FILASOL, RICHARD

Contracts without consideration or with an illicit one have no effect whatsoever. A consideration is
illicit when it is contrary to law and good morals.

Arroyo v Berwin

GR No L-10551
March 3, 1917
Appeal

Parties:
Ignacio Arroyo Plaintiff-appellant
Alfred Berwin Defendant-appelle

Facts: On Aug 14, 1914, defendant, representing Marcela Juaneza, requested plaintiff to agree to dismiss a criminal
proceeding for theft against his client. Defendant stipulated with the plaintiff that his client would recognize the
plaintiffs ownership in the land situated on Calle San Juan, suburb of Molo, municipality of Ilo-ilo (where his client
ordered the cane cut, which land and which cut cane are referred to in the cause for the theft) only if plaintiff would ask
the prosecuting attorney to dismiss the said proceeding against his client. Plaintiff complied with the agreement and
requested the prosecuting attorney to dismiss the criminal case (who then dismissed the case). However, despite several
demands by plaintiff, defendant has still not delivered the written agreement acknowledging the ownership of the
described land. Thus, plaintiff prayed for the court to render judgment ordering the defendant to comply with the
agreement by causing defendants client Marcela Juaneza to sign the document in which she recognizes the plaintiffs
ownership of the land. The trial court, however, dismissed the complaint on the ground of illegality of the
consideration of alleged contract.

Issue: W/N Trial court erred in dismissing the complaint on the ground of illegality of the consideration of alleged
contract.

Ruling: No. Trial court decision affirmed.

An agreement by the owner of stolen goods to stifle the prosecution of the person charged with the theft, for a pecuniary
or other valuable consideration, is manifestly contrary to public policy and the due administration of justice. In the
interest of the public it is of the utmost importance that criminals should be prosecuted, and that all criminal
proceedings should be instituted and maintained in the form and manner prescribed by law; and to permit an offender
to escape the penalties prescribed by law by the purchase of immunity from private individuals would result in a
manifest perversion of justice.

Article 1255 of the Civil Code (now Art 1306, NCC) provides that:

The contracting parties may make the agreement and establish the clauses and conditions which they may dream
advisable, provided they are not in contravention of law, morals, or public order.

Article 1275 (Old Civil Code) provides that:

Contracts without consideration or with an illicit one have no effect whatsoever. A consideration is illicit when it is
contrary to law and good morals.