Page 63 - Obligations & Contracts Module 1-2

PARI DELICTO DOCTRINE -both parties are guilty, no action against each other; those

who come in equity must come with clean hands; applies only to illegal contracts & not to

inexistent contracts; does not apply when a superior public policy intervenes.

EXCEPTION TO PARI DELICTO RULE

1. If purpose has not yet been accomplished & If damage has not been caused to any 3rd person

Requisites:

a) contract is for an illegal purpose

b) contract must be repudiated by any of the parties before purpose is accomplished or

damage is caused to 3rd parties

c) court believes that public interest will be served by allowing recovery (discretionary upon

the court ) – based on remorse; illegality is accomplished when parties entered into

contract; before it takes effect – party w/c is remorseful prevents it

2. Where laws are issued to protect certain sectors: consumer protection, labor, usury law

a) Consumer protection – if price of commodity is determined by statute, any person paying

an amount in excess of the maximum price allowed may recover such excess

b) Labor – if law sets the minimum wage for laborers, any laborer who agreed to receive less

may still be entitled to recover the deficiency; if law set max working hours & laborer who

undertakes to work longer may demand additional compensation

c) Interest paid in excess of the interest allowed by the usury law may be recovered by

debtor with interest from date of payment