenforceable contract?
Unenforceable contracts are those which cannot be enforced by
a proper action of court.
What is your remedy?
Ratification. Since they are entered into without or in excess of
authority, or they do not comply with the Statute of Frauds, or both
of the contracting parties do not possess the required legal
capacity.
What if it is a verbal contract of sale?
It is still valid, however in case of breach of contract, it is difficult
to prove. That is why it needs to follow a certain form for it to
become a proper subject matter of a suit.
3. Convenience – this is where we say that formalities are required
for purposes of convenience.
What do you mean by form of contract?
The manner in which it is executed or manifested.
General rule: A contract of sale has no prescribed form. It need not
contain a technical description of the subject property, real or personal.
Provided all essential requisites of a contract are present.
What are the instances wherein form is not important for the validity
of the sale?
a. Sale being consensual, may be oral or written, perfected by mere
consent as to price and subject matter.
b. If particular form is required under the statute of frauds:
i. Valid and binding between parties but not binding as to
third persons.
Exceptions: particular form may be required for enforceability under the
Statute of Frauds, or validity of the contract, or for convenience. Refer to
Article 1356.
Statute of Frauds – is descriptive of statutes that require certain classes
of contracts to be in writing. This statute does not deprive the parties of
the right to contract with respect to matters therein involved, but merely
SY 2022-2023 SALES-ATTY CHU
 regulates the formalities of the contract necessary to render it enforceable.
It is embodied under Article 1403 (2).

What is the purpose of statute of frauds?

To prevent fraud and perjury in the enforcement of obligations depending
on their evidence upon the unassisted memory of witnesses by requiring
certain enumerated contracts and transactions to be evidenced in writing.

What are those certain contracts and transactions?

(1) Sale of personal property at a price not less than P500;
(2) Sale of real property or an interest therein regardless of the price
involved.
(3) Sale of property not to be performed within a year from the date
thereof regardless of the nature of the property and the price
involved.

The Statute of Frauds refers to specific kinds of transactions and cannot

apply to any other transactions and cannot apply to any other transactions
that are not enumerated in Article 1403(2). Thus it does not apply to:
• Right of first refusal – may be proven by oral evidence.
• Easement of right-of-way – since it is not a sale of property or of
an interest therein.
• Partitions effected by heirs

Note: Where there is no perfected contract, there is no basis for the

application of the Statute of Frauds.

A contract infringing Statute of Frauds may be ratified.

1. Ratification by failure to object to the presentation of oral
evidence to prove the same. (Article 1405)
a. An objection against the admission of any evidence must
be made at the proper time, otherwise the contract is
ratified.
b. A contract may be ratified upon cross-examination, which
elicits evidence proving the existence of a perfected
contract of sale.
2. Ratification by the acceptance of benefits under the contract.

Three ways wherein contracts of sales of goods within its terms may
be made binding:
1. The giving of memorandum;
2. Acceptance and receipt of part of the goods (or things in action)
sold and actual receipt of the same; and
3. Payment or acceptance at the time of some part of the purchase
price.

Note: Statute of Frauds also applies to things in action (i.e., assignment

of credit at a price not less than P500)

Statute of Frauds applies only to executory contracts and not to

contracts totally or partially performed.

What is an executory contract?

Where no performance has yet been made by both parties.

Reason: partial performance like the writing, furnishes reliable evidence

of the intention of the parties or the existence of the contract.

Note: Statute of Frauds applies only to agreements not to be performed

by either party within one year from the making of it. Less than full
JUDYBETH ANGULO-LLOREN SY 2022-2023 SALES-ATTY CHU
 performance by one party will suffice, if anything remains to be done after
the expiration of one year besides the payment, Statute of Frauds will
apply.

Sale of real property or an interest

1. A sale of a piece of land or interest therein when made through
an agent is void, unless there’s a written authority. (Article 1874)
2. For the sale of real property to be effective against third persons,
the sale must be registered with the Registry of Deeds of the
Province or city where the property is located. The sale must be
in a public document, otherwise registration will be refused.
3. The real purpose of registration of a contract of sale is to give
notice to third persons and to protect the buyer against claims of
third persons arising from subsequent alienations of vendor.

Actual notice is equivalent to registration.

4. The sale of land in a private instrument is valid and binding upon
the parties, for the time-honored rule is that even a verbal contract
of sale of real estate produces legal effects between the parties.
Since sale is a consensual contract and is perfected by mere
consent.
5. The fact that notarization of a deed of sale of real property is false
is of no consequence, it is enough to be in writing.

Republic Act No. 8792. Electronic Commerce Act

1. Information shall not be denied validity or enforceability solely on
the ground that it is in the form of an electronic data message or
document to give rise to legal effect. It shall have the same legal
effect, validity, or enforceability as any other document or legal
writing.

What are the rules under Republic Act No. 8792?

1. A written information can be equalized to an electronic date
message or electronic document.
2. Provision of an information to another person in a non-electronic
form is satisfied by the provision of an electronic data message or
electronic document if provided in the same or substantially the
same form.
3. Nothing limits the operation of any requirement under law for
information to be posted or displayed in specified manner, time,
or location; or for any information or document to be
communicated by a specified method unless and until a
functional equivalent shall have been developed, installed, and
implemented.

What if the law requires a document to be in writing?

An electronic data message or electronic document will be sufficient,
provided that:
1. Maintain its integrity and reliability; and
2. Can be authenticated so as to be usable for subsequent
reference, in that:
a. It has remained complete and unaltered; and
b. It is reliable in the light of the purpose for which it was
generated and in the light of all relevant circumstances.

What if the law requires that a document presented be original or

retained in its original form?
1. There should exists a reliable assurance as to the integrity of the
electronic data message or electronic document from the time

JUDYBETH ANGULO-LLOREN SY 2022-2023 SALES-ATTY CHU

 when it was first generated in its final form and such integrity is
shown by evidence aliunde, or otherwise; and
2. The electronic data message or electronic document is capable of
being displayed to the person to whom it is to be presented.

What are the criteria for the number 1 above?

1. It shall be whether the information has remained complete and
unaltered;
2. The standard of reliability required shall be assed in the light of
the purpose for which the information was generated and in the
light of all relevant circumstances.

In cases of solemn contracts. When the law requires that a contract be

in some form in order that it may be valid or enforceable, or that a contract
is proved in a certain way, that requirement is absolute and
indispensable.
Form required for enforceability: Statute of Frauds
Article 1403. The following contracts are In depth discussion of statute of frauds in the preceding table.
unenforceable, unless they are ratified:
(1) Those entered into in the name of Statute of Frauds – laws, statutes, or provisions which require certain
another person by one who has agreements to be in writing before they can be enforced in a judicial action.
given no authority or legal • Statutes are applicable only to executory contracts, not partially
representation, or who has acted or totally executed or performed contracts.
beyond his powers; • It may be invoked in action for damages for breach of said
(2) Those that do not comply with the agreement or for specific performance.
Statute of Frauds as set forth in this
number. In the following cases an Purpose
agreement hereafter made shall be • to prevent fraud, thus some agreements are required to be in
unenforceable action, unless the writing.
same, or some note or o Waivable (defense)
memorandum, thereof, be in writing o Personal defense cannot be assailed by third persons.
and subscribed by the party o Does not apply to contracts fully or partially performed.
charged, or by his agent; evidence, o Does not apply to contract of loan.
therefore, of the agreement cannot
be received without the writing, or a Two ways to waive this defense
secondary evidence of its contents: 1. Timely failure to object to presentation of oral evidence to prove
a. An agreement that by its the oral agreement.
terms is not to be performed 2. Acceptance of benefits under them (as where contract is totally or
within a year from the partially performed.)
making thereof;
b. A special promise to answer
for the debt, default, or
miscarriage of another;
c. An agreement made in
consideration of marriage,
other than of a mutual
promise to marry;
d. An agreement for the sale
of goods, chattels, or things
in action, at a price not less
than five hundred pesos,
unless the buyer accept and
receive part of such goods
and chattels, or the
evidences, or some of
them, of such things in
action or pay at the time of
the sale, of the amount and
kind of property sold, terms
of sale, price, names of the
JUDYBETH ANGULO-LLOREN SY 2022-2023 SALES-ATTY CHU
 purchasers and person on
whose account the sale, it is
sufficient memorandum.
e. An agreement of the leasing
for a longer period than one
year, or for the sale of real
property or of an interest
therein;
f. A representation as to the
credit of a third person.
(3) Those where both parties are
incapable of giving consent to a
contract.
Article 1405. Contracts infringing the This provision is an exception. The failure to object to the presentation of
Statute of Frauds, referred to in No. 2 of oral evidence to prove the unenforceable agreement because it is not in
Article 1403, are ratified by the failure to writing.
object to the presentation of oral evidence to
prove the same, or by the acceptance of
benefit under them.
Article 1406. When a contract is This right is given only when contract is both valid and enforceable.
enforceable under the Statute of Frauds,
and a public document is necessary for its The public document is only necessary for the registration with the
registration in the Registry of Deeds, the Registry of Deeds, and you can compel the other contracting party to
parties may avail themselves of the right observe the required form, and not for purposes of validity and
under Article 1357. enforceability. But for purposes of registration.
Form required for validity
Article 1356. Contracts shall be obligatory, General rule: no form is required in consensual contracts.
in whatever form they may have been
entered into, provided all requisites essential • Formal contracts – requires certain form.
for their validity are present. However, when • Real contracts – requires delivery.
the law requires that a contract be in some
form in order that it may be valid and When is form important?
enforceable, or that a contract be proved in 1. For validity
a certain way, that requirement is absolute 2. Enforceability
and indispensable. In such cases, the right 3. Convenience
of the parties stated in the following article
cannot be exercised. This provision is the spiritual system of a contract, which means that,
contracts are obligatory in whatever form they may have been entered
into, provided that all essential requisites for its validity are present.

The sale of a piece of land or any interest therein made through an

agent is void. (Article 1874)
Form required for convenience of the parties
Article 1358. The following must appear in is the requirement that it must be in a public document for the
a public document: purpose of validity?
(1) Acts and contracts which have for No. Only for purposes of affecting third persons, or for efficacy against
their object the creation, third persons. So, those enumerated under Article 1358, even if not in a
transmission, modification, or public document are valid.
extinguishment of real rights over
immovable property; sales of real Why?
property or of an interest therein a To enforce to third persons. Because by itself, it already valid.
governed by articles 1403 (2), and
1405; Nowhere does it say that if it is not in writing, the contract is void.
(2) The cession, repudiation, or
renunciation of hereditary rights or What is reformation of instrument?
of those of the conjugal partnership It is a remedy in equity by means of which a written instrument is made or
of gains; construed so as to express or conform to the real intention of the parties
(3) The power to administer property, or when some error or mistake has been committed.
any other power which has for its

JUDYBETH ANGULO-LLOREN SY 2022-2023 SALES-ATTY CHU

 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.

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 (2) and 1405.

JUDYBETH ANGULO-LLOREN SY 2022-2023 SALES-ATTY CHU