Constantino vs. Heirs of Pedro Constantino, Jr.

The doctrine of in pari delicto does not apply where two separate deeds, executed by different sets of heirs, are used to exclude co-heirs from an ancestor's estate; such deeds are void for violating the law on legitimes and cannot be validated by time or ratification. A party's pre-trial admission that a lot was previously owned by the decedent is a judicial admission that is binding and conclusive unless shown to have been made through palpable mistake or not made at all.

Pedro Constantino, Sr. was the common ancestor of petitioners and respondents, who trace their lineage through different children of Pedro Sr. The dispute concerns the settlement and partition of his estate, particularly the requirement under the Civil Code and the Rules of Court that all heirs participate or receive notice in any extrajudicial settlement. The doctrine of in pari delicto, invoked by the trial court, and the law on legitimes form the legal backdrop.

Pedro Constantino, Sr. owned several parcels of land, one of which was an unregistered 240-square-meter lot situated at Sta. Monica, Hagonoy, Bulacan, declared for taxation purposes under Tax Declaration No. 20814. Upon his death, he was survived by six children: Pedro Constantino, Jr., the grandfather of respondents; Antonia Constantino and Clara Constantino, who both later died without issue; Bruno Constantino, survived by six children including petitioner Casimira Constantino-Maturingan; Eduardo Constantino, survived by his daughter Maura; and Santiago Constantino, survived by five children including petitioner Oscar Constantino. Respondents Asuncion Laquindanum and Josefina Cailipan are great grandchildren of Pedro Sr., in representation of Pedro Jr.

On 17 June 1999, respondents filed a complaint against petitioners Oscar Constantino, Maxima Constantino, and Casimira Maturingan for nullification of a document denominated as "Pagmamana sa Labas ng Hukuman" dated 10 August 1992, Tax Declaration Nos. 96-10022 (02653) and 96-10022 (02655), and reinstatement of Tax Declaration No. 20814 in the name of Pedro Sr. They alleged that in October 1998 petitioners asserted ownership over the whole 240-square-meter lot to the exclusion of respondents, who were occupying a portion thereof. Upon verification, respondents learned that Tax Declaration No. 02010-2170-33235 in the name of petitioner Oscar Constantino and his cousin Maxima Constantino had been unlawfully issued, canceling Tax Declaration No. 20814 in the name of Pedro Sr. The new declaration was allegedly due to the execution of a simulated, fabricated, and fictitious "Pagmamana sa Labas ng Hukuman," in which petitioners misrepresented themselves as the sole and only heirs of Pedro Sr. The land was thereafter divided equally between Oscar and Maxima, resulting in Tax Declaration No. 96-10022-02653 in Oscar's name for 120 square meters and Tax Declaration No. 96-10022-02652 in Maxima's name for the other half; Maxima's share was eventually conveyed to her sister, petitioner Casimira, in whose name Tax Declaration No. 96-10022-02655 was issued.

In their Answer with Counterclaim, petitioners averred that Pedro Sr. left several parcels of land: the 240-square-meter lot covered by Tax Declaration No. 20814; a 192-square-meter lot also situated at Sta. Monica, Hagonoy, Bulacan, previously covered by Tax Declaration No. 9534; and an agricultural land of about four hectares. They claimed that the "Pagmamana sa Labas ng Hukuman" pertaining to the 240-square-meter lot was perfectly valid and legal, as it was the product of a mutual and voluntary agreement among the descendants of Pedro Sr. They further alleged that respondents had no cause of action because respondents' lawful share over the estate of Pedro Sr. had already been transferred to them by a Deed of Extrajudicial Settlement with Waiver dated 5 December 1968, executed by Angelo Constantino, Maria Constantino (mother of respondent Asuncion), Arcadio Constantino, and Mercedes Constantino, all heirs of Pedro Jr. In that deed, respondents adjudicated unto themselves, to the exclusion of other heirs, the 192-square-meter lot by misrepresenting that they were the only legitimate heirs of Pedro Sr. Petitioners claimed that, in a manner similar to the assailed "Pagmamana," they asserted their rights and ownership over the 240-square-meter lot without damage to respondents. Their position was that the Deed of Extrajudicial Settlement with Waiver, which led to the issuance of Tax Declaration No. 9534, was acquiesced in by the other heirs of Pedro Sr., including petitioners, on the understanding that the respondent heirs of Pedro Jr. would no longer share or participate in the settlement and partition of the remaining lot covered by the "Pagmamana sa Labas ng Hukuman."

A pre-trial conference was conducted on 15 August 2000, during which the parties entered into stipulations and admissions and identified the issues to be litigated. Among the admissions made by respondents were that the land covered by Tax Declaration No. 9534, previously owned by Pedro Constantino, Sr., was transferred to Maria Constantino under Tax Declaration No. 9535, and that there existed an Extrajudicial Settlement with Waiver per Doc. No. 319, Page No. 44, Book No. 11, Series of 1968, notarized by Notary Public Romerico Flores, Jr. Trial on the merits thereafter ensued.

The RTC found that both plaintiffs and defendants acted equally at fault and were in pari delicto, that respondents were privies to the Extrajudicial Settlement with Waiver and estopped from claiming otherwise, and it dismissed the complaint, upholding the "Pagmamana sa Labas ng Hukuman" and the tax declarations. On appeal, the Court of Appeals found that the 192-square-meter lot covered by the Extrajudicial Settlement with Waiver belonged to Pedro Jr., not Pedro Sr., reasoning that the reference to "Pedro Constantino" was a typographical error and that the deed identified Pedro Jr.'s four children by Felipa dela Cruz. Respondent Asuncion Laquindanum, when placed on the stand, denied that the 192-square-meter lot was owned by Pedro Sr., stating that it was Pedro Jr.'s property inherited by her mother Maria Constantino and that she had known the land since childhood; no other evidence was offered to support the CA's finding.

• In Pari Delicto: Petitioners argued that the Court of Appeals failed to appreciate the existence of misrepresentation in both the 1968 Extrajudicial Settlement with Waiver and the 1992 "Pagmamana sa Labas ng Hukuman," and thus ignored the propriety of applying the in pari delicto doctrine.
• Pre-trial Admissions: Petitioners maintained that the Court of Appeals erroneously disregarded the stipulations and admissions made during the pre-trial conference, on which the application of in pari delicto was based.
• Acquiescence and Underlying Agreement: Petitioners asserted that the 1992 "Pagmamana sa Labas ng Hukuman," which excluded other heirs of Pedro Sr., was executed pursuant to an underlying agreement with other heirs, including Maria Constantino, daughter of Pedro Jr. and predecessor-in-interest of respondents; under that agreement, the other heirs would recognize the 192-square-meter lot covered by the 1968 Extrajudicial Settlement with Waiver as the share of Pedro Jr.'s heirs, and petitioners respected it.
• No Proof of Pedro Jr.'s Ownership: Petitioners argued that the mention of Pedro Jr.'s children in the Extrajudicial Settlement was not proof that the property belonged to Pedro Jr.; rather, only Pedro Jr.'s children appeared as heirs because the deed was meant to exclude all other heirs of Pedro Sr.

• Non-Privity and No Fault: Respondents argued that they were not signatories to any contract or privies to the arrangement and therefore no fault could be attributed to them or binding effect arise from the alleged unlawful agreement between Maria Laquindanum, their predecessor-in-interest, and other heirs, including petitioners.
• Ownership of the 192-Square-Meter Lot: Respondents claimed that the 192-square-meter lot covered by the Extrajudicial Settlement with Waiver was not part of the estate of Pedro Sr. but belonged to Pedro Jr.; the Court of Appeals upheld this based on the alleged typographical error and identification of Pedro Jr.'s children.
• Erroneous In Pari Delicto: On appeal, respondents raised the erroneous application by the trial court of the doctrine of in pari delicto in declaring the validity of the "Pagmamana sa Labas ng Hukuman."
• Nullification of the Pagmamana: In their complaint, respondents alleged that the "Pagmamana sa Labas ng Hukuman" was simulated, fabricated, and fictitious, and that petitioners misrepresented themselves as the sole and only heirs of Pedro Sr.; they sought annulment of the document and the tax declarations issued on its basis.

• In Pari Delicto: Whether the doctrine of in pari delicto applies to two separate deeds executed by different sets of heirs to exclude other co-heirs from the estate of Pedro Constantino, Sr.
• Validity of the "Pagmamana sa Labas ng Hukuman": Whether the Court of Appeals correctly upheld the validity of the "Pagmamana sa Labas ng Hukuman" despite its exclusion of other heirs.
• Privity and Binding Effect: Whether respondents, as successors-in-interest of Maria Laquindanum, are privies to the Extrajudicial Settlement with Waiver and bound by the agreement precipitating its execution.
• Ownership of the 192-Square-Meter Lot: Whether the 192-square-meter lot covered by the Extrajudicial Settlement with Waiver formed part of the estate of Pedro Constantino, Sr.
• Judicial Admissions: Whether respondents' pre-trial stipulation that the 192-square-meter lot was previously owned by Pedro Constantino, Sr. is binding and conclusive.
• Effect of Exclusion of Heirs: Whether both deeds are void for excluding other heirs and circumventing the law on legitimes.

• In Pari Delicto: No. The doctrine applies only to parties to one contract who are both at fault; here two separate deeds are involved, and applying it would validate both illegal deeds instead of nullifying them.
• Validity of the "Pagmamana sa Labas ng Hukuman": No. It is void for excluding other heirs and circumventing the law on legitimes; a void contract cannot be validated by time or ratification.
• Privity and Binding Effect: Yes. Respondents are successors-in-interest and privies of Maria Laquindanum, a signatory to the Extrajudicial Settlement with Waiver, and are bound by the conditions attached to that deed.
• Ownership of the 192-Square-Meter Lot: Yes. Respondents' pre-trial admission established that the lot covered by Tax Declaration No. 9534 was previously owned by Pedro Constantino, Sr.; the CA's contrary finding contradicted that judicial admission.
• Judicial Admissions: Yes. Pre-trial admissions are binding under Section 7, Rule 18 of the Rules of Court and Section 4, Rule 129; respondents failed to show palpable mistake or that no admission was made.
• Effect of Exclusion of Heirs: Both deeds are void; partition of the estate must proceed with full participation of all heirs.

• In Pari Delicto: In pari delicto means parties are equally at fault, and neither courts of law nor equity will grant relief to parties to an illegal agreement. Articles 1411 and 1412 of the Civil Code govern the doctrine, but it applies to parties to one contract who are both at fault. Here, two deeds were involved—the 1968 Extrajudicial Settlement with Waiver and the 1992 "Pagmamana sa Labas ng Hukuman"—executed by different sets of heirs, each excluding other co-heirs from Pedro Sr.'s estate. Applying the doctrine would validate both deeds instead of nullifying them as required by their illegality. The underlying agreement was void under Article 1409, and a void contract has no force and effect from the beginning and cannot be validated by time or ratification. Thus, the trial court erred in applying the doctrine, and the CA's contrary treatment was also incorrect.
• Validity of the "Pagmamana sa Labas ng Hukuman": The deed could not be upheld. Like the Extrajudicial Settlement with Waiver, it excluded other heirs of Pedro Sr. and circumvented the law on legitimes. Neri vs. Heirs of Hadji Yusop Uy held that an extrajudicial settlement that excluded heirs was not valid and binding upon them and was a total nullity; Segura vs. Segura held that a partition excluding six of nine heirs was invalid because no extrajudicial settlement binds a person who did not participate or receive notice. Because the infirmity related to exclusion of heirs and circumvention of legitimes, the deed was void.
• Privity and Binding Effect: Respondents' contention that they were not bound because they were not signatories was rejected. They are successors-in-interest of Maria Laquindanum, one of the signatories to the Extrajudicial Settlement with Waiver. Correa vs. Pascual explained that a privy in estate derives title by purchase or conveyance and stands in the shoes of the predecessor. As successors, respondents are in the same position as Maria Laquindanum and are bound by any condition attached to the property or agreement precipitating the deed. Their situation was compared to a transferee pendente lite under Santiago Land Development Corporation vs. Court of Appeals and Fetalino vs. Sanz, who is bound by proceedings against the predecessor.
• Ownership of the 192-Square-Meter Lot: The 192-square-meter lot was part of Pedro Sr.'s estate based on respondents' own pre-trial admission. During pre-trial, respondents stipulated that the land covered by Tax Declaration No. 9534, previously owned by Pedro Constantino, Sr., was transferred to Maria Constantino under Tax Declaration No. 9535. This was an admission against interest. The CA's conclusion that the lot belonged to Pedro Jr. based on an alleged typographical error was weak and contradicted the admission. Respondent Asuncion Laquindanum's testimony denying Pedro Sr.'s ownership was a self-serving declaration unsupported by evidence. Thus, the stipulation was conclusive.
• Judicial Admissions: Judicial admissions are legally binding on the party making them. Under Section 7, Rule 18 of the Rules of Court, the contents of the pre-trial order control the subsequent course of the action and define and limit the issues. Under Section 4, Rule 129, an admission made in the course of proceedings does not require proof and may be contradicted only by showing palpable mistake or that no admission was made. Bayas vs. Sandiganbayan and Alfelor vs. Halasan were cited for the binding effect of stipulations and judicial admissions. Respondents failed to refute the admission; their denial did not fall under either exception. Therefore, they were bound by the admission that the 192-square-meter lot was owned by Pedro Sr.
• Effect of Exclusion of Heirs: Because both deeds excluded heirs and circumvented the law on legitimes, both were declared void. De Leon vs. Court of Appeals held that the pari delicto rule does not apply where it would put a premium on circumvention of law; positive relief should be granted to the party seeking to avoid the illegal transaction. Magsalin vs. National Organization of Working Men held that any circumvention of law cannot be countenanced. The proper course was partition of Pedro Sr.'s estate with full participation of all heirs.

• In Pari Delicto — Latin for "in equal fault"; two or more persons are equally culpable or guilty, and neither courts of law nor equity will grant relief to parties to an illegal agreement. The doctrine is expressed in the maxims "ex dolo malo nonoritur actio" and "in pari delicto potior est conditio defendentis." It applies to parties to one contract who are both at fault. In this case, it was held inapplicable because two separate deeds, not one contract, were involved, and because applying it would validate both illegal deeds rather than nullify them.
• Judicial Admissions — Admissions, verbal or written, made by a party in the course of proceedings in the same case do not require proof and are binding on the party making them. They may be contradicted only by showing palpable mistake or that no admission was made. Pre-trial stipulations, once reduced to writing and signed, become judicial admissions. Applied to respondents' stipulation that the 192-square-meter lot was previously owned by Pedro Sr.
• Privity in Estate — A privy in estate derives title to property by purchase or conveyance and stands in the shoes of the predecessor in interest. Such a successor is bound by proceedings and conditions attached to the property. Applied to respondents as successors-in-interest of Maria Laquindanum, a signatory to the Extrajudicial Settlement with Waiver.
• Void Contracts for Illegality or Circumvention of Legitimes — Under Article 1409 of the Civil Code, 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. A void contract has no force and effect from the beginning and cannot be validated by time or ratification. Applied to both deeds because they excluded heirs and circumvented the law on legitimes.
• Extrajudicial Settlement Excluding Heirs — No extrajudicial settlement is binding upon a person who did not participate therein or had no notice thereof. A partition that excludes heirs entitled to shares is a total nullity as to the excluded heirs. Applied to invalidate both the 1968 Extrajudicial Settlement with Waiver and the 1992 "Pagmamana sa Labas ng Hukuman."

• "Under the pari delicto doctrine, the parties to a controversy are equally culpable or guilty, they shall have no action against each other, and it shall leave the parties where it finds them." — Defines the doctrine and frames the Court's threshold analysis.
• "Clearly, the principle of in pari delicto cannot be applied. The inapplicability is dictated not only by the fact that two deeds, not one contract, are involved, but because of the more important reason that such an application would result in the validation of both deeds instead of their nullification as necessitated by their illegality." — States the ratio for rejecting the trial court's and the CA's reliance on in pari delicto.
• "Judicial admissions are legally binding on the party making the admissions. Pre-trial admission in civil cases is one of the instances of judicial admissions explicitly provided for under Section 7, Rule 18 of the Rules of Court, which mandates that the contents of the pre-trial order shall control the subsequent course of the action, thereby, defining and limiting the issues to be tried." — States the rule on pre-trial judicial admissions that made respondents' stipulation conclusive.
• "Accordingly, in order not to put a premium to the circumvention or the laws as contemplated by the parties in the instant case, we must declare both contracts as void. Indeed, any circumvention of the law cannot be countenanced." — Summarizes the Court's justification for nullifying both deeds.

• Packaging Products Corporation vs. NLRC, 236 Phil. 225 (1987) — Cited to illustrate in pari delicto: courts cannot give positive relief to either party to an illegal arrangement.
• Correa vs. Pascual, 99 Phil. 696 (1956) — Explained privity in estate; a privy in estate derives title by purchase or conveyance and stands in the predecessor's shoes.
• Santiago Land Development Corporation vs. Court of Appeals, 334 Phil. 741 (1997) and Fetalino vs. Sanz, 44 Phil. 691 (1923) — Cited for the rule that a transferee pendente lite stands in the shoes of the predecessor and is bound by the proceedings.
• Bayas vs. Sandiganbayan, 440 Phil. 54 (2002) — Held that pre-trial stipulations reduced to writing and signed become binding judicial admissions.
• Alfelor vs. Halasan, 520 Phil. 982 (2006) — Judicial admissions are a waiver of proof and are conclusive against the party making them.
• Neri vs. Heirs of Hadji Yusop Uy, G.R. No. 194366, 10 October 2012, 683 SCRA 553 — An extrajudicial settlement excluding heirs is not valid and binding upon them; it is a total nullity.
• Segura vs. Segura, 247-A Phil. 449 (1988) — A partition invalid for excluding six of nine heirs; no extrajudicial settlement is binding on nonparticipating or unnotified heirs.
• De Leon vs. Court of Appeals, G.R. No. 80965, 6 June 1990, 186 SCRA 345 — The pari delicto rule does not apply where it would put a premium on circumvention of law; positive relief may be granted.
• Magsalin vs. National Organization of Working Men, 451 Phil. 254 (2003) — Any circumvention of law cannot be countenanced.
• Ubarra vs. Mapalad, A.M. No. MTJ-91-622, 22 March 1993, 220 SCRA 224 — Cited for the maxims expressing the in pari delicto doctrine.
• Cabresos vs. Judge Tiro, 248 Phil. 631 (1988) — Cited for the definition of "privies."
• Florentino Atillo, III vs. Court of Appeals, 334 Phil. 546 (1997) — Cited for the exceptions to the conclusiveness of judicial admissions.
• Tongoy vs. Court of Appeals, 208 Phil. 95 (1983) — Cited for the rule that a void contract cannot be validated by time or ratification.

• Article 1409, Civil Code — 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. Applied to the underlying agreement and the deeds that excluded heirs and circumvented the law on legitimes.
• Article 1411, Civil Code — When the nullity proceeds from the illegality of the cause or object of the contract and the act constitutes a criminal offense, both parties being in pari delicto shall have no action against each other and both shall be prosecuted. The Court noted that no criminal offense was involved.
• Article 1412, Civil Code — If the act in which the unlawful or forbidden cause consists does not constitute a criminal offense, and the fault is on the part of both contracting parties, neither may recover what he has given by virtue of the contract or demand the performance of the other's undertaking. The Court discussed this provision but found in pari delicto inapplicable because two deeds, not one contract, were involved.
• Section 7, Rule 18, Rules of Court — The contents of the pre-trial order shall control the subsequent course of the action unless modified before trial to prevent injustice. Applied to make respondents' pre-trial stipulation binding.
• Section 4, Rule 129, Rules of Court — An admission, verbal or written, made by a party in the course of the proceedings in the same case does not require proof; it may be contradicted only by showing palpable mistake or that no such admission was made. Applied; respondents failed to refute their admission.
• Section 1, Rule 74, Rules of Court — No extrajudicial settlement shall be binding upon any person who has not participated therein or had no notice thereof. Cited through Segura vs. Segura and applied to invalidate deeds that excluded heirs.

Antonio T. Carpio, Arturo D. Brion, Mariano C. Del Castillo, and Estela M. Prlas-Bernabe.