CHAPTER 7 VOIDABLE CONTRACTS TWO GENERAL CLASSES OF VOIDABLE CONTRACTS

VOIDABLE CONTRACTS those in which all of the essential
elements for validity are present, although the element of
consent is vitiated either by lack of legal capacity of one of the
contracting parties, or by mistake, violence, intimidation, undue
influence, or fraud
1. One of the parties is incapable of giving consent
2. where the consent is vitiated by mistake, violence,
intimidation, undue influence or fraud

Most essential feature binding until annulled by a competent Art. 1391. The action for annulment shall be brought within
court four years.

Once executed, there are only two alternatives left to the party This period shall begin: In cases of intimidation, violence
who may invoke its voidable character or undue influence, from the time the defect of the consent
ceases.
1. To attack its validity
2. To convalidate it by either ratification or prescription In case of mistake or fraud, from the time of the discovery
of the same.
CHARACTERISTICS OF VOIDABLE CONTRACTS
And when the action refers to contracts entered into by
1. Their defect consists in the vitiation of consent of one minors or other incapacitated persons, from the time the
of the contracting parties guardianship ceases.
2. They are binding until they are annulled by a
competent court GENERAL RULE PRESCRIPTIVE PERIOD 4 years
3. They are susceptible of convalidation by ratification or
prescription PERIOD SHALL BEGIN

** Their defect cannot be invoked by a third person 1. Intimidation, violence, undue influence: The time the
defect of the consent ceases
VOIDABLE vs. RESCISSIBLE 2. Fraud or mistake: The time they discovered the fraud
or mistake
the defect is intrinsic because the defect is external because 3. Contracts entered by minors/incapacitated persons:
it consists of a vice which it consists of damage or The time the guardianship ceases
vitiates consent prejudice either to one of the
contracting parties or to a
third person
the contract is voidable even the contract is not rescissible Art. 1392. Ratification extinguishes the action to annul a
if there is no if there is no damage or voidable contract.
damage or prejudice prejudice
the annulability of the contract the rescissibility of the
Art. 1393. Ratification may be effected expressly or tacitly.
is based on the law contract is based
on equity It is understood that there is a tacit ratification if, with
annulment is not only a rescission is a mere remedy knowledge of the reason which renders the contract
remedy but a sanction voidable and such reason having ceased, the person who
Public interest, therefore, private interest predominates has a right to invoke it should execute an act which
predominates necessarily implies an intention to waive his right.
susceptible of ratification Not susceptible of ratification
Annulment may be invoked rescission may be invoked Art. 1394. Ratification may be effected by the guardian of
only by a contracting party either by a contracting party the incapacitated person.
or by a third person who is
prejudiced Art. 1395. Ratification does not require the conformity of
the contracting party who has no right to bring the action
Art. 1390. The following contracts are voidable or for annulment.
annullable, even though there may have been no damage
Art. 1396. Ratification cleanses the contract from all its
to the contracting parties:
defects from the moment it was constituted
(1) Those where one of the parties is incapable of giving
Besides prescription, the action for annulment of a
consent to a contract;
voidable contract may also be extinguished by
(2) Those where the consent is vitiated by mistake, ratification
violence, intimidation, undue influence or fraud. RATIFICATION is defined as the act or means by
virtue of which efficacy is given to a contract which
These contracts are binding, unless they are annulled by a suffers from a vice of curable nullity
proper action in court. They are susceptible of ratification.
REQUISITES OF RATIFICATION:
 1. The contract should be tainted with a vice which is
susceptible of being cured
2. The confirmation should be effected by the person
who is entitled to do so under the law
3. It should be effected with knowledge of the vice or
defect of the contract
4. The cause of the nullity or defect should have already
disappeared
*** that in the case of contracts entered into by
incapacitated persons, this is not indispensable in a
sense, because even while the incapacity continues
to exist, the confirmation may be effected by the
guardian of the incapacitated person
FORMS OF RATIFICATION
1. Expressly - if, with knowledge of the reason which
renders the contract voidable and such reason having
ceased, the person who has a right to invoke it should
expressly declare his desire to convalidate it, or what
amounts to the same thing, to renounce his right to
annul the contract
2. Tacitly - if, with knowledge of the reason which
renders the contract voidable and such reason having
ceased, the person who has a right to invoke it should
execute an act which necessarily implies an intention
to waive his right
EFFECTS OF RATIFICATION
1. extinguishes the action to annul the contract
2. cleanses the contract of its defects from the moment it
was constituted
Art. 1397. The action for the annulment of contracts may
be instituted by all who are thereby obliged principally or
subsidiarily. However, persons who are capable cannot
allege the incapacity of those with whom they contracted;
nor can those who exerted intimidation, violence, or
undue influence, or employed fraud, or caused mistake
base their action upon these flaws of the contract
REQUISITES TO INSTITUTE THE ACTION
1. the plaintiff must have an interest in the contract
2. the victim and not the party responsible for the vice
defect must be the person who assert the same
third person cannot institute an action!!! EXCEPT a person
who is not a party obliged principally or subsidiarily under a
contract may exercise an action for annulment of the contract if
he is prejudiced in his rights with respect to one of the
contracting parties, and can show detriment which would
positively result to him from the contract in which he has no
intervention.
IMPORTANT PROBLEM:
Problem No. 1 X, of age, entered into a contract with Y,
a minor. X knew and the contract specifi cally stated the age of
Y. May X successfully demand annulment of the contract?
Reason.
(1971 Bar Problem)
Answer X cannot successfully demand annulment of the
contract. True, said contract is voidable because of the fact
that at the time of the celebration of the contract, Y, the other
contracting party, was a minor, and such minority was known
to X (Arts. 1327, No. 1, 1390 CC). However, the law is
categorical with regard to who may institute the action for
annulment of the contract. In addition to the requirement that
the action may be instituted only by the party who has an
interest in the contract in the sense that he is obliged thereby
either principally or subsidiarily, Art. 1397 of the Civil Code
further requires that in case of contracts voidable by
reason of incapacity of one of the contracting parties, the
party who has capacity cannot allege the incapacity of the
party with whom he contracted. Because of this additional
requisite, it is clear that Y and not X can institute the action for
annulment
Art. 1398. An obligation having been annulled, the
contracting parties shall restore to each other the things
which have been the subject matter of the contract, with
their fruits, and the price with its interest, except in cases
provided by law.
In obligations to render service, the value thereof shall be
the basis for damages.
Art. 1399. When the defect of the contract consists in the
incapacity of one of the parties, the incapacitated person
is not obliged to make any restitution except insofar as he
has been benefited by the thing or price received by him
EFFECTS OF ANNULMENT
1. Contract not yet consummated the contracting
parties shall be released from the obligations arising
therefrom
2. If the contract has been consummated the rules of
Art. 1398 1402 shall govern
OBLIGATION OF MUTUAL RESTITUTION
Upon the annulment of the contract, if the prestation
thereof consisted in obligations to give, the parties
shall restore to each other the things which have been
the subject matter of the contract, with their fruits, and
the price with its interest, except in cases provided by
law.
If on the other hand, the prestation consisted in
obligations to do or not to do, there will have to be an
apportionment of damages based on the value of
such prestation with corresponding interests.
In other words, upon annulment the contracting
parties should be restored to their original position by
mutual restitution.
RULE IN CASE OF INCAPACITY
 1. the incapacitated person is not obliged to make any LOSS IS DUE TO FAULT OF PLAINTIFF
restitution except insofar as he has been benefited by
the thing or price received by him ** the action for annulment shall be extinguished
2. The benefi t spoken of in Art. 1399 which obliges the
incapacitated person to make restitution does not ** There are, therefore, three modes whereby such action may
necessarily presuppose a material and permanent be extinguished
augmentation of fortune; it is sufficient if there has
1. Prescription
been a prudent and beneficial use by the
2. Ratification
incapacitated person of the thing which he has
3. Loss of the thing which is the object of the contract
received.
through the fraud or fault of the person who is entitled
3. Does not apply if the minor can still return what he
to institute the action
has received
LOSS IS DUE TO FORTUITOUS EVENT

** If the person obliged by the decree of annulment to return

Art. 1400. Whenever the person obliged by the decree of
annulment to return the thing can not do so because it has
been lost through his fault, he shall return the fruits
received and the value of the thing at the time of the loss,
with interest from the same date.
Art. 1401. The action for annulment of contracts shall be
extinguished when the thing which is the object thereof is
lost through the fraud or fault of the person who has a
right to institute the proceedings.
If the right of action is based upon the incapacity of any
one of the contracting parties, the loss of the thing shall
not be an obstacle to the success of the action, unless
said loss took place through the fraud or fault of the
plaintiff.
the thing cannot do so because it has been lost through a
fortuitous event, the contract can still be annulled, but with this
difference - the defendant can be held liable only for the value
of the thing at the time of the loss, but without interest thereon.
The defendant, and not the plaintiff, must suffer the loss
because he was still the owner of the thing at the time of the
loss; he should, therefore, pay the value of the thing, but not
the interest thereon because the loss was not due to his fault.
** If it is the plaintiff who cannot return the thing because it has
been lost through a fortuitous event, the contract may still be
annulled, but with this difference he must pay to the
defendant the value of the thing at the time of the loss, but
without interest thereon.

Art. 1402. As long as one of the contracting parties does

not restore what in virtue of the decree of annulment he is
bound to return, the other cannot be compelled to comply
with what is incumbent upon him.

LOSS IS DUE TO FAULT OF DEFENDANT

** According to Art. 1400, when the person obliged by the

decree of annulment to return the thing cannot do so because
it has been lost through his fault, he shall return the fruits
received and the value of the thing at the time of the loss, with
interest from the same date.

** It is evident that this rule is applicable only when the loss of

the thing is due to the fault of the party against whom the
action for annulment may be instituted.

** This is so because if the loss is due to the fault of the party

who has a right to institute the action, the provision of Art.1401
shall apply.

** The loss of the thing which constitutes the object of the

contract through the fault of the party against whom the action
for annulment may be instituted shall not, therefore, extinguish
the action for annulment.

** The only difference from an ordinary action for annulment is

that, instead of being compelled to restore the thing, the
defendant can only be compelled to pay the value thereof at
the time of the loss.