VOID OR INEXSITENT parties being in pari delicto, they shall have no action against each other,

and both shall be prosecuted. Moreover, the provisions of the Penal

VOIDABLE VOID Code relative to the disposal of the effects or instruments of a crime shall
May be ratified Cannot be ratified be applicable to the things or the price of the contract.
Produces effects until Generally, effects
annulled This rule shall be applicable when only one of the parties is guilty; but the
Defect is due to incapacity Defect here is that ordinarily, public innocent one may claim what he has given, and shall be bound to comply
or vitiated consent policy is militated against with his promise.
Valid until annulled Void from the very beginning so
generally, no action is required to set Art. 1412. If the act in which the unlawful or forbidden cause consists
it aside, unless the contract has does not constitute a criminal offense, the following rules shall be
already been performed observed:
May be cured by No prescription 1. When the fault is on the part of both contracting parties,
prescription neither may recover what he has given by virtue of the
Defense may be invoked Defense may be availed of by contract, or demand the performance of the other’s
only by the parties, or their anybody, whether he is a party to the undertaking;
successors in interest and contract or not, as long as his interest 2. When only one of the contracting parties is at fault, he cannot
privies is directly affected recover what he has given by reason of the contract or ask for
Relative or Conditional Absolute Nullity the fulfillment of what has been promised him. The other, who
Nullity is not a fault, may demand the return of what he has given
without any obligation to comply with his promise.
UNENFORCEABLE VOID
2 kinds of illegal Contracts:
May be ratified Cannot be ratified
1. With criminal offense
There is a contract but it No contract at all
a. Both parties are guilty (in pari delicto)
cannot be enforced
i. No action against each other
Cannot be assailed by third Can be assailed by anybody directly ii. Both shall be prosecuted
parties affected iii. Effects or instruments shall be confiscated
in favor of government
Art. 1409. The following contracts are inexistent and void from the b. Only one is guilty and One is innocent
beginning: i. Guilty party will be prosecuted
1. Those whose cause, object, or purpose is contrary to law, ii. Instrument of the crime will be
morals, good customs, public order, or public policy confiscated
2. Those whose cause are absolutely simulated or fictitious iii. Innocent one may claim what he has
3. Those whose cause or object did not exist at the time of the given, or if he has not yet given anything,
transaction he shall NOT be bound to comply with his
4. Those whose object is outside the commerce of men promise
5. Those which contemplate an impossible service iv. Cannot demand fulfillment because the
6. Those where the intention of the parties relative to the contract is prohibited
principal object of the contract cannot be ascertained 2. Without criminal offense
7. The expressly prohibited or declared void by law a. Both are guilty
These contracts cannot be ratified. Neither can the right to set up the b. One is guilty
defense of illegality be waived.
Exception to the rule:
2 kinds of void contracts  In case of a sale of land by a Filipino to a foreigner.
1. Inexistent - formalities are not complied with o Filipino may recover the land, otherwise, no one will
2. Illegal or Illicit own the land
Simulated Contracts o Foreigner must not be allowed to recover the
a. Absolutely simulated – void for utter lack of consent
payment (Better answer)
b. Relatively simulated – hidden intent is generally binding  The law is clear (Art. 1412)
Characteristics of void contracts:
 In pari delicto
a. Right to set up the defense of illegality cannot be waived  Constitutional prohibition
b. Action or defense does not prescribe  Ignorance of the law excuses no one
c. Defense of illegality is not available to third persons whose o Foreigner must be allowed to recover to the
interests are not directly affected payment:
d. Cannot give rise to a contract  Law on equity
e. Generally produces no effect
f. Generally, no action to declare them void is needed
g. Cannot be ratified In pari delicto
 Does not apply to fictitious or absolutely simulated contracts
Art. 1410. The action or defense for the declaration of the inexistence of
 Does not apply to Inexistent and Void Contracts
a contract does not prescribe.
Art. 1413. Interest paid in excess of the interest allowed by the usury
Art. 1411. When the nullity proceeds for the illegality of the cause or
laws may be recovered by the debtor with interest thereon from the date
object of the contract, and the act constitutes a criminal offense, both
of the payment.

Art. 1414. When money is paid or property delivered for n 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 can be done:
a. If purpose has not yet been accomplished; or
b. If damage has not been caused any third person
Art. 1420. In case of a divisible contract, if the illegal terms can be
separated from the legal ones, the latter may be enforced.
Illegal terms of a contract
a. Indivisible – void
b. Divisible – legal terms may be enforced if same can be
separated from the illegal terms
Art. 1421. The defense of the illegality of contracts is not available to
third persons whose interests are not directly affected.

*applicable even if  Defense may be set up only by those whose interest is directly
 parties are not equally guilty affected.
 public policy would be advanced by allowing the suit for relief  Not the rule on annullable and unenforceable contracts

Art. 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 or property delivered by the incapacitated person.

Art. 1416. When agreement is not illegal per se but is merely prohibited
and prohibition by the law is designed for the protection of the plaintiff,
he may, if public policy is thereby enhance, recover what he has paid or
delivered

Articles:
 Illegal per se
o Forbidden due to public interest
 Merely prohibited contracts
o Not illegal per se
o Prohibition is designated for protection of the
plaintiff
o Public policy would be enhanced by allowing the
recovery

Art. 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.

Art. 1418. When the law fixes, or authorizes the fixing of the maximum
number of house of labor, 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.

*8-hour labor law applies only to employments in industry or

occupation performed for profit or gain

Art. 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

*No waiver of right in minimum wages

When wages should be paid:

Not less often than once every two weeks or twice a month at
intervals not exceeding 16 days

Duty of employer:
a. To make payment on account not less often than once every
two weeks or twice a month at intervals not exceeding 16
days; and
b. To make a final settlement within two weeks after the
completion of the task