OBLICON LECTURE (1.14.

21)

Rescissible, voidable, unenforceable and void or inexistent contracts

RESCISSIBLE
- Suffer damage or injury
- When a guardian enters into a contract which is injurious to the ward
- Contract entered into in representation of an absentee
- There is no magic amount here = no 1/3 or ½; as long as its aim is to defraud someone – it is rescissible
- Usually involves a contract of sale
- Contracts declared rescissible by law (art. 1381) (art 1191 – the power to rescind)
- the main problem is in the damage that it may cause to another party or third party such as creditor
VOIDABLE CONTRACTS
ART. 1391 –
- defect in the consent: one of the congracting parties is either incapacitated by reason of minority, insanity or
deaf-mute OR by reason of some other incapacity described elsewhere for persons required to be under
guardianship
- when consent is vitiated – defect in the consent; given but defective coz vitiated by reason of force
- you don’t need to prove damage
- but in annulment, you can also require damage
- damage is not necessary here but you may still require or ask for damage
- defect in the consent of one of the contracting parties
- if both are capable of giving consent = enforceable
- if one cannot give = voidable
- if both cannot give = unenforceable
- two general categories of voidable contracts
- “these contracts ARE BINDING unless they are annulled by a proper action in court. They are susceptible of
ratification.”
- Only a court can annul a contract; a judicial function
- Parties, by mutual assent, can get away from their contracts
- Mutual assent of the parties may extinguish a contract
- Voidable of contract is susceptible of ratification
- A guardian may ratify a contract
- Different vices of consent (READ AND UNDERSTAND)
- Within what a period an action of annulment may be brought or filed in court?
 Art 1391 = within 4 YEARS
- BOTH FOR RESCISSIBLE AND VOIDABLE = 4 YEARS (prescriptive period)
- The reckoning of the 4 year period may vary
- If the ground for annulment
- Shall reckon from the discovery of fraud
- If can be ratified or not (article 1390)
- Ratification may be effected expressly or impliedly
o When a minor turns 18 and notifies the other party that he is ratifying the contract
o Tacit = when the party who can ask for the annulment could derive benefit from that contract
- One implied ratification = would cause the loss of the thing he may be required to return; if he loses the thing
and the court annuls the court due to his fault he cannot return; no need for asking the annulment, it will be
tantamount to ratification
- In article 1391 – the action for annulment shall be brought WITHIN 4 YEARS (compare it with 1410)
- 1391 – action for annulment
- 1410 – the action and the defense (void or inexistent)
- Does the defense that is the voidable character of the contract, does it prescribe?
o The action prescribes in 4 years, the party who asks for ratification may no longer ask because it already
prescribed
 o Does the defense prescribe in 4 years
Example minor ka pa then pinapirma kita ng contract of sale, 17 ka nun. Then after four years, wala ka ginawa, di mo
pina ratify yung contract – di ka na pwede magpa ano sa court kasi nagprescribe na yung period

Can you raise as a defense the fact that the contract you signed is voidable? Because you were still a minor then?
o 1391 speaks of action has already prescribed
But did the defense prescribe as well?
o Two schools of thought
 1st – the defense DOES NOT prescribe; you are not asking for a specific relief from court, 1391
only speaks of prescription of action but NOT raising the voidable character of a contract by way
of defense; so it does not prescribe; so you can raise that ANYTIME
 2ND – even though art 1391 does not mention defense and only spoke about action, both action
and defense PRESCRIBED in four years; you can no longer raise the voidable character by way of
defense; you cannot ask from the court indirectly; if the court will allow you to raise the
defense, edi imprescriptible pala yun; when you failed to file in 4 years, then all the defects ARE
CURED; what is a voidable is no longer voidable but already ENFORCEABLE (Pastrana’s
preference)
- What is the effect of annulment?
o Restored in their respective positions BEFORE entering the contract; whatever received thru the
voidable contract, it will be returned, ganun din sa rescissible
o In annulment of contracts – the parties would have to be restored to their respective positions
o Even tho damage is not an element, if you can show that the innocent party suffered damage like the
other party took advantage of the injured party and fraud can be linked = then there can be a award for
damage
- Art 1401
o Shall be extinguished
o When the other party was unable to return
o Annulment = return whatever you may have received; kapag di nyo na mareturn edi para saan pa
annulment
o Kahit igrant pa ng court pero you are unable to return = di na rin ma-annul; what’s the point pa; action
for annulment shall be extinguished

UNENFORCEABLE CONTRACTS
ART 1403
- Ultra vires
- You will encounter this in corporation law
- What if both claim to represent other people despite being authorized (ako ay represented SM companies; you
represented the robinson companies)
o The contract will be unenforceable
- Whether one or both are portraying to be authorized, the contract will always be unenforceable
- Statute of Frauds
o Requires an agreement to be in a written memorandum subscribed by the parties
o Reason: because parties tend to forget or vary from their original agreement
o 1403 (2) – correlate it with forms of contract; kailangan in written memo subscribed by the parties
- 1356 – when a law requires it in a particular form in order for it to be valid = it shall be absolute and
indispensable; furthermore the remedy of compulsion shall not be available
o You cannot compel the other party to do the proper form
- There are forms required for validity:
o Be in writing
o Be notarized
o Registered in some government registry
  WHY? A notary public cannot notarized unless there is a piece of paper in front him; same with
registration; it has to be a written document
 Kapag hindi ka nagcomply – void
For enforceability
- Memorize Art 1403 (2)
- Recall ABSCBN v. CA
o Attempt to establish that there was a contract between Viva films and ABSCBN
(1) If the execution would take place 2 to 3 years later, it should be in writing, otherwise, it is
unenforceable
(2) A special promise – example: security contract/guaranty = must be in writing/ otherwise unenforceable
(3) For the sale of goods of the price not less than 500 pesos, a 1950 law = 500 pesos and up (dapat written
na yung agreement)
(4) Agreement for the leasing for a longer period than 1 year
 What if you are leasing a condominium for 50k and you pay 50k every month, and there is no
contract of lease made = what is the status of the contract then? It is ENFORCEABLE because the
parties are ALREADY ENFORCING the contract
 When speaking of unenforceable contracts , they are contracts NOT YET ENFORCED; kaya pag
naenforce na at kahit nasa list sya sa 1403, it would still be ENFORCEABLE and ceases to be
unenforceable
 Sale of a real property (Sale of a lot, warehouse, house, as long as immovable) – if I sell a
condominium to you near QC worth 5 million = do we have a contract? Yes, because there is
meeting of the minds, what is the status = valid; because a law does not reuire the sale of parcel
of land to be in written form to be valid; it is valid kaso statues of frauds requires it to be
evidenced in written memorandum or in writing or unenforceable; if there is oral sale = valid but
unenforceable
 The buyer made a partial payment of 500k, what is the status?
 Sale is valid because there is meeting of minds
 The sale is enforceable because it had already been PARTIALLY ENFORCED by the parties
 The contract CEASED to be unenforceable
 Can the buyer compel now the seller to put it in writing? – yes, because you have now a
valid agreement, a contract that had been perfected tho partially only
 The remedy of compulsion may work now
(5) Incapable of giving consent to a contract

- What happens if two minors entered into a contract?

- What if your son has an expensive toy and his playmate has cheap toys only, pinagpalit nya yung playstation niya
sa pog ng friend niya
- What contract is that? It is a barter? What is the status of it then? It is unenforceable contract then pero we only
talk about unenforceable if it is not enforced yet, pero dito, nagswap na mga bata, the parties precisely enforced
the contract already
- What is the remedy to recover your son’s toy?
o Demand that your son’s toy be returned and offer return the box full of pogs
o If the other parent refused, then it would be ratification then; it means the contract is ratified on one
side and there is only one incapacitated party; then remedy is annulment
ART 1407 -
When an unenforceable contract is transformed into a voidable one

Your minor daughter donated the car to her boyfriend

- Implied ratification kapag ayaw isauli ng jowa and parents
- Only one party is incapacitated to give consent
- The donation is voidable