BOOK

IV, TITLE II: CONTRACTS

CHAPTER 9: VOID OR INEXISTENT CONTRACTS VOID RESCISSIBLE
VOID CONTRACTS Contract produces no Contract is valid until
All requisites are present but they the cause effect even if it is not set rescinded
object or purpose is contrary to law, morals, aside by a direct action
good customs, public order or public policy; Defect is absolute lack in Lesion or damage to one
or the contract is self is prohibited or fact or in law of one or of the contracting
declared void by law some of the essential parties or to third
INEXISTENT CONTRACTS elements of a contract persons
One or some or all of those requisites which Nullity or inexistence of Based on equity
are essential for the validity of a contract the contract is based on
are ABSOLUTELY LACKING; law
Those which are absolutely simulated or Not only a remedy but a Mere remedy
fictititious sanction
Those where the cause or object did not Involves public interest Private interest
exist at the time of the transaction predominates
Imprescriptible Prescriptible
GR: cannot be assailed May be assailed by third
by 3rd persons persons
ART. 1409: CONTRACTS VOID AB INITIO
(1) Those whose cause, object or purpose is VOID VOIDABLE
contrary to law, morals, good customs, public order Contract produces no Binding unless annulled
or public policy; effect even if it is not set
aside by a direct action
(2) Those which are absolutely simulated or Not susceptible of Susceptible of
fictitious; ratification ratification
Imprescriptible Prescriptible
(3) Those whose cause or object did not exist at the Defense of inexistence is Not available to third
time of the transaction; available to third persons
persons whose interests
(4) Those whose object is outside the commerce of are directly affected
men;
VOID UNENFORCEABLE
(5) Those which contemplate an impossible In reality there is no There is actually a
service; contract at all contract that cannot be
enforced by court action
(6) Those where the intention of the parties relative Not susceptible of Susceptible of
to the principal object of the contract cannot be ratification ratification
ascertained; Imprescriptible Prescriptible
Defense of inexistence is Not available to third
(7) Those expressly prohibited or declared void by available to third persons
law. persons whose interests
are directly affected
These contracts cannot be ratified. Neither can the
right to set up the defense of illegality be waived.

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IN PARI DELICTO (2) When only one of the contracting parties is at
Means in equal fault fault, he cannot recover what he has given by
General rule : parties to a void contract reason of the contract, or ask for the fulfillment of
cannot expect the aid of the law. what has been promised him. The other, who is not
Illegality of the cause or object of the at fault, may demand the return of what he has
contract and both parties are at fault given without any obligation to comply his promise.
A universal doctrine which holds that no (1306)
action arises , in equity or at law, from an
illegal contract Article 1413. Interest paid in excess of the interest
No suit can be maintained for its specific allowed by the usury laws may be recovered by the
peroformance or to recovery the property debtor, with interest thereon from the date of the
agreed to be sold or delivered or the money payment.
agreed to pay
Article 1414. When money is paid or property
No affirmative relief of any kind will be given
delivered for an illegal purpose, the contract may
to one against the other
be repudiated by one of the parties before the
Eg: contracts involving contrabands
purpose has been accomplished, or before any
Based on: ex dolo malo non oritur action [
damage has been caused to a third person. In such
no right of action can have its origin in
case, the courts may, if the public interest will thus
fraud]
be subserved, allow the party repudiating the
In pari delicto potior est condition
contract to recover the money or property.
defendantis [ if both parties are in the

wrong, the position of the defendant is the
Article 1416. When the agreement is not illegal per
stronger]
se but is merely prohibited, and the prohibition by

the law is designed for the protection of the
EXCEPTIONS:
plaintiff, he may, if public policy is thereby
Article 1411. When the nullity proceeds from the
enhanced, recover what he has paid or delivered.
illegality of the cause or object of the contract, and

the act constitutes a criminal offense, both parties
Article 1417. When the price of any article or
being in pari delicto, they shall have no action
commodity is determined by statute, or by
against each other, and both shall be prosecuted.
authority of law, any person paying any amount in
Moreover, the provisions of the Penal Code relative
excess of the maximum price allowed may recover
to the disposal of effects or instruments of a crime
such excess.
shall be applicable to the things or the price of the

contract.
Article 1418. When the law fixes, or authorizes the
This rule shall be applicable when only one of the
fixing of the maximum number of hours of labor,
parties is guilty; but the innocent one may claim
and a contract is entered into whereby a laborer
what he has given, and shall not be bound to
undertakes to work longer than the maximum thus
comply with his promise. (1305)
fixed, he may demand additional compensation for

service rendered beyond the time limit.
Article 1412. If the act in which the unlawful or

forbidden cause consists does not constitute a
Article 1419. When the law sets, or authorizes the
criminal offense, the following rules shall be
setting of a minimum wage for laborers, and a
observed:
contract is agreed upon by which a laborer accepts
(1) When the fault is on the part of both contracting
a lower wage, he shall be entitled to recover the
parties, neither may recover what he has given by
deficiency.
virtue of the contract, or demand the performance

of the other's undertaking;
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NOTE: In void contracts, there is really no need for Conchita Liguez and Salvador P. Lopez lived together in the
a positive action. house that was built upon the latter's orders, until Lopez
was killed on July 1st, 1943, by some guerrillas who

believed him to be pro-Japanese.
VERY IMPORTANT CASE:
Liguez v. CA & Lopez, GR No. L-11240, December It was also ascertained by the Court of Appeals that the
18, 1957 donated land originally belonged to the conjugal
partnership of Salvador P. Lopez and his wife, Maria Ngo;
REYES, J.B.L., J.: that the latter had met and berated Conchita for living
maritally with her husband, sometime during June of 1943;
From a decision of the Court of Appeals, affirming that of that the widow and children of Lopez were in possession of
the Court of First Instance of Davao dismissing her the land and made improvements thereon; that the land
complaint for recovery of land, Conchita Liguez has was assessed in the tax rolls first in the name of Lopez and
resorted to this Court, praying that the aforesaid decision later in that of his widow.; and that the deed of donation
be reversed on points of law. We granted certiorari on was never recorded.
October 9, 1956.
Upon these facts, the Court of Appeals held that the deed
The case began upon complaint filed by petitioner- of donation was inoperative, and null and void (1) because
appellant against the widow and heirs of the late Salvador the husband, Lopez, had no right to donate conjugal
P. Lopez to recover a parcel of 51.84 hectares of land, property to the plaintiff appellant; and (2) because the
situated in barrio Bogac-Linot, of the municipality of Mati, donation was tainted with illegal cause or consideration, of
Province of Davao. Plaintiff averred to be its legal owner, which donor and donee were participants.
pursuant to a deed of donation of said land, executed in
her favor by the late owner, Salvador P. Lopez, on 18 May Appellant vigorously contends that the Court of First
1943. The defense interposed was that the donation was Instance as well as the Court of Appeals erred in holding
null and void for having an illicit causa or consideration, the donation void for having an illicit cause or
which was the plaintiff's entering into marital relations consideration. It is argued that under Article 1274 of the
with Salvador P. Lopez, a married man; and that the Civil Code of 1889 (which was the governing law in 1948,
property had been adjudicated to the appellees as heirs of when the donation was executed), "in contracts of pure
Lopez by the court of First Instance, since 1949. beneficence the consideration is the liberality of the
donor", and that liberality per se can never be illegal, since
The Court of Appeals found that the deed of donation was it is neither against law or morals or public policy.
prepared by the Justice of the Peace of Mati, Davao, before
whom it was signed and ratified on the date aforesaid. At The flaw in this argument lies in ignoring that under Article
the time, the appellant Liguez was a minor, only 16 years of 1274, liberality of the do or is deemed causa in those
age. While the deed recites contracts that are of "pure" beneficence; that is to say,
contracts designed solely and exclusively to procure the
That the DONOR, Salvador P. Lopez, for and in the welfare of the beneficiary, without any intent of producing
consideration of his love and affection for the said any satisfaction for the donor; contracts, in other words, in
DONEE, Conchita Liguez, and also for the good and which the idea of self-interest is totally absent on the part
valuable services rendered to the DONOR by the of the transferor. For this very reason, the same Article
DONEE, does by these presents, voluntarily give 1274 provides that in remuneratory contracts, the
grant and donate to the said donee, etc. consideration is the service or benefit for which the
(Paragraph 2, Exhibit "A") remuneration is given; causa is not liberality in these cases
because the contract or conveyance is not made out of
the Court of Appeals found that when the donation was pure beneficence, but "solvendi animo." In consonance
made, Lopez had been living with the parents of appellant with this view, this Supreme Court in Philippine Long
for barely a month; that the donation was made in view of Distance Co. vs. Jeturian * G.R. L-7756, July 30, 1955, like
the desire of Salvador P. Lopez, a man of mature years, to the Supreme Court of Spain in its decision of 16 Feb. 1899,
have sexual relations with appellant Conchita Liguez; that has ruled that bonuses granted to employees to excite
Lopez had confessed to his love for appellant to the their zeal and efficiency, with consequent benefit for the
instrumental witnesses, with the remark that her parents employer, do not constitute donation having liberality for a
would not allow Lopez to live with her unless he first consideration.
donated the land in question; that after the donation,

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Here the facts as found by the Court of Appeals (and which (1) When the fault is on the part of both
we can not vary) demonstrate that in making the donation contracting parties, neither may recover what he
in question, the late Salvador P. Lopez was not moved has given by virtue of the contract, or demand the
exclusively by the desire to benefit appellant Conchita performance of the other's undertaking;
Liguez, but also to secure her cohabiting with him, so that
he could gratify his sexual impulses. This is clear from the (2) When only one of the contracting parties is at
confession of Lopez to the witnesses Rodriguez and Ragay, fault, he cannot recover, what he has given by
that he was in love with appellant, but her parents would reason of the contract, or ask for fulfillment of
not agree unless he donated the land in question to her. what has been promised him. The other, who is
Actually, therefore, the donation was but one part of an not at fault, may demand the return of what he
onerous transaction (at least with appellant's parents) that has given without any obligation to comply with
must be viewed in its totality. Thus considered, the his promise.
conveyance was clearly predicated upon an illicit causa.
In our opinion, the Court of Appeals erred in applying to
Appellant seeks to differentiate between the alleged the present case the pari delicto rule. First, because it can
liberality of Lopez, as causa for the donation in her favor, not be said that both parties here had equal guilt when we
and his desire for cohabiting with appellant, as motives consider that as against the deceased Salvador P. Lopez,
that impelled him to make the donation, and quotes from who was a man advanced in years and mature experience,
Manresa and the jurisprudence of this Court on the the appellant was a mere minor, 16 years of age, when the
distinction that must be maintained between causa and donation was made; that there is no finding made by the
motives (De Jesus vs. Urrutia and Co., 33 Phil. 171). It is Court of Appeals that she was fully aware of the terms of
well to note, however that Manresa himself (Vol. 8, pp. the bargain entered into by and Lopez and her parents;
641-642), while maintaining the distinction and upholding that, her acceptance in the deed of donation (which was
the inoperativeness of the motives of the parties to authorized by Article 626 of the Old Civil Code) did not
determine the validity of the contract, expressly excepts necessarily imply knowledge of conditions and terms not
from the rule those contracts that are conditioned upon set forth therein; and that the substance of the testimony
the attainment of the motives of either party. of the instrumental witnesses is that it was the appellant's
parents who insisted on the donation before allowing her
. . . distincion importantisima, que impide anular el to live with Lopez. These facts are more suggestive of
contrato por la sola influencia de los motivos a no seduction than of immoral bargaining on the part of
ser que se hubiera subordinando al cumplimiento appellant. It must not be forgotten that illegality is not
de estos como condiciones la eficacia de aquel. presumed, but must be duly and adequately proved.

The same view is held by the Supreme Court of Spain, in its In the second place, the rule that parties to an illegal
decisions of February 4, 1941, and December 4, 1946, contract, if equally guilty, will not be aided by the law but
holding that the motive may be regarded as causa when it will both be left where it finds them, has been interpreted
predetermines the purpose of the contract. by this Court as barring the party from pleading the
illegality of the bargain either as a cause of action or as a
In the present case, it is scarcely disputable that Lopez defense. Memo auditor propriam turpitudinem allegans.
would not have conveyed the property in question had he Said this Court in Perez vs. Herranz, 7 Phil. 695-696:
known that appellant would refuse to cohabit with him; so
that the cohabitation was an implied condition to the It is unnecessary to determine whether a vessel for
donation, and being unlawful, necessarily tainted the which a certificate and license have been
donation itself. fraudulently obtained incurs forfeiture under these
or any other provisions of this act. It is enough for
The Court of Appeals rejected the appellant's claim on the this case that the statute prohibits such an
basis of the well- known rule "in pari delicto non oritur arrangement as that between the plaintiff and
actio" as embodied in Article 1306 of 1889 (reproduced in defendant so as to render illegal both the
Article 1412 of the new Civil Code): arrangement itself and all contracts between the
parties growing out of it.
ART. 1412. If the act in which the unlawful or
forbidden cause consists does not constitute a It does not, however, follow that the plaintiff can
criminal offense, the following rules shall be succeed in this action. There are two answers to
observed: his claim as urged in his brief. It is a familiar

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 principle that the courts will not aid either party to ineffectiveness of the same must be decided by different
enforce an illegal contract, but will leave them legal principles. In this regard, the Court of Appeals
both where it finds them; but where the plaintiff correctly held that Lopez could not donate the entirety of
can establish a cause of action without exposing its the property in litigation, to the prejudice of his wife Maria
illegality, the vice does not affect his right to Ngo, because said property was conjugal in character and
recover. The American authorities cited by the the right of the husband to donate community property is
plaintiff fully sustain this doctrine. The principle strictly limited by law (Civil Code of 1889, Arts. 1409, 1415,
applies equally to a defense. The law in those 1413; Baello vs. Villanueva, 54 Phil. 213).
islands applicable to the case is found in article
1305 of the Civil Code, shutting out from relief ART. 1409. The conjugal partnership shall also be
either of the two guilty parties to an illegal or chargeable with anything which may have been
vicious contract. given or promised by the husband alone to the
children born of the marriage in order to obtain
In the case at bar the plaintiff could establish employment for them or give then, a profession or
prima facie his sole ownership by the bill of sale by both spouses by common consent, should they
from Smith, Bell and Co. and the official not have stipulated that such expenditures should
registration. The defendant, on his part, might be borne in whole or in part by the separate
overthrow this title by proof through a certain property of one of them.".
subsequent agreement between him and the
plaintiff, dated March 16, 1902, that they had ART. 1415. The husband may dispose of the
become owners in common of the vessel, 'the property of the conjugal partnership for the
agreement not disclosing the illegal motive for purposes mentioned in Article 1409.)
placing the formal title in the plaintiff. Such an
ownership is not in itself prohibited, for the United ART. 1413. In addition to his powers as manager
States courts recognize the equitable ownership of the husband may for a valuable consideration
a vessel as against the holder of a legal title, where alienate and encumber the property of the
the arrangement is not one in fraud of the law. conjugal partnership without the consent of the
(Weston vs. Penniman, Federal Case 17455; wife.
Scudder vs. Calais Steamboat Company, Federal
Case 12566.). The text of the articles makes it plain that the donation
made by the husband in contravention of law is not void in
On this proof, the defendant being a part owner of its entirety, but only in so far as it prejudices the interest of
the vessel, would have defeated the action for its the wife. In this regard, as Manresa points out
exclusive possession by the plaintiff. The burden (Commentaries, 5th Ed., pp. 650-651, 652-653), the law
would then be cast upon the plaintiff to show the asks no distinction between gratuitous transfers and
illegality of the arrangement, which the cases cited conveyances for a consideration.
he would not be allowed to do.
Puede la mujer como proprietaria hacer anular las
The rule was reaffirmed in Lima vs. Lini Chu Kao, 51 Phil. donaciones aun durante el matrimonio? Esta es,
477. en suma, la cuestion, reducida a determinar si la
distinta naturaleza entre los actos a titulo oneroso
The situation confronting us is exactly analogous. The y los actos a titulo lucrativo, y sus especiales y
appellant seeks recovery of the disputed land on the diversas circunstancias, pueden motivar una
strength of a donation regular on its face. To defeat its solucion diferente en cuanto a la epoca en que la
effect, the appellees must plead and prove that the same is mujer he de reclamar y obtener la nulidad del
illegal. But such plea on the part of the Lopez heirs is not acto; cuestion que no deja de ser interesantisima. lawphi1.net

receivable, since Lopez, himself, if living, would be barred

from setting up that plea; and his heirs, as his privies and El Codigo, a pesar de la variacion que ha
successors in interest, can have no better rights than Lopez introducido en el proyecto de 1851, poniendo
himself. como segundo parrafo del articulo 1.413, o como
limitacion de las enajenaciones u obligaciones a
Appellees, as successors of the late donor, being thus titulo oneroso, lo que era una limitacion general
precluded from pleading the defense of immorality or de todos los actos del marido, muestra, sin
illegalcausa of the donation, the total or partial embargo, que no ha variado de criterio y que para

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 el las donaciones deben en todo equipararse a "collationable gifts" under Article 818 should include gifts
cualquier otro acto ilegal o frraudulento de made not only in favor of the forced heirs, but even those
caracter oneroso, al decir en el art. 1.419: made in favor of strangers, as decided by the Supreme
"Tambien se traera a colacion en el inventario de Court of Spain in its decisions of 4 May 1899 and 16 June
la sociedad el importe de las donaciones y 1902. So that in computing the legitimes, the value of the
enajenaciones que deban considerarse ilegales o property to herein appellant, Conchita Liguez, should be
fraudulentas, con sujecion al art. 1.413.' (Debio considered part of the donor's estate. Once again, only the
tambien citarse el articulo 1.415, que es el que court of origin has the requisite date to determine whether
habla de donaciones.) lawphi1.net the donation is inofficious or not.

"En resumen: el marido solo puede donar los With regard to the improvements in the land in question,
bienes gananciales dentro de los limites marcados the same should be governed by the rules of accession and
en el art. 1.415. Sin embargo, solo la mujer o sus possession in good faith, it being undisputed that the
herederos pueden reclamar contra la valides de la widow and heirs of Lopez were unaware of the donation in
donacion, pues solo en su interes establece la favor of the appellant when the improvements were made.
prohibicion. La mujer o sus herederos, para poder
dejar sin efecto el acto, han de sufrir verdadero The appellees, relying on Galion vs. Garayes, 53 Phil. 43,
perjuicio, entendiendose que no le hay hasta, contend that by her failure to appear at the liquidation
tanto que, terminada por cualquier causa la proceedings of the estate of Salvador P. Lopez in July 1943,
sociedad de gananciales, y hecha su liquidacion, no the appellant has forfeited her right to uphold the donation
pueda imputarse lo donado al haber por cualquier if the prejudice to the widow Maria Ngo resulting from the
concepto del marido, ni obtener en su donation could be made good out of the husband's share in
consecuencia la mujer la dibida indemnizacion. La the conjugal profits. It is also argued that appellant was
donacioni reviste por tanto legalmente, una guilty of laches in failing to enforce her rights as donee
eficacia condicional, y en armonia con este until 1951. This line of argument overlooks the capital fact
caracter, deben fijarse los efectos de la misma con that in 1943, appellant was still a minor of sixteen; and she
relacion a los adquirentes y a los terceros did not reach the age of majority until 1948. Hence, her
poseedores, teniendo, en su caso, en cuenta lo action in 1951 was only delayed three years. Nor could she
dispuesto en la ley Hipotecaria. Para prevenir todo be properly expected to intervene in the settlement of the
perjuicio, puede la mujer, durante el matrimonio estate of Lopez: first, because she was a minor during the
inmediatamente al acto, hacer constar ante los great part of the proceedings; second, because she was not
Tribunales su existencia y solicitor medidas de given notice thereof ; and third, because the donation did
precaucion, como ya se ha dicho. Para evitarlo en not make her a creditor of the estate. As we have ruled
lo sucesivo, y cuando las circunstancias lo in Lopez vs. Olbes, 15 Phil. 547-548:
requieran, puede instar la declaracion de
prodigalidad. The prima facie donation inter vivos and its
acceptance by the donees having been proved by
To determine the prejudice to the widow, it must be shown means of a public instrument, and the donor
that the value of her share in the property donated can not having been duly notified of said acceptance, the
be paid out of the husband's share of the community contract is perfect and obligatory and it is perfectly
profits. The requisite data, however, are not available to us in order to demand its fulfillment, unless an
and necessitate a remand of the records to the court of exception is proved which is based on some legal
origin that settled the estate of the late Salvador P. Lopez. reason opportunely alleged by the donor or her
heirs.
The situation of the children and forced heirs of Lopez
approximates that of the widow. As privies of their parent, So long as the donation in question has not been
they are barred from invoking the illegality of the donation. judicially proved and declared to be null,
But their right to a legitime out of his estate is not thereby inefficacious, or irregular, the land donated is of
affected, since the legitime is granted them by the law the absolute ownership of the donees and
itself, over and above the wishes of the deceased. Hence, consequently, does not form a part of the property
the forced heirs are entitled to have the donation set aside of the estate of the deceased Martina Lopez;
in so far as in officious: i.e., in excess of the portion of free wherefore the action instituted demanding
disposal (Civil Code of 1889, Articles 636, 654) computed as compliance with the contract, the delivery by the
provided in Articles 818 and 819, and bearing in mind that deforciant of the land donated, or that it be,

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 prohibited to disturb the right of the donees,
should not be considered as incidental to the
probate proceedings aforementioned.

The case of Galion vs. Gayares, supra, is not in point. First,

because that case involved a stimulated transfer that case
have no effect, while a donation with illegal causa may
produce effects under certain circumstances where the
parties are not of equal guilt; and again, because the
transferee in the Galion case took the property subject
to lis pendens notice, that in this case does not exist.

In view of the foregoing, the decisions appealed from are

reversed and set aside, and the appellant Conchita Liguez
declared entitled to so much of the donated property as
may be found, upon proper liquidation, not to prejudice
the share of the widow Maria Ngo in the conjugal
partnership with Salvador P. Lopez or the legitimes of the
forced heirs of the latter. The records are ordered
remanded to the court of origin for further proceedings in
accordance with this opinion. Costs against appellees. So
ordered.

Paras, C.J., Bengzon, Padilla, Montemayor, Reyes, A.,

Bautista Angelo, Labrador, Concepcion, and Endencia, JJ.,
concur.

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