Notes Oblicon Art1380 1402

8/13/2019 Notes Oblicon Art1380 1402

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Obligations and ContractsTITLE II ContractsChapter 6 Rescissible Contracts

4 types of Defective contracts1. Rescissible ca!sed a particular damageto one of the

parties or to a third person" and #hich for e$!itable reasons%ay be set aside even if it is valid

&. Voidable or Annullable consentof one party is defectiveeither beca!se of #ant of capacityor beca!se it is vitiated"b!t #hich contract is valid !ntil set aside by a co%petentco!rt

'. Unenforceable for% so%e reason cannot be enforced"!nless it is ratified in the %anner provided by la#

4. Void or inexistent an absolute nullityand prod!ces noeffect" as if it had never been e(ec!ted or entered into

). Relatively ineffective ineffective only #ith respect tocertain parties b!t are effective as to other persons

a. *ssign%ent of the lease by the lessee #itho!t consentof lessor+ ineffective only for lessor

b. Transfer of debt by debtor to another #itho!t consentof creditor+ ineffective as to creditorc. ,ay%ent by debtor to his creditor after credit has been

attached by a third party+ ineffective as to third party

-oidable vs. relatively ineffective -oidable beco%es inoperative O/L0 #hen there is an

action to ann!l it is instit!ted Ineffectiveness of relatively ineffective contracts are

prod!ced ipso !re

-oid vs. relatively ineffective

Ineffectiveness of void contracts is absol!te" cannot beratified

Relatively ineffective can be %ade co%pletely effectivethro!gh the consent of the person to #ho% it is ineffectiveOR by cessation of i%pedi%ent preventing co%pleteeffectiveness

*rticle 1'23Contracts validly agreed !pon %ay be rescinded in the casesestablished by la#

Rescission

Re%edy granted by la# to contracting parties and 'rd

persons

To sec!re the reparation of da%ages ca!sed to the% by acontract even if valid5

y %eans of restoration of things to their condition at the%o%ent prior to the celebration of the said contract

,rotection of+o Contracting parties and third persons fro% all in!ry

and da%age ca!sed by contracto 7o%e inco%patible preferent right created by

contracto I8,LIE7 that even if contract is initially valid" b!t it

prod!ces a lesion or pec!niary da%age to so%eoneLesion in!ry s!ffered as a conse$!ence ofine$!ality

Sets asidethe act or contract forjustifiablereasons ofequity

/at!re+ valid and voidable contracts %ay be rescinded Different fro% 8!t!al dissent both parties agree to cancel

contract and %!t!ally ret!rn the obect and the ca!se5o ,resent article does not refer to contracts rescinded

by %!t!al consent for the %!t!al convenience of

the partieso 7i%ply another contract for the dissol!tion of the

previo!s and its effects Rescission of obligations /OT the sa%e as rescission of

contractso In Reciprocal Obligations 1191 states that po#er to

rescind obligations is i%plied in reciprocal ones#hen one of the obligors does not co%ply #ith #hatis inc!%bent !pon hi%

Rescissible obligations Rescissible Contracts,res!ppose contracts validly entered into and e(isting :vs. ann!l%ent#here there is a defect #hich vitiates the contract;

oth re$!ire %!t!al restit!tion #hen declared po#er1191 %ay be de%anded only bya party to the contract

8ay be de%anded only by a thirdparty pre!diced by the contract

8ay be denied by the co!rt #henthere is s!fficient !stification toe(tend ti%e for perfor%ance

Only gro!nd for rescission+ /O/perfor%ance

-ario!s reasons of e$!ity asgro!nds

*pplies only to reciprocalobligations #herein one party hasnot perfor%ed

*pplies to !nilateral or reciprocalobligations and even #hencontract has been f!lly f!lfilled

Re$!isites %!st al#ays conc!r before rescission5


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1. 8!st be a rescissible contract %entioned in 1'21 and 1'2&&. ,arty as=ing for rescission %!st have no other legl %eans to

obtain reparation for da%ages s!ffered by hi% 1'2''. ,arty de%anding rescission %!st be able to ret!rn #hatever

he %ay be obliged to restore if rescission is granted 1'2)4. Things #hich are the obect of the contract %!st not have

passed legally to the possession of a third person acting ingood faith 1'2)

). *ction for rescission %!st be bro!ght #ithin prescriptiveperiod of 4 yrs 1'29

Direct proceedings to Rescind+ Rescissible contracts *RE /OT -OID> !ntil set aside in a

rescissory action" they are legally effective" convey title"and cannot be attac=ed collaterally.

o#ever" in !stice to the party #ho #o!ld be entitled to as=for rescission" co!rt %ay e(pressly reserve s!ch right ofrescission so that s!ch rescission%ay be noted !pon in thecertificate of title.

*rticle 1'21The follo#ing contracts are rescissible+1. Those #hich are entered into by g!ardians #henever the

#ards #ho% they represent s!ffer lesion by %ore than onefo!rth of the val!e of the things #hich are the obect thereof>

&. Those agreed !pon in representation of absentees" if the latters!ffer the lesion stated in the preceding n!%ber>

'. Those !nderta=en in fra!d of creditors #hen the latter cannotin any other %anner collect the clai%s d!e the%>

4. Those #hich refer to things !nder litigation if they have beenentered into by the defendant #itho!t the =no#ledge andapproval fo the litigants or of co%petent !dicial a!thority>

). *ll other contracts specially declared by la# to be s!bect torescission

* -*LID contract can be rescinded only for LE?*L C*@7E

Contracts #ith LE7IO/ ,aragraphs 1 and & of the article+ rescissible if the party

represented s!ffers lesion by more than one-fourth ofthe valueof the things #hich are the obects of thecontracts

Lesion+ in!ry #hich one of the parties s!ffers by virt!e of acontract #hich is disadvantageo!s for hi%

o 8!st be =no#n or co!ld have been =no#n at theti%e of %a=ing the contract

o 8!st not be d!e to circ!%stances s!bse$!ent

thereto or !n=no#n to the parties ,rice is less than the tr!e val!e of the thing at the ti%e of

perfection of the contracto Deter%ination and appreciation is diffic!lt beca!se

of the s!bective charactero Idea is to establish parity bet#een the val!e of the

thing and its price

Cases of lesion in the code+o 1&21

o 1392 on partition of inheritance

o 1)'9 on sales

o 1)4& on sales

?!ardians 15 *!thoriAed only to manage/administerthe estate of his

#ard> no po#er to dispose of any portion ithout theapproval of the court

The re$!isites" proced!re and co!rt approval as providedin R!les of Co!rt for sale! mortgage or other

encumbrance of real estateare indispensableo If not co%plied #ith" contract is @/E/BORCE*LE

!nder 143'o @nenforceable+ contracts entered into in behalf of

another #itho!t the others consent its ratifiable5 ,resent article li%ited to contracts of g!ardians

constit!ting administrationo E(. ,!rchase of e$!ip%ent to c!ltivate far%> sale of

harvesto Do not re$!ire co!rt approval beca!se %ade in the

ordinary co!rse of estate %anage%ento If lesion e(ists rescissible>

o Even if lesion e(ists contract cannot be rescinded

IB g!ardian has sec!red approval of theg!ardianship co!rt for s!ch contract

7a%e #ith contracts entered into by legal reps of an absentee&5appointed by co!rt" #ithin his po#ers and d!ties

In fra!d of creditors '5 Contracts e(ec!ted #ith the I/TE/TIO/ TO ,RE


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To deter%ine intention+o 1'2 alienation by grat!ito!s title" by onero!s

title #hen %ade by person against #ho% so%e!dg%ent has been %ade rendered or #rit ofattach%ent iss!ed" and any other %anner !nderla# of evidence

o y proofs presented in the trial

o Re%ission of credits

*ccion ,a!liana Rescissory action to set asidecontracts in fra!d of

creditors*ccion ,a!liana vs. declaration of si%!lated or fictitio!scontract

accion pa!liana cannot be bro!ght #hen debt is not yetd!e and de%andable

o *ccion pa!liana pres!pposes a !dg%ent and an

!nsatisfied e(ec!tion of that !dg%ento Rescission is 7@7IDI*R0+ pres!pposing that the

creditor already e(ha!sted the estate of the debtor

*vailable #hen alienation occ!rs before the credit #asconstit!ted" beca!se the debtor ,@R,O7EL0 and in *DB*ITF deprives hi%self of the ability to %eet theobligations he intends to inc!r in the f!t!re

o 7!ch alienation can be rescinded if deter%ined+

*lienation #as %ade precisely in vie# off!t!re obli

8ade for the p!rpose of depring in advancethe creditor of the g!aranty

,a!liana 7i%!latedReal alienation 8ere pretense of alienation>

no real alienationCan be alleged O/L0 bycreditors EBORE the act ofalienating property in fra!dof creditors

Can be alleged by *LLcreditors" before or after theact

Re$!ired+ i%possible tosatisfy the clai% of thecreditorplaintiff

/ot re$!ired that it isi%possible for creditor tosatisfy clai%

*ction to set aside a -*LIDcontract

/ot to set aside thesi%!lated contract b!t toDECL*RE it as ine(istent

Re$!isites of Rescission of contracts in fra!d of creditors+

1. ,laintiff as=ing for rescission has a credit ,RIOR to thealienation" altho!gh de%andable later

o EGCE,TIO/+ ,arties #ho appear to be creditors

after the alienation b!t %ay already be consideredas having a prior right and entitled to the accionpa!liana

1. Those #hose clai%s #ere ac=no#ledged bythe debtor after the alienation" b!t the origins

of #hich antedated the alienation> recognition does not give rise to the

credit %erely confir%s e(istence&. those #ho beco%e s!brogated in the rights of

the creditors after alienation> the rights ofcreditors being %ade prior to the alienationb!t s!brogation occ!rs after

o Debtor does not o#e !st any person #ho files a

s!it against hi%o Even 7EC@RED creditors or lienholders are entitled

to pa!lianao Hhere an estate in the co!rse of ad%inistration"

appears to be insolvent" any creditor #ho believesthat a conveyance of property e(ec!ted d!ringlifeti%e of the decedent #as %ade in fra!d ofcreditors" %ay bring an action to recover propertyth!s fra!d!lently conveyed

o Hitho!t prior e(isting debts" there can be neither

in!ry or fra!do Credit %!st be e(isting at the ti%e of the

fra!d!lent alienation" even if it is not yet d!eo !t at the ti%e accion pa!liana is bro!ght" credit

%!st already be d!eo Date of !dg%ent enforcing accion pa!liana is

i%%aterial beca!se it is %erely declaratory andretroactiveto the date #hen the credit #asconstit!ted

o Bor $!asi delicts" the act or o%ission #hich res!lted

to the liability for inde%nification %!st havehappened EBORE the alienation" even if !dg%entdeclaring it rendered co%es after#ard

&. Debtor %ade a s!bse$!ent contract conveying apatri%onial benefit to a third person

'. Creditor has no other legal re%edy to satisfy his clai% b!t#o!ld benefit fro% the rescission of the conveyance to thethird person


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o /ECE77*R0 for creditors to prove that they

C*//OT RECO-ER in any other %anner fro% thedebtor #hat is d!e the%

o *lienation %!st have been pre!dicial to the% in

s!ch a #ay that it %ade the debtor I/7OL-E/T orhas di%inished property of debtor to an e(tent thatdebtor cannot pay his debt

4. *ct being i%p!gned is fra!d!lent

o 8!st be sho#n that the conveyance #asfraudulent " ith intent to prejudice creditors

o The fra!d %ay be established by+

,res!%ption 1'2 credit %!st still provefacts sho#ing act!al fra!d!lent intent of thedebtor

Bro% the #hole of the evidence# If the caseis not one #hich the la# establishes apres!%ption of fra!d" creditor bringingaction 8@7T prove via co%petent evidencethe e(istence of s!ch fra!d

o Hitho!t proof of fra!d!lent intent" contract cannot

be rescindedo /ot fra!d+ #hen the sale #as %ade to one of the

creditors of the debtor to settle his debt #ith thatcreditor

o /ot fra!d+ #hen sale #as %ade #ith s!fficient

consideration IB there is no !dg%ent or attach%entagainst the debtor

o Test of Bra!d+ Does it pre!dice the rights of

creditors

ona fide transaction Or tric= andcontrivance to defeat creditors

Does it conserve to the debtor a specialright

/o need to re$!ire intent to ca!se da%ageto creditors> s!fficient that debtor J/EH hisaction #o!ld pre!dice and ca!se da%agecreditors beca!se he =ne# of his insolvencyand his property cannot be alienated #itho!tca!sing evident in!ry to creditors #ithe(isting clai%s" #hether alienation #asgrat!ito!s or onero!s

o 7igns of Bra!d set do#n by co!rts+

1. Consideration of conveyance is inade$!ate

&. Transfer %ade by a debtor after s!it hasbeg!n and pending against hi%

'. 7ale !pon credit by an insolvent debtor4. Evidence of large indebtedness or co%plete

insolvency). Transfer of all or nearly all of his property by

a debtor especially #hen he is insolvent6. Transfer is %ade bet#een father and son

#hen above circ!%stances are present. Bail!re of vendee to ta=e e(cl!sive

possession of all the property). Third person #ho received property IB by onero!s title is an acco%plice in the fra!d

o Transferee

?rat!ito!s good faith of transfereei%%aterial beca!se he gave nothing so he#ont be pre!diced by the rescission

Onero!s transferee %!st be a party to thefra!d for the rescission to ta=e place> if heacted in good faith" then he is in the sa%eposition as creditor and alienation cannot berescinded beca!se he is in possession of his

ac$!isition

enefit & vie#s+1. @pon rescission" property #ill be reverts to the patri%ony of

the debtor !nder its original liability as a legal g!aranty todebtors obligations

&. ,roperty sho!ld /OT reverted to the debtor /OR be convertedto a general sec!rity of all creditors relative effect ofbenefitting only that creditor #ho bro!ght action" to the e(tentof his creditKto the e(tent he #as pre!diced

'. Tolentino 8IDDLE ?RO@/D+ ?en R!le+ sho!ld benefit only the creditor #ho bro!ght

action for rescission" #hich is !stified by 1'24 If there is anything left after satisfying the clai% of the

creditor #ho bro!ght action" other creditors can then begiven benefit of rescission" #itho!t re$!iring the% to bringa separate action

Contracts on Things in Litigation paragraph 45 Contract e(ec!ted by defendant in a s!it involving the

o#nership or possession of a thing" #hen s!ch contract is%ade HITFO@T J/OHLED?E and *,,RO-*L of plaintiffOR of the court

Li=e in cases of fra!d of creditors" re%edy of rescission in

this case is given to third persons not a party to thecontract


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In fra!d of creditors+ personal right is protected by givings!ch right right of creditor to his credit against debtor5 ag!aranty in the for% of the debtors property

In litigation+ real right is rendered effective #ith respect tothe o#nership of the partic!lar property

Transfereeo Cannot be deprived of property by rescission #hen+

clai% pending and not yet registered>

there is nothing in the land registry sho#inglegal obstacles to the transfer>

transferee ac$!ires property in good faithand val!able consideration> and

ac$!ired #itho!t =no#ledge or notice of thelitigation pending first b!llet5

o If transferee =ne# of the clai% either act!ally or

constr!ctively thro!gh registry" bad faith>transfer can be rescinded

o If transfer grat!ito!s " transferee loses nothing by

rescission> contract %ay be rescinded. Right of theplaintiff #hich #as prior to the transferee sho!ld

prevail

*rticle 1'2&,ay%ents %ade in a state of insolvency for obligations to #hosef!lfill%ent the debtor co!ld not be co%pelled at the ti%e they #ereeffected" are also rescissible.

Circ!%stances+1. Debtor transfers property to a creditor&. To allegedly5 settle a debt'. Debt is not yet %at!re4. Debtor is insolvent at the ti%e of transfer

). Consideration for the property is ?RO77L0 inade$!ateco%pared to the act!al val!e of the property

transfer is fra!d!lent and %ay rescinded

IB debt is D@E and o#ing and enforceable at the ti%e of deed ofsale #as %ade even if s!ch pay%ent #as allegedly for thep!rpose of satisfying a debt to another creditor s!ch conveyance#ill not fall !nder 1'2&

Insolvency insolvency in B*CT> does not re$!ire !dicialproceeding in insolvency

Can be proved by sho#ing that debtor did not haves!fficient properties to satisfy creditors clai%

Creditor does not need a !dg%ent or e(ec!tion to rescind

*rticle 1'2'The action for rescission is s!bsidiary> it cannot be instit!ted e(cept#hen the party s!ffering da%age has no other legal %eans to obtainreparation for the sa%e

,laintiff as=ing for rescission 8@7T ,RO-E that he has no otherlegal %eans> if he doesnt sho# this" he is not entitled torescissionReason+ action for rescission is 7@7IDI*R0 available O/L0#hen the aggrieved party has no other legal %eans to obtainreparation

*rticle 1'24Rescission shall be only to the e(tent necessary to cover theda%ages ca!sed

E(tent1. Only in favor of the plaintiff creditor&. Only !ntil his credit is satisfied or the a%o!nt of pre!dice

s!ffered

E(cess+ alienation is 8*I/T*I/ED> re%ains #ith the transfereeE-E/ IB he acted in bad faith

Other creditors that do not have the capacity to bringabo!t accion pa!liana beca!se their credit did not arisebefore the alienation5 cannot benefit fro% the rescission

Hho %ay bring action

1. ,erson in!red by the rescissible contract #ard or absentee"creditors pre!diced and the plaintiff in a pending litigation foro#nership of the property alienated5

&. Feirs of these persons 8ay bring rescissory action after death of debtor #hen

s!ch debtor %ade a fra!d!lent alienation for the p!rposeof depriving his co%p!lsory heir of his legiti%e. !t in thiscase" the heir does not act as a representative of thedebtor b!t as a CREDITOR hi%self based on ,ar' 1'215

'. Creditors by virt!e of the right granted in 11 accions!braogatoria5

*rticle 1'2)


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Rescission creates the obligation to ret!rn the things #hich #ere theobect of the contract" together #ith their fr!its" and the price #ith itsinterest> conse$!ently" it can be carried o!t only #hen he #hode%ands rescission can ret!rn #hatever he %ay be obliged torestore./either shall rescission ta=e place #hen the things #hich are theobect of the contract are legally in the possession of third persons#ho did act in bad faith

In this case" inde%nity for da%ages %ay be de%anded fro% theperson ca!sing the loss

8!t!al restit!tion applicable only to ,ars 1 and & of 1'21> 7Calso applied r!le to cases of %!t!al dissent and rescission ofreciprocal obligations !nder 1191

Third persons both parties and not parties of the rescissiblecontract

& Circ!%stances that %!st be present that renders anac$!isition by a third person as an obstacle to theefficacio!sness of the action for rescission+

1. Third person is in la#f!l possession of the realty he isprotected by la# #hen the transfer to hi% has beenrecorded in the registry5o If not yet registered" they are not protected against

rescission&. Fe did not act in bad faith

third person acted in *D B*ITF and he C*//OT RET@R/the thing !pon rescission liable for the -*L@E of theproperty to the party entitled to the benefits of rescission

Transferee ?rat!ito!s good faith of transferee i%%aterial beca!se

he gave nothing so he #ont be pre!diced by therescission

o Transferee is OLI?ED to restore the thing. Reason+

no one is allo#ed to enrich hi%self at the e(penseof another

Br!its+ not obliged to pay fr!its received byhi% beca!se he #as a possessor in goodfaith

Rei%b!rse%ent+ entitled to rei%b!rse%entof e(penses inc!rred on the thing

Losses or Deteriorations+ /OT liable" e(cepthe acted #ith fra!d!lent intent or

negligence *BTER !dicial s!%%ons

Onero!so if he acted in good faith" then he is in the sa%e

position as creditor and alienation cannot berescinded beca!se he is in possession of hisac$!isition

to deprive hi% of the thing #o!ld ca!se hi%in!ry TO TFE EGTE/T of the considerationhe has ,*ID" beca!se he cannot recover

fro% the insolvent debtor possessor of property preferred> since in this

case" the transferee and the creditor is inthe sa%e position

o transferee %!st be a party to the fra!d for

rescission

%!st have J/OHLED?E that the transfer tohi% #o!ld pre!dice e(isting creditors of thetransferor

Inde%nity for da%age+ /OT entitled toinde%nity for da%ages fro% the debtor

Either beca!se he =no#s of the

danger of eviction or beca!se boththe transferee and the debtor share aco%%on #rong

Recovery of #hat transferee paid to debtor+/OT entitled strengthened by 141& #hichstates that parties to an !nla#f!l contractcannot recover fro% each other #hen theyare OTF ?@ILT05.

If #hat has been paid is still in the

patri%ony of the debtor" pa!liana#o!ld not have been applied"beca!se then there #o!ld still beso%ething left in the property of thedebtor and the creditor has note(ha!sted all %eans before resortingto rescission

If debtor is already insolvent" then

there cannot be rei%b!rse%entany%ore

Da%ages Hhen the contract cannot be rescinded beca!se the thing

has been ac$!ired in good faith by a third person" party

#ho ca!sed the loss shall be liable for damages Incl!des+


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o ?!ardian of %inors

o Representative or ad%in of absentees

o Transferee in bad faith of things fra!d!lently

alienated by debtoro Defendant #ho transferred the thing in litigation

*rticle 1'26Rescission referred to in /os. 1 and & of article 1'21 shall not ta=e

place #ith respect to contracts approved by the co!rts

*rticle 1'2*ll contracts by virt!e of #hich the debtor alienates property bygrat!ito!s title are pres!%ed to have been entered into in fraudofcreditors" #hen the donor did not reserve s!fficient property to payall debts contracted before the donation.*lienations by onero!s title are also pres!%ed fra!d!lent #hen %adeby persons against #ho% so%ejudgmenthas been rendered in anyinstance or so%e #rit of attachmenthas been iss!ed. The decisionor attach%ent need not refer to the property alienated" and need nothave been obtained by the party see=ing the rescission.

In addition to these pres!%ptions" the design to defra!d creditors%ay be proved in any other %anner recogniAed by the la# ofevidence.

Bra!d ,res!%ed

circ!%stances above" alienation held to be fra!d!lentEC*@7E it #as %ade *BTER a !dg%ent had beenrendered against the debtor %a=ing the alienation.

o Does not apply #hen alienation %ade before

!dg%ent #as rendered *ttach%ent for pres!%ption of fra!d to arise" s!fficient

that attach%ent #as I77@EDo Even if alienation is %ade before service or

e(ec!tion of attach%ent" as long as it #as %ade*BTER iss!ance of s!ch attach%ent" it is pres!%edto be fra!d

/OT concl!sive> %ay be reb!tted by 7*TI7B*CTOR0 andCO/-I/CI/? evidence to the contrary+

o /ecessary to establish affir%atively that the

conveyance #as %ade in good faith */D for as!fficient and val!able consideration

Hhen pres!%ption of fra!d has been overthro#n" partyas=ing for rescission 8@7T prove by s!fficient evidence the

e(istence of *CT@*L 8*L* BIDE7> other#ise" contract #illnot be rescinded

o 8ala fides+ bad faith vs. bona fides or good faith5

,roof of Bra!d R!les laid do#n by co!rts to deter%ine fra!d!lentcharacter of transaction on sales51. $onsiderationof conveyance is inadequate&. %ransfer%ade by a debtor aftersuithas begun and

pendingagainst hi%'. Sale upon credit by an insolvent debtor4. Evidence of largeindebtedness or completeinsolvency). Transfer of all or nearly allof his property by a debtor

especially #hen he is insolvent or greatly e%barrassedfinancially one has no f!nds5

6. Transfer is %ade bet#een father and son #hen abovecirc!%stances are present

. Bail!re of vendee to ta=e e(cl!sive possession of all theproperty

Co!rts are free to deal #ith fra!d !nder #hatever for% it %ay

present itself

Effect of fra!d Hhether proved or pres!%ed" fra!d DOE7 /OT

/ECE77*RIL0 %a=e alienation rescissible Only O/E of the re$!isites of accion pa!liana

*rticle 1'22Hhoever ac$!ires in bad faith the things alienated in fra!d ofcreditors" shall inde%nify the latter for da%ages s!ffered by the% onacco!nt of the alienation" #henever" d!e to any ca!se" it sho!ld bei%possible for hi% to ret!rn the%.

If there are t#o or %ore alienations" the first ac$!irer shall be liablefirst" and so on s!ccessively.

1sttransferee &ndtransferee?ood faith /OT liable to

ret!rn>considered ashaving left thepartri%ony ofthe debtor

?ood faith /OT liable even ifhe =ne# thatdebtor alienatedproperty in fra!dof creditors.@/LE77 1sttransferee anddebtor CO//I-ED

to %a=e 1sttransferee an

ad faith


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innocentinter%ediary> in#hich case" &ndtransferee #ill beliable

ad Baith

Inde%nity forda%ages

?ood faith

onero!s

Transfer cannotbe rescindedproperty cannotbe ret!rned

/OT liable forda%ages

/ot liable forda%ages #henproperty isret!rned

?ood faith grat!ito!s

Can be re$!iredto ret!rnproperty>

If property /OTret!rned> liablefor da%ages

liable forda%ages after1sttransferee

/ot liable forda%ages #henproperty isret!rned ad Baith

Can be re$!iredto ret!rnproperty>

If property /OTret!rned> liablefor da%ages

liable forda%ages after1sttransferee

ad faith of transferee /ot re$!ired to have connived to defra!d creditors of

debtor 7!fficient to have J/OHLED?E of the intention of the

transferorKdebtor to defra!d creditors

To deter%ine" co!rt %!st consider +1. REL*TIO/ of the parties&. Conditions of the sale'. Other circ!%stances fro% #hich the =no#ledge of the

transferee %ay be inferred Co!nted as =no#ledge #hen circ!%stances a#a=ens

s!spicion on the part of the vendee b!t he does not %a=ean in$!iry to verify

*rticle 1'29The action to clai% rescission %!st be co%%enced #itho!t fo!ryears.

Bor persons !nder g!ardianship and for absentees" the period of fo!ryears shall not begin !ntil the ter%ination of the for%ers incapacity"or !ntil the do%icile of the latter is =no#n

8inor #ho is a party of the contract of sale %!st bring the actionfor rescission #ithin 4 years after attaining age of %aority 4years fro% re%oval of ones incapacity5

Chapter -oidable Contracts

*rticle 1'93The follo#ing contracts are voidable or ann!lable" even tho!gh there%ay have been no da%age to the contracting parties+

1. Those #here one of the parties is incapable of giving consentin a contract>

&. Those #here the consent is vitiated by %ista=e" violence"inti%idation" !nd!e infl!ence or fra!d.

These contracts are binding" !nless they are ann!lled by a properaction in co!rt. They are s!sceptible of ratification.

-oidable or ann!lable contracts E(istent" valid and binding b!t can be ann!lled beca!se of+

o #ant of C*,*CIT0> or

o -ITI*TED consent of one of the parties

efore ann!l%ent" they are effective and obligatorybet#een the parties

-alid !ntil set aside -alidity %ay be assailed O/L0 in an action for that p!rpose They can be CO/BIR8ED or R*TIBIED

RE7CI77IO/ /@LLIT0Renders contract inefficacio!s #hen declared

,rod!ces the inefficacy #hichDID /OT EGI7T essentially inthe contract

Declares the inefficacy #hichthe CO/TR*CT *LRE*D0C*RRIE7 in itself

/eeds no ratification C!re+ ratification,rivate interest alone governs ,!blic interest has direct

infl!enceCo%patible #ith ,ERBECT-*LIDIT0 of the contract

ased on a -ICE #hichinvalidates contract

* re%edy" predo%inated bye$!ity

* sanction" predo%inated byla#

8ay be de%anded even bythird parties affected

Can be de%anded O/L0 byparties to the contract


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E(press ratification code is silent as to nat!re and re$!isites b!tit can be pres!%ed that any OR*L or HRITTE/ ratification #ill do*7 LO/? *7 the person entitled to as= for ann!l%ent agrees to bebo!nd by the contract and that he #ill not see= for ann!l%ent.

I%plied ratification ratification %ay be i%plied fro% the cond!ctor acts of the party entitled to as= for ann!l%ent

*/0 act evidencing I/TE/T to abide by the contract is

ta=en as affir%ation to contract and a #aiver of right toann!l. Bor%s+

o 7ilence or ac$!iescence

o *cts sho#ing approval or adoption of the contract

o y acceptance and retention of benefits flo#ing

therefro%

*rticle 1'94Ratification %ay be effected by the g!ardian of the incapacitatedperson.

E(ercise of ratification right to ratify pertains to theI/C*,*CIT*TED ,ER7O/ D!ring incapacity" s!ch right %ay be e(ercised by the

g!ardian for the incapacitated person

*rticle 1'9)Ratification does not re$!ire the confor%ity of the contracting party#ho has no right to bring the action for ann!l%ent.

*rticle 1'96Ratification cleanses the contract fro% all its defects fro% the%o%ent it #as constit!ted

Effect of ratification after a contract has been -*LIDL0 ratified"cannot ann!l based on defects relating to its original validity

Retroactivity effects retroact to the %o%ent #hen the contract#as entered into

EGCE,T #hen retroactivity #ill pre!dice rights of thirdpersons ac$!ired before ratification

o E(. G sells land to 0 #hen he #as a %inor. Hhen he

attained %aority" he sells the sa%e land to . *fterselling to " he confir%s his sale of the land to 0.The confir%ation cannot pre!dice the rights of 0

Reason+ ratificationKconfir%ation %erely declaratory

*rticle 1'9The action for the ann!l%ent of contracts %ay be instit!ted by all#ho are thereby obliged principally or s!bsidiarily. Fo#ever" persons#ho are capable cannot allege the incapacity of those #ith #ho%they contracted> nor can those #ho e(erted inti%idation" violence" or!nd!e infl!ence" or e%ployed fra!d" or ca!sed %ista=e base theiraction !pon these fla#s of the contract.

,ersonal re$!isites1. ,laintiff %!st have interest in the contract * person not principally or s!bsidiarily bo!nd has /O legal

capacity to challenge the validity of the contract&. The victi% and /OT the party responsible for the defect is the

person #ho %!st assert the sa%e Even the s!ccessor in interest of one #ho contracted #ith

a %inor cannot avoid the contract on the gro!nd of the%inority of the one he conracted #ith

Incapacitated person at fa!lt If the incapacitated person has acted #ith BR*@D in order

to ind!ce the other party to enter into the contracto /either FE /OR FI7 LE?*L RE, can as= for the

ann!l%ent

@/LE77 he is of tender age and #anting indiscretion

*lso applicable if an incapacitated e%ployed -IOLE/CE orI/TI8ID*TIO/ on the other party

o Faving e%ployed ILLICIT %eans to %a=e the other

party enter into the contract

Fe cannot be conferred the privilege ofann!lling the contract

Other codes %aintain that the %ere fact that an

incapacitated person %isrepresents hi%self as havingcapacity to the person #ith #ho% he contracts" does notprevent hi% fro% asserting his incapacity to ann!l thecontract

o O!r code+ E7TO,,EL

o 7C has r!led that the %inor is E7TO,,ED !nder

s!ch circ!%stances" to assert his %inority thereare so!nd and strong dissents to this vie#5.

*rticle 1'92*n obligation having been ann!lled" the contracting parties shallrestore to each other the things #hich have been the s!bect %atter


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of the contract #ith their fr!its" and the price #ith its interest" e(ceptin cases provided by la#.In obligations to render service" the val!e thereof shall be the basisfor da%ages.

8!t!al restit!tion effect of ann!l%ent #iping it o!t of e(istenceand restoring to the parties in so far as LE?*LL0 and EM@IT*L0possible to their ORI?I/*L sit!ation before entering into

contract. If /O perfor%ance by either party contract ceases tohave any force and effect

One or both parties perfor%ed each party %!st ret!rn tothe other #hatever he %ay have received by reason of thecontract

o @/LE77 the la# prevents s!ch restit!tiono E(. Registration of land does not e(ting!ish the

obligation of %!t!al restit!tion

Hho %ay invo=e restit!tion Only the parties> stranger to contractcannot invo=e benefit of this provision

Contracts not covered 1'92 not applicable to all contracts ,rinciple of !n!st enrich%ent

o If one of the parties received so%e benefit and he

has not given anything for it to the other

Only e$!itable that he ret!rn the a%o!nt by#hich he #as !n!stly enriched

o If reciprocal prestations #hich compensateeach

other

The e(cess can be paid to the party to #hichit pertains

If there is no co%pensation" there %!st be%!t!al restit!tion

@nless 8R #o!ld violate principle

against !n!st enrich%ento asis of &ndparagraph covering services rendered

If service has already been rendered even ifcontract is ann!lled" the party benefited bythe service %!st pay for the val!e

Other#ise" party #ho benefited #illbe !n!stly enriched

Restit!tion of Br!its and Interest

Can be applied #itho!t $!alification #hen ca!se of then!llity does not involve an illicit act. E(. Error andincapacity

#hen ca!se of n!llity is illicit li=e fra!d" violence"inti%idation or !nd!e infl!ence5

o party #ho e%ployed s!ch %eans considered a

,O77E77OR in *D B*ITF

obliged to restore /OT O/L0 the fr!its

received b!t also those #hich 8I?FT F*-EEE/ receivedo innocent party %!st be dee%ed a ,O77E77OR I/

?OOD B*ITF

/ot re$!ired to ret!rn fr!its or pay interestLiability for Da%ages

?eneral r!le+ ann!l%ent of contract and the res!lting%!t!al restit!tion ELI8I/*TE7 possibility of da%ages!ffered by in!red party

o E(ception+ cases #herein losses occasioned by the

contract cannot be erased or co%pensated byann!l%ent

o E(. efore discovery of fra!d in!red party alreadyinc!rred e(penses #hich beca%e !seless beca!seof the ann!l%ent

Da%ages incl!de the follo#ing ele%ents ta=en fro%?er%an code b!t applicable to ,hils51. E(penses inc!rred in the e(ec!tion of the contract&. Reasonable disb!rse%ents %ade by the in!red party

in connection #ith the contract *BTER its e(ec!tion"li=e preparations to carry o!t the contract

'. Da%ages s!ffered by the thing #hich %!st beret!rned" #hen i%p!table tot eh defendant

4. Losses s!ffered by the plaintiff fro% the possession of

the thing beca!se of its $!alities and the da%agesoccasioned to hi% by it restit!tion e(. In!ries ca!sedby rene#al5

Liability can be based on *rts &3 and &1+*rticle &3 every person #ho" contrary to la#" #illf!lly ornegligently ca!ses da%age to another" shall inde%nify the latterafter the sa%e*rticle &1 any person #ho #illf!lly ca!ses loss or in!ry toanother in a %anner that is contrary to %orals" good c!sto%s andp!blic policy shall co%pensate the latter for the da%age.


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*rticle 1'99Hhen the obect of the contract consists in the incapacity of one of itsparties" the incapacitated person is not obliged to %a=e anyrestit!tion e(cept insofar as he has been benefited by the thing orprice received by hi%.

Documents

Notes Oblicon Art1380 1402