BASILIA BOUGH vs .

MATILDE CANTIVEROS

FIRST DIVISION
[G.R. No. 13300. September 29, 1919.]
BASILIA BOUGH and GUSTAVUS BOUGH , plaintis-appellants, vs.
MATILDE CANTIVEROS and PRESBITERA HANOPOL, defendantsappellees.

P. E. del Rosario and William F. Mueller for appellants.

Sison & Veloso for appellees.
SYLLABUS
1.
PLEADING AND PRACTICE; CIVIL PROCEDURE; ANSWERS;
GENUINENESS AND DUE EXECUTION OF WRITTEN INSTRUMENTS; SECTION
103 OF THE CODE OF CIVIL PROCEDURE CONSTRUED. In accordance with
section 103 of the Code of Civil Procedure, the genuineness and due execution of
a written instrument, properly pleaded, is deemed admitted unless the plainti
or defendant, as the case may be, shall specifically deny the same under oath.
2.
ID.; ID.; ID.; ID.; ID. The phrase "genuineness and due execution of
the instrument" means nothing more than that the instrument is not spurious,
counterfeit, or of different import on its face from the one executed.
3.
ID.; ID.; ID.; ID.; ID. The failure of the party to le an adavit
denying the genuineness and due execution of the document does not estop him
from controverting it by evidence of fraud, mistake, compromise, payment,
statute of limitations, estoppel, and want of consideration.
4.
ID.; ID.; ID.; ID.; ID.; DEFENSE OF ILLEGALITY OF FRAUD. As
section 285 of the Code of Civil Procedure permits a writing to be impeached
because of its illegality or fraud, such a defense would not be barred by the
provisions of section 103.
5.
ID.; ID.; ID.; ID.; ID.; ID. Held: That although the defendants did
not deny the genuineness and due execution of the contract of sale of December
9, 1913, under oath, yet the defendants could properly set up the defenses of
fraud and want of consideration.
6.
PUBLIC INSTRUMENTS; VARYING TERMS; PAROLE EVIDENCE TO
ESTABLISH ILLEGALITY OR FRAUD; SECTION 2185 OF THE CODE OF CIVIL
PROCEDURE CONSTRUED. Article 1218 of the Civil Code which provides that
public instruments are evidence of the fact which gave rise to their execution,
should be read in conjunction with section 286 of the Code of Civil Procedure.
7.
ID.; ID.; ID.; ID. Evidence to establish illegality or fraud, is
expressly permitted under section 285 of the Code of Civil Procedure, and may be

proved by circumstantial evidence, aided by legitimate inferences from the direct

facts.
8.
CONTRACTS; ILLEGAL AS AGAINST PUBLIC POLICY. Contracting
parties may not establish pacts, clauses, and conditions, which conict with the
laws, morals, or public order.
9.
ID.; ID.; "PUBLIC ORDER" CONSTRUED. "Public order" in the civil
law signifies the public weal public policy.
10.
ID.; ID.; ACTIONS TO ENFORCE. A party to an illegal contract
cannot come into a court of law and ask to have his illegal objects carried out.
The law will not aid either party to an illegal agreement; it leaves the parties
where it finds them.
11.
ID.; ID.; ID. Where the parties to an illegal contract are not
equally guilty, and where public policy is considered as advanced by allowing the
more excusable of the two to sue for. relief against the transaction, relief is given
to him. Cases of this character are, where the conveyance was wrongfully
induced by the grantee through imposition or overreaching, or by false
representations, especially by one in a confidential relation.
12.
ID.; ID.; ID. Held: That since the grantor, reposing faith in the
integrity of the grantee and relying on a suggested occurrence which did not in
fact take place, was made the dupe of the grantee, the grantor should be placed
in the position in which she was before the transactions were entered into.
DECISION
MALCOLM, J :
p

This action was begun in the Court of First Instance of Leyte, pursuant to a
complaint by means of which the plaintis Basilia Bough and Gustavus Bough
sought to have themselves put in possession of the property covered by the deed
of sale quoted in the complaint, and to require the defendant Matilde Cantiveros
to pay the plaintis the sum of ve hundred pesos by way of damages, and to
pay the costs. Matilde Cantiveros answered with a general denial and a special
defense, not sworn to, in which she asked that judgment be rendered declaring
the contract of sale theretofore made between herself and Basilia Bough null.
The plaintis, thereupon, denied under oath the genuineness and due execution
of the so-called donation intervivos set forth in the answer. Presbitera Hanopol
was permitted to intervene as a defendant. After trial, judgment was rendered by
the Honorable W. E. McMahon, judge of rst instance, in favor of the defendants,
declaring the deed of sale, Exhibit A, ctitious, null, and without eect, and
absolving the defendants from the complaint, with costs against the plaintis. It
is from this judgment through the ordinary means of perfection of a bill of
exceptions that the case is brought to this court for decision.
The facts are these: Matilde Cantiveros is reputed to be the richest resident
of the municipality of Carigara, Leyte. In the latter part of the year 1913, she

was the owner of various parcels of realty of the value of thirty thousand pesos,
or more. On December 24, 1912, Matilde Cantiveros and her husband Jose
Vasquez, signed a marital contract of separation. At this time there lived with
Matilde Cantiveros, Basilia Hanopol, a cousin and protege since childhood, who
was married to Gustavus Bough. For this reason, Gustavus Bough was regarded
by Matilde Cantiveros with great condence, even as her child. Through the
inuence of Gustavus Bough, who brought a story to Matilde Cantiveros that her
husband Jose Vasquez was in town and might contest the contract for the
separation of the conjugal property, Matilde Cantiveros was induced to sign a
ctitious contract of sale of all her property to Basilia Bough. This document,
introduced in evidence as Exhibit A, was prepared in due form and acknowledged
before a notary public, the amount of the consideration, ten thousand pesos,
being last inserted with a pen. By this deed, Matilde Cantiveros purported to
convey sixty-three parcels of land, the real value of which was over thirty
thousand pesos, for ten thousand pesos, although no evidence that any such sum
ever passed between the parties was introduced, to her cousin, Basilia Bough. In
order to reassure Matilde Cantiveros that they would not take advantage of the
ctitious sale, Gustavus Bough and Basilia Bough prepared and signed another
document, introduced in evidence as Exhibit 1, which is a donation by them to
Matilde Cantiveros of all the property mentioned in Exhibit A, to be eective in
case of the death of themselves and their children before the death of Matilde
Cantiveros. The defendant, Matilde Cantiveros, has remained in possession of the
property.
These facts, which, it may be said, are mainly derived from the ndings of
the trial court, merely repeat the threadbare story of a conveyance of property
entered into with a fraudulent intention and for a fraudulent purpose, in order to
defeat recovery in a suit at law by a third party.
Plaintis and appellants assign six errors of the trial court. In so far as these
assignments concern the facts, they need no discussion. Plainti's declarations
have not been corroborated, while defendant's story has been corroborated by
reliable witnesses. All the reason all the equity of the case, is in favor of the
defendants. As far as necessary for the disposition of the appeal, we resolve
plaintiff's points in order.
1.
The rst assignment of error reads: "The lower Court erred in
permitting the defendants to present evidence, over the objections of the
plainti, tending to impugn the genuineness and due execution of the document,
Exhibit A, and in admitting them to show the circumstances under which it was
executed."
It is undeniable that this was an action brought upon a written instrument,
and that the complaint contained a copy of the instrument, but that its
genuineness and due execution were not specically denied under oath in the
answer. Is this fatal to the defense?
Section 103 of the Philippine Code of Civil Procedure provides:
"When an action is brought upon a written instrument and the
complaint contains or has annexed a copy of such instrument, the
genuineness and due execution of the instrument shall be deemed admitted,

unless specifically denied under oath in the answer; and when the defense to
an action, or a counterclaim stated in an answer, is founded upon a written
instrument and the copy thereof is contained in or annexed to the answer,
the genuineness and due execution of such instrument shall be deemed
admitted, unless specically denied under oath by the plainti in his
pleadings."

This section is derived from sections 448 and 449 of the Code of Civil
Procedure of California, and is to be found in varying form in the statutes of
practically all the states of the American Union. The meaning of this portion of
the Code, and the intention of the Legislature in enacting it, are easily found. The
law says that the genuineness and due execution of a written instrument
properly pleaded shall be deemed admitted unless the plainti or defendant, as
the case may be, shall specically deny the same under oath. When the law
makes use of the phrase "genuineness and due execution of the instrument" it
means nothing more than that the instrument is not spurious, counterfeit, or of
dierent import on its face from the one executed. As an example, where the
name of a corporation is signed to the document which is the basis of an action,
the failure of the defendant corporation to put in issue, by denial under oath, the
due execution of the instrument, is required in section 103 of the Code of Civil
Procedure, operates as an admission of the authority of the ocer to execute the
contract, since the authority of the ocer to bind the company is essential to the
due execution of its contract. (Ramirez vs. Orientalist Co. and Fernandez [1918],
38 Phil., 634.) But the failure of the party to le an adavit denying the
genuineness and due execution of the document does not estop him from
controverting it by evidence of fraud mistake, compromise, payment, statute of
limitations, estoppel, and want of consideration. As section 285 of our Code of
Civil Procedure permits a writing to be impeached because of its illegality or
fraud, such a defense would not be barred by the provisions of section 103.
(Moore vs. Copp [1897], 119 Cal., 429; Brooks vs. Johnson [1898], 122 Cal., 669;
Hibberd vs. Rohde and McMillian [1915], 32 Phil., 476.)
We hold that although the defendants did not deny the genuineness and
due execution of the contract of sale of December 9, 1913, under oath, yet the
defendants could properly set up the defenses of fraud and want of consideration.
2.
The second assignment of error reads: "The lower Court erred in
nding that the plainti Gustavus Bough, having prepared a contract of
separation between the defendant Matilde Cantiveros and her husband, Jose
Vasquez, sought to cause her to believe that she exposed herself to a suit by her
husband regarding her property, notwithstanding the contract of separation, and
for that reason and for the purpose of shielding herself from the consequences of
the apprehended suit, that she and her mother executed the document Exhibit
A."
Counsel relies on the provisions of article 1218 of the Civil Code, which
provides that "Public instruments are evidence, even against a third person, of
the fact which gave rise to their execution and of the date of the latter." The
eect of this article has been announced in numerous decisions of the Supreme

Court of Spain and of this Court. (See Hijos de I. de la Rama vs. Robles and
Robles [1907], 8 Phil., 712.) But in conjunction with article 1218 of the Civil
Code, there should always be read section 285 of the Code of Civil Procedure
which provides that:
"When the terms of an agreement have been reduced to writing by
the parties, it is to be considered as containing all those terms, and
therefore there can be, between the parties and their representatives or
successors in interest, no evidence of the terms of agreement other than
the con- tents of the writing, except in the following cases:
"1.
Where a mistake or imperfection of the writing, or its failure to
express the true intent and agreement of the parties, is put in issue by the
pleadings;
"2.
Where the validity of the agreement is the fact in dispute. But
this section does not exclude other evidence of the circumstances under
which the agreement was made, or to which it relates, or to explain an
intrinsic ambiguity, or to establish its illegality or fraud. The term 'agreement'
includes deeds and instruments conveying real estate, and wills as well as
contracts between parties."

While thus as the law well says "public instruments are evidence of the fact
which gave rise to their execution" and are to be considered as containing all the
terms of the agreement, yet, if the validity of the agreement is the issue, parole
evidence may be introduced to establish illegality or fraud. Evidence to establish
illegality or fraud, is expressly permitted under section 285 of the Code of Civil
Procedure, and may be proved by circumstantial evidence, aided by legitimate
inferences from the direct facts. (Camacho vs. Municipality of Baliuag [1914], 28
Phil., 466; Maulini vs. Serrano [1914], 28 Phil., 640; Union Mut. Life Insurance
Co. vs. Wilkinson [1872], 13 Wall., 222; Maxon vs. Llewelyn [1898], 122 Cal.,
195, construing section 1856 of the Code of Civil Procedure of California,
identical with section 285 of the Code of Civil Procedure of the Philippines.)
We hold that parole evidence was properly admitted to show the illegality
of the contract of sale introduced as Exhibit A.
3.
The third point raised by appellant is, that the defendant, having
accepted the donation expressed in the instrument Exhibit 1, is now estopped
from denying the consideration set forth therein. A sucient answer is, that it
having been established that Exhibit A is invalid, such an instrument cannot be
made the basis of an estoppel.
We hold that the so-called donation in favor of Matilde Cantiveros did not
operate to create an estoppel.
4.
The last question which is propounded by appellant relates to the
eect of the illegality of the instant contract. It is rudimentary that contracting
parties may not establish pacts, clauses, and conditions, which conict with the
laws, morals, or public order; "public order" signies "the public weal" public
policy (Article 1255, Civil Code; Manresa, Comentarios al Codigo Civil, Vol. 8, p.
574.) It is further well settled, that a party to an illegal contract cannot come into
a court of law and ask to have his illegal objects carried out. The rule is expressed
in the maxims: "Ex dolo malo non oritur actio," and "In pari delicto potior est

conditio defendentis." The law will not aid either party to an illegal agreement; it
leaves the parties where it nds them. (Article 1306, Civil Code; Perez vs.
Herranz [1907], 7 Phil., 693.) Where, however, the parties to an illegal contract
are not equally guilty, and where public policy is considered as advanced by
allowing the more excusable of the two to sue for relief against the transaction,
relief is given to him. Cases of this character are, where the conveyance was
wrongfully induced by the grantee through imposition or overreaching, or by
false representations, especially by one in a condential relation. (13 C. J., 497499; Pride vs. Andrew [1894], 51 Ohio State, 405.)
As corroborative examples of these principles, we may cite the following:
"Where a husband falsely represented to his wife that she was liable
for certain debts, and that the creditors would take her property and
inuenced by this, and intending to defraud such creditors, she transferred
her property to him, it was held that the deed would be set aside." (Boyd vs.
De la Montagnie [1878], 73 N. Y., 498.)
"Where a party has given a conveyance of his property with intent to
defraud a creditor, the law will allow him no relief against such conveyance,
but will leave him in the situation in which he has placed himself. But where
there is no creditor in fact, but only an imaginary one, through fear of whom
the grantor, encouraged by the grantee, makes the conveyance, a
fraudulent intent will not be imputed to the grantor, and where the
conveyance of the property has been without consideration, he may recover
the same or its value." (Kervick vs. Mitchell [1885], 68 Iowa, 273.)
"Where a son falsely represented to his mother that a suit was about
to be brought against her for slander which would result in her losing all her
property, and thereby induced her to convey all her property to him, it was
held that the conveyance would be set aside at her suit." (Harper vs. Harper
& Co. [1887], 85 Ky., 160.)
"Where a woman seventy years of age and illiterate was induced by
her son-in-law and the sureties on his bond to execute a mortgage to the
sureties to indemnify them on a defalcation by the son-in-law, by holding out
to her the anticipated punishment of the latter, without allowing her a
chance to consult any disinterested friend, it was held that the mortgage
would be set aside." (Bell vs. Campbell [1894], 123 Mo., 1.)
"One who executes a bill of sale at the instance of the grantee, for the
purpose of putting his property beyond the reach of a third person whom
the grantee represented was about to institute suit against the grantor, is
entitled to recover the value of the property, where such third person had
no valid claim against the grantor, but had been settled with in full, and his
receipt taken." (Kervick vs. Mitchell [1885], 68 Iowa, 273.)
"A brother who conveyed property to his sister on a secret trust for
his benet, to defeat any claim for alimony which his wife, who had instituted
a suit for divorce, might make against him, is entitled to enforce the trust
upon which the conveyance was made, where it does not appear that any
claim for alimony was ever set up by his wife, or allowed, or that facts
existed entitling her to such an allowance. The court said: 'It does not appear
that there was any creditor whose rights or interests could be prejudiced by

the conveyance, and the question is whether or not the mere motive which
impelled the party to make the deed will preclude him from enforcing the
trust upon which it was executed. We think that where there is no creditor,
there is no fraud, and therefore no policy of the law to prevent the
enforcement of the trust.' " (Rivera vs. White [1901], 94 Tex., 538.)
"A conveyance made by a mother to a daughter in consequence of
false representations that her property might otherwise be taken from her
to satisfy a claim for alimony arising from a suit for divorce about to be
brought against her son by his wife will be cancelled. The Court said: 'If the
conveyance was made for the purpose of protecting the property from
such claim, such representations being untrue, and such apprehensions in
fact groundless, then she is entitled to have the deeds set aside.' " (Kleeman
vs. Peltzer [1885], 17 Neb., 381.)

In this instance, the grantor, reposing faith in the integrity of the grantee,
and relying on a suggested occurrence, which did not in fact take place, was
made the dupe of the grantee, and led into an agreement against public policy.
The party asking to be relieved from the agreement which she was induced to
enter into by means of fraud, was thus in delicto, but not in pari delicto with the
other party. The deed was procured by misrepresentation and fraud sucient to
vitiate the transaction. The rights of creditors are not aected. We feel that
justice will be done if we place the grantor in the position in which she was
before these transactions were entered into.
The facts of this case are not greatly dissimilar from those to be found in
Hibberd vs. Rohde and McMillian ( [1915], 32 Phil., 476), relating to the defenses
permissible where an instrument was submitted by the plainti, and not denied
under oath by the defendant, and to the subject of contracts against public policy.
The doctrine there announced need not be incorporated in this decision.
We resolve each assignment of error against the appellants, and having
done so, arm the judgment of the trial court, with costs of this instance against
the appellants. So ordered.

Arellano, C. J., Torres, Johnson, Araullo, Street, Avancea

concur.

and Moir, JJ.,