Here is a detailed analysis of Voidable Contracts under Philippine Civil Law.

VOIDABLE CONTRACTS IN PHILIPPINE LAW

In Philippine Civil Law, voidable contracts are defined under Article 1390 of the Civil Code of the Philippines. Voidable contracts are considered valid and binding unless they are annulled. They are not void or unenforceable per se; they remain effective unless an action for annulment is successfully pursued by an interested party. Voidable contracts differ from void contracts, which are deemed non-existent and have no legal effect from the outset.

A. Definition and Nature

Voidable contracts are those contracts that, despite having apparent validity, suffer from some legal infirmity or defect. This defect allows the party or parties adversely affected to bring an action to annul the contract. However, unless and until annulled, these contracts produce legal effects as if they were valid.

B. Grounds for Annulment of Voidable Contracts

Under Article 1390 of the Civil Code, contracts may be voidable if:

Lack of Capacity - One or both of the parties suffer from some defect in their capacity to contract, such as being a minor or suffering from insanity.
Vitiation of Consent - Consent of one or both parties was obtained by means of fraud, intimidation, violence, undue influence, or mistake.

These grounds for annulment stem from the idea that the party giving consent must have the capacity to do so and must give it freely, without any impairment of their autonomy.

C. Characteristics of Voidable Contracts

Validity Until Annulled - Voidable contracts are valid and binding upon the parties until annulled. This means that they produce all legal effects as if they were valid.
Right of Action for Annulment - The injured party or the party suffering from lack of capacity may bring an action to annul the contract. This action is discretionary and may be waived, expressly or impliedly.
Capable of Ratification - Voidable contracts may be ratified, which confirms their validity and bars future annulment.
Susceptible to Prescription - Actions to annul voidable contracts are subject to prescription. The right to file an action to annul a contract is not indefinite and may be lost due to the lapse of time.

D. Causes of Voidability

Lack of Capacity
- The Civil Code identifies two primary types of incapacity:
  - Absolute Incapacity: Involves those who cannot contract at all, such as minors below 18 years of age and insane or demented persons.
  - Relative Incapacity: Affects certain classes of people due to particular relationships or circumstances, e.g., contracts between a guardian and ward, or contracts made by a spouse without the other spouse’s consent.
Vitiated Consent
- Voidable contracts due to vitiated consent arise in situations where a party’s consent is obtained through:
  - Mistake (Article 1331) – Refers to error or misunderstanding of a fact that materially affects the agreement.
  - Violence or Intimidation (Articles 1335-1336) – Refers to physical or moral pressure, where one party compels another to agree through fear or threat of harm.
  - Undue Influence (Article 1337) – Refers to taking advantage of the weakness of mind, age, or other circumstances to influence the other party improperly.
  - Fraud (Article 1338) – Refers to deliberate deception to secure unfair or unlawful gain, leading one party to enter into the contract based on misrepresentations.

E. Annulment of Voidable Contracts

Right to Annul
- The right to annul a voidable contract rests with the party adversely affected by the defect or by their representatives (e.g., parents or guardians in the case of minors). Annulment is discretionary and not automatically granted.
Effects of Annulment
- Once a contract is annulled, both parties are restored to their original positions as far as possible (Article 1398). If restoration in kind is not possible, the party entitled to restitution may be compensated with damages.
Period for Annulment
- Under Article 1391, the period to bring an action for annulment varies:
  - For contracts due to incapacity, the period is four years from the time the incapacity ceases.
  - For contracts due to mistake, violence, intimidation, undue influence, or fraud, the period is four years from the time the defect ceases or is discovered.
Ratification of Voidable Contracts
- Voidable contracts may be ratified either expressly or impliedly (Article 1392). Ratification extinguishes the action for annulment. It occurs when the party with the right to annul chooses to affirm the contract despite its defects.
- Express Ratification - When the party explicitly confirms the contract in a statement.
- Implied Ratification - Occurs through actions such as accepting benefits under the contract, failing to seek annulment within the prescriptive period, or performing the obligations of the contract despite the defect.
Effects of Ratification
- Ratification purges the defect, rendering the contract entirely valid from the beginning. Thus, the contract can no longer be annulled after ratification.

F. Restitution and the Status Quo Ante

Upon annulment, restitution is mandatory to restore the parties to their pre-contractual positions. This restitution includes returning the benefits received under the contract or, if restoration in kind is not possible, compensation through equivalent value.

Restitution in Kind - Returning what has been received under the contract.
Restitution through Equivalent Value - If the specific items cannot be returned (e.g., in cases of fungible goods consumed), equivalent monetary value is given.

G. Prescriptive Period for Annulment

As mentioned, the action for annulment is subject to the prescriptive period specified in Article 1391. This highlights the principle that the right to annul is not perpetual and may be waived through inaction over time.

H. Special Cases Involving Voidable Contracts

Contracts Involving Minors
- Contracts entered into by minors are generally voidable. However, contracts for necessities (food, shelter, clothing) are exceptions, and minors are bound to pay for these.
Contracts with Persons under Civil Interdiction
- Persons who are declared incapacitated (e.g., due to mental incapacity) have contracts that may be considered voidable. However, such incapacitation must be judicially declared to trigger this effect.
Contracts Involving Deception in Marriage
- A particular application involves marriage contracts where one party deceives the other in a way that affects the essence of marital consent (e.g., bigamous or fraudulent marriages).

Summary of Key Points

Voidable contracts are valid unless annulled.
Grounds for annulment include lack of capacity and vitiated consent (mistake, fraud, intimidation, violence, undue influence).
Annulment may be pursued within four years from the discovery of the defect.
Ratification of a voidable contract cures the defect, making it fully valid.
Upon annulment, restitution is required to return parties to their original positions.

This framework enables parties to protect themselves from the effects of unfair contracts and addresses the specific needs of those who may have been vulnerable at the time of agreement.