Perceived unethical acts on a contract

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Persida Acosta

Dear PAO,
I have entered into an agreement with a contractor for the installation and construction of a swimming pool in my vacation house in the province. We have a written contract for its construction, and I have already paid more than half of the agreed price. I learned, however, that the same contractor was building another swimming pool for my neighbor with the same dimensions and specifications. It was basically the same kind of swimming pool with my own, but for almost half of our agreed contract price.

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I am baffled by this fact, and I feel that the contractor is being unethical for giving my neighbor a significantly cheaper contract price over the same kind of swimming pool, considering the amount that I am paying for my own pool. Because of this unethical conduct of the contractor, I want to know if I can cancel our contract. I also what to know if I can legally claim that our contract is now void or at least voidable, because of what the contractor did that is unfair to me. Thanks!
Ryan

Dear Ryan,
It appears from the details you provided that you want to nullify your contract in building a swimming pool, because your contractor gave a different contract price to your neighbor. You judge this as an unethical act which you claim is a basis to consider your contract void or voidable. To address your concerns, it is necessary to look into the nature of a void and voidable contract which is clarified and settled by jurisprudence, to wit:

“A void or inexistent contract is one which has no force and effect from the very beginning. Hence, it is as if it has never been entered into and cannot be validated either by the passage of time or by ratification. There are two types of void contracts: [1] those where one of the essential requisites of a valid contract as provided for by Article 1318 of the Civil Code is totally wanting; and [2] those declared to be so under Article 1409 of the Civil Code. By contrast, a voidable or annullable contract is one in which the essential requisites for validity under Article 1318 are present, but vitiated by want of capacity, error, violence, intimidation, undue influence, or deceit” (Julian Francisco vs Pastor Herrera, GR 139982, November 21, 2002, Ponente: former Associate Justice Leonardo A. Quisumbing).

Nowhere in the cited legal provisions in the abovementioned jurisprudence does it mention that perceived unethical acts are considered as legal grounds to declare a contract void or voidable. The terms and conditions of a contract, which you have freely agreed upon with your contractor, are independent of, and will not be tainted with alleged infirmity by the dealings which he may have contracted with third parties such as your neighbor. So long as there is a meeting of the minds regarding the cause and the object of the contract, your agreement with your contractor is already perfected and consequently binding and obligatory pursuant to Article 1315 of the New Civil Code of the Philippines:

“Article 1315. Contracts are perfected by mere consent, and from that moment the parties are bound not only to the fulfillment of what has been expressly stipulated but also to all the consequences which, according to their nature, may be in keeping with good faith, usage and law.”(Emphasis supplied)

From this, it appears that your agreement with your contractor cannot be considered void based solely on your perceived unethical act of your contractor in charging a different amount to your neighbor. Preference accorded to other clients in relation with terms and conditions of a contract will not nullify a contract freely entered into between parties.

Considering this, you have no legal basis to claim that your contract to build your swimming pool is void. And even if you claim that your contract is voidable, you still have to prove the presence of want of capacity, error, violence, intimidation, undue influence or deceit that vitiates the essential requisites of a valid contract. Otherwise, there is no legal reason to claim that your contract is void or even voidable.

Again, we find it necessary to mention that this opinion is solely based on the facts you have narrated and our appreciation of the same. The opinion may vary when the facts are changed or elaborated.

We hope that we were able to enlighten you on the matter.

Editor’s note: Dear PAO is a daily column of the Public Attorney’s Office. Questions for Chief Acosta may be sent to dearpao@manilatimes.net

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