Article 1417.

When the price of any article or commodity is determined by statute, or by authority of

law, any person payingany amount in excess of the maximum priced allowed may recover such excess.

- Refers to the ceiling price. If a ceiling price for a certain commodity has been determined by statute
by law or competent authority who pays any amount more than what has been determined may
recover such excess
- Example: basic needs and during an emergency or crisis. Prices of can goods, noodles etc.

Article 1418. When the law fixes, or authorizes the fixing of the maximum number of hours of labor, and
a contract is entered into whereby a laborer undertakes to work longer than the maximum thus fixed,
he may demand additional compensation for service rendered beyond the time limit.

- According to the PD 442, known as the Labor Code, sets forth that the normal hours of work of any
employee shall not exceed 8 hours a day.
- The labor code applies to employees in all establishments and undertakings whether for profit or
not, but not to:
1. Government employees
2. managerial employees
3. Field personnel
4. members of the family of the employer who are dependent upon him for support
5. domestic helpers
6. persons in the personal service of another,
7. workers who are paid by result

Example - Bong works in Toyota Company in Sta Rosa, Laguna. She works from Monday to Saturday
from 8am to 5pm as the maximum working hours. However, he works from Monday, Wednesday, and
Friday from 8am to 7pm exceeding two hours beyond the maximum working hours.

Article 1419. When the law sets or authorizes the setting of a minimum wage for laborers, and a
contract is agreed upon by which a laborer accepts a lower wage, he shall be entitled to recover the
deficiency.

- If an employee or worker receives less than the minimum wage rate, he can still recover the
deficiency with legal interest and the employer shall be criminally liable.

Example: Rolly is the owner of a shoe factory in Manila executed a contract with Ulysses as a laborer.
When the pay day comes Ulysses reacted for the sum of money that he received because the amount
that he received is only P380.00/day instead of P481.00, therefore Ulysses can recover for the
deficiency that he received from Rolly which stated on this article that “When the law sets, or
authorizes the setting of a minimum wage for laborers, and a contract is agreed upon by which a
laborer accepts a lower wage, he shall be entitled to recover the deficiency.”
Article 1420. In case of a divisible contract, if the illegal terms can be separated from the legal ones, the
latter may be enforced.

- The Article applies only if there are several stipulations, terms or conditions in the contract. If some
of the stipulations are illegal and others are valid, the latter if separable from the former shall be
effective and enforceable. The rule of divisibility or separability cannot apply in two situations: (a)
When the contract by its nature required indivisibility; (b) When the parties intended the contract
to be entire or indivisible.

- Example: Paulo Dut agreed to sell and deliver to Sarah Dut certain amount of illegally cut logs
including the towing vessel to be used. The sale of the illegal logs may be avoided leaving the
transaction on the towing vessel enforceable. However, if the parties intended the transaction to be
entire, that is, without the logs the vessel would not be purchased, the entire transaction is void. In
a contract of loan, the borrower as security for the payment executed a real state mortgage using a
fake title. The mortgage is void but the loan remains valid. Invalid stipulations on the compromise
which are independent of the rest of the agreement and which could easily be separated therefrom
without violating the manifest intention of the parties do not make the entire agreement void.

Article 1421. The defense of illegality of contract is not available to third persons whose interests are
not directly affected.

- Persons entitled to raise defense of illegality Third persons are not allowed to bring an action to
annul OR assail a voidable and unenforceable contracts. HOWEVER, if the contract is illegal OR void,
even a third person may avail of the defense of illegality or set up its illegality if his interest is
directly affected by the contract.

Example Harry sold his house and lot to his wife, Margarita. Under the law, husband and wife cannot
sell property to each other. Such sale is illegal and void. If Salvador, a third person, became a creditor of
Harry before the transaction, he can question the sale for the reason that his right or interest is directly
affected. However, if he became a creditor after the transfer, the defense of illegality is not available to
him.
Article 1422. A contract which is the direct result of a previous illegal contract, is also void and
inexistent.

- Void contract cannot be novated. This provision is based on the requisites of a valid novation. An
illegal contract is void and inexistent and cannot, therefore, give rise to a valid contract.

Example: Debold sells a red Ford Mustang to Ronald Rock. The two parties also signed a repurchase
contract wherein Debold has the right to buy back the car within two years. It turned out that the
Red Ford Mustang was rightfully owned by Manny, and not by Debold.
Under Art. 1422, the contract of repurchase is dependent on the validity of the contract of sale.
Since the contract of sale is void because Debold, the seller, is not the owner, the subsequent
contract of repurchase is also void because it presupposes a valid contract of sale between the
same parties. One can repurchase only what he has previously sold.

Art. 1491. The following persons cannot acquire by purchase, even at a public or judicial auction, either
in person or through the mediation of another:

(1) The guardian, the property of the person or persons who may be under his guardianship;

(2) Agents, the property whose administration or sale may have been entrusted to them, unless the
consent of the principal has been given;

(3) Executors and administrators, the property of the estate under administration;

(4) Public officers and employees, the property of the State or of any subdivision thereof, or of any
government-owned or controlled corporation, or institution, the administration of which has been
intrusted to them; this provision shall apply to judges and government experts who, in any manner
whatsoever, take part in the sale;

(5) Justices, judges, prosecuting attorneys, clerks of superior and inferior courts, and other officers and
employees connected with the administration of justice, the property and rights in litigation or levied
upon an execution before the court within whose jurisdiction or territory they exercise their respective
functions; this prohibition includes the act of acquiring by assignment and shall apply to lawyers, with
respect to the property and rights which may be the object of any litigation in which they may take part
by virtue of their profession. (

6) Any others specially disqualified by law. (1459a)

- Reason for prohibition is to prevent frauds, prevent temptations to the exertion of undue and
improper influence.
- The fear that the greed might get the better sentiments of loyalty and disinterestedness is the
reason.
Art. 1898. If the agent contracts in the name of the principal, exceeding the scope of his authority, and
the principal does not ratify the contract, it shall be void if the party with whom the agent contracted is
aware of the limits of the powers granted by the principal. In this case, however, the agent is liable if he
undertook to secure the principal's ratification. (n)

- the acts of an agent beyond the scope of his authority do not bind the principal, unless the latter
ratifies the same expressly or impliedly. Furthermore, when the third person knows that the agent
was acting beyond his power or authority, the principal cannot be held liable for the acts of the
agent. If the said third person is aware of the limits of the authority, he is to blame, and is not
entitled to recover damages from the agent, unless the latter undertook to secure the principal’s
ratification.