Void Contracts

Group IV
Members:
Sadiwa, Angel Kaye
Santiago, Jericho
Sauquillo, Myanche
Sochaco, Pauleen Joy
Surabia, Sheril
Tabor, Nicole
Tubig, Almira
 VOID OR INEXISTENT CONTRACTS
ART.1409. The following contracts
are inexistent and void from the
beginning:
(1) Those whose cause, object or
purpose in 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.
These contracts cannot be ratified.
Neither can the right to set up the
defense of illegality be waived.
Void Contracts

1.) The action or defense for the declaration of the existence

of a contract does not prescribe. ( NCC 1410)

2.) The title is susceptible to direct as well as to collateral

attack (Ferrer v. Bautista, 1994)

- 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. The expression "void contract"
is, therefore, a contradiction in terms.
Meaning of Inexistent Contracts

• Inexistent contracts refer to agreements

which lack one or some or all of the
elements (i.e., consent, object, and cause).

• An illegal contract may produce effects

under certain circumstances where the
parties are not of equal guilt.
(see Arts. 1411-1412.)
 Characteristics of a Void or
Inexistent Contract

• They are as follows:

• (1) Generally, it produces no force and effect
whatsoever;
• (2) It cannot be ratified (par. 2, Art. 1409.);
• (3) The right to set up the defense of illegality cannot be
waived (Ibid.);
• (4) The action or defense for the declaration of its
existence does not prescribe (Art. 1410.);
• (5) The defense of illegality is not available to third
persons whose interests are not directly affected (Art.
1421.); and
• (6) It cannot give rise to a valid contract. (Art.1422).
 INSTANCES OF VOID OR
INEXISTENT CONTRACTS
• Void and inexistent contracts are not enforceable from the very beginning, regardless of the
intention of the parties.

• (1) Contracts whose cause, object or purpose in contrary to law, etc. (examples under Arts.
1306 and 1416).

• (2) Contracts which are absolutely simulated or fictitious. (examples under Arts. 1345 and
1346)
• A contract of sale is void where the price, which appears thereon as paid, has, in fact, never
been paid. (Catindig vs. Heirs of Catalina Roque, 74 SCRA 83)

• (3) Contracts without cause or object. - The phrase " did not exist at the time of the transaction"
does not apply to a future thing which may legally be the object of a contract. (example under
Arts. 1347,1352 and 1353)

• (4) Contracts whose object is outside the commerce of men. (example under Arts. 1347 and
1348)

• (5) Contracts which contemplate an impossible service. ( examples under Arts. 1347 and 1348)

• (6) Contracts where the intention of the parties relative to the object cannot be ascertained.
(examples under par.2, Art. 1378).
(7) Contracts expressly prohibited or declared void by law. (below are examples of contracts
which are prohibited or declared void by law)

(a) Contracts upon future inheritance except in cases expressly authorized by law. (Art.
1347)

(b) Sale a property between husband and wife except when there is a separation of property.
(Art. 1490.)

(c) Purchase of property by persons who are specially disqualified by law (like guardians,
agents, executors, administrators, public officers, and employees, judges, lawyers, etc.)
Because of their position or relation with the person or property under their care. (Art.
1491)

(d) “ Every donation between the spouses during the marriage shall be void except moderate
gifts which the spouses may give each other on the occasion of any family rejoicing." (Art
87, Family Code).

(e) " A testamentary provision in favor of a disqualified person, even though made under the
guise of an onerous contract, or made through an intermediary , shall be void". (Art.
1031)

(f) “ Any stipulation that household service is without compensation shall be void". (Art. 1689)

(g) Under the Constitution ( Sec. 14, Art. VI thereof), members of Congress are prohibited
from being financially interested, directly or indirectly, in any contract with the government
or any subdivision or instrumentality thereof. (Arts. 1782, 1874, 2035, 2088,2130)
 ACTION TO DEMAND
PARTITION
No prescription shall run in favor of co-
owner or co- heir against his co-owners or
co- heirs so long as expressly or impliedly
recognizes the co-ownership. (NCC 494)
 RULES WHERE CONTRACT IS ILLEGAL
AND THE ACT CONSTITUTES A CRIMINAL
OFFENSE
(2) Where only one party is guilty.
(1) Where both parties are in pari delicto -
The following are the effects of a
contract whose cause or object - if only one party is guilty or both
constitutes a criminal offense and both
parties are in pari delicto, that is, parties are not equally guilty (in
equally guilty: delicto, but not in pari delicto),
(a) The parties shall have no action the rule in par. 1 of Art. 1411,
against each other applies only to the guilty party
or the more guilty party. The
(b) Both should be prosecuted ; and innocent one or the less guilty
with him what he has given
(c) The things or the price of the contract, and shall not be bound to
as the effects or instruments of the
crime, shall be confiscated in favor of
comply with his promise.
the government. (par. 1, Art. 48, (par. 2)
Revised Penal Code.)
 RULES WHERE CONTRACT IS
ILLEGAL BUT THE ACT DOES NOT
CONSTITUTE A CRIMINAL OFFENSE

(1) Where both parties are in pari delicto - is the cause of the contract is unlawful or
forbidden but there is no criminal offense, the rules are as follows:

(a) Neither party me recover what he has given by virtue of the contract; and
(b) Neither party may demand the performance of the others undertaking.

(2) Where only one party is guilty - if only one party is guilty or both parties are not
equally guilty, the following are the rules:

(a) The guilty party losses what he has given by reason of the contract;

(b) The guilty party cannot ask for the fulfillment of the other's undertaking;

(c) The innocent party may demand the return of what he has given; and

(d) The innocent party cannot be compelled to comply with his promise.
Prescription or Limitation of Actions
TO RECOVER MOVABLE PROPERTIES

(1) The action prescribes in 8 years from the time the

possession thereof is lost. [NCC 1140]

(2) However, the action shall not prosper if it is brought

after 4 years when the possessor has already acquired
title by ordinary acquisitive prescription. [NCC 1132]

(3) If the possessor acquired the movable in good faith at a

public sale, the owner cannot obtain its return without
reimbursing the price paid.
TO RECOVER IMMOVABLES
(1) Real Actions prescribe after 30 years [NCC 1141]

(2) UNLESS the possessor has acquired ownership of the

immovable by ordinary acquisitive prescription through
possession of 10 years. [NCC 1134]

(3) Action for reconveyance

• (a) Based on fraud; Prescribes 4 years from the
discovery of fraud.
• (b) Based on Implied or constructive trust:
• 10 years from the alleged fraudulent registration or date
of issuance of certificate of title over the property.
OTHER ACTIONS
(1) Action to foreclose mortgage:
Prescribes after 10 years from the time the obligation
secured by the mortgage becomes due and
demandable.

(2) Actions that Prescribes in 10 Years [NCC 1144]

(a) Upon a written contract
(b) Upon an obligation created by law
(c) Upon a judgement

The computation of the period of prescription of any cause

or right of action which is the same as saying
prescription
(3) Actions that Prescribe in 6 Years [NCC 1145]
• (a) Upon an oral contract
• (b) Upon a quasi-contract

(4) Actions that Prescribe in 4 Years [NCC 1145]

• (a) Upon an injury to the rights of the plaintiff
• (b) Upon a quasi-delict

BUT when the action arises from any act of any public
officer involving the exercise of powers arising from
Martial Law including the arrest, detention and/or trial of
the plaintiff, the same must be brought within 1year.

(5) Actions that Prescribe in One Year or Less [NCC 1147]

(a) For forcible entry or unlawful detainer
(b) For defamation
(6) Other Actions that Prescribe in 1 Year under the Civil Code

(a) To recover possession de facto [NCC 554(4)]

(b) To revoke a donation on the ground of ingratitude [NCC 769]
(c) To rescind or recover damages if immovable is sold with non-apparent burden
or servitude [NCC 1560 (3,4)]
(d) To enforce warranty of solvency in assignment credits [NCC 629]

(7) Where Periods of Other Actions Not Fixed in the Civil Code and in Other Laws

All other actions whose periods are not fixed in the Civil Code or in other laws
must be brought within 5 years from the time the right of action accrues. [NCC
1149]

(8) Interruption [NCC 1155] The prescription of actions is interrupted when:

(a) They are filed before the court

(b) When there is a written extrajudicial demand by the creditors
(c) When there is any written acknowledgment of the debt by the debtor
Civil actions are deemed commenced from the date of the
filing and docketing of the complaint with the Clerk of
Court. [Cabrera v. Riano (1963)]

A written extrajudicial demand wipes out the period that

has already elapsed and starts a new the prescriptive
period [The Overseas Bank of Manila v. Geraldez,
(1979)]

Not all acts of acknowledgement of a debt interrupt

prescription. To produce such effect, the
acknowledgment must be “written”, so that the payment,
if not coupled with the communication signed by the
payor would interrupt the running of the period of
prescription [PNB v. Osete (1968)
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