VALID BUT DEFECTIVE VOID OR INEXISTENT

RESCISSIBLE VOIDABLE UNENFORCEABLE

(1) Those whose cause, object or purpose is
Contracts: Contracts: Contracts: contrary to law, morals, good customs, public
order or public policy;
(1) Those which are entered into by guardians Even though there may have been no damage to Unenforceable unless ratified: (2) Those which are absolutely simulated or
whenever the wards whom they represent the contracting parties: fictitious;
suffer lesion by more than 1/4 of the value of (1) Those where one of the parties is (1) Those entered into in the name of another (3) Those whose cause or object did not exist at
the things which are the object thereof; incapable of giving consent to a contract; person by one who has been given no the time of the transaction;
(2) Those agreed upon in representation of (2) Those where the consent is vitiated by authority or legal representation, or who has (4) Those whose object is outside the commerce
absentees, if the latter suffer the lesion mistake, violence, intimidation, undue acted beyond his powers; of men;
stated in the preceding number; influence or fraud. (2) Those that do not comply with the Statute of (5) Those which contemplate an impossible
(3) Those undertaken in fraud of creditors Frauds as set forth in this number. In the service;
when the latter cannot in any other manner following cases an agreement hereafter (6) Those where the intention of the parties
collect the claims due them; made shall be unenforceable by action, relative to the principal object of the contract
(4) Those which refer to things under litigation unless the same, or some note or cannot be ascertained;
if they have been entered into by the memorandum, thereof, be in writing, and (7) Those expressly prohibited or declared void
defendant without the knowledge and subscribed by the party charged, or by his by law.
approval of the litigants or of competent agent; evidence, therefore, of the agreement
judicial authority; cannot be received without the writing, or a These contracts cannot be ratified. Neither can the
(5) All other contracts specially declared by law to secondary evidence of its contents: right to set up the defense of illegality be waived.
be subject to rescission. (a) An agreement that by its terms is
not to be performed within a year A contract which is the direct result of a previous
Payments made in a state of insolvency for from the making thereof; illegal contract, is also void and inexistent.
obligations to whose fulfillment the debtor could not (b) A special promise to answer for the
be compelled at the time they were effected. debt, default, or miscarriage of
another;
(1) and (2) shall not take place with respect to (c) An agreement made in consideration
contracts approved by the courts. of marriage, other than a mutual
promise to marry;
(d) An agreement for the sale of goods,
chattels or things in action, at a price
not less than five hundred pesos,
unless the buyer accept and receive
part of such goods and chattels, or
the evidences, or some of them, of
such things in action or pay at the
time some part of the purchase
money; but when a sale is made by
auction and entry is made by the
auctioneer in his sales book, at the
time of the sale, of the amount and
kind of property sold, terms of sale,
price, names of the purchasers and
person on whose account the sale is
made, it is a sufficient
memorandum;
 (e) An agreement for the leasing for a
longer period than one year, or for
the sale of real property or of an
interest therein;
(f) A representation as to the credit of a
third person.
(3) Those where both parties are incapable of
giving consent to a contract.

Rules: Rules: Rules: Rules:

Action for Rescission 2. Contracts are binding Unauthorized contracts The action or defense for the declaration of the
 Subsidiary 3. Must be annulled by a proper court action  governed by article 1317 and the inexistence of a contract does not prescribe.
 Cannot be instituted except when the party 4. Susceptible of ratification principles of agency
suffering damage has no other legal means to When the nullity proceeds from the illegality of the
obtain reparation for the same. Action for Annulment (2) ratified by the failure to object to the cause or object of the contract, and the act
 Must be commenced within 4 years  May be instituted by all who are thereby presentation of oral evidence to prove the same, or constitutes a criminal offense, both parties being in
 For persons under guardianship and for obliged principally or subsidiarily. by the acceptance of benefit under them. pari delicto
absentees, the period of 4 years shall not  Persons who are capable cannot allege the  they shall have no action against each other,
begin until the termination of the former's incapacity of those with whom they When a contract is enforceable under the Statute of and both shall be prosecuted.
incapacity, or until the domicile of the latter is contracted; nor can those who exerted Frauds, and a public document is necessary for its  Moreover, the provisions of the Penal Code
known. intimidation, violence, or undue influence, or registration in the Registry of Deeds, the parties relative to the disposal of effects or
employed fraud, or caused mistake base their may avail themselves of the right under Article instruments of a crime shall be applicable to
Extent: necessary to cover the damages caused action upon these flaws of the contract. 1357. the things or the price of the contract.
 Extinguished when the thing which is the  This rule shall be applicable when only one of
Effect: object thereof is lost through the fraud or In a contract where both parties are incapable of the parties is guilty; but the innocent one
 Return fault of the person who has a right to institute giving consent, express or implied ratification by the may claim what he has given, and shall not
o Things which were the object of the the proceedings. parent, or guardian, as the case may be, of one of be bound to comply with his promise.
contract  Shall be brought within 4 years, from: the contracting parties shall give the contract the
o Their fruits, and o Intimidation, violence or UI: from the same effect as if only one of them were If the act in which the unlawful or forbidden cause
o The price with its interest; time the defect of the consent ceases incapacitated. consists does not constitute a criminal offense, the
 Can be carried out only when he who o Mistake or fraud: from the time of following rules shall be observed:
demands rescission can return whatever he discovery If ratification is made by the parents or guardians, (1) When the fault is on the part of both
may be obliged to restore. o Re contracts entered into by minors/ as the case may be, of both contracting parties, the contracting parties, neither may recover what
incapacitated: from the time the contract shall be validated from the inception. he has given by virtue of the contract, or
Cannot take place: guardianship ceases. demand the performance of the other's
 things are legally in the possession of third Unenforceable contracts cannot be assailed by third undertaking;
persons who did not act in bad faith. Ratification may be effected by the guardian of the persons. (2) When only one of the contracting parties is at
 Remedy: damages from the person who incapacitated person. fault, he cannot recover what he has given
caused the loss. by reason of the contract, or ask for the
Ratification does not require the conformity of the fulfillment of what has been promised him.
Contracts where debtor alienates property by: contracting party who has no right to bring the The other, who is not at fault, may demand
action for annulment. the return of what he has given without any
(a) gratuitous title obligation to comply his promise.
 Presumed to have been entered into in fraud Effect of Ratification:
 of creditors, when the donor did not reserve  Ratification cleanses the contract from all its When money is paid or property delivered for an
sufficient property to pay all debts contracted defects from the moment it was constituted. illegal purpose
before the donation  the contract may be repudiated by one of the
Effect of Annulment: parties before the purpose has been
(b) onerous title  Contracting parties shall restore to each other accomplished, or before any damage has
 Presumed fraudulent when made by persons the things which have been the subject been caused to a third person.
against whom some judgment has been matter of the contract, with their fruits, and  In such case, the courts may, if the public
rendered in any instance or some writ of the price with its interest, except in cases interest will thus be subserved, allow the
attachment has been issued. provided by law. If not possible and lost party repudiating the contract to recover the
 The decision or attachment need not refer to through his fault, he shall return the fruits money or property.
the property alienated, and need not have received and the value of the thing at the
been obtained by the party seeking the time of the loss, with interest from the same Where one of the parties to an illegal contract is
rescission. date. incapable of giving consent
 Render Service: damages  the courts may, if the interest of justice so
 Incapacitated person is not obliged to make demands allow recovery of money or
Whoever acquires in bad faith the things alienated any restitution except insofar as he has been property delivered by the incapacitated
in fraud of creditors benefited by the thing or price received by person.
 Shall indemnify the latter for damages him.
suffered by them on account of the alienation,  As long as one of the contracting parties does When the agreement is not illegal per se but is
whenever, due to any cause, it should be not restore what in virtue of the decree of merely prohibited, and the prohibition by the law is
impossible for him to return them. annulment he is bound to return, the other designed for the protection of the plaintiff
 If there are two or more alienations, the first cannot be compelled to comply with what is  he may, if public policy is thereby enhanced,
acquirer shall be liable first, and so on incumbent upon him. recover what he has paid or delivered.
successively.
When the price of any article or commodity is
determined by statute, or by authority of law
 any person paying any amount in excess
of the maximum price allowed may
recover such excess.

When the law fixes, or authorizes the fixing of the

maximum number of hours of labor, and a contract
is entered into whereby a laborer undertakes to
work longer than the maximum thus fixed
 he may demand additional compensation
for service rendered beyond the time limit.