DELA CRUZ V. BETTER LIVING INC.

PETITIONERS: Julio T. Dela Cruz (substituted by Rosita C. dela Cruz, Elizabeth, Julio Jr., Emmanuel, Evelyn, Elaine,
Julio Jesus and Emily, all surnamed dela Cruz)
RESPONDENTS: Better Living Inc., Earthwealth (Phil.), Inc., Better Living, Inc. and Tropical Homes Inc.
DATE: 19 August 1977
SUMMARY:
This case concerns the sale of the Paranaque Estate, a 129 hectare land located near the South Super Highway.
Such land was owned by Peoples Homesite and Housing Corporation (PHHC) and was sold to Earthwealth Phil. Inc.,
Better Livings predecessor in interest. The sale of the land was brokered by Julio dela Cruz who was also promised
2 hectares of land and Php 320,000 as payment for his services as real estate broker and lawyer for Earthwealth.
However, Earthwealth failed to comply with its obligations to dela Cruz; thus, the latter filed an action for specific
performance. In appealing the lower courts decision granting dela Cruz complaint, Better Living (and Earthwealth)
alleged that the agreement with dela Cruz was void and inexistent for being contrary to public policy. According to
them, dela Cruz was able to broker the sale because of his close personal intimate relations with PHHC General
Manager Bernardo Torres. The SC did not uphold this allegation because the exploitation of friendship ceased on 21
July 1960 when the PHHC Board of Directors approved the sale while RA 3019 was enacted on 17 August 1960. The
provisions of RA 3019 cannot be given retroactive effect.

FACTS:

While the South Super Highway was being constructed, the late Julio T. dela Cruz individually contacted
owners of land in the vicinity. He was able to gather a group owning a total of 129 hectares (Paranaque
estate), which out of his efforts, he was able to sell to the Peoples Homesite and Housing Corporation
(PHHC).
On 2 November 1959, Earthwealth Phil Inc., through its General Manager Martinez, asked dela Cruz to
make legal representations and to negotiate in behalf of the former for the acquisition of the Paranaque
estate from PHHC for Php 3.50 per square meter with the understanding that if dela Cruz should succeed in
his negotiations, he would be entitled to the difference between the actual purchase price and the said
amount as compensation for his legal services.
This agreement was amended to indicate that Earthwealth will only purchase 100 hectares and agrees to
pay as much as Php 3.80 per square meter under the terms and conditions imposed by PHHC and the
President of the Philippines. The further sum of Php 320,000 as attorneys fees for dela Cruz and 2 hectares
of the Paranaque estate shall also be given to dela Cruz. Earthwealth will also shoulder any expenses that
dela Cruz may incur that are necessary to the mission assigned to him.
Meanwhile, on 22 March 1961, Earthwealth and Better Living Inc. entered into an agreement where
Earthwealth conveys and transfers irrevocably the right to buy and/or whatever lien or interest it has on the
Paranaque estate. Better Living also undertakes all of Earthwealths obligations in relation to the said estate.
On 29 March 1961, the PHHC and Earthwealth executed a Contract of Sale, whereby the former, for and
in consideration of Php 3.80 a square meter, sold to the latter and its successors and assigns, 1,003,345
square meters of its properties situated in Paranaque, Rizal.
After the sale, Better Living and Earthwealth had allegedly failed to comply with their obligation to Julio T.
dela Cruz; hence, dela Cruz filed a complaint against them for specific performance. Dela Cruz died during
the pendency of the case so he was substituted by his heirs.
The lower court rendered a decision in favor of dela Cruz; hence, this appeal.

ISSUES:

Whether or not Better Living had assumed the obligation to pay dela Cruz claim
Whether or not the agreement between dela Cruz and Earthwealth was void because it is contrary to public
policy (Corrupgov issue)

RATIO:
On Better Livings obligation to pay dela Cruz

Better Living pretends that it did not assume the obligation of Earthwealth. This is quite far from truth. Under
the Absolute Conveyance of Right to Buy Real Estate With All the Obligation Thereto Appertaining and/or
Arising Therefrom, executed on 12 March 1961, among the obligations transferred by Earthwealth was its
obligations to dela Cruz.
Also, Better Living had already paid to dela Cruz a total of Php 24,000. These circumstances show Better
Livings assumption of Earthwealths obligation.

On the validity of the contract:

As dela Cruz has explained in his testimony, the services he rendered for Earthwealth were that of a real
estate broker and a lawyer because he had to appear before the Cabinet in order to convince them as to the
feasibility and reasonableness of the sale wherein he was also made to file a memorandum.
Better Living is contending that the agreement to pay for the services of dela Cruz was in violation of RA
3019 or the Anti Graft and Corrupt Practices act and is therefore void and inexistent from the beginning.
In support thereof, Better Living points to certain admissions made by dela Cruz during trial that sale to
Earthwealth was mainly due to his representation and close personal relations with the PHHC General
Manager Torres which amounted to influence peddling within the concept of RA 3019. Mr Torres and dela
Cruz were close because they are from the same province and know each other intimately and trust one
another.
RA 3019 was enacted on 17 August 1960 and Section 4 of the said act provides that it shall be unlawful for
any person, family or close personal relation to any public official to capitalize or exploit or take advantage of
such family or close personal relation by directly or indirectly requesting or receiving any present, gift or
material or pecuniary advantage from any other person having some business, transaction, application,
request or contract with the government in which such public official has to intervene.
Family relation shall include the spouse or relatives by consanguinity or affinity in the third civil degree. The
word close personal relation shall include close personal friendship, social fraternal connections and
professional employment all giving rise to intimacy which assure free access to such public officer.
Here, it is contended that there is a violation of RA 3019 since dela Cruz admitted that there exists a close
intimacy between him and PHHC General Manager Bernardo Torres; that he capitalized on such close
personal relation and took advantage of such relation by directly receiving pecuniary advantage from
Earthwealth through their agreement and that Torres had to intervene in the transaction between
Earthwealth and PHHC.
Indeed, it is clear that dela Cruz capitalized on his friendship and intimacy with Torres in promoting the sale
of the Paranaque estate.
The exploitation of friendship, however, ceased on 21 July 1960, when the PHHC Board of Drectors
approved the said sale through Resolution No. 38. Considering the Anti Graft Law was enacted
subsequent thereto, on 17 August 1960, the provisions of said law cannot be given retroactive effect
and invoked against dela Cruz. Although the sale was finally approved by the President/his Cabinet
on 14 December 1960, there is no evidence to show that the late dela Cruz is a close intimate of the
President and capitalized on such personal relations in the final approval of the sale.