G.R. No.

127540 October 17, 2001

EUGENIO DOMINGO, CRISPIN MANGABAT and SAMUEL CAPALUNGAN, petitioners,

vs.
HON. COURT OF APPEALS, FELIPE C. RIGONAN and CONCEPCION R. RIGONAN, respondents.

EUGENIO DOMINGO, CRISPIN MANGABAT and SAMUEL CAPALUNGAN, petitioners,

vs.
HON. COURT OF APPEALS, THE DIRECTOR OF LANDS, and FELIPE C. RIGONAN and CONCEPCION R.
RIGONAN, respondents.

QUISUMBNG, 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 reinvindicacionconsolidated
with Cadastral Case No. 1.2 The petition likewise seeks to annul the resolution dated December 11, 1996, denying
petitioners' motion for reconsideration.

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

Paulina Rigonan owned three (3) parcels of land, located at Batac and Espiritu, Ilocos Norte, including the house and
warehouse on one parcel. She allegedly sold them to private respondents, the spouses Felipe and Concepcion
Rigonan, who claim to be her relatives. In 1966, herein petitioners Eugenio Domingo, Crispin Mangabat and Samuel
Capalungan, who claim to be her closest surviving relatives, allegedly took possession of the properties by means of
stealth, force and intimidation, and refused to vacate the same. Consequently, on February 2, 1976, herein
respondent Felipe Rigonan filed a complaint for reinvindicacion against petitioners in the Regional Trial Court of
Batac, Ilocos Norte. On July 3, 1977, he amended the complaint and included his wife as co-plaintiff. They alleged
that they were the owners of the three parcels of land through the deed of sale executed by Paulina Rigonan on
January 28, 1965; that since then, they had been in continuous possession of the subject properties and had
introduced permanent improvements thereon; and that defendants (now petitioners) entered the properties illegally,
and they refused to leave them when asked to do so.

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

During trial, Juan Franco, Notary Public Evaristo P. 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 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 (plaintiffs) copy.

Counsel for defendants (petitioners herein) presented as witnesses Jose Flores, the owner of the adjacent lot; Ruben
Blanco, then acting Registrar of Deeds in Ilocos Norte; and Zosima Domingo, wife of defendant Eugenio Domingo.

Jose Flores testified that he knew defendants, herein petitioners, who had lived on the land with Paulina Rigonan
since he could remember and continued to live there even after 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:

THE RESPONDENT COURT OF APPEALS HAS DECIDED QUESTIONS OF LEGAL SUBSTANCE AND
SIGNIFICANCE NOT IN ACCORDANCE WITH THE EVIDENCE, LAW AND WITH THE APPLICABLE DECISIONS
OF THIS HONORABLE COURT.

II

THAT THE FINDINGS OF RESPONDENT COURT OF APPEALS ARE CONTRARY TO THOSE OF THE TRIAL
COURT AND CLEARLY VIOLATES THE RULE THAT THE FACTUAL FINDINGS OF TRIAL COURTS ARE
ENTITLED TO GREAT WEIGHT AND RESPECT ON APPEAL, ESPECIALLY WHEN SAID FINDINGS ARE
ESTABLISHED BY UNREBUTTED TESTIMONIAL AND DOCUMENTARY EVIDENCE.

III

THAT THE FINDINGS AND CONCLUSIONS OF RESPONDENT COURT OF APPEALS ARE GROUNDED
ENTIRELY ON SPECULATIONS, SURMISES, CONJECTURES, OR ON INFERENCES MANIFESTLY MISTAKEN.

IV

THAT THE RESPONDENT COURT OF APPEALS MANIFESTLY OVERLOOKED CERTAIN RELEVANT FACTS
NOT DISPUTED BY THE PARTIES AND WHICH, IF PROPERLY CONSIDERED, WOULD JUSTIFY A DIFFERENT
CONCLUSION.

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 said findings are established by unrebutted
testimonial and documentary evidence. They add that the Court of Appeals, in reaching a different conclusion, had
decided the case contrary to the evidence presented and the law applicable to the case. Petitioners maintain that the
due execution of the deed of sale was not sufficiently established by private respondents, who as plaintiffs had the
burden of proving it. First, the testimonies of the two alleged instrumental witnesses of the sale, namely, Juan Franco
and Efren Sibucao, were dispensed with and discarded when Franco retracted his oral and written testimony that he
was a witness to the execution of the subject deed. As a consequence, the appellate court merely relied on Atty.
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 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 later 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, 74389 19 and 64369. 20 The deed was apparently
registered long after its alleged date of execution and after Paulina's death on March 20, 1966.21Admittedly, 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 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.

G.R. No. L-15113 January 28, 1961

ANTONIO MEDINA, petitioner,

vs.
COLLECTOR OF INTERNAL REVENUE and THE COURT OF TAX APPEALS respondents.

Eusebio D. Morales for petitioner.

Office of the Solicitor General for respondents.

REYES, J.B.L. J.:

Petition to review a decision of the Court of Tax Appeals upholding a tax assessment of the Collector of Internal
Revenue except with respect to the imposition of so-called compromise penalties, which were set aside.

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

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
premarital agreement of complete separation of properties between him and his wife, and contending that the
assessment for the years 1946 to 1952 had already prescribed. After one hearing, the Conference Staff of the Bureau
of Internal Revenue eliminated the 50% fraud penalty and held that the taxes assessed against him before 1948 had
already prescribed. Based on these findings, the Collector issued a modified assessment, demanding the payment of
only P3,325.68, computed as follows:

5% tax due on P7,209.83 -1949 P 360.49

5% tax due on 16,945.55 - 1950 847.28
5% tax due on 16,874.52 - 1951 843.75
5% tax due on 11,009.94 - 1952 550.50
TOTAL sales tax due P2,602.0
25% Surcharge thereon 650.51
Short taxes per quarterly returns, 3rd quarter, 1950 58.52
25% Surcharge thereon 14.63
TOTAL AMOUNT due & collectible P3,325.68

Petitioner again requested for reconsideration, but respondent Collector, in his letter of April 4, 1955, denied the
same.

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

In his petition for review to this Court, petitioner raises several assignments of error revolving around the central issue
of whether or not the sales made 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
which book was among those saved from the ravages of the war, did not show that the document in question was
among those recorded therein.

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

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

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

Contracts violative of the provisions of Article 1490 of the Civil Code are null and void (Uy Sui Pin vs. Cantollas, 70
Phil. 55; Uy Coque vs. Sioca 45 Phil. 43). Being void transactions, the sales made by the petitioner to his wife were
correctly disregarded by the Collector in his tax assessments that considered as the taxable sales those made by the
wife through the spouses' common agent, Mariano Osorio. In upholding that stand, the Court below committed no
error.

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

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

Padilla, Bautista Angelo, Labrador, Barrera, Gutierrez David and Dizon, JJ., concur.

G.R. 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.

Fernandez Law Offices for petitioner.

Francisco Pulido for respondents.

MELENCIO-HERRERA, J.:

Petition for Review on certiorari assailing the Decision, dated October 6, 1980, and the Resolution on the Motion for
Reconsideration, dated November 27, 1980, of the then Court of First Instance of Pangasinan, Branch I, in Civil Case
No. 15620 entitled "Corazon DAGUINES vs. MERCEDES Calimlim-Canullas," upholding the sale of a parcel of land
in favor of DAGUINES but not of the conjugal house thereon'

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

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

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 () 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;

xxx xxx xxx

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

The determination of the first issue revolves around the interpretation to be given to the second paragraph of Article
158 of the Civil Code, which reads:

xxx xxx xxx

Buildings constructed at the expense of the partnership during the marriage on land belonging to one of the spouses
also pertain to the partnership, but the value of the land shall be reimbursed to the spouse who owns the same.

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

In his commentary on the corresponding provision in the Spanish Civil Code (Art. 1404), Manresa stated:

El articulo cambia la doctrine; los edificios construidos durante el matrimonio en suelo propio de uno de los conjuges
son gananciales, abonandose el valor del suelo al conj uge a quien pertenezca.

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

As to the above properties, their conversion from paraphernal to conjugal assets should be deemed to retroact to the
time the conjugal buildings were first constructed thereon or at the very latest, to the time immediately before the
death of Narciso A. Padilla that ended the conjugal partnership. They can not be considered to have become
conjugal property only as of the time their values were paid to the estate of the widow Concepcion Paterno because
by that time the conjugal partnership no longer existed and it could not acquire the ownership of said properties. The
acquisition by the partnership of these properties was, under the 1943 decision, subject to the suspensive condition
that their values would be reimbursed to the widow at the liquidation of the conjugal partnership; once paid, the
effects of the fulfillment of the condition should be deemed to retroact to the date the obligation was constituted (Art.
1187, New Civil Code) ...
The foregoing premises considered, it follows that FERNANDO could not have alienated the house and lot to
DAGUINES since MERCEDES had not given her consent to said sale. 4

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

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

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

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

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

As announced in the outset of this opinion, a 1954 Court of Appeals decision, Buenaventura vs. Bautista, 50 OG
3679, interpreting a similar provision of the old Civil Code speaks unequivocally. If the policy of the law is, in the
language of the opinion of the then Justice J.B.L. Reyes of that Court, 'to prohibit donations in favor of the other
consort and his descendants because of fear of undue influence and improper pressure upon the donor, a prejudice
deeply rooted in our ancient law, ..., then there is every reason to apply the same prohibitive policy to persons living
together as husband and wife without benefit of nuptials. For it is not to be doubted that assent to such irregular
connection for thirty years bespeaks greater influence of one party over the other, so that the danger that the law
seeks to avoid is correspondingly increased'. Moreover, as pointed out by Ulpian (in his lib 32 ad Sabinum, fr. 1), "It
would not be just that such donations — should subsist, lest the conditions of those who incurred guilt should turn out
to be better." So long as marriage remains the cornerstone of our family law, reason and morality alike demand that
the disabilities attached to marriage should likewise attach to concubinage (Emphasis supplied),

WHEREFORE, the Decision of respondent Judge, dated October 6, 1980, and his Resolution of November 27, 1980
on petitioner's Motion for Reconsideration, are hereby set aside and the sale of the lot, house and improvements in
question, is hereby declared null and void. No costs.

SO ORDERED.

Teehankee (Chairman), Plana, Relova, Gutierrez, Jr., and De la Fuente, JJ., concur.
G.R. No. L-35702 May 29, 1973

DOMINGO D. RUBIAS, plaintiff-appellant,

vs.
ISAIAS BATILLER, defendant-appellee.

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
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 illegally entered
said portions of the lot on two occasions — in 1945 and in 1959. Plaintiff prayed also for damages and attorneys fees.
(pp. 1-7, Record on Appeal). In his answer with counter-claim defendant claims the complaint of the plaintiff does not
state a cause of action, the truth of the matter being that he and his predecessors-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 P 2,000.00, as well as the sum of P500.00 for attorney's fees. ...

On December 9, 1964, the trial court issued a pre-trial order, after a pre-trial conference between the parties and their
counsel which order reads as follows..
'When this case was called for a pre-trial conference today, the plaintiff appeared assisted by himself and Atty.
Gregorio M. Rubias. The defendant also appeared, assisted by his counsel Atty. Vicente R. Acsay.

A. During the pre-trial conference, the parties have agreed that the following facts are attendant in this case and that
they will no longer introduced any evidence, testimonial or documentary to prove them:

1. That Francisco Militante claimed ownership of a parcel of land located in the Barrio of General Luna, municipality
of Barotac Viejo province of Iloilo, which he caused to be surveyed on July 18-31, 1934, whereby he was issued a
plan Psu-99791 (Exhibit "B"). (The land claimed contained an area of 171:3561 hectares.)

2. Before the war with Japan, Francisco Militante filed with the Court of First Instance of Iloilo an application for the
registration of the title of the land technically described in psu-99791 (Exh. "B") opposed by the Director of Lands, the
Director of Forestry and other oppositors. However, during the war with Japan, the record of the case was lost before
it was heard, so after the war Francisco Militante petitioned this court to reconstitute the record of the case.
The record was reconstituted on the Court of the First Instance of Iloilo and docketed as Land Case No. R-695,
GLRO Rec. No. 54852. The Court of First Instance heard the land registration case on November 14, 1952, and after
the trial this court dismissed the application for registration. The appellant, Francisco Militante, appealed from the
decision of this Court to the Court of Appeals where the case was docketed as CA-GR No. 13497-R..

3. Pending the disposal of the appeal in CA-GR No. 13497-R and more particularly on June 18, 1956, Francisco
Militante sold to the plaintiff, Domingo Rubias the land technically described in psu-99791 (Exh. "A"). The sale was
duly recorded in the Office of the Register of Deeds for the province of Iloilo as Entry No. 13609 on July 11, 1960
(Exh. "A-1").

(NOTE: As per deed of sale, Exh. A, what Militante purportedly sold to plaintiff-appellant, his son-in-law,for the sum of
P2,000.00 was "a parcel of untitled land having an area Of 144.9072 hectares ... surveyed under Psu 99791 ... (and)
subject to the exclusions made by me, under (case) CA-i3497, Land Registration Case No. R-695, G.L.R.O. No.
54852, Court of First Instance of the province of Iloilo. These exclusions referred to portions of the original area of
over 171 hectares originally claimed by Militante as applicant, but which he expressly recognized during the trial to
pertain to some oppositors, such as the Bureau of Public Works and Bureau of Forestry and several other individual
occupants and accordingly withdrew his application over the same. This is expressly made of record in Exh. A, which
is the Court of Appeals' decision of 22 September 1958 confirming the land registration court's dismissal of Militante's
application for registration.)

4. On September 22,1958 the Court of appeals in CA-G.R. No. 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. Not. 8583 for 1957
and a portion of Lot No. 2, Psu-155241, for 1945 under Tax Dec. No. 8584 (Exh. "2-A" Tax No. 8583 (Exh. "2") was
revised by Tax Dec. No. 9498 in the name of the defendant (Exh. "2-B") and Tax Dec. No. 8584 (Exh. "2-A") was
cancelled by Tax Dec. No. 9584 also in the name of the defendant (Exh. "2-C"). The defendant paid the land taxes for
Lot 2, Psu-155241, on Nov. 9, 1960 for the years 1945 and 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 Land on November 15, 1956 was issued, identified as Psu 155241 (Exh. "5").

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

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

B. During the trial of this case on the merit, the plaintiff will prove by competent evidence the following:

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 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. "1-3"). The sale was registered in the Office of the
Register of Deeds of Iloilo on August 4, 1920, under Primary Entry No. 69 (Exh. "1"), and a definite Deed of Sale was
executed by Constantino A. Canto, provincial Sheriff of Iloilo, on Jan. 19, 1934 in favor of Yap Pongco (Exh. "I"), the
sale having been registered in the Office of the Register of Deeds of Iloilo on February 10, 1934 (Exh. "1-1").

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-1552 it (Exh. '5') was originally owned and possessed by Felipe Batiller, grandfather of
the defendant Basilio Batiller, on the death of the former in 1920, as his sole heir. Isaias Batiller succeeded his father
, Basilio Batiller, in the ownership and possession of the land in the year 1930, and since then up to the present, the
land remains in the possession of the defendant, his possession being actual, open, public, peaceful and continuous
in the concept of an owner, exclusive of any other rights and adverse to all other claimants.

2. That the alleged predecessors in interest of the plaintiff have never been in the actual possession of the land and
that they never had any title thereto.
3. That Lot No. 2, Psu 155241, the subject of Free Patent application of the defendant has been approved.

4. The damages suffered by the defendant, as alleged in his counterclaim."'1

The appellate court further related the developments of the case, as follows:

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 thatplaintiff does not have cause
of action against him because the property in dispute which he (plaintiff) allegedly bought from his father-in-law,
Francisco Militante was the subject matter of LRC No. 695 filed in the CFI of Iloilo, which case was brought on appeal
to this Court and docketed as CA-G.R. No. 13497-R in which aforesaid case plaintiff was the counsel on record of
his father-in-law, Francisco Militante. Invoking Arts. 1409 and 1491 of the Civil Code which reads:

'Art. 1409. The following contracts are inexistent and void from the beginning:

xxx xxx xxx

(7) Those expressly prohibited by law.

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

xxx xxx xxx

(5) Justices, judges, prosecuting attorneys, clerks of superior and inferior courts, and other officers and employees
connected with the administration of justice, the property and rights of in litigation or levied upon an execution before
the court within whose jurisdiction or territory they exercise their respective functions; this prohibition includes the act
of acquiring an assignment and shall apply to lawyers, with respect to the property and rights which may be the object
of any litigation in which they may take part by virtue of their profession.'

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

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

'3. The lower court erred in entertaining the motion to dismiss of the defendant-appellee after he had already filed his
answer, and after the termination of the pre-trial, when the said motion to dismiss raised a collateral question.

'4. The lower court erred in dismissing the complaint of the plaintiff-appellant.'

The appellate court concluded that plaintiffs "assignment of errors gives rise to two (2) legal posers — (1) whether or
not the contract of sale between appellant and his father-in-law, the late Francisco Militante over the property subject
of Plan Psu-99791 was void because it was made when plaintiff was counsel of his father-in-law in a land registration
case involving the property in dispute; and (2) whether or not the lower court was correct in entertaining defendant-
appellee's motion to dismiss after the latter had already filed his answer and after he (defendant) and plaintiff-
appellant had agreed on some matters in a pre-trial conference. Hence, its elevation of the appeal to this Court as
involving pure questions of law.

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 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 to enforce his rights as vendee thus acquired.

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

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

In the meantime cadastral case No. 30 of the Province of Tarlac was instituted, and on August 21, 1923, Eleuteria
Macaraeg, as administratrix of the estate of Vicente Macaraeg, filed claims for the parcels in question. Buenaventura
Lavitoria administrator of the estate of Juan Soriano, did likewise and so did Sisenando Palarca. In a decision dated
June 21, 1927, the Court of First Instance, Judge Carballo presiding, rendered judgment in favor of Palarea and
ordered the registration of the land in his name. Upon appeal to this court by the administration of the estates of Juan
Soriano and Vicente Macaraeg, the judgment of the court below was reversed and the land adjudicated to the two
estates as conjugal property of the deceased spouses. (G.R. No. 28226, Director of Lands vs. Abagat, promulgated
May 21, 1928, not reported.)9

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

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

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

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

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

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

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

Perez Gonzales in such view, stating that "Dado el caracter prohibitivo delprecepto, la consequencia de la infraccion
es la nulidad radical y ex lege." 15

Castan, quoting Manresa's own observation that.

"El fundamento do esta prohibicion es clarisimo. No sa trata con este precepto tan solo de guitar la ocasion al fraude;
persiguese, ademasel proposito de rodear a las personas que intervienen en la administrcionde justicia de todos los
retigios que necesitan pora ejercer su ministerio librandolos de toda suspecha, que aunque fuere in fundada,
redundura endescredito de la institucion." 16 arrives at the contrary and now accepted view that "Puede considerace
en nuestro derecho inexistente 'o radicalmente nulo el contrato en los siguentes cases: a) ...; b) cuando el contrato
se ha celebrado en violacion de una prescripcion 'o prohibicion legal, fundada sobre motivos de orden
publico (hipotesis del art. 4 del codigo) ..." 17

It is noteworthy that Caltan's rationale for his conclusion that fundamental consideration of public policy render void
and inexistent such expressly prohibited purchase (e.g. by public officers and employees of government property
intrusted to them and by justices, judges, fiscals and lawyers of property and rights in litigation and submitted to or
handled by them, under Article 1491, paragraphs (4) and (5) of our Civil Code) has been adopted in a 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 his aspect, the
permanent disqualification of public and judicial officers and lawyers grounded on public policy differs from the first
three cases of guardians, agents and administrators (Article 1491, Civil Code), as to whose transactions it had been
opined that they may be "ratified" by means of and in "the form of a new contact, in which cases its validity shall be
determined only by the circumstances at the time the execution of such new contract. The causes of nullity which
have ceased to exist cannot impair the validity of the new contract. Thus, the object which was illegal at the time of
the first contract, may have already become lawful at the time of the ratification or second contract; or the service
which was impossible may have become possible; or the intention which could not be ascertained may have been
clarified by the parties. The ratification or second contract would then be valid from its execution; however, it does not
retroact to the date of the first contract." 19

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 in existence of the contract whenever juridical effects founded
thereon are asserted against him. Thus, if there has been a void transfer of property, the transferor can recover it by
the accion reinvindicatoria; and any prossessor may refuse to deliver it to the transferee, who cannot enforce the
contract. Creditors may attach property of the debtor which has been alienated by the latter under a void contract; a
mortgagee can allege the inexistence of a prior encumbrance; a debtor can 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 declare its inexistence,
when it has already been fulfilled. Nobody can take the law into his own hands; hence, the intervention of the
competent court is necessary to declare the absolute nullity of the contract and to decree the restitution of what has
been given under it. The judgment, however, will retroact to the very day when the contract was entered into.

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, Zaldivar, Castro,. Fernando, Barredo, Makasiar, Antonio and Esguerra, JJ., concur.

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

PAULINO VALENCIA, complainant,
vs.
ATTY. ARSENIO FER CABANTING, respondent.

CONSTANCIA L. VALENCIA, complainant,

vs.
ATTY. DIONISIO C. ANTINIW, ATTY. EDUARDO U. JOVELLANOS and ATTY. ARSENIO FER.
CABANTING,respondents.

LYDIA BERNAL, complainant,

vs.
ATTY. DIONISIO C. ANTINIW, respondent.

PER CURIAM:

These consolidated administrative cases seek to disbar respondents Dionisio Antiniw, Arsenio Fer. Cabanting and
Eduardo Jovellanos (the last named, now an MCTC Judge) for grave malpractice and misconduct in the exercise of
their legal profession committed in the following manner:

1. Administrative Cases No. 1302 and 1391.

In 1933, complainant Paulino Valencia (Paulino in short) and his wife Romana allegedly bought a parcel of land,
where they built their residential house, from a certain Serapia Raymundo, an heir of Pedro Raymundo the 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 Castaneda, Jr., pp. 21-22).

On December 15, 1969 Serapia, assisted by Atty. Arsenio Fer. Cabanting, filed a complaint against Paulino for the
recovery of possession with damages. The case was docketed as Civil Case No. V-2170, entitled "Serapia
Raymundo, Plaintiff, versus Paulino Valencia, Defendant." (Report, p. 11).

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

On January 22, 1973, the Court of First Instance of Pangasinan, Branch V, rendered a decision in favor of plaintiff,
Serapia Raymundo. The lower court expressed the belief that the said document is not authentic. (Report, p. 14)

Paulino, thereafter, filed a Petition for Certiorari, under Rule 65, with Preliminary Injunction before the Court of
Appeals alleging that the trial court failed to provide a workable solution concerning his house. While the 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 petition 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 Rufino Rincoraya had filed a Civil Case in Court to annul and declare void the said sales (p. 7, Report)

2. Administrative Case No. 1543.

A deed of donation propter nuptias involving the transfer of a piece of land by the grandparents of Lydia Bernal
(complainant,) in favor of her parents, was lost during the last world war. For this reason, her grandmother (the living
donor) executed a deed of confirmation of the donation propter nuptias with renunciation of her rights over the
property. (Complaint, p. 1). Notwithstanding the deed, her grandmother still offered to sell the same property in favor
of the complainant, ostensibly to strengthen the deed of donation (to prevent others from claim-ing the property).

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.

On April 12, 1988, We referred the investigation of these cases to the Integrated Bar of the Philippines. When Atty.
1âwphi 1

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

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

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

After investigation, Judge Catalino 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.

Under Article 1491 of the New Civil Code:

The following persons cannot acquire by purchase, even at a public of judicial auction, either in person or through the
mediation of another:

xxx xxx xxx

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

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

Art. 1491, prohibiting the sale to the counsel concerned, applies only while the litigation is pending. (Director of Lands
vs. Adaba, 88 SCRA 513; Hernandez vs. Villanueva, 40 Phil. 775).
In the case at bar, while it is true that Atty. Arsenio Fer. Cabanting purchased the lot after finality of judgment, there
was still a pending certiorari proceeding. A thing is said to be in litigation not only if there is some contest or litigation
over it in court, but also from the moment that it becomes subject to the judicial action of the judge. (Gan Tingco vs.
Pabinguit, 35 Phil. 81). Logic indicates, in certiorari proceedings, that the appellate court may either grant or dismiss
the petition. Hence, it is not safe to conclude, for purposes under Art. 1491 that the litigation has terminated when the
judgment of the trial court become final while a certiorari connected therewith is still in progress. Thus, purchase of
the property by Atty. Cabanting in this case constitutes malpractice in violation of Art. 1491 and the Canons of
Professional Ethics. Clearly, this malpractice is a ground for suspension.

The sale in favor of Atty. Jovellanos does not constitute malpractice. There was no attorney-client relationship
between Serapia and Atty. Jovellanos, considering that the latter did not take part as counsel in Civil Case No. V-
2170. The transaction is not covered by Art. 1491 nor by the Canons adverted to.

II

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

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

There is a clear preponderant evidence that Atty. Antiniw committed falsification of a deed of sale, and its subsequent
introduction in court prejudices his prime duty in the administration of justice as an officer of the court.

A lawyer owes entire devotion to the interest of his client (Santos vs. Dichoso, 84 SCRA 622), but not at the expense
of truth. (Cosmos Foundry Shopworkers Union vs. La Bu, 63 SCRA 313). The first duty of a lawyer is not to his client
but to the administration of justice. (Lubiano vs. Gordalla, 115 SCRA 459) To that end, his client's success is wholly
subordinate. His conduct ought to and must always be scrupulously observant of law and ethics. While a lawyer must
advocate his client's cause in utmost earnestness and with the maximum skill he can marshal, he is not at liberty to
resort to 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
1âwphi1

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

WHEREFORE, judgment is hereby rendered declaring: 1. Dionisio Antiniw DISBARRED from the practice of law, and
his name is ordered stricken off from the roll of attorneys; 2. Arsenio Fer. Cabanting SUSPENDED from the practice
of law for six months from finality of this judgment; and 3. Administrative Case No. 1391 against Attorney Eduardo
Jovellanos and additional charges therein, and Administrative Case No. 1543 DISMISSED.

SO ORDERED.

Fernan, C.J., Narvasa, Melencio-Herrera, Gutierrez, Jr., Cruz, Paras, Feliciano, Gancayco, Padilla, Bidin, Sarmiento,
Griño-Aquino, Medialdea, Regalado and Davide, Jr., JJ., concur.

G.R. No. L-36902 January 30, 1982

LUIS PICHEL, petitioner,

vs.
PRUDENCIO ALONZO, respondent.
GUERRERO, J.:

This is a petition to review on certiorari the decision of the Court of First Instance of Basilan City dated January 5,
1973 in Civil Case No. 820 entitled "Prudencio Alonzo, plaintiff, vs. Luis Pichel, defendant."

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

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

That for the herein sale of the coconut fruits are for all the fruits on the aforementioned parcel of land presently found
therein as well as for future fruits to be produced on the said parcel of land during the years period; which shag
commence to run as of SEPTEMBER 15,1968; up to JANUARY 1, 1976 (sic);

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

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

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

The following facts are admitted by the parties:

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

On August 14, 1968, plaintiff and his wife sold to defendant an the fruits of the coconut trees which may be harvested
in the land in question for the period, September 15, 1968 to January 1, 1976, in consideration of P4,200.00. Even as
of the date of sale, however, the land was still under lease to one, Ramon Sua, and it was the agreement that part of
the consideration of the sale, in the sum of P3,650.00, was to be paid by defendant directly to Ramon Sua so as to
release the land from the clutches of the latter. Pending said payment plaintiff refused to snow the defendant to make
any harvest.

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

xxx xxx xxx

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

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

Second.— Is the deed of sale, Exhibit 'A', the prohibited encumbrance contemplated in Section 8 of Republic Act No.
477? 2

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

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

The Court, therefore, concluded that the deed of sale in question is an encumbrance prohibited by Republic Act No.
477 which provides thus:

Sec. 8. Except in favor of the Government or any of its branches, units, or institutions, land acquired under the
provisions of this Act or any permanent improvements thereon shall not be thereon and for a term of ten years from
and after the date of issuance of the certificate of title, nor shall they become liable to the satisfaction of any debt
contracted prior to the expiration of such period.

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
nun and void; that plaintiff be, as he is, ordered to pay back to defendant the consideration of the sale in the sum of
P4,200.00 the same to bear legal interest from the date of the filing of the complaint until paid; that defendant shall
pay to the plaintiff the sum of P500.00 as attorney's fees.

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

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 ... .

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

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

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 the sale. Here, the
Supreme Court, citing Mechem on Sales and American cases said which have potential existence may be the subject
matter of sale. Here, the Supreme Court, citing Mechem on Sales and American cases said:

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

We do not agree with the trial court that the contract executed by and between the parties is "actually a contract of
lease of the land and the coconut trees there." (CFI Decision, p. 62, Records). The Court's holding that the contract in
question fits the definition of a lease of things wherein one of the parties binds himself to give to another the
enjoyment or use of a thing for a price certain and for a period which may be definite or indefinite (Art. 1643, Civil
Code of the Philippines) is erroneous. The essential difference between a contract of sale and a lease of things is that
the delivery of the thing sold transfers ownership, while in lease no such transfer of ownership results as the rights of
the lessee are limited to the use and enjoyment of the thing leased.

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

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

In concluding that the possession and enjoyment of the coconut trees can therefore be said to be the possession and
enjoyment of the land itself because the defendant-lessee in order to enjoy his right under the contract, he actually
takes possession of the land, at least during harvest time, gather all of the fruits of the coconut trees in the land, and
gain exclusive use thereof without the interference or intervention of the plaintiff-lessor such that said plaintiff-lessor is
excluded in fact from the land during the period aforesaid, the trial court erred. The contract was clearly a "sale of the
coconut fruits." The vendor sold, transferred and conveyed "by way of absolute sale, all the coconut fruits of his land,"
thereby divesting himself of all ownership or dominion over the fruits during the seven-year period. The possession
and enjoyment of the coconut trees cannot be said to be the possession and enjoyment of the land itself because
these rights are distinct and separate from each other, the first pertaining to the accessory or improvements (coconut
trees) while the second, to the principal (the land). A transfer of the accessory or improvement is not a transfer of the
principal. It is the other way around, the accessory follows the principal. Hence, the sale of the nuts cannot be
interpreted nor construed to be a lease of the trees, much less extended further to include the lease of the land itself.

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

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

By virtue of R.A. No. 477, bona fide occupants, veterans, members of guerilla organizations and other qualified
persons were given the opportunity to acquire government lands by purchase, taking into account their limited
means. It was intended for these persons to make good and productive use of the lands awarded to them, not only to
enable them to improve their standard 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 of the property in the real and complete sense.

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

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.

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

SO ORDERED.

Teehankee (Chairman), Makasiar, Fernandez, Melencio-Herrera and Plana, JJ., concur.