Short answer. Article 1408 blocks only outside strangers — not someone who has stepped into a contracting party's legal position. An heir, assignee, or other successor-in-interest takes over that party's rights and defenses along with the contract, including the ability to raise or resist a claim of unenforceability; they are not the 'third person' the article shuts out.
What the law says
Unenforceable contracts cannot be assailed by third persons.
Civil Code, Article 1408 — Third Persons and Unenforceable Contracts. Read the full provision →
Who counts as a 'third person' here
Article 1408 is meant to protect the two contracting parties' private choice about whether to enforce a defective agreement — a stranger with no legal stake in it cannot barge in and use unenforceability to upset arrangements that do not concern him. That protection is narrow. It is aimed at outsiders, not at people who later occupy one of the original parties' own legal shoes. The rule binds only the parties to the unenforceable contract and those who later stand in their shoes; it does not reach anyone whose interest in the outcome is merely economic or incidental.
Why successors are different
An heir who inherits a decedent's estate, or a person who buys or is assigned a party's rights under a contract, does not acquire a fresh, independent interest from nothing — he steps directly into the position the original party held. Philippine succession and assignment rules treat the successor as continuing the same legal position for purposes of that relationship, not as a newcomer to it. Whatever the original party could have asserted about the contract's unenforceability, the successor can generally assert too.
What passes along with the contract
This means the right to demand performance, the right to invoke unenforceability as a shield, and the exposure to being sued on the contract if it is later ratified, all travel together to the successor. A buyer of a party's receivables, for instance, takes the account subject to the same defenses the original creditor could have raised or that could have been raised against him. If the original party instead ratifies the contract, that ratification also binds the successor, since ratification cures the defect for everyone standing in the ratifying party's position, not just for the party who signed it.
The limits of this rule
This is not a blanket rule that anyone connected to a contract may challenge it. A creditor of one of the parties, a co-owner of unrelated property, or a curious neighbor still counts as an outside third person under Article 1408 even if the contract indirectly affects them — they inherited no legal position under it, so the door Article 1408 shuts stays shut.
Cases citing this provision
These Supreme Court decisions cite the provision above. We list them so you can read them yourself; the summaries of what each decided are not ours to give.
- Rapid City Realty and Development Corporation vs. Lourdes Estudillo Paez-Cline alias Lourdes Paez-Villa, et, G.R. No. 217148, December 7, 2021 — read the decision on LawPhil →
Related provisions
- Civil Code, Article 1408 — Third Persons and Unenforceable Contracts
- Civil Code, Article 1407 — Both Parties Incapable