Republic of the Philippines

SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 176474

November 27, 2008

HEIRS OF ARTURO REYES, represented by Evelyn R. San Buenaventura, petitioners,

vs.
ELENA SOCCO-BELTRAN, respondent.
DECISION
CHICO-NAZARIO, J.:
This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, assailing the Decision 1dated
31 January 2006 rendered by the Court of Appeals in CA-G.R. SP No. 87066, which affirmed the
Decision2 dated 30 June 2003 of the Office of the President, in O.P. Case No. 02-A-007, approving the
application of respondent Elena Socco-Beltran to purchase the subject property.
The subject property in this case is a parcel of land originally identified as Lot No. 6-B, situated in Zamora
Street, Dinalupihan, Bataan, with a total area of 360 square meters. It was originally part of a larger parcel of
land, measuring 1,022 square meters, allocated to the Spouses Marcelo Laquian and Constancia Socco
(Spouses Laquian), who paid for the same with Japanese money. When Marcelo died, the property was left
to his wife Constancia. Upon Constancias subsequent death, she left the original parcel of land, along with
her other property, with her heirs her siblings, namely: Filomena Eliza Socco, Isabel Socco de Hipolito,
Miguel R. Socco, and Elena Socco-Beltran. 3 Pursuant to an unnotarized document entitled "Extrajudicial
Settlement of the Estate of the Deceased Constancia R. Socco," executed by Constancias heirs sometime in
1965, the parcel of land was partitioned into three lotsLot No. 6-A, Lot No. 6-B, and Lot No. 6-C.4 The
subject property, Lot No. 6-B, was adjudicated to respondent, but no title had been issued in her name.
On 25 June 1998, respondent Elena Socco-Beltran filed an application for the purchase of Lot No. 6-B
before the Department of Agrarian Reform (DAR), alleging that it was adjudicated in her favor in the extrajudicial settlement of Constancia Soccos estate. 5
Petitioners herein, the heirs of the late Arturo Reyes, filed their protest to respondents petition before the
DAR on the ground that the subject property was sold by respondents brother, Miguel R. Socco, in favor of
their father, Arturo Reyes, as evidenced by the Contract to Sell, dated 5 September 1954, stipulating that:6
That I am one of the co-heirs of the Estate of the deceased Constancia Socco; and that I am to inherit as
such a portion of her lot consisting of Four Hundred Square Meters (400) more or less located on the (sic)
Zamora St., Municipality of Dinalupihan, Province of Bataan, bounded as follows:
xxxx

Petitioners averred that they took physical possession of the subject property in 1954 and had been
uninterrupted in their possession of the said property since then.
Legal Officer Brigida Pinlac of the DAR Bataan Provincial Agrarian Reform Office conducted an
investigation, the results of which were contained in her Report/ Recommendation dated 15 April 1999.
Other than recounting the afore-mentioned facts, Legal Officer Pinlac also made the following findings in
her Report/Recommendation:7
Further investigation was conducted by the undersigned and based on the documentary evidence presented
by both parties, the following facts were gathered: that the house of [the] Reyes family is adjacent to the
landholding in question and portion of the subject property consisting of about 15 meters [were] occupied by
the heirs of Arturo Reyes were a kitchen and bathroom [were] constructed therein; on the remaining portion
a skeletal form made of hollow block[s] is erected and according to the heirs of late Arturo Reyes, this was
constructed since the year (sic) 70s at their expense; that construction of the said skeletal building was not
continued and left unfinished which according to the affidavit of Patricia Hipolito the Reyes family where
(sic) prevented by Elena Socco in their attempt of occupancy of the subject landholding; (affidavit of Patricia
Hipolito is hereto attached as Annex "F"); that Elena Socco cannot physically and personally occupy the
subject property because of the skeletal building made by the Reyes family who have been requesting that
they be paid for the cost of the construction and the same be demolished at the expense of Elena Socco; that
according to Elena Socco, [she] is willing to waive her right on the portion where [the] kitchen and bathroom
is (sic) constructed but not the whole of Lot [No.] 6-B adjudicated to her; that the Reyes family included the
subject property to the sworn statement of value of real properties filed before the municipality of
Dinalupihan, Bataan, copies of the documents are hereto attached as Annexes "G" and "H"; that likewise
Elena Socco has been continuously and religiously paying the realty tax due on the said property.
In the end, Legal Officer Pinlac recommended the approval of respondents petition for issuance of title over
the subject property, ruling that respondent was qualified to own the subject property pursuant to Article
1091 of the New Civil Code. 8 Provincial Agrarian Reform Officer (PARO) Raynor Taroy concurred in the
said recommendation in his Indorsement dated 22 April 1999.9
In an Order dated 15 September 1999, DAR Regional Director Nestor R. Acosta, however, dismissed
respondents petition for issuance of title over the subject property on the ground that respondent was not an
actual tiller and had abandoned the said property for 40 years; hence, she had already renounced her right to
recover the same.10 The dispositive part of the Order reads:
1. DISMISSING the claims of Elena Socco-Beltran, duly represented by Myrna Socco for lack of merit;
2. ALLOCATING Lot No. 6-B under Psd-003-008565 with an area of 360 square meters, more or less,
situated Zamora Street, Dinalupihan, Bataan, in favor of the heirs of Arturo Reyes.
3. ORDERING the complainant to refrain from any act tending to disturb the peaceful possession of herein
respondents.
4. DIRECTING the MARO of Dinalupihan, Bataan to process the pertinent documents for the issuance of
CLOA in favor of the heirs of Arturo Reyes. 11
Respondent filed a Motion for Reconsideration of the foregoing Order, which was denied by DAR Regional
Director Acosta in another Order dated 15 September 1999.12

That for or in consideration of the sum of FIVE PESOS (P5.00) per square meter, hereby sell, convey and
transfer by way of this conditional sale the said 400 sq.m. more or less unto Atty. Arturo C. Reyes, his heirs,
administrator and assigns x x x. (Emphasis supplied.)

Respondent then appealed to the Office of the DAR Secretary. In an Order, dated 9 November 2001, the
DAR Secretary reversed the Decision of DAR Regional Director Acosta after finding that neither petitioners
predecessor-in-interest, Arturo Reyes, nor respondent was an actual occupant of the subject property.
However, since it was respondent who applied to purchase the subject property, she was better qualified to
own said property as opposed to petitioners, who did not at all apply to purchase the same. Petitioners were
further disqualified from purchasing the subject property because they were not landless. Finally, during the
investigation of Legal Officer Pinlac, petitioners requested that respondent pay them the cost of the
construction of the skeletal house they built on the subject property. This was construed by the DAR
Secretary as a waiver by petitioners of their right over the subject property.13 In the said Order, the DAR
Secretary ordered that:

Hence, the present Petition, wherein petitioners raise the following issues:
I
WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN AFFIRMING THE
FINDINGS OF THE OFFICE OF THE PRESIDENT THAT THE SUBJECT LOT IS VACANT AND THAT
PETITIONERS ARE NOT ACTUAL OCCUPANTS THEREOF BY DENYING THE LATTERS CLAIM
THAT THEY HAVE BEEN IN OPEN, CONTINUOUS, EXCLUSIVE, NOTORIOUS AND AVDERSE
POSSESSION THEREOF SINCE 1954 OR FOR MORE THAN THIRTY (30) YEARS.

WHEREFORE, premises considered, the September 15, 1999 Order is hereby SET ASIDE and a new
Order is hereby issued APPROVING the application to purchase Lot [No.] 6-B of Elena Socco-Beltran. 14
Petitioners sought remedy from the Office of the President by appealing the 9 November 2001 Decision of
the DAR Secretary. Their appeal was docketed as O.P. Case No. 02-A-007. On 30 June 2003, the Office of
the President rendered its Decision denying petitioners appeal and affirming the DAR Secretarys
Decision.15 The fallo of the Decision reads:

II
WHETHER OR NOT THE COURT OF APPEALS ERRED WHEN IT HELD THAT PETITIONERS
"CANNOT LEGALLY ACQUIRE THE SUBJECT PROPERTY AS THEY ARE NOT CONSIDERED
LANDLESS AS EVIDENCED BY A TAX DECLARATION."
III

WHEREFORE, premises considered, judgment appealed from is AFFIRMED and the instant
appeal DISMISSED.16
Petitioners Motion for Reconsideration was likewise denied by the Office of the President in a Resolution
dated 30 September 2004.17 In the said Resolution, the Office of the President noted that petitioners failed to
allege in their motion the date when they received the Decision dated 30 June 2003. Such date was material
considering that the petitioners Motion for Reconsideration was filed only on 14 April 2004, or almost nine
months after the promulgation of the decision sought to be reconsidered. Thus, it ruled that petitioners
Motion for Reconsideration, filed beyond fifteen days from receipt of the decision to be reconsidered,
rendered the said decision final and executory.
Consequently, petitioners filed an appeal before the Court of Appeals, docketed as CA-G.R. SP No. 87066.
Pending the resolution of this case, the DAR already issued on 8 July 2005 a Certificate of Land Ownership
Award (CLOA) over the subject property in favor of the respondents niece and representative, Myrna
Socco-Beltran.18 Respondent passed away on 21 March 2001,19 but the records do not ascertain the identity
of her legal heirs and her legatees.
Acting on CA-G.R. SP No. 87066, the Court of Appeals subsequently promulgated its Decision, dated 31
January 2006, affirming the Decision dated 30 June 2003 of the Office of the President. It held that
petitioners could not have been actual occupants of the subject property, since actual occupancy requires the
positive act of occupying and tilling the land, not just the introduction of an unfinished skeletal structure
thereon. The Contract to Sell on which petitioners based their claim over the subject property was executed
by Miguel Socco, who was not the owner of the said property and, therefore, had no right to transfer the
same. Accordingly, the Court of Appeals affirmed respondents right over the subject property, which was
derived form the original allocatees thereof. 20 The fallo of the said Decision reads:
WHEREFORE, premises considered, the instant PETITION FOR REVIEW is DISMISSED.
Accordingly, the Decision dated 30 June 2003 and the Resolution dated 30 December 2004 both issued by
the Office of the President are hereby AFFIRMED in toto.21
The Court of Appeals denied petitioners Motion for Reconsideration of its Decision in a Resolution dated 16
August 2006.22

WHETHER OR NOT THE COURT OF APPEALS ERRED IN HOLDING THAT "WHATEVER

RESERVATION WE HAVE OVER THE RIGHT OF MYRNA SOCCO TO SUCCEED WAS ALREADY
SETTLED WHEN NO LESS THAN MIGUEL SOCCO (PREDECESSOR-IN INTEREST OF HEREIN
PETITIONERS) EXECUTED HIS WAIVER OF RIGHT DATED APRIL 19, 2005 OVER THE SUBJECT
PROPERTY IN FAVOR OF MYRNA SOCCO.
IV
WHETHER OR NOT THE COURT OF APPEALS ERRED WHEN IT DENIED PETITIONERS MOTION
FOR NEW TRIAL THEREBY BRUSHING ASIDE THE FACT THAT MYRNA V. SOCCO-ARIZO
GROSSLY MISREPRESENTED IN HER INFORMATION SHEET OF BENEFICIARIES AND
APPLICATION TO PURCHASE LOT IN LANDED ESTATES THAT SHE IS A FILIPINO CITIZEN,
WHEN IN TRUTH AND IN FACT, SHE IS ALREADY AN AMERICAN NATIONAL. 23
The main issue in this case is whether or not petitioners have a better right to the subject property over the
respondent. Petitioners claim over the subject property is anchored on the Contract to Sell executed between
Miguel Socco and Arturo Reyes on 5 September 1954. Petitioners additionally allege that they and their
predecessor-in-interest, Arturo Reyes, have been in possession of the subject lot since 1954 for an
uninterrupted period of more than 40 years.
The Court is unconvinced.
Petitioners cannot derive title to the subject property by virtue of the Contract to Sell. It was unmistakably
stated in the Contract and made clear to both parties thereto that the vendor, Miguel R. Socco, was not yet
the owner of the subject property and was merely expecting to inherit the same as his share as a co-heir of
Constancias estate.24 It was also declared in the Contract itself that Miguel R. Soccos conveyance of the
subject to the buyer, Arturo Reyes, was a conditional sale. It is, therefore, apparent that the sale of the subject
property in favor of Arturo Reyes was conditioned upon the event that Miguel Socco would actually inherit
and become the owner of the said property. Absent such occurrence, Miguel R. Socco never acquired
ownership of the subject property which he could validly transfer to Arturo Reyes.

Under Article 1459 of the Civil Code on contracts of sale, "The thing must be licit and the vendor must have
a right to transfer ownership thereof at the time it is delivered." The law specifically requires that the vendor
must have ownership of the property at the time it is delivered. Petitioners claim that the property was
constructively delivered to them in 1954 by virtue of the Contract to Sell. However, as already pointed out
by this Court, it was explicit in the Contract itself that, at the time it was executed, Miguel R. Socco was not
yet the owner of the property and was only expecting to inherit it. Hence, there was no valid sale from which
ownership of the subject property could have transferred from Miguel Socco to Arturo Reyes. Without
acquiring ownership of the subject property, Arturo Reyes also could not have conveyed the same to his
heirs, herein petitioners.
Petitioners, nevertheless, insist that they physically occupied the subject lot for more than 30 years and, thus,
they gained ownership of the property through acquisitive prescription, citing Sandoval v. Insular
Government 25 and San Miguel Corporation v. Court of Appeals. 26
In Sandoval, petitioners therein sought the enforcement of Section 54, paragraph 6 of Act No. 926, otherwise
known as the Land Registration Act, which required -- for the issuance of a certificate of title to agricultural
public lands -- the open, continuous, exclusive, and notorious possession and occupation of the same in good
faith and under claim of ownership for more than ten years. After evaluating the evidence presented,
consisting of the testimonies of several witnesses and proof that fences were constructed around the property,
the Court in the afore-stated case denied the petition on the ground that petitioners failed to prove that they
exercised acts of ownership or were in open, continuous, and peaceful possession of the whole land, and had
caused it to be enclosed to the exclusion of other persons. It further decreed that whoever claims such
possession shall exercise acts of dominion and ownership which cannot be mistaken for the momentary and
accidental enjoyment of the property. 27
In San Miguel Corporation, the Court reiterated the rule that the open, exclusive, and undisputed possession
of alienable public land for the period prescribed by law creates the legal fiction whereby land ceases to be
public land and is, therefore, private property. It stressed, however, that the occupation of the land for 30
years must be conclusively established. Thus, the evidence offered by petitioner therein tax declarations,
receipts, and the sole testimony of the applicant for registration, petitioners predecessor-in-interest who
claimed to have occupied the land before selling it to the petitioner were considered insufficient to satisfy
the quantum of proof required to establish the claim of possession required for acquiring alienable public
land.28
As in the two aforecited cases, petitioners herein were unable to prove actual possession of the subject
property for the period required by law. It was underscored in San Miguel Corporation that the open,
continuous, exclusive, and notorious occupation of property for more than 30 years must be no less
than conclusive, such quantum of proof being necessary to avoid the erroneous validation of actual fictitious
claims of possession over the property that is being claimed. 29
In the present case, the evidence presented by the petitioners falls short of being conclusive. Apart from their
self-serving statement that they took possession of the subject property, the only proof offered to support
their claim was a general statement made in the letter 30 dated 4 February 2002 ofBarangay Captain Carlos
Gapero, certifying that Arturo Reyes was the occupant of the subject property "since peace time and at
present." The statement is rendered doubtful by the fact that as early as 1997, when respondent filed her
petition for issuance of title before the DAR, Arturo Reyes had already died and was already represented by
his heirs, petitioners herein.
Moreover, the certification given by Barangay Captain Gapero that Arturo Reyes occupied the premises for
an unspecified period of time, i.e., since peace time until the present, cannot prevail over Legal Officer
Pinlacs more particular findings in her Report/Recommendation. Legal Officer Pinlac reported that
petitioners admitted that it was only in the 1970s that they built the skeletal structure found on the subject
property. She also referred to the averments made by Patricia Hipolito in an Affidavit, 31 dated 26 February

1999, that the structure was left unfinished because respondent prevented petitioners from occupying the
subject property. Such findings disprove petitioners claims that their predecessor-in-interest, Arturo Reyes,
had been in open, exclusive, and continuous possession of the property since 1954. The adverted findings
were the result of Legal Officer Pinlacs investigation in the course of her official duties, of matters within
her expertise which were later affirmed by the DAR Secretary, the Office of the President, and the Court of
Appeals. The factual findings of such administrative officer, if supported by evidence, are entitled to great
respect.32
In contrast, respondents claim over the subject property is backed by sufficient evidence. Her predecessorsin-interest, the spouses Laquian, have been identified as the original allocatees who have fully paid for the
subject property. The subject property was allocated to respondent in the extrajudicial settlement by the heirs
of Constancias estate. The document entitled "Extra-judicial Settlement of the Estate of the Deceased
Constancia Socco" was not notarized and, as a private document, can only bind the parties thereto. However,
its authenticity was never put into question, nor was its legality impugned. Moreover, executed in 1965 by
the heirs of Constancia Socco, or more than 30 years ago, it is an ancient document which appears to be
genuine on its face and therefore its authenticity must be upheld. 33 Respondent has continuously paid for the
realty tax due on the subject property, a fact which, though not conclusive, served to strengthen her claim
over the property.34
From the foregoing, it is only proper that respondents claim over the subject property be upheld. This Court
must, however, note that the Order of the DAR Secretary, dated 9 November 2001, which granted the
petitioners right to purchase the property, is flawed and may be assailed in the proper proceedings. Records
show that the DAR affirmed that respondents predecessors-in-interest, Marcelo Laquian and Constancia
Socco, having been identified as the original allocatee, have fully paid for the subject property as provided
under an agreement to sell. By the nature of a contract or agreement to sell, the title over the subject property
is transferred to the vendee upon the full payment of the stipulated consideration. Upon the full payment of
the purchase price, and absent any showing that the allocatee violated the conditions of the agreement,
ownership of the subject land should be conferred upon the allocatee. 35 Since the extrajudicial partition
transferring Constancia Soccos interest in the subject land to the respondent is valid, there is clearly no need
for the respondent to purchase the subject property, despite the application for the purchase of the property
erroneously filed by respondent. The only act which remains to be performed is the issuance of a title in the
name of her legal heirs, now that she is deceased.
Moreover, the Court notes that the records have not clearly established the right of respondents
representative, Myrna Socco-Arizo, over the subject property. Thus, it is not clear to this Court why the DAR
issued on 8 July 2005 a CLOA36 over the subject property in favor of Myrna Socco-Arizo. Respondents
death does not automatically transmit her rights to the property to Myrna Socco-Beltran. Respondent only
authorized Myrna Socco-Arizo, through a Special Power of Attorney 37dated 10 March 1999, to represent her
in the present case and to administer the subject property for her benefit. There is nothing in the Special
Power of Attorney to the effect that Myrna Socco-Arizo can take over the subject property as owner thereof
upon respondents death. That Miguel V. Socco, respondents only nephew, the son of the late Miguel R.
Socco, and Myrna Socco-Arizos brother, executed a waiver of his right to inherit from respondent, does not
automatically mean that the subject property will go to Myrna Socco-Arizo, absent any proof that there is no
other qualified heir to respondents estate. Thus, this Decision does not in any way confirm the issuance of
the CLOA in favor of Myrna Socco-Arizo, which may be assailed in appropriate proceedings.
IN VIEW OF THE FOREGOING, the instant Petition is DENIED. The assailed Decision of the Court of
Appeals in CA-G.R. SP No. 87066, promulgated on 31 January 2006,
is AFFIRMED withMODIFICATION. This Court withholds the confirmation of the validity of title over
the subject property in the name of Myrna Socco-Arizo pending determination of respondents legal heirs in
appropriate proceedings. No costs.
SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 159578

ruled that when there is a showing of such illegality, the property registered is deemed to be simply held in
trust for the real owner by the person in whose name it is registered, and the former then has the right to sue
for the reconveyance of the property.5 An action for reconveyance based on a void contract is
imprescriptible. 6 As long as the land wrongfully registered under the Torrens system is still in the name of
the person who caused such registration, an action in personam will lie to compel him to reconvey the
property to the real owner.7 In this case, title to the property is in the name of petitioner Rogelia; thus, the
trial court correctly ordered the reconveyance of the subject land to respondents.

February 18, 2009

ROGELIA DACLAG and ADELINO DACLAG (deceased), substituted by RODEL M. DACLAG, and
ADRIAN M. DACLAG, Petitioners,
vs.
ELINO MACAHILIG, ADELA MACAHILIG, CONRADO MACAHILIG, LORENZA HABER and
BENITA DEL ROSARIO, Respondents.

Petitioners next contend that they are possessors in good faith, thus, the award of damages should not have
been imposed. They further contend that under Article 544, a possessor in good faith is entitled to the fruits
received before the possession is legally interrupted; thus, if indeed petitioners are jointly and severally
liable to respondents for the produce of the subject land, the liability should be reckoned only for 1991 and
not 1984.
We find partial merit in this argument.

RESOLUTION
AUSTRIA-MARTINEZ, J.:
Before us is petitioners' Motion for Reconsideration of our Decision dated July 28, 2008 where we affirmed
the Decision dated October 17, 2001 and the Resolution dated August 7, 2003 of the Court of Appeals (CA)
in CA-G.R. CV No. 48498.
Records show that while the land was registered in the name of petitioner Rogelia in 1984, respondents
complaint for reconveyance was filed in 1991, which was within the 10-year prescriptive period.
We ruled that since petitioners bought the property when it was still an unregistered land, the defense of
having purchased the property in good faith is unavailing. We affirmed the Regional Trial Court (RTC) in
finding that petitioners should pay respondents their corresponding share in the produce of the subject land
from the time they were deprived thereof until the possession is restored to them.
In their Motion for Reconsideration, petitioners contend that the 10-year period for reconveyance is
applicable if the action is based on an implied or a constructive trust; that since respondents' action for
reconveyance was based on fraud, the action must be filed within four years from the discovery of the fraud,
citing Gerona v. De Guzman,1 which was reiterated in Balbin v. Medalla.2
We do not agree.
In Caro v. Court of Appeals,3 we have explicitly held that "the prescriptive period for the reconveyance of
fraudulently registered real property is 10 years reckoned from the date of the issuance of the
certificate of title x x x."4
However, notwithstanding petitioners' unmeritorious argument, the Court deems it necessary to make certain
clarifications. We have earlier ruled that respondents' action for reconveyance had not prescribed, since it
was filed within the 10-year prescriptive period. However, a review of the factual antecedents of the case
shows that respondents' action for reconveyance was not even subject to prescription. The deed of sale
executed by Maxima in favor of petitioners was null and void, since Maxima was not the owner of the land
she sold to petitioners, and the one-half northern portion of such land was owned by respondents. Being an
absolute nullity, the deed is subject to attack anytime, in accordance with Article 1410 of the Civil Code that
an action to declare the inexistence of a void contract does not prescribe. Likewise, we have consistently

Article 528 of the Civil Code provides that possession acquired in good faith does not lose this character,
except in a case and from the moment facts exist which show that the possessor is not unaware that he
possesses the thing improperly or wrongfully. Possession in good faith ceases from the moment defects in
the title are made known to the possessors, by extraneous evidence or by suit for recovery of the property by
the true owner. Whatever may be the cause or the fact from which it can be deduced that the possessor has
knowledge of the defects of his title or mode of acquisition, it must be considered sufficient to show bad
faith.8 Such interruption takes place upon service of summons. 9lawphil.net
Article 544 of the same Code provides that a possessor in good faith is entitled to the fruits only so long as
his possession is not legally interrupted. Records show that petitioners received a summons together with
respondents' complaint on August 5, 1991;10 thus, petitioners' good faith ceased on the day they received the
summons. Consequently, petitioners should pay respondents 10 cavans of palay per annum beginning
August 5, 1991 instead of 1984.
Finally, petitioner would like this Court to look into the finding of the RTC that "since Maxima died in
October 1993, whatever charges and claims petitioners may recover from her expired with her"; and that the
proper person to be held liable for damages to be awarded to respondents should be Maxima Divison or her
estate, since she misrepresented herself to be the true owner of the subject land.
We are not persuaded.
Notably, petitioners never raised this issue in their appellants' brief or in their motion for reconsideration
filed before the CA. In fact, they never raised this matter before us when they filed their petition for review.
Thus, petitioners cannot raise the same in this motion for reconsideration without offending the basic rules of
fair play, justice and due process, specially since Maxima was not substituted at all by her heirs after the
promulgation of the RTC Decision.
WHEREFORE, petitioners Motion for Reconsideration is PARTLY GRANTED. The Decision of the
Court of Appeals dated July 28, 2008 is MODIFIED only with respect to prescription as discussed in the
text of herein Resolution, and the dispositive portion of the Decision is MODIFIED to the effect that
petitioners are ordered to pay respondents 10 cavans of palay per annum beginning August 5, 1991 instead
of 1984.
SO ORDERED.

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. 4On 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. 6crlwvirtualibrry

SECOND DIVISION
A.C. No. 3046. October 26, 1998
REGALADO DAROY, complainant, vs. ATTY. ESTEBAN ABECIA, Respondent.

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.7crlwvirtualibrry
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. 8crlwvirtualibrry

DECISION
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

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.10crlwvirtualibrry
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: 11crlwvirtualibrry
. . . 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. T15926 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:15crlwvirtualibrry
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.

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?

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.16crlwvirtualibrry
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

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. 20crlwvirtualibrry
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.

Republic of the Philippines

SUPREME COURT
Manila
THIRD DIVISION

G.R. No. L-68838

March 11, 1991

FLORENCIO FABILLO and JOSEFA TANA (substituted by their heirs Gregorio Fabillo, Roman
Fabillo, Cristeta F. Maglinte and Antonio Fabillo), petitioners,
vs.
THE HONORABLE INTERMEDIATE APPELLATE COURT (Third Civil Case Division) and
ALFREDO MURILLO (substituted by his heirs Fiamita M. Murillo, Flor M. Agcaoili and Charito M.
Babol),respondents.
Francisco A. Tan for petitioners.
Von Kaiser P. Soro for private respondent.

KNOW ALL MEN BY THESE PRESENTS:

That I, FLORENCIO FABILLO, married to JOSEFA TANA, of legal age, Filipino citizen and with residence
and postal address at Palo, Leyte, was the Petitioner in Special Proceedings No. 843, entitled "In the Matter
of the Testate Estate of the late Justina Fabillo, Florencio Fabillo, Petitioner" of the Court of First Instance of
Leyte;
That by reason of the Order of the Court of First Instance of Leyte dated June 2, 1962, my claim for the
house and lot mentioned in paragraph one (1) of the last will and testament of the late Justina Fabillo, was
denied altho the will was probated and allowed by the Court;
That acting upon the counsel of Atty. Alfredo M. Murillo, I have cause(d) the preparation and filing of
another case, entitled "Florencio Fabillo vs. Gregorio D. Brioso," which was docketed as Civil Case No.
3532 of the Court of First Instance of Leyte;

FERNAN, C.J.:
In the instant petition for review on certiorari, petitioners seek the reversal of the appellate court's decision
interpreting in favor of lawyer Alfredo M. Murillo the contract of services entered into between him and his
clients, spouses Florencio Fabillo and Josefa Taa.
In her last will and testament dated August 16, 1957, Justina Fabillo bequeathed to her brother, Florencio, a
house and lot in San Salvador Street, Palo, Leyte which was covered by tax declaration No. 19335, and to
her husband, Gregorio D. Brioso, a piece of land in Pugahanay, Palo, Leyte. 1 After Justina's death, Florencio
filed a petition for the probate of said will. On June 2, 1962, the probate court approved the project of
partition "with the reservation that the ownership of the land declared under Tax Declaration No. 19335 and
the house erected thereon be litigated and determined in a separate proceedings." 2
Two years later, Florencio sought the assistance of lawyer Alfredo M. Murillo in recovering the San Salvador
property. Acquiescing to render his services, Murillo wrote Florencio the following handwritten letter:
Dear Mr. Fabillo:
I have instructed my stenographer to prepare the complaint and file the same on Wednesday if you are ready
with the filing fee and sheriffs fee of not less than P86.00 including transportation expenses.
Considering that Atty. Montilla lost this case and the present action is a revival of a lost case, I trust that you
will gladly give me 40% of the money value of the house and lot as a contigent (sic) fee in case of a success.
When I come back I shall prepare the contract of services for your signature.
Thank you.
Cordially yours,
(Sgd.) Alfredo M. Murillo
Aug. 9, 1964 3
Thirteen days later, Florencio and Murillo entered into the following contract:
CONTRACT OF SERVICES

That I have retained and engaged the services of Atty. ALFREDO M. MURILLO, married and of legal age,
with residence and postal address at Santa Fe, Leyte to be my lawyer not only in Social Proceedings No. 843
but also in Civil Case No. 3532 under the following terms and conditions;
That he will represent me and my heirs, in case of my demise in the two cases until their successful
conclusion or until the case is settled to my entire satisfaction;
That for and in consideration for his legal services, in the two cases, I hereby promise and bind myself to pay
Atty. ALFREDO M. MURILLO, in case of success in any or both cases the sum equivalent to FORTY PER
CENTUM (40%) of whatever benefit I may derive from such casesto be implemented as follows:
If the house and lot in question is finally awarded to me or a part of the same by virtue of an amicable
settlement, and the same is sold, Atty. Murillo, is hereby constituted as Atty. in-fact to sell and convey the
said house and lot and he shall be given as his compensation for his services as counsel and as attorney-infact the sum equivalent to forty per centum of the purchase price of the house and lot;
If the same house and lot is just mortgage(d) to any person, Atty. Murillo shall be given the sum equivalent
to forty per centum (40%) of the proceeds of the mortgage;
If the house and lot is leased to any person, Atty. Murillo shall be entitled to receive an amount equivalent to
40% (FORTY PER CENTUM) of the rentals of the house and lot, or a part thereof;
If the house and lot or a portion thereof is just occupied by the undersigned or his heirs, Atty. Murillo shall
have the option of either occupying or leasing to any interested party FORTY PER CENT of the house and
lot.
Atty. Alfredo M. Murillo shall also be given as part of his compensation for legal services in the two cases
FORTY PER CENTUM of whatever damages, which the undersigned can collect in either or both cases,
provided, that in case I am awarded attorney's fees, the full amount of attorney's fees shall be given to the
said Atty. ALFREDO M. MURILLO;
That in the event the house and lot is (sic) not sold and the same is maintained by the undersigned or his
heirs, the costs of repairs, maintenance, taxes and insurance premiums shall be for the account of myself or

my heirs and Attorney Murillo, in proportion to our rights and interest thereunder that is forty per cent shall
be for the account of Atty. Murillo and sixty per cent shall be for my account or my heirs.

be ordered to pay moral damages and the total amount of P1,000 representing expenses of litigation and
attorney's fees.

IN WITNESS HEREOF, I hereby set unto my signature below this 22nd day of August 1964 at Tacloban
City.

In its decision of December 2, 1975, 7 the lower court ruled that there was insufficient evidence to prove that
the Fabillo spouses' consent to the contract was vitiated. It noted that the contract was witnessed by two of
their children who appeared to be highly educated. The spouses themselves were old but literate and
physically fit.

(Sgd.) FLORENCIO FABILLO

(Sgd.) JOSEFA T. FABILLO
WITH MY CONFORMITY:
(Sgd.) ALFREDO M. MURILLO
(Sgd.) ROMAN T. FABILLO
(Witness)

(Sgd.) CRISTETA F. MAGLINTE

(Witness) 4

Pursuant to said contract, Murillo filed for Florencio Fabillo Civil Case No. 3532 against Gregorio D. Brioso
to recover the San Salvador property. The case was terminated on October 29, 1964 when the court, upon the
parties' joint motion in the nature of a compromise agreement, declared Florencio Fabillo as the lawful
owner not only of the San Salvador property but also the Pugahanay parcel of land.
Consequently, Murillo proceeded to implement the contract of services between him and Florencio Fabillo
by taking possession and exercising rights of ownership over 40% of said properties. He installed a tenant in
the Pugahanay property.
Sometime in 1966, Florencio Fabillo claimed exclusive right over the two properties and refused to give
Murillo his share of their produce. 5 Inasmuch as his demands for his share of the produce of the Pugahanay
property were unheeded, Murillo filed on March 23, 1970 in the then Court of First Instance of Leyte a
complaint captioned "ownership of a parcel of land, damages and appointment of a receiver" against
Florencio Fabillo, his wife Josefa Taa, and their children Ramon (sic) Fabillo and Cristeta F. Maglinte. 6
Murillo prayed that he be declared the lawful owner of forty per cent of the two properties; that defendants
be directed to pay him jointly and severally P900.00 per annum from 1966 until he would be given his share
of the produce of the land plus P5,000 as consequential damages and P1,000 as attorney's fees, and that
defendants be ordered to pay moral and exemplary damages in such amounts as the court might deem just
and reasonable.
In their answer, the defendants stated that the consent to the contract of services of the Fabillo spouses was
vitiated by old age and ailment; that Murillo misled them into believing that Special Proceedings No. 843 on
the probate of Justina's will was already terminated when actually it was still pending resolution; and that the
contingent fee of 40% of the value of the San Salvador property was excessive, unfair and unconscionable
considering the nature of the case, the length of time spent for it, the efforts exerted by Murillo, and his
professional standing.

In claiming jurisdiction over the case, the lower court ruled that the complaint being one "to recover real
property from the defendant spouses and their heirs or to enforce a lien thereon," the case could be decided
independent of the probate proceedings. Ruling that the contract of services did not violate Article 1491 of
the Civil Code as said contract stipulated a contingent fee, the court upheld Murillo's claim for "contingent
attorney's fees of 40% of the value of recoverable properties." However, the court declared Murillo to be the
lawful owner of 40% of both the San Salvador and Pugahanay properties and the improvements thereon. It
directed the defendants to pay jointly and severally to Murillo the amount of P1,200 representing 40% of the
net produce of the Pugahanay property from 1967 to 1973; entitled Murillo to 40% of the 1974 and 1975
income of the Pugahanay property which was on deposit with a bank, and ordered defendants to pay the
costs of the suit.
Both parties filed motions for the reconsideration of said decision: Fabillo, insofar as the lower court
awarded 40% of the properties to Murillo and the latter insofar as it granted only P1,200 for the produce of
the properties from 1967 to 1973. On January 29, 1976, the lower court resolved the motions and modified
its decision thus:
ACCORDINGLY, the judgment heretofore rendered is modified to read as follows:
(a) Declaring the plaintiff as entitled to and the true and lawful owner of forty percent (40%) of the parcels
of land and improvements thereon covered by Tax Declaration Nos. 19335 and 6229 described in Paragraph
5 of the complaint;
(b) Directing all the defendants to pay jointly and severally to the plaintiff the sum of Two Thousand Four
Hundred Fifty Pesos (P2,450.00) representing 40% of the net produce of the Pugahanay property from 1967
to 1973;
(c) Declaring the plaintiff entitled to 40% of the 1974 and 1975 income of said riceland now on deposit with
the Prudential Bank, Tacloban City, deposited by Mr. Pedro Elona, designated receiver of the property;
(d) Ordering the defendants to pay the plaintiff the sum of Three Hundred Pesos (P 300.00) as attorney's
fees; and
(e) Ordering the defendants to pay the costs of this suit.
SO ORDERED.

They prayed that the contract of services be declared null and void; that Murillo's fee be fixed at 10% of the
assessed value of P7,780 of the San Salvador property; that Murillo be ordered to account for the P1,000
rental of the San Salvador property which he withdrew from the court and for the produce of the Pugahanay
property from 1965 to 1966; that Murillo be ordered to vacate the portion of the San Salvador property
which he had occupied; that the Pugahanay property which was not the subject of either Special Proceedings
No. 843 or Civil Case No. 3532 be declared as the exclusive property of Florencio Fabillo, and that Murillo

In view of the death of both Florencio and Justina Fabillo during the pendency of the case in the lower court,
their children, who substituted them as parties to the case, appealed the decision of the lower court to the
then Intermediate Appellate Court. On March 27, 1984, said appellate court affirmed in toto the decision of
the lower court. 8

10

The instant petition for review on certiorari which was interposed by the Fabillo children, was filed shortly
after Murillo himself died. His heirs likewise substituted him in this case. The Fabillos herein question the
appellate court's interpretation of the contract of services and contend that it is in violation of Article 1491 of
the Civil Code.

integrity and dignity of the legal profession so that his basic ideal becomes one of rendering service and
securing justice, not money-making. For the worst scenario that can ever happen to a client is to lose the
litigated property to his lawyer in whom all trust and confidence were bestowed at the very inception of the
legal controversy." 16

The contract of services did not violate said provision of law. Article 1491 of the Civil Code, specifically
paragraph 5 thereof, prohibits lawyers from acquiring by purchase even at a public or judicial auction,
properties and rights which are the objects of litigation in which they may take part by virtue of their
profession. The said prohibition, however, applies only if the sale or assignment of the property takes place
during the pendency of the litigation involving the client's property. 9

WHEREFORE, the decision of the then Intermediate Appellate Court is hereby reversed and set aside and a
new one entered (a) ordering the petitioners to pay Atty. Alfredo M. Murillo or his heirs the amount of
P3,000.00 as his contingent fee with legal interest from October 29, 1964 when Civil Case No. 3532 was
terminated until the amount is fully paid less any and all amounts which Murillo might have received out of
the produce or rentals of the Pugahanay and San Salvador properties, and (b) ordering the receiver of said
properties to render a complete report and accounting of his receivership to the court below within fifteen
(15) days from the finality of this decision. Costs against the private respondent.

Hence, a contract between a lawyer and his client stipulating a contingent fee is not covered by said
prohibition under Article 1491 (5) of the Civil Code because the payment of said fee is not made during the
pendency of the litigation but only after judgment has been rendered in the case handled by the lawyer. In
fact, under the 1988 Code of Professional Responsibility, a lawyer may have a lien over funds and property
of his client and may apply so much thereof as may be necessary to satisfy his lawful fees and
disbursements. 10

SO ORDERED.
Gutierrez, Jr., Feliciano, Bidin and Davide, Jr., JJ., concur.

As long as the lawyer does not exert undue influence on his client, that no fraud is committed or imposition
applied, or that the compensation is clearly not excessive as to amount to extortion, a contract for contingent
fee is valid and enforceable. 11 Moreover, contingent fees were impliedly sanctioned by No. 13 of the Canons
of Professional Ethics which governed lawyer-client relationships when the contract of services was entered
into between the Fabillo spouses and Murillo. 12
However, we disagree with the courts below that the contingent fee stipulated between the Fabillo spouses
and Murillo is forty percent of the properties subject of the litigation for which Murillo appeared for the
Fabillos. A careful scrutiny of the contract shows that the parties intended forty percent of the value of the
properties as Murillo's contingent fee. This is borne out by the stipulation that "in case of success of any or
both cases," Murillo shall be paid "the sum equivalent to forty per centum of whatever benefit" Fabillo would
derive from favorable judgments. The same stipulation was earlier embodied by Murillo in his letter of
August 9, 1964 aforequoted.
Worth noting are the provisions of the contract which clearly states that in case the properties are sold,
mortgaged, or leased, Murillo shall be entitled respectively to 40% of the "purchase price," "proceeds of the
mortgage," or "rentals." The contract is vague, however, with respect to a situation wherein the properties are
neither sold, mortgaged or leased because Murillo is allowed "to have the option of occupying or leasing to
any interested party forty per cent of the house and lot." Had the parties intended that Murillo should become
the lawful owner of 40% of the properties, it would have been clearly and unequivocally stipulated in the
contract considering that the Fabillos would part with actual portions of their properties and cede the same to
Murillo.
The ambiguity of said provision, however, should be resolved against Murillo as it was he himself who
drafted the contract. 13 This is in consonance with the rule of interpretation that, in construing a contract of
professional services between a lawyer and his client, such construction as would be more favorable to the
client should be adopted even if it would work prejudice to the lawyer. 14 Rightly so because of the inequality
in situation between an attorney who knows the technicalities of the law on the one hand and a client who
usually is ignorant of the vagaries of the law on the other hand. 15
Considering the nature of the case, the value of the properties subject matter thereof, the length of time and
effort exerted on it by Murillo, we hold that Murillo is entitled to the amount of Three Thousand Pesos
(P3,000.00) as reasonable attorney's fees for services rendered in the case which ended on a compromise
agreement. In so ruling, we uphold "the time-honored legal maxim that a lawyer shall at all times uphold the

EN BANC

11

A.M. Nos. 1302, 1391 and 1543 April 26, 1991

PAULINO VALENCIA, Complainant, vs. ATTY. ARSENIO FER CABANTING,Respondent.chanrobles
virtual law library

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.chanroblesvirtualawlibrarychanrobles virtual law library

CONSTANCIA L. VALENCIA, Complainant, vs. ATTY. DIONISIO C. ANTINIW, ATTY. EDUARDO

U. JOVELLANOS and ATTY. ARSENIO FER. CABANTING, Respondents.chanrobles virtual law
library

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).chanroblesvirtualawlibrarychanrobles virtual law library

LYDIA BERNAL, Complainant, vs. ATTY. DIONISIO C. ANTINIW, Respondent.

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.chanroblesvirtualawlibrarychanrobles virtual law library

PER CURIAM: pp
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:chanrobles virtual law library
1. Administrative Cases No. 1302 and 1391.chanroblesvirtualawlibrarychanrobles virtual law library
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.chanroblesvirtualawlibrarychanrobles virtual law library
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).chanroblesvirtualawlibrarychanrobles virtual law library
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).chanroblesvirtualawlibrarychanrobles virtual law library
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.chanroblesvirtualawlibrarychanrobles virtual
law library
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)chanrobles virtual law library

On March 21, 1974 the appellate court dismissed the petition of

Paulino.chanroblesvirtualawlibrarychanrobles virtual law library
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. V2170 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:chanrobles virtual law library
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.chanroblesvirtualawlibrarychanrobles virtual law library
2. AGAINST ATTY. EDUARDO JOVELLANOS:chanrobles virtual law library
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).chanroblesvirtualawlibrarychanrobles virtual law
library

12

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.chanroblesvirtualawlibrarychanrobles virtual law library
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.chanroblesvirtualawlibrarychanrobles virtual law library

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 xxxchanrobles virtual law library

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.chanroblesvirtualawlibrarychanrobles virtual law library
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.chanroblesvirtualawlibrarychanrobles virtual law library
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.chanroblesvirtualawlibrarychanrobles virtual law library
On April 12, 1988, We referred the investigation of these cases to the Integrated Bar of the Philippines.
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.chanroblesvirtualawlibrarychanrobles virtual law
library
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.chanroblesvirtualawlibrarychanrobles virtual law library
The three administrative cases were raffled to Branch XVII of the Regional Trial Court of Manila, under the
sala of Judge Catalino Castaneda, Jr.chanroblesvirtualawlibrarychanrobles virtual law library
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."chanrobles virtual law library
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.chanroblesvirtualawlibrarychanrobles virtual law library
II. Whether or not Attys. Antiniw and Jovellanos are guilty of malpractice in falsifying notarial
documents.chanroblesvirtualawlibrarychanrobles virtual law library

(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).chanroblesvirtualawlibrarychanrobles virtual law library
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).chanroblesvirtualawlibrarychanrobles virtual law library
In the case at bar, while it is true that Atty. Arsenio Fer. Cabanting purchased the lot afterfinality 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.chanroblesvirtualawlibrarychanrobles virtual law library
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).chanroblesvirtualawlibrarychanrobles
virtual law library

III. Whether or not the three lawyers connived in rigging Civil Case No. V-2170.

13

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.chanroblesvirtualawlibrarychanrobles virtual law library
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.chanroblesvirtualawlibrarychanrobles virtual law library
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).chanroblesvirtualawlibrarychanrobles virtual law
library
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.chanroblesvirtualawlibrarychanrobles virtual law library
The other charges of malpractice against Atty. Antiniw and Atty. Jovellanos should be dismissed for lack of
evidence.chanroblesvirtualawlibrarychanrobles virtual law library
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 crossexamination were unheeded. She eventually requested the withdrawal of her
complaint.chanroblesvirtualawlibrarychanrobles virtual law library

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.chanroblesvirtualawlibrarychanrobles virtual law library
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. V2170.chanroblesvirtualawlibrarychanrobles virtual law library
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.chanroblesvirtualawlibrarychanrobles virtual law library
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.chanroblesvirtualawlibrarychanrobles virtual law library
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.chanroblesvirtualawlibrarychanrobles virtual law library
SO ORDERED.

Procedural due process demands that respondent lawyer should be given an opportunity to cross-examine the
witnesses against him. 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.chanroblesvirtualawlibrarychanrobles virtual law library
THIRD DIVISION
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 facto result 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.chanroblesvirtualawlibrarychanrobles virtual law library
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

[A.C. No. 2430. August 30, 1990.]

MAURO P. MANANQUIL, Complainant, v. ATTY. CRISOSTOMO C. VILLEGAS, Respondent.
Geminiano M. Eleccion for complainant.
R E SO LU TI O N

14

That, the lifetime of the lease contract was FOUR (4) sugar crop years, with a yearly rental of TEN
PERCENT (10%) of the value of the sugar produced from the leased parcels of land;
CORTES, J.:
That, on April 20, 1965, the formal partnership of HIJOS DE JOSE VILLEGAS was formed amongst the
heirs of Jose Villegas, of which respondent was a member;
In a verified complaint for disbarment dated July 5, 1982, Mauro P. Mananquil charged respondent Atty.
Crisostomo C. Villegas with gross misconduct or malpractice committed while acting as counsel of record of
one Felix Leong in the latters capacity as administrator of the Testate Estate of the late Felomina Zerna in
Special Proceedings No. 460 before then Court of First Instance of Negros Occidental. The complainant was
appointed special administrator after Felix Leong died.
In compliance with a resolution of this Court, respondent filed his comment to the complaint on January 20,
1983. After complainant filed his reply, the Court resolved to refer the case to the Solicitor General for
investigation, report and recommendation.
In a hearing conducted on May 15, 1985 by the investigating officer assigned to the case, counsel for the
complainant proposed that the case be considered on the basis of position papers and memoranda to be
submitted by the parties. Respondent agreed. Thus, the investigating officer required the parties to submit
their respective position papers and memoranda, with the understanding that with or without the memoranda,
the case will be deemed submitted for resolution after the expiration of 30 days. In compliance, both parties
submitted their respective position papers; but no memorandum was filed by either party. Thereafter, the
case was deemed submitted.
In the pleadings submitted before the Court and the Office of the Solicitor General, complainant alleges that
over a period of 20 years, respondent allowed lease contracts to be executed between his client Felix Leong
and a partnership HIJOS DE JOSE VILLEGAS, of which respondent is one of the partners, covering several
parcels of land of the estate, i.e. Lots Nos. 1124, 1228, 2221, 2402, 3939, 3942 and 3957 of the Tanjay
Cadastre, under iniquitous terms and conditions. Moreover, complainant charges that these contracts were
made without the approval of the probate court and in violation of Articles 1491 and 1646 of the new Civil
Code.
On the basis of the pleadings submitted by the parties, and other pertinent records of the investigation, the
Solicitor General submitted his report dated February 21, 1990, finding that respondent committed a breach
in the performance of his duties as counsel of administrator Felix Leong when he allowed the renewal of
contracts of lease for properties involved in the testate proceedings to be undertaken in favor of HIJOS DE
JOSE VILLEGAS without notifying and securing the approval of the probate court. However, the Solicitor
General opined that there was no sufficient evidence to warrant a finding that respondent had allowed the
properties to be leased in favor of his family partnership at a very low rental or in violation of Articles 1491
and 1646 of the new Civil Code. Thus, the Solicitor General recommended that respondent be suspended
from the practice of law for a period of THREE (3) months with a warning that future misconduct on
respondents part will be more severely dealt with [Report and Recommendation of the Solicitor General, pp.
1-10; Rollo, pp. 37-46. Also, Complaint of the Solicitor General, pp. 1-3; Rollo, pp. 47-49].chanrobles.com :
virtual law library
As gleaned from the record of the case and the report and recommendation of the Solicitor General, the
following facts are uncontroverted:chanrob1es virtual 1aw library
That as early as March 21, 1961, respondent was retained as counsel of record for Felix Leong, one of the
heirs of the late Felomina Zerna, who was appointed as administrator of the Testate Estate of the Felomina
Zerna in Special Proceedings No. 460 on May 22, 1961;
That, a lease contract dated August 13, 1963 was executed between Felix Leong and the "Heirs of Jose
Villegas" represented by respondents brother-in-law Marcelo Pastrano involving, among others, sugar lands
of the estate designated as Lot Nos. 1124, 1228, 2221, 2402, 3939, 3942 and 3957 of the Tanjay Cadastre;
That Felix Leong was designated therein as administrator and "owner, by testamentary disposition, of 5/6 of
all said parcels of land" ;

That, on October 18, 1965, another lease contract was executed between Felix Leong and the partnership
HIJOS DE JOSE VILLEGAS, containing basically the same terms and conditions as the first contract, with
Marcelo Pastrano signing once again as representative of the lessee;
That, on March 14, 1968, after the demise of Marcelo Pastrano, respondent was appointed manager of
HIJOS DE JOSE VILLEGAS by the majority of partners;
That, renewals of the lease contract were executed between Felix Leong and HIJOS DE JOSE VILLEGAS
on January 13, 1975 and on December 4, 1978, with respondent signing therein as representative of the
lessee; and,
That, in the later part of 1980, respondent was replaced by his nephew Geronimo H. Villegas as manager of
the family partnership.
Under the above circumstances, the Court finds absolutely no merit to complainants charge, and the
Solicitor Generals finding, that respondent committed acts of misconduct in failing to secure the approval of
the court in Special Proceedings No. 460 to the various lease contracts executed between Felix Leong and
respondents family partnership.chanrobles virtualawlibrary chanrobles.com:chanrobles.com.ph
Pursuant to Section 3 of Rule 84 of the Revised Rules of Court, a judicial executor or administrator has the
right to the possession and management of the real as well as the personal estate of the deceased so long as it
is necessary for the payment of the debts and the expenses of administration. He may, therefore, exercise acts
of administration without special authority from the court having jurisdiction of the estate. For instance, it
has long been settled that an administrator has the power to enter into lease contracts involving the properties
of the estate even without prior judicial authority and approval [See Ferraris v. Rodas, 65 Phil. 732 (1938),
Jocson de Hilado v. Nava, 69 Phil. 1 (1939); San Diego, Sr. v. Hombre, G.R No. L-19265, May 29, 1964, 11
SCRA 165].
Thus, considering that administrator Felix Leong was not required under the law and prevailing
jurisprudence to seek prior authority from the probate court in order to validly lease real properties of the
estate, respondent, as counsel of Felix Leong, cannot be taken to task for failing to notify the probate court of
the various lease contracts involved herein and to secure its judicial approval thereto.
Nevertheless, contrary to the opinion of the Solicitor General, the Court finds sufficient evidence to hold
respondent subject to disciplinary sanction for having, as counsel of record for the administrator in Special
Proceedings No. 460, participated in the execution in 1975 and 1978 of renewals of the lease agreement
involving properties of the estate in favor of the partnership HIJOS DE JOSE VILLEGAS, of which
respondent is a member and in 1968 was appointed managing partner.
By virtue of Article 1646 of the new Civil Code, the persons referred to in Article 1491 are prohibited from
leasing, either in person or through the mediation of another, the properties or things mentioned in that
article, to wit:chanrob1es virtual 1aw library
x
x
x
(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 have been given;
(3) Executors and administrators, the property of the estate under administration;

15

(4) Public officers and employees, the property of the State or of any subdivision 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, clerks of superior and inferior courts, and other officers and
employees connected with the administration of justice, the property or rights in litigation or levied upon on
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.
x

[Article 1491 of the new Civil Code; Emphasis supplied.]

The above disqualification imposed on public and judicial officers and lawyers is grounded on public policy
considerations which disallow the transactions entered into by them, whether directly or indirectly, in view
of the fiduciary relationship involved, or the peculiar control exercised by these individuals over the
properties or rights covered [See Rubias v. Batiller, G.R. No. L-35702, May 29, 1973, 51 SCRA 120;
Maharlika Publishing Corporation v. Tagle, G.R. No. 65594, July 9, 1986, 142 SCRA 553; Fornilda v. The
Branch 164, RTC Fourth Judicial Region, Pasig, G.R. No. 72306, October 5, 1988, 166 SCRA 281 and
January 24, 1989, 169 SCRA 351].
Thus, even if the parties designated as lessees in the assailed lease contracts were the "Heirs of Jose
Villegas" and the partnership HIJOS DE JOSE VILLEGAS, and respondent signed merely as an agent of the
latter, the Court rules that the lease contracts are covered by the prohibition against any acquisition or lease
by a lawyer of properties involved in litigation in which he takes part. To rule otherwise would be to lend a
stamp of judicial approval on an arrangement which, in effect, circumvents that which is directly prohibited
by law. For, piercing through the legal fiction of separate juridical personality, the Court cannot ignore the
obvious implication that respondent as one of the heirs of Jose Villegas and partner, later manager of, in
HIJOS DE JOSE VILLEGAS stands to benefit from the contractual relationship created between his client
Felix Leong and his family partnership over properties involved in the ongoing testate proceedings.

confidential association [Sotto v. Samson, G.R. No. L-16917, July 31, 1962, 5 SCRA 733]. Thus, the law
makes the prohibition absolute and permanent [Rubias v. Batiller, supra]. And in view of Canon 1 of the new
Code of Professional Responsibility and Sections 8 & 27 of Rule 138 of the Revised Rules of Court,
whereby lawyers are duty-bound to obey and uphold the laws of the land, participation in the execution of
the prohibited contracts such as those referred to in Articles 1491 and 1646 of the new Civil Code has been
held to constitute breach of professional ethics on the part of the lawyer for which disciplinary action may be
brought against him [See Bautista v. Gonzalez, Adm. Matter No. 1625, February 12, 1990]. Accordingly, the
Court must reiterate the rule that the claim of good faith is no defense to a lawyer who has failed to adhere
faithfully to the legal disqualifications imposed upon him, designed to protect the interests of his client [See
In re Ruste, 70 Phil 243 (1940);Also, Severino v. Severino, 44 Phil. 343 (1923)].
Neither is there merit in respondents reliance on the case of Tuason v. Tuason [supra.] It cannot be inferred
from the statements made by the Court in that case that contracts of sale or lease where the vendee or lessee
is a partnership, of which a lawyer is a member, over a property involved in a litigation in which he takes
part by virtue of his profession, are not covered by the prohibition under Articles 1491 and 1646.
However, the Court sustains the Solicitor Generals holding that there is no sufficient evidence on record to
warrant a finding that respondent allowed the properties of the estate of Filomena Zerna involved herein to
be leased to his family partnership at very low rental payments. At any rate, it is a matter for the court
presiding over Special Proceedings No. 460 to determine whether or not the agreed rental payments made by
respondents family partnership is reasonable compensation for the use and occupancy of the estate
properties.
Considering thus the nature of the acts of misconduct committed by respondent, and the facts and
circumstances of the case, the Court finds sufficient grounds to suspend respondent from the practice of law
for a period of three (3) months.
WHEREFORE, finding that respondent Atty. Crisostomo C. Villegas committed acts of gross misconduct,
the Court Resolved to SUSPEND respondent from the practice of law for four (4) months effective from the
date of his receipt of this Resolution, with a warning that future misconduct on respondents part will be
more severely dealt with. Let copies of this Resolution be circulated to all courts of the country for their
information and guidance, and spread in the personal record of Atty. Villegas.
SO ORDERED.
Fernan, C.J., Gutierrez, Jr., Feliciano and Bidin, JJ., concur.

In his defense, respondent claims that he was neither aware of, nor participated in, the execution of the
original lease contract entered into between his client and his family partnership, which was then represented
by his brother-in-law Marcelo Pastrano. And although he admits that he participated in the execution of
subsequent renewals of the lease contract as managing partner of HIJOS DE JOSE VILLEGAS, he argues
that he acted in good faith considering that the heirs of Filomena Zerna consented or acquiesced to the terms
and conditions stipulated in the original lease contract. He further contends that pursuant to the ruling of the
Court in Tuason v. Tuason [88 Phil. 428 (1951)] the renewal contracts do not fall within the prohibition of
Articles 1491 and 1646 since he signed the same as a mere agent of the partnership.
Respondents contentions do not provide sufficient basis to escape disciplinary action from this Court.
It taxes this Courts imagination that respondent disclaims any knowledge in the execution of the original
lease contract between his client and his family partnership represented by his brother-in-law. Be that as it
may, it cannot be denied that respondent himself had knowledge of and allowed the subsequent renewals of
the lease contract. In fact, he actively participated in the lease contracts dated January 13, 1975 and
December 4, 1978 by signing on behalf of the lessee HIJOS DE JOSE VILLEGAS.chanrobles lawlibrary :
rednad
Moreover, the claim that the heirs of Filomena Zerna have acquiesced and consented to the assailed lease
contracts does not militate against respondents liability under the rules of professional ethics. The
prohibition referred to in Articles 1491 and 1646 of the new Civil Code, as far as lawyers are concerned, is
intended to curtail any undue influence of the lawyer upon his client on account of his fiduciary and

EN BANC
[A.M. No. 1625. February 12, 1990.]
ANGEL L. BAUTISTA, Complainant, v. ATTY. RAMON A. GONZALES, Respondent.
SYLLABUS
1. LEGAL ETHICS; DISBARMENT OF SUBMISSION OF ATTORNEYS; REFERENCE TO THE IBP OF
COMPLAINTS AGAINST LAWYERS IS NOT MANDATORY; CASES MAY BE REFERRED TO THE

16

SOLICITOR GENERAL. Contrary to respondents claim, reference to the IBP of complaints against
lawyers is not mandatory upon the Court [Zaldivar v. Sandiganbayan, G.R. Nos. 79690-707; Zaldivar v.
Gonzales, G.R. No. 80578, October 7, 1988]. Reference of complaints to the IBP is not an exclusive
procedure under the terms of Rule 139-B of the Revised Rules of Court [Ibid]. Under Sections 13 and 14 of
Rule 139-B, the Supreme Court may conduct disciplinary proceedings without the intervention of the IBP by
referring cases for investigation to the Solicitor General or to any officer of the Supreme Court or judge of a
lower court. In such a case, the report and recommendation of the investigating official shall be reviewed
directly by the Supreme Court. The Court shall base its final action on the case on the report and
recommendation submitted by the investigating official and the evidence presented by the parties during the
investigation.
2. ID.; ID.; ID.; ONLY PENDING CASES, THE INVESTIGATION OF WHICH HAS NOT BEEN
SUBSTANTIALLY COMPLETED BY THE SOLICITOR GENERAL SHALL BE TRANSFERRED TO
THE IBP. There is no need to refer the case to the IBP since at the time of the effectivity of Rule 139-B
[June 1, 1988] the investigation conducted by the Office of the Solicitor General had been substantially
completed. Section 20 of Rule 139-B provides that only pending cases, the investigation of which has not
been substantially completed by the Office of the Solicitor General, shall be transferred to the IBP. In this
case the investigation by the Solicitor General was terminated even before the effectivity of Rule 139-B.
Respondent himself admitted in his motion to dismiss that the Solicitor General terminated the investigation
on November 26, 1986, the date when respondent submitted his reply memorandum [Motion to Dismiss, p.
1; Record, p. 353]
3. ID.; ID.; ID.; REFERRAL OF CASE WHERE THE SOLICITOR GENERAL HAS ALREADY MADE A
THOROUGH INVESTIGATION RESULTS IN DUPLICATION OF THE PROCEEDINGS AND DELAY.
There is no need for further investigation since the Office of the Solicitor General already made a
thorough and comprehensive investigation of the case. To refer the case to the IBP, as prayed for by the
respondent, will result not only in duplication of the proceedings conducted by the Solicitor General but also
to further delay in the disposition of the present case which has lasted for more than thirteen (13) years.
4. CONSTITUTIONAL LAW; BILL OF RIGHTS; DUE PROCESS; NO DENIAL OF, WHERE
RESPONDENT WAS GIVEN AMPLE OPPORTUNITY TO PRESENT EVIDENCE. Respondents
assertion that he still has some evidence to present does not warrant the referral of the case to the IBP.
Considering that in the investigation conducted by the Solicitor General respondent was given ample
opportunity to present evidence, his failure to adduce additional evidence is entirely his own fault. There was
therefore no denial of procedural due process. The record shows that respondent appeared as witness for
himself and presented no less than eleven (11) documents to support his contentions. He was also allowed to
cross-examine the complainant who appeared as a witness against him.
5. CIVIL LAW; SALES; CAPACITY TO BUY; LAWYER IS PROHIBITED FROM ACQUIRING HIS
CLIENTS PROPERTY OR INTEREST IN LITIGATION WHICH HE MAY TAKE PART. The record
shows that respondent prepared a document entitled "Transfer of Rights" which was signed by on August 31,
1971. The document assigned to respondent one-half (1/2) of the properties of the Fortunados covered by
TCT No. T-1929, with an area of 239.650 sq. m., and TCT No. T-3041, with an area of 72.907 sq. m., for and
in consideration of his legal services to the latter. At the time the document was executed, respondent knew
that the abovementioned properties were the subject of a civil case [Civil Case No. Q-15143] pending before
the Court of First Instance of Quezon City since he was acting as counsel for the Fortunados in said case
[See Annex "B" of Original Complaint, p. 12; Rollo, p. 16]. In executing the document transferring one-half
(1/2) of the subject properties to himself, respondent violated the law expressly prohibiting a lawyer from
acquiring his clients property or interest involved in any litigation in which he may take part by virtue of his
profession [Article 1491, New Civil Code].
6. LEGAL ETHICS; DISBARMENT AND SUSPENSION; PURCHASE BY A LAWYER OF CLIENTS
PROPERTY OR INTEREST IN LITIGATION IS A BRANCH OF PROFESSIONAL ETHICS AND
CONSTITUTES MALPRACTICE. This Court has held that the purchase by a lawyer of his clients
property or interest in litigation is a breach of professional ethics and constitutes malpractice [Hernandez v.
Villanueva, 40 Phil. 774 (1920); Go Beltran v. Fernandez, 70 Phil. 248 (1940)].
7. ID.; ID.; TRANSGRESSION OF ANY LAW BY A LAWYER IS A REPULSIVE AND

REPREHENSIBLE ACT. The very first Canon of the new Code states that "a lawyer shall uphold the
Constitution, obey the laws of the land and promote respect for law and legal process." Moreover, Rule 138,
Sec. 3 of the Revised Rules of Court requires every lawyer to take an oath to "obey the laws [of the Republic
of the Philippines] as well as the legal orders of the duly constituted authorities therein." And for any
violation of this oath, a lawyer may be suspended or disbarred by the Supreme Court [Rule 138, Sec. 27,
Revised Rules of Court]. All of these underscore the role of the lawyer as the vanguard of our legal system.
The transgression of any provision of law by a lawyer is a repulsive and reprehensible act which the Court
will not countenance. In the instant case, respondent, having violated Art. 1491 of the Civil Code, must be
held accountable both to his client and to society.
8. ID.; ID.; NOTWITHSTANDING THE ABSENCE OF PROVISION PROHIBITING PURCHASE OF
CLIENTS PROPERTY AND INTEREST, A DISCIPLINARY ACTION MAY BE BROUGHT AGAINST
LAWYER. It should be noted that the persons mentioned in Art. 1491 of the Civil Code are prohibited
from purchasing the property mentioned therein because of their existing trust relationship with the latter. A
lawyer is disqualified from acquiring by purchase the property and rights in litigation because of his
fiduciary relationship with such property and rights, as well as with the client. And it cannot be claimed that
the new Code of Professional Responsibility has failed to emphasize the nature and consequences of such
relationship. Canon 17 states that "a lawyer owes fidelity to the cause of his client and he shall be mindful of
the trust and confidence reposed in him." On the other hand, Canon 16 provides that "a lawyer shall hold in
trust all moneys and properties of his client that may come into his possession." Hence, notwithstanding the
absence of a specific provision on the matter in the new Code, the Court, considering the abovequoted
provisions of the new Code in relation to Art. 1491 of the Civil Code, as well as the prevailing jurisprudence,
holds that the purchase by a lawyer of his clients property in litigation constitutes a breach of professional
ethics for which a disciplinary action may be brought against him.
9. ID.; ID.; A LAWYER SHOULD OBSERVE HONESTY AND FAIRNESS EVEN IN PRIVATE
DEALINGS. Another misconduct committed by respondent was his failure to disclose to complainant, at
the time the land development agreement was entered into, that the land covered by TCT No. T-1929 had
already been sold at a public auction. The land development agreement was executed on August 31, 1977
while the public auction was held on June 30, 1971. Respondent failed to live up to the rigorous standards of
ethics of the law profession which place a premium on honesty and condemn duplicitous conduct. The fact
that complainant was not a former client of respondent does not exempt respondent from his duty to inform
complainant of an important fact pertaining to the land which is subject of their negotiation. Since he was a
party to the land development agreement, respondent should have warned the complainant of the sale of the
land at a public auction so that the latter could make a proper assessment of the viability of the project they
were jointly undertaking. This Court has held that a lawyer should observe honesty and fairness even in his
private dealings and failure to do so is a ground for disciplinary action against him [Custodio v. Esto, Adm.
Case No. 1113, February 22, 1978, 81 SCRA 517].
10. ID.; ID.; A LAWYER SHOULD NEVER SEEK TO MISLEAD THE COURT BY AN ARTIFICE OR
FALSE STATEMENT OF FACT. When respondent submitted the alleged true copy of the addendum on
May 23, 1973 as Annex "A" of his Manifestation filed with the Court of First Instance of Quezon City, he
knowingly misled the Court into believing that the original addendum was signed by Edith Fortunado and
Nestor Fortunado. Such conduct constitutes willful disregard of his solemn duty as a lawyer to act at all
times in a manner consistent with the truth. A lawyer should never seek to mislead the court by an artifice or
false statement of fact or law [Section 20 (d), Rule 138, Revised Rules of Court; Canon 22, Canons of
Professional Ethics; Canon 10, Rule 10.01, Code of Professional Responsibility].
11. ID.; ID.; AN AGREEMENT WHEREBY AN ATTORNEY AGREES TO PAY EXPENSES OF
PROCEEDINGS IS CHAMPERTOUS. The Court, finds that the agreement between the respondent and
the Fortunados, which provides in part that: [the Fortunados] agree on the 50% contingent fee, provided,
[respondent Ramon Gonzales] defray all expenses, for the suit, including court fees . . . is contrary to Canon
42 of the Canons of Professional Ethics which provides that a lawyer may not properly agree with a client to
pay or bear the expenses of litigation. [See also Rule 16.04, Code of Professional Responsibility]. Although a
lawyer may in good faith, advance the expenses of litigation, the same should be subject to reimbursement.
The agreement between respondent and the Fortunados, however, does not provide for reimbursement to
respondent of litigation expenses paid by him. An agreement whereby an attorney agrees to pay expenses of
proceedings to enforce the clients rights is champertous [JBP Holding Corp. v. U.S. 166 F. Supp. 324

17

(1958)]. Such agreements are against public policy especially where, as in this case, the attorney has agreed
to carry on the action at his own expense in consideration of some bargain to have part of the thing in dispute
[See Sampliner v. Motion Pictures Patents Co., Et Al., 255 F. 242 (1918)]. The execution of these contracts
violates the fiduciary relationship between the lawyer and his client, for which the former must incur
administrative sanctions.
12. ID.; ID.; RULE AGAINST REPRESENTATION OF CONFLICTING INTEREST; EXCEPTION.
One of the recognized exceptions to the rule against representation of conflicting interests is where the
clients knowingly consent to the dual representation after full disclosure of the facts by counsel [Canon 6,
Canons of Professional Ethics; Canon 15, Rule 15.03, Code of Professional Responsibility].

6. Committing acts of treachery and disloyalty to complainant who was his client;
7. Harassing the complainant by filing several complaints without legal basis before the Court of First
Instance and the Fiscals Office of Quezon City;
8. Deliberately misleading the Court of First Instance and the Fiscals Office by making false assertion of
facts in his pleadings;
9. Filing petitions "cleverly prepared (so) that while he does not intentionally tell a lie, he does not tell the
truth either."cralaw virtua1aw library

13. ID.; ID.; FOR FAILING TO LIVE UP TO THE STANDARDS EXPECTED OF A MEMBER OF THE
BAR, LAWYER IS SUSPENDED FROM PRACTICE OF LAW. The Court finds clearly established in
this case that on four counts the respondent violated the law and the rules governing the conduct of a
member of the legal profession. Sworn to assist in the administration of justice and to uphold the rule of law,
he has "miserably failed to live up to the standards expected of a member of the Bar." [Artiaga v. Villanueva,
Adm. Matter No. 1892, July 29, 1988, 163 SCRA 638, 647]. The Court agrees with the Solicitor General
that, considering the nature of the offenses committed by respondent and the facts and circumstances of the
case, respondent lawyer should be suspended from the practice of law for a period of six (6) months.

Respondent filed an answer on September 29, 1976 and an amended answer on November 18, 1976, denying
the accusations against him. Complainant filed a reply to respondents answer on December 29, 1976 and on
March 24, 1977 respondent filed a rejoinder.chanrobles.com.ph : virtual law library

R E SO LU TI O N

On May 16, 1988 respondent filed a motion to dismiss the complaint against him, claiming that the long
delay in the resolution of the complaint against him constitutes a violation of his constitutional right to due
process and speedy disposition of cases. Upon order of the Court, the Solicitor General filed a comment to
the motion to dismiss on August 8, 1988, explaining that the delay in the investigation of the case was due to
the "numerous requests for postponement of scheduled hearings filed by both parties and the motions for
extension of time to file their respective memoranda." [Comment of the Solicitor General, p. 2; Record, p.
365]. Respondent filed a reply to the Solicitor Generals comment on October 26, 1988. In a resolution dated
January 16, 1989 the Court required the Solicitor General to submit his report and recommendation within
thirty (30) days from notice.

PER CURIAM:

In a verified complaint filed by Angel L. Bautista on May 19, 1976, respondent Ramon A. Gonzales was
charged with malpractice, deceit, gross misconduct and violation of lawyers oath. Required by this Court to
answer the charges against him, respondent filed on June 19, 1976 a motion for a bill of particulars asking
this Court to order complainant to amend his complaint by making his charges more definite. In a resolution
dated June 28, 1976, the Court granted respondents motion and required complainant to file an amended
complaint. On July 15, 1976, complainant submitted an amended complaint for disbarment, alleging that
respondent committed the following acts:chanrob1es virtual 1aw library
1. Accepting a case wherein he agreed with his clients, namely, Alfaro Fortunado, Nestor Fortunado and
Editha Fortunado [hereinafter referred to as the Fortunados] to pay all expenses, including court fees, for a
contingent fee of fifty percent (50%) of the value of the property in litigation.
2. Acting as counsel for the Fortunados in Civil Case No. Q-15143, wherein Eusebio Lopez, Jr. is one of the
defendants and, without said case being terminated, acting as counsel for Eusebio Lopez, Jr. in Civil Case
No. Q-15490;
3. Transferring to himself one-half of the properties of the Fortunados, which properties are the subject of the
litigation in Civil Case No. Q-15143, while the case was still pending;
4. Inducing complainant, who was his former client, to enter into a contract with him on August 30, 1971 for
the development into a residential subdivision of the land involved in Civil Case No. Q-15143, covered by
TCT No. T-1929, claiming that he acquired fifty percent (50%) interest thereof as attorneys fees from the
Fortunados, while knowing fully well that the said property was already sold at a public auction on June 30,
1971, by the Provincial Sheriff of Lanao del Norte and registered with the Register of Deeds of Iligan City;
5. Submitting to the Court of First Instance of Quezon City falsified documents purporting to be true copies
of "Addendum to the Land Development Agreement dated August 30, 1971" and submitting the same
document to the Fiscals Office of Quezon City, in connection with the complaint for estafa filed by
respondent against complainant designated as I.S. No. 7512936;

In a resolution dated March 16, 1983, the Court referred the case to the Office of the Solicitor General for
investigation, report and recommendation. In the investigation conducted by the Solicitor General,
complainant presented himself as a witness and submitted Exhibits "A" to "PP, while respondent appeared
both as witness and counsel and submitted Exhibits "1" to "11." The parties were required to submit their
respective memoranda.

On April 11, 1989, the Solicitor General submitted his report with the recommendation that Atty. Ramon A.
Gonzales be suspended for six (6) months. The Solicitor General found that respondent committed the
following acts of misconduct:chanrob1es virtual 1aw library
a. transferring to himself one-half of the properties of his clients during the pendency of the case where the
properties were involved;
b. concealing from complainant the fact that the property subject of their land development agreement had
already been sold at a public auction prior to the execution of said agreement; and
c. misleading the court by submitting alleged true copies of a document where two signatories who had not
signed the original (or even the xerox copy) were made to appear as having fixed their signatures [Report
and Recommendation of the Solicitor General, pp. 17-18; Rollo, pp. 403-404].
Respondent then filed on April 14, 1989 a motion to refer the case to the Integrated Bar of the Philippines
(IBP) for investigation and disposition pursuant to Rule 139-B of the Revised Rules of Court. Respondent
manifested that he intends to submit more evidence before the IBP. Finally, on November 27, 1989,
respondent filed a supplemental motion to refer this case to the IBP, containing additional arguments to
bolster his contentions in his previous pleadings.
I.
Preliminarily, the Court will dispose of the procedural issue raised by Respondent. It is respondents
contention that the preliminary investigation conducted by the Solicitor General was limited to the
determination of whether or not there is sufficient ground to proceed with the case and that under Rule 139
the Solicitor General still has to file an administrative complaint against him. Respondent claims that the
case should be referred to the IBP since Section 20 of Rule 139-B provides that:chanrob1es virtual 1aw

18

library
This Rule shall take effect on June 1, 1988 and shall supersede the present Rule 139 entitled
"DISBARMENT OR SUSPENSION OF ATTORNEYS." All cases pending investigation by the Office of
the Solicitor General shall be transferred to the Integrated Bar of the Philippines Board of Governors for
investigation and disposition as provided in this Rule except those cases where the investigation has been
substantially completed.
The above contention of respondent is untenable. In the first place, contrary to respondents claim, reference
to the IBP of complaints against lawyers is not mandatory upon the Court [Zaldivar v. Sandiganbayan, G.R.
Nos. 79690-707; Zaldivar v. Gonzales, G.R. No. 80578, October 7, 1988]. Reference of complaints to the
IBP is not an exclusive procedure under the terms of Rule 139-B of the Revised Rules of Court [Ibid]. Under
Sections 13 and 14 of Rule 139-B, the Supreme Court may conduct disciplinary proceedings without the
intervention of the IBP by referring cases for investigation to the Solicitor General or to any officer of the
Supreme Court or judge of a lower court. In such a case, the report and recommendation of the investigating
official shall be reviewed directly by the Supreme Court. The Court shall base its final action on the case on
the report and recommendation submitted by the investigating official and the evidence presented by the
parties during the investigation.
Secondly, there is no need to refer the case to the IBP since at the time of the effectivity of Rule 139-B [June
1, 1988] the investigation conducted by the Office of the Solicitor General had been substantially completed.
Section 20 of Rule 139-B provides that only pending cases, the investigation of which has not been
substantially completed by the Office of the Solicitor General, shall be transferred to the IBP. In this case the
investigation by the Solicitor General was terminated even before the effectivity of Rule 139-B. Respondent
himself admitted in his motion to dismiss that the Solicitor General terminated the investigation on
November 26, 1986, the date when respondent submitted his reply memorandum [Motion to Dismiss, p. 1;
Record, p. 353].
Thirdly, there is no need for further investigation since the Office of the Solicitor General already made a
thorough and comprehensive investigation of the case. To refer the case to the IBP, as prayed for by the
respondent, will result not only in duplication of the proceedings conducted by the Solicitor General but also
to further delay in the disposition of the present case which has lasted for more than thirteen (13) years.
Respondents assertion that he still has some evidence to present does not warrant the referral of the case to
the IBP. Considering that in the investigation conducted by the Solicitor General respondent was given
ample opportunity to present evidence, his failure to adduce additional evidence is entirely his own fault.
There was therefore no denial of procedural due process. The record shows that respondent appeared as
witness for himself and presented no less than eleven (11) documents to support his contentions. He was also
allowed to cross-examine the complainant who appeared as a witness against him.
II.
The Court will now address the substantive issue of whether or not respondent committed the acts of
misconduct alleged by complainant Bautista.
After a careful review of the record of the case and the report and recommendation of the Solicitor General,
the Court finds that respondent committed acts of misconduct which warrant the exercise by this Court of its
disciplinary power.chanrobles virtual lawlibrary
The record shows that respondent prepared a document entitled "Transfer of Rights" which was signed by
the Fortunados on August 31, 1971. The document assigned to respondent one-half (1/2) of the properties of
the Fortunados covered by TCT No. T-1929, with an area of 239.650 sq. m., and TCT No. T-3041, with an
area of 72.907 sq. m., for and in consideration of his legal services to the latter. At the time the document
was executed, respondent knew that the abovementioned properties were the subject of a civil case [Civil
Case No. Q-15143] pending before the Court of First Instance of Quezon City since he was acting as counsel
for the Fortunados in said case [See Annex "B" of Original Complaint, p. 12; Rollo, p. 16]. In executing the
document transferring one-half (1/2) of the subject properties to himself, respondent violated the law
expressly prohibiting a lawyer from acquiring his clients property or interest involved in any litigation in

which he may take part by virtue of his profession [Article 1491, New Civil Code]. This Court has held that
the purchase by a lawyer of his clients property or interest in litigation is a breach of professional ethics and
constitutes malpractice [Hernandez v. Villanueva, 40 Phil. 774 (1920); Go Beltran v. Fernandez, 70 Phil. 248
(1940)].
However, respondent notes that Canon 10 of the old Canons of Professional Ethics, which states that" [t]he
lawyer should not purchase any interests in the subject matter of the litigation which he is conducting," does
not appear anymore in the new Code of Professional Responsibility. He therefore concludes that while a
purchase by a lawyer of property in litigation is void under Art. 1491 of the Civil Code, such purchase is no
longer a ground for disciplinary action under the new Code of Professional Responsibility.
This contention is without merit. The very first Canon of the new Code states that "a lawyer shall uphold the
Constitution, obey the laws of the land and promote respect for law and legal process" (Emphasis supplied).
Moreover, Rule 138, Sec. 3 of the Revised Rules of Court requires every lawyer to take an oath to "obey the
laws [of the Republic of the Philippines] as well as the legal orders of the duly constituted authorities
therein." And for any violation of this oath, a lawyer may be suspended or disbarred by the Supreme Court
[Rule 138, Sec. 27, Revised Rules of Court]. All of these underscore the role of the lawyer as the vanguard
of our legal system. The transgression of any provision of law by a lawyer is a repulsive and reprehensible
act which the Court will not countenance. In the instant case, respondent, having violated Art. 1491 of the
Civil Code, must be held accountable both to his client and to society.chanrobles.com.ph : virtual law library
Parenthetically, it should be noted that the persons mentioned in Art. 1491 of the Civil Code are prohibited
from purchasing the property mentioned therein because of their existing trust relationship with the latter. A
lawyer is disqualified from acquiring by purchase the property and rights in litigation because of his
fiduciary relationship with such property and rights, as well as with the client. And it cannot be claimed that
the new Code of Professional Responsibility has failed to emphasize the nature and consequences of such
relationship. Canon 17 states that "a lawyer owes fidelity to the cause of his client and he shall be mindful of
the trust and confidence reposed in him." On the other hand, Canon 16 provides that "a lawyer shall hold in
trust all moneys and properties of his client that may come into his possession." Hence, notwithstanding the
absence of a specific provision on the matter in the new Code, the Court, considering the abovequoted
provisions of the new Code in relation to Art. 1491 of the Civil Code, as well as the prevailing jurisprudence,
holds that the purchase by a lawyer of his clients property in litigation constitutes a breach of professional
ethics for which a disciplinary action may be brought against him.
Respondents next contention that the transfer of the properties was not really implemented, because the land
development agreement on which the transfer depended was later rescinded, is untenable. Nowhere is it
provided in the Transfer of Rights that the assignment of the properties of the Fortunados to respondent was
subject to the implementation of the land development agreement. The last paragraph of the Transfer of
Rights provides that:chanrob1es virtual 1aw library
. . . for and in consideration of the legal services of ATTY. RAMON A. GONZALES, Filipino, married to
Lilia Yusay, and a resident of 23 Sunrise Hill, New Manila, Quezon City, rendered to our entire satisfaction,
we hereby, by these presents, do transfer and convey to the said ATTY. RAMON A. GONZALES, his heirs,
successor, and assigns, one-half (1/2) of our rights and interests in the above-described property, together
with all the improvements found therein [Annex "D" of the Complaint, Record, p. 28; Emphasis supplied].
It is clear from the foregoing that the parties intended the transfer of the properties to respondent to be
absolute and unconditional, and irrespective of whether or not the land development agreement was
implemented.
Another misconduct committed by respondent was his failure to disclose to complainant, at the time the land
development agreement was entered into, that the land covered by TCT No. T-1929 had already been sold at
a public auction. The land development agreement was executed on August 31, 1977 while the public
auction was held on June 30, 1971.
Respondent denies that complainant was his former client, claiming that his appearance for the complainant
in an anti-graft case filed by the latter against a certain Gilbert Teodoro was upon the request of complainant
and was understood to be only provisional. Respondent claims that since complainant was not his client, he

19

had no duty to warn complainant of the fact that the land involved in their land development agreement had
been sold at a public auction. Moreover, the sale was duly annotated at the back of TCT No. T-1929 and this,
respondent argues, serves as constructive notice to complainant so that there was no concealment on his
part.chanroblesvirtualawlibrary
The above contentions are unmeritorious. Even assuming that the certificate of sale was annotated at the
back of TCT No. T-1929, the fact remains that respondent failed to inform the complainant of the sale of the
land to Samauna during the negotiations for the land development agreement. In so doing, respondent failed
to live up to the rigorous standards of ethics of the law profession which place a premium on honesty and
condemn duplicitous conduct. The fact that complainant was not a former client of respondent does not
exempt respondent from his duty to inform complainant of an important fact pertaining to the land which is
subject of their negotiation. Since he was a party to the land development agreement, respondent should have
warned the complainant of the sale of the land at a public auction so that the latter could make a proper
assessment of the viability of the project they were jointly undertaking. This Court has held that a lawyer
should observe honesty and fairness even in his private dealings and failure to do so is a ground for
disciplinary action against him [Custodio v. Esto, Adm. Case No. 1113, February 22, 1978, 81 SCRA 517].
Complainant also charges respondent with submitting to the court falsified documents purporting to be true
copies of an addendum to the land development agreement.chanrobles law library : red
Based on evidence submitted by the parties, the Solicitor General found that in the document filed by
respondent with the Court of First Instance of Quezon City, the signatories to the addendum to the land
development agreement - namely, Ramon A. Gonzales, Alfaro T. Fortunado, Editha T. Fortunado, Nestor T.
Fortunado, and Angel L. Bautista were made to appear as having signed the original document on
December 9, 1972, as indicated by the letters" (SGD.)" before each of their names. However, it was only
respondent Alfaro Fortunado and complainant who signed the original and duplicate original (Exh. "2") and
the two other parties, Edith Fortunado and Nestor Fortunado, never did. Even respondent himself admitted
that Edith and Nestor Fortunado only signed the xerox copy (Exh. "2-A") after respondent wrote them on
May 24, 1973, asking them to sign the said xerox copy attached to the letter and to send it back to him after
signing [Rejoinder to Complainants Reply, pp. 4-6; Rollo, pp. 327-329]. Moreover, respondent
acknowledged that Edith and Nestor Fortunado had merely agreed by phone to sign, but had not actually
signed, the alleged true copy of the addendum as of May 23, 1973 [Respondents Supplemental Motion to
Refer this Case to the Integrated Bar of the Philippines, p. 16]. Thus, when respondent submitted the alleged
true copy of the addendum on May 23, 1973 as Annex "A" of his Manifestation filed with the Court of First
Instance of Quezon City, he knowingly misled the Court into believing that the original addendum was
signed by Edith Fortunado and Nestor Fortunado. Such conduct constitutes willful disregard of his solemn
duty as a lawyer to act at all times in a manner consistent with the truth. A lawyer should never seek to
mislead the court by an artifice or false statement of fact or law [Section 20 (d), Rule 138, Revised Rules of
Court; Canon 22, Canons of Professional Ethics; Canon 10, Rule 10.01, Code of Professional
Responsibility].
Anent the first charge of complainant, the Solicitor General found that no impropriety was committed by
respondent in entering into a contingent fee contract with the Fortunados [Report and Recommendation, p. 8;
Record, p. 394]. The Court, however, finds that the agreement between the respondent and the Fortunados,
which provides in part that:chanrob1es virtual 1aw library
We [the Fortunados] agree on the 50% contingent fee, provided, you [respondent Ramon Gonzales] defray
all expenses, for the suit, including court fees.
Alfaro T. Fortunado [signed]
Editha T. Fortunado [signed]

[Annex "A" to the Complaint, Record, p. 4].

is contrary to Canon 42 of the Canons of Professional Ethics which provides that a lawyer may not properly
agree with a client to pay or bear the expenses of litigation. [See also Rule 16.04, Code of Professional
Responsibility]. Although a lawyer may in good faith, advance the expenses of litigation, the same should be
subject to reimbursement. The agreement between respondent and the Fortunados, however, does not
provide for reimbursement to respondent of litigation expenses paid by him. An agreement whereby an
attorney agrees to pay expenses of proceedings to enforce the clients rights is champertous [JBP Holding
Corp. v. U.S. 166 F. Supp. 324 (1958)]. Such agreements are against public policy especially where, as in
this case, the attorney has agreed to carry on the action at his own expense in consideration of some bargain
to have part of the thing in dispute [See Sampliner v. Motion Pictures Patents Co., Et Al., 255 F. 242 (1918)].
The execution of these contracts violates the fiduciary relationship between the lawyer and his client, for
which the former must incur administrative sanctions.
The Solicitor General next concludes that respondent cannot be held liable for acting as counsel for Eusebio
Lopez, Jr. in Civil Case No. Q-15490 while acting as counsel for the Fortunados against the same Eusebio
Lopez, Jr. in Civil Case No. Q-15143. The Court, after considering the record, agrees with the Solicitor
Generals findings on the matter. The evidence presented by respondent shows that his acceptance of Civil
Case No. Q-15490 was with the knowledge and consent of the Fortunados. The affidavit executed by the
Fortunados on June 23, 1976 clearly states that they gave their consent when respondent accepted the case of
Eusebio Lopez, Jr. [Affidavit of Fortunados, dated June 23, 1976; Rollo, p. 198]. One of the recognized
exceptions to the rule against representation of conflicting interests is where the clients knowingly consent to
the dual representation after full disclosure of the facts by counsel [Canon 6, Canons of Professional Ethics;
Canon 15, Rule 15.03, Code of Professional Responsibility].
Complainant also claims that respondent filed several complaints against him before the Court of First
Instance and the Fiscals Office of Quezon City for the sole purpose of harassing him.
The record shows that at the time of the Solicitor Generals investigation of this case, Civil Case No. Q18060 was still pending before the Court of First Instance of Quezon City, while the complaints for libel (I.S.
No. 76-5912) and perjury (I.S. No. 5913) were already dismissed by the City Fiscal for insufficiency of
evidence and lack of interest, respectively [Report and Recommendation, pp. 16-17; Rollo, pp. 402-403].
The Solicitor General found no basis for holding that the complaints for libel and perjury were used by
respondent to harass complainant. As to Civil Case No. Q-18060, considering that it was still pending
resolution, the Solicitor General made no finding on complainants claim that it was a mere ploy by
respondent to harass him. The determination of the validity of the complaint in Civil Case No. Q-18060 was
left to the Court of First Instance of Quezon City where the case was pending resolution.
The Court agrees with the above findings of the Solicitor General, and accordingly holds that there is no
basis for holding that the respondents sole purpose in filing the aforementioned cases was to harass
complainant.
Grounds 6, 8 and 9 alleged in the complaint need not be discussed separately since the above discussion on
the other grounds sufficiently cover these remaining grounds.chanrobles virtual lawlibrary
The Court finds clearly established in this case that on four counts the respondent violated the law and the
rules governing the conduct of a member of the legal profession. Sworn to assist in the administration of
justice and to uphold the rule of law, he has "miserably failed to live up to the standards expected of a
member of the Bar." [Artiaga v. Villanueva, Adm. Matter No. 1892, July 29, 1988, 163 SCRA 638, 647]. The
Court agrees with the Solicitor General that, considering the nature of the offenses committed by respondent
and the facts and circumstances of the case, respondent lawyer should be suspended from the practice of law
for a period of six (6) months.

Nestor T. Fortunado [signed]

CONFORME
Ramon A. Gonzales [signed]

WHEREFORE, finding that respondent Attorney Ramon A. Gonzales committed serious misconduct, the
Court Resolved to SUSPEND respondent from the practice of law for SIX (6) months effective from the date
of his receipt of this Resolution. Let copies of this Resolution be circulated to all courts of the country for
their information and guidance, and spread in the personal record of Atty. Gonzales.

20

SO ORDERED.
Fernan (C.J.), Narvasa, Melencio-Herrera, Cruz, Paras, Feliciano, Gancayco, Padilla, Bidin and Corts,JJ.,
concur.

EN BANC
[B.M. NO. 793. July 30, 2004]
IN RE: SUSPENSION FROM THE PRACTICE OF LAW IN THE TERRITORY OF GUAM OF
ATTY. LEON G. MAQUERA
R E SO LU TI O N
TINGA, J.:
May a member of the Philippine Bar who was disbarred or suspended from the practice of law in a foreign
jurisdiction where he has also been admitted as an attorney be meted the same sanction as a member of the

21

Philippine Bar for the same infraction committed in the foreign jurisdiction? There is a Rule of Court
provision covering this cases central issue. Up to this juncture, its reach and breadth have not undergone the
test of an unsettled case.
In a Letter dated August 20, 1996,1 the District Court of Guam informed this Court of the suspension of Atty.
Leon G. Maquera (Maquera) from the practice of law in Guam for two (2) years pursuant to
the Decision rendered by the Superior Court of Guam on May 7, 1996 in Special Proceedings Case No.
SP0075-94,2 a disciplinary case filed by the Guam Bar Ethics Committee against Maquera.
The Court referred the matter of Maqueras suspension in Guam to the Bar Confidant for comment in
its Resolution dated November 19, 1996.3 Under Section 27, Rule 138 of the Revised Rules of Court, the
disbarment or suspension of a member of the Philippine Bar in a foreign jurisdiction, where he has also been
admitted as an attorney, is also a ground for his disbarment or suspension in this realm, provided the foreign
courts action is by reason of an act or omission constituting deceit, malpractice or other gross misconduct,
grossly immoral conduct, or a violation of the lawyers oath.
In a Memorandum dated February 20, 1997, then Bar Confidant Atty. Erlinda C. Verzosa recommended that
the Court obtain copies of the record of Maqueras case since the documents transmitted by the Guam District
Court do not contain the factual and legal bases for Maqueras suspension and are thus insufficient to enable
her to determine whether Maqueras acts or omissions which resulted in his suspension in Guam are likewise
violative of his oath as a member of the Philippine Bar.4 cralawred
Pursuant to this Courts directive in its Resolution dated March 18, 1997,5 the Bar Confidant sent a letter
dated November 13, 1997 to the District Court of Guam requesting for certified copies of the record of the
disciplinary case against Maquera and of the rules violated by him.6 cralawred
The Court received certified copies of the record of Maqueras case from the District Court of Guam on
December 8, 1997.7 cralawred
Thereafter, Maqueras case was referred by the Court to the Integrated Bar of the Philippines (IBP) for
investigation report and recommendation within sixty (60) days from the IBPs receipt of the case
records.8 cralawred
The IBP sent Maquera a Notice of Hearing requiring him to appear before the IBPs Commission on Bar
Discipline on July 28, 1998.9 However, the notice was returned unserved because Maquera had already
moved from his last known address in Agana, Guam and did not leave any forwarding address. 10 cralawred
On October 9, 2003, the IBP submitted to the Court its Report and Recommendation and itsResolution No.
XVI-2003-110, indefinitely suspending Maquera from the practice of law within the Philippines until and
unless he updates and pays his IBP membership dues in full. 11 cralawred
The IBP found that Maquera was admitted to the Philippine Bar on February 28, 1958. On October 18, 1974,
he was admitted to the practice of law in the territory of Guam. He was suspended from the practice of law
in Guam for misconduct, as he acquired his clients property as payment for his legal services, then sold it
and as a consequence obtained an unreasonably high fee for handling his clients case. 12 cralawred
In its Decision, the Superior Court of Guam stated that on August 6, 1987, Edward Benavente, the creditor
of a certain Castro, obtained a judgment against Castro in a civil case. Maquera served as Castros counsel in
said case. Castros property subject of the case, a parcel of land, was to be sold at a public auction in
satisfaction of his obligation to Benavente. Castro, however, retained the right of redemption over the

property for one year. The right of redemption could be exercised by paying the amount of the judgment debt
within the aforesaid period. 13 cralawred
At the auction sale, Benavente purchased Castros property for Five Hundred U.S. Dollars (US$500.00), the
amount which Castro was adjudged to pay him.14 cralawred
On December 21, 1987, Castro, in consideration of Maqueras legal services in the civil case involving
Benavente, entered into an oral agreement with Maquera and assigned his right of redemption in favor of the
latter.15 cralawred
On January 8, 1988, Maquera exercised Castros right of redemption by paying Benavente US$525.00 in
satisfaction of the judgment debt. Thereafter, Maquera had the title to the property transferred in his
name.16 cralawred
On December 31, 1988, Maquera sold the property to C.S. Chang and C.C. Chang for Three Hundred
Twenty Thousand U.S. Dollars (US$320,000.00). 17 cralawred
On January 15, 1994, the Guam Bar Ethics Committee (Committee) conducted hearings regarding Maqueras
alleged misconduct.18 cralawred
Subsequently, the Committee filed a Petition in the Superior Court of Guam praying that Maquera be
sanctioned for violations of Rules 1.519 and 1.8(a)20 of the Model Rules of Professional Conduct (Model
Rules) in force in Guam. In its Petition, the Committee claimed that Maquera obtained an unreasonably high
fee for his services. The Committee further alleged that Maquera himself admitted his failure to comply with
the requirement in Rule 1.8 (a) of the Model Rules that a lawyer shall not enter into a business transaction
with a client or knowingly acquire a pecuniary interest adverse to a client unless the transaction and the
terms governing the lawyers acquisition of such interest are fair and reasonable to the client, and are fully
disclosed to, and understood by the client and reduced in writing. 21 cralawred
The Committee recommended that Maquera be: (1) suspended from the practice of law in Guam for a period
of two [2] years, however, with all but thirty (30) days of the period of suspension deferred; (2) ordered to
return to Castro the difference between the sale price of the property to the Changs and the amount due him
for legal services rendered to Castro; (3) required to pay the costs of the disciplinary proceedings; and (4)
publicly reprimanded. It also recommended that other jurisdictions be informed that Maquera has been
subject to disciplinary action by the Superior Court of Guam. 22 cralawred
Maquera did not deny that Castro executed a quitclaim deed to the property in his favor as compensation for
past legal services and that the transaction, except for the deed itself, was oral and was not made pursuant to
a prior written agreement. However, he contended that the transaction was made three days following the
alleged termination of the attorney-client relationship between them, and that the property did not constitute
an exorbitant fee for his legal services to Castro. 23 cralawred
On May 7, 1996, the Superior Court of Guam rendered its Decision 24 suspending Maquera from the practice
of law in Guam for a period of two (2) years and ordering him to take the Multi-State Professional
Responsibility Examination (MPRE) within that period. The court found that the attorney-client relationship
between Maquera and Castro was not yet completely terminated when they entered into the oral agreement
to transfer Castros right of redemption to Maquera on December 21, 1987. It also held that Maquera profited
too much from the eventual transfer of Castros property to him since he was able to sell the same to the
Changs with more than US$200,000.00 in profit, whereas his legal fees for services rendered to Castro
amounted only to US$45,000.00. The court also ordered him to take the MPRE upon his admission during

22

the hearings of his case that he was aware of the requirements of the Model Rules regarding business
transactions between an attorney and his client in a very general sort of way.25 cralawred

property of his clients under the circumstances obtaining therein rendered him liable for malpractice. The
Court held:chanroblesvirtua1awlibrary

On the basis of the Decision of the Superior Court of Guam, the IBP concluded that although the said court
found Maquera liable for misconduct, there is no evidence to establish that [Maquera] committed a breach of
ethics in the Philippines. 26 However, the IBP still resolved to suspend him indefinitely for his failure to pay
his annual dues as a member of the IBP since 1977, which failure is, in turn, a ground for removal of the
name of the delinquent member from the Roll of Attorneys under Section 10, Rule 139-A of the Revised
Rules of Court.27 cralawred

Whether the deed of sale in question was executed at the instance of the spouses driven by financial
necessity, as contended by the respondent, or at the latters behest, as contended by the complainant, is of no
moment. In either case an attorney occupies a vantage position to press upon or dictate his terms to a
harassed client, in breach of the rule so amply protective of the confidential relations, which must necessarily
exist between attorney and client, and of the rights of both. 32 cralawred

The power of the Court to disbar or suspend a lawyer for acts or omissions committed in a foreign
jurisdiction is found in Section 27, Rule 138 of the Revised Rules of Court, as amended by Supreme
Court Resolution dated February 13, 1992, which states:chanroblesvirtua1awlibrary
Section 27. Disbarment or suspension of attorneys by Supreme Court, grounds therefor.A member of the bar
may be disbarred or suspended from his office as attorney by the Supreme Court for any deceit,
malpractice, or other gross misconduct in such office, grossly immoral conduct, or by reason of his
conviction of a crime involving moral turpitude, or for any violation of the oath which he is required to
take before admission to practice, or for a willful disobedience appearing as attorney for a party to a case
without authority to do so.The practice of soliciting cases at law for the purpose of gain, either personally or
through paid agents or brokers, constitutes malpractice.
The disbarment or suspension of a member of the Philippine Bar by a competent court or other
disciplinatory agency in a foreign jurisdiction where he has also been admitted as an attorney is a
ground for his disbarment or suspension if the basis of such action includes any of the acts
hereinabove enumerated.
The judgment, resolution or order of the foreign court or disciplinary agency shall be prima
facie evidence of the ground for disbarment or suspension (Emphasis supplied).
The Court must therefore determine whether Maqueras acts, namely: acquiring by assignment Castros right
of redemption over the property subject of the civil case where Maquera appeared as counsel for him;
exercising the right of redemption; and, subsequently selling the property for a huge profit, violate Philippine
law or the standards of ethical behavior for members of the Philippine Bar and thus constitute grounds for
his suspension or disbarment in this jurisdiction.
The Superior Court of Guam found that Maquera acquired his clients property by exercising the right of
redemption previously assigned to him by the client in payment of his legal services.Such transaction falls
squarely under Article 1492 in relation to Article 1491, paragraph 5 of the Civil Code of the Philippines.
Paragraph 5 of Article 149128 prohibits the lawyers acquisition by assignment of the clients property which is
the subject of the litigation handled by the lawyer. Under Article 1492,29the prohibition extends to sales in
legal redemption.
The prohibition ordained in paragraph 5 of Article 1491 and Article 1492 is founded on public policy
because, by virtue of his office, an attorney may easily take advantage of the credulity and ignorance of his
client30 and unduly enrich himself at the expense of his client.
31

The case of In re: Ruste illustrates the significance of the aforementioned prohibition. In that case, the
attorney acquired his clients property subject of a case where he was acting as counsel pursuant to a deed of
sale executed by his clients in his favor.He contended that the sale was made at the instance of his clients
because they had no money to pay him for his services. The Court ruled that the lawyers acquisition of the

The Superior Court of Guam also hinted that Maqueras acquisition of Castros right of redemption, his
subsequent exercise of said right, and his act of selling the redeemed property for huge profits were tainted
with deceit and bad faith when it concluded that Maquera charged Castro an exorbitant fee for his legal
services. The court held that since the assignment of the right of redemption to Maquera was in payment for
his legal services, and since the property redeemed by him had a market value of US$248,220.00 as of
December 21, 1987 (the date when the right of redemption was assigned to him), he is liable for misconduct
for accepting payment for his legal services way beyond his actual fees which amounted only to
US$45,000.00.
Maqueras acts in Guam which resulted in his two (2) -year suspension from the practice of law in that
jurisdiction are also valid grounds for his suspension from the practice of law in the Philippines. Such acts
are violative of a lawyers sworn duty to act with fidelity toward his clients. They are also violative of the
Code of Professional Responsibility, specifically, Canon 17 which states that [a] lawyer owes fidelity to the
cause of his client and shall be mindful the trust and confidence reposed in him; and Rule 1.01 which
prohibits lawyers from engaging in unlawful, dishonest, immoral or deceitful conduct. The requirement of
good moral character is not only a condition precedent to admission to the Philippine Bar but is also a
continuing requirement to maintain ones goods standing in the legal profession. 33 cralawred
It bears stressing that the Guam Superior Courts judgment ordering Maqueras suspension from the practice
of law in Guam does not automatically result in his suspension or disbarment in the Philippines. Under
Section 27,34 Rule 138 of the Revised Rules of Court, the acts which led to his suspension in Guam are mere
grounds for disbarment or suspension in this jurisdiction, at that only if the basis of the foreign courts action
includes any of the grounds for disbarment or suspension in this jurisdiction. 35 Likewise, the judgment of the
Superior Court of Guam only constitutes prima facieevidence of Maqueras unethical acts as a lawyer.36 More
fundamentally, due process demands that he be given the opportunity to defend himself and to present
testimonial and documentary evidence on the matter in an investigation to be conducted in accordance with
Rule 139-B of the Revised Rules of Court. Said rule mandates that a respondent lawyer must in all cases be
notified of the charges against him. It is only after reasonable notice and failure on the part of the respondent
lawyer to appear during the scheduled investigation that an investigation may be conducted ex
parte.37 cralawred
The Court notes that Maquera has not yet been able to adduce evidence on his behalf regarding the charges
of unethical behavior in Guam against him, as it is not certain that he did receive the Noticeof
Hearing earlier sent by the IBPs Commission on Bar Discipline. Thus, there is a need to ascertain Maqueras
current and correct address in Guam in order that another notice, this time specifically informing him of the
charges against him and requiring him to explain why he should not be suspended or disbarred on those
grounds (through this Resolution), may be sent to him.
Nevertheless, the Court agrees with the IBP that Maquera should be suspended from the practice of law for
non-payment of his IBP membership dues from 1977 up to the present. 38 Under Section 10, Rule 139-A of
the Revised Rules of Court, non-payment of membership dues for six (6) months shall warrant suspension of
membership in the IBP, and default in such payment for one year shall be ground for removal of the name of
the delinquent member from the Roll of Attorneys. 39 cralawred

23

WHEREFORE, Atty. Leon G. Maquera is required to SHOW CAUSE, within fifteen (15) days from receipt
of this Resolution, why he should not be suspended or disbarred for his acts which gave rise to the
disciplinary proceedings against him in the Superior Court of Guam and his subsequent suspension in said
jurisdiction.
The Bar Confidant is directed to locate the current and correct address of Atty. Maquera in Guam and to
serve upon him a copy of this Resolution.
In the meantime, Atty. Maquera is SUSPENDED from the practice of law for ONE (1) YEAR or until he
shall have paid his membership dues, whichever comes later.
Let a copy of this Resolution be attached to Atty. Maqueras personal record in the Office of the Bar
Confidant and copies be furnished to all chapters of the Integrated Bar of the Philippines and to all courts in
the land.
SO ORDERED.
Davide, Jr., C.J., Puno, Panganiban, Quisumbing, Ynares-Santiago, Sandoval-Gutierrez, Carpio,
Austria-Martinez, Carpio-Morales, Callejo, Sr., Azcuna, and Chico-Nazario, JJ., concur.
Corona, J., on leave.

EN BANC
[A.M. No. MTJ-89-270. July 5, 1993.]
THELMA ARCENIO and MARGARITA PONTING, Complainants, v. JUDGE VIRGINIA
PAGOROGON, Respondent.

24

[A.M. No. MTJ-92-673. July 5, 1993.]

OFFICE OF THE COURT ADMINISTRATOR, Complainant, v. JUDGE VIRGINIA
PAGOROGON,Respondent.
SYLLABUS
1. LEGAL AND JUDICIAL ETHICS; ADMINISTRATIVE COMPLAINT AGAINST MTC JUDGE FOR
IGNORANCE OF LAW, GRAVE ABUSE OF DISCRETION, AND ACTING IN EXCESS OF
JURISDICTION ARISING FROM ISSUANCE BY JUDGE AFTER PRELIMINARY EXAMINATION IN
TWO CRIMINAL COMPLAINTS FOR ILLEGAL SQUATTING OF WARRANTS OF ARREST
AGAINST ACCUSED, AND OF TWO ORDERS, THE FIRST, DENYING ACCUSEDS MOTION FOR
EXTENSION OF TIME TO FILE COUNTER-AFFIDAVITS, THE SECOND, FORWARDING THE
RECORDS OF CASES TO THE PROVINCIAL FISCAL FOR FILING OF CORRESPONDING
INFORMATION. Complainants Arcenio and Ponting were the accused in two criminal complaints filed
by one Cipriano de Guzman, Jr. for Illegal Squatting (P.D. 772) before respondent judge Pagorogon. After a
preliminary examination, respondent judge issued warrants for the arrest of the complainants. On January
23, 1989, complainants were apprehended and filed their respective bail bonds. Respondent judge then
issued an Order requiring complainants to file their counter-affidavits within ten (10) days from receipt of
the Order. Complainants failed to comply with the aforestated Order but instead filed a Motion for Extension
of time to file counter-affidavits in the afternoon of February 3, 1989, the last day for compliance.
Respondent judge denied the Motion for Extension filed by the accused for being moot and academic. It
appears that in the morning of the same day, respondent judge had already issued an Order forwarding the
records to the Provincial Fiscal for the filing of the corresponding information on the ground that "accused
Ponting failed to submit her witnesses." The Order of denial however, erroneously referred to the Motion for
Extension as a Motion for Reconsideration, which mistake respondent judge attributed to clerical error. On
February 14, 1989 complainants filed their counter-affidavits alleging that they are DAR-identified farmer
beneficiaries of the disputed parcel of land which is devoted to agriculture and as such, is beyond the
coverage of P.D. 772. On the same day, the accused filed a Motion for Reconsideration of the Order
transmitting the cases to the Provincial Fiscal on the ground that the Motion for Extension filed by them
served to suspend the running of the period within which to file their counter-affidavits. Respondent judge
allegedly denied the Motion for Reconsideration on the same day that it was filed but the Order itself is
missing from the records of the case. On February 22, 1989 complainants filed the present administrative
complaint against respondent judge with the Office of the Court Administrator for gross ignorance of the
law, grave abuse of discretion and acting in excess of her jurisdiction, alleging that respondent judge found
probable cause only on the basis of the sworn statements of the complainant and his witness, ordered their
arrest on the basis of a P.D. that is not applicable to them, and for acting with undue haste in transmitting the
records to the Provincial Fiscal without first ruling on their Motion for Extension and Motion for
Reconsideration.
2. ID.; ID.; COMPLAINT DISMISSED IN VIEW OF FAITHFUL COMPLIANCE BY JUDGE WITH
PROCEDURE FOR PRELIMINARY EXAMINATION EVEN AS NATURE OF PROPERTY SUBJECT
MATTER OF COMPLAINTS NOT ELICITED DURING PRELIMINARY EXAMINATION AS WOULD
HAVE OTHERWISE JUSTIFIED APPLICATION OF P.D. 772, AND IN VIEW OF DISCRETION OF
JUDGE TO GRANT OR DENY MOTION FOR EXTENSION. On the first administrative complaint for
gross ignorance, grave abuse of discretion and acting in excess of her jurisdiction, this Court believes and so
holds that respondent judge is not guilty of the acts complained of as to warrant an administrative sanction.
From the aforestated facts, it appears that respondent judge faithfully complied with the procedure for
preliminary examination outlined in Rule 112, Sections 9(b) and 6(b) of the Rules on Criminal Procedure.
She did not base her finding of probable cause solely on the sworn statements of the complainant therein and
his witness as alleged by the complainants. Instead she propounded her own searching questions to the
aforestated parties during the preliminary examination, consistently with the Rules. Apparently however,
such "searching" questions (and answers thereto) proved insufficient to elicit the nature of the property
subject matter of the complaint as to justify the application of P.D. 772 against the accused. However such
fact alone is not sufficient to justify a charge of gross ignorance of the law against respondent judge. Not
every error or mistake of a judge in the performance of her duties makes her liable administratively. To hold

a judge accountable for every erroneous ruling or decision that he renders, would be nothing short of
harassment and would make his position unbearable. For after all, no judge, in the process of administering
justice, can be infallible in his judgment (Gallardo v. Judge Quintos, Adm. Mat. No. RTJ- 90-577, 2 July
1991 En Banc, Minute Resolution). Even the allegation that respondent judge acted with undue haste in
forwarding the case to the Provincial Fiscal is devoid of merit. Complainants had no right to assume that
respondent judge will grant their Motion for Extension, especially in the present case where the motion was
filed on the very last day for filing of the counter-affidavits and more so, where the respondent judge had
already issued an order of transmittal of the records to the Provincial Fiscal, thereby rendering the motion
moot and academic. Neither do complainants have the right to assume that by the mere act of filing a motion
for an extension, the period for compliance with the Order will be automatically "suspended." Nowhere in
the Rules is such automatic suspension sanctioned. The fact that respondent judge denied their motion for
extension cannot be deemed as an abuse of discretion inasmuch as the decision on whether to grant motions
or not rest entirely upon the discretion of the judge. There being no merit in the charges against respondent
judge, the Court resolved to dismiss the first administrative case against her.
3. ID.; ADMINISTRATIVE COMPLAINT AGAINST MTC JUDGE FOR MISCONDUCT ARISING
FROM TAKING POSSESSION AND MAINTENANCE BY JUDGE OF JEEP UNDER CUSTODIA
LEGIS. This case originated from an anonymous letter-complaint filed by one A.C.B. with the Office of
the Ombudsman accusing respondent judge of abuse of authority and irregularity in connection with motor
vehicle in custodia legis alleged to have been used in connection with a robbery case filed with respondents
court. In turn, the Office of the Ombudsman referred the undated letter to this Court for administrative
investigation. Per Resolution dated August 29, 1991, the Court directed the Court Administrator to file a
formal complaint for misconduct against respondent judge and thereafter, to refer the complaint to Executive
Judge Natividad G. Dizon of the Regional Trial Court of Malolos, Bulacan for investigation, report and
recommendation. The report of the Executive Judge disclosed that respondent judge conducted a preliminary
examination of a robbery (hold-up) case entitled "People of the Philippines v. Robert Geroi, Et. Al." on
August 26, 1988. Part of the evidence in the aforementioned case was a black and white renegade type
jeepney. On September 19, 1988, the robbery case was endorsed to the Office of the Provincial Fiscal of
Malolos, Bulacan, for filing of the information inasmuch as three (3) of the accused were detained. However,
the jeep was not turned over to the Provincial Fiscal because the Clerk of Court had no available funds to
tow said jeep. The subject vehicle, therefore, remained in the premises of the municipal building of San Jose
del Monte, Bulacan. In March 1989, the Station Commander of San Jose del Monte requested respondent
judge to remove the jeep from the premises of the municipal building as it was becoming an eyesore.
Respondent judge then sought the opinion of then Acting RTC Executive Judge Benjamin de Vega and
Provincial Fiscal Liberato L. Reyes and was allegedly advised that since the RTC of Malolos has no
impounding area, she should keep and maintain the jeep herself. In their sworn affidavits, however, the
Executive Judge merely remembered disclaiming control over the jeep until the Provincial Fiscal files the
criminal case with the RTC; the Provincial Fiscal, on the other hand, had a vague recollection of the
conversation and remembered only his hesitation to accept the turnover of the jeep to his office. Neither one
of the officials confirmed having advised respondent judge to have custody of the subject vehicle. On March
31, 1989 respondent Judge took possession of the jeep and had an auto mechanic tow it to his (the auto
mechanics) shop in Marilao, Bulacan, repair it and repaint the same from black and white to red.
Respondent judge even provided new batteries for the jeep and initially spent P1,500.00 to put the jeep in
good running condition. Her brother volunteered "to take care of the jeep" as she "could not afford to hire a
driver." In addition, her brother shouldered additional expenses for the further repair and maintenance of the
jeep. It is for these expenses that respondent judge is seeking reimbursement from the anonymous owner
with the threat that unless she is reimbursed "she is to return the jeep to its original condition." The
anonymous letter-complaint further alleged that the respondent judge even had the vehicle registered in her
brothers name but respondent judge denied the same nor is there any evidence to support such allegation.
However, the investigation of Executive Judge Dizon revealed that on the basis of the report from the Land
Transportation Office, the sticker attached to the vehicle appears to be falsified.
4. ID.; ID.; JUDGE DISMISSED FOR GROSS MISCONDUCT. However, as to the second
administrative complaint involving the vehicle in custodia legis, there is sufficient evidence on record to
warrant a finding that respondent judge committed gross misconduct in office deserving the imposition of
the most stringent of penalties possible. The intention of respondent judge to make use of and benefit from
the vehicle, a property in custodia legis, was manifest. Respondent judge had no reason to go overboard in
spending for the repair of the jeep. The most she should have done, if her real intention was the preservation

25

of evidence and her goal was to turn over the same to the office of the Provincial Fiscal, was simply to have
the jeep, then already in a dilapidated condition owing to its prolonged exposure to the elements, towed to
the premises of the RTC of Malolos, Bulacan. From that moment on, the vehicle would have been out of her
hands, which was how it should be considering that the robbery case had already been endorsed by her to the
office of the Provincial Fiscal. Had she effected the delivery of the vehicle, then her insistence on being
reimbursed, this time only for the towing expenses, would have been reasonable. But instead, respondent
judge engaged the services of a mechanic, not only to tow the jeep but also to place the jeep in good running
condition, spending in the process P1,500.00 of her own money. No other logical inference could be deduced
from such an action other than respondent judges desire to use and enjoy the jeep for her own benefit and
convenience. Quite obviously, respondent judge exhibited manifest intent to gain. . . . Undoubtedly,
respondent judge committed gross misconduct in her office. Misconduct is "a transgression of some
established and definite rule of action, more particularly, unlawful behavior or gross negligence by the public
officer" (Amasco v. Magro, 73 SCRA 107 [1976]). It is this kind of gross and flaunting misconduct on the
part of those who are charged with the responsibility of administering the law and rendering justice that so
quickly and surely corrodes the respect for law and the courts without which the government cannot continue
and that tears apart the very bonds of our polity (Ompoc v. Judge Torres, A.M. No. MTJ-86-11, 17 Sept.
1989 En Banc, Per Curiam).

private capacities (National Intelligence and Security Authority v. Tablang, 199 SCRA 766 [1991]). For, as
we have often stated," (a)lthough every office in the government service is a public trust, no position exacts a
greater demand on moral righteousness and uprightness of an individual than a seat in the Judiciary. A
magistrate of the law must comport himself at all times in such manner that his conduct, official or
otherwise, can bear the most searching scrutiny of the public that looks up to him as the epitome of integrity
and justice" (Dia-Anonuevo v. Bercacio, 68 SCRA 81, 89 [1975]).

5. ID.; ID.; ID.; PROHIBITED NATURE OF ACT OF APPROPRIATING SUBJECT JEEP FOR OWN USE
AND BENEFIT. The act of respondent judge is not unlike the prohibited acquisition by purchase
described in Article 1491 of the New Civil Code and is in fact, even worse. In Article 1491 paragraphs 4 and
5, public officers and employees, justices, judges, lawyers and similar persons charged with the
administration of justice are prohibited from acquiring by purchase, property the administration of which has
been entrusted to them or any other property which is the object of litigation. Here, respondent judge did not
even offer to purchase the jeep from the owner but by the mere fact of having whimsically spent for its
repairs, automatically appropriated the jeep for her own use and benefit.

A. M. No. MTJ 89-270:chanrob1es virtual 1aw library

6. ID.; ID.; ID.; LACK OF GOOD FAITH ON PART OF JUDGE. To all these accusations, respondent
judge maintains the defense of having acted in good faith. In fact to show her alleged good faith, respondent
judge officially turned over the jeep to the office of the Provincial Fiscal on February 25, 1992, three (3)
years after having received custody thereof in March 1989. She did so only after this case was referred to the
Executive Judge of Bulacan for investigation, report and recommendation . . . Assuming, arguendo, that
respondent judge was indeed acting in good faith, i.e. she was acting upon the "advise" of the Executive
Judge of Malolos and the Provincial Fiscal, still the fact that she and her brother regularly used the subject
vehicle as if it were their own destroys her pretensions of good intentions.
7. ID.; ID.; ID.; DAMAGING EFFECT ON JUDGE OF SUSPICION OF HAVING FALSIFIED LTO
STICKER ATTACHED TO SUBJECT JEEP. In addition to the foregoing irregularities, the investigating
Judge also discovered, in the process of investigating whether the jeep was actually registered in the name of
respondent judges brother, that the sticker attached to the jeep appears to be falsified inasmuch as the
control numbers in the sticker remain unissued and are in fact, still in the possession of the Land
Transportation Office. Whether the sticker was already attached to the jeep when it was used in the robbery
or whether the same was attached by respondent judge in the course of her use of the jeep, does not appear
on record. Nevertheless, the mere fact of suspicion tips the scale against herein respondent judge who, as a
member of the judiciary, should be beyond reproach at all times.
8. ID.; ID.; ID.; ADVANTAGE TAKEN BY JUDGE OF POWER OF OFFICE. There is indeed no doubt
that respondent judge took advantage of the powers vested in her office in committing the acts complained
of herein. For, had she not been the judge who conducted the preliminary examination in the robbery case,
she would not have acquired jurisdiction over the subject vehicle and consequently, she could not have taken
possession of the said vehicle and used the same for her personal benefit.
9. ID.; ID.; ID.; FAILURE OF JUDGE TO AVOID IMPROPRIETY AND APPEARANCE OF
IMPROPRIETY IN ALL ACTIVITIES. Respondent judge utterly failed to conduct herself in the manner
prescribed by Canon 2 of the Code of Judicial Conduct which is to "avoid impropriety and the appearance of
impropriety in all activities." The case at bar presents an occasion to again remind the members of the
Judiciary to so conduct themselves as to be beyond reproach and suspicion, and be free from any appearance
of impropriety in their personal behavior not only in the discharge of their official duties but also in their

DECISION
PER CURIAM:
These are two (2) administrative complaints commenced by different parties against Municipal Trial Court
Judge Virginia Pagorogon of San Jose del Monte, Bulacan. The factual background of these complaints will
be treated herein separately, as follows:chanrob1es virtual 1aw library

Complainants Arcenio and Ponting were the accused in two criminal complaints filed by one Cipriano de
Guzman, Jr. for Illegal Squatting (P.D. 772) before respondent judge Pagorogon.chanrobles lawlibrary :
rednad
After a preliminary examination, respondent judge issued warrants for the arrest of the complainants. On
January 23, 1989, complainants were apprehended and filed their respective bail bonds. Respondent judge
then issued an Order requiring complainants to file their counter-affidavits within ten (10) days from receipt
of the Order. Complainants failed to comply with the aforestated Order but instead filed a Motion for
Extension of time to file counter-affidavits in the afternoon of February 3, 1989, the last day for compliance.
Respondent judge denied the Motion for Extension filed by the accused for being moot and academic. It
appears that in the morning of the same day, respondent judge had already issued an Order forwarding the
records to the Provincial Fiscal for the filing of the corresponding information on the ground that "accused
Ponting failed to submit her witnesses" .
The Order of denial however, erroneously referred to the Motion for Extension as a Motion for
Reconsideration, which mistake respondent judge attributed to clerical error.
On February 14, 1989 complainants filed their counter-affidavits alleging that they are DAR-identified
farmer beneficiaries of the disputed parcel of land which is devoted to agriculture and as such, is beyond the
coverage of P.D. 772.
On the same day, the accused filed a Motion for Reconsideration of the Order transmitting the cases to the
Provincial Fiscal on the ground that the Motion for Extension filed by them served to suspend the running of
the period within which to file their counter-affidavits. Respondent judge allegedly denied the Motion for
Reconsideration on the same day that it was filed but the Order itself is missing from the records of the case.
On February 22, 1989 complainants filed the present administrative complaint against respondent judge with
the Office of the Court Administrator for gross ignorance of the law, grave abuse of discretion and acting in
excess of her jurisdiction, alleging that respondent judge found probable cause only on the basis of the sworn
statements of the complainant and his witness, ordered their arrest on the basis of a P.D. that is not applicable
to them, and for acting with undue haste in transmitting the records to the Provincial Fiscal without first
ruling on their Motion for Extension and Motion for Reconsideration.
In her Comment, respondent judge claimed as erroneous and without basis the complaint filed against her,
arguing that the fact that only one witness was presented does not militate against the existence of probable
cause as found by her. Furthermore, she alleged compliance with the requirements of examination in writing
and under oath to justify the issuance of the warrants of arrest. On the issue of acting with undue haste,
respondent judge claimed that she acted upon the Motion for Extension and the Motion for Reconsideration

26

by denying both motions.chanrobles lawlibrary : rednad

recommendation.

Thereupon, complainants were ordered to file their Reply by way of a Resolution of this Court dated August
7, 1990. However, despite several Resolutions ordering compliance and service of the said Resolutions upon
the complainants, no Reply has yet been filed by the complainants. In the meantime, respondent Judge filed
a motion for resolution of the complaint.

On the basis of the documentary evidence obtaining in the present case, the investigating Executive Judge
found respondent judge guilty of misconduct in that she "exerted undue interest" over the vehicle by
spending for its repair and maintenance over and beyond what the circumstances and the duties of her office
called for. Moreover, by having the jeep repainted from its original color of black and white to red, with full
knowledge that the jeep constitutes vital evidence in a Robbery case, respondent judge tampered with the
evidence in a criminal case for which she should be held answerable. In view of her findings, the
investigating judge recommended the imposition of the appropriate penalty upon respondent judge.

A. M. No. MTJ-92-637:chanrob1es virtual 1aw library

This case originated from an anonymous letter-complaint filed by one A.C.B. with the Office of the
Ombudsman accusing respondent judge of abuse of authority and irregularity in connection with a motor
vehicle in custodia legis alleged to have been used in connection with a robbery case filed with respondents
court. In turn, the Office of the Ombudsman referred the undated letter to this Court for administrative
investigation.
Per Resolution dated August 29, 1991, the Court directed the Court Administrator to file a formal complaint
for misconduct against respondent judge and thereafter, to refer the complaint to Executive Judge Natividad
G. Dizon of the Regional Trial Court of Malolos, Bulacan for investigation, report and recommendation.
The report of the Executive Judge disclosed that respondent judge conducted a preliminary examination of a
robbery (hold-up) case entitled "People of the Philippines v. Robert Geroi, Et. Al." on August 26, 1988. Part
of the evidence in the aforementioned case was a black and white renegade type jeepney. On September 19,
1988, the robbery case was endorsed to the Office of the Provincial Fiscal of Malolos, Bulacan, for filing of
the information inasmuch as three (3) of the accused were detained.
However, the jeep was not turned over to the Provincial Fiscal because the Clerk of Court had no available
funds to tow said jeep. The subject vehicle, therefore, remained in the premises of the municipal building of
San Jose del Monte, Bulacan.
In March 1989, the Station Commander of San Jose del Monte requested respondent judge to remove the
jeep from the premises of the municipal building as it was becoming an eyesore. Respondent judge then
sought the opinion of then Acting RTC Executive Judge Benjamin de Vega and Provincial Fiscal Liberato L.
Reyes and was allegedly advised that since the RTC of Malolos has no impounding area, she should keep
and maintain the jeep herself. In their sworn affidavits, however, the Executive Judge merely remembered
disclaiming control over the jeep until the Provincial Fiscal files the criminal case with the RTC; the
Provincial Fiscal, on the other hand, had a vague recollection of the conversation and remembered only his
hesitation to accept the turnover of the jeep to his office. Neither one of the officials confirmed having
advised respondent judge to have custody of the subject vehicle.
On March 31, 1989 respondent Judge took possession of the jeep and had an auto mechanic tow it to his (the
auto mechanics) shop in Marilao, Bulacan, repair it and repaint the same from black and white to red.
Respondent judge even provided new batteries for the jeep and initially spent P1,500.00 to put the jeep in
good running condition. Her brother volunteered "to take care of the jeep" as she "could not afford to hire a
driver." In addition, her brother shouldered additional expenses for the further repair and maintenance of the
jeep. It is for these expenses that respondent judge is seeking reimbursement from the anonymous owner
with the threat that unless she is reimbursed "she is to return the jeep to its original condition."cralaw
virtua1aw library
The anonymous letter-complaint further alleged that the respondent judge even had the vehicle registered in
her brothers name but respondent judge denied the same nor is there any evidence to support such
allegation. However, the investigation of Executive Judge Dizon revealed that on the basis of the report from
the Land Transportation Office, the sticker attached to the vehicle appears to be falsified.chanrobles
lawlibrary : rednad
To all these accusations, respondent judge maintains the defense of having acted in good faith. In fact to
show her alleged good faith, respondent judge officially turned over the jeep to the office of the Provincial
Fiscal on February 25, 1992, three (3) years after having received custody thereof in March 1989. She did so
only after this case was referred to the Executive Judge of Bulacan for investigation, report and

On the first administrative complaint for gross ignorance, grave abuse of discretion and acting in excess of
her jurisdiction, this Court believes and so holds that respondent judge is not guilty of the acts complained of
as to warrant an administrative sanction. From the aforestated facts, it appears that respondent judge
faithfully complied with the procedure for preliminary examination outlined in Rule 112 sections 9(b) and
6(b) of the Rules on Criminal Procedure. She did not base her finding of probable cause solely on the sworn
statements of the complainant therein and his witness as alleged by the complainants. Instead she
propounded her own searching questions to the aforestated parties during the preliminary examination,
consistently with the Rules. Apparently however, such "searching" questions (and answers thereto) proved
insufficient to elicit the nature of the property subject matter of the complaint as to justify the application of
P.D. 772 against the accused. However such fact alone is not sufficient to justify a charge of gross ignorance
of the law against respondent judge.
Not every error or mistake of a judge in the performance of her duties makes her liable administratively. To
hold a judge accountable for every erroneous ruling or decision that he renders, would be nothing short of
harassment and would make his position unbearable. For after all, no judge, in the process of administering
justice, can be infallible in his judgment (Gallardo v. Judge Quintos, Adm. Mat. No. RTJ-90-577, 2 July
1991 En Banc, Minute Resolution).
Even the allegation that respondent judge acted with undue haste in forwarding the case to the Provincial
Fiscal is devoid of merit. Complainants had no right to assume that respondent judge will grant their Motion
for Extension, especially in the present case where the motion was filed on the very last day for filing of the
counter-affidavits and more so, where the respondent judge had already issued an order of transmittal of the
records to the Provincial Fiscal, thereby rendering the motion moot and academic. Neither do complainants
have the right to assume that by the mere act of filing a motion for an extension, the period for compliance
with the Order will be automatically "suspended." Nowhere in the Rules is such automatic suspension
sanctioned. The fact that respondent judge denied their motion for extension cannot be deemed as an abuse
of discretion inasmuch as the decision on whether to grant motions or not rest entirely upon the discretion of
the judge.
There being no merit in the charges against respondent judge, the Court resolved to dismiss the first
administrative case against her.chanrobles law library : red
However, as to the second administrative complaint involving the vehicle in custodia legis, there is sufficient
evidence on record to warrant a finding that respondent judge committed gross misconduct in office
deserving the imposition of the most stringent of penalties possible. The intention of respondent judge to
make use of and benefit from the vehicle, a property in custodia legis, was manifest. Respondent judge had
no reason to go overboard in spending for the repair of the jeep. The most she should have done, if her real
intention was the preservation of evidence and her goal was to turn over the same to the office of the
Provincial Fiscal, was simply to have the jeep, then already in a dilapidated condition owing to its prolonged
exposure to the elements, towed to the premises of the RTC of Malolos, Bulacan. From that moment on, the
vehicle would have been out of her hands, which was how it should be considering that the robbery case had
already been endorsed by her to the office of the Provincial Fiscal. Had she effected the delivery of the
vehicle, then her insistence on being reimbursed, this time only for the towing expenses, would have been
reasonable. But instead, respondent judge engaged the services of a mechanic, not only to tow the jeep but
also to place the jeep in good running condition, spending in the process P1,500.00 of her own money. No
other logical inference could be deduced from such an action other than respondent judges desire to use and
enjoy the jeep for her own benefit and convenience. Quite obviously, respondent judge exhibited manifest
intent to gain.

27

The act of respondent judge is not unlike the prohibited acquisition by purchase described in Article 1491 of
the New Civil Code and is in fact, even worse. In Article 1491 paragraphs 4 and 5, public officers and
employees, justices, judges, lawyers and similar persons charged with the administration of justice are
prohibited from acquiring by purchase, property the administration of which has been entrusted to them or
any other property which is the object of litigation. Here, respondent judge did not even offer to purchase the
jeep from the owner but by the mere fact of having whimsically spent for its repairs, automatically
appropriated the jeep for her own use and benefit.

WHEREFORE, the Court finds respondent judge Virginia Pagorogon guilty of gross misconduct in A.M.
No. 92-637 and she is hereby ordered DISMISSED from the service with forfeiture of all benefits except
accrued leave credits with prejudice to reinstatement or reappointment to any public office including
government-owned or controlled corporations.
The complaint against respondent Judge in A.M. No. MTJ 89-270 is DISMISSED for lack of merit.
Narvasa, C.J., Cruz, Feliciano, Padilla, Bidin, Grio-Aquino, Regalado, Davide, Jr., Romero, Nocon, Melo
and Quiason, JJ., concur.

Assuming, arguendo, that respondent judge was indeed acting in good faith, i.e. she was acting upon the
"advise" of the Executive Judge of Malolos and the Provincial Fiscal, still the fact that she and her brother
regularly used the subject vehicle as if it were their own destroys her pretensions of good intentions.
Furthermore, respondent judge had absolutely no right and/or authority to change the color of the jeep from
black and white to red. She knew very well that the jeep was vital evidence in a robbery case since in fact,
she was even the one who conducted the preliminary examination in said case. Her act of having the jeep
repainted to a different color clearly amounted to tampering with evidence in a criminal case. The fact that
the person who committed the act of tampering is a member of the judiciary makes the act even more
deplorable, and sad to say, leaves a bitter taste.
In addition to the foregoing irregularities, the investigating Judge also discovered, in the process of
investigating whether the jeep was actually registered in the name of respondent judges brother, that the
sticker attached to the jeep appears to be falsified inasmuch as the control numbers in the sticker remain
unissued and are in fact, still in the possession of the Land Transportation Office. Whether the sticker was
already attached to the jeep when it was used in the robbery or whether the same was attached by respondent
judge in the course of her use of the jeep, does not appear on record. Nevertheless, the mere fact of suspicion
tips the scale against herein respondent judge who, as a member of the judiciary, should be beyond reproach
at all times.
There is indeed no doubt that respondent judge took advantage of the powers vested in her office in
committing the acts complained of herein. For, had she not been the judge who conducted the preliminary
examination in the robbery case, she would not have acquired jurisdiction over the subject vehicle and
consequently, she could not have taken possession of the said vehicle and used the same for her personal
benefit.chanrobles lawlibrary : rednad
Undoubtedly, respondent judge committed gross misconduct in her office. Misconduct is "a transgression of
some established and definite rule of action, more particularly, unlawful behavior or gross negligence by the
public officer" (Amasco v. Magro, 73 SCRA 107 [1976]). It is this kind of gross and flaunting misconduct on
the part of those who are charged with the responsibility of administering the law and rendering justice that
so quickly and surely corrodes the respect for law and the courts without which the government cannot
continue and that tears apart the very bonds of our polity (Ompoc v. Judge Torres, A.M. No. MTJ-86-11, 17
Sept. 1989 En Banc, Per Curiam).
Respondent judge utterly failed to conduct herself in the manner prescribed by Canon 2 of the Code of
Judicial Conduct which is to "avoid impropriety and the appearance of impropriety in all activities." The
case at bar presents an occasion to again remind the members of the Judiciary to so conduct themselves as to
be beyond reproach and suspicion, and be free from any appearance of impropriety in their personal
behavior not only in the discharge of their official duties but also in their private capacities (National
Intelligence and Security Authority v. Tablang, 199 SCRA 766 [1991]). For, as we have often stated,"
(a)lthough every office in the government service is a public trust, no position exacts a greater demand on
moral righteousness and uprightness of an individual than a seat in the Judiciary. A magistrate of the law
must comport himself at all times in such manner that his conduct, official or otherwise, can bear the most
searching scrutiny of the public that looks up to him as the epitome of integrity and justice" (Dia-Anonuevo
v. Bercacio, 68 SCRA 81, 89 [1975]).
In the case at bar, respondent judge has shown herself unfit to be a member of the Judiciary and must
therefore be removed from office.

Republic of the Philippines

SUPREME COURT
Manila
THIRD DIVISION

G.R. No. 116635 July 24, 1997

CONCHITA NOOL and GAUDENCIO ALMOJERA, petitioner,
vs.
COURT OF APPEALS, ANACLETO NOOL and EMILIA NEBRE, respondents.

28

PANGANIBAN, J.:
A contract of repurchase arising out of a contract of sale where the seller did not have any title to the
property "sold" is not valid. Since nothing was sold, then there is also nothing to repurchase.
Statement of the Case
This postulate is explained by this Court as it resolves this petition for review on certiorari assailing the
January 20, 1993 Decision 1 of Respondent Court of Appeals 2 in CA-G.R. CV No. 36473, affirming the
decision 3 of the trial court 4which disposed as follows: 5
WHEREFORE, judgment is hereby rendered dismissing the complaint for no cause of action, and hereby:
1. Declaring the private writing, Exhibit "C", to be an option to sell, not binding and considered validly
withdrawn by the defendants for want of consideration;
2. Ordering the plaintiffs to return to the defendants the sum of P30,000.00 plus interest thereon at the legal
rate, from the time of filing of defendants' counterclaim until the same is fully paid;
3. Ordering the plaintiffs to deliver peaceful possession of the two hectares mentioned in paragraph 7 of the
complaint and in paragraph 31 of defendants' answer (counterclaim);
4. Ordering the plaintiffs to pay reasonable rents on said two hectares at P5,000.00 per annum or at
P2,500.00 per cropping from the time of judicial demand mentioned in paragraph 2 of the dispositive portion
of this decision, until the said two hectares shall have been delivered to the defendants; and
5. To pay the costs.
SO ORDERED.
The Antecedent Facts
The facts, which appear undisputed by the parties, are narrated by the Court of Appeals as follows:
Two (2) parcels of land are in dispute and litigated upon here. The first has an area of 1 hectare. It was
formerly owned by Victorino Nool and covered by Transfer Certificate of Title No. T-74950. With an area of
3.0880 hectares, the other parcel was previously owned by Francisco Nool under Transfer Certificate of Title
No. T-100945. Both parcel's are situated in San Manuel, Isabela. The plaintiff spouses, Conchita Nool and
Gaudencio Almojera, now the appellants, seek recovery of the aforementioned parcels of land from the
defendants, Anacleto Nool, a younger brother of Conchita, and Emilia Nebre, now the appellees.
In their complaint, plaintiff-appellants alleged inter alia that they are the owners of subject parcels of land,
and they bought the same from Conchita's other brothers, Victorino Nool and Francisco Nool; that as
plaintiffs were in dire need of money, they obtained a loan from the Ilagan Branch of the Development Bank
of the Philippines, in Ilagan, Isabela, secured by a real estate mortgage on said parcels of land, which were
still registered in the names of Victorino Nool and Francisco Nool, at the time, and for the failure of
plaintiffs to pay the said loan, including interest and surcharges, totaling P56,000.00, the mortgage was

foreclosed; that within the period of redemption, plaintiffs contacted defendant Anacleto Nool for the latter
to redeem the foreclosed properties from DBP, which the latter did; and as a result, the titles of the two (2)
parcels of land in question were transferred to Anacleto Nool; that as part of their arrangement or
understanding, Anacleto Nool agreed to buy from plaintiff Conchita Nool the two (2) parcels of land under
controversy, for a total price of P100,000.00, P30,000.00 of which price was paid to Conchita, and upon
payment of the balance of P14,000.00, plaintiffs were to regain possession of the two (2) hectares of land,
which amounts defendants failed to pay, and the same day the said arrangement 6 was made; another
covenant 7 was entered into by the parties, whereby defendants agreed to return to plaintiffs the lands in
question, at anytime the latter have the necessary amount; that plaintiffs asked the defendants to return the
same but despite the intervention of the Barangay Captain of their place, defendants refused to return the
said parcels of land to plaintiffs; thereby impelling them (plaintiffs) to come to court for relief.
In their Answer, defendants-appellees theorized that they acquired the lands in question from the
Development Bank of the Philippines, through negotiated sale, and were misled by plaintiffs when defendant
Anacleto Nool signed the private writing, agreeing to return subject lands when plaintiffs have the money to
redeem the same; defendant Anacleto having been made to believe, then, that his sister, Conchita, still had
the right to redeem the said properties.
The pivot of inquiry here, as aptly observed below, is the nature and significance of the private document,
marked Exhibit "D" for plaintiffs, which document has not been denied by the defendants, as defendants
even averred in their Answer that they gave an advance payment of P30,000.00 therefor, and acknowledged
that they had a balance of P14,000.00 to complete their payment. On this crucial issue, the lower court
adjudged the said private writing (Exhibit "D") as an option to sell not binding upon and considered the same
validly withdrawn by defendants for want of consideration; and decided the case in the manner abovementioned.
There is no quibble over the fact that the two (2) parcels of land in dispute were mortgaged to the
Development Bank of the Philippines, to secure a loan obtained by plaintiffs from DBP (Ilagan Branch),
Ilagan, Isabela. For the non-payment of said loan, the mortgage was foreclosed and in the process, ownership
of the mortgaged lands was consolidated in DBP (Exhibits 3 and 4 for defendants). After DBP became the
absolute owner of the two parcels of land, defendants negotiated with DBP and succeeded in buying the
same. By virtue of such sale by DBP in favor of defendants, the titles of DBP were cancelled and the
corresponding Transfer Certificates of Title (Annexes "C" and "D" to the Complaint) issued to the
defendants. 8
It should be stressed that Manuel S. Mallorca, authorized officer of DBP, certified that the one-year
redemption period was from March 16, 1982 up to March 15, 1983 and that the mortgagors' right of
redemption was not exercised within this period. 9 Hence, DBP became the absolute owner of said parcels of
land for which it was issued new certificates of title, both entered on May 23, 1983 by the Registry of Deeds
for the Province of Isabela. 10 About two years thereafter, on April 1, 1985, DBP entered into a Deed of
Conditional Sale 11 involving the same parcels of land with Private Respondent Anacleto Nool as vendee.
Subsequently, the latter was issued new certificates of title on February 8, 1988. 12
The Court of Appeals ruled: 13
WHEREFORE, finding no reversible error infirming it, the appealed Judgment is hereby AFFIRMED in
toto. No pronouncement as to costs.
The Issues
Petitioners impute to Respondent Court the following alleged "errors":

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1. The Honorable Court of Appeals, Second Division has misapplied the legal import or meaning of Exhibit
"C" in a way contrary to law and existing jurisprudence in stating that it has no binding effect between the
parties and considered validly withdrawn by defendants-appellees for want of consideration.
2. The Honorable Court of Appeals, Second Division has miserably failed to give legal significance to the
actual possession and cultivation and appropriating exclusively the palay harvest of the two (2) hectares land
pending the payment of the remaining balance of fourteen thousand pesos (P14,000.00) by defendantsappellees as indicated in Exhibit "C".
3. The Honorable Court of Appeals has seriously erred in affirming the decision of the lower court by
awarding the payment of rents per annum and the return of P30,000.00 and not allowing the plaintiffsappellants to re-acquire the four (4) hectares, more or less upon payment of one hundred thousand pesos
(P100,000.00) as shown in Exhibit "D". 14
The Court's Ruling
The petition is bereft of merit.
First Issue: Are Exhibits "C" and "D" Valid and Enforceable?
The petitioner-spouses plead for the enforcement of their agreement with private respondents as contained in
Exhibits "C" and "D," and seek damages for the latter's alleged breach thereof. In Exhibit C, which was a
private handwritten document labeled by the parties as Resibo ti Katulagan or Receipt of Agreement, the
petitioners appear to have "sold" to private respondents the parcels of land in controversy covered by TCT
No. T-74950 and TCT No. T-100945. On the other hand, Exhibit D, which was also a private handwritten
document in Ilocano and labeled as Kasuratan, private respondents agreed that Conchita Nool "can acquire
back or repurchase later on said land when she has the money." 15
In seeking to enforce her alleged right to repurchase the parcels of land, Conchita (joined by her copetitioner-husband) invokes Article 1370 of the Civil Code which mandates that "(i)f the terms of a contract
are clear and leave no doubt upon the intention of the contracting parties, the literal meaning of its
stipulations shall control." Hence, petitioners contend that the Court of Appeals erred in affirming the trial
court's finding and conclusion that said Exhibits C and D were "not merely voidable but utterly void and
inexistent."

We should however add that Dignos did not cite its basis for ruling that a "sale is null and void" where the
sellers "were no longer the owners" of the property. Such a situation (where the sellers were no longer
owners) does not appear to be one of the void contracts enumerated in Article 1409 of the Civil
Code. 18 Moreover, the Civil Code 19itself recognizes a sale where the goods are to be "acquired . . . by the
seller after the perfection of the contract of sale," clearly implying that a sale is possible even if the seller
was not the owner at the time of sale, provided he acquires title to the property later on.
In the present case however, it is likewise clear that the sellers can no longer deliver the object of the sale to
the buyers, as the buyers themselves have already acquired title and delivery thereof from the rightful owner,
the DBP. Thus, such contract may be deemed to be inoperative 20 and may thus fall, by analogy, under item
no. 5 of Article 1409 of the Civil Code: "Those which contemplate an impossible service." Article 1459 of
the Civil Code provides that "the vendor must have a right to transfer the ownership thereof [object of the
sale] at the time it is delivered." Here, delivery of ownership is no longer possible. It has become impossible.
Furthermore, Article 1505 of the Civil Code provides that "where goods are sold by a person who is not the
owner thereof, and who does not sell them under authority or with consent of the owner, the buyer acquires
no better title to the goods than the seller had, unless the owner of the goods is by his conduct precluded
from denying the seller's authority to sell." Here, there is no allegation at all that petitioners were authorized
by DBP to sell the property to the private respondents. Jurisprudence, on the other hand, teaches us that "a
person can sell only what he owns or is authorized to sell; the buyer can as a consequence acquire no more
than what the seller can legally transfer." 21 No one can give what he does not have nono dat quod non
habet. On the other hand, Exhibit D presupposes that petitioners could repurchase the property that they
"sold" to private respondents. As petitioners "sold" nothing, it follows that they can also "repurchase"
nothing. Nothing sold, nothing to repurchase. In this light, the contract of repurchase is also inoperative
and by the same analogy, void.
Contract of Repurchase
Dependent on Validity of Sale
As borne out by the evidence on record, the private respondents bought the two parcels of land directly from
DBP on April 1, 1985 after discovering that petitioners did not own said property, the subject of Exhibits C
and D executed on November 30, 1984. Petitioners, however, claim that they can exercise their alleged right
to "repurchase" the property, after private respondents had acquired the same from DBP. 22 We cannot accede
to this, for it clearly contravenes the intention of the parties and the nature of their agreement. Exhibit D
reads:
WRITING

We cannot sustain petitioners' view. Article 1370 of the Civil Code is applicable only to valid and
enforceable contracts. The Regional Trial Court and the Court of Appeals ruled that the principal contract of
sale contained in Exhibit C and the auxiliary contract of repurchase in Exhibit D are both void. This
conclusion of the two lower courts appears to find support in Dignos vs. Court of Appeals, 16 where the Court
held:
Be that as it may, it is evident that when petitioners sold said land to the Cabigas spouses, they were no
longer owners of the same and the sale is null and void.
In the present case, it is clear that the sellers no longer had any title to the parcels of land at the time of sale.
Since Exhibit D, the alleged contract of repurchase, was dependent on the validity of Exhibit C, it is itself
void. A void contract cannot give rise to a valid one. 17 Verily, Article 1422 of the Civil Code provides that
"(a) contract which is the direct result of a previous illegal contract, is also void and inexistent."

Nov. 30, 1984

That I, Anacleto Nool have bought from my sister Conchita Nool a land an area of four hectares (4 has.) in
the value of One Hundred Thousand (100,000.00) Pesos. It is our agreement as brother and sister that she
can acquire back or repurchase later on said land when she has the money. [Emphasis supplied].
As proof of this agreement we sign as brother and sister this written document this day of Nov. 30, 1984, at
District 4, San Manuel, Isabela.
Sgd ANACLETO NOOL
Anacleto Nool

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Sgd Emilio Paron

Hence, the Option to Repurchase executed by private respondent in the present case, was merely a promise
to sell, which must be governed by Article 1479 of the Civil Code which reads as follows:

Witness
Art. 1479. A promise to buy and sell a determinate thing for a price certain is reciprocally demandable.
Sgd Conchita Nool
Conchita Nool

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One "repurchases" only what one has previously sold. In other words, the right to repurchase presupposes a
valid contract of sale between the same parties. Undisputedly, private respondents acquired title to the
property from DBP, and not from petitioners.
Assuming arguendo that Exhibit D is separate and distinct from Exhibit C and is not affected by the nullity
of the latter, still petitioners do not thereby acquire a right to repurchase the property. In that scenario,
Exhibit D ceases to be a "right to repurchase" ancillary and incidental to the contract of sale; rather, it
becomes an accepted unilateral promise to sell. Article 1479 of the Civil Code, however, provides that "an
accepted unilateral promise to buy or sell a determinate thing for a price certain is binding upon the
promissor if the promise is supported by a consideration distinct from the price." In the present case, the
alleged written contract of repurchase contained in Exhibit D is bereft of any consideration distinct from the
price. Accordingly, as an independent contract, it cannot bind private respondents. The ruling
in Diamante vs. CA 24 supports this. In that case, the Court through Mr. Justice Hilario G. Davide, Jr.
explained:
Article 1601 of the Civil Code provides:
Conventional redemption shall take place when the vendor reserves the right to repurchase the thing sold,
with the obligation to comply with the provisions of article 1616 and other stipulations which may have been
agreed upon.
In Villarica, et al. Vs. Court of Appeals, et al., decided on 29 November 1968, or barely seven (7) days
before the respondent Court promulgated its decisions in this case, this Court, interpreting the above Article,
held:
The right of repurchase is not a right granted the vendor by the vendee in a subsequent instrument, but is a
right reserved by the vendor in the same instrument of sale as one of the stipulations of the contract. Once
the instrument of absolute sale is executed, the vendor can not longer reserve the right to repurchase, and any
right thereafter granted the vendor by the vendee in a separate instrument cannot be a right of repurchase but
some other right like the option to buy in the instant case. . . .
In the earlier case of Ramos, et al. vs. Icasiano, et al., decided in 1927, this Court had already ruled that "an
agreement to repurchase becomes a promise to sell when made after the sale, because when the sale is made
without such an agreement, the purchaser acquires the thing sold absolutely, and if he afterwards grants the
vendor the right to purchase, it is a new contract entered into by the purchaser, as absolute owner already of
the object. In that case the vendor has nor reserved to himself the right to repurchase.
In Vda. De Cruzo, et al. vs. Carriaga, et al. this Court found another occasion to apply the foregoing
principle.

An accepted unilateral promise to buy or to sell a determinate thing for a price certain is binding upon the
promissor if the promise is supported by a consideration distinct from the price.
Right to Repurchase Based on
Homestead or Trust Non-Existent
Petitioners also base their alleged right to repurchase on (1) Sec. 119 of the Public Land Act 25 and (2) an
implied trust relation as "brother and sister." 26
The Court notes that Victorino Nool and Francisco Nool mortgaged the land to DBP. The brothers, together
with Conchita Nool and Anacleto Nool, were all siblings and heirs qualified to repurchase the two parcels of
land under Sec. 119 of the Public Land Act which provides that "(e)very conveyance of land acquired under
the free patent or homestead provisions, when proper, shall be subject to repurchase by the applicant, his
widow or legal heirs, within a period of five years from the date of conveyance." Assuming the applicability
of this statutory provision to the case at bar, it is indisputable that Private Respondent Anacleto Nool already
repurchased from DBP the contested properties. Hence, there was no more right of repurchase that his sister
Conchita or brothers Victorino and Francisco could exercise. The properties were already owned by an heir
of the homestead grantee and the rationale of the provision to keep homestead lands within the family of the
grantee was thus fulfilled. 27
The claim of a trust relation is likewise without merit. The records show that private respondents did not
purchase the contested properties from DBP in trust for petitioners. The former, as previously mentioned, in
fact bought the land from DBP upon realization that the latter could not validly sell the same. Obviously,
petitioners bought it for themselves. There is no evidence at all in the records that they bought the land in
trust for private respondents. The fact that Anacleto Nool was the younger brother of Conchita Nool and that
they signed a contract of repurchase, which as discussed earlier was void, does not prove the existence of an
implied trust in favor of petitioners.
Second Issue: No Estoppel in Impugning the
Validity of Void Contracts
Petitioners argue that "when Anacleto Nool took the possession of the two hectares, more or less, and let the
other two hectares to be occupied and cultivated by plaintiffs-appellant, Anacleto Nool cannot later on
disclaim the terms or contions (sic) agreed upon and his actuation is within the ambit of estoppel . . . 28 We
disagree. The private respondents cannot be estopped from raising the defense of nullity of contract,
specially in this case where they acted in good faith, believing that indeed petitioners could sell the two
parcels of land in question. Article 1410 of the Civil Code mandates that "(t)he action or defense for the
declaration of the inexistence of a contract does not prescribe." It is a well-settled doctrine that "as between
parties to a contract, validity cannot be given to it by estoppel if it is prohibited by law or it is against public
policy (19 Am. Jur. 802). It is not within the competence of any citizen to barter away what public policy by
law seeks to preserve." 29 Thus, it is immaterial that private respondents initially acted to implement the
contract of sale, believing in good faith that the same was valid. We stress that a contract void at inception
cannot be validated by ratification or prescription and certainly cannot be binding on or enforceable against
private respondents. 30

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Third Issue: Return of P30,000.00 with Interest

and Payment of Rent
Petitioners further argue that it would be a "miscarriage of justice" to order them (1) to return the sum of
P30,000.00 to private respondents when allegedly it was Private Respondent Anacleto Nool who owed the
former a balance of P14,000.00 and (2) to order petitioners to pay rent when they "were allowed to cultivate
the said two hectares." 31
We are not persuaded. Based on the previous discussion, the balance of P14,000.00 under the void contract
of sale may not be enforced. Petitioners are the ones who have an obligation to return what they unduly and
improperly received by reason of the invalid contract of sale. Since they cannot legally give title to what they
"sold," they cannot keep the money paid for the object of the sale. It is basic that "(e)very person who
through an act of performance by another, or any other means, acquires or comes into possession of
something at the expense of the latter without just or legal ground, shall return the same." 32 Thus, if a void
contract has already "been performed, the restoration of what has been given is in order." 33 Corollarily and
as aptly ordered by respondent appellate court, interest thereon will run only from the time of private
respondents' demand for the return of this amount in their counterclaim. 34 In the same vein, petitioners'
possession and cultivation of the two hectares are anchored on private respondents' tolerance. Clearly, the
latter's tolerance ceased upon their counterclaim and demand on the former to vacate. Hence, their right to
possess and cultivate the land ipso facto ceased.
WHEREFORE, the petition is DENIED and the assailed Decision of the Court of Appeals affirming that of
the trial court is hereby AFFIRMED.
SO ORDERED.
Narvasa, C.J., Davide, Jr., Melo and Francisco, JJ., concur.

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