Article 1409.

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 of illegality be waived.

VOID CONTRACTS are those which, because of certain defects, generally produce no effect at all.
INEXISTENT CONTRACTS, on the other hand, 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 a contract.

CHARACTERISTICS OF A VOID OR INEXISTENT CONTRACT

1. Generally, it produces no effect whatsoever, being void or inexistent from the beginning
2. It cannot be cured or validated
3. The action or defense for the declaration of its illegality, inexistence or absolute nullity does
not prescribe
4. It cannot give rise to a valid contract

INSTANCES OF VOID OR INEXISTENT CONTRACTS

CONTRACTS WHOSE CAUSE, OBJECT OR PURPOSE IS CONTRARY TO LAW

CONTRACTS WHICH ARE ABSOLUTELY SIMULATED OR FICTITIOUS

CONTRACTS WITHOUT CAUSE OR OBJECT

CONTRACTS WHICH IS OUTSIDE OF COMMERCE OF MEN

CONTRACTS WHICH CONTEMPLATE AN IMPOSSIBLE SERVICE

CONTRACTS EXPRESSLY PROHIBITED OR DECLARED VOID BY LAW

Article 1410. The action or defense for the declaration of the inexistence of a contract does not
prescribe..

There is necessity of judicial declaration.

Article 1411. When the nullity proceeds from the illegality of the cause or object of the contract, and
the act 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.

Generally, parties to a void agreement cannot expect the aid of the law; the courts leave them as
they are, because they are deemed in pari delicto or in equal fault.

IN PARI DELICTO, is “a universal doctrine which holds that no action arises, in equity or law, from
an illegal contract; no suit can be maintained for its specific performance or to recover the property
agreed to be sold or delivered, or money agreed to be paid, or damages for its violation, and no
affirmative relief of any kind will be given to one against the other.

Article 1412. If the act in which the unlawful or forbidden cause consists does not constitute a
criminal offense, the following rules shall be observed:

(1) When the fault is on the part of both contracting parties, neither may recover what he has
given by virtue of the contract, or demand the performance of the other's undertaking;

(2) When only one of the contracting parties is at fault, he cannot recover what he has given
by reason of the contract, or ask for the fulfillment of what has been promised him. The
other, who is not at fault, may demand the return of what he has given without any obligation
to comply his promise. (1306)

WHERE BOTH PARTIES IN PARI DELICTO

A. Neither party may recover what he has given by virtue of the contract; and
B. Neither party may demand the performance of the other’s undertaking
C. No relief can be granted to either party

WHERE ONLY ONE PARTY IS GUILTY

A. The guilty party loses 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
D. The innocent party cannot be compelled to comply with his promise

WHEN PARI DELICTO RULE NOT APPLICABLE

1. Breach of warranty cases

2. Simulated contracts
3. Parties not equally guilty
4. Against the government
5. Prohibited conveyances under the law
6. Constitutional prohibition against alien landholding