VOIDABLE CONTRACTS Exceptions: Persons capable of giving consent and Guilty

parties who have caused the vitiation of consent cannot allege the
ART. 1390: The following contracts are voidable or annullable even incapacity or want of consent of those they contracted with.
though there may have been no damage to the contracting parties:
(1) Those where one of the parties is incapacitated of giving WHEN CAN AN ACTION FOR ANNULMENT BE INSTITUTED: [ART. 1391]
consent to a contract; It shall be brought within 4 years. Prescriptive period may be
(2) Those where the consent is vitiated by mistake, violence, determined in the following cases:
intimidation, undue influence or fraud. o Intimidation, violence, undue influence – from the time the
These contracts are binding, unless they are annulled by a proper defect of consent ceases;
action in court. They are susceptible of ratification. o Mistake or fraud – from the time of the discovery of the same;
and
Note: The validity of a voidable contract may only be attacked either o Incapacitated persons – from the time the guardianship
by way of direct action or by way of defense via counterclaim, and ceases.
not a special affirmative defense.
EFFECTS OF ANNULMENT:
CHARACTERISTICS OF VOIDABLE CONTRACTS:
General Rule: In the following cases:
o Its defect consists of vitiation of consent of one of the
1. Contract is consummated – parties shall be released from the
contracting parties;
obligations arising therefrom; or
o It is binding until it is annulled;
2. Contract is not consummated – Mutual restoration of the things
o It is susceptible of convalidation by ratification, prescription, or
which have been the subject matter of the contract with their
loss of the thing which is the object of the contract through the
fruits and the price with its interest. If the subject is a service, the
fraud or fault of the plaintiff; once ratified, they become
value thereof shall be the basis for damages. [ART. 1398]
absolutely valid and can no longer be annulled [ART. 1392];
Exceptions to No. 2: In the following cases:
and
o Defect is caused by the incapacity of one of the parties – the
o Its defect or voidable character cannot be invoked by third
incapacitated person is not obliged to make restitution, except
persons.
what he has been benefited by the thing or price received by
him [ART. 1399];
WHO MAY INSTITUTE ANNULMENT: [ART. 1397]
o Loss of the thing by Plaintiff – action for annulment of voidable
General Rule: Action for annulment may be instituted by all who
contract shall be extinguished. But the action shall proceed if
are thereby obliged principally or subsidiarily: (a) Victim of the defect;
it is based upon the incapacity of one of the contracting
and (b) Third persons if prejudiced in his rights with respect to one of
parties, unless it is accompanied by fraud or fault of the plaintiff
the contracting parties and can show detriment which would
[ART. 1401];
positively result to him from the contract in which he has no
o Loss of the thing by Defendant - he shall return the fruits
intervention.
received and the value of the thing at the time of the loss, with
interest from the same date [ART. 1400]; and
 o Failure of one of the contracting parties to make restoration –
the other party cannot be compelled to comply with what is
incumbent upon him. [ART. 1402]
WHO MAY RATIFY:
o It may be ratified by the person who is entitled to do so under
the law;
o His right to ratify may be transmitted to his heirs; or
o Guardian of the incapacitated person. [ART. 1394]
WHO MAY NOT BE REQUIRED TO CONFORM TO RATIFICATION: [ART.
1395]
- The contracting party who has no right to bring the action for
annulment.
FORMS OF RATIFICATION: [ART. 1393]
o Express; or
o Tacit. When the person who has the right to invoke it, with the
knowledge of the reason which renders the contract voidable
and such reason having ceased, executes an act implying an
intention to waive his right.
EFFECTS OF RATIFICATION:
o It extinguishes the action to annul a voidable contract. [ART.
1392]; and
o It cleanses the contract from all its defects from the moment it
was constituted. [ART. 1396]
UNENFORCEABLE CONTRACTS
ART. 1403. The following contracts are unenforceable, unless they are
ratified: <SIN>
(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 for 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.
Note: Contracts that by reason of statutory defects do not confer any
action to enforce the same until and unless they are ratified in the
manner prescribed by law. [Reyes]
CHARACTERISTICS OF UNENFORCEABLE CONTRACTS:
o Cannot be enforced by proper action in court;
o Susceptible of ratification; and
o Cannot be assailed by third persons. [ART. 1408]
KINDS OF UNENFORCEABLE CONTRACTS: [ART. 1403]
1. Unauthorized contracts – are governed by ART 1317 and the
principles of agency in the Title X of this Code [ART 1404];
2. Those which did not comply with the Statute of Frauds – can be
ratified by the failure to object to the presentation of oral
evidence to prove the same, or by the acceptance of benefits
under them [ART 1405] ; and
3. Those where both parties are incapable of giving consent to a
contract – if both parties are incapacitated, it can be ratified
by the parent or guardian of one of the contracting parties,
which shall give the contract the same effect as if only one of
them were incapacitated. In case, it had been ratified by the
parents or guardians of both the contracting parties, the
contract shall be validated from the inception. [ART 1407].
HOW TO ASSAIL:
o W/out authority: NOT BY DIRECT ACTION. It can be assailed as
a defense by motion to dismiss the complaint on the ground
that the contract is unenforceable.
o Statute of Frauds: NOT BY DIRECT ACTION. It can be assailed as
a defense by motion to dismiss the complaint on the ground
that the contract is unenforceable, OR objection to the
presentation of oral evidence to prove an oral contract. [ART
1405]
o Incapacity: NOT BY DIRECT ACTION: It can be assailed as a
defense by motion to dismiss the complaint on the ground
that the contract is unenforceable.
WHO MAY ASSAIL:
o W/out authority: By the person whose name the contract was
entered into by owner of property.
o Statute of Frauds: By the party against whom the contract is
being enforced; or his privies.
o Incapacity: By the party against whom the contract is being
enforced; or his privies; or parents or guardians, as it is a
personal defense.
WHEN TO ASSAIL:
In ALL cases: When a party asks the court to enforce the
contract.
HOW TO CURE DEFECT:
o W/out authority: Ratification by person whose name the
contract was entered into.
o Statute of Frauds: Ratification by party against whom the
contract is being enforced, OR failure to object to the
presentation of oral evidence to prove the contract amounts
to waiver [ART. 1405] makes it as binding as if written.
o Incapacity: Ratification of party against whom the contract is
being enforced; or his privies; or parents or guardians, OR The
ratification by one party converts the contract into a voidable
contract [ART. 1407].
Note: 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. [ART. 1406]