SALES

PARTIES TO A CONTRACT OF SALE

1. [G.R. No. 127540. October 17, 2001]
EUGENIO DOMINGO, CRISPIN MANGABAT and SAMUEL
CAPALUNGAN, petitioners, vs. HON. COURT OF APPEALS, FELIPE
C. RIGONAN and CONCEPCION R. RIGONAN, respondents.
EUGENIO DOMINGO, CRISPIN MANGABAT and SAMUEL
CAPALUNGAN, petitioners, vs. HON. COURT OF APPEALS, THE
DIRECTOR OF LANDS, and FELIPE C. RIGONAN and
CONCEPCION R. RIGONAN, respondents.
DECISION
QUISUMBING, J.:

This petition[1] seeks to annul the decision of the Court of Appeals dated
August 29, 1996, which set aside the decision of the Regional Trial Court of
Batac, Ilocos Norte, Branch 17, in Civil Case No. 582-17 for reinvindicacion
consolidated with Cadastral Case No. 1.[2] The petition likewise seeks to
annul the resolution dated December 11, 1996, denying petitioners motion
for reconsideration.

The facts of this case, culled from the records, are as follows:

Paulina Rigonan owned three (3) parcels of land, located at Batac and
Espiritu, Ilocos Norte, including the house and warehouse on one parcel. She
allegedly sold them to private respondents, the spouses Felipe and
Concepcion Rigonan, who claim to be her relatives. In 1966, herein
petitioners Eugenio Domingo, Crispin Mangabat and Samuel Capalungan,
who claim to be her closest surviving relatives, allegedly took possession of
the properties by means of stealth, force and intimidation, and refused to
vacate the same. Consequently, on February 2, 1976, herein respondent
Felipe Rigonan filed a complaint for reinvindicacion against petitioners in
the Regional Trial Court of Batac, Ilocos Norte. On July 3, 1977, he amended
the complaint and included his wife as co-plaintiff. They alleged that they

were the owners of the three parcels of land through the deed of sale
executed by Paulina Rigonan on January 28, 1965; that since then, they had
been in continuous possession of the subject properties and had introduced
permanent improvements thereon; and that defendants (now petitioners)
entered the properties illegally, and they refused to leave them when asked to
do so.

Herein petitioners, as defendants below, contested plaintiffs claims.

According to defendants, the alleged deed of absolute sale was void for being
spurious as well as lacking consideration. They said that Paulina Rigonan did
not sell her properties to anyone. As her nearest surviving kin within the fifth
degree of consanguinity, they inherited the three lots and the permanent
improvements thereon when Paulina died in 1966. They said they had been
in possession of the contested properties for more than 10 years. Defendants
asked for damages against plaintiffs.

During trial, Juan Franco, Notary Public Evaristo P. Tagatag[3] and plaintiff
Felipe Rigonan testified for plaintiffs (private respondents now).

Franco testified that he was a witness to the execution of the questioned deed
of absolute sale. However, when cross-examined and shown the deed he
stated that the deed was not the document he signed as a witness, but rather it
was the will and testament made by Paulina Rigonan.

Atty. Tagatag testified that he personally prepared the deed, he saw Paulina
Rigonan affix her thumbprint on it and he signed it both as witness and
notary public. He further testified that he also notarized Paulinas last will and
testament dated February 19, 1965. The will mentioned the same lots sold to
private respondents. When asked why the subject lots were still included in
the last will and testament, he could not explain. Atty. Tagatag also
mentioned that he registered the original deed of absolute sale with the
Register of Deeds.

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Plaintiff Felipe Rigonan claimed that he was Paulinas close relative. Their
fathers were first cousins. However, he could not recall the name of Paulinas
grandfather. His claim was disputed by defendants, who lived with Paulina as
their close kin. He admitted the discrepancies between the Register of Deeds
copy of the deed and the copy in his possession. But he attributed them to the
representative from the Office of the Register of Deeds who went to
plaintiffs house after that Office received a subpoena duces tecum.
According to him, the representative showed him blanks in the deed and then
the representative filled in the blanks by copying from his (plaintiffs) copy.

Counsel for defendants (petitioners herein) presented as witnesses Jose

Flores, the owner of the adjacent lot; Ruben Blanco, then acting Registrar of
Deeds in Ilocos Norte; and Zosima Domingo, wife of defendant Eugenio
Domingo.

Jose Flores testified that he knew defendants, herein petitioners, who had
lived on the land with Paulina Rigonan since he could remember and
continued to live there even after Paulinas death. He said he did not receive
any notice nor any offer to sell the lots from Paulina, contrary to what was
indicated in the deed of sale that the vendor had notified all the adjacent
owners of the sale. He averred he had no knowledge of any sale between
Paulina and private respondents.

On March 23, 1994, the trial court rendered judgment in favor of defendants
(now the petitioners). It disposed:

WHEREFORE, premises considered, judgment is hereby rendered in favor

of defendants and against the plaintiffs, and as prayed for, the Amended
Complaint is hereby DISMISSED.

Defendants are hereby declared, by virtue of intestate succession, the lawful

owners and possessors of the house including the bodega and the three (3)
parcels of land in suit and a Decree of Registration adjudicating the
ownership of the said properties to defendants is hereby issued.

The alleged deed of sale (Exhs. A, A-1, 1 and 1-a) is hereby declared null
and void and fake and the prayer for the issuance of a writ of preliminary
injunction is hereby denied.
Plaintiffs are hereby ordered to pay defendants:
a) P20,000.00 as moral damages;
b) P10,000.00 as exemplary damages;

Ruben Blanco, the acting Registrar of Deeds, testified that only the carbon
copy, also called a duplicate original, of the deed of sale was filed in his
office, but he could not explain why this was so.

c) P10,000.00 attorneys fees and other litigation expenses.

No pronouncement as to costs.[4]
Private respondents herein appealed to the Court of Appeals.

Zosima Domingo testified that her husband, Eugenio Domingo, was Paulinas
nephew. Paulina was a first cousin of Eugenios father. She also said that they
lived with Paulina and her husband, Jose Guerson, since 1956. They took
care of her, spent for her daily needs and medical expenses, especially when
she was hospitalized prior to her death. She stated that Paulina was never
badly in need of money during her lifetime.

On August 29, 1996, the CA reversed the trial courts decision, thus:

WHEREFORE, the decision dated March 23, 1994 is hereby SET ASIDE.
The plaintiffs-appellants Felipe Rigonan and Concepcion Rigonan are
declared the owners of the properties under litigation and the defendants-

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appellees are hereby ordered to VACATE the subject properties and
SURRENDER the possession thereof to the heirs of the plaintiffs-appellants.

Costs against the defendants-appellees.[5]

Hence, this petition assigning the following as errors:

I
THE RESPONDENT COURT OF APPEALS HAS DECIDED
QUESTIONS OF LEGAL SUBSTANCE AND SIGNIFICANCE NOT IN
ACCORDANCE WITH THE EVIDENCE, LAW AND WITH THE
APPLICABLE DECISIONS OF THIS HONORABLE COURT.
II
THAT THE FINDINGS OF RESPONDENT COURT OF APPEALS ARE
CONTRARY TO THOSE OF THE TRIAL COURT AND CLEARLY
VIOLATES THE RULE THAT THE FACTUAL FINDINGS OF TRIAL
COURTS ARE ENTITLED TO GREAT WEIGHT AND RESPECT ON
APPEAL, ESPECIALLY WHEN SAID FINDINGS ARE ESTABLISHED
BY UNREBUTTED TESTIMONIAL AND DOCUMENTARY
EVIDENCE.
III
THAT THE FINDINGS AND CONCLUSIONS OF RESPONDENT
COURT OF APPEALS ARE GROUNDED ENTIRELY ON
SPECULATIONS, SURMISES, CONJECTURES, OR ON INFERENCES
MANIFESTLY MISTAKEN.
IV
THAT THE RESPONDENT COURT OF APPEALS MANIFESTLY
OVERLOOKED CERTAIN RELEVANT FACTS NOT DISPUTED BY
THE PARTIES AND WHICH, IF PROPERLY CONSIDERED, WOULD
JUSTIFY A DIFFERENT CONCLUSION.

V
THAT THE FINDINGS OF FACT OF RESPONDENT COURT OF
APPEALS ARE PREMISED ON SUPPOSED ABSENCE OF EVIDENCE
BUT IS CONTRADICTED BY THE EVIDENCE ON RECORD THUS
CONSTITUTES GRAVE ABUSE OF DISCRETION.[6]
The basic issue for our consideration is, did private respondents sufficiently
establish the existence and due execution of the Deed of Absolute and
Irrevocable Sale of Real Property? Marked as Exhibits A, A-1, 1 and 1-a, this
deed purportedly involved nine (9) parcels of land, inclusive of the three (3)
parcels in dispute, sold at the price of P850 by Paulina Rigonan to private
respondents on January 28, 1965, at Batac, Ilocos Norte.[7] The trial court
found the deed fake, being a carbon copy with no typewritten original
presented; and the court concluded that the documents execution was tainted
with alterations, defects, tamperings, and irregularities which render it null
and void ab initio.[8]

Petitioners argue that the Court of Appeals erred in not applying the doctrine
that factual findings of trial courts are entitled to great weight and respect on
appeal, especially when said findings are established by unrebutted
testimonial and documentary evidence. They add that the Court of Appeals,
in reaching a different conclusion, had decided the case contrary to the
evidence presented and the law applicable to the case. Petitioners maintain
that the due execution of the deed of sale was not sufficiently established by
private respondents, who as plaintiffs had the burden of proving it. First, the
testimonies of the two alleged instrumental witnesses of the sale, namely,
Juan Franco and Efren Sibucao, were dispensed with and discarded when
Franco retracted his oral and written testimony that he was a witness to the
execution of the subject deed. As a consequence, the appellate court merely
relied on Atty. Tagatags (the notary public) testimony, which was incredible
because aside from taking the double role of a witness and notary public, he
was a paid witness. Further his testimony, that the subject deed was executed
in the house of Paulina Rigonan, was rebutted by Zosima Domingo, Paulinas
housekeeper, who said that she did not see Atty. Tagatag, Juan Franco and
Efren Sibucao in Paulinas house on the alleged date of the deeds execution.

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Secondly, petitioners said that private respondents failed to account for the
typewritten original of the deed of sale and that the carbon copy filed with
the Register of Deeds was only a duplicate which contained insertions and
erasures. Further, the carbon copy was without an affidavit of explanation, in
violation of the Administrative Code as amended, which requires that if the
original deed of sale is not presented or available upon registration of the
deed, the carbon copy or so-called duplicate original must be accompanied
by an affidavit of explanation, otherwise, registration must be denied.[9]

Thirdly, petitioners aver that the consideration of only P850 for the parcels of
land sold, together with a house and a warehouse, was another indication that
the sale was fictitious because no person who was financially stable would
sell said property at such a grossly inadequate consideration.

due to inadvertence. Petitioners ask for the Courts indulgence for anyway
there was substantial compliance with Revised Circular No. 28-91.

On the contention that here only factual issues had been raised, hence not the
proper subject for review by this Court, petitioners reply that this general rule
admits of exceptions, as when the factual findings of the Court of Appeals
and the trial court are contradictory; when the findings are grounded entirely
on speculations, surmises or conjectures; and when the Court of Appeals
overlooked certain relevant facts not disputed by the parties which if properly
considered would justify a different conclusion. All these, according to
petitioners, are present in this case.

Before proceeding to the main issue, we shall first settle procedural issues
raised by private respondents.
Lastly, petitioners assert that there was abundant evidence that at the time of
the execution of the deed of sale, Paulina Rigonan was already senile. She
could not have consented to the sale by merely imprinting her thumbmark on
the deed.

In their comment, private respondents counter that at the outset the petition
must be dismissed for it lacks a certification against forum-shopping.
Nonetheless, even disregarding this requirement, the petition must still be
denied in due course for it does not present any substantial legal issue, but
factual or evidentiary ones which were already firmly resolved by the Court
of Appeals based on records and the evidence presented by the parties.
Private respondents claim that the factual determination by the trial court
lacks credibility for it was made by the trial judge who presided only in one
hearing of the case. The trial judge could not validly say that the deed of
absolute sale was fake because no signature was forged, according to private
respondents; and indeed a thumbmark, said to be the sellers own, appears
thereon.

In their reply, petitioners said that the copy of the petition filed with this
Court was accompanied with a certification against forum shopping. If
private respondents copy did not contain same certification, this was only

While the trial judge deciding the case presided over the hearings of the case
only once, this circumstance could not have an adverse effect on his decision.
The continuity of a court and the efficacy of its proceedings are not affected
by the death, resignation or cessation from the service of the presiding judge.
A judge may validly render a decision although he has only partly heard the
testimony of the witnesses.[10] After all, he could utilize and rely on the
records of the case, including the transcripts of testimonies heard by the
former presiding judge.

On the matter of the certification against forum-shopping, petitioners aver

that they attached one in the copy intended for this Court. This is substantial
compliance. A deviation from a rigid enforcement of the rules may be
allowed to attain their prime objective for, after all, the dispensation of
justice is the core reason for the courts existence.[11]

While the issues raised in this petition might appear to be mainly factual, this
petition is properly given due course because of the contradictory findings of
the trial court and the Court of Appeals. Further, the latter court apparently

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overlooked certain relevant facts which justify a different conclusion.[12]
Moreover, a compelling sense to make sure that justice is done, and done
rightly in the light of the issues raised herein, constrains us from relying on
technicalities alone to resolve this petition.

and June 10, 1966, 3:16 P.M.,[18] and different entry numbers: 66246,
74389[19] and 64369.[20] The deed was apparently registered long after its
alleged date of execution and after Paulinas death on March 20, 1966.[21]
Admittedly, the alleged vendor Paulina Rigonan was not given a copy.[22]

Now, on the main issue. Did private respondents establish the existence and
due execution of the deed of sale? Our finding is in the negative. First, note
that private respondents as plaintiffs below presented only a carbon copy of
this deed. When the Register of Deeds was subpoenaed to produce the deed,
no original typewritten deed but only a carbon copy was presented to the trial
court. Although the Court of Appeals calls it a duplicate original, the deed
contained filled in blanks and alterations. None of the witnesses directly
testified to prove positively and convincingly Paulinas execution of the
original deed of sale. The carbon copy did not bear her signature, but only
her alleged thumbprint. Juan Franco testified during the direct examination
that he was an instrumental witness to the deed. However, when crossexamined and shown a copy of the subject deed, he retracted and said that
said deed of sale was not the document he signed as witness.[13] He declared
categorically he knew nothing about it.[14]

Furthermore, it appears that the alleged vendor was never asked to vacate the
premises she had purportedly sold. Felipe testified that he had agreed to let
Paulina stay in the house until her death.[23] In Alcos v. IAC, 162 SCRA
823 (1988), the buyers immediate possession and occupation of the property
was deemed corroborative of the truthfulness and authenticity of the deed of
sale. The alleged vendors continued possession of the property in this case
throws an inverse implication, a serious doubt on the due execution of the
deed of sale. Noteworthy, the same parcels of land involved in the alleged
sale were still included in the will subsequently executed by Paulina and
notarized by the same notary public, Atty. Tagatag.[24] These circumstances,
taken together, militate against unguarded acceptance of the due execution
and genuineness of the alleged deed of sale.

We note that another witness, Efren Sibucao, whose testimony should have
corroborated Atty. Tagatags, was not presented and his affidavit was
withdrawn from the court,[15] leaving only Atty. Tagatags testimony, which
aside from being uncorroborated, was self-serving.

Secondly, we agree with the trial court that irregularities abound regarding
the execution and registration of the alleged deed of sale. On record, Atty.
Tagatag testified that he himself registered the original deed with the
Register of Deeds.[16] Yet, the original was nowhere to be found and none
could be presented at the trial. Also, the carbon copy on file, which is
allegedly a duplicate original, shows intercalations and discrepancies when
compared to purported copies in existence. The intercalations were allegedly
due to blanks left unfilled by Atty. Tagatag at the time of the deeds
registration. The blanks were allegedly filled in much later by a
representative of the Register of Deeds. In addition, the alleged other copies
of the document bore different dates of entry: May 16, 1966, 10:20 A.M.[17]

Thirdly, we have to take into account the element of consideration for the
sale. The price allegedly paid by private respondents for nine (9) parcels,
including the three parcels in dispute, a house and a warehouse, raises further
questions. Consideration is the why of a contract, the essential reason which
moves the contracting parties to enter into the contract.[25] On record, there
is unrebutted testimony that Paulina as landowner was financially well off.
She loaned money to several people.[26] We see no apparent and compelling
reason for her to sell the subject parcels of land with a house and warehouse
at a meager price of P850 only.

In Rongavilla vs. CA, 294 SCRA 289 (1998), private respondents were in
their advanced years, and were not in dire need of money, except for a small
amount of P2,000 which they said were loaned by petitioners for the repair of
their houses roof. We ruled against petitioners, and declared that there was
no valid sale because of lack of consideration.

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In the present case, at the time of the execution of the alleged contract,
Paulina Rigonan was already of advanced age and senile. She died an
octogenarian on March 20, 1966, barely over a year when the deed was
allegedly executed on January 28, 1965, but before copies of the deed were
entered in the registry allegedly on May 16 and June 10, 1966. The general
rule is that a person is not incompetent to contract merely because of
advanced years or by reason of physical infirmities.[27] However, when such
age or infirmities have impaired the mental faculties so as to prevent the
person from properly, intelligently, and firmly protecting her property rights
then she is undeniably incapacitated. The unrebutted testimony of Zosima
Domingo shows that at the time of the alleged execution of the deed, Paulina
was already incapacitated physically and mentally. She narrated that Paulina
played with her waste and urinated in bed. Given these circumstances, there
is in our view sufficient reason to seriously doubt that she consented to the
sale of and the price for her parcels of land. Moreover, there is no receipt to
show that said price was paid to and received by her. Thus, we are in
agreement with the trial courts finding and conclusion on the matter:

The whole evidence on record does not show clearly that the fictitious
P850.00 consideration was ever delivered to the vendor. Undisputably, the
P850.00 consideration for the nine (9) parcels of land including the house
and bodega is grossly and shockingly inadequate, and the sale is null and
void ab initio.[28]

WHEREFORE, the petition is GRANTED. The decision and resolution of

the Court of Appeals dated August 29, 1996 and December 11, 1996,
respectively, are REVERSED and SET ASIDE. The decision of the Regional
Trial Court of Batac, Ilocos Norte, Branch 17, dated March 23, 1994, is
REINSTATED.

Costs against private respondents.

SO ORDERED.

SALES
2. Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-15113

January 28, 1961

ANTONIO MEDINA, petitioner,

vs.
COLLECTOR OF INTERNAL REVENUE and THE COURT OF TAX
APPEALS respondents.
Eusebio D. Morales for petitioner.
Office of the Solicitor General for respondents.

either received by Osorio for petitioner or deposited by said agent in

petitioner's current account with the Philippine National Bank.

On the thesis that the sales made by petitioner to his wife were null and void
pursuant to the provisions of Article 1490 of the Civil Code of the
Philippines (formerly, Art. 1458, Civil Code of 1889), the Collector
considered the sales made by Mrs. Medina as the petitioner's original sales
taxable under Section 186 of the National Internal Revenue Code and,
therefore, imposed a tax assessment on petitioner, calling for the payment of
P4,553.54 as deficiency sales taxes and surcharges from 1949 to 1952. This
same assessment of September 26, 1953 sought also the collection of another
sum of P643.94 as deficiency sales tax and surcharge based on petitioner's
quarterly returns from 1946 to 1952.

REYES, J.B.L. J.:

Petition to review a decision of the Court of Tax Appeals upholding a tax

assessment of the Collector of Internal Revenue except with respect to the
imposition of so-called compromise penalties, which were set aside.

The records show that on or about May 20, 1944, petitioning taxpayer
Antonio Medina married Antonia Rodriguez. Before 1946, the spouses had
neither property nor business of their own. Later, however, petitioner
acquired forest, concessions in the municipalities of San Mariano and
Palanan in the Province of Isabela. From 1946 to 1948, the logs cut and
removed by the petitioner from his concessions were sold to different persons
in Manila through his agent, Mariano Osorio.

On November 30, 1953, petitioner protested the assessment; however,

respondent Collector insisted on his demand. On July 9, 1954, petitioner filed
a petition for reconsideration revealing for the first time the existence of an
alleged premarital agreement of complete separation of properties between
him and his wife, and contending that the assessment for the years 1946 to
1952 had already prescribed. After one hearing, the Conference Staff of the
Bureau of Internal Revenue eliminated the 50% fraud penalty and held that
the taxes assessed against him before 1948 had already prescribed. Based on
these findings, the Collector issued a modified assessment, demanding the
payment of only P3,325.68, computed as follows:

5% tax due on P7,209.83 -1949

P 360.49
5% tax due on 16,945.55 - 1950

Some time in 1949, Antonia R. Medina, petitioner's wife, started to engage in

business as a lumber dealer, and up to around 1952, petitioner sold to her
almost all the logs produced in his San Mariano, concession. Mrs. Medina, In
turn, sold in Manila the logs bought from her husband through the same
agent, Mariano Osorio. The proceeds were, upon instructions from petitioner,

847.28
5% tax due on 16,874.52 - 1951
843.75

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5% tax due on 11,009.94 - 1952

by the petitioner to his wife could be considered as his original taxable sales
under the provisions of Section 186 of the National Internal Revenue Code.

550.50
TOTAL sales tax due
P2,602.0
25% Surcharge thereon
650.51
Short taxes per quarterly returns, 3rd quarter, 1950
58.52
25% Surcharge thereon
14.63
TOTAL AMOUNT due & collectible
P3,325.68
Petitioner again requested for reconsideration, but respondent Collector, in
his letter of April 4, 1955, denied the same.

Petitioner appealed to the Court of Tax Appeals, which rendered judgment as

aforesaid. The Court's decision was based on two main findings, namely, (a)
that there was no premarital agreement of absolute separation of property
between the Medina spouse; and (b) assuming that there was such an
agreement, the sales in question made by petitioner to his wife were
fictitious, simulated, and not bona fide.

In his petition for review to this Court, petitioner raises several assignments
of error revolving around the central issue of whether or not the sales made

Relying mainly on testimonial evidence that before their marriage, he and his
wife executed and recorded a prenuptial agreement for a regime of complete
separation of property, and that all trace of the document was lost on account
of the war, petitioner imputes lack of basis for the tax court's factual finding
that no agreement of complete separation of property was ever executed by
and between the spouses before their marriage. We do not think so. Aside
from the material inconsistencies in the testimony of petitioner's witnesses
pointed out by the trial court, the circumstantial evidence is against
petitioner's claim. Thus, it appears that at the time of the marriage between
petitioner and his wife, they neither had any property nor business of their
own, as to have really urged them to enter into the supposed property
agreement. Secondly, the testimony that the separation of property agreement
was recorded in the Registry of Property three months before the marriage, is
patently absurd, since such a prenuptial agreement could not be effective
before marriage is celebrated, and would automatically be cancelled if the
union was called off. How then could it be accepted for recording prior to the
marriage? In the third place, despite their insistence on the existence of the
ante nuptial contract, the couple, strangely enough, did not act in accordance
with its alleged covenants. Quite the contrary, it was proved that even during
their taxable years, the ownership, usufruct, and administration of their
properties and business were in the husband. And even when the wife was
engaged in lumber dealing, and she and her husband contracted sales with
each other as aforestated, the proceeds she derived from her alleged
subsequent disposition of the logs incidentally, by and through the same
agent of her husband, Mariano Osorio were either received by Osorio for
the petitioner or deposited by said agent in petitioner's current account with
the Philippine National Bank. Fourth, although petitioner, a lawyer by
profession, already knew, after he was informed by the Collector on or about
September of 1953, that the primary reason why the sales of logs to his wife
could not be considered as the original taxable sales was because of the
express prohibition found in Article 1490 of the Civil Code of sales between
spouses married under a community system; yet it was not until July of 1954
that he alleged, for the first time, the existence of the supposed property
separation agreement. Finally, the Day Book of the Register of Deeds on
which the agreement would have been entered, had it really been registered
as petitioner insists, and which book was among those saved from the

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ravages of the war, did not show that the document in question was among
those recorded therein.

We have already ruled that when the credibility of witnesses is the one at
issue, the trial court's judgment as to their degree of credence deserves
serious consideration by this Court (Collector vs. Bautista, et al., G.R. Nos.
L-12250 & L-12259, May 27, 1959). This is all the more true in this case
because not every copy of the supposed agreement, particularly the one that
was said to have been filed with the Clerk of Court of Isabela, was accounted
for as lost; so that, applying the "best evidence rule", the court did right in
giving little or no credence to the secondary evidence to prove the due
execution and contents of the alleged document (see Comments on the Rules
of Court, Moran, 1957 Ed., Vol. 3, pp. 10.12).

The foregoing findings notwithstanding, the petitioner argues that the

prohibition to sell expressed under Article 1490 of the Civil Code has no
application to the sales made by said petitioner to his wife, because said
transactions are contemplated and allowed by the provisions of Articles 7 and
10 of the Code of Commerce. But said provisions merely state, under certain
conditions, a presumption that the wife is authorized to engage in business
and for the incidents that flow therefrom when she so engages therein. But
the transactions permitted are those entered into with strangers, and do not
constitute exceptions to the prohibitory provisions of Article 1490 against
sales between spouses.

Petitioner's contention that the respondent Collector can not assail the
questioned sales, he being a stranger to said transactions, is likewise
untenable. The government, as correctly pointed out by the Tax Court, is
always an interested party to all matters involving taxable transactions and,
needless to say, qualified to question their validity or legitimacy whenever
necessary to block tax evasion.

Contracts violative of the provisions of Article 1490 of the Civil Code are
null and void (Uy Sui Pin vs. Cantollas, 70 Phil. 55; Uy Coque vs. Sioca 45
Phil. 43). Being void transactions, the sales made by the petitioner to his wife

were correctly disregarded by the Collector in his tax assessments that

considered as the taxable sales those made by the wife through the spouses'
common agent, Mariano Osorio. In upholding that stand, the Court below
committed no error.

It is also the petitioner's contention that the lower court erred in using
illegally seized documentary evidence against him. But even assuming
arguendo the truth of petitioner's charge regarding the seizure, it is now
settled in this jurisdiction that illegally obtained documents and papers are
admissible in evidence, if they are found to be competent and relevant to the
case (see Wong & Lee vs. Collector of Internal Revenue, G.R. No. L-10155,
August 30, 1958). In fairness to the Collector, however, it should be stated
that petitioner's imputation is vehemently denied by him, and relying on
Sections 3, 9, 337 and 338 of the Tax Code and the pertinent portions of
Revenue Regulations No. V-1 and citing this Court's ruling in U.S. vs.
Aviado, 38 Phil. 10, the Collector maintains that he and other internal
revenue officers and agents could require the production of books of
accounts and other records from a taxpayer. Having arrived at the foregoing
conclusion, it becomes unnecessary to discuss the other issues raised, which
are but premised on the assumption that a premarital agreement of total
separation of property existed between the petitioner and his wife.

WHEREFORE, the decision appealed from is affirmed, with costs against

the petitioner.

Separate Opinions
CONCEPCION, J., concurring:
I concur in the result. I do not share the view that documents and papers
illegally obtained are admissible in evidence, if competent and relevant to the
case. In this connection, I believe in the soundness of the following
observations of the Supreme Court of the United States in Weeks v. United
States (232 US 383, 58 L. ed. 652, 34 S. Ct. 341):1

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The effect of the Fourth Amendment is to put the courts of the United States
and Federal officials, in the exercise of their power and authority, under
limitations and restraints as to the exercise of such power and authority, an to
forever secure the people, their persons, houses, papers, and effects against
all unreasonable searches and seizures under the guise of law. This protection
reaches all alike, whether accused of crime or not, and the duty of giving to it
force and effect is obligatory upon all entrusted under our Federal system
with the enforcement of the laws. The tendency of those who execute the
criminal laws of the country to obtain conviction by means of unlawful
seizures and enforced confessions, the latter often obtained after subjecting
accused persons to unwarranted practices destructive of rights secured by the
Federal Constitution, should find no sanction in the judgments of the courts
which are charged at all times with the support of the Constitution and to
which people of all conditions have a right to appeal for the maintenance of
such fundamental rights.

xxx

xxx

xxx

If letters and private documents can thus be seized and held and used in
evidence, against a citizen accused of an offense, the protection of the
Fourth. Amendment declaring his right to be secured against such searches
and seizures is of no value, and, so far as those thus placed are concerned
well be stricken from the Constitution. The efforts of the courts and their
officials to bring the guilty to punishment, praiseworthy as they are, are not
to be aided by the sacrifice of those great principles established by years of
endeavor and suffering which have resulted in their embodiment in the
fundamental law of the land." as applied and amplified in Elkins v. United
States (June 27, 1960), 4 L. ed. 1669.

SALES
3. EN BANC
[G.R. No. L-28771. March 31, 1971.]

donations should subsist lest the condition of those who incurred guilt should
turn out to be better. So long as marriage remains the cornerstone of our
family law, reason and morality alike demand that the disabilities attached to
marriage should likewise attach to concubinage.

CORNELIA MATABUENA, Plaintiff-Appellant, v. PETRONILA

CERVANTES, Defendant-Appellee.
Alegre, Roces, Salazar & Saez, for Plaintiff-Appellant.
Fernando Gerona, Jr., for Defendant-Appellee.

SYLLABUS

1. CIVIL LAW; PROPERTY RELATIONS BETWEEN HUSBAND AND

WIFE; DONATIONS BY REASON OF MARRIAGE; PROHIBITION
AGAINST DONATION BETWEEN SPOUSES DURING MARRIAGE;
APPLICABLE TO COMMON LAW RELATIONSHIP. While Art. 133
of the Civil Code considers as void a "donation between the spouses during
the marriage", policy considerations of the most exigent character as well as
the dictates of morality require that the same prohibition should apply to a
common-law relationship. A 1954 Court of Appeals decision Buenaventura
v. Bautista, (50 O.G. 3679) interpreting a similar provision of the old Civil
Code speaks unequivocally. If the policy of the law is, in the language of the
opinion of the then Justice J.B.L. Reyes of that Court, "to prohibit donations
in favor of the other consort and his descendants because of fear of undue
and improper pressure and influence upon the donor, a prejudice deeply
rooted in our ancient law; porque no se engaen despojandose el uno al otro
por amor que han de consuno, [according to] the Partidas (Part. IV, Tit. Xl,
LAW IV), reiterating the rationale Ne mutuato amore invicem spoliarentur
of the Pandects (Bk 24, Tit. I, De donat, inter virum et uxorem); then there is
every reason to apply the same prohibitive policy to persons living together
as husband and wife without benefit of nuptials. For it is not to be doubted
that assent to such irregular connection for thirty years bespeaks greater
influence of one party over the other, so that the danger that the law seeks to
avoid is correspondingly increased. Moreover, as already pointed out by
Ulpian (in his lib. 32 ad Sabinum, fr. 1), it would not be just that such

2. ID.; SUCCESSION; INTESTATE SUCCESSION; SURVIVING

SPOUSE; RULE WHERE A SISTER SURVIVES WITH THE WIDOW.
The lack of validity of the donation made b~ the deceased to defendant
Petronila Cervantes does not necessarily result in plaintiff having exclusive
right to the disputed property. Prior to the death of Felix Matabuena, the
relationship between him and the defendant was legitimated by their
marriage on March 28. 1962. She is therefore his widow. As provided in the
Civil Code, she is entitled to one-half of the inheritance and the plaintiff, as
the surviving sister to the other half.

DECISION

FERNANDO, J.:

A question of first impression is before this Court in this litigation. We are

called upon to decide whether the ban on a donation between the spouses
during a marriage applies to a common-law relationship. 1 The plaintiff, now
appellant Cornelia Matabuena, a sister to the deceased Felix Matabuena,
maintains that a donation made while he was living maritally without benefit
of marriage to defendant, now appellee Petronila Cervantes, was void.
Defendant would uphold its validity. The lower court, after noting that it was
made at a time before defendant was married to the donor, sustained the
latters stand. Hence this appeal. The question, as noted, is novel in character,
this Court not having had as yet the opportunity of ruling on it. A 1954
decision of the Court of Appeals, Buenaventura v. Bautista, 2 by the then
Justice J. B. L. Reyes, who was appointed to this Court later that year, is
indicative of the appropriate response that should be given. The conclusion
reached therein is that a donation between common-law spouses falls within
the prohibition and is "null and void as contrary to public policy." 3 Such a

SALES
view merits fully the acceptance of this Court. The decision must be
reversed.

In the decision of November 23, 1965, the lower court, after stating that in
plaintiffs complaint alleging absolute ownership of the parcel of land in
question, she specifically raised the question that the donation made by Felix
Matabuena to defendant Petronila Cervantes was null and void under the
aforesaid article of the Civil Code and that defendant on the other hand did
assert ownership precisely because such a donation was made in 1956 and
her marriage to the deceased did not take place until 1962, noted that when
the case was called for trial on November 19, 1965, there was stipulation of
facts which it quoted. 4 Thus: "The plaintiff and the defendant assisted by
their respective counsels, jointly agree and stipulate: (1) That the deceased
Felix Matabuena owned the property in question; (2) That said Felix
Matabuena executed a Deed of Donation inter vivos in favor of Defendant,
Petronila Cervantes over the parcel of land in question on February 20, 1956,
which same donation was accepted by defendant; (3) That the donation of the
land to the defendant which took effect immediately was made during the
common law relationship as husband and wife between the defendant-done
and the now deceased donor and later said donor and done were married on
March 28, 1962; (4) That the deceased Felix Matabuena died intestate on
September 13, 1962; (5) That the plaintiff claims the property by reason of
being the only sister and nearest collateral relative of the deceased by virtue
of an affidavit of self-adjudication executed by her in 1962 and had the land
declared in her name and paid the estate and inheritance taxes thereon" 5

The judgment of the lower court on the above facts was adverse to plaintiff.
It reasoned out thus: "A donation under the terms of Article 133 of the Civil
Code is void if made between the spouses during the marriage. When the
donation was made by Felix Matabuena in favor of the defendant on
February 20, 1956, Petronila Cervantes and Felix Matabuena were not yet
married. At that time they were not spouses. They became spouses only
when they married on March 28, 1962, six years after the deed of donation
had been executed." 6

We reach a different conclusion. While Art. 133 of the Civil Code considers
as void a "donation between the spouses during the marriage," policy
considerations of the most exigent character as well as the dictates of
morality require that the same prohibition should apply to a common-law
relationship. We reverse.

1. As announced at the outset of this opinion, a 1954 Court of Appeals

decision, Buenaventura v. Bautista, 7 interpreting a similar provision of the
old Civil Code 8 speaks unequivocally. If the policy of the law is, in the
language of the opinion of the then Justice J.B.L. Reyes of that Court, "to
prohibit donations in favor of the other consort and his descendants because
of fear of undue and improper pressure and influence upon the donor, a
prejudice deeply rooted in our ancient law; porque no se engaen
despojandose el uno al otro por amor que han de consuno [according to] the
Partidas (Part IV, Tit. XI, LAW IV), reiterating the rationale Ne mutuato
amore invicem spoliarentur of the Pandects (Bk. 24, Tit. 1, De donat, inter
virum et uxorem); then there is every reason to apply the same prohibitive
policy to persons living together as husband and wife without the benefit of
nuptials. For it is not to be doubted that assent to such irregular connection
for thirty years bespeaks greater influence of one party over the other, so that
the danger that the law seeks to avoid is correspondingly increased.
Moreover, as already pointed out by Ulpian (in his lib. 32 ad Sabinum, fr. 1),
it would not be just that such donations should subsist, lest the condition of
those who incurred guilt should turn out to be better. So long as marriage
remains the cornerstone of our family law, reason and morality alike demand
that the disabilities attached to marriage should likewise attach to
concubinage." 9

2. It is hardly necessary to add that even in the absence of the above

pronouncement, any other conclusion cannot stand the test of scrutiny. It
would be to indict the framers of the Civil Code for a failure to apply a
laudable rule to a situation which in its essentials cannot be distinguished.
Moreover, if it is at all to be differentiated, the policy of the law which
embodies a deeply-rooted notion of what is just and what is right would be
nullified if such irregular relationship instead of being visited with
disabilities would be attended with benefits. Certainly a legal norm should
not be susceptible to such a reproach. If there is ever any occasion where the
principle of statutory construction that what is within the spirit of the law is

SALES
as much a part of it as what is written, this is it. Otherwise the basic purpose
discernible in such codal provision would not be attained. Whatever omission
may be apparent in an interpretation purely literal of the language used must
be remedied by an adherence to its avowed objective. In the language of
Justice Pablo: "El espiritu que informa la ley debe ser la luz que ha de guiar a
los tribunales en la aplicacin de sus disposiciones. 10

3. The lack of validity of the donation made by the deceased to defendant

Petronila Cervantes does not necessarily result in plaintiff having exclusive
right to the disputed property. Prior to the death of Felix Matabuena, the
relationship between him and the defendant was legitimated by their
marriage on March 28, 1962. She is therefore his widow. As provided for in
the Civil Code, she is entitled to one-half of the inheritance and the plaintiff,
as the surviving sister, to the other half. 11

WHEREFORE, the lower court decision of November 23, 1965 dismissing

the complaint with costs is reversed. The questioned donation is declared
void, with the rights of plaintiff and defendant as pro indiviso heirs to the
property in question recognized. The case is remanded to the lower court for
its appropriate disposition in accordance with the above opinion. Without
pronouncement as to costs.

SALES
4. Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-57499

In 1978, FERNANDO abandoned his family and was living with private
respondent Corazon DAGUINES. During the pendency of this appeal, they
were convicted of concubinage in a judgment rendered on October 27, 1981
by the then Court of First Instance of Pangasinan, Branch II, which judgment
has become final.

June 22, 1984

MERCEDES CALIMLIM- CANULLAS, petitioner,

vs.
HON. WILLELMO FORTUN, Judge, Court of First instance of
Pangasinan, Branch I, and CORAZON DAGUINES, respondents.

On April 15, 1980, FERNANDO sold the subject property with the house
thereon to DAGUINES for the sum of P2,000.00. In the document of sale,
FERNANDO described the house as "also inherited by me from my deceased
parents."

Fernandez Law Offices for petitioner.

Francisco Pulido for respondents.

MELENCIO-HERRERA, J.:

Petition for Review on certiorari assailing the Decision, dated October 6,

1980, and the Resolution on the Motion for Reconsideration, dated
November 27, 1980, of the then Court of First Instance of Pangasinan,
Branch I, in Civil Case No. 15620 entitled "Corazon DAGUINES vs.
MERCEDES Calimlim-Canullas," upholding the sale of a parcel of land in
favor of DAGUINES but not of the conjugal house thereon'

The background facts may be summarized as follows: Petitioner

MERCEDES Calimlim-Canullas and FERNANDO Canullas were married
on December 19, 1962. They begot five children. They lived in a small house
on the residential land in question with an area of approximately 891 square
meters, located at Bacabac, Bugallon, Pangasinan. After FERNANDO's
father died in 1965, FERNANDO inherited the land.

Unable to take possession of the lot and house, DAGUINES initiated a

complaint on June 19, 1980 for quieting of title and damages against
MERCEDES. The latter resisted and claimed that the house in dispute where
she and her children were residing, including the coconut trees on the land,
were built and planted with conjugal funds and through her industry; that the
sale of the land together with the house and improvements to DAGUINES
was null and void because they are conjugal properties and she had not given
her consent to the sale,

In its original judgment, respondent Court principally declared DAGUINES

"as the lawful owner of the land in question as well as the one-half () of the
house erected on said land." Upon reconsideration prayed for by
MERCEDES, however, respondent Court resolved:

WHEREFORE, the dispositive portion of the Decision of this Court,

promulgated on October 6, 1980, is hereby amended to read as follows:

(1)
Declaring plaintiff as the true and lawful owner of the land in
question and the 10 coconut trees;

SALES
(2)
Declaring as null and void the sale of the conjugal house to plaintiff
on April 15, 1980 (Exhibit A) including the 3 coconut trees and other crops
planted during the conjugal relation between Fernando Canullas (vendor) and
his legitimate wife, herein defendant Mercedes Calimlim- Canullas;

xxx

xxx

xxx

The issues posed for resolution are (1) whether or not the construction of a
conjugal house on the exclusive property of the husband ipso facto gave the
land the character of conjugal property; and (2) whether or not the sale of the
lot together with the house and improvements thereon was valid under the
circumstances surrounding the transaction.

In his commentary on the corresponding provision in the Spanish Civil Code

(Art. 1404), Manresa stated:

El articulo cambia la doctrine; los edificios construidos durante el

matrimonio en suelo propio de uno de los conjuges son gananciales,
abonandose el valor del suelo al conj uge a quien pertenezca.

It is true that in the case of Maramba vs. Lozano, 3 relied upon by respondent
Judge, it was held that the land belonging to one of the spouses, upon which
the spouses have built a house, becomes conjugal property only when the
conjugal partnership is liquidated and indemnity paid to the owner of the
land. We believe that the better rule is that enunciated by Mr. Justice J.B.L.
Reyes in Padilla vs. Paterno, 3 SCRA 678, 691 (1961), where the following
was explained:

The determination of the first issue revolves around the interpretation to be

given to the second paragraph of Article 158 of the Civil Code, which reads:

xxx

xxx

xxx

Buildings constructed at the expense of the partnership during the marriage

on land belonging to one of the spouses also pertain to the partnership, but
the value of the land shall be reimbursed to the spouse who owns the same.

We hold that pursuant to the foregoing provision both the land and the
building belong to the conjugal partnership but the conjugal partnership is
indebted to the husband for the value of the land. The spouse owning the lot
becomes a creditor of the conjugal partnership for the value of the lot, 1
which value would be reimbursed at the liquidation of the conjugal
partnership. 2

As to the above properties, their conversion from paraphernal to conjugal

assets should be deemed to retroact to the time the conjugal buildings were
first constructed thereon or at the very latest, to the time immediately before
the death of Narciso A. Padilla that ended the conjugal partnership. They can
not be considered to have become conjugal property only as of the time their
values were paid to the estate of the widow Concepcion Paterno because by
that time the conjugal partnership no longer existed and it could not acquire
the ownership of said properties. The acquisition by the partnership of these
properties was, under the 1943 decision, subject to the suspensive condition
that their values would be reimbursed to the widow at the liquidation of the
conjugal partnership; once paid, the effects of the fulfillment of the condition
should be deemed to retroact to the date the obligation was constituted (Art.
1187, New Civil Code) ...

The foregoing premises considered, it follows that FERNANDO could not

have alienated the house and lot to DAGUINES since MERCEDES had not
given her consent to said sale. 4

SALES
Anent the second issue, we find that the contract of sale was null and void for
being contrary to morals and public policy. The sale was made by a husband
in favor of a concubine after he had abandoned his family and left the
conjugal home where his wife and children lived and from whence they
derived their support. That sale was subversive of the stability of the family,
a basic social institution which public policy cherishes and protects. 5

Article 1409 of the Civil Code states inter alia that: contracts whose cause,
object, or purpose is contrary to law, morals, good customs, public order, or
public policy are void and inexistent from the very beginning.

Article 1352 also provides that: "Contracts without cause, or with unlawful
cause, produce no effect whatsoever. The cause is unlawful if it is contrary to
law, morals, good customs, public order, or public policy."

Additionally, the law emphatically prohibits the spouses from selling

property to each other subject to certain exceptions. 6 Similarly, donations
between spouses during marriage are prohibited. 7 And this is so because if
transfers or con conveyances between spouses were allowed during marriage,
that would destroy the system of conjugal partnership, a basic policy in civil
law. It was also designed to prevent the exercise of undue influence by one
spouse over the other, 8 as well as to protect the institution of marriage,
which is the cornerstone of family law. The prohibitions apply to a couple
living as husband and wife without benefit of marriage, otherwise, "the
condition of those who incurred guilt would turn out to be better than those
in legal union." Those provisions are dictated by public interest and their
criterion must be imposed upon the wig of the parties. That was the ruling in
Buenaventura vs. Bautista, also penned by Justice JBL Reyes (CA) 50 O.G.
3679, and cited in Matabuena vs. Cervantes. 9 We quote hereunder the
pertinent dissertation on this point:

We reach a different conclusion. While Art. 133 of the Civil Code considers
as void a donation between the spouses during the marriage, policy
considerations of the most exigent character as wen as the dictates of

morality require that the same prohibition should apply to a common-law

relationship.

As announced in the outset of this opinion, a 1954 Court of Appeals decision,

Buenaventura vs. Bautista, 50 OG 3679, interpreting a similar provision of
the old Civil Code speaks unequivocally. If the policy of the law is, in the
language of the opinion of the then Justice J.B.L. Reyes of that Court, 'to
prohibit donations in favor of the other consort and his descendants because
of fear of undue influence and improper pressure upon the donor, a prejudice
deeply rooted in our ancient law, ..., then there is every reason to apply the
same prohibitive policy to persons living together as husband and wife
without benefit of nuptials. For it is not to be doubted that assent to such
irregular connection for thirty years bespeaks greater influence of one party
over the other, so that the danger that the law seeks to avoid is
correspondingly increased'. Moreover, as pointed out by Ulpian (in his lib 32
ad Sabinum, fr. 1), "It would not be just that such donations should
subsist, lest the conditions of those who incurred guilt should turn out to be
better." So long as marriage remains the cornerstone of our family law,
reason and morality alike demand that the disabilities attached to marriage
should likewise attach to concubinage (Emphasis supplied),

WHEREFORE, the Decision of respondent Judge, dated October 6, 1980,

and his Resolution of November 27, 1980 on petitioner's Motion for
Reconsideration, are hereby set aside and the sale of the lot, house and
improvements in question, is hereby declared null and void. No costs.

SO ORDERED.

SALES
5. Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-35702

May 29, 1973

DOMINGO D. RUBIAS, plaintiff-appellant,

vs.
ISAIAS BATILLER, defendant-appellee.
Gregorio M. Rubias for plaintiff-appellant.

under a claim of title many years before Francisco Militante sold the land to
the plaintiff."

Furthermore, even assuming that Militante had anything to sell, the deed of
sale executed in 1956 by him in favor of plaintiff at a time when plaintiff was
concededly his counsel of record in the land registration case involving the
very land in dispute (ultimately decided adversely against Militante by the
Court of Appeals' 1958 judgment affirming the lower court's dismissal of
Militante's application for registration) was properly declared inexistent and
void by the lower court, as decreed by Article 1409 in relation to Article
1491 of the Civil Code.

Vicente R. Acsay for defendant-appellee.

The appellate court, in its resolution of certification of 25 July 1972, gave the
following backgrounder of the appeal at bar:
TEEHANKEE, J.:

In this appeal certified by the Court of Appeals to this Court as involving

purely legal questions, we affirm the dismissal order rendered by the Iloilo
court of first instance after pre-trial and submittal of the pertinent
documentary exhibits.

Such dismissal was proper, plaintiff having no cause of action, since it was
duly established in the record that the application for registration of the land
in question filed by Francisco Militante, plaintiff's vendor and predecessor
interest, had been dismissed by decision of 1952 of the land registration court
as affirmed by final judgment in 1958 of the Court of Appeals and hence,
there was no title or right to the land that could be transmitted by the
purported sale to plaintiff.

As late as 1964, the Iloilo court of first instance had in another case of
ejectment likewise upheld by final judgment defendant's "better right to
possess the land in question . having been in the actual possession thereof

On August 31, 1964, plaintiff Domingo D. Rubias, a lawyer, filed a suit to

recover the ownership and possession of certain portions of lot under Psu99791 located in Barrio General Luna, Barotac Viejo, Iloilo which he bought
from his father-in-law, Francisco Militante in 1956 against its present
occupant defendant, Isaias Batiller, who illegally entered said portions of the
lot on two occasions in 1945 and in 1959. Plaintiff prayed also for
damages and attorneys fees. (pp. 1-7, Record on Appeal). In his answer with
counter-claim defendant claims the complaint of the plaintiff does not state a
cause of action, the truth of the matter being that he and his predecessors-ininterest have always been in actual, open and continuous possession since
time immemorial under claim of ownership of the portions of the lot in
question and for the alleged malicious institution of the complaint he claims
he has suffered moral damages in the amount of P 2,000.00, as well as the
sum of P500.00 for attorney's fees. ...

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

SALES
'When this case was called for a pre-trial conference today, the plaintiff
appeared assisted by himself and Atty. Gregorio M. Rubias. The defendant
also appeared, assisted by his counsel Atty. Vicente R. Acsay.

A. During the pre-trial conference, the parties have agreed that the following
facts are attendant in this case and that they will no longer introduced any
evidence, testimonial or documentary to prove them:
1.
That Francisco Militante claimed ownership of a parcel of land
located in the Barrio of General Luna, municipality of Barotac Viejo
province of Iloilo, which he caused to be surveyed on July 18-31, 1934,
whereby he was issued a plan Psu-99791 (Exhibit "B"). (The land claimed
contained an area of 171:3561 hectares.)
2.
Before the war with Japan, Francisco Militante filed with the Court
of First Instance of Iloilo an application for the registration of the title of the
land technically described in psu-99791 (Exh. "B") opposed by the Director
of Lands, the Director of Forestry and other oppositors. However, during the
war with Japan, the record of the case was lost before it was heard, so after
the war Francisco Militante petitioned this court to reconstitute the record of
the case. The record was reconstituted on the Court of the First Instance of
Iloilo and docketed as Land Case No. R-695, GLRO Rec. No. 54852. The
Court of First Instance heard the land registration case on November 14,
1952, and after the trial this court dismissed the application for registration.
The appellant, Francisco Militante, appealed from the decision of this Court
to the Court of Appeals where the case was docketed as CA-GR No. 13497R..
3.
Pending the disposal of the appeal in CA-GR No. 13497-R and more
particularly on June 18, 1956, Francisco Militante sold to the plaintiff,
Domingo Rubias the land technically described in psu-99791 (Exh. "A"). The
sale was duly recorded in the Office of the Register of Deeds for the province
of Iloilo as Entry No. 13609 on July 11, 1960 (Exh. "A-1").
(NOTE: As per deed of sale, Exh. A, what Militante purportedly sold to
plaintiff-appellant, his son-in-law, for the sum of P2,000.00 was "a parcel of
untitled land having an area Of 144.9072 hectares ... surveyed under Psu
99791 ... (and) subject to the exclusions made by me, under (case) CA-i3497,
Land Registration Case No. R-695, G.L.R.O. No. 54852, Court of First

Instance of the province of Iloilo. These exclusions referred to portions of the

original area of over 171 hectares originally claimed by Militante as
applicant, but which he expressly recognized during the trial to pertain to
some oppositors, such as the Bureau of Public Works and Bureau of Forestry
and several other individual occupants and accordingly withdrew his
application over the same. This is expressly made of record in Exh. A, which
is the Court of Appeals' decision of 22 September 1958 confirming the land
registration court's dismissal of Militante's application for registration.)
4.
On September 22,1958 the Court of appeals in CA-G.R. No. 13497R promulgated its judgment confirming the decision of this Court in Land
Case No. R-695, GLRO Rec. No. 54852 which dismissed the application for
Registration filed by Francisco Militante (Exh. "I").
5.
Domingo Rubias declared the land described in Exh. 'B' for taxation
purposes under Tax Dec. No. 8585 (Exh. "C") for 1957; Tax Dec. Nos. 9533
(Exh. "C-1") and 10019 (Exh. "C-3")for the year 1961; Tax Dec. No. 9868
(Exh. "C-2") for the year 1964, paying the land taxes under Tax Dec. No.
8585 and 9533 (Exh. "D", "D-1", "G-6").
6.
Francisco Militante immediate predecessor-in-interest of the
plaintiff, has also declared the land for taxation purposes under Tax Dec. No.
5172 in 1940 (Exh. "E") for 1945; under Tax Dec. No. T-86 (Exh. "E-1") for
1948; under Tax Dec. No. 7122 (Exh. "2"), and paid the land taxes for 1940
(Exhs. "G" and "G-7"), for 1945 46 (Exh. "G-1") for 1947 (Exh. "G-2"), for
1947 & 1948 (Exh. "G-3"), for 1948 (Exh. "G-4"), and for 1948 and 1949
(Exh. "G-5").
7.
Tax Declaration No. 2434 in the name of Liberato Demontao for
the land described therein (Exh. "F") was cancelled by Tax. Dec. No. 5172 of
Francisco Militante (Exh. "E"). Liberato Demontao paid the land tax under
Tax Dec. No. 2434 on Dec. 20, 1939 for the years 1938 (50%) and 1959
(Exh. "H").
8.
The defendant had declared for taxation purposes Lot No. 2 of the
Psu-155241 under Tax Dec. Not. 8583 for 1957 and a portion of Lot No. 2,
Psu-155241, for 1945 under Tax Dec. No. 8584 (Exh. "2-A" Tax No. 8583
(Exh. "2") was revised by Tax Dec. No. 9498 in the name of the defendant
(Exh. "2-B") and Tax Dec. No. 8584 (Exh. "2-A") was cancelled by Tax Dec.
No. 9584 also in the name of the defendant (Exh. "2-C"). The defendant paid
the land taxes for Lot 2, Psu-155241, on Nov. 9, 1960 for the years 1945 and

SALES
1946, for the year 1950, and for the year 1960 as shown by the certificate of
the treasurer (Exh. "3"). The defendant may present to the Court other land
taxes receipts for the payment of taxes for this lot.

Constantino A. Canto, provincial Sheriff of Iloilo, on Jan. 19, 1934 in favor

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

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

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

10.
On April 22, 1960, the plaintiff filed forcible Entry and Detainer case
against Isaias Batiller in the Justice of the Peace Court of Barotac Viejo
Province of Iloilo (Exh. "4") to which the defendant Isaias Batiller riled his
answer on August 29, 1960 (Exh. "4-A"). The Municipal Court of Barotac
Viejo after trial, decided the case on May 10, 1961 in favor of the defendant
and against the plaintiff (Exh. "4-B"). The plaintiff appealed from the
decision of the Municipal Court of Barotac Viejo which was docketed in this
Court as Civil Case No. 5750 on June 3, 1961, to which the defendant, Isaias
Batiller, on June 13, 1961 filed his answer (Exh. "4-C"). And this Court after
the trial. decided the case on November 26, 1964, in favor of the defendant,
Isaias Batiller and against the plaintiff (Exh. "4-D").

3.

(NOTE: As per Exh. 4-B, which is the Iloilo court of first instance decision
of 26 November 1964 dismissing plaintiff's therein complaint for ejectment
against defendant, the iloilo court expressly found "that plaintiff's complaint
is unjustified, intended to harass the defendant" and "that the defendant,
Isaias Batiller, has a better right to possess the land in question described in
Psu 155241 (Exh. "3"), Isaias Batiller having been in the actual physical
possession thereof under a claim of title many years before Francisco
Militante sold the land to the plaintiff-hereby dismissing plaintiff's complaint
and ordering the plaintiff to pay the defendant attorney's fees ....")
B.
During the trial of this case on the merit, the plaintiff will prove by
competent evidence the following:

That plaintiff suffered damages alleged in his complaint.

C.
Defendants, on the other hand will prove by competent evidence
during the trial of this case the following facts:
1.
That lot No. 2 of the Psu-1552 it (Exh. '5') was originally owned and
possessed by Felipe Batiller, grandfather of the defendant Basilio Batiller, on
the death of the former in 1920, as his sole heir. Isaias Batiller succeeded his
father , Basilio Batiller, in the ownership and possession of the land in the
year 1930, and since then up to the present, the land remains in the
possession of the defendant, his possession being actual, open, public,
peaceful and continuous in the concept of an owner, exclusive of any other
rights and adverse to all other claimants.
2.
That the alleged predecessors in interest of the plaintiff have never
been in the actual possession of the land and that they never had any title
thereto.
3.
That Lot No. 2, Psu 155241, the subject of Free Patent application of
the defendant has been approved.
4.
The damages suffered by the defendant, as alleged in his
counterclaim."' 1
The appellate court further related the developments of the case, as follows:

1.
That the land he purchased from Francisco Militante under Exh. "A"
was formerly owned and possessed by Liberato Demontao but that on
September 6, 1919 the land was sold at public auction by virtue of a
judgment in a Civil Case entitled "Edw J. Pflieder plaintiff vs. Liberato
Demontao Francisco Balladeros and Gregorio Yulo, defendants", of which
Yap Pongco was the purchaser (Exh. "1-3"). The sale was registered in the
Office of the Register of Deeds of Iloilo on August 4, 1920, under Primary
Entry No. 69 (Exh. "1"), and a definite Deed of Sale was executed by

On August 17, 1965, defendant's counsel manifested in open court that

before any trial on the merit of the case could proceed he would file a motion
to dismiss plaintiff's complaint which he did, alleging that plaintiff does not
have cause of action against him because the property in dispute which he
(plaintiff) allegedly bought from his father-in-law, Francisco Militante was
the subject matter of LRC No. 695 filed in the CFI of Iloilo, which case was
brought on appeal to this Court and docketed as CA-G.R. No. 13497-R in

SALES
which aforesaid case plaintiff was the counsel on record of his father-in-law,
Francisco Militante. Invoking Arts. 1409 and 1491 of the Civil Code which
reads:
'Art. 1409. The following contracts are inexistent and void from the
beginning:
xxx

xxx

xxx

(7)

Those expressly prohibited by law.

void. In due season plaintiff filed a motion for reconsideration (pp. 50-56
Record on Appeal) which was denied by the lower court on January 14, 1966
(p. 57, Record on Appeal).

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

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

'ART. 1491.
The following persons cannot acquire any purchase, even at
a public auction, either in person of through the mediation of another: .
xxx

xxx

xxx

(5)
Justices, judges, prosecuting attorneys, clerks of superior and inferior
courts, and other officers and employees connected with the administration
of justice, the property and rights of 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 an
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.'

defendant claims that plaintiff could not have acquired any interest in the
property in dispute as the contract he (plaintiff) had with Francisco Militante
was inexistent and void. (See pp. 22-31, Record on Appeal). Plaintiff
strongly opposed defendant's motion to dismiss claiming that defendant can
not invoke Articles 1409 and 1491 of the Civil Code as Article 1422 of the
same Code provides that 'The defense of illegality of contracts is not
available to third persons whose interests are not directly affected' (See pp.
32-35 Record on Appeal).

On October 18, 1965, the lower court issued an order disclaiming plaintiffs
complaint (pp. 42-49, Record on Appeal.) In the aforesaid order of dismissal
the lower court practically agreed with defendant's contention that the
contract (Exh. A) between plaintiff and Francism Militante was null and

'1.
The lower court erred in holding that the contract of sale between the
plaintiff-appellant and his father-in-law, Francisco Militante, Sr., now
deceased, of the property covered by Plan Psu-99791, (Exh. "A") was void,
not voidable because it was made when plaintiff-appellant was the counsel of
the latter in the Land Registration case.
'2.
The lower court erred in holding that the defendant-appellee is an
interested person to question the validity of the contract of sale between
plaintiff-appellant and the deceased, Francisco Militante, Sr.
'3.
The lower court erred in entertaining the motion to dismiss of the
defendant-appellee after he had already filed his answer, and after the
termination of the pre-trial, when the said motion to dismiss raised a
collateral question.
'4.
The lower court erred in dismissing the complaint of the plaintiffappellant.'
The appellate court concluded that plaintiffs "assignment of errors gives rise
to two (2) legal posers (1) whether or not the contract of sale between
appellant and his father-in-law, the late Francisco Militante over the property
subject of Plan Psu-99791 was void because it was made when plaintiff was
counsel of his father-in-law in a land registration case involving the property
in dispute; and (2) whether or not the lower court was correct in entertaining
defendant-appellee's motion to dismiss after the latter had already filed his
answer and after he (defendant) and plaintiff-appellant had agreed on some
matters in a pre-trial conference. Hence, its elevation of the appeal to this
Court as involving pure questions of law.

SALES

It is at once evident from the foregoing narration that the pre-trial conference
held by the trial court at which the parties with their counsel agreed and
stipulated on the material and relevant facts and submitted their respective
documentary exhibits as referred to in the pre-trial order, supra, 2 practically
amounted to a fulldress trial which placed on record all the facts and exhibits
necessary for adjudication of the case.

The three points on which plaintiff reserved the presentation of evidence at

the-trial dealing with the source of the alleged right and title of Francisco
Militante's predecessors, supra, 3 actually are already made of record in the
stipulated facts and admitted exhibits. The chain of Militante's alleged title
and right to the land as supposedly traced back to Liberato Demontao was
actually asserted by Militante (and his vendee, lawyer and son-in-law, herein
plaintiff) in the land registration case and rejected by the Iloilo land
registration court which dismissed Militante's application for registration of
the land. Such dismissal, as already stated, was affirmed by the final
judgment in 1958 of the Court of Appeals. 4

The four points on which defendant on his part reserved the presentation of
evidence at the trial dealing with his and his ancestors' continuous, open,
public and peaceful possession in the concept of owner of the land and the
Director of Lands' approval of his survey plan thereof, supra, 5 are likewise
already duly established facts of record, in the land registration case as well
as in the ejectment case wherein the Iloilo court of first instance recognized
the superiority of defendant's right to the land as against plaintiff.

No error was therefore committed by the lower court in dismissing plaintiff's

complaint upon defendant's motion after the pre-trial.

1.
The stipulated facts and exhibits of record indisputably established
plaintiff's lack of cause of action and justified the outright dismissal of the
complaint. Plaintiff's claim of ownership to the land in question was
predicated on the sale thereof for P2,000.00 made in 1956 by his father-in-

law, Francisco Militante, in his favor, at a time when Militante's application

for registration thereof had already been dismissed by the Iloilo land
registration court and was pending appeal in the Court of Appeals.

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

Manifestly, then plaintiff's complaint against defendant, to be declared

absolute owner of the land and to be restored to possession thereof with
damages was bereft of any factual or legal basis.

2.
No error could be attributed either to the lower court's holding that
the purchase by a lawyer of the property in litigation from his client is
categorically prohibited by Article 1491, paragraph (5) of the Philippine
Civil Code, reproduced supra; 6 and that consequently, plaintiff's purchase of
the property in litigation from his client (assuming that his client could sell
the same since as already shown above, his client's claim to the property was
defeated and rejected) was void and could produce no legal effect, by virtue
of Article 1409, paragraph (7) of our Civil Code which provides that
contracts "expressly prohibited or declared void by law' are "inexistent and
that "(T)hese contracts cannot be ratified. Neither can the right to set up the
defense of illegality be waived."

The 1911 case of Wolfson vs. Estate of Martinez 7 relied upon by plaintiff as
holding that a sale of property in litigation to the party litigant's lawyer "is
not void but voidable at the election of the vendor" was correctly held by the
lower court to have been superseded by the later 1929 case of Director of
Lands vs. Abagat. 8 In this later case of Abagat, the Court expressly cited
two antecedent cases involving the same transaction of purchase of property
in litigation by the lawyer which was expressly declared invalid under Article
1459 of the Civil Code of Spain (of which Article 1491 of our Civil Code of
the Philippines is the counterpart) upon challenge thereof not by the vendor-

SALES
client but by the adverse parties against whom the lawyer was to enforce his
rights as vendee thus acquired.

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

The spouses, Juan Soriano and Vicente Macaraeg, were the owners of twelve
parcels of land. Vicenta Macaraeg died in November, 1909, leaving a large
number of collateral heirs but no descendants. Litigation between the
surviving husband, Juan Soriano, and the heirs of Vicenta immediately arose,
and the herein appellant Sisenando Palarca acted as Soriano's lawyer. On
May 2, 1918, Soriano executed a deed for the aforesaid twelve parcels of
land in favor of Sisenando Palarca and on the following day, May 3, 1918,
Palarca filed an application for the registration of the land in the deed. After
hearing, the Court of First Instance declared that the deed was invalid by
virtue of the provisions of article 1459 of the Civil Code, which prohibits
lawyers and solicitors from purchasing property rights involved in any
litigation in which they take part by virtue of their profession. The
application for registration was consequently denied, and upon appeal by
Palarca to the Supreme Court, the judgement of the lower court was affirmed
by a decision promulgated November 16,1925. (G.R. No. 24329, Palarca vs.
Director of Lands, not reported.)

In the meantime cadastral case No. 30 of the Province of Tarlac was

instituted, and on August 21, 1923, Eleuteria Macaraeg, as administratrix of
the estate of Vicente Macaraeg, filed claims for the parcels in question.
Buenaventura Lavitoria administrator of the estate of Juan Soriano, did
likewise and so did Sisenando Palarca. In a decision dated June 21, 1927, the
Court of First Instance, Judge Carballo presiding, rendered judgment in favor
of Palarea and ordered the registration of the land in his name. Upon appeal
to this court by the administration of the estates of Juan Soriano and Vicente
Macaraeg, the judgment of the court below was reversed and the land
adjudicated to the two estates as conjugal property of the deceased spouses.
(G.R. No. 28226, Director of Lands vs. Abagat, promulgated May 21, 1928,
not reported.) 9

In the very case of Abagat itself, the Court, again affirming the invalidity and
nullity of the lawyer's purchase of the land in litigation from his client,
ordered the issuance of a writ of possession for the return of the land by the
lawyer to the adverse parties without reimbursement of the price paid by him
and other expenses, and ruled that "the appellant Palarca is a lawyer and is
presumed to know the law. He must, therefore, from the beginning, have
been well aware of the defect in his title and is, consequently, a possessor in
bad faith."

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

Article 1491 of our Civil Code (like Article 1459 of the Spanish Civil Code)
prohibits in its six paragraphs certain persons, by reason of the relation of
trust or their peculiar control over the property, from acquiring such property
in their trust or control either directly or indirectly and "even at a public or
judicial auction," as follows: (1) guardians; (2) agents; (3) administrators; (4)
public officers and employees; judicial officers and employees, prosecuting
attorneys, and lawyers; and (6) others especially disqualified by law.

In Wolfson which involved the sale and assignment of a money judgment by

the client to the lawyer, Wolfson, whose right to so purchase the judgment
was being challenged by the judgment debtor, the Court, through Justice
Moreland, then expressly reserved decision on "whether or not the judgment
in question actually falls within the prohibition of the article" and held only
that the sale's "voidability can not be asserted by one not a party to the
transaction or his representative," citing from Manresa 10 that "(C)onsidering
the question from the point of view of the civil law, the view taken by the
code, we must limit ourselves to classifying as void all acts done contrary to
the express prohibition of the statute. Now then: As the code does not
recognize such nullity by the mere operation of law, the nullity of the acts

SALES
hereinbefore referred to must be asserted by the person having the necessary
legal capacity to do so and decreed by a competent
court." 11

The reason thus given by Manresa in considering such prohibited

acquisitions under Article 1459 of the Spanish Civil Code as merely voidable
at the instance and option of the vendor and not void "that the Code does
not recognize such nullity de pleno derecho" is no longer true and
applicable to our own Philippine Civil Code which does recognize the
absolute nullity of contracts "whose cause, object, or purpose is contrary to
law, morals, good customs, public order or public policy" or which are
"expressly prohibited or declared void by law" and declares such contracts
"inexistent and void from the beginning." 12

The Supreme Court of Spain and modern authors have likewise veered from
Manresa's view of the Spanish codal provision itself. In its sentencia of 11
June 1966, the Supreme Court of Spain ruled that the prohibition of Article
1459 of the Spanish Civil Code is based on public policy, that violation of
the prohibition contract cannot be validated by confirmation or ratification,
holding that:

Citing the same decisions of the Supreme Court of Spain, Gullon Ballesteros,
his "Curso de Derecho Civil, (Contratos Especiales)" (Madrid, 1968) p. 18,
affirms that, with respect to Article 1459, Spanish Civil Code:.

Que caracter tendra la compra que se realice por estas personas? Porsupuesto
no cabe duda de que el caso (art.) 1459, 40 y 50, la nulidad esabsoluta porque
el motivo de la prohibicion es de orden publico. 14

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

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

Castan, quoting Manresa's own observation that.

... la prohibicion que el articulo 1459 del C.C. establece respecto a los
administradores y apoderados, la cual tiene conforme a la doctrina de esta
Sala, contendia entre otras, en S. de 27-5-1959, un fundamento de orden
moral lugar la violacion de esta a la nulidad de pleno derecho del acto o
negocio celebrado, ... y prohibicion legal, afectante orden publico, no cabe
con efecto alguno la aludida retification ... 13

"El fundamento do esta prohibicion es clarisimo. No sa trata con este

precepto tan solo de guitar la ocasion al fraude; persiguese, ademasel
proposito de rodear a las personas que intervienen en la administrcionde
justicia de todos los retigios que necesitan pora ejercer su ministerio
librandolos de toda suspecha, que aunque fuere in fundada, redundura
endescredito de la institucion." 16 arrives at the contrary and now accepted
view that "Puede considerace en nuestro derecho inexistente 'o radicalmente
nulo el contrato en los siguentes cases: a) ...; b) cuando el contrato se ha
celebrado en violacion de una prescripcion 'o prohibicion legal, fundada
sobre motivos de orden publico (hipotesis del art. 4 del codigo) ..." 17

The criterion of nullity of such prohibited contracts under Article 1459 of the
Spanish Civil Code (Article 1491 of our Civil Code) as a matter of public
order and policy as applied by the Supreme Court of Spain to administrators
and agents in its above cited decision should certainly apply with greater
reason to judges, judicial officers, fiscals and lawyers under paragraph 5 of
the codal article.

It is noteworthy that Caltan's rationale for his conclusion that fundamental

consideration of public policy render void and inexistent such expressly
prohibited purchase (e.g. by public officers and employees of government
property intrusted to them and by justices, judges, fiscals and lawyers of
property and rights in litigation and submitted to or handled by them, under
Article 1491, paragraphs (4) and (5) of our Civil Code) has been adopted in a

SALES
new article of our Civil Code, viz, Article 1409 declaring such prohibited
contracts as "inexistent and void from the beginning." 18

assert the nullity of an assignment of credit as a defense to an action by the

assignee.

Indeed, the nullity of such prohibited contracts is definite and permanent and
cannot be cured by ratification. The public interest and public policy remain
paramount and do not permit of compromise or ratification. In his aspect, the
permanent disqualification of public and judicial officers and lawyers
grounded on public policy differs from the first three cases of guardians,
agents and administrators (Article 1491, Civil Code), as to whose
transactions it had been opined that they may be "ratified" by means of and in
"the form of a new contact, in which cases its validity shall be determined
only by the circumstances at the time the execution of such new contract.
The causes of nullity which have ceased to exist cannot impair the validity of
the new contract. Thus, the object which was illegal at the time of the first
contract, may have already become lawful at the time of the ratification or
second contract; or the service which was impossible may have become
possible; or the intention which could not be ascertained may have been
clarified by the parties. The ratification or second contract would then be
valid from its execution; however, it does not retroact to the date of the first
contract." 19

Action On Contract. Even when the contract is void or inexistent, an

action is necessary to declare its inexistence, when it has already been
fulfilled. Nobody can take the law into his own hands; hence, the
intervention of the competent court is necessary to declare the absolute
nullity of the contract and to decree the restitution of what has been given
under it. The judgment, however, will retroact to the very day when the
contract was entered into.

As applied to the case at bar, the lower court therefore properly acted upon
defendant-appellant's motion to dismiss on the ground of nullity of plaintiff's
alleged purchase of the land, since its juridical effects and plaintiff's alleged
cause of action founded thereon were being asserted against defendantappellant. The principles governing the nullity of such prohibited contracts
and judicial declaration of their nullity have been well restated by Tolentino
in his treatise on our Civil Code, as follows:

Parties Affected. Any person may invoke the in existence of the contract
whenever juridical effects founded thereon are asserted against him. Thus, if
there has been a void transfer of property, the transferor can recover it by the
accion reinvindicatoria; and any prossessor may refuse to deliver it to the
transferee, who cannot enforce the contract. Creditors may attach property of
the debtor which has been alienated by the latter under a void contract; a
mortgagee can allege the inexistence of a prior encumbrance; a debtor can

If the void contract is still fully executory, no party need bring an action to
declare its nullity; but if any party should bring an action to enforce it, the
other party can simply set up the nullity as a defense. 20

ACCORDINGLY, the order of dismissal appealed from is hereby affirmed,

with costs in all instances against plaintiff-appellant. So ordered.

SALES
6. EN BANC
[G.R. No. L-8477. May 31, 1956.]
THE PHILIPPINE TRUST COMPANY, as Guardian of the Property of
the minor, MARIANO L. BERNARDO, Petitioner, vs. SOCORRO
ROLDAN, FRANCISCO HERMOSO, FIDEL C. RAMOS and EMILIO
CRUZ, Respondents.
DECISION

BENGZON, J.:

As guardian of the property of the minor Mariano L. Bernardo, the Philippine

Trust Company filed in the Manila court of first instance a complaint to
annul two contracts regarding 17 parcels of land:chanroblesvirtuallawlibrary
(a) sale thereof by Socorro Roldan, as guardian of said minor, to Fidel C.
Ramos; chan roblesvirtualawlibraryand (b) sale thereof by Fidel C. Ramos to
Socorro Roldan personally. The complaint likewise sought to annul a
conveyance of four out of the said seventeen parcels by Socorro Roldan to
Emilio Cruz.

The action rests on the proposition that the first two sales were in reality a
sale by the guardian to herself therefore, null and void under Article 1459
of the Civil Code. As to the third conveyance, it is also ineffective, because
Socorro Roldan had acquired no valid title to convey to Cruz.

The material facts of the case are not complicated. These 17 parcels located
in Guiguinto, Bulacan, were part of the properties inherited by Mariano L.
Bernardo from his father, Marcelo Bernardo, deceased. In view of his
minority, guardianship proceedings were instituted, wherein Socorro Roldan
was appointed his guardian. She was the surviving spouse of Marcelo
Bernardo, and the stepmother of said Mariano L. Bernardo.

On July 27, 1947, Socorro Roldan filed in said guardianship proceedings

(Special Proceeding 2485, Manila), a motion asking for authority to sell as
guardian the 17 parcels for the sum of P14,700 to Dr. Fidel C. Ramos, the
purpose of the sale being allegedly to invest the money in a residential house,
which the minor desired to have on Tindalo Street, Manila. The motion was
granted.

On August 5, 1947 Socorro Roldan, as guardian, executed the proper deed of

sale in favor of her brother-in-law Dr. Fidel C. Ramos (Exhibit A-1), and on
August 12, 1947 she asked for, and obtained, judicial confirmation of the
sale. On August 13, 1947, Dr. Fidel C. Ramos executed in favor of Socorro
Roldan, personally, a deed of conveyance covering the same seventeen
parcels, for the sum of P15,000 (Exhibit A-2). And on October 21, 1947
Socorro Roldan sold four parcels out of the seventeen to Emilio Cruz for
P3,000, reserving to herself the right to repurchase (Exhibit A-3).

The Philippine Trust Company replaced Socorro Roldan as guardian, on

August 10, 1948. And this litigation, started two months later, seeks to undo
what the previous guardian had done. The step-mother in effect, sold to
herself, the properties of her ward, contends the Plaintiff, and the sale should
be annulled because it violates Article 1459 of the Civil Code prohibiting the
guardian from purchasing either in person or through the mediation of
another the property of her ward.

The court of first instance, following our decision in Rodriguez vs. Mactal,
60 Phil. 13 held the article was not controlling, because there was no proof
that Fidel C. Ramos was a mere intermediary or that the latter had previously
agreed with Socorro Roldan to buy the parcels for her benefit.

However, taking the former guardian at her word - she swore she had
repurchased the lands from Dr. Fidel C. Ramos to preserve it and to give her
protege opportunity to redeem the court rendered judgment upholding the
contracts but allowing the minor to repurchase all the parcels by paying
P15,000, within one year.

SALES

The Court of Appeals affirmed the judgment, adding that the minor knew the
particulars of, and approved the transaction, and that only clear and positive
evidence of fraud or bad faith, and not mere insinuations and inferences will
overcome the presumptions that a sale was concluded in all good faith for
value.

At first glance the resolutions of both courts accomplished substantial

justice:chanroblesvirtuallawlibrary the minor recovers his properties. But if
the conveyances are annulled as prayed for, the minor will obtain a better
deal:chanroblesvirtuallawlibrary he receives all the fruits of the lands from
the year 1947 (Article 1303 Civil Code) and will return P14,700, not
P15,000.

To our minds the first two transactions herein described couldnt be in a

better juridical situation than if this guardian had purchased the seventeen
parcels on the day following the sale to Dr. Ramos. Now, if she was willing
to pay P15,000 why did she sell the parcels for less? In one day (or actually
one week) the price could not have risen so suddenly. Obviously when,
seeking approval of the sale she represented the price to be the best
obtainable in the market, she was not entirely truthful. This is one phase to
consider.

Again, supposing she knew the parcels were actually worth P17,000; chan
roblesvirtualawlibrarythen she agreed to sell them to Dr. Ramos at P14,700;
chan roblesvirtualawlibraryand knowing the realtys value she offered him
the next day P15,000 or P15,500, and got it. Will there be any doubt that she
was recreant to her guardianship, and that her acquisition should be nullified?
Even without proof that she had connived with Dr. Ramos. Remembering the
general doctrine that guardianship is a trust of the highest order, and the
trustee cannot be allowed to have any inducement to neglect his wards
interest and in line with the courts suspicion whenever the guardian acquires
the wards property 1 we have no hesitation to declare that in this case, in the
eyes of the law, Socorro Roldan took by purchase her wards parcels thru Dr.
Ramos, and that Article 1459 of the Civil Code applies.

She acted it may be true without malice; chan roblesvirtualawlibrarythere

may have been no previous agreement between her and Dr. Ramos to the
effect that the latter would buy the lands for her. But the stubborn fact
remains that she acquired her proteges properties, through her brother-inlaw. That she planned to get them for herself at the time of selling them to
Dr. Ramos, may be deduced from the very short time between the two sales
(one week). The temptation which naturally besets a guardian so
circumstanced, necessitates the annulment of the transaction, even if no
actual collusion is proved (so hard to prove) between such guardian and the
intermediate purchaser. This would uphold a sound principle of equity and
justice. 2

We are aware of course that in Rodriguez vs. Mactal, 60 Phil. p. 13 wherein

the guardian Mactal sold in January 1926 the property of her ward to Silverio
Chioco, and in March 1928 she bought it from Chioco, this Court
said:chanroblesvirtuallawlibrary

In order to bring the sale in this case within the part of Article 1459, quoted
above, it is essential that the proof submitted establish some agreement
between Silverio Chioco and Trinidad Mactal to the effect that Chioco
should buy the property for the benefit of Mactal. If there was no such
agreement, either express or implied, then the sale cannot be set aside cralaw
. (Page 16; chan roblesvirtualawlibraryItalics supplied.)

However, the underlined portion was not intended to establish a general

principle of law applicable to all subsequent litigations. It merely meant that
the subsequent purchase by Mactal could not be annulled in that particular
case because there was no proof of a previous agreement between Chioco
and her. The court then considered such proof necessary to establish that the
two sales were actually part of one scheme guardian getting the wards
property through another person because two years had elapsed between
the sales. Such period of time was sufficient to dispel the natural suspicion of
the guardians motives or actions. In the case at bar, however, only one week
had elapsed. And if we were technical, we could say, only one day had

SALES
elapsed from the judicial approval of the sale (August 12), to the purchase by
the guardian (Aug. 13).

Attempting to prove that the transaction was beneficial to the minor,

Appellees attorney alleges that the money (P14,700) invested in the house
on Tindalo Street produced for him rentals of P2,400 yearly; chan
roblesvirtualawlibrarywhereas the parcels of land yielded to his step-mother
only an average of P1,522 per year. 3 The argument would carry some
weight if that house had been built out of the purchase price of P14,700 only.
4 One thing is certain:chanroblesvirtuallawlibrary the calculation does not
include the price of the lot on which the house was erected. Estimating such
lot at P14,700 only, (ordinarily the city lot is more valuable than the
building) the result is that the price paid for the seventeen parcels gave the
minor an income of only P1,200 a year, whereas the harvest from the
seventeen parcels netted his step-mother a yearly profit of P1,522.00. The
minor was thus on the losing end.

Hence, from both the legal and equitable standpoints these three sales should
not be sustained:chanroblesvirtuallawlibrary the first two for violation of
article 1459 of the Civil Code; chan roblesvirtualawlibraryand the third
because Socorro Roldan could pass no title to Emilio Cruz. The annulment
carries with is (Article 1303 Civil Code) the obligation of Socorro Roldan to
return the 17 parcels together with their fruits and the duty of the minor,
through his guardian to repay P14,700 with legal interest.

Judgment is therefore rendered:chanroblesvirtuallawlibrary

a. Annulling the three contracts of sale in question; chan

roblesvirtualawlibraryb. declaring the minor as the owner of the seventeen
parcels of land, with the obligation to return to Socorro Roldan the price of
P14,700 with legal interest from August 12, 1947; chan
roblesvirtualawlibraryc. Ordering Socorro Roldan and Emilio Cruz to deliver
said parcels of land to the minor; chan roblesvirtualawlibraryd. Requiring
Socorro Roldan to pay him beginning with 1947 the fruits, which her
attorney admits, amounted to P1,522 a year; chan roblesvirtualawlibrarye.

Authorizing the minor to deliver directly to Emilio Cruz, out of the price of
P14,700 above mentioned, the sum of P3,000; chan
roblesvirtualawlibraryand f. charging Appellees with the costs. SO
ORDERED.

SALES
7. Republic of the Philippines
SUPREME COURT
Manila

original owner. However, they failed to register the sale or secure a transfer
certificate of title in their names.

EN BANC
A.M. Nos. 1302, 1391 and 1543

April 26, 1991

PAULINO VALENCIA, complainant,

vs.
ATTY. ARSENIO FER CABANTING, respondent.
CONSTANCIA L. VALENCIA, complainant,
vs.
ATTY. DIONISIO C. ANTINIW, ATTY. EDUARDO U.
JOVELLANOS and ATTY. ARSENIO FER. CABANTING,
respondents.
LYDIA BERNAL, complainant,
vs.
ATTY. DIONISIO C. ANTINIW, respondent.

PER CURIAM:

These consolidated administrative cases seek to disbar respondents Dionisio

Antiniw, Arsenio Fer. Cabanting and Eduardo Jovellanos (the last named,
now an MCTC Judge) for grave malpractice and misconduct in the exercise
of their legal profession committed in the following manner:

1.

Administrative Cases No. 1302 and 1391.

In 1933, complainant Paulino Valencia (Paulino in short) and his wife

Romana allegedly bought a parcel of land, where they built their residential
house, from a certain Serapia Raymundo, an heir of Pedro Raymundo the

Sometime in December, 1968, a conference was held in the house of Atty.

Eduardo Jovellanos to settle the land dispute between Serapia Raymundo
(Serapia in short) another heir of Pedro Raymundo, and the Valencia spouses
since both were relatives and distant kin of Atty. Jovellanos. Serapia was
willing to relinquish ownership if the Valencias could show documents
evidencing ownership. Paulino exhibited a deed of sale written in the Ilocano
dialect. However, Serapia claimed that the deed covered a different property.
Paulino and Serapia were not able to settle their differences. (Report of
Investigating Judge Catalino Castaneda, Jr., pp. 21-22).

On December 15, 1969 Serapia, assisted by Atty. Arsenio Fer. Cabanting,

filed a complaint against Paulino for the recovery of possession with
damages. The case was docketed as Civil Case No. V-2170, entitled "Serapia
Raymundo, Plaintiff, versus Paulino Valencia, Defendant." (Report, p. 11).

Summoned to plead in Civil Case No. V-2170, the Valencias engaged the
services of Atty. Dionisio Antiniw. Atty. Antiniw advised them to present a
notarized deed of sale in lieu of the private document written in Ilocano. For
this purpose, Paulino gave Atty. Antiniw an amount of P200.00 to pay the
person who would falsify the signature of the alleged vendor (Complaint, p.
2; Rollo, p. 7). A "Compraventa Definitiva" (Exh. B) was executed
purporting to be a sale of the questioned lot.

On January 22, 1973, the Court of First Instance of Pangasinan, Branch V,

rendered a decision in favor of plaintiff, Serapia Raymundo. The lower court
expressed the belief that the said document is not authentic. (Report, p. 14)

Paulino, thereafter, filed a Petition for Certiorari, under Rule 65, with
Preliminary Injunction before the Court of Appeals alleging that the trial
court failed to provide a workable solution concerning his house. While the

SALES
petition was pending, the trial court, on March 9, 1973, issued an order of
execution stating that "the decision in this case has already become final and
executory" (Exhibits 3 and 3-A). On March 14, 1973, a writ of execution was
issued.

On March 20, 1973, Serapia sold 40 square meters of the litigated lot to Atty.
Jovellanos and the remaining portion she sold to her counsel, Atty. Arsenio
Fer. Cabanting, on April 25, 1973. (Annex "A" of Administrative Case No.
1302).

In the year 1973 Atty. Dionisio Antiniw fraudulently and in confabulation

with one Lydia Bernal had a deed of sale, fabricated, executed and ratified
before him as Notary Public by one Santiago Bernal in favor of Lydia Bernal
when as a matter of fact said Santiago Bernal had died already about eight
years before in the year 1965.

2.

AGAINST ATTY. EDUARDO JOVELLANOS:

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.

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)

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

2.

On October 14, 1974, Constancia Valencia, daughter of Paulino, filed a

disbarment proceeding (docketed as Administrative Case No. 1391) against
Atty. Dionisio Antiniw for his participation in the forgery of "Compraventa
Definitiva" and its subsequent introduction as evidence for his client; and
also, against Attys. Eduardo Jovellanos and Arsenio Cabanting for
purchasing a litigated property allegedly in violation of Article 1491 of the
New Civil Code; and against the three lawyers, for allegedly rigging Civil
Case No. V-2170 against her parents. On August 17, 1975, Constancia
Valencia filed additional charges against Atty. Antiniw and Atty. Jovellanos
as follows:

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).

1.

AGAINST ATTY. DIONISIO ANTINIW:

Administrative Case No. 1543.

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.

SALES
Felicidad Bernal-Duzon, her aunt who had a claim over the property filed a
complaint against her (Lydia Bernal) and her counsel, Atty. Antiniw for
falsification of a public document. (Complaint, pp. 1-2) The fiscal exonerated
the counsel for lack of evidence, while a case was filed in court against Lydia
Bernal.

On October 3, 1975, Lydia Bernal filed a disbarment proceeding (docketed

as Administrative Case No.1543) against Atty. Antiniw for illegal acts and
bad advice.

Pursuant to the resolution of the First Division of this Court dated December
9, 1974, the resolution of the Second Division dated March 3, 1975 and the
two resolutions of the Second Division both dated December 3, 1975,
Administrative Cases Nos. 1302, 1391 and 1543 were referred to the Office
of the Solicitor General for investigation, report and recommendation.

Upon formal request of Constancia L. Valencia and Lydia Bernal dated

March 3, 1976, all of these cases were ordered consolidated by Solicitor
General Estelito P. Mendoza per his handwritten directive of March 9, 1976.

On April 12, 1988, We referred the investigation of these cases to the

Integrated Bar of the Philippines.1wphi1 When Atty. Jovellanos was
appointed as Municipal Circuit Trial Court Judge of Alcala-Bautista,
Pangasinan, We referred the investigation of these cases to Acting Presiding
Judge Cesar Mindaro, Regional Trial Court, Branch 50, Villasis, Pangasinan,
for further investigation.

In view of the seriousness of the charge against the respondents and the
alleged threats against the person of complainant Constancia L. Valencia, We
directed the transfer of investigation to the Regional Trial Court of Manila.

The three administrative cases were raffled to Branch XVII of the Regional
Trial Court of Manila, under the sala of Judge Catalino Castaneda, Jr.

After investigation, Judge Catalino Castaeda, Jr., recommended the

dismissal of cases against Atty. Jovellanos and Atty. Arsenio Fer. Cabanting;
dismissal of Administrative Case No. 1543 and the additional charges in
Administrative Case No. 1391 against Antiniw and Judge Jovellanos;
however, he recommended the suspension of Atty. Antiniw from the practice
of law for six months finding him guilty of malpractice in falsifying the
"Compraventa Definitiva."

The simplified issues of these consolidated cases are:

I.
Whether or not Atty. Cabanting purchased the subject property in
violation of Art. 1491 of the New Civil Code.
II.
Whether or not Attys. Antiniw and Jovellanos are guilty of
malpractice in falsifying notarial documents.
III.
Whether or not the three lawyers connived in rigging Civil Case No.
V-2170.

I
Under Article 1491 of the New Civil Code:

The following persons cannot acquire by purchase, even at a public of

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

xxx

xxx

xxx

SALES
(5)
. . . this prohibition includes the act of acquiring by assignment and
shall apply to lawyers, with respect to the property and rights which may be
the object of any litigation in which they make take part by virtue of their
profession.

Public policy prohibits the transactions in view of the fiduciary relationship

involved. It is intended to curtail any undue influence of the lawyer upon his
client. Greed may get the better of the sentiments of loyalty and
disinterestedness. Any violation of this prohibition would constitute
malpractice (In re: Attorney Melchor Ruste, 40 O.G. p. 78) and is a ground
for suspension. (Beltran vs. Fernandez, 70 Phil. 248).

Art. 1491, prohibiting the sale to the counsel concerned, applies only while
the litigation is pending. (Director of Lands vs. Adaba, 88 SCRA 513;
Hernandez vs. Villanueva, 40 Phil. 775).

In the case at bar, while it is true that Atty. Arsenio Fer. Cabanting purchased
the lot after finality of judgment, there was still a pending certiorari
proceeding. A thing is said to be in litigation not only if there is some contest
or litigation over it in court, but also from the moment that it becomes subject
to the judicial action of the judge. (Gan Tingco vs. Pabinguit, 35 Phil. 81).
Logic indicates, in certiorari proceedings, that the appellate court may either
grant or dismiss the petition. Hence, it is not safe to conclude, for purposes
under Art. 1491 that the litigation has terminated when the judgment of the
trial court become final while a certiorari connected therewith is still in
progress. Thus, purchase of the property by Atty. Cabanting in this case
constitutes malpractice in violation of Art. 1491 and the Canons of
Professional Ethics. Clearly, this malpractice is a ground for suspension.

The sale in favor of Atty. Jovellanos does not constitute malpractice. There
was no attorney-client relationship between Serapia and Atty. Jovellanos,
considering that the latter did not take part as counsel in Civil Case No. V2170. The transaction is not covered by Art. 1491 nor by the Canons
adverted to.

II

It is asserted by Paulino that Atty. Antiniw asked for and received the sum of
P200.00 in consideration of his executing the document "Compraventa
Definitiva" which would show that Paulino bought the property. This charge,
Atty. Antiniw simply denied. It is settled jurisprudence that affirmative
testimony is given greater weight than negative testimony (Bayasen vs. CA,
L-25785, Feb. 26, 1981; Vda. de Ramos vs. CA, et al., L40804, Jan. 31,
1978). When an individual's integrity is challenged by evidence, it is not
enough that he deny the charges against him; he must meet the issue and
overcome the evidence for the relator and show proofs that he still maintains
the highest degree of morality and integrity which at all time is expected of
him. (De los Reyes vs. Aznar, Adm. Case No. 1334, Nov. 28, 1989).

Although Paulino was a common farmer who finished only Grade IV, his
testimony, even if not corroborated by another witness, deserves credence
and can be relied upon. His declaration dwelt on a subject which was so
delicate and confidential that it would be difficult to believe the he fabricated
his evidence.

There is a clear preponderant evidence that Atty. Antiniw committed

falsification of a deed of sale, and its subsequent introduction in court
prejudices his prime duty in the administration of justice as an officer of the
court.

A lawyer owes entire devotion to the interest of his client (Santos vs.
Dichoso, 84 SCRA 622), but not at the expense of truth. (Cosmos Foundry
Shopworkers Union vs. La Bu, 63 SCRA 313). The first duty of a lawyer is
not to his client but to the administration of justice. (Lubiano vs. Gordalla,
115 SCRA 459) To that end, his client's success is wholly subordinate. His
conduct ought to and must always be scrupulously observant of law and
ethics. While a lawyer must advocate his client's cause in utmost earnestness
and with the maximum skill he can marshal, he is not at liberty to resort to

SALES
illegal means for his client's interest. It is the duty of an attorney to employ,
for the purpose of maintaining the causes confided to him, such means as are
consistent with truth and honor. (Pangan vs. Ramos, 93 SCRA 87).

Membership in the Bar is a privilege burdened with conditions. By far, the

most important of them is mindfulness that a lawyer is an officer of the court.
(In re: Ivan T. Publico, 102 SCRA 722). This Court may suspend or disbar a
lawyer whose acts show his unfitness to continue as a member of the Bar.
(Halili vs. CIR, 136 SCRA 112). Disbarment, therefore, is not meant as a
punishment depriving him of a source of livelihood but is rather intended to
protect the administration of justice by requiring that those who exercise this
function should be competent, honorable and reliable in order that courts and
the public may rightly repose confidence in them. (Noriega vs. Sison, 125
SCRA 293). Atty. Antiniw failed to live up to the high standards of the law
profession.

The other charges of malpractice against Atty. Antiniw and Atty. Jovellanos
should be dismissed for lack of evidence.

During the proceedings in Administrative Case No. 1543, Lydia Bernal

testified in full on direct examination, but she never submitted herself for
cross-examination. Several subpoenas for cross-examination were unheeded.
She eventually requested the withdrawal of her complaint.

Procedural due process demands that respondent lawyer should be given an

opportunity to cross-examine the witnesses against him.1wphi1 He enjoys
the legal presumption that he is innocent of the charges against him until the
contrary is proved. (Santos vs. Dichoso, 84 SCRA 622). The case must be
established by clear, convincing and satisfactory proof. (Camus vs. Diaz,
Adm. Case No. 1616, February 9, 1989), Since Atty. Antiniw was not
accorded this procedural due process, it is but proper that the direct testimony
of Lydia Bernal be stricken out.

In view also of the affidavit of desistance executed by the complainant,

Administrative Case No. 1543 should be dismissed. Although the filing of an
affidavit of desistance by complainant for lack of interest does not ipso 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.

The additional charge against Atty. Antiniw in Administrative Case No. 1391
is predicated on the information furnished by Lydia Bernal. It was not based
on the personal knowledge of Constancia L. Valencia: hence, hearsay. "Any
evidence, whether oral or documentary, is hearsay if its probative value is not
based on the personal knowledge of the witness but on the knowledge of
some other person not on the witness stand." (Regalado, Remedial Law
Compendium, 6th ed., vol. 2, 1989, p. 486). Being hearsay, the evidence
presented is inadmissible.

The additional charge filed by Constancia L. Valencia against Atty.

Jovellanos in Administrative Case No. 1391 was not proved at all.
Complainant failed to prove her additional charges.

III

There is no evidence on record that the three lawyers involved in these

administrative cases conspired in executing the falsified "Compraventa
Definitiva" and rigged the Civil Case No. V-2170.

Atty. Jovellanos is a distant kin of the Raymundos and Valencias. In fact, he

and the Valencias are neighbors and only two meters separate their houses. It
would not be believable that Atty. Jovellanos, a practicing lawyer, would
hold a meeting with the heirs of Pedro Raymundo in his house with the
intention of inducing them to sue the Valencias. Atty. Jovellanos even tried
to settle the differences between the parties in a meeting held in his house.

SALES
He appeared in Civil Case No. V-2170 as an involuntary witness to attest to
the holding of the conference.

Besides, the camaraderie among lawyers is not proof of conspiracy, but a

sign of brotherhood among them. One of the fourfold duties of a lawyer is his
duty to the Bar. A lawyer should treat the opposing counsel, and his brethren
in the law profession, with courtesy, dignity and civility. They may "do as
adversaries do in law: strive mightily but (they) eat and drink as friends."
This friendship does not connote conspiracy.

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

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

SO ORDERED.

SALES
8. Republic of the Philippines
SUPREME COURT
Manila

fruits to be produced on the said parcel of land during the years period;
which shag commence to run as of SEPTEMBER 15,1968; up to JANUARY
1, 1976 (sic);

FIRST DIVISION
G.R. No. L-36902 January 30, 1982
LUIS PICHEL, petitioner,
vs.
PRUDENCIO ALONZO, respondent.

GUERRERO, J.:

This is a petition to review on certiorari the decision of the Court of First

Instance of Basilan City dated January 5, 1973 in Civil Case No. 820 entitled
"Prudencio Alonzo, plaintiff, vs. Luis Pichel, defendant."

This case originated in the lower Court as an action for the annulment of a
"Deed of Sale" dated August 14, 1968 and executed by Prudencio Alonzo, as
vendor, in favor of Luis Pichel, as vendee, involving property awarded to the
former by the Philippine Government under Republic Act No. 477. Pertinent
portions of the document sued upon read as follows:

That the VENDOR for and in consideration of the sum of FOUR

THOUSAND TWO HUNDRED PESOS (P4,200.00), Philippine Currency,
in hand paid by the VENDEE to the entire satisfaction of the VENDOR, the
VENDOR hereby sells transfers, and conveys, by way of absolute sale, all
the coconut fruits of his coconut land, designated as Lot No. 21 - Subdivision
Plan No. Psd- 32465, situated at Balactasan Plantation, Lamitan, Basilan
City, Philippines;

That for the herein sale of the coconut fruits are for all the fruits on the
aforementioned parcel of land presently found therein as well as for future

That the delivery of the subject matter of the Deed of Sale shall be from time
to time and at the expense of the VENDEE who shall do the harvesting and
gathering of the fruits;

That the Vendor's right, title, interest and participation herein conveyed is of
his own exclusive and absolute property, free from any liens and
encumbrances and he warrants to the Vendee good title thereto and to defend
the same against any and all claims of all persons whomsoever. 1

After the pre-trial conference, the Court a quo issued an Order dated
November 9, 1972 which in part read thus:

The following facts are admitted by the parties:

Plaintiff Prudencio Alonzo was awarded by the Government that parcel of

land designated as Lot No. 21 of Subdivision Plan Psd 32465 of Balactasan,
Lamitan, Basilan City in accordance with Republic Act No. 477. The award
was cancelled by the Board of Liquidators on January 27, 1965 on the
ground that, previous thereto, plaintiff was proved to have alienated the land
to another, in violation of law. In 197 2, plaintiff's rights to the land were
reinstated.

On August 14, 1968, plaintiff and his wife sold to defendant an the fruits of
the coconut trees which may be harvested in the land in question for the
period, September 15, 1968 to January 1, 1976, in consideration of
P4,200.00. Even as of the date of sale, however, the land was still under lease
to one, Ramon Sua, and it was the agreement that part of the consideration of

SALES
the sale, in the sum of P3,650.00, was to be paid by defendant directly to
Ramon Sua so as to release the land from the clutches of the latter. Pending
said payment plaintiff refused to snow the defendant to make any harvest.

In July 1972, defendant for the first time since the execution of the deed of
sale in his favor, caused the harvest of the fruit of the coconut trees in the
land.

xxx

xxx

xxx

Considering the foregoing, two issues appear posed by the complaint and the
answer which must needs be tested in the crucible of a trial on the merits, and
they are:

First. Whether or nor defendant actually paid to plaintiff the full sum of
P4,200.00 upon execution of the deed of sale.

all legal intents and purposes, a contract of lease of the land itself. According
to the Court:

... the sale aforestated has given defendant complete control and enjoyment
of the improvements of the land. That the contract is consensual; that its
purpose is to allow the enjoyment or use of a thing; that it is onerous because
rent or price certain is stipulated; and that the enjoyment or use of the thing
certain is stipulated to be for a certain and definite period of time, are
characteristics which admit of no other conclusion. ... The provisions of the
contract itself and its characteristics govern its nature. 4

The Court, therefore, concluded that the deed of sale in question is an

encumbrance prohibited by Republic Act No. 477 which provides thus:

Sec. 8. Except in favor of the Government or any of its branches, units, or

institutions, land acquired under the provisions of this Act or any permanent
improvements thereon shall not be thereon and for a term of ten years from
and after the date of issuance of the certificate of title, nor shall they become
liable to the satisfaction of any debt contracted prior to the expiration of such
period.

Second. Is the deed of sale, Exhibit 'A', the prohibited encumbrance

contemplated in Section 8 of Republic Act No. 477? 2

Anent the first issue, counsel for plaintiff Alonzo subsequently 'stipulated
and agreed that his client ... admits fun payment thereof by defendant. 3 The
remaining issue being one of law, the Court below considered the case
submitted for summary judgment on the basis of the pleadings of the parties,
and the admission of facts and documentary evidence presented at the pretrial conference.

Any occupant or applicant of lands under this Act who transfers whatever
rights he has acquired on said lands and/or on the improvements thereon
before the date of the award or signature of the contract of sale, shall not be
entitled to apply for another piece of agricultural land or urban, homesite or
residential lot, as the case may be, from the National Abaca and Other Fibers
Corporation; and such transfer shall be considered null and void. 5

The dispositive portion of the lower Court's decision states:

The lower court rendered its decision now under review, holding that
although the agreement in question is denominated by the parties as a deed of
sale of fruits of the coconut trees found in the vendor's land, it actually is, for

SALES
WHEREFORE, it is the judgment of this Court that the deed of sale, Exhibit
'A', should be, as it is, hereby declared nun and void; that plaintiff be, as he
is, ordered to pay back to defendant the consideration of the sale in the sum
of P4,200.00 the same to bear legal interest from the date of the filing of the
complaint until paid; that defendant shall pay to the plaintiff the sum of
P500.00 as attorney's fees.

This brings Us to the issues raised by the instant Petition. In his Brief,
petitioner contends that the lower Court erred:

1.
In resorting to construction and interpretation of the deed of sale in
question where the terms thereof are clear and unambiguous and leave no
doubt as to the intention of the parties;

Costs against the defendant. 6

Before going into the issues raised by the instant Petition, the matter of
whether, under the admitted facts of this case, the respondent had the right or
authority to execute the "Deed of Sale" in 1968, his award over Lot No. 21
having been cancelled previously by the Board of Liquidators on January 27,
1965, must be clarified. The case in point is Ras vs. Sua 7 wherein it was
categorically stated by this Court that a cancellation of an award granted
pursuant to the provisions of Republic Act No. 477 does not automatically
divest the awardee of his rights to the land. Such cancellation does not result
in the immediate reversion of the property subject of the award, to the State.
Speaking through Mr. Justice J.B.L. Reyes, this Court ruled that "until and
unless an appropriate proceeding for reversion is instituted by the State, and
its reacquisition of the ownership and possession of the land decreed by a
competent court, the grantee cannot be said to have been divested of
whatever right that he may have over the same property." 8

There is nothing in the record to show that at any time after the supposed
cancellation of herein respondent's award on January 27, 1965, reversion
proceedings against Lot No. 21 were instituted by the State. Instead, the
admitted fact is that the award was reinstated in 1972. Applying the doctrine
announced in the above-cited Ras case, therefore, herein respondent is not
deemed to have lost any of his rights as grantee of Lot No. 21 under Republic
Act No. 477 during the period material to the case at bar, i.e., from the
cancellation of the award in 1965 to its reinstatement in 1972. Within said
period, respondent could exercise all the rights pertaining to a grantee with
respect to Lot No. 21.

2.
In declaring granting without admitting that an interpretation is
necessary the deed of sale in question to be a contract of lease over the
land itself where the respondent himself waived and abandoned his claim that
said deed did not express the true agreement of the parties, and on the
contrary, respondent admitted at the pre-trial that his agreement with
petitioner was one of sale of the fruits of the coconut trees on the land;

3.
In deciding a question which was not in issue when it declared the
deed of sale in question to be a contract of lease over Lot 21;

4.
In declaring furthermore the deed of sale in question to be a contract
of lease over the land itself on the basis of facts which were not proved in
evidence;

5.
In not holding that the deed of sale, Exhibit "A" and "2", expresses a
valid contract of sale;

6.
In not deciding squarely and to the point the issue as to whether or
not the deed of sale in question is an encumbrance on the land and its
improvements prohibited by Section 8 of Republic Act 477; and

SALES
7.
In awarding respondent attorney's fees even granting, without
admitting, that the deed of sale in question is violative of Section 8 of
Republic Act 477.

Art. 1458. By the contract of sale one of the contracting parties obligates
himself to transfer the ownership of and to deliver a determinate thing, and
the other to pay therefor a price certain in money or its equivalent.

The first five assigned errors are interrelated, hence, We shall consider them
together. To begin with, We agree with petitioner that construction or
interpretation of the document in question is not called for. A perusal of the
deed fails to disclose any ambiguity or obscurity in its provisions, nor is there
doubt as to the real intention of the contracting parties. The terms of the
agreement are clear and unequivocal, hence the literal and plain meaning
thereof should be observed. Such is the mandate of the Civil Code of the
Philippines which provides that:

A contract of sale may be absolute or conditional.

Art. 1370. If the terms of a contract are clear and leave no doubt upon the
intention of the contracting parties, the literal meaning of its stipulation shall
control ... .

Pursuant to the afore-quoted legal provision, the first and fundamental duty
of the courts is the application of the contract according to its express terms,
interpretation being resorted to only when such literal application is
impossible. 9

Simply and directly stated, the "Deed of Sale dated August 14, 1968 is
precisely what it purports to be. It is a document evidencing the agreement of
herein parties for the sale of coconut fruits of Lot No. 21, and not for the
lease of the land itself as found by the lower Court. In clear and express
terms, the document defines the object of the contract thus: "the herein sale
of the coconut fruits are for an the fruits on the aforementioned parcel of land
during the years ...(from) SEPTEMBER 15, 1968; up to JANUARY 1,
1976." Moreover, as petitioner correctly asserts, the document in question
expresses a valid contract of sale. It has the essential elements of a contract
of sale as defined under Article 1485 of the New Civil Code which provides
thus:

The subject matter of the contract of sale in question are the fruits of the
coconut trees on the land during the years from September 15, 1968 up to
January 1, 1976, which subject matter is a determinate thing. Under Article
1461 of the New Civil Code, things having a potential existence may be the
object of the contract of sale. And in Sibal vs. Valdez, 50 Phil. 512, pending
crops which have potential existence may be the subject matter of the sale.
Here, the Supreme Court, citing Mechem on Sales and American cases said
which have potential existence may be the subject matter of sale. Here, the
Supreme Court, citing Mechem on Sales and American cases said:

Mr. Mechem says that a valid sale may be made of a thing, which though not
yet actually in existence, is reasonably certain to come into existence as the
natural increment or usual incident of something already in existence, and
then belonging to the vendor, and the title will vest in the buyer the moment
the thing comes into existence. (Emerson vs. European Railway Co., 67 Me.,
387; Cutting vs. Packers Exchange, 21 Am. St. Rep. 63) Things of this nature
are said to have a potential existence. A man may sell property of which he is
potentially and not actually possess. He may make a valid sale of the wine
that a vineyard is expected to produce; or the grain a field may grow in a
given time; or the milk a cow may yield during the coming year; or the wool
that shall thereafter grow upon sheep; or what may be taken at the next case
of a fisherman's net; or fruits to grow; or young animals not yet in existence;
or the goodwill of a trade and the like. The thing sold, however, must be
specific and Identified. They must be also owned at the time by the vendor.
(Hull vs. Hull 48 Conn. 250 (40 Am. Rep., 165) (pp. 522-523).

We do not agree with the trial court that the contract executed by and
between the parties is "actually a contract of lease of the land and the coconut
trees there." (CFI Decision, p. 62, Records). The Court's holding that the

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contract in question fits the definition of a lease of things wherein one of the
parties binds himself to give to another the enjoyment or use of a thing for a
price certain and for a period which may be definite or indefinite (Art. 1643,
Civil Code of the Philippines) is erroneous. The essential difference between
a contract of sale and a lease of things is that the delivery of the thing sold
transfers ownership, while in lease no such transfer of ownership results as
the rights of the lessee are limited to the use and enjoyment of the thing
leased.

In Rodriguez vs. Borromeo, 43 Phil. 479, 490, the Supreme Court held:

Since according to article 1543 of the same Code the contract of lease is
defined as the giving or the concession of the enjoyment or use of a thing for
a specified time and fixed price, and since such contract is a form of
enjoyment of the property, it is evident that it must be regarded as one of the
means of enjoyment referred to in said article 398, inasmuch as the terms
enjoyment, use, and benefit involve the same and analogous meaning relative
to the general utility of which a given thing is capable. (104 Jurisprudencia
Civil, 443)

In concluding that the possession and enjoyment of the coconut trees can
therefore be said to be the possession and enjoyment of the land itself
because the defendant-lessee in order to enjoy his right under the contract, he
actually takes possession of the land, at least during harvest time, gather all
of the fruits of the coconut trees in the land, and gain exclusive use thereof
without the interference or intervention of the plaintiff-lessor such that said
plaintiff-lessor is excluded in fact from the land during the period aforesaid,
the trial court erred. The contract was clearly a "sale of the coconut fruits."
The vendor sold, transferred and conveyed "by way of absolute sale, all the
coconut fruits of his land," thereby divesting himself of all ownership or
dominion over the fruits during the seven-year period. The possession and
enjoyment of the coconut trees cannot be said to be the possession and
enjoyment of the land itself because these rights are distinct and separate
from each other, the first pertaining to the accessory or improvements
(coconut trees) while the second, to the principal (the land). A transfer of the
accessory or improvement is not a transfer of the principal. It is the other way

around, the accessory follows the principal. Hence, the sale of the nuts
cannot be interpreted nor construed to be a lease of the trees, much less
extended further to include the lease of the land itself.

The real and pivotal issue of this case which is taken up in petitioner's sixth
assignment of error and as already stated above, refers to the validity of the
"Deed of Sale", as such contract of sale, vis-a-vis the provisions of Sec. 8,
R.A. No. 477. The lower Court did not rule on this question, having reached
the conclusion that the contract at bar was one of lease. It was from the
context of a lease contract that the Court below determined the applicability
of Sec. 8, R.A. No. 477, to the instant case.

Resolving now this principal issue, We find after a close and careful
examination of the terms of the first paragraph of Section 8 hereinabove
quoted, that the grantee of a parcel of land under R.A. No. 477 is not
prohibited from alienating or disposing of the natural and/or industrial fruits
of the land awarded to him. What the law expressly disallows is the
encumbrance or alienation of the land itself or any of the permanent
improvements thereon. Permanent improvements on a parcel of land are
things incorporated or attached to the property in a fixed manner, naturally or
artificially. They include whatever is built, planted or sown on the land
which is characterized by fixity, immutability or immovability. Houses,
buildings, machinery, animal houses, trees and plants would fall under the
category of permanent improvements, the alienation or encumbrance of
which is prohibited by R.A. No. 477. While coconut trees are permanent
improvements of a land, their nuts are natural or industrial fruits which are
meant to be gathered or severed from the trees, to be used, enjoyed, sold or
otherwise disposed of by the owner of the land. Herein respondents, as the
grantee of Lot No. 21 from the Government, had the right and prerogative to
sell the coconut fruits of the trees growing on the property.

By virtue of R.A. No. 477, bona fide occupants, veterans, members of

guerilla organizations and other qualified persons were given the opportunity
to acquire government lands by purchase, taking into account their limited
means. It was intended for these persons to make good and productive use of
the lands awarded to them, not only to enable them to improve their standard

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of living, but likewise to help provide for the annual payments to the
Government of the purchase price of the lots awarded to them. Section 8 was
included, as stated by the Court a quo, to protect the grantees from
themselves and the incursions of opportunists who prey on their misery and
poverty." It is there to insure that the grantees themselves benefit from their
respective lots, to the exclusion of other persons.

The purpose of the law is not violated when a grantee sells the produce or
fruits of his land. On the contrary, the aim of the law is thereby achieved, for
the grantee is encouraged and induced to be more industrious and productive,
thus making it possible for him and his family to be economically selfsufficient and to lead a respectable life. At the same time, the Government is
assured of payment on the annual installments on the land. We agree with
herein petitioner that it could not have been the intention of the legislature to
prohibit the grantee from selling the natural and industrial fruits of his land,
for otherwise, it would lead to an absurd situation wherein the grantee would
not be able to receive and enjoy the fruits of the property in the real and
complete sense.

the question of whether or not in accordance with Our ruling in this case,
respondent is entitled to an award of attorney's fees. The Civil Code provides
that:

Art. 2208. In the absence of stipulation, attorney's fees and expenses of

litigation, other than judicial costs, cannot be recovered, except:
(1)

When exemplary damages are awarded;

(2) When the defendant's act or omission has compelled the plaintiff to
litigate with third persons or to incur expenses to protect his interest;
(3) In criminal cases of malicious prosecution against the plaintiff;
(4) In case of a clearly unfounded civil action or proceeding against the
plaintiff;
(5) Where the defendant acted in gross and evident bad faith in refusing to
satisfy the plaintiff's plainly valid, just and demandable claim;

Respondent through counsel, in his Answer to the Petition contends that even
granting arguendo that he executed a deed of sale of the coconut fruits, he
has the "privilege to change his mind and claim it as (an) implied lease," and
he has the "legitimate right" to file an action for annulment "which no law
can stop." He claims it is his "sole construction of the meaning of the
transaction that should prevail and not petitioner. (sic). 10 Respondent's
counsel either misapplies the law or is trying too hard and going too far to
defend his client's hopeless cause. Suffice it to say that respondent-grantee,
after having received the consideration for the sale of his coconut fruits,
cannot be allowed to impugn the validity of the contracts he entered into, to
the prejudice of petitioner who contracted in good faith and for a
consideration.

(6) In actions for legal support;

(7) In actions for the recovery of wages of household helpers, laborers and
skilled workers;
(8) In actions for indemnity under workmen's compensation and employer's
liability laws;
(9) In a separate civil action to recover civil liability arising from a crime;
(10) When at least double judicial costs are awarded;
(11) In any other case where the court deems it just and equitable that
attorney's fees and expenses of litigation should be recovered.

The issue raised by the seventh assignment of error as to the propriety of the
award of attorney's fees made by the lower Court need not be passed upon,
such award having been apparently based on the erroneous finding and
conclusion that the contract at bar is one of lease. We shall limit Ourselves to

In all cases, the attorney's fees and expenses of litigation must be reasonable.
We find that none of the legal grounds enumerated above exists to justify or
warrant the grant of attorney's fees to herein respondent.

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IN VIEW OF THE FOREGOING, the judgment of the lower Court is hereby
set aside and another one is entered dismissing the Complaint. Without costs.
SO ORDERED.