Short answer. No. Article 2018 declares null and void a contract that looks like a sale of goods, securities or shares but is entered into with the intention that only the difference between the stipulated price and the market price be paid by the loser to the winner. And the loser may recover what he has paid.
What the law says
If a contract which purports to be for the delivery of goods, securities or shares of stock is entered into with the intention that the difference between the price stipulated and the exchange or market price at the time of the pretended delivery shall be paid by the loser to the winner, the transaction is null and void. The loser may recover what he has paid.
Civil Code, Article 2018 — Futures/Difference Contracts Void. Read the full provision →
The law is aimed at a disguised wager
Article 2018 targets what is often called a "difference contract": an arrangement dressed up as a sale of goods, securities or shares, where in truth neither side ever intends anything to be delivered. The only thing meant to change hands is a sum of money reflecting how the market moved — the loser paying the winner the gap between the agreed price and the actual price. Stripped of its trading vocabulary, that is a bet on price movement, and the Code refuses to lend it the standing of a genuine commercial contract.
What the provision says
The text is emphatic: If a contract which purports to be for the delivery of goods, securities or shares of stock is entered into with the intention that the difference between the price stipulated and the exchange or market price at the time of the pretended delivery shall be paid by the loser to the winner, the transaction is null and void. The loser may recover what he has paid. The controlling word is intention. The contract may recite a sale in perfect form; what condemns it is the parties' shared understanding that no delivery will ever occur and only the difference will be settled.
The loser can get his money back
This is a notable departure from the usual treatment of gambling debts, where the law tends to leave the parties where it finds them. Here the Code goes further and gives the loser an affirmative right to recover what he paid. Because the contract is void, it produces no enforceable obligation at all; the winner has no legal claim to keep his winnings, and the loser is not left to bear a loss the law never recognised. That recovery right is the practical bite of the article — it undoes the settlement rather than merely declining to enforce it.
Telling this apart from genuine trading
Not every contract that can be closed out for a cash difference is caught. What matters is whether the parties genuinely undertook obligations capable of real performance, or merely pretended to. Transactions carried out on a recognised, regulated exchange, with actual margin, clearing and delivery mechanisms behind them, stand on a different footing from a private side-bet cast as a sale. If a dispute arises, the decisive evidence is what the parties actually intended and did — whether any delivery was ever contemplated, how the deal was documented, and how similar dealings between them were carried out.
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.
- Safic Alcan & Cie vs. Imperial Vegetable Oil Co., Inc, G.R. No. 126751, March 28, 2001 — read the decision on LawPhil →
- NM Rothschild and Sons (Australia) Limited vs. Lepanto Consolidated Mining Company, G.R. No. 175799, November 28, 2011 — read the decision on LawPhil →