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CONTRACTS
DEFINITION
AS TO KINDS
VOIDABLE CONTRACTS
UNENFORCEABLE
CONTRACTS
A
contract
that
cannot
be
enforced
by
a
proper
action
in
court,
unless
they
are
ratified.
VOID/
NON-EXISTENT
CONTRACTS
A
contract
that
is
valid
A
contract
that
has
all
of
Void-
refer
to
those
where
because
it
contains
all
the
the
essential
elements
for
all
of
the
requisites
of
a
essential
requisites
validity
are
present,
contract
are
present,
but
prescribed
by
law,
but
although
the
element
of
the
cause,
object
or
which
is
defective
because
consent
is
vitiated
either
purpose
is:
of
the
injury
or
damage
to
by:
(1)
contrary
to
law,
either
of
the
contracting
(1) lack
of
legal
capacity
of
morals,
good
customs,
rd
parties
or
to
3
persons,
one
of
the
contracting
public
order
or
public
as
a
consequence
of
which
parties,
or
policy,
or
it
may
be
rescinded
by
(2) mistake,
violence,
(2)
contract
itself
is
means
of
a
proper
action
intimidation,
undue
prohibited
or
declared
for
rescission.
influence
or
fraud
void
by
law.
(vices
of
consent).
Inexistent-
refer
to
those
where
one
or
some
or
all
of
those
requisites
which
are
essential
for
the
validity
of
a
contract
are
absolutely
lacking.
Include:
Include:
Include:
Include:
(1) Those
which
are
(1) Those
where
one
of
(1) Those
entered
into
in
(1) Those
whose
cause,
entered
into
by
the
parties
is
incapable
the
of
another
person
object
or
purpose
is
guardians
whenever
of
giving
consent
to
a
by
one
who
has:
contrary
to
law,
the
wards
whom
they
contract;
(a) Been
given
no
morals,
good
represent
suffer
(2) Those
where
the
authority,
or
customs,
public
order
lesion
by
more
than
consent
is
vitiated
by
(b) Been
given
no
legal
or
public
policy
of
the
value
of
the
mistake,
violence,
representation,
or
(void);
things
which
are
the
intimidation,
undue
(c) Acted
beyond
his
(2) Those
which
are
object
thereof;
influence
or
fraud.
powers.
absolutely
simulated
(2) Those
agreed
upon
in
NOTE:
(1)
are
called
the
or
fictitious
DLSU-COL|
OBLIGATIONS
AND
CONTRACTS
|
ATTY.
JOYCE
CRUZ
|
KAREN
MAE
CRUZ
|
1
AS
TO
DEFECT
representation
of
unauthorized
absentees,
if
the
contracts
latter
suffer
the
(2) Those
that
do
not
lesion
stated
in
(1);
comply
with
the
(3) Those
undertaken
in
Statute
of
Frauds;
fraud
of
creditors
(3) Those
where
both
when
the
latter
parties
are
incapable
cannot
in
any
manner
of
giving
consent
to
a
collect
the
claims
due
contract.
them
(the
action
to
rescind
a
contract
that
defraud
creditors
is
called
accion
pauliana);
(4) Those
which
refer
to
things
under
lititgation
if
they
have
been
entered
into
by
the
defendant
without
the
knowledge
and
approval
of
the
litigants
or
of
competent
judicial
authority;
(5) All
other
contract
specially
declared
by
law
to
be
subject
of
rescission.
Damage/injury
to
either:
(1) Vitiation
of
consent,
or
Contract
is
entered
into:
(1) One
of
the
(2) Legal
incapacity
of
one
(1) In
excess
or
without
(3)
(4)
(5)
(6)
(7)
(inexistent);
Those
whose
cause
or
object
did
not
exist
at
the
time
of
the
transaction
(inexistent);
Those
whose
object
is
outside
the
commerce
of
men
(void);
Those
which
contemplate
an
impossible
service
(void);
Those
where
the
intention
of
the
parties
relative
to
the
principal
object
of
the
contract
cannot
be
ascertained
(void);
Those
expressly
prohibited
or
declared
void
by
law
(void).
DLSU-COL| OBLIGATIONS AND CONTRACTS | ATTY. JOYCE CRUZ | KAREN MAE CRUZ | 2
contracting
parties,
or
(2) 3rd
persons.
AS
TO
ORIGIN
OF
DEFECT
Economic
damage
or
lesion
AS
TO
DAMAGE/
Necessary.
INJURY/PREJUDICE
AS
TO
EFFECT
Considered
valid
and
enforceable
until
rescinded
by
a
competent
court.
REMEDY
OR
Rescission.
CAUSE
OF
ACTION
of
the
contracting
parties.
any
authority;
(2) Without
compliance
with
the
Statute
of
Frauds,
or
(3) With
both
parties
not
legally
capacitated.
(1) Incapacity
of
one
of
(1) Entered
into
in
behalf
the
contracting
parties
of
another
person,
to
give
consent,
or
without
authority
or
(2) Vitiated
consent
due
to
in
excess
thereof,
or
the
presence
of
the
(2) Non-compliance
with
vices
of
consent.
the
Statute
of
Frauds,
or
(3) Incapacity
of
both
contracting
parties
to
give
consent.
Not
necessary.
Not
necessary.
As
a
general
rule,
produces
no
legal
effects.
Annulment.
Can
be
considered
as
a
validable
transaction
that
is,
it
has
no
effect
now,
but
it
may
be
effective
upon
ratification.
However,
it
cannot
be
enforced
by
a
proper
action
in
court.
A
personal
defense
only
when
the
plaintiff
pursues
a
specific
action
or
performance
or
complaint
for
damages
based
on
Not necessary.
Declaration
of
nullity
of
the
contract.
DLSU-COL| OBLIGATIONS AND CONTRACTS | ATTY. JOYCE CRUZ | KAREN MAE CRUZ | 3
AS
TO
PRESCRIPTIBILITY
OF
ACTION
OR
DEFENSE
breach
of
contract.
The
action
to
claim
The
action
for
annulment
The
corresponding
action
rescission
must
be
shall
be
brought
within
4
for
recovery,
if
there
was
commenced
within
4
years.
total
or
partial
years.
(1) in
cases
of
performance
of
the
(1) For
persons
under
intimidation,
violence
unenforceable
contract
guardianship:
4-year
or
undue
influence:
the
under
Article
1403,
nos.
1
period
shall
not
begin
4-year
period
shall
and
3,
may
prescribe.
until
the
termination
of
begin
from
the
time
the
formers
the
defect
of
the
incapacity,
or
until
the
consent
ceases.
domicile
of
the
latter
is
(2) In
case
of
mistake
or
shown.
fraud,:
the
4-year
(2) For
absentees:
4-year
period
shall
start
from
period
shall
not
begin
the
time
of
the
until
the
absentees
discovery
of
the
same.
domicile
is
known.
(3) When
the
action
refers
to
contracts
entered
into
by
minors
or
other
incapacitated
persons:
the
4-year
period
shall
start
from
the
time
the
guardianship
ceases.
Cannot
be
ratified.
Can
be
ratified.
Can
be
ratified.
AS
TO
SUSCEPTIBILITY
TO
RATIFICATION
AS
TO
By
prescription
only.
SUSCEPTIBILITY
TO
CONVALIDATION
AS
TO
WHO
MAY
(1) A
contracting
party,
ASSAIL
THE
or
CONTRACT
(2) The
contracting
(1) Ratification,
or
(2) Prescription.
By
ratification
only.
Cannot
be
ratified.
NONE.
It
can
neither
be
ratified
nor
can
it
prescribe.
(1) A
contracting
party,
or
(2) A
3rd
person
whose
DLSU-COL| OBLIGATIONS AND CONTRACTS | ATTY. JOYCE CRUZ | KAREN MAE CRUZ | 4
AS
TO
HOW
CONTRACTS
MAY
BE
ASSAILED
partys
representative,
or
(3) Heirs
of
the
contracting
parties,
or
(4) Creditors
by
virtue
of
their
suppletory
action
defined
in
art.
1177
of
the
CC,
or
(5) A
3rd
person
who
is
prejudiced
by
the
contract.
Direct
action
only.
interest
is
directly
affected.
DLSU-COL| OBLIGATIONS AND CONTRACTS | ATTY. JOYCE CRUZ | KAREN MAE CRUZ | 5
TERM
Reformation
Rescission
DEFINITION
The
remedy
in
equity
by
means
of
which
a
written
instrument
is
made
or
construed
so
as
to
express
or
conform
to
the
real
intention
of
the
parties
when
some
error
or
mistake
has
been
committed.
Requisites:
(1) There
must
be
a
meeting
of
the
minds.
(2) The
true
intention
is
not
expressed
in
the
instrument.
(3) There
must
be
clear
and
convincing
proof
thereof
(mere
preponderance
of
evidence
is
insufficient).
(4) It
must
be
brought
within
the
proper
prescriptive
period.
(5) The
document
must
not
refer
to
a
simple
unconditional
donation
inter
vivos
(Art.
1366),
or
to
wills
(Art.
1366),
or
to
a
contract
where
the
real
agreement
is
void
(Art.
1366).
The
proper
remedy
when
there
has
been
a
meeting
of
the
minds,
but
there
is
mistake,
fraud,
inequitable
conduct
or
accident
in
the
contract
as
written.
Reformation
does
not
invalidate
a
contract.
Hence,
in
reforming
instruments,
courts
do
not
make
another
contract
for
the
parties.
They
merely
inquire
into
the
intention
of
the
parties
and
having
found
it,
reform
the
written
instrument
(not
the
content),
in
order
that
it
may
express
the
real
intention
of
the
parties.
When
Reformation
may
be
asked
because
of
mutual
mistake:
(1) Under
Art.
1361,
the
mistake
must
be
mutual.
(2) The
mistake
may
be
unilateral
under
the
conditions
set
forth
in
Arts.
1362
and
1363
of
the
CC.
(3) The
mistake
must
be
of
fact-
usually.
Therefore,
generally
an
error
of
law
is
not
enough.
Failure
to
convey
the
true
intent
because
of
the:
(1) ignorance
(2) lack
of
skill
(3) bad
faith
of:
(1) the
drafter
of
the
instrument
(2) or
the
clerk
(3) or
the
typist.
Scaevola:
A
process
designated
to
render
inefficacious
a
contract
validly
entered
into
and
normally
binding,
by
reason
of
external
conditions,
causing
an
economic
prejudice
to
a
party
or
to
his
creditors.
DLSU-COL|
OBLIGATIONS
AND
CONTRACTS
|
ATTY.
JOYCE
CRUZ
|
KAREN
MAE
CRUZ
|
6
Manresa:
a
remedy
granted
by
law
to
the
contracting
parties
and
to
3rd
persons
in
order
to
secure
reparation
of
damages
the
contract
caused
them,
even
if
the
contract
be
valid,
by
means
of
the
restoration
of
things
to
their
condition
prior
to
the
celebration
of
said
contract.
Supreme
Court:
a
relief
to
protect
one
of
the
parties
or
a
3rd
person
from
all
injury
and
damages
which
the
contract
may
cause,
to
protect
some
preferential
right.
Requisites
for
Rescission:
(1) There
must
be
at
the
beginning
either
a
valid
or
a
voidable
contract
(not
a
void
one)
such
as
those
mentioned
in
Arts.
1381
and
1382..
(2) But
there
is
an
economic
or
financial
prejudice
to
someone
(a
party
or
a
3rd
person).
(3) Requires
mutual
restitution
(Art.
1385).
(a) Plaintiff
must
be
able
to
return
what
has
been
received
by
virtue
of
the
rescissible
contract
(Exception:
prejudiced
creditors).
(b) The
object
of
the
contract
must
not
be
in
the
legal
possession
of
3rd
persons
in
good
faith.
(4) There
must
be
no
other
legal
remedy
(Art.
1383).
(5) The
action
must
be
brought
within
the
proper
prescriptive
period
(Art.
1389).
Two
Kinds
of
Rescission:
(1) Art.
1380:
rescission.
(2) Art.
1191:
resolution.
Rescission
under
Art.
1380
in
general:
(1) is
based
on
lesion
or
fraud
upon
creditors.
(2) The
action
is
instituted
by
either
of
the
contracting
parties
or
by
3rd
persons.
(3) The
courts
cannot
grant
a
period
or
term
within
which
to
comply.
(4) Non-performance
by
the
other
party
is
immaterial.
Rescission
under
Art.
1191:
(1) is
based
on
non-performance
or
non-fulfillment
of
the
obligation.
(2) The
action
may
be
instituted
only
by
the
injured
party
to
the
contract.
DLSU-COL| OBLIGATIONS AND CONTRACTS | ATTY. JOYCE CRUZ | KAREN MAE CRUZ | 7
Lesion
Accion
pauliana
Confirmation
Ratification
Rescission
v.
Mutual
Dissent:
the
latter
is
an
agreement
of
the
parties
to
cancel
their
contract
and
mutually
return
the
object
and
the
cause
thereof.
Damage
or
injury
to
the
party
asking
for
rescission
(generally,
disparity
between
the
price
and
the
value)
The
rescissory
action
to
rescind
contracts
in
fraud
of
creditors.
The
requisites
before
it
can
be
brought
are:
(1) there
must
be
a
creditor
who
became
such
prior
to
the
contract
sought
to
be
rescinded
(whether
the
party
asking
for
rescission
is
a
judgment
creditor
already
or
not,
is
likewise
immaterial).
(2) there
must
be
an
alienation
made
subsequent
to
such
credit.
(3) The
party
alienating
must
be
in
bad
faith
(that
is,
he
knew
that
damages
would
be
caused
his
creditors
whether
or
not
he
intended
to
cause
such
damage).
(4) There
must
be
no
other
remedy
for
the
prejudiced
creditor-
inability
to
collect
the
claims
due
them.
Because
of
(4),
this
action
is
subsidiary.
This
means
that
if
the
creditor
can
still
exhaust
the
debtors
other
properties,
this
action
will
not
be
available
to
the
creditor.
Rescission
via
accion
pauliana
v.
Action
to
declare
a
contract
as
absolutely
simulated
or
fictitious:
(1) R:
there
is
real
alienation
but
it
is
fraudulent.
S:
there
is
no
simulation
but
a
mere
pretense
that
one
has
been
made.
(2) R:
can
be
alleged
only
by
creditor
prior
to
the
act.
S:
can
be
alleged
by
all
creditors,
before
or
after
the
simulation.
(3) R:
impossibility
of
satisfying
the
plaintiffs
claim
is
required.
S:
impossibility
of
satisfying
the
plaintiffs
claim
is
not
required.
(4)
R:
accion
pauliana
is
an
action
to
set
aside
a
valid
contract.
S:
does
not
seek
to
set
aside
the
simulated
contract,
but
merely
to
declare
its
inexistence.
To
cure
a
defect
in
a
voidable
contract
(Art.
1396)
To
cure
the
defect
of
lack
of
authority
in
an
authorized
contract
(entered
into
by
another)
(Arts.
1317
and
1405)
DLSU-COL|
OBLIGATIONS
AND
CONTRACTS
|
ATTY.
JOYCE
CRUZ
|
KAREN
MAE
CRUZ
|
8
Requisites
of
Ratification
(properly,
confirmation
of
a
voidable
contract):
(1) The
contract
must
be
a
voidable
one.
(2) The
person
ratifying
must
know
the
reason
for
the
contract
being
voidable
(that
is,
the
cause
must
be
known).
(3) The
cause
must
not
exist
or
continue
to
exist
anymore
at
the
time
of
ratification.
(4) The
ratification
must
have
been
made
expressly
or
by
an
act
implying
a
waiver
of
the
action
to
annul.
(5) The
person
ratifying
must
be
the
injured
party.
Kinds
of
Ratification:
(1) Express
(oral
or
written).
(2) Tacit
(implied-
as
from
conduct
implying
a
waiver).
Acknowledgment
To
remedy
a
deficiency
of
proof
(Art.
1405)
Badges
of
Fraud
(1) The
fact
that
the
consideration
of
the
conveyance
is
inadequate.
(2) A
transfer
is
made
by
a
debtor
after
suit
ahs
been
begun
and
while
it
is
pending
against
him.
(3) A
sale
upon
credit
by
an
insolvent
debtor.
(4) Evidence
of
large
indebtedness
or
complete
insolvency.
(5) The
transfer
of
all
or
nearly
all
of
his
property
by
a
debtor,
especially
when
he
is
insolvent
or
greatly
embarrassed
financially.
(6) The
fact
that
the
transfer
is
made
between
father
and
son,
when
there
are
present
any
of
the
above
circumstances.
(7) The
failure
of
the
vendee
to
take
exclusive
possession
of
all
the
property.
NOTE:
(1) This
list
is
not
exclusive.
(2) Art.
1387
is
the
provision
on
badges
of
fraud.
Statute
of
Frauds
Descriptive
of
statutes
which
require
certain
classes
of
contracts
to
be
in
writing.
This
statute
does
not
deprive
the
parties
of
the
right
to
contract
with
respect
to
the
matters
therein
involved
but
merely
regulates
the
formalities
of
the
contract
necessary
to
render
it
enforceable.
It
seeks
to
prevent
fraud
and
perjury
in
the
enforcement
of
obligations
depending
for
their
evidence
upon
the
unassisted
memory
of
witnesses
by
requiring
certain
enumerated
contracts
and
transactions
to
be
evidence
by
a
writing
signed
by
the
party
to
be
charged.
DLSU-COL|
OBLIGATIONS
AND
CONTRACTS
|
ATTY.
JOYCE
CRUZ
|
KAREN
MAE
CRUZ
|
9
RESCISSION
BASIS
AS
TO
DEFECT
AS
TO
ACTION
AS
TO
NATURE
OF
ACTION
AS
TO
WHAT
INTEREST
GOVERNS
AS
TO
WHAT
PREDOMINATES
AS
TO
CHARACTER
OF
PLAINTIFF
AS
TO
DAMAGE
AS
TO
WHEN
ACTION
CAN
PROSPER
AS
TO
COMPATIBILITY
WITH
THE
CONTRACT
AS
TO
THE
NECESSITY
OF
RATIFICATION
Lesion.
External
or
intrinsic.
This
action
is
subsidiary.
This
is
a
remedy.
Private
interest
governs.
Equity
predominates.
Plaintiff
may
be
a
party
or
a
3rd
person.
Damage
to
the
plaintiff
is
material.
If
plaintiff
is
indemnified,
rescission
cannot
prosper.
Compatible
with
the
perfect
validity
of
the
contract.
To
prevent
rescission,
ratification
is
not
required.
ANNULMENT
Vitiated
consent
or
incapacity
to
consent.
Intrinsic
(in
the
meeting
of
the
minds).
This
action
is
principal.
This
is
a
sanction.
Public
interest
governs.
Law
predominates.
Plaintiff
must
be
party
to
the
contract
(whether
bound
principally
or
subsidiarily).
Damage
to
the
plaintiff
is
immaterial.
Indemnity
here
is
no
bar
to
the
prosecution
of
the
action.
Defect
is
presupposed.
To
prevent
annulment,
ratification
is
required.
DLSU-COL| OBLIGATIONS AND CONTRACTS | ATTY. JOYCE CRUZ | KAREN MAE CRUZ | 10
AS
TO
THE
NATURE
OF
NEGLIGENCE
AS
TO
THE
EXISTENCE
OF
A
PREVIOUS
OBLIGATION
AS
TO
THE
REQUIRED
QUANTUM
OF
PROOF
AS
TO
THE
DEFENSE
OF
A
GOOD
FATHER
OF
A
FAMILY
AS
PRESUMPTION
AND
BURDEN
OF
PROOF
CULPA
CONTRACTUAL
Negligence
is
merely
incidental,
incident
to
the
performance
of
an
obligation
already
existing
because
of
a
contract.
There
is
a
pre-existing
obligation
(a
contract,
either
express
or
implied).
Preponderance
of
evidence.
This
defense
in
the
selection
and
supervision
of
employees
is
not
a
proper
complete
defense
(though
this
may
mitigate
damages).
The
rule
followed
is
respondeat
superior
or
command
responsibility
or
the
master
and
servant
rule.
As
long
as
it
is
proved
that
there
was
a
contract,
and
that
it
was
not
carried
out,
it
is
presumed
that
the
debtor
is
at
fault,
and
it
is
his
duty
to
prove
that
there
was
no
negligence
in
carrying
out
the
terms
of
the
contract.
CULPA
AQUILIANA
Negligence
here
is
direct,
substantive,
and
independent.
CULPA
CRIMINAL
Negligence
here
is
direct,
substantive
and
independent
of
a
contract.
No
pre-existing
obligation
(except
of
course
the
duty
to
be
careful
in
all
human
actuations).
Preponderance
of
evidence.
No
pre-existing
obligation
(except
the
duty
never
to
harm
others).
DLSU-COL| OBLIGATIONS AND CONTRACTS | ATTY. JOYCE CRUZ | KAREN MAE CRUZ | 11