VALID CONTRACTS:

1. Valid CONSENT, OBJECT, CAUSE – complied with;

2. Entered into during a LUCID INTERVAL
3. Relative simulated contracts, no prejudice to 3P, not contrary to L, M,GC, PO, PP.
4. Divisible contracts – valid/legal terms may be enforced and can be separated from unlawful/illegal terms

RESCISSIBLE CONTRACTS – valid until VOIDABLE – valid until annulled by court UNENFORCEABLE- cannot be enforced in VOID CONTRACTS (IMPRISCRIPTIBLE)
rescinded court unless it’s ratified
• Valid until rescinded: ALL requisites • voidable even if no damage: • unenforceable contracts: • No legal effect = void from the
of a valid contract complied with o one party incapable of o entered into the name of beginning
• There is economic/financial injury giving consent another without • One or some of ESSENTIAL REQ of a
to contracting party/3P: (minor/insane) authority/legal valid contract is lacking
o Lesion: contract entered o vitiated consent: fraud, representation/beyond o Cause, object, purpose
by guardians. Wards suffer mistake, violence, authority contrary to law, morals,
more than ¼ of value of intimidation, undue o No compliance with public policy, public order,
things (object of contract) influence statute of frauds (in good customs
o Same with ABSENTEES o state of writing, subscribed) o Absolutely
exceeds ¼, contracts drunkenness/hypnotic ▪ Agreement with simulated/fictitious
entered by their spell terms not contracts
representative • Can be ratified: remedy mutually performed o Cause/object inexistent at
o Fraud of creditors- C can’t exclusive annulment or ratification. within 1 year the time of transaction
collect claims that are due. o Ratification cleanses from creation could not have come to
Debtor alienated property defects; ▪ Special promise existence
gratuitously and o Retroact from constitution to answer for: o Object outside commerce
donor/debtor no sufficient of contract; debt, default, of man
property to pay debts. o Express/ tacit ratification miscarriage o Impossible service
▪ Alienation by o Effected by guardian (collateral o Intention of parties to the
onerous title (incapacitated persons) surety, principal object cannot be
fraudulently o Extinguish action to annul guarantor, ascertained = ambiguous
made by contract promissor) intention
persons (there’s o No need conformity of ▪ Agreement o Expressly declared by law
a judgment other party – no right to made, as void
against bring an action for consideration of • CANNOT BE RATIFIED
them/there’s annulment marriage other • RIGHT OF ACTION/DEFENSE DOES
writ of • Assailed by only contracting parties than mutual NOT PRESCRIBE
attachment (obliged principally or subsidiarily). promise to • Assailed by:
issued against The ff can’t assail: marry. o Contracting parties
them) o Capacitated party cannot ▪ Agreement of o 3rd person interest directly
o Entered into by allege incapacity of other Sale of goods, affected
defendant- objects under party chattel or things, • Parties IN PARI DELICTO, nullity due
litigation. (no knowledge o Party who committed price not less to illegal cause or object and act
and approval of litigants or intimidation, violence, than 500 pesos constitutes criminal offense:
court. undue influence, fraud, ▪ Lease for more o Each party no right of
o Other contracts declared mistake than 1 year action against each other
by law ▪ Sale of real o Both prosecuted
• CANNOT BE RATIFIED property
• Assailed by (1) contracting party; (2) • MUTUAL RESTORATION – object ▪ Representation o Interest paid may be
injured 3P and cause → subject matter, object, as to the credit recovered
• Action of rescission SUBSIDIARY: thing, fruits, price with interest. of a 3rd person • Act does not constitute a criminal
o There’s damage o Incapacitated person not o BOTH parties INCAPABLE offense?
o No other legal means compelled to restitute to give CONSENT o Both parties at fault –
*so if there’s a remedy: no (except: so far he • CAN BE RATIFIED: neither may recover or
rescission benefited from thing/price o Contracts under statute of demand performance
received) frauds = o 1 at fault only – cannot
• Rescission- extent of damage o Loss of thing by person ▪ failure to object recover or ask fulfillment.
caused obliged to return, his fault, to presentation ▪ Innocent party
• Obligation to Return objects, fruits, must return fruits and of oral evidence may demand
price and interest value of thing at time of or return and no
o No rescission if object in loss + interest ▪ acceptance of obligation to
possession of 3P in good o Action for annulment benefits – comply with his
faith. extinguished = loss of estopped to promise
o Remedy- indemnity for object fraud/fault mistake deny • Repudiation of a contract when
damages from person who of person who has a right • ONLY assailed by contracting money/property delivered for illegal
caused the loss to institute annulment parties NOT 3rd parties purpose.
• In contracts with lesion more than ¼ ▪ so kung wala o One party can repudiate
of ward/absentee: No rescission if fault and action before its
CONTRACT APPROVED BY COURT to annul is based accomplishment/before
• Effects of rescission RETROACT from on incapacity = damage to 3rd persons
date when action for rescission loss of thing not o Court may allow
instituted. obstacle to repudiating party to
• Person acquired alienations in bad success of action recover money/property
faith from debtor who wants to (no fault/fraud) • One party to an illegal contract is
defraud creditors incapable to give consent:
o remedy indemnify o Court may allow recovery
creditors for damages of money/property of
suffered by them (if object incapacitated person
cannot be returned) • Agreement not illegal but prohibited
by law
o Plaintiff may recover what
he paid/delivered
• Additional compensation for
service/labor rendered beyond time
limit provided by law
• Price of an article of commodity
determined by statute, person may
recover excess he paid
• Law set maximum wage for laborers;
a contract agreed with a lower wage
entitles laborer to claim deficiency
• Contract is divisible the illegal terms
may be separated from the legal
ones and the contract is still valid
 • Defense of illegality of contract not
available to 3rd persons not unless
directly interested.

• ACTION OF RESCISSION = within 4 • ACTION FOR ANNULMENT = within • RIGHT OF ACTION/DEFENSE DOES
YEARS 4 years NOT PRESCRIBE
• Within 4 years from • Intimidation, violence, undue
o Termination of influence = time when defect of
guardianship consent ceases
o Time domicile of absentee • Mistake/fraud = time of discovery
known • Minors/incapacitated= time when
guardianship ceases
Natural Obligations

• Based on equity and natural law

• Not enforceable in court action
• If voluntarily fulfilled by obligor, oblige has the right to retain what was delivered or
service rendered
• When the right to sue on a civil obligation prescribed but obligor voluntarily
performed contract → cannot recover what obligor delivered/value of service
rendered
• 3rd person paid on behalf of debtor (no knowledge) and the action to enforce the
debt prescribed, debtor voluntarily reimburses 3rd person → debtor/obligor cannot
recover what he paid
• Minor 18-21 yo contracted without consent of parents/guardian:
o After annulment voluntarily returns thing/price
o No benefit to minor
o Minor cannot demand thing/price returned
• Minor 18-21 yo contracted without consent P/G:
o Voluntarily deliver fungible thing or pay price for obligation
o No right to recover from oblige who spent it in good faith
o Exception to mutual restitution because can’t recover na

ESTOPPEL

• Admission or representation rendered conclusive and cannot be denied/disproved

against persons who relied on it in good faith
• Estoppel in pais (conduct):
o Arises from act/representations/admissions/silence, out to speak out;
o intentionally or through culpable negligence
o induces another to believe certain facts to exist
o other party rely and acts on such belief
o but other party prejudiced if former is permitted to deny its existence of
act/representation/admission/silence
• Estoppel by deed (Technical estoppel)
o Party to a deed and his privies are precluded from asserting against the
other and his privies
o Any right/title in derogation of the deed or from denying any material fact
therein
• Title transfer to buyer – person sold thing and delivers it, but not the owner but later
acquires title to the thing sold then title passes to buyer by operation of law
• Person in representation of another sells to buyer- agent cannot subsequently set up
his own title against buyer
• Lessee/bailee- estopped to assert title over thing leased/received against the
lessor/bailor ( di naman siya may ari no alam niya yun)
• Effective only between parties to the contract or successors in interest