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Rules Regarding Voidable Contracts a. Voidable contracts are effective unless set aside (Article 1390). b.

The validity of a voidable contract can only be assailed in a suit for that purpose (i.e. complaint or counterclaim). The action for 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 contracted; nor can those who exerted intimidation, violence, or undue influence, or employed fraud, or caused, mistake base their action upon these flaws of the contract (Article 1397). The action for annulment shall be brought within 4 years. This period shall begin i. Intimidation from the time the defect of the consent ceases ii. Violence from the time the defect of the consent ceases iii. Undue influence from the time the defect of the consent ceases iv. Mistake from the time of the discovery of the mistake v. Fraud from the time of the discovery of the fraud The 4 year prescription period to annul contracts entered into by minors or other incapacitated persons shall begin from the time the guardianship ceases (Article 1391, 4th ). 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 (Article 1398, 1st ). In obligations to render service, the value thereof shall be the basis for damages (Article 1398, 2nd ). When the defect of the contract consists in the incapacity of 1 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 (Article 1399). What if the Thing to Be Returned is Lost i. Loss due to Fault of Defendant Defendant has to pay the plaintiff 1. Value of the thing loss 2. Fruits if any 3. Interest

ii. Loss due to a Fortuitous Event or due to a 3rd party Defendant has to pay the plaintiff 1. Value of the thing loss 2. Fruits if any iii. Loss due to Fault or Fraud of Plaintiff The plaintiff loses the right to annul (Article 1401). There is fault on the part of the plaintiff once the plaintiff regains capacity. iv. Loss without Fault on the Plaintiffs Part Commentators have a difference of opinion 1. The right to annul is extinguished unless the plaintiff offers to pay the value of the object at the time of loss 2. The plaintiff is entitled to annul without having to pay anything. As long as 1 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 (Article 1402). The action for annulment will not prosper in the following: i. If the contract has been confirmed (Article 1392) ii. If the action to annul has prescribed (Article 1391) iii. When the thing which is the object of the contract is lost through the fault or fraud of the person who has a right to institute the proceedings (Article 1401, 1st ) iv. Estoppel Voidable contracts can be confirmed. Confirmation extinguishes the action to annul a voidable contract (Article 1392). Confirmation is the proper term for curing the defect of a voidable contract. Confirmation cleanses the contract from all its defects from the moment it was constituted (Article 1396). Requisites of Confirmation 1. That the contract is a voidable or annullable contract 2. That the ratification is made with knowledge of the cause for nullity 3. That at the time the ratification is made, the cause of nullity has already ceased to exist

Confirmation may be effected expressly or tacitly. It is understood that there is tacit confirmation 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 (Article 1393). d. Voidable contracts can be confirmed only by the party whose consent was vitiated Confirmation does not require the conformity of the contracting party who has no right to bring the action for annulment (Article 1395). Confirmation may be effected by the guardian of the incapacitated person (Article 1394).