Form in real contracts

“A verbal contract isn’t worth the paper it’s written on,” said Samuel Goldwyn, an American-Polish film producer.

As a general rule, parties only need to consent to the terms of their contract so as to perfect or give effect to it—that is, they become bound to what has been expressly stipulated and all the consequences which, according to their nature, may be in keeping with good faith, usage and law. But, some contracts must be in a particular form when they are required by law, for their enforceability or to create a binding effect against third persons.

For instance, a sale of a piece of land or any interest therein is void if it was transacted through an agent whose authority is not in written form. Likewise, the donation of real property shall be valid only if it was made in a public document, specifying that the property donated and the value of the charges which the donee must satisfy.

Meanwhile, the following contracts must be in writing so that they become enforceable: (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; and (c) an agreement for the leasing for a longer period than one year, or for the sale of real property or of an interest therein.

Nevertheless, parties failing to comply with this requirement are deemed to have ratified their unenforceable contracts either by the failure to object to the presentation of oral evidence to prove the same or by the acceptance of benefits under them.

Moreover, the following acts and contracts, among others, must appear in a public document: (a) those which create, transmit, modify or extinguish real rights over real property; and (b) those involving 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.

In Tapec v. Court of Appeals, the Supreme Court held that failure to comply with this Article would not affect the validity of a contract between the parties involved, as it merely insures its efficacy.

A contract is converted to a public document when it has been notarized. In this regard, the Supreme Court has consistently held that in notarizing a document, the notary public must have personally acknowledged the same before the contracting or executing parties, who represent that they affixed their signatures for the purposes stated therein and declaring the same as their free and voluntary act and deed. Thereafter, the notary public affixes his notarial seal on the instrument which certifies the due execution of the document and thus, converts it into a public document, which on its face is entitled to full faith and credit.

To overcome the presumption of regularity in notarizing the document, there must be presented clear and convincing contrary evidence. Absent this evidence, the presumption must be upheld.

Notaries public were subjected to disciplinary action for failing to perform their duties as such. For instance, in Dela Cruz v. Zabala, the Supreme Court revoked the notary public’s commission and disqualified him from being commissioned as such for two years for notarizing a deed of sale of a piece of land merely based on the documents presented to him, and upon the appearance of persons fraudulently claiming to be the contracting parties.

In finding the notary public’s acts as grossly negligent, the Supreme Court held that a notary public should only notarize the document when the persons who signed the same are the very same persons who executed and personally appeared before him to attest to the contents and veracity thereof.

In De Jesus v. Malit, the Supreme Court suspended the notary public from practice of law for one year, immediately revoked her notarial commission, and perpetually disqualified her from being commissioned as such after notarizing unsigned legal documents.

Meanwhile, in Japitana v. Parado, the Supreme Court suspended a lawyer from his practice for two years and permanently disqualified him from being commissioned as a notary public upon finding that he had knowingly notarized documents despite the absence of a notarial commission.

Moreover, even if he was validly commissioned as a notary public, the Supreme Court noted that he erroneously notarized the deed of real estate mortgage and affidavit of conformity with the executing parties who had merely presented to him their Residence Certificates or Community Tax Certificates.