Chapter 6(1380-1389)
must be lesion or pecuniary
Rescissible Contracts
Those validly agreed upon
because the essential
elements exist
and therefore, legally
effective
but in the cases established
by law,
the remedy of rescission is
granted in the interest of
equity
*there is damage/injuries to the
party/3rd person
*least defective
Rescission
remedy granted by law to the
(1) contracting parties, (2)
sometimes even in third
person
in order to secure reparation
of damages caused by them
by a valid contract
by means of the restoration
of things to their condition in
whichthey were prior to the
celebration of the said
contract
*rescission is not a principal
remedy but a subsidiaryit can
only be availed if the injured party
proves that he has no other legal
means aside from rescinding the
contract
Requisites of rescission
1. contract must be validly
agreed upon
2.
prejudice to one of the
parties or third person
3. rescission must be based
upon a case especially
provided by law
4. must be no other legal
remedy to obtain
5. the party asking for
rescission must be able to
return what he is obliged to
restore the reason of the
contract
6. the object of the contract
must not legally be in
possession of third person
7. period for filing the action for
rescission must not have
prescribed.
Cases of Rescissible contracts
1. Contracts entered into in
behalf of wards
when the wards whom they
represent suffer lesion by more
than one-fourth of the value of
the things which are the object
thereof
Ward- person under
guardianship by reason of some
incapacity
2. Contracts agreed upon in
representation of absentees
if the latter suffer the lesion
Absentee- person who
disappears from his domicile his
whereabouts being unknown
and without leaving an agent to
administer his property
3. Contracts undertaken in
fraud of creditors
a. there must be an
existing credit prior
to the contract to be
rescinded, although it
is not yet due or
demandable
b.
There must be fraud
on the part of the
debtor which may be
presumed or proved
c.
The creditor cannot
recover his credit in
any other manner, it
not being required
that the debtor be
insolvent
4. Contracts which refer to thing
under litigation
5. Other instances:
a.
sale in case of breach by the
seller of warranty against
hidden defects
b.
sale of animals with
redhibitory effects
c.
Contracts of partition when
an heir received things
whose value is less by one-
fourth than the share to w/c
he is entitled
d. contracts of lease where
the lessor or
lessee fails to comply with his
obligations, the aggrieved
party may ask for rescission
and damages
*vendee may exercise the
remedy of rescission when the
lack in the area of the real
estate sold be not less than
1/10 of that stated.
Extent of rescission (1384)
-shall only be to the extent of
the creditors unsatisfied credit.
-entire contract need not to
be set aside by rescission if the
damage can be repaired or covered
by partial rescission
Effect of rescission (1385)
Return to each other
1. The object of the contract with
its fruits
2. Price thereof with legal interest
*can be carried out only when he
who demands rescission can return
whatever he may obliged to restore
*rescission shall not take place
when the object of the contract are
legally in the possession of 3rd
person with bad faith
*indemnity for damages may be
demanded from the person who
caused the loss
When rescission is not allowed:
1. If the party who demands
rescission cannot return
what he is obliged to
restore under the contract
2. If the property is legally in
the possession of a third
person who acted in good
faith, that is he acquired the
property and registered in
under Torrens System in the
registry of property unaware
of the flaw in his title or
mode of acquisition
Skip art 1387 kasi bien largo
Badges of Fraud
1. sold The fact that
consideration of the
conveyance is fictitious or
inadequate
2. A transfer made by a debtor
after suit has been begun
and while it is pending
against him
3. A sale upon credit by an
insolvent debtor
4. The transfer of all his
property by a debtor,
especially when he is
insolvent or greatly
embarrassed financially
5. The fact that the transfer is
made between father and
son, when there are present
some or any of the above
circumstances
6. The failure of the vendee to
take exclusive possession of
all the property
It was known to the vendee that
the vendor had no properties other
than that to him
Period for filing action of rescission
(1389)
It will commence within four years
from the date the contract was
entered into except:
1. For persons under
guardianship, the period shall
begin from the termination of
incapacity
2. For absentees, from the time
the domicile is known
Persons entitled to bring action
1. Injured party or the
defrauded creditor
2. His heirs, assigns, or
successors in interest
3. The creditors of the above
entitled to subrogation
Chapter 7
Voidable or Annullable
Contracts
Those which possess all the
essential requisites of a valid
contract
but one of the parties is
incapable of giving consent
or consent is vitiated by:
o mistake
o violence,
 o intimidation,
o undue influence or
fraud
*no need for damage
*legal incapacity of a
party (minor/inscine)
*binding force- valid
and binding between
the parties unless
annulled by a proper
action in court by the
injured party.
* Once ratified, they
become absolutely valid
and can no longer be
annulled
Kinds of Voidable Contracts
Defect is caused by either:
1. Legal incapacity to give
consent, where one of the
parties is incapable of giving
consent to the contract
2. Violation of consent, where
the vitiation is done by
mistake, violence,
intimidation, undue influence
or fraud
Annulment-
Remedy provided by law for:
o reason of public
interest,
o for the declaration of
the inefficacy of a
contract based on a
defect or
o vice in the consent of
one of the contracting
parties
in order to restore them to
their original position in
which they were before the
contract was executed
Period for filling action for
annulment
Four year period is reckoned:
1. In cases of I. V. or UI, from
the time they cease
2. In case of M or F, from the
time it is discovered
3. In case of contracts entered
into my minors or
incapacitated persons, from
the time the guardianship
ceases
Ratification-
Extinguishes the action to
annul a voidable contract
(1392)
means that one voluntarily
adopts some defect or
unauthorized act or contract
which, without his
subsequent approval or
consent, would not be
binding on him.
It cleanses the contract from
all its defects from the
moment it was constituted
Kinds of Ratification:
Express- manifested in words
or writing
 Implied or tacit- may take
diverse forms:
a. by silence or
acquiescence
b. by acts of showing
adoption or approval of
contract
c. by acceptance and
retention of benefits
flowing

Requisites for implied

ratification

1. There must be knowledge of

the reason which renders the
contract voidable
2. Such reason must have
ceased
3. The injured party must have
executed an act which
necessarily implies an
intention to waive his right

Who may ratify

A contract entered by
incapacitated person may be
ratified by:
1. The guardian
2. Injured party himself
provided he is already
capacitated

*incase the contract is voidable

on the grounds of mistake, etc.
ratification can be made by the
party whose consent is vitiated

Stopped at art1395
Chapter 8(1403-1408)
Unenforceable Contracts-
Those that cannot be
enforced in court
or sued upon by reason of
certain defects provided
by law
until and unless they are
ratified according to the
law
Binding force- Unenforceable
contracts although valid are
unenforceable in court unless they
are cured or ratified
Kinds of Unenforceable contracts
1. Those entered into in the
name of another by one
without, or acting in excess
of, authority
2. Those that do not comply
with the statute of frauds
3. where both parties are
incapable of giving
Unauthorized contracts
-are those entered into in the
name of another person by one
who has been given no authority or
legal representation or who has
acted beyond his powers
*contract must be in writing to
be enforceable
Agreements within the scope
of the Statute of Frauds
-to be enforceable, to contract does
not have to be in writing.
-not legally enforceable in court
although valid unless the same be
in writing
*if either party refused to comply
with the agreement, the same
could not be enforced.
1. Agreements not to be
performed within one year
from the making thereof
2. Promise to answer for the
debt, default or miscarriage
of another
3. Agreement in consideration
of marriage other than
mutual promise to marry
4. Agreement for sale of goods,
etc. at price not less than
500
5. Agreement for leasing for a
longer period than one year
6. Agreement for the sale of
real property or of an interest
therein
7. Representation as to the
credit of a third person
 *strangers to the contract cannot
bring an action to annul the same,
Modes of Ratification under the
neither can they assail or question
statute
a contract because of its
1. By failure to object to the unenforceability.
prestation of oral evidence to
*benefit of statute of frauds can
prove the contract
2. By acceptance of benefits only be claimed or waived by one
under the contract of the contracting parties
personal defense.
(1406) When the contract is
enforceable under the statute
of frauds, and a public
document is necessary for its
registration in the Registry of
deeds, parties may avail
themselves of the right under
1357

When unenforceable contract

becomes avoidable contract
-if a parent or guardian or either of
the parties ratifies contract
voidable
When unenforceable contract
becomes a valid contract
-if ratification is made by parents or
guardians, or both contracting
parties after attaining or regaining
capacitycontract is validated;
validly retroacts to the time it was
entered to.
Chapter 9(1409-1422)
Void Contracts
-Those which, because of
certain defects, generally produce no
effect at all
Inexistent contracts
-Refer to agreement which lack
one or some or all of the elements or
do not comply with formalities which
are essential for the existence of a
contract

(1408) unenforceable contracts

cannot be assailed by third
persons.