VDA. DE HALILI v. CA | J.

Aquino (16 June 1978)

FACTS: Federico Suntay - official gubernatorial candidate of LP in Bulacan in 1951
elections
Fortunato Halili - incumbent governor, head of LP in Bulacan, public utility operator,
campaign manager,
Out of friendship, Halili agreed to make cash advances to Suntay to finance the
latters campaign. However, as public utility operator, Halili admitted that he could
not make any monetary contribution to Suntays campaign. On the other hand,
Suntay could not spend for his campaign more than the governors annual salary of
P5K.
Scheme for laundering of loans and advances of Halili: made in the names of Halilis
trusted employees as dummies.
4 Sept 1951: Suntay executed a PN for P5K in favor of Virgilio Ramos, payable w/in
120 days from date
Suntay leased his fishpond to Ramos & two other employees, for P8K/year for four
years. Two days after, Suntay signed a PN for P30K in favor of same
lessees/employees, allegedly payable within three years with 10% interest a year. In
case Suntay would not be able to pay the loan within the period, it would be
considered as additional consideration for the lease. Two days after, said lease was
assigned by Ramos, Santiago, and Queyquep to Halili also for the sum of P32K.
Suntay executed two more PNs in favor of Santiago for P10K each, payable within
120 days from date & from receipt. The four notes (P55K) were all indorsed to Halili.
According to Suntay, he never received the rentals nor proceeds of the notes, which
was denied by Halili.
After the expiration of the four-year lease term, Suntay filed a complaint against
Halili, Ramos, Santiago, Queyquep in CFI QC - praying that the lease and four PNs be
declared void under CC1409 for lack of consideration and being contrary to CC
47&48.
> Halili: lease should be considered automatically extended in view of Suntays
failure to pay the PN for P30K; should pay face value (P25K) plus interests (died
during pendency, substituted by administratrix)
CFI: PNs and lease VOID under CC 1409 & 48 Revised Election Code; claims for
damages dismissed because in pari delicto
CA: affirmed CFI + Halili should pay Suntay P8K as rental until possession of fishpond
restored; lease and PN executed for valuable consideration but void under CC
1409(1) bec they evidenced loans and cash advances which were made to Suntay to
sustain his campaign funds, in violation of 47, since Halili was a public service
operator or entity.
consideration evidently designed to promote an unlawful object to spend in
Suntays political campaign exceeding govs salary for 1yr
parties in pari delicto; lease void, thus not automatically extended
Halilis administratrix:
48 does not apply to non-candidate like Halili; Suntay did not prove that Halili
knew that loans and rental for lease would be used by Suntay as would
exceed the govs salary for 1yr
lease & loans were lawful business transactions not rendered illegal by fact that

consideration thereof might have enabled Suntay to violate 48

47 applies to natural persons
47 does not prohibit public utility operator from lending money to a candidate
or leasing property from him
Halili did not violate 47 & 48; not in pari delicto; erred in granting affirmative
reliefs to Suntay
ISSUES: W/N 48 applies to a non-candidate
W/N 47 applies (only) to natural persons
W/N they were in pari delicto
W/N affirmative relief was properly granted to Suntay although allegedly in pari
delicto
1) YES. Halili admitted allegations in Suntays complaint Suntay would incur
campaign expenses exceeding govs annual salary and that Suntays
disbursements exceed that amount. CA found that Halili was fully aware of
purpose & objective in consummating lease contract and PN (to sustain campaign
funds) Halili, as gov and campaign manager, could not have been ignorant of fact
that under 48 Suntays campaign expenses should not exceed P5K. Factual
findings conclusive. Rule that an agreement is illegal if it involves the commission
of a crime.
184 of Revised Election Code speaks of principals and accomplices. Halili no
ordinary lender & lessee knew that rental and loans would be spent for Suntay
candidacy as Suntays financial backer & campaign manager who had a hand in
the expenditure of funds supplied by him to Suntay.
Suntays co-principal
Money knowingly loaned to be corruptly used in an election cannot be
recovered
The knowledge of the lender and the borrower to a promissory note that
the money borrowed from the payee was to be used, and was actually
used, to bring the electors to vote for the maker was held to be a good
defense to an action on the note.
2) YES. 47: any corporation or entity operating a public utility cannot
contribute or make any expenditure in connection with an election campaign
entity may refer to an individual
public utility operator is prohibited from making a contribution or
expenditure in an electio campaign
o disbursement = diminish his/its income; controversial = embroil in
partisan politics
o diminution in income = constrain operator to ask for increase =
detrimental to public
Public utility operators should not spend their income to support the
election of politicians who, if elected, would pressure the public utility
commission to allow public utilities to increase their rates or who would
use their influence to cover up the violations of law committed by public
utility operators.
Probition to corporations justly applied to natural persons
Advances or loans made by Halili to Suntay are prohibited contributions within the
meaning of 39(b) and 47 of Revised Election Code
Lease & PNs void or illegal used as devices for making advances or
contributions

3) YES, equally guilty of violating 47&48.

Suntay, as the candidate and beneficiary of the contributions, and Halili,
as the contributor or financial backer and campaign manager, disbursing
the campaign funds, were co-principals. (The electoral offenses in question
had already prescribed.)
Without Halilis money, the offenses in question could not have been
perpetrated. Use of Halilis trusted employees as dummies was his own
idea
CC1411: The rule is that, if both parties are in pari delicto, they shall have
no action against each other
4) YES. The ground for such affirmative relief is to prevent Halili from enriching
himself unjustly at Suntays expense.
Under the theory of in pari delicto, the lease expired on 30 Sept 1955. The renewal of
the lease for another four years, as contemplated in the PN of 29 Sept 1951, cannot
be given effect. To give effect to that renewal would violate the in pari delicto
principle. Consequently, CA treated Halili as having unlawfully detained the fishpond
from 1 Oct1955 and, hence, he should be liable to pay the reasonable compensation
for the use and occupation thereof, which compensation was found by that Court to
be P8,000 per annum and not P16,000.