CONTRACT CHAPTER 9

CATEGORY: CHAPTER 9: VOID AND

INEXISTENT CONTRACTS

Article 1409
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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.

These contracts cannot be ratified.  Neither can the right to set up the defense or
illegality be waived. (n)

Ang mga sumusunod na kontrata ay walang bisa sa simula’t sapul:

1.) Mga kontrata na ang dahilan, layunin, at intensyon ay labag sa batas, moral,
mabuting pamantayan, pampublikong utos o pampublikong patakaran;

2.) Mga kontrata na walang dudang kunwarian or gawa-gawa lamang;

3.) Mga kontrata na may dahilan at layunin na hindi umiiral sa panahon ng

transaksiyon;

4.) Mga kontrata na ang layunin ay labas sa komersyo ng sangkatauhan;

5.) Mga kontrata na nagmumungkahi ng imposibleng gawain;

6.) Mga kontrata na kung saan ang intensiyon ng bawat partido tungkol sa pangunahing
layunin nito ay hindi matiyak;

7.) Mga kontrata na hayagang ipinagbabawal o dineklarang walang bisa ng batas.

Ang mga kontrata na ito ay hindi maaaring ma-ratify, at ang karapatan na itaguyod ang
depensa o pagiging ilegal nito ay hindi matatalikdan.

Discussion:

Distinctions between Void and Rescissible Contracts

Basis Void Contract Rescissible Contract

The defect is in its

The defect is inherent in effects, which is either
1. Nature of defect
the contract itself. against once of the
parties or a third person.

It is based on equity and

Nullity is a matter of law
2. Interest served is more a matter of
and public interest.
private interest.

There are no legal Contract remains valid if

3. Consequences when
effects even if no action no action is filed. It
no action is filed
is filed to set it aside. produces legal effects.

4. Prescription Action to declare its Action to rescind

nullity does not contract prescribes
prescribe (Art. 1410) within four (4) years
 (Art. 1389).
Distinctions between Void and Voidable Contracts

Basis Void Contract Voidable Contract

Consent is vitiated or
Absence of essential
1. Cause of defect there is incapacity to
element/s of a contract.
give consent.

It has no effect even if

It is a valid contract until
2. Effect not set aside, because it
it is set aside.
is non-existent.

3. Ratification It cannot be ratified. It can be ratified.

Its nullity can be set up

against any person
Its nullity can be set up
4. Against whom asserting right arising
only against a party
nullity can be set up from it, and his
thereto.
successors in interest not
protected by law.

Action to declare nullity Action to annul contract

5. Prescription of contract does not prescribes within four
prescribe (Art. 1410). (4) years (Art. 1391).
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Distinctions between Void and Unenforceable Contracts

Unenforceable
Basis Void Contract
Contract

There is a contract but

There is no contract at
1. Status which cannot be
all
enforced.

It is not subject to It is subject to

2. Ratification
ratification. ratification.

It can be assailed by
3. Attack by third third persons whose It cannot be assailed by
persons interests are directly third persons.
affected.

Causes of
Causes of nullity are
unenforceability are
4. Causes those enumerated in
enumerated in Article
Article 1409.
1403 (par.2)
(Pineda, Ernesto L. Obligations and Contracts, 2009)
Case Illustration: GoChan vs. Young (354 SCRA 207)

Article 1410
March 25, 2016Leave a comment
The action or defense for the declaration of the inexistence of a contract does not
prescribe.

Ang aksyon o depensa sa deklarasyon ng pagiging walang bisa ng isang kontrata ay

hindi nagtatapos at pwedeng idulog sa korte sa anumang oras.

Discussion:

The action for the declaration of inexistence or the defense on such is imprescriptible.
The mere lapse of time does not validate a void contract, unlike in voidable contracts,
which, if not assailed within the specific period provided by law, shall remain valid.

It is not necessary to go to the court to declare the nullity of a void contract if both
parties agree that it is void and henceforth, on their own volition, change it. However, to
avoid instances where one party refuses to restore what he has received out of a void
contract, it is better to go to the court first to avoid inconvenience or to avoid taking the
law into his own hands. Taking the law into one’s hands may lead to coercion which is a
criminal offense.

Laches:

Laches has been defined as the failure or neglect, for an unreasonable length of time, to
do that which by exercising due diligence could or should have been done earlier; it is
negligence or omission to assert a right within a reasonable time, warranting a
presumption that the party entitled to assert it either has abandoned it or declined to
assert it (Lim Tay vs CA 293 SCRA 634).

The right to have a contract declared void ab initio may be barred by laches although
not barred by prescription.

It is an application of equity, based upon the grounds of public policy which require for
the peace of society, discouraging stale claims. It is however exercised on the discretion
of the court, its application controlled by equitable considerations.

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Case Illustration: Metropolitan Waterworks and Sewerage System vs Court of

Appeals, 297 SCRA 287 (1998)
 

Article 1411
March 25, 2016Leave a comment
When the nullity proceeds from the illegality of the cause or object of the
contract, and the set 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.

This rule shall be applicable when only one of the parties is guilty; but the
innocent one may claim what he has given, and shall not be bound to comply
with his promise.

Kapag ang pagpapawalang bisa ay mag tungo sa ilegalidad ng sanhi o bagay sa

kontrata, at ang pagtatakda ay bumuo ng criminal offense, ang parehong partido ang
may pagkakamali, sila ay walang aksyon laban sa isat isa, at pareho silang uusigin.
Moreover, ang probisyon ng Revised Penal Code katulad sa pagaalis ng epekto o
instrumento sa krimen ay dapat angkop sa bagay o sa halaga ng kontrata.

Ang patakaran na ito dapat angkop kapag ang isang partido ay nagkasala; ngunit ang
kainosentehan ng isa ay maaring kunin ang kanyang binigay, at hindi dapat nakatali
para maisakatuparan ang kanyang pangako.

If the contract is still on its executory stage, they cannot compel one another to fulfill
their respective promises; and

If the contract was already executed, they cannot get back what they had already paid
or delivered to one another. The law will leave them where they are.

Case Illustration: Fausta Batarra vs. Francisco Marcos

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