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Contracts which must appear in a public document

Voidable: 1. Donation of real properties (NCC, Art. 719);


2. Partnership where immovable property or real rights
Persons incapacitated to give consent (DIM) are contributed to the common fund (NCC, Arts. 1171 &
1. Deaf-mutes who do not know how to read and write 1773);
(illiterates); 3. Acts and contracts which have for their object the
2. Insane or demented persons, unless the contract was creation, transmission, modification or extinguishment
entered into during a lucid interval; of real rights over immovable property; sale of real
3. Minors (NCC, Art. 1327) except: property or of an interest therein is governed by Arts.
1403, No. 2, and 1405 [NCC, Art. 1358(1)];
a. Contracts for necessaries (NCC, Art. 1489); 4. The cession, repudiation or renunciation of
b. Contracts by guardians or legal representatives and hereditary rights or of those of the conjugal partnership
the court having jurisdiction had approved the same; of gains [NCC, Art. 1358(2)];
c. When there is active misrepresentation on the part of 5. The power to administer property or any other
the minor (minor is estopped); power which has for its object an act appearing or
which should appear in a public document or should
NOTE: It is now well settled that misrepresentation by prejudice a third person; [NCC, Art. 1358(3)];
unemancipated minors with regard to their age when 6. The cession of actions or rights proceeding from an
entering into a contract shall bind them in the sense act appearing in a public document [NCC, Art. 1358(4)].
that they are estopped subsequently from impugning
the validity of the contract on the ground of minority. It Contracts that must be registered
is, however, necessary that the misrepresentation must 1. Chattel mortgages (NCC, Art. 2140).
be active, not merely constructive (Braganza v. Abrille,
105Phil456, GR L-12471, April 13, 1959). NOTE: In accordance with Article 2125 of the Civil
d. Contracts of deposit with the Postal Savings Bank Code, an unregistered chattel mortgage is binding
provided that the minor is over 7 years of age; between the parties because registration is necessary
e. Upon reaching age of majority – they ratify the same. only for the purpose of binding third persons (Filipinas
NOTE: Because the law incapacitates them to give their Marble Corporation v. Intermediate Appellate Court, G.R.
consent to a contract, the only way by which any one of No. L-68010, May 30, 1986).
those enumerated above can enter into a contract is to 2. Sale or transfer of large cattle (Cattle Registration
act through a parent or guardian. If this requirement is Act).
not complied with, the result is a defective contract. If
only one of the contracting parties is incapacitated to
give his consent, the contract is voidable. If both of them
are incapacitated to give their consent, the contract is
unenforceable [NCC, Art. 1390(1), NCC, Art. 1403(3)].

Vices of consent (MI-VUF) Solemn contracts – contracts which must appear in


1. Mistake writing, such as:
2. IntimidationViolence
3. Undue influence a. Donations of real estate or of movables if the value
4. Fraud exceeds P5,000;
b. Partnership to which immovables are contributed;
c. Contract of antichresis – requires the amount of
principal and interest be specified;
VOID (formal) d. Sale of piece of land or interest therein is through an
agent;
Contracts which must be in writing to be valid e. Stipulation to charge interest;
1. Donation of personal property whose value exceeds f. Stipulation limiting common carrier's duty of
five thousand pesos (NCC, Art. 748). – the donation and extraordinary diligence to ordinary diligence;
acceptance must be in writing. g. Chattel mortgage; or
2. Sale of a piece of land or any interest therein through h. Transfer of large cattle (Sec. 22, Act No. 1147; NCC,
an agent (NCC, Art. 1874). – the authority of the agent Art. 1581).
shall appear in writing.
3. Agreements regarding payment of interest in
contracts of loan (NCC, Art. 1956).
4. Antichresis – the amount of the principal and the
interest shall be specified in writing (NCC, Art. 2134;
Jurado, 2011).
Contracts that may be rescinded acted beyond the scope of his authority is void, not
1. Under Art. 1381, those merely unenforceable (NCC, Art. 1874).
a. Entered into by guardians whenever the wards 2. Those that do not comply with the Statute of Frauds;
whom they represent suffer lesion by more than ¼ of and
value of the property [NCC, Art. 1381(1)]; 3. Those where both parties are incapable of giving
NOTE: Contracts entered by a guardian over the consent to a contract (NCC, Art. 1403).
property of his ward, without court approval is void, not
merely rescissible regardless of the existence of lesion.
b. Agreed upon in representation of absentees, if Contracts or agreements covered by the Statute of
absentee suffers lesion by more than ¼ of value of Frauds
property [NCC, Art. 1381(2)]; 1. An agreement that by its terms is not to be performed
c. Contracts where rescission is based on fraud within a year from the making thereof;
committed on creditor and cannot collect the claim 2. A special promise to answer for the debt, default or
due (accion pauliana) [NCC, Art. 1381(3)];
miscarriage of another;
NOTE: Contracts which are rescissible under the third 3. An agreement made in consideration of marriage,
paragraph of Art. 1381 are valid contracts, although
other than a mutual promise to marry;
undertaken in fraud of creditors. If the contract is
4. An agreement for the sale of goods, chattels or things
‘‘absolutely simulated’’, the contract is not merely
in action, at a price not less than 500 pesos, unless the
rescissible but inexistent, although undertaken as well
buyer accepts and receives part of such goods and
in fraud of creditors (MBC v. Silverio, 466 SCRA 438, chattels, or the evidences, or some of them, of such
August 11, 2005). In the former, the remedy is things in action, or pay at the time some part of the
rescission; in the latter, the remedy is an action to purchase money; but when a sale is made by an auction
declare the contract inexistent which action is and entry is made by the auctioneer in his sales book, at
imprescriptible (Rabuya, 2017). the time of the sale, of the amount and kind of property
d. Contracts where the object involved is the subject of sold, terms of sale, price, names of the purchasers and
litigation; contract entered into by defendant without person on whose account the sale is made, it is a
knowledge or approval of litigants or judicial authority
sufficient memorandum ;
[NCC, Art. 1381(4)]; 5. An agreement for the leasing for a longer period than
e. Payment by an insolvent – on debts which are not yet one year, or for the sale of real property or of an
due; prejudices the claim of others (NCC, Art. 1382); interest therein;
f. Provided for by law (NCC, Arts. 1526, 1534, 1538, 5. A representation as to the credit of a third person
1539, 1542, 1556, 1560, 1567 & 1659). – unpaid seller, (NCC, Art. 1403).
warranties, etc
NOTE: C, D and E are contracts which are not
necessarily entered into by persons exercising fiduciary
capacity. In Art. 1381 (1 & 2), the contract must be of Kinds of void contracts
administration and representation. Those lacking in essential elements:
a. Those whose cause, object or purpose is contrary to
2. Payments made in state of insolvency (NCC, Art. law, morals, good customs, public order or public
1382): policy: illicit cause, or object;
a. Plaintiff has no other means to maintain reparation; b. Those which are absolutely simulated or fictitious: no
b. Plaintiff must be able to return whatever he may be cause;
obliged to return due to rescission; c. Those whose cause or object did not exist at the time
c. The things must not have been passed to third of the transaction: no cause or object;
persons in good faith; d. Those whose object is outside the commerce of man:
d. It must be made within 4 years (NCC, Art 1382). no object;
e. Those which contemplate an impossible service: no
object;
f. Those where the intention of parties relative to
principal object of the contract cannot be ascertained.

Kinds of unenforceable contracts 2. Contracts prohibited by law


The following contracts are unenforceable unless they a. Pactum commisorium – the creditor appropriates to
are ratified: himself the things given by way of pledge or mortgage
1. Those entered into the name of another person by to fulfill the debt.
one who has been given no authority/legal b. Pactum de non alienando – an agreement prohibiting
representation or acted beyond his powers; the owner from alienating the mortgaged immovable.
c. Pactumleonina – a stipulation in a partnership
NOTE: A contract of sale over a piece of land entered by agreement which excludes one or more partners from
an agent whose authority is not in writing, even if he any share in the profits or losses.
d. Illegal or illicit contracts (e.g. contract to sell
marijuana)

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