Not a party to the illegality - A Law Each Day (Keeps Trouble Away) byJose C. Sison

"In pari delicto non oritur actio." When two persons are equally at fault, they shall have no action against each other. This is the principle which Severo tried to use in his case.

Severo was the purchaser of three parcels of registered lands titled in the name of Rolando covered by TCT Nos. 89621, 89622 and 89623. Before actually buying the property he asked his nephew to investigate their origin and the latter learned that the same formed part of the properties of the first husband of Matilde, Rolando's wife. He also learned that Deeds of Sale was executed by Matilde in favor of Rolando about four years before. To verify further, he inspected the property and met all the lessees who informed him that the subject lands belong to Matilde and they had to knowledge that they were sold to the husband, Rolando.

Nevertheless Severo decided to buy the property from Rolando for a consideration of P145,800. So the latter executed two Deeds of Absolute Sale on the basis of which titles were transferred and issued in the name of Severo.

Thereafter, Severo filed a complaint for recovery of possession with damages against the three lessees occupying the property.

Upon learning of the institution of said case by Severo, Matilde filed a complaint in intervention seeking the declaration of nullity of the Deeds of Sale between her husband Rolando and Severo on the ground that the titles to the land were never legally transferred to her husband. She denied the existence of the Deeds of Sale in favor of her husband. She alleged that fraudulent acts were employed by him as there was no consideration paid by him for the lands, although she admitted that those lands formerly belonged to her late first husband which were ordered sold by the probate court and that as administratrix she was issued an authority to sell them.

After the trial, the court voided the sale of the lots by Matilde to her husband for lack of consideration. Thus, the court also declared as void and inexistent the sale of the land by Rolando in favor of Severo and ordered Rolando to restitute and pay Severo the P145,800 price.

The Court of Appeals, on appeal, affirmed the decision of the trial court in toto. However, aside from finding that the Deed of Sales by Matilde to Rolando was void for lack of consideration, the Court of Appeals also ruled that said sale was void for violating Art. 1490 of the Civil Code which prohibits sales between spouses.

Severo banked on this finding of the Court of Appeals. He contended that since the sale between Matilde and Rolando is null and void for being violative of Art. 1490 prohibiting sales between spouses, the principle of in pari delicto applies. Thus, Matilde cannot attack the subject contract of sale as she was a guilty party thereto and the rights of third persons like him to whom the lots were sold should remain undisturbed. Was Severo correct?

No. The principle of in pari delicto non oritur actio denies all recovery to the guilty parties. It applies to cases where the nullity arises from illegality of the consideration or the purpose of the contract. In this case, the trial court found that the subject Deed of Sale (between Matilde and Rolando) was a nullity for lack, not illegality, of consideration. Indeed, in her complaint in intervention Matilde did not aver that the contract was void for being violative of Art. 1490 prohibiting sales between spouses. She denied the existence of the Deed of Sale for want of consideration. Under the law (Art. 1409 Civil Code), a contract without consideration is void or inexistent contract. One of the characteristics of a void or inexistent contract is that it produces no effect. Since the contracts in controversy are inexistent contracts, the doctrine of "in pari delicto" (Art. 1411 and 1412 Civil Code) is inapplicable. "In pari delicto" applies only to contracts with illegal consideration or subject matter, whether the attendant facts constitute an offense or misdemeanor or whether the consideration involved is merely rendered illegal (Medina vs. Court of Appeals et. al. G.R. No. 109355).

Atty. Sison's e-mail address is: [email protected]