Articles 1355-1380

Kenneth Lim
Kirsten Lomuntad
William Mariano
 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
 Art. 1355
Lesion - inadequacy of the cause
In a contract of sale, this would mean the
insufficiency of the price paid for the thing
Example
Dianne needs money to pay for her pugs expensive medical bills,
which is a very urgent reason to her, so she decided to sell one of
her properties for less than its market value. AJ offers to buy her
property for a lower price knowing that A needs the money to
immediately cure her pug. Dianne accepts AJs offer

The inadequacy in price will not lead to annulment of the contract

Dianne can allege that she gave her consent because of undue
influence
FORM OF CONTRACTS
CHAPTER THREE
 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.
 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
 Contracts are binding
General rule on the whether or not in writing

form of contracts
as long as the essential
elements are present:
Consent
Art. 1358
Object
Cause
 Sale is a consensual
contract
General rule on the It is perfected by a

form of contracts
meeting of minds on three
requisites:
Subject matter, price and
Art. 1358
terms and conditions
Exception: Sale of real
property
General rule on the The contract serves as an

form of contracts
articulation of all the
stipulations by the parties
(terms of an agreement
Art. 1358
are written down)
General rule on the No written contract is
required:
form of contracts Common carriage of
passengers and partition
Art. 1358 of property
 Certain provisions of the
law require form for

Exceptions to the particular contracts, to wit:

1) Form is required for the
rule validity of the contract
2) Form is required for
Art. 1358 enforceability such as
those mentioned in the
Statute of Frauds under
Article 1403
 Examples of contracts where

1) Form required for

a written from is required for
validity:

validity
Donation
Antichresis
Interest in loan
Art. 1358 Sale of land by an agent
Contribution of immovables
in a partnership
2) Form needed for Art. 1403 lists down certain
contracts that have to be in
enforceability writing and signed by the
party against whom the
Art. 1358 contract is sought to be
enforced
Contracts that need Contract that appears in a
public instrument - contract

to be in public
is in writing and is
acknowledged before a

instrument
notary public
Only for convenience and for
validity
Art. 1358 Absence of a formal deed of
sale does not render the
agreement null and void or
without any effect
 Art. 1358

The following must appear in a public document:

a) 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 governed by Art. 1403, No.
2, and 1405;
Example 1
Ramuel pays 2M to Joseph to grant him right of way over Josephs
property however, the contract is not in a public instrument.

If Joseph sells his property to Zara, Ramuel cannot demand a right

of way from Zara because Zara is unaware of the right of way
contract and is not bound by it
Ramuel can keep on using his right of way that he obtained if
Joseph does not sell his property to a third party.
Example 2
Yza accepts Bells offer to buy Bells land for 2M however, the
contract is not in writing nor is it in a public instrument.

If Bell goes to Yza with 2M cash, Yza can refuse the payment
because their contract is not enforceable (does not comply with
Art. 1403)
The contract cannot be registered as it is not in a public
instrument
Example 3
Francis purchases a parcel of land from Liam. The contract is in writing
and signed by both parties. However, the contracts was not subscribed
and sworn before a notary public, so it is not a public instrument.

Contract is enforceable between Francis and Liam

If Francis goes to Liam with 1M cash, Liam cannot refuse payment and the
transfer of ownership of the parcel of land to Francis
Francis has the right to compel Liam to execute the public document
necessary for the conveyance of the property and registration of the sale.
 Art. 1358

b) The cession, repudiation or renunciation of hereditary rights or of

those of the conjugal partnership of gains

Conjugal partnership of gains - one type of property relations

between husband and wife
 Art. 1358
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;

Revocation of Special Power of Attorney to mortgage property should

appear in a public instrument.
 Art. 1358

d) The cession of actions or rights proceeding from an act appearing in a public

document.

All other contracts where the amount exceeds Php 500 must be in writing,
even a private one (this requirement is only for convenience)
 Right to compel execution of written instrument

The contracting parties may compel each other to observe the form or
document required by the law once the contract has been perfected.
This right may be exercised simultaneously with the action to enforce the
contract
Example
Ramuel pays 2M to Joseph to grant him right of way over Josephs
property however, the contract is not in a public instrument.

It is enforceable between Ramuel and Joseph

Ramuel can go to court to enforce his right of way over Josephs
property
Ramuel can also compel Joseph to execute a public instrument
that embodies the grant of the right of way
 Sample of a deed of absolute sale for a parcel of land which appears in a
public instrument:
Simple deed where the purchase price was immediately received by the
buyer
Friendly transaction - there are no warranties and covenants
The acknowledgement portion of the deed of absolute sale means that
contracting parties who sign the deed should personally appear and sign
before a notary public
REFORMATION OF INSTRUMENTS
CHAPTER FOUR
 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.
 Art. 1359
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
 Art. 1360

The principles of the general law on the reformation of

instruments are hereby adopted insofar as they are not in conflict
with the provisions of this Code.
 Art. 1361

When a mutual mistake of the parties causes the failure of the

instrument to disclose their real agreement, said instrument may
be reformed.
 Art. 1362

If one party was mistaken and the other acted fraudulently or

inequitably in such a way that the instrument does not show
their true intention, the former may ask for the reformation of
the instrument.
 Art. 1363

When one party was mistaken and the other knew or believed
that the instrument did not state their real agreement, but
concealed that fact from the former, the instrument may be
reformed.
 When through the ignorance,
lack of skill, negligence or bad
faith on the part of the
person drafting the
Art. 1364 instrument or of the clerk or
typist, the instrument does
not express the true intention
of the parties, the courts may
order that the instrument be
reformed.
 Patrick agreed to sell his
condo unit to Bob for P100k
and the both parties agreed
to it. The clerk made a
Example mistake in writing the draft
and the parties was later on
notified that the proper
amount should be
represented in dollars. The
contract then will be
reformed.
 If two parties agree upon the
mortgage or pledge of real or
personal property, but the
Art. 1365 instrument states that the
property is sold absolutely or
with a right of repurchase,
reformation of the
instrument is proper.
 Kaye secured a loan from Jay
in the amount of P6M. They
agreed that Kaye will
mortgage to Jay her house as
security for the loan. When

Example
the contract was drawn, it
was made to appear that
Kaye was selling the house.
Under Art. 1365, reformation
of instrument is proper
because the contract failed to
express the true intentions of
the parties.
 There shall be no reformation
in the following cases:
1) Simple donations inter vivos
(a transfer or gift that is made
Art. 1366 during the donor's lifetime)
wherein no condition is
imposed;
2) Wills;
3) When the real agreement is
void.
 When one of the parties has

Art. 1367
brought an action to enforce
the instrument, he cannot
subsequently ask for its
reformation.
 When a party brings an action
to enforce a contract, this
means that he admits its
validity and admits that the
contract expresses the true
intention of the contracting
parties.
 Reformation may be ordered
at the instance of either party

Art. 1368
or his successors in interest, if
the mistake was mutual;
otherwise, upon petition of
the injured party, or his heirs
and assigns.
 Vans and Daniel made a
written contract that was

Example
mortgage although they
intended a contract of sale.
They could ask for
reformation due to their
mutual error.
 The procedure for the
reformation of the
Art. 1369 instrument shall be governed
by rules of court to be
promulgated by the Supreme
Court.
 Reformation of instrument
presumes a valid agreement
between the parties but the
contracts as written and

Additional notes:
signed by them does not
accurately express their
agreement. The parties then
have a right of action for the
reformation of the contract
so that their true intent may
be expressed.
 The following are the
requisites for reformation:
A. A meeting of minds on the
contract
B. The contract as written does
Additional notes: not express the true
agreement of the parties; and
C. The written contracts failure
to express the parties
agreement is due to mistake,
fraud, inequitable ocnduct, or
accident.
INTERPRETATION OF CONTRACTS
CHAPTER FIVE
 If the terms of a contract are
clear and leave no doubt
upon the intention of the
contracting parties, the literal

Art. 1370
meaning of its stipulations
shall control.
If the words appear to be
contrary to the evident
intention of the parties, the
latter shall prevail over the
former.
 Literal meaning controls
when language is clear.
Contract of parties should be
fulfilled according to the
literal sense of their
stipulations if the terms of
the contract are clear and
unequivocal.
 In order to judge the
intention of the contracting
Art. 1371 parties, their
contemporaneous and
subsequent acts shall be
principally considered.
 The contemporaneous and
subsequent acts of the
parties shall be considered by
the court in determining its
meaning and ascertaining the
intention of parties when
their intentions are not
ascertained from the words
used in their contract.
 However general the terms of
a contract may be, they shall
not be understood to
Art. 1372 comprehend things that are
distinct and cases that are
different from those upon
which the parties intended to
agree.
 Special intent prevails over a
general intent. Special
provisions covering the same
subject matter will have the
control over general
provisions when the two
cannot stand together.
 If some stipulation of any
contract should admit of

Art. 1373
several meanings, it shall be
understood as bearing that
import which is most
adequate to render it
effectual.
 The various stipulations of a
contract shall be interpreted
Art. 1374 together, attributing to the
doubtful ones that sense
which may result from all of
them taken jointly.
 Words which may have
different significations shall
Art. 1375 be understood in that which
is most in keeping with the
nature and object of the
contract.
 The usage or custom of the
place shall be borne in mind

Art. 1376
in the interpretation of the
ambiguities of a contract, and
shall fill the omission of
stipulations which are
ordinarily established.
 The interpretation of obscure

Art. 1377
words or stipulations in a
contract shall not favor the
party who caused the
obscurity.
 When it is absolutely impossible to
settle doubts by the rules established
in the preceding articles, and the
doubts refer to incidental
circumstances of a gratuitous
contract, the least transmission of
rights and interests shall prevail. If the

Art. 1378 contract is onerous, the doubt shall be

settled in favor of the greatest
reciprocity of interests.
If the doubts are cast upon the
principal object of the contract in such
a way that it cannot be known what
may have been the intention or will of
the parties, the contract shall be null
and void
 The principles of

Art. 1379
interpretation stated in Rule
123 of the Rules of Court shall
likewise be observed in the
construction of contracts.
Rules of Court
Sec. 10 - Interpretation of a writing according to its
legal meaning.
Sec. 11 - Instrument construed so as to give effect to all
provisions.
Sec. 12 - Interpretation according to intention; general
and particular provisions.
Rules of Court

Sec. 13 - Interpretation according to circumstances.

Sec. 14 - Peculiar signification of terms.
Sec. 15 - Written words control printed.
Sec. 16 - Experts and interpreters to be used in
explaining certain writings.
Rules of Court

Sec. 17 - Of two constructions, which preferred.

Sec. 18 - Construction in favor of Natural right.
Sec. 19 - Interpretation according to usage.
RESCISSIBLE CONTRACTS
CHAPTER SIX
Art. 1380
Contracts validly agreed upon
may be rescinded in the cases
established by law.
Rescissible Valid Contracts that are also

Contracts
defective due to economic
injury or damage to (a) one of
the contracting parties, or (b)
a third party.
Requisites for the Rescission of a Contract
1. It must have all the elements of a contract e.g.
consent, object, and cause.
2. The Contract causes economic injury or damage to
one of the contracting parties or a third party.
3. Such Injury or Damage must fall under one of the cases
established by Law.
Requisites for the Rescission of a Contract
4. There is obligation of mutual restitution i.e. to return
the things which the parties received from each other.
5. The action for rescission must be filed within the
prescriptive period.
6. There is no other remedy available for the party
injured to obtain reparation for the damage caused.