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    Lita Enterprises Vs Second Civil Cases Division

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    MrAlbus
    The parties entered into an illegal contract known as the "kabit system" where one party allowed others to operate vehicles under their transportation franchise for a fee. This type of arrangement is contrary to public policy and void. When an accident occurred involving one of the vehicles, the franchise holder was held liable for damages. However, the Supreme Court ruled that as the contract was illegal, no party could seek relief from the courts. Both the trial court and appellate court erred in granting relief to the parties given the illegality of their contract. As the parties were equally at fault, the doctrine of in pari delicto applies and no affirmative relief can be granted. The decisions of the lower courts were annulled.

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    © All Rights Reserved
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    Lita Enterprises Vs Second Civil Cases Division

    Uploaded by

    MrAlbus
    266 views2 pages
    The parties entered into an illegal contract known as the "kabit system" where one party allowed others to operate vehicles under their transportation franchise for a fee. This type of arrangement is contrary to public policy and void. When an accident occurred involving one of the vehicles, the franchise holder was held liable for damages. However, the Supreme Court ruled that as the contract was illegal, no party could seek relief from the courts. Both the trial court and appellate court erred in granting relief to the parties given the illegality of their contract. As the parties were equally at fault, the doctrine of in pari delicto applies and no affirmative relief can be granted. The decisions of the lower courts were annulled.

    Original Description:

    Lita Enterprises vs Second Civil Cases Division GR No. L-64693 April 27, 1984

    Original Title

    Lita Enterprises vs Second Civil Cases Division

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    The parties entered into an illegal contract known as the "kabit system" where one party allowed others to operate vehicles under their transportation franchise for a fee. This type of arrangement is contrary to public policy and void. When an accident occurred involving one of the vehicles, the franchise holder was held liable for damages. However, the Supreme Court ruled that as the contract was illegal, no party could seek relief from the courts. Both the trial court and appellate court erred in granting relief to the parties given the illegality of their contract. As the parties were equally at fault, the doctrine of in pari delicto applies and no affirmative relief can be granted. The decisions of the lower courts were annulled.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    266 views2 pages

    Lita Enterprises Vs Second Civil Cases Division

    Uploaded by

    MrAlbus
    The parties entered into an illegal contract known as the "kabit system" where one party allowed others to operate vehicles under their transportation franchise for a fee. This type of arrangement is contrary to public policy and void. When an accident occurred involving one of the vehicles, the franchise holder was held liable for damages. However, the Supreme Court ruled that as the contract was illegal, no party could seek relief from the courts. Both the trial court and appellate court erred in granting relief to the parties given the illegality of their contract. As the parties were equally at fault, the doctrine of in pari delicto applies and no affirmative relief can be granted. The decisions of the lower courts were annulled.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    Lita Enterprises, Inc.

    v. Second Civil Cases Division, Ocampo and Garcia


    GR No. L-64693
    April 27, 1984

    "Ex pacto illicito non oritur actio" [No action arises out of an illicit bargain] is the
    tune-honored maxim that must be applied to the parties in the case at bar.
    Having entered into an illegal contract, neither can seek relief from the courts,
    and each must bear the consequences of his acts.

    Facts:

    Spouses Ocampo and Garcia purchased in installment five (5)


    vehicles to be used as taxicab. Since they had no franchise to
    operate taxicabs, they contracted with Lita Enterprises, Inc., for the
    use of the latter's certificate of public convenience in consideration
    of an initial payment of P1,000.00 and a monthly rental of P200.00 per
    taxicab unit. The cars were registered in the name of petitioner Lita
    Enterprises, Inc, Possession, however, remained with the spouses
    Ocampo who operated and maintained the same under the name
    Acme Taxi, petitioner's trade name.

    About a year later one of said taxicabs driven by their employee,


    collided with a motorcycle whose driver died from the head injuries
    sustained therefrom. A criminal case was eventually filed against the
    driver, while a civil case for damages was instituted against Lita
    Enterprises, Inc. Lita Enterprises was adjudged liable for damages and
    for attorney's fees. The decision having become final, a writ of
    execution was issued. Two of the vehicles of the spouses were levied
    upon and sold at public auction to the highest bidder.

    Ocampo decided to register his taxicabs in his name. He requested


    Lita Enterprises, Inc. to turn over the registration papers to him, but the
    latter allegedly refused. Hence, he and his wife filed a complaint for
    reconveyance of motor vehicles with damages.

    The trial court ruled in favor of spouses Ocampo. On appeal, the CA


    affirmed the decision.
    Issue:

    Is the decision valid?

    Held:

    Unquestionably, the parties herein operated under an arrangement,


    commonly known as the "kabit system", whereby a person who has
    been granted a certificate of convenience allows another person
    who owns motors vehicles to operate under such franchise for a fee.

    Although not out rightly penalized as a criminal offense, the "kabit


    system" is invariably recognized as being contrary to public policy
    and, therefore, void and inexistent under Article 1409 of the Civil
    Code, It is a fundamental principle that the court will not aid either
    party to enforce an illegal contract, but will leave them both where it
    finds them. Upon this premise, it was flagrant error on the part of both
    the trial and appellate courts to have accorded the parties relief from
    their predicament.

    The principle of in pari delicto is well known not only in this jurisdiction but also in
    the United States where common law prevails. Under American jurisdiction, the
    doctrine is stated thus: "The proposition is universal that no action arises, in equity
    or at law, from an illegal contract; no suit can be maintained for its specific
    performance, or to recover the property agreed to be sold or delivered, or
    damages for its property agreed to be sold or delivered, or damages for its
    violation. The rule has sometimes been laid down as though it was equally
    universal, that where the parties are in pari delicto, no affirmative relief of any kind
    will be given to one against the other." 3 Although certain exceptions to the rule
    are provided by law, we see no cogent reason why the full force of the rule should
    not be applied in the instant case.

    Decisions rendered therein are hereby annulled and set aside.

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