CHAPTER 3

FORM OF CONTRACTS
FORM OF CONTRACTS
FORM OF CONTRACTS
– Refers to the manner in which a contract is executed or manifested.
– A contract may be oral, or in writing, or partly oral and partly in writing. If in writing, it
may be public or a private instrument.
– To be recognized as a written contract, all its terms must be in writing. A contract partly
in writing and partly oral is, in legal effect, an oral contract.
CLASSIFICATION OF CONTRACTS ACCORDING TO FORM
A. INFORMAL or COMMON
– That which may be entered into in whatever form provided all the essential requisites for
their validity are present. This refers only to consensual contracts. An informal contract
may be oral or written.
B. FORMAL or SOLEMN
– That which requires compliance with certain formalities prescribed by law for its
efficacy, such prescribed form being thereby an essential element thereof.
RULES REGARDING FORM
RULES REGARDING FORM OF CONTRACTS (Article 1356)

A. GENERAL RULE
– Form does not matter for the validity of a contract. It is enough that there be
consent, subject matter and cause. This rule applies, however, to consensual
contracts.

B. EXCEPTIONS

1. FORM FOR VALIDITY

– When the law requires that a contract be in some form to be valid.

2. FORM FOR ENFORCEABILITY

– When the law requires that a contract be in some form to be enforceable or
proved in a certain way.
RULES REGARDING FORM
3. FORM FOR CONVENIENCE OR GREATER EFFICACY
– When the law requires that a contract be in some form for the convenience of
the parties or for the purpose of affecting third persons.

FORM FOR VALIDITY

A. REQUIRED TO BE IN WRITING

1. DONATION OF PERSONAL PROPERTY (Article 748)

– Donations of personal property the value of which exceeds ₱5,000 require that
the donation and acceptance be made in writing otherwise the donation is
void.
RULES REGARDING FORM
2. STIPULATIONS REDUCING THE COMMON CARRIER’S EXTRAORDINARY DILIGENCE
AND LIMITING ITS LIABILITY (Articles 1744-1750)

3. SALE OF LAND THROUGH AN AGENT (Article 1874)

– Sale of land thru an agent whose authority must be in writing, otherwise, the
sale is null and void.

4. STIPULATION TO PAY INTEREST (Article 1956)

– Stipulation to pay interest on loans, interest for the use of the money must be
in writing.

5. ANTICHRESIS (Article 2134)

– In contracts of antichresis, the amount of the principal and of the interest
shall be specified in writing; otherwise, the contract shall be void.
RULES REGARDING FORM
B. REQUIRED TO BE IN A PUBLIC INSTRUMENT

1. DONATION OF REAL PROPERTY (Article 749)

– Donation of an immovable must be made in a public document. The acceptance
may be made in the same deed of donation or in a separate public document,
but it shall not take effect unless it is done during the lifetime of the donor. If
in a separate instrument, the donor shall be notified thereof in an authentic
form, and this step shall be noted in both instruments.

2. CONTRACT OF PARTNERSHIP (Articles 1771 and 1773)

– In partnerships where real property is contributed the contract of partnership
should be in writing.
RULES REGARDING FORM
FORM FOR ENFORCEABILITY (Article 1403)
– In the cases of contracts covered by the Statute of Frauds and Perjuries, the law
requires that they be in writing, subscribed by the party charged or by his agent.
If the contract is not in writing, the contract is valid (assuming all the essential
elements are present) but it cannot be proved in court and is unenforceable
(neither party may be compelled by court action to perform) unless it is ratified.

FORM FOR CONVENIENCE OR GREATER EFFICACY

– In certain cases, a certain form is required for the convenience of the parties in
order that the contract may be registered in the proper registry to make effective
the right acquired under such contract as against third persons. Non-compliance
with the required form would not adversely affect the validity nor the
enforceability of the contract between the parties themselves.
RULES REGARDING FORM
– As between 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
that the contract be both valid and enforceable (Article 1357).

CONTRACTS WHICH MUST APPEAR IN A PUBLIC DOCUMENT (Article 1358)

A. Acts and contracts which have for their object the creation, transmission,
modification or extinguishment of real rights over immovable property.

B. The cession, repudiation or renunciation of hereditary rights or of those of the

conjugal partnership of gains.
RULES REGARDING FORM
C. 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.

D. The cession of actions or rights proceeding from an act appearing in a public

document.