Ethics Cases Report

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LEGAL ETHICS CASES REPORT

G.R. No. L-35702 May 29, 1973

DOMINGO D. RUBIAS,plaintiff-appellant,

vs.ISAIAS BATILLER, defendant-appellee.

Gregorio M. Rubias for plaintiff-appellant.

Vicente R. Acsay for defendant-appellee.

TEEHANKEE,J.:

In this appeal certified by the Court of Appeals to this Court as involving purely legalquestions, we affirm the dismissal order rendered by the Iloilo court of first instance

after pre-trial and submittal of the pertinent documentary exhibits.

Such dismissal was proper, plaintiff having no cause of action, since it was dulyestablished in the record that the application for registration of the land in question filed

by Francisco Militante, plaintiff's vendor and predecessor interest, had been dismissedby decision of 1952 of the land registration court as affirmed by final judgment in 1958of the Court of Appeals and hence, there was no title or right to the land that could betransmitted by the purported sale to plaintiff.

As late as 1964, the Iloilo court of first instance had in another case of ejectmentlikewise upheld by final judgment defendant's "better right to possess the land in

question . having been in the actual possession thereof under a claim of title many yearsbefore Francisco Militante sold the land to the plaintiff."

Furthermore, even assuming that Militante had anything to sell, the deed of saleexecuted in 1956 by him in favor of plaintiff at a time when plaintiff was concededly hiscounsel of record in the land registration case involving the very land in dispute(ultimately decided adversely against Militante by the Court of Appeals' 1958 judgmentaffirming the lower court's dismissal of Militante's application for registration) was

properly declared inexistent and void by the lower court, as decreed by Article 1409 inrelation to Article 1491 of the Civil Code.

The appellate court, in its resolution of certification of 25 July 1972, gave the followingbackgrounder of the appeal at bar:

On August 31, 1964, plaintiff Domingo D. Rubias, a lawyer, filed a suit torecover the ownership and possession of certain portions of lot under Psu-99791 located in Barrio General Luna, Barotac Viejo, Iloilo which he

bought from his father-in-law, Francisco Militante in 1956 against itspresent occupant defendant, Isaias Batiller, who illegally entered said


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portions of the lot on two occasions in 1945 and in 1959. Plaintiff prayedalso for damages and attorneys fees. (pp. 1-7, Record on Appeal). In hisanswer with counter-claim defendant claims the complaint of the plaintiffdoes not state a cause of action, the truth of the matter being that he and his

predecessors-in-interest have always been in actual, open and continuous

possession since time immemorial under claim of ownership of the portionsof the lot in question and for the alleged malicious institution of thecomplaint he claims he has suffered moral damages in the amount of P2,000.00, as well as the sum of P500.00 for attorney's fees. ...

On December 9, 1964, the trial court issued a pre-trial order, after a pre-trialconference between the parties and their counsel which order reads asfollows..

'When this case was called for a pre-trial conference today, theplaintiff appeared assisted by himself and Atty. Gregorio M.

Rubias. The defendant also appeared, assisted by his counselAtty. Vicente R. Acsay.

A. During the pre-trial conference, the parties have agreed thatthefollowing facts are attendantin this case and that they willno longer introduced any evidence, testimonial or documentaryto prove them:

1. That Francisco Militante claimed ownership of a parcel of land located inthe Barrio of General Luna, municipality of Barotac Viejo province ofIloilo, which he caused to be surveyed on July 18-31, 1934, whereby he was

issued a plan Psu-99791 (Exhibit "B"). (The land claimed contained an areaof 171:3561 hectares.)

2. Before the war with Japan, Francisco Militante filed with the Court ofFirst Instance of Iloilo an application for the registration of the title of theland technically described in psu-99791 (Exh. "B") opposed by the Directorof Lands, the Director of Forestry and other oppositors. However, duringthe war with Japan, the record of the case was lost before it was heard, soafter the war Francisco Militante petitioned this court to reconstitute therecord of the case. The record was reconstitutedon the Court of the First

Instance of Iloilo and docketed asLand Case No. R-695, GLRO Rec. No.54852. The Court of First Instance heard the land registration case on

November 14, 1952, and after the trial this court dismissed the applicationfor registration. The appellant, Francisco Militante, appealed from thedecision of this Court to the Court of Appeals where the case was docketedas CA-GR No. 13497-R..

3.Pending the disposal of the appealin CA-GR No. 13497-R and more


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particularly onJune 18, 1956, Francisco Militante sold to the plaintiff,Domingo Rubias the landtechnically described in psu-99791 (Exh. "A").The sale was duly recorded in the Office of the Register of Deeds for the

province of Iloilo as Entry No. 13609 on July 11, 1960 (Exh. "A-1").

(NOTE: As per deed of sale, Exh. A, what Militante purportedly sold to

plaintiff-appellant, his son-in-law,for the sum of P2,000.00 was "a parcel ofuntitledland having an area Of 144.9072 hectares ... surveyed under Psu99791 ... (and) subject to the exclusions made by me, under (case) CA-i3497, Land Registration Case No. R-695, G.L.R.O. No. 54852, Court ofFirst Instance of the province of Iloilo. These exclusions referred to portionsof the original area of over 171 hectares originally claimed by Militante asapplicant, but which he expressly recognized during the trial to pertain tosome oppositors, such as the Bureau of Public Works and Bureau ofForestry and several other individual occupants and accordingly withdrewhis application over the same. This is expressly made of record in Exh. A,which is the Court of Appeals' decision of 22 September 1958 confirmingthe land registration court's dismissalof Militante's application forregistration.)

4. On September 22,1958 the Court of appeals in CA-G.R. No. 13497-Rpromulgated its judgment confirming the decision of this Court in LandCase No. R-695, GLRO Rec. No. 54852 which dismissed the applicationfor Registration filed by Francisco Militante (Exh. "I").

5. Domingo Rubias declared the land described in Exh. 'B' for taxation

purposes under Tax Dec. No. 8585 (Exh. "C") for 1957; Tax Dec. Nos. 9533(Exh. "C-1") and 10019 (Exh. "C-3")for the year 1961; Tax Dec. No. 9868(Exh. "C-2") for the year 1964, paying the land taxes under Tax Dec. No.8585 and 9533 (Exh. "D", "D-1", "G-6").

6. Francisco Militante immediate predecessor-in-interest of the plaintiff, hasalso declared the land for taxation purposes under Tax Dec. No. 5172 in1940 (Exh. "E") for 1945; under Tax Dec. No. T-86 (Exh. "E-1") for 1948;under Tax Dec. No. 7122 (Exh. "2"), and paid the land taxes for 1940(Exhs. "G" and "G-7"), for 1945 46 (Exh. "G-1") for 1947 (Exh. "G-2"), for

1947 & 1948 (Exh. "G-3"), for 1948 (Exh. "G-4"), and for 1948 and 1949(Exh. "G-5").

7. Tax Declaration No. 2434 in the name of Liberato Demontao for theland described therein (Exh. "F") was cancelled by Tax. Dec. No. 5172 ofFrancisco Militante (Exh. "E"). Liberato Demontao paid the land tax underTax Dec. No. 2434 on Dec. 20, 1939 for the years 1938 (50%) and 1959(Exh. "H").


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8. The defendant had declared for taxation purposes Lot No. 2 of the Psu-155241 under Tax Dec. Not. 8583 for 1957 and a portion of Lot No. 2, Psu-155241, for 1945 under Tax Dec. No. 8584 (Exh. "2-A" Tax No. 8583 (Exh."2") was revised by Tax Dec. No. 9498 in the name of the defendant (Exh."2-B") and Tax Dec. No. 8584 (Exh. "2-A") was cancelled by Tax Dec. No.

9584 also in the name of the defendant (Exh. "2-C"). The defendant paid theland taxes for Lot 2, Psu-155241, on Nov. 9, 1960 for the years 1945 and1946, for the year 1950, and for the year 1960 as shown by the certificate ofthe treasurer (Exh. "3"). The defendant may present to the Court other landtaxes receipts for the payment of taxes for this lot.

9. The land claimed by the defendantas his own was surveyed on June 6and 7,1956, and a plan approved by Director of Land on November 15,1956was issued, identified asPsu 155241 (Exh. "5").

10. On April 22, 1960, theplaintiff filed forcible Entry and Detainer case

against Isaias Batiller in the Justice of the Peace Court of Barotac ViejoProvince of Iloilo (Exh. "4") to which the defendant Isaias Batiller riled hisanswer on August 29, 1960 (Exh. "4-A"). TheMunicipal Courtof BarotacViejo after trial, decided the case on May 10, 1961 in favor of the defendantand against the plaintiff(Exh. "4-B"). The plaintiffappealedfrom thedecision of the Municipal Court of Barotac Viejo which was docketed inthis Court as Civil Case No. 5750 on June 3, 1961, to which the defendant,Isaias Batiller, on June 13, 1961 filed his answer (Exh. "4-C"). And thisCourt after the trial. decided the case on November 26, 1964, in favor of

the defendant, Isaias Batillerand against the plaintiff (Exh. "4-D").

(NOTE: As per Exh. 4-B, which is the Iloilo court of first instance decisionof 26 November 1964 dismissingplaintiff's therein complaint for ejectmentagainst defendant, the iloilo court expressly found "that plaintiff's complaintis unjustified, intended to harass the defendant" and "that the defendant,Isaias Batiller, has a better rightto possess the land in question described inPsu 155241 (Exh. "3"), Isaias Batiller having been in the actual physical

possession thereofunder a claim of title many years before FranciscoMilitante sold the land to the plaintiff-hereby dismissing plaintiff's

complaint and ordering the plaintiff to pay the defendant attorney's

fees ....")

B. During the trial of this case on the merit, the plaintiff will prove by competentevidence the following:

1. That the land he purchased from Francisco Militante under Exh. "A" wasformerly owned and possessed by Liberato Demontao but that onSeptember 6, 1919 the land was sold at public auction by virtue of a

judgment in a Civil Case entitled "Edw J. Pflieder plaintiff vs. Liberato


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Demontao Francisco Balladeros and Gregorio Yulo, defendants", of whichYap Pongco was the purchaser (Exh. "1-3"). The sale was registered in theOffice of the Register of Deeds of Iloilo on August 4, 1920, under PrimaryEntry No. 69 (Exh. "1"), and a definite Deed of Sale was executed byConstantino A. Canto, provincial Sheriff of Iloilo, on Jan. 19, 1934 in favor

of Yap Pongco (Exh. "I"), the sale having been registered in the Office ofthe Register of Deeds of Iloilo on February 10, 1934 (Exh. "1-1").

2. On September 22, 1934, Yap Pongco sold this land to Francisco Militanteas evidenced by a notarial deed (Exh. "J") which was registered in theRegistry of Deeds on May 13, 1940 (Exh. "J-1").

3. That plaintiff suffered damages alleged in his complaint.

C. Defendants, on the other hand will prove by competent evidence during the trial ofthis case the following facts:

1. That lot No. 2 of the Psu-1552 it (Exh. '5') was originally owned andpossessed by Felipe Batiller, grandfather of the defendant Basilio Batiller,on the death of the former in 1920, as his sole heir. Isaias Batiller succeededhis father , Basilio Batiller, in the ownership and possession of the land inthe year 1930, and since then up to the present, the land remains in the

possession of the defendant, his possession being actual, open, public,peaceful and continuous in the concept of an owner, exclusive of any otherrights and adverse to all other claimants.

2. That the alleged predecessors in interest of the plaintiff have never beenin the actual possession of the land and that they never had any title thereto.

3. That Lot No. 2, Psu 155241, the subject ofFree Patent application of thedefendanthas been approved.

4. The damages suffered by the defendant, as alleged in his counterclaim."'

1

The appellate court further related the developments of the case, as follows:

On August 17, 1965, defendant's counsel manifested in open court thatbefore any trial on the merit of the case could proceed he would file a

motion to dismissplaintiff's complaint which he did, alleging thatplaintiffdoes not have cause of action against himbecause the property in disputewhich he (plaintiff) allegedly bought from his father-in-law, FranciscoMilitante was the subject matter of LRC No. 695 filed in the CFI of Iloilo,which case was brought on appeal to this Court and docketed as CA-G.R.

No. 13497-R in which aforesaid caseplaintiff was the counsel on record ofhis father-in-law, Francisco Militante. Invoking Arts. 1409 and 1491 of theCivil Code which reads:


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'Art. 1409. The following contracts are inexistent and voidfrom the beginning:

xxx xxx xxx

(7) Those expressly prohibited by law.

'ART. 1491. The following persons cannot acquire anypurchase, even at a public auction, either in person of throughthe mediation of another: .

xxx xxx xxx

(5)Justices, judges, prosecuting attorneys, clerks of superior and inferiorcourts, and other officers and employees connected with the administration

of justice, the property and rights of in litigation or levied upon an executionbefore the court within whose jurisdiction or territory they exercise theirrespective functions; this prohibition includes the act of acquiring an

assignment and shall apply to lawyers, with respect to the property andrights which may be the object of any litigation in which they may take part

by virtue of their profession.'

defendant claims that plaintiff could not have acquired any interest in theproperty in dispute as the contract he (plaintiff) had with FranciscoMilitante was inexistent and void. (See pp. 22-31, Record on Appeal).Plaintiff strongly opposed defendant's motion to dismiss claiming thatdefendant can not invoke Articles 1409 and 1491 of the Civil Code asArticle 1422 of the same Code provides that 'The defense of illegality of

contracts is not available to third persons whose interests are not directlyaffected' (See pp. 32-35 Record on Appeal).

On October 18, 1965, the lower court issued an order disclaiming plaintiffscomplaint(pp. 42-49, Record on Appeal.) In the aforesaid order ofdismissal the lower court practically agreed with defendant's contention thatthe contract (Exh. A) between plaintiff and Francism Militante was null andvoid. In due season plaintiff filed a motion for reconsideration (pp. 50-56Record on Appeal) which was denied by the lower court on January 14,1966 (p. 57, Record on Appeal).

Hence, this appeal by plaintiff from the orders of October 18, 1965 andJanuary 14, 1966.

Plaintiff-appellant imputes to the lower court the following errors:

'1. The lower court erred in holding that the contract of salebetween the plaintiff-appellant and his father-in-law, FranciscoMilitante, Sr., now deceased, of the property covered by PlanPsu-99791, (Exh. "A") was void, not voidable because it was


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made when plaintiff-appellant was the counsel of the latter inthe Land Registration case.

'2. The lower court erred in holding that the defendant-appelleeis an interested person to question the validity of the contract ofsale between plaintiff-appellant and the deceased, Francisco

Militante, Sr.'3. The lower court erred in entertaining the motion to dismissof the defendant-appellee after he had already filed his answer,and after the termination of the pre-trial, when the said motionto dismiss raised a collateral question.

'4. The lower court erred in dismissing the complaint of theplaintiff-appellant.'

The appellate court concluded that plaintiffs "assignment of errors gives rise to two (2)

legal posers (1) whether or not the contract of sale between appellant and his father-in-law, the late Francisco Militante over the property subject of Plan Psu-99791 wasvoid because it was made when plaintiff was counsel of his father-in-law in a landregistration case involving the property in dispute; and (2) whether or not the lowercourt was correct in entertaining defendant-appellee's motion to dismiss after the latterhad already filed his answer and after he (defendant) and plaintiff-appellant had agreedon some matters in a pre-trial conference. Hence, its elevation of the appeal to this Courtas involving pure questions of law.

It is at once evident from the foregoing narration that the pre-trial conference held by thetrial court at which the parties with their counsel agreed and stipulated on the materialand relevant facts and submitted their respective documentary exhibits as referred to in

the pre-trial order,supra,2practically amounted to a fulldress trial which placed onrecord all the facts and exhibits necessary for adjudication of the case.

The three points on which plaintiff reserved the presentation of evidence at the-trialdealing with the source of the alleged right and title of Francisco Militante's

predecessors,supra,3actually are already made of record in thestipulated facts andadmitted exhibits. The chain of Militante's alleged title and right to the land assupposedly traced back to Liberato Demontao was actually assertedby Militante (and

his vendee, lawyer and son-in-law, herein plaintiff) in the land registration case andrejectedby the Iloilo land registration court which dismissedMilitante's application forregistration of the land. Such dismissal, as already stated, was affirmed by the final

judgment in 1958 of the Court of Appeals.4

The four points on which defendant on his part reserved the presentation of evidence atthe trial dealing with his and his ancestors' continuous, open, public and peaceful

possession in the concept of owner of the land and the Director of Lands' approval of his


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survey plan thereof,supra,5are likewise already duly established facts of record, in theland registration case as well as in the ejectment case wherein the Iloilo court of firstinstance recognized the superiority of defendant's right to the land as against plaintiff.

No error was therefore committed by the lower court in dismissing plaintiff's complaintupon defendant's motion after the pre-trial.

1. The stipulated facts and exhibits of record indisputably established plaintiff's lack ofcause of action and justified the outright dismissal of the complaint. Plaintiff's claim ofownership to the land in question was predicated on the sale thereof for P2,000.00 madein 1956 by his father-in- law, Francisco Militante, in his favor, at a time when Militante'sapplication for registration thereof had already been dismissedby the Iloilo landregistration court and was pending appeal in the Court of Appeals.

With the Court of Appeals' 1958 final judgment affirming the dismissalof Militante'sapplication for registration, the lack of any rightful claim or title of Militante to the landwas conclusively and decisively judicially determined. Hence, there was no right or titleto the land that could be transferred or sold by Militante's purported sale in 1956 in favorof plaintiff.

Manifestly, then plaintiff's complaint against defendant, to be declared absolute owner ofthe land and to be restored to possession thereof with damages was bereft of any factualor legal basis.

2. No error could be attributed either to the lower court's holding that the purchase by alawyer of the property in litigation from his client is categorically prohibited by Article

1491, paragraph (5) of the Philippine Civil Code, reproducedsupra;6and that

consequently, plaintiff's purchase of the property in litigation from his client (assumingthat his client could sell the same since as already shown above, his client's claim to the

property was defeated and rejected) was void and could produce no legal effect, byvirtue of Article 1409, paragraph (7) of our Civil Code which provides that contracts"expressly prohibited or declared void by law' are "inexistent and that "(T)hese contractscannot be ratified. Neither can the right to set up the defense of illegality be waived."

The 1911 case ofWolfson vs. Estate of Martinez7relied upon by plaintiff as holding thata sale of property in litigation to the party litigant's lawyer "is not void but voidable atthe election of the vendor" was correctly held by the lower court to have been

superseded by the later 1929 case ofDirector of Lands vs. Abagat.8In this later case ofAbagat, the Court expressly cited two antecedent cases involving the same transaction of

purchase of property in litigation by the lawyer which was expressly declared invalidunder Article 1459 of the Civil Code of Spain (of which Article 1491 of our Civil Codeof the Philippines is the counterpart) upon challenge thereof not by the vendor-client but

by the adverse parties against whom the lawyer was to enforce his rights as vendee thusacquired.


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These two antecedent cases thus cited in Abagat clearly superseded (without soexpressly stating the previous ruling in Wolfson:

The spouses, Juan Soriano and Vicente Macaraeg, were the owners oftwelve parcels of land. Vicenta Macaraeg died in November, 1909, leavinga large number of collateral heirs but no descendants. Litigation between

the surviving husband, Juan Soriano, and the heirs of Vicenta immediatelyarose, and the herein appellant Sisenando Palarca acted as Soriano's lawyer.On May 2, 1918, Soriano executed a deed for the aforesaid twelve parcelsof land in favor of Sisenando Palarca and on the following day, May 3,1918, Palarca filed an application for the registration of the land in the deed.

After hearing, the Court of First Instance declared that the deed was

invalid by virtue of the provisions of article 1459 of the Civil Code, which

prohibits lawyers and solicitors from purchasing property rights involved in

any litigation in which they take part by virtue of their profession. The

application for registration was consequently denied, and upon appeal by

Palarca to the Supreme Court, the judgement of the lower court was

affirmed by a decision promulgated November 16,1925. (G.R. No. 24329,Palarca vs. Director of Lands, not reported.)

In the meantime cadastral case No. 30 of the Province of Tarlac wasinstituted, and on August 21, 1923, Eleuteria Macaraeg, as administratrix ofthe estate of Vicente Macaraeg, filed claims for the parcels in question.Buenaventura Lavitoria administrator of the estate of Juan Soriano, didlikewise and so did Sisenando Palarca. In a decision dated June 21, 1927,the Court of First Instance, Judge Carballo presiding, rendered judgment infavor of Palarea and ordered the registration of the land in his name. Uponappeal to this court by the administration of the estates of Juan Soriano

and Vicente Macaraeg, the judgment of the court below was reversed and

the land adjudicated to the two estates as conjugal property of the deceased

spouses. (G.R. No. 28226, Director of Lands vs. Abagat, promulgated May

21, 1928, not reported.)9

In the very case ofAbagatitself, the Court, again affirming the invalidity and nullity ofthe lawyer's purchase of the land in litigation from his client, ordered the issuance of awrit of possession for the return of the land by the lawyer to the adverse parties withoutreimbursement of the price paid by him and other expenses, and ruled that "the appellantPalarca is a lawyer and is presumed to know the law. He must, therefore, from the

beginning, have been well aware of the defect in his title and is, consequently, apossessor in bad faith."

As already stated, Wolfson andAbagatwere decided with relation to Article 1459 of theCivil Code of Spain then adopted here, until it was superseded on August 30, 1950 bythe Civil Code of the Philippines whose counterpart provision is Article 1491.


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Article 1491 of our Civil Code (like Article 1459 of the Spanish Civil Code) prohibits inits six paragraphs certain persons, by reason of the relation of trust or their peculiarcontrol over the property, from acquiring such property in their trust or control eitherdirectly or indirectly and "even at a public or judicial auction," as follows: (1) guardians;(2) agents; (3) administrators; (4) public officers and employees; judicial officers and

employees, prosecuting attorneys, and lawyers; and (6) others especially disqualified bylaw.

In Wolfson which involved the sale and assignment of a money judgment by the client tothe lawyer, Wolfson, whose right to so purchase the judgment was being challenged bythe judgment debtor, the Court, through Justice Moreland, then expressly reserveddecision on "whether or not the judgment in question actually falls within the prohibitionof the article" and held only that the sale's "voidability can not be asserted by one not a

party to the transaction or his representative," citing from Manresa 10that"(C)onsidering the question from the point of view of the civil law, the view taken by the

code, we must limit ourselves to classifying as void all acts done contrary to the expressprohibition of the statute. Now then: As the code does not recognize such nullity by themere operation of law, the nullity of the acts hereinbefore referred to must be asserted bythe person having the necessary legal capacity to do so and decreed by a competent

court." 11

The reason thus given by Manresa in considering such prohibited acquisitions underArticle 1459 of the Spanish Civil Code as merely voidable at the instance and option ofthe vendor and not void "that the Code does not recognize such nullity de plenoderecho" is no longer true and applicable to our own Philippine Civil Code which

does recognize the absolute nullity of contracts "whose cause, object, or purpose iscontrary to law, morals, good customs,public order or public policy" or which are"expressly prohibited or declared void by law" and declares such contracts "inexistent

and void from the beginning." 12

The Supreme Court of Spain and modern authors have likewise veered from Manresa'sview of the Spanish codal provision itself. In itssentencia of 11 June 1966, the SupremeCourt of Spain ruled that the prohibition of Article 1459 of the Spanish Civil Code is

based on public policy, that violation of the prohibition contract cannot be validated byconfirmation or ratification, holding that:

... la prohibicion que el articulo 1459 del C.C. establece respecto a losadministradores y apoderados, la cual tiene conforme a la doctrina de estaSala, contendia entre otras, en S. de 27-5-1959, un fundamento de ordenmoral lugar la violacion de esta a la nulidad de pleno derecho del acto onegocio celebrado, ... y prohibicion legal, afectante orden publico, no cabe

con efecto alguno la aludida retification ... 13

The criterion of nullity of such prohibited contracts under Article 1459 of the Spanish


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Civil Code (Article 1491 of our Civil Code) as a matter of public order and policy asapplied by the Supreme Court of Spain to administrators and agents in its above citeddecision should certainly apply with greater reason to judges, judicial officers, fiscalsand lawyers under paragraph 5 of the codal article.

Citing the same decisions of the Supreme Court of Spain, Gullon Ballesteros, his "Curso

de Derecho Civil, (Contratos Especiales)" (Madrid, 1968) p. 18, affirms that, withrespect to Article 1459, Spanish Civil Code:.

Que caracter tendra la compra que se realice por estas personas?Porsupuesto no cabe duda de que el caso (art.) 1459, 40 y 50, la nulidad

esabsoluta porque el motivo de la prohibicion es de orden publico. 14

Perez Gonzales in such view, stating that "Dado el caracter prohibitivo delprecepto, la

consequencia de la infraccion es la nulidad radical y ex lege." 15

Castan, quoting Manresa's own observation that.

"El fundamento do esta prohibicion es clarisimo. No sa trata con este precepto tan solode guitar la ocasion al fraude; persiguese, ademasel proposito de rodear a las personasque intervienen en la administrcionde justicia de todos los retigios que necesitan pora

ejercer su ministerio librandolos de toda suspecha, que aunque fuere in fundada,

redundura endescredito de la institucion." 16arrives at the contrary and now acceptedview that "Puede considerace en nuestro derecho inexistente 'o radicalmente nulo elcontrato en los siguentes cases: a) ...; b) cuando el contrato se ha celebrado en violacionde unaprescripcion 'o prohibicion legal, fundada sobre motivos de orden publico

(hipotesis del art. 4 del codigo) ..."

17

It is noteworthy that Caltan's rationale for his conclusion that fundamental considerationof public policy render void and inexistent such expressly prohibited purchase (e.g. by

public officers and employees of government property intrusted to them and by justices,judges, fiscals and lawyers of property and rights in litigation and submitted to orhandled by them, under Article 1491, paragraphs (4) and (5) of our Civil Code) has beenadopted in a new article of our Civil Code, viz, Article 1409 declaring such prohibited

contracts as "inexistent and void from the beginning." 18

Indeed, the nullity of such prohibited contracts is definite and permanent and cannot be

cured by ratification. The public interest and public policy remain paramount and do notpermit of compromise or ratification. In his aspect, the permanent disqualification ofpublic and judicial officers and lawyers grounded onpublic policy differs from the firstthree cases of guardians, agents and administrators (Article 1491, Civil Code), as towhose transactions it had been opined that they may be "ratified" by means of and in"the form of a new contact, in which cases its validity shall be determined only by thecircumstances at the time the execution of such new contract. The causes of nullitywhich have ceased to exist cannot impair the validity of the new contract. Thus, the


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object which was illegal at the time of the first contract, may have already becomelawful at the time of the ratification or second contract; or the service which wasimpossible may have become possible; or the intention which could not be ascertainedmay have been clarified by the parties. The ratification or second contract would then be

valid from its execution; however, it does not retroact to the date of the first contract." 19

As applied to the case at bar, the lower court therefore properly acted upon defendant-appellant's motion to dismiss on the ground of nullity of plaintiff's alleged purchase ofthe land, since its juridical effects and plaintiff's alleged cause of action founded thereonwere being asserted against defendant-appellant. The principles governing the nullity ofsuch prohibited contracts and judicial declaration of their nullity have been well restated

by Tolentino in his treatise on our Civil Code, as follows:

Parties Affected. Anyperson may invoke the in existence of the contractwhenever juridical effects founded thereon are asserted against him. Thus,if there has been a void transfer of property, the transferor can recover it by

the accion reinvindicatoria; and any prossessor may refuse to deliver it tothe transferee, who cannot enforce the contract. Creditors may attach

property of the debtor which has been alienated by the latter under a voidcontract; a mortgagee can allege the inexistence of a prior encumbrance; adebtor can assert the nullity of an assignment of credit as a defense to anaction by the assignee.

Action On Contract. Even when the contract is void or inexistent, anaction is necessary to declare its inexistence, when it has already beenfulfilled. Nobody can take the law into his own hands; hence, the

intervention of the competent court is necessary to declare the absolutenullity of the contract and to decree the restitution of what has been givenunder it. The judgment, however, will retroact to the very day when thecontract was entered into.

If the void contract is still fully executory, no party need bring an action todeclare its nullity; but if any party should bring an action to enforce it, the

other party can simply set up the nullity as a defense. 20

ACCORDINGLY, the order of dismissal appealed from is hereby affirmed, with costs inall instances against plaintiff-appellant. So ordered.


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G.R. No. L-49219 December 11, 1946

PABLO D. PALMA, petitioner,vs.EDUARDO REYES CRISTOBAL, respondent.

Vicente J. Francisco and Guillermo B. Guevara for petitioner.

Antonio Gonzales for respondent.

PERFECTO,J.:

A parcel of a land located in Quesada Street, Tondo, Manila, covered by transfercertificate of title No. 31073 of the Register of Deeds of Manila, issued in favor of

petitioner Pablo D. Palma, is the subject of contention between the parties.

Petitioner sought, at first, to eject respondent Eduardo Cristobal Reyes from the land inquestion in a complaint filed with the Municipal Court of Manila. As respondent raised

the question of ownership, the complaint was dismissed, and petitioner filed with theCourt of First Instance of Manila the complaint which initiated this case, petitioner

praying that he be declared the owner of the land and that respondent be ordered torestore its possession and to remove his house therefrom.

The complaint was dismissed and petitioner brought the case to the Court of Appeals,where he again failed, the appealed judgment having been affirmed by a decision penned

by Mr. Justice Padilla, concurred in by Mr. Justice Jose G. Generoso and Mr. JusticePedro Tuason.

The case is now before us on appeal by certiorari.In 1909, after registration proceedings under the provisions of Act No. 496, originalcertificate of title No. 1627 was issued in the names of petitioner and his wife LuisaCristobal. In 1923, said certificate was cancelled and substituted by certificate of title

No. 20968 by virtue of a decree issued by the Court of First Instance of Manila inconnection with Manila cadastre. It was later substituted by certificate of title No.26704, also in the name of petitioner and his wife. After the latter's death in 1922,a newcertificate of title was issued in 1923 only in the name of the name of the petitioner,substituted in 1928 by certificate of title No. 31073.

The Court of Appeals, upon the evidence, concluded with the Court of First Instance ofManila that the parcel of land in question is a community property held by petitioner intrust for the real owners (the respondent being an heir of one of them), the registrationhaving been made in accordance with an understanding between the co-owners, byreason of the confidence they had in petitioner and his wife. This confidence, closerelationship, and the fact that the co-owners were receiving their shares in the rentals,were the reasons why no step had been taken to partition the property.

The Court of Appeals explains that it was only after the death of Luisa Cristobal and


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petitioner had taken a second wife that trouble on religious matters arose betweenpetitioner and respondent, and it gives credence to the testimony of Apolonia Reyes andrespondent to the effect that Luisa, before her death, called her husband, the petitioner,and enjoined him to give her co-owners their shares in the parcel of land; but respondenttold her then not to worry about it, for it was more important to them to have her cured

of the malady that affected her. Petitioner answered his wife that she should not worrybecause he would take care of the matter by giving the co-owners their respectiveshares.

Petitioner assigns as first error of the Court of Appeals the fact that it considered the oraltestimony adduced in behalf of respondent sufficient to rebut the legal presumption that

petitioner is the owner of the land in controversy. .

In Severino vs. Severino (43 Phil., 343), this court declared that "the relations of an agentto his principal are fiduciary and it is an elementary and very old rule that in regard to

property forming the subject-matter of the agency, he is estopped from acquiring or

asserting a title adverse to that of the principal. His position is analogous to that of atrustee and he cannot consistently, with the principles of good faith, be allowed to createin himself an interest in opposition to that of his principal orcestui que trust." Affirmingthe said doctrine inBarretto vs. Tuason (50 Phil., 888), the Supreme Court declared thatthe registration of the property in the name of the trustees in possession thereof, must bedeemed to have been effected for the benefit of the cestui que trust. InPalet vs. Tejedor(55 Phil., 790), it was declared that whether or not there is bad faith or fraud in obtaininga decree with respect to a registered property, the same does not belong to the person inwhose favor it was issued, and the real owners be entitled to recover the ownership ofthe property so long as the same has not been transferred to a third person who hasacquired it in good faith and for a valuable consideration. This right to recover issanctioned by section 55 of Act No. 496, as amended by Act No. 3322.

There is no showing why the conclusions of facts of the Court of Appeals should bedisturbed, and upon said facts petitioner's first assignment of errors appears to beuntenable in the light of law and of the decision of this court.

Petitioner alleged that the Court of Appeals erred in not holding the respondent estoppedfrom claiming that petitioner is not the absolute owner of the property in question

because, after Luisa Cristobal, petitioner's wife, died in 1922, instead of moving for the

partition of the property, considering specially that petitioner had promised such apartition at the deathbed of the deceased, respondent appeared as attorney for petitionerand prayed that a new certificate of title be issued in the name of said petitioner as thesole owner of the property.

Petitioner insisted with energy that respondent himself was a party to the fraud upon thecourt, as guilty as petitioner himself, and that estops him from asserting that he is the co-owner of the land involved herein.lawphil.net


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There is no merit in petitioner's contention. The fact that respondent has been a party tothe deception which resulted in petitioner's securing in his name the title to a propertynot belonging to him, is not valid reason for changing the legal relationship between thelatter and its true owners to such an extent as to let them lose their ownership to a persontrying to usurp it.

Whether petitioner and respondent are or are not jointly responsible for any fraud upon acourt of justice, cannot affect the substantial rights of the real owners of the title of a real

property.

Respondent is not barred because his appearance as attorney for petitioner was not amisrepresentation which would induce petitioner to believe that respondent recognizedthe former as the sole owner of the property in controversy. The misrepresentation coulddeceive the court and outsiders, because they were not aware of the understanding

between the co-owners that the property be registered in the name of petitioner. TheCourt of Appeals found, and the finding is not now in issue, that petitioner was a party to

the understanding and assumed the role of an instrument to make it effective.Respondent's appearance, as attorney for petitioner in 1923, was a consequence of theunderstanding, and petitioner could not legitimately assume that it had the effect of

breaking or reversing said understanding.

Lastly, it is contended by petitioner that, even conceding that the controverted propertywas owned in common by several co-owners, yet the Court of Appeals erred in notholding that, as against respondent, petitioner had acquired absolute ownership of thesame through prescription.

Upon the premise that the registration in 1909 in the name of petitioner and his wife,

Luisa Cristobal, was in accordance with an agreement among the co-owners, petitioneradvances the theory that when he, upon the death of his wife in 1922, caused the trust

property to be registered in his sole name in 1923, and subsequently partitioned betweenhimself and his daughter, Ildefonsa Cristobal Ditangco, as heirs of the decedent, "heopenly breached the agreement of 1909 as well as the promise made to his dying wife ofgiving the co-owners their respective shares," concluding that "that breach was anassumption of ownership, and could be the basis of title by prescription."

This theory holds no water because, according to the pronouncement of the Court ofAppeals, upon the evidence, petitioner held the property and secured its registration in

his name in a fiduciary capacity, and it is elementary that a trustee cannot acquire byprescription the ownership of the property entrusted to him. The position of a trustee isof representative nature. His position is the position of a cestui que trust. It is logical thatall benefits derived by the possession and acts of the agent, as such agent, should accrueto the benefit of his principal.

Petitioner's pretension of building his right to claim ownership by prescription upon hisown breach of a trust cannot be countenanced by any court, being subversive of


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generally accepted ethical principles.

The decision of the Court of Appeals is affirmed. No costs.

G.R. No. L-16917 July 31, 1962

PLARIDEL SOTTO, Administrator of the Testate Estate of Vicente Sotto, petitioner-appellant,vs.QUINTILLANA SAMSON (SANSON), respondent-appellee.

Ricardo Summers for petitioner-appellant.

Rama Law Offices for respondent-appellee.

BENGZON, C.J.:

Statement of the case. This is a review of the judgement of the Court of Appealsaffirming the decision of the First Instance of Cebu in a litigation which began acomplaint of Quintillana Samson (Sanson) to annul sale of a lot executed by her in favorof defendant Vicente Sotto. She alleges that, as her attorney, Sotto had taken advantageof her financial difficulties and mental weakness and of the confidence she had reposedin him.

As special defenses, Sotto averred that the action already prescribed; that judicial licensehad been granted her to dispose of said lot; that there was due consider for the purchase

P21,595.00; and that she was estopped from asserting this claim because she hadratified the sale on various occasions, once after the passage of the Paraphernal PropertyAct No. 3922 (authorizing a married woman to dispose of her paraphernal propertywithout consent of her husband).

Vicente Sotto died while the case was pending decision; and upon orders of the lowercourt, he was substituted as defendant by the administrator of his estate. (We shall,however, herein refer to him as the litigant Sotto, although the judgment shall be againstor in favor of, said administrator as such).

On November 29, 1954, the Cebu court decided in favor of plaintiff Samson. Uponappeal, the Court of Appeals affirmed the decision in all respects.

Issues. Petitioner Sotto alleges here that said appellate court erred in holding: 1. that the

sale is null and void; 2. that the new deed of sale of September 17, 1932 executed bySamson in favor of Sotto, (after Act No. 3922 had been approved, and after all the casesin which appellant intervened for appellee had terminated) is also null and void; and 3.that this action, (in 1941) has not prescribed.

In general, only questions of law may be discussed in this review, because we regard thefacts found by the Court of Appeals to be binding on us.

Facts. From the evidence of record, the Court of Appeals made the following findings of


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fact:

. . . that since 1924 Atty. Sotto was appellee's counsel in several cases in which theadverse party was her husband, Manuel Carratala, from whom she was estranged;that sometime in March 1926, Atty. Sotto, acting as counsel for appellee, filed a

petition with the Court of First Instance of Cebu (Civil Case No. 6448) requesting

for judicial authority to sell her paraphernal property without the need of herhusband's consent; that having learned of such petition, Manuel Carratala in turnfiled on May 7, 1926, Civil Case No. 6528 asking the same court to annul or

prevent any conveyance of said paraphernal property, and obtained a writ ofinjunction forbidding both appellee and Atty. Sotto from carrying out the sale andregistering any conveyance of property with the register of deeds; that on May 11,1926, although appellee's petition for judicial authority was still pending, andregardless of the writ of injunction, appellee Samson (Sanson) executed a deed ofsale whereby she sold and conveyed to her counsel, Atty. Sotto, her paraphernal

property known as lot No. 872 of the Cadastral Survey of Cebu with theimprovements existing thereon; that Atty. Sotto gave appellee an option torepurchase the property within two years; which was extended to another twoyears; and that the deed was presented for registration but the register of deeds ofCebu refused to register the same.

. . .; that on May 16, 1926 appellee left Cebu for Manila; that upon her arrival inthe city (of Manila) another petition for judicial authority was filed with the Courtof First Instance of Manila; that having failed to appear at the hearing although hewas duly notified thereof, her husband was declared in default and the case wasdecided in her favor by Judge Eulogio Revilla; that on the day after she hadobtained judicial authority to dispose of her property, she executed a confirmationdeed of the original sale: and that Atty. Sotto succeeded in having OriginalCertificate of Title No. 681 in appellee's name cancelled and a new one issued inhis name.

. . . That the decision of the Manila Court having reversed by the Supreme Court,Atty. Sotto filed another petition for judicial authority with the said Manila Court

but this time the same was assigned to Judge Anacleto Diaz; that without notifyingappellee's husband on the alleged ground that he was abroad as he was hunted as aleper, the petition was heard in his absence; that after the hearing, the court

granted to appellee the judicial authority sought by her; and that by virtue thereof,she executed another confirmation deed of the sale in Atty. Sotto's favor but thesame was invalidated by the Supreme Court when it revoked the decision of JudgeDiaz.

. . . That on the other hand, the Cebu Court decided Civil Case No. 6528 in favorof appellee's husband, thereby declaring null and void the sale of her paraphernal

property in favor of her counsel; that Atty. Sotto appealed to the Supreme Court


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but later withdrew the appeal after the Philippine Legislature enacted Act No.3922 authorizing a married woman to dispose of her paraphernal property withouther husband's consent; and that six days after the passage of said law, Atty. Sottohad the third ratification deed executed by appellee in his favor.

Discussion. In resolving the question whether or not the sale was null and void, the

Court of Appeals agreed with Samson's contention that inasmuch as Article 1459 of theCivil Code mentions property which is the object of any litigation in which the attorneymay take part, it follows that Sotto fell within its inhibition.

On the other hand petitioner maintains that said Article 1459 should read:

ART. 1459. The prohibition contained in No. 5 shall apply to lawyers andsolicitors with respect to property or rights that are the object of a litigation INWHICH THEY INTERVENE by their profession or office.

And then he insists that this sale could not be banned inasmuch as at the time of its

execution, he (Sotto) was not yet the attorney of record in said Case No. 6528 he hadnot yet been served with summons relative to the said complaint.

Another point brought up by petitioner Sotto is that the contract being merely voidable,it is susceptible of ratification; that in the instant case, the revalidation and confirmationhas been accomplished by no less than four (4) documents executed by appellee,specially the ratification sale Exh. 1 signed by her after the passage of the ParaphernalAct No. 3922, authorizing married women to dispose of their paraphernal propertywithout their husband's consent.

Referring to this last deed of sale Exh. 1 appellant repeatedly maintains that the same is

not only a confirmation and validation of the original sale of May 11, 1926, but also acompletely new sale; that such a construction is inevitable considering appellee's

declaration therein:1

Que haciendo uso del derecho que me concede la nueva Ley No. 3922 paradisponer libremente de mis bienes propios y parafernales, sin licencia de mimarido por la presente CONFIRMO Y REVALIDO la venta definitiva arribamencionada (de 11 de Mayo, 1926) en los mismos terminos en que fueotorgada por mi en dicha fecha, y con el mismo valor ya efecto que AHORA LAOTORGO y la ratifico expontaneamente, libre de toda carga y gravamen,

quedando ipso facto, consolidado el domino del Sr. Vicente Sotto, sobre elreferido lote y sus mejoras.

On this paramount issue, we must declare that on May 11, 1926 when this sale was firstagreed upon, Sotto was Samson's lawyer in a litigation involving the subject of thecontract. Therefore, Sotto was disqualified to buy under article 1459 of the Civil Code,which according to Fisher's translation which we deem correct reads as follows:

ART. 1459. The following persons cannot take by purchase, even at a public or


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judicial auction, either in person or through the mediation of another:

x x x x x x x x x

5. Justices, judges, members of the department of public prosecution, clerks ofsuperior and inferior courts and other officers of such courts, the property andrights on litigation before the court within whose jurisdiction or territory they

perform their respective duties. This prohibition shall include the acquisition ofsuch property by assignment. . . .

The prohibition contained in this fifth paragraph shall include lawyers andsolicitors with respect to any property rights involved in any litigation in whichthey may take part by virtue of their profession and office.

Certainly, on said date there was pending in the Court of First Instance of Cebu Civil

Case No. 6448 which was a litigation2 handled by Sotto as the lawyer, concerning thesame lot. The husband objected to the wife's plan to sell; so much so that he filed on

May 7, 1926 a petition to annul whatever conveyance his wife may have made orattempted to make (Civil Case No. 6528).

Indeed, because of their client-attorney relationship Sotto probably unduly influencesSamson, not only to sell the lot to him but also to accept terms less favorable to her.

But Sotto claims that the action has prescribed because it was filed only in 1941, i.e.,fifteen years after May, 1926. It must be realized, however, that the complainant reallyseeks the annulment of the document made by Samson in 1932 Exh. 1 after theapproval of Act No. 3922. Recall that according to the Court of Appeals the Court ofCebu in Civil Case 6528, declared her sale in 1926 to Sotto to be void; that Sotto

appealed such declaration to the Supreme Court, and after the approval of Act 3922Sotto moved for withdrawalof his appeal; which motion was subsequently granted. Noneed therefore to discuss the document (1926) or documents of sale (the ratifications)

before Act 3922. Those have been avoided by the Court of First Instance of Cebu in adecision which became final upon the withdrawalof Samson's appeal. In fact petitionerhere insistently maintains that the document Exh. 1 was a "new contract of sale" and

relies thereon to retain the property. (pp. 20, 21, 52, 54, 61, et seq., printed brief)3

Hence, we repeat, the document to be avoided, is the one executed by Samson in 1932(Exh. 1) after the withdrawal of the appeal. Now then, in 1941 when this action was

commenced, less than ten (10) years had elapsed: 1932-1941.

It is argued, however, that when this document Exh. 1 was executed (Sept. 17, 1932) thelitigation involving the property had already terminated because on that date Sotto hadfiled the motion to withdraw Samson's appeal. The argument has no merit, since thelitigation had not terminated on September 17, 1932, it appearing that this SupremeCourt granted the motion only on Sept. 26, 1932. Up to that time, at least, the appeal in which Sotto represented Samson was pending in court.


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We find it unnecessary to go into other incidental contentions discussed in petitioner'sbrief. Many are immaterial; others are sufficiently met or explained in respondent's briefin the Court of Appeals. The undeniable core of the matter is the conveyance of alitigant's property made during the existence of attorney-and-client relationship; and thestatute prohibiting such sales which is designed to curtail any undue influence of the

lawyer upon his client on account of their confidential association.In this connection, in examining the phase on prescription from 1926 to 1941 asclaimed by Sotto and impressed by Samson's argument about an attorney's "bad faith,disregard of conscience, court orders, laws and legal ethics", but reluctant to adopt theappellate court's ruling that prescription could not run because the contract was void ab

initio,4 the thought struck us in the light of some remarks of Samson's counsel thatperhaps it may be desirable, in situations like this, to apply a rule that the period ofprescription should be counted only from the severance of the attorney-and-client bonds;

because it is only then that the controlling influence of the attorney has ceased.5

However, no pronouncement on this subject is needed, since this client's right may besufficiently protected thru the line of approach we have already indicated.

Nonetheless, protection may not be so extended as to allow her to unjustly profit at theexpense of her attorney by retaining the money or consideration given to her for the sale.Under Art. 1303 of the Civil Code when a sale is avoided, the seller shall return the

purchase price, together with interest. The total consideration given by Sotto to Samsonamounts to P21,595.00 (Exh. 3).

This requires one modification of the judgment of the Court of Appeals affirming the

decision of the court of first instance, which decision in its dispositive part, reads asfollows:

IN VIEW THEREOF, this Court hereby pronounces judgment:

(1) Declaring the aforementioned sale in favor of defendant, dated May 11, 1926and the subsequent deeds of ratification executed on June 17, 1926, September 11,1928, and September 17, 1932 (Exhs. A, A-1, K and Exh. 1, respectively), nulland void "ab initio";

(2) Ordering defendant to restore or reconvey to plaintiff the property in questionwith all its improvements thereon (Lot No. 872 Cadastral Survey of Cebu) under

Transfer Torrens Certificate of Title No. 0-628 (T-681, 1941); in case this is nolonger possible, pay the plaintiff its value as of the date of the rendition of this

judgment;

(3) Ordering defendant to pay the equitable rentals on said property from May 11,1926 to July 1941, plus legal interest thereon until fully paid; and

(4) Ordering plaintiff to pay Attorney Paulino Gullas or his heirs the sum ofP738.33 as attorney's fees, the defendant to pay the costs.


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Now, if as we propose to do, such appellate judgment is affirmed with the modificationindicated, the next step would ordinarily be to remand the record for determination ofthe amount to be paid by Sotto, (should he be unable to retransfer the property itself) andto fix the rentals payable by him. However, aware of the many years this case has been

pending in the courts, and desirous of expediting the disposition of the controversy, we

have searched the records and found facts not covered in the Court of Appeals' decision:First, the Cebu court in an amendatory order fixed the value of the realty at P70 pesosper square meter (p. 361, Record on Appeal). Second, the parties agreed at the trial thatthe rents of the property could be fixed at P100 pesos a month (pp. 179. 186, Record onAppeal). To overlook these things would unduly prolong this litigation.

Judgment: Wherefore, it is our judgment that the decision of the Court of Appealsshould be, and is hereby affirmed, with these additional directives: (a) In case Sotto cannot return the lot to Samson he shall pay for it (786 sq. m.) at the price of P70 pesos persquare meter; (b) Sotto shall also pay rents at the rate of P100 pesos a month from Sept.17, 1932; (c) Samson shall in turn pay Sotto the amount of P21,595.00 plus legal interestfrom Sept. 17, 1932.

No pronouncement as to costs. So ordered.

A.M. No. 3216 March 16, 1992

DOMINGA VELASCO ORDONIO,petitioner,vs.ATTY. JOSEPHINE PALOGAN EDUARTE, respondent.

R E S O L U T I O N

PER CURIAM:

This is a complaint for the disbarment of respondent Atty. Josephine Palogan-Eduarteoriginally filed with this Court on April 18, 1988. On August 10, 1989, the Commissionon Bar Discipline of the Integrated Bar of the Philippines, to which the case was referredfor investigation, submitted a report confirming in substance the charge of violation ofArt. 1491 of the Civil Code and part of the Oath of Office of a lawyer andrecommending the suspension of herein respondent.

The evidence discloses that on July 18, 1983, Antonia Ulibari filed with the RTC,Branch XXII, Cabagan, Isabela, Civil Case No. 391 for annulment of a document(known as Affidavit of Adjudication of the Estate of Felicisimo Velasco and QuitclaimThereof) against her children. The case was handled by Atty. Henedino Eduarte, hereinrespondent's husband, until his appointment as RTC judge on October 26, 1984. Hiswife, Atty. Josephine Palogan-Eduarte, took over. On August 22, 1985, decision in CivilCase No. 391 was rendered in favor of Antonia Ulibari. Except for Dominga Velasco-


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Ordonio, one of the children of Antonia Ulibari and complainant in the instant case, therest of the defendants did not appeal. On June 13, 1987, while Civil Case No. 391 was

pending appeal in the Court of Appeals, Antonia Ulibari conveyed some parcels of herland to her children in the form of deeds of absolute sale, prepared and notarized byherein respondent. Significantly, on the same day, Antonia Ulibari also conveyed 20

hectares of land to herein respondent and her husband as their Attorney's fees for legalservices rendered. All the titles of the lands subject of the deeds of absolute sale and thedeed of conveyance however remained in the name of Antonia Ulibari.

On April 4, 1988, Dominga Velasco-Ordonio filed this complaint for disbarment againstherein respondent on the basis of an affidavit executed by her mother Antonia Ulibari onMarch 2, 1988 stating that affiant never conveyed the subject parcel of land torespondent as her attorney's fees and that the deeds of absolute sale executed in favor ofher children were not known to her (and that she received no consideration therefor).

On August 10, 1989, the Investigation Commissioner submitted a report finding the

charges to be true and recommending a one-year suspension of the respondent from thepractice of law.

The first issue to be resolved is whether Antonia Ulibari was defrauded into signing theDeed of Conveyance transferring to her lawyer (herein respondent) the subject parcel ofland containing 298,420 square meters as the latter's attorney's fees. It is clear fromAntonia Ulibari's affidavit and deposition that she never conveyed the said land to herlawyer as attorney's fees.

Even granting for the sake argument that Antonia Ulibari knowingly and voluntarilyconveyed the subject property in favor of the respondent and her husband, the

respondent, in causing the execution of the Deed of Conveyance during the pendency ofthe appeal of the case involving the said property, has violated Art. 1491 of the CivilCode which prohibits lawyers from "acquiring by assignment property and rights whichmay be the object of any litigation in which they may take part by virtue of their

profession."

In the case at bar, the property (which includes the more than 20 hectares of landallegedly conveyed to the respondent) was already in actual litigation first in the lowercourt and then in the Court of Appeals. Whether the deed of conveyance was executed atthe instance of the client driven by financial necessity or of the lawyers is of no moment

(In re: Atty. Melchor E. Ruste, 70 Phil. 243). "In either case, an attorney occupies avantage position to press upon or dictate his terms to a harrased client, in breach of therule so amply protective of the confidential relations, which must necessarily exist

between attorney and client, and of the rights of both." The act constitutes malpractice,even if the lawyer had purchased the property in litigation. (Hernandez v. Villanueva, 40Phil. 775; In re: Calderon, 7 Phil. 427). We agree with the Investigating Commissioner'sopinion that the prohibition applies when the lawyer has not paid money for it and the

property was merely assigned to him in consideration of legal services rendered at a time


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when the property is still the subject of a pending case.

For having improperly acquired the subject property, under the foregoing circumstances,respondent has violated not only Art. 1491 of the Civil Code but also Rule 10 of theCanons of Professional Ethics which provides that "the lawyer should not purchase anyinterest in the subject matter of the litigation which he is conducting."

The last issue to be resolved is whether respondent violated any law in preparing andnotarizing the deeds of absolute sale in making it appear that there were considerationstherefor, when in truth there were none so received by the seller. In her answer,respondent admitted that Antonia Ulibari did not actually sell the parcels of land to herchildren for the considerations stated in the deeds of sale and that she (respondent)"utilized the form of deed of sale as the most convenient and appropriate document toeffect the transfer of the parcels of land to Antonia Ulibari's children in accordance withher wish that said parcels of land be given to them.

In so doing, respondent has manifestly violated that part of her oath as a lawyer that she

shall not do any falsehood. Not only that. In preparing the documents which do notreflect the true transaction, respondent has likewise violated Rule 10.01 of the Code ofProfessional Responsibility which provides:

Rule 10.01. A lawyer shall not do any falsehood, nor consent to the doing ofany in court; nor shall be mislead or allow the court to be mislead by anyartifice.

ACCORDINGLY, for having violated Article 1491 of the Civil Code, respondent ishereby ordered suspended from the practice of law for a period of six (6) months, and,for having stated falsehoods in the four (4) deeds of absolute sale she prepared andnotarized, in violation of the lawyer's oath and Rule 10.01 of the Code of ProfessionalResponsibility, respondent is also ordered suspended from the practice or law for a

period of another six (6) months, resulting in a total period on one year, effective fromthe date this judgment becomes final.

SUSPENSION ORDERED.

A.M. No. 632 June 27, 1940

In re Attorney MELCHOR E. RUSTE, respondent,

The respondent in his own behalf.

Office of the Solicitor-General Hilado for the Government.

LAUREL,J.:

By virtue of an administrative complaint filed by Mateo San Juan against Melchor E.Ruste on February 27, 1934, to which the respondent made answer on March 15, 1934,this Court, by resolution of December 1, 1934, referred the case to the Solicitor-General


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for report. The reference brought forth the following formal complaint filed by theSolicitor-General against the respondent on March 26, 1935:

Comes now the undersigned Solicitor-General of the Philippine Islands in theabove entitled administrative case, and pursuant to the provisions of Rule 5 of therules concerning disbarment or suspension of attorneys-at-law, to this Honorable

Supreme Court, respectively alleges:1. That in cadastral case No. 6, G. L. R. O. Record No. 483 of the Court of FirstInstance of Zamboanga, the respondent, Melchor E. Ruste, appeared for andrepresented, as counsel, Severa Ventura and her husband, Mateo San Juan, theherein complainant, who claimed lot No. 3765; and as a result of said cadastral

proceedings, an undivided eleven-twentieth (11/20) share of said lot wasadjudicated by said court to said claimants;

2. That there was no agreement the respondent and his said clients as to theamount of his fees; but that they paid to him upon demand on different occasions

the sums of (30 and P25 as attorney's fees;

3. That after said payments, the respondent again demanded of the complainantand his wife as additional fees the sum of P25, but they had no money to pay, him,and so he asked them to execute in his favor a contract of lease, and a contract ofsale, of their share in said lot No. 3764 in order that he may be able to borrow orraise said sum of P25;

4. That in accordance with said respondent's request, the complainant and his wifeexecuted on September 22, 1930, a contract of lease, whereby in consideration ofP100, they leased to him their coconut and banana plantation in said lot No. 3764for a term of five years, and also a deed of sale, whereby in consideration ofP1,000, they sold and transferred to him their undivided eleven-twentieth (11/20)share in said lot No . 3764, although, ,in fact and in truth, neither of theconsideration mentioned in said contracts of lease and sale were ever receive bythem;

5. That on March 21, 1931, the respondent executed a deed of sale, whereby inconsideration of P370 he sold and transferred to Ong Chua said undivided eleven-twentieth (11/20) share in lot No. 3764 excluding the house and its lot, occupied

by the complainant and his wife; and on March 28, 1931, the respondent executedanother deed of sale, whereby in consideration of the same amount of P370 paidto him by the same Ong Chua, he sold and transferred to the latter the sameundivided eleven-twentieth (11/20") share in lot No. 3764, but already includingsaid houses and its lot;

6. That by virtue of the sale to him, Ong Chua has taken possession of saideleven-twentieth share in lot No. 3764;

7. That notwithstanding said second deed of sale, the respondent obtained from


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Ong Chua to allow the complaint and his wife to continue living house for aperiod of two years without paying any rent;

8. That on October 10, 1933, however, the respondent notified the complainantand his wife in writing that the said house still belonged to the respondent, andrequires said spouses to pay, the sum of P40.50, representing ten months' rental in

arrears, and thereafter a monthly rental of P1.50; and9. That the respondent did not turn over to the complainant and his wife theamount of P370 paid by Ong Chua nor any part thereof.

Wherefore, the undersigned prays that disciplinary action be taken against therespondent.

To the foregoing complaint, the respondent, on April 23, 1935, interposed the followinganswer:

Comprarece el infrascrito, en su propiarepresentacion y a la Honorable Corte

Suprema, alega:Niega, general y especificamente sus alegaciones en dicha demanda, sobretodo encuanto al pago de cantidades monetarias alli especificadas, y como defensaespecial, alega:

Que el denunciante Mateo San Juan, y sus testigos Esperato Bucoy y SeveraVentura han infringido la Ley del Perjurio; ademasd el Fiscal Provincial JoseEvangelista es una parte interesada en el resultado de este asunto;

Por todo lo expuesto, al Honorable Tribunal pide:

(a) Que para la substanciacion de esta causa que actue de Fiscal, el HonorableEnrique Braganza, Fiscal de Jolo, Sulu;

(b) Que dicho Honorable Fiscal Enrique Braganza, sea requerido a investigar a lostestigos, Esperato Bucoy y Severa, Ventura, y la Ley del Perjirio tal como estaenmendada.

Sometido respetuosamente.

By resolution of this court of April 24, 1935, the said formal complaint and answer werereferred to the judge of First Instance of Zamboanga for investigation, report, and

recommendation. After various and postponements, transpiring between August 3, 1935and October 18, 1939, the Honorable Catalino Buenaventura, then presiding over theCourt of First Instance of Zamboanga, elevated the record of the case of this court. OnOctober 31, 1939, the case was included in the January, 1940 calendar, and at thehearing thereof on February 1, 1940, the respondent submitted the case without oralargument, and the memorandum presented by the Solicitor-General, recommending thedismissal of the complaint filed against respondent, was ordered attached to the record.

From a perusal of the entire record, particularly of the formal complaint filed by the


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Solicitor-General against the respondent attorney, we gather the following materialcharges formulated against the latter, to wit, (1) that he engineered the execution in hisfavor, by the spouses Mateo San Juan and Severa Ventura, of the contract of lease,Exhibit A, and of the deed of sale, Exhibit B, covering the property in question; (2) thathe did turn over the considerations therefor to the said spouses; (3) that he likewise

deeded the same property to one Ong Chua, for P370, without paying the spouses thesaid purchase price, and (4) that he required the spouses to pay (40.50 for ten months'rental in arrears, and thereafter a monthly rental of P1.50 for the house occupied by thesaid spouses.

Sometime in July, 1930, the respondent acted as counsel for the complainant and hiswife when the latter laid claim of ownership upon lot No. 3764 in case No. 6, G. L. R.O., Cadastral Record 483 of the Court of First Instance of Zamboanga, eleven-twentiethof said lot having been eventually adjudicated to the wife, Severa Ventura, on December20, 1933. On September 22, 1930, that is, during pendency of said cadastral case, thespouses purportedly leased a part of said lot to the respondent for P100, which lease wascancelled and superseded by a deed of sale executed on the same date, whereby the saidspouses, in consideration of P1,000, conveyed eleven-twentieth of the same land infavor of the respondent. This is also the finding of the Solicitor-General in his reportsubmitted in this case:

. . . convinieron cancelar el arrendamiento y otorgar en sustitucion un contrato decompraventa absoluta a favor del recurrido, como en efecto se hizo y es elExhibito B (pp. 37-38,Rollo 1), por cuyo documento Severa Ventura con elconsentimiento marital correspondiente vendio definitivamente al recurrido su

participacion pro indivisa da 11/20 partes en el rferido lote, y estando aun elmismo pendiente de vista u decision el Expediente Catastral No. 6, Record No.483, del Juzgado de Primera Instancia de Zamboanga. (Pp. 19-20.)

The property being thus in suit, which the respondent was waging on behalf of hisclients, his acquisition thereof by the deed of sale, Exhibit B, constitutes malpractice.(Hernandez vs. Villanueva, 40 Phil., 775;In re Calderon, 7 Phil. 427.) Whether the deedof sale in question was executed at the instance of the spouses driven by financialnecessity, as contended by the respondent, or at the latter's behest, as contended by thecomplainant, is of no moment. In either case as attorney occupies a vantage position to

press upon or dictate his terms to a harassed client, in breach of the "rule so amply

protective of the confidential relations, which must necessarily exist between attorneyand client, and of the rights of both." (Hernandez vs. Villanueva,supra.)

There is evidence to show that the respondent has failed to account to the aggrievedspouses for the various amounts received by him on account of the transactions effected

by him pertaining to the portion of lot No. 3764. However, as the evidence is conflictingand the statements of the parties are contradictory on this point, it is believed that thedetermination of the exact amount due them by the respondent should better elucidated


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and determined in an appropriate action which the complaint and his spouse mayinstitute against the respondent for this purpose.

For having improperly acquired the property referred to in Exhibits A and B, under theabove circumstances, which property was then subject matter of a judicial proceedings,in which he was counsel, the respondent is found guilty of malpractice and is hereby

suspended for a period of one year, reserving to the complainant and his spouse suchaction as may by proper for the recovery of such amount or amounts as may be due fromthe respondent. So ordered.

A.C. No. 724 January 31, 1969

FLORENTINO B. DEL ROSARIO, complainant,vs.EUGENIO MILLADO, respondent.

R E S O L U T I O NCONCEPCION, C.J.:

Complainant Florentino B. del Rosario seeks the disbarment of respondent,Attorney Eugenio Millado, upon the ground that the latter had committed malpractice, inviolation of Article 1491 of the Civil Code of the Philippines and Canon No. 10 of theCanons of Legal Ethics, by acquiring an interest in the land involved in a litigation inwhich he had taken part by reason of his profession; that said interest was adverse to thatof his client in the aforementioned litigation; and that he filed therein pleadingscontaining allegations which were inconsistent with those made in another pleading

subsequently filed by him in the same proceedings, as well as false.

In his answer to these charges, respondent alleged that his interest in said landhad been acquired before he intervened in said proceedings, as counsel for one of the

parties therein; that his client therein was aware of his aforementioned interest; that thereis no conflict between the same and that of his client; and that there is neither a falseallegation of facts in the pleadings alluded to in the complaint herein nor anyinconsistency between said pleadings. By way of "counterclaim," respondent alleged,also, that the present charges had been preferred as a means to offset an action fordamages and some criminal charges filed by him against complainant herein.

After due investigation conducted by the office of the Solicitor General, to whomsaid charges were referred therefor, the aforementioned officer submitted his reportexonerating, in effect, respondent herein.

Indeed, the provisions of the Civil Code and of the Canons of Legal Ethics,prohibit the purchase by lawyers of any interest in the subject matter of the litigation inwhich they participated by reason of their profession, and complainant herein has notestablished a violation of such injunction. In this connection, respondent introduced


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evidence, which is uncontradicted, to the effect that one Eladio Tiburcio, now deceased,claimed title to a tract of land of about 430 hectares, in Diliman, Quezon City; that partsof said land were the object of two (2) ejectment cases of the City Court of Quezon City,against La Paz Mesina Vda. de Pascual, one of the heirs of said deceased, one filed byherein complainant, Florentino B. del Rosario, and the other by Leonor Sta. Clara; that

prior to the institution of said cases, one Conrado Baluyot, who claims to be another heirof Eladio Tiburcio, offered to allow respondent to construct a house on part of said landof about 430 hectares, in consideration of his professional services in defense of theclaim thereto of the Tiburcios; that Baluyot's understanding with respondent was that,should he succeed in securing a decision favorable to the Tiburcios, he (respondent)could buy the land on which his house was built, namely, lots 4 and 5 of Block E-102 ofQuezon City, by paying the current value thereof; that Mrs. Pascual, who occupiedanother lot in the same block, knew that respondent was in possession of said lots 4 and5 and had constructed a house thereon, by agreement with Baluyot, as one of the heirs ofthe deceased; that Mrs. Pascual, who claimed an interest in the whole Block E-102,

asked respondent to be her counsel in said ejectment cases; that, after filing the answerof Mrs. Pascual, as defendant in said two (2) cases, respondent ceased to be her counseltherein; and that, although in her aforementioned answer, he alleged that Mrs. Pascualwas the owner and possessor of the lots involved in said cases, there is no realinconsistency between this allegation and his claim over said lots 4 and 5, much less amisrepresentation of facts, because the issue in the ejectment cases hinged upon the rightof possession whereas the alleged ownership of Mrs. Pascual merely tended to bolster upher alleged prior possession, and because he could not acquire title to said lots 4 and 5from the heirs of the late Eladio Tiburcio, unless they and, hence, Mrs. Pascual, as

one of the heirs of the deceased were the true owners thereof.1awphil.tThus, the records show that respondent's alleged interest in said lots was

acquired before he intervened as counsel for Mrs. Pascual in the ejectment cases againsther and that said interest is not necessarily inconsistent with that of his aforementionedclient, aside from the fact that he had made no substantial misrepresentation in the

pleadings filed by him in said cases. This fact and the absence of said conflict are mademore manifest by the circumstance that the charges under consideration have been

preferred, not by Mrs. Pascual, but by her opponent in one of the ejectment cases abovementioned.1awphil.t

Finding no merit in the complaint herein, the same is, accordingly, dismissed. Itis so ordered.

G.R. No. L-26882 April 5, 1978

ROSARIO VDA. DE LAIG, ROMEO, JOSE, NESTOR and BENITO, JR., all

surnamed LAIG, minors, assisted by Rosario Vda. de Laig, Their GuardianAd

Litem,petitioners,


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vs.COURT OF APPEALS, CARMEN VERZO, PETRE GALERO, THE REGISTER

OF DEEDS OF CAMARINES NORTE, THE DIRECTOR OF LANDS, AND THE

SECRETARY OF AGRICULTURE AND NATURAL RESOURCES, respondents.

Gelasio L. Dimaano for petitioners.

Pedro A. Venida for private respondents.

Office of the Solicitor General for respondents The Director of Lands, etc., et al.

MAKASIAR,J.:

Appeal by certiorari from the decision of respondent Court of Appeals which affirmedthe judgment of the Court of First Instance of Camarines Norte in Civil Case No. 577entitled "Rosario Vda. de Laig, et al. vs. Carmen Verzo, et al.," dismissing herein

petitioners' complaint for the reconveyance of a parcel of land with damages, and

declaring herein respondent Carmen Verzo as the lawful owner of the land in issue.

It appears that on March 27, 1939, one Petre Galero obtained rained from the Bureau ofLands Homestead Patent No. 53-176 covering 219,949 square meters of land located atBarrio Pinagtambangan, Labo, Camarines Norte, for which Original Certificate of Title

No. 1097 was issued in Galero's name.

On June 25, 1940, Galero sold the land to a certain Mario Escuta for P300.00. Escuta inturn, sold the same land to Florencio Caramoan in December, 1942, Later, however,Petre Galero, through proper court action, and with Atty. Benito K. Laig the deceased

husband of herein petitioner Rosario Vda. de Laig as counsel recovered the land, thecourt having been convinced that its alienation violated Section 118 of the Public LandAct, which reads:

No alienation, transfer, or conveyance of any homestead after five years andbefore twenty-five years after issuance of title shall be valid without theapproval of the Secretary of Agriculture and Commerce, which approvalshall not be denied except on constitutional and legal grounds (Sec. 118, CA

No. 141, as amended by CA No. 456).

On June 1, 1948, a deed of sale was executed by and between Petre Galero as vendor

and Atty. Benito K. Laig as vendee, whereby the former sold to the latter the land inquestion with its improvements, for P1,500.00 plus attorney's fees due Atty. Laig for hislegal services as counsel for Galero in the successful reconveyance case (p. 87, rec.;People vs. Petre Galero, CA-G.R. No. 12043-R). This deed of sale was executed in thehouse of Carmen Verzo and witnessed by one Claudio Muratalla and Rosario VerzoVillarente (p. 87, back, rec., People vs. Petre Galero,supra), sister of herein respondentCarmen Verzo, who was living with her in the same house at that time.

Original Certificate of Title No. 1097 was delivered by Galero to Atty. Laig (Exh. J and


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Annex B, p. 6, CA Brief for Petitioners, p. 137, back, rec.).

Unfortunately, vendee Atty. Benito K. Laig failed to solicit the approval of the Secretaryof Agriculture and Natural Resources (then Secretary of Agriculture and Commerce), asrequired by Section 118 of the Public Land Act, as amended. It was only after Atty.Laig's death in 1951 that his wife, herein petitioner Rosario, noticed the deficiency.

On November 5, 1951, herein petitioner Vda. de Laig wrote the then Register of Deedsof Camarines Norte, respondent Baldomero M. Lapak, stating that the disputed parcel ofland covered by original Certificate of Title No. 1097 in the same of Petre Galero, had

been sold to her late husband, requesting that she be informed of any claim of ownershipby other parties so that she could take the necessary steps, and serving notice of herclaim over the said property as surviving spouse of the late Atty. Laig and as naturalguardian of their children.

On November 12, 1951, Register of Deeds Lapak replied that Original Certificate ofTitle No. 1097 was still intact and took note of her letter.

On March 29, 1952, petitioner Vda. de Laig filed with the Bureau of Lands an affidavittogether with copy of the deed of sale in her husband's favor. Said affidavit stated thatshe wanted to have the ownership over the land transferred to her husband's name.

On August 14, 1952, the Bureau of Lands forwarded the said affidavit of Vda. de Laig,together with the deed of sale, to the Office of the Secretary of Agriculture and NaturalResources with a recommendation that the said deed of sale be approved as the samedoes not violate any pertinent provisions of the Public Land Act or the correspondingrules and regulations thereunder promulgated. On the same day, the Office of theSecretary of Agriculture and Natural Resources, thru then Undersecretary Jose S.Camus, approved the deed of sale. And also on the same day, the Office of the Directorof Lands, thru Vicente Tordesillas, Chief of the Publication Lands Division, addressed aletter to Atty. Benito Laig informing him of the approval of the deed of sale executed byand between him and Petre Galero.

Meanwhile, however, onJuly 15, 1952, Petre Galero, with the assistance of Atty. Jose L.Lapak, son of respondent Register of Deeds Baldomero M. Lapak sought in court theissuance of a second owner's duplicate copy of OCT No. 1097, claiming that his firstduplicate of said OCT was lost during World War 11.

On July 19, 1952 or in a span of only four days - a second owner's duplicate copy ofOCT No. 1097 was issued by respondent Register of Deeds Baldomero M. Lapak infavor of Petre Galero. And right on that same day, Galero executed in favor ofrespondent Carmen Verzo a deed of sale of the land in issue for the sum of P600.00. Itwas claimed that previously, the additional consideration of P500.00 in Japanese warnotes was received by Galero from Carmen Verzo, although this amount, or anything tothat effect, was not mentioned in the deed of sale executed by and between them.

Upon being informed that the sale necessitates the approval of the Secretary of


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Agriculture and Natural Resources before it could be registered in the Register of Deeds,herein respondent Carmen Verzo, onJuly 30, 1952, addressed a letter to the Secretary ofAgriculture and Natural Resources, through the Director of Lands, seeking the former'srequired approval Enclosed in the letter was a copy of the deed of sale in Verzo's favor,and an affidavit that the land in point was sold to Verzo by homestead grantee Petre

Galero.OnAugust 30, 1952, Assistant Director of Lands Zoilo Castrillo forwarded Verzo's

papers to the Secretary of Agriculture and Natural Resources and recommended that thesale, not being violative of the pertinent provisions of the Public Land Act nor the rulesand regulations promulgated thereunder, be approved.

On September 12, 1952, Acting Secretary of Agriculture Jose S. Camus approved thesale in favor of Carmen Verzo.

On September 27, 1952, the office of the Director of Lands notified Carmen Verzo ofsuch approval. Whereupon, on October 13, 1952, Verzo declared the land in her name

for taxation purposes, and since then, had been paying the realty taxes thereon.

On October 14, 1952, the deed of sale in Verzo's favor was registered, and TransferCertificate of Title No. T-1055, in lieu of OCT No. 1097, which was cancelled, wasissued in her name.

On January 26, 1953, petitioner Vda. de Laig, thru counsel, her brother Atty. Dimaano,inquired from the Register of Deeds of Camarines Norte if it was true that OCT No.1097 in favor of Galero had already been cancelled and a transfer certificate of title had

been issued in favor of another person. Respondent Register of Deeds Lapak replied inthe affirmative.

In no time at all, petitioners called the attention of the Director of Lands to the existenceof two deeds of sale, one in favor of Atty. Benito Laig, and another in favor of CarmenVerzo.

On February 25, 1953, the Director of Lands requested Petre Galero to explain within 30days such double sale, and ordered the Provincial Land Officer in Daet, Camarines

Norte to investigate the matter and immediately submit findings thereon.

On March 12, 1953, in reply to the Director of Land's request, Petre Galero deniedhaving sold the land in issue to Atty. Benito K. Laig.

On March 15, 1953, the Bureau of Lands in Camarines Norte reported to the Director ofLands that second vendee Carmen Verzo had already successfully obtained a transfercertificate of title over the land in question, with the recommendation that the heirs ofthe first vendee, Benito K. Laig, seek their remedy in court as the status of the propertyat that stage does not anymore fall within the jurisdiction of the Bureau of Lands.

Petre Galero was charged in Criminal Case No. 533 before the Court of First Ins

Documents

Ethics Cases Report