Notes Oblicon1356 1379

8/13/2019 Notes Oblicon1356 1379

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Obligations and Contracts TITLE II ContractsChapter 3 Form of Contracts

Article 1356Contracts shall be obligatory in !hate"er form they may ha"e beenentered into pro"ided all the essential re#$isites for their "alidity arepresent% &o!e"er !hen the la! re#$ires that a contract be n some

form in order that it may be "alid or enforceable or that a contract bepro"ed in a certain !ay that re#$irement is absol$te andindispensable% In s$ch cases the right of the parties stated in thefollo!ing article cannot be e'ercised%

General Rule( the spiritual system; spirit over form) contractmay be in !hate"er form pro"ided all essential re#$isites for"alidity are present and is th$s binding on the contracting parties* This article is in recognition of the a$tonomy of !ill o"er strict

formalism* Exception( +hen is form absol$te and indispensible,

1% +hen form is essential to the validity of the contract

-% +hen contract is unenforceable unless it is in a certainform* As long as the possibility of dishonesty e'ists the spirit$al

system cannot be adopted in an $n#$alified manner

.alid and effecti"e contracts bet!een parties(1% Oral contract of partnership

a% Ci"il or commercialb% Irrespecti"e of the amo$nt of contrib$tion of the partners

-% Oral contract of sale of real property3% E'change of land altho$gh not in !riting or !itho$t registration IF the

rights of I//OCE/T third parties or s$bse#$ent transferees are notin"ol"ed

0% Lease of ser"ices5% E'tra$dicial partition made "erbally6% Agency not in !riting2% ri"ate doc$ment contemplating s$bse#$ent e'ec$tion of p$blic doc

4 pri"ate doc has same force as p$blic doc bet!een parties !hoe'ec$te them and their legal reps

3 ro$ps of Formalities re#$ired by la!1% Those re#$ired for the validity of the contract ad esentia,

ad solemnitatem

-% e#$ired to ma7e contracts effective against third parties81352 and 1359:

3% Those re#$ired for the p$rpose of proving the existence ofthe contract or formalities ad probationem s$ch as those in;tat$te of Fra$ds in 10<3

Contracts that re#$ired certain formalities for "alidity(1% /egotiable instr$ments in the form of pro"ided by the /egotiable

Instr$ments La!-% =onations of personal property abo"e 5<<< m$st be made and

accepted in !riting

3% =onations of real property m$st be made and adopted in p$blicinstr$ments

0% Interest in loans m$st be e'pressly stip$lated in !riting other!isethey are not d$e

5% rincipal and interest in antichresis m$st be specified in !riting elsecontract is "oid

6% ;ale or transfer of large cattle m$st be registered and a certificate oftransfer is sec$red > Cattle egistration Act) other!ise o!nership ofcattle is not passed and may still be attached by "endor

2% Chattel mortgage also re#$ires registration9% artnership !ith contrib$tions of real property or real rights m$st be

made in a p$blic instr$ment !ith an in"entory attached

1352 > res$pposes a "alid contract) 1352 refers to form re#$iredto ma7e contract effecti"e not "alid* If the "alidity of a contract is made to depend $pon a

formality 1352 cannot be bro$ght to ma7e the other partye'ec$te the formality

Article 1352If the la! re#$ires a doc$ment or other special form as in the actsand contracts en$merated in the follo!ing article the contractingparties may compel each other to obser"e that form once thecontract has been perfected% This right may be e'ercisedsim$ltaneo$sly !ith the action $pon the contract

* rants to each contracting party the po!er to compel theother to e'ec$te the formalities re#$ired by the la! as soonas the re#$isites for the "alidity of the contract are present

* An I?LIE= condition of every contract !hich grants aremedy of enforceability of a contract so that !hene"er aspecial e'trinsic form is re#$ired for the e'ec$tion of a p$blic!riting or any special form these must be complied with even without express agreement by the contractingparties

* =oes /OT s$bordinate the principal action 8of complying !ithobligation@contract itself,: to the secondary action concerning

the form 8complying !ith the form,:

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* =oes /OT impose an obligation) instead confers a pri"ilege >1356 1352 and 1359 =OE; /OT re#$ire the e'ercise of theaction to compel e'ec$tion 8action on formalities,: to be?A=E EFOE action deri"ed from the contract

o Action for compliance !ith re#$ired formaliti3es may

be one ca$se and an action for the enforcement of thecontract as another ca$se may be made in the ;A?ECO?LAI/T

1352 and 1359 do not operate against "alidity of contract nor"alidity of acts "ol$ntarily performed by either party beforee'ec$tion of p$blic instr$ment* BT from the moment of them in"o7es s$ch pro"isions

e"ident that #$estion in"ol"ing e'ec$tion m$st precede thedetermination of other obligations deri"ed from the contract

;$r"i"al of actions > heirs of a dead party to a contract may becompelled to e'ec$te the proper docs* &eirs are not third parties* &eirs s$cceed to !hate"er interest their predecessors ha"e

o"er a property co"ered in a contract* ALL &EI; m$st be made parties of s$ch action

Article 1359 The follo!ing m$st appear in a p$blic doc$ment(

1% Acts or contracts !ith ha"e for their obect the creationtransmission modification or e'ting$ishment of real rightso"er immo"able property) sales of real property or of aninterest therein are go"erned by articles 10<3 /o% - and 10<5

-% The cession rep$diation or ren$nciation of hereditary rights orof those of the con$gal partnership of gains

3% The po!er to administer property or any other po!er !hich

has for its obect an act appearing or !hich sho$ld appear in ap$blic doc$ment or sho$ld pre$dice a third person

0% The cession of actions or rights proceeding from an actappearing in a p$blic doc$ment

All other contracts !here the amo$nt in"ol"ed e'ceeds 5<< m$stappear in !riting e"en a pri"ate one% $t sales of goods chattels orthings in action are go"erned by articles 10<3 no% - and 10<5

* Article en$merates acts and contracts !hich sho$ld be in!riting either in a p$blic or pri"ate instr$ment

o ed$ction in !riting /OT an essential re#$isite for the

e'istence of the contract

o ?erely coercive po!er) contracting parties maycompel the obser"ance of these formal re#$isites

* Contracts en$merated are still "alid bet!een contractingparties e"en !hen not p$blic or pri"ate !ritings

The LEALIATIO/ of a contract by means of 81: p$blic !ritingand 8-: entry into the register of deeds* /OT re#$isites for "alidity of contract as bet!een contracting

parties* These are EDBIE= for the p$rpose of ma7ing contract

EFFECTI.E as against T&I= E;O/;

Chapter 0 eformation of instr$ments

;o$rce( American La!) b$t before enactment of Ci" Code hil ;Calready reformed !ritten contracts !here a mista7e or imperfectionof the !riting or that the !riting fails to e'press the tr$e agreementis pleaded and pro"eneason( EDBIT dictates reformation of an instr$ment so that the TBE I/TE/TIO/ of the contracting parties may be e'pressed

* Co$rts do not ma7e a ne! contract) only to e'press the realagreement

* It !o$ld be B/B;T and I/EDBITALE to enforce a !ritteninstr$ment !hich does not reflect the real meeting of minds ofthe parties

* To forestall effects of fra$d mista7e ine#$itable cond$ct oraccident

Article 135G+hen there ha"ing been a meeting of the minds of the parties to acontract their tr$e intention is not e'pressed in the instr$mentp$rporting to embody the agreement by reason of mista7e fra$dine#$itable cond$ct or accident one of the parties may as7 for thereformation of the instr$ment to the end that s$ch tr$e intention may

be e'pressed%If mista7e fra$d ine#$itable cond$ct or accident has pre"ented ameeting of the minds of the parties the proper remedy is /OTreformation of the instr$ment b$t ann$lment of the contract

A;I; of reformation(* +hen instr$ments red$ced in !riting do not correctly e'press

the tr$e intentions of the contracting parties* Action of reformation ass$mes that parties had a meeting of

minds@came to an $nderstanding b$t that d$ring thered$ction in !riting > thro$gh mista7e fra$d ine#$itablecond$ct or accident > some pro"ision !as omitted or

mista7enly inserted so that the parties did not intend toe'press the agreement in the form that it too7

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* An action to C&A/E the instr$ment so as to ma7e it conformto the contract agreed $pon

e#$isites(1% A meeting of the minds $pon the contract-% Instr$ment or doc$ment e"idencing the contract does NOT

express the true agreement bet!een the parties3% Fail$re to e'press tr$e agreement m$st be d$e to mistae,

fraud, ine!uitable conduct or accident

EFO?ATIO/ A//BL?E/T

res$pposes a meeting of theminds a "alid e'isting contract

/O "alid e'isting contractbeca$se no meeting of the minds

Only the doc$ment or instr$ment!hich !as dra!n $p in !ritingand signed by the parties doesnot correctly e'press the terms ofthat agreement

Or consent of either one of theparties !as "itiated by "iolenceor intimidation or mista7e orfra$d

i"es LIFE to a contract $poncertain corrections

A complete n$llification of thecontract

eneral r$le( eformation relates bac7 to and ta7es effect fromthe time of original e'ec$tion of the instr$ment

;tat$e of Fra$ds /OT an impediment to reformation !hether aninstr$ment by mista7e includes property that !as not intendedor omits property or conveys too much

Article 136< The principles of general la! on the reformation of instr$ments arehereby adopted insofar as they are not in conflict !ith the pro"isionsof the Code

Comment of $stice L eyes( this article is a delegation ofpower to the courts to determine !hat the la! is since thereare not standards set to enable the determination !hich la! ismeant%

Article 1361 ?I;TAHE OT&+hen a m$t$al mista7e of the parties ca$ses the fail$re of theinstr$ment to disclose their real agreement said instr$ment may bereformed

e#$isites(1% ?ista7e is one of fact

o I/CLB=E; something !hish ;&OBL= /OT be there oro O?IT; something !hich sho$ld be there

o ;omething =IFFEE/T from !hat !as intended

-% Common to both parties 8m$t$al:o ?$st be m$t$al !hen mista7e ALO/E is the gro$nd for

reformationo .iolates $nderstanding of OT& partieso ?$st be in reference to the ;A?E mattero arties m$st ;&O+ that they made a "alid oral

agreement b$t the attempt to p$t s$ch oral agreement

in !riting failed beca$se of mista7e) reformation in thiscase enforces the OII/AL agreement

3% "lear and convincing proof of m$t$al mista7e 8more than amere preponderance of e"idence:

Article 136- ?I;TAHE O/EIf one party !as mista7en and the other acted fra$d$lently orine#$itably in s$ch a !ay that the instr$ment does not sho! theirtr$e intention the former may as7 for the reformation of theinstr$ment

A !ritten instr$ment may be reformed !hen there is ?I;TAHE in

one side and FAB= or I/EDBITALE CO/=BCT on the other side* One party ma7es a mista7e and the other 7no!s b$t conceals

it

e#$isites(1% ?ista7e of one of the parties-% Fra$d and ine#$itable cond$ct of the other party m$st be

clearly sho!n3% Fra$d and ine#$itable cond$ct of the other m$st be at the

time of e'ec$tion of the instr$ment0% ?ay be act$al or constr$cti"e5% ?$st refer to the contents of the agreement /OT to the obect

or the principal conditions of the original agreement

Ine#$itable cond$ct > doing acts or omitting to do acts !hich are$nconscionable as determined by the co$rts

Article 1363+hen one party !as mista7en and the other 7ne! or belie"ed thatthe instr$ment did not state their real agreement b$t concealed thatfact from the former instr$ment may be reformed

Article 1360 ?I;TAHE OF =AFT;?A/+hen thro$gh the ignorance lac7 of s7ill negligence or bad faith on

the part of the person drafting the instr$ment or of the cler7 or typist

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the instr$ment does not e'press the tr$e intention of the parties theco$rts may order that the instr$ment be reformed

+hen drafter acts $pon direction of parties he stands as anAE/T of the parties;atisfactory proof of mista7e of the agent is proof of the m$t$almista7e of the parties* In this case the !ritten e"idence of the contract I; /OT the

agreement of the parties) the tr$e agreement !as note'ec$ted

Article 1365If t!o parties agree $pon the mortgage or pledge of real or personalproperty b$t the instr$ment states that the property is soldabsol$tely or !ith a right of rep$rchase reformation of theinstr$ment is proper

=$e to se"erity of a contract pacto de retro it is declared to be amortgage and /OT A ;ALE !hene"er this interpretation $stifiesthe concl$sion

+hen facts indicate that the intention of the parties !as to enterinto a contract of mortgage altho$gh the !ritten instr$mentseems to be one of sale !ith right to rep$rchase* Intention of mortgage !ill pre"ail* Intention of the parties to be inferred from(

o The sim$ltaneo$s or s$bse#$ent acts of the partieso The stip$lation of the contract

* E'amples(o Bse of the !ord debtJ !hich is not in accord of a

transaction of saleo +hen a creditor holds on to a deed to a land absol$te

on its face as sec$rity for the repayment of the loanreser"ing to the "endor right of rep$rchase

* AOL E.I=E/CE admissible to pro"e s$ch agreements of theparties

Article 1366 There shall be no reformation in the follo!ing cases(

1% ;imple donations inter "i"os !herein no condition is imposed-% +ills3% +hen the real agreement is "oid

=onations and !ills are ATBITOB; dispositions of property

* eason !hy co$rts do not reform these(

o An action to reform is in the nat$re of an action for

specific performance and re#$ires "al$ableconsideration

o .al$able consideration is an element lac7ing bet!een

donee and donor and bet!een testator and beneficiary

eneral $le on +ills( 1366* E'ception( 29G !hich pro"ides that Konly imperfect or

erroneo$s descriptions of persons or property can becorrected) the manner !hich the testator disposes hisproperty cannot be changed by reformation

.oid agreements > !hen an instr$ment that is corrected !illbecome "oid or inoperati"e s$ch agreement !ill /OT EEFO?E=

Article 1362+hen one of the parties has bro$ght an action to enforce theinstr$ment he cannot s$bse#$ently as7 for its reformation

eason for article( party s$ing $nder the !ritten contract may besaid to ha"e ATIFIE= it

Article 1369eformation may be ordered at the instance of either party or hiss$ccessors in interest if the mista7e !as m$t$al) other!ise $ponpetition of the in$red party or his heirs and assigns%

Action for reformation may be bro$ght by(

?BTBAL mista7e /ot m$t$al mista7eAt the instance of either party Bpon petition of in$red party

;$ccessors in interest of either

party

Bpon petition of heirs and

assigns of in$red partyArticle 136G The proced$re for the reformation of instr$ments shall be go"ernedby r$les of co$rt to be prom$lgated by the ;$preme Co$rt

Chapter 5 Interpretation of Contracts

Article 132<If the terms of a contract are clear and lea"e no do$bt $pon theintention of the contracting parties the literal meaning of itsstip$lation shall control%If the !ords appear to be contrary to the e"ident intention of the

parties the latter shall pre"ail o"er the former

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Contents of a !ritten contract > e"idence of the terms of theagreement of the contracting parties* /o other e"idence b$t the contents of the contract B/LE;;

alleged and pro"ed that the I/TE/TIO/ of the parties isother!ise

* A contract is !hat the la! defines it to be not !hat it is calledin its title by the parties

Interpretation* Lang$age of a !riting is to be interpreted according to itsLEAL ?EA/I/ in the place of its e'ec$tion B/LE;; partiesha"e reference to a different place

* Terms are pres$med to ha"e been $sed in their I?A andE/EAL meaning BT e"idence can be admitted to sho!that the terms ha"e a local technical or pec$liar meaning and!ere $sed and $nderstood in s$ch manner

* +hen terms are CLEA and EMLICIT and there is no $stification to read any alleged intention of the parties theseterms are $nderstood LITEALL $st as they appear on theface of the contract

In constr$ction of an instr$ment intention of the parties m$st bep$rs$ed !hen(1% There is mista7e or imperfection of the !riting-% +riting fails to e'press the tr$e intent and agreement of the

parties3% There is an intrinsic ambig$ity in the !riting

Once true intent is established this pre"ails o"er !ords of the!ritten contract* Important tas7 in contract interpretation 4 ascertainment of

the intention of the contracting parties by loo7ing to the !ords

$sed to proect that intention

roof of Intention* ?$st be CLEA and carry to the mind of $dge an

I/EDBI.OCAL con"iction* E"ident intention 8general or m$t$al intention of both not $st

one party:

?$st be e'pressly p$t in iss$e in the pleadings !hether action isfor reformation or ann$lment before parol e"idence is s$bmitted

Article 1321In order to $dge the intention fo the contracting parties their

contemporaneous and subse!uent acts shall be principally considered

Intention can be determined(* y sho!ing circ$mstances $nder !hich the instr$ment !as

made* ;it$ation of the parties* ;it$ation of the s$bect 8sho$ldnNt this be obect,,:* elations bet!een the parties* ;$rro$nding circ$mstances

* $rpose and tenor of the !hole contract* +hen contract is in se"eral docs all these m$st be considered* All other facts !hich !ill enable the $dge to be in the position

of those !hose lang$age he m$st interpret

+hen the parties themsel"es ha"e already placed aninterpretation to their contract the co$rt ?B;T FOLLO+ thisinterpretation as an indication of the interpretation of the parties

Article 132- E/EAL A/= ATICBLA I/CO/;I;TE/C&o!e"er general the terms of a contract may be they shall not be$nderstood to comprehend things that are distinct and cases that are

different from those $pon !hich the parties intended to agree

In constr$ction of an instr$ment* !hen there is inconsistency the particular pro"ision@intent

!ill govern a general one* cannot be constr$ed to incl$de matters !hich the parties did

not intend to contract

Article 1323 .ALI=IT FA.OE=If some stip$lation of any contract sho$ld admit of se"eral meaningsit shall be $nderstood as bearing that import !hich is most ade#$ateto render it effect$al

+here instr$ment may ha"e t!o interpretations( one !hich !illma7e the instr$ment "oid and illegal and another !hich !ill ma7eit "alid and legal* that !hich !ill ma7e it "alid and legal !ill be adopted

Article 1320 TAHE/ A; A +&OLE The "ario$s stip$lations of a contract shall be interpreted togetherattrib$ting to the do$btf$l ones that sense !hich may res$lt from allof them ta7en ointly

If possible constr$ction m$st be adopted as to gi"e effect to all

!here there are se"eral pro"isions or partic$lars

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* contract cannot be constr$ed by parts b$t its cla$ses sho$ldbe interpreted in relation to one another

* cannot segregate some stip$lations and ma7e them control* partic$lar !ords or phrases do not determine character of a

contract* legal effect /OT to be determined ALO/E by any partic$lar

pro"ision disconnected from the otherso determined by the r$ling intention of the parties as

gathered from lang$age $sed

contemporaneo$s and s$bse#$ent acts* pro"isions are to be gi"en a EA;O/ALE A/= ACTICAL

interpretation so as to be EFFICACIOB;

Article 1325 =OBT I/ ?EA/I/ OF LA/BAE 4 BO;E+ords !hich may ha"e different significations shall be $nderstood inthat !hich is most in 7eeping !ith the nat$re and obect of thecontract

+hen there is do$bt on the meaning of a partic$lar lang$age the

meaning sho$ld be determined from the general scope,purpose and nature of the instr$ment

Article 1326 B;AE O CB;TO?; The $sage or c$stom of the place shall be borne in mind in theinterpretation of the ambig$ities of a contract and shall fill theomission of stip$lations !hich are ordinarily established

To determine the tr$e character of the instr$ment it may beconstr$ed according to $sage

Article 1322 O;CBE TE?;

The interpretation of obsc$re !ords or stip$lations in a contract shallnot fa"or the party !ho ca$sed the obsc$rity

arty !ho dra!s $p the contract is responsible for the obsc$reterms or cla$ses that appear* obsc$re terms or cla$ses are therefore CO/;TBE= AAI/;T

s$ch party* !hen terms !ere intended to be in a different sense that

different sense shall pre"ail against the party !ho s$pposedthat the other $nderstood it

* !hen there are different constr$ctions of a pro"ision !hich areall proper the one most fa"orable to the party in !hose fa"or

the pro"ision !as made !ill be ta7en

Contracts of Adhesion* there is already a printed contract prepared by one party and

the other party either ta7es it or lea"es it* diffic$lt to determine common intention* in the e"ent of ambig$ity do$bt m$st al!ays be resol"ed

against party !ho prepared the contract and in fa"or of theone !ho merely adhered

* liberally against the one !ho adhered and strictly against one

!ho prepared* ambig$o$s !ords are determined in fa"or of the beneficiary

Article 1329+hen it is absolutely impossible to settle do$bts by the r$lesestablished in the preceding articles and the do$bts refer toincidental circumstances of a gratuitous contract the leasttransmission of rights and interests shall pre"ail% If the contract isonerous the do$bt shall be settled in fa"or of the greatestreciprocity of interests%If the do$bts are cast $pon the principal obect of the contract in s$cha !ay that it cannot be 7no!n !hat may ha"e been the intention or

!ill of the parties the contract shall be n$ll and "oid%

reater eciprocity* ;ale !ith right of rep$rchase "s% loan !ith mortgage 4 m$st

be interpreted to be a loan !ith mortgage beca$se the latteris in fa"or of a greater reciprocity of interests

Least transmission* Constr$ction amo$nting to impairment or loss of right is not

fa"ored* Conser"ation and preser"ation is the r$le

o O"er !ai"er abandonment or forfeit$re

Intention B/H/O+/* +hen intention of the parties relati"e to the obect cannot be

definitely ascertained contract is n$ll and "oid

Article 132G The principles of interpretation stated in $le 1-3 of the $les ofCo$rt shall li7e!ise be obser"ed in the constr$ction of contracts

artly !ritten contract* In case rep$gnance e'ists bet!een !ritten and printed

portions +ITTE/ E.AIL;

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* ;ection 13 $le 13<( !hen an instr$ment consists partly of!ritten !ords and partly of a printed form and the t!o areinconsistent the former controls the latter

+hen an instr$ment is s$sceptible to interpretations one in fa"orof nat$ral right and another against it* Interpretation in FA.O OF /ATBAL I&T is to be adopted* E'% ight to redeem

Documents

Notes Oblicon1356 1379