Constantino v. Laquindanum
REITERATIONFacts
The Antecedents: This case concerns a dispute over a parcel of land originally owned by Pedro Constantino, Sr. Pedro Sr. was survived by six children, including Pedro Constantino, Jr., whose heirs are the respondents, and Bruno and Santiago Constantino, whose descendants include the petitioners. The controversy arose when petitioners asserted ownership over a 240-square-meter lot, previously declared under Tax Declaration No. 20814 in Pedro Sr.'s name, to the exclusion of the respondents. Petitioners allegedly obtained this claim through a document titled "Pagmamana sa Labas ng Hukuman" (Extrajudicial Inheritance) dated August 10, 1992, and subsequent tax declarations, which respondents claim were based on a simulated and fabricated document. Procedural History: The respondents, heirs of Pedro Constantino, Jr., filed a complaint against the petitioners seeking the nullification of the "Pagmamana sa Labas ng Hukuman" and related tax declarations, and the reinstatement of the original tax declaration. The Regional Trial Court (RTC) dismissed the complaint, ruling that both parties were in pari delicto (equally at fault) due to separate deeds of extrajudicial settlement that excluded other heirs. The respondents appealed to the Court of Appeals (CA). The CA reversed the RTC's decision, finding that the "Extrajudicial Settlement with Waiver" dated December 5, 1968, executed by the heirs of Pedro Jr. concerning a 192-square-meter lot, pertained to a property owned by Pedro Jr. himself and not part of Pedro Sr.'s estate, thus rendering the in pari delicto doctrine inapplicable. The CA's decision was based on an alleged typographical error in the deed and the respondents' claim that the 192 sq. m. lot was Pedro Jr.'s property. The Petition: Petitioners seek a review of the CA's decision via a Petition for Review on Certiorari under Rule 45 of the Rules of Court. They argue that the CA erred in failing to appreciate the misrepresentation in both deeds and in disregarding the in pari delicto doctrine. Petitioners also contend that the CA ignored stipulations and admissions made during the pre-trial conference, specifically that the 192-square-meter lot covered by Tax Declaration No. 9534 belonged to Pedro Sr. The Supreme Court, in its ruling, found that the CA and RTC both erred in applying the in pari delicto doctrine and declared both the "Pagmamana sa Labas ng Hukuman" and the "Extrajudicial Settlement with Waiver" void, without prejudice to the proper partition of Pedro Constantino Sr.'s estate among all his heirs.
Issue(s)
Whether the doctrine of in pari delicto was correctly applied by the RTC and erroneously disregarded by the CA. Whether the "Pagmamana sa Labas ng Hukuman" and the "Deed of Extrajudicial Settlement with Waiver" are void due to being simulated or intended to exclude other heirs from their rightful shares, thus circumventing the law on legitimes. Whether the respondents, as successors-in-interest, are bound by the "Deed of Extrajudicial Settlement with Waiver." Whether the CA erred in disregarding the judicial admissions made during the pre-trial conference regarding the ownership of the land covered by Tax Declaration No. 9534, and whether this admission is binding on the respondents. Whether the exclusion of heirs from their rightful shares in the estate of Pedro Constantino, Sr., constitutes a violation of mandatory provisions of law concerning legitimes. Whether the contracts are void due to the circumvention of the law on legitimes.
Ruling
The Supreme Court reversed the Court of Appeals' decision. It declared both the "Pagmamana sa Labas ng Hukuman" and the "Deed of Extrajudicial Settlement with Waiver" void. The Court held that the in pari delicto doctrine does not apply to simulated or void contracts, especially when it would validate such agreements and circumvent the law on legitimes. The Court emphasized that any circumvention of the law cannot be countenanced.
Ratio Decidendi
On the applicability of the in pari delicto doctrine: The Court clarified that the doctrine of in pari delicto, governed by Articles 1411 and 1412 of the Civil Code, applies to contracts with an illegal cause or object that do not constitute a criminal offense, or where both parties are equally guilty. However, it does not apply to contracts that are void ab initio due to being simulated or where the parties do not intend to be bound. In this case, both deeds were executed with the intention to exclude other heirs from their rightful shares, constituting a circumvention of the law on legitimes. Applying in pari delicto would validate these void agreements, which the Court cannot countenance. The Court reiterated that such circumvention of the law cannot be put a premium on. On the validity of the "Pagmamana sa Labas ng Hukuman" and "Deed of Extrajudicial Settlement with Waiver": The Court found that both deeds were void. The "Pagmamana sa Labas ng Hukuman" was alleged to be simulated and fictitious, used by petitioners to claim ownership of the entire lot to the exclusion of other heirs. Similarly, the "Deed of Extrajudicial Settlement with Waiver," while initially upheld by the RTC, was found by the Supreme Court to be part of a scheme to exclude heirs. The Court cited Article 1409 of the Civil Code, which states that contracts whose cause, object, or purpose is contrary to law, morals, good customs, public order, or public policy are inexistent and void from the beginning. The exclusion of heirs from their rightful shares in an estate violates mandatory provisions of law regarding legitimes. On the respondents' status as successors-in-interest: The Court agreed with the RTC that the respondents, as successors-in-interest of Maria Constantino, are "privies" to the "Deed of Extrajudicial Settlement with Waiver." This means they derive their rights from their predecessor and are bound by any conditions or agreements that were binding upon her. The Court explained that "privity in estate" denotes a relationship between parties who derive their title to property from a common source. Therefore, the respondents stand in the same position as Maria Constantino and are bound by the proceedings and agreements concerning the property, even if they were not direct signatories to the original deed. On the CA's disregard of judicial admissions: The Court found that the CA erred in disregarding the judicial admissions made by the respondents during the pre-trial conference. The respondents had stipulated that the land covered by Tax Declaration No. 9534, consisting of 192 sq. m., belonged to Pedro Constantino, Sr. This admission was crucial and contradicted the CA's conclusion that the property belonged to Pedro Jr. The Court emphasized that judicial admissions are binding on the parties and remove the admitted fact from the field of controversy, unless shown to be a palpable mistake. The respondents failed to provide sufficient evidence to refute this admission. On the circumvention of the law on legitimes: The core issue revolved around the exclusion of heirs from their rightful shares in the estate of Pedro Constantino, Sr. The Court reiterated that such exclusion, whether through a simulated deed or an extrajudicial settlement that omits heirs, is a violation of mandatory provisions of law, particularly concerning legitimes. The Court cited Neri v. Heirs of Hadji Yusop Uy and Segura v. Segura to highlight that partitions or settlements that exclude heirs are void and not binding upon them. On the contracts being void: The Court's ultimate ruling was to declare both contracts void to prevent the circumvention of the law.
Main Doctrine
The doctrine of in pari delicto applies to contracts with an illegal cause or object that do not constitute a criminal offense, but not to contracts that are void for being simulated or where the parties do not intend to be bound. Circumvention of the law, particularly on the rights of heirs to their legitimes, cannot be countenanced and will result in the declaration of contracts as void.