1. Contracts infringing the Statute of Frauds cannot be ratified.

False. Art. 1405. Contracts infringing the Statute of Frauds, referred to in No. 2 of
article 1403, are ratified by the failure to object to the presentation of oral evidence to
prove the same, or by the acceptance of benefit under them.

2. The ratification by the parent of one of the incapacitated parties will not make the contract
perfectly valid.
True. Art. 1407 par. 1. In a contract where both parties are incapable of giving consent,
express or implied ratification by the parent, or guardian, as the case may be, of one
of the contracting parties shall give the contract the same effect as if only one of them
were incapacitated.

3. The buyer in a Contract of Sale entered into by an agent without authority from the principal
cannot set up the defense of unenforceability.
True. Art. 1404. Unauthorized contracts are governed by Art. 1317 par. 2 which
provides that a contract entered into in the name of another by one who has no
authority or legal representation, or who has acted beyond his powers, shall be
unenforceable, unless it is ratified, expressly or impliedly, by the person on whose
behalf it has been executed, before it is revoked by the other contracting party.

4. An incapacitated person is not obliged to make a restitution should his contract be annulled.
False. Art. 1399. When the defect of the contract consists 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.

5. In case the consent is vitiated by fraud or mistake, the prescriptive period commences from
discovery, which is the time of actual knowledge.
False. MWSS v. Court of Appeals. At the least, discovery is deemed to have taken
place on the date of the registration of the deed with the Registration of Deeds as
registration is constructive notice to the world. Carantes v. Court of Appeals. The
registration of an instrument with the Register of Deeds constitutes constructive notice
to the whole world, and, therefore discovery of fraud is deemed to have taken place at
the time of registration.

6. The principle of in pari delicto is applicable to void and inexistent contracts.

False. Arts. 1411 and 1412 contemplates the application of the principle of in pari
delicto only to void contracts – which are contracts wherein all the requisites of a
contract are present but the cause, object or purpose is contrary to law, morals, good
customs, public order or public policy, or the contract itself is prohibited or declared by
law to be void.

7. The principle of in pari delicto is not applicable to simulated or fictitious contracts.

True. Arts. 1411 and 1412 contemplates that the principle of in pari delicto applies
only to cases of existing contracts with an illegal cause of object and not to simulated
or fictitious contracts nor to those which are inexistent for lack of an essential requisite
such as cause or consideration. (Rodriguez v. Rodriguez)

8. A natural obligation constitutes a sufficient cause or consideration.

True. Art. 1424 contemplates that when a moral obligation is based upon a previous
civil obligation which has been barred by the Statute of Limitations at the time when
the contract is entered into, it constitutes a sufficient cause or consideration to support
the said contract. (Villaruel v. Estrada)
9. Miguel has paid has paid his debt that he contracted 15 years ago to Laida not knowing it has
prescribed. Miguel cannot recover what he has paid because this a natural obligation.
True. Art. 1424. When a right to sue upon a civil obligation has lapsed by extinctive
prescription, the obligor who voluntarily performs the contract cannot recover what he
has delivered or the value of the service he has rendered.

10. The government is bound by estoppel.

False. National Housing Authority v. Grace Baptist Church. It is a hornbook law
that the principle of estoppel does not operate against the government for the acts of
its agents, or, as in this case, their inaction.

1. What are the characteristics of void or inexistent contracts? (5)

 does not produce any legal effect
 not susceptible of ratification
 right to set up defense of inexistence or absolute nullity cannot be waived or
renounced
 action or defense for the declaration of their inexistence or nullity is
imprescriptible
 inexistence of absolute nullity of a contract cannot be invoked by a contracting
party and a third person whose interest is directly affected

2. What are the effects of nullity of a contract under:

A. Article 1411 (2)

 Both parties are at fault and the act constitutes a criminal offense:
 They shall have no action against each other
 Both shall be prosecuted
 Effects or instrument of the crime shall be confiscated in favor
of the government

B. Article 1412 (2)

 Both parties are at fault and the act does not constitute a criminal
offense:
 Neither may recover what he has given by virtue of the contract
nor demand the performance of the other’s undertaking
 Only one is at fault and the act does not constitute a criminal offense:
 Guilty party – cannot recover what he has given by reason of
the contract or ask for fulfillment of what has been promised
him
 Innocent party – may demand the return of what he has given
without any obligation to comply his promise

3. State at least 3 exceptions to the principle of in pari delicto. (3)

 Payment of usurious interest
 Payment of money made by an incapacitated person
 Payment made of any amount in excessed of the maximum price of any article
or commodity fixed by law
 Contract whereby a laborer undertakes to work longer than the maximum
number of hours by law
 Contract whereby laborer accepts a wage lower than the minimum wage foxed
by law
4. What are natural obligations and state at least 4 kinds of natural obligations under the Civil
Code. (5)
Art. 1423. Natural obligations, not being based on positive law but on equity and
natural law, do not grant a right of action to enforce their performance, but after
voluntary fulfillment by the obligor, they authorize the retention of what has been
delivered or rendered by reason thereof.
 Performance after the civil obligation has prescribed (Art. 1424)
 Reimbursement of a third person for a debt for that has prescribed (Art. 1425)
 Performance after action to enforce civil obligation has failed (Art. 1428)
 Payment by heir of debt exceeding value of property inherited (Art. 1429)
 Payment of legacy after the will had been declared void (Art. 1430)

5. Define:

A. Estoppel – a condition or state by virtue of which an admission or representation

is rendered conclusive upon the person making it, and cannot be denied or
disproved as against the person relying thereon.

B. Estoppel in Pais – applies to a situation where, because of something which a

person has done or omitted to do, a party is denied the right to plead or prove an
otherwise important fact.

C. Estoppel by Deed – a party to a deed is precluded from asserting as against the

other party, any material fact asserted in a deed or record.

D. Estoppel by Laches – it is negligence or omission to assert a right within a

reasonable time, warranting a presumption that the party entitled to assert it either
has abandoned it or declined to assert it.

6. What are the 4 elements of the Doctrine of Laches? (4)

 Conduct on the part of the defendant, or of one under whom he claims, giving
rise to the situation of which complaint is made and for the which the complaint
seeks a remedy
 Delay in asserting the complainant’s rights
 Lack of knowledge or notice of the part of the defendant that the complainant
would assert the right which he bases his suit
 Injury or prejudice to the defendant in the event relief is not accorded to the
complainant, or the suit is not held to be barred
1. A voidable contract which has already been consummated can no longer be annulled.
False. Art. 1398. 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.

2. Miguel, 20 years old, sold an iPhone 7 to 17-year-old Miguelito for the sum of P15,000 at that
time when he was badly in need of money to pay his tuition fee. Miguel can file an action to
annul the contract.
False. Art. 1397. The action for the 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.

3. Ratification of a voidable contract requires the consent of the guilty party.

False. Art. 1395. Ratification does not require the conformity of the contracting party
who has no right to bring the action for annulment.

4. The prescriptive period to file an action for annulment is 4 years from the execution of the
contract.
False. Art. 1391. The action for annulment shall be brought within four years. This
period shall begin:
 In cases of intimidation, violence or undue influence, from the time the defect of
the consent ceases.
 In case of mistake or fraud, from the time of the discovery of the same.
 And when the action refers to contracts entered into by minors or other
incapacitated persons, from the time the guardianship ceases.

5. The Statute of Frauds is applicable to all kinds of contract stated in Article 1403 (2), whether
executory or consummated.
False. Arrogante v. Detalier. Jurisprudence dictates that the Statute of Frauds only
apply to executory, not to completed, executed or partially consummated contracts.

6. The Statute of Fraud requires a contract to be notarized to be enforceable.

False. Art. 1403 (2) only requires that the agreement/contract be in writing and
subscribed by the party charged, or by his agent.

7. The principle that the contract which fails to comply with the Statute of Frauds cannot be
enforced means that the parties cannot execute and get what is due them under the contract.
False. Art. 1403 (2) contemplates that the effect of non-compliance with the
requirements is simply that no action can be enforced unless such requirements are
complied with – it means that the form required is for evidential purposes only.

8. A void contract is the same as an inexistent contract.

False. Art. 1409 contemplates that in void contract, all the requisites of a contract are
present but the cause, object or purpose is contrary to law, morals, good customs,
public order or public policy, or the contract itself is prohibited or declared by law to be
void; while an inexistent contract, one or some or all of those requisites which are
essential for validity are absolutely lacking.

9. The principle of in pari delicto is applicable to a simulated or fictitious contract.

False. Arts. 1411 and 1412 contemplates that the principle of in pari delicto applies
only to cases of existing contracts with an illegal cause of object and not to simulated
or fictitious contracts nor to those which are inexistent for lack of an essential requisite
such as cause or consideration. (Rodriguez v. Rodriguez)
10. In a contract which is void because it is a prohibited contract, the parties cannot recover what
they have given to each other.
False. Art. 1416. When the agreement is not illegal per se but is merely prohibited,
and the prohibition by the law is designed for the protection of the plaintiff, he may, if
public policy is thereby enhanced, recover what he has paid or delivered.

1. State the contracts that are voidable. (2) Art. 1390.

1. Those where one of the parties is incapable of giving consent to a contract
2. Those where consent is vitiated by mistake, violence, intimidation, undue influence or
fraud

2. State the contracts that are unenforceable. (3) Art. 1403

1. Those entered into without or in excess of authority
2. Those that do not comply with the Statute of Frauds
3. Those where both contracting parties do not possess the required legal capacity

3. State at least 5 contracts that are covered by the Statute of Frauds. (5) Art. 1403, par. 2
1. An agreement that by its terms is not be performed within 1 year from the making
thereof
2. A special promise to answer for debt, default or miscarriage of another
3. An agreement made in consideration of marriage, other than a mutual promise to
marry
4. An agreement for the sale of goods, chattels or things in action, at a price not less than
500 pesos
5. An agreement for the leasing for a longer period than one year
6. An agreement for the sale of real property or interest
7. A representation as to the credit of a person

4. State the contracts that are void and inexistent. (7) Art. 1409
1. Those whose cause, object or purpose is contrary to law, morals, good 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

5. State at least 3 natural obligations. (3)

1. Performance after the civil obligation has prescribed (Art. 1424)
2. Reimbursement of a third person for a debt for that has prescribed (Art. 1425)
3. Performance after action to enforce civil obligation has failed (Art. 1428)
4. Payment by heir of debt exceeding value of property inherited (Art. 1429)
5. Payment of legacy after the will had been declared void (Art. 1430)

Distinguish the 4 classes of defective contracts as to:

1. Defect (4)
 Rescissible – lesion/damage/injury to one of the contracting parties or third person
 Voidable – vice of consent
 Unenforceable – lack of form, authority or capacity of both parties
 Void or Inexistent – illegality or lack of essential elements
2. Who may assail the contract (4)
 Rescissible – by a contracting party or a third person injured by the contract
 Voidable – only by a contracting party
 Unenforceable – only by a contracting party
 Void or Inexistent – by a contracting party or third person whose interest is directly
affected
1. A contract, in order to be obligatory is required to be in a certain form.
FALSE. Art. 1356. Contracts shall be obligatory, in whatever form they may have been
entered into, provided all the essential requisites for their validity are present.

2. A contract of sale must be in a public instrument in order to be valid as required by Article

1358.
FALSE. Art. 1358. Only acts and contracts which have for their object the creation,
transmission, modification or extinguishment of real rights over immovable property
must appear in a public document.

3. If the defect in the contract is due to fraud or mistake, the remedy of the parties is to file for
reformation of the contract.
FALSE. Art. 1359, par. 2. If mistake, fraud, inequitable conduct, or accident has
prevented a meeting of the minds of the parties, the proper remedy is not reformation
of the instrument but annulment of the contract.

4. A sale made in violation of the right of first refusal is void.

FALSE. Tanay Recreation v. Fausto. The rule is that a sale made in violation of a
right of first refusal is valid. However, it may be rescinded or may be the subject of an
action for specific performance.

5. The remedy to set aside the transfer or assignment of a property made by the debtor/seller to
his son in order to shield his property from the creditor is accion pauliana.
TRUE. Manila Banking Corporation v. Silverio. The remedy of accion pauliana is
available when the subject is a conveyance, otherwise valid undertaken in fraud of
creditors. Such a contract is governed by the rules on rescission which prescribe under
1383 of the Civil Code, that such action be instituted only when the party suffering the
damage has no other legal means to obtain reparation for the same.

1. What are the contracts that are required to be in a public document under Article 1358? (5)
 Acts and contracts which have for their object the creation, transmission,
modification or extinguishment of real rights over immovable property; sales of
real property or of an interest therein are governed by articles 1403, No. 2, and
1405;
 The cession, repudiation or renunciation of hereditary rights or of those of the
conjugal partnership of gains;
 The power to administer property, or any other power which has for its object
an act appearing or which should appear in a public document, or should
prejudice a third person;
 The cession of actions or rights proceeding from an act appearing in a public
document.
 Donation of immovable property

2. What is the doctrine of Reformation of Contracts and state the requisites of the doctrine. (5)
a. Meeting of the minds of the parties
b. Their true intention is not expressed in the instrument
c. Failure to express true intent is due to mistake, fraud, inequitable conduct or
accident
d. The facts upon which relief by way of reformation of the instrument is sought are
put in issue by the pleadings
e. Clear and convincing proof of mistake accident, relative simulation, fraud or
inequitable conduct
3. State at least four rules on interpretation of contracts. (4)
 Article 1370. If the terms of a contract are clear and leave no doubt upon the
intention of the contracting parties, the literal meaning of its stipulations shall
control.
 Article 1371. In order to judge the intention of the contracting parties, their
contemporaneous and subsequent acts shall be principally considered.
 Article 1375. Words which may have different significations shall be
understood in that which is most in keeping with the nature and object of the
contract.
 Article 1376. The usage or custom of the place shall be borne in mind in the
interpretation of the ambiguities of a contract, and shall fill the omission of
stipulations which are ordinarily established.

4. Who are incapacitated to enter into contract?

Article 1327 provides that the following cannot give consent to a contract:
a. Unemancipated minors
b. Insane or demented persons
c. Deaf-mutes who do not know how to write

5. Define the vices of consent.

a. Art. 1331 – Mistake – 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. / Art. 1334 – Mutual error as to the legal effect of an agreement when
the real purpose of the parties is frustrated, may vitiate consent
b. Art. 1335 – Violence – when in order to wrest consent, serious or irresistible force
is employed.
c. Art. 1335 – 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.
d. Art. 1337 – 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.
e. Art. 1338 – 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.

6. What can be the object of contracts?

 Article 1347, par. 1. All things which are not outside the commerce of men,
including future things, may be the object of a contract. All rights which are
not intransmissible may also be the object of contracts.
 Article 1347, par. 2. All services which are not contrary to law, morals,
good customs, public order or public policy may likewise be the object of
a contract.

7. In a contract of loan, what is the cause? Define cause.

 In a contract of loan, the cause of the debtor is the money to be borrowed
(acquisition of the thing), while for the creditor it is the interest therein stipulated
or the right to demand its return or its equivalent.
 Cause is the immediate, direct or most proximate reason which explains and
justifies the creation of an obligation through the will of the contracting parties.