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16. Rosario de Laig et al. v. CA et al, G.R. No.

L-26882, November 21, 1978

I. Doctrine: *see bullet 3


II. Facts:

Petre Galero (one of the respondent) obtained rained from the Bureau of Lands Homestead
219,949 square meters of land located at Barrio Pinagtambangan, Labo, Camarines Norte.
Galero sold the land to a certain Mario Escuta for P300.00. Escuta in turn, sold the same land
to Florencio Caramoan. Later, however, Petre Galero, through proper court action, and with
Atty. Benito K. Laig the deceased husband of herein petitioner Rosario Vda. de Laig as
counsel recovered the land, the court having been convinced that its alienation violated
Section 118 of the Public Land Act.
A deed of sale was executed by and between Petre Galero as vendor and Atty. Benito K. Laig
as vendee, whereby the former sold to the latter the land in question with its improvements,
for P1,500.00 plus attorney's fees due Atty. Laig for his legal services as counsel for Galero in
the successful reconveyance case.
o Unfortunately, Atty. Benito K. Laig failed to solicit the approval of the Secretary of
Agriculture and Natural Resources, as required by Section 118 of the Public Land
Act, as amended. It was only after Atty. Laig's death in 1951 that his wife, herein
petitioner Rosario, noticed the deficiency.
Petitioner Vda. de Laig wrote the then Register of Deeds of Camarines Norte, respondent
Baldomero M. Lapak, stating that the disputed parcel of land covered by original Certificate
of Title No. 1097 in the same of Petre Galero, had been sold to her late husband, requesting
that she be informed of any claim of ownership by other parties so that she could take the
necessary steps, and serving notice of her claim over the said property as surviving spouse of
the late Atty. Laig and as natural guardian of their children.
o Register of Deeds Lapak replied that Original Certificate of Title No. 1097 was still
intact and took note of her letter.
Petitioner Vda. de Laig filed with the Bureau of Lands an affidavit together with copy of the
deed of sale in her husband's favor. Said affidavit stated that she wanted to have the
ownership over the land transferred to her husband's name.
The Bureau of Lands forwarded the said affidavit of Vda. de Laig, together with the deed of
sale, to the Office of the Secretary of Agriculture and Natural Resources with a
recommendation that the said deed of sale be approved as the same does not violate any
pertinent provisions of the Public Land Act.
On the same day, the Office of the Secretary of Agriculture and Natural Resources, approved
the deed of sale. Moreover, the Office of the Director of Land addressed a letter to Atty.
Benito Laig informing him of the approval of the deed of sale executed by and between him
and Petre Galero.
On July 15, 1952, Petre Galero sought in court the issuance of a second owner's duplicate
copy claiming that his first duplicate of said OCT was lost during World War.
o A second duplicate copy was granted (after only 4 days) and Galero then executed
in favor of respondent Carmen Verzo a deed of sale of the land.
o Petitioner de Laig later found out that about the cancellation of the OCT in favor of
Galero and the issuance of the same in favor of Verzo.

Petitioner then initiated this case praying for the annulment of the sale in favor of Carmen
Verzo and the cancellation of the second owner's duplicate of Original Certificate of Title No.
1097 and Transfer Certificate of Title No. T-1055 by declaring the first OCT No. 1097 valid
and effective or in the alternative, by ordering Carmen Verzo to reconvey the land in question
to petitioners, plus P5,000.00 by way of damages.
RTC and CA: case dismissed, ruled in favor of respondents. The SC reversed this decision
stating that there is bad faith on the part of respondents. Atty. Laig was the first possessor in
good faith. Hence this Motion for Reconsideration.

III. Issue: Whether first sale of the property in question made by Petre Galero in favor of Atty. Benito
Laig was void ab initio, for being in violation of Article 1491, paragraph 5, of the New Civil Code.
(NO.)
IV. Held:

Article 1491.The following persons cannot acquire by purchase, even at a public or judicial
action, either in person or through the mediation of another: (5) Justices,
judges,
prosecuting attorneys, clerks of superior and inferior courts and other officers and
employees connected with the administration of justice, the property and rights in litigation
or levied upon an execution before the court within whose jurisdiction or territory they
exercise their respective functions; this prohibition includes the act of acquiring by
assignment and shall apply to lawyers, with respect to the property and right which may be
the object of any litigation in which they may take part by virtue of their profession.
(Emphasis supplied).

It must be noted that only one-half [1/2] of the property in question was sold by Petre Galero
to Atty. Laig; because the other one-half () was given to him as contingent attorney's fees
for his legal services as counsel of Petre Galero.
The first sale of the one-half () of the property in question in favor of Atty. Laig was not in
violation of Art. 1491, paragraph 5. The prohibition in said article applies only to a sale or
assignment to the lawyer by his client of the property which is the subject of litigation.
In other words, for the prohibition to operate, the sale or assignment of the property
must take place during the pendency of the litigation involving the properly.

When the one-half portion of the property in question was sold by Petre Galero to Atty. Laig
on June 1, 1948, the decision in Civil Case No. 164-R-14 was already final and therefore the
property in question was no longer subject of litigation. Hence Atty. Laig was no longer
prohibited from buying the property in question because "attorneys are only prohibited from
buying their clients' property which is the subject of litigation.

Furthermore, any question on the validity of the sale of the one-half of the property in
question has been foreclosed by the final decision in Criminal Case No. 533 which upheld the
genuineness and in effect the validity of the sale made by Petre Galero in favor of Atty. Laig.

With respect to the other one-half (1/2) of the property in question, which was given to Atty.
Laig as his attorney's fees on a contingent basis, the Court finds nothing wrong in this for the
reason that contingent fees are recognized in this jurisdiction (Canon 13 of the Canons of
Professional Ethics adopted by the Philippine Bar Association in 1917 [Appendix B, Revised
Rules of Court]), which contingent fees may be a portion of the property in litigation.

WHEREFORE, THE MOTION FOR RECONSIDERATION OF RESPONDENT CARMEN


VERSO AND THE PETITION OF ATTY. JOSE LOZADA LAPAK ARE HEREBY
DENIED, FOR LACK OF MERIT.

NOTES:

In the first case decided by the Supreme Court, it was held that respondent Carmen Verzo was
not in good faith when she facilitated the registration of her deed of sale.
At the time of the sale of the land in question by Petre Galero to Atty. Benito K. Laig, the
latter was a boarder of Carmen Verzo in her house. Atty. Benito K. Laig, as her boarder, must

have mentioned to Carmen Verzo, his landlady, the land sold to him by Galero. By the same
token, Carmen Verzo must have known such sale.
Logically, therefore, since, as has already been earlier shown, respondent Carmen Verzo was
not a purchaser in good faith, she could never have been a registrant in good faith of the deed
of sale of said land in her favor. Consequently, she cannot claim the protection accorded to a
registrant in good faith by paragraph 2, Article 1544 of the New Civil Code.
Finally, since there is no valid inscription to speak of in the present case, the applicable
provision of law is paragraph 3, Article 1544, New Civil Code (Carbonell vs. Hon. Court of
Appeals, supra), which states: Should there be no insciption, the ownership shall pertain to
the person who in good faith was first in the possession; and, in the ab thereat to the person
who presents the oldest title, provided there is good faith (emphasis supplied).