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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. CONSENSUAL CONTRACTS - form is required for validity FORMAL CONTRACTS (SOLEMN CONTRACTS) require a certain specified form, in addition to consent, subject matter, and cause REAL CONTRACTS - require delivery to be valid as a real contract even as between the parties, in addition to consent, subject matter, and cause When is form important a) for validity (formal or solemn contracts) b) for enforceability (agreements enumerated under the statute of frauds, maybe waived by acceptance of benefits or by failure to object to the presentation of oral evidence) c) for convenience (contracts enumerated under Art 1385 Civil Code) Examples of formal contracts (if the form is not complied with, Art 1457 of the Civil Code cannot be availed of) a) donations of real property (requires public instrument, Art 749 Civil Code) b) donations of personal property (requires written contract or document if donation exceeds P5000, Art 748 Civil Code) c) stipulations to pay interest on loans, interest for the use of the money, said stipulation must be in writing d) transfer of large cattle (requires transfer of the certificate of registration, Sec 523 Rev Adm Code) e) sale of land thru an agent (authority of the agent must be in writing otherwise sale is null and void, Art 1874 Civil Code) f) contracts of antichresis (the principal loan and the interest, if any, must be specified in writing otherwise contract is void, Art 1773 Civil Code) Article 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. Before contracting parties may be compelled to execute the needed form, it is essential that the contract be a) perfected (valid) b) enforceable under the statute of frauds Article 1358. The following must appear in a public document: (1) 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 are governed by articles 1403, No. 2, and 1405; (2) The cession, repudiation or renunciation of hereditary rights or of those of the conjugal partnership of gains; (3) 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; (4) The cession of actions or rights proceeding from an act appearing in a public document. All other contracts where the amount involved exceeds five hundred pesos must appear in writing, even a private one. But sales of goods, chattels or things in action are governed by articles, 1403, No. 2 and 1405. The necessity for the public document in the contracts enumerated by Art 1358 is only for convenience, not for validity or enforceability.
CIVIL CODE IV PRESCRIPTION, OBLIGATIONS & CONTRACTS
DVOREF Chapter Exam Review Notes Arts 1356 - 1402
Justice Edgardo L Paras All Rights Reserved
Maria Adeliza M Diego SY 2013
one of the parties may ask for the reformation of the instrument to the end that such true intention may be expressed. 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. inequitable conduct or accident in the contract as written c) does not invalidate the contract Requisites for the action of reformation a) there must be a meeting of minds b) the true intention is not expressed in the instrument c) there must be clear and convincing proof thereof (mere preponderance of evidence here would not be sufficient) d) it must be brought within the proper prescriptive period e) the document must not refer to a simple unconditional donation inter vivos (Art 1366) or to wills (Art 1366) or to a contract where the real agreement is void (Art 1366) Article 1360. the proper remedy is not reformation of the instrument but annulment of the contract. When a mutual mistake of the parties causes the failure of the instrument to disclose their real agreement. lack of skill. inequitable conduct.1402 Justice Edgardo L Paras All Rights Reserved Maria Adeliza M Diego SY 2013 . OBLIGATIONS & CONTRACTS DVOREF Chapter Exam Review Notes Arts 1356 . the courts may order that the instrument be reformed. the instrument does not express the true intention of the parties. CHAPTER 4 REFORMATION OF INSTRUMENTS Article 1359. generally an error of law is not enough Article 1362.the mistake is unilateral but the other party acted fraudulently or inequitably Article 1363. 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. UNILATERAL MISTAKE . If mistake. inequitable conduct or accident. by reason of mistake. When through the ignorance. their true intention is not expressed in the instrument purporting to embody the agreement. When reformation maybe asked because of mutual mistake a) under this article. there having been a meeting of the minds of the parties to a contract. or accident has prevented a meeting of the minds of the parties. Civil Code prevails and general law will only have suppletory effect Article 1361. fraud. In case of conflict. negligence or bad faith on the part of the person drafting the instrument or of the clerk or typist. REFORMATION . the mistake must be mutual b) the mistake may be unilateral under the conditions set forth in Arts 1362 and 1363 of the Civil Code c) the mistake must be of fact. the former may ask for the reformation of the instrument. When one party was mistaken and the other knew or believed that the instrument did not state their real agreement. the instrument may be reformed. vitiated consent invalidates the contrac ANNULMENT no meeting of minds CIVIL CODE IV PRESCRIPTION. said instrument may be reformed. When. but concealed that fact from the former. Unilateral mistake also a) the mistake is unilateral but the other party is guilty of concealment b) only the party in good faith can ask for reformation Article 1364. fraud.that remedy in equity by means of which a written instrument is made or construed so as to express or conform to the real intention of the parties when some error or mistake has been committed REFORMATION a) there is a meeting of minds b) there is mistake. fraud.
(2) Wills. the latter shall prevail over the former. but to establish and perpetuate the true existine one . If two parties agree upon the mortgage or pledge of real or personal property. either party or his successors in interest b) in all other cases -.essentially acts of pure liberality WILLS .courts do not reform instruments merely for the sake of reforming them. Article 1367. Effect of an action to enforce the instrument a) another instance when reformation cannot prosper b) basis is estoppel. Reformation may be ordered at the instance of either party or his successors in interest. but only to enable some party to assert rights under them as reformed 10 years .1402 Justice Edgardo L Paras All Rights Reserved Maria Adeliza M Diego SY 2013 . CIVIL CODE IV PRESCRIPTION. Plaintiffs in action for reformation a) if the mistake is mutual.strictly a personal act (Art 784) which is free (Art 839) and maybe revoked anytime (Art 828 Civil Code) After death of the testator errors or imperfections in descriptions maybe corrected under Art 789 but not in the manner of property disposal Reformation is not allowed in case the real agreement is void because such a procedure would be useless. reformation of the instrument is proper. otherwise. If the words appear to be contrary to the evident intention of the parties. Article 1366. The procedure for the reformation of instrument shall be governed by rules of court to be promulgated by the Supreme Court. upon petition of the injured party.period of prescription for reformation of contract Article 1369.typist Article 1365. if the mistake was mutual. DONATIONS . but the instrument states that the property is sold absolutely or with a right of repurchase. CHAPTER 5 INTERPRETATION OF CONTRACTS Article 1370. waiver or ratification Article 1368.1) the injured party 2) his heirs and assigns What complaint must allege a) that the instrument to be reformed does not express the real agreement or intention of the parties b) what the real agreement or intention was . If the terms of a contract are clear and leave no doubt upon the intention of the contracting parties.clerk . There shall be no reformation in the following cases: (1) Simple donations inter vivos wherein no condition is imposed.the drafter of the instrument . or his heirs and assigns. OBLIGATIONS & CONTRACTS DVOREF Chapter Exam Review Notes Arts 1356 .Failure to convey true intent a) ignorance b) lack of skill c) bad faith . the literal meaning of its stipulations shall control.it is not the function of the remedy of reformation to make a new agreement. (3) When the real agreement is void. When one of the parties has brought an action to enforce the instrument. he cannot subsequently ask for its reformation.
However general the terms of a contract may be. in which case the agreement must be construed accordingly Article 1376. technical or otherwise peculiar signification. If one interpretation makes a contract valid and illegal. If a word is susceptible of two or more meanings a) that in keeping with the nature and object of the contract b) if this cannot be determined.It is true we must apply the terms of the contract. they need not be pleaded b) if the customs and the usages are merely local. in other cases. but only when they are so clear that there is no doubt regarding the intention of the cotracting parties. the party who drew up the contract with ambiguous terms should be responsible therefor. How to judge intent of the parties a) if the parties themselves placed an interpretation to the terms of their contract. attributing to the doubtful ones that sense which may result from all of them taken jointly. OBLIGATIONS & CONTRACTS DVOREF Chapter Exam Review Notes Arts 1356 . The various stipulations in a contract must be read together to give effect to all Performance more clearly indicate intention than the name or title given to the contract by the parties Article 1375. Pleading and proof of customs and usages a) if the customs and usages are general. If some stipulation of any contract should admit of several meanings. Interpretation to be against party who caused obscurity Since he caused the obscurity. The various stipulations of a contract shall be interpreted together. and shall fill the omission of stipulations which are ordinarily established. Words which may have different significations shall be understood in that which is most in keeping with the nature and object of the contract.1402 Justice Edgardo L Paras All Rights Reserved Maria Adeliza M Diego SY 2013 . The interpretation of obscure words or stipulations in a contract shall not favor the party who caused the obscurity. it shall be understood as bearing that import which is most adequate to render it effectual. then the terms of a writing are presumed to have been used in their primary and general acceptation c) when other meanings or significations can be proved using a local. Special intent prevails over a general intent Article 1373. then they have to be both alleged and proved Article 1377. The usage or custom of the place shall be borne in mind in the interpretation of the ambiguities of a contract. they shall not be understood to comprehend things that are distinct and cases that are different from those upon which the parties intended to agree. particularly when it was made in good faith between mutual friends Article 1372. In order to judge the intention of the contracting parties. we should apply the rules of interpretation Rule in case of confict between the words of the contract and the evident intention of the parties a) intention must prevail b) where the terms and provisions thereof are clear and leave no doubt as to the intention of the contracting parties. so the obscurity must be construed against him CIVIL CODE IV PRESCRIPTION. such interpretation must be in general followed b) the contract of the parties may result in estoppel (Arts 1431-1439 Civil Code) c) the courts may consider the relations existing between the parties and the purpose of the contract. the literal meaning of its stipulation shall control Article 1371. the former interpretation must prevail Article 1374. their contemporaneous and subsequent acts shall be principally considered.
Doubts as to principal object or incidental circumstances a) principal object . OBLIGATIONS & CONTRACTS DVOREF Chapter Exam Review Notes Arts 1356 . or who understood the language. it maybe considered as a CIVIL CODE IV PRESCRIPTION.applies with even greater force Article 1378.1402 Justice Edgardo L Paras All Rights Reserved Maria Adeliza M Diego SY 2013 . but evidence is admissible to show that they have a local. the agreement must be construed accordingly (Sec 12 Rule 130 Revised Rules of Court) Conflict between printed and written (not printed) . If the contract is onerous. the evidence of persons skilled in deciphering the characters. Rule 123 should be construed to refer to Rule 130 of the new rules on evidence The language of a writing is to be interpreted according to the legal meaning it bears in the place of its execution. the least transmission of rights and interests shall prevail. one in favor of a natural right and the other against it. Contracts validly agreed upon may be rescinded in the cases established by law. and were so used and understood in the particular instance.EXPRESSO UNIUS EST EXCLUSIO ALTERIUS . in which case. The principles of interpretation stated in Rule 123 of the Rules of Court shall likewise be observed in the construction of contracts.contract is void b) incidental circumstances if gratuitous apply the rule of least transmission of rights and interests if onerous apply the rule of the greatest reciprocity of interests Article 1379. and the doubts refer to incidental circumstances of a gratuitous contract. there is a sort of extrinsic defect consisting of an economic damage or lesion b) voidable contract is valid until annulled. unless the parties intended otherwise (Sec 8 Rule 130 Revised Rules of Court) The terms of a writing are presumed to have been used in their primary and general acceptation. is admissible to declare the characters or the meaning of the language (Sec 14 Rule 130 Revised Rules of Court) When an instrument is equally susceptible of two interpretations. defect is intrinsic as in the case of vitiated consent c) unenforceable contract cannot be sued upon or enforced unless ratified. the former is to be adopted (Sec 14 Rule 130 Revised Rules of Court) An instrument may be construed according to usage. the contract shall be null and void. or the language is not understood by the Court.the mention of one thing implies the exclusion of another thing CONTRACTS OF ADHESION . the doubt shall be settled in favor of the greatest reciprocity of interests. in order to determine its true character (Sec 17 Rule 130 Revised Rules of Court) CHAPTER 6 RESCISSIBLE CONTRACTS Article 1380. 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. technical or otherwise peculiar signification.written words control (Sec 13 Rule 130 Revised Rules of Court) When the characters in which an instrument is written are difficult to be deciphered. Four kinds of defective contracts (may be invalidated) a) rescissible b) voidable c) unenforceable d) void ( which may be inexistent or illegal) In general (arranged in decreasing validity) a) rescissible contract is valid until rescinded. When it is absolutely impossible to settle doubts by the rules established in the preceding articles.
identity of terms and conditions to be offered to the lessee and all other prospective buyers Article 1381.if an act of ownership. otherwise contract is unenforceable whether there is lesion or not CIVIL CODE IV PRESCRIPTION. courts may grant a term d) nonperformance by the other party is important Mutual withdrawal . if the latter suffer the lesion stated in the preceding number. court approval is required. 1/2 etc) merely raises a presumption of undue influence that vitiates consent and renders the contract voidable whenever lesion is coupled with exploitation by the others c) Effect of contracts entered into in behalf of ward . (3) Those undertaken in fraud of creditors when the latter cannot in any other manner collect the claims due them.1402 Justice Edgardo L Paras All Rights Reserved Maria Adeliza M Diego SY 2013 . proper term should be resolution Rescission in general (Art 1380) a) is based on lesion or fraud upon creditors b) the action is instituted by either of the contracting parties or by third persons c) the courts cannot grant a period or term within which to comply d) non performance by the other party is immaterial Rescission under Art 1191 (resolution) a) based on nonperformance or non fulfillment of the obligation b) the action may be instituted only by the injured party to the contract c) in some cases. no effect now but maybe effective upon ratification d) void contract is one that has no effect at all.the will of the parties that constitute the basis for dissolution Right of first refusal . The following contracts are rescissible: (1) Those which are entered into by guardians whenever the wards whom they represent suffer lesion by more than one-fourth of the value of the things which are the object thereof.damage or injury to the party asking for rescission (disparity between price and value) b) Lesion of certain proportions (1/4. by means of the restoration of things to their condition prior to the celebration of the contract [Supreme Court] . (4) Those which refer to things under litigation if they have been entered into by the defendant without the knowledge and approval of the litigants or of competent judicial authority. even if the contract be valid. (5) All other contracts specially declared by law to be subject to rescission. by reason of external conditions. 1) In behalf of wards a) Lesion .validable transaction.it is a relief to protect one of the parties or a third person from all injury and damages which the contract may cause.a process designated to render inefficacious a contract validly entered into and normally binding. to protect some preferential right Requisites for rescission a) there must be at the beginning either a valid or a voidable contract (not void) b) but there is an economic or financial prejudice to someone (a party or third person) c) requires mutual restitution Two kinds of rescission a) Art 1380 b) Art 1191. it cannot be ratified or validated RESCISSION [Scaevola] . OBLIGATIONS & CONTRACTS DVOREF Chapter Exam Review Notes Arts 1356 .a remedy granted by law to the contracting parties both to contracting parties and to third persons in order to secure reparation of damages caused them by a contract. causing an economic prejudice to a party or to his creditors [Manresa] . (2) Those agreed upon in representation of absentees.
Payments made in a state of insolvency for obligations to whose fulfillment the debtor could not be compelled at the time they were effected. the party alienating must be in bad faith 4. are also rescissible. Rescission is not a principal remedy Article 1384. The action for rescission is subsidiary.if merely an act of administration (a) if with court approval . OBLIGATIONS & CONTRACTS DVOREF Chapter Exam Review Notes Arts 1356 .. there must be alienation made subsequent to such credit 3.right given to unpaid seller Art 1539 . and the price with its interest. Necessity of mutual rescission .1402 Justice Edgardo L Paras All Rights Reserved Maria Adeliza M Diego SY 2013 . Requisites a) debtor-payer must have been insolvent (need not be judicially declared) b) debt was not yet due and demandable Article 1383. 1) Partial rescission 2) Only the creditor who has asked for rescisssion benefits Article 1385.if personal property.sale of real estate Article 1382. indemnity for damages may be demanded from the person causing the loss.result of deterioration Arts 1526 and 1534 . it cannot be instituted except when the party suffering damage has no other legal means to obtain reparation for the same.rescissible. Rescission creates the obligation to return the things which were the object of the contract. consequently.in real property. if lesion is more than 1/4 2) In representation of absentees same comment as in wards 3) Undertaken in fraud of creditors a) ACCION PAULIANA b) Requisites before accion pauliana can be brought 1. maybe levied upon. together with their fruits. Rescission shall be only to the extent necessary to cover the damages caused. there must be a creditor who became such prior to the contract sought to be rescinded 2.partition Art 1189 . plaintiff must register his claim in the registry of property to give notice to the whole world WRIT OF PRELIMINARY ATTACHMENT . In this case. it can be carried out only when he who demands rescission can return whatever he may be obliged to restore. there must be no other remedy for the prejudiced creditor 4) Things in litigation NOTICE OF LIS PENDENS . or else it maybe place in the hand of a receiver 5) Other instances Art 1098 .the obligation applies to tohers so that the status quo may be restored Requisites before action for rescission can be brought a) plaintiff must be able to return what has been received by virtue of the rescissible contract (except prejudiced creditors) b) the thing object of the contract is not in the legal possession of third persons in good faith c) there must be no other legal remedy CIVIL CODE IV PRESCRIPTION.valid regardless of lesion Art 1386 (b) if without court approval . Neither shall rescission take place when the things which are the object of the contract are legally in the possession of third persons who did not act in bad faith.
1402 Justice Edgardo L Paras All Rights Reserved Maria Adeliza M Diego SY 2013 . and need not have been obtained by the party seeking the rescission. (1) Effect of bad faith a) the acquirer must return or indemnify b) due to any case includes fortuitous events (2) Subsequent transfers a) if the first transferee is in good faith. Rescission referred to in Nos. All contracts by virtue of which the debtor alienates property by gratuitous title are presumed to have been entered into in fraud of creditors. (1) Presumptions of fraud .d) action must be brought within the proper prescriptive period What should be returned in rescinding a contract a) object of the contract with its fruits b) price with its interest Article 1386. Article 1387. If there are two or more alienations.when made by persons (a) against whom some judgment has been rendered in any instance (b) or against whom some writ of attachment has been issued (4) Badges of fraud 1) the fact that the consideration of the conveyance is fictitious or inadequate 2) a transfer made by a debtor after suit has been begun and while it is pending against him 3) a sale upon credit by an insolvent debtor 4) the transfer of all or nearly all of his property by a debtor. In addition to these presumptions. it should be impossible for him to return them. when the donor did not reserve sufficient property to pay all debts contracted before the donation. 1 and 2 of article 1381 shall not take place with respect to contracts approved by the courts. the design to defraud creditors may be proved in any other manner recognized by the law of evidence.when the debtor did not reserve sufficient property to pay all debts contracted before the donation (3) onerous alienations .does not apply to registered lands under the Torrens System if the judgment or attachment made is not registered. OBLIGATIONS & CONTRACTS DVOREF Chapter Exam Review Notes Arts 1356 . shall indemnify the latter for damages suffered by them on account of the alienation.legally effective and can convey title (7) Necessity of a direct action for rescission . the first acquirer shall be liable first.on its face (prima facie) presumed valid and good as between the parties (9) Fraud alone not sufficient for rescission . The decision or attachment need not refer to the property alienated. whenever.the design to defraud creditors (2) gratuitous alienations . and so on successively. Whoever acquires in bad faith the things alienated in fraud of creditors.validity cannot be attacked collaterally (in a proceeding different from an action to rescind) (8) Presumption of validity .transferee may be in good faith and in legal possession Article 1388. the next transferee is liable only if he is also in bad faith (3) Concept of bad faith a) a state of mind affirmatively operating with furtive design or with some motive or self interest or ill will or for an ulterior purpose and implies a conscious and intentional design to do a wrongful act for a dishonest purpose or moral obliquity b) nonchalance in performing an urgent obligation indicates gross negligence amounting to bad faith CIVIL CODE IV PRESCRIPTION. due to any cause. the good or bad faith of the next transferee is not important b) if the first transferee is in bad faith. cannot prejudice an innocent purchaser for value (6) Valid before rescission . especially when he is insolvent or greatly embarrrassed financially 5) evidence of large indebtedness or complete insolvency 6) the fact that the transfer is made between the father and son (when this fact is considered together with the preceding circumstances 7) the failure of the vendee to take exclusive possession of all the property (5) Rule in case of registered lands . Alienations by onerous title are also presumed fraudulent when made by persons against whom some judgment has been rendered in any instance or some writ of attachment has been issued.
a contract where consent is vitiated is not void ab initio and is binding upon the parties unless annulled by proper action in court Grounds for annulment (declaration of nullity) a) incapacity to consent b) vitiated consent The action to bring a) for positive redress . The following contracts are voidable or annullable. DISTINCTIONS BETWEEN RESCISSIBLE AND VOIDABLE CONTRACT RESCISSION a) the basis here is lesion (damage) b) the defect here is external or extrinsic c) the action is subsidiary d) this is a remedy e) private interest governs f) equity predominates g) plaintiff may be a party or a third person h) there must be damage to the plaintiff i) if plaintiff is indemnified. intimidation. They are susceptible of ratification. These contracts are binding. undue influence or fraud. even though there may have been no damage to the contracting parties: (1) Those where one of the parties is incapable of giving consent to a contract.4 years from termination of incapacity (2) absentees . courts must carefully examine the evidence as to the conduct and outward acts from which the inward motive may be determined Article 1389. unless they are annulled by a proper action in court. or until the domicile of the latter is known. OBLIGATIONS & CONTRACTS DVOREF Chapter Exam Review Notes Arts 1356 . the period of four years shall not begin until the termination of the former's incapacity.no affirmative action needed CIVIL CODE IV PRESCRIPTION. violence. (2) Those where the consent is vitiated by mistake. ratification is not required ANNULMENT a) the basis here is vitiated consent or incapacity to consent b) the defect here is intrinsic (in the meeting of the minds) c) the action is principal d) this is a sanction e) public interest governs f) law predominates g) plaintiff must be a party to the contract (whether bound principally or subsidiarily) h) damage to the plaintiff is immaterial i) indemnity here is no bar to the prosecution of the action k) to prevent annulment. The action to claim rescission must be commenced within four years.4 years from the time the domicile is known (2) Who can bring the action a) the injured party or the defrauded creditor b) his heir or successor-in-interest c) creditors of (a) and (b) by virtue of Art 1177 Civil Code ( accion subrogatoria) CHAPTER 7 VOIDABLE CONTRACTS Article 1390.an action (complaint or counterclaim) must be filed b) for use as a defense .4 years from the date the contract was entered into b) exceptions (1) persons under guardianship . For persons under guardianship and for absentees. ratification is required j) compatible with the perfect validity of the contract j) a defect is presupposed Voidable contract is not void ab initio .c) in ascertaining the intention of the persons accus of acting in bad faith. (1) Prescriptive period for rescission a) general rule .1402 Justice Edgardo L Paras All Rights Reserved Maria Adeliza M Diego SY 2013 . rescission cannot prosper k) to prevent rescission.
The action for the annulment of contracts may be instituted by all who are thereby obliged principally or subsidiarily. It is understood that there is a tacit ratification if. Ratification does not require the conformity of the contracting party who has no right to bring the action for annulment. And when the action refers to contracts entered into by minors or other incapacitated persons. nor can those who exerted intimidation. or employed fraud. This period shall begin: In cases of intimidation. Ratification extinguishes the action to annul a voidable contract. with their fruits. the contract becomes a completely valid one b) the contract is cleansed of its defect from the beginning Requisites of ratification a) the contract must be a voidable one b) the person ratifying must know the reason for the contract being voidable (cause must be known) c) the cause must not exist or continue to exist anymore at the time of ratification d) the ratification must have been made expressly or by an act implying a waiver of the action to annul e) the person ratifying must be the injured party Article 1393. Effects of annulment a) if the contract has not yet been complied with. However. Retroactive effect of ratification .to cure a defect in a voidable contract [Art 1396 Civil Code] RATIFICATION . Article 1396. violence. from the time the defect of the consent ceases. Kinds of ratification a) express (oral or written) b) tacit ( implied or conduct implying a waiver) Article 1394.to remedy a deficiency of proof [Art 1405 Civil Code] Effects of ratification a) the action to annul is extinguished. the person who has a right to invoke it should execute an act which necessarily implies an intention to waive his right. not the guilty person or his successor Article 1398. the value thereof shall be the basis for damages. with knowledge of the reason which renders the contract voidable and such reason having ceased. violence or undue influence. or caused mistake base their action upon these flaws of the contract. OBLIGATIONS & CONTRACTS DVOREF Chapter Exam Review Notes Arts 1356 . or undue influence. The action for annulment shall be brought within four years. there must be mutual restitution 1) the thing with the fruits 2) the price with interest CIVIL CODE IV PRESCRIPTION.the victim (principal or subsidiary party) may ask. except in cases provided by law.to cure the defect of lack of authority in an authorized contract entered into by another [Arts 1317 and 1405 Civil Code] ACKNOWLEDGMENT . Article 1395. An obligation having been annulled. Ratification may be effected by the guardian of the incapacitated person. CONFIRMATION .Article 1391. from the time the guardianship ceases. the parties are excused from their obligations b) if the contracts has already been performed. Ratification may be effected expressly or tacitly. In obligations to render service. and the price with its interest. the contracting parties shall restore to each other the things which have been the subject matter of the contract. from the time of the discovery of the same. In case of mistake or fraud. Ratification cleanses the contract from all its defects from the moment it was constituted.once ratification has taken place (1) annulment based on original defects cannot prosper (2) but the rights of innocent third persons must not be prejudiced Article 1397. Persons who may ask for annulment . Article 1392.1402 Justice Edgardo L Paras All Rights Reserved Maria Adeliza M Diego SY 2013 . persons who are capable cannot allege the incapacity of those with whom they contracted.
Article 1399. Article 1402. he shall return the fruits received and the value of the thing at the time of the loss.in the duty of mutual restitution.the capacitated person has the burden of showing such enrichment The capacitated person must restore whether he benefited or not except if Art 1427 Civil Code applies [Art 1427 . the loss of the thing shall not be an obstacle to the success of the action.a reciprocal obligation of restitution has been created CIVIL CODE IV PRESCRIPTION. No restitution by incapacitated party a) applies only if the defect is incapacity b) this constitutes an exception to the obligation of mutual restitution under Art 1398 c) restitution is only to the extent of enrichment (pecuniary or otherwise) No presumption of enrichment . The action for annulment of contracts shall be extinguished when the thing which is the object thereof is lost through the fraud or fault of the person who has a right to institute the proceedings.when a minor between 18 and 21 years of age who has entered into a contract without the consent of the parent or guardian voluntarily pays a sum of money or delivers a fungible thing in fulfillment of the obligation (natural obligation). Value may be substituted for the thing itself . unless said loss took place through the fraud or fault of the plaintiff. the incapacitated person is not obliged to make any restitution except insofar as he has been benefited by the thing or price received by him. When the defect of the contract consists in the incapacity of one of the parties. If the right of action is based upon the incapacity of any one of the contracting parties. Whenever the person obliged by the decree of annulment to return the thing can not do so because it has been lost through his fault. OBLIGATIONS & CONTRACTS DVOREF Chapter Exam Review Notes Arts 1356 . As long as one of the contracting parties does not restore what in virtue of the decree of annulment he is bound to return. there shall be no right to recover the same from the obligee who has spent or consumed it in good faith] Article 1400. Reason why one party cannot be compelled if other party does not restore . the other cannot be compelled to comply with what is incumbent upon him. the value of the thing with interest substitutes for the thing itself that was lost thru the party's fault Article 1401. with interest from the same date.1402 Justice Edgardo L Paras All Rights Reserved Maria Adeliza M Diego SY 2013 .