Colgate Palmolive GR 14787

Doctrine: Since the law does not distinguish between "stabilizer and flavors" used in the
preparation of food and those used in the manufacture of toothpaste or dental cream, we are
not authorized to make any distinction and must construe the words in their general sense. The
rule of construction that general and unlimited terms are restrained and limited by particular
recitals when used in connection with them, does not require the rejection of general terms
entirely.

Colgate Palmolive Philippines is a corporation duly organized and existing under the Philipine
laws, on several occasions, it imported a number of materials such as irish moss extract,
sodium benoate, sodium saccharinate precipitated calcium carbonate and dicalcium phosphate,
to be used as stabilizers and flavoring of the dental cream it manufactures. Colgate Palmolive
duly paid its taxes, but after sometime, filed for a refund with the Centrak Bank under Section 2
or Republic Act 601/Exchange Tax Law. It was, however, denied on the ground that the
stabilizers mentioned therein allegedly pertains only to those used for food, the argument was
that, since the word stabilizers were followed by those from the “food” category, then it is to be
construed as stabilizers used for and in food.

SEC, 2. The tax collected under the preceding section on foreign exchange used for the
payment of the cost, transportation and/or other charges incident to importation into the
Philippines of rice, flour, canned milk, cattle and beef, canned fish, soya beans, butterfat,
chocolate, malt syrup, tapioca, stabilizer and flavors, vitamin concentrate, fertilizer, poultry feed;
textbooks, reference books, and supplementary readers approved by the Board of Textbooks
and/or established public or private educational institutions; newsprint imported by or for
publishers for use in the publication of books, pamphlets, magazines and newspapers; book
paper, book cloth, chip board imported for the printing of supplementary readers (approved by
the Board of Textbooks) to be supplied to the Government under contracts perfected before the
approval of this Act, the quantity thereof to be certified by the Director of Printing; anesthetics,
anti-biotics, vitamins, hormones, x-ray films, laboratory reagents, biologicals, dental supplies,
and pharmaceutical drugs necessary for compounding medicines; medical and hospital supplies
listed in the appendix to this Act, in quantities to be certified by the Director of Hospitals as
actually needed by the hospitals applying therefor; drugs and medicines listed in the said
appendix; and such other drugs and medicines as may be certified by the Secretary of Health
from time to time to promote and protect the health of the people of the Philippines shall be
refunded to any importer making application therefor, upon satisfactory proof of actual
importation under the rules and regulations to be promulgated pursuant to section seven
thereof."

RULING: "Ubi lex non distinguish nec nos distinguire debemos", or "where the law does not
distinguish, neither do we distinguish". General terms may be restricted by specific terms, only
when the whole provision or paragraph, embraces a single and common subject. As in this
case, Section 2 of RA 601 pertains, not only to food, but also to other materials used for medical
equipment, books, laboratory equipment, fertilizer, poultry, etc.
OSEA V MALAYA
Verba legis - Where the words of a statute are clear, plain and free from ambiguity, it must
be given its literal meaning and applied without attempted interpretation.

FACTS: Petitioner Eleonor Osea filed a protest case with the Civil Service Commission
alleging that she was appointed as Officer-in-Charge, Assistant Schools Division
Superintendent of Camarines Sur, by the then Secretary of DECS, upon the endorsement
of the Provincial School Board of Camarines Sur. However, despite this, President Fidel
Ramos, appointed respondent Corazon Malaya to the position of Schools Division
Superintendent of Camarines Sur. She further claims that the appointment of respondent
was made without prior consultation with the Provincial School Board, in violation of
Section 99 of the Local Government Code as well as her vested right as the Schools
Division Superintendent of Camarines Sur. Petitioner prayed that respondent’s
appointment be recalled and set aside for being null and void.
The CSC dismissed the said complaint. It found that President Ramos appointed
respondent without any specific division. Thus, respondent performed the functions of
Schools Division Superintendent in Iriga City. On November 3, 1997, Sec. Gloria
designated respondent as Schools Division Superintendent of Camarines Sur, and
petitioner Osea as Schools Division Superintendent of Iriga City. CSC held that Sec. 99
of the LGC of 1991 contemplates a situation where the DECS issues the appointments,
whereas respondent’s appointment was made by the President, in the exercise of his
appointing power. Moreover, the designation of respondent as Schools Division
Superintendent of Camarines Sur and of petitioner as Schools Division Superintendent
of Iriga City were in the nature of reassignments, in which case consultation with the local
school board was unnecessary.

ISSUE: Whether respondent’s appointment requires the mandatory consultation with the
Local School Board under Sec.99 of RA 7160.

RULING: The appointment issued by President Ramos in favor of respondent to the

Schools Division Superintendent position on September 3, 1996 did not specify her
station. It was Secretary Gloria who, in a Memorandum dated November 3, 1997,
assigned and designated respondent to the Division of Camarines Sur, and petitioner to
the Division of Iriga City. The designation of respondent as Schools Division
Superintendent of Camarines Sur was not a case of appointment but rather in the nature
of reassignment from Iriga City, where she previously exercised her functions as Officer-
in-Charge-Schools Division Superintendent, to Camarines Sur. Therefore, Section 99 of
the LGC does not apply. It only refers to appointments made by the Department of
Education, Culture and Sports. Such is the plain meaning of the said law.
An appointment may be defined as the selection, by the authority vested with the power,
of an individual who is to exercise the functions of a given office. On the other hand, a
reassignment is merely a movement of an employee from one organizational unit to
another in the same department or agency which does not involve a reduction in rank,
status or salary and does not require the issuance of an appointment. In the same vein,
a designation connotes merely the imposition of additional duties on an incumbent official.
Petitioner Osea's designation as Officer-in-Charge, Assistant Schools Division
Superintendent, was expressly made subject to further advice from the DECS. Thus, her
designation was temporary. In fact, there was a need to recommend her to the President
for appointment in a permanent capacity. Inasmuch as she occupied her position only
temporarily, petitioner can be transferred or reassigned to other positions without violating
her right to security of tenure. Indeed, petitioner has no vested right to the position of
Schools Division Superintendent of Camarines Sur.
YOLANDA SIGNEY vs SSS, EDITHA ESPINOSA-CASTILLO
VERBA LEGIS/PLAIN MEANING RULE: If a statute is clear, plain and free from
ambiguity, it must be given its literal meaning and applied without attempted
interpretation.
FACTS:
Rodolfo Signey, Sr., a member of the SSS, died on 21 May 2001. In his member’s
records, he had designated petitioner as primary beneficiary and his four children with
her as secondary beneficiaries. On 6 July 2001, petitioner filed a claim for death benefits
with the public respondent SSS. She revealed in her SSS claim that the deceased had a
common-law wife, Gina Servano (Gina), with whom he had two minor children namely,
Ginalyn Servano (Ginalyn), born on 13 April 1996, and Rodelyn Signey (Rodelyn), born
on 20 April 2000.
Petitioner’s declaration was confirmed when Gina herself filed a claim for the same death
benefits on 13 July 2001 in which she also declared that both she and petitioner were
common-law wives of the deceased and that Editha Espinosa (Editha) was the legal wife.
In addition, in October 2001, Editha also filed an application for death benefits with the
SSS stating that she was the legal wife of the deceased.
The SSS denied the death benefit claim of petitioner. However, it recognized Ginalyn and
Rodelyn, the minor children of the deceased with Gina, as the primary beneficiaries under
the SSS Law. The SSS also found that the marriage between petitioner and the deceased
was null and void because of a prior subsisting marriage between the deceased and
Editha, as confirmed with the Local Civil Registry of Cebu City.
ISSUE: Whether petitioner has a superior legal right over the SSS benefits as
against the illegitimate minor children of the deceased
RULING:
The Court agreed with SSS, stating that the two minor children of the deceased with Gina
was entitled 100% of the benefits as provided by the SSS Law. The SSS Law was clear
in stating that for a minor child to qualify as a dependent entitled the benefit, the
only requirement was that the child must be below 21 years of age, not married not
gainfully employed. Section 8(e) and (k) of R. A. No. 828227 is very clear. Hence,
we need only apply the law.
Though Editha waived her claim for the rights to the claim of benefits, it was not a strong
ground for Yolanda’s claim because she did not even try to allege and prove any infirmity
in the marriage between the deceased and Editha, after having been proven that her
marriage with Rodolfo was null and void. She was disqualified because she did not have
a legitimate child or children. Under the SSS Law, it follows that the dependent illegitimate
minor children of the deceased shall be entitled the death benefits as the primary
beneficiaries.
IGMIDIO HIDALGO versus POLICARPIO HIDALGO,
G.R. NO. L-25326,
AGUILA & HIDALGO versus POLICARPIO HIDALGO,
G.R. NO. L-25327
May 29, 1970

FACTS: These are consolidated cases involving two lots. First is for 25326 which involves a 22,
876 sqm lot sold by the respondents in the amount of 4,000.00 pesos wherein petitioners argue
that the lot is only worth 1,500.00 pesos. Second involves the 7,638 sqm lot which was sold for
750.00 pesos.
Petitioners herein are share tenants of the Respondent-vendors. No 90-day notice was given to
the petitioners for them to exercise their right of pre-emption under Sec. 11 of the Agricultural
Land Reform law. Despite the lack of notice and non-execution of Affidavit required by law, the
Registry of Deeds as well as the Provincial Assessor of Batangas—registered the Deeds of Sale
of the Respondent vendors. The Agrarian court dismissed the petitions for redemption solely on
the ground that Section 12 of RA 3844 is only applicable to leasehold tenants and not to share
tenants. Thus, a petition was filed.

ISSUE: Whether or not the petitioners have a right to redeem parcels of land?
RULING: REVERSED.

REASON: The Agricultural Land Reform’s essence is the abolition of Share Tenancy. It is
wrong for the Agrarian Court to anchor their premise solely to the notion that the law applies to
leasehold tenants when in fact share tenancy contracts temporarily allowed. The code declares it
to be a policy of the state that “to establish owner cultivatorship and the economic family sited
farm as the basis of Philippine Agriculture and as consequences [xxx] to make small farmers
more independent, self-reliant, and responsible citizens. Well established is the doctrine that in
interpretation of a law, one should consider the spirit and reason of the law.
Shiou v. Chim
G.R. No. 174168

Facts:
Juanita Tan, corporate treasurer of Sy Siy Ho & Sons, Inc. submitted a letter to the
corporation’s Board of Directors stating that Felicidad Chan Sy did not make any cash deposits
to any of the corporation’s banks from Nov. 1, 2001 to Jan. 31, 2003. The children of the
spouses Sy allegedly stole from the corporation cash, postdated checks, and other documents.
After the incident, the Spouses Sy allegedly transferred residence and ceased reporting to the
corporation. Thereupon, the corporation filed a criminal complaint for robbery against the
Spouses Sy. The spouses filed a motion for leave to file a third-party complaint, accusing Sy
Tiong Shiou and Juanita Tan as directly liable for the misappropriating corporate funds.

Issue:
Whether or not a third-party complaint is prohibited by the Interim Rules

Held:
No. Petition denied.

Ratio:
A statute should be read with reference to its leading idea, and its general purpose and
intention should be gathered from the whole act. While a third-party complaint isn’t among the
allowed pleadings, neither is it among the prohibited ones.
FACTS: Sometime in the 1900s, Toribio applied for a license to have his carabao be
slaughtered. His request was denied because his carabao is found to be fit for agricultural
work. Even so, he still slaughtered his carabao for the purpose of human consumption.
The trial court of Bohol found that the respondent slaughtered or caused to be slaughtered
a carabao without a permit from the municipal treasurer of the municipality, in violation of
Sections 30 and 33 of Act No. 1147, an Act regulating the registration, branding, and
slaughter of Large Cattle. The act prohibits the slaughter of large cattle fit for agricultural
work or other draft purposes for human consumption.
Appellant contended that the provisions of Act No. 1147 do not prohibit nor penalize the
slaughter of large cattle without a permit of the municipal treasure if the slaughtering of
large cattle happened outside the municipal slaughterhouse; that the prohibition and
penalty is limited only to the large cattle slaughtered at the municipal slaughterhouse for
the prohibition contained in section 30 and the penalty imposed in section 33 stated only
the phrase “at the municipal slaughterhouse”; and that the act constitutes a taking of
property for public use in the exercise of the right of eminent domain without providing for
the compensation of owners, and it is an undue and unauthorized exercise of police power
of the state for it deprives them of the enjoyment of their private property.

ISSUE: Whether or not Act. No. 1147, regulating the registration, branding and slaughter
of large cattle, is an undue and unauthorized exercise of police power and
unconstitutional

RULING: Police power is the inherent power of the state to legislate laws which may
interfere with personal liberties. To justify the state in the exercise of its sovereign police
power it must appear (1) that the interest of the general public requires it and (2) that the
means are reasonably necessary for the accomplishment of the purpose, and not unduly
oppressive upon individuals.
The Supreme court finally said that article 1147 is not an exercise of the inherent power
of eminent domain. The said law does not constitute the taking of carabaos for public
purpose; it just serve as a mere regulation for the consumption of these private properties
for the protection of general welfare and public interest. The SC explained that it “is not a
taking of the property for public use, within the meaning of the constitution, but is a just and
legitimate exercise of the power of the legislature to regulate and restrain such particular use
of the property as would be inconsistent with or injurious to the rights of the publics.
A construction which would limit the prohibitions and penalties prescribed in the statute
to the killing of such animals in municipal slaughterhouses, leaving unprohibited and
unpenalized their slaughter outside of such establishments, so manifestly tends to defeat
the purpose and object of the legislator, that unless imperatively demanded by the
language of the statute it should be rejected; and, as we have already indicated, the
language of the statute is clearly susceptible of the construction which we have placed
upon it, which tends to make effective the provisions of this as well as all the other
sections of the Act. Where the language of a statute is fairly susceptible of two or more
constructions, that construction should be adopted which will most tend to give effect to
the manifest intent of the lawmaker and promote the object for which the statute was
enacted, and a construction should be rejected which would tend to render abortive other
provisions of the statute and to defeat the object which the legislator sought to attain by
its enactment.
LEONORA MACABENTA vs DAVAO STEVEDORE TERMINAL

MISCHIEF RULE: WHERE LAW IS CLEAR; DUTY OF COURT TO APPLY THE LAW
TO FACTS AS FOUND. — Where the law is clear, our duty is equally plain. We must
apply it to the facts as found. What is more, we have taken pains to defeat any
evasion of its literal language by rejecting an interpretation, even if not totally
devoid of plausibility, but likely to attach to it a significance different from that
intended by the lawmakers.

FACTS:

Conrado Macabenta, who was a laborer in the sawmill of Davao Stevedore, got into a
vehicular accident. Before the accident, he was not yet married to petitioner although they
had already been living together for three (3) months. On the day following the accident,
they were lawfully wedded in a marriage ceremony solemnized in the hospital where the
deceased was hospitalized up to his death. Almost a year after Conrado’s death, the
claimant widow gave birth to the posthumous child. The Workmen’s Compensation
Commission awarded the claimant and her posthumous child compensation and
attorney’s fees.

ISSUE:

Whether or not the widow of a deceased employee whose marriage occurred after the
accident as well ast he posthumous child could be considered dependents within the
meaning of the Workmen's Compensation Act.

RULING: YES
From the express language of the Workmen’s Compensation Act, a widow living with the
deceased or actually dependent upon him totally or partly as well as her daughter, if under
t18 years of age or incapable of supporting herself are considered dependents. It is true
that the marriage took place after the fatal accident, but there was no question that the
marriage took place prior to his death.
The court stressed that where the law is clear, we must apply it to the facts. Court
have taken pains to defeat any evasion of its literal meaning/language by rejecting an
interpretation, even if not totally devoid of any plausibility, but likely to attach to it a
significance different from that intended by the lawmakers.
Once the policy of the law has been ascertained, effect should be given to it by the
judiciary. Even if honest doubts could be entertained as to the meaning of the statutory
provisions, still respect for such a basic doctrine calls for a rejection of the plea of the
respondent. Assuming a choice is necessary between conflicting theories, that
which best conforms to the language of the statute and its purpose should prevail.
BANGUS FRY FISHERFOLK ET. AL. v. LANZANAS,
G.R. 131412,
July 10, 2003

FACTS: Regional Director Principe of DENR issued an Environmental Compliance Certificate

in favor of NAPOCOR authorizing them to construct a temporary mooring facility in Minolo
Cove. The Minolo Cove is declared by the Sangguniang Bayan of Puerto Galero as a breeding
grond of Bangus fry and an eco-tourist zone. The mooring facility shall also serve as the
temporary docking site of NAPOCOR’s power barge.
The Petitioners are fisher folk which sought reconsideration of the ECC issuance. They
petitioned for the cancellation of the license and a writ of injunction for the construction of the
facility. The trial court issued a 20-day temporary restraining order enjoining the construction of
the mooring facility. However, the trial court lifted the same on 6 August 1997 on NAPOCOR's
manifestation that the provincial government of Oriental Mindoro was the one undertaking the
construction of the mooring facility. respondents ORMECO and the provincial officials of
Oriental Mindoro moved to dismiss the complaint. These respondents claimed that petitioners
failed to exhaust administrative remedies, rendering the complaint without cause of action. They
also asserted that the Manila RTC has no jurisdiction to enjoin the construction of the mooring
facility in Oriental Mindoro, which lies outside the Manila RTC's territorial jurisdiction.

Petitioners opposed the motion on the ground that there was no need to exhaust administrative
remedies. They argued that the issuance of the ECC was in patent violation of Presidential
Decree No. 1605 Sections 26 and 27 of Republic Act No. 7160 and the provisions of DENR
Department Administrative Order No. 96-37 ("DAO 96-37") on the documentation of ECC
applications. Petitioners also claimed that the implementation of the ECC was in patent violation
of its terms. RTC ruled in favor of the respondents.

ISSUE: Whether the trial court erred in dismissing petitioners' complaint for lack of cause of
action and lack of jurisdiction.

RULING: Petition is denied for lack of merit.

REASON: Congress introduced Sections 26 and 27 in the Local Government Code to emphasize
the legislative concern "for the maintenance of a sound ecology and clean environment." These
provisions require every national government agency or government-owned and controlled
corporation to hold prior consultations with the local government unit concerned and to secure
the prior approval of its sanggunian before implementing "any project or program that may cause
pollution, climatic change, depletion of non-renewable resources, loss of cropland, rangeland, or
forest cover and extinction of animal or plant species." Sections 26 and 27 respectively provide:

Section 26. Duty of National Government Agencies in the Maintenance of Ecological Balance. It
shall be the duty of every national agency or government-owned or controlled corporation
authorized or involved in the planning and implementation of any project or program that may
cause pollution, climatic change, depletion of non-renewable resources, loss of crop land,
rangeland, or forest cover and extinction of animal or plant species, to consult with the local
government units, non-governmental organizations, and other sectors concerned and explain the
goals and objectives of the project or program, its impact upon the people and the community in
terms of environmental or ecological balance, and the measures that will be undertaken to
prevent or minimize the adverse effects thereof.

Section 27. Prior Consultations Required. No project or program shall be implemented by

government authorities unless the consultations mentioned in Section x x x 26 hereof are
complied with, and prior approval of the sanggunian concerned is obtained: Provided, That
occupants in areas where such projects are to be implemented shall not be evicted unless
appropriate relocation sites have been provided, in accordance with the provisions of the
Constitution.

Section 27 of the Code should be read in conjunction with Section 26. Thus, the projects and
programs mentioned in Section 27 should be interpreted to mean projects and programs whose
effects are among those enumerated in Sections 26 and 27, to wit, those that: (1) may cause
pollution; (2) may bring about climatic change; (3) may cause the depletion of non-renewable
resources; (4) may result in loss of crop land, rangeland, or forest cover; (5) may eradicate
certain animal or plant species; and (6) other projects or programs that may call for the eviction
of a particular group of people residing in the locality where these will be implemented.

Again, Sections 26 and 27 do not apply to this case because as petitioners admit the mooring
facility itself is not environmentally critical and hence does not belong to any of the six types of
projects mentioned in the law. There is no statutory requirement for the concerned sanggunian to
approve the construction of the mooring facility. It is another matter if the operation of the power
barge is at issue. As an environmentally critical project that causes pollution, the operation of the
power barge needs the prior approval of the concerned sanggunian. However, what is before this
Court is only the construction of the mooring facility, not the operation of the power barge. Thus,
the issuance of the ECC does not violate Sections 26 and 27 of RA No. 7160.
FACTS: Petitioner was engaged in business as a banker and a dealer of securities of
listed companies at the PSE Center. On April 8, 1997, respondent opened a cash account
with petitioner for his transactions in securities and started trading on that account. As a
result, he accumulated an outstanding obligation in favor of the corporation. However,
Ampil failed to settle his account upon the lapse of the required period given by petitioner,
prompting it to sell his securities to offset his unsettled obligations but such remaining
accountabilities failed to have been settled despite demands.
The RTC and the CA both held that the parties were in pari delicto and, hence, without
recourse against each other. The lower courts ruled that the petitioner had violated
Sections 23 and 25 of the Revised Securities Act (RSA) and Rule 25-1 of the Rules
Implementing the Act when it failed to (1) required respondent to pay for his check/stock
purchases; and (2) request from the appropriate authority an extension of time for the
payment of his cash purchases++

ISSUE: W/N the pari delicto rule was applicable to the case at bar

RULING: Petitioner could still collect from respondent to the extent of the difference
between his outstanding obligation less the proceeds from the mandatory sellout of the
shares pursuant to the RSA Rules. It could not be denied such right, as the initial
transaction had been entered into pursuant to the instructions of respondent.
Since the buyer was not able to pay for the transactions, the broker was duty bound to
advance the payment to the settlement banks, without prejudice to its right to collect from
the client. Failure to ensure his payment allows him to make subsequent purchases. The
extension or the maintenance of credits on nonmargin transactions were specifically
prohibited. Thus, petitioner was remiss in its duty and could not be said to have come to
court with “clean hands” insofar as it intended to collect on transactions subsequent to
the initial trades.
AHS PHILIPPINES V COURT OF APPEALS

FACTS:
AHS Philippines was engaged in the sale and manufacture of medicine and pharmaceuticals in
the country and did substantial business with government hospitals. Alfonso Bayani was hired
as an Area Manager in Visayas and Mindanao and later on appointed as Cebu branch
manager.
On January 1978, Bayani was dismissed from service and at that time he was receiving a
monthly compensation of P3,180.
Bayani filed a complaint before the trial court alleging AHS was directly encouraging, abetting
and promoting bribery in the guise of commissions, entertainment expenses and representation
expenses which were given to government hospital officials in exchange of favorable
recommendation, approvals and actual purchase of medicines and pharmaceuticals.
Bayani also alleged that his refusal to take direct and personal hand in giving the bribery was
the reason of his dismissal. AHS in its answer claims that Bayani was not dismissed but that he
resigned in his own volition.
RTC ruled that Bayani was illegally dismissed and he was only entitled to compensatory
damages and not to moral and exemplary damages.
On appeal, CA affirmed the decision of RTC.

ISSUE:
WON it is right for Bayani not to receive moral and exemplary damages.

RULING:
It has been admitted by Bayani that he took part in the bribery. Under the principle that he who
comes to court must come with clean hands, Bayani cannot now pretend that he was innocent
of the corrupt practices of his company and had clean hands. He should have resigned, as that
was the most honorable thing for him to do.
The court, therefore, is hard put, to award damages to Bayani in this case after betraying the
confidences of his company because it would only serve his own selfish and disloyal ends.
Tala Realty Services Corporation v. Court of Appeals
G.R. No. 130088
April 7, 2009
Equity of the State/Clean Hands Doctrine

Facts:

· Banco Filipino filed before 17 RTCs nationwide 17 complaints for reconveyance of different
properties against Tala Realty Services Corp.
· Complaints commonly alleged that the expansion of its operations required the purchase
of real properties for the purpose of acquiring sites for more branches.
· Sections 25(a) and 34 of the General Banking Act limit a bank's allowable investments in
real estate to 50% of its capital assets.
· The Board of Directors decided to warehouse some of its existing properties and branch
sites.
· Nancy (major stockholder and director) with Pedro and Tomas Aguirre organized and
incorporated Tala Realty to hold and purchase properties in trust for Banco Filipino.
· Banco Filipino sold to Tala Realty some of its properties. Tala Realty then leased to Banco
Filipino the properties for 20 years, renewable for another 20 years, at the option of Banco Filipino
with a right of first refusal in the event Tala Realty wants to sell.
· Tala Realty repudiated the trust, claimed the titles for itself, and demanded payment of
rentals, deposits, and goodwill, with a threat to eject Banco Filipino.
· Tala Realty filed a motion to dismiss on all 17 complaints on the grounds of forum shopping,
lack of course of action, and pari delicto.

Issue:

WON the trust agreement between the parties is void.

Ratio:

In Tala Realty v. Banco Filipino (2002), the Supreme Court, ruling on one of the several ejectment
cases filed by Tala Realty against Banco Filipino arising from the same trust agreement in the
reconveyance cases, held that the trust agreement is void and thus cannot be enforced.

The Bank and Tala Realty entered into contracts of sale and lease back of the disputed property
and created an implied trust warehousing agreement for the reconveyance of property. In the
eyes of the law, this implied trust is inexistent and void for being contrary to law.

An implied trust could not have been formed where the purchase is made in violation of an existing
statute and in evasion of its express provision, no trust can result in favor of the party who is guilty
of the fraud.

The Bank's purpose was contrary to law because it avoided the real property holdings limit under
Sections 25(a) and 34 of the General Banking Act, which it already reached.

It was a scheme to circumvent the limitation. The Bank opted not to put the agreement in writing
and call a spade a spade, but instead phrased its right to reconveyance of the subject property at
any time as a first preference to buy at the same transfer price.
Thus, while we find the sale and lease of the subject property genuine and binding upon the
parties, we cannot enforce the implied trust even assuming the parties intended to create it.

The courts will not assist the payor in achieving his improper purpose by enforcing a resultant
trust for him in accordance with the clean hands doctrine. The Bank cannot thus demand
reconveyance of the property based on its alleged implied trust relationship with Tala.

The Bank and Tala are in pari delicto, thus, no affirmative relief should be given to one against
the other. The Bank should not be allowed to dispute the sale of its lands to Tala nor should Tala
be allowed to further collect rent from the Bank. The clean hands doctrine will not allow the
creation nor the use of a juridical relation such as a trust to subvert, directly or indirectly, the law.
Neither the Bank nor Tala came to court with clean hands; neither will obtain relief from the court
as the one who seeks equity and justice must come to court with clean hands.