1.

Rescissible Contracts Remedy allowed by law to the contracting

Is one which has all the essential parties and even to third persons, to secure the
requisites of a contract but which may reparation of damages caused to them by a
be set aside by reason of equity on contract, even if it should be valid by means of
account of damage to one of the parties the restoration of things to their condition at
or upon a third person. the moment prior to the celebration of said
contracts.
The following are rescissible contracts
A remedy to make ineffective a contract, validly
1. Those entered into by guardians
entered into and therefore obligatory under
whenever the ward whom they
normal conditions, by reason of external causes
represent suffer lesion by more than
resulting in a pecuniary prejudice to one of the
of the value of things which are the
contracting parties or their creditors.
objects thereof
2. Those agreed to in representation of Requisites of Rescission
absentees if the latter suffer lesion by
1 The party suffering damage must have
more than of the value of the things
no other legal means to obtain
are the object thereof.
reparation for the same.1383
Absentee- person who disappears from
2. The party demanding rescission must
his domicile, his whereabouts being
be able to return whatever he may be
unknown and without leaving an agent
obliged to restore. 1385
to administer his property.
3. The thing object of the contract must
3. Those undertaken in fraud of creditors
be legally in the possession of a third
when the later cannot in any manner
person who acted in good faith. 1385
collect the claims due to them
4. The action for rescission must be
4. Those which refer to things under
brought within the period allowed by
litigation if they have been entered into
law. 1389
by the defendant without the
*the prescriptive period is 4 years from
knowledge and approval of the litigants
the date of the contract, except the ff.
or of competent judicial authority.
A. For persons under
5. All other contracts specially declared by
guardianship -4 years from termination
aw to be subject to rescission
of incapacity
Rescissible payment, Requites B. For absentees- 4 years from
the time the absentees domicile is
1. The debtor is insolvent
known.
2. The obligation is not yet due
Extent of rescission
3. The debtor makes the payment (art.
Rescission shall only be to the extent
1382)
necessary to cover the damages caused.
RESCISSION
Alienations in fraud of creditors
1. Alienations by gratuitous title
2. Alienations by onerous title

Liability for damages of person acquiring things

in alienations in fraud of creditors
 1. If the Purchase was made in bad faith
2. If the purchase was made in good faith
Rules on annulment of voidable contracts

1. When action must be brought

VOIDABLE OCNTRACTS
One that is defective by reason of the incapacity
or vitiated consent of one to the parties. It is
binding unless annulled by a proper action in
court. It is susceptible of ratification.
The following are voidable or annullable
contracts
1. Those where one of the parties is
incapable of giving consent to a
contract
2. Those where the consent is vitiated by
mistake, violence intimidation, undue
influence or fraud.
3. Those where consent is given in state of
drunkenness
4. Those where consent is given during a
hypnotic spell
Annulment
prescriptive period otherwise the
contract can no longer be set aside
The actions for annulment must be
brought within 4 years which period
shall begin:
a. Intimidation, violence, undue
influence from the time the defect
in the consent ceases
b. Fraud, mistake from the time of
discovery of the same
c. Minority, incapacity of a party-
from the time guardianship ceases
2. Who may bring action for annulment
The action for annulment may be
instituted by all who are thereby
obliged principally or subsidiary (1397).
Hence, it cannot be brought by third
persons. It may be brought by the ff:

Action brought to set aside a voidable contract. a. The guardian of the capacitated
Annulment Rescission persons during the latters
Brought to declare Availed of to produce incapacity.
thee inefficacy the inefficacy which b. The incapacitated persons after he
inherent in the did not exist in the has attained capacity
contract contract c. The party whose consent is vitiated
Based on Vitiated Based on lesion or by mistake, violence, intimidation,
consent, hence damage undue influence or fraud.
damage is immaterial 3. Effects of annulment
Action is principal Action is subsidiary a. Obligations created by annulment
Sanctions where the Remedy where 1. In obligations to give, the
law predominates equity predominates contracting parties shall restore
Available only to the Available not only to to each other, except in cases
parties whether the contracting provided by law, the ff.
bound principally or parties but also to
a. The things which have been
subsidiary third person whose
the subject matter if the
interests are affected
Raification is Ratification is not contract with their fruits
required to prevent required to prevet b. The price with its interest
annulment rescission (1398)
 2. In obligations to render service,
the value thereof shall be the
basis of damages(1398).
3. Restitution when one of the
parties is incapacitated.
The incapacitated persons is
not obliged to make any
restitution except insofar as he
has been benefited by the
things or price received by him
(1399).
4. When the thing is lost through
the fault of the party obliged by
the decree if annulment to
return it
The said party shall return the
ff.:
a. Fruits received
b. Value of the thing at the
time of the loss
c. Interest from the time of
the loss (1400)
5. Mutual restitution
If one part cannot restore what
he is bound to return I the
decree of annulment, the other
cannot be compelled to comply
with what is incumbent upon
him (1402)
4. Effect of loss of thing while in the
possession of the party who has right
to bring the action for annulment
a. If lost through his fault, the action
for annulment is extinguished,
whether such party is incapacitated
or his consent is vitiated.
b. If lost without his fault and such
party is incapacitated, he can still
bring an action for annulment/
However, he will be required to
return the value of the thing and its
fruits (1398) and only up to extent
that he has benefited 1399
Ratification
Adoption or affirmation of a contract which is
defective because of a partys vitiated consent
or incapacity.
Rules on ratification
1. How ratification is made
a. Express
b. Implied/tacit
2. Who may ratify (same persons who may
annul the contract)
a. The guardian of the capacitated
persons during the latters
incapacity.
b. The incapacitated persons after he
has attained capacity
c. The party whose consent is vitiated
by mistake, violence, intimidation,
undue influence or fraud.
Note: ratification does nt require the
conformity of the person who has no right to
bring the action for annulment
3. Effects of ratification
a. It extinguishes the action to annul
avoidable contract (1392)
b. It cleanses the contract from all its
defects from the moment it was
constituted. In other words, the
contract is validated from inception
Unenforceable contract
One that cannot be enforced unless ratified>
Right to defense of unenforceability
This right is available only to the contracting
parties. Unenforceable contracts cannot be
assailed by their persons 1408
The following are unenforceable contracts
1. Those entered into on the name of
another persons b one whose been
given no authority or legal
representation or who has acted
beyond his powers (1403)
2. Those that do not comply with the
statue of frauds (1403)
3. Those where both attires are incapable
of giving consent to a contract
Effect of ratification by parent or guardian
a. When only the parent or guardian of
one party ratifies, the contract is
voidable at the instance of the parent
or guardian of the party who did not
ratify the contract
b. When the parents or guardians of both
parties ratify the contract shall be
considered validated from inception
(1407)
Void or Inexistent Contracts
5. . A contract is void and inexistent if it is
the direct result of a pervious illegal
contract.
The following contracts are void from the very
beginning (1409)
1. Those whose cause, object or purpose
is contrary to law, morals good
customs, public order and public policy.
(1347, 1352)
2. Those which are absolutely simulated r
fictitious (1356)
3. Those whose object or cause did not
exist at the time the transaction
4. Those whose object s outside the
commerce of men(1347)
5. Those which contemplate and
impossible service(1347,1348)
6. Those whose the intention of the
parties relative to the principal object of
the contract cannot be ascertained
(1387)
7. Those expressly prohibited or declared
void by the law (1409)

A void contract is one which has no force and

effect from the very beginning as if it had never
been entered into and which cannot be
validated either time or ratification. Its is
equivalent a juridical no civil effect. It does not
create, modify extinguish a juridical relations

Characteristics of void contract

1. A void contract cannot be ratified

2. The right to set up the defense of
illegality cannot be waived
3. The action or defense for the
declaration of the inexistence of a
contract does not prescribe
4. The defense of illegality of contracts is
not available to third persons whose
interest are not directly infected (1421)