419 Phil. 845
"We cannot see any justification for the setting aside of the contested Decision.
"THE FOREGOING CONSIDERED, the appealed Decision is hereby AFFIRMED."
"23. WHEREFORE, the Court hereby renders judgment as follows:
23.1. The Deed of Sale dated July 24, 1992 (Exh. EE or Exh. 3) is declared VOID.
23.2. The plaintiff ELVIRA ONG is declared the OWNER of the property covered by Transfer Certificate of Title No. 217614, Registry of Deeds, Makati (Exh. DD).
23.3. The Register of Deeds, City of Makati is ordered to:
23.2.1. Cancel Transfer Certificate of Title No. 181033 (Exh. HH); and
23.2.2. Issue in lieu thereof, a transfer certificate of title in the name of ELVIRA A. ONG, of legal age, single, Filipino';
23.. The defendant YU BUN GUAN is ordered to pay to the said plaintiff, the following:
23..1. P48,631.00 - As reimbursement of the capital gains tax (Exh. FF);
23..2. Six (6) percent of P48,631.00 - per annum from November 23, 1993, until the said P48,631.00 is paid - as damages
23..3. P100,000.00 - as moral damages;
23..4. P 50,000.00 - as exemplary damages;
23..5. P 100,000.00 - as attorney's fees.
23.. The COUNTERCLAIM is DISMISSED.
23.. Cost is taxed against the defendant.
"24. In Chambers, City of Makati, June 23, 1998."
"[Herein respondent] said that she and [petitioner] are husband and wife, having been married according to Chinese rites on April 30, 1961. They lived together until she and her children were abandoned by [petitioner] on August 26, 1992, because of the latter's `incurable promiscuity, volcanic temper and other vicious vices'; out of the reunion were born three (3) children, now living with her [respondent].
"She purchased on March 20, 1968, out of her personal funds, a parcel of land, then referred to as the Rizal property, from Aurora Seneris, and supported by Title No. 26795, then subsequently registered on April 17, 1968, in her name.
"Also during their marriage, they purchased, out of their conjugal funds, a house and lot, in 1983, thereafter, registered in their names, under Title No. 118884.
"Before their separation in 1992, she `reluctantly agreed' to the [petitioner's] `importunings' that she execute a Deed of Sale of the J.P. Rizal property in his favor, but on the promise that he would construct a commercial building for the benefit of the children. He suggested that the J.P. Rizal property should be in his name alone so that she would not be involved in any obligation. The consideration for the `simulated sale' was that, after its execution in which he would represent himself as single, a Deed of Absolute Sale would be executed in favor of the three (3) children and that he would pay the Allied Bank, Inc. the loan he obtained.
"Because of the `glib assurances' of [petitioner], [respondent] executed a Deed of Absolute Sale in 1992, but then he did not pay the consideration of P200,000.00, supposedly the `ostensible' valuable consideration. On the contrary, she paid for the capital gains tax and all the other assessments even amounting to not less than P60,000.00, out of her personal funds.
"Because of the sale, a new title (TCT No. 181033) was issued in his name, but to `insure' that he would comply with his commitment, she did not deliver the owner's copy of the title to him.
"Because of the refusal of [petitioner] to perform his promise, and also because he insisted on delivering to him the owner's copy of the title [to] the JP Rizal property, in addition to threats and physical violence, she decided executing an Affidavit of Adverse Claim.
"Also to avoid burdening the JP Rizal property with an additional loan amount, she wrote the Allied Bank, Inc. on August 25, 1992, withdrawing her authority for [petitioner] to apply for additional loans.
"To save their marriage, she even sought the help of relatives in an earnest effort [at] reconciliation, not to mention a letter to [petitioner] on November 3, 1992.
"[Petitioner], on the other hand, filed with the RTC, Makati, in 1993 (Case No. M-2905), a `Petition for Replacement' of an owner's duplicate title.
"Attached to the Petition was the Affidavit of Loss dated March 26, 1993, in which he falsely made it appear that the owner's copy of the title was lost or misplaced, and that was granted by the court in an Order dated September 17, 1993, following which a new owner's copy of the title was issued to [petitioner].
"Upon discovery of the `fraudulent steps' taken by the [petitioner], [respondent] immediately executed an Affidavit of Adverse Claim on November 29, 1993.
"She precisely asked the court that the sale of the JP Rizal property be declared as null and void; for the title to be cancelled; payment of actual, moral and exemplary damages; and attorney's fees.
"It was, on the other hand, the version of [petitioner] that sometime in 1968 or before he became a Filipino, `through naturalization,' the JP Rizal property was being offered to him for sale. Because he was not a Filipino, he utilized [respondent] as his `dummy' and agreed to have the sale executed in the name of [respondent], although the consideration was his own and from his personal funds.
"When he finally acquired a Filipino citizenship in 1972, he purchased another property being referred to as the `Juno lot' out of his own funds. If only to reflect the true ownership of the JP Rizal property, a Deed of Sale was then executed in 1972. Believing in good faith that his owner's copy of the title was lost and not knowing that the same was surreptitiously `concealed' by [respondent], he filed in 1993 a petition for replacement of the owner's copy of the title, in court.
"[Petitioner] added that [respondent] could not have purchased the property because she had no financial capacity to do so; on the other hand, he was financially capable although he was disqualified to acquire the property by reason of his nationality. [Respondent] was in pari delicto being privy to the simulated sale.
"Before the court a quo, the issues were: who purchased the JP Rizal property? [W]as the Deed of Sale void? and damages.
"x x x [T]he JP Rizal property was purchased by the [respondent] alone; therefore it is a paraphernal property. As a matter of fact, the title was issued in her name, Exh. `DD'. This was even admitted by [petitioner] in the Answer that the sale was executed in her name alone. He also signed the sale mentioning [respondent] to be an absolute owner; therefore, he should be estopped from claiming otherwise. She alone likewise did the payment of the taxes."
"Whether or not the Court of Appeals gravely erred in not applying [the] rules on co-ownership under Article 144 of the New Civil Code in determining the proprietary rights of the parties herein even as respondent herself expressly declared that the money with which she allegedly bought the property in question in 1968 came from her funds, salaries and savings at the time she and petitioner already lived as husband and wife.II
"Whether or not the Court of Appeals likewise palpably erred in declaring the sale of the subject property to herein petitioner in 1992 to be fictitious, simulated and inexistent.III
"Whether or not the Court of Appeals further erred in not applying the `[in] pari delicto' rule to the sale of the subject property in favor of the petitioner in 1992 contrary to the express declaration to that effect in the very same case it cited (Rodriguez v. Rodriguez; 20 SCRA 908) in the decision herein sought to be reviewed.IV
"Whether or not the Court of Appeals gravely erred in annul[l]ing the title (TCT No. 181033) to the subject property in the name of herein petitioner in the absence of actual fraud." (Underscoring in the original.)
"The fact however, is that Yu never refuted Elvira's testimony that: (a) the money with which she acquired the JP Rizal property came from: (1) her income as a cashier in the Hong Kiat Hardware; (2) income from her paraphernal property - a lot in Guadalupe; (3) her savings from the money which her parents gave her while she was still a student; and (4) the money which her sister gave her for helping her run the beauty parlor; (b) her parents were well off - they had stores, apartments and beauty parlors from which they derived income; (c) before her marriage she bought lots in different places (p. 8, TSN, Jan. 26, 1998; pp. 22-23, TSN March 10, 1998)."
"The `problem' before the Court is whether a deed which states a consideration that in fact did not exist, is a contract, without consideration, and therefore void ab initio, or a contract with a false consideration, and therefore, at least under the Old Civil Code, voidable. x x x."
"In our view, therefore, the ruling of this Court in Ocejo, Perez & Co. vs. Flores, 40 Phil. 921[,] is squarely applicable herein. In that case we ruled that a contract of purchase and sale is null and null and void and produces no effect whatsoever where the same is without cause or consideration in that the purchase price which appears thereon as paid has in fact never been paid by the purchaser to vendor."
The principle of in pari delicto provides that when two parties are equally at fault, the law leaves them as they are and denies recovery by either one of them. However, this principle does not apply with respect to inexistent and void contracts. Said this Court in Modina v. Court of Appeals: