Chapter 9

Void and Inexistent

Contract
Prepared by :
BSA -1A
Alegado,Maicah Marie c.
Alpon, Alpon Christian Dr.
Rabor, Ana
 Article 1409. The following contracts
are inexistent and void from the
beginning:
(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.
 Meaning of Void Contract
Void contracts are those which, because of
certain defects, generally produce no
effect at all. They are considered as
inexistent from its inception or from the
very beginning
 Meaning of Inexistent Contract
Inexistent contracts refer to agreements
which lack one or some or all of the
elements (i.e., consent, object, and cause)
or do not comply with the formalities which
are essential for the existence of a contract.
 CHARACTERISTICS OF A VOID
CONTRACTS
(1) Generally, it produces no effect whatsoever, being
void or inexistent from the beginning;
(2) It cannot be cured or validated either by time or
ratification;
(3) The right to set up the defense of illegality,
inexistence, or absolute nullity cannot be waived;
(4) The action or defense for the declaration of its
illegality, inexistence, or absolute nullity does not
prescribe;
 CHARACTERISTICS OF A VOID
CONTRACTS
(4) The action or defense for the declaration of its
illegality, inexistence, or absolute nullity does not
prescribe;
(5) The defense of illegality, inexistence, or absolute
nullity is not available to third persons whose interests
are not directly affected;
(6) It cannot give rise to a valid contract; and
(7) Its invalidity can be questioned by anyone affected by
it.
VOID AND VOIDABLE CONTRACTS DISTINGUISHED
ILLUSTRATION:
(1) Those whose cause, object or purpose is contrary
to law, morals, good customs, public order or public
policy;

Contrary to Law
An agreement whereby Anna is to render service as a
servant to Ben without compensation as long as Anna
has not paid his debt is reprehensible and censurable.
ILLUSTRATION:
(1) Those whose cause, object or purpose is contrary to
law, morals, good customs, public order or public policy;

Contrary to Morals
A contract, whereby Anna promised to live as the
common-law wife of Ben without the benefit of
marriage in consideration of P50,000.00, is immoral and,
therefore, void.
ILLUSTRATION:
(1) Those whose cause, object or purpose is contrary to
law, morals, good customs, public order or public policy;

Contrary to Good Customs

Anna entered into a contract whereby Anna binds
herself to slap his father. This contract is void because
it is against the good custom of showing respect to our
parents.
ILLUSTRATION:
(1) Those whose cause, object or purpose is contrary to
law, morals, good customs, public order or public policy;

Contrary to Public Order

A stipulation in a contract of lease whereby the landlord
can use force to eject the tenant in case of failure of
the latter to pay the rent agreed upon is void as being
against public order.
ILLUSTRATION:
(2) Those which are absolutely simulated or
fictitious;
Anna is indebted to Ben. Upon learning that Ben is
going to enforce her credit, Anna pretended to sell
her land to Felimon, his father-in-law. Anna did
not receive a single centavo for the deed of sale
she executed and she continued in possession of
the land as the contract was merely simulated or
fictitious.
ILLUSTRATION:
(3) Those whose cause or object did not
exist at the time of the transaction;
Sandra sells to Ben a parcel of land. In the
deed of sale, P100,000.00 is stated as the
price of the land. If this statement is false,
then there is no contract of sale.
ILLUSTRATION:
(4) Those whose object is outside the commerce
of men;
If the object is outside the commerce of man,
such as sidewalks or public plazas or public
bridges, they cannot be the object of contracts of
alienation (but may be the object, for example,
of a contract for repair).
ILLUSTRATION:
(5) Those which contemplate an impossible
service;
If a blind man enters into a contract which
requires the use of his eyesight, the contract is
void although in this particular case, we have
only a relative impossibility. This is because
here, the relative impossibility is not merely
temporary.
ILLUSTRATION:
(6) Those where the intention of the parties
relative to the principal object of the
contract cannot be ascertained;
Anna sold his land to Ben. Anna has many
lands. It cannot be determined which land
was intended by the parties to be the subject
of the sale.
ILLUSTRATION:
(7) Those expressly prohibited or declared
void by law.
Contracts upon future inheritance except in
cases expressly authorized by law.
Article 1410
The action or defense for the
declaration of the inexistence of a
contract does not prescribe.
ILLUSTRATION:
Alaska sells Bearbrand the Pagsanjan Falls and Bearbrand
gives Alaska the money. Of course, this contract is null
and void, but suppose Alaska refuses to return to
Bearbrand the money, stating that there is nothing wrong
with the contract, what should Bearbrand do? He should
file an action in court to declare the inexistence of the
contract. This right of Bearbrand to bring the action does
not prescribe. The defect in this kind of contract cannot
be cured by prescription or by ratification.
Article 1411
When the nullity proceeds from the illegality of the
cause or object of the contract, and the act
constitutes a criminal offense, both parties being in
pari delicto, they shall have no action against each
other, and both shall be prosecuted. Moreover, the
provisions of the Penal Code relative to the disposal
of effects or instruments of a crime shall be
applicable to the things or the price of the
contract.
Rules where contract is illegal and the act constitutes a
criminal offense.

1. When both parties are in pari delicto;( equally at fault)

Result:
a) The parties shall have no action against each other;
b) Both shall be prosecuted;
c) The things or the price of the stipulated contract as the
effect or instrument of the crime shall be confiscated in favor
of the government.
ILLUSTRATION:
Renel sold unlicense firearms to Emerson
amounting 10,000. Emerson paid only 3,000
and Renel delivered only the fire arms with
out magazine.
In this case the parties have no right of
action to other.
Rules where contract is illegal and the
act constitutes a criminal offense.
2. When only one party is guilty;
In the preceding example, if Emerson is in
good faith believing that the firearms was a
legal one, he can claim the 3,000 to Renal, or
if he did not yet paid Renel he shall not be
bound to comply with his promise. Renel shall
be prosecuted and the object sold by him shall
be confiscated.
Article 1412. If the act in which the unlawful or
forbidden cause consists does not constitute a
criminal offense, the following rules shall be
observed:
(1) When the fault is on the part of both contracting parties,
neither may recover what he has given by virtue of the
contract, or demand the performance of the other’s
undertaking;
(2) When only one of the contracting parties is at fault, he
cannot recover what he has given by reason of the contract, or
ask for the fulfillment of what has been promised him. The
other, who is not at fault, may demand the return of what he
has given without any obligation to comply his promise.
Article 1413
Interest paid in excess of the interest
allowed by the usury laws may be
recovered by the debtor, with
interest thereon from the date of the
payment.
Usury Law
Usury is the illegal act of charging for a loan a higher
rate of interest than that which is allowed by law.
Recovery of usurious interest Any rate of interest in
excess of the maximum allowed under the Usury Law
is usurious and if paid, may be recovered together
with interest thereon from the date of payment in a
proper action for the same. (Art. 1413.)
Article 1414
When money is paid or property delivered for an
illegal purpose, the contract may be repudiated by
one of the parties before the purpose has been
accomplished, or before any damage has been
caused to a third person. In such case, the courts
may, if the public interest will thus be subserved,
allow the party repudiating the contract to recover
the money or property.
Recovery where contract for an illegal purpose

• The law allows recovery by one of the parties even though

both of them have acted contrary to laws.
• Requisites:
✓A contract that is for an illegal purpose
✓The contract is repudiated before the purpose has been
accomplished OR before any damage has caused to a third
person
✓The court considers that public interest will be subserved by
allowing recovery
ILLUSTRATION:
Cleonette is accused of murder.
Kyla paid ₱10,000 to Camille to hide Cleonette
Before Camille could hide Cleonette, Kyla changed his
mind.
The court may allow Kyla to recover the ₱10,000 given
to Camille
Article 1415
Where one of the parties to an illegal
contract is incapable of giving consent, the
courts may, if the interest of justice so
demands allow recovery of money or property
delivered by the incapacitated person.
Recovery by an incapacitated person
This article is another exception to the in pari
delicto rule in Articles 1411-1412. Recovery can be
allowed if one of the parties is incapacitated and the
interest of justice so demands. It is not necessary
that the illegal purpose has not been accomplished
or that no damage has been caused to a third
person.
(see Art. 1414.)
ILLUSTRATION:
Tony Stork, an insane but crazy rich person,
paid Thanos $1 million dollars to hide Peter
Porker, who is currently accused of murder.
Under Art. 1415, the court may allow Tony Stork
to recover the money paid by him if the interest
of justice so demands.
Article 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.
 Article 1416 is another exception to the rule that where both parties
are in pari delicto, they will be left where they are without relief.

Recovery is permitted provided:

(1) The agreement is not illegal per se but is merely prohibited;
(2) The prohibition is designed for the protection of the
plaintiff; and
(3) Public policy would be enhanced by allowing the plaintiff to
recover what he has paid or delivered.
ILLUSTRATION:
Black Widow donated to Hawkeye
everything that she (Black Widow)
possessed and owned, leaving
nothing for herself. This is
prohibited but not illegal per se.
Since public policy is hereby
enhanced, Black Widow will be
allowed to recover, at least that
necessary for her own support and
the support of her relatives.
Article 1417
When the price of any article or commodity is
determined by statute, or by authority of
law, any person paying any amount in excess
of the maximum price allowed may recover
such excess.
Explanation:
This article 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
This is usually applies to basic needs and during an
emergency or crisis. Prices of can goods, noodles etc.
ILLUSTRATION:
A regulation was promulgates by the
government fixing the maximum price of a
particular brand of rice at 700.00 pesos per
cavan. Angelyn a buyer paid 1000 pesos per
cavan whether or not he knew the regulation he
is allowed to recover the excess of 300.00 which
he paid for the price of each cavan.
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.
Basis of Minimum Wage Rates
The basis of the minimum wage rates is not more
than eight hours daily labor in the case of
employees working in non-agricultural
enterprises, and not more than the customary
hours of work in the case of agricultural workers.
(Article 1, Section 3, Code of Rules and
Regulations to Implement the Minimum Wage
Law, as Amended.
ILLUSTRATION:
Micka works in Toshiba Company in Canlubang,
Laguna. She works from Monday to Saturday from
8am to 5pm as the maximum working hours.
However, s she 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 the laborer has agreed to receive a
wage lower than the minimum wage
fixed by law he is not barred from
recovering the deficiency. Such
contract or agreement is void under
the minimum wage law.
ILLUSTRATION:
Lheia the owner of a candy factory in Manila executed a
contract with Allyssa as a laborer. When the pay day comes
Allyssa 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 Allyssa can recover for the
deficiency that he received from Lheia which stated on this
art. 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.
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
✓as long as his interest is directly affected by the
contract.
ILLUSTRATION:
Harold sold his parcel of land to his wife, Margarita.
Under the law, husband and wife CANNOT sell property to each
other.
Such sale is illegal and void.
If Charlie, a third person, became a creditor of Harold 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.
ILLUSTRATION:
Optimus sells a yellow Chevrolet Camaro to Megatron. The two
parties also signed a repurchase contract wherein Optimus has
the right to buy back the car within two years. It turned out
that the Yellow Chevrolet Camaro was rightfully owned by
Bumblebee, and not by Optimus. 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 Optimus, 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.