CONTRACTS (CAUSE) FINALS ACJUCO 1
CAUSE
CAUSE (causa) is the ESSENTIAL or more
PROXIMATE PURPOSE OR REASON which
the contracting parties have in view at the time
of entering into the contract.
It is the “WHY OF THE CONTRACT”, the
essential reason which moves the contracting
parties to enter into the contract.
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.
It is the Civil Code term for consideration in
Anglo-American or common law.
CAUSE VS CONSIDERATION
Causa is merely the civil law term, while
consideration is the common law term.
It is, however, undisputed that the causa in
civil law jurisdictions is broader in scope
than consideration in Anglo-American
jurisdictions. Many agreements which cannot
be supported in Anglo-American law for want
of consideration can be enforced under the
broader doctrine of causa.
Thus, a subsequent promise by X to reimburse
Y for a past service or benefit conferred on X
but not at the instance of X, would be sufficient
causa but would not constitute sufficient
consideration in the sense of the common law.
Similarly, mere liberality of the benefactor
constitutes causa in a contract of pure
beneficence but does not furnish sufficient
consideration under the English doctrine to
make the promise enforceable.
CAUSE VS OBJECT
The cause, for each contracting party, is the
prestation or promise of a thing or service by
the other, while the object of the contract, on
the other hand, is the thing or service itself.
E.g. Contract of sale
For Vendor
Cause – is the acquisition of the purchase
price
Object - thing
For Vendee
Cause - acquisition of the thing
Object- price
E.g. S sells a watch to B for P2,000. As far as
S (vendor) is concerned, the subject matter or
object is the watch and the cause is the price.
As regards B (vendee), the subject matter or
object is the price and the cause is the watch.
A school of thought, however, makes these
distinctions. The cause for S is the delivery of
the price and for B, the delivery of the watch.
But to both S and B, the subject matter of the
transaction is the watch.
1. ONEROUS
One the cause of which, for each
contracting party, is the PRESTATION OR
PROMISE OF A THING OR SERVICE by
the other. The parties are reciprocally
obligated to each other.
EXAMPLE:
 A logging company by contract
designated a certain agency as its
distributor to export logs to Korea
and Europe at the best market price
obtainable on condition that it would
pay the latter a commission of 13%
of the gross value of the logs.
 CAUSE OF LOGGING COMPANY-
is the distribution of its logs in the
areas agreed upon which the
agency undertook to accomplish.

 CAUSE OF AGENCY - its
commitment to sell or export the
logs for onerous consideration.
a. The cause as to one party need not be
adequate or of equivalent value with that
of the other.
Exception: where the marked disparity
in value may, in combination with other
circumstances, indicate fraud, mistake,
or undue influence.
A valuable consideration, however,
small or nominal, if given or stipulated in
good faith is, in the absence of fraud,
sufficient.
b. A purely moral obligation cannot
constitute a sufficient cause to support
an onerous contract but a natural
obligation is a sufficient cause to
sustain such contract.
c. In an accessory contract (like
mortgage), the cause is the very cause
of the principal contract from which it
receives its life and without which it
cannot exist as an independent contract.
2. REMUNERATORY OR
REMUNERATIVE
One the cause of which is the SERVICE
OR BENEFIT WHICH IS
REMUNERATED. The purpose of the
contract is to reward the service that had
been previously rendered by the party
renumerated.
EXAMPLE:
A gives a certain property in accordance
with the formalities prescribed by law to his
lawyer friend, B, in remuneration for legal
services which the latter had rendered to
him freely in the past and such gift is duly
accepted.
CONTRACTS (CAUSE) FINALS ACJUCO 2
CAUSE (for A) - the legal services
rendered by B, although such services do
not constitute demandable debts.
3. CONTRACTS OF PURE
BENEFICENCE
Gratuitous or one the cause of which is
the MERE LIBERALITY OF THE
BENEFACTOR OR GIVER, such as
commodatum; pure donation; guaranty or
suretyship unless there is a stipulation to
the contrary (Art. 2048.), mortgage given
by a third person to secure an obligation of
a debtor (see Art. 2085, last par.) unless a
consideration is paid for such mortgage.
EXAMPLE:
A makes a pure donation of a certain
property to B in accordance with the
formalities prescribed by law,
CAUSE – mere liberality (causa
liberalitatis) of the donor or benefactor.
1. The liberality of the benefactor is
deemed causa only in those
contracts that are of pure
beneficence, that is to say,
contracts designed solely and
exclusively to procure the welfare
of the beneficiary, without any
intent of producing any satisfaction
for the donor; contracts, in other
words, in which the idea of self-
interest is totally absent on the
part of the transferor.
In line with the above view, bonuses
granted to employees to excite their
zeal and efficiency, with consequent
benefit to the employer, do not
constitute donation having liberality
for a consideration.
CAUSE VS MOTIVE
ART. 1351. The particular motives of the
parties in entering into a contract are
different from the cause thereof.
 CONTRACTS (CAUSE) FINALS ACJUCO 3

Motive is the purely personal or private reason 2. If the motive of S in selling his property is
which a party has in entering into a contract. It to defraud C, a creditor, the latter may ask
is different from the cause of the contract. for the rescission of the sale.

CAUSE MOTIVE 3. W (wife) died. To preclude her heirs from

1. Immediate or Remote or indirect inheriting and to avoid payment of estate
direct reason reason taxes, H (spouse) sold the conjugal
2. Always known to Motive may be property to B.
the other unknown
contracting party The sale cannot prejudice the inheritance right
3. Essential element Not essential of the heirs to their share of the conjugal
of a contract property. Here, the illegal motive of H
4. Illegality of the Illegality of one’s predetermined the purpose of the contract of
cause affects the motive does not sale rendering it null and void.
validity of a render the contract
contract void 4. Where a married man of mature years
donated a parcel of land to a girl of sixteen
In other words, cause is the essential reason subject to the condition that the latter shall
which moves the contracting parties to cohabit with him, and such condition is
enter into it and justifies the creation of an accepted.
obligation through their will. While cause is
the essential reason for the contract, motive is It is clear that the donation is conditioned
the particular reason of a contracting party upon the attainment of the motive of the
which does not affect the other party. donor; in other words, it predetermines the
purpose of the contract. Thus considered,
WHEN MOTIVE REGARDED AS CAUSE the conveyance is clearly predicated upon
an illegal causa. Consequently, it is void.
As a general principle, the motive or particular Therefore, under what is now Art. 1412 of
purpose of a party in entering into a contract the New Civil Code, there can be no
does not affect the validity nor existence of the recovery of what has already been
contract. delivered.

Motive may be considered the cause in a CASE: LIGUEZ VS CA

contract WHEN SUCH MOTIVE
PREDETERMINES THE CAUSE OF THE Donation was impelled by donor’s desire to
CONTRACT. cohabit with donee.

Examples: Facts: R donated a parcel of land to E. R was

1. S sells his house and lot to B for One (1)
million pesos. For S, the cause or
consideration is the One (1) million pesos.
But his motive or private reason may be to
use the money in business or to buy
another house.
The motives which impel one to a sale or
purchase are not always the cause of the
contract as that term is understood in law. With
one’s motives, the law cannot deal in actions
between the parties; while with the
consideration, the law is always concerned.
impelled to make the donation because of his
desire for cohabiting with E. E claimed that the
cause of the contract was the liberality of R
and that the motive of E (i.e., to cohabit with
her) was different from such cause and,
therefore, the donation was valid.
Issue: Is this contention tenable?
Held: No. The motive may be regarded as the
cause when it predetermines the cause of the
contract. It was not disputed that R would not
have conveyed the property in question had
he known that E would refuse to cohabit with
him; so that cohabitation was an implied

condition of the donation, and being unlawful,
necessarily tainted the donation itself.
The contract was onerous in character. It was
clearly predicated upon an illicit cause.
NOTE:
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PRESUMPTION: EXISTENCE AND
LAWFULLNESS OF CAUSE
ART. 1354. Although the cause is not
stated in the contract, it is presumed that it
exists and is lawful, unless the debtor
proves the contrary.
It is not necessary that the cause be expressly
stated in the contract. The presumption is that
the cause exists and is lawful unless the
debtor proves the contrary. This presumption
is in accord with the natural order of things.
Ordinarily, a person will not part with his
property unless there is a consideration. It is
only prima facie and must yield to contrary
evidence.
PRESUMPTIOM: There is a consideration.
To overcome the presumption, the alleged
lack of consideration must be shown by
preponderance of evidence.
EXAMPLE:
D issued in favor of C a promissory note which
recites:
“Thirty days after date, I promise to pay C or
order the amount of P1,000.00.” Signed “D.”
Although the promissory note does not
mention the consideration, the law presumes
that D must have received a consideration for
CONTRACTS (CAUSE) FINALS ACJUCO 4
the debt and that the same is lawful, and
furthermore, that it is sufficient or adequate.
DEFECTIVE CAUSES AND
EFFECTS:
ABSENCE OF CAUSE OR
UNLAWFUL CAUSE
ART. 1352. Contracts without cause, or with
unlawful cause, produce no effect whatever.
The cause is unlawful if it is contrary to law,
morals, good customs, public order or public
policy.
REQUISITES OF CAUSE:
1. It must exist at the time of the
celebration of the contract.
2. It must be licit or lawful; and
3. It must be true or real.
GENERAL RULE: Contract has no
cause/cause should be illicit or unlawful =
SHALL NOT PRODUCE ANY EFFECT AND
IT IS INEXISTENT OR VOID FROM THE
BEGINNING.
EFFECT OF ABSENCE OF CAUSE
Contracts without cause CONFER NO RIGHT
AND PRODUCE NO LEGAL EFFECT
WHATEVER.
Thus, a contract which is absolutely simulated
or fictitious is inexistent and void. (Arts.
1346, 1409[3].) Where there is, in fact, no
consideration, the statement of one in the
contract will not suffice to bring it under the rule
of Article 1353 as stating a false consideration.
EXAMPLES:
A contract of sale, for example, is void if the
price is simulated, but the act may be shown
to have been in reality a donation or some
other act or contract.
If the purchase price in a contract of sale was
never in fact paid by the purchaser or vendee
to the vendor, the contract is inexistent for all
purposes for lack of a cause or consideration.

Except: the purchaser or vendee failed to fully
pay for the property, even if there is a
stipulation in the contract of sale that full
payment shall be made at the time of the
celebration thereof. REASON: There is a
consideration.
1. Grant of right of first refusal. — It is
not correct to say that there is no
consideration for the grant of the right
of first refusal if such grant is embodied
in the same contract of lease.
EFFECT OF UNLAWFUL CAUSE
The cause is unlawful when it is contrary to
law, morals, good customs, public order or
public policy. According to the same article, if
a contract has an unlawful cause, IT SHALL
NOT PRODUCE ANY EFFECT
WHATSOEVER; in other words IT IS VOID
FROM THE VERY BEGINNING.
EXAMPLES:
(1) Contract affecting the course of a
criminal prosecution is invalid, because
such a contract would be manifestly
contrary to public policy and the due
administration of justice.
(2) A promise of marriage based upon
carnal connection is founded on an
unlawful cause and, therefore, void and
no action can be maintained by the
woman against the man therefor.
(3) A proscription against sale of property
between spouses applies even to
common law relationships.
EFFECT OF FAILURE OF CAUSE
GENERAL RULE: is not a ground for relief
and from failure of cause which does not
render a contract void.
CONTRACTS (CAUSE) FINALS ACJUCO 5
STATEMENT OF FALSE CAUSE
ART. 1353. The statement of a false cause
in contracts shall render them void, if it
should not be proved that they were
founded upon another cause which is true
and lawful.
The statement of a false cause in contracts
SHALL RENDER THEM VOID.
EXCEPTION: if it should not be proved that
they were founded upon another cause which
is true and lawful.
Thus, where the deed of sale expressly states
that the purchase price has been paid when in
fact it has never been paid, it is evident that
the contract of sale is invalid in accordance
with the general rule announced in Art. 1353
and confirmed by Art. 1409, No. 2, which
declares as inexistent those contracts which
are absolutely simulated or fictitious.
A false cause may be erroneous or
simulated.
ERRONEOUS - produces the inexistence of a
contract. If the cause is false, the contract is
rendered void because the same actually
does not exist.
SIMULATED - The second does not always
produce this effect, because it may happen
that the hidden but true cause is sufficient to
support the contract. If the parties can show
that there is another cause and that said
cause is true and lawful, then the parties
shall be bound by their true agreement.
EXAMPLES:
(1) X promised to give to Y P1,000.00 as
payment for past services allegedly rendered
by Y which in truth and in fact have not been
rendered; or for a carabao which unknown to
X is already dead.
Here, the cause for X, the service remunerated
or the promise of Y to sell the carabao, is
erroneous as it is based upon facts believed to
be existing, but really inexistent.

INADEQUACY OF CAUSE/LESION
ART. 1355. Except in cases specified by
law, lesion or inadequacy of cause shall not
invalidate a contract, unless there has been
fraud, mistake or undue influence.
Lesion is any damage caused by the fact
that the price is unjust or inadequate. It is the
injury suffered in consequence of inequality of
situation, by one party who does not receive
the full equivalent for what he gives in a
commutative contract, like a sale.
GENERAL RULE — Lesion or inadequacy of
cause (e.g., price of thing sold) does not of
itself invalidate a contract.
The general rule is that a party to a contract
will not be relieved from his obligation under it
by the mere fact that the contract may turn out
to be financially disadvantageous to him.
REASON: All men are presumed to be sane
and normal and subject to be moved by
substantially the same motives.
EXCEPTIONS — Lesion will invalidate a
contract —
(a) When there has been fraud, mistake, or
undue influence; and
(b) In cases specified by law. (Art. 1381.)
The rule in Article 1355 “is a general principle
of modern law.
Related provisions. — The following
provisions of law are pertinent:
“Art. 1098. A partition, judicial or extrajudicial,
may also be rescinded on account of lesion,
when any one of the co-heirs received
things whose value is less, by at least one-
fourth, than the share to which he is entitled,
considering the value of the things at the time
they were adjudicated.”
“Art. 1470. Gross inadequacy of price does
not affect a contract of sale, except as it may
indicate a defect in the consent, or that the
CONTRACTS (CAUSE) FINALS ACJUCO 6
parties really intended a donation or some
other act or contract.”
“Art. 1539. x x x .’’ If the sale of real estate
should be made with a statement of its area,
at the rate of a certain price for a unit of
measure or number, the vendor shall be
obliged to deliver to the vendee, if the latter
should demand it, all that may have been
stated in the contract; but should this be not
possible, the vendee may choose between a
proportional reduction of the price and the
rescission of the contract, provided, that in the
latter case, the lack in the area be not less than
one-tenth of that stated.
The same shall be done, even when the area
is the same, if any part of the immovable is not
of the quality specified in the contract.
The rescission, in this case, shall only take
place at the will of the vendee, when the
inferior value of the thing sold exceeds one
tenth of the price agreed upon.
Nevertheless, if the vendee would not have
bought the immovable had he known of its
smaller area or inferior quality, he may rescind
the sale.’’
“Art. 1542. In the sale of real estate, made for
a lump sum and not at the rate of a certain sum
for a unit of measure or number, there shall be
no increase or decrease of the price, although
there be a greater or less or area or number
than that stated in the contract.
The same rule shall be applied when two or
more immovable are sold for a single price; but
if, besides mentioning the boundaries, which is
indispensable in every conveyance of real
estate, its area or number should be
designated in the contract, the vendor shall be
bound to deliver all that is included within said
boundaries, even when it exceeds the area or
number specified in the contract; and, should
he not be able to do so, he shall suffer a
reduction in the price, in proportion to what is
lacking in the area or number, unless the
contract is rescinded because the vendee
does not accede to the failure to deliver what
has been stipulated.’’
 CONTRACTS (CAUSE) FINALS ACJUCO 7

“Art. 1602. The contract shall be presumed to

be an equitable mortgage in any of the
following cases:
(1) When the price of a sale with right to
repurchase is unusually inadequate. x
x x.’’

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 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.
CONTRACT may be:
FORMS:
a) Parol or oral,
b) In writing
c) Partly oral and partly in writing. If in writing,
it may be in a public or a private instrument.
- Need not be contained in a single
writing. It may be collected from
different writings which do not confl ict
with each other and which when
connected, show the parties, subject
matter, terms and consideration, as in
contracts entered into by
correspondence.
- 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.
- Similarly, a written agreement of which
there are two copies, one signed by
each of the parties is binding on both to
the same extent as though there had
been only one copy of the agreement
and both had signed.
CONTRACTS (CAUSE) FINALS ACJUCO 8
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 are present.
(Art. 1356.) This refers only to
consensual contracts (Art. 1356.), such
as the contract of sale. An informal
contract may be oral or written; and
(2) Formal or solemn contract or that
which is required by law for its efficacy
to be in a certain specified form.
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.
The form in which a contract is executed has
no effect, as a general rule, upon its obligatory
force, provided all of the essential requisites
for its validity are present.
Contracts of partnership, of agency, and of
lease of services, although executed verbally,
are obligatory as far as the contracting parties
are concerned. Also, verbal extrajudicial
partition of property is valid and binding among
the parties thereto.
EXCEPTIONS:
(1) When the law requires that the contract
must be in a certain form in order to be
valid;
(2) When the law requires that the contract
must be in a certain form in order to be
enforceable.

FORMALITIES FOR VALIDITY
There are certain contracts for which the law
prescribes certain forms for their validity.
These contracts maybe classified as follows:
(1) THOSE WHICH MUST APPEAR IN
WRITING;
(2) THOSE WHICH MUST APPEAR IN A
PUBLIC DOCUMENT; AND
(3) THOSE WHICH MUST BE
REGISTERED.
CONTRACTS W/C MUST APPEAR IN
WRITING are as follows:
(1) Donations of personal property whose
value exceeds five thousand pesos.
According to Art. 748 of the Code, the
donation and the acceptance shall be
made in writing; otherwise, it shall be void.
(2) Sale of a piece of land or any interest
therein through an agent. According to
Art. 1874 of the Code, the authority of the
latter shall be in writing; otherwise, the sale
shall be void.
(3) Agreements regarding payment of
interest in contracts of loan. According
to Art. 1956 of the Code, no interest shall
be due unless it has been expressly
stipulated in writing. The validity of the
contract of loan, however, is not affected.
(4) According to Art. 2134 of the Code, in
contracts of antichresis, the amount of
the principal and of the interest shall be
specified in writing; otherwise, the contract
shall be void.
Contracts which must appear in a
PUBLIC DOCUMENT are as follows:
(1) Donations of immovable property.
According to Art. 749 of the Code, the
donation must be made in a public
document. The acceptance, on the other
hand, may be made in the same deed of
CONTRACTS (CAUSE) FINALS ACJUCO 9
donation or in a separate public
document. If the acceptance is made in
a separate public document, the donor
shall be notified thereof in an authentic
form, and this step shall be noted in both
instruments.
Noncompliance with any of these
formalities shall render the donation
void.
(2) Partnerships where immovable
property or real rights are contributed
to the common fund. According to Arts.
1771 and 1773 of the Code, in a
contract of partnership where immovable
property or real rights are contributed to
the common fund, it is necessary that the
contract must appear in a public
instrument and that there must be an
inventory of the immovable property or
real rights, signed by the partners, and
attached to the public instrument;
otherwise, the contract is void.
CONTRACTS WHICH MUST BE
REGISTERED are as follows:
(1) Chattel mortgages. According to Art.
2140 of the Code, by a chattel
mortgage, personal property is
recorded in the Chattel Mortgage
Register as a security for the
performance of an obligation.
If the movable, instead of being
recorded, is delivered to the creditor or
a third person, the contract is a pledge
and not a chattel mortgage.
(2) Sales or transfers of large cattle.
According to the Cattle Registration Act
(Act No. 1147, Sec. 22), no sale or
transfer of large cattle shall be valid
unless it is duly registered and a
certificate of transfer is secured.
FORM OF CONTRACTS REQUIRED
BY LAW

1) Those which are necessary for the
convenience of the contracting parties or
for the efficacy of the contract;
2) Those which are necessary for the validity
of the contract; and
3) Those which are necessary for the
enforceability of the contract.
TO MAKE IT EFFECTIVE AS TO
THIRD PARTIES
Art. 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 perfected. This right may
be exercised simultaneously with the action
upon the contract.
Art. 1358. The following must appear in a
public document:
(1) Acts and contracts which have for their
object the creation, transmission,
modification or extinguishment of real rights
over immovable property; sales of real
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) 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, No. 2, and
1405.
CONTRACTS (CAUSE) FINALS ACJUCO 10
The Civil Code, recognizing this necessity,
enumerates in Art. 1358 the different classes
of contracts which must appear either in a
public or in a private document, and grants in
Art. 1357 a coercive power to the contracting
parties by which they can reciprocally compel
the observance of the required form.
1. Arts. 1357 and 1358 do not require the
execution of the contract either in a public
or in a private document in order to validate
or enforce it but only to insure its efficacy,
so that after its existence has been
admitted, the party bound may be
compelled to execute the necessary
document.
2. Even where the contract has not been
reduced to the required form, it is still valid
and binding as far as the contracting
parties are concerned. Consequently, both
articles presuppose the existence of a
contract which is valid and enforceable.
3. From the moment one of the contracting
parties invokes the provisions of Arts. 1357
and 1358 by means of a proper action, the
effect is to place the existence of the
contract in issue, which must be resolved
by the ordinary rules of evidence.
4. Art. 1357 does not require that the action
to compel the execution of the necessary
document must precede the action upon
the contract.17 As a matter of fact, both
actions may be exercised simultaneously.
5. However, although the provisions of Art.
1357, in connection with those of Art. 1358,
do not operate against the validity of the
contract nor the validity of the acts
voluntarily performed by the parties for the
fulfillment thereof, yet from the moment
when any of the contracting parties invokes
said provisions, it is evident that under
them the execution of the required
document must precede the determination
of the other obligations derived from the
contract.
 CONTRACTS (CAUSE) FINALS ACJUCO 11

CASE: DAUDEN-HERNAEZ VS. DE LOS 1403(2) of the Civil Code. Their existence not
ANGELES being probable by mere oral testimony (unless
wholly or partly executed), these contracts are
Facts: Marlene Dauden, a movie actress, filed
exceptional in requiring a writing embodying
a complaint against the Hollywood Far East
the terms thereof for their enforceability by
Productions, Inc. and its President and
action in court. The contract sued upon by
General Manager, Ramon Valenzuela, to
petitioner herein does not come under either
recover P14, 700 representing the balance of
exception. It is true that it appears included in
her compensation as leading actress in two
the last clause of Art. 1358, but it nowhere
motion pictures produced by the defendant
provides that the absence of written form in
company.
this case will make the agreement invalid or
Upon motion of defendants, the lower court unenforceable.
dismissed the complaint because “the claim of
On the contrary, Art. 1357 clearly indicates
plaintiff was not evidenced by any written
that contracts covered by Art. 1358 are binding
document, either public or private’’ in violation
and enforceable by action despite the absence
of Art. 1358 of the New Civil Code.
of writing.
As a last recourse, plaintiff appealed to the
Wherefore, the order dismissing the
Supreme Court on the ground that the court
complaint is set aside, and the case is
below had abused its discretion.
ordered remanded to the court of origin for
Held: We hold that there was abuse, since the further proceedings not at variance with
ruling herein contested betrays a basic and this decision.
lamentable misunderstanding of the role of the
written form in contracts, as ordained in the
FOR PURPOSES OF PROVING
present Civil Code. EXISTENCE OF CONTRACT
In the matter of formalities, the contractual In the cases of contracts covered by the
system of our Civil Code still follows that of the Statute of Frauds, the law requires that they
Spanish Civil Code of 1889 and of the be in writing subscribed by the party charged
“Ordenamiento de Alcala” of upholding the or by his agent. (Art. 1403[2].)
spirit and intent of the parties over formalities; If the contract is not in writing, the contract
hence, in general, contracts are valid and is valid (assuming all the essential elements
binding from their perfection regardless of are present) but, upon the objection of a party,
form, whether they be oral or written. This is it cannot be proved and, therefore, it cannot be
plain from Articles 1315 and 1356 of the enforced unless it is ratified. (Art. 1405.)
present Civil Code.
To this general rule, the Code admits two
exceptions, to wit: (1) 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).
Examples of these are the contracts or
agreements contemplated in Arts. 748, 749,
1744, 1773, 1874, 1956, and 2134 of the
present Civil Code. (2) Contracts that the law
requires to be proved by some writing
(memorandum) of its terms, as in those
covered by the Statute of Frauds, now Art.

REFORMATION OF INSTRUMENTS
ART. 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.
REFORMATION OF INSTRUMENTS - When
the true intention of the parties to a perfected
and valid contract are not expressed in the
instrument purporting to embody their
agreement by reason of mistake, fraud,
inequitable conduct or accident, one of the
parties may ask for the reformation of the
instrument so that such true intention may be
expressed.
REQUISITES:
(1) There must be a meeting of the minds of
the contracting parties;
(2) Their true intention is not expressed in the
instrument;
(3) Such failure to express their true intention
is due to mistake, fraud, inequitable conduct or
accident.
REASON: Equity orders the reformation of an
instrument in order that the true intention of the
contracting parties may be expressed.
CONTRACTS (CAUSE) FINALS ACJUCO 12
WHEN REFORMATION IS NOT
ALLOWED
Art. 1366. There shall be no reformation in
the following cases:
(1) Simple donations inter vivos wherein no
condition is imposed;
(2) Wills;
(3) When the real agreement is void
(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. 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.
(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 ratifi
cation. (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.
 CONTRACTS (CAUSE) FINALS ACJUCO 13

IMPLIED RATIFICATION Thus, in an action to reform a deed of sale, all

Art. 1367. When one of the parties has
brought an action to enforce the instrument,
he cannot subsequently ask for its
reformation.
parties claiming an interest in the property
or any part thereof purportedly conveyed by
the instrument sought to be reformed and
whose interests will be affected by the
reformation of the instrument are necessary
parties to the action.

WHO MAY ASK FOR REFORMATION

Art. 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 assign.

(1) Either of the parties, if the mistake is

mutual under Articles 1361, 1364, and 1365;
(2) In all other cases, the injured party, under
Articles 1362, 1363, 1364, and 1365; and
(3) 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 instrument.

PROCEDURE FOR REFORMATION

Art. 1369. The procedure for the reformation

of instruments shall be governed by rules of
court to be promulgated by the Supreme
Court.

The Rules of Court govern procedure.

However, the Supreme Court has not as yet
promulgated the procedure for the reformation
of instruments. (see Sec. 7, Rule 130, Rules of
Court.)
As a general rule, all persons interested in
the subject matter of litigation, whether it is
a legal or an equitable interest should be made
parties in suits to reform written instruments,
so that the court may settle all of their rights at
once and thus, prevent the necessity of a
multiplicity of suits.