Fornilda vs. RTC (Resolution) G.R. No. 72306.

January 24, 1989 Ponente: Justice Melencio-Herrera FACTS: 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 from1959 until 1968 by his own admission. These properties were adjudicated to Alfonso Fornilda and Asuncion M. Pasamba in the Project of Partition approved by the Court on 12 January 1965. 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. Since the mortgage indebtedness was not paid, Respondent Amonoy instituted an action for judicial foreclosure of mortgage on 21 January 1970. The mortgage was subsequently ordered foreclosed and auction sale followed where Respondent Amonoy was the sole bidder forP23,600.00. Being short of the mortgage indebtedness, he applied for and further obtained a deficiency judgment. The Court rendered a Decision granting the Petition for Certiorari and setting aside the decision of the RTC which granted the Writ of Possession and directed respondent Sheriff to demolish the houses of petitioners Angela and Leocadia Fornilda. Moreover, the six parcels of land controverted were ordered to be returned to petitioner unless some of them have been conveyed to innocent third persons. Respondent Amonoy filed his Motion for Reconsideration stating that the transaction involved being a mortagage Article 1491[5] of the Civil Code does not apply, therefore, the mortgage contract executed in favor of respondent Amonoy is valid. He also argued that Article 1491[5] does not apply to foreclosure sales in favor of judgment creditors. Issue: Does the prohibition against lawyers acquisition of property apply to mortgages? Held: Yes. The pertinent portions of the said Article 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. 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. The prohibition on purchase is all embracing to include not only sales to private individuals but also public or judicial sales At the time of the execution of the mortgage contract, the Controverted Parcels were still in litigation and a fiduciary relationship of lawyer and client, which Article 1491[5] precisely seeks to protect, still existed between the parties. To state that mortgages are not included within the prohibition is to open the door to an indirect circumvention of that statutory injunction, acquisition of the property being merely postponed till eventual foreclosure.

Respondent asserts further that Article 1491[5] does not apply to judgment creditors of which, he claims, he was one. Under ordinary circumstances, the argument of respondent could be considered plausible. Unfortunately, however, as heretofore explained, the mortgage was executed in violation of Article 1491[5] so that this Article has a direct bearing on this case and respondent cannot escape its provision. Having violated the same, he cannot be considered in the general run of a judgment creditor. C o n si d e r i ng t ha t t h e m o rt g a g e c o n t ra c t , e n t er e d i n t o i n c o n t ra v e n t i o n of A r ti c l e 1 4 9 1 of t h e C i vi l C o d e i s e x p r es s l y prohibited by law, the same must be held inexistent and void ab initio.