Professional Documents
Culture Documents
vs.
COURT OF APPEALS AND ERNESTO HONTARCIEGO, PAUL FIGUEROA, TEODORO HIPALLA
AND RAMON CHIANG, MERLINDA CHIANG, respondents.
Facts: Merlinda Plana Chiang (hereinafter referred to as MERLINDA), sold a parcel of land to Ramon
Chiang (hereinafter referred to as CHIANG) covered by TCT Nos. T-86912, T-86913, and T-86914. and
were subsequently sold by CHIANG to the petitioner Serafin Modina (MODINA), as shown by the
Deeds of Sale. MERLINDA presented a Complaint-in-intervention, seeking the declaration of nullity of
the Deed of Sale between her husband and MODINA on the ground that the titles of the parcels of land
in dispute were never legally transferred to her husband.
Trial Court decided in favor of MERLINDA. Lower Court ruled declaring as void and inexistent the sale
of Lots 10063, 10088, 10085 and 10089 of the Cadastral Survey of Sta. Barbara by Merlinda Plana in
favor of Ramon Chiang as evidenced by the deed of definite sale.
Court of Appeals affirmed the aforesaid decision in toto.
Issues: (1) whether the sale of subject lots should be nullified, (2) whether petitioner was not a
purchaser in good faith, (3) whether or not only three-fourths of subject lots should be returned to the
private respondent.
Held: Petition is DENIED and the decision of the Court of Appeals, dated September 30, 1992, in CAG.R. CV No. 26051 AFFIRMED.
Ruling:
(1) Since one of the characteristics of a void or inexistent contract is that it does not produce any effect,
MERLINDA can recover the property from petitioner who never acquired title thereover.
(2) Petitioner cannot claim that the sale between him and MODINA falls under the exception provided
for by law. As a general rule, in a sale under the Torrens system, a void title cannot give rise to a valid
title. The exception is when the sale of a person with a void title is to a third person who purchased it
for value and in good faith.
(3) The issue of whether only three-fourths of subject property will be returned was never an issue
before the lower court and therefore, the petitioner cannot do it now. A final word. In a Petition for
Review, only questions of law may be raised.
DIONISIO RELLOSA, PETITIONER, VS. GAW CHEE HUN, RESPONDENT.
Facts: On February 2, 1944, Dionisio Rellosa sold to Gaw Chee Hun a parcel of land, together with the
house erected thereon, situated in the City of Manila, Philippines, for the sum of P25,000. The sale
was executed subject to the condition that the vendee, being a Chinese citizen, would obtain the
approval of the Japanese Military Administration in accordance with (seirei) No. 6 issued on April 2,
1943, by the Japanese authorities, and said approval has not been obtained, and that, even if said
requirement were met, the sale would at all events be void under article XIII, Section 5, of our
Constitution, Vendor filed an action for annulment of the sale. And said duplicate title be returned
before said property be disposed by vendee. Defendant denied allegations and contended that said
sale is absolute and unconditional.
The trial court declared both the sale and the lease valid and binding and dismissed the complaint.
Court of Appeals affirmed in toto.
Issues: Whether or not the sale in question is valid and, even if it were invalid, plaintiff cannot maintain
the action under the principle of pari delicto?
Held: The sale in question is null and void, but plaintiff is barred from taking the present action under the principle
of pari delicto.
Ruling:
(1) Constitution, in its article VIII, section 5, provides that "no private agricultural land shall be transferred or assigned
except to individuals, corporations, or associations qualified to acquire or hold lands of the public domain in the
Philippines", which provisions are similar to those contained in our present Constitution.
(2) In Pari Delicto - The proposition is universal that no action arises, in equity or at law, from an illegal contract; no suit
can be maintained for its specific performance, or to recover the property agreed to be sold or delivered, or the money
agreed to be paid, or damages for its violation. This doctrine is subject to one important limitation, namely, "whenever
public policy is considered as advanced by allowing either party to sue for relief against the transaction"The cases in
which this limitation may apply only "include the class of contracts which are intrinsically contrary to public policy,
contracts in which the illegality itself consists in their opposition to public policy, and any other species of illegal
contracts in which, from their particular circumstances, incidental and collateral motives of public policy require relief."
The contract in question does not come under this exception because it is not intrinsically contrary to public policy, nor
one where the illegality itself consists in its opposition to public policy. It is illegal not because it is against public policy
but because it is against the Constitution. Nor may it be contended that to apply the doctrine of pari delicto would be
tantamount to contravening the fundamental policy embodied in the constitutional prohibition in that it would allow an
alien to remain in the illegal possession of the land, because in this case the remedy is lodged elsewhere.
(2) Remedies: There are at present two ways by which this situation may be remedied, to wit, (1) action for reversion,
and (2) escheat to the state. An action for reversion is slightly different from escheat proceeding, but in its effects they
are the same. They only differ in procedure. Escheat proceedings may be instituted as a consequence of a violation of
article XIII, section 5 of our Constitution, which prohibits transfers of private agricultural lands to aliens, whereas an
action for reversion is expressly authorized by the Public Land Act (sections 122, 123 and 124 of Commonwealth Act
No. 141).
PHILIPPINE BANKING CORPORATION, representing the estate of JUSTINA SANTOS Y CANON FAUSTINO,
deceased, plaintiff-appellant,
vs.
LUI SHE in her own behalf and as administratrix of the intestate estate of Wong Heng, deceased, defendantappellant.
Facts: Justina Santos y Canon Faustino and her sister Lorenzo were the owners in common of a piece of land in
Manila. Her sister Lorenzo died. At 90 years old, blind, crippled and an invalid, she was left with no other relative to live
with. Her only companions in the house were her 17 dogs and 8 maids. Wong Heng, a Chinese, lived with his family in
the restaurant. Wong had been a long-time lessee of a portion of the property, paying a monthly rental of P2,620.
Wong himself was the trusted man to whom she delivered various amounts for safekeeping, including rentals from her
property at the corner of Ongpin and Salazar streets and the rentals which Wong himself paid as lessee of a part of the
Rizal Avenue property. Wong also took care of the payment; in her behalf, of taxes, lawyers' fees, funeral expenses,
masses, salaries of maids and security guard, and her household expenses.
Justina Santos executed on November 15, 1957 a contract of lease (Plff Exh. 3) in favor of Wong, covering the portion
then already leased to him and another portion fronting Florentino Torres street. The lease was for 50 years, although
the lessee was given the right to withdraw at any time from the agreement; the monthly rental was P3,120.
She executed another contract (Plff Exh. 7) giving Wong the option to buy the leased premises for P120,000, payable
within ten years at a monthly installment of P1,000. The option, written in Tagalog, imposed on him the obligation to
pay for the food of the dogs and the salaries of the maids in her household, the charge not to exceed P1,800 a month.
The option was conditioned on his obtaining Philippine citizenship, a petition for which was then pending in the Court of
First Instance of Rizal.
She executed two other contracts, one (Plff Exh. 5) extending the term of the lease to 99 years, and another (Plff Exh.
6) fixing the term of the option of 50 years. Both contracts are written in Tagalog.
In two wills executed on August 24 and 29, 1959 (Def Exhs. 285 & 279), she bade her legatees to respect the contracts
she had entered into with Wong, But later, she had a change of heart and directed her executor to secure the
annulment of the contracts.
Lower court rendered judgment declaring all contract null and void except for the contract of lease.
Issue: Whether contracts executed are null and void?
Held: The contracts in question are annulled and set aside; the land subject-matter of the contracts is ordered returned
to the estate of Justina Santos as represented by the Philippine Banking Corporation; Wong Heng (as substituted by
the defendant-appellant Lui She) is ordered to pay the Philippine Banking Corporation the sum of P56,564.35, with
legal interest from the date of the filing of the amended complaint; and the amounts consigned in court by Wong Heng
shall be applied to the payment of rental from November 15, 1959 until the premises shall have been vacated by his
heirs.
Ruling:
ecause the parties are in pari delicto they will be left where they are, without relief. For one thing, the original parties
who were guilty of a violation of the fundamental charter have died and have since been substituted by their
administrators to whom it would be unjust to impute their guilt. Article 1416 of the Civil Code provides, as an exception
to the rule on pari delicto, that "When the agreement is not illegal per se but is merely prohibited, and the prohibition by
law is designed for the protection of the plaintiff, he may, if public policy is thereby enhanced, recover what he has paid
or delivered." The Constitutional provision that "Save in cases of hereditary succession, no private agricultural land
shall be transferred or assigned except to individuals, corporations, or associations qualified to acquire or hold lands of
the public domain in the Philippines"24 is an expression of public policy to conserve lands for the Filipinos. As this
Court said in Krivenko:
It is well to note at this juncture that in the present case we have no choice. We are construing the Constitution
as it is and not as we may desire it to be. Perhaps the effect of our construction is to preclude aliens admitted freely
into the Philippines from owning sites where they may build their homes. But if this is the solemn mandate of the
Constitution, we will not attempt to compromise it even in the name of amity or equity . . . .
For all the foregoing, we hold that under the Constitution aliens may not acquire private or public agricultural
lands, including residential lands, and, accordingly, judgment is affirmed, without costs.
was going to Germany, she executed a special power of attorney on December 13, 1983[5] appointing her brother,
Aser Catito, as her attorney-in-fact in managing the beauty parlor business. She stated in the said deed that she was
married to Klaus Muller. Alfred went back to Papua New Guinea to resume his work as a pilot.
When Alfred returned to the Philippines, he visited Ederlina in her Manila residence and found it unsuitable for her. He
decided to purchase a house and lot owned by Victoria Binuya Steckel in San Francisco del Monte, Quezon City,
covered by Transfer Certificate of Title No. 218429 for US$20,000.00. On January 23, 1984, a Contract to Sell was
entered into between Victoria Binuya Steckel as the vendor and Ederlina as the sole vendee. Alfred signed therein as a
witness.
Alfred later learned of Ederlina's marriage through Klaus Muller. He confronted the latter and admitted everything.
Ederlina mentioned that she will dirvorced said Kalus.
lfred purchased another parcel of land from one Atty. Mardoecheo Camporedondo, located in Moncado, Babak, Davao,
covered by TCT No. 35251. Alfred once more agreed for the name of Ederlina to appear as the sole vendee in the
deed of sale. On December 31, 1984, Atty. Camporedondo executed a deed of sale over the property for P65,000.00 in
favor of Ederlina as the sole vendee.[21] Alfred, through Ederlina, paid the lot at the cost of P33,682.00 and
US$7,000.00, respectively, for which the vendor signed receipts.[22] On August 14, 1985, TCT No. 47246 was issued
to Ederlina as the sole owner of the said property
The couple decided to put up a beach resort on a four-hectare land in Camudmud, Babak, Davao, owned by spouses
Enrique and Rosela Serrano. Alfred purchased the property from the spouses for P90,000.00, and the latter issued a
receipt therefor.
In the meantime, Ederlinas petition for divorce was denied because Klaus opposed the same. A second petition filed
by her met the same fate. Klaus wanted half of all the properties owned by Ederlina in the Philippines before he would
agree to a divorce. Worse, Klaus threatened to file a bigamy case against Ederlina.
Alfred proposed the creation of a partnership to Ederlina, or as an alternative, the establishment of a corporation, with
Ederlina owning 30% of the equity thereof. She initially agreed to put up a corporation and contacted Atty. Armando
Dominguez to prepare the necessary documents. Ederlina changed her mind at the last minute when she was advised
to insist on claiming ownership over the properties acquired by them during their coverture.
Alfred and Ederlinas relationship started deteriorating. Ederlina had not been able to secure a divorce from Klaus. The
latter could charge her for bigamy and could even involve Alfred, who himself was still married.
He demanded the return of all the amounts that Ederlina and her family had stolen and turn over all the properties
acquired by him and Ederlina during their coverture. And that all real and personal properties be returned to him.
Trial court ruled favoring Ederlina.
CA rendered a decision affirming in toto the decision of the RTC.
Issue: Whether or not Frenzel contention is correct?
Held: Petition bereft with merit. The sales in question were entered into by him as the real vendee, the said
transactions are in violation of the Constitution; hence, are null and void ab initio.
Ruling:
Section 14, Article XIV of the 1973 Constitution provides, as follows:
Save in cases of hereditary succession, no private land shall be transferred or conveyed except to individuals,
corporations, or associations qualified to acquire or hold lands in the public domain.
A contract that violates the Constitution and the law, is null and void and vests no rights and creates no obligations. It
produces no legal effect at all.The petitioner, being a party to an illegal contract, cannot come into a court of law and
ask to have his illegal objective carried out. One who loses his money or property by knowingly engaging in a contract
or transaction which involves his own moral turpitude may not maintain an action for his losses. To him who moves in
deliberation and premeditation, the law is unyielding.The law will not aid either party to an illegal contract or agreement;
it leaves the parties where it finds them.Under Article 1412 of the New Civil Code, the petitioner cannot have the
subject properties deeded to him or allow him to recover the money he had spent for the purchase thereof.
Issue: Whether or not deed of sale executed in favor of defendants is null and void?
Facts: Francisco Militante claimed ownership of a parcel of land located in the Barrio of General Luna,
Ruling: Under the circumstances and considering that petitioner was only discharging his duty
according to his best lights, and could not be said to have in any way acted arbitrarily or in bad faith in
filing the informations with the Circuit Criminal Court, his apology could have been graciously accepted
by respondent judge with an admonition to exercise greater care in the future, in lieu of the
unwarranted imposition of punitive fines in the total sum of P 1,000.00.
municipality of Barotac Viejo province of Iloilo covering an area of 171:3561 hectares. Before the war
with Japan, Francisco Militante application for the registration of the title of the land opposed by the
Director of Lands, the Director of Forestry and other oppositors. during the war with Japan, the record
of the case was lost before it was heard, so after the war Francisco Militante petitioned this court to
reconstitute the record of the case. The record was reconstituted on the Court of the First Instance of
Iloilo and docketed as Land Case No. R-695, GLRO Rec. No. 54852. Trial court dismissed the
application for registration. Pending appeal, Francisco disposed said land to Domingo Rubias, his sonin-law. CA dismissed application for registration.
Domingo Rubias paid taxes to said land and later filed forcible Entry and Detainer case against Isaias
Batiller. Lower Court and appellate court decided in favor of Batiller.
Issue: Whether or not the contract of sale between appellant and his father-in-law, the late Francisco
Militante over the property subject of Plan Psu-99791 was void because it was made when plaintiff was
counsel of his father-in-law in a land registration case involving the property in dispute
Held: Contract of Sale is null and void.
Ruling:
The principles governing the nullity of such prohibited contracts and judicial declaration of their nullity
have been well restated by Tolentino in his treatise on our Civil Code;
Parties Affected. Any person may invoke the in existence of the contract whenever juridical effects
founded thereon are asserted against him. Thus, if there has been a void transfer of property, the
transferor can recover it by the accion reinvindicatoria; and any prossessor may refuse to deliver it to
the transferee, who cannot enforce the contract. Creditors may attach property of the debtor which has
been alienated by the latter under a void contract; a mortgagee can allege the inexistence of a prior
encumbrance; a debtor can assert the nullity of an assignment of credit as a defense to an action by
the assignee.
Action On Contract. Even when the contract is void or inexistent, an action is necessary to declare
its inexistence, when it has already been fulfilled. Nobody can take the law into his own hands; hence,
the intervention of the competent court is necessary to declare the absolute nullity of the contract and
to decree the restitution of what has been given under it. The judgment, however, will retroact to the
very day when the contract was entered into.
Vda. de Cruz and her children Civil Case No. 5996 to declare null and void a deed of sale of a part of a
parcel of land located in Barrio San Isidro, Taytay, Rizal. The complaint stated that Eusebio Cruz, who
died on February 2, 1941 at the age of 100 years without leaving any will nor compulsory heirs, was
the absolute and exclusive owner of a parcel of mountainous and unimproved land situated in sitio
Matogalo, Taytay, Rizal. Delfin Cruz, by means of deceit and in collusion with persons among them his
father Gregorio Cruz made Eusebio Cruz, who could read and write, stamp his thumbmark on a deed
of sale of a portion of the land described in the complaint consisting of 26,577 square meters for the
Held: The questioned contempt orders and fines imposed therein are annulled and set aside.
Land Registration Act, and serves as a notice and warning to third parties dealing with said property
that someone is claiming an interest on the same or a better right than the registered owner thereof
(Sanchez, Jr. vs. Court of Appeals, 69 SCRA 332 [1976]; Paz Ty Sin Tei vs. Jose Le Dy Piao supra).
(2) Article 1491 prohibits only the sale or assignment between the lawyer and his client, of property
which is the subject of litigation. The contract for a contingent fee is not covered by Article 1491. the
payment of the attorney's fees, that is, the transfer or assignment of one-half (1/2) of the property in
litigation will take place only if the appeal prospers. Therefore, the tranfer actually takes effect after the
finality of a favorable judgment rendered on appeal and not during the pendency of the litigation
involving the property in question.
For while Canon 10 prohibits a lawyer from purchasing ...any interest in the subject matter of the
litigation which he is conducting", Canon 13, on the other hand, allowed a reasonable contingent fee
contract, thus: "A contract for a contingent fee where sanctioned by law, should be reasonable under
all the circumstances of the ca including the risk and uncertainty of the compensation, but should
always be subject to the supervision of a court, as to its reasonableness." Canon 13 specifically
permits the lawyer to contract for a con tangent fee which of itself, negatives the thought that the
Canons preclude the lawyer's having a stake in his litigation.
FRANCISCO A. TONGOY, for himself and as Judicial Administrator of the Estate of the Late Luis
D. Tongoy and Ma. Rosario Araneta Vda. de Tongoy, petitioners,
vs.
THE HONORABLE COURT OF APPEALS, MERCEDES T. SONORA, JUAN T. SONORA, JESUS T.
SONORA, TRINIDAD T. SONORA, RICARDO P. TONGOY, CRESENCIANO P. TONGOY, AMADO P.
TONGOY, and NORBERTO P. TONGOY, respondents.
Facts:
Issue:
Held:
Ruling:
Held: Yes.
Ruling:
The parties herein operated under an arrangement, comonly known as the "kabit system", whereby a
person who has been granted a certificate of convenience allows another person who owns motors
vehicles to operate under such franchise for a fee. Article 1409 of the Civil Code, It is a fundamental
principle that the court will not aid either party to enforce an illegal contract, but will leave them both
where it finds them. The defect of inexistence of a contract is permanent and incurable, and cannot be
cured by ratification or by prescription. As this Court said in Eugenio v. Perdido, 2 "the mere lapse of
time cannot give efficacy to contracts that are null void."
Issue: Whether or not sale to Ong King Po, a Chinese, was inexistent and/or void ab initio?
Held: Yes. Subsequent sale after said first sale is valid. Respondent, therefore, must be declared to be
the rightful owner of the property.Pacita Vallar, should not be held also liable for actual damages to
respondent. In the absence of contrary proof, she, too, must be considered as a vendee in good faith
of petitioner Epifania.
Ruling:
The sale of the land in question in 1936 by Epifania to Ong King Po was inexistent and void from the
beginning (Art. 1409 Civil Code) because it was a contract executed against the mandatory provision
of the 1935 Constitution, which is an expression of public policy to conserve lands for the Filipinos. The
litigated property is now in the hands of a naturalized Filipino. It is no longer owned by a disqualified
vendee. Respondent, as a naturalized citizen, was constitutionally qualified to own the subject
property. There would be no more public policy to be served in allowing petitioner Epifania to recover
the land as it is already in the hands of a qualified person.
Held: No. The defect of in existence of a contract is permanent and cannot be cured by ratification or
by prescription. The mere lapse of time cannot give efficacy to contracts that are null and void.
Ruling: Although not outrightly penalized as a criminal offense, the kabit system is invariably
recognized as being contrary to public policy and, therefore, void and in existent under Article 1409 of
the Civil Code. It is a fundamental principle that the court will not aid either party to enforce an illegal
contract, but will leave both where it finds then. Upon this premise it would be error to accord the
parties relief from their predicament. Article 1412 of the Civil Code denies them such aid. It provides:
Art. 1412. If the act in which the unlawful or forbidden cause consists does not
constitute a criminal offense, the following rules shall be observed:
1. When the fault is on the part of both contracting parties, neither may recover
that he has given by virtue of the contract, or demand, the performance of the
other's undertaking.
In the present case, it is scarcely disputable that Lopez would not have conveyed the property in
question had he known that appellant would refuse to cohabit with him; so that the cohabitation was an
implied condition to the donation, and being unlawful, necessarily tainted the donation itself.
Held: Appellee may recover from appellant the principal of the loan (P1,180.00) only, with interest
thereon at the legal rate of 6% per annum from the date of the filing of the complaint.
Conchita Liguez declared entitled to so much of the donated property as may be found, upon proper
liquidation, not to prejudice the share of the widow Maria Ngo in the conjugal partnership with Salvador
P. Lopez or the legitimes of the forced heirs of the latter.
True, as stated in Article 1411 of the New Civil Code, the rule of pari delicto applies where a contract's
nullity proceeds from illegality of the cause or object of said contract.
Ruling:
However, appellants fail to consider that a contract of loan with usurious interest consists of principal
and accessory stipulations; the principal one is to pay the debt; the accessory stipulation is to pay
interest thereon.
The question therefore to resolve is whether the illegal terms as to payment of interest likewise renders
a nullity the legal terms as to payments of the principal debt. Article 1420 of the New Civil Code
provides in this regard: "In case of a divisible contract, if the illegal terms can be separated from the
legal ones, the latter may be enforced."
In simple loan with stipulation of usurious interest, the prestation of the debtor to pay the principal debt,
which is the cause of the contract (Article 1350, Civil Code), is not illegal. The illegality lies only as to
the prestation to pay the stipulated interest; hence, being separable, the latter only should be deemed
void, since it is the only one that is illegal.