Art.1403. The following contracts are unenforceable, unless they are ratified: 1. Those entered into in the name of another person by one who has been
given no authority or legal representation, or who has acted beyond his authority;
2. Those that do not comply with the Statute of Frauds as set forth in this number. In the following agreement hereafter made shall be
unenforceable by action, unless the same, or some note or memorandum thereof, be in writing, and subscribed by the party charged, or by his agent, evidence, therefore, of the agreement cannot be received without the writing, or a secondary of its contents:
a. An agreement that by its terms is not to be performed within a year from the making thereof;
b. A special promise to answer for the debt, default, or miscarriage of another;
c. An agreement made in consideration of marriage, other than a mutual promise to marry;
d. An agreement for the sale of goods, chattels or things in action, at a price not less than five hundred pesos, unless the buyer accept and receives part of such goods and chattels, or the evidences, or some of them, of such things in action or pay at the time some part of the purchase money; but when a sale is made by auction and the entry is made by the auctioneer in his sales book, at the time of the sale, of the amount and kind of property sold, terms of sale, price ,names of the purchasers and person on whose account the sale is made, it is a sufficient memorandum;
e. An agreement of the leasing for a longer period than one year, or for the sale of real property or of an interest therein;
f. A representation as to the credit of a third person.
3. Those where both parties are incapacitated of giving consent to a contract.
A contract, which cannot be enforced through court action. What is the legal status?
It is valid, it produces no effect unless it is ratified
How many kinds of Unenforceable Contracts are there under the law? 3
What are these contracts? 1. Due to lack of authority
2. Contracts which are covered by the Statute of Frauds but failed to comply with the Statute of Frauds
3. Due to incapacity of both parties
They must be ratified first before they produce effect What does the Statute of Frauds require?
Contracts covered by the Statute of Frauds are required to appear in a note, memorandum,or in a writing
If a contract is covered by the Statute of Frauds, but fails to comply, what will be the effect of such failure?
The oral agreement cannot be proven by oral evidence because the requirement of writing is the best proof of the existence of the agreement. What is the purpose of the Statute of Frauds?
The purpose is to prevent the commission of perjury through reliance on memory.
One’s memory is not always accurate, the tendency always is either to expand or retract , resulting to the commission of perjury.
Most reliable proof- in writing.
What do you understand y the provision of law “in note, memorandum, in writing, duly subscribed by the parties?
What will amount compliance to that?
Cirilo PAREDES vs. Jose ESPINO (1968)
Court said, that requirement does not necessarily mean that everything must be written; only the essentials in the agreement are required to be in writing.
What contracts are covered by the Statute of Frauds?
Only the first five are truly covered by the Statute of Frauds. The 6th one is a misplaced one.
What is the nature of the enumeration?
They are exclusive character, any other contract not included in the enumeration are deemed excluded.
1. An agreement that by its terms is not to be performed within a year from the making thereof;
If a contract is to be performed within one year, is it covered? No
If beyond one year? Yes
Partly within a year, partly beyond 1 year? Yes
These are contracts, which are not to be performed within 1 year. If a contract is negative, is it covered?
No, because they are immediately effective
What must be the reason of not performing the contract within 1 year? Because of the agreement of the parties
But if due to some external force? Not included.
2. A special promise to answer for the debt, default, or miscarriage of another; To what kind of contract is the law referring?
Contract of Guaranty
Under the Law on Guaranty, there are 2 Kinds of Guaranty Personal- reliance on the word of another
Real- there is always a security or collateral to insure performance of the obligation
Differ: Absence of collateral or security Does it apply to both guaranty?
Yes, it applies to both contracts of guaranty whether real or personal as long as the contract does not require writing for its validity.
Statute of Frauds does not concern validity but for enforceability Example: Contract of Real Mortgage
Oral mortgage is never valid.
marry;
What are these agreement covered by this paragraph? 1. Donation Propter Nuptias
2. Marriage Settlements
Under the provision of the New Civil Code, they are covered by the Statute of Frauds.
It meant that an oral marriage settlement or oral donation propter nuptias, regardless of the kind of property, whether real or personal, they are both valid, but they are not enforceable.
The writing is required not for validity but for enforceability What does the Family Code say?
A marriage settlement must be in writing, executed and duly signed by the parties
A radical change by the law
Donation Propter Nuptias, distinguish:
Existing property- as to form, they will be governed by the formalities observed by donation.
Article 748 & 749
Mandatory, so that failure to comply will invalidate the donation
Future property- it must be governed by Testamentary Successions and Formalities of Wills.
Donation Propter Nuptias and Marriage Settlements are no longer covered by the Statute of Frauds, because the writing is now required no longer for purposes of enforceability but for validity
than five hundred pesos,
This paragraph, applies to sale of personal properties, it has no application to sale of real properties. The latter is covered by paragraph 5.
If the object of sale is a personal property, it is covered by paragraph 4 If the price is not less than 500 pesos, it must be in note, memorandum or in writing.
The test is in the price if it is covered by the Statute of Frauds. Paragraph 4 provides a general rule, 1st part.
Exception: 2nd part- Auction Sale
Entries made by the auctioneer, considered a sufficient memorandum if these are complied with.
Writing in the Auction book is considered compliance with the Statute of Frauds.
5. An agreement of the leasing for a longer period than one year, or for the sale of real property or of an interest therein;
Object of lease and sale must always be a real property.
Period must be more than 1 year no matter how short the excess.
What will be the status of the sale of real properties if it was made orally?
An oral sale of real property is valid, regardless of the amount involved but it is not registerable.
Because in registration, the law requires that only public documents can be recorded or registered.
Sale of real property under the Statute of Frauds should not be confused with the Sale of property under the Law on Agency.
If the sale of an immovable is made through an agent, if the authority of the agent is not in writing, the sale will be VOID.
It applies only to sale of immovable/real property.
Under that provision, what the law requires to be in writing is not the sale, but the authority of the agent.
In Statute of Frauds, the sale itself is required to be in writing. Validity of transaction is one thing, enforceability is another thing.
Under the Statute of Frauds. The price of an immovable is immaterial & the writing is not for validity but for enforceability.
Hernandez v. Court of Appeals