Frenzel vs Catito

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G.R. No. 143958. July 11, 2003

ALFRED FRITZ FRENZEL, petitioner, vs. EDERLINA P. CATITO, respondent.

Facts:

Petitioner Alfred Fritz Frenzel is an Australian citizen of German descent. He is an electrical engineer by profession, but worked as a pilot with the New Guinea Airlines. He arrived in the Philippines in 1974, started engaging in business in the country; two years thereafter, he married Teresita Santos, a Filipino citizen.

In 1981, Alfred and Teresita separated from bed and board without obtaining a divorce.

In 1983, Alfred arrived in Sydney, Australia for a vacation. He went to King’s Cross, a night spot in Sydney, for a massage where he met Ederlina Catito, a Filipina and a native of Bajada, Davao City.

Unknown to Alfred, she resided for a time in Germany and was married to Klaus Muller, a German national. She left Germany and tried her luck in Sydney, Australia, where she found employment as a masseuse in the King’s Cross nightclub.

Alfred was so enamored with Ederlina that he persuaded her to stop working at King’s Cross, return to the Philippines, and engage in a wholesome business of her own. He also proposed that they meet in Manila, to which she assented. Alfred gave her money for her plane fare to the Philippines. Within two weeks of Ederlina’s arrival in Manila, Alfred joined her. Alfred reiterated his proposal for Ederlina to stay in the Philippines and engage in business, even offering to finance her business venture. Ederlina was delighted at the idea and proposed to put up a beauty parlor. Alfred happily agreed.

Alfred told Ederlina that he was married but that he was eager to divorce his wife in Australia. Alfred proposed marriage to Ederlina, but she replied that they should wait a little bit longer.

Alfred went back to Papua New Guinea to resume his work as a pilot.
Since Alfred knew that as an alien he was disqualified from owning lands in the Philippines, he agreed that only Ederlina’s name would appear in the deed of sale as the buyer of the property, as well as in the title covering the same. After all, he was planning to marry Ederlina and he believed that after their marriage, the two of them would jointly own the property.

When Ederlina left for Germany to visit Klaus, she had her father Narciso Catito and her two sisters occupy the property.

Alfred decided to stay in the Philippines for good and live with Ederlina. He returned to Australia and sold his fiber glass pleasure boat to John Reid in 1984. He also sold his television and video business in Papua New Guinea. He had his personal properties shipped to the Philippines and stored at San Francisco del Monte, Quezon City.

On July 28, 1984, while Alfred was in Papua New Guinea, he received a Letter dated December 7, 1983 from Klaus Muller who was then residing in Berlin, Germany. Klaus informed Alfred that he and Ederlina had been married on October 16, 1978 and had a blissful married life until Alfred intruded therein.

Klaus stated that he knew of Alfred and Ederlina’s amorous relationship, and discovered the same sometime in November 1983 when he arrived in Manila. He also begged Alfred to leave Ederlina alone and to return her to him, saying that Alfred could not possibly build his future on his (Klaus’) misfortune.

Alfred had occasion to talk to Sally MacCarron, a close friend of Ederlina. He inquired if there was any truth to Klaus’ statements and Sally confirmed that Klaus was married to Ederlina.

When Alfred confronted Ederlina, she admitted that she and Klaus were, indeed, married. But she assured Alfred that she would divorce Klaus. Alfred was appeased. He agreed to continue the amorous relationship and wait for the outcome of Ederlina’s petition for divorce. After all, he intended to marry her. He retained the services of Rechtsanwältin Banzhaf with offices in Berlin, as her counsel who informed her of the progress of the proceedings. Alfred paid for the services of the lawyer.

Ederlina often wrote letters to her family informing them of her life with Alfred. In a Letter dated January 21, 1985, she wrote about how Alfred had financed the purchases of some real properties, the establishment of her beauty parlor business, and her petition to divorce Klaus.

In the meantime, Ederlina’s petition for divorce was denied because Klaus opposed the same. A second petition filed by her met the same fate. Klaus wanted half of all the properties owned by Ederlina in the Philippines before he would agree to a divorce. Worse, Klaus threatened to file a bigamy case against Ederlina.

Alfred proposed the creation of a partnership to Ederlina, or as an alternative, the establishment of a corporation, with Ederlina owning 30% of the equity thereof. She initially agreed to put up a corporation and contacted Atty. Armando Dominguez to prepare the necessary documents. Ederlina changed her mind at the last minute when she was advised to insist on claiming ownership over the properties acquired by them during their coverture.

Alfred and Ederlina’s relationship started deteriorating. Ederlina had not been able to secure a divorce from Klaus. The latter could charge her for bigamy and could even involve Alfred, who himself was still married. To avoid complications, Alfred decided to live separately from Ederlina and cut off all contacts with her. In one of her letters to Alfred, Ederlina complained that he had ruined her life. She admitted that the money used for the purchase of the properties in Davao were his. She offered to convey the properties deeded to her by Atty. Mardoecheo Camporedondo and Rodolfo Morelos, asking Alfred to prepare her affidavit for the said purpose and send it to her for her signature. The last straw for Alfred came on September 2, 1985, when someone smashed the front and rear windshields of Alfred’s car and damaged the windows. Alfred thereafter executed an affidavit-complaint charging Ederlina and Sally MacCarron with malicious mischief.

On October 15, 1985, Alfred wrote to Ederlina’s father, complaining that Ederlina had taken all his life savings and because of this, he was virtually penniless. He further accused the Catito family of acquiring for themselves the properties he had purchased with his own money. He demanded the return of all the amounts that Ederlina and her family had “stolen” and turn over all the properties acquired by him and Ederlina during their coverture.

Alfred filed a Complaint dated October 28, 1985, against Ederlina, with the Regional Trial Court of Quezon City, for recovery of real and personal properties located in Quezon City and Manila. In his complaint, Alfred alleged, inter alia, that Ederlina, without his knowledge and consent, managed to transfer funds from their joint account in HSBC Hong Kong, to her own account with the same bank. Using the said funds, Ederlina was able to purchase the properties subject of the complaints. He also alleged that the beauty parlor in Ermita was established with his own funds, and that the Quezon City property was likewise acquired by him with his personal funds.

Ederlina failed to file her answer and was declared in default. Alfred adduced his evidence ex-parte.

Alfred prayed that after hearing, judgment be rendered in his favor.

Issues:

a) Whether the Court of Appeals erred in applying the rule of In Pari Delicto since both parties are not equally guilty but rather it was the respondent who employed fraud when she did not inform petitioner that she was already married?

b) Whether the intention of the petitioner is not to own real properties in the Philippines but to sell them as public auction to be able to recover his money used in purchasing them?

Ruling:

The trial court ruled that based on documentary evidence, the purchaser of the three parcels of land subject of the complaint was Ederlina. The court further stated that even if Alfred was the buyer of the properties, he had no cause of action against Ederlina for the recovery of the same because as an alien, he was disqualified from acquiring and owning lands in the Philippines.

The sale of the three parcels of land to the petitioner was null and void ab initio. Applying the pari delicto doctrine, the petitioner was precluded from recovering the properties from the respondent.

Alfred appealed the decision to the Court of Appeals in which the petitioner posited the view that although he prayed in his complaint in the court a quo that he be declared the owner of the three parcels of land, he had no intention of owning the same permanently.

His principal intention therein was to be declared the transient owner for the purpose of selling the properties at public auction, ultimately enabling him to recover the money he had spent for the purchase thereof.

On March 8, 2000, the CA rendered a decision affirming in toto the decision of the RTC. The appellate court ruled that the petitioner knowingly violated the Constitution; hence, was barred from recovering the money used in the purchase of the three parcels of land. It held that to allow the petitioner to recover the money used for the purchase of the properties would embolden aliens to violate the Constitution, and defeat, rather than enhance, the public policy.

Even if, as claimed by the petitioner, the sales in question were entered into by him as the real vendee, the said transactions are in violation of the Constitution; hence, are null and void ab initio.

A contract that violates the Constitution and the law, is null and void and vests no rights and creates no obligations. It produces no legal effect at all. The petitioner, being a party to an illegal contract, cannot come into a court of law and ask to have his illegal objective carried out. One who loses his money or property by knowingly engaging in a contract or transaction which involves his own moral turpitude may not maintain an action for his losses. To him who moves in deliberation and premeditation, the law is unyielding. The law will not aid either party to an illegal contract or agreement; it leaves the parties where it finds them.

Under Article 1412 of the New Civil Code, the petitioner cannot have the subject properties deeded to him or allow him to recover the money he had spent for the purchase thereof. Equity as a rule will follow the law and will not permit that to be done indirectly which, because of public policy, cannot be done directly. Where the wrong of one party equals that of the other, the defendant is in the stronger position ... it signifies that in such a situation, neither a court of equity nor a court of law will administer a remedy. The rule is expressed in the maxims: EX DOLO MALO NON ORITUR ACTIO and IN PARI DELICTO POTIOR EST CONDITIO DEFENDENTIS.

Futile, too, is petitioner’s reliance on Article 22 of the New Civil Code which reads:

Art. 22. Every person who through an act of performance by another, or any other means, acquires or comes into possession of something at the expense of the latter without just or legal ground, shall return the same to him.

The provision is expressed in the maxim: “MEMO CUM ALTERIUS DETER DETREMENTO PROTEST” (No person should unjustly enrich himself at the expense of another). An action for recovery of what has been paid without just cause has been designated as an accion in rem verso. This provision does not apply if, as in this case, the action is proscribed by the Constitution or by the application of the pari delicto doctrine. It may be unfair and unjust to bar the petitioner from filing an accion in rem verso over the subject properties, or from recovering the money he paid for the said properties, but, as Lord Mansfield stated in the early case of Holman vs. Johnson: “The objection that a contract is immoral or illegal as between the plaintiff and the defendant, sounds at all times very ill in the mouth of the defendant. It is not for his sake, however, that the objection is ever allowed; but it is founded in general principles of policy, which the defendant has the advantage of, contrary to the real justice, as between him and the plaintiff.”

IN LIGHT OF ALL THE FOREGOING, the petition is DISMISSED. The decision of the Court of Appeals is AFFIRMED in toto.

Costs against the petitioner. SO ORDERED.