1. Domingo v. CA (367 SCRA 368) death. In Alcos v.
death. In Alcos v. IAC, 162 SCRA 823 (1988), the buyer’s immediate possession and
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. BIGONAN,
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.
Courts; Judges; Judgments; 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.—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.
After all, he could utilize and rely on the records of the case, including the transcripts of
testimonies heard by the former presiding judge.
Actions; Pleadings and Practice; Certification Against Forum-Shopping; Where the
petitioners attached the certification against forum-shopping in the copy intended for
the Supreme Court, the same constitutes substantial compliance.—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 court’s existence.
Appeals; While the issues raised in a petition might appear to be mainly factual, the
petition may properly be given due course where there are contradictory findings of
the trial court and the Court of Appeals.—While the issues raised in this petition might
appear to be mainly factual, this petition is properly given due course because of the
contradictory 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 overlooked
certain relevant facts which justify a different conclusion. 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.
Sales; The alleged vendor’s continued possession of the property throws an inverse
implication, a serious doubt on the due execution of the deed of sale.—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
1
occupation of the property was deemed corroborative of the truthfulness and authenticity of
the deed of sale. The alleged vendor’s 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. These circumstances, taken together, militate against unguarded acceptance of
the due execution and genuineness of the alleged deed of sale.
Same; Consideration is the “why” of a contract, the essential reason which moves
the contracting parties to enter into the contract.—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. On record, there is unrebutted testimony
that Paulina as landowner was financially well off. She loaned money to several people. 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.
Same; Contracts; Capacity; The general rule is that a person is not incompetent to
contract merely because of advanced years or by reason of physical infirmities, but
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.—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. 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.
PETITION for review on certiorari of a decision of the Court of Appeals.
The facts are stated in the opinion of the Court.
Herman D. Coloma for petitioners.

Eddie Tamondong for private respondents.
QUISUMBING, J.:
This petition1 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 reivindicacion 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, as 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. Tagatag3 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
2
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 Paulina’s 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.
Plaintiff Felipe Rigonan claimed that he was Paulina’s close relative. Their fathers were first
cousins. However, he could not recall the name of Paulina’s 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 (plaintiff’s) 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
Paulina’s 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.
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.
Zosima Domingo testified that her husband, Eugenio Domingo, was Paulina’s nephew.
Paulina was a first cousin of Eugenio’s 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 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;
c)P10,000.00 attorney’s fees and other litigation expenses.
No pronouncement as to costs.4
Private respondents herein appealed to the Court of Appeals.
On August 29, 1996, the CA reversed the trial court’s 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-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 said findings are established by unrebutted testimonial and documentary evidence. They
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
3
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 document’s 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
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. Tagatag’s (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, Paulina’s housekeeper, who said that she did not see
Atty. Tagatag, Juan Franco and Efren Sibucao in Paulina’s house on the alleged date of the
deed’s execution.
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.
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 seller’s 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 due to inadvertence. Petitioners ask for the
Court’s 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
4
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.
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 court’s 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 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.
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 Paulina’s 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 cross-examined 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
We note that another witness, Efren Sibucao, whose testimony should have corroborated
Atty. Tagatag’s, was not presented and his affidavit was withdrawn from the court,15 leaving
only Atty. Tagatag’s 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 deed’s 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 and June
10, 1966, 3:16 P.M.,18 and different entry numbers: 66246, 7438919 and 64369.20 The
deed was apparently registered long after its alleged date of execution and after Paulina’s
death on March 20, 1966.21 Admittedly, the alleged vendor Paulina Rigonan was not given
a copy.22
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 buyer’s immediate possession
and occupation of the property was deemed corroborative of the truthfulness and
authenticity of the deed of sale. The alleged vendor’s 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.
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 house’s roof. We ruled
against petitioners, and declared that there was no valid sale because of lack of
consideration.
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
5
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 court’s 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.
2. Medina v. Collector of Internal Revenue (1 SCRA 302)
ANTONIO MEDINA, petitioner, vs. COLLECTOR OF INTERNAL REVENUE and THE
COURT OF TAX APPEALS, respondents.
Husband and wife; Antenuptial agreement; Evidence; Sales between husband and
wife.—The facts of the case negative the existence of an antenuptial agreement between
husband and wife. Where the husband, in 1953, was already apprised that his sales of logs
to his wife were void under article 1400 of the New Civil Code, and it was only in 1954 that
he claimed that there was an agreement between him and his wife for separation of
property, such an allegation cannot be given credence.
Evidence; Appeals; Findings of trial court.—When the credibility of witnesses is one in
issue, the trial court's judgment as to their degree of credence deserves serious
consideration.
Same; Best evidence rule.—Where not every copy of a supposed antenuptial agreement
had been accounted for as lost, then, under the best evidence rule, little or no credence can
be given to the oral testimony as secondary evidence, to prove the due execution and
contents of the alleged agreement.
Sales; Husband and wife; Provisions of the Code of Commerce.—Articles 7 and 10 of
the Code of Commerce do not allow sales between husband and wife. Said provisions
merely state, under certain conditions, a presumption that the wife is authorized to engage
in business and state the incidents that flow therefrom when she so engages therein. The
transactions permitted are those with strangers and they do not constitute exceptions to the
prohibitory exceptions of article 1490 of the New Civil Code against sales between spouses.
Same; Right of Government to assail sales between husband and wife.—The
government is always an interested party in all matters involving taxable transactions. It is
competent to question their validity or legitimacy whenever necessary to block tax evasion.
It can impugn sales between husband and wife.
Same.—Contracts violative of article 1490 of the New Civil Code are void.
Taxation; Sales tax; Sales between husband and wife.—Sales made by the husband to
the wife are void. Being void, they were correctly disregarded by the Commissioner of
Internal Revenue.
Constitutional law; Evidence; Illegally seized evidence is admissible.—Illegally
obtained documents and papers are admissible in evidence, if found to be competent and
relevant to the case.
PETITION for review by certiorari of a decision of the Court of Tax Appeals.
The facts are stated in the opinion of the Court.
Eusebio D. Morales for petitioner.
Solicitor General for respondents.
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
6
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.
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, 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.
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 pre-marital
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 P 7,209.83—1949..............................P 360.49
5% tax due on 16,945.55—1950 ...............................847.28
5% tax due on 16,874.52—1951................................843.76
5% tax due on 11,009.94—1952................................550.50
TOTAL sales tax due ..............................................P2,602.02
25% Surcharge thereon ...........................................650.51
Short taxes per quarterly returns, 3rd quarter, 195058.52
25% Surcharge thereon ...........................................14.63
TOTAL AMOUNT due & collectible ........................P3.326.68
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 pre-marital
agreement of absolute separation of property between the Medina spou&es; 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 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.
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 whichbook was among those
saved from the ravages of the war, did not show that the document in question was among
those recorded therein.
7
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 cannot 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.
Padilla, Bautista Angelo, Labrador, Barrera, Gutierrez David and Dizon, JJ., concur.
3. Matabuena v. Cervantes (38 SCRA 284)
CORNELIA MATABUENA, plaintiff-appellant, vs. PETRONILA CERVANTES, defendant-
appellee.
Civil law; Donations; Donation between common-law spouses void.—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.
Same; Same; Reason for the rule.—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
engañen 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 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.
Statutory construction; Omission must be remedied by adherence to its avowed
objective.—If there is ever any occasion where the principle of statutory construction that
what is within the spirit of the law is 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 remedial by an adherence to its avowed objective.
APPEAL from a decision of the Court of First Instance of Sorsogon. Yap, J.
8
The facts are stated in the opinion of the Court.
Alegre, Roces, Salazar & Sañez for plaintiff-appellant.
Fernando Gerona, Jr. for defendant-appellee.
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 of 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 latter’s 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 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 plaintiff’s
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-donee and the now deceased donor and later
said donor and donee 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 Code8 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 engañen 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 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
9
mforma la ley debe ser la luz que ha de guiar a los tribunales en la aplicación 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.
Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Castro, Barredo, Villamor
and Makasiar, JJ., concur.
Teehankee, J., took no part.
Decision reversed; case remanded to lower court for its appropriate disposition.
4. Calimlim-Canullas v. Fortun (129 SCRA 675)
No. L-57499. June 22, 1984.*
MERCEDES CALIMLIM-CANULLAS, petitioner, vs. HON. WILLELMO FORTUN, Judge,
Court of First Instance of Pangasinan, Branch I, and CORAZON DAGUINES, respondents.
Property; Husband and Wife; Where conjugal house is constructed on land belonging
exclusively to the husband, the land ipso facto becomes conjugal, but husband is
entitled to reimbursement of value of land.—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, which value would be
reimbursed at the liquidation of the conjugal partnership.
Same; Same; Same.—“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). x x x”
Same; Same; Same; Sale; Consent of wife needed for validity of sale of land of
husband on which conjugal house was constructed.—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.
Same; Same; Same; Sale to concubine null and void.—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.
PETITION for certiorari to review the decision of the Court of First Instance of Pangasinan,
Br. I. Fortun, J.
The facts are stated in the opinion of the Court.
Fernandez Law Offices for petitioner.
Francisco Pulido for respondents.
MELENCIO-HERRERA, J.:
A 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.
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
10
judgment rendered on October 27, 1981 by the then Court of First Instance of Pangasinan,
Branch II, which judgment has become final.
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.”
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 (½) 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;
“(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:
x x x”
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.
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:
“x x x
“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
In his commentary on the corresponding provision in the Spanish Civil Code (Art. 1404),
Manresa stated:
“El articulo cambia la doctrina; los edificios construidos durante el matrimonio en suelo
propio de uno de los conjuges son gananciales, abonandose el valor del suelo al conjuge 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 JBL Reyes in Padilla vs. Paterno, 3 SCRA 678, 691 (1961), where the following
was explained:
“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). x x x”
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
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
11
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 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 will 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 well 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, x x x, 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” (Italics 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.
Teehankee, (Chairman), Plana, Relova, Gutierrez, Jr., and De la Fuente, JJ., concur.
Decision set aside.
5. Rubias v. Batiller (51 SCRA 120)
`No. L-35702. May 29, 1973
DOMINGO D. RUBIAS, plaintiff-appellant, vs. ISAIAS BATILLER, defendant-appellee.
Actions; Dismissal of complaint for declaration of absolute ownership and
restoration of possession of land where plaintiff has no right or title thereto; Case at
bar.—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 made in 1956 by his
father-in-law in his favor at a time when the latter's application for registration thereof had
already been dismissed by the land registration court and was pending appeal in the Court
of Appeals. With the appellate court's 1958 final judgment affirming the dismissal of the
vendor's application for registration, the lack of any rightful claim or title of the said vendor 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 the vendor's purported sale in 1956 in
favor of the 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.
Sales; Prohibition against purchase by lawyer of property in litigation from his client;
Article 1491, paragraph (5) of the Philippine Civil Code construed.—Article 1491 of the
Civil Code of the Philippines (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 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; (5) judicial officers and
employees, prosecuting attorneys, and lawyers; and (6) others specially disqualified by law.
Same; Prohibited purchase void and produces no legal effect.—Castan's rationale for
his conclusion that fundamental considerations of public policy render void and inexistent
such expressly prohibited purchases (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 submitted to or handled by them, under Article 1491, paragraphs (4) and (5) of
the Civil Code of the Philippines) has been adopted in a new article of the Civil Code of the
12
Philippines, viz, Article 1409 declaring such prohibited contracts as "inexistent and void from
the beginning."
Same; Nullity of such prohibited contracts cannot be cured by ratification.—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.
Same; Nullity of such prohibited contracts differentiated from the nullity of contracts of
purchase by the guardians, agents and administrators.—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, its has been opined, may be "ratified" by means of and "in the form of a new
contract, in which case its validity shall be determined only by the circumstances at the time
of 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 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.
APPEAL from a decision of the Court of First Instance of Iloilo. Rovira, J.
The facts are stated in the opinion of the Court.
Gregorio M. Rubias for plaintiff-appellant.
Vicente R. Acsay for defendant-appellee.
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 in 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 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.
The appellate court, in its resolution of certification of 25 July 1972, gave the following
backgrounder of the appeal at bar:
"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 Psu-99791 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 allegedly
entered said portions of the lot on two occasions—in 1945 and in 1959. Plaintiff prayed also
for damages and attorney's 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-in-interest 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 P2,000.00, as well as the sum of
P500.00 for attorney's fees, x x x
"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:
'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 introduce 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.)
13
2.Before the war with Japan, Francisco Militante filed with the Court of First Instance of Iloilo
an application for the registration of 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 in the Court of 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 trial this Court dismissed the application
for registration. The applicant, Francisco Militante, appealed from the decision of this Court
to the Court of Appeals where the case was docketed as CA-G.R. No. 13497-R.
3.Pending the disposal of the appeal in CA-G.R. 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 14, 1960 (Exh. ‘A-1').
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 -13497, 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. 13497-R 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 Demontaño for the land described
therein (Exh. 'F') was cancelled by Tax. Dec. No. 5172 of Francisco Militante (Exh. 'E').
Liberato Demontaño 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. Noc. 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 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.
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 Lands on November 15, 1956 was issued, identified as Psu
155241 (Exh. ‘5').
10.On April 22, 1960, the plaintiff filed a 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 filed 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').
(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 x x x.")
B. During the trial of this case on the merit, the plaintiff will prove by competent evidence the
following:
1.That the land he purchased from Francisco Militante under Exh. 'A' was formerly owned
and possessed by Liberato Demontaño, but that on September 6, 1919 the land was sold at
14
public auction by virtue of a judgment in a Civil Case entitled 'Edw. J. Pflieder, plaintiff vs.
Liberato Demontaño, Francisco Balladeros and Gregorio Yulo, defendants', of which Yap
Pongco was the purchaser (Exh. '1-2'). The sale was registered in the Office of the Register
of Deeds of Iloilo on August 4, 1920, under Primary Entry No. 69 (Exh. '1-3') and a definite
Deed of Sale was executed by Constantino A. Canto, provincial Sheriff of Iloilo, on Jan. 19,
1934 in favor of Yap Pongco (Exh. '1'), the sale having been registered in the Office of the
Register of Deeds of Iloilo on February 10, 1934 (Exh. '1-1').
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').
3.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-155241 (Exh. '5') was originally owned and possessed by Felipe
Batiller, grandfather of the defendant, who was succeeded by 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:
"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 a 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 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:
x x x '3.The lower court erred in entertaining the motion to dismiss of the defendant-appellee after
(7) Those expressly prohibited or declared void by law.
'ART. 1491. The following persons cannot acquire any purchase, even at a public or judicial
auction, either in person or through the mediation of another:
x x x was made when plaintiff was counsel of his father-in-law in a land registration case
(5) Justices, judges, prosecuting attorneys, clerks of superior and inferior courts, and other
officers and employees connected with the administration of justice, the property and rights
in litigation or levied upon an execution before the court within whose jurisdiction or territory
they exercise their respective functions; this prohibition includes the act of acquiring by
assignment and shall apply to lawyers, with respect to the property and rights which may be
the object of any litigation in which they may take part by virtue of their profession.'
defendant claims that plaintiff could not have acquired any interest in the property in dispute
as the contract he (plaintiff) had with 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 dismissing plaintiff's 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
Francisco Militante was null and 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:
'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.
15
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 plaintiff-appellant.' "
The appellate court concluded that plaintiff's "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
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.
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
Demontaño 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 void from the beginning" 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 Martinez7 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-client but by the adverse parties
against whom the lawyer was seeking 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 Vicenta 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 Macaraeg immediately arose, and the herein appellant Sisenando Palarca acted
as Soriano's lawyer.
16
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 described 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 may tak e part by virtue of their profession. The application for
registration was consequently denied, and upon appeal by Palarca to the Supreme Court,
the judgment 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 Vicenta 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
Palarca and ordered the registration of the land in his name. Upon appeal to this court by
the administrators of the estates of Juan Soriano and Vicenta 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; (5) 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 Manresa10 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 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:
" x x x la prohibición que el articulo 1459 del C.C. establece respecto a los administradores
y apoderados, la cual tiene conforme a la doctrina de esta Sala, contenida entre otras, en
S. de 27-5-1959, un fundamento de orden moral, dando lugar la violación de esta regla a la
nulidad de pleno derecho del acto ó negocio celebrado, x x x y porque al realizarse el acto
juridico en contravención con una prohibición legal, afectante al orden público, no cabe con
efecto alguno la aludida ratificación x x x"13
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.
Citing the same decision of the Supreme Court of Spain, Gullón Ballesteros, in his "Curso
de Derecho Civil, (Contratos Especiales)" (Madrid, 1968) p. 18, affirms that, with respect to
Article 1459, Spanish Civil Code:
"Qúe carácter tendrá la compra que se realice por estas personas? Por supuesto no cabe
duda de que en el caso del (art.) 1459, 4° y 5°, la nulidad es absoluta porque el motivo de
la prohibición es de orden público."14
17
Perez Gonzales concurs in such view, stating that "Dado el carácter prohibitivo del
precepto, la consequencia de la infracción es la nulidad radical y ex lege."15
Castan, quoting Manresa's own observation that
"El fundamento de esta prohibición es clarísimo. No se trata con este precepto tan solo de
quitar la ocasión al fraude; persiguese, además, el propósito de rodear a las personas que
intervienen en la administración de justicia de todos los restigios que necesitan para ejercer
su ministerio, librándolos de toda sospecha, que aunque fuere infundada, redundaría en
descredito de la institución."
considerarse en nuestro derecho inexistente ó radicalmente nulo el contrato en los
siguentes cases: a) x x x ; b) cuando el contrato se ha celebrado en violación de una
prescripción ó prohibición legal, fundada sobre motivos de orden público (hipótesis del art.
4 del Código) x x x."17
It is noteworthy that Castan's rationale for his conclusion that fundamental considerations 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 submitted to or handled by them,
under Article 1491, paragraphs (4) and (5) of our Civil Code) has been adopted in a new
article of our Civil Code, viz, Article 1409 declaring such prohibited contracts as "inexistent
and void from the beginning."18
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 this 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 has been opined that they may be "ratified" by means of and in "the form of
a new contract, in which case its validity shall be determined only by the circumstances at
the time of 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
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 defendant-appellant. 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 inexistence 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 reivindicatoria; 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
assert the nullity of an assignment of credit as a defense to an action by the assignee.
"Action On Contract.—Even when the contract is void or inexistent, an action is necessary
to delare 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.
"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.
Makalintal, Actg. C.J., Zaldivar, Castro, Fernando, Barredo, Makasiar, Antonio and
Esguerra, JJ., concur.
Order affirmed.
Notes.—a) Purchase by lawyer before commencement of lawyer-client relationship.—
Granting that they were attorneys for the defendant, yet they were not forbidden to buy the
property in question. Attorneys are only prohibited from buying their client's property which
is the subject of litigation. The questioned sale was effected before the subject thereof
became involved in the present action. There was already at the time of the sale a litigation
over this property between the parties but the attorneys were not the defendant's attorneys
in that case (Gregorio Araneta, Inc. vs. Tuason de Paterno, L-2886, August 22, 1952).
b) Extent of article 1491, Civil Code.—Article 1491 does not prohibit a lawyer from acquiring
a certain percentage of the value of the properties in litigation that may be awarded to his
client. A contingent fee based on such value is allowed (Recto vs. Harden, L-6897,
November 29, 1956). behalf of his client (Diaz vs. Kapunan, 45 Phil. 482) or by an attorney
who, as counsel of one of the three heirs, negotiated a contract between the heirs and a
18
corporation of which he was an officer for the subdivision and sale of the heirs' property, the
attorney himself not being a party to the contract (Tuason vs. Tuason, 88 Phil. 428).
LEGAL RESEARCH SERVICE
See SCRA Quick Index-Digest, volume 1, page 14 on Actions; page 177 on Attorneys; and
page 333 on Complaint.
See also SCRA Quick Index-Digest, volume 2, page 1882 on Sales.
Batacan, D. Fl., Legal and Judicial Ethics, 1973 Edition.
c) Prohibition does not only apply where interest in the property acquired by the attorney
before the property became the subject matter of litigation.—The provisions of the Civil
Code and of the Canons of Legal Ethics prohibit the purchase by lawyers of any interest in
the subject matter of the litigation in which they participated by reason of their profession.
The attorney's alleged interest in the lots was acquired before he intervened as counsel for
the defendant in the ejectment cases against the latter and that said interest is not
necessarily inconsistent with that of his aforementioned client, aside from the fact that he
had made no substantial misrepresentation in the pleadings filed by him in said cases (Del
Rosario vs. Millado, Adm. Case No. 724, January 31, 1969).
The same prohibition is not violated by a lawyer who participates at a foreclosure sale of his
client's property in
6. Philtrust v. Roldan (99 Phil 392)
[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.
GUARDIANS AND WARD; PURCHASE OF WARD's PROPERTY BY GUARDIAN OR
THROUGH INTERMEDIARY.—As Guardianship is a trust of the highest order, the trustee
cannot ke allowed to have any inducement to neglect his ward's interest; and whenever the
guardian acquires the ward's property through an intermediary, he violates the provision of
Article 1459 of the Civil Code and such transaction and .soibsequent ones emanating
therefrom shall be annulled.
PETITION for review by certiorari of a decision of the Court of Appeals.
The facts are stated in the opinion of the Court.

Cesar R. Canonizado and Enrique A. Santos for petitioner.
Nicodemus L. Dasig for respondents.
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: (a) sale thereof by Socorro Roldan, as guardian of said minor, to Fidel C.
Ramos; and (6) 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 steprnother 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 m favor
of her brother-in-law Dr. Fidel C. Ramos (Exhibit A-l); 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
19
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.
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: the minor
recovers his properties. But if the conveyances are annulled as prayed for, the minor will
obtain a better deal: 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 traftsactions herein described couldn't 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 Fl 5,000 why did she sell the parcels for
less? In one day (or actually one week) the price could not have risen so suddenly.
Obviousty 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; then she agreed to
sell them to Dr. Ramos at P14,700; and knowing the realty's 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. Ranios. 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
ward's interest and in line with the court's suspicion whenever the guardian acquires the
ward's property1 we have no hesitation to declare that in this case, in the eyes of the law,
Socorro Roldan took by purchase her ward's parcels thru Dr. Ramos, and that Article 1459
of the Civil Code applies.
She acted it may be true without malice; there 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 protege's properties, through her brother-in-law.
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:
"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.
* * *. (Page 16; Italics 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 subsequant purchase by
Mactal could not bc 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 ward's 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
guardian's 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 elapsed from the judicial approval of
the sale (Augwst 12), to the purchase by the guardian (Aug. 13).
Attempting to prove that the transaction was beneficial to the minor, appellee's attorney
alleges that the money (P14,700) invested in the house on Tindalo Street produced for him
rentals of ?2,400 yearly; whereas the parcels of land yielded to his step-mother only an
average of Pl,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: the calculation does
not include the price of the lot on which the house was erected. Estimating such lot at Pl
4,700 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 Pl,200 a year,
whereas the harvest from the seventeen parcels netted his step-mother a yearly profit of Pl,
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: the first two for violation of article 1459 of thv3 Civil Code; and the third because
Socorro Roldan could pass no title to Emilio Cruz. The annulment carries witK il (Article
1303 Civil Code) the obligation of Socorro Roldan to return the 17 parcels together with
20
their fruits and the duty of the minor, thi/ough his guardian to repay P14,700 with legal
interest.
Judgment is therefore rendered:
a. Annulling the three contracts of sale in question; 6. 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 f rom August 12, 1947; c. Ordering Socorro Roldan and Emilio
Cruz to deliver said parcels of land to the minor; d. Requiring Socorro Roldan to pay him
beginning with 1947 the fruits, which her attorney admits, amounted to Fl,522 a year; c.
Authorizing the minor to deliver directly to Emilio Cruz, out of the price of P14,7QO above
mentioned, the sum of P3,000; and f. charging appellees with the costs. So ordered.
Pards, C. J., Padilla, Montemayor, Reyes, A., Bautista Angelo, Concepcion, Reyes, J. B. L.,
and Endencia, JJ., eoncur.
Decision reversed.
7. Valencia v. Cabanting (196 SCRA 302)
Adm. Cases 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.
Attorneys; Property; Art. 1491 prohibits sale to counsel of a property pending
litigation; Case at bar.—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 dictates, 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.

Same; Disbarment and Suspension; Membership in the Bar is a privilege burdened
with conditions.—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.
ADMINISTRATIVE CASES in the Supreme Court. Grave malpractice and misconduct.
The facts are stated in the decision of the Court.
PER CURIAM:
These consolidated administrative cases seek to disbar respondents Dionisio Antiniw,
Arsenio Fer Cabanting and Eduardo Jovellanos (the last named, now an MCTC Judge) for
grave malpractice and misconduct in the exercise of their legal profession committed in the
following manner:
1. Administrative Cases No. 1302 and 1391
In 1933, complainant Paulino Valencia (Paulino in short) and his wife Romana allegedly
bought a parcel of land, where they built their residential house, from a certain Serapia
Raymundo, an heir of Pedro Raymundo the original owner. However, they failed to register
the sale or secure a transfer certificate of title in their names.
Sometime in December, 1968, a conference was held in the house of Atty. Eduardo
Jovellanos to settle the land dispute between Serapia Raymundo (Serapia in short) another
heir of Pedro Raymundo, and the Valencia spouses since both were relatives and distant
kin of Atty. Jovellanos. Serapia was willing to relinquish ownership if the Valencias could
show documents evidencing ownership. Paulino exhibited a deed of sale written in the
Ilocano dialect. However, Serapia claimed that the deed covered a different property.
Paulino and Serapia were not able to settle their differences. (Report of Investigating Judge
Catalino Castañeda, 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).
21
Summoned to plead in Civil Case No. V-2170, the Valencias engaged the services of Atty.
Dionisio Antiniw. Atty. Antiniw advised them to present a notarized deed of sale in lieu of the
private document written in Ilocano. For this purpose, Paulino gave Atty. Antiniw an amount
of P200.00 to pay the person who would falsify the signature of the alleged vendor
(Complaint, p. 2; Rollo, p. 7). A “Compraventa Definitiva” (Exh. B) was executed purporting
to be a sale of the questioned lot.
On January 22, 1973, the Court of First Instance of Pangasinan, Branch V, rendered a
decision in favor of plaintiff, Serapia Raymundo. The lower court expressed the belief that
the said document is not authentic. (Report, p. 14)
Paulino, thereafter, filed a Petition for Certiorari, under Rule 65, with Preliminary Injunction
before the Court of Appeals alleging that the trial court failed to provide a workable solution
concerning his house. While the petition was pending, the trial court, on March 9, 1973,
issued an order of execution stating that “the decision in this case has already become final
and executory” (Exhibits 3 and 3-A). On March 14, 1973, a writ of execution was issued.
On March 20, 1973, Serapia sold 40 square meters of the litigated lot to Atty. Jovellanos
and the remaining portion she sold to her counsel, Atty. Arsenio Fer Cabanting, on April 25,
1973. (Annex “A” of Administrative Case No. 1302).
On March 4, 1974, Paulino filed a disbarment proceeding (docketed as Administrative Case
No. 1302) against Atty. Cabanting on the ground that said counsel allegedly violated Article
1491 of the New Civil Code as well as Article II of the Canons of Professional Ethics,
prohibiting the purchase of property under litigation by a counsel.
On March 21, 1974 the appellate court dismissed the petiton of Paulino.
On October 14, 1974, Constancia Valencia, daughter of Paulino, filed a disbarment
proceeding (docketed as Administrative Case No. 1391) against Atty. Dionisio Antiniw for his
participation in the forgery of “Compraventa Definitiva” and its subsequent introduction as
evidence for his client; and also, against Attys. Eduardo Jovellanos and Arsenio Cabanting
for purchasing a litigated property allegedly in violation of Article 1491 of the New Civil
Code; and against the three lawyers, for allegedly rigging Civil Case No. V-2170 against her
parents.
On August 17, 1975, Constancia Valencia filed additional charges against Atty. Antiniw and
Atty. Jovellanos as follows:
“1. AGAINST ATTY. DIONISIO ANTINIW:
“In the year 1973 Atty. Dionisio Antiniw fraudulently and in confabulation with one Lydia
Bernal had a deed of sale, fabricated, executed and ratified before him as Notary Public by
one Santiago Bernal in favor of Lydia Bernal when as a matter of fact said Santiago Bernal
had died already about eight years before in the year 1965.
“2. AGAINST ATTY. EDUARDO JOVELLANOS:
“In the year 1954 Atty. Eduardo Jovellanos, fraudulently and in bad faith, in confabulation
with Rosa de los Santos as vendee had, as Notary Public, executed and ratified before him,
two (2) deeds of sale in favor of said Rosa de los Santos when as a matter of fact the said
deeds were not in fact executed by the supposed vendor Rufino Rincoraya and so said
Rufino Rincoraya had filed a Civil Case in Court to annul and declare void the said
sales.” (p. 7, Report)
2. Administrative Case No. 1543.
A deed of donation propter nuptias, involving the transfer of a piece of land by the
grandparents of Lydia Bernal (complainant) in favor of her parents, was lost during the last
world war. For this reason, her grandmother (the living donor) executed a deed of
confirmation of the donation propter nuptias with renunciation of her rights over the property.
(Complaint, p. 1). Notwithstanding the deed, her grandmother still offered to sell the same
property in favor of the complainant, ostensibly to strengthen the deed of donation (to
prevent others from claiming the property).
On consultation, Atty. Antiniw advised them to execute a deed of sale. Atty. Antiniw allegedly
prepared and notarized the deed of sale in the name of her grandfather (deceased at the
time of signing) with her grandmother’s approval.
Felicidad Bernal-Duzon, her aunt who had a claim over the property, filed a complaint
against her (Lydia Bernal) and her counsel, Atty. Antiniw for falsification of a public
document. (Complaint, pp. 1-2) The fiscal exonerated the counsel for lack of evidence,
while a case was filed in court against Lydia Bernal.
On October 3, 1975, Lydia Bernal filed a disbarment proceeding (docketed as
Administrative Case No. 1543) against Atty. Antiniw for illegal acts and bad advice.
Pursuant to the resolution of the First Division of this Court dated December 9, 1974, the
resolution of the Second Division dated March 3, 1975 and the two resolutions of the
Second Division both dated December 3, 1975, Administrative Cases Nos. 1302, 1391 and
1543 were referred to the Office of the Solicitor General for investigation, report and
recommendation.
Upon formal request of Constancia L. Valencia and Lydia Bernal dated March 3, 1976, all of
these cases were ordered consolidated by Solicitor General Estelito P. Mendoza per his
handwritten directive of March 9, 1976.
22
On April 12, 1988, We referred the investigation of these cases to the Integrated Bar of the
Philippines. When Atty. Jovellanos was appointed as Municipal Circuit Trial Court Judge of
Alcala-Bautista, Pangasinan, We referred the investigation of these cases to Acting
Presiding Judge Cesar Mindaro, Regional Trial Court, Branch 50, Villasis, Pangasinan, for
further investigation.
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 Castañeda, Jr.
After investigation, Judge Catalino Castañeda, 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
(5) x x x 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 dictates, in certiorari proceedings, that the appellate court may
either grant or dismiss the petition. Hence, it is not safe to conclude, for purposes under Art.
1491 that the litigation has terminated when the judgment of the trial court become final
while a certiorari connected therewith is still in progress. Thus, purchase of the property by
Atty. Cabanting in this case constitutes malpractice in violation of Art. 1491 and the Canons
of Professional Ethics. Clearly, this malpractice is a ground for suspension.
The sale in favor of Atty. Jovellanos does not constitute malpractice. There was no attorney-
client relationship between Serapia and Atty. Jovellanos, considering that the latter did not
take part as counsel in Civil Case No. V-2170. The transaction is not covered by Art. 1491
nor by the Canons adverted to.
II
It is asserted by Paulino that Atty. Antiniw asked for and received the sum of P200.00 in
consideration of his executing the document “Compraventa Definitiva” which would show
that Paulino bought the property. This charge, Atty. Antiniw simply denied. It is settled
jurisprudence that affirmative testimony is given greater weight than negative testimony
(Bayasen vs. CA, L-25785, Feb. 26, 1981; Vda. de Ramos vs. CA, et al., L-40804, 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
23
declaration dwelt on a subject which was so delicate and confidential that it would be
difficult to believe the he fabricated his evidence.
There is a clear preponderant evidence that Atty. Antiniw committed falsification of a deed of
sale, and its subsequent introduction in court prejudices his prime duty in the administration
of justice as an officer of the court.
A lawyer owes entire devotion to the interest of his client (Santos vs. Dichoso, 84 SCRA
622), but not at the expense of truth. (Cosmos Foundry Shopworkers Union vs. La Bu, 63
SCRA 313). The first duty of a lawyer is not to his client but to the administration of justice.
(Lubiano vs. Gordalla, 115 SCRA 459) To that end, his client’s success is wholly
subordinate. His conduct ought to and must always be scrupulously observant of law and
ethics. While a lawyer must advocate his client’s cause in utmost earnestness and with the
maximum skill he can marshal, he is not at liberty to resort to illegal means for his client’s
interest. It is the duty of an attorney to employ, for the purpose of maintaining the causes
confided to him, such means as are consistent with truth and honor. (Pangan vs. Ramos, 93
SCRA 87).
Membership in the Bar is a privilege burdened with conditions. By far, the most important of
them is mindfulness that a lawyer is an officer of the court. (In re: Ivan T. Publico, 102 SCRA
722). This Court may suspend or disbar a lawyer whose acts show his unfitness to continue
as a member of the Bar. (Halili vs. CIR, 136 SCRA 112). Disbarment, therefore, is not meant
as a punishment depriving him of a source of livelihood but is rather intended to protect the
administration of justice by requiring that those who exercise this function should be
competent, honorable and reliable in order that courts and the public may rightly repose
confidence in them. (Noriega vs. Sison, 125 SCRA 293). Atty. Antiniw failed to live up to the
high standards of the law profession.
The other charges of malpractice against Atty. Antiniw and Atty. Jovellanos should be
dismissed for lack of evidence.
During the proceedings in Administrative Case No. 1543, Lydia Bernal testified in full on
direct examination, but she never submitted herself for cross-examination. Several
subpoenas for cross-examination were unheeded. She eventually requested the withdrawal
of her complaint.
Procedural due process demands that respondent lawyer should be given an opportunity to
cross-examine the witnesses against him. 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. 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 four fold 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
24
this judgment; and 3. Administrative Case No. 1391 against Attorney Eduardo Jovellanos
and additional charges therein, and Administrative Case No. 1543 DISMISSED.
SO ORDERED.
8. Pichel v. Alonzo (111 SCRA 341)
No. L-36902. January 30, 1982.*
LUIS PICHEL, petitioner, vs. PRUDENCIO ALONZO, respondent.
Public Lands; Cancellation of award of public land does not automatically divest the
awardee of his rights to the land.—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 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.”
Contracts; Interpretation of a document is not called for where its terms are clear.—
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.
Same; Sale; Potential fruits of apiece of land may be the subject of sale.—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 sale.
Same; Same; A transfer of possession or ownership of the fruits of apiece of land
cannot be equated with the transfer of possession or ownership of the land.—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.
Public Lands; Sale; The grantee of public land is not prohibited from selling the fruits
thereof, like coconut fruits, which are meant to be gathered and severed from the
trees.—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.
Same; Same; Sale of produce or fruits of land acquired from the government under
RA. 477 does not violate the purpose of said law.—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
self-sufficient 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.
25
Same; Same; Contracts; A contracting party cannot be allowed to impugn the
contract he has entered into by saying he can change his mind.—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).” Respondent’s counsel either
mis-applies 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.
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 fruits to be produced on the said
parcel of land during the years period; which shall commence to run as of SEPTEMBER 15,
1968; up to JANUARY 1, 1976 (sic);
“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 1972, plaintiff’s rights to the land
were reinstated.
“On August 14, 1968, plaintiff and his wife sold to defendant all 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 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 allow 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.
“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 x x x admits full 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 pre-trial conference.
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
26
coconut trees found in the vendor’s land, it actually is, for all legal intents and purposes, a
contract of lease of the land itself. According to the Court:
“x x x 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, x x x 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 subject to encumbrance or alienation from the date of the award of the land or the
improvements 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.
“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:
“WHEREFORE, it is the judgment of this Court that the deed of sale, Exhibit ‘A’, should be,
as it is, hereby declared null 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.
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.
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;
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
7.In awarding respondent attorneys fees even granting, without admitting, that the deed of
sale in question is violative of Section 8 of Republic Act 477.
27
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:
“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, x x x.”
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 all the fruits on the aforementioned parcel of land
during the years x x x (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:
“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.
A contract of sale may be absolute or conditional.”
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 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 possessed. 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 good will 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 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
28
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 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 self-sufficient 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 IN VIEW OF THE FOREGOING, the judgment of the lower Court is hereby set aside and
of the property in the real and complete sense. another one is entered dismissing the Complaint. Without costs.

Respondent through counsel, in his Answer to the Petition contends that even granting SO ORDERED.
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 mis-applies 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.

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 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;
(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.
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.

29