Teja Marketing, et.al vs Nale and IAC, GR No. 65510, March 9, 1987
Subject: Obligations and Contracts
FACTS
On May 9, 1975, the defendant bought from the plaintiff a motorcycle
with complete accessories and a sidecar in the total consideration of P8,000.00
as shown by Invoice No. 144. Out of the total purchase price the defendant gave
a down payment of P1,700.00 with a promise that he would pay plaintiff the
balance within sixty days. The defendant, however, failed to comply with his
promise and so upon his own request, the period of paying the balance was
extended to one year in monthly installments until January 1976 when he stopped
paying anymore. The plaintiff made demands but just the same the defendant
failed to comply with the same thus forcing the plaintiff to consult a lawyer
and file this action for his damage. The records of the LTC show that the
motorcycle sold to the defendant was first mortgaged to the Teja Marketing by
Angel Jaucian though the Teja Marketing and Angel Jaucian are one and the same,
because it was made to appear that way only as the defendant had no franchise
of his own and he attached the unit to the plaintiff's MCH Line. The agreement
also of the parties here was for the plaintiff to undertake the yearly
registration of the motorcycle with the Land Transportation Commission.
Pursuant to this agreement the defendant on February 22, 1976 gave the
plaintiff P90.00, the P8.00 would be for the mortgage fee and the P82.00 for
the registration fee of the motorcycle. The plaintiff, however failed to
register the motorcycle on that year on the ground that the defendant failed to
comply with some requirements such as the payment of the insurance premiums and
other renewal processing.
ISSUE
Whether or not the plaintiff can ask for "Sum of Money with
Damages" against private respondent.
RULING
No.
Under the law, If the act in which the unlawful or forbidden cause
consists of does not constitute a criminal offense, the following rules shall
be observed: when the fault is on the part of both contracting parties, neither
may recover that he has given by virtue of the contract, or demand, the
performance of the other's undertaking.
The parties herein operated under an arrangement, commonly known as the
"kabit system" whereby a person who has been granted a certificate of
public convenience allows another person who owns motor vehicles to operate
under such franchise for a fee. A certificate of public convenience is a
special privilege conferred by the government. Abuse of this privilege by the
grantees thereof cannot be countenanced. The "kabit system" has been
Identified as one of the root causes of the prevalence of graft and corruption
in the government transportation offices. Although not outrightly penalized as
a criminal offense, the kabit system is invariably recognized as being contrary
to public policy. It is a fundamental principle that the court will not aid
either party to enforce an illegal contract but will leave both where it finds
then. Upon this premise it would be error to accord the parties relief from
their predicament.
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