CHAPTER 7

VOIDABLE CONTRACTS

FELIPE V. HEIRS OF ALDON

Voidable contracts as 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.

F: Spouses Maximo Aldon and Gimena Almosara bought several pieces of land in Masbate
divided into 3 lots. Gimena Almosara then sold the lots to spouses Eduardo and Hermogena
Felipe. The sale was made without the consent of her husband, Maximo.

Most essential feature it is binding until it is annulled by a competent court

The heirs of Maximo Aldon (widow Gimena and their children Sofia & Salvador) then filed a
complaint in CFI Masbate against the Felipes. Heirs of Aldon claim that they are the owners
of the lots in dispute on the following grounds: (1) they had orally mortgaged the same to the
defendants, (2) and an offer to redeem the mortgage had been refused. The defendants
answered that they acquired the lots by purchase and subsequent delivery to them by the
plaintiff.

Once it is executed, there are two possible alternatives:

1. To attack its validity
a. Directly by means of a proper action in court: annulment1
b. Indirectly by way of defense: annulability or relative nullity2
2. To convalidate it either by ratification or by prescription
Characteristics:
1. Defect consists in the vitiation of consent of one of the contracting parties.
2. Binding until they are annulled by a competent court.
3. Susceptible of convalidation by ratification or by prescription.
The defect or voidable character cannot be invoked by third persons.
VOIDABLE CONTRACT
Defect is intrinsic because it consists of a
voce which vitiates consent

RESCISSIBLE CONTRACT
Defect is external because it consists of
damage or prejudice either to one of the
contracting parties or to a third person
Damage or prejudice not necessary
Damage or prejudice is necessary
Annulability of the contract is based on the Rescissibility of the contract is based on
law; annulment not only a remedy but a equity; rescission is a mere remedy for
sanction for public interest
private interest
Different causes
Susceptible of ratification
Not susceptible of ratification
Annulment may be invoked only by a Rescission may be invoked either by a
contracting party
contracting party or by a third person who is
prejudiced

Ratio: The sale made by Gimena Almosara is invalid, having been executed without the
needed consent of her husband, the lots being conjugal. It is a voidable contract. Gimena had
no capacity to give consent to the contract of sale. Gimenas contract is not rescissible for in
such contract all the essential elements are untainted but Gimenas consent was tainted. The
voidable contract of Gimena was subject to annulment by her husband only during the
marriage because he was the victim who had an interest in the contract.
ARTICLE 1391
CARANTES V. CA
The weight of authorities is to the effect that the registration of an instrument in the Office of
the Registrar of Deeds constitutes constructive notice to the whole world, and, therefore,
discovery of the fraud is deemed to have taken place at the time of the registration.
Defense shall also prescribe within the same period as the action for annulment, since the
basis of the action and the basis of the defense are identical.
ARTICLE 1392-96

ARTICLE 1390
VOIDABLE
All essential requisites are present, although
the requisites of consent is defective
because one of the contracting parties does
not possess the necessary legal capacity, or
because it is vitiated by mistake, violence,
intimidation, undue influence or fraud.

CFI: Defendants Felipe

CA: Plaintiffs Heirs of Aldon
SC: Award to Sofia & Salvador their shares of the lands

VOID
Consent is absolutely lacking or simulated,
the contract is inexistent

1 In order to distinguish it from an action for the rescission of rescissible contracts or from an action for the
declaration of absolute nullity or inexistence of void or inexistent contracts.

2 In order to distinguish it from the defense of absolute nullity or inexistence in void or inexistent contracts
or the defense of unenforceability in unenforceable contracts..

Ratification or confirmation the act or means by virtue of which efficacy is given to a contract
which suffers from a vice of curable nullity.
Requisites:
1. The contract should be tainted with a vice which is susceptible of being cured.
a. Confirmation presupposes the existence of a vice in the contract because
otherwise it would not have any object.
b. Such vice should be susceptible of being cured because otherwise the
contract would be void or inexistent, and, therefore, not susceptible of
confirmation.
2. The confirmation should be effected by the person who is entitled to do so under
the law.
a. Implied from the provisions of Arts. 1394 and 1395.
3. It should be effected without knowledge of the vice or defect of the contract.
a. Since confirmation is above all a form of expressing the will, as such it
requires, independently of the act to which it refers, the same conditions
of freedom, knowledge and clarity which consent also requires, although
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it does not require the conformity of the other party who has no right to
invoke the nullity of the contract.
The cause of the nullity or defect should have already disappeared.
a. Otherwise the act of confirmation would also suffer from the very vice or
defect which it seeks to cure.

Form:
No special form required for confirmation, but as the law provides, it may be effected:
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:
1.
2.

Extinguishes the action to annul the contract

Cleanses the contract of its defects from the moment it was constituted

ARTICLE 1397
Requisites on who may institute action:
1. The plaintiff must have an interest in the contract
a. A stranger to the contract cannot institute an action for its annulment
i. Exception: 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
2. The victim and not the party responsible for the vice or defect must be the person
who must assert the same
a. Based on the principle of equity that whoever goes to court must do so
with clean hands
ARTICLE 1398-99
Effects of annulment:

If the contract has not yet been consummated the contracting parties shall be
released from the obligations arising therefrom

If the contract has already been consummated Arts. 1398 to 1402 of the Code
shall govern
Exception in the obligation of mutual restitution:
When the defect of the contract consists in the incapacity of one of the contracting 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. It is sufficient if there has been a prudent and
beneficial use. In order to determine this, it is necessary to know his necessities, his social
position as well as his duties as a consequence thereof to others.

Exception: If the incapacitated person can still return the thing which he has
received, he must return such portion thereof as remains in his possession upon
reaching or attaining capacity.

Hence, if after attaining capacity, it is established that he not only failed to ask for
the annulment of the contract but he also squandered that part of the consideration
which remained, it is clear that there is already an implied ratification or
confirmation.

ARTICLE 1400-02
1400 when the loss of the thing is due to the fault of the party against whom the action for
annulment may be instituted
- loss of the thing does not extinguish the action for annulment
1401 when the loss is due to the fault of the party who has a right to institute the action
- action for annulment shall be extinguished
- three modes whereby such action may be extinguished:
1. Prescription
2. Ratification
3. Loss of the thing which is the object of the contract through fraud or fault
of the person who is entitled to institute the action
Where loss is due to fortuitous event:
1. If defendant cannot return contract can still be annulled, but 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 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.
2. If plaintiff cannot return contract may still be annulled, but he must pay to the
defendant the value of the thing at the time of the loss, but without interest there on.
CHAPTER 8
UNENFORCEABLE CONTRACTS
Unenforceable contract those which cannot be enforced by a proper action in court, unless
they are ratified, because, either they are entered into without or in excess of authority or they
do not comply with the statute of frauds or both of the contracting parties do not possess the
required legal capacity. They occupy an intermediate ground between voidable and void
contracts.
Classes:
1. Entered into in the name of another person by one without any authority or in
excess of his authority there is absolutely no consent insofar as the person in
whose name the contract is entered into is concerned
2. Those which do not comply with the Statute of Frauds there is no writing, note or
memorandum by which the contract may be proved
a. Essentially a rule of substantive law, should not be made the instrument
to further frauds
b. Contract must be in writing and subscribed by the party charged or by his
agent
c. Form is required for evidential purposes only
3. Those where both contracting parties are legally incapacitated consent is
absolutely vitiated by the legal incapacity of both of the contracting parties
Characteristics:
1. They cannot be enforced by a proper action in court
2. They are susceptible of ratification
3. They cannot be assailed by third persons

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UNENFORCEABLE
RESCISSIBLE
Cannot be enforced by a proper action in Can be enforced, unless it is rescinded
court
Causes are different
Susceptible of ratification
Not susceptible of ratification
Cannot be assailed by third persons
May be assailed by third persons who are
prejudiced
UNENFORCEABLE
VOIDABLE
Cannot be enforced by a proper action in Can be enforced, unless it is annulled
court
Causes are different
ARTICLE 1403
Principles applicable for 1403(1):
1. No one may contract in the name of another without being authorized by the latter
or unless he has a right to represent him. If he is duly authorized, he must act
within the scope of his powers.
2. A contract entered into in the name of another by one who has no authority or legal
representation, or who has acted beyond his powers, is unenforceable. This
principle is reiterated in the law on agency.
3. However, such contract may be ratified, expressly or impliedly, by the person in
whose behalf it has been executed, before it is revoked by the other contracting
party.
Confirmation v. Ratification:

Under the old law, confirmation was used to designate the act by which a voidable
contract was cured of its vice or defect, while ratification was used exclusively to

designate the act by which a contract entered into by a person in behalf of another
without or in excess of authority s cured of its defect.
Under the present Code, both terms are used to designate the act of validating any
kind of defective contract.

Six classes of contracts covered by the Statute of Frauds:

1. Refers only to agreements which by their terms are not to be performed on either
side within a year from the execution thereof.
2. A promise in order to fall under the statute must be collateral, not independent or
original.
3. Marriage settlements and donations by reason of marriage, shall be regulated by
the Statute of Frauds.
4.
5.
6.
Effect of performance of contract:
Statute of Frauds is applicable only to those contracts which are executor and not those
which have been consummated either totally or partially.
Contracts infringing the State of Frauds are susceptible to ratification either:
1. By the failure to object to the presentation of oral evidence to prove the same
2. By the acceptance of benefits under them
Contracts where parties are incapacitated:

Both incapacitated unenforceable

Only one is incapacitated voidable

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