Module 4 discussed about the Formalities, Reformation and Interpretation & Defective Contracts

and also Rescissible, Voidable, Unenforceable, Void or Inexistent Contracts. Following are my
reflection of the articles under the Formalities, Reformation and Interpretation & Defective
Contracts and some are not included because it is easier to understand.

Article 1356 explains that contracts are considered compulsory, and they must meet the
necessary requirements to verify their legitimacy. Contracts are binding in whatever form they
are entered into, as long as all of the necessary conditions for their legality are met.

Article 1357, based on my understanding on this article, when a contract is required by law for
its convenience only and the contract is not in that form, the contracting parties may compel each
other to follow that form. However, if the contract is required by law but not essential for the
contract's validity, this article cannot be made.

Article 1359 explains that because of mistake, fraud, inequitable action, or accident, the written
instrument claiming to contain the contract does not express the genuine purpose of the parties.

Article 1370 explains that it is a fundamental rule in contract interpretation that if the provisions
of a contract are clear and leave no doubt about the contractual parties' intentions, the literal
meaning of the contract's stipulation takes priority. Any other intention of the contracting parties
must not be read into the plain meaning by the Court. It is assumed that the provisions of an
agreement or writing were employed in their primary and general acceptance. Evidence may be
accepted to prove that they are employed in a regional, technical, or other unusual context.

Article 1373 explains that when a contract has numerous possible interpretations, one of which
would make it effective, it should be given that interpretation. Thus, if one interpretation renders
a contract valid while the other renders it illegal, the former view is supported by Article 1373
regulations.

Article 1378 explains that if some doubts remain notwithstanding the application of the
preceding rules (arts. 1370-1377), they must be resolved in accordance with the supplemental
regulations provided in Article 1378.
Following are my reflection of the articles under the Rescissible, Voidable, Unenforceable, Void
or Inexistent Contracts and some are not included because it is easier to understand.

If one party cannot pay its debts, the injured party can rescind the contract under Article 1382.
Rescission is only required to the extent that it is essential to compensate for damages. The
contract's subject objects, as well as interest, must be returned by the violating party.

Article 1383 explains that an action to rescind a rescissible is only secondary, which means that
it can only be brought when the party who has suffered damages has exhausted all other legal
options. As a result, the plaintiff must have completed all other legal options for obtaining
compensation. Otherwise, action will be unsuccessful.

Article 1385 this article states that both parties shall return what they acquired from the other.

Article 1387 explains that an action for rescission cannot succeed whether the person against
whom a judgment or writ of attachment was issued acted with or without fraud, as long as the
third party in legal possession of the property in question did not act with deception and in bad
faith.

Article 1388 tackles about if the contract is canceled, the buyer in bad faith who received the
object of the contract alienated in fraud of creditors must return it, and if he is unable to return it
for any reason, he must indemnify the former.

Article 1389 explains that rescission is not possible if a contract entered into on behalf of a ward
or absentee has been allowed by the court since it is valid whether or not there is a lesion.

Article 1391. “The action for annulment shall be brought within four years. This period shall
begin: In cases of intimidation, violence or undue influence, from the time the defect of the
consent ceases. In case of mistake or fraud, from the time of the discovery of the same. And
when the action refers to contracts entered into by minors or other incapacitated persons, from
the time the guardianship ceases.”

This article solely pertains to the contracting parties. When the law allows a third party to
question the legitimacy of a contract, it does not apply to them. Failure to prosecute a legal
action within the time limits set by law will result in the action being dismissed.
Article 1393 explains that ratification is the act or process of giving efficacy to a contract that
has a curable nullity problem. It is a remedy for the defect of a party's lack or excess of authority
in entering into a contract through another without the latter's consent. It refers to unenforceable
contracts and covers all voidable contracts.

Article 1397 explains that persons who are capable, on the other hand, cannot claim the
incompetence of others with whom they contracted; similarly, those who utilized pressure,
violence, or undue influence, or committed fraud, or made a mistake, cannot blame their actions
on the contract's defects.

Article 1399 explains that the law favors the incapacitated or disadvantaged person; no
restoration is expected of him.

Article 1401 tackled that the creditor would have no cause of action in the first instance because
he was the one who caused the item's loss. Similarly, if the plaintiff suffers a loss as a result of
his fraud or negligence, the loss of the thing will bar the case because the client cannot benefit
from his fault or wrongdoing. Furthermore, unless the defendant has incurred in delay, the action
for annulment is barred if the thing was lost or destroyed due to a fortuitous accident. Similarly,
the action for annulment might be ended by ratification or prescription of the action.

Article 1407 states that when both parties to a claimed contract are unable to assent, the contract
is unenforceable and cannot be enforced in court. If only one of the contracting parties ratifies
the agreement. That is, the contract is turned into a voidable contract on the part of the person
who did not ratify by the parent or guardian, meaning it is now legitimate and binding unless the
court annuls it. If both sides of the contract are ratified by the parents or guardians, the contract is
effective from the start. The authorization is conditional.

Article 1411 explains that they cannot compel one another to fulfill their respective obligations if
the contract is still in the execution stage, and they cannot recover what they have already paid or
provided to one another if the contract has already been completed. They will be left alone by the
law.

Article 1415 states that if the party who entered into an illegal contract is incapable of consenting
(minor or insane), he may be allowed to reclaim the money or property supplied, but only if the
interests of justice demand it. The matter is left to the court's discretion on a case-by-case basis,
as there are no legal criteria in place.

Article 1417 applies to articles or commodities for which a responsible authority has enacted a
legislation or rule setting their maximum price. This law attempts to prohibit profiteering that is
detrimental to the public interest, hence any excess payment must be recoverable.

Article 1418 states that under the Eight-Hour Labor Law, employees are entitled to supplemental
remuneration for services provided beyond the 8-hour labor/day.

Article 1419 stated that the laborer is not prevented from recovering the difference if he agrees to
be paid less than the legal minimum wage. Under the minimum wage law, such a contract or
agreement is void.