[G.R. No. 112954. August 25, 2000] Meanwhile, Justo Abiertas, Jr.
Meanwhile, Justo Abiertas, Jr., the brother of Iluminada Abiertas, died leaving
RICARDO DISTAJO, ERNESTO DISTAJO, RAUL DISTAJO, FEDERICO DISTAJO,
ZACARIAS A. DISTAJO, EDUARDO DISTAJO, and PILAR DISTAJO TAPAR, petitioners,
vs. COURT OF APPEALS and LAGRIMAS SORIANO DISTAJO, respondents.
PARDO, J.:
The case under consideration is a petition for review on certiorari of a decision of
the Court of Appeals[1], which modified the ruling of the Regional Trial Court, Roxas
City regarding seven parcels of land located in Barangay Hipona, Pontevedra, Capiz.
[2]
During the lifetime of Iluminada Abiertas, she designated one of her sons, Rufo
Distajo, to be the administrator of her parcels of land denoted as Lot Nos. 1018,
1046, 1047, and 1057 situated in Barangay Hipona, Pontevedra, Capiz.
On May 21, 1954, Iluminada Abiertas sold a portion of Lot No. 1018 (1018-A) to her
other children, namely, Raul Distajo, Ricardo Distajo, Ernesto Distajo, Federico
Distajo, and Eduardo Distajo.[3]
On May 29, 1963, Iluminada Abiertas certified to the sale of Lot Nos. 1046 and 1047
in favor of Rufo Distajo.[4]
On June 4, 1969, Iluminada Abiertas sold Lot No. 1057 to Rhodora Distajo, the
daughter of Rufo Distajo.[5]
On July 12, 1969, Iluminada Abiertas sold Lot No. 1018 to Rufo Distajo. [6]
behind his children, Teresita, Alicia, Josefa and Luis Abiertas. Teresita paid for the
real estate taxes of the following properties, which she inherited from her father:
Lot Nos. 1001, 1048, 1049, and a portion of Lot No. 1047, all located in Capiz. On
May 26, 1954, Teresita Abiertas sold Lot No. 1001 in favor of Rufo Distajo. [7] On June
2, 1965, Teresita Abiertas, for herself and representing her sisters and brother, sold
Lot Nos. 1048, 1049, and a portion of Lot No. 1047 to Rufo Distajo. [8]
After purchasing the above-mentioned parcels of land, Rufo Distajo took possession
of the property and paid the corresponding real estate taxes thereon. Rhodora
Distajo likewise paid for the real estate taxes of Lot No. 1057.
When Iluminada Abiertas died in 1971, Zacarias Distajo, Pilar Distajo-Tapar, and
Rizaldo Distajo,[9] demanded possession of the seven parcels of land from Lagrimas
S. Distajo, and her husband, Rufo Distajo. The latter refused.
Consequently, on June 5, 1986, Ricardo Distajo, with the other heirs of Iluminada
Abiertas, namely, Ernesto Distajo, Raul Distajo, Federico Distajo, Zacarias Distajo,
Eduardo Distajo, and Pilar Distajo, filed with the Regional Trial Court, Roxas City a
complaint for recovery of possession and ownership of Lot No. 1018, partition of Lot
Nos. 1001, 1018-B, 1046, 1047, 1048, 1049, 1057, and damages.
On September 4, 1986, private respondent Lagrimas Distajo [10] filed an answer with
counterclaim.
On April 9, 1990, the trial court dismissed the complaint for lack of cause of action,
laches and prescription. The counterclaim was likewise dismissed. The parties
appealed to the Court of Appeals.[11]
On August 21, 1992, the Court of Appeals rendered its decision, [12] the dispositive
portion of which states as follows:
PREMISES CONSIDERED, the decision appealed from is hereby SET ASIDE and a new
judgment rendered, as follows:
WHEREFORE, the Court decides the case in favor of the defendant and dismisses the
plaintiffs complaint for lack of cause of action except with regard to the plaintiffs
claim over a 238 sq. m. portion of Lot No. 1018 (the portion adjoining the market
site and measuring seventeen meters and that adjoining the property of E.
Rodriguez measuring 14 meters). The Court hereby Orders the partition of Lot No.
1018 to conform to the following: 238 sq. m. as above specified to belong to the
plaintiffs as prayed for by them while the rest is declared property of the defendant.
Upon partition of Lot No. 1018 in accordance with this Courts Order, the City
Assessor of Roxas City is hereby Ordered to cancel Tax Declaration 2813 in the name
of Rufo Distajo (or any subsequent tax declaration/s issued relative to the above-
cited Tax Declaration No. 2813) and forthwith to issue the corresponding tax
declarations in the names of the respective parties herein.
SO ORDERED.
On September 10, 1992, Ricardo Distajo filed a motion for reconsideration. [13] On
December 9, 1993, the Court of Appeals denied the motion. [14]
Hence, this petition.[15]
Petitioner alleges that Iluminada Abiertas exclusively owns the seven parcels of land
delineated as Lot Nos. 1001, 1018, 1046, 1047, 1048, 1049, and 1057, all of which
should be partitioned among all her heirs. Furthermore, Rufo Distajo cannot acquire
the subject parcels of land owned by Iluminada Abiertas because the Civil Code
prohibits the administrator from acquiring properties under his administration.
[16]
Rufo Distajo merely employed fraudulent machinations in order to obtain the
consent of his mother to the sale, and may have even forged her signature on the
deeds of sale of the parcels of land.
In her comment dated May 13, 1994, private respondent Lagrimas S. Distajo
contends that Rufo Distajo rightfully owns the subject parcels of land because of
various deeds of sale executed by Iluminada Abiertas selling Lot Nos. 1018-B, 1047
and 1046 in favor of Rufo Distajo and Lot No. 1057 in favor of Rhodora
Distajo. Private respondent also avers that petitioner cannot claim any right over Lot
Nos. 1001, 1048 and 1049, considering that such lands belong to the brother of
Iluminada Abiertas, namely, Justo Abiertas, Jr., whose heirs sold said parcels of land
to Rufo Distajo.
The petition lacks merit.
Factual findings of the trial court will not be disturbed on appeal unless the court
has overlooked or ignored some fact or circumstance of sufficient weight or
significance, which, if considered, would alter the result of the case. [17] When there
is no conflict between the findings of the trial and appellate courts, a review of the
facts found by the appellate court is unnecessary.[18]
Since the trial court and the Court of Appeals agree that Iluminada Abiertas owned
Lot Nos. 1046, 1057 and a portion of Lot No. 1047, and that Justo Abiertas Jr. owned
Lot Nos. 1001, 1048, and 1049, such findings are binding on this Court, which is not
a trier of facts.[19] However, the record shows that Lot No. 1018 should be divided
into Lot No. 1018-A and 1018-B, the delineation of which the Court of Appeals
clarified in its decision.
The issues in this case, therefore, are limited to those properties which were owned
by Iluminada Abiertas, ascendant of petitioner, consisting of Lot Nos. 1018-A, 1046,
1057, and a portion of 1047.
In his petition, Ricardo Distajo assails the genuineness of the signatures of Iluminada
Abiertas in the deeds of sale of the parcels of land, and claims that Rufo Distajo
forged the signature of Iluminada Abiertas. However, no handwriting expert was
presented to corroborate the claim of forgery. Petitioner even failed to present a
witness who was familiar with the signature of Iluminada Abiertas. Forgery should
be proved by clear and convincing evidence, and whoever alleges it has the burden
of proving the same.[20]
Petitioner likewise contends that the sale transactions are void for having been
entered into by the administrator of the properties. We disagree. The pertinent Civil
Code provision provides:
Art. 1491. The following persons cannot acquire by purchase, even at a public or
judicial auction, either in person or through the mediation of another:
(1) The guardian, the property of the person or persons who may be under
guardianship;

(2) Agents, the property whose administration or sale may have been entrusted to
them, unless the consent of the principal has been given;

(3) Executors and administrators, the property of the estate under administration; x
xx

Under paragraph (2) of the above article, the prohibition against agents purchasing
property in their hands for sale or management is not absolute. It does not apply if
the principal consents to the sale of the property in the hands of the agent or
administrator. In this case, the deeds of sale signed by Iluminada Abiertas shows
that she gave consent to the sale of the properties in favor of her son, Rufo, who
was the administrator of the properties. Thus, the consent of the principal
Iluminada Abiertas removes the transaction out of the prohibition contained in
Article 1491(2).

Petitioner also alleges that Rufo Distajo employed fraudulent machinations to

obtain the consent of Iluminada Abiertas to the sale of the parcels of land. However,
petitioner failed to adduce convincing evidence to substantiate his allegations.

In the absence of any showing of lack of basis for the conclusions made by the Court
of Appeals, this Court finds no cogent reason to reverse the ruling of the appellate
court.

WHEREFORE, the Court DENIES the petition and AFFIRMS the decision of the Court
of Appeals in CA-G.R. CV No. 30063.

SO ORDERED.
G.R. No. L-65594 July 9, 1986
MAHARLIKA PUBLISHING CORPORATION, ANGELA CALICA, ADOLFO CALICA and
the HEIRS OF THE LATE PIO CALICA, petitioners, vs. SPOUSES LUZ R. TAGLE and
EDILBERTO TAGLE and the GOVERNMENT SERVICE INSURANCE SYSTEM and the
HONORABLE INTERMEDIATE APPELLATE COURT, respondents
GUTIERREZ, JR., J.:
The Government Service Insurance System (GSIS) was the registered owner of a
parcel of land consisting of 1,373 square meters situated in the district of Paco and
covered by Transfer Certificate of Title No. 5986 of the Registry of Deeds of Manila.
On June 4, 1963, the GSIS entered into a conditional contract to sell the parcel of
land to petitioner Maharlika Publishing Corporation (Maharlika for short) together
with the building thereon as well as the printing machinery and equipment therein.
Among the conditions of the sale are that the petitioner shall pay to the GSIS
monthly installments of P969.94 until the total purchase price shall have been fully
paid and that upon the failure of petitioner to pay any monthly installment within
ninety (90) days from due date, the contract shall be deemed automatically
cancelled.
After Maharlika failed to pay the installments for several months, the GSIS, on June
7, 1966, notified Maharlika in writing of its arrearages and warned Maharlika that
the conditions of the contract would be enforced should Maharlika fail to settle its
account within fifteen (15) days from notice. Because of Maharlika's failure to settle
the unpaid accounts, the GSIS notified Maharlika in writing on June 26, 1967 that
the conditional contract of sale was annulled and cancelled and required Maharlika
to sign a lease contract. Maharlika refused to vacate the premises and to sign the
lease contract.
Sometime later, the GSIS published an invitation to bid several acquired properties,
among which was the property in question, to be held at the Office of the General
Manager, second floor, GSIS Building, Arroceros Street, Manila, from 9:00 a.m. to
3:00 p.m. on February 12, 1971.
Meanwhile, on February 11, 1971, or one day before the scheduled public bidding,
Maharlika represented by its president Adolfo Calica addressed to GSIS a letter-
proposal to repurchase their foreclosed properties proposing that they be allowed
to pay P11,000.00 representing ten percent (10%) of their total account; that they
be allowed to pay P18,300.00 as balance to complete the twenty-five percent (25%)
of their total arrearages( P117,175.00) not later than February 28, 1971 and the
remaining seventy-five percent (75%) to be paid in twenty four (24) months.
This letter-proposal was discussed by Adolfo Calica with GSIS Board Vice-Chairman
Leonilo Ocampo, who wrote a note to the General Manager Roman Cruz, Jr., the last
paragraph of which reads as follows:
It sounds fair and reasonable subject to your wise judgment, as usual. (Exhibit 4,
Maharlika)
Said letter-proposal and Ocampo's note were taken by Calica to General Manager
Cruz, Jr., who, in turn, wrote on the face of Exhibit 4-Maharlika a note to one Mr.
Ibaez which reads: "Hold Bidding. Discuss with me." The letter-proposal together
with two (2) checks amounting to P11,000.00 were submitted to the office of
General Manager Cruz, Jr. and were received by his Secretary.
On February 12, 1971, however, the public bidding of this particular property was
held as scheduled prompting Adolfo Calica to submit his bid to the Bidding
Committee with a deposit of P11,000.00 represented by the same two checks
submitted to General Manager Cruz, Jr., together with his letter-proposal. His bid
proposal reads: "I bid to match the highest bidder."
The bidding committee rejected Maharlika's bid as an imperfect bid and
recommended acceptance of private respondent Luz Tagle's bid of P130,000.00 with
a ten percent (10%) deposit of P13,000.00.
On February 19, 1971, the GSIS addressed a letter to Adolfo Calica informing him of
the non-acceptance of his bid and returning his two checks.
After approval and confirmation of the sale of the subject property to Luz Tagle on
April 20, 1971, the GSIS executed a Deed of Conditional Sale in favor of the Tagles
on June 8, 1971.
Due to the refusal of petitioners to surrender the possession of the property in
question, respondent spouses Luz R. Tagle and Edilberto Tagle filed a case for
Recovery of Possession with Damages with the Court of First Instance of Manila
which rendered the following decision on May 15, 1974:"
IN VIEW OF THE FOREGOING CONSIDERATIONS, the Court hereby renders
judgment:
(a) declaring the letter-proposal (Exh.. 3-Maharlika) ineffective and without any
binding effect, being imperfect to create any contractual relation between GSIS and
defendants Maharlika and Adolfo Calica;
(b) declaring plaintiffs and (sic) entitled to the possession of the properties in
question and directing, therefore, defendants Maharlika and Adolfo Calica, or any
person or persons holding or possessing the properties in their behalf, to forthwith
vacate the properties in question and to surrender the same to the plaintiffs;"
(c) dismissing the complaint as against defendants 'Heirs of the deceased Pio Calica'
(except Angela Calica) it appearing that they were not properly summoned and
represented in the instant suit:"
(d) directing the defendants Maharlika, Adolfo Calica and Angela Calica, to pay
jointly and severally the plaintiffs a monthly rental of the properties in question in
the sum of P976.00 a month commencing 12 February 1971, until the said
properties are vacated by said defendants, with legal interest of all sums due from
12 Feb. 1971 up to the rendition of this judgment in this instant suit, such interest to
commence from the filing of the complaint until the same is fully paid; and that
such monthly rentals commencing from the date of this judgment, shall also earn
interest at the legal rate unless paid within the first ten days of the current month
for the rental of the preceding month;"
(e) dismissing the counterclaim of defendants Maharlika and the Calicas against
plaintiffs;
(f) dismissing the cross-claim of defendants Maharlika and the Calicos against
defendant GSIS;"
(g) dismissing all other claims which the parties may have against each other; and
(h) directing defendants Maharlika, Adolfo Calica and Angela Calica to pay the costs
of this suit.
After a motion to set aside judgment and grant a new trial was denied by the trial
court for lack of merit, the case was brought on appeal to the former Court of
Appeals on April 8, 1976. On March 2, 1983, the Intermediate Appellate Court
affirmed the decision of the trial court, stating as follows:
xxx xxx xxx
The mere offer to repurchase of the subject property and the deposit of the amount
of P11,000.00 by the defendants on February 11, 1971, does not have the effect of
reviving the conditional deed of sale (Exhibit 4-GSIS, Ibid, p. 29) executed by the
GSIS and the defendants. To revive the said contract, and for the defendants to be
deemed to have repurchased the subject property, there should have been payment
in favor of the GSIS of all the installments due and interests thereon in the total
amount of P117,175.00 as of February 11, 1971
But the defendants insist that the notations of Leonilo M. Ocampo, Vice-Chairman
of the GSIS Board of Trustees, to GSIS General Manager Roman Cruz, Jr. (Exhibits 4-A
and 4-B Maharlika, Ibid, p. 76) as well as the notation of GSIS General Manager
Roman Cruz, Jr.' to hold bidding. Discuss with me' (Exhibit 4-C Maharlika, Ibid, p. 76)
means that the GSIS had accepted defendants' offer and had revived the conditional
contract of sale dated June 4, 1963.
This interpretation is far-fetched. The notations referred to by the defendants do not
show acceptance of defendants' offer to repurchase the subject property. In fact,
the defendants themselves were aware that their offer was not accepted at all
because they submitted to and participated in the bidding of the subject property
on February 12,1971 (Exhibits K, K-1, 6, 6-A, Ibid, pp. 16-34), using its letter-
proposal as deposit for its bid. But defendants' bid was rejected because it was
imperfect and not accompanied with a deposit of 10% of the highest bid (Exhibits B-
1, 7 GSIS, 7-A Maharlika, Ibid, pp. 5, 35), and that defendants' bid did not contain a
specific bid price proposal (Exhibit 7 GSIS, Ibid, p. 35).
The consequent auction sale of the property on February 12, 1971 and execution of
the conditional deed of sale in favor of the plaintiffs (Exhibit A, Ibid, p. 1) is valid.
The plaintiffs are entitled to the possession of the subject property.
xxx xxx xxx
A motion for reconsideration and/or new trial was filed by petitioners. The motion
was denied by the respondent Appellate Court.
Hence, this petition for review on certiorari filed on December 16,1983.
On January 9, 1984, we resolved to deny in a minute resolution, the petition for lack
of merit. A timely motion for reconsideration was filed by the petitioners which
contained the following reasons to warrant review of the case:
It is apparent that petitioners will suffer serious injustice, consisting in the loss of
the subject property, by reason of the failure of respondent Court to decide
questions of substance involved herein in a way not in accord with law and the
applicable decisions of this Honorable Court, such questions being the following:
(1) Whether or not respondent Edilberto Tagle's being a GSIS officer at the time of
the sale by the GSIS of the subject property to his wife should be allowed to be
introduced as newly discovered evidence or at any rate received in the interest of
justice;"
(2) Whether or not respondent Court acted with grave abuse of discretion in
ignoring the irregular appearance of respondent Luz Tagle's bid and the inference of
fraud flowing therefrom in the context of surrounding circumstances;
(3) Whether or not the auction sale in question is void for having been conducted
despite the directive of the GSIS General Manager to suspend the same in virtue of
petitioners' offer to repurchase the subject property and their payment of
P11,000.00 in checks as earnest money which he accepted.
Significantly, on September 21, 1984, the GSIS filed a Supplemental Memorandum
submitting for resolution of this Court the matter of whether the respondent
spouses Luz and Edilberto Tagle can still enforce their claim as winning bidders
considering the fact that they have so far made only two payments to the GSIS
amounting to P32,500.00 in violation of the terms and conditions of the conditional
sale executed in their favor and which provides for its automatic cancellation in such
case, or whether the petitioners can still repurchase the property in question as
original owners thereof.
We find the petitioners' motion for reconsideration impressed with merit.
The certification secured by the petitioners from GSIS on April 28, 1983 shows that
Edilberto Tagle was Chief, Retirement Division, GSIS, from 1970 to 1978. He worked
for the GSIS since 1952. Strictly speaking, the evidence of Mr. Tagle's being a GSIS
official when his wife bid for the disputed property is not newly discovered
evidence. However, we cannot simply ignore the fact that on February 12, 1971
when Adolfo Calica was desperately trying to retrieve the property foreclosed
against him, after receiving assurances from the highest GSIS officials that his letter-
proposal would be accepted and after the sale at public auction of the property was,
in fact, ordered to be stopped, the wife of a GSIS official would be allowed to bid for
that property and would actually win in the bidding.
As stated by the petitioners, this important factor implicit in good government,
should have been considered in the interest of justice. It was incumbent under the
law for GSIS to have rejected the bid of the wife of a GSIS official and to have
refused to enter into the deed of conditional sale with the respondents Tagle.
The petitioners bank on the allegation that the indirect participation of Edilberto
Tagle in the public bidding creates a "conflict of interests situation" which
invalidates the aforesaid transaction under the precept laid down in Article 1409
paragraph (1) of the Civil Code making his participation void for being contrary to
morals, good customs, and public policy.
The Supreme Court has ample authority to go beyond the pleadings when in the
interest of justice and the promotion of public policy there is a need to make its own
finding to support its conclusions. In this particular case, there is absolutely no
doubt that Mr. Edilberto Tagle was a GSIS Division Chief when his wife bid for the
property being sold by GSIS. The only issue is whether or not to consider this fact
because it surfaced only after trial proper.
We declare it to be a policy of the law that public officers who hold positions of trust
may not bid directly or indirectly to acquire prop properties foreclosed by their
offices and sold at public auction.
Article XIII, Section 1 of our Constitution states that:
Public office is a public trust. Public officers and employees shall serve with the
highest degree of responsibility, integrity, loyalty and efficiency, and shall remain
accountable to the people.
We stated in Ancheta vs. Hilario (96 SCRA 62);
xxx xxx xxx
...A public servant must exhibit at all times the highest sense of honesty and
integrity. ...
Under Article 1491 of the Civil Code the following persons cannot acquire by
purchase, even at a public or judicial auction, either in person or through the
mediation of another:
(1) The guardian, the property of the person or persons who may be under his
guardianship;
(2) Agents, the property whose administration or sale may have been intrusted to
them, unless the consent of the principal has been given;
(3) Executors and administrators, the property of the estate under administration;
(4) Public officers and employees, the property of the State or of any subdivisions
thereof, or of any government owned or controlled corporation, or institution, the
administration of which has been intrusted to them; this provision shall apply to
judges and government experts who, in any manner whatsoever, take part in the
sale;
(5) Justices, judges, prosecuting attorneys, clerk of superior and inferior courts, and
other officers and employees connected with the administration of justice, the
property and rights in litigation or levied upon an execution before the court within
whose jurisdiction or territory they exercise their respective functions; this
prohibition includes the act of acquiring by assignment and shall apply to lawyers,
with respect to the property and rights which may be the object of any litigation in
which they may take part by virtue of their profession;
(6) Any others specially disqualified by law.
In so providing, the Code tends to prevent fraud, or more precisely, tends not to give
occasion for fraud, which is what can and must be done (Francisco, Sales, p. 111).
We, therefore, reject the contention of respondents that the fact that Edilberto
Tagle was, at the time of the public bidding, a GSIS official, will not alter or change
the outcome of the case.
A Division Chief of the GSIS is not an ordinary employee without influence or
authority. The mere fact that he exercises ample authority with respect to a
particular activity, i.e., retirement, shows that his influence cannot be lightly
regarded.
The point is that he is a public officer and his wife acts for and in his name in any
transaction with the GSIS. If he is allowed to participate in the public bidding of
properties foreclosed or confiscated by the GSIS, there will always be the suspicion
among other bidders and the general public that the insider official had access to
information and connections with his fellow GSIS officials as to allow him to
eventually acquire the property. It is precisely the need to forestall such suspicions
and to restore confidence in the public service that the Civil Code now declares such
transactions to be void from the beginning and not merely voidable (Rubias vs.
Batiller, 51 SCRA 120). The reasons are grounded on public order and public policy.
We do not comment on the motives of the private respondents or the officers
supervising the bidding when they entered into the contract of sale. Suffice it to say
that it fags under the prohibited transactions under Article 1491 of the Civil Code
and, therefore, void under Article 1409.
In the case of Garciano vs. Oyao (102 SCRA 195), this Court held:
xxx xxx xxx
...We need not exaggerate the importance of being absolutely free from any
suspicion which may unnecessarily erode the faith and confidence of the People in
their government. As the Constitution categorically declared: 'Public office is a
public trust. Public officers and employees shall serve with the highest degree of
responsibility, integrity, loyalty and efficiency, and shall remain accountable to the
people' (Art. XIII, Sec. 1, Constitution).
xxx xxx xxx
Respondent Wilfredo Oyao, should avoid so far as reasonably possible a situation
which would normally tend to arouse any reasonable suspicion that he is utilizing
his official position for personal gain or advantage to the prejudice of party litigants
or the public in general. In the language of then Justice, now Chief Justice Enrique
M. Fernando in the case of Pineda vs. Claudio (28 SCRA 34, 54): 'There may be
occasion then where the needs of the collectivity that is the government may collide
with his private interest as an individual.
In Mclain vs. Miller County (23 SW 2d. 2-4; 255) the Court ruled that:
As the efficiency of the public service is a matter of vital concern to the public, it is
not surprising that agreements tending to injure such service should be regarded as
being contrary to public policy. It is not necessary that actual fraud should be
shown, for a contract which tends to the injury of the public service is void,
although the parties entered into it honestly, and proceeded under it in good faith.
The courts do not inquire into the motives of the parties in the particular case to
ascertain whether they were corrupt or not, but stop when it is ascertained that the
contract is one which is opposed to public policy. Nor is it necessary to show that
any evil was in fact, done by or through the contract. The purpose of the rule is to
prevent persons from assuming a position where selfish motives may impel them to
sacrifice the public good to private benefit.
There is no need, therefore, to pass upon the issue of irregularity in the appearance
of the private respondents' bid and the alleged inference of fraud flowing
therefrom.
We reiterate that assuming the transaction to be fair and not tainted with
irregularity, it is still looked upon with disfavor because it places the officer in a
position which might become antagonistic to his public duty.
There are other grounds which contain us to grant this petition.
We now come to the issue whether or not there was a repurchase of the property in
question from the GSIS effected by the petitioners the day before the public bidding.
In Article 1475 of the Civil Code, we find that "the contract of sale is perfected at the
moment there is a meeting of minds upon the thing which is the object of the
contract and upon the price. From that moment, the parties may reciprocally
demand performance, subject to the law governing the form of contracts. "
This Court in the case of Central Bank of the Philippines vs. Court of Appeals (63
SCRA 431) ruled on the perfection of government contracts in the following manner:
We are not persuaded that petitioner's posture conforms with law and equity.
According to Paragraph IB 114.1 of the Instructions to Bidders, Ablaza was 'required
to appear in the office of the Owner (the Bank) in person, or, if a firm or
corporation, a duly authorized representative (thereof )and to execute the contract
within five (5) days after notice that the contract has been awarded to him. Failure
or neglect to do so shall constitute a breach of agreement effected by the
acceptance of the Proposal. There can be no other meaning of this provision than
that the Bank's acceptance of the bid of respondent Ablaza effected an actionable
agreement between them. We cannot read it in the unilateral sense suggested by
petitioner that it bound only the contractor, without any corresponding
responsibility or obligation at all on the part of the Bank. An agreement
presupposed a meeting of minds and when that point is reached in the negotiations
between two parties intending to enter into a contract, the purported contract is
deemed perfected and none of them may thereafter disengage himself therefrom
without being liable to the other in an action for specific performance. "
In American Jurisprudence, 2d., Section 73 (pp. 186-187), we read:
The principle is fundamental that a party cannot be held to have contracted if there
was no assent, and this is so both as to express contracts and contracts implied in
fact. There must be mutual assent or a meeting of minds in all essential elements or
terms in order to form a binding contract. However, ordinarily no more is meant by
this than an expression or manifestation of mutual assent, as an objective thing, is
necessary, and that is generally deemed sufficient in the formation of a contract ...
In other words, appropriate conduct by the parties may be sufficient to establish an
agreement, and there may be instances where interchanged correspondence does
not disclose the exact point at which the deal was closed, but the actions of the
parties may indicate that a binding obligation has been undertaken.
It is undisputed that when the letter-proposal of petitioners was presented to GSIS
General Manager Roman Cruz, Jr., he wrote on the face of such letter the words
"Hold Bidding. Discuss with me." These instructions were addressed to one Mr.
Ibaez who was in-charge of public bidding. Thereafter, a deposit of P11,000.00 in
checks was accepted by the Secretary of Mr. Roman Cruz, Jr. In the light of these
circumstances an inference may be made that General Manager Cruz, Jr. had already
accepted the petitioners' offer of repurchase or at the very least had led them to
understand that he had arrived at a decision to accept it.
It should also be noted that there is no serious denial as to General Manager Cruz,
Jr.'s capacity to enter into binding contractual obligations for GSIS without the prior
approval of the Board of Trustees.
On the other hand, the letter of endorsement made by the GSIS Board Vice-
Chairman Leonilo Ocampo which states ...subject to your wise judgment, as usual
leads one to conclude that it has been the practice of GSIS to permit the General
Manager to do acts within the scope of his apparent authority.
In the case of Francisco vs. Government Service Insurance System (7 SCRA 577), we
held that:
xxx xxx xxx
... Corporate transactions would speedily come to a standstill were every person
dealing with a corporation held duty-bound to disbelieve every act of its responsible
officers, no matter how regular they should appear on their face. This Court has
observed in Ramirez vs. Orientalist Co., 38 Phil. 634, 654-655, that
of an apparent authority, and thus holds him out to the public as possessing power
to do those acts, the corporation will, as against any one who has in good faith dealt
with the corporation through such agent, be estopped from denying his authority;
and where it is said if the corporation permits' this means the same as 'if the thing is
permitted by the directing power of the corporation.
We note that the petitioners are not complete strangers entering into a contract
with respondent GSIS for the first time. There was an earlier contract to sell the
same properties to the petitioners. That contract was perfected and there had been
partial compliance with its terms. The transaction now under question in this case
merely referred to the curing of certain defects which led to the cancellation of the
earlier contract by GSIS. Under the peculiar circumstances of this case, therefore,
the acceptance of the petitioners' letter-proposal by Mr. Roman Cruz, Jr., the person
with authority to do so, and his order to his subordinates to stop the bidding so that
they could first discuss the matter with him, created an agreement of binding nature
with the petitioners.
WHEREFORE, the decision and resolution of the Intermediate Appellate Court
subject of the instant petition for review on certiorari are hereby SET ASIDE. The
conditional sale entered into between public respondent GSIS and private
respondents Luz and Edilberto Tagle is declared NULL and VOID for being contrary to
public policy. The prayer of petitioners for the repurchase of the subject property in
an amount equal to the amount offered by private respondents and to retain
ownership and possession of the disputed property is GRANTED.
SO ORDERED.

In passing upon the liability of a corporation in cases of this kind it is always well to
keep in mind the situation as it presents itself to the third party with whom the
contract is made. Naturally he can have little or no information as to what occurs in
corporate meetings; and he must necessarily rely upon the external manifestation
of corporate consent. The integrity of commercial transactions can only be
maintained by holding the corporation strictly to the liability fixed upon it by its
agents in accordance with law; and we would be sorry to announce a doctrine
which would permit the property of a man in the city of Paris to be whisked out of
his hands and carried into a remote quarter of the earth without recourse against
the corporation whose name and authority had been used in the manner disclosed
in this case. As already observed, it is familiar doctrine that if a corporation
knowingly permits one of its officers, or any other agent, to do acts within the scope

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 Guardian Ad
Litem, petitioners,
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.
MAKASIAR, J.:
Appeal by certiorari from the decision of respondent Court of Appeals which
affirmed the judgment of the Court of First Instance of Camarines Norte in Civil Case
No. 577 entitled "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 of Lands Homestead Patent No. 53-176 covering 219,949 square meters of
land located at Barrio 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
in turn, 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, the court having been convinced that its alienation violated
Section 118 of the Public Land Act, which reads:
No alienation, transfer, or conveyance of any homestead after five years and before
twenty-five years after issuance of title shall be valid without the approval of the
Secretary of Agriculture and Commerce, which approval shall 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 in question with its improvements, for P1,500.00 plus attorney's fees due Atty.
Laig for his legal 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 the house of Carmen Verzo and witnessed by one Claudio Muratalla and
Rosario Verzo Villarente (p. 87, back, rec., People vs. Petre Galero, supra), sister of
herein respondent Carmen 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
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
Secretary of Agriculture and Natural Resources (then Secretary of Agriculture and
Commerce), as required 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
Deeds of Camarines Norte, respondent Baldomero M. Lapak, stating that the
disputed parcel of land 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 ownership by other parties so that she could take the necessary
steps, and serving notice of her claim over the said property as surviving spouse of
the late Atty. Laig and as natural guardian of their children.
On November 12, 1951, Register of Deeds Lapak replied that Original Certificate of
Title 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
affidavit together with copy of the deed of sale in her husband's favor. Said affidavit
stated that she 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
Natural Resources with a recommendation that the said deed of sale be approved as
the same does not violate any pertinent provisions of the Public Land Act or the
corresponding rules and regulations thereunder promulgated. On the same day, the
Office of the Secretary 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 Director of Lands, thru Vicente Tordesillas, Chief of the
Publication Lands Division, addressed a letter to Atty. Benito Laig informing him of
the approval of the deed of sale executed by and between him and Petre Galero.
Meanwhile, however, on July 15, 1952, Petre Galero, with the assistance of Atty.
Jose L. Lapak, son of respondent Register of Deeds Baldomero M. Lapak sought in
court the issuance of a second owner's duplicate copy of OCT No. 1097, claiming
that his first duplicate 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
of OCT No. 1097 was issued by respondent Register of Deeds Baldomero M. Lapak
in favor of Petre Galero. And right on that same day, Galero executed in favor of
respondent Carmen Verzo a deed of sale of the land in issue for the sum of P600.00.
It was claimed that previously, the additional consideration of P500.00 in Japanese
war notes was received by Galero from Carmen Verzo, although this amount, or
anything to that 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
Agriculture and Natural Resources before it could be registered in the Register of
Deeds, herein respondent Carmen Verzo, on July 30, 1952,addressed a letter to the
Secretary of Agriculture and Natural Resources, through the Director of Lands,
seeking the former's required 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.
On August 30, 1952, Assistant Director of Lands Zoilo Castrillo forwarded Verzo's
papers to the Secretary of Agriculture and Natural Resources and recommended
that the sale, not being violative of the pertinent provisions of the Public Land Act
nor the rules and regulations promulgated thereunder, be approved.
On September 12, 1952, Acting Secretary of Agriculture Jose S. Camus approved the
sale in favor of Carmen Verzo.
On September 27, 1952, the office of the Director of Lands notified Carmen Verzo of
such 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 Transfer
Certificate of Title No. T-1055, in lieu of OCT No. 1097, which was cancelled, was
issued 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 in the affirmative.
In no time at all, petitioners called the attention of the Director of Lands to the
existence of two deeds of sale, one in favor of Atty. Benito Laig, and another in favor
of Carmen Verzo.
On February 25, 1953, the Director of Lands requested Petre Galero to explain
within 30 days 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 denied
having 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 of Lands that second vendee Carmen Verzo had already successfully
obtained a transfer certificate of title over the land in question, with the
recommendation that the heirs of the first vendee, Benito K. Laig, seek their remedy
in court as the status of the property at 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 Instance
of Camarines with estafa thru falsification of public documents in connection with
the sale in favor of Carmen Verzo of the land in point. Galero was convicted on
October 29, 1953, which conviction was later affirmed by the Court of Appeals
in People vs. Petre Galero (CA-G.R. No. 12043-R, December 2, 1954).
On April 13, 1954, petitioner Vda. de Laig, together with her minor children, filed
the present action, docketed as Civil Case No. 577 in the Court of First Instance of
Camarines Norte against respondents Carmen Verzo, Petre Galero, the Director of
Lands, the Register of Deeds of Camarines Norte and the Secretary of Agriculture
and Natural Resources praying for the annulment of the sale in favor of Carmen
Verzo and the cancellation of the second owner's duplicate of Original Certificate of
Title No. 1097 and Transfer Certificate of Title No. T-1055 by declaring the first OCT
No. 1097 valid and effective or in the alternative, by ordering Carmen Verzo to
reconvey the land in question to petitioners, plus P5,000.00 by way of damages.
Sometime in 1958, Galero died while serving his sentence at the National
Penitentiary, and was, on November 11, 1958, substituted by his wife, Perpetua Dar,
as party defendant (p. 27, ROA; p. 114, rec.).
On November 21, 1961, the trial court, in a decision, dismissed the complaint and
declared that the land described in TCT No. 1055 to be rightfully owned by Carmen
Verzo. The lower court also found Baldomero M. Lapak, then the Register of Deeds
of Camarines Norte, guilty of negligence, but exempted him from any liability; found
the Director of Lands and the Secretary of Agriculture and Natural Resources
likewise guilty of negligence, but exempted them from any liability on the theory
that they are not responsible for the acts of their subordinates; held that the
approval of two deeds of sale in favor of two different vendees in a space of less
than one month is but a ministerial duty which exculpates the Director of Lands and
the Secretary of Agriculture and Natural Resources from liability, and that plaintiffs-
appellants slept on their rights in not having the first deed of sale in favor of Atty.
Laig registered in the Registry of property, and therefore, have only themselves to
blame for losing the land; and exempted Galero from liability (pp. 88-97, ROA; pp.
119-124, rec.).
On April 12, 1962, petitioners appealed the decision of the lower court to the Court
of Appeals.
On September 28, 1966 (p. 32, rec.), the Fifth Division of the Court of Appeals, thru
Justice Jesus Y. Perez, affirmed the decision of the Court of First Instance of
Camarines Norte.
The case unveils a couple of issues to resolve, to wit:
1. Who between petitioner Vda. de Laig and respondent Carmen Verzo should be
considered as the rightful owner of the land in question; and
2. Should the respondents register of deeds, Director of Lands and the Secretary of
Agriculture and Natural Resources, together with respondent Carmen Verzo, be held
liable for damages for approving the sale of one and the same piece of land in favor
of two different persons?
I
As in the present case of Rosario Carbonell vs. Hon. Court of Appeals, et al.
(L-29972, Jan. 26, 1976), the first issue calls for the application of Article 1544,
paragraph 2, of the New Civil Code regarding double sale.
The above-said provision reads:
Should it be immovable property, the ownership shall belong to the person acquiring
it who in good faith recorded it in the Register of Property (emphasis supplied).
In the Carbonell case, supra, WE held that to be under the protective umbrella of
paragraph 2, Article 1544, of the New Civil Code, it is essential that the vendee of
the immovable must act in good faith in registering his deed of sale. In other words,
good faith must characterize the vendee's act of prior registration.
To this effect was Our ruling in a 1918 case that
The force and effect given by law to an inscription in a public record presupposes
the good faith of him who enters such inscription; and rights created by statute,
which are predicated upon an inscription in a public registry, do not and cannot
accrue under an inscription 'in bad faith,' to the benefit of the person who thus
makes the inscription (Leung Yee vs. F.L. Strong Machinery Co. and Williamson, No.
11658, Feb. 15, 1918, 37 Phil. 644, 649).
The records reveal that respondent Carmen Verzo was not in good faith when she
facilitated the registration of her deed of sale. The following indicia of bad faith
characterized NOT ONLY her act of registering her deed of sale, BUT ALSO her
purchase of the disputed realty:
1. At the time of the sale of the land in question by Petre Galero to Atty. Benito K.
Laig in 1948, the latter was a boarder of Carmen Verzo in her house. As a matter of
fact, Atty. Laig maintained his law office, and received his clients (among whom was
Petre Galero) therein [p. 81, t.s.n., session of Aug. 23, 1961 ].
Atty. Benito K. Laig, as her boarder, must have mentioned to Carmen Verzo, his
landlady, the land sold to him by Galero. By the same token, Carmen Verzo must
have known such sale; because transactions of this sort in the rural areas do not
escape the knowledge of persons living under one roof with a party to the
document, more especially when there exists between such persons and party the
peculiarly intimate relationship of landlady and boarder in a small town.
2. One of the witnesses to the deed of sale executed by and between Atty. Laig and
Petre Galero was Rosario Verzo Villarente, Carmen Verzo's very own sister who was
at that time living with her in her house, where Atty. Laig then boarded.
Rosario Verzo Villarente, being in the household of her sister Carmen Verzo, must
have likewise informed the latter about the deed of sale executed by Petre in favor
of Atty. Laig which she signed as witness. A formal act, such as witnessing a deed of
sale, is not a common daily experience. Laymen, especially rural folk like Rosario
Verzo Villarente, who participate in the same, ordinarily regard the same as a
memorable event. It is not therefore unreasonable to assume that her significant
role as an instrumental witness to the deed of sale between Atty. Laig and Petre
Galero must have moved Rosario to confide to her sister Carmen the fact of her
participation therein.
3. Petre Galero was able to procure another copy of the duplicate of Original
Certificate of Title No. 1097 covering the disputed land through the aid of Atty. Jose
Lapak who is the son of the respondent register of deeds, Baldomero Lapak, under
clearly dubious circumstances. For one, it was done without observing the required
formalities of notice and hearing (Sec. 117, Act No. 496). Secondly, it was an over in
a record-setting period of ONLY four [41 days. Add to this the fact that respondent
register of deeds Baldomero Lapak issued said duplicate of OCT 1097 despite his
having received about eight months earlier and taken note on November 12, 1951
of the letter of petitioner Rosario Vda. de Laig inquiring about the status of the title
to the questioned land which was purchased by her husband from Petre Galero; and
the process, indeed, reeks with an unpleasant scent. If Atty. Jose Lapak were not the
son of respondent Baldomero Lapak, the latter as register of deeds would not have
facilitated the issuance of the duplicate copy of the title with such "scandalous
haste." He should have informed his son, Atty. Lapak, and Petre Galero about the
previous inquiry of petitioner as early as November 5, 1951, to which he replied on
November 12, 1951 that OCT No. 1097 was still intact.
Moreover, the expeditious disposal of the land in litigation by Petre Galero to
Carmen Verzo was done immediately after the death of Atty. Benito Laig, and during
the time that his wife Rosario Vda. de Laig, who was residing in faraway Manila, was
seeking all legal means to have the title over the property transferred to her name.
Such bad faith on the part of respondent Carmen Verzo and Baldomero Lapak is
further underscored by the fact that Atty. Jose Lapak himself (a) was the notary
public before whom the deed of sale executed by and between Petre Galero and
Carmen Verzo was acknowledged, and (b) was the same lawyer who assisted
Carmen Verzo in writing the Director of Lands and the Secretary of Agriculture and
Natural Resources, enclosing therewith an affidavit also sworn before said Atty.
Lapak, praying that the deed of sale be approved.
This conspiracy among Petre Galero, register of deeds Baldomero Lapak, his son
Atty. Jose Lapak, and Carmen Verzo, could not have been known to petitioner
Rosario Vda. de Laig, who was then as now, residing in Manila.
4. Carmen Verzo was familiar with the property in dispute and with the previous
legal battle over the same. In fact in her special defense (par. 2, p. 47, ROA), she
stated that she gave sums of money to Petre Galero to enable him to institute Civil
Case No. 164-R-14 entitled "Petre Galero vs. Macario Escuta and Florendo
Caramoan," for the recovery of said parcel of land. Knowing that said case was for
the reconveyance from defendants therein of the land in issue and that Atty. Laig
was the counsel of Petre Galero, Carmen Verzo must have known likewise that a
torrens title to the same was existing and intact and the same was delivered by
Petre to Atty. Laig as the buyer of the land. And if she inquired from the wife of Atty.
Laig, which was incumbent upon her as she was aware of the antecedent
circumstances, she would have been told by petitioner Rosario Vda. de Laig that the
owner's copy of the original certificate of title was then in her possession
Respondent Carmen Verzo could not pretend that she believed that said owner's
duplicate was lost during the war because Civil Case No. 164-R-14 involving the land
in point was instituted only AFTER the war and the owner 's duplicate copy of the
title was intact and returned to Petre after he won in 1948 the suit for
reconveyance. She could have also asked about said title the first buyer, Florencio
Caramoan, who was ordered by the court to reconvey the land and return the
owner's duplicate of the to title.
5. Prior to the sale in her favor, Carmen Verzo knew that the disputed property
belongs to Atty. Laig, because whenever Atty. Laig was in Manila, Carmen Verzo
attended to said property and communicated with Atty. Laig in Manila about his
share of the harvest from the land (pp. 33-34, t.s.n., session of Aug. 4, 1964). How
can Carmen Verzo speak of Atty. Laig's share of the harvest without first knowing
that the land from where the crop was harvested was owned by Atty. Benito Laig?
Bad faith can be demonstrated, not ONLY by direct proof, but also by substantial
evidence.
Bad faith is a state of mind indicated by acts and circumstances and is provable by
CIRCUMSTANTIAL ... evidence (Zumwalt v. Utilities Ins. Co., 228 S.W. 2d 750, 754,
360 Mo. 362; Words and Phrases Permanent Ed., Vol. 5, p. 261).
Logically, therefore, since, as has already been earlier shown, respondent Carmen
Verzo was not a purchaser in good faith, she could never have been a registrant in
good faith of the deed of sale of said land in her favor. Consequently, she cannot
claim the protection accorded to a registrant in good faith by paragraph 2, Article
1544 of the New Civil Code.
Finally, since there is no valid inscription to speak of in the present case, the
applicable provision of law is paragraph 3, Article 1544, New Civil Code (Carbonell
vs. Hon. Court of Appeals, supra), which states:
Should there be no insciption, the ownership shall pertain to the person who in good
faith was first in the possession; and, in the ab thereat to the person who presents
the oldest title, provided there is good faith (emphasis supplied).
In the present case, the fact of Atty. Benito Laig's having been the first possessor in
good faith of the property in issue was never disputed by respondent Carmen Verzo.
Moreover, the deed of sale in favor of the late Atty. Benito Laig was executed on
June 1, 1948, over 4 years earlier than the deed of sale executed on July 19, 1952 in
favor of respondent Carmen Verzo.
It is Our view that the offices of the Secretary of Agriculture and Natural Resources
and the Director of Lands should be cleared of any liability. It is not difficult to see
that the reason why separate approvals concerning two separate sale of the same
piece of land were had was the fact that two sets of officials took charge of both
requests. But no malice can be gleaned from this fact. It should be borne in mind
that both officials daily attend to thousands upon thousands of papers. It is also
possible that their assistants failed to notice that two deeds of sale covered the
same parcel of land or failed to advise these two officials of such fact.
As heretofore indicated, the malicious participation of respondent register of deeds
Baldomero Lapak and his son Atty. Lapak is evident.
Knowing of the existence in his records of the original of OCT No. 1097, Baldomero
Lapak effected the issuance of the second duplicate of OCT No. 1097 to Petre Galero
in just four (4) days, dispensing with the requirements of notice and hearing to
interested parties. The law in this regard is Section 109 of Act No. 496, which reads:
If the duplicate certificate is lost or destroyed, or cannot be produced by a grantee,
heir, devisee, assignee, or other person applying for the entry of a new certificate to
him ..., a suggestion may be filed by the registered owner or other person in interest
and registered. The court (the Court of First Instance acting as land registration
court) may thereupon, upon the petition of the registered owner or other person in
interest, AFTER NOTICE AND HEARING, direct the issue of a new duplicate
certificate, which shall contain a memorandum of the fact that it is issued in place of
the lost duplicate certificate, but shall in all respects be entitled to like faith and
credit as the original duplicate, and shall thereafter be regarded as the original
duplicate for all the purposes of this Act (Ocampo vs. Garcia, L-11260, April 29,
1959, 105 Phil. 553).
For his malicious involvement, WE find Baldomero Lapak liable under the following
provision of the Land Registration Act:
Whoever fraudulently procures, or assists in fraudulently procuring or is privy to the
fraudulent procurement of any certificate of title or owner's duplicate certificate,
shall be fined not exceeding five thousand dollars (ten thousand pesos) or
imprisoned not exceeding five years, or both, in the discretion of the court (Sec.
117, Act No. 496).
Baldomero Lapak likewise stands liable under Article 27 of the New Civil Code,
which states:
wilfully or negligently causing damage to another (Art. 20, New Civil Code), or for
wilfully causing loss or injury to another in a manner that is contrary to morals, good
customs and/or public policy (Art. 21, New Civil Code).
WHEREFORE, THE DECISION APPEALED FROM IS HEREBY REVERSED AND
I. THE REGISTER OF DEEDS OF CAMARINES NORTE IS HEREBY DIRECTED
(A) TO CANCEL TCT NO. T-1055; AND
(B) TO ISSUE IN LIEU THEREOF A NEW TRANSFER CERTIFICATE OF TITLE IN FAVOR OF
THE HEIRS OF THE LATE BENITO K. LAIG; AND
II. ALL THE RESPONDENTS HEREIN, EXCEPT THE DIRECTOR OF LANDS AND THE
SECRETARY OF AGRICULTURE AND NATURAL RESOURCES, ARE HEREBY ORDERED TO
PAY JOINTLY AND SEVERALLY PETITIONERS IN THE AMOUNT OF TEN THOUSAND
(P10,000.00) PESOS AS MORAL DAMAGES; THE SUM OF FIVE THOUSAND
(P5,000.00) PESOS AS ATTORNEY'S FEES; AND THE COSTS:
SO ORDERED.

Any person suffering material or moral loss because a public servant or employee
refuses or neglects, without just cause, to perform his official duty may file an action
for damages and other relief against the latter, without prejudice to any disciplinary
administrative action that may be taken.

For in essence, his refusal to follow the directive of law (Act No. 496) was a conduct
injurious to the petitioner. Thus a chief of police is liable under Article 27 of the New
Civil Code for refusal to give assistance to the complainants which was his official
duty as an officer of the law (Amarro, et al. vs. Sumanggit, L-14986, July 31, 1962, 5
SCRA 707, 708-9). Similarly, a municipal mayor incurs the same liability for
neglecting to perform his official functions (Javellana vs. Tayo, L-18919, Dec. 29,
1962, 6 SCRA 1042, 1051).

WE also find Atty. Jose L. Lapak liable under the abovequoted Section 117 of Act No.
496 (Land Registration Act), for which he should be, not only prosecuted but also,
disciplined as a member of the Bar.

Moreover, both Baldomero Lapak and his son Atty. Jose Lapak are likewise civilly
liable for failure to observe honesty and good faith in the performance of their
duties as public officer and as a member of the Bar (Art. 19, New Civil Code) or for

A.M. Nos. 1302, 1391 and 1543 April 26, 1991
PAULINO VALENCIA, complainant, vs. ATTY. ARSENIO FER CABANTING, respondent.
CONSTANCIA L. VALENCIA, complainant, vs. ATTY. DIONISIO C. ANTINIW, ATTY.
EDUARDO U. JOVELLANOS and ATTY. ARSENIO FER. CABANTING,respondents.
LYDIA BERNAL, complainant, vs. ATTY. DIONISIO C. ANTINIW, respondent.
PER CURIAM:
These consolidated administrative cases seek to disbar respondents Dionisio
Antiniw, Arsenio Fer. Cabanting and Eduardo Jovellanos (the last named, now an
MCTC Judge) for grave malpractice and misconduct in the exercise of their legal
profession committed in the following manner:
1. Administrative Cases No. 1302 and 1391.
In 1933, complainant Paulino Valencia (Paulino in short) and his wife Romana
allegedly bought a parcel of land, where they built their residential house, from a
certain Serapia Raymundo, an heir of Pedro Raymundo the original owner. However,
they failed to register the sale or secure a transfer certificate of title in their names.
Sometime in December, 1968, a conference was held in the house of Atty. Eduardo
Jovellanos to settle the land dispute between Serapia Raymundo (Serapia in short)
another heir of Pedro Raymundo, and the Valencia spouses since both were
relatives and distant kin of Atty. Jovellanos. Serapia was willing to relinquish
ownership if the Valencias could show documents evidencing ownership. Paulino
exhibited a deed of sale written in the Ilocano dialect. However, Serapia claimed
that the deed covered a different property. Paulino and Serapia were not able to
settle their differences. (Report of Investigating Judge Catalino Castaneda, Jr., pp.
21-22).
On December 15, 1969 Serapia, assisted by Atty. Arsenio Fer. Cabanting, filed a
complaint against Paulino for the recovery of possession with damages. The case
was docketed as Civil Case No. V-2170, entitled "Serapia Raymundo, Plaintiff, versus
Paulino Valencia, Defendant." (Report, p. 11).
Summoned to plead in Civil Case No. V-2170, the Valencias engaged the services of
Atty. Dionisio Antiniw. Atty. Antiniw advised them to present a notarized deed of
sale in lieu of the private document written in Ilocano. For this purpose, Paulino
gave Atty. Antiniw an amount of P200.00 to pay the person who would falsify the
signature of the alleged vendor (Complaint, p. 2; Rollo, p. 7). A "Compraventa
Definitiva" (Exh. B) was executed purporting to be a sale of the questioned lot.
On January 22, 1973, the Court of First Instance of Pangasinan, Branch V, rendered a
decision in favor of plaintiff, Serapia Raymundo. The lower court expressed the
belief that the said document is not authentic. (Report, p. 14)
Paulino, thereafter, filed a Petition for Certiorari, under Rule 65, with Preliminary
Injunction before the Court of Appeals alleging that the trial court failed to provide a
workable solution concerning his house. While the petition was pending, the trial
court, on March 9, 1973, issued an order of execution stating that "the decision in
this case has already become final and executory" (Exhibits 3 and 3-A). On March
14, 1973, a writ of execution was issued.
On March 20, 1973, Serapia sold 40 square meters of the litigated lot to Atty.
Jovellanos and the remaining portion she sold to her counsel, Atty. Arsenio Fer.
Cabanting, on April 25, 1973. (Annex "A" of Administrative Case No. 1302).
On March 4, 1974, Paulino filed a disbarment proceeding (docketed as
Administrative Case No. 1302) against Atty. Cabanting on the ground that said
counsel allegedly violated Article 1491 of the New Civil Code as well as Article II of
the Canons of Professional Ethics, prohibiting the purchase of property under
litigation by a counsel.
On March 21, 1974 the appellate court dismissed the petition of Paulino.
On October 14, 1974, Constancia Valencia, daughter of Paulino, filed a disbarment
proceeding (docketed as Administrative Case No. 1391) against Atty. Dionisio
Antiniw for his participation in the forgery of "Compraventa Definitiva" and its
subsequent introduction as evidence for his client; and also, against Attys. Eduardo
Jovellanos and Arsenio Cabanting for purchasing a litigated property allegedly in
violation of Article 1491 of the New Civil Code; and against the three lawyers, for
allegedly rigging Civil Case No. V-2170 against her parents. On August 17, 1975,
Constancia Valencia filed additional charges against Atty. Antiniw and Atty.
Jovellanos as follows:
1. AGAINST ATTY. DIONISIO ANTINIW:
In the year 1973 Atty. Dionisio Antiniw fraudulently and in confabulation with one
Lydia Bernal had a deed of sale, fabricated, executed and ratified before him as
Notary Public by one Santiago Bernal in favor of Lydia Bernal when as a matter of
fact said Santiago Bernal had died already about eight years before in the year 1965.
2. AGAINST ATTY. EDUARDO JOVELLANOS:
In the year 1954 Atty. Eduardo Jovellanos, fraudulently and in bad faith, in
confabulation with Rosa de los Santos as vendee had, as Notary Public, executed
and ratified before him, two (2) deeds of sale in favor of said Rosa de los Santos
when as a matter of fact the said deeds were not in fact executed by the supposed
vendor Rufino Rincoraya and so Rufino Rincoraya had filed a Civil Case in Court to
annul and declare void the said sales (p. 7, Report)
2. Administrative Case No. 1543.
A deed of donation propter nuptias involving the transfer of a piece of land by the
grandparents of Lydia Bernal (complainant,) in favor of her parents, was lost during
the last world war. For this reason, her grandmother (the living donor) executed a
deed of confirmation of the donation propter nuptias with renunciation of her rights
over the property. (Complaint, p. 1). Notwithstanding the deed, her grandmother
still offered to sell the same property in favor of the complainant, ostensibly to
strengthen the deed of donation (to prevent others from claim-ing the property).
On consultation, Atty., Antiniw advised them to execute a deed of sale. Atty. Antiniw
allegedly prepared and notarized the deed of sale in the name of her grandfather
(deceased at the time of signing) with her grandmother's approval.
Felicidad Bernal-Duzon, her aunt who had a claim over the property filed a
complaint against her (Lydia Bernal) and her counsel, Atty. Antiniw for falsification of
a public document. (Complaint, pp. 1-2) The fiscal exonerated the counsel for lack of
evidence, while a case was filed in court against Lydia Bernal.
On October 3, 1975, Lydia Bernal filed a disbarment proceeding (docketed as
Administrative Case No.1543) against Atty. Antiniw for illegal acts and bad advice.
Pursuant to the resolution of the First Division of this Court dated December 9,
1974, the resolution of the Second Division dated March 3, 1975 and the two
resolutions of the Second Division both dated December 3, 1975, Administrative
Cases Nos. 1302, 1391 and 1543 were referred to the Office of the Solicitor General
for investigation, report and recommendation.
Upon formal request of Constancia L. Valencia and Lydia Bernal dated March 3,
1976, all of these cases were ordered consolidated by Solicitor General Estelito P.
Mendoza per his handwritten directive of March 9, 1976.
On April 12, 1988, We referred the investigation of these cases to the Integrated Bar
of the Philippines.1wphi1 When Atty. Jovellanos was appointed as Municipal
Circuit Trial Court Judge of Alcala-Bautista, Pangasinan, We referred the
investigation of these cases to Acting Presiding Judge Cesar Mindaro, Regional Trial
Court, Branch 50, Villasis, Pangasinan, for further investigation.
In view of the seriousness of the charge against the respondents and the alleged
threats against the person of complainant Constancia L. Valencia, We directed the
transfer of investigation to the Regional Trial Court of Manila.
The three administrative cases were raffled to Branch XVII of the Regional Trial Court
of Manila, under the sala of Judge Catalino Castaneda, Jr.
After investigation, Judge Catalino Castaeda, Jr., recommended the dismissal of
cases against Atty. Jovellanos and Atty. Arsenio Fer. Cabanting; dismissal of
Administrative Case No. 1543 and the additional charges in Administrative Case No.
1391 against Antiniw and Judge Jovellanos; however, he recommended the
suspension of Atty. Antiniw from the practice of law for six months finding him guilty
of malpractice in falsifying the "Compraventa Definitiva."
The simplified issues of these consolidated cases are:
I. Whether or not Atty. Cabanting purchased the subject property in violation of Art.
1491 of the New Civil Code.
II. Whether or not Attys. Antiniw and Jovellanos are guilty of malpractice in falsifying
notarial documents.
III. Whether or not the three lawyers connived in rigging Civil Case No. V-2170.
I
Under Article 1491 of the New Civil Code:
The following persons cannot acquire by purchase, even at a public of judicial
auction, either in person or through the mediation of another:
xxx xxx xxx
(5) . . . this prohibition includes the act of acquiring by assignment and shall apply to
lawyers, with respect to the property and rights which may be the object of any
litigation in which they make take part by virtue of their profession.
Public policy prohibits the transactions in view of the fiduciary relationship involved.
It is intended to curtail any undue influence of the lawyer upon his client. Greed
may get the better of the sentiments of loyalty and disinterestedness. Any violation
of this prohibition would constitute malpractice (In re: Attorney Melchor Ruste, 40
O.G. p. 78) and is a ground for suspension. (Beltran vs. Fernandez, 70 Phil. 248).
Art. 1491, prohibiting the sale to the counsel concerned, applies only while the
litigation is pending. (Director of Lands vs. Adaba, 88 SCRA 513; Hernandez vs.
Villanueva, 40 Phil. 775).
In the case at bar, while it is true that Atty. Arsenio Fer. Cabanting purchased the lot
after finality of judgment, there was still a pending certiorari proceeding. A thing is
said to be in litigation not only if there is some contest or litigation over it in court,
but also from the moment that it becomes subject to the judicial action of the
judge. (Gan Tingco vs. Pabinguit, 35 Phil. 81). Logic indicates,
in certiorari proceedings, that the appellate court may either grant or dismiss the
petition. Hence, it is not safe to conclude, for purposes under Art. 1491 that the
litigation has terminated when the judgment of the trial court become final while
a certiorari connected therewith is still in progress. Thus, purchase of the property
by Atty. Cabanting in this case constitutes malpractice in violation of Art. 1491 and
the Canons of Professional Ethics. Clearly, this malpractice is a ground for
suspension.
The sale in favor of Atty. Jovellanos does not constitute malpractice. There was no
attorney-client relationship between Serapia and Atty. Jovellanos, considering that
the latter did not take part as counsel in Civil Case No. V-2170. The transaction is not
covered by Art. 1491 nor by the Canons adverted to.
II
It is asserted by Paulino that Atty. Antiniw asked for and received the sum of
P200.00 in consideration of his executing the document "Compraventa Definitiva"
which would show that Paulino bought the property. This charge, Atty. Antiniw
simply denied. It is settled jurisprudence that affirmative testimony is given greater
weight than negative testimony (Bayasen vs. CA, L-25785, Feb. 26, 1981; Vda. de
Ramos vs. CA, et al., L40804, Jan. 31, 1978). When an individual's integrity is
challenged by evidence, it is not enough that he deny the charges against him; he
must meet the issue and overcome the evidence for the relator and show proofs
that he still maintains the highest degree of morality and integrity which at all time
is expected of him. (De los Reyes vs. Aznar, Adm. Case No. 1334, Nov. 28, 1989).
Although Paulino was a common farmer who finished only Grade IV, his testimony,
even if not corroborated by another witness, deserves credence and can be relied
upon. His declaration dwelt on a subject which was so delicate and confidential that
it would be difficult to believe the he fabricated his evidence.
There is a clear preponderant evidence that Atty. Antiniw committed falsification of
a deed of sale, and its subsequent introduction in court prejudices his prime duty in
the administration of justice as an officer of the court.
A lawyer owes entire devotion to the interest of his client (Santos vs. Dichoso, 84
SCRA 622), but not at the expense of truth. (Cosmos Foundry Shopworkers Union vs.
La Bu, 63 SCRA 313). The first duty of a lawyer is not to his client but to the
administration of justice. (Lubiano vs. Gordalla, 115 SCRA 459) To that end, his
client's success is wholly subordinate. His conduct ought to and must always be
scrupulously observant of law and ethics. While a lawyer must advocate his client's
cause in utmost earnestness and with the maximum skill he can marshal, he is not
at liberty to resort to illegal means for his client's interest. It is the duty of an
attorney to employ, for the purpose of maintaining the causes confided to him, such
means as are consistent with truth and honor. (Pangan vs. Ramos, 93 SCRA 87).
Membership in the Bar is a privilege burdened with conditions. By far, the most
important of them is mindfulness that a lawyer is an officer of the court. (In re: Ivan
T. Publico, 102 SCRA 722). This Court may suspend or disbar a lawyer whose acts
show his unfitness to continue as a member of the Bar. (Halili vs. CIR, 136 SCRA
112). Disbarment, therefore, is not meant as a punishment depriving him of a
source of livelihood but is rather intended to protect the administration of justice by
requiring that those who exercise this function should be competent, honorable and
reliable in order that courts and the public may rightly repose confidence in them.
(Noriega vs. Sison, 125 SCRA 293). Atty. Antiniw failed to live up to the high
standards of the law profession.
The other charges of malpractice against Atty. Antiniw and Atty. Jovellanos should
be dismissed for lack of evidence.
During the proceedings in Administrative Case No. 1543, Lydia Bernal testified in full
on direct examination, but she never submitted herself for cross-examination.
Several subpoenas for cross-examination were unheeded. She eventually requested
the withdrawal of her complaint.
Procedural due process demands that respondent lawyer should be given an
opportunity to cross-examine the witnesses against him.1wphi1 He enjoys the
legal presumption that he is innocent of the charges against him until the contrary is
proved. (Santos vs. Dichoso, 84 SCRA 622). The case must be established by clear,
convincing and satisfactory proof. (Camus vs. Diaz, Adm. Case No. 1616, February 9,
1989), Since Atty. Antiniw was not accorded this procedural due process, it is but
proper that the direct testimony of Lydia Bernal be stricken out.
In view also of the affidavit of desistance executed by the complainant,
Administrative Case No. 1543 should be dismissed. Although the filing of an affidavit
of desistance by complainant for lack of interest does not ipso factoresult in the
termination of a case for suspension or disbarment of an erring lawyer (Munar vs.
Flores, 122 SCRA 448), We are constrained in the case at bar, to dismiss the same
because there was no evidence to substantiate the charges.
The additional charge against Atty. Antiniw in Administrative Case No. 1391 is
predicated on the information furnished by Lydia Bernal. It was not based on the
personal knowledge of Constancia L. Valencia: hence, hearsay. "Any evidence,
whether oral or documentary, is hearsay if its probative value is not based on the
personal knowledge of the witness but on the knowledge of some other person not
on the witness stand." (Regalado, Remedial Law Compendium, 6th ed., vol. 2, 1989,
p. 486). Being hearsay, the evidence presented is inadmissible.
The additional charge filed by Constancia L. Valencia against Atty. Jovellanos in
Administrative Case No. 1391 was not proved at all. Complainant failed to prove her
additional charges.
III
There is no evidence on record that the three lawyers involved in these
administrative cases conspired in executing the falsified "Compraventa Definitiva"
and rigged the Civil Case No. V-2170.
Atty. Jovellanos is a distant kin of the Raymundos and Valencias. In fact, he and the
Valencias are neighbors and only two meters separate their houses. It would not be
believable that Atty. Jovellanos, a practicing lawyer, would hold a meeting with the
heirs of Pedro Raymundo in his house with the intention of inducing them to sue
the Valencias. Atty. Jovellanos even tried to settle the differences between the
parties in a meeting held in his house. He appeared in Civil Case No. V-2170 as an
involuntary witness to attest to the holding of the conference.
Besides, the camaraderie among lawyers is not proof of conspiracy, but a sign of
brotherhood among them. One of the fourfold duties of a lawyer is his duty to the
Bar. A lawyer should treat the opposing counsel, and his brethren in the law
profession, with courtesy, dignity and civility. They may "do as adversaries do in law:
strive mightily but (they) eat and drink as friends." This friendship does not connote
conspiracy.

WHEREFORE, judgment is hereby rendered declaring: 1. Dionisio Antiniw

DISBARRED from the practice of law, and his name is ordered stricken off from the
roll of attorneys; 2. Arsenio Fer. Cabanting SUSPENDED from the practice of law for
six months from finality of this judgment; and 3. Administrative Case No. 1391
against Attorney Eduardo Jovellanos and additional charges therein, and
Administrative Case No. 1543 DISMISSED.

SO ORDERED.
A.M. No. 3216 March 16, 1992
DOMINGA VELASCO ORDONIO, petitioner, vs. ATTY. JOSEPHINE PALOGAN
EDUARTE, respondent.
PER CURIAM:
This is a complaint for the disbarment of respondent Atty. Josephine Palogan-
Eduarte originally filed with this Court on April 18, 1988. On August 10, 1989, the
Commission on Bar Discipline of the Integrated Bar of the Philippines, to which the
case was referred for investigation, submitted a report confirming in substance the
charge of violation of Art. 1491 of the Civil Code and part of the Oath of Office of a
lawyer and recommending 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 Quitclaim
Thereof) against her children. The case was handled by Atty. Henedino Eduarte,
herein respondent's husband, until his appointment as RTC judge on October 26,
1984. His wife, Atty. Josephine Palogan-Eduarte, took over. On August 22, 1985,
decision in Civil Case No. 391 was rendered in favor of Antonia Ulibari. Except for
Dominga Velasco-Ordonio, one of the children of Antonia Ulibari and complainant in
the instant case, the rest 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 her land to her children in the form of deeds of absolute
sale, prepared and notarized by herein 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 legal services rendered. All the titles of the
lands subject of the deeds of absolute sale and the deed of conveyance however
remained in the name of Antonia Ulibari.
On April 4, 1988, Dominga Velasco-Ordonio filed this complaint for disbarment
against herein respondent on the basis of an affidavit executed by her mother
Antonia Ulibari on March 2, 1988 stating that affiant never conveyed the subject
parcel of land to respondent as her attorney's fees and that the deeds of absolute
sale executed in favor of her 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 the practice of law.
The first issue to be resolved is whether Antonia Ulibari was defrauded into signing
the Deed of Conveyance transferring to her lawyer (herein respondent) the subject
parcel of land containing 298,420 square meters as the latter's attorney's fees. It is
clear from Antonia Ulibari's affidavit and deposition that she never conveyed the
said land to her lawyer as attorney's fees.
Even granting for the sake argument that Antonia Ulibari knowingly and voluntarily
conveyed 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 of the appeal of the case involving the said property, has violated Art.
1491 of the Civil Code which prohibits lawyers from "acquiring by assignment
property and rights which may 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 land ACCORDINGLY, for having violated Article 1491 of the Civil Code, respondent is
allegedly conveyed to the respondent) was already in actual litigation first in the hereby ordered suspended from the practice of law for a period of six (6) months,
lower court and then in the Court of Appeals. Whether the deed of conveyance was and, for having stated falsehoods in the four (4) deeds of absolute sale she prepared
executed at the instance of the client driven by financial necessity or of the lawyers and notarized, in violation of the lawyer's oath and Rule 10.01 of the Code of
is of no moment (In re: Atty. Melchor E. Ruste, 70 Phil. 243). "In either case, an Professional Responsibility, respondent is also ordered suspended from the practice
attorney occupies a vantage position to press upon or dictate his terms to a or law for a period of another six (6) months, resulting in a total period on one year,
harrased client, in breach of the rule so amply protective of the confidential effective from the date this judgment becomes final.
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 SUSPENSION ORDERED.
the property in litigation. (Hernandez v. Villanueva, 40 Phil. 775; In re: Calderon, 7
Phil. 427). We agree with the Investigating Commissioner's opinion 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 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 the Canons of Professional Ethics which provides that "the lawyer should
not purchase any interest 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
and notarizing the deeds of absolute sale in making it appear that there were
considerations therefor, 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 her children 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 to effect the transfer of the parcels of land to Antonia
Ulibari's children in accordance with her 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 not reflect the true transaction, respondent has likewise violated Rule
10.01 of the Code of Professional Responsibility which provides:

Rule 10.01. A lawyer shall not do any falsehood, nor consent to the doing of any in
court; nor shall be mislead or allow the court to be mislead by any artifice.

[A.C. No. 6210. December 9, 2004]
FEDERICO N. RAMOS, complainant, vs. ATTY. PATRICIO A. NGASEO, respondent.
YNARES-SANTIAGO, J.:
This is a complaint for suspension of respondent Atty. Patricio A. Ngaseo for
violation of the Code of Professional Responsibility and Article 1491 of the Civil
Code by demanding from his client, complainant Federico N. Ramos, the delivery of
1,000 square meters of land, a litigated property, as payment for his appearance
fees.
The facts as narrated by the complainant are as follows:
Sometime in 1998, complainant Federico Ramos went to respondent Atty. Patricio
Ngaseos Makati office to engage his services as counsel in a case [1] involving a piece
of land in San Carlos, Pangasinan. Respondent agreed to handle the case for an
acceptance fee of P20,000.00, appearance fee of P1,000.00 per hearing and the cost
of meals, transportation and other incidental expenses. Complainant alleges that he
did not promise to pay the respondent 1,000 sq. m. of land as appearance fees. [2]
On September 16, 1999, complainant went to the respondents office to inquire
about the status of the case. Respondent informed him that the decision was
adverse to them because a congressman exerted pressure upon the trial judge.
Respondent however assured him that they could still appeal the adverse judgment
and asked for the additional amount of P3,850.00 and another P2,000.00 on
September 26, 2000 as allowance for research made. [3]
Although an appeal was filed, complainant however charges the respondent of
purposely failing to submit a copy of the summons and copy of the assailed
decision. Subsequently, complainant learned that the respondent filed the notice of
appeal 3 days after the lapse of the reglementary period.
On January 29, 2003, complainant received a demand-letter from the respondent
asking for the delivery of the 1,000 sq. m. piece of land which he allegedly promised
as payment for respondents appearance fee. In the same letter, respondent also
threatened to file a case in court if the complainant would not confer with him and
settle the matter within 30 days.
Respondent alleged that sometime in the late 1997, a former client, Federico Ramos
and his brother, Dionisio, went to his Makati office to engage his professional
services in connection with a 2-hectare parcel of land situated in San Carlos,
Pangasinan which the complainants family lost 7 years earlier through an execution
sale in favor of one Alfredo T. Castro. Complainant, who was deaf and could only
speak conversational Tagalog haltingly, was assisted by his brother Dionisio. They
came all the way from Pangasinan because no lawyer in San Carlos City was willing
to handle the case. Complainant, through Dionisio, avers that he has consulted 2
local lawyers but did not engage their services because they were demanding
exorbitant fees. One local lawyer was willing to handle the case for at least one-half
of the land involved as his attorneys fee, plus cash expenses, while the other asked
for of the land in addition to a large sum of money. Respondent agreed to handle
the case for an acceptance fee of P60,000.00 plus an appearance fee of P3,000.00
per hearing. Complainant told him that he would consult his siblings on the matter.
Six months later, i.e., in April 1998, complainant, assisted by one Jose Castillo, went
to respondents office to discuss the legal fees. Complainant, through Castillo, told
respondent that he was willing to pay an acceptance fee of P40,000.00, P20,000.00
of which shall be paid upon engagement and the remaining P20,000.00 to be paid
after their treasure hunt operations in Nueva Viscaya were terminated. Further,
complainant offered, in lieu of P3,000.00 per appearance, 1,000 sq. m. of land from
the land subject matter of the case, if they win, or from another piece of property, if
they lose. In addition, complainant also offered to defray the expenses for
transportation, meals and other incidental expenses. Respondent accepted the
complainants offer.
Respondent claims that after the trial court dismissed Civil Case No. SCC 2128, he
filed a timely notice of appeal and thereafter moved to be discharged as counsel
because he had colon cancer. Complainant, now assisted by one Johnny Ramos,
implored respondent to continue handling the case, with an offer to double the
1,000 sq. m. piece of land earlier promised and the remaining balance of P20,000.00
acceptance fee. Johnny Ramos made a written commitment and gave respondents
secretary P2,000.00 of the P3,850.00 expenses for the preparation of the appellants
brief.
On July 18, 2001, the Court of Appeals rendered a favorable decision ordering the
return of the disputed 2-hectare land to the complainant and his siblings. The said
decision became final and executory on January 18, 2002. Since then complainant
allegedly failed to contact respondent, which compelled him to send a demand
letter on January 29, 2003.
On February 14, 2003, complainant filed a complaint before the IBP charging his
former counsel, respondent Atty. Ngaseo, of violation of the Code of Professional
Responsibility for demanding the delivery of 1,000 sq. m. parcel of land which was
the subject of litigation.
In a report dated July 18, 2003, IBP Commissioner Rebecca Villanueva-Maala found
the respondent guilty of grave misconduct and conduct unbecoming of a lawyer in
violation of the Code of Professional Responsibility and recommended that he be
suspended from the practice of law for 1 year.[4]
On August 30, 2003, the IBP Board of Governors passed Resolution No. XVI-2003-47
the full text of which reads:[5]
RESOLVED to ADOPT and APPROVE, as it is hereby ADOPTED and APPROVED, the
Report and Recommendation of the Investigating Commissioner of the above-
entitled case, herein made part of this Resolution/Decision as Annex A; and, finding
the recommendation fully supported by the evidence on record and the applicable
laws and rules, with modification, and considering that respondent have violated
the Code of Professional Responsibility for grave misconduct and conduct
unbecoming of a lawyer Atty. Patricio A. Ngaseo is hereby SUSPENDED from the
practice of law for six (6) months.
On December 11, 2003, respondent filed a petition for review assailing IBP
Resolution No. XVI-2003-47 for having been issued without or in excess of
jurisdiction.[6]
Respondent argues that he did not violate Article 1491 of the Civil Code because
when he demanded the delivery of the 1,000 sq. m. of land which was offered and
promised to him in lieu of the appearance fees, the case has been terminated, when
the appellate court ordered the return of the 2-hectare parcel of land to the family
of the complainant.
Respondent further contends that he can collect the unpaid appearance fee even
without a written contract on the basis of the principle of quantum meruit. He
claims that his acceptance and appearance fees are reasonable because a Makati
based legal practitioner, would not handle a case for an acceptance fee of only
P20,000.00 and P1,000.00 per court appearance.
Under Article 1491(5) of the Civil Code, lawyers are prohibited from acquiring either
by purchase or assignment the property or rights involved which are the object of
the litigation in which they intervene by virtue of their profession. [7] The prohibition
on purchase is all embracing to include not only sales to private individuals but also
public or judicial sales. The rationale advanced for the prohibition is that public
policy disallows the transactions in view of the fiduciary relationship involved, i.e.,
the relation of trust and confidence and the peculiar control exercised by these
persons.[8] It is founded on public policy because, by virtue of his office, an attorney
may easily take advantage of the credulity and ignorance of his client and unduly
enrich himself at the expense of his client. [9] However, the said prohibition applies
only if the sale or assignment of the property takes place during the pendency of
the litigation involving the clients property. Consequently, where the property is
acquired after the termination of the case, no violation of paragraph 5, Article 1491
of the Civil Code attaches.
Invariably, in all cases where Article 1491 was violated, the illegal transaction was
consummated with the actual transfer of the litigated property either by purchase
or assignment in favor of the prohibited individual. In Biascan v. Lopez, respondent
was found guilty of serious misconduct and suspended for 6 months from the
practice of law when he registered a deed of assignment in his favor and caused the
transfer of title over the part of the estate despite pendency of Special Proceedings
No. 98037 involving the subject property. [10] In the consolidated administrative cases
of Valencia v. Cabanting,[11] the Court suspended respondent Atty. Arsenio Fer
Cabanting for six (6) months from the practice of law when he purchased his client's
property which was still the subject of a pending certiorari proceeding.

In the instant case, there was no actual acquisition of the property in litigation since
the respondent only made a written demand for its delivery which the complainant
refused to comply. Mere demand for delivery of the litigated property does not
cause the transfer of ownership, hence, not a prohibited transaction within the
contemplation of Article 1491. Even assuming arguendo that such demand for
delivery is unethical, respondents act does not fall within the purview of Article
1491. The letter of demand dated January 29, 2003 was made long after the
judgment in Civil Case No. SCC-2128 became final and executory on January 18,
2002.

We note that the report of the IBP Commissioner, as adopted by the IBP Board of
Governors in its Resolution No. XVI-2003-47, does not clearly specify which acts of
the respondent constitute gross misconduct or what provisions of the Code of
Professional Responsibility have been violated. We find the recommended penalty
of suspension for 6 months too harsh and not proportionate to the offense
committed by the respondent. The power to disbar or suspend must be exercised
with great caution. Only in a clear case of misconduct that seriously affects the
standing and character of the lawyer as an officer of the Court and member of the
bar will disbarment or suspension be imposed as a penalty. [12] All considered, a
reprimand is deemed sufficient and reasonable.

WHEREFORE, in view of the foregoing, respondent Atty. Patricio A. Ngaseo is found

guilty of conduct unbecoming a member of the legal profession in violation of Rule
20.04 of Canon 20 of the Code of Professional Responsibility. He
is REPRIMANDED with a warning that repetition of the same act will be dealt with
more severely.

SO ORDERED.
A.M. No. 133-J May 31, 1982
BERNARDITA R. MACARIOLA, complainant, vs.HONORABLE ELIAS B. ASUNCION,
Judge of the Court of First Instance of Leyte, respondent.
MAKASIAR, J:
In a verified complaint dated August 6, 1968 Bernardita R. Macariola charged
respondent Judge Elias B. Asuncion of the Court of First Instance of Leyte, now
Associate Justice of the Court of Appeals, with "acts unbecoming a judge."
The factual setting of the case is stated in the report dated May 27, 1971 of then
Associate Justice Cecilia Muoz Palma of the Court of Appeals now retired Associate
Justice of the Supreme Court, to whom this case was referred on October 28, 1968
for investigation, thus:
Civil Case No. 3010 of the Court of First Instance of Leyte was a complaint for
partition filed by Sinforosa R. Bales, Luz R. Bakunawa, Anacorita Reyes, Ruperto
Reyes, Adela Reyes, and Priscilla Reyes, plaintiffs, against Bernardita R. Macariola,
defendant, concerning the properties left by the deceased Francisco Reyes, the
common father of the plaintiff and defendant.
In her defenses to the complaint for partition, Mrs. Macariola alleged among other
things that; a) plaintiff Sinforosa R. Bales was not a daughter of the deceased
Francisco Reyes; b) the only legal heirs of the deceased were defendant Macariola,
she being the only offspring of the first marriage of Francisco Reyes with Felisa
Espiras, and the remaining plaintiffs who were the children of the deceased by his
second marriage with Irene Ondez; c) the properties left by the deceased were all
the conjugal properties of the latter and his first wife, Felisa Espiras, and no
properties were acquired by the deceased during his second marriage; d) if there
was any partition to be made, those conjugal properties should first be partitioned
into two parts, and one part is to be adjudicated solely to defendant it being the
share of the latter's deceased mother, Felisa Espiras, and the other half which is the
share of the deceased Francisco Reyes was to be divided equally among his children
by his two marriages.
On June 8, 1963, a decision was rendered by respondent Judge Asuncion in Civil
Case 3010, the dispositive portion of which reads:
IN VIEW OF THE FOREGOING CONSIDERATIONS, the Court, upon a preponderance of
evidence, finds and so holds, and hereby renders judgment (1) Declaring the
plaintiffs Luz R. Bakunawa, Anacorita Reyes, Ruperto Reyes, Adela Reyes and Priscilla
Reyes as the only children legitimated by the subsequent marriage of Francisco
Reyes Diaz to Irene Ondez; (2) Declaring the plaintiff Sinforosa R. Bales to have been
an illegitimate child of Francisco Reyes Diaz; (3) Declaring Lots Nos. 4474, 4475,
4892, 5265, 4803, 4581, 4506 and 1/4 of Lot 1145 as belonging to the conjugal
partnership of the spouses Francisco Reyes Diaz and Felisa Espiras; (4) Declaring Lot
No. 2304 and 1/4 of Lot No. 3416 as belonging to the spouses Francisco Reyes Diaz
and Irene Ondez in common partnership; (5) Declaring that 1/2 of Lot No. 1184 as
belonging exclusively to the deceased Francisco Reyes Diaz; (6) Declaring the
defendant Bernardita R. Macariola, being the only legal and forced heir of her
mother Felisa Espiras, as the exclusive owner of one-half of each of Lots Nos. 4474,
4475, 4892, 5265, 4803, 4581, 4506; and the remaining one-half (1/2) of each of
said Lots Nos. 4474, 4475, 4892, 5265, 4803, 4581, 4506 and one-half (1/2) of one-
fourth (1/4) of Lot No. 1154 as belonging to the estate of Francisco Reyes Diaz; (7)
Declaring Irene Ondez to be the exclusive owner of one-half (1/2) of Lot No. 2304
and one-half (1/2) of one-fourth (1/4) of Lot No. 3416; the remaining one-half (1/2)
of Lot 2304 and the remaining one-half (1/2) of one-fourth (1/4) of Lot No. 3416 as
belonging to the estate of Francisco Reyes Diaz; (8) Directing the division or partition
of the estate of Francisco Reyes Diaz in such a manner as to give or grant to Irene
Ondez, as surviving widow of Francisco Reyes Diaz, a hereditary share of. one-
twelfth (1/12) of the whole estate of Francisco Reyes Diaz (Art. 996 in relation to
Art. 892, par 2, New Civil Code), and the remaining portion of the estate to be
divided among the plaintiffs Sinforosa R. Bales, Luz R. Bakunawa, Anacorita Reyes,
Ruperto Reyes, Adela Reyes, Priscilla Reyes and defendant Bernardita R. Macariola,
in such a way that the extent of the total share of plaintiff Sinforosa R. Bales in the
hereditary estate shall not exceed the equivalent of two-fifth (2/5) of the total share
of any or each of the other plaintiffs and the defendant (Art. 983, New Civil Code),
each of the latter to receive equal shares from the hereditary estate, (Ramirez vs.
Bautista, 14 Phil. 528; Diancin vs. Bishop of Jaro, O.G. [3rd Ed.] p. 33); (9) Directing
the parties, within thirty days after this judgment shall have become final to submit
to this court, for approval a project of partition of the hereditary estate in the
proportion above indicated, and in such manner as the parties may, by agreement,
deemed convenient and equitable to them taking into consideration the location,
kind, quality, nature and value of the properties involved; (10) Directing the plaintiff
Sinforosa R. Bales and defendant Bernardita R. Macariola to pay the costs of this
suit, in the proportion of one-third (1/3) by the first named and two-thirds (2/3) by
the second named; and (I 1) Dismissing all other claims of the parties [pp 27-29 of
Exh. C].
The decision in civil case 3010 became final for lack of an appeal, and on October
16, 1963, a project of partition was submitted to Judge Asuncion which is marked
Exh. A. Notwithstanding the fact that the project of partition was not signed by the
parties themselves but only by the respective counsel of plaintiffs and defendant,
Judge Asuncion approved it in his Order dated October 23, 1963, which for
convenience is quoted hereunder in full:
The parties, through their respective counsels, presented to this Court for approval
the following project of partition:
COMES NOW, the plaintiffs and the defendant in the above-entitled case, to this
Honorable Court respectfully submit the following Project of Partition:
l. The whole of Lots Nos. 1154, 2304 and 4506 shall belong exclusively to Bernardita
Reyes Macariola;
2. A portion of Lot No. 3416 consisting of 2,373.49 square meters along the eastern
part of the lot shall be awarded likewise to Bernardita R. Macariola;
3. Lots Nos. 4803, 4892 and 5265 shall be awarded to Sinforosa Reyes Bales;
4. A portion of Lot No. 3416 consisting of 1,834.55 square meters along the western
part of the lot shall likewise be awarded to Sinforosa Reyes-Bales;
5. Lots Nos. 4474 and 4475 shall be divided equally among Luz Reyes Bakunawa,
Anacorita Reyes, Ruperto Reyes, Adela Reyes and Priscilla Reyes in equal shares;
6. Lot No. 1184 and the remaining portion of Lot No. 3416 after taking the portions
awarded under item (2) and (4) above shall be awarded to Luz Reyes Bakunawa,
Anacorita Reyes, Ruperto Reyes, Adela Reyes and Priscilla Reyes in equal shares,
provided, however that the remaining portion of Lot No. 3416 shall belong
exclusively to Priscilla Reyes.
WHEREFORE, it is respectfully prayed that the Project of Partition indicated above
which is made in accordance with the decision of the Honorable Court be approved.
Tacloban City, October 16, 1963.
(SGD) BONIFACIO RAMO Atty. for the Defendant Tacloban City
(SGD) ZOTICO A. TOLETE Atty. for the Plaintiff Tacloban City
While the Court thought it more desirable for all the parties to have signed this
Project of Partition, nevertheless, upon assurance of both counsels of the respective
parties to this Court that the Project of Partition, as above- quoted, had been made
after a conference and agreement of the plaintiffs and the defendant approving the
above Project of Partition, and that both lawyers had represented to the Court that
they are given full authority to sign by themselves the Project of Partition, the
Court, therefore, finding the above-quoted Project of Partition to be in accordance
with law, hereby approves the same. The parties, therefore, are directed to execute
such papers, documents or instrument sufficient in form and substance for the
vesting of the rights, interests and participations which were adjudicated to the
respective parties, as outlined in the Project of Partition and the delivery of the
respective properties adjudicated to each one in view of said Project of Partition,
and to perform such other acts as are legal and necessary to effectuate the said
Project of Partition.
SO ORDERED.
Given in Tacloban City, this 23rd day of October, 1963.
(SGD) ELIAS B. ASUNCION Judge
EXH. B.
The above Order of October 23, 1963, was amended on November 11, 1963, only
for the purpose of giving authority to the Register of Deeds of the Province of Leyte
to issue the corresponding transfer certificates of title to the respective adjudicatees
in conformity with the project of partition (see Exh. U).
One of the properties mentioned in the project of partition was Lot 1184 or rather
one-half thereof with an area of 15,162.5 sq. meters. This lot, which according to
the decision was the exclusive property of the deceased Francisco Reyes, was
adjudicated in said project of partition to the plaintiffs Luz, Anacorita Ruperto,
Adela, and Priscilla all surnamed Reyes in equal shares, and when the project of
partition was approved by the trial court the adjudicatees caused Lot 1184 to be
subdivided into five lots denominated as Lot 1184-A to 1184-E inclusive (Exh. V).
Lot 1184-D was conveyed to Enriqueta D. Anota, a stenographer in Judge Asuncion's
court (Exhs. F, F-1 and V-1), while Lot 1184-E which had an area of 2,172.5556 sq.
meters was sold on July 31, 1964 to Dr. Arcadio Galapon (Exh. 2) who was issued
transfer certificate of title No. 2338 of the Register of Deeds of the city of Tacloban
(Exh. 12).
On March 6, 1965, Dr. Arcadio Galapon and his wife Sold a portion of Lot 1184-E
with an area of around 1,306 sq. meters to Judge Asuncion and his wife, Victoria S.
Asuncion (Exh. 11), which particular portion was declared by the latter for taxation
purposes (Exh. F).
On August 31, 1966, spouses Asuncion and spouses Galapon conveyed their
respective shares and interest in Lot 1184-E to "The Traders Manufacturing and
Fishing Industries Inc." (Exit 15 & 16). At the time of said sale the stockholders of the
corporation were Dominador Arigpa Tan, Humilia Jalandoni Tan, Jaime Arigpa Tan,
Judge Asuncion, and the latter's wife, Victoria S. Asuncion, with Judge Asuncion as
the President and Mrs. Asuncion as the secretary (Exhs. E-4 to E-7). The Articles of
Incorporation of "The Traders Manufacturing and Fishing Industries, Inc." which we
shall henceforth refer to as "TRADERS" were registered with the Securities and
Exchange Commission only on January 9, 1967 (Exh. E) [pp. 378-385, rec.].
Complainant Bernardita R. Macariola filed on August 9, 1968 the instant complaint
dated August 6, 1968 alleging four causes of action, to wit: [1] that respondent
Judge Asuncion violated Article 1491, paragraph 5, of the New Civil Code in
acquiring by purchase a portion of Lot No. 1184-E which was one of those
properties involved in Civil Case No. 3010 decided by him; [2] that he likewise
violated Article 14, paragraphs I and 5 of the Code of Commerce, Section 3,
paragraph H, of R.A. 3019, otherwise known as the Anti-Graft and Corrupt Practices
Act, Section 12, Rule XVIII of the Civil Service Rules, and Canon 25 of the Canons of
Judicial Ethics, by associating himself with the Traders Manufacturing and Fishing
Industries, Inc., as a stockholder and a ranking officer while he was a judge of the
Court of First Instance of Leyte; [3] that respondent was guilty of coddling an
impostor and acted in disregard of judicial decorum by closely fraternizing with a
certain Dominador Arigpa Tan who openly and publicly advertised himself as a
practising attorney when in truth and in fact his name does not appear in the Rolls
of Attorneys and is not a member of the Philippine Bar; and [4] that there was a
culpable defiance of the law and utter disregard for ethics by respondent Judge (pp.
1-7, rec.).
Respondent Judge Asuncion filed on September 24, 1968 his answer to which a
reply was filed on October 16, 1968 by herein complainant. In Our resolution of
October 28, 1968, We referred this case to then Justice Cecilia Muoz Palma of the
Court of Appeals, for investigation, report and recommendation. After hearing, the
said Investigating Justice submitted her report dated May 27, 1971 recommending
that respondent Judge should be reprimanded or warned in connection with the
first cause of action alleged in the complaint, and for the second cause of action,
respondent should be warned in case of a finding that he is prohibited under the
law to engage in business. On the third and fourth causes of action, Justice Palma
recommended that respondent Judge be exonerated.
The records also reveal that on or about November 9 or 11, 1968 (pp. 481, 477,
rec.), complainant herein instituted an action before the Court of First Instance of
Leyte, entitled "Bernardita R. Macariola, plaintiff, versus Sinforosa R. Bales, et al.,
defendants," which was docketed as Civil Case No. 4235, seeking the annulment of
the project of partition made pursuant to the decision in Civil Case No. 3010 and the
two orders issued by respondent Judge approving the same, as well as the partition
of the estate and the subsequent conveyances with damages. It appears, however,
that some defendants were dropped from the civil case. For one, the case against
Dr. Arcadio Galapon was dismissed because he was no longer a real party in interest
when Civil Case No. 4234 was filed, having already conveyed on March 6, 1965 a
portion of lot 1184-E to respondent Judge and on August 31, 1966 the remainder
was sold to the Traders Manufacturing and Fishing Industries, Inc. Similarly, the case
against defendant Victoria Asuncion was dismissed on the ground that she was no
longer a real party in interest at the time the aforesaid Civil Case No. 4234 was filed
as the portion of Lot 1184 acquired by her and respondent Judge from Dr. Arcadio
Galapon was already sold on August 31, 1966 to the Traders Manufacturing and
Fishing industries, Inc. Likewise, the cases against defendants Serafin P. Ramento,
Catalina Cabus, Ben Barraza Go, Jesus Perez, Traders Manufacturing and Fishing
Industries, Inc., Alfredo R. Celestial and Pilar P. Celestial, Leopoldo Petilla and
Remedios Petilla, Salvador Anota and Enriqueta Anota and Atty. Zotico A. Tolete
were dismissed with the conformity of complainant herein, plaintiff therein, and her
counsel.
On November 2, 1970, Judge Jose D. Nepomuceno of the Court of First Instance of
Leyte, who was directed and authorized on June 2, 1969 by the then Secretary (now
Minister) of Justice and now Minister of National Defense Juan Ponce Enrile to hear
and decide Civil Case No. 4234, rendered a decision, the dispositive portion of which
reads as follows:
A. IN THE CASE AGAINST JUDGE ELIAS B. ASUNCION
(1) declaring that only Branch IV of the Court of First Instance of Leyte has
jurisdiction to take cognizance of the issue of the legality and validity of the Project
of Partition [Exhibit "B"] and the two Orders [Exhibits "C" and "C- 3"] approving the
partition;
(2) dismissing the complaint against Judge Elias B. Asuncion;
(3) adjudging the plaintiff, Mrs. Bernardita R. Macariola to pay defendant Judge Elias
B. Asuncion,
(a) the sum of FOUR HUNDRED THOUSAND PESOS [P400,000.00] for moral
damages;
(b) the sum of TWO HUNDRED THOUSAND PESOS [P200,000.001 for exemplary
damages;
(c) the sum of FIFTY THOUSAND PESOS [P50,000.00] for nominal damages; and
(d) he sum of TEN THOUSAND PESOS [PI0,000.00] for Attorney's Fees.
B. IN THE CASE AGAINST THE DEFENDANT MARIQUITA VILLASIN, FOR HERSELF AND
FOR THE HEIRS OF THE DECEASED GERARDO VILLASIN
(1) Dismissing the complaint against the defendants Mariquita Villasin and the heirs
of the deceased Gerardo Villasin;
(2) Directing the plaintiff to pay the defendants Mariquita Villasin and the heirs of
Gerardo Villasin the cost of the suit.
C. IN THE CASE AGAINST THE DEFENDANT SINFOROSA R. BALES, ET AL., WHO WERE
PLAINTIFFS IN CIVIL CASE NO. 3010
(1) Dismissing the complaint against defendants Sinforosa R. Bales, Adela R. Herrer,
Priscilla R. Solis, Luz R. Bakunawa, Anacorita R. Eng and Ruperto O. Reyes.
D. IN THE CASE AGAINST DEFENDANT BONIFACIO RAMO
(1) Dismissing the complaint against Bonifacio Ramo;
(2) Directing the plaintiff to pay the defendant Bonifacio Ramo the cost of the suit.
SO ORDERED [pp. 531-533, rec.]
It is further disclosed by the record that the aforesaid decision was elevated to the
Court of Appeals upon perfection of the appeal on February 22, 1971.
I
WE find that there is no merit in the contention of complainant Bernardita R.
Macariola, under her first cause of action, that respondent Judge Elias B. Asuncion
violated Article 1491, paragraph 5, of the New Civil Code in acquiring by purchase a
portion of Lot No. 1184-E which was one of those properties involved in Civil Case
No. 3010. 'That Article provides:
Article 1491. The following persons cannot acquire by purchase, even at a public or
judicial action, either in person or through the mediation of another:
xxx xxx xxx
(5) Justices, judges, prosecuting attorneys, clerks of superior and inferior courts, and
other officers and employees connected with the administration of justice, the
property and rights in litigation or levied upon an execution before the court within
whose jurisdiction or territory they exercise their respective functions; this
prohibition includes the act of acquiring by assignment and shall apply to lawyers,
with respect to the property and rights which may be the object of any litigation in
which they may take part by virtue of their profession [emphasis supplied].
The prohibition in the aforesaid Article applies only to the sale or assignment of the
property which is the subject of litigation to the persons disqualified therein. WE
have already ruled that "... for the prohibition to operate, the sale or assignment of
the property must take place during the pendency of the litigation involving the
property" (The Director of Lands vs. Ababa et al., 88 SCRA 513, 519 [1979], Rosario
vda. de Laig vs. Court of Appeals, 86 SCRA 641, 646 [1978]).
In the case at bar, when the respondent Judge purchased on March 6, 1965 a
portion of Lot 1184-E, the decision in Civil Case No. 3010 which he rendered
on June 8, 1963 was already final because none of the parties therein filed an
appeal within the reglementary period; hence, the lot in question was no longer
subject of the litigation. Moreover, at the time of the sale on March 6, 1965,
respondent's order dated October 23, 1963 and the amended order
dated November 11, 1963 approving the October 16, 1963 project of partition made
pursuant to the June 8, 1963 decision, had long become final for there was no
appeal from said orders.
Furthermore, respondent Judge did not buy the lot in question on March 6, 1965
directly from the plaintiffs in Civil Case No. 3010 but from Dr. Arcadio Galapon who
earlier purchased on July 31, 1964 Lot 1184-E from three of the plaintiffs, namely,
Priscilla Reyes, Adela Reyes, and Luz R. Bakunawa after the finality of the decision in
Civil Case No. 3010. It may be recalled that Lot 1184 or more specifically one-half
thereof was adjudicated in equal shares to Priscilla Reyes, Adela Reyes, Luz
Bakunawa, Ruperto Reyes and Anacorita Reyes in the project of partition, and the
same was subdivided into five lots denominated as Lot 1184-A to 1184-E. As
aforestated, Lot 1184-E was sold on July 31, 1964 to Dr. Galapon for which he was
issued TCT No. 2338 by the Register of Deeds of Tacloban City, and on March 6,
1965 he sold a portion of said lot to respondent Judge and his wife who declared
the same for taxation purposes only. The subsequent sale on August 31, 1966 by
spouses Asuncion and spouses Galapon of their respective shares and interest in
said Lot 1184-E to the Traders Manufacturing and Fishing Industries, Inc., in which
respondent was the president and his wife was the secretary, took place long after
the finality of the decision in Civil Case No. 3010 and of the subsequent two
aforesaid orders therein approving the project of partition.
While it appears that complainant herein filed on or about November 9 or 11,
1968 an action before the Court of First Instance of Leyte docketed as Civil Case No.
4234, seeking to annul the project of partition and the two orders approving the
same, as well as the partition of the estate and the subsequent conveyances, the
same, however, is of no moment.
The fact remains that respondent Judge purchased on March 6, 1965 a portion of
Lot 1184-E from Dr. Arcadio Galapon; hence, after the finality of the decision which
he rendered on June 8, 1963 in Civil Case No. 3010 and his two questioned orders
dated October 23, 1963 and November 11, 1963. Therefore, the property was no
longer subject of litigation.
The subsequent filing on November 9, or 11, 1968 of Civil Case No. 4234 can no
longer alter, change or affect the aforesaid facts that the questioned sale to
respondent Judge, now Court of Appeals Justice, was effected and consummated
long after the finality of the aforesaid decision or orders.
Consequently, the sale of a portion of Lot 1184-E to respondent Judge having taken
place over one year after the finality of the decision in Civil Case No. 3010 as well as
the two orders approving the project of partition, and not during the pendency of
the litigation, there was no violation of paragraph 5, Article 1491 of the New Civil
Code.
It is also argued by complainant herein that the sale on July 31, 1964 of Lot 1184-E
to Dr. Arcadio Galapon by Priscilla Reyes, Adela Reyes and Luz R. Bakunawa was only
a mere scheme to conceal the illegal and unethical transfer of said lot to respondent
Judge as a consideration for the approval of the project of partition. In this
connection, We agree with the findings of the Investigating Justice thus:
And so we are now confronted with this all-important question whether or not the
acquisition by respondent of a portion of Lot 1184-E and the subsequent transfer of
the whole lot to "TRADERS" of which respondent was the President and his wife the
Secretary, was intimately related to the Order of respondent approving the project
of partition, Exh. A.
Respondent vehemently denies any interest or participation in the transactions
between the Reyeses and the Galapons concerning Lot 1184-E, and he insists that
there is no evidence whatsoever to show that Dr. Galapon had acted, in the
purchase of Lot 1184-E, in mediation for him and his wife. (See p. 14 of
Respondent's Memorandum).
xxx xxx xxx
On this point, I agree with respondent that there is no evidence in the record
showing that Dr. Arcadio Galapon acted as a mere "dummy" of respondent in
acquiring Lot 1184-E from the Reyeses. Dr. Galapon appeared to this investigator as
a respectable citizen, credible and sincere, and I believe him when he testified that
he bought Lot 1184-E in good faith and for valuable consideration from the Reyeses
without any intervention of, or previous understanding with Judge Asuncion (pp.
391- 394, rec.).
On the contention of complainant herein that respondent Judge acted illegally in
approving the project of partition although it was not signed by the parties, We
quote with approval the findings of the Investigating Justice, as follows:
1. I agree with complainant that respondent should have required the signature of
the parties more particularly that of Mrs. Macariola on the project of partition
submitted to him for approval; however, whatever error was committed by
respondent in that respect was done in good faith as according to Judge Asuncion
he was assured by Atty. Bonifacio Ramo, the counsel of record of Mrs. Macariola,
That he was authorized by his client to submit said project of partition, (See Exh. B
and tsn p. 24, January 20, 1969). While it is true that such written authority if there
was any, was not presented by respondent in evidence, nor did Atty. Ramo appear
to corroborate the statement of respondent, his affidavit being the only one that
was presented as respondent's Exh. 10, certain actuations of Mrs. Macariola lead
this investigator to believe that she knew the contents of the project of partition,
Exh. A, and that she gave her conformity thereto. I refer to the following documents:
1) Exh. 9 Certified true copy of OCT No. 19520 covering Lot 1154 of the Tacloban
Cadastral Survey in which the deceased Francisco Reyes holds a "1/4 share" (Exh. 9-
a). On tills certificate of title the Order dated November 11, 1963, (Exh. U) approving
the project of partition was duly entered and registered on November 26, 1963
(Exh. 9-D);
2) Exh. 7 Certified copy of a deed of absolute sale executed by Bernardita Reyes
Macariola on October 22, 1963, conveying to Dr. Hector Decena the one-fourth
share of the late Francisco Reyes-Diaz in Lot 1154. In this deed of sale the vendee
stated that she was the absolute owner of said one-fourth share, the same having
been adjudicated to her as her share in the estate of her father Francisco Reyes Diaz
as per decision of the Court of First Instance of Leyte under case No. 3010 (Exh. 7-
A). The deed of sale was duly registered and annotated at the back of OCT 19520 on
December 3, 1963 (see Exh. 9-e).
In connection with the abovementioned documents it is to be noted that in the
project of partition dated October 16, 1963, which was approved by respondent on
October 23, 1963, followed by an amending Order on November 11, 1963, Lot 1154
or rather 1/4 thereof was adjudicated to Mrs. Macariola. It is this 1/4 share in Lot
1154 which complainant sold to Dr. Decena on October 22, 1963, several days after
the preparation of the project of partition.
Counsel for complainant stresses the view, however, that the latter sold her one-
fourth share in Lot 1154 by virtue of the decision in Civil Case 3010 and not because
of the project of partition, Exh. A. Such contention is absurd because from the
decision, Exh. C, it is clear that one-half of one- fourth of Lot 1154 belonged to the
estate of Francisco Reyes Diaz while the other half of said one-fourth was the share
of complainant's mother, Felisa Espiras; in other words, the decision did not
adjudicate the whole of the one-fourth of Lot 1154 to the herein complainant (see
Exhs. C-3 & C-4). Complainant became the owner of the entire one-fourth of Lot
1154 only by means of the project of partition, Exh. A. Therefore, if Mrs. Macariola
sold Lot 1154 on October 22, 1963, it was for no other reason than that she was
wen aware of the distribution of the properties of her deceased father as per Exhs.
A and B. It is also significant at this point to state that Mrs. Macariola admitted
during the cross-examination that she went to Tacloban City in connection with the
sale of Lot 1154 to Dr. Decena (tsn p. 92, November 28, 1968) from which we can
deduce that she could not have been kept ignorant of the proceedings in civil case
3010 relative to the project of partition.
Complainant also assails the project of partition because according to her the
properties adjudicated to her were insignificant lots and the least valuable.
Complainant, however, did not present any direct and positive evidence to prove
the alleged gross inequalities in the choice and distribution of the real properties
when she could have easily done so by presenting evidence on the area, location,
kind, the assessed and market value of said properties. Without such evidence there
is nothing in the record to show that there were inequalities in the distribution of
the properties of complainant's father (pp. 386389, rec.).
Finally, while it is. true that respondent Judge did not violate paragraph 5, Article
1491 of the New Civil Code in acquiring by purchase a portion of Lot 1184-E which
was in litigation in his court, it was, however, improper for him to have acquired the
same. He should be reminded of Canon 3 of the Canons of Judicial Ethics which
requires that: "A judge's official conduct should be free from the appearance of
impropriety, and his personal behavior, not only upon the bench and in the
performance of judicial duties, but also in his everyday life, should be beyond
reproach." And as aptly observed by the Investigating Justice: "... it was unwise and
indiscreet on the part of respondent to have purchased or acquired a portion of a
piece of property that was or had been in litigation in his court and caused it to be
transferred to a corporation of which he and his wife were ranking officers at the
time of such transfer. One who occupies an exalted position in the judiciary has the
duty and responsibility of maintaining the faith and trust of the citizenry in the
courts of justice, so that not only must he be truly honest and just, but his
actuations must be such as not give cause for doubt and mistrust in the uprightness
of his administration of justice. In this particular case of respondent, he cannot deny
that the transactions over Lot 1184-E are damaging and render his actuations open
to suspicion and distrust. Even if respondent honestly believed that Lot 1184-E was
no longer in litigation in his court and that he was purchasing it from a third person
and not from the parties to the litigation, he should nonetheless have refrained
from buying it for himself and transferring it to a corporation in which he and his
wife were financially involved, to avoid possible suspicion that his acquisition was
related in one way or another to his official actuations in civil case 3010. The
conduct of respondent gave cause for the litigants in civil case 3010, the lawyers
practising in his court, and the public in general to doubt the honesty and fairness of
his actuations and the integrity of our courts of justice" (pp. 395396, rec.).
II
With respect to the second cause of action, the complainant alleged that
respondent Judge violated paragraphs 1 and 5, Article 14 of the Code of Commerce
when he associated himself with the Traders Manufacturing and Fishing Industries,
Inc. as a stockholder and a ranking officer, said corporation having been organized to
engage in business. Said Article provides that:
Article 14 The following cannot engage in commerce, either in person or by
proxy, nor can they hold any office or have any direct, administrative, or financial
intervention in commercial or industrial companies within the limits of the districts,
provinces, or towns in which they discharge their duties:
1. Justices of the Supreme Court, judges and officials of the department of public
prosecution in active service. This provision shall not be applicable to mayors,
municipal judges, and municipal prosecuting attorneys nor to those who by chance
are temporarily discharging the functions of judge or prosecuting attorney.
xxx xxx xxx
5. Those who by virtue of laws or special provisions may not engage in commerce in
a determinate territory.
It is Our considered view that although the aforestated provision is incorporated in
the Code of Commerce which is part of the commercial laws of the Philippines, it,
however, partakes of the nature of a political law as it regulates the relationship
between the government and certain public officers and employees, like justices
and judges.
Political Law has been defined as that branch of public law which deals with the
organization and operation of the governmental organs of the State and define the
relations of the state with the inhabitants of its territory (People vs. Perfecto, 43
Phil. 887, 897 [1922]). It may be recalled that political law embraces constitutional
law, law of public corporations, administrative law including the law on public
officers and elections. Specifically, Article 14 of the Code of Commerce partakes
more of the nature of an administrative law because it regulates the conduct of
certain public officers and employees with respect to engaging in business: hence,
political in essence.
It is significant to note that the present Code of Commerce is the Spanish Code of
Commerce of 1885, with some modifications made by the "Commission de
Codificacion de las Provincias de Ultramar," which was extended to the Philippines
by the Royal Decree of August 6, 1888, and took effect as law in this jurisdiction on
December 1, 1888.
Upon the transfer of sovereignty from Spain to the United States and later on from
the United States to the Republic of the Philippines, Article 14 of this Code of
Commerce must be deemed to have been abrogated because where there is change
of sovereignty, the political laws of the former sovereign, whether compatible or not
with those of the new sovereign, are automatically abrogated, unless they are
expressly re-enacted by affirmative act of the new sovereign.
Thus, We held in Roa vs. Collector of Customs (23 Phil. 315, 330, 311 [1912]) that:
By well-settled public law, upon the cession of territory by one nation to another,
either following a conquest or otherwise, ... those laws which are political in their
nature and pertain to the prerogatives of the former government immediately cease
upon the transfer of sovereignty. (Opinion, Atty. Gen., July 10, 1899).
While municipal laws of the newly acquired territory not in conflict with the, laws of
the new sovereign continue in force without the express assent or affirmative act of
the conqueror, the political laws do not. (Halleck's Int. Law, chap. 34, par. 14).
However, such political laws of the prior sovereignty as are not in conflict with the
constitution or institutions of the new sovereign, may be continued in force if the
conqueror shall so declare by affirmative act of the commander-in-chief during the
war, or by Congress in time of peace. (Ely's Administrator vs. United States, 171 U.S.
220, 43 L. Ed. 142). In the case of American and Ocean Ins. Cos. vs. 356 Bales of
Cotton (1 Pet. [26 U.S.] 511, 542, 7 L. Ed. 242), Chief Justice Marshall said:
On such transfer (by cession) of territory, it has never been held that the relations of
the inhabitants with each other undergo any change. Their relations with their
former sovereign are dissolved, and new relations are created between them and
the government which has acquired their territory. The same act which transfers
their country, transfers the allegiance of those who remain in it; and the law which
may be denominated political, is necessarily changed, although that which regulates
the intercourse and general conduct of individuals, remains in force, until altered by
the newly- created power of the State.
Likewise, in People vs. Perfecto (43 Phil. 887, 897 [1922]), this Court stated that: "It
is a general principle of the public law that on acquisition of territory the previous
political relations of the ceded region are totally abrogated. "
There appears no enabling or affirmative act that continued the effectivity of the
aforestated provision of the Code of Commerce after the change of sovereignty
from Spain to the United States and then to the Republic of the Philippines.
Consequently, Article 14 of the Code of Commerce has no legal and binding effect
and cannot apply to the respondent, then Judge of the Court of First Instance, now
Associate Justice of the Court of Appeals.
It is also argued by complainant herein that respondent Judge violated paragraph H,
Section 3 of Republic Act No. 3019, otherwise known as the Anti-Graft and Corrupt
Practices Act, which provides that:
Sec. 3. Corrupt practices of public officers. In addition to acts or omissions of
public officers already penalized by existing law, the following shall constitute
corrupt practices of any public officer and are hereby declared to be unlawful:
xxx xxx xxx
(h) Directly or indirectly having financial or pecuniary interest in any business,
contract or transaction in connection with which he intervenes or takes part in his
official capacity, or in which he is prohibited by the Constitution or by any Iaw from
having any interest.
Respondent Judge cannot be held liable under the aforestated paragraph because
there is no showing that respondent participated or intervened in his
official capacity in the business or transactions of the Traders Manufacturing and
Fishing Industries, Inc. In the case at bar, the business of the corporation in which
respondent participated has obviously no relation or connection with his judicial
office. The business of said corporation is not that kind where respondent
intervenes or takes part in his capacity as Judge of the Court of First Instance. As
was held in one case involving the application of Article 216 of the Revised Penal
Code which has a similar prohibition on public officers against directly or indirectly
becoming interested in any contract or business in which it is his official duty to
intervene, "(I)t is not enough to be a public official to be subject to this crime; it is
necessary that by reason of his office, he has to intervene in said contracts or
transactions; and, hence, the official who intervenes in contracts or transactions
which have no relation to his office cannot commit this crime.' (People vs. Meneses,
C.A. 40 O.G. 11th Supp. 134, cited by Justice Ramon C. Aquino; Revised Penal Code,
p. 1174, Vol. 11 [1976]).
It does not appear also from the records that the aforesaid corporation gained any
undue advantage in its business operations by reason of respondent's financial
involvement in it, or that the corporation benefited in one way or another in any
case filed by or against it in court. It is undisputed that there was no case filed in the
different branches of the Court of First Instance of Leyte in which the corporation
was either party plaintiff or defendant except Civil Case No. 4234 entitled
"Bernardita R. Macariola, plaintiff, versus Sinforosa O. Bales, et al.," wherein the
complainant herein sought to recover Lot 1184-E from the aforesaid corporation. It
must be noted, however, that Civil Case No. 4234 was filed only on November 9 or
11, 1968 and decided on November 2, 1970 by CFI Judge Jose D. Nepomuceno when
respondent Judge was no longer connected with the corporation, having disposed
of his interest therein on January 31, 1967.
Furthermore, respondent is not liable under the same paragraph because there is
no provision in both the 1935 and 1973 Constitutions of the Philippines, nor is there
an existing law expressly prohibiting members of the Judiciary from engaging or
having interest in any lawful business.
It may be pointed out that Republic Act No. 296, as amended, also known as the
Judiciary Act of 1948, does not contain any prohibition to that effect. As a matter of
fact, under Section 77 of said law, municipal judges may engage in teaching or other
vocation not involving the practice of law after office hours but with the permission
of the district judge concerned.
Likewise, Article 14 of the Code of Commerce which prohibits judges from engaging
in commerce is, as heretofore stated, deemed abrogated automatically upon the
transfer of sovereignty from Spain to America, because it is political in nature.
Moreover, the prohibition in paragraph 5, Article 1491 of the New Civil Code against
the purchase by judges of a property in litigation before the court within whose
jurisdiction they perform their duties, cannot apply to respondent Judge because
the sale of the lot in question to him took place after the finality of his decision in
Civil Case No. 3010 as well as his two orders approving the project of partition;
hence, the property was no longer subject of litigation.
In addition, although Section 12, Rule XVIII of the Civil Service Rules made pursuant
to the Civil Service Act of 1959 prohibits an officer or employee in the civil service
from engaging in any private business, vocation, or profession or be connected with
any commercial, credit, agricultural or industrial undertaking without a written
permission from the head of department, the same, however, may not fall within
the purview of paragraph h, Section 3 of the Anti-Graft and Corrupt Practices Act
because the last portion of said paragraph speaks of a prohibition by
the Constitution or law on any public officer from having any interest in any business
and not by a mere administrative rule or regulation. Thus, a violation of the
aforesaid rule by any officer or employee in the civil service, that is, engaging in
private business without a written permission from the Department Head may not
constitute graft and corrupt practice as defined by law.
On the contention of complainant that respondent Judge violated Section 12, Rule
XVIII of the Civil Service Rules, We hold that the Civil Service Act of 1959 (R.A. No.
2260) and the Civil Service Rules promulgated thereunder, particularly Section 12 of
Rule XVIII, do not apply to the members of the Judiciary. Under said Section 12: "No
officer or employee shall engage directly in any private business, vocation, or
profession or be connected with any commercial, credit, agricultural or industrial
undertaking without a written permission from the Head of Department ..."
It must be emphasized at the outset that respondent, being a member of the
Judiciary, is covered by Republic Act No. 296, as amended, otherwise known as the
Judiciary Act of 1948 and by Section 7, Article X, 1973 Constitution.
Under Section 67 of said law, the power to remove or dismiss judges was then
vested in the President of the Philippines, not in the Commissioner of Civil Service,
and only on two grounds, namely, serious misconduct and inefficiency, and upon the
recommendation of the Supreme Court, which alone is authorized, upon its own
motion, or upon information of the Secretary (now Minister) of Justice to conduct
the corresponding investigation. Clearly, the aforesaid section defines the grounds
and prescribes the special procedure for the discipline of judges.
And under Sections 5, 6 and 7, Article X of the 1973 Constitution, only the Supreme
Court can discipline judges of inferior courts as well as other personnel of the
Judiciary.
It is true that under Section 33 of the Civil Service Act of 1959: "The Commissioner
may, for ... violation of the existing Civil Service Law and rules or of reasonable office
regulations, or in the interest of the service, remove any subordinate officer or
employee from the service, demote him in rank, suspend him for not more than one
year without pay or fine him in an amount not exceeding six months' salary." Thus, a
violation of Section 12 of Rule XVIII is a ground for disciplinary action against civil
service officers and employees.
However, judges cannot be considered as subordinate civil service officers or
employees subject to the disciplinary authority of the Commissioner of Civil Service;
for, certainly, the Commissioner is not the head of the Judicial Department to which
they belong. The Revised Administrative Code (Section 89) and the Civil Service Law
itself state that the Chief Justice is the department head of the Supreme Court (Sec.
20, R.A. No. 2260) [1959]); and under the 1973 Constitution, the Judiciary is the
only other or second branch of the government (Sec. 1, Art. X, 1973 Constitution).
Besides, a violation of Section 12, Rule XVIII cannot be considered as a ground for
disciplinary action against judges because to recognize the same as applicable to
them, would be adding another ground for the discipline of judges and, as
aforestated, Section 67 of the Judiciary Act recognizes only two grounds for their
removal, namely, serious misconduct and inefficiency.
Moreover, under Section 16(i) of the Civil Service Act of 1959, it is the Commissioner
of Civil Service who has original and exclusive jurisdiction "(T)o decide, within one
hundred twenty days, after submission to it, all administrative cases
against permanent officers and employees in the competitive service, and, except as
provided by law, to have final authority to pass upon their removal, separation, and
suspension and upon all matters relating to the conduct, discipline, and efficiency of
such officers and employees; and prescribe standards, guidelines and regulations
governing the administration of discipline" (emphasis supplied). There is no
question that a judge belong to the non-competitive or unclassified service of the
government as a Presidential appointee and is therefore not covered by the
aforesaid provision. WE have already ruled that "... in interpreting Section 16(i) of
Republic Act No. 2260, we emphasized that only permanent officers and employees
who belong to the classified service come under the exclusive jurisdiction of the
Commissioner of Civil Service" (Villaluz vs. Zaldivar, 15 SCRA 710,713 [1965], Ang-
Angco vs. Castillo, 9 SCRA 619 [1963]).
Although the actuation of respondent Judge in engaging in private business by
joining the Traders Manufacturing and Fishing Industries, Inc. as a stockholder and a
ranking officer, is not violative of the provissions of Article 14 of the Code of
Commerce and Section 3(h) of the Anti-Graft and Corrupt Practices Act as well as
Section 12, Rule XVIII of the Civil Service Rules promulgated pursuant to the Civil
Service Act of 1959, the impropriety of the same is clearly unquestionable because
Canon 25 of the Canons of Judicial Ethics expressly declares that:
A judge should abstain from making personal investments in enterprises which are
apt to be involved in litigation in his court; and, after his accession to the bench, he
should not retain such investments previously made, longer than a period sufficient
to enable him to dispose of them without serious loss. It is desirable that he should,
so far as reasonably possible, refrain from all relations which would normally tend
to arouse the suspicion that such relations warp or bias his judgment, or prevent his
impartial attitude of mind in the administration of his judicial duties. ...
WE are not, however, unmindful of the fact that respondent Judge and his wife had
withdrawn on January 31, 1967 from the aforesaid corporation and sold their
respective shares to third parties, and it appears also that the aforesaid corporation
did not in anyway benefit in any case filed by or against it in court as there was no
case filed in the different branches of the Court of First Instance of Leyte from the
time of the drafting of the Articles of Incorporation of the corporation on March 12,
1966, up to its incorporation on January 9, 1967, and the eventual withdrawal of
respondent on January 31, 1967 from said corporation. Such disposal or sale by
respondent and his wife of their shares in the corporation only 22 days after the
incorporation of the corporation, indicates that respondent realized that early that
their interest in the corporation contravenes the aforesaid Canon 25. Respondent
Judge and his wife therefore deserve the commendation for their immediate
withdrawal from the firm after its incorporation and before it became involved in
any court litigation
III
With respect to the third and fourth causes of action, complainant alleged that
respondent was guilty of coddling an impostor and acted in disregard of judicial
decorum, and that there was culpable defiance of the law and utter disregard for
ethics. WE agree, however, with the recommendation of the Investigating Justice
that respondent Judge be exonerated because the aforesaid causes of action are
groundless, and WE quote the pertinent portion of her report which reads as
follows:
The basis for complainant's third cause of action is the claim that respondent
associated and closely fraternized with Dominador Arigpa Tan who openly and
publicly advertised himself as a practising attorney (see Exhs. I, I-1 and J) when in
truth and in fact said Dominador Arigpa Tan does not appear in the Roll of Attorneys
and is not a member of the Philippine Bar as certified to in Exh. K.
The "respondent denies knowing that Dominador Arigpa Tan was an "impostor" and
claims that all the time he believed that the latter was a bona fide member of the
bar. I see no reason for disbelieving this assertion of respondent. It has been shown
by complainant that Dominador Arigpa Tan represented himself publicly as an
attorney-at-law to the extent of putting up a signboard with his name and the words
"Attorney-at Law" (Exh. I and 1- 1) to indicate his office, and it was but natural for
respondent and any person for that matter to have accepted that statement on its
face value. "Now with respect to the allegation of complainant that respondent is
guilty of fraternizing with Dominador Arigpa Tan to the extent of permitting his wife
to be a godmother of Mr. Tan's child at baptism (Exh. M & M-1), that fact even if
true did not render respondent guilty of violating any canon of judicial ethics as long
as his friendly relations with Dominador A. Tan and family did not influence his
official actuations as a judge where said persons were concerned. There is no
tangible convincing proof that herein respondent gave any undue privileges in his
court to Dominador Arigpa Tan or that the latter benefitted in his practice of law
from his personal relations with respondent, or that he used his influence, if he had
any, on the Judges of the other branches of the Court to favor said Dominador Tan.

Of course it is highly desirable for a member of the judiciary to refrain as much as

possible from maintaining close friendly relations with practising attorneys and
litigants in his court so as to avoid suspicion 'that his social or business relations or
friendship constitute an element in determining his judicial course" (par. 30, Canons
of Judicial Ethics), but if a Judge does have social relations, that in itself would not
constitute a ground for disciplinary action unless it be clearly shown that his social
relations be clouded his official actuations with bias and partiality in favor of his
friends (pp. 403-405, rec.).

In conclusion, while respondent Judge Asuncion, now Associate Justice of the Court
of Appeals, did not violate any law in acquiring by purchase a parcel of land which
was in litigation in his court and in engaging in business by joining a private
corporation during his incumbency as judge of the Court of First Instance of Leyte,
he should be reminded to be more discreet in his private and business activities,
because his conduct as a member of the Judiciary must not only be characterized
with propriety but must always be above suspicion.

WHEREFORE, THE RESPONDENT ASSOCIATE JUSTICE OF THE COURT OF APPEALS IS

HEREBY REMINDED TO BE MORE DISCREET IN HIS PRIVATE AND BUSINESS
ACTIVITIES.

SO ORDERED.
G.R. No. 72306 October 6, 1988
DAVID P. FORNILDA, JUAN P. FORNILDA, EMILIA P. FORNILDA OLILI, LEOCADIA P.
FORNILDA LABAYEN and ANGELA P. FORNILDA GUTIERREZ, petitioners,
vs.
THE BRANCH 164, REGIONAL TRIAL COURT IVTH JUDICIAL REGION, PASIG,
JOAQUIN C. ANTONIO Deputy Sheriff, RTC, 4JR Tanay, Rizal and ATTY. SERGIO I.
AMONOY respondents.
MELENCIO-HERRERA, J.:
The Petition entitled "Petisiyung Makapagpasuri Taglay ang Pagpapapigil ng Utos",
translated as one for certiorari with Preliminary Injunction, was filed on 27
September 1985 by three (3) petitioners, namely David P. Fornilda, Emilia P.
Fornilda-Olili and Angela P. Fornilda-Gutierrez. They seek the reversal of the Order
of respondent Trial Court, dated 25 July 1985, granting a Writ of Possession, as well
as its Orders, dated 25 April 1986 and 16 May 1986 (p. 241, Rollo), directing and
authorizing respondent Sheriff to demolish the houses of petitioners Angela and
Leocadia Fornilda (who is listed as a petitioner but who did not sign the Petition).
Neither is Juan P. Fornilda a signatory.
The facts disclose that the deceased, Julio M. Catolos formerly owned six (6) parcels
of land located in Tanay, Rizal, which are the controverted properties in the present
litigation. His estate was the subject of settlement in Special Proceedings No. 3103
of the then Court of First Instance of Rizal, at Pasig, Branch 1. Francesca Catolos
Agnes Catolos Alfonso I. ForniIda and Asuncion M. Pasamba were some of the legal
heirs and were represented in the case by Atty. Sergio Amonoy (hereinafter referred
to as Respondent Amonoy). A Project of Partition was filed in the Intestate Court
whereby the Controverted Parcels were adjudicated to Alfonso I. Fornilda and
Asuncion M. Pasamba.
On 12 January 1965, the Court approved the Project of Partition. It was not until 6
August 1969, however, that the estate was declared closed and terminated after
estate and inheritance taxes had been paid, the claims against the estate settled and
all properties adjudicated.
Eight (8) days thereafter, or on 20 January 1965, Alfonso 1. Fornilda and Asuncion
M. Pasamba executed a Contract of Mortgage wherein they mortgaged the
Controverted Parcels to Respondent Amonoy as security for the payment of his
attorney's fees for services rendered in the aforementioned intestate proceedings,
in the amount of P27,600.00 (Annex "A", Comment).
Asuncion M. Pasamba died on 24 February 1969 while Alfonso 1. Fornilda passed
away on 2 July 1969. Petitioners are some of the heirs of Alfonso I. Fornilda.
Since the mortgage indebtedness was not paid, on 21 January 1970, Respondent
Amonoy instituted foreclosure proceedings before the Court of First Instance of
Rizal, at Pasig, Branch VIII entitled "Sergio I. Amonoy vs. Heirs of Asuncion M.
Pasamba and Heirs of Alfonso 1. Fornilda" [Civil Case No. 12726] (Annex "B", Ibid.).
Petitioners, as defendants therein, alleged that the amount agreed upon as
attorney's fees was only Pll,695.92 and that the sum of P27,600.00 was
unconscionable and unreasonable. Appearing as signatory counsel for Respondent
Amonoy was Atty. Jose S. Balajadia.
On 28 September 1972, the Trial Court 1 rendered judgement in the Foreclosure
Case ordering the Pasamba and Fornilda heirs to pay Respondent Amonoy, within
ninety (90).days from receipt of the decision, the sums of P27,600.00 representing
the attorney's fees secured by the mortgage; Pl l,880.00 as the value of the harvest
from two (2) parcels of land; and 25% of the total of the two amounts, or P9,645.00,
as attorney's fees, failing which the Controverted Parcels would be sold at public
auction (Annex "C", Ibid.).
On 6 February 1973, the Controverted Parcels were foreclosed and on 23 March
1973, an auction sale was held with Respondent Amonoy as the sole bidder for
P23,760.00 (Annex "D", Ibid.). Said sale was confirmed by the Trial Court on 2 May
1973 (Annex "E", Ibid.). To satisfy the deficiency, another execution sale was
conducted with Respondent Amonoy as the sole bidder for P12,137.50. On the basis
of an Affidavit of Consolidation of Ownership by Respondent Amonoy, the
corresponding tax declarations covering the Controverted Parcels were consolidated
in his name.
On 19 December 1973, or a year after the judgment in the Foreclosure Case, an
action for Annulment of Judgment entitled "Maria Penano et al. vs. Sergio Amonoy,
et al." (Civil Case No. 18731) was filed before the then Court of First Instance of
Rizal, at Pasig the Annulment Case (Annex "F", Ibid.) Petitioners were also included
as plaintiffs. Appearing for the plaintiffs in that case was Atty. Jose F. Tiburcio.
Squarely put in issue were the propriety of the mortgage, the validity of the
judgment in the Foreclosure Case, and the tenability of the acquisitions by
Respondent Amonoy at the Sheriffs sale. Of particular relevance to the instant
Petition is the contention that the mortgage and the Sheriffs sales were null and
void as contrary to the positive statutory injunction in Article 1491 (5) of the Civil
Code, which prohibits attorneys from purchasing, even at a public or judicial
auction, properties and rights in litigation, and that the Trial Court, in the
Foreclosure Case, had never acquired jurisdiction over the subject matter of the
action, i.e., the Controverted Parcels.
On 7 November 1977, the Trial Court 2 dismissed the Annulment Case holding that
the particular disqualification in Article 1491 of the Civil Code is not of general
application nor of universal effect but must be reconciled with the rule that permits
judgment creditors to be bidders at sheriffs sales, so that Respondent Amonoy was
"clearly not prohibited from bidding his judgment and his acquisitions therefore are
sanctioned by law" (Annex "G", Ibid.).
On 22 July 1981, the Court of Appeals (in CA-G.R. No. 63214-R) (the Appealed
Case) 3 affirmed the aforesaid judgment predicated on three principal grounds: (1)
that no legal impediment exists to bar an heir from encumbering his share of the
estate after a project of partition has been approved, that act being a valid exercise
of his right of ownership; (2) res judicata, since petitioners never questioned the
capacity of Respondent Amonoy to acquire the property in the Foreclosure Case;
and (3) the complaint in the Annulment Case did not allege extrinsic fraud nor
collusion in obtaining the judgment so that the action must fail.
Upon remand of the Foreclusure Case to respondent Regional Trial Court, Branch
164, at Pasig, Respondent Sheriff, on 26 August 1985, notified petitioners to vacate
the premises (p. 17, Rollo), subject of the Writ of Possession issued on 25 July 1985
(p. 18, Rollo).
On 27 September 1985, petitioners came to this Court in a pleading entitled
"Petisiyung Makapagpasuri Taglay ang Pagpapapigil ng Utos". On 11 November
1985, we dismissed the petition for non-payment of docket and other fees.
However, upon payment thereof, the Order of dismissal was set aside and
respondents were directed to submit their Comment. In his Comment, Respondent
Amonoy denies that he had acquired the Controverted Parcels through immoral and
illegal means contending that "the question of attorney's fees, the mortgage to
secure the same, the sale of the mortgaged properties at public auction, which was
confirmed by the Court, and ultimately, the ownership and possession over them,
have all been judicially adjudicated (p. 146, Rollo)
We gave due course to the petition and required the filing of the parties' respective
memoranda.
Meanwhile, on motion of Respondent Amonoy, dated 24 April 1986, respondent
Trial Court, in the Foreclosure Case, issued Orders dated 25 April and 16 May 1986
authorizing the demolition of the houses and other structures of petitioners
Leocadia and Angela Fornilda (p. 241, Rollo).
On 1 June 1986 the house of Angela Fornilda was totally demolished while that of
Leocadia was spared due to the latter's assurance that she would seek
postponement. On 1 June 1986, in a pleading entitled "Mahigpit na Musiyung Para
Papanagutin Kaugnay ng Paglalapastangan", followed by a Musiyung Makahingi ng
Utos sa Pagpapapigil ng Pagpapagiba at Papanagutin sa Paglalapastangan'
petitioners applied for a Restraining Order, which we granted on 2 June 1986,
enjoining respondents and the Sheriff of Rizal from demolishing petitioners' houses
(p. 221, Rollo). In a pleading entitled 'Mahigpit na Musiyung para Papanagutin
Kaugnay ng Paglapastangan' and 'Masasamang Gawain (Mal-Practices)' and
'Paninindigan (Memorandum)' both filed on 16 June 1988, petitioners likewise
charged Respondent Amonoy with malpractice and prayed for his disbarment (pp.
224; 226, Rollo).
In Respondent Amonoy's "Comment and Manifestations" filed on 30 June 1986, he
indicated that the Restraining Order received by the Deputy Sheriff of Rizal only on 6
June 1986 had already become moot and academic as Angela Fornilda's house had
been demolished on 2 June 1986 while Leocadia offered to buy the small area of the
land where her house is built and he had relented.
In the interim, Respondent Amonoy was appointed as Assistant Provincial Fiscal of
Rizal, and subsequently as a Regional Trial Court Judge in Pasay City.
The threshold issue is whether or not the mortgage constituted on the Controverted
Parcels in favor of Respondent Amonoy comes within the scope of the prohibition in
Article 1491 of the Civil Code.
The pertinent portions of the said Articles read:
Art. 1491. The following persons cannot acquire by purchase even at a public or
judicial or auction, either in person or through the mediation of another:
xxx xxx xxx
(5) Justices, judges, prosecuting attorneys, ... the property and rights in litigation or
levied upon on execution before the court within whose junction or territory they
exercise their respective functions; this prohibition includes the act of acquitting by
assignment and shall apply to lawyers with respect to the property and rights which
may be the object of any litigation in which they may take part by virtue of their
profession. (Emphasis supplied)
Under the aforequoted provision, a lawyer is prohibited from acquiring either by
purchase or assignment the property or rights involved which are the object of the
litigation in which they intervene by virtue of their profession ( Padilla Vol. H Civil
Law, 1974 Ed., p. 230 citing Hernandez vs. Villanueva, 40 Phil. 773 and Rubias vs.
Batiller 51 SCRA 130). The prohibition on purchase is all embracing to include not
only sales to private individuals but also public or judicial sales (ibid., p. 221).
The rationale advanced for the prohibition is that public policy disallows the
transactions in view of the fiduciary relationship involved i.e., the relation of trust
and confidence and the peculiar control exercised by these persons (Paras, Civil
Code, Vol. V, 1973., p. 70).
In the instant case, it is undisputed that the Controverted Parcels were part of the
estate of the late Julio M. Catolos subject of intestate estate proceedings, wherein
Respondent Amonoy acted as counsel for some of the heirs from 1959 until 1968 by
his own admission (Comment, p. 145, Rollo); that these properties were adjudicated
to Alfonso Fornilda and Asuncion M. Pasamba in the Project of Partition approved
by the Court on 12 January 1965; that on 20 January 1965, or only eight (8) days
thereafter, and while he was still intervening in the case as counsel, these properties
were mortgaged by petitioners' predecessor-in-interest to Respondent Amonoy to
secure payment of the latter's attorney's fees in the amount of P27,600.00; that
since the mortgage indebtedness was not paid, Respondent Amonoy instituted an
action for judicial foreclosure of mortgage on 21 January 1970; that the mortgage
was subsequently ordered foreclosed and auction sale followed where Respondent
Amonoy was the sole bidder for P23,600.00; and that being short of the mortgage
indebtedness, he applied for and further obtained a deficiency judgment.
Telling, therefore, is the fact that the transaction involved falls squarely within the
prohibition against any acquisition by a lawyer of properties belonging to parties
they represent which are still in suit. For, while the Project of Partition was approved
on 12 January 1965, it was not until 6 August 1969 that the estate was declared
closed and terminated (Record on Appeal, Civil Case No. 3103, p. 44). At the time
the mortgage was executed, therefore, the relationship of lawyer and client still
existed, the very relation of trust and confidence sought to be protected by the
prohibition, when a lawyer occupies a vantage position to press upon or dictate
terms to an harassed client. What is more, the mortgage was executed only eight (8)
days after approval of the Project of Partition thereby evincing a clear intention on
Respondent Amonoy's part to protect his own interests and ride roughshod over
that of his clients. From the time of the execution of the mortgage in his favor,
Respondent Amonoy had already asserted a title adverse to his clients' interests at a
time when the relationship of lawyer and client had not yet been severed.
The fact that the properties were first mortgaged and only subsequently acquired in
an auction sale long after the termination of the intestate proceedings will not
remove it from the scope of the prohibition. To rule otherwise would be to
countenance indirectly what cannot be done directly.
There is no gainsaying that petitioners' predecessor-in-interest, as an heir, could
encumber the property adjudicated to him; that the Complaint in the Annulment
Case did not contain any specific allegation of fraud or collusion in obtaining the
judgment appealed from as opined by the Court of appeals in the Appealed Case;
and that the auction sale of the properties to Respondent Amonoy was judicially
confirmed and ownership and possession of the Controverted Parcels ultimately Art. 1412. If the act in which the unlawful or forbidden cause consists does not
transferred to him. constitute a criminal offense, the following rules shall be observed:

Nonetheless, considering that the mortgage contract, entered into in contravention
of Article 1491 of the Civil Code, supra, is expressly prohibited by law, the same
must be held inexistent and void ab initio (Director of Lands vs. Abagat, 53 Phil.
147).
Art. 1409. The following contracts are inexistent and void from the beginning:
xxx xxx xxx
(2) When only one of the contracting parties is at fault, he cannot recover what he
has given by reason of the contract, or ask for the fulfillment of what has been
promised him. The other, who is not at fault, may demand the return of what he has
given without any obligation to comply with his promise. (Civil Code).

(1) Those whose cause, object or purpose is contrary to law, morals, good customs, WHEREFORE, certiorari is granted; the Order of respondent Trial Court, dated 25
public order or public policy; July 1985, granting a Writ of Possession, as well as its Orders, dated 25 April 1986
and 16 May 1986, directing and authorizing respondent Sheriff to demolish the
xxx xxx xxx houses of petitioners Angela and Leocadia Fornilda are hereby set aside, and the
Temporary Restraining Order heretofore issued, is made permanent. The six (6)
(7) Those expressly prohibited or declared void by law. These contracts cannot be
parcels of land herein controverted are hereby ordered returned to petitioners
ratified. Neither can the right to set up the defense of illegality be waived. (Civil
unless some of them have been conveyed to innocent third persons.
Code)
With respect to petitioners' prayer for disbarment by reason of malpractice of
Being a void contract, the action or defense for the declaration of its inesistence is
Respondent Amonoy embodied in their pleading entitled 'Mahigpit na Musiyung
imprescriptible (Article 1410, Civil Code). The defect of a void or inexistence
para Papanagutin Kaugnay ng Paglalapastangan' and 'Masasamang Gawain (Mal-
contract is permanent. Mere lapse of time cannot give it efficacy. Neither can the
Pracrices) and "Paninindigan (Memorandum)" both filed on Sergio I. Amonoy is
right to set up the defense of illegality be waived (Article 1409, Civil Code).
hereby required, within fifteen (15) days from notice hereof, to submit an Answer
The Controverted Parcels could not have been the object of any mortgage contract thereto. After receipt of the same, a new docket number will be assigned to the
in favor of Respondent Amonoy and consequently neither of a foreclosure sale. By case.
analogy, the illegality must be held to extend to whatsover results directly from the
Costs against respondent, Sergio I. Amonoy.
illegal source (Article 1422, Civil Code). Such being the case, the Trial Court did not
acquire any jurisdiction over the subject matter of the Foreclosure Case and the SO ORDERED.
judgment rendered therein could not have attained any finality and could be
attacked at any time. Neither could it have been a bar to the action brought by
petitioners for its annulment by reason of res judicata. (Municipality of Antipolo vs.
Zapanta, No. L-65334, December 26, 1984, 133 SCRA 820). Two of the requisites of
the rule of prior judgment as a bar to a subsequent case, namely, (1) a final
judgment and (2) that it must have been rendered by a Court having jurisdiction
over the subject matter, are conspicuously absent.

And since the nullity of the transaction herein involved proceeds from the illegality
of the cause or object of the contract, and the act does not constitute a criminal
offense, the return to petitioners of the Controverted Parcels is in order.
[A.C. No. 3046. October 26, 1998]
REGALADO DAROY, complainant, vs. ATTY. ESTEBAN ABECIA, respondent.
MENDOZA, J.:
This refers to the complaint for malpractice filed by Regalado Daroy (now deceased)
against Esteban Abecia, a member of the Bar. Complainant Daroy accused
respondent Abecia of having forged his signature in a deed of absolute sale by
means of which the latter was able to transfer a parcel of land in Opol, Misamis
Oriental, first to Jose Gangay and eventually to his (respondents) wife Nena Abecia.
The facts of the instant case are as follows:
Respondent Abecia was counsel of complainant Daroy in a case for forcible entry
before the Municipal Trial Court of Opol, Misamis Oriental. [1] Judgment was
rendered in favor of complainant as plaintiff in the ejectment case, ordering the
defendants to pay damages, attorneys fees, and the costs of the suit. To satisfy the
judgment, the sheriff sold at public auction on March 25, 1971 a parcel of land
belonging to one of the defendants to complainant Daroy as highest bidder
for P1,250.00. Upon failure of the defendants to redeem the land, its ownership was
consolidated in complainant Daroy.
Complainant Daroy claimed that respondent Abecia forged his signature in a deed
of absolute sale, dated March 31, 1971, transferring the subject parcel of land to
Jose Gangay purportedly for the sum of P1,250.00 and that in a fictitious deed of
absolute sale, dated April 17, 1971, it was made to appear that Gangay in turn
conveyed the land to Nena Abecia, wife of respondent Abecia, for the sum
of P1,350.00.[2] Complainant alleged that he entrusted the title to the land (TCT No.
T-315) to Abecia as his counsel and allowed him to take possession of the land upon
the latters request. By means of the forged deed of sale, Abecia was able to obtain
new transfer certificates of title, first in the name of Gangay and then in that of Mrs.
Abecia, from the Registry of Deeds of Misamis Oriental. [3] Daroy claimed he
discovered the fraud only in 1984.
Daroy submitted in evidence a report of the National Bureau of Investigation, which
had examined the deed of sale in favor of Jose Gangay, showing that Daroys
signature in the deed of sale had been written by a different hand. In addition,
Daroy presented the affidavit, executed on August 10, 1988, of Anita Gangay, wife of
Jose Gangay, in which she retracted an earlier affidavit executed on June 5, 1985.In
the first affidavit, she stated that she had bought the land in question from Regalado
Daroy and then sold it to her sister Nena Abecia, wife of respondent Esteban. Now,
in her present affidavit, it is stated that she did not buy the land from Daroy nor
later sell it to Nena Abecia and that she really did not know anything about the
controversy between Regalado Daroy and Esteban Abecia, both of whom are her
brothers-in-law. (It appears that Mrs. Conchita Daroy, Mrs. Anita Gangay, and Mrs.
Nena Abecia are sisters, although Conchita Daroy and Regalado Daroy are not
married but lived together in a common-law relationship.)
A complaint for falsification of public document was also filed against respondent
Abecia in the Office of the City Prosecutor of Cagayan de Oro which, however,
dismissed the same.[4] On appeal, then Undersecretary of Justice Silvestre H. Bello III
reversed on May 6, 1988 the findings of the City Prosecutor of Cagayan de Oro and
consequently ordered the filing of the corresponding information in court.
[5]
Accordingly, City Prosecutor Rodolfo R. Waga filed an information for falsification
of public document, dated June 30, 1988, with the Regional Trial Court of Misamis
Oriental.[6]
Respondent Abecia was unable to attend the hearings. He asked for their transfer to
Cagayan de Oro on the ground that he did not have the means to travel, but his
request was apparently denied sub silencio as the Commission continued the
hearings in Pasig, Metro Manila. As a result only his counsel was present at the
hearings.[7]
As respondent reiterated his request for the transfer of venue, it was agreed at the
hearing of January 30, 1989 that respondents answer, dated August 3, 1987, and the
affidavits of his witnesses as well as his own would be considered as their direct
testimonies.[8]
In his answer, respondent Esteban Abecia maintained that on March 31, 1971,
Regalado Daroy sold the land in question to Jose Gangay, and the latter in turn sold
the land to Nena Abecia on April 17, 1971. He cited the sheriffs return, dated August
6, 1973, in which it was stated that on August 4, 1993 Regalado Daroy and his
assignee Nena Abecia were . . . placed in actual possession of the parcel of land
subject matter of the Deed of Conveyance and Possession. [9] He also referred to the
resolution of the Assistant Provincial Fiscal of Misamis Oriental, who dismissed the
complaint for grave coercion and malicious mischief filed by Gertrudes De Bajuyo,
one of the defendants in the ejectment case, against Regalado Daroy and Nena
Abecia for the demolition of her house, precisely on the basis of the right of Mrs.
Nena Abecia . . . as assignee to do whatever she wants to do of the things she owns.
[10]
On July 15, 1993, Commissioner Plaridel C. Jose rendered a report finding
respondent Abecia guilty of malpractice and recommending his disbarment. In his
report, Commissioner Jose stated:[11]
. . . In the course of his law practice, the respondent handled several cases in behalf
of the complainant Regalado Daroy, among which is Civil Case No. 3288, wherein a
parcel of land located at Opol, Misamis Oriental covered by TCT No. T-15924 (TCT
No. T-315) was the subject of litigation. In the course of handling the same, the
complainant entrusted to the respondent the pertinent documents necessary in the
said case which included his said TCT No. T-15924.
In the year 1971, without the knowledge of the complainant, a document entitled
Deed of Sale dated March 31, 1971 was executed and notarized by Notary Public
Erasmo G. Damasing as Doc. No. 68, Page No. 16, Book No. VIII, Series of 1971,
which appears to have been signed by complainant Regalado Daroy, thereby
conveying the said property in favor of a certain Jose Gangay, married to Anita
Basmayor, by virtue of which TCT No. T-15925 was issued in the name of Jose
Gangay.
Two weeks thereafter, under date of April 17, 1971, the said Jose Gangay executed a
Deed of Sale of the same property in favor of Mrs. Nena Abecia, the wife of the
respondent, by virtue of which TCT No. T-15926 was issued in the name of Nena
Abecia, married to Atty. Esteban Abecia, the respondent.
Sometime in the year 1984, the complainant discovered that his said property was
already in the name of Mrs. Nena Abecia and Atty. Esteban Abecia.
....
The foregoing evidence sufficiently proved respondents acts complained of in the
present case . . . . The significant fact is that the herein respondent was instrumental
and responsible for falsifying the signature of his client, complainant Daroy, in the
deed of conveyance in favor of Jose Gangay, for which he is at present criminally
charged in Criminal Case No. 88-443 before the Regional Trial Court of Misamis
Oriental.
In an unclear manner, respondent tried to justify his act by alleging that the transfer
of his clients property to his wife was proper because he allegedly was not paid for
his professional services. Such allegation, even if true, would not exculpate him from
liability. A lawyer who executed with his client a deed transferring ownership over a
parcel of land involved in a pending litigation as his attorneys fees violates the rule
prohibiting the purchase of property in litigation by a lawyer from his client.
. . . What is saddening is the fact that he is presently an incumbent labor arbiter of
the National Labor Relations Commission with the delicate responsibility of
administering justice to the parties before him. . . . The Commission has no
alternative but to recommend his disbarment. It is likewise recommended that the
National Labor Relations Commission be furnished with these findings for its
guidance and appropriate action.
The Board of Governors of the Integrated Bar of the Philippines in Resolution No. XI-
94-072, dated March 26 1994, [12] approved the report but reduced the penalty to
indefinite suspension.
Respondent Abecia filed a Motion for Reconsideration and/or Appeal. Among other
things, he contends that:[13]
1. The Commission on Bar Discipline erred when it held that complainant had no
knowledge of the execution of the Deed of Absolute Sale on March 31, 1971 before
Notary Public Erasmo G. Damasing.
Complainant very well knew of the execution of the deed of sale as shown in the
Sheriffs Return of Service (Respondents Annex 9) dated August 6, 1973, where he
declared that he was accompanied by the complainant and his assignee, Nena
Abecia, in implementing the Deed of Conveyance and Possession on August 4,
1973. The Deputy Sheriff even went as far as declaring that the land was already in
the name of complainants assignee. Paragraph 2 of the said Sheriffs Return of
Service is herein quoted verbatim:
2. The undersigned then proceeded to the parcel of land which is the subject matter
of the Deed of Conveyance and Possession together with purchaser Regalado Daroy,
his assignee Nena Abecia, Atty. Esteban Abecia, Ex-LTC Registrar Clemente Quiblat,
P.M. Salazar, and the Police Sgt. of Opol, Misamis Oriental, Felix Abejuela. Regalado
Daroy and his assignee, Nena Abecia, were then formally placed in actual and
physical possession of the parcel of land subject matter of the Deed of Conveyance
and Possession. Regalado Daroy and his assignee, Nena Abecia, then asserted their
ownership of the parcel of land by making use of the improvements found on the
land such as the young coconuts and bananas. As a matter of fact the parcel of land
is already in the name of Nena Abecia per Transfer Certificate of Title No. T-15926
entered in the Register of Deeds of Cagayan de Oro City on June 18, 1973 at 1:00
P.M. (Underscoring Ours).
Likewise, in Office File No. 419-74 of the Office of the Provincial Fiscal (Respondents
Annex 10) dated April 18, 1974, wherein complainant Regalado Daroy was the
accused, then 4th Asst. Fiscal Alejo G. Rola referred to Nena Abecia as the owner of
the subject property by virtue of her being the assignee and/or transferee of the
rights of Regalado Daroy.
Furthermore, in Criminal Case No. 88-443 before Branch 25 of the RTC of Misamis
Oriental, complainant testified in open court that he came to know of the Deed of
Absolute Sale (Exhibit A) when the sheriff awarded the land to him (TSN, p. 3. Oct. 4,
1989). The Sheriffs Deed of Conveyance and Possession, however, was executed by
the Provincial Sheriffs way back in April 11, 1972.
How indeed can complainant now have the temerity to claim that he discovered
that the subject property was transferred only in 1984? And how could the
Commission on Bar Discipline have overlooked the above evidence and believed the
complainant hook, line and sinker?
2. The Commission on Bar Discipline erred in not giving credence and weight to the
testimony/sworn statement of the Notary Public (Respondents Annex 4) and the
instrumental witnesses to the execution of the questioned Deed of Absolute Sale
(Respondents Annexes 5 and 6). Between the Notary Public and the complainant,
the Notary Public, who is known for his unquestioned integrity, honesty and probity,
is more believable. In fact, Notary Public Erasmo G. Damasing, then the incumbent
vice-mayor, went on to become the congressman of Cagayan de Oro City. And
between the positive identification of the complainant as the person who executed
the instrument by the Notary Public (and the instrumental witnesses) and the
assertion of the alleged handwriting expert, the positive identification must prevail
especially since the questioned signature of complainant has as many strokes as the
sample signatures in the documents submitted for comparison.
Respondents motion is well taken. As already stated, the land in question was
purchased by complainant at the sheriffs sale held on March 25, 1971. The land was
owned by Gertrudes de Bajuyo, wife of one of the defendants in the action for
forcible entry. Upon the lapse of one year and the failure of the owner to redeem
the land, its ownership was consolidated in the name of complainant Regalado
Daroy. In his sheriffs Return of Service issued on August 6, 1973 - long before the
complaint in this case was filed on May 25, 1987 Deputy Sheriff Eufrosino P. Castillo
stated that when he finally transferred the land to the buyer, he placed in
possession of the land not only the buyer, Regalado Daroy, but also the latters
assignee, Nena Abecia, in whose name the title to the land had in fact been
transferred. The Deputy Sheriff said in his report:[14]
2. The undersigned then proceeded to the parcel of land which is the subject matter
of the Deed of Conveyance and Possession together with purchaser Regalado
Daroy, his assignee Nena Abecia, Atty. Esteban Abecia, Ex-LTC Registrar
Clemente Quiblat, P.M. Salazar, and the Police Sgt. of Opol, Misamis Oriental, Felix
Abejuela. Regalado Daroy and his assignee, Nena Abecia, were then formally place
in actual and physical possession of the parcel of land subject of the Deed of
Conveyance and Possession. Regalado Daroy and his assignee, Nena Abecia, then
asserted their ownership of the parcel of land by making use of the improvements
found in the land such as the young coconuts and bananas. As a matter of fact the
parcel of land is already in the name of Nena Abecia per Transfer Certificate of Title
No. T-15926 entered in the Register of Deeds at Cagayan de Oro City on June 18,
1973 at 1:00 P.M.
3. At about 2:00 P.M. of the same day, August 4, 1973, the undersigned
accompanied with police Sgt. Felex Abejuela of Opol Police Department and P.M.
Salazar went to the house of Restituto Bajuyo at Mulugan, Opol, Mis. Or. The
undersigned explained to Restituto Bajuyo that Regalado Daroy and his assignee
Nena Abecia were already placed in actual and physical possession of the parcel of
land subject matter of the Deed of Conveyance and Possession and admonished him
not to molest Regalado Daroy and his assignee or anybody appointed by them to
take care of the aforecited parcel of land. He was warned that any violation will be
contrary to law and will subject him to court punishment.
It would appear, therefore, that as early as August 4, 1973 Daroy already knew that
title to the land had already been transferred in the name of respondents
wife. Complainants claim that he came to know of such transfer only in 1984 is thus
belied. Nor does it appear that the transfer was made without his knowledge and
consent. To the contrary, the sheriffs return suggests that Daroy had agreed to such
transfer. Hence, the references to Mrs. Abecia as Daroys assignee.
It appears further that as a consequence of the demolition of the former owners
house, complainant and Mrs. Abecia were charged, together with Deputy Sheriff
Eufrosino P. Castillo, with grave coercion/malicious mischief in the Office of the
Provincial Fiscal of Misamis Oriental. In his resolution, dated April 18, 1974,
dismissing the charges, Assistant Provincial Fiscal Alejo G. Rola stated, among other
things:[15]
The undersigned despite the declaration of complainant Gertrudes de Bajuyo
corroborated by the testimony of Josefina Jaraula that she was intimidated by a PC
soldier, is of the opinion that such evidence is insufficient to warrant a belief that
such an act was in fact done by Sgt. Abalos, because the other witnesses for the
complainant namely, Lito Ejina and Jose Jaime never mentioned that there was such
intimidation employed by Sgt. Abalos at the time despite the fact that these two (2)
aforenamed witnesses, were present at the time and on the date Josefina Jaraula
was around. The undersigned is however of the considered opinion that the house
occupied by complainant Gertrudes de Bajuyo was demolished by respondents, but
such an act is a right of Mrs. Nena Abecia in her capacity as an assignee to do
whatever she wants to do of the thing she owns. Furthermore, the allegation of
complainant regarding the intimidation made against her by the PC Sgt.
corroborated by the other witness Josefina Jaraula is insufficient to offset the
presumption of regularity of performance of an official duty by a public officer, apart
from the fact that the testimony of Gertrudes Bajuyo and Josefina Jaraula are of
dubious credibility.
Like the sheriffs return made in 1973, this resolution of the Assistant Provincial
Fiscal rendered the following year (1974) belies complainants allegation that the
land in question was transferred to Mrs. Abecia without his knowledge and consent
and that he came to know about it only in 1984.
The aforementioned documents were attached to the answer of respondent
Esteban Abecia. However, despite the parties agreement made at the hearing held
on January 30, 1989, that the said documents would be considered the evidence of
respondent Abecia, they were not even mentioned in the report of the
Commissioner who investigated the case.
Indeed, what appears to have happened in this case is that the parties thought that
because the land had been acquired by complainant at a public sale held in order to
satisfy a judgment in his favor in a case in which respondent was complainants
counsel, the latter could not acquire the land. The parties apparently had in mind
Art. 1491 of the Civil Code which provides, in pertinent parts, as follows:
ART. 1491. The following persons cannot acquire by purchase, even at a public or
judicial auction, either in person or through the mediation of another:
(5) Justices, judges, prosecuting attorneys, clerks of superior and inferior courts,
and other officers and employees connected with the administration of justice, the
property and rights in litigation or levied upon an execution before the court within
whose jurisdiction or territory they exercise their respective functions; this
prohibition includes the act of acquiring by assignment and shall apply to lawyers,
with respect to the property and rights which may be the object of any litigation in
which they may take part by virtue of their profession.[16]
Of course, the parties were mistaken in thinking that respondent could not validly
acquire the land. In Guevara v. Calalang,[17] on facts similar to those in this case, we
held that the prohibition in Art. 1491 does not apply to the sale of a parcel of land,
acquired by a client to satisfy a judgment in his favor, to his attorney as long as the
property was not the subject of the litigation. For indeed, while judges, prosecuting
attorneys, and others connected with the administration of justice are prohibited
from acquiring property or rights in litigation or levied upon in execution, the
prohibition with respect to attorneys in the case extends only to property and rights
which may be the object of any litigation in which they may take part by virtue of
their profession.
The point is, the parties in this case thought the transfer of the land to respondent
Abecia was prohibited and so they contrived a way whereby the land would be sold
to Jose Gangay, whose wife Anita is the sister of Mrs. Nena Abecia, and then Gangay
would sell the land to Mrs. Abecia. As Jose Gangay stated in his affidavit of March 6,
1985:[18]
4. T - Ano ba ang iyong masasabi tungkol sa nangyari?
S - Sinabihan ako ni Atty. Esteban Abecia, sapagkat siya raw ang abogado sa lupang
pinagkaguluhan, hindi maari na siya ang nakalagay na nagbili ng upa sa kanyang
cliente na si Regalado Daroy, dahil laban raw sa kanilang batas sa mga abogado, kaya
sinabihan ako ni Atty. Esteban Abecia na maari bang gamitin niya ang pangalan ko na
ako raw ang nakabili sa lupa ni Regalado Daroy at paglipas raw ng isang taon, ay
kanya ng ilipat sa pangalan sa documento at tituto hanggang sa pangalan ng
kanyang asawa na si Nena Abecia.
5.T - Sumagot ka ba sa hiling ni Atty. Esteban Abecia?
S - Opo, pumayag ako dahil silang dalawa, si Regalado Daroy at si Atty. Esteban
Abecia ay aking mga bilas, sapagkat ang isat-isa naming mga asawa ay
magkakapatid.
6. T - Ano man ang nangyari pagkatapos noon?
S - Isang araw, ay pumunta si Atty. Esteban Abecia sa amin at sinama niya ako doon
kay Atty. Wilfredo Linaac upang ipa tunayan ang aking pangalan doon sa documento
sa pagbili, at dahil doon, iyong documento sa pabili ay na notariohan ni Atty.
Wilfredo Linaac.
7. T - Binayaran ba kayo ni Nena Abecia at ni Atty. Esteban Abecia sa pera na
naghaga ng isang libo tatlong daan at limang[pung] pesos (P1,350.00) na iyong ang
halaga sa lupa.
S - Wala.
8. T - Ipakita ko sa iyo itong documento ng pagbili at may takda ng petsa na Abril 17,
1971 notariadad ni Atty. Wilfredo Linaac Signes sa Doc. No. 333, Pahina 48, Aklat
No. VI; taon series sa 1971; ano mang ang kaugnayan nito sa documento ng pagbili?
S - Ang lahat na mga papiles sa sinasabi ninyo ay wala akong nalalaman, ang
nalaman ko lang noon akoy dinala ni Atty. Esteban Abecia sa oficina ni Atty. Wilfredo
Linaac tinanong ako kong aking pirma iyong sa sa documento.
The sale of the land to Gangay may be fictitious and, therefore, void, but that
complainant Regalado Daroy intended to convey the land ultimately to respondent
Esteban Abecia appears to be the case.
It is true that the NBI found the signature of Regalado Daroy on the deed of sale
made in favor of Jose Gangay to have been forged. But Erasmo Damasing, the
notary public who notarized the deed, affirmed that Daroy and his wife appeared
before him on March 31, 1971 and, in his presence, signed the document in
question.[19] Daisy Felicilda likewise stated in an affidavit executed on February 17,
1986 that she was a witness to the execution of the deed of sale and that she saw
Daroy signing the deed of sale.[20]
Daroy never denied these claims of the notary public and a witness to the execution
of the deed of sale. Nor was the NBI writing expert ever called to testify on his
finding that the signature of Daroy in the deed of sale appeared to have been signed
by a different hand. The finding that the deed of sale was forged was simply implied
from the report of the NBI writing expert. As complainant, Daroy had the burden of
proving that contrary to the recital in the jurat he and his wife never appeared
before the notary public and acknowledged the deed to be their voluntary act.
WHEREFORE, the resolution dated March 26, 1994, of the IBP Board of Governors is
RECONSIDERED and the complaint against respondent Esteban Abecia is DISMISSED.
SO ORDERED.
G.R. No. L-36731 January 27, 1983
VICENTE GODINEZ, ET AL., plaintiffs-appellants, vs. FONG PAK LUEN ET AL.,
defendants, TRINIDAD S. NAVATA, defendant-appellee.
GUTIERREZ, JR., J.:
The plaintiffs filed this case to recover a parcel of land sold by their father, now
deceased, to Fong Pak Luen, an alien, on the ground that the sale was null and void
ab initio since it violates applicable provisions of the Constitution and the Civil Code.
The order of the Court of First Instance of Sulu dismissing the complaint was
appealed to the Court of Appeals but the latter court certified the appeal to us since
only pure questions of law were raised by the appellants.
The facts of the case were summarized by the Court of Appeals as follows:
On September 30, 1966, the plaintiffs filed a complaint in the Court of First Instance
of Sulu alleging among others that they are the heirs of Jose Godinez who was
married to Martina Alvarez Godinez sometime in 1910; that during the marriage of
their parents the said parents acquired a parcel of land lot No. 94 of Jolo townsite
with an area of 3,665 square meters as evidenced by Original Certificate of Title No.
179 (D -155) in the name of Jose Godinez; that their mother died sometime in 1938
leaving the plaintiffs as their sole surviving heirs; that on November 27, 1941,
without the knowledge of the plaintiffs, the said Jose Godinez, for valuable
consideration, sold the aforesaid parcel of land to the defendant Fong Pak Luen, a
Chinese citizen, which transaction is contrary to law and in violation of the Civil
Code because the latter being an alien who is inhibited by law to purchase real
property; that Transfer Certificate Title No. 884 was then issued by the Register of
Deeds to the said defendant, which is null and void ab initio since the transaction
constituted a non-existent contract; that on January 11, 1963, said defendant Fong
Pak Luen executed a power of attorney in favor of his co-defendant Kwan Pun Ming,
also an alien, who conveyed and sold the above described parcel of land to co-
defendant Trinidad S. Navata, who is aware of and with full knowledge that Fong
Pak Luen is a Chinese citizen as well as Kwan Pun Ming, who under the law are
prohibited and disqualified to acquire real property in this jurisdiction; that
defendant Fong Pak Luen has not acquired any title or interest in said parcel of land
as the purported contract of sale executed by Jose Godinez alone was contrary to
law and considered non- existent, so much so that the alleged attorney-in-fact,
defendant Kwan Pun Ming had not conveyed any title or interest over said property
and defendant Navata had not acquired anything from said grantor and as a
consequence Transfer Certificate of Title No. 1322, which was issued by the Register
of Deeds in favor of the latter is null and void ab initio,- that since one-half of the
said property is conjugal property inherited by the plaintiffs from their mother, Jose
Godinez could -not have legally conveyed the entire property; that notwithstanding
repeated demands on said defendant to surrender to plaintiffs the said property she
refused and still refuses to do so to the great damage and prejudice of the plaintiffs;
and that they were constrained to engage the services of counsel in the sum of
P2,000.00.1wph1.t The plaintiffs thus pray that they be adjudged as the owners
of the parcel of land in question and that Transfer Certificate of Title RT-90 (T-884)
issued in the name of defendant Fong Pak Luen be declared null and void ab initio;
and that the power of attorney issued in the name of Kwan Pun Ming, as well as
Transfer Certificate of Title No. 'L322 issued in the name of defendant Navata be
likewise declared null and void, with costs against defendants.
On August 18, 1966, the defendant Register of Deeds filed an answer claiming that
he was not yet the register of deeds then; that it was only the ministerial duty of his
office to issue the title in favor of the defendant Navata once he was determined the
registerability of the documents presented to his office.
On October 20, 1966, the defendant Navata filed her answer with the affirmative
defenses and counterclaim alleging among others that the complaint does not state
a cause of action since it appears from the allegation that the property is registered
in the name of Jose Godinez so that as his sole property he may dispose of the
same; that the cause of action has been barred by the statute of limitations as the
alleged document of sale executed by Jose Godinez on November 27, 1941,
conveyed the property to defendant Fong Pak Luen as a result of which a title was
issued to said defendant; that under Article 1144 (1) of the Civil Code, an action
based upon a written contract must be brought within 10 years from the time the
right of action accrues; that the right of action accrued on November 27, 1941 but
the complaint was filed only on September 30, 1966, beyond the 10 year period
provided for by law; that the torrens title in the name of defendant Navata is
indefeasible who acquired the property from defendant Fong Pak Luen who had
been in possession of the property since 1941 and thereafter defendant Navata had
possessed the same for the last 25 years including the possession of Fong Pak Luen;
that the complaint is intended to harass the defendant as a civic leader and
respectable member of the community as a result of which she suffered moral
damages of P100,000.00, P2,500.00 for attorney's fees and P500.00 expenses of
litigation, hence, said defendant prays that the complaint be dismissed and that her
counterclaim be granted, with costs against the plaintiffs. On November 24, 1967,
the plaintiffs filed an answer to the affirmative defenses and counter-claim. As the
defendants Fong Pak Luen and Kwan Pun Ming are residing outside the Philippines,
the trial court upon motion issued an order of April 17, 1967, for the service of
summons on said defendants by publication. No answer has been filed by said
defendants.
On December 2, 196 7, the court issued an order as follows:
Both parties having agreed to the suggestion of the Court that they submit their
supplemental pleadings to support both motion and opposition and after submittal
of the same the said motion to dismiss which is an affirmative defense alleged in the
complaint is deemed submitted. Failure of both parties or either party to submit
their supplemental pleadings on or about December 9, the Court will resolve the
case.
On November 29, 1968, the trial court issued an order missing the complaint
without pronouncement as to costs. (Record on Appeal, pp. 31- 37). A motion for
reconsideration of this order was filed by the plaintiffs on December 12, 196F, which
was denied by the trial court in an order of July 11, 1969, (Rec. on Appeal, pp. 38,
43, 45, 47). The plaintiffs now interpose this appeal with the following assignments
of errors:
I. The trial court erred in dismissing plaintiffs-appellants' complaint on the ground of
prescription of action, applying Art. 1144 (1) New Civil Code on the basis of
defendant Trinidad S. Navata's affirmative defense of prescription in her answer
treated as a motion to dismiss.
II. The trial court erred in denying plaintiffs-appellants' motion for reconsideration of
the order of dismissal.
III. The trial court erred in not ordering this case to be tried on the merits."
The appellants contend that the lower court erred in dismissing the complaint on
the ground that their cause of action has prescribed. While the issue raised appears
to be only the applicability of the law governing prescription, the real question
before us is whether or not the heirs of a person who sold a parcel of land to an
alien in violation of a constitutional prohibition may recover the property if it had, in
the meantime, been conveyed to a Filipino citizen qualified to own and possess it.
The question is not a novel one. Judicial precedents indicate fairly clearly how the
question should be resolved.
There can be no dispute that the sale in 1941 by Jose Godinez of his residential lot
acquired from the Bureau of Lands as part of the Jolo townsite to Fong Pak Luen, a
Chinese citizen residing in Hongkong, was violative of Section 5, Article XIII of the
1935 Constitution which provided:
Sec. 5. Save in cases of hereditary succession, no private agricultural land will be
transferred or assigned except to individuals, corporations, or associations qualified
to acquire or hold lands of the public domain in the Philippines.
The meaning of the above provision was fully discussed in Krivenko v. Register of
Deeds of Manila (79 Phil. 461) which also detailed the evolution of the provision in
the public land laws, Act No. 2874 and Commonwealth Act No. 141.
The Krivenko ruling that "under the Constitution aliens may not acquire private or
agricultural lands, including residential lands" is a declaration of an imperative
constitutional policy. Consequently, prescription may never be invoked to defend
that which the Constitution prohibits. However, we see no necessity from the facts
of this case to pass upon the nature of the contract of sale executed by Jose Godinez
and Fong Pak Luen whether void ab initio, illegal per se or merely pro-exhibited.** It
is enough to stress that insofar as the vendee is concerned, prescription is
unavailing. But neither can the vendor or his heirs rely on an argument based on
imprescriptibility because the land sold in 1941 is now in the hands of a Filipino
citizen against whom the constitutional prescription was never intended to apply.
The lower court erred in treating the case as one involving simply the application of
the statute of limitations.
From the fact that prescription may not be used to defend a contract which the
Constitution prohibits, it does not necessarily follow that the appellants may be
allowed to recover the property sold to an alien. As earlier mentioned, Fong Pak
Luen, the disqualified alien vendee later sold the same property to Trinidad S.
Navata, a Filipino citizen qualified to acquire real property.
In Vasquez v. Li Seng Giap and Li Seng Giap & Sons (96 Phil. 447), where the alien
vendee later sold the property to a Filipino corporation, this Court, in affirming a
judgment dismissing the complaint to rescind the sale of real property to the
defendant Li Seng Giap on January 22, 1940, on the ground that the vendee was an
alien and under the Constitution incapable to own and hold title to lands, held:
In Caoile vs. Yu Chiao 49 Qff Gaz., 4321; Talento vs. Makiki 49 Off. Gaz.,
4331; Bautista vs. Uy 49 Off. Gaz., 4336; Rellosa vs. Gaw Chee 49 Off. Gaz., 4345
and Mercado vs. Go Bio, 49 Off. Gaz., 5360, the majority of this Court has ruled that
in sales of real estate to aliens incapable of holding title thereto by virtue of the
provisions of the Constitution (Section 5, Article XIII Krivenko vs. Register of
Deeds, 44 Off. Gaz., 471) both the vendor and the vendee are deemed to have
committed the constitutional violation and being thus in pari delicto the courts will
not afford protection to either party. (Article 1305, old Civil Code; Article 1411, new
Civil Code) From this ruling three Justices dissented. (Mr. Justice Pablo, Mr. Justice
Alex. Reyes and the writer. See Caoile vs. Yu Chiao Talento vs. Makiki Bautista us. Uy,
Rellosa vs. Gaw Chee and Mercado vs. Go Bio). supra.
The action is not of rescission because it is not postulated upon any of the grounds
provided for in Article 1291 of the old Civil Code and because the action of
rescission involves lesion or damage and seeks to repair it. It is an action for
annulment under Chapter VI, Title II, Book 11, on nullity of contracts, based on a
defect in the contract which invalidates it independently of such lesion or damages.
(Manresa, Commentarios al Codigo Civil Espanol Vol. VIII, p. 698, 4th ed.) It is very
likely that the majority of this Court proceeded upon that theory when it applied
the in pari delicto rule referred to above.
In the United States the rule is that in a sale of real estate to an alien disqualified to
hold title thereto the vendor divests himself of the title to such real estate and has
no recourse against the vendee despite the latter's disability on account of alienage
to hold title to such real estate and the vendee may hold it against the whole world
except as against the State. It is only the State that is entitled by proceedings in the
nature of office found to have a forfeiture or escheat declared against the vendee
who is incapable of holding title to the real estate sold and conveyed to him.
Abrams vs. State, 88 Pac. 327; Craig vs. Leslie et al., 4 Law, Ed. 460; 3 Wheat, 563,
589590; Cross vs. Del Valle, 1 Wall, [U.S.] 513; 17 Law. Ed., 515; Governeur vs.
Robertson, 11 Wheat, 332, 6 Law. Ed., 488.)
However, if the State does not commence such proceedings and in the meantime
the alien becomes naturalized citizen, the State is deemed to have waived its right
to escheat the real property and the title of the alien thereto becomes lawful and
valid as of the date of its conveyance or transfer to him. (Osterman vs. Baldwin, 6
Wall, 116, 18 Law. ed. 730; Manuel vs. Wulff, 152 U.S. 505, 38 Law. ed. 532;
Pembroke vs. Houston, 79, SW 470; Fioerella vs. Jones, 259 SW 782. The rule in the
United States that in a sale of real estate to an alien disqualified to hold title
thereto, the vendor divests himself of the title to such real estate and is not
permitted to sue for the annulment Of his Contract, is also the rule under the Civil
Code. ... Article 1302 of the old Civil Code provides: ... Persons sui juris cannot,
however, avail themselves of the incapacity of those with whom they contracted; ...
xxx xxx xxx
. . . (I)f the ban on aliens from acquiring not only agricultural but, also urban lands,
as construed by this Court in the Krivenko case, is to preserve the nation's land for
future generations of Filipinos, that aim or purpose would not be thwarted but
achieved by making lawful the acquisition of real estate by aliens who became
Filipino citizens by naturalization. The title to the parcel of land of the vendee, a
naturalized Filipino citizen, being valid that of the domestic corporation to which the
parcel of land has been transferred, must also be valid, 96.67 per cent of its capital
stock being owned by Filipinos.
Herrera v. Luy Kim Guan (SCRA 406) reiterated the above ruling by declaring that
where land is sold to a Chinese citizen, who later sold it to a Filipino, the sale to the
latter cannot be impugned.
The appellants cannot find solace from Philippine Banking Corporation v. Lui She (21
SCRA 52) which relaxed the pari delicto doctrine to allow the heirs or successors-in-
interest, in appropriate cases, to recover that which their predecessors sold to
aliens.
Respondent, therefore, must be declared to be the rightful owner of the property.
In the light of the above considerations, we find the second and third assignments
of errors without merit. Respondent Navata, the titled owner of the property is
declared the rightful owner.
WHEREFORE, the instant appeal is hereby denied. The orders dismissing the
complaint and denying the motion for reconsideration are affirmed.

Only recently, in Sarsosa vda. de Barsobia v. Cuenco (113 SCRA 547) we had SO ORDERED.
occasion to pass upon a factual situation substantially similar to the one in the
instant case. We ruled:

But the factual set-up has changed. The litigated property is now in the hands of a
naturalized Filipino. It is no longer owned by a disqualified vendee. Respondent, as a
naturalized citizen, was constitutionally qualified to own the subject property. There
would be no more public policy to be served in allowing petitioner Epifania to
recover the land as it is already in the hands of a qualified person. Applying by
analogy the ruling of this Court in Vasquez vs. Giap & Sons: (.96 Phil. 447 [1955])

... if the ban on aliens from acquiring not only agricultural but also urban lands, as
construed by this Court in the Krivenko case, is to preserve the nation's lands for
future generations of Filipinos, that aim or purpose would not be thwarted but
achieved by making lawful the acquisition of real estate by aliens who became
Filipino citizens by naturalization.

While, strictly speaking, Ong King Po, private respondent's vendor, had no rights of
ownership to transmit, it is likewise in escapable that petitioner Epifania had slept
on her rights for 26 years from 1936 to 1962. By her long inaction or inexcusable
neglect, she should be held barred from asserting her claim to the litigated property
(Sotto vs. Teves, 86 SCRA 157 [1978])

Laches has been defined as the failure or neglect, for an unreasonable and
unexplained length of time, to do that which by exercising due diligence could or
should have been done earlier; it is negligence or ommission to assert a right within
a reasonable time, warranting a presumption that the party entitled to assert it
either has abandoned it or declined to assert it. (Tijam, et al. vs. Sibonghanoy, et al.,
No. L-21450, April 15, 1968, 23 SCRA 29, 35).' (Cited in Sotto vs. Teves, 86 SCRA 154
[1978]).
G.R. No. 158230 July 16, 2008
REPUBLIC OF THE PHILIPPINES, represented by the DIRECTOR OF
LANDS, Petitioner, vs. REGISTER OF DEEDS OF ROXAS CITY, ELIZABETH LEE, and
PACITA YU-LEE, Respondents.
CARPIO, J.:
The Case
This is a petition for review 1 of the Decision2 dated 12 July 2002 and the Resolution
dated 9 May 2003 of the Court of Appeals in CA-G.R. CV No. 53890.
The Facts
In March 1936, Lee Liong, a Chinese citizen, bought Lot No. 398 from Vicenta
Arcenas, Francisco, Carmen Ramon, Mercedes, Concepcion, Mariano, Jose, and
Manuel, all surnamed Dinglasan. Lot No. 398, with an area of 1,574 square meters,
is located at the corner of Roxas Avenue and Pavia Street in Roxas City. In February
1944, Lee Liong died intestate and was survived by his widow Ang Chia, and his sons
Lee Bing Hoo and Lee Bun Ting. On 30 June 1947, the surviving heirs of Lee Liong
extrajudicially settled the estate of the deceased and partitioned among themselves
Lot No. 398. When Lee Bing Hoo and Lee Bun Ting died, Lot No. 398 was transferred
by succession to their respective wives, Elizabeth Lee (Elizabeth) and Pacita Yu-Lee
(Pacita).
In the 1956 case of Dinglasan v. Lee Bun Ting,3 involving Lot No. 398, the Court held
that even if the sale of the property was null and void for violating the constitutional
prohibition on the sale of land to an alien, still the doctrine of in pari delicto barred
the sellers from recovering the title to the property. Eleven years later, in the case
of Lee Bun Ting v. Judge Aligaen,4 the Court ordered the trial court to dismiss the
complaint of the Dinglasans for the recovery of Lot No. 398. Applying the doctrine
of res judicata, the Court held that the case was a mere relitigation of the same
issues previously adjudged with finality in the Dinglasan case, involving the same
parties or their privies and concerning the same subject matter.
On 7 September 1993, Elizabeth and Pacita (private respondents) filed a petition for
reconstitution of title of Lot No. 398 because the records of the Register of Deeds,
Roxas City were burned during the war. On 3 October 2001, the Court held that the
trial courts order of reconstitution was void for lack of factual support because it
was based merely on the plan and technical description approved by the Land
Registration Authority.5
Meanwhile, on 26 January 1995, petitioner Republic of the Philippines (petitioner),
through the Office of the Solicitor General (OSG), filed with the Regional Trial Court
of Roxas City a Complaint 6 for Reversion of Title against private respondents and the
Register of Deeds of Roxas City, praying that (1) the sale of Lot No. 398 to Lee Liong
be set aside for being null and void ab initio; and (2) Lot No. 398 be reverted to the
public domain for the States disposal in accordance with law.
In their Answer, private respondents invoked as affirmative defenses: (1)
prescription; (2) private ownership of Lot No. 398; and (3) Lee Liongs being a buyer
in good faith and for value. Furthermore, private respondents claimed that as
Filipino citizens, they are qualified to acquire Lot No. 398 by succession.
The Register of Deeds of Roxas City did not file an answer.
On 7 May 1996, the trial court rendered a decision ordering the reversion of Lot No.
398 to the State.
On appeal, the Court of Appeals rendered its Decision 7 dated 12 July 2002, reversing
the trial courts decision and declaring private respondents as the absolute and
lawful owners of Lot No. 398. Petitioner moved for reconsideration, which the Court
of Appeals denied in its Resolution8 dated 9 May 2003.
Hence, this petition for review.
The Ruling of the Trial Court
The trial court ordered the reversion of Lot No. 398 to the State. The trial court held
that private respondents could not have acquired a valid title over Lot No. 398
because the sale of the lot to their predecessor-in-interest Lee Liong was null and
void. Being an innocent purchaser in good faith and for value did not cure Lee
Liongs disqualification as an alien who is prohibited from acquiring land under the
Constitution. The trial court further held that prescription cannot be invoked against
the State as regards an action for reversion or reconveyance of land to the State.
The Ruling of the Court of Appeals
The Court of Appeals agreed with the trial court that the State is not barred by
prescription. However, the Court of Appeals held that the trial court erred in
ordering the reversion of Lot No. 398 to the State. Although the sale of Lot No. 398
to Lee Liong violated the constitutional prohibition on aliens acquiring land, the
Court of Appeals noted that Lot No. 398 had already been acquired by private
respondents through succession. The transfer of Lot No. 398 to private respondents,
who are Filipino citizens qualified to acquire lands, can no longer be impugned on
the basis of the invalidity of the initial transfer. The flaw in the original transaction is
considered cured and the title of the transferee is deemed valid considering that the
objective of the constitutional proscription against alien ownership of lands, that is
to keep our lands in Filipino hands, has been achieved.
The Issue
Petitioner raises the lone issue that:
THE COURT OF APPEALS GRAVELY ERRED WHEN IT REVERSED AND SET ASIDE THE
APPEALED DECISION AND DECLARED PRIVATE RESPONDENTS THE ABSOLUTE AND
LAWFUL OWNERS AND POSSESSORS OF LOT NO. 398 OF ROXAS CITY CADASTRE
CONSIDERING THAT LEE LIONG, WHO IS AN ALIEN, AND THUS, CONSTITUTIONALLY
PROHIBITED TO OWN REAL PROPERTY IN THE PHILIPPINES, ACQUIRED NO RIGHT OR
TITLE OVER SUBJECT LOT WHICH HE COULD HAVE TRANSMITTED BY SUCCESSION TO
PRIVATE RESPONDENTS PREDECESSORS-IN-INTEREST.
The Ruling of the Court
The petition is without merit.
Petitioner argues that since the sale of Lot No. 398 to Lee Liong was void, Lot No.
398 never became part of the deceased Lee Liongs estate. Hence, Lot No. 398 could
not be transmitted by succession to Lee Liongs surviving heirs and eventually to
private respondents.
We do not subscribe to petitioners position. The circumstances of this case are
similar to the case of De Castro v. Teng Queen Tan,9 wherein a residential lot was
sold to a Chinese citizen. Upon the death of the alien vendee, his heirs entered into
an extrajudicial settlement of the estate of the deceased and the subject land was
transferred to a son who was a naturalized Filipino. Subsequently, the vendor of the
lot filed a suit for annulment of sale for alleged violation of the Constitution
prohibiting the sale of land to aliens. Independently of the doctrine of in pari
delicto, the Court sustained the sale, holding that while the vendee was an alien at
the time of the sale, the land has since become the property of a naturalized Filipino
citizen who is constitutionally qualified to own land.
Similarly, in this case, upon the death of the original vendee who was a Chinese
citizen, his widow and two sons extrajudicially settled his estate, including Lot No.
398. When the two sons died, Lot No. 398 was transferred by succession to their
respective spouses, herein private respondents who are Filipino citizens.
We now discuss whether reversion proceedings is still viable considering that Lot
No. 398 has already been transfered to Filipino citizens. In the reconstitution case
of Lee v. Republic of the Philippines 10 involving Lot No. 398, this Court explained that
the OSG may initiate an action for reversion or escheat of lands which were sold to
aliens disqualified from acquiring lands under the Constitution. However, in the case
of Lot No. 398, the fact that it was already transferred to Filipinos militates against
escheat proceedings, thus:
Although ownership of the land cannot revert to the original sellers, because of the achieved. In short, the law disregards the constitutional disqualification of the
doctrine of pari delicto, the Solicitor General may initiate an action for reversion or buyer to hold land if the land is subsequently transferred to a qualified party, or
escheat of the land to the State, subject to other defenses, as hereafter set forth. the buyer himself becomes a qualified party.15 (Emphasis supplied)

In this case, subsequent circumstances militate against escheat proceedings Clearly, since Lot No. 398 has already been transferred to private respondents who
because the land is now in the hands of Filipinos. The original vendee, Lee Liong, are Filipino citizens, the prior invalid sale to Lee Liong can no longer be assailed.
has since died and the land has been inherited by his heirs and subsequently their Hence, reversion proceedings will no longer prosper since the land is now in the
heirs, petitioners herein [Elizabeth Lee and Pacita Yu Lee]. Petitioners are Filipino hands of Filipino citizens.
citizens, a fact the Solicitor General does not dispute.
WHEREFORE, we DENY the petition. We AFFIRM the Decision dated 12 July 2002
The constitutional proscription on alien ownership of lands of the public or private and the Resolution dated 9 May 2003 of the Court of Appeals in CA-G.R. CV No.
domain was intended to protect lands from falling in the hands of non-Filipinos. In 53890.
this case, however, there would be no more public policy violated since the land is in
the hands of Filipinos qualified to acquire and own such land. "If land is invalidly SO ORDERED.
transferred to an alien who subsequently becomes a citizen or transfers it to a
citizen, the flaw in the original transaction is considered cured and the title of the
transferee is rendered valid." Thus, the subsequent transfer of the property to
qualified Filipinos may no longer be impugned on the basis of invalidity of the initial
transfer. The objective of the constitutional provision to keep our lands in Filipino
hands has been achieved.11 (Emphasis supplied)

In this case, the reversion proceedings was initiated only after almost 40 years from
the promulgation of the case of Dinglasan v. Lee Bun Ting,12 where the Court held
that the sale of Lot No. 398 was null and void for violating the constitutional
prohibition on the sale of land to an alien. If petitioner had commenced reversion
proceedings when Lot No. 398 was still in the hands of the original vendee who was
an alien disqualified to hold title thereto, then reversion of the land to the State
would undoubtedly be allowed. However, this is not the case here. When petitioner
instituted the action for reversion of title in 1995, Lot No. 398 had already been
transferred by succession to private respondents who are Filipino citizens.1avvphi1

Since Lot No. 398 has already been transferred to Filipino citizens, the flaw in the
original transaction is considered cured.13 As held in Chavez v. Public Estates
Authority:14

Thus, the Court has ruled consistently that where a Filipino citizen sells land to an
alien who later sells the land to a Filipino, the invalidity of the first transfer is
corrected by the subsequent sale to a citizen. Similarly, where the alien who buys
the land subsequently acquires Philippine citizenship, the sale was validated since
the purpose of the constitutional ban to limit land ownership to Filipinos has been