The Philippine law on Obligations &

Contracts
Reference: Hector S. Deleon Laws on Obligation &
COntracts
 Governing Law
Civil Code of the Philippines
Article 1156 to 1430

Laws on Obligations
Article 1156 to 1304

Laws on Contracts
Article 1305 to 1430
NECESSITIES AND FUNCTIONS
TITLE 1 GENERAL PROVISIONS: OBLIGATIONS
 OBLIGATION DEFINED

Juridical necessity – non compliance is sanctioned by law.

 Civil vs. natural obligations
Civil Obligation Natural Obligation
• Gives the creditor or oblige a right • Do not grant a right of action to
under the law to enforce their enforce their performance.
performance in Courts of Justice. • Based on equity and natural law.
• Based on Positive Law (Civil Code). • Cannot compel performance hence the
• Non fulfillment gives rise to an action unavailability for the recovery of
for damages. damages.
 PARTIES TO AN OBLIGATION

CREDITOR/OBLIGEE DEBTOR/OBLIGOR
Person in whose favor Person required to
the performance or non- perform an obligation.
performance of an action is
made.

Illustration: (Obligation to support)

Parents under the Family Code (law) are obliged to support their Children.
Debtor/Obligor = Parents
Creditor/Obligee = Children
ESSENTIAL REQUISITES OF AN OBLIGATION
ILLUSTRATION
KINDS OF OBLIGATIONS AS TO SUBJECT MATTER
SOURCES OF OBLIGATION (ART. 1157)
 SOURCES OF OBLIGATIONS: LAW

Illustration:

The obligation of the parents to financially support their children arises

because there is an existing law, the Family Code of the Philippines, that impose
upon each parent to support their children.
 SOURCES OF OBLIGATIONS: CONTRACT

Illustration:

Juan and Pedro mutually agreed that Pedro will buy the motorcycle of Juan for
P30,000. The obligation of Pedro to pay the purchase price and the obligation of
Juan to deliver the motorcycle arises because of their agreement.
 SOURCES OF OBLIGATIONS: QUASI-CONTRACT

Illustration:
1. Juan left his car in the parking lot and went shopping. While Juan was inside the
mall, a tree was about to fall in the direction of juan’s car, however, Pedro was
able to save the Juan’s car by hiring a tow truck.
2. Juan is indebted to Pedro in the amount of P10. When Juan paid his debt, he
gave Pedro P20, thinking the bill was only P10.
 SOURCES OF OBLIGATIONS: DELICTS/CRIME

Illustration:

Killing a person. The killer, by reason of his criminal act is obligated to pay the
victim or his heirs compensatory damages.
 SOURCES OF OBLIGATIONS: QUASI-DELICTS

- The birth and performance of the obligation is premised upon the

act of one person causing damage to another by reason of his negligence.
Requirements:
1. There must be an act or omission causing damage.
2. There must be fault or negligence.

Illustration:

Juan unintentionally broke the phone of Pedro while he was trying surprise
him.
TITLE 1 GENERAL PROVISIONS: OBLIGATIONS
NATURE AND EFFECT OF OBLIGATIONS
DUTIES, RIGHTS, AND REMEDIES - DUTIES
DUTIES (DEBTOR): 1. PRESERVATION OF THE THING
DUTIES (DEBTOR): 2. DELIVERY OF THE THING INCLUDING ALL
ACCESSION AND ACCESSORIES
ACCESSIONS ACCESSORIES

Illustrations:

1. Delivery of a purchased car should also include its air-conditioners even if not included
in the contract of sale.
2. When a watch is purchased, it is deemed to include the bracelet/strap, and the seller
should also deliver this item despite the non-agreement of the parties.
 DUTIES (DEBTOR): 3. NOT TO INCUR IN DEFAULT

Delay Default

REQUISITES TO RENDER DEBTOR IN DEFAULT:

1. Failure to perform obligation on date agreed upon
2. Demand made by the creditor
3. Failure of the debtor to comply the demand
 Kinds of Delay

1. Mora Solvendi – delay on the part of the debtor to fulfill his obligation.
2. Mora Accipiendi – delay on the part of the creditor to accept the performance of the
obligations.
3. Compensation morae – delay of the obligors in reciprocal obligations.

ILLUSTRATIONS: (DELAY & DEFAULT)

Juan borrowed the book of Pedro and obliged himself to return and deliver the same on
November 30. If Juan does not deliver the book on November 30 in the absence of any demand
coming from Pedro for the delivery of the book, Juan merely incurred an ordinary delay.
However, if Pedro made a demand against Juan to deliver the book on December 5 and still
Juan failed to deliver, Juan is considered in default on from the date.
Effect:
Failure to give demand will result in the presumption of law that creditor is giving an
extension of time within which debtor may comply his obligation.
DEMAND IS NOT NECESSARY TO RENDER DEBTOR IN
 DUTIES (DEBTOR): 4. NOT TO COMMIT FRAUD OR
NEGLIGENCE, DELAY, OR CONTRAVENE THE TENOR.

EFFECT:
> Entitles the creditor for damages.
DUTIES, RIGHTS, AND REMEDIES
RIGHTS (CREDITOR):1.RIGHTS TO THE FRUITS ACCRUED
DUTIES, RIGHTS, AND REMEDIES
DUTIES, RIGHTS, AND REMEDIES - DUTIES
DUTIES, RIGHTS, AND REMEDIES
DUTIES, RIGHTS, AND REMEDIES
RULES FOR DAMAGES
ILLUSTRATION: FRAUD
ILLUSTRATION: DELAY
ILLUSTRATION: CONTRAVENTION
ILLUSTRATION: NEGLIGENCE
 SPECIAL RULES

FORTUITOUS EVENT
- Any event which cannot be foreseen or which, though
foreseen, is inevitable.
Rule:
- Loss caused by fortuitous event shall exempt the debtor
from liability except when:
A. Expressly specified by the law
B. When it is otherwise declared by stipulations
C. Nature of the obligation requires assumption of risk
D. Debtor is in delay
ASSESSMENT EXAM I
CHAPTER 3 DIFFERENT KINDS OF OBLIGATION
CLASSIFICATIONS OF OBLIGATIONS
i. PURE AND CONDITIONAL OBLIGATIONS

law 1 subject, your

ownership will cease and it will be mine again.
Rules:
1. Potestative Condition – the fulfillment of the condition depends upon the will of one of the
parties. (refers only to suspensive conditions)
Debtor – Obligation & Condition are Void except when It involves pre-existing
obligations. (A borrowed money from B payable in 2 mos. Later B promised to pay when he has
money which B agreed.)
Creditor – Condition is Valid (I will pay you on demand)
Third Person – Condition is Valid (I will pay you when A wins)
2. Impossible conditions, contrary to public customs or public policy and those prohibited by law shall
annul the obligations which depends upon them.
Effect: Voids the Obligation not only the conditions
Exception: Divisible obligations
Conditions not to do an
impossible thing
(Deemed not to have agreed
upon)
3. Positive Suspensive Condition – some event happen at a determinate time
Effect: Extinguish the obligation as soon as the time expires or if it has become
indubitable that the event will not take place.
“I will give you 1 million if you will marry before reaching 30 yrs. Old”
Rules:
4. Negative Conditions – An event will not happen at a determinate time.
Effect: The obligation effective from the moment the time indicated has
elapsed or if it has become evident that the event cannot occur.
I will pay you 1 million if you will not marry A until December 30.
5. The condition shall be deemed fulfilled when the obligor voluntarily prevents its
fulfillment.
Req:
A. The conditions is suspensive
B. The obligor actually prevents the fulfillment of the condition
C. He acts voluntarily
Rules:
6. Loss, Deterioration, or improvement of thing during pendency of suspensive
condition (Applies only to real obligation)
(a) Loss of the thing without debtor’s fault = obligation is extinguished
i.e. Juan promises Pedro to give his jewelry if Pedro can sell his land.
(b) Loss of the thing with debtor’s fault = obliged to pay damages
i.e. If the loss in the above example is through negligence of Juan
(c) Deterioration of thing without debtor’s fault – Impairment is to be born by
creditor.
(d) Deterioration through debtor’s fault – recession or fulfillment with damages.
(e) Improvement of the thing by nature or time – Inure to the benefit of the
creditor.
(f) Improvement at the expense of debtor – right as a usufructuary by the
debtor.
II. OBLIGATIONS WITH A PERIOD
Kinds Of Period
1. Suspensive Period (ex Die) – The obligation begins only from a day certain upon the
arrival of the period.
Illustrations:
A. I will pay you 30 days from today.
obligation = to pay
period = 30 days from today
B. I will support you the moment your father dies.
obligation = to support
period = death of father
C. I will pay you if I will have money.
obligation = to pay
period = when capable of paying
2. Resolutory Period (in Diem) – The obligation is valid up to a day certain
and terminates upon arrival of the period.

Illustration:
A. I will pay your tuition for four years.
Obligation = pay tuition
Period = Four years
B. I will give you P1,000 a day as long as my means allows.
Obligation = to give
Period = means permit
C. I will Support you until death.
Obligation = to support
Period = Death
Exercises:
1. I will pay your tuition fees until you graduate.
2. I will give you this car and you may go to the moon.
3. I will buy you a phone on February 30, 2017.
4. I will bring you to Disneyland when my means permits to do so.
5. Marry me and I will buy you a house.
6. I will give you allowance until the next full moon.
7. I will bring you to the beach when it will be low tide.
8. Juan promised to give Pedro a car upon reaching the age of 18 yrs Old.
9. I will pay you after I have harvested corn.
10. Juan binds himself to sell his land to B if he wins a case which is pending before the
Court.
RULES:
1. Loss, Deterioration, or increased of the thing before the arrival of the period, = same
rules in conditional obligations.
(a) Loss of the thing without debtor’s fault = obligation is extinguished
i.e. Juan promises Pedro to give his jewelry if 12 mos. thereafter.
(b) Loss of the thing with debtor’s fault = obliged to pay damages
i.e. If the loss in the above example is through negligence of Juan
(c) Deterioration of thing without debtor’s fault – Impairment is to be born by
creditor.
(d) Deterioration through debtor’s fault – recession or fulfillment with damages.
(e) Improvement of the thing by nature or time – Inure to the benefit of the
creditor.
(f) Improvement at the expense of debtor – right as a usufructuary by the
debtor.
RULES:
2. Payment before arrival of the period (applies only in obligations to give) – Maybe recovered
by the obligor including the fruits thereon provided the following requisites concur:
A. The obligation is a real obligation (obligation to give)
B. The obligor is unaware of the period or believing that the
obligation has become due and demandable.
C. The period has not yet arrived.
Basis = Unjust Enrichment/solution indebeti

Illustration:
Juan is indebted to Pedro for 1,000 payable on January 2018. Unaware of
the period Given, Juan paid Pedro on January 2016.
Effect:
1. Prior to January 2018, Juan may still recover the payments mistakenly
made including fruits/interest.
2. After January 2018, Juan can only recover the fruits but not anymore
the payments.
RULES:
3. Judicial Period – Periods fixed by the court when no period is fixed but a period was
intended by the parties, or when the period depends upon the will of the debtor.
Requisites:
A. No period is fixed in the obligation
B. The parties intended the obligation to be with a period.
Once a period is fixed by the Court, it cannot be changed by the parties.
4. Right to make use of the period – The debtor may enjoy the benefits brought about by the
fixation of the period, except:
A. When Debtor becomes insolvent unless he gives a guaranty or security of the debt.
B. Failure to furnish guaranties or securities as promised
C. When Guaranties or securities have been impaired or have disappeared.
D. When debtor violates any undertaking of which the creditor agreed to the period.
E. When debtor attempt to abscond.
RULES:
5. Presumption as to benefit of period – the period is presumed to have been
established for the benefit of both the creditor and debtor, unless from the tenor of
the same or other circumstance it should appear that the period has been
established in favor of one or of the other.
Illustrations:
1. On January 1 Juan borrowed money from the bank payable on December 31,
2016 at 12 % interest.
Benefit of debtor = to use the money for 1 yr.
Benefit of creditor = interest
Effect: Juan cannot compel the bank to accept payments prior to due date
except when full interest is paid. Neither the bank may compel Juan to pay before
due date.
 KINDS OF OBLIGATIONS ACCORDING TO OBJECT

(1) Simple Obligation – one where there is only one prestation.

(2) Compound Obligation – where there are two or more prestations.
(a) conjunctive – one where there are several prestations and all of them
are due.
(b) Distributive – one where two or more of the prestations is due.
(i) Alternative obligation – one where several prestation are due
but the performance of one is sufficient.
(ii) Facultative Obligation – one where only one prestation is due
but the debto may substitute another
III. ALTERNATIVE OBLIGATION
RULES:

Illustration:
As payment of his debt to B, it was agreed that A could payback B a cash amount of P10,000.00 or deliver
his motorcycle to B.
Effect:
The delivery of either cash amount or the motorcycle is sufficient to comply with the obligation.
Creditor However cannot be compelled to accept partly on the cash and part ownership over the
motorcycle.

Limitations:
1. Debtor cannot choose those prestations which are impossible, unlawful or which could not have been
the object of the obligation.
2. Debtor has no more right of choice when among the prestations, only one is practicable.
RULES:
3. Remedies:
A. If debtor cannot make a choice according to the terms of the obligation
through creditor’s act, he may rescind the contract with damages.
B. Creditor shall have the right to Damages when through fault of debtor, all the
things which are alternatively the object of the obligation have been lost or compliance
is impossible.
RULES:
3. Remedies:
C. If choice is Given to the creditor, before communication of the choice, the
following rules shall apply:
1. If thing is lost through fortuitous event.
- Debtor is not liable, he can choose from the remainder.
2. If thing is lost through debtor’s fault
- Creditor may claim any of the remainder or demand
value of what was lost with right to damages.
3. When all things are lost through fault of debtor,
- Creditor may demand payment of the price of any one of
the choices with a right to damages.
4. When all things are lost through fortuitous event,
- Obligation is extinguished
IIIA. FACULTATIVE OBLIGATION
RULES:
 IV. JOINT & SOLIDARY OBLIGATIONS
(KINDS OF OBLIGATION ACCORDING TO NUMBER OF PARTIES)
RULES “Joint Obligations”:

Illustration:
RULES “Solidary Obligations”:
V. DIVISIBLE & INDIVISIBLE OBLIGATION
(KINDS OF OBLIGATION ACCORDING TO OBJECT)
Rules:
VI. OBLIGATION WITH A PENAL CLAUSE
CHAPTER 4 EXTINGUISHMENT OF OBLIGATIONS
OBLIGATIONS ARE EXTINGUISHED
PAYMENT OR PERFORMANCE
Rules:
3. Payments made by third persons:
A
6.
7
9.
APPLICATION OF PAYMENTS
Rules:
PAYMENT BY CESSION
TENDER OF PAYMENT AND CONSIGNATION
LOSS OF THE THING DUE
CONDONATION OR REMISSION OF DEBT
Kinds of Remission:
1. As to extent:
A. Complete – when it covers the entire obligation
B. Partial – when it does not cover the entire obligation.
2. As to its form:
A. Express – when it is made verbally or in writing
B. Implied – when it can only be inferred from conduct
E.g.
(1)Art. 1271 – delivery of a private document evidencing a credit.
Limitations:
(1) Applicable only in private document
(2) Contrary evidence
(3) Inofficious
(2) Art. 1273 – Possession of the thing pledge by the debtor
3. As to its effectivity:
A. Inter-vivos – when made during the lifetime of the donor
B. Mortis-causa – when it will become effective upon the death of the
donor.
CONFUSION OR MERGER OF RIGHTS
COMPENSATION
NOVATION
Kinds of Novation:
1. Real or objective – when the object or cause or principal conditions of the obligation are
change.
E.g.
Juan obliged himself to deliver to pedro 100 sacks of seven tonner of rice.
On a Later date, both agreed that instead of delivering rice, Juan should deliver instead
P100,000.00. The obligation to deliver rice is extinguished.

2. Personal or subjective – when the person of the debtor is substituted and/or when a third
person is subrogated in the rights of the creditor.
E.g.
Substitution of debtor (Expromission/delegacion)
Subrogation of creditor

3. Mixed – when the object and/or principal conditions of the obligation and the debtor or the
creditor, or both parties are changed.
E.g.
Combination
CONTRACTS
 Contract vs. obligation
CONTRACTS OBLIGATION
• One of the sources of Obligation • The legal tie or relation itself that
• No contract if there is no obligation exists after a contract has been
accepted in return for some benefit to entered into.
be enjoyed. • Obligation may exist without a
contract.
1. CONTRACTING PARTIES MAY ESTABLISH SUCH STIPULATIONS, CLAUSES, TERMS AND
CONDITIONS (FREEDOM TO STIPULATE) AS THEY MAY DEEM CONVENIENT. (1306)

2. PERFECTION BY MERE CONSENT (CONSENSUALITY). (ART. 1159, 1315).

3. THE CONTRACT MUST BIND BOTH PARTIES, ITS VALIDITY OR COMPLIANCE CANNOT BE LEFT
TO THE WILL OF ONE OF THEM. (OBLIGATORY FORCE AND COMPLIANCE IN GOOD FAITH) (1308)

4. BOTH PARTIES ARE MUTUALLY BOUND (MUTUALITY) (1308)

5. GENERALLY, BINDING ONLY BETWEEN PARTIES, THEIR ASSIGNS, AND HEIRS (RELATIVITY)
(1311)

General Principles
> CONTRACTS MUST NOT BE CONTRARY TO LAW, MORALS, GOOD
CUSTOMS, PUBLIC ORDER, OR PUBLIC POLICY.

> DETERMINATION OF PERFORMANCE SHALL MAY BE LEFT TO

THIRD PERSON BUT SHOULD BE MADE KNOWN TO THE PARTIES
(1309)

> CONTRACTS TAKE EFFECT ONLY BETWEEN THE PARTIES, THEIR

ASSIGNS, AND HEIRS. (1311) EXCEPTION: POUR ATRUI

Limitations
1

Classification
According to perfection or formation
1.

Classification
According to Cause
1.

Classification
According to importance
1. ORDINARY

Classification
According to participation in preparation
 STAGES OF CONTRACT
(A) PREPARATION – here the parties are progressing with their negotiations; they
have not yet arrived at any definite agreement, although there may have been a
preliminary offer and bargaining.
(B) PERFECTION – here the parties have at long last came to a definite agreement,
the elements of definite subject matter and valid cause have been accepted by
mutual consent
(C) CONSUMMATION – here the terms of the contract are performed, and the
contract may be said to have been fully executed.
Elements
CONSENT
CONSENT
 - a proposal made by one party to another, indicating to enter
into a contract. It is more than an expression of desire or hope.
Requirements:
1. Offer must be certain – liability may be exactly fixed
Will you buy this car for P1m – certain offer
Will you buy me a car – not certain
2. It must be seriously intended – not made in jest or in anger, or while
emotionally upset or in other ways indicating that the same was not
seriously intended.

offer
 - The manifestation by the offeree of his assent to all the terms of
the offer. Without acceptance, there can be no meeting of the minds
between the parties.
Requirements:
1. Must be clear
2. Must be absolute
- if acceptance is qualified, it will result as a counter-offer which
must be accepted by the original offeror in order to result a contract.

acceptance
1. An acceptance made by a letter or telegram does not bind the offeror except
from the time it came to his knowledge. (1319)
2. Acceptance may be express or implied. (1320)
3. The person making an offer may fix the time, place, and the manner of
acceptance, all of which must be complied with. (1321)
4. If the offer is made by an agent, communication of the acceptance to him binds
the principal (1322)
5. An offer becomes ineffective upon the death, civil interdiction, insanity, or
insolvency of either party before acceptance is conveyed. (1323) – An offer may
be revoked or withdrawn at anytime before it is accepted.

Rules on offer & acceptance

 - Giving a person for a consideration a certain period within which
to accept the offer of the offerer.
General Rule: MAY BE WITHDRAWN BEFORE ACCEPTANCE
Exception: When the option is founded upon CONSIDERATION
(OPTION MONEY), OR SOMETHING PAID OR PROMISED.
ILLUSTRATION:
A offered to sell his only car to B for P10,000.00 giving him to
decide within 10 days.

Option contract
A. BUSINESS ADVERTISEMENTS – not definite offers but mere
invitations to make and offer.
Rule: Not valid offer hence even if accepted, will not result in
a contract.
Exception: If the advertisement is complete in all particulars.
Illustration: For sale 200 sq. meters House and Lot
B. ADVERTISEMENTS FOR BIDDERS – invitations to make proposals and
the advertiser is not bound to accept the highest or lowest bidder
unless contrary appears.

advertisements
The following will result into a voidable contracts (valid until annulled):
1. Consent given by disqualified persons:
A. Minors
B. Insane or demented persons, and deaf-mutes
who do not know how to write.
2. When there are vices of consent

Voidable contracts
Consent given through:
1. MISTAKE
2. VIOLENCE
3. INTIMIDATION
4. UNDUE INFLUENCE
5. FRAUD

Vices of consent
 - False notion of a thing or a fact material to the contract.
To vitiate CONSENT, mistake must refer:
1. Substance of the thing which is object of the contract
2. Those conditions which have caused parties to the contract.
3. Identity or qualification of one of the parties provided the same was
the principal cause of the contract.

Errors or mistake
Violence – there is violence when in order to wrest consent, serious or
irresistible force is employed.
requirement: employment of physical force
Intimidation – when one of the contracting parties is compelled by
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 consent.

Violence & intimidation

 - influence of a kind that so overpowers the mind of a party as to prevent him
from acting understandingly and voluntarily to do what he would have done if he
had been left to exercise freely his own judgment and discretion.
requirement: Influence must be undue or improper.
Circumstances to be considered:
1. confidential, family spiritual and other relation between the parties.
2. Mental weakness
3. Ignorance
4. Financial distress of the person alleged to have been unduly influenced.

Undue influence
 - employment of insidious words and 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.
- fraud committed by one party before or at the time of the
celebration of the contract to secure the consent of the other.
REQUISITES
1. There must be misrepresentation or concealment of a material fact
with knowledge of its falsity.
2. It must be serious
3. Must have been employed by one of the parties
4. Made with bad faith or with intent to deceive
Causal fraud
5. Must have induced the consent of the other party
6. Must be alleged and proved by clear and convincing evidence.
OBJECT
CAUSE
REFORMATION OF INSTRUMENTS
INTERPRETATION OF INSTRUMENTS
1. Literal meaning controls when language is clear – contracts should be fulfilled
according to the literal sense of their stipulations, if the terms of a contract are
clear and unequivocal.
2. Evident Intention of parties prevails over terms of contract – applies only when
words and clauses are in conflict with the manifest intention of the parties.
3. Contemporaneous and subsequent acts shall principally be considered in the
determination of intention.
4. Special Intent prevails over general intent.
5. In interpreting stipulations with several meanings, the same shall be interpreted
which is most adequate to render it effectual.
6. A contract must be interpreted as a whole.

Rules in interpretation of contracts

DEFECTIVE CONTRACTS
 - Valid because all the essential requisites of a contract exist but by reason of
economic injury or damage to one of the parties or to third persons, such as
creditors, the contract may be rescinded.

Rescission
- a remedy granted by law to the contracting partoes and sometimes even to
third persons in order to secure reparation of damages caused them by a valid
contract, by means of restoration of things to their condition in which they were
prior to the celebration of said contract.

Rescissible contracts
1. The contract must be validly agreed upon
2. There must be lesion or pecuniary prejudice to one of the parties or to a third
person
3. The rescission must be based upon grounds provided by law
4. There must be no other legal remedy to obtain reparation for the damage
5. The party asking for rescission must be able to return what he is obliged to
restore by reason of the contract
6. The object of the contract must not legally be in possession of third persons who
did not act in bad faith
7. The period for rescission must not have prescribed yet.

Requisites
5
 - Those which possess all the essential requisites of a valid
contract but one of the parties is incapable of giving consent, or consent
is vitiated by Mistake, violence, intimidation, undue influence, or fraud.

Nature
- valid and binding between the parties unless annulled by a
proper action in court by the injured party.

Voidable contracts
General Rule:
Annulment shall be brought within four years, the period shall begin:
1. For violence, intimidation and undue influence, from the time the said
vices ceases.
2. In cases of mistake or fraud, from the time of the discovery.
3. In cases of contracts entered into by the minors or incapacitated persons,
from the time the guardianship ceases.
Exception: RATIFICATION

Prescriptive period
 - means that one voluntarily adopts or approves some defective or
unauthorized act or contract which, without his subsequent approval or consent,
would not be binding on him. Indicates an intention on the part of the ratifier to be
bounded to the provisions of the contract.

- it cleanses the contract from all its defects from the moment it was
constituted. The contract thus becomes valid. Hence, the action to annul cannot be
valid.

ratification
 - Those which cannot be enforced or given effect in a court of law
or sued upon by reason of certain defects provided by law until and
unless they are ratified according to law.
Nature
Valid but unenforceable in court unless cured or ratified.

Unenforceable contracts
 - Those which because of certain defects, generally produces no
effect at all. They are considered inexistent from the very beginning.
Nature
Void and produces no effect whatsoever.

Void or inexistent contracts

 Rescissible Unenforceable Voidable Void

Nature Valid Until annulled unenforceable Valid Until annulled Inexistent

Prescription 4 years N/A 4 years imprescriptible

Effectivity Valid No effect Valid Inexistent

RatificationYes N/A Yes NO

Defective Contracts compared