• ‘Unethical’ act of one party not enough to void contract

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    Persida Acosta

    Persida Acosta

    Dear PAO,
    I am engaged in the business of assembling and constructing food carts. In a written contract, a client and I agreed on the price and other details of his order for several carts. I was already paid almost 60 percent of the agreed price when the client demanded to cancel our contract.  He said he found out that we are giving better prices to other clients. He now contends that our contract is void because we are “unethical” for giving him a different contract price compared with those of other clients. I  want to know now if his contention is a legal basis to void our contract. Thank you in advance.
    Lemmy

    Dear Lemmy,
    We opine that your contract with your client cannot be considered void based solely on his perceived unethical act on your part in charging your other clients a different amount. Preference accorded  other clients in relation to terms and conditions of a contract will not nullify a contract freely entered into between parties.  The nature of a void contract 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,G.R. 139982, November 21, 2002).    Nothing in the cited provisions in the aforementioned jurisprudence cites perceived unethical acts as a ground to declare a contract void. Considering this, your client has no legal basis to claim that your contract is void. And even if your client claims that your contract is voidable, he must still 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.

    Furthermore, the terms and conditions of the contract, which you have freely agreed upon with your client, are independent of, and will not be tainted with infirmity by the dealings that you may have contracted with third parties. So long as there is a meeting of the minds regarding the cause and the object of the contract, your contract with your client 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)

    Finally, your client is mistaken in his belief that your contract with him is now void as he has no legal basis to support his claims. Should he insist on his erroneous stance and decide to cancel your agreement, he can be held liable for the breach of your contract.

    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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