The Duty of Candor: Why Honesty is Crucial in Legal Disputes

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340 Phil. 1; 94 OG No. 10, 1757 (March 9, 1998)

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Imagine investing your life savings into a community project, only to discover that the loan you’re repaying is far larger than you initially believed. This is precisely what happened in Buhangin Residents and Employees Association for Development, Inc. (BREAD) vs. Atty. Corazon Nuñez-Malanyaon. This case underscores a fundamental principle in Philippine law: the importance of honesty and good faith in legal claims. When a party misrepresents facts to the court, their entire case can crumble, regardless of the underlying merits.

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The Buhangin Residents and Employees Association for Development, Inc. (BREAD) filed a disbarment case against Atty. Corazon Nuñez-Malanyaon, accusing her of falsifying public documents related to two deeds of sale. The core of the issue was a discrepancy in the stated price of land purchased by BREAD, leading to a larger loan than they anticipated. However, the Supreme Court uncovered that BREAD’s president, Arturo S. Asumbrado, misrepresented key facts, ultimately leading to the dismissal of their complaint.

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The Foundation: Good Faith and Contractual Obligations

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Philippine law places a strong emphasis on good faith, particularly in contractual relationships. This principle is enshrined in Article 1159 of the Civil Code, which states that “Obligations arising from contracts have the force of law between the contracting parties and should be complied with in good faith.” This means that parties are expected to be honest and transparent in their dealings, avoiding any actions that could mislead or deceive the other party.

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Article 1318 of the Civil Code also provides the essential requisites for contracts, including: (1) Consent of the contracting parties; (2) Object certain which is the subject matter of the contract; (3) Cause of the obligation which is established. Lack of consent due to vitiation can nullify the contract.

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In the context of real estate transactions, good faith is crucial in disclosing all relevant information, including the true price of the property. Misrepresenting the price, as alleged in this case, can have serious consequences, affecting not only the parties involved but also third parties like financing institutions.

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The Supreme Court consistently emphasizes that parties coming before the court must act with utmost honesty. As stated in numerous cases, “Courts are not gambling casinos where one stakes on deceit and chicanery.”