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[RAFAEL A. DINGLASAN v. LEE BUN TING](https://www.lawyerly.ph/juris/view/c3337?user=fbGU2WFpmaitMVEVGZ2lBVW5xZ2RVdz09)
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[ GR No. L-5996, Jun 27, 1956 ]

RAFAEL A. DINGLASAN v. LEE BUN TING +

DECISION

99 Phil. 427

[ G.R. No. L-5996, June 27, 1956 ]

RAFAEL A. DINGLASAN, ET AL., PETITIONERS, VS. LEE BUN TING, ANG CHIA, IN HER CAPACITY AS WIDOW OF THE DECEASED LEE LIONG, AS WELL AS JUDICIAL ADMINISTRATRIX OF THE PROPERTIES OF SAID DECEASED, AND CLARO LEES, RESPONDENTS.

D E C I S I O N

LABRADOR, J.:

This is an  appeal by certiorari against  a judgment of the  Court of  Appeals,  affirming  that  of  the Court  of First Instance of Capiz.  The facts found in the  Court of Appeals,  which  are pertinent  to this appeal are  as follows:

In  the month  of  March,  1936  petitioners-appellants sold to Lee Liong, a Chinese citizen, predecessor in interest of respondents-appellees, a parcel of land situated  on the corner of Roxas Avenue and Pavia Street, Capiz (now Roxas City), Capiz, designated as  lot 398 and covered by  original Certificate of Title No. 3389.  The  cost was P6,000 and  soon  after the sale  Lee Liong constructed thereon  a concrete building which he  used as a place for his  lumber business  and in  part as  residence  for himself and  family.   Petitioners  had contended that the sale was  a conditional sale, or one with the  right of repurchase during the three last years of a ten year period, but both the trial court and the Court of Appeals  found that the  sale was an absolute one.  Another contention of the petitioners-appellants is that the sale is null  and void as  it was made  in violation of the provision contained in the Constitution  (Article  XIII, section 5), but the Court of Appeals found that  the purchaser was not aware of the constitutional prohibition while petitioners-appellants were because  the negotiations for  the sale were conducted with  the knowledge and direct  intervention of  Judge  Rafael Dinglasan,  one of  the plaintiffs, who was at that time an assistant attorney  in the Department of  Justice.  And it held that even if Lee  Liong had known  of the prohibition,  the suit would not  lie because  of the  principle  of pari  delicto, that courts will not  aid  either  party to  an illegal  contract  if  both  are equally guilty but will leave them where they find  them, citing Rellosa vs.  Gaw  Chee  Hun,  93 Phil.,  827, promulgated March 18,  1947,  and articles  1302, 1305 and 1306  of  the  Civil  Code.   The Court of Appeals said: 

"By the same token, we hold that  appellants cannot now  retrieve the lot in question.  'Money  paid  under an  agreement which is executed, whether as the consideration or in performance of  the promise,  cannot be  recovered back where  the  parties are  in  part  delicto.  And  goods  delivered  or  lands conveyed under  an  illegal  agreement  are subject  to  the  same rule  (17 C.  J   S.  656,  658-659,  660).  By  this  holding  we are  riot sanctioning or legalizing  the  transaction in question.  We merely refuse to  aid either  party  to  an  illegal  agreement.  As  stated in  Corpus Juris  Secundum  (Vol. 17,  p.  659),  the 'pari  delicto rule' is made  for  the protecti6n of  the  public and not for  the benefit of the parties; its object in refusing relief to either  party where  the  contract is  executed is not  to give validity to the transaction but to  deprive  the  parties  of all right to  have  either enforcement of, or  relief from,  the  illegal agreement.  In such cases the  defense  of illegality  prevails,  not as a protection  to defendant,  but  as  a  disability  in plaintiff. The court does  not give effect to  the  contract,  but  merely refuses  its  aid  to  undo what the  parties  have already  done.   While' it  may not always seem an honorable thing to do, yet a  party to an illegal agreement is permitted  to set up  the  illegality as  a defense, even though it may be alleging his own turpitude. 

"Upon the  other hand there  is  a  preponderating  weight  of judicial authorities holding that an  alien  can take by deed and can  hold  land until  office found or  until  the land is taken  by the  State, and  he had  full  capacity to  hold  against all  the rest of the world  (2 C. J.  1051-1054; 2 Am. Jur. 476; Abrams vs. State,  45  Wash. 327, Goon Gan vs.  Richardson, 44 P. 762, 16  Wash.  373, Oregon Mortg.  Co. Garstens, 47  P.  421, 16  Wash. 165, 35  L. R.  A.  841); that before an  adjudication  of  escheat the  title   of  an  alien  grantee  is  unaffected;  he  has  complete dominion  over the property  acquired by  purchase; and  he  can hold land even  against the State itself  (19 Am.  Jur.  391; 2 Am. Jur. 476-477; 23  A.  L. R. 1244-1245); and that the one deeding the  land  to  an alien retains no right, title or interest  therein, although   the  Constitution  provides  that  conveyance  to   an alien shall be  void (Abrams vs. State of Washington, 45 Wash. 327, 9 L. R. A. MS 186; 2 Am.  Jur. 490-491;  3 C. J.  S.  550)."  (pp. 31  to 32, Court of  Appeals  decision, contained  in  pp.  67-68, Record on  Appeal.)

On this appeal it is contended that as the sale to Lee Liong is  prohibited by the Constitution,  title to the land did not pass to said alien because the sale did not produce any juridical effect in  his  favor  and that  the constitutional prohibition  should  be  deemed  self-executing   in character,  in  order  to give  effect to the Constitutional mandate.   In  answer we state that granting the sale to be null and  void and can  not give title to the vendee, it does not  necessarily  follow therefrom that  the  title remained in the vendor,  who had  also violated  the  constitutional prohibition, or that he  (vendor)  has the right to  recover  the  title  of which  he had divested  himself by his act in ignoring the prohibition.  In  such contingency another principle of law sets in to  bar the equally guilty  vendor from, recovering  the title  which  he had voluntarily vconveyed for  a  consideration,  that  of  pari delicto.  We have  applied  this principle as a bar to the present action in a series of cases, thus:

"The  next question to be determined is whether plaintiff-appellant can maintain the  present action of annulment  and recover the property  considering the  effect of  the  law  governing rescission of contracts;  or,  stated  in  another  way,  whether he can. recover  the property notwithstanding the share he  had  in the  execution of the sale which is  known to be tainted with invalidity. Our answer must  of necessity be in  the  negative following the doctrine laid down in the case of Trinidad Gonzaga de Cabauatan et al. vs.  Uy  Boo, et  al., G.  R.  No. L-2207, wherein  we made the following  pronouncement:

"We can,' therefore, say  that  even if the  plaintiffs  can  still invoke the Consitution, or the doctrine in the Krivenko case, to set aside the sale in question, they are now prevented from doing  so if their purpose is  to  recover the lands that they have voluntariily parted with, because of their guilty knowledge that what they were doing was in violation of the Constitution.  They cannot  escape the law. As this  Court well said: A party to an illegal contract cannot come into a court of law and ask to have his illegal objects carried out.  The law will not aid either party to  an illegal  agreement; it leaves the  parties  where it finds them.'  The rule  is expressed in the maxims Ex  dolo malo non oritur aetio',  and   'In pari delieto potior est conditio defendentis.'   (Bough and Bough  vs. Cantiveros  and  Hanopol, 40  Phil.,  210,  216.)'"  (Caile vs. Yu  Chiaco  Peng,  49  Off. Gaz.  (10) 4345;  93  Phil.,  861;  See also  Rellosa vs. Yaw Chee Hun, 49 Off. Gaz. (10),  4321;  Ricamara  vs. Ngo Ki, 92 Phil.,  1084,  April  29, 1953;  Arambulo  vs.  Chua  So, et al., 95  Phil.,  749., August 31, 1954;  Talento, et al. vs.  Makiki,  et al., 93 Phil.,  855/ September 29, 1953 and  Cortes vs. 0 Po Poe, 93 Phil., 1117,  October 30, 1953.)

It is not necessary for  us  to re-examine the doctrine laid down by  us in the above  cases.  We must add in justification of the  adoption of the doctrine that the scope of our power and authority is  to interpret the law merely, leaving  to  the  proper  co-ordinate  body  the  function of  laying  down the policy that  should be  followed in relation to conveyances in  violation of the constitutional prohibition and in implementing said policy.   The  situation of these  prohibited  conveyances  is  not  different from that of homestead  sold within five years from  and after the issuance of the patent,  (Section 118, C. A. 141, otherwise known as the Public  Land  Law), for which situation the legislature  has  adopted the policy, not of returning the homestead  sold to the original homesteader, but of forfeiting the homestead and returning it to the public domain again subject to  disposition  in accordance with  law.  (Section 124, Id.)

The doctrine of  in pari delioto bars  petitioners-appellants from recovering the title to the  property in question and renders unnecessary the  consideration of the other arguments presented in appellants' brief.

There is one other cause why petitioners remedy can not be entertained, that  is the prescription of the action. As the sale occurred  in  March,  1936, more than ten years  had already  elapsed from  the time the  cause of action accrued  when the action was filed (1948).

We  take this occasion to call the attention  of the legislature to the absence of a law or policy on sales in violation of the Constitution; this Court would have  filled the void were we not  aware'of the fact  that the matter falls beyond the scope of our authority and properly belongs to a coordinate power.

The petition for certiorari is hereby  denied with costs.

Bengzon, Montemayor, Bautista Angelo, and Endencia, JJ., concur.

Paras, C. J.,  and Concepcion, J.J., concur in the result.




DISSENTING:

PADILLA, J.,

If the majority opinion is made to rest? on illicit consideration  of the contract of sale, not constituting a crime  or misdemeanor, as provided for in article 1306 of the Civil Code or 1412 of the new Civil Code, the only way to make it fall under the theory or principle of in pari delicto, then I disagree with the majority for  the same reason given in my dissent in the case of Caoile vs. Yu Chiao Peng, 49 Off.  Gaz. 4321, 4328.  The consideration of the contract is not illicit, so it does  not fall under the provisions of article 1306 of  the Civil Code.  The consideration may be deemed illegal because it is in violation of the  Constitution as construed in the Krivenko case,1 but as it does not constitute a crime or misdemeanor common to both contracting parties  the provisions of article 1305 of the Civil  Code cannot  be  invoked and applied.  A sheld in the Krivenko case, supra, an alien  is disqualified from acquiring urban lands.   Under that interpretation the nearest provisions on "Nullity of Contracts," Chapter VI, Title II, Book IV, of the Civil Code applicable to the case would be  article 1304.

There is article 1303  which  provides that

When  an  obligation  has  been adjudged  void,  the contracting  , parties  shall restore to each other  the things which  have been the subject-matter of  the  contract, together with  their fruits,, and the price paid therefor, together  with interest without prejudice to the provisions of the following articles*.*[2]

The only  obstacle to  the  application of the last quoted article  would be  the preceding  article which provides that "* *  * Persons sui juris cannot, however, avail themselves   of   the   incapacity  of  those  with   whom  they contracted; *  * *."  However,  the  incapacity  referred to in article 1304 of the Civil Code  is not that provided for in the Constitution, as interpreted by this  Court in the off-cited Krivenko case, supra.   The one referred to in the Civil Code is personal incapacity, whereas that which is provided for in the Constitution,  as construed in the Krivenko  case, is  disqualification.  A person  otherwise perfectly  capable  of entering into contract may be  disqualified, such as those referred to in article 1459 of the Civil  Code.  Because  of  personal   incapacity,  such  as minority,  insanity  and the  like, persons  suffering from such  incapacity  cannot  give their consent necessary to or for the validity  of a contract. So the only solution to the problem that confronts us in the  case at bar is to adjudge the contract void ab  initio because it contravenes the Constitution, as construed  by this Court in the Krivenko  case, and  apply the provisions of Article  1303 of the Civil Code or 1398  of the new Civil Code.



[1] 44 Off. Gaz. 471.

[2] Oliveros vs. Porciongcola, 40 Off. Gaz., 6th Supp., 7.




 
    DISSENTING:

REYES, A. J.,

In my dissent in  the case of Dionisio Rellosa vs.  Gaw Chee  Hun,  93   Phil.,  , 827,  I  said:  "The  majority opinion holds the  sale in  question  void  but denies relief on the ground that the parties were  in pari delicto. The  doctrine invoked by  the majority  has no application where, as in the present case, the contract sought to be annulled is against public policy the same being forbidden by the  Constittuion.  (Vol. 3,  Pomeroy's Equity Jurisprudence,  5th ed.,  section  941.)"  That  statement holds good  in the present case and is  my  ground for not subscribing to the majority opinion.


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