7/30/2019 Potenciano Ramirez

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POTENCIANO RAMIREZ, Petitioner, vs. MA. CECILIA RAMIREZ, Respondent.

G.R. No. 165088 March 17, 2006

FACTS: A Deed of Donation and Waiver of Possessory Rights were allegedly executed by petitioner and

his wife, Dolores Ramirez, in 1993 and 1995 respectively in favor of respondent Ma. Cecilia Ramirez.

However, the death certificate presented showed that Dolores died in 1991 and, consequently, could

not have executed the assailed documents.

Later on, petitioner filed a complaint against respondent for annulment of the Deed of 

Donation, Waiver of Possessory Rights and the title issued under the name of respondent. Petitioner

claimed that respondent caused the execution of the Deed of Donation and Waiver of Possessory Rights

to acquire ownership over the land and improvements. As a result, the certificate of title was issued

under her name and the tax declarations were also transferred in her name.

In her Answer, respondent alleged that it was her father’s idea to cause the preparation of the

Deed of Donation and Waiver of Possessory Rights to save on expenses for publication and inheritance

taxes.

After trial, the RTC declared both parties in pari delicto, as participants to the forgery, and ruled

that they must bear the consequences of their acts without cause of action against each other in

accordance with Article 1412 of the Civil Code. The RTC further held that the signature of Dolores on theDeed of Donation was a forgery while her signature on the Waiver of Possessory Rights was genuine.

On appeal, the Court of Appeals held that Dolores’ signature on the Deed of Donation as well as

her alleged signature appearing in the Waiver of Possessory Rights were forgeries and likewise held that

both parties are in pari delicto.

ISSUE: Whether or not petitioner and respondent are in pari delicto.

HELD: Yes. As one of the modes of acquiring ownership, donations are governed by Title 3, Book III, of 

the Civil Code. Donations inter vivos are additionally governed by the general provisions on obligations

and contracts in all that is not determined by the title governing donations. Hence, the rule on pari

delicto under the general provisions of contracts is applicable to the present case.The Supreme Court affirmed that both parties are in pari delicto since respondent did not deny

petitioner’s allegation that the signatures of the latter’s wife are a forgery. But Article 1412 is not

applicable as the lower courts ruled. It is because said article applies only when the cause of the contract

is unlawful or forbidden but does not constitute a violation of the criminal laws. Instead, Article 1411

applies.

Under Article 1411, it must be shown that the nullity of the contract proceeds from an illegal

cause or object, and the act of executing said contract constitutes a criminal offense.

On the first element, petitioner claims that the illegality stems from the act of forgery which

pertains to consent and not to the object or cause. The Court, however, held that petitioner wrongly

asserts that the donated real properties are both the object and cause of the donation. In fact, the

donated properties pertain only to the object. The cause which moved the parties to execute the Deed

of Donation and the Waiver of Possessory Rights, the motive behind the forgery, is the desire to evade

the payment of publication expenses and inheritance taxes, which became due upon the death of 

Dolores. Undeniably, the Deed of Donation and the Waiver of Possessory Rights were executed for an

illegal cause. The second requirement is also present as the act of forging corresponds to the felony of 

falsification under Section 4, Title IV of the Revised Penal Code.

Hence, neither of the parties may expect positive relief from the courts from their illegal acts

and transactions.