Ronrei Don N Amboy

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
defense of illegality be waived
ART 1409

VOID vs. INEXISTENT
VOID CONTRACTS
Are those which,
because of certain
defects, generally
produce no effect at all.
INEXISTENT
CONTRACTS
Refer to agreements
which lack one or some
or all of the elements or
do not comply with the
formalities which are
essential for the
existence of the
contract.

(1) Generally, it produces no force and effect whatsoever;
(2) It cannot be ratified (Art. 1409, par. 2.);
(3) The right to set up the defense of illegality cannot be
waived;
(4) The action or defense for the declaration of its
inexistence does not prescribe (Art. 1410.);
(5) The defense of illegality is not available to third persons
whose interests are not directly affected (Art. 1421.);
(6) It cannot give rise to a valid contract. (Art. 1422.)
CHARACTERISTICS

Both parties in pari delicto
Parties shall have no action against each other
Both shall be prosecuted
The things or the price of the contract, as the effects or
instruments of the crime, shall be confiscated in favor of the
government.(par.1; Art.48, Revised Penal Code.)
Where only one party is guilty
The rule in par. 1 of Art. 1411, applies only to the guilty
party or the more guilty party.
The innocent one or the less guilty may claim what he has
given and shall not be bound to comply with his promise.
Rules where contract is illegal
and the act constitutes a criminal
offense

Both parties are in pari delicto
Neither party may recover what he has given by virtue of the
contract; and
Neither party may demand the performance of the others
undertaking.
Where only one party is guilty
The guilty party loses what he has given by reasons of the
contract;
The guilty party cannot ask for the fulfillment of the others
undertaking;
The innocent party may demand the return of what he has
given;
The innocent party cannot be compelled to comply with his
promise.
Rules where contracts is illegal but
the act does not constitute a
criminal offense

(1) The contract is for an illegal purpose;
(2) The contract is repudiated before the purpose has
been accomplished or before any damage has been
caused to a third person;
(3) The court considers that public interest will be
subserved by allowing recovery
Recovery where contract entered
into for illegal purpose

Allowed when one of the parties is incapacitated
Interest of justice so demands
Recovery of an
incapacitated person

Recovery of Amount paid in excess of ceiling price
Recovery of additional compensation for service
rendered beyond time limit
Recovery of of amount of wage less than minimum
fixed.
Other Recoveries
Art. 1417-1419