CHAPTER 7.

– VOIDABLE CONTRACTS

1. Define annulment.
Annulment is remedy granted by law, for reason of public interest, for the declaration of the
inefficacy of a contract based on a defect or vice in the consent of one of the contracting parties
to restore them to the original position before the contract was executed.

2. What are the voidable or annullable contracts?

They are:

(1) Those where one of the parties is incapable of giving consent to a contract; and
(2) Those where consent his vitiated by mistake, violence, intimidation, undue influence, or
fraud. (Art. 1390)

3. State the grounds for the annulment of a contract.

They are:

(1) Incapacity of the party to give consent; and

(2) Mistake, violence, intimidation, undue influence, or fraud vitiating consent. (Ibid.)

4. Give the characteristics of voidable contract.

They are:

(1) It is valid and binding unless annulled by a proper action in court;

(2) It is susceptible of ratification;
(3) It requires no damage to the contracting parties; and
(4) Its defect is that the consent of one of the contracting parties is vitiated. (Ibid.)

5. Who can institute an action to annul a contract?

The victim or aggrieved party, whether he is principally, or subsidiary bound by the contracts
can bring the action. The capacitated party or the guilty party (Art. 1397) and the creditors 9
unless they can show prejudice to their rights) of the victim cannot ask for annulment.

6. Give the effects of annulment when it is ordered by a court.

They are:
(1) If the contract has not yet been performed, the parties are released from their
obligations;
(2) If it has already been performed, the parties must return to each other, the thing with
its fruits ( i.e., benefits received from the thing), and the price with its interest. In
obligations to render service, the value thereof is the basis of damage. (Art. 1398.)
 7. What are the exceptions to the rule of mutual restitution in case of annulment?

They are:

(1) The incapacitated person is obliged to make restitution only to the extent that he was
benefited by the thing or price received (Art. 1399; see Art 1426, IV.- Natural Obligations,
infra.);
(2) The person, through whose fault the thing he is obliged to return was lost, is liable to return
the fruits received and the value of the thing at the time of the loss with interest from the
same date (Art. 1400.); and
(3) A party cannot be compelled to comply with what is incumbent upon him, if the other does
not restore what he is obliged to return by virtue of the decree of annulment. 9art. 1402.)

8. Enumerate the causes of extinction of the action in court to annual a voidable contract.

They are:

(1) Prescription of the action (Art.1391.) by failure to file the necessary action within the
prescribed period;
(2) Ratification (confirmation), which may be express or implied (Art. 1392.) effected by the
guardian or by the injured party himself, provided he is (already) capacitated (Art. 1394.);
(3) Loss of the thing received by the plaintiff due to his fraud or fault (Art. 1401.);
(4) Fraudulent concealment by the plaintiff of his incapacity provided the other party is not
negligent (see Mercado vs. Espiritu,37 Phil. 215; Papa vs. Montenegro, 54 Phil. 1331.); and
(5) Estoppel such as the taking of benefits by the party who was incapacitated, after he has
acquired capacity. (Uy Soo Lim vs. Tan, 58 Phil. 552.)

9. What are the requisites of implied ratification?

They are:

(1) There must be knowledge of the reason which renders the contract voidable;
(2) Such as reason must have ceased; and
(3) The injured party must have executed an act which necessarily implies an intention to waive
his right. (Art.1393.)

10. Give the effects of ratification?

They are:

(1) The action to annul a voidable contract is extinguished (Art. 1392); and
(2) The contract becomes completely valid. It is cleansed from all its defects from the moment
it was constituted. (Art. 1396). In other words, the effect of ratification is retroactive.

Note: Ratification does not require conformity of the capacitated or guilty party. (Art. 1395)
Reason: Otherwise, he can conveniently disregard his contract by the simple expedient of refusing
to give his conformity.
 CHAPTER 8. – UNENFORCEABLE CONTRACTS
1. What are the classes of unenforceable contracts?
They are:
(1) Those entered into the name of another by one without authority or legal
representation, or who acted beyond his powers;
(2) Those that do not comply with the Statue of Frauds; and
(3) Those where both parties are incapable of giving consent to the contract. (Art.
1403.)
Note: The contracts falling under the first class may be ratified, expressly or
impliedly, by the person on whose behalf they have been executed before they are
revoked by the other contracting party. (Art. 1317.)
2. What is the Statue of Frauds?

The Statue of Frauds, found in Article 1403, No.2, Civil Code, is the rule which
requires that certain agreements or some note or memorandum thereof, shall
be in writing and subscribed by the party charged or by his agent; otherwise,
such agreements shall be unenforceable