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UNENFO RCEABLE CONTRACTS

UNENFORCEABLE CONTRACTS DISTINGUISHED FROM


VOIDABLE AND RESCISSIBLE CONTRACTS:

 Unenforceable contracts cannot be sued upon or enforced unless ratified:


thus, it is as if they have no effect yet.
 In one sense, they may be validable.
 Voidable and rescissible contracts are valid until annulled or rescinded.
 Thus, unenforceable contracts are nearer absolute nullity than the other
two.

KINDS OF UNENFORCEABLE CONTRACTS:

a) Unauthorized contracts
b) Those that fail to comply with the Statute of Frauds
c) Those wherein both parties are incapable of giving consent to a contract

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
powers;

2) Those that do not comply with the Statute of Frauds as set forth in this
number. In the following cases an 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 evidence 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
receive 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 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 incapable of giving consent to a contract.

UNAUTHORIZED CONTRACTS

These are “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
powers.”

Example:
Without my authority, my brother sold my car, in my name, to X. The
contract is unauthorized and cannot affect me unless I ratify the same
expressly or implicitly, as by accepting the proceeds of sale.

Bumanlag vs. Alzate G.R. No. 39119, September 26, 1986

A compromise agreement signed in behalf of the client by his lawyer


who did so without authorization of said client is merely unenforceable (not
void) and may therefore, be ratified by said party expressly or implicitly.

 Mere lapse of time, no matter how long, is NOT the ratification required
by law of an unenforceable contract. (Tipton vs. Velasco, 6 Phil 67)
 Without ratification, the “agent” assumes liability. (2 Am. Jur. 251)
THE STATUTE OF FRAUDS

a) The purpose of the Statute of Frauds is to prevent fraud, and not to


encourage the same. Thus, certain agreements are required to be in
writing so that they may be enforced.
b) How the Statute of Frauds prevents Fraud?
 Since memory is unreliable, oral agreements may result in
injustice. To aid human memory, to prevent the commission of
injustices due to fault memory to discourage intentional
misrepresentation, are the principal aims of the Statute of Frauds.
(Facturan vs. Sabanal, 81 Phil 512)

c) First country to enact statute (England in 1676)


 England was the first country to adopt the Statute of Frauds. In
1676, the English Parliament passed a law or statute requiring certain
agreements to be in writing. Since then the statute has been called the
Statute of Frauds. (National Bank vs Phil. Vegetable Oil Co., 49 Phil
857)
d) History, Chief Characteristic and Object of the Statute of Frauds:
1. The Statute of Frauds is a name of a celebrated English
statute which has been modified and adopted in the United States and
the Philippines.
2. Its chief characteristic is the provision that no suit or
action shall be maintained on certain classes of contracts or
engagements unless there is a note or memorandum thereof in
writing signed by the party to be charged or by his authorized agent.
3. Its object was to close the door to the numerous frauds
which were believed to be perpetrated and the perjuries which were
believed to be committed when such obligations could be enforced
upon no other evidence than the mere recollection of the witness.
4. It is more fully named as “The Statute of Frauds and
Perjuries.”

GENERAL RULES OF APPLICATION

1st Principle
The Statute of Frauds applies only to executory contracts (contracts
where no performance has yet been made) and not to partially or
completely executed
(consummated contracts).

(See Almirol & Carino v. Monserrat, 48 Phil.67; Asturias Sugar Central,


Inc. v Montinola, 69 Phil. 725; and Facturan v. Sabanal, 81 Phil. 512).

 The Statute of Frauds applies only to executory contracts.

Example 1:

A sold to B real estate for a stipulated price. The agreement was oral. A
has not yet delivered the real estate. B has to not yet paid the price. B offered
to buy, but A refused to go ahead with the agreement.

Under the Statute of Frauds, to be enforceable, an agreement for the sale


of real estate must be in writing (Art. 1403, [2e]); B sued for specific
performance. A’s attorney objected, setting up the Statute of Frauds as the
reason for objection.

May the contract be proved by oral evidence?

ANS.: No. The agreement being merely executory, the agreement cannot
be proved. Therefore also, A cannot be compelled to deliver.

(See Santos v. Rivera, 33 Phil 1)

Example 2:

Question : Why is the Statute of Frauds applicable only to executory


contracts and not to those fully or partially informed?

Answer : This is so because the possibility for fraud in executory


contracts is much greater. As a result, were the rule otherwise, many would
perjure themselves on the witness stand.

(See Hernandez v. Andal, 78 Phil. 1196)


Example 3:

By virtue of an oral contract of sale, seller delivered to a buyer a piece of


land which was partially paid. May seller recover balance of price?

Answer : Yes, since the contract has already been partially executed.

(See Almirol & Carino v Monserrat, 48 Phil. 67)

Example 4:

Through the failure of the would-be buyer, the Manila Railroad Co., to
accept the deed after having orally offered to buy the house subjected the
plaintiff (would-be seller) to much trouble and annoyance and may therefore
be subject to criticism.

Still , plaintiff has no cause of action for the Statute of Frauds has been
timely pleaded in defense by the Manila Railroad Company.

(See Barreto v. Manila Railroad Cp., 46 Phil. 964)

Example 5:

Statute of Frauds applies only to executory contracts and their


enforcement.

Both the extensions of the period of repurchase and the extensions of the
lease contracts are no longer executory, because they have been performed
and consummated.

(See Goejin v. Libo, L-4250, Aug. 21, 1953)

Example 6:

A Contract of Sale of Real Property in installment is NOT within the


Statute of Frauds, even though it is not in writing, if the first installment has
already been a partial performance of the contract by the buyer.

In Babao v. Perez, it has also been held that an oral contract partially
performed must be proven clearly in court, thus:

“The contract must be fully made and completed in every respect except
for the writing required by the statute, in order to be enforceable on the
ground of part performance. The parol agreement relied on must be certain,
definite, clear, unambiguous, and unequivocal in its terms, particularly
where the agreement is between parent and child, and be clearly established
by the evidence.

The requisite of clearness and definiteness extends to both the terms and
the subject matter of the contract. Also, the oral contract must be fair,
reasonable, and just in its provisions for equity to enforce the oral agreement,
or its specific enforcement would be harsh or oppressive upon the defendant,
equity will withhold its aid.

Clearly, the doctrine of part performance taking an oral contract out of


the statute of frauds does not apply so as to support a suit for specific
performance where both the equities and the statute support the defendant’s
case.”
(49 Am. Jur., p. 729)

2nd Principle

The Statute of Frauds cannot apply if the action is neither for damages
because of the violation of an agreement nor for the specific performance
of said agreement.

(See Lim v. Lim, 10 Phil. 635; and Facturan v. Sabanal, 81 Phil. 512)

Example 1:

A tenant and a landlord who had an oral contract of lease which


stipulates that half of the crops belongs to the tenant; the other half, to the
landlord. Landlord in violation of the agreement, sold all the crops and
refused to give the tenant his share.
Statute of Frauds is NOT applicable in this case. The tenant can recover,
although it should be in writing, the damages asked was not through the
breach of the contract of the lease. The tenant in this case is asking for
damages, because of the violation of the agreement of the crops.

(See Lim vs. Lim, 10 Phil. 635)

Example 2:

Where the purpose of action was to enforce an alleged verbal agreement


to sell, which is claimed to have been occupied by the plaintiff as a tenant,
the court dismissed the case on motion to dismiss, under the Statute of
Frauds, said verbal agreement cannot be enforced, nor evidence thereof
proven, because it was not done in writing, nor in any note or memorandum,
as required by said Statute.

(See Pascual vs. Realty Investment Inc., 91 Phil. 257)

Example 3:

Where the complaint does not contain allegations that the plaintiff has
taken possession of land, due to the verbal contract he had with the
defendant to purchase it, nor is there any allegation that has made
improvements thereon.

It alleges that the plaintiff occupied the land as tenant, the alleged
transaction comes under Statute of Frauds.

3rd Principle

The Statute of Frauds is exclusive, that is, it applies only to the


agreements or contracts enumerated herein.

(See Quintos v. Morata, 54 Phil. 481; also the rule of Statutory Construction
which states: Inclusio unius est exclusio alterius” ― what the law does not
include, it excludes. Or, the enumeration of certain things excludes. Or, the
enumeration of certain things excludes all those not so enumerated.)
The Statute of Frauds is exclusive, that is, it applies only to the agreements
or contracts enumerated therein:

1. A loan of P1,000 does not have to be in writing to be enforceable


because the contract of loan is not one of those enumerated in the
Statute.
2. An oral sale of less than P500 is valid and enforceable.
3. A defect in the attestation clause of a will cannot be cured by oral
evidence, although no objection has been made. As the Statute of
Frauds refers only to certain agreement and contracts whereas wills
and testaments and formalities are governed by a separate and
specific provisions of a law.
4. A mutual promise to marry is NOT governed by the Statute of
Frauds

4th Principle

The defense of the Statute of Frauds may be waived.

(Art. 1405, Civil Code: Contracts infringing the Statute of Frauds, referred
to in No. 2 of Art. 1403, are ratified by the failure to object to the failure to
object to the prestation of oral evidence to prove the same, or by the
acceptance of benefits under them.)

The defense of Statute of Frauds may be waived.


 In an oral executory contract of sale, if one party fails to timely
object to oral evidence presented, it is as if there was a waiver,
and the agreement considered valid, provided all the essential
requisites for the transactions are present.

There are two ways to waive this defense:


1. Timely failure to object to the presentation of oral evidence to
prove the oral agreement.
2. Acceptance of benefits under them.

When must the timely objection made?


Either after the question about the agreement is made or after the
answer to said question is made.
(See Abrenica vs. Gonda, et al. 34 Phil. 739)

5th Principle

The Statute of Frauds is a personal defense, that is, a contract infringing


it cannot be assailed by third persons.

(Art. 1408, Civil Code)

The Statute of Frauds is a personal defense, that is, an agreement


infringing it cannot be assailed by third persons.

Example:

“A tenant was occupying the landlord's house on a lease contract when


the landlord sold the house orally to the buyer. The buyer has not yet given
the price and seller has not yet delivered the house. Buyer asks the tenant to
pay him rent, tenant refuses on the ground that the sale is unenforceable.”

 The tenant's contention will not prosper, as he is not a party to said


sale, he cannot set up the Statute of Frauds.

6th Principle

Contracts infringing the Statute of Frauds are not void; they are merely
unenforceable.

(Art. 1403, Civil Code)

Example:
A and B entered into an oral executory sale. The sale is not void, for
if this were so, it cannot be ratified. The contract of sale had also some
effect, namely, that the tenant cannot refuse to pay rent to the new
landlord-buyer.
7th Principle

The Statute of Frauds is a Rule of Exclusion, such that oral evidence


might be relevant to the agreements therein and might therefore be
admissible were it not for the fact that the law or the statute excludes said
oral evidence.

(See Jones on Evidence, Sec. 1425)

Example:
A orally sold B a piece of land. Agreement was still executory. A
asked for payment, B refused, setting up Statute of Frauds. In court, A
presented 2 witnesses to testify.

Their testimony is indeed relevant, but should the timely


objection on B's attorney, their evidence would be inadmissible
because Statute of Frauds excludes such testimony on a
matter like this.

8th Principle

The Statute of Frauds does not determine the credibility or the weight
of evidence. It merely concerns itself with the admissibility thereof.

Example:
To prove an oral sale, X presented cabinet members to testify, all of
whom are men of integrity, still their testimony is will not be admitted,
although may be very truthful.

9th Principle

The Statute of Frauds does NOT apply if it is claimed that the contract
does not express the true agreement of the parties.

As long as the true or real agreement is not covered by the Statute of


Frauds, it is provable by oral evidence.
(See Cayugan v. Santos, 34 Phil. 100)

Example:
A orally sold a ring to B allegedly for a price of 700. The contract is
unenforceable, but if A insists that the price was only P400, oral evidence is
allowed.

THE SPECIFIC AGREEMENTS

There are six agreements referred under the Statute of Frauds.

1. “An agreement that by its terms is not to be performed within a year


from the making thereof.” (Art. 1403, No. 2-a, Civil Code)
 Hence, an agreement orally entered into on 1987, for a person
to commence the painting of a portrait in 1989, cannot be
enforced unless such contract is in writing.
 Also, if a contract stipulates that a certain type of activity
shall be commenced within the year from the making of the
contract, but can only be accomplished after one (1) year
from the same, it will fall within the Statute of Frauds.
 If the contract stipulates that the contract shall be executed
immmediately upon the signing of the agreement, although it
has been reset to another date by agreement of the parties so
that it can be finished only beyond one year, the contract is
not within the statute.

Example of Specific Agreement #1:


A and B, neighbors, orally agreed that A would sell and B would buy
A's transistor radio for P200 three years from the date of the agreement. At
the end of three years, A refused to hand over the radio although B was
willing to pay. Is the agreement enforceable under the Statute of Frauds?

ANS: No, because under the terms of the contract, the sale was to be
performed at the end of three years. It should have been, therefore, made in
writing. The Statute recognizes the frailty of man's memory, and apparently
only one year is the limit.
Had the agreement been that performance would be made within three
months, the agreement, even if oral, would have been enforceable. (See
Boydell v. Drummond, 11 east 143)

A and B, neighbors, orally agreed that from that day, B would not
erect a garage on his property till after three years. A week later, B began to
erect the garage in violation of the agreement. A complains and B sets up the
Statute of Frauds.

ANS: A is correct in complaining. This agreement does not come


under the Statute of Frauds, becacuse here the performance was to begin
right on that day they agreed, namely, the obligation not to construct. This is
not an agreement that will be performed after a year; the performance was to
begin right away.

2. “A special promise to answer for the debt, default, or miscarriage of


another.” (Art. 1403, No. 2-b, Civil Code)
 The word “special promise” is meant to limit the “statutory
provision to express and tacit promises in fact made and does
not apply in cases where the duties are created by law without
any promissory assent.”
 The promise must be made to the promisee and not to the
debtor.
 The phrase “debt, default, and miscarriages” includes all legal
obligations under which a person can come, contractual or
non-contractual, requiring a money payment or any other
kind of performance.
 The commitment of the promisor to pay the debt of another
should not immediately discharge the debtor from the his debt
at the time of the making of the promise; otherwise, there will
be a novation which will not fall under the Statute of
Frauds.Hence, if one merely promises to pay the obligation of
another once the debt becomes due, such promise does not
fall under the Statute of Frauds.
 In case the obligation is joint, there is no “special promise” as
contemplated in the Statute of Frauds.
 However, in solidary obligations, it will depend on whether
or not the promisor knew that only of the solidary debtors
will truly be benefited by the payment.
Example of Specific Agreement #2
a. A borrowed money from B, with C as guarantor. The contract of
guaranty between B, the creditor, and C, the guarantor, must be
in writing to be enforceable. (See Gull v. Lindsay, 4 Ech. 45)

b. “Special promise” refers to a subsidiary or collateral promise to


pay, like a contract or guaranty. (See Brown v. Coleman Dev.
Co., 34 Ont. L-210)

c. A was having his house repaired by B, who needed certain


materials. So A told storeowner (of materials), “Give B the
materials, I shall be responsible. I shall stand good.” This was
orally made. Is this a special promise? Is this oral agreement
enforceable?
i. ANS: This is not a special promise. This is not a guaranty.
Only A obligated himself. Since this is not a guaranty, the
contract is enforceable, so that the seller can properly sue
A and prove the oral agreement by parol evidence, over
and above A's objection. (See Reiss v. Memije, 15 Phil.
350.)

3. “An agreement made in consideration of marriage, other than a


mutual promise to marry.” (Art. 1403, No. 2-c, Civil Code)
 Ante-nuptial agreements or marriage settlements must be in
writing to be enforceable.
 However, this rule has been modified by Article 77 of the
Family Code, which provides that ante-nuptial
agreements or marriage settlements or any modifications
thereof shall be in writing, signed by the parties and
executed before the marriage.
 This legal requirement is mandatory in nature. Hence,
violation of this mandatory provision of the Family Code
will make the marriage settlement not only unenforceable
but null and void pursuant to Article 5 of the Civil Code,
which pertinently provides that acts executed against the
provision of mandatory laws shall be void.
 On the other hand, a mutual promise to marry will not fall
under the Statute of Frauds because a breach of such promise
per se is not actionable.

Example of Specific Agreement #3


a. Examples of agreements made in consideration of marriage:
i. marriage settlements. (Art. 122, Civil Code)
ii. donations propter nuptias. (Art. 127, Civil Code)

b. When the law says “in consideration of marriage,” it really


means “by reason of the marriage.” Thus, the cause of the
donation by propter nuptias is not the marriage but the
liberality or the generosity of the giver.

c. Note that the law says “other than a mutual promise to


marry.” Hence, an oral mutual promise to marry is not
embraced by the Statute of Frauds. The injured party may
present oral evidence of the promise in an action to obtain
actual damages for breach thereof. (Cabague v. Auxilio, 92
Phil. 294)

Example of the Exception


 A and B mutually promised to marry each other. The promise
need not be in writing unless the marriage be deferred till
after the lapse of one (1) year from the agreement. (See
Atienza v. Castillo, et al., 71 Phil. 589)
 For breach of a mutual promise to marry, the groom may
sue the bride for actual damages and oral evidence of such
mutual promise is admissible. (Cabague v. Auxilio, supra)

4. “An agreement for the sale of goods, chattels, or things in action, at a


price not less than five hundred pesos unless…(Art. 1403, No. 2-d, Civil
Code)
 Hence, a contract of sale of a fountain pen worth P5,000 must
be in writing to be enforceable.
 In an auction sale, the recording of the sale in the sales book
is enough memorandum so as to remove the contract from the
Statute of Fraud.

Example of Specific Agreement #4


a. A sold B his pen for P400.00 orally. Contract was still
executory. This is unenforceable unless B gets the pen or
pays fully or partially for the price. (See Engel, et al. v.
Velasco & Co., 47 Phil. 115)
b. Meaning of “things in action”: incorporated or intangible
personal property. (Example: credit)

c. Note that the law says “sale”, not other contracts. (Engel, et al.
v. Velasco & Co., 47 Phil. 115)

d. Note also that if the price is exactly P500.00, the contract


must be in writing to be enforceable.

e. Partial payment takes the contract away from the Statute


except if said part payment corresponds to the part delivered,
in which case, if the contract is divisible, the remainder is
covered by the Statute.

f. Rule in case of auction sale:


“When a sale is made by auction, and entry is made by
the auctioneer in his sales book at the time of the sale of:
I. The amount and kind of property sold;
II. The terms of the sale;
III. The price;
IV. The names of the purchasers and persons on whose
account the sale is made - the entry is considered a
SUFFICIENT memorandum (even if the same is not
signed by the party sought to be charged)

5. “An agreement for the leasing for a longer period than one year, or
for the sale of real property or of an interest therein.” (Art. 1403, No.
2-e, Civil Code)
 Thus, a contract of lease for two years must be in writing to
be enforceable.
 A sale of real estate must likewise be in writing to be
enforceable, but it need not be notarized or in a public
document to be effective between the parties.
 Notarization is needed only to bind third persons, and so that
the proper registry of property can accept the deed or contract
for registration.
Example of Specific Agreement #5
a. Two kinds of agreements are referred here:
a) Lease of real property for more than one year (note of
personal property)
b) Sale of real property (regardless of price)

b. Example:
A is B’s tenant. Lease is for six months. If oral, lease is still
enforceable, for the period does not exceed one year.
c. If lease of real property is exactly one year, the contract may
be oral, since here the period does not exceed one year.

d. “Interest” in real property may include easement or usufruct.

e. A verbal agreement was made between A and B whereby A


agreed to sell and B agreed to buy A’s farm for P100,000.00.
The price was paid. Possession was not given nor was the
deed delivered, both being refused. B comes to you and wants
to know if he can compel A to give him the deed and
possession. What would you advise?

ANS.: I would advise B to sue for specific performance


and also ask A to execute the deed of conveyance. The
Statute of Frauds refers only to purely executory contracts;
hence the statute will not apply in this case. (See Art. 1403,
No. 2[e]; See also Facturan v. Sabanal, 81 Phil. 512) Since
the contract is valid and enforceable; we can now apply Art.
1357 of the new Civil Code which states that: “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 perfect. This right may be exercised
simultaneously with the action upon the contract.

6. “A representation as to the credit of a third person.” (Art. 1403, No.


2-f, Civil Code)
 Under Article 21 of the Civil Code, it is provided that “every
person must, in the exercise of his rights and in the
performance of his duties, act with justice, give everyone his
due and observe honesty and good faith.”
 A representation therefore of the credit worthiness of another,
which turns out to be untrue may be a cause of action for
damages if the same were given in bad faith.

Express Trust Concerning Real Property


It will be observed that while the Statute of Frauds makes no mention
of it; still under Art. 1443 of the Civil Code, “no express trusts concerning
an immovable or any interest therein may be proved by parol (oral)
evidence.” Hence, we can safely conclude that the Statute of Frauds also
applies to such express (conventional) trust.

Duty of the Attorney for the Defendant


If an agreement violates the Statute of Frauds, but an action is
nevertheless brought against one of the parties, his attorney can do the
following:

a. File a motion to dismiss. (Rule 16, 1997 Rules of Civil


Procedure);

b. Plead the Statute of Frauds as an affirmative defense. (Sec. 6,


Rule 6, New Rules of Civil Procedure);

c. Make a timely objection in the course of the trial. (See Art.


1405, Civil Code)

Duty of the Attorney for the Plaintiff

a. Present the written agreement or contract;

b. If this cannot be done, as when the contract is lost, present a


memorandum or note in writing where the important details of
the contract are set forth such the names of the parties,
description of the property.

c. If the written agreement has been lost and there is no note or


memorandum, present secondary evidence of the agreement.
Problem on “Sufficient Memorandum”
Example:
A telegram was sent advising a would be buyer to come to a
certain place to complete the purchase of a parcel of land verbally promised
to said buyer. But---

A. The telegram did not state purchase price;


B. The telegram did not describe the property;
C. The telegram had not been signed by any individual in behalf
of the seller.

Question: Is the sale enforceable?


No. It is not enforceable because the telegram, as a note or
memorandum is clearly insufficient for the details above-mentioned were
not placed.
(See Basa v. Roque 45 Phil 655)

Formal Requirements of Sufficient Memorandum


The Supreme Court, consistent with the established doctrine, has
held that no particular form of language or instrument is necessary to
constitute a memorandum or note in writing under the contract of Statute of
Frauds.

Any document or writing under the contract or for another purpose,


which complies with all the statutory requirements of statute as contents
and signature, maybe considered as sufficient. (See Berg v. Magdalena, 92
Phil 110)

Rule on Authority of the Agent to Sell Land or any interest therein


Under the Civil Code, when a sale of a piece of land or any interest
therein is through an agent, the authority of the latter shall be in writing;
otherwise the sale shall be void. Note that the law says “void”, not merely
unenforceable.

Oral Promise to Put in Writing


An oral promise to put in writing an agreement that is covered by the
Statute of Frauds is itself enforceable. (37 C.J.S 745)
INCAPACITY OF BOTH PARTIES TO ENTER INTO A CONTRACT

The third kind of unenforceable contract is one where both parties are
incapacitated to give consent.
Example:
A contract entered into by two minors without parental consent.

New Jurisprudence
Unless otherwise provided by law, a contract is obligatory in
whatever form it is entered into, provided that all the essential requisites are
present.

When a verbal contract has already been complete, executed or


partially consummated, its enforceability will not be barred by the Statute of
Frauds, which applies to an executory agreement.

Case: Gerardo Cordial v. David Miranda


G.R. No. 135492, December 14, 2000

Art. 1405. Contracts infringing the Statute of Frauds, referred to in No. 2 of


Article 1403, are ratified by the failure to object to the presentation of oral
evidence to prove the same, or by acceptance of benefits under them.

Two ways of ratification of contracts infringing the Statute of Frauds:

1. Failure to object to the presentation of oral evidence to prove the


contract.
(See Domalagan v. Bolifer, 33 Phil. 471)
2. Acceptance of benefits under them.
(See Hernandez v. Andal, 78 Phil. 196)

Example:
1. Contracts infringing the Statute of Frauds are ratified when the
defense fails to object, or asks questions on cross-examination.

As no timely objection or protests was made to the


admission of the testimony of the plaintiff with respect to the
contract [defendants] tacitly waived there right to have it stricken out.
Limketkai Sons Milling v. CA
G.R.118509, 1 December 1995

2. A sold to G a particular real property, and A benefited from the


transaction by already obtaining the purchase price.

Art. 1406. When a contract is enforceable under the statute of Frauds, and a
public document is necessary for its registration in the Registry of Deeds, the
parties may avail themselves of the right under Article 1357.

 Provides that the agreements are in written form and are therefore
enforceable.

 The law also requires it to be transformed into a public document,


for its registration in the Registry of Property.

 May compel each other to observe the form once the contract is
perfected.

 May exercise this right simultaneously with the action upon


contract.

 The right of one party to have the other execute the public
document needed in registration is only when the contract is both
valid and enforceable.

Case: Almirol vs. Monserrat, G.R. No. 23717

By virtue of a verbal sale, the applicant came into actual possession


of the land, where said applicants sought the registration of the subject lot
already in their possession, the oppositors claimed that oral proof of the
contract cannot be adduced in court where the registration being questioned.

Art. 1407. In a contract where both parties are incapable of giving consent,
express or implied ratification by the parent, or guardian, as the case may be,
of one of the contracting parties shall give the contract the same effect as if
only one of them were incapacitated.

If ratification is made by the parents or guardians, as the case may be, of


both contracting parties, the contract shall be validated from the inception.

 In cases where both of the contracting parties are incapacitated,


and the guardians of one of the incapacitated persons ratifies the
contract, it shall be transformed into a voidable or annullable
contract.

 If the ratification is made by the parents or guardian of both


parties, the contract shall be completely valid as if it has not been
visited by any defect or infirmity at all.

Example:
A and B, both 15 years old, entered into a contract. The contract is
unenforceable because both parties cannot give consent. Now, if the
guardian or parent of A ratifies expressly or impliedly the contract, it
becomes voidable, valid unless annulled by guardian or parent of B.
However, if the guardian or parent of ratifies, the contract is validated right
from the start it was entered into.

Art. 1408. Unenforceable contracts cannot be assailed by third persons.

 Strangers cannot attack the validity of voidable contracts, so also


they cannot attack a contract because of its unenforceability. The Statute
of Frauds cannot be set as a defense by strangers to the transaction.
(Ayson v.CA 97 Phil. 965)
REPORT ON CHAPTER 8
CIVIL CODE OF THE PHILIPPINES

UNENFORCEABLE CONTRACTS

OBLIGATIONS AND CONTRACTS

Presented To:

Atty. Fitzgerald Macalalag

Presented By:

CATALUÑA, Charles Angelo


GORANTES, Nieva Francesca
GEGANZO, Gerelyn
MELLIZA, Ronald John
VARON, Joefritz

March 30, 2019