Simulated

This is a case explaining the meaning of “in pari delicto” which came into play between husband and wife, Gerry and Rica.

Gerry and Rica were married on April 30, 1961 according to Chinese rites. On April 17, 1968 Rica purchased a parcel of land using her own separate personal funds so the title to the property was issued and registered in her name.

Later on, sometime in 1992, after more than 30 years of marriage and with three children, Gerry was able to convince Rica, through repeated importunings, to execute a Deed of Sale of her property in his favor. Gerry promised Rica that he would construct a commercial building on the property for the benefit of their children. He suggested that the property should be in his name alone so that Rica would not be involved in the loan with the bank. The consideration of the transfer of the property in his name consisted of his promise to construct a commercial building for the benefit of their children to whom he will in turn, execute a Deed of Absolute Sale, and to pay the loan he had obtained from the bank. Because of Gerry’s glib assurances, Rica signed a “Deed of Absolute Sale” in his favor with the ostensible consideration of P200,000 which Gerry did not actually pay. So a new title was issued in the name of Gerry alone. But to insure that Gerry would comply with his promise, Rica did not deliver the owner’s copy of the TCT to Gerry.

From then on, marital trouble worsened as Gerry would insist on delivering to him the owner’s copy of the title which Rica would ask Gerry to comply with his promise. The marital spat was aggravated by Gerry’s promiscuity, volcanic temper and other vicious vices until he finally abandoned Rica and their children.    

Gerry then fraudulently tried to obtain a new owner’s title by filing a petition in court alleging that the original title was lost. When Rica learned about this scheme, she filed an adverse claim and asked the Court to declare the Deed of Sale she signed null and void and Gerry’s title be cancelled. Gerry however contended that Rica should not be granted the relief she was praying for because she was equally at fault (in pari delicto) in the execution of the said Deed of Sale. Was Gerry correct?

No. The rule of “in pari delicto” applies to cases where the nullity arises from the illegality of the consideration or the purpose of the contract. In this case, the nullity of the deed arises not because of the illegality of the consideration but because the stated consideration had in fact not been paid and therefore the said deed is fictitious, simulated, inexistent and produces no effect whatsoever for lack of consideration. “In pari delicto” does not apply to inexistent contract due to lack of consideration or other essential requisites. It applies only to existing contracts with illegal consideration (Yu Bun Guan vs. Ong G.R. No. 144735 October 18, 2001.)

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