Page 1 of 12

Chapter 3
FORM OF CONTRACTS Exceptions: When Form Is Indispensable
 The above rule that contracts may
be entered into in any form is not
Art. 1356. Contracts shall be obligatory, absolute. The second sentence of
in whatever form they may have been Article 1356 states that “when the
entered into, provided all the essential law requires that a contract be in
requisites for the validity are present. some form in order that it may be
However, when the law requires that a valid or enforceable, or that a
contract be in some form in order that it contract be proved in a certain way,
may be valid or enforceable, or that a that requirement is absolute and
contract be proved in a certain way, that indispensable.”
requirement is absolute and  There are three (3) groups of
indispensable. In such cases, the right contracts where the requirement of
of the parties stated in the following form is absolute and indispensable:
article cannot be exercised. 1. Those contracts which
require a certain form for the
purpose of proving their
General Rule: No Form Required validity; and
2. Those contracts which
 As a rule, no form is required in
require a certain form for the
order to make the contract binding
purpose of proving their
and effective between the parties
existence in order to be
thereto. This much is clear in the first
enforceable between the
sentence of Article 1356 which
parties.
states that “contracts shall be
3. Those contracts which
obligatory, in whatever form they
require a certain form, not for
may have been entered into,
the purpose of making the
provided all the essential requisites
contract valid and
for the validity are present.”
enforceable between the
 In effect, what the first sentence of
parties, but simply for greater
Article 1356 is saying is that once a
efficacy or convenience or for
contract if perfected, it is, as rule,
the purpose of making the
obligatory.
contract effective as against
 As a consequence of this rule, a
third persons.
contract may either be orally or in
writing and, if entered into in writing,
it may either be in a private or public
document. Form for Validity
 In general, a certain form may be  In this group of contracts, the law
prescribed by law for any of the expressly declares the contract to be
following purposes: void or invalid of the formality
1. Validity – its non- required by law is not complied with.
observance renders the  The following are the contracts
contract void and of no which require a certain form for the
effect. purpose of their validity:
2. Enforceability – non- 1. Donation of personal
compliance therewith will not property exceeding Php
permit, upon the objection of 5,000.00 in value;
a party, the contract, 2. Donation of real property;
although otherwise valid, to 3. Donation proper nuptias;
be proved or enforced by 4. Contract of partnership when
action. real property is contributed to
3. Greater efficacy or the capital;
convenience – if not done, 5. Sale of parcel of land or any
would not adversely affect interest therein by an agent;
the validity or enforceability 6. Contract of antichresis;
of the contract between the 7. Sale or transfer of large
contracting parties cattle;
themselves. 8. Chattel mortgage contract;
and

YRSC – Obligations and Contracts Reviewer, 2019-2020

 Page 2 of 12

9. Stipulation limiting the

common carrier’s liability in
carriage of goods
Donation of Personal Property
 The formalities of donations Donation of Real Property
involving personal (or movable)  The formalities of donation involving
property are governed by Article real (immovable) property are
748, which provides, “The donation governed by Article 749 which
of a movable property may be made provides, “In order that the donation
orally or in writing. An oral donation of an immovable may be valid, it
requires the simultaneous delivery must be made in public document,
of the thing or of the document specifying therein the property
representing the right donated. If the donated and the value of the
value of the personal property charges which the done must
donated exceeds five thousand specify. The acceptance may be
pesos, the donation and the mad in the same deed of donation
acceptance shall be made in writing, or in a separate public document,
otherwise the donation shall be but it shall not take effect unless it is
void.” done during the lifetime of the
 Depending therefore on the value of donor. If the acceptance is made in
the personal property to be donated, a separate instrument, the donor
the donation may be made either: shall be notified thereof in an
1. Orally; or authentic form, and this step shall
2. In writing be noted in both instruments.”
 If what is donated is a real property,
Personal Property Does Not Exceed Php the law mandates that:
5,000 1. Both the donation and the
acceptance must be
1. Orally embodied in a public
 It is subject to the instrument, although not
requirement that there must necessarily embodied in a
be simultaneous delivery of single document;
the thing or of the document 2. Thee real property donated
representing the right and the value of the charges
donated. which the done is required to
2. In writing satisfy must be specified in
 There is no requirement of the deed of donation;
simultaneous delivery. 3. If the acceptance is
 The law does not require that embodied in a separate
the acceptance must also be public instrument, the donor
in writing. shall be notified thereof in an
authentic form and such step
shall be noted in both
Personal Property Exceeds Php 5,000 instruments of donation and
 The law requires the donation and acceptance.
acceptance to be in written form and
such requirement is complied with if
both the donation and the Donation and Acceptance Must Be In
acceptance are embodied either in a Public Instrument
private or public document.
 Further, the law does not require  In order that the donation of an
that both donation and the immovable property may be valid, it
acceptance be embodied in a single must be made in a public instrument
instrument. Hence, the acceptance regardless of the value of the
may be made in a separate property.
instrument and such fact is not  And since donation is perfected only
required to be noted in both the from the moment the donor knows
instruments of donation and the acceptance by the done,
acceptance. acceptance of the donation by the
done is indispensable; its absence
make the donation null and void.

YRSC – Obligations and Contracts Reviewer, 2019-2020

 Page 3 of 12

 The law further requires that the Contract of Partnership Where Real
acceptance must be made in the Property Is Contributed to the Capital
same deed of donation or in a
separate public document. If the  A contract of partnership is defined
acceptance is mot embodied in a by law as one where two or more
public instrument, the donation shall persons bind themselves to
also be void. contribute, money, property, or
industry to a common fund, with the
intention of dividing the profits
among themselves.
Requirement of Notification and Notation  In order to constitute a partnership, it
 Title to immovable property does not must be established that:
pass from the donor to the done by 1. Two or more persons bound
virtue of a deed of donation until and themselves to contribute
unless it has been accepted in public money, property, or industry
instrument and the donor duly to a common fund; and
notifies thereof. 2. They intended to divide the
 It is necessary that formal notice profits among themselves.
thereof be given to the donor, and  The agreement need not be formally
the fact that due notice has been reduced in writing, since statute
given must be noted in both allows the oral constitution of a
instruments (that containing the offer partnership, save in two instances, a
to donate and that showing of public instrument is required:
acceptance). 1. When immovable property or
 Where the deed of donation fails to real rights are contributed;
show the acceptance, or where the and
formal notice of the acceptance, 2. When the partnership has a
made in a separate instrument, is capital of three thousand
either not given to the donor or else pesos or more.
not noted in the deed of donation  Whenever immovable property is
and in the separate acceptance, the contributed to the partnership as
donation is null and void. capital, it is required that there must
be an inventory of said property,
signed by the parties, and attached
to the public instrument.
Donation Proper Nuptias
 Donations by reason of marriage or
donations proper nuptias are those Agency to Sell Land or Any Interest
which are made before its Therein
celebration, in consideration of the
same, and in favor of one or both of  If the sale of parcel of land or any
the future spouses. interest therein is made through an
 For a donation to be considered a agent, the law requires that the
donation proper nuptias, the authority of the agent must be in
following requisites must be present: writing. Thus, in Article 1874, it
1. It must be made before the states “When a sale of piece of land
celebration of marriage; or interest therein is through an
2. It must be made in agent, the authority of the latter
consideration of the must be in writing; otherwise the
marriage; and sale shall be void.”
3. It must be made in favor of  If the authority of the agent is not in
one or both of the future writing, the law declares the sale of
spouses. the land belonging to the principal to
 In this kind of donation, it is essential be void and not merely
that the donee or donees be either unenforceable.
of the future spouses or both of  With respect to the sale of a parcel
them, although the donor may either of land, the law does not require any
be one of the future spouses or a form for its validity, although under
third person. the Statue of Frauds the sale is
required to be in writing for the
purpose of making the sale
enforceable.

YRSC – Obligations and Contracts Reviewer, 2019-2020

 Page 4 of 12

property is recorded in the Chattel

Mortgage Register as a security for
the performance of the 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.”
Contract of Antichresis
 Above provision makes the
 By the contract of antichresis the recording of the contract of chattel
creditor acquires the right to receive mortgage before the chattel
the fruits of an immovable of his mortgage registry as an
debtor, with the obligation to apply indispensable requirement for the
them to the payment of the interest, existence of the contract itself. If
if owing, and thereafter to the there be no recording of the chattel
principal of his credit. mortgage, the delivery of a personal
 In order for this contract to be valid, property to the creditor as a security
the law requires that the amount of shall constitute a contract of pledge
the principal and of the interest shall and not of a chattel mortgage.
be specified in writing. This is
expressly provided for in Article
2134 which states, “The amount of Stipulation Limiting Common Carrier’s
the principal and of the interest shall Liability in Carriage of Goods
be specified in writing; otherwise,
the contract of antichresis shall be  In order for a stipulation between the
void.” common carrier and the shipper or
owner limiting the liability of the
former for the loss, destruction, or
deterioration of the goods to a
Sale of Transfer of Large Cattle
degree less than extraordinary
 No particular form is required for the diligence to be valid, the same must
validity of a contract of sale. The be in writing and signed by the
only instance where a certain form is shipper or owner.
required for validity of the sale is
when it involves large cattle.
 The formalities of the sale or transfer Form of Enforceability: The Statute of
of large cattle are governed by Act Frauds
No. 1147 (Cattle Registration Law).
The law specifically provides that no  Statute of Frauds is incorporated in
sale or transfer of large cattle shall Article 1403 (2). “The following
be considered valid unless the sale contracts are unenforceable, unless
or transfer is registered in the office they are ratified. Those that do not
of the municipal treasurer and a comply with the Statute of Frauds as
certificate of transfer is secured. If set forth in this number. In the
the record such sale or transfer is following cases an agreement
not registered and the certificate hereafter made shall be
obtained, the sale or transfer is not unenforceable by action, unless the
valid and the ownership of the cattle same, or some note or
does not pass. It is implicitly required memorandum thereof, be in writing
in this law that the sale or transfer of and subscribed by the party
the large cattle must be mad in a charged, or by his agent; evidence,
public instrument since only a public therefore, of the agreement cannot
instrument may be accepted for be received without the writing, or
registration. secondary evidence of its contents:
 The term “large cattle” includes a) an agreement that by its
carabaos, horses, mules, asses, and terms is not to be performed
all members of the bovine family. within a year from the
making thereof;
b) a special promise to answer
for a debt, default, or
Chattel Mortgage
miscarriage of another;
 Article 2140 provides that “By a c) an agreement made in
chattel mortgage, a personal consideration of marriage,

YRSC – Obligations and Contracts Reviewer, 2019-2020

 Page 5 of 12

other than a mutual promise  The effect of non-compliance with

to marry; the requirement of the Statute of
d) an agreement for the sale of Frauds is simply that no action can
goods, chattels, or things in be enforced unless the requirement
action, at a price not less is complied with.
than five hundred pesos,
unless the buyer accept and
receive part of such goods
and chattels, or the
evidence, or some of them,
of such things in action, or
pay at the time some part of
the purchase money; but Sufficiency in Writing
when a sale is made by
auction and entry is made by  The Statute of Frauds does not
the auctioneer in his sales require that the contract itself be in
book, at the time of sale, of writing. Article 1403 (2) is clear that
the amount and kind of a written note or memorandum,
property sold, terms of sale, embodying the essentials of the
price, names of purchasers contract and signed by the party
and person on whose charged, or his agent, suffices to
account the sale is made; it make the verbal agreement
is sufficient memorandum; enforceable, taking it out of the
e) An agreement for the leasing operation of the statute.
for a longer period than one
year, or for the sale of real
property or of an interest What Constitutes Notes or Memorandum
therein;
f) A representation as to the  No particular form of language or
credit of a third person. instrument is necessary to constitute
 Thus, the term “statute of frauds” is a memorandum or note in writing
descriptive of statutes which require under the statute of frauds; any
certain classes of contracts to be in document or writing, formal or
writing to be enforceable. informal, written either for the
purpose of furnishing evidence of
the contract or for another purpose,
which satisfies all the requirements
Purpose of Statute of Frauds of the statute as to contents and
 The purpose of the statute is to signature, is a sufficient
prevent fraud and perjury in the memorandum or note.
enforcement of obligations  The note or memorandum, in fact,
depending for their evidence on the need not to be contained in a single
unassisted memory of witnesses by document, nor, when contained in
requiring certain enumerated two or more papers, need each
contracts and transactions to be paper to be sufficient as to contents
evidence by a writing signed by the and signature to satisfy the statute.
party to be charged.  In addition, it is not necessary to
establish the authenticity of the note
or memorandum for the purpose of
showing prima facie that the contract
How Statute of Frauds Operates
is enforceable. The authenticity of
 The statute states that “evidence of the writing need not be established
the agreement cannot be received until the trial is held.
without the writing, or secondary
evidence of its contents.”
 Thus, the statute simply provides the Note or Memorandum Must Be Complete
method by which the contracts in Itself
enumerated therein may be proved
but does not declare them invalid  However, for a note or memorandum
because they are not reduced in to satisfy the Statute, it must be
writing. complete in itself and cannot rest
partly in writing and partly in parol.

YRSC – Obligations and Contracts Reviewer, 2019-2020

 Page 6 of 12

 The note or memorandum must  Partial execution is even enough to

contain the name of the parties, the bar the application of the Statute of
terms and conditions of the contract, Frauds.
and a description of the property  When the party concerned has
sufficient to render it capable of pleaded partial performance, such
identification. part is entitled to a reasonable
 Such note or memorandum must chance to establish by parol
contain the essential elements of the evidence the truth of this allegation,
contract expressed with certainty as well as the contract itself.
that may be ascertained from the
note or memorandum itself, or some
other writing to which it refers or Applicable to Actions for Violation of
within which it is connected, without Contract or for Its Performance
resorting to parol evidence.
 To be binding on the persons to be  The Statute of Frauds does not
charged, such note or memorandum apply to actions which are neither
must also be signed by the said violation of a contract nor for the
party or by his agent duly authorized performance thereof.
in writing.  In order that the defendant may
successfully invoke the defense of
Statute of Frauds by objecting to the
Basic Principles Governing Statute of presentation of parol evidence to
Frauds prove the existence of the contract,
the action must be either for specific
1. Applicable only to purely executory performance of the oral contract or
contract; for the recovery of damages arising
2. Applicable to actions for violation of from a violation thereof.
contract or for its performance;
3. Defense is exclusive to parties;
4. Defense can be waived; and Defense Is Exclusive to Parties
5. Defense is limited to specific
transactions.  The defense of Statute of Frauds
can be relied only by the parties to
the contract or their representative
Applicable Only to Purely Executory or privies, or those whose rights are
Contract directly controlled by the statute.
 Note that unenforceable contract,
 The Statute of Frauds applies only to including those which infringe the
executory contracts. It does not statute of frauds, cannot be assailed
apply to contracts which have been by third persons. Article 1408
completely or partially performed. provides, “Unenforceable contracts
 The reason for the rule is simple: cannot be assailed by third
xxx In executory contracts there is a persons.”
wide field for fraud because unless
they be in writing there is no
palpable evidence of the intention of Defense Can Be Waived
the contracting parties. The statute
has precisely been enacted to  The defense of the Statute of Frauds
prevent fraud. However, if a can be waived either:
contract, has been totally or partially 1. By failing to object to the
performed, the exclusion of parol presentation of oral evidence
evidence would promote fraud or to prove the contract; and
bad faith, for it would enable the 2. By accepting benefits
defendant to keep the benefits therefrom.
already delivered by him from the  On the score, Article 1405 states,
transaction in litigation, and, at the “Contracts infringing the Statute of
same time, evade the obligations, Frauds, referred to in No. 2 of Article
responsibilities or liabilities assumed 1403, are ratified by the failure to
or contracted by him thereby. object to the presentation of oral
evidence to prove the same, or by
acceptance of benefits under them.”
The Doctrine of Partial Performance

YRSC – Obligations and Contracts Reviewer, 2019-2020

 Page 7 of 12

Defense Is Limited to Specific contracts of conveyance. It

Transactions has also been held to have
no application to an
 The statute of frauds refers to innominate contract, as
specific kinds of transactions and where an interpreter
cannot apply to any other rendered services for an
transactions that is not enumerated inconsiderable number of
in Article 1403, paragraph 2. times; to employment of a
 Thus, the following are not covered attorney or an authority to
by the Statute of Frauds: employ an attorney; or to a
1. An agreement creating an condition upon which a deed
easement of right-of-way is delivered in escrow.
since it is not a sale of real
property or of an interest Specific Contracts Covered By Statute of
therein; Frauds
2. An agreement for the setting
up of boundaries, hence, an  Pursuant to Article 1403 (2), the
oral testimony to prove such following contracts and/or
agreement is admissible; agreements are covered by the
3. An oral partition of real Statute of Frauds:
property is enforceable since a) An agreement that by its
partition is not a conveyance terms is not to be performed
of property but simply a within a year from the making
segregation and designation thereof;
of the part of the property b) A special promise to answer
which belongs to the co- for a debt, default, or
owners. miscarriage of another;
4. A right of first refusal is not c) An agreement made in
among those listed as consideration of marriage,
unenforceable under the other than a mutual promise
Statute of Frauds. to marry;
Furthermore, the application d) An agreement for the sale of
of Article 1403 (2) goods, chattels, or things in
presupposes the existence of action, at a price not less
a perfected, albeit unwritten, than five hundred pesos,
contract of sale. A right of unless the buyer accept and
refusal is not by any means a receive part of such goods
perfected contract of sale of and chattels, or the evidence,
real property. At best, it is a or some of them, of such
contractual grant, not of the things in action, or pay at the
sale of the real property time some part of the
involved, but of the right of purchase money; but when a
first refusal over the property sale is made by auction and
sought to be sold; entry is made by the
5. When one of the parties is auctioneer in his sales book,
trying to enforce the delivery at the time of sale, of the
to him 3,000 square meters amount and kind of property
of land which he claims the sold, terms of sale, price,
defendant orally promised to names of purchasers and
do in consideration of his person on whose account the
services as mediator or sale is made; it is sufficient
intermediary in effecting a memorandum;
compromise of a certain civil e) An agreement for the leasing
case since such contract is in for a longer period than one
no sense a “sale of real year, or for the sale of real
property or of any interest property or of an interest
therein”; and therein; and
6. The Statute of Frauds is not f) A representation as to the
applicable to wills or to credit of a third person.
renunciation or partition of
inheritance, these
transactions not being Contract Not to be Performed Within A
year

YRSC – Obligations and Contracts Reviewer, 2019-2020

 Page 8 of 12

 An agreement that by its term is not another is required to be in writing or

to be performed within a year from to be evidenced by some note or
the making thereof is required to be memorandum signed by the
in writing to be enforceable under promisor to be enforceable against
the Statute of Frauds. the latter.
 Thus, the contracts of guaranty
proper and suretyship are covered
by the Statute.

Test in Determining Whether the Test in Determining Whether Promise Is

Contract Is Within One-Year Rule Within the Statute

 The test to determine whether an  The true test as to whether a

oral contract is enforceable under promise is within the statute had
the one-year rule of the Statute of been said to lie in the answer to the
Frauds is whether, under its own question whether the promise is an
terms, performance is possible original or a collateral one:
within a year from the making 1. Original or independent –
thereof. If so, the contract us outside of the promisor becomes
of the Statute of Frauds and need thereby primarily liable for
not be in writing to be enforceable. the payment of the debt, the
 The fact that the performance promise is not within the
actually may have taken more than statue.
one year after the making of the 2. Collateral – the promisor
contract is immaterial as long as becomes thereby merely a
performance is possible in less than surety, the promise must be
a year under the terms of the in writing.
contract.

Covers Contracts of Guaranty and

Applies Only to Agreements Not to Be Suretyship
Performed on Either Side  Under Article 1403 (2) (b),
 Statute of Frauds applies only to concerning a guaranty agreement,
agreements not to be performed on which is a promise to answer for the
either side within a year from the debt or default of another, the law
making thereof. clearly requires that it, or some note
or memorandum thereof, be in
writing. Otherwise, it would be
unenforceable unless ratified. The
Effect or Partial Performance
same requirement is applicable to a
 Contracts which by their terms are contract od suretyship.
not to be performed within one year  Guaranty is not presumed, but must
may be taken out of the Statue of be express, and cannot extend to
Frauds through performance by one more than what is stipulated therein.
party thereto. This is the obvious rationale why a
 A partial performance of the contract contract of guarantee is
may take the case out of the unenforceable unless made in
operation of the statute, it must writing or evidenced by some
appear clear that the full writing.
performance has been made by one  However, what is required to be
party within one year, as otherwise stated expressly and to be in writing
the statute would apply. is the guarantor’s undertaking or
special promise to answer for the
debt of the principal debtor,
Special Promise to Answer for Debt, otherwise such promise may not be
Default or Miscarriage of Another enforced against the guarantor
pursuant to the Statute of Frauds.
 A special promise to answer for the
debt, default or miscarriage of

YRSC – Obligations and Contracts Reviewer, 2019-2020

 Page 9 of 12

Agreements in Consideration of The written memorandum is required

Marriage to be signed by the party against
whom the enforcement is sought.
 Except for mutual promise to marry,  Where a number of articles, the
oral agreements in consideration of price of each is less than Php 500,
marriage are unenforceable under but the aggregate price of all the
the Statute of Frauds. goods exceeds that amount, are
purchased under such
circumstances as to constitute one
trade, it has been held that the
Statute of Frauds Apply.

Marriage Settlement
Qualification of the Rule
 The Family Code requires that
marriage settlements and any  When the sale is made by auction
modifications thereof shall be in and entry is made by the auctioneer
writing but it did not provide if such in his sales book, at the time of the
formality is not allowed. sale, of the amount and kind of
property sold price, names of the
purchasers and person on whose
Donation Proper Nuptias account the sale is made, it is
considered as sufficient
 While donation proper nuptias are memorandum, in which case, the
contracts in consideration of a sale is enforceable between the
marriage, they are not governed by purchaser and the person on whose
the Statue of Frauds with respect to account the sale is made
their formalities. notwithstanding the absence of their
 Instead, donations proper nuptias signatures in the auctioneer’s sales
are governed by the formalities book.
required in ordinary donations
pursuant to the provisions of Articles
748 and 749 in relation to Article 83.
Exception to the Rule
 If the buyer accepts an receives part
Mutual Promise to Marry of the goods and chattels or pays at
the time some part of the purchase
 A promise to marry is not covered by money, the transaction is taken out
the Statue of Frauds. An oral of the Statue of Frauds under the
promise of marriage can be proved doctrine of partial performance.
by parol evidence.
 While, as a rule, a breach of promise
to marry per se is not an actionable
Leasing for More Than a Year and Sale of
wrong, there are instances where
Real Property
such oral promise is necessary in
actions for recovery of damages.  Not all agreements affecting and
must be put in writing to attain
enforceability. Under the Statue of
Sales of Goods, Chattels or Things in Frauds, Article 1403 (2) (e), such
Action formality is only required contracts
involving leases for longer than one
 A contract for the sale of goods, year, or for the sale of real property
chattels or things in action for a price or of an interest therein.
of Php 500.00 or more must be in
writing to be enforceable under the
Statue of Frauds.
Lease of Realty for Longer Period Than
 The requirement of the Statute can
One Year
be satisfied, however, either by
having the contract itself in writing,  Statue of Frauds requires that the
or by having a subsequent written contracts lease over real property be
memorandum of the oral agreement. in writing or be in some note or

YRSC – Obligations and Contracts Reviewer, 2019-2020

 Page 10 of 12

memorandum signed by the party Other Contracts Where From Is Also

charged, if “the agreement for the Indispensable
leasing is for a longer period than
one year”. 1. Negotiable Instruments; and
 The requirement of the Statute of 2. Agreement to pay monetary interest
Frauds is also necessary in case of
agreement to renew the lease.
Negotiable Instruments
 Section 1 of Act No. 2031, otherwise
known as the Negotiable
Instruments Law, requires that
instruments, such as promissory
note and bills of exchange, must be
in writing in order to be negotiable.

Sale of Realty
 Under the Statue of Frauds,
however, a sale of real property or Agreement to Pay Monetary Interest
any interest therein, to be
enforceable, is required to be in  The law requires that the agreement
writing and signed by the party to pay monetary interest must be
against whom the contract is being express and in writing. On this
enforced. score, Article 1956 provides. “No
interest shall be due unless it has
been expressly stipulated in writing.”
 Payment of monetary interest is
Representations As to Credit of Third allowed only if:
Persons 1. There was an express
 To bring the case within the stipulation for the payment of
operation of the Statute of Frauds, interest; and
the representation must have been 2. The agreement for the
made by a stranger to the contract in payment of interest was
which credit was extended, or as reduced in writing.
otherwise stated, the representation  Collection of interest without any
must relate to third person’ credit. stipulation therefor in writing is
prohibited by law.
 While the creditor may not legally
compel the debtor to pay monetary
Express Trust Over Immovable or Any
interest pursuant to an oral
Interest Therein
agreement for its payment, should
 Express trusts are created by the debtor decide to voluntarily pay
intention of the trustor or of the the same, the creditor is
parties. nevertheless authorized to retain the
 These express trusts are those payment.
which are created by the direct and
positive acts of the parties, by some
writing or deed, or will, or by words Art. 1357. If the law requires a document
either expressly or impliedly evincing or other special form, as in the acts and
an intention to create a trust, contracts enumerated in the following
although no particular words are articles, the contracting parties may
required for its creation, it being compel each other to observe that form,
sufficient that a trust is clearly once the contract has been perfected.
intended. This right may be exercised
 An express trust concerning an simultaneously with the action upon the
immovable r any interest therein contract.
cannot be proved by parol evidence.
It must be proven by some writing or
deed. Remedy Granted Under Article 1357:
Right to Compel Each Other to Observe
Required Form

YRSC – Obligations and Contracts Reviewer, 2019-2020

 Page 11 of 12

 Under Article 1357, its enforceability All other contracts where the
is recognized as each contracting amount involved exceeds Five hundred
party is granted the right to compel pesos must appear in writing, even a
the other to execute the proper private one. But sales of good, chattels,
public instrument so that the valid or things in action are governed by
contract of sale can be duly Article 1403, No. 2 and 1405.
registered and can bind third
persons.
Form For Greater Efficacy or
Convenience: Purpose and Effect of
Requisites for Exercise of Right Under Form in Article 1358
Article 1357
 There are certain contracts which
 Before the remedy under Article are provided to be in a public
1357 can be availed of, it is required document under Article 1358.
that the contract between parties However, the requirement of a public
must have been perfected first and document is not for the validity or
that it is already valid and enforceability of the contract but only
enforceable as to form. Article 1357 for its greater efficacy or
says that the remedy therein convenience or to bind third
provided us available only “once the persons.
contract has been perfected.”
 In order for said remedy to be Contracts Required to be in Public
exercised, it is necessary that the Document for Convenience
following requisites must concur: 1. Acts and contracts which have for
1. The contract us perfected; their object the creation,
2. It is valid as to form; and transmission, modification or
3. It is also enforceable under extinguishment of real rights over
the Statute of Frauds. immovable property; sales of real
 Thus, when a contract is enforceable property or of an interest therein are
under the Statute of Frauds, and a governed by Article 1403, No. 2 and
public document is necessary for its 1405;
registration in the Registry of Deeds, 2. The cession, repudiation or
the parties may avail themselves of renunciation of hereditary rights or
the right under Article 1357. those of conjugal partnership of
gains;
3. The power to administer property, or
Art. 1358. The following must appear in a any other power which has for its
public document: object an act appearing or which
should appear in a public document,
1. Acts and contracts which have or should prejudice a third person;
for their object the creation, 4. The cession of actions or rights
transmission, modification or proceeding from an act appearing in
extinguishment of real rights over a public document.
immovable property; sales of real
property or of an interest therein
are governed by Article 1403, No.
2 and 1405; Contracts Required to be in Writing
2. The cession, repudiation or Under Article 1358
renunciation of hereditary rights  The last paragraph of Article 1358
or those of conjugal partnership requires that “all other contracts
of gains; where the amount involved exceeds
3. The power to administer property, Five hundred pesos must appear in
or any other power which has for writing, even a private one. But
its object an act appearing or sales of good, chattels, or things in
which should appear in a public action are governed by Article 1403,
document, or should prejudice a No. 2 and 1405.”
third person;  The writing required in the last
4. The cession of actions or rights paragraph is merely for convenience
proceeding from an act appearing and not for the purpose of validity
in a public document. and enforceability.

YRSC – Obligations and Contracts Reviewer, 2019-2020

 Page 12 of 12

YRSC – Obligations and Contracts Reviewer, 2019-2020