Article 1356 of the Civil Code: Contracts are binding in any form
Status: In force
What does Article 1356 say?
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.
What does it mean in plain language?
Article 1356 of the Civil Code says a contract binds the parties in whatever form it was made, spoken or written, notarized or not, as long as the essential requisites are present. The exception is when a law requires a certain form for the contract to be valid or enforceable, or requires that it be proved in a certain way. In those cases, the required form is "absolute and indispensable".
In Philippine law, the starting point is consent, not paperwork. Article 1305 defines a contract as "a meeting of minds between two persons" in which one binds himself to give something or to render some service. Article 1318 lists the essential requisites: consent of the parties, an object certain, and the cause of the obligation. If those are present, the form usually does not matter.
How does it work in real life?
Cora and Jomar's handwritten note
Cora lends ₱12,000 to Jomar. Jomar writes and signs: "I promise to pay Cora ₱12,000 on August 31." No notary. There was consent, an object and a cause, so the loan binds under Article 1356, and it is in writing as Article 1358 asks for amounts above ₱500. A case to collect on this written contract has ten years (Article 1144).
Tess and her verbal room rental
Tess agrees by word of mouth to rent a room to Lito for two years, starting next month. Nothing is signed, and Lito has not moved in yet. A lease for longer than one year is on the Statute of Frauds list (Article 1403(2)(e)). It cannot be enforced by action unless there is a signed note or memorandum, or the agreement was ratified (Article 1405). Here the form rule is about enforceability, so Article 1356 calls it "absolute and indispensable".
Arnel's verbal interest
Arnel lends ₱20,000 to his cousin. They agree by word of mouth on 3% interest a month. The loan itself can bind under Article 1356. But Article 1956 says no interest is due unless expressly stipulated in writing, so the agreed interest cannot be collected as interest.
These are made-up examples to show how the rule works. They are not advice for any real case.
What does this mean in practice?
- Even when a verbal deal is valid, proving it can be hard. A short signed writing with the date, the amount, the due date and any interest makes a case much easier.
- If the deal involves land, a house or another immovable, or inheritance rights, Article 1358 calls for a public document. A lawyer or a notary public can explain the form needed before anything is signed or paid.
- An action on a written contract has ten years (Article 1144); on an oral contract, six years (Article 1145).
- For verbal deals in general, see is a verbal agreement binding?
- For free or low-cost legal help, see where to find legal help.
What does Article 1356 say?
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.
The article has three parts:
- The general rule. A contract binds in any form, if it has the essential requisites.
- The exception. When a law requires a form for the contract to be valid or enforceable, or requires a certain way to prove it, that form must be followed.
- The effect of the exception. In those cases, the parties cannot use the right in Article 1357 to compel each other to observe the form.
What do Articles 1357 and 1358 add?
Article 1358 lists acts and contracts that "must appear in a public document". They include contracts creating, transferring, changing or ending real rights over immovable property, such as land, and the cession, repudiation or renunciation of hereditary rights.
Its last paragraph adds a rule for everything else:
All other contracts where the amount involved exceeds five hundred pesos must appear in writing, even a private one.
The ₱500 figure is the amount written in the Code of 1949 (Republic Act No. 386).
Article 1357 then says what happens if the form in Article 1358 was not followed. The parties "may compel each other to observe that form, once the contract has been perfected." In other words, for these cases the contract already exists, and one party can compel the other to put it in the required form.
So there are two kinds of form rules:
- Forms the parties can demand later (Article 1358): the contract is perfected, and either party can compel the other to observe the form (Article 1357).
- Form for validity or enforceability: the form is "absolute and indispensable" (Article 1356), and Article 1357 cannot be used. One example is the Statute of Frauds in Article 1403, which makes some agreements unenforceable by action without a signed note or memorandum, unless ratified.
Does a contract need to be notarized?
Article 1356 does not require notarization for a contract to bind. The question matters mostly for the contracts that Article 1358 or another law says must appear in a public document. This page does not cover the rules on how notarized and private documents are proved in court.
In Spouses Abella v. Spouses Abella (2015), the Supreme Court read a short signed acknowledgment receipt, saying the money was "payable within one (1) year from date hereof with interest", as proof of a simple loan. It then worked out what was owed under it, applying the legal rate because no rate was written. The decision does not discuss notarization. See is a promissory note valid without a notary?
Frequently asked questions
Is a contract valid even if it is not notarized?
As a rule, yes. Article 1356 of the Civil Code says contracts are obligatory in whatever form they were entered into, as long as the essential requisites for validity are present. The exceptions are cases where the law itself requires a form.
What are the essential requisites of a contract?
Article 1318 lists three: consent of the contracting parties, an object certain that is the subject matter of the contract, and the cause of the obligation.
Which contracts must be in a public document?
Article 1358 lists acts and contracts on real rights over immovable property, the cession or renunciation of hereditary rights or rights in the conjugal partnership of gains, certain powers of administration, and the cession of rights from a public document.
If the law requires a written form, is an unwritten contract void?
Not always. For the forms in Article 1358, Article 1357 lets the parties compel each other to observe the form once the contract has been perfected. But when the law requires a form for the contract to be valid or enforceable, Article 1356 says that requirement is absolute and indispensable.
Is a loan with interest valid without a written agreement?
The loan can be valid, but agreed interest is not due unless it was expressly stipulated in writing (Article 1956). That is one case where the law requires writing for a specific term.
General information, not legal advice. For your case, ask a lawyer, the Public Attorney's Office (PAO) or the agency.
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