Voidable Contract Study Guide

Article 1390
The following contracts are voidable or annullable,

even though there may have been no damage to the
contracting parties:
1. Those where one of the parties incapable of
giving consent to a contract;
2. Those where the consent is vitiated by
mistake, violence, intimidation, undue
influence or fraud.
These contracts are binding, unless they are
annulled by a proper action in court. They are
susceptible of ratification.
Voidable or Annullable Contracts possess all the
essential requisites of a valid contract but one of the
parties is incapable of giving consent, or consent is
vitiated by mistake, violence, intimidation, undue
influence, or fraud.
Note: Existence of economic damage is not essential for
their annulment as in the case of rescissible contract.
Economic damages refers to compensation for
objectively verifiable monetary losses such as past and
future medical expenses, loss of past and future
earnings, loss of use of property, costs of repair or
replacement, the economic value of domestic services,
and loss of employment or business opportunities.
Kinds of Voidable Contract
Defects that causes the contract to be voidable:
1. Legal incapacity to give consent of one of the
parties
2. Violation of consent, where the vitiation is done
by mistake, violence, intimidation, undue
influence, or fraud
Annulment remedy provided by law, for reason of
public interest, for the declaration of inefficacy of a
contract based on a defect or vice in the consent of one
of the contracting parties in order to restore them to their
original position which they were before the contract was
executed.
Article 1391
The action for annulment shall be brought within
four years.
And when the action refers to contracts entered into

by minors or other incapacitated persons, from the
time the guardianship ceases.
-
Incapacitated person has no capacity to sue.
Article 1392
Ratification extinguishes the action to annul a
voidable contract.
Ratification One voluntarily adopts or approves some
defective or unauthorized act or contract which without
his subsequent approval or consent, would not be
binding on him.
-
Intention on the part of the ratifier to be

bound to the provisions of the contract.
Artitcle 1393
Ratification may be effected expressly or tacitly. It is
understood that there is a tacit ratification 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.
Kinds of Ratification
1. Express ratification is manifested in words or
in writing
2. Implied or tacit As silence or acquiescence
- Acts showing adoption or approval of the
contract
- Acceptance and retention of benefits
therefrom
Requisites for Ratification
1. There must be Implied Ratification
a. There must be knowledge of the reason
which renders the contract voidable
b. Such reason must have ceased
c. The injured must have executed an act
which necessarily implies an intention to
waive his right.
2. Express Retification the same as those
implied ratification except that the former is
effected expressly.
This period shall begin:
Article 1394
In case of intimidation, violence or undue influence,

from the time defect of the consent ceases.
Ratification may be effected by the guardian of the

incapacitated person.
Before that time, the consent is still being

vitiated and, therefore, the victim cannot be
expected to bring an action in court.
In case of mistake or fraud, from the time of the

discovery of the same.
-
Before that time of discovery, the innocent

party is unaware of the reason which
renders the contract voidable and cannot
also be expected bring an action in court.
The guilty party should not be rewarded for
successfully hiding the mistake or fraud.
Who may ratify

1. If contract entered into by an incapacitated
person
a. Guardian
b. Injured party himself provided he is
already capacitated
2. If contract voidable on the ground of
mistake, etc
a. Party whose consent is vitiated
Article 1395
Ratification does not require the conformity of the
contracting party who has no right to bring the
action for annulment.
Ratification is unilateral act yb which a party

waives defect in his consent; conformity of
guilty party to ratification not required.
1396
Ratification cleanses the contract from all its defects
from the moment it was constituted.
-
Cleanses the contract of all its defects from

the moment it was executed
Extinguishes the right to annul
Make the contract valid from its inception
subject to the prior rights of third persons
Article 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.
-
Incapacitated is obliged to make restitution

only to the extent that he was benefited by
the thing or price received by him.
If the incapacitated is not benefited, only the
other contracting party is bound to return
what he had received, whether the latter has
benefited or not.
Article 1400
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 are contracted; nor can those who exerted
intimidation, violence, or undue influence, or
employed, or caused mistake base their action upon
these flaws of the contract.
Party entitled to bring an action for annulment of a
contract:
1. The plaintiff must have an interest in the contract
2. The victim and not the party responsible for the
defect is the person who must assert the same.
Whenever 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.
Effect of the loss of thing to be returned

1. Without fault of the person obliged to make
restitution, there is no more obligation to return
such thing. The other cannot be compelled as
well to restore what he is bound to return.
2. With fault obligation is not extinguished but is
converted into an indemnity for damages
consisting of the value of the thing at the time of
the loss with interest from the same date and the
fruits received from the time the thing was given
to him to the time of its loss.
Note: Strangers are without right or personality to bring

the action for they are not obliged by the contract,
principally or subsidiariliy, unless they can show
detriment which would positively result to them from the
contract in which they had no intervention or
participation.
Article 1401
Guilty party, including his successor in interest,

cannot ask for annulment. This rule is sustained by
the principle that he who comes to court must come
with clean hands.
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.
Article 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.
Indemnity Fee for damages
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.
-
Duty of mutual restitution upon annulment

1. Must restore to each other
a. Subject matter of the contract with its
fruits
b. Price with legal interest
2. In personal obligation where service had already
been rendered
a. The value with corresponding interest is
the basis for damages
b. Recoverable from the party benefited by
the service
Action for annulment shall be extinguished

only if the loss is through the fault of the
plaintiff.
Whether the right of action is based upon

incapacity or not, the rule is the same.
Article 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.
-
There will be no annulment if the party

cannot restore what he is bound to return.
Even if loss is due to a fortuitous event.

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Article 1390

The following contracts are voidable or annullable,

And when the action refers to contracts entered into

Incapacitated person has no capacity to sue.

Intention on the part of the ratifier to be

This period shall begin:

In case of intimidation, violence or undue influence,

Ratification may be effected by the guardian of the

Before that time, the consent is still being

In case of mistake or fraud, from the time of the

Before that time of discovery, the innocent

Who may ratify

Ratification is unilateral act yb which a party

Cleanses the contract of all its defects from

Incapacitated is obliged to make restitution

Whenever the person obliged by the decree of

Effect of the loss of thing to be returned

Note: Strangers are without right or personality to bring

Guilty party, including his successor in interest,

The action for annulment of contracts shall be

Indemnity Fee for damages

If the right of action is based upon the incapacity of

Duty of mutual restitution upon annulment

Action for annulment shall be extinguished

Whether the right of action is based upon

There will be no annulment if the party

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