ARTICLE 1399,

1403, 1406, 1409,

1410
Gestopa, Art Joseph Q.
ME70/E01
ARTICLE 1399

When the defect of the

contract consist in the
incapacity of one 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. (1304)
 Interpretation

The incapacity mentioned in this article

is any form of incapacity or mental
debility and not merely minority.

This is an exception to the general rule

of mutual restitution. The incapacitated
person is obliged to make restitution
only to the extent that he was benefited
by the thing or the price received by
him.
Interpretation

It results therefore, that if he was not benefited, he is not

obliged to restore what he had received but the other
contracting party is still bound to return what he had
received, whether he has benefited or not.

If at the time the incapacity ceases and the thing received

still exists, the presumption is that he benefited, so that
should he ask for annulment, he must return the same to the
other party. If he alienates or squanders the thing instead of
annulling, he is deemed to have ratified the contract.
Example

2 minors, together with their mother, borrowed money during the

Japanese occupation from Villa Abrille. The money was used for
the support of the minors. While the promissory note signed by
the minors promising to pay P10,000.00 in 2 years, it is voidable
and annulled by the Court. The minors were required to return the
money they received from the Villa Abrille as they profited by the
use thereof.
Whether or not the capacitated party has benefited from what he
received from a minor, he must return the same except when he
received the thing from the minor in the performance of the
latter’s natural obligation, and what had been received had been
spent or consumed in good faith.
ARTICLE 1403; Unenforceable Contracts

The following contracts are unenforceable, unless they are ratified:

(1)Those entered into in the name of another person by one who
has been given no authority or legal representation, or who has
acted beyond his powers;
(2)Those that do not comply with the Statute of Frauds as set forth
in this number. In the following cases an agreement hereafter
made shall be unenforceable by action, unless the same, or
some note or memorandum, thereof, be in writing, and
subscribed by the party charged, or by his agent; evidence,
therefore, of the agreement cannot be received without the
writing, or a secondary evidence of its contents:
ARTICLE 1403

(a)An agreement that by its terms is not to be performed within a year from the making
thereof;
(b)A special promise to answer for the debt, default, or miscarriage of another;
(c)An agreement made in consideration 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 of not less
than five hundred pesos, unless the buyer accept and receive part of such goods and
chattels, or the evidence, or some of them of such things in action, or pay at the time
some part of the purchase money; but when the 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 presentation as to the credit of a third person
(3). Those where both parties are incapable of giving consent to a contract
UNENFORCEABLE CONTRACTS (n)

Unenforceable Contracts (n)

Cannot be sued or enforced unless ratified, it has no effect yet voidable and
rescissible contracts produced legal effects until they are annulled or
rescinded.

Kinds of unenforceable contracts:

 Unauthorized contracts

 Those that fail to comply with the statute of frauds

 Those where both parties are incapable of giving consent to a contract

Interpretation

This article is divided into two categories:

1. Those that are unauthorized or even if authorized
but beyond the power or authority given
2. Those who do not comply with the statute of frauds.
The term statute of frauds is descriptive of those laws,
statutes or provisions which require certain agreements
to be in writing before they can be proved and enforced
in a judicial action.
Example

Unauthorized Contracts
Without Mark’s authority, his sister sold his parcel of land in his name, to
Aaron

The said contract is unauthorized and cannot affect Mark unless he ratify the
contract expressly or impliedly as by accepting the proceeds of sale.

Statute of Frauds

Mark and Aaron are neighbors, they orally agreed that Mark would sell and
Aaron would buy Mark’s car for Php.150,000 3 years from the date of
agreement. At the end of 3 years Mark refused to hand over the said car
although Aaron was willing to pay.

In this case, the agreement is not enforceable under the statute of frauds, it
should be made in writing and apparently only 1 year is the limit, if the
agreement lets say within 5 months, the agreement even if oral would have
been enforceable.
Example

A special promise to answer for the debt, default, or miscarriage of another

Mark asked Aaron to purchase certain properties to Paulo who was orally assured by Mark
that he would pay for them. But Aaron did not pay and he was sued by Paulo.

In this case, the promise is enforceable even if orally made, because Mark merely
promised to pay his own debt.

An agreement made in consideration of marriage, other than a mutual promise

to marry
Examples of agreement made in consideration of marriage: Marriage settlements (Article
122) and Donation proper nuptias (Article 127)

An agreement for the sale of goods, chattels or things in action, at a price not
less than 500 pesos unless….
Mark sold Aaron his car for Php.120,000 orally

Contract was still executory but it is unenforceable, unless Aaron gets the car or pays fully
or partially
Example

An agreement of the leasing for a longer period than one

year, or for the sale of real property or of an interest
therein
Mark is Aaron’s tenant. Lease is for 8 months. If oral lease is still
enforceable for the period as long as it does not exceed for one
year.
A representation as to the credit of a third person
Aaron seeking loan from Mark, Paulo represents to Mark that
Aaron is solvent and has a good reputation as to credit. Mark
relying upon the representation of Paulo, Mark extends a loan to
Aaron who actually, is insolvent.
ARTICLE 1406

When a contract is enforceable

under that Statute of Frauds,
and a public document is
necessary for its registration in
the Registry of Deeds, the
parties may avail themselves
of the right under Article 1357.
Discussion

According to Article 1357:

If the law requires a document or other special form as
in the acts and contracts enumerated in the following
article, the contracting parties may compel each other
to observe that form, once the contract has been
perfected. This right may be exercised simultaneously
with the action upon the contract.
Interpretation

The party concerned may compel the other

party to effect the rendition of the agreement in
the form of a public document, to have it
notarized.
When a party brings an action on a contract, he
may simultaneously ask the court to compel the
other party to make the writing or the
memorandum in a public instrument.
ARTICLE 1409
The following contracts are inexistent and void from the beginning:

1. Those whose cause ,object or purpose is contrary to law, morals, goods customs, public
order or public policy;

2. Those which are absolutely simulated or fictitious;

3. Those whose cause or object did not exist at the time of the transaction;

4. Those whose object is outside the commerce of men;

5. Those which contemplate an impossible service;

6. Those where the intention of the parties relative to the principal object of the contract
cannot be ascertained;

7. Those expressly prohibited or declared void by law

These contracts cannot be ratified. Neither can the right to set up the defense or illegality
be waived. (n)
Interpretation

Void or Inexistent Contracts

In general, void and inexistent contracts may be defined as those
which lack absolutely either in fact or in law one or some or all of
those elements which are essential for its validity. In particular, void
contracts are contracts where all of the requisites prescribed by law
for contracts are present, but the cause, object or purpose is
contrary to law, morals, good customs, public order or public policy,
or they are prohibited by law, or they are declared by law to be void.
Inexistent contracts, on the other hand, are those contracts which
lack absolutely one or some or all of those requisites which are
essential for validity.
Example

Contrary to Law
An agreement whereby Anna is to render service as a servant to Ben without
compensation as long as Anna has not paid her debt is reprehensible and censurable.
Contrary to Morals
A contract, whereby Anna promised to live as the common-law wife of Ben without
the benefit of marriage in consideration of P50,000, is immoral and, therefore, void.
Contrary to Good Customs
Anna entered into a contract whereby Anna binds herself to slap her father. This
contract is void because it is against the good custom of showing respect to our
parents.
Contrary to Public Order
A stipulation in a contract of lease whereby the landlord can use force to eject the
tenant in case of failure of the latter to pay the rent agreed upon is void as being
against public order.
Example

Those which are absolutely simulated or fictitious

Anna is indebted to Ben. Upon learning that Ben is going to enforce her credit, Anna
pretended to sell her land to Mark, her father-in-law. Anna did not receive a single
centavo for the deed of sale she executed and she continued in possession of the
land as the contract was merely simulated or fictitious.
There is no contract of sale in this case as the parties do not intend to be bound at
all. The sale is but a sham.
Those whose cause or object did not exist at the time of the transaction
Sandra sells to Ben a parcel of land. In the deed of sale, P100,000 is stated as the
price of the land. If this statement is false, then there is no contract of sale.
Those whose object is outside the commerce of men
If the object is outside the commerce of man, such as sidewalks or public plazas or
public bridges, they cannot be the object of contracts of alienation
Example

Those which contemplate an impossible service

If a blind man enters into a contract which requires the use of his eyesight, the
contract is void although in this particular case, we have only a relative
impossibility. This is because here, the relative impossibility is not merely
temporary.
Those where the intention of the parties relative to the principal object
of the contract cannot be ascertained
Anna sold his land to Ben. Anna has many lands. It cannot be determined which
land was intended by the parties to be the subject of the sale.
Therefore, the contract shall be null and void and it is as if the parties have not
entered into any contract at all.
Those expressly prohibited or declared void by law
Contracts upon future inheritance except in cases expressly authorized by law.
ARTICLE 1410

The action or defense

for the declaration of
the inexistence of a
contract does not
prescribe
Interpretation

Defect Incurable
The defect of void contract is perpetual and absolute.
Therefore, the action can be filed anytime.
Nature of Action
A void contract remains void even if no court has
confirmed its inexistence or illegality. But to avoid taking
the law into our own hands, there is nothing wrong in
having a void contract declared really void.
Example

Alaska sells Bearbrand the Pagsanjan Falls and Bearbrand

gives Alaska the money. Of course, this contract is null and
void, but suppose Alaska refuses to return to Bearbrand
the money, stating that there is nothing wrong with the
contract, what should Bearbrand do?
Bearbrand should file an action in court to declare the
inexistence of the contract. This right of Bearbrand to
bring the action does not prescribe. The defect in this kind
of contract cannot be cured by prescription or by
ratification.
END