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Distinction Between and Among the Defective Contracts

1.

Basis
Origin of the defect

Rescissible Contract
Economic damage or
lesion to one of the
parties or to a third
person: a special
declaration by law that
the contract is subject to
rescission (Art. 1381).

Voidable Contract
Incapacity of one of the
contracting parties to give
consent, or vitiated
consent due to presence
of vices of consent (Art.
1390).

Unenforceable Contract
It was entered into in
behalf of another person
without authority or in
excess thereof;
noncompliance with the
Statute of Frauds;
incapacity of both
contracting parties to give
consent (Art. 1403,
1407).
Damage or prejudice is
not necessary.

Void Contract
Absence of any of the
essential requisites of a
contract (consent, object,
cause) (Art. 1409).

2.

Damage or prejudice

Damage or prejudice to
the other party is not
necessary.

3.

Legal effect

There must be
damage/lesion or
prejudice to one of the
contracting parties or
third person.
They are considered valid
and legally enforceable
until judicially rescinded
(Art. 1380).

They are considered


valid, binding and
enforceable until judicially
annulled (Art 1390, last
par.).

They are inoperative until


ratified. They are not
enforceable in court
without proper ratification
(Art. 1405).

Rescission or rescissory
action.

Annulment of contract.

It must be a direct action.


Collateral attack is not
allowed (Borja vs.
Addison. 44 Phil. 895).
He must be a contracting
party. Exception:
Creditors who are
defrauded.

Direct action is needed


either in the complaint or
as a counterclaim.

This is just a personal


defense when the plaintiff
pursues a specific
performance case or
complaint for damages
based on breach of
contract.
Indirect attack is allowed
in the form of a defense.

Generally, they do not


produce legal effects;
there are few exceptions
(e.g. void marriages
under Art. 36 and Art. 53.
F. C. produce legitimate
children (See Art. 165.
FC).
Declaration of nullity of
the contract.

4.

Remedy/ action

5.

Nature of action

6.

Persons who can file


the action

7.

Susceptibility of
ratification

8.

Susceptibility of
prescription

Susceptible of
convalidation but not of
ratification proper.
Action for rescission
prescribes after four
years (Art. 1389).

Damage or prejudice is
not necessary.

It may be attacked
directly or indirectly.

Generally must be a
contracting party
principally or subsidiarily
obliged under the
contract (Art. 1397).
Exception: A third person
who is prejudiced.
Susceptible of ratification
(Art. 1392).

He must be a contracting
party. Third persons
cannot assail it (Art.
1438).

Third persons cannot


assail the contract,
unless his interest are
directly affected.

Susceptible of ratification
(Art. 1495).

Action for annulment also


prescribes after four
years (Art. 1391).

Action for recovery, or


action for specific
performance of damages
for breach of contract,
also prescribe. There
being no specific period,
it could be 10 years if the
basis of the action is a
written contract, or 6
years if unwritten (Arts.
1144 and 1145).

Not susceptible of
ratification (Art. 1409, last
par.).
Action for declaration of
nullity or the putting of the
defense of nullity of the
contract does not
prescribe (Art. 1410).