Bough v. Cantiveros
REITERATIONFacts
The Antecedents: Plaintiffs Basilia Bough and Gustavus Bough sought possession of property conveyed by a deed of sale (Exhibit A) from Matilde Cantiveros and damages. Matilde Cantiveros, the richest resident of Carigara, Leyte, was induced by Gustavus Bough to sign a fictitious contract of sale of all her property, valued at over thirty thousand pesos, for ten thousand pesos. This was allegedly to shield her from a supposed suit by her husband regarding their marital contract of separation. To reassure Matilde, the plaintiffs executed a donation (Exhibit 1) of the same property to Matilde, effective upon the death of the plaintiffs and their children before Matilde's death. Matilde remained in possession. Procedural History: The Court of First Instance of Leyte declared the deed of sale (Exhibit A) fictitious, null, and void, absolving the defendants. The plaintiffs appealed. The Petition: The plaintiffs appealed the decision of the lower court, assigning six errors.
Issue(s)
Whether the defendants could present evidence impugning the genuineness and due execution of Exhibit A despite not being denied under oath. Whether parole evidence was admissible to show the illegality of the contract of sale. Whether the defendant, by accepting the donation in Exhibit 1, was estopped from denying the consideration in Exhibit A. The effect of the illegality of the contract of sale.
Ruling
The Supreme Court affirmed the judgment of the trial court, declaring the deed of sale (Exhibit A) null and void. The defendants were absolved from the complaint.
Ratio Decidendi
On the issue of presenting evidence impugning genuineness and due execution without a sworn denial: The Court held that while Section 103 of the Code of Civil Procedure deems the genuineness and due execution of a written instrument admitted if not denied under oath, this does not estop a party from controverting it by evidence of fraud, mistake, compromise, payment, statute of limitations, estoppel, and want of consideration. Section 285 of the Code of Civil Procedure permits a writing to be impeached due to illegality or fraud, thus such defenses are not barred by Section 103. Therefore, the defendants could properly set up the defenses of fraud and want of consideration despite the lack of a sworn denial. On the admissibility of parole evidence to show illegality: The Court reiterated that while public instruments are evidence of the fact giving rise to their execution (Article 1218, Civil Code), Section 285 of the Code of Civil Procedure allows parole evidence to establish illegality or fraud when the validity of the agreement is in dispute. This exception permits evidence of the circumstances under which the agreement was made or to explain its illegality or fraud. Thus, parole evidence was properly admitted to show the illegality of the contract of sale. On the issue of estoppel by accepting the donation: The Court ruled that if Exhibit A, the contract of sale, was established as invalid, it could not serve as the basis for an estoppel. Therefore, the so-called donation in favor of Matilde Cantiveros did not operate to create an estoppel against her. On the effect of the illegality of the contract: The Court stated that contracting parties cannot establish pacts conflicting with laws, morals, or public order. A party to an illegal contract cannot seek judicial aid to enforce it, based on the maxims 'Ex dolo malo non oritur actio' and 'In pari delicto potior est conditio defendentis.' However, where parties are not equally guilty and public policy is advanced by relieving the more excusable party, especially when induced by fraud or misrepresentation in a confidential relation, relief is granted. In this case, Matilde Cantiveros, reposing faith in the grantee and relying on a suggested occurrence that did not materialize, was made the dupe of the grantee through misrepresentation and fraud. Although in delicto, she was not in pari delicto with the other party. The rights of creditors were not affected, and justice required placing the grantor in her original position.
Main Doctrine
A party to an illegal contract cannot seek judicial aid to enforce it. However, where parties are not equally guilty, and public policy is advanced by granting relief to the more excusable party, especially when induced by fraud or misrepresentation in a confidential relation, relief may be granted. A conveyance procured by misrepresentation and fraud, even if intended to defraud a non-existent creditor, may be set aside if the grantor was the dupe of the grantee.