Oblicon Report

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Voidable

ContractsBy:



- Those contracts in which all the essentialelements for validity are present, although theelement of consent is vitiated either by

a. Lack of legal capacity of one of thecontracting parties or

b. By mistake, violence intimidation, undue

influence or fraud



1. Attack the validity of the contract

a. direct – by means of proper action

(annulment)

b. indirect–

as a defense (annulability)

2. Convalidate it either by Ratification or

Prescription



1.Defect consists in the vitiation of consent of

one of the contracting parties

2. Binding until annulled by a competent court

3. Susceptible of convalidation by ratification

or by prescription

4. Defect or voidable character cannot be

invoked by 3rd persons



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 is incapableof giving consent to a contract;

(2) Those where the consent is vitiated bymistake, violence, intimidation, undue

influence or fraudThese contacts are binding, unless they are

annulled by a proper action in court. They are

susceptible of ratification.



1. Those where one of the parties is

incapable of giving consent to a contract;

2. Those where the consent is vitiated by

mistake, violence, intimidation, undue

influence or fraud.

*if the consent is absolutely lacking orsimulated, the contract is inexistent, not

voidable.



-in relation to Art. 1327-1328 (legal capacity)

Art. 1327. The following cannot give consentto a contract:

(1) Minors(2) Insane or demented persons, and deaf-

mutes who do not know how to write

*one party is incapacitated = voidable

*both are incapacitated= unenforceable

* Consent is given through a guardian/parent



-no more emancipated minors since the age of

Majority has been raised to 18 years old

- there are five (5) exceptional cases where acontract entered into by a minor may have

all the effects of a valid contract



1. When the contract is entered by a minor who(constructively not active) misrepresents his age

2. When it involves the sale and delivery of necessaries tothe minor (Arts. 1489 par. 2, NCC)

3. Where it involves a natural obligation and such obligation

fulfilled by the minor, provided that such minor is between18 and 21 years of age (Arts. 1426, 1427, NCC)

4. When it is a marriage settlement or a donation by reasonof marriage, provided that the minor is between 20 and21, if male, or between 18 and 21, if female (Arts. 120,128, NCC)

5. When it is a life, health or accident insurance taken on thelife of the minor, provided that the minor is 18 years old ormore and the beneficiary is the minor’s estate or theminor’s father, mother, husband, wife, child, brother orsister.



2. When it involves the sale and delivery of

necessaries to the minor (Arts. 1489 par. 2, NCC)

3. Where it involves a natural obligation and such

obligation fulfilled by the minor, provided thatsuch minor is between 18 and 21 years of age

(Arts. 1426, 1427, NCC)

4. When it is a marriage settlement or a donation

by reason of marriage, provided that the minoris between 20 and 21, if male, or between 18

and 21, if female (Arts. 120, 128, NCC)

5. When it is a life, health or accident insurance

taken on the life of the minor, provided that theminor is 18 years old or more and the beneficiary

is the minor’s estate or the minor’s father,

mother, husband, wife, child, brother or sister.



-those persons at the time of the celebration of

the contract cannot understand the nature and

consequences of the contract at the time of its

execution by reason of any cause affecting his

intellectual or sensitive faculties whetherpermanent or temporary. (includes drunkenness,

or under hypnotic spell)

-contracts entered into during lucid interval is

valid.-monomania or delusion of wealth= not voidable

-mental incapacity is a question of fact which

must be decided by Courts



-there is no way that the stipulations in the

contract be explained to them to insure that

they understand what they are entering into

-contracts entered by deaf mutes who CAN

write are valid



1. Married women in cases specified by law (they are qualified for

all acts of civil life except ex. Art 114 of the NCC, consent of husband is necessary before wife can acquire property bygratuitous title except if the property is acquired fromascendants, descendants, parents-in-law and relatives withinthe 4th degree

2. Incompetent persons under Sec. 2 of Rule 92 of the New Rulesof Court

a. Persons suffering from civil interdiction

b. Hospitalized lepers

c. Prodigals

d. Deaf and dumb who are unable to read

e. Those who have unsound mind, even though they have lucidintervals

f. Those who by reason of age, weak mind, other similar cases,cannot, without aid from other, take care of themselves andmanage their property becoming thereby easy prey for deceitand exploitation



- In relation to Art. 1330-1334

Vices which may vitiate consent (Art. 1330)

1. Vices of the will

a. mistake c. intimidation e. fraud

b. violence d. undue influence2. Vices of declaration

-simulation of contracts



Art. 1330 is a negative enumeration of the

requisites of consent (Manresa)

1. Intelligent (mistake)

2. Free (violence, intimidation and undueinfluence)

3. Spontaneous (Fraud)4. Real (Simulation of Contracts)

*absence of first three requisites= voidable

*absence of the 4th requisite = either void orvalid (depending upon whether the simulation

is absolute or relative)



In order that mistake may invalidate

consent, it should refer to the substance of the

thing which is the object of the contract, or to

those conditions which have principally moved

one or both parties to enter into the contract.

Mistake as to the identity or qualification of

one of the parties will vitiate consent only when

such identity or qualifications have been the

principal cause of the contract.A simple mistake of account shall give rise

to its correction.



-wrong conception of a thing and the lack of

knowledge with respect to a thing

-mistake should refer to the substance of the thing which isthe object of the contract, or to those conditions whichhave principally moved one or both parties to enter into

the contract (Art. 1331)1. mistake as to object

▪ identity of the thing (error in corpore)

▪ substance of the thing (error in substantia)

▪ conditions of the thing (provided such condition principally

moved one or both of the parties to enter into the contract)▪ quantity of the thing (error in quantitate)

2. mistake as to person

▪ name of a person.; identity of a person (effect is

voidable contract); qualification of a person



-when one or both of the contracting parties

arrive at an erroneous conclusion regarding

the interpretation of a question of law or the

legal effects of a certain act or transaction

General Rule: Only Mistake of Fact which will

vitiate consent renders the contract

voidable. A Mistake of Law does not renderthe contract voidable because of the

principle that ignorance of the law does not

excuse anyone from compliance therewith.



When one of the parties is unable to read or if

the contract is in a language not understood by

him, and mistake or fraud is alleged, the

person enforcing the contract must show that

the terms thereof have been fully explained tothe former.

Ex. Plaintiff cannot read and write, signed with across a document which she thought was apromise to pay certain expenses whichdefendant had an absolute deed of sale of 2parcels of land and carabao, the document isvoidable, for if she truly understood thecontents, she would not have accepted



Art. 1332 was intended for the protection of aparty to a contract who is at the disadvantage due

to his illiteracy, ignorance, mental weakness orother handicap. It contemplates a situationwherein a contract has been entered into, butconsent of one of the parties is vitiated by mistakeor fraud committed by the other contracting party.

Mistake, to invalidate consent, must refer to thesubstance of the thing which is the object of thecontract. Fraud, is present when, through insidiouswords or machination of one of the contractingparties, the other is induced to enter into acontract which, without them, he would not haveagreed.



Art. 1333 There is no mistake if the partyalleging it knew the doubt, contingency orrisk affecting the object of the contract.

Art. 1334 Mutual error as to the legal effect of an agreement when the real purpose of theparties is frustrated, may vitiate consent.

General Rule: Mistake of Law will not vitiateconsent

Exception: Art. 1334 mutual error

Requisites: (1) mistake must be with respectto the legal effect of the agreement;(2)mistake must be mutual; (3) real purposeof the parties have been frustrated



Ex. (Art. 1334)

A is an heir in the estate of B, his deceased

father. A sold his share to C, which isindicated as his inheritance in the last will

and testament of his father. A and C believed

that the sale is valid. However, the will was

denied probate. Thus, the property cannotpass ownership because A is not yet the

owner. Sale is voidable due to the parties

mutual error as to the legal effect of their

agreement.



Art. 1335 There is violence when in order to wrest consent,

serious or irresistible force is employed.

There is intimidation when one of the contracting parties

is compelled by a reasonable and well-grounded fear of an

imminent and grave evil upon his person or property, or

upon the person or property of his spouse, descendants or

ascendants, to give his consent.

To determine the degree of the intimidation, the age, sex

and condition of the person shall be borne in mind.

A threat to enforce one’s claim through competent

authority, if the claim is just or legal, does not vitiate

consent.

Art. 1336 Violence or intimidation shall annul the obligation,although it may have been employed by a third person who

did not take part in the contract



-Use of irresistible force

Requisites:

1. Force employed to wrest consent must be

serious or irresistible2. It must be the determining cause for the

party upon whom it is employed in entering

into the contract



Compelling by reasonable and well grounded fear of animminent or grave evil upon his person, property, or upon the person or property of his spouse,descendants, or ascendants

Requisites:1. one of the contracting parties is compelled

to give consent by a reasonable and well

grounded fear of an evil

2. the evil must be imminent and grave

3. the evil must be unjust

4. the evil must be the determining cause for

the party upon whom it is employed in entering into thecontract



•Actual, serious,possible of

realization, andthat the actor canstill carry out histhreat

Character of Intimidation

•Age,

•Sex

•Condition of theperson

Determination

of the degreeof intimidation



• External-physicalcompulsion (Castan)

• Prevents the expression

of the will substituting itwith a material actdictated by another

Violence

• Internal-moralcompulsion (Castan)

• Influences the will

inhibiting it in such a waythat the expressiontherefore is apparentlythat of a person who hasfreely given his consent

Intimidation



-Does not vitiate consent

-Contract would still be perfectly valid and not

voidable

Vitiated Consent vs. Relunctant Consent

(Martinez vs. Hongkong and Shanghai Bank)



There is undue influence when a person takes

improper advantage of his power over the

will of another, depriving the latter of a

reasonable freedom of choice. The following

circumstances shall be considered: the

confidential, family, spiritual, and other

relations between the parties, or the fact

that the person alleged to have been unduly

influenced was suffering from mental

weakness, or was ignorant or in financial

distress



-taking improper advantage of one's powerover the will of another, depriving the latterof a reasonable freedom of choice.

Test:

WON the influence exerted has overpoweredor subjugated the mind of a contractingparty as to destroy his free agency, makinghim express the will of another rather than

his own.Thing to be considered:

-confidential, spiritual, family, and other

elations between parties



-There is fraud when, through insidious words

or machinations of one of the contracting

parties, the other is induced to enter into a

contract which, without them, he would not

have agreed to.



- insidious words or machinations employed by oneof the contracting parties in order to induce theother to enter into a contract, which, withoutthem, he would not have agreed to.

Requisites:1. insidious words

2. insidious words must be serious

3. insidious words must have induced the other

party to enter into the contract – such fraudmust be the principal or causal inducement orconsideration for the consent of the other party.

4. fraud should not have been employed by both of

the contracting parties or by third persons



• Fraud in the perfection of the contract

• Employed in securing theconsent of the other party

Art. 1338,

Civil Code

• Fraud in the performance

of the obligation• Fraud employed by the

obligor in the performanceof a pre-existing obligation

Art. 1770-1171,Civil Code



• Casual fraud

• Deceptions or misrepresentation of a serious character employed byone party and without it, the otherparty would not have entered intothe agreement (Art. 1338)

• Effect is VIODABLE

Dolo

cuasante

• Incidental Fraud

• Deceptions or misrepresentationNOT of a serious characteremployed by one party and withoutit, the other party WOULD STILLhave entered into the agreement

• Effect is LIABILITY for damages

Doloincidente



- Failure to disclose facts, when there is a

duty to reveal them, as when the parties are

bound by confidential relations, constitutes

fraud

- Effect: Fraud



- The usual exaggerations in trade, when the

other party had an opportunity to know the

facts, are not in themselves fraudulent.



- A mere expression of an opinion does not

signify fraud, unless made by an expert and

the other party has relied on the former’s

special knowledge.



- Misrepresentation by a third person does not

vitiate consent, unless such

misrepresentation has created substantial

mistake and the same is mutual.



Art. 1343 Misrepresentation made in good

faith is not fraudulent but may constitute

error

Art. 1344 In order that fraud may make acontract voidable, it should be serious and

should not have been employed by both

contracting parties.



- The action for annulment shall be broughtwithin four years.

- This period shall begin: In cases of intimidation, violence or undue influence,

from the time the defect of the consentceases.

- In case of mistake or fraud, from the time of the discovery of the same.

- And when the action refers to contractsentered into by minors or otherincapacitated person, from the time theguardianship ceases.

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