254.
ROSENCOR DEVELOPMENT CORPORATION V Furthermore, the act by De Leon of offering to sell the
INQUING, ET AL
FACTS:
Respondents are tenants of a two-storey
residential apartment in Tomas Morato QC. The lease
was not covered by any contract. Lessees were verbally
given by the lessors the pre-emptive right to purchase the
property in case of sale.
The original lessors died and their heir also
promised the lessees the same pre-emptive right to
purchase. The new lessors represented by Eufrocina de
Leon demanded the lessees to vacate the property
because the building will allegedly be demolished but
after the lessees declined, she sent them a letter offering
to sell the property for 2M. Lessees made a counter offer
of 1M but no reply was made by the lessors.
De Leon subsequently informed the lessees that
the property was already sold to Rosencor. Lessees
claimed that they were deceived because the property
was already sold to Rosencor before it was offered to
them. They offered to reimburse the payment to the
lessors but the offer was declined as hence, this petition.
ISSUES:
1) WON the oral contract for the rights of first refusal
of the lessees is covered by the provision of the
NCC on Statute of Frauds.
2) WON the respondents have proven their right of
first refusal.
3) WON the rescission of the Deed of Absolute Sale
was proper.
RULING:
FIRST ISSUE:
No, the right of first refusal is not among those
listed unenforceable under the statue of frauds.
Paragraph 2(e) of Article 1403 of the Civil Code only
mentions a perfected contract of sale of real property. A
right of first refusal is not a perfected contract of sale of
real property. And, also, the Court has also previously
held that not all agreements affecting land must be put
into writing to attain enforceability.
SECOND ISSUE:
Yes. The Court agrees with the CA that the
lessee-respondents have proven the existence of their
right of first refusal. All respondents have individually and
uniformly testified that they were promised by the late
Spouses Tiangco and, later on, by their heirs a right of
first refusal over the property they were leasing.
property to the lessees verifies that the heirs recognize
the existence of the right of first refusal. Also, the
petitioners did not present evidence that the rights of first
refusal did not exist.
THIRD ISSUE:
No. The court mentioned four cases in relation to
the third issue. In the first cases, the court held in
Guzman, Bocaling and Co, Inc.vs. Bonnevie that a
Contract of Sale was not voidable but rescissible. Under
Article 1380 to 1381 (paragraph 3) of the Civil Code, a
contract otherwise valid may nonetheless be
subsequently be rescinded by reason of injury to third
persons, like creditors. According to Tolentino, rescission
is a remedy granted by law to the contracting parties and
even to third persons, to secure reparations for damages
caused to them by a contract.
In the second case, Equatorial Realty and Devt,
Inc. vs Mayfair Theater, Inc, the Court ordered the
rescission of a contract entered into in violation of a right
of first refusal. Mayfair could only exercise the right if the
fraudulent sale is first set aside or rescinded.
Third, in Paranaque Kings Enterprises, Inc. vs
CA, the Court held that the allegations in a complaint
showing violation of a contractual right of first option to
buy properties subject to lease constitute a valid cause of
action by summarizing the rulings in the two previously
cited cases.
Lastly, in the case of Litonjua vs L&R
Corporation, the court held that the sale made therein in
violation of a right of first refusal embodied in a mortgage
contract was rescissible.
Thus, as enunciated in the cited cases, a contract
of sale entered into in violation of a right of first refusal of
another person is rescissible. However, that doctrine
cannot be applied to the case at bar. Under Article 1381
of the Civil Code, paragraph 3, a contract validly agreed
upon may be rescinded if it is undertaken in fraud of
creditors when the latter cannot in any manner collect the
claim due them. Moreover, under Article 1385, rescission
shall not take place when the things which are the object
of the contract are legally in the possession of third
persons who did not act in bad faith.
Good faith is always presumed unless contrary to
the evidence is adduced. In the case at bar, there clear
and convincing evidence should have been shown to
prove that petitioners were aware of the right of first
refusal accorded to the respondents. Respondents point
to the letter by Atty. Aguila as proof. However, no mention
about the rights of first refusal was made in said letter.
Neither was there any showing that respondents notified
Rosencor of Atty. Aguila of their right of first refusal after
they received the said letter.
Respondents also point to the letter by De Leon
where she recognized the right of first refusal of the
respondents. However, De Leon was writing on her behalf
and not on behalf of petitioners and, as such, it only
shows that De Leon was aware of the existence of the
rights. It does not show that petitioners were aware of
such rights. Clearly, De Leon is the only party in bad faith
in this case.
Considering the there was no showing of bad
faith on the part of the petitioners, the CA erred in ordering
for the rescission of the Deed of Absolute Sale between
Rosencor and De Leon. Thus, the remedy for the
respondent is not rescission but an action for damages
against De Leon and the heirs of the Spouses Tiangco for
the unjustified disregard of their right of first refusal.
260. LILIA B. ADA ETC. v BAYLON
FACTS:
This case involves the estate of spouses Florentino
Baylon and Maximina Elnas Baylon. At the time of their
death, Spouses Baylon were survived by 6 their legitimate
children. Two of their children died intestate. One of them
is survived by herein respondent Florante Baylon.
The petitioners filed with the RTC a Complaint for
partition, accounting and damages against Florante, Rita
and Panfila. They alleged therein that Spouses Baylon,
during their lifetime, owned 43 parcels of land all situated
in Negros Oriental. After the death of Spouses Baylon,
they claimed that Rita took possession of the said parcels
of land and appropriated for herself the income from the
same. Using the income produced by the said parcels of
land, Rita allegedly purchased two parcels of land, Lot No.
47096 and half of Lot No. 4706, situated in Canda-uay,
Dumaguete City. The petitioners averred that Rita refused
to effect a partition of the said parcels of land.
In their Answer, Florante, Rita and Panfila asserted that
they and the petitioners co-owned 22 out of the 43 parcels
of land mentioned in the latters complaint, whereas Rita
actually owned 10 parcels of land out of the 43 parcels
which the petitioners sought to partition. During the
pendency of the case, Rita, through a Deed of Donation
dated July 6, 1997, conveyed Lot No. 4709 and half of Lot
No. 4706 to Florante. Rita died intestate and without any
issue. Thereafter, learning of the said donation inter vivos
in favor of Florante, the petitioners filed a Supplemental
Pleading, praying that the said donation in favor of the
respondent be rescinded in accordance with Article
1381(4) of the Civil Code. Florante and Panfila opposed
the rescission of the said donation, asserting that Article
1381(4) of the Civil Code applies only when there is
already a prior judicial decree on who between the
contending parties actually owned the properties under
litigation.
RTC ruled donation inter vivos executed by Rita Baylon
in favor of Florante Baylon is rescissible for the reason
that it refers to the parcels of land in litigation without the
knowledge and approval of the plaintiffs or of this Court.
CA held that before the petitioners may file an action for
rescission, they must first obtain a favorable judicial ruling
that Lot No. 4709 and half of Lot No. 4706 actually
belonged to the estate of Spouses Baylon and not to Rita.
ISSUE:
WON the CA erred in ruling that the donation inter vivos
of Lot No. 4709 and half of Lot No. 4706 in favor of
Florante may only be rescinded if there is already a
judicial determination that the same actually belonged to
the estate of Spouses Baylon.
RULING:
The petition is partly meritotious. The resolution of the
instant dispute is fundamentally contingent upon a
determination of whether the donation inter vivos of Lot
No. 4709 and half of Lot No. 4706 in favor of Florante may
be rescinded pursuant to Article 1381(4) of the Civil Code
on the ground that the same was made during the
pendency of the action for partition with the RTC.
Contracts which are rescissible due to fraud or bad faith
include those which involve things under litigation, if they
have been entered into by the defendant without the
knowledge and approval of the litigants or of competent
judicial authority.
The RTC aptly ordered the rescission of the donation inter
vivos of Lot No. 4709 and half of Lot No. 4706 in favor of
Florante. The petitioners had sufficiently established the
presence of the requisites for the rescission of a contract
pursuant to Article 1381(4) of the Civil Code. It is
undisputed that, at the time they were gratuitously
conveyed by Rita, Lot No. 4709 and half of Lot No. 4706
are among the properties that were the subject of the
partition case then pending with the RTC.
It is also undisputed that Rita, then one of the defendants
in the partition case with the RTC, did not inform nor
sought the approval from the petitioners or of the RTC
with regard to the donation inter vivos of the said parcels
of land to Florante. Although the gratuitous conveyance
of the said parcels of land in favor of Florante was valid,
the donation inter vivos of the same being merely an
exercise of ownership, Ritas failure to inform and seek
the approval of the petitioners or the RTC regarding the
conveyance gave the petitioners the right to have the said
donation rescinded pursuant to Article 1381(4) of the Civil
Code.
 The petitioners right to institute the action for rescission
pursuant to Article 1381(4) of the Civil Code is not
preconditioned upon the RTCs determination as to the
ownership of the said parcels of land. It bears stressing
that the right to ask for the rescission of a contract under
Article 1381(4) of the Civil Code is not contingent upon
the final determination of the ownership of the thing
subject of litigation. The petition is partly granted. The
decision of the CA is modified. The case remanded to the
trial court for the determination of the ownership of Lot No.
4709 and half of Lot No. 4706.
266. TANKEH v DBP
FACTS:
Sometime In 1980, Alejandro was approached by
his brother, Ruperto (president of SSL) informing him that
the latter was operating a new shipping line business and
offered him 1000 shares worth of P1M to be a director of
the business. Alejandro accepted the offer based on the
promised that he be part of the admin staff so that he can
oversee the operation of the business plus his son, who
is a practicing lawyer would be given a position in the
company.
A loan was applied from DBP for financing an
ocean-going vessel with the conditions that the first
mortgage is obtained over the vessel, the future earnings
of the mortgage including proceeds should be assigned
to DBP and DBP is assigned to no less than 67% of the
voting shares of the company. Alejandro signed the
Assignment of Shares of Stock with Voting Rights and the
promissory note making him liable jointly and severally for
the amount of the loan. After the vessel is acquired, a
deed of assignment was executed in favor of DBP. On
1983, upon realizing that he was only being made a tool
to realize the purpose of Ruperto, Alejandro officially
informed the company by means of letter that he has
severed his connection with the company and asking the
board to pass a resolution to released him from his
liabilities with DBP and notify the latter about this.
On 1986, the account of SSL in DBP were
transferred to Asset Privatization Trust by virtue of
Presidential Proclamation No. 50. The asset including
loan in favor of DBP were ordered to be transferred to the
national government. Despite the assignment and cash
equity contribution of SSL to cover part of the acquisition
cost of the vessel and the like, the promissory note still
subsisted. Hence, Alejandro is still bound as a debtor
because if the promissory note.
Alejandros contention: The promissory note
must be declared as null and void and he be absolved
from any liability. Ruperto exercised deceit and fraud in
causing him to bind himself jointly and severally to pay
DBP the amount of the mortgage loan. All the money
supposedly invested by him were put by Ruperto, hence,
he had never invested any money. He was invited to
attend the board meeting only once and he was never
compensated by SSL for being called director and
stockholder. None of the promises of Ruperto was
complied with.
ISSUE:
WON the fraud perpetrated by Ruperto is serious
enough to warrant annulment of the contract?
RULING:
No. Only incidental fraud exists in this case.
Therefore it is not sufficient to warrant the annulment of
the contracts petitioners entered but respondent Ruperto
is liable to pay him damages. The distinction between
fraud as a ground for rendering a contract voidable or as
basis for an award of damages is provided in Article 1344.
In order that fraud may make a contract voidable. It should
be serious and should not have been employed by both
contracting parties, Incidental fraud only obliges the
person employing it to pay damages.
There are two types of fraud contemplated in the
performance of contracts: dolo incidente or incidental
fraud and dolo causante or fraud serious enough to
render a contract voidable. If there is fraud in the
performance of the contract, then this fraud will give rise
to damages. If the fraud did not compel the imputing party
to give his or her consent, it may not serve as the basis to
annul the contract, which exhibits dolo causante.
However, the party alleging the existence of fraud may
prove the existence of dolo incidente. This may make the
party against whom fraud is alleged liable for damages.
Article 1340 of the Civil Code recognizes the reality of
some exaggerations in trade which negates fraud. It
reads: The usual exaggerations in trade, when the other
party had an opportunity to know the facts, are not in
themselves fraudulent.
Given the standing and stature of the petitioner,
he was in a position to ascertain more information about
the contract. The following facts show that petitioner was
fully aware of the magnitude of his undertaking. First,
petitioner was fully aware of the financial reverses that
SSL had been undergoing, and he took great pains to
release himself from the obligation. Second, his
background as a doctor, as a bank organizer and as a
businessman with experience in the textile business and
real estate should have apprised hum of the irregularity in
the contract that he would be undertaking. This meant that
at the time petitioner gave his consent to become a part
of the corporation, he had been fully aware of the
circumstances and the risks of his participation. Intent is
determined by the acts. Finally, the records showed that
petitioner had been fully aware of the effect of his signing
the promissory note. The bare assertion that he was not
privy to the records cannot counteract the fact that
petitioner himself had admitted that after he had severed
ties with his brother, he had written a letter seeking to
reach an amicable settlement with respondent Ruperto.
Petitoners actions defied his claim of a complete lack of
awareness regarding the circumstances and the contract
he had been entering.
The required standard of proof clear and
convincing evidence was not met. There was no dolo
causante or fraud used to obtain the petitioners consent
to enter into the contract. Petitioner had the opportunity to
become aware of the facts that attended the signing of the
promissory note. He even admitted that he has a lawyer-
son who the petitioner had hoped would assist him in the
administration of SSL. The totality of the facts on record
belies petitioners claim that fraud was used to obtain his
consent to the contract given his personal circumstances
and the applicable law.
However, in refusing to allow petitioner to
participate in the management of the business,
respondent Ruperto Tankeh was liable for the
commission of incidental fraud. In Geraldez, this Court
defined incidental fraud as those which are not serious in
character and without which the other party would still
have entered into the contract. Although there was no
fraud that had been undertaken to obtain petitioners
consent, there was fraud in the performance of the
contract.
272. REISS V MEMIJE
FACTS:
Memije entered into a contract with a certain
Kabalsa for the repair of a house. The repair of the house
was delayed because the contractor was unable to secure
a credit for the lumbers to be used in the repairs. The
plaintiff, whom he was dealing, did not allow any lumber
to leave their yard without paying in advance. Thus,
Memije accompanied the contractor to the plaintiffs
promising to satisfy their financial obligation. Then, they
came out into an agreement whereby the lumber will be
delivered to the contractor for the repair of the house.
Upon delivery, an action was filed with the court. The
judgment was rendered in favor of plaintiffs wherein it was
proven that there was still unpaid balance of the
purchased lumber. Defendant contended that the court
erred in its findings that the former assumes the
responsibility for the payment of the lumber delivered to
the contractor or if so, he merely guaranteed payment and
such was not made into writing, hence inadmissible as
evidence and he was not bound to pay.
ISSUE:
WON defendant is bound to pay the unpaid balance for
the purchased lumber.
HELD:
Yes. If goods are sold upon the sole credit and
responsibility of the party who make the promise, then,
even though they be delivered to a third person, there is
no liability of the third person to which that of the party
promising can be collateral, and consequently such a
promise to pay does not require a memorandum in
writing; and on the same principle it has been held that
when one advances money at the request of another (on
his promise to repay it) to pay the debt of a third party, as
the payment creates no debt against such third party, not
being made at all upon his credit, the liability of the party
on whose request and promise it was made is original and
not collateral, and not with the Statute of Frauds.
In such cases, the defendant is said to come in aid to
procure the credit to be given to the principal debtor, and
the question, therefore, ultimate is "upon whose credit the
goods were sold or the money advanced, or whatever
other thing done which the defendant by his promise
procured to be done;" and where the defendant stands in
the relation to the third party of surety to principal "if any
credit at all be given to the third party, the defendant's
promise is required to be in writing as collateral." But it
must be clearly recognized that these principles are
applicable only where the parties are liable in the same
way to do the same thing, one as principal and the other
as surety, for if the credit is given to both jointly, since
neither can be said to be surety for the other to the
creditor, their engagement need not be in writing.
278: DBP v PEREZ
FACTS:
On April 28, 1978, petitioner Development Bank of the
Philippines (DBP) sent a letter to respondent
Bonita Perez, informing the latter of the approval of an
industrial loan amounting to P214,000.00 and an
additional industrial loan amounting to P21,000.00 to
cover unforeseen price escalation. 2
On May 18, 1978, the respondents were made to sign four
promissory notes covering the total amount of the loan,
P235,000.00. The promissory notes were to be paid in
equal quarterly amortizations and were secured by a
mortgage contract covering real and personal
properties. 5
On September 6, 1978, the petitioner sent a letter 6 to the
respondents informing them of the terms for the payment
of the P214,000.00 industrial loan. On November 8, 1978,
the petitioner sent another letter 7 to the respondents
informing them about the terms and conditions of their
additional P21,000.00 industrial loan.
Due to the respondents' failure to comply with their
amortization payments, the petitioner decided to
foreclose the mortgages that secured the obligation.
However, in a Letter 8 dated October 7, 1981,
Mrs. Perez requested for a restructuring of their account
due to difficulties they were encountering in collecting
receivables.
On April 1, 1982, the petitioner informed the respondents
that it had approved the restructuring of their
accounts. 9 The loan was restructured, and on May 6,
1982, the respondents signed another promissory note in
the amount of P231,000.00 at (18%) interest per annum,
payable quarterly at P12,553.27, over a period of ten
years.
Respondent failed to pay the amortization in their
reconstructed loan and on October 24, 1985, the
respondents filed a Complaint 16 for the nullification of
the new promissory note with damages and preliminary
prohibitory injunction. The complaint alleged that the
petitioner restructured the respondents' obligation in bad
faith by requiring them to sign another promissory note for
P231,000.00 without considering the total payments
made on the loan amounting to P224,383.43. The
respondents claimed that the petitioner failed to explain to
them how it had arrived at the amount of the restructured
loan. The respondents also alleged that the petitioner
failed to furnish them with a disclosure statement as
required by Rep. Act No. 3765, also known as the Truth
in Lending Act, prior to the consummation of the
transaction. They averred that the interest imposed on the
said transaction was usurious. They, likewise, alleged that
the new promissory note constituted a novation of the
previous obligations.
In its answer, the petitioner denied the allegations and
averred that the claim for violation of the disclosure
requirement under Rep. Act No. 3765 was not within the
jurisdiction of the RTC and was barred by prescription.
The TC ordered petitioner to desist from holding a public
auction and upheld the validity of the PN and ordered the
respondents to pay their obligation. Dissatisfied, the
respondents appealed to the CA. On February 28, 2001,
the CA found that the respondents did not voluntarily sign
the restructured promissory note as they were only forced
to sign it for fear of having their mortgaged property
foreclosed by the bank. It ruled that the restructured
promissory note which was prepared by the petitioner
alone was a contract of adhesion which violates the rule
on mutuality of contracts.
Both parties moved to reconsider said decision. Hence,
this petition.
ISSUE:
1) WON the new promissory note is voidable for not
having been voluntarily signed by the
respondents and for being a contract of adhesion;
2) WON the interest rate agreed upon by the parties
in the new promissory note is usurious
3) WON Central Bank Circular No. 158 should be
applied in computing the total obligations of the
respondents; and
4) The amount of the total obligation of the
respondents
RULING:
FIRST ISSUE:
NO. In the instant case, there was no evidence
showing that the respondents signed the new promissory
note through mistake, violence, intimidation, undue
influence, or fraud. The respondents merely alleged that
they were forced to restructure their loan for fear of having
their mortgaged properties foreclosed. However, it is
axiomatic that this would not amount to vitiated consent.
The last paragraph of Article 1335 of the New Civil
Code specifically states that a threat to enforce one's
claim through competent authority, if the claim is just or
legal, does not vitiate consent. Foreclosure of mortgaged
properties in case of default in payment of a debtor is a
legal remedy afforded by law to a creditor. Hence, a threat
to foreclose the mortgage would not, per se, vitiate
consent.
The CA noted that the petitioner prepared the new
promissory note on its own and that the only participation
of the respondents was to sign the same. The CA
concluded, therefore, that the new promissory note was a
contract of adhesion.
A contract of adhesion is so-called because its terms are
prepared by only one party while the other party merely
affixes his signature signifying his adhesion thereto. While
we accede to the appellate court's conclusion that the new
promissory note was in the nature of a contract of
adhesion, we cannot fathom how this can further the
respondents' case.
SECOND ISSUE:
Yes. It is elementary that the laws in force at the
time the contract was made generally govern the
effectivity of its provision. We note that the new
promissory note was executed on May 6, 1982, prior to
the effectivity of CB Circular No. 905 on January 1, 1983.
At that time, The Usury Law, Act No. 2655, as amended
by Presidential Decree No. 116, was still in force and
effect.
Under the Usury Law, no person shall receive a rate of
interest, including commissions, premiums, fines and
penalties, higher than twelve percent (12%) per annum or
the maximum rate prescribed by the Monetary Board for
a loan secured by a mortgage upon real estate the title to
which is duly registered. 37
In this case, by specific provision in the new promissory
note, the restructured loan continued to be secured by the
same mortgage contract executed on May 18, 1978 which
covered real and personal properties of the respondents.
We, therefore, find the eighteen percent (18%) interest
rate plus the additional interest and penalty charges of
eighteen percent (18%) and eight percent (8%),
respectively, to be highly usurious.
THIRD ISSUE:
No. The total obligation of the respondents must
be computed according to the terms and conditions
agreed upon. The formula provided under paragraph 3,
Sec. 2(i), CB Circular No. 158 cannot be used in
computing the total obligation of the respondents because
it merely applies to the computation of the simple annual
rate.
Simple annual rate is the uniform percentage which
represents the ratio, on an annual basis, between the
finance charges and the amount to be financed. It is one
of the items required to be disclosed under the Truth in
Lending Act pursuant to the State's policy to protect its
citizens from lack of awareness of the true cost of credit.
FOURTH ISSUE:
The Court ruled that the records are insufficient
to enable us to determine the total amount of the
respondents' obligation. It is not even clear how much the
respondents have already paid on the restructured loans
and when such payments were made.
Decision of the CA, affirmed with modification. Case is
remanded to Trial Court for determination of the total
amount of respondents obligation.
284. HOMENA v CASA
FACTS:
This is an appeal from the order of the Court of
First Instance of Cotabato dated Jan 4, 1968 dismissing
plaintiff-appellants complaint and from its order dated
May 8, 1968, denying their motion for reconsideration.
Sabas Homena and Iluminad Juaneza filed a
complaint against the Sps Dimas Casa and Maria Castor
for alleged unlawful acts of dispossession disturbing
plaintiffs peaceful, continuous, open, uninterrupted
adverse and public possession of the property in
question.
Plaintiffs sought the annulment of the original
certificate of title issued by the Register of Deeds for the
province of Cotabato in favor of defendant spouses
pursuant to a Homestead Patent on the ground that said
patent was obtained by defendant spouses through fraud
and misrepresentation by stating, among others, in their
application, that the lot was not claimed and occupied by
another person.
Plaintiffs alleged that on June 15, 1967, they purchased
from the defendants two (2) hectares of the
aforementioned parcel of land, it being agreed in the deed
of sale that the said portion would be reconveyed to
plaintiffs after the five-year prohibitory period, as provided
for in the Homestead Patent Law, shall have elapsed, and
that defendants failed to abide by said agreement|||
The defendants moved to dismiss the complaint, based
on the following grounds:
(1) The complaint is barred by prescription, since thirteen
years had elapsed from the issuance of the homestead
patent before the action was filed;
(2) Plaintiff has no cause of action, since the deed of sale
executed on June 15, 1952 or prior to the approval of the
application and issuance of the homestead patent was
null and void and inoperative to convey the land in
question, which was at that time still public land; and
(3) Plaintiff is not the proper party to institute the action
to annul the homestead patent.
Plaintiffs opposed the Motion to Dismiss. They averred
that they were not assailing the validity of the patent as a
whole, but only with respect to that portion of two (2)
hectares owned by them which defendants, through
fraud, were able to register in their name. Because of
such fraud, the action of the plaintiffs cannot be deemed
to have prescribed, since such action can be brought
within four (4) years from discovery of the fraud.
Moreover, the defense of prescription can not be set up in
an action to recover property held in trust by a person for
another.
ISSUE:
WON the Deed of Sale is void or inexistent?
WON the Doctrine of Implied Trust applies.
RULING:
No. Basically, the plaintiffs' supposed cause of
action rests upon the deed of sale executed by
defendants in their favor on June 15, 1962 wherein the
latter sold a two-hectare portion of the homestead which
they were applying for to the plaintiffs on the
understanding that the actual conveyance of the said
portion to plaintiffs would be made only after the lapse of
the five-year period during which, under the Public Land
Act, the homestead owner was prohibited from
transferring his rights. The agreement is clearly illegal and
void ab initio; it is intended to circumvent and violate the
law. As parties to a void contract, the plaintiffs have no
rights which they can enforce and the court cannot lend
itself to its enforcement.
 No. Plaintiffs can neither invoke the doctrine of
implied trust based on an illegal contract. The issue of
prescription or laches becomes irrelevant in a case such
as this, where plaintiffs clearly have no cause of action.