X. LAWYER S FIDUCIARY OBLIGATIONS A. EFFECTS OF FIDUCIARY RELATION [A.C. No. 5019. April ! "000# $%&'( ADORACION G. ANGELES! complainant!

vs. A))*. T+O,AS C. UY $R.! respondent. DECISION -ANGANIBAN! J.. Lawyers must promptly account for money or property they receive on behalf of their clients. Failure to do so constitutes professional Misconduct and justifies the imposition of disciplinary sanctions. T/( C01( 02& )/( F03)1 In a letter dated February 11, 1999 addressed to the Office of the hief !ustice, !ud"e #doracion $. #n"eles of the %e"ional &rial ourt of aloocan ity '(ranch 1)1* char"ed #tty. &homas . +y !r. with violation of anon 1, of the ode of -rofessional %esponsibility. omplainant states that respondent.s acts, which had earlier been held contemptible in her February 1/, 1999 Order,011 also rendered him administratively liable. In the said Order, she narrated the followin" facts2 34hen the case was called for the second time at 11 2)5 o.cloc6 in the mornin", the private prosecutor #tty. &homas . +y, !r. appeared. In open court, accused 7orma &rajano manifested that she had already settled in full the civil aspect in rim. ase 7o. 8591:: '9;* in the total amount of 0t1hirty 0s1i< 0t1housand 0f1ive 0h1undred '-=,,5//.//* 0p1esos. >he further alle"ed that she paid -)/,///.// directly to the private complainant and the balance of -1,,5//.// was delivered to #tty. &homas . +y, !r., the lawyer of the private complainant and accordin"ly produced in open court the receipt for such payment si"ned by no less than the aforesaid lawyer. Indeed, the civil liability of the accused had already been satisfied in full. Miso 3?owever, the private complainant, -rimitiva Malansin" 0@el %osario1 manifested that she did not receive the amount of 0s1i<teen 0t1housand 0f1ive 0h1undred '-1,,5//.//* 0p1esos which was paid to his lawyer #tty. &homas . +y, !r., thereby constrainin" this court to direct #tty. &homas . +y to turn over the money to the private complainant which he received in trust for his client. #tty. +y however ar"ued that his client did not li6e to accept the money but the assertion of the lawyer was belied by his own client, the herein private complainant, who manifested in open court < < < her willin"ness to accept the money. &he ourt a"ain directed #tty. +y to produce the money but the latter ar"ued that he 6ept it in his office. onseAuently, the ourt suspended the proceedin"s to enable #tty. +y to

"et the money from his law office which is located only at the second floor of the same buildin" where this court is located. 3+nfortunately, it is already 1)2 15 o.cloc6 past noon but #tty. +y did not show up anymore and not even his shadow appeared in ourt. 3It cannot be denied that the act of #tty. &homas +y in deliberately failin" to return to the ourt 0the1 proceedin"s 0of which1 were suspended just because of his representations, mirrors not only an undis"uised disobedience of a court order but also manifests his propensity to moc6 the di"nity of the ourt. @is"ustin"ly, he deliberately i"nored his solemn oath to conduct himself as befittin" the status of an officer of the court. 3Indeed, this "ross misbehavior of #tty. +y cannot simply be i"nored for it is a raw challen"e to the authority of the ourt. 3It must also be pointedly emphasiBed that #tty. &homas +y committed a braBen violation of the provisions of anon 1, of the ode of -rofessional %esponsibility, to wit2 7e<C old 3< < < < < < <<<

3Obviously, #tty. &homas +y fell short of the duties e<pected from him as a member of the bar.3 In compliance with this ourt.s March )9, 1999 %esolution, %espondent +y0)1 filed his omment on !une :, 1999. @enyin" that he violated anon 1, of the ode of -rofessional %esponsibility, he e<plained2 31*. In a criminal case, then pendin" before the %e"ional &rial ourt, (ranch 1)1 of Daloo6an ity, Metro Manila, presided by the complainant ?onorable #doracion $. #n"eles, entitled .-eople of the -hilippines vs. 7orma &rajano, et., al., riminal ase 7o. 8591:,8 :: '9;*, #tty. &homas . +y !r., herein referred to as 0r1espondent, was en"a"ed as 0p1rivate 0p1rosecutor of the complainant therein, Mrs. -rimitiva Malansin @el %osario. #t the outset 7orma &rajano, accused in said criminal case, e<pressed her desire and offered to settle the civil aspect of the criminal case a"ainst her to which -rimitiva @el %osario acceded. On separate hearin"s, 7orma &rajano made installment payments to -rimitiva @el %osario some of which payments were duly ac6nowled"ed by the latter in the presence of 0r1espondentE 3)*. On a previously cancelled date of hearin" of the aforesaid criminal case < < < on @ecember 19, 199;, 7orma &rajano went to the office of the 0r1espondent at about ;295 o.cloc6 in the mornin", < < < and met Mr. %omeo . !amisola !r., who is actin" as 0r1espondent.s personal secretary and at the same time the liason officer of the law firm @e Feyra, +y and #ssociates < < <. Mr0.1

%omeo !amisola !r., is the lone staff of the law firm < < <. %espondent was at that time not in the office as he was attendin" a hearin" before the %e"ional &rial ourt, (ranch 1)), Daloo6an ity, Metro Manila. < < <ManiC 6< 3=*. On the aforesaid date and time '@ecember 19, 199;* at the office of the 0r1espondent, 7orma &rajano told Mr. %omeo !amisola !r. that she will ma6e another partial payment to -rimitiva M. @el %osario because she cannot attend the hearin" the followin" day ';021=/ o.cloc6 a.m. of @ecember 15, 1999* before !ud"e #doracion $. #n"eles due to a conflict of schedule with her 0other1 case in the %e"ional &rial ourt, (ranch 19, Malolos, (ulacan, where she is li6ewise the accused for 0e1stafa0.1 Mr. %omeo !amisola told 7orma &rajano to wait for a while as he will fetch 0r1espondent at the "round floor in the sala of the ?onorable %emi"io G. Hari. %espondent, upon bein" informed of the presence of 7orma &rajano in the office of the 0r1espondent by %omeo !amisola !r. went to his office and 7orma &rajano immediately told 0r1espondent that she 6new that the settin" for that day '@ecember 19, 199;* was previously cancelled and that she cannot attend the hearin" the followin" day ';021=/ o.cloc6 a.m. @ecember 15, 199;* and further told the 0r1espondent that she '7orma &rajano* will ma6e another partial payment to -rimitiva M. @el %osario and that she will just leave her payment in the sum of 0s1i<teen 0t1housand 0five hundred1 0p1esos '-1,,5//.//*, -hilippine 0c1urrency, in the office of the 0r1espondent. %espondent then told 7orma &rajano to inform -rimitiva M. @el %osario first but 7orma &rajano replied that she will just call -rimitiva 0@el %osario1. 7onetheless, 0r1espondent told %omeo !amisola !r. to call -rimitiva @el %osario, usin" the office phone, and let her tal6 with 7orma &rajano, and, if -rimitiva @el %osario a"reed 0r1espondent instructed %omeo !amisola !r., to just prepare a receipt. %espondent, fearin" that his case '-eople vs. %ommel >enadrin et al. above8stated* mi"ht have been called in the calendar, immediately left the office and proceeded 0at1 the sala of the ?onorable %emi"io G. Hari. %espondent, after the hearin" < < <, returned to his office and upon learnin" that his si"nature was affi<ed by %omeo !amisola !r. upon the insistence of 7orma &rajano scolded %omeo !amisola !r. and for his unsuccessful attempt to contact first -rimitiva @el %osario before receivin" the sum of money left by 7orma &rajanoE Mani6sC 39*. &he followin" day 0o1n the mornin" of @ecember 15, 199; 0r1espondent arrived at his office and met -rimitiva @el %osario and her dau"hter #urora @el %osario and immediately the trio appeared before the sala of !ud"e #doracion $. #n"eles in the hearin" of the 7orma &rajano case. %eturnin" 0to1 the office of the 0r1espondent after the hearin", -rimitiva @el %osario and #urora @el %osario, bein" earlier informed that on @ecember 19, 199; 7orma &rajano went 0to1 his office and made partial payment in the sum of -1,,5// thru Mr. %omeo !amisola !r., the 0r1espondent told Mr. %omeo !amisola to "et the money from the filin" cabinet and while the money in the envelope 0was1 bein" handed

over to -rimitiva @el %osario, 0the latter1 and her dau"hter < < <, however, told 0r1espondent to just let the money in the sum of -1,,5//.// be 6ept at the office of the 0r1espondent so that future payments of 7orma &rajano will be save0d1 in whole and for them to avoid spendin" the same as what had happened to the past installment payments of 7orma &rajano.%espondent then acceded to the reAuest of -rimitiva @el %osario and her dau"hter and told them that they can "et the money anytime they want from the 0r1espondent.s office. ?ence, the money was 6ept loc6ed 0in1 the filin" cabinet of the 0r1espondent where he used to 6eep all his personal file0s1. Mani6anI 35*. On @ecember )=, 199;, early before noon, -rimitiva @el %osario and her dau"hter #urora @el %osario, on a prior invitation, attended the hristmas -arty of the office of 0r1espondent and undersi"ned counsel. < < < %espondent, after the < < < lunch, instructed Mr. %omeo !amisola !r., to "ive the sum of money '-1,,5//.//* and for -rimitiva @el %osario to receive the same for fear of a repetition of a bur"lary incident before, where some cash and minor office appliances of undersi"ned were lost. -rimitiva @el %osario, however, insisted that said sum of money be 6ept at the office of the 0r1espondent to save in whole the installment payments of 7orma &rajano and that 0was1 the wish of her son Fernando .(on". @el %osario, who is a lon" time friend and a compadre of the 0r1espondent. %espondent, respectin" the trust reposed upon him by -rimitiva @el %osario, her dau"hter #urora @el %osario, and son Fernando @el %osario, acceded to hold in trust the said sum of 0s1i<teen 0t1housand 0f1ive 0h1undred '-1,,5//.//* 0p1esos, -hilippine 0c1urrency, which 0was1 loc6ed and safely 6ept 0in1 the filin" cabinet of the 0r1espondent until February 1), 1999E < < <E 3,*. On February 1/, 1999 0durin"1 the hearin" of the 7orma &rajano case before the ?on. #doracion $. #n"eles, 0r1espondent appeared shortly before 1/2=/ o.cloc6 in the mornin", pursuant to a .Motion to all ase at 1/2=/ o.cloc6 in the Mornin"J < < <. 3:*. 4hen the said 7orma &rajano 0case1 < < < was called on second call at 11021)5 a.m., 0i1n said February 1/, 1999 hearin", respondent was first scolded by the ?onorable ourt '!ud"e #doracion $. #n"eles* < < < 0for1 "ivin" more preference to the Metropolitan &rial ourt than her ourt. %esp0o1ndent, however, be"0"ed the1 indul"ence of the ?onorable ourt '!ud"e #doracion $. #n"eles* and e<plained why 0he1 first attend0ed1 the Mandaluyon" hearin" of Manny hua.s case, to witE < < <. OldmisC o 3;*. &hat it was durin" the course of 0the1 litany of sermon, 0i1n that hour, made by the ?onorable ourt addressed to the 0r1espondent that 7orma &rajano < < < butted in and informed the ?onorable ourt '!ud"e #doracion $. #n"eles* that she will be tenderin" another partial paymentE it was at that moment that !ud"e #doracion $. #n"eles as6ed 7orma &rajano how much had she paid -rimitiva @el %osario, and, 7orma 0&1rajano answered that she had already paid -=,,5//.// as full

payment for one case, and that of the -=,,5//, -)/,///.// was paid to -rimitiva @el %osario and ?G>I&#7&LK said that the -1,,5// was paid to the 0r1espondent. !ud"e #n"eles then too6 the receipt from 7orma &rajano and had it <ero<ed by a personnel of the ourt. &he carbon duplicate ori"inal of the %eceipt, dated 0@1ecember 19, 199;, showin" the receipt by the office of the 0r1espondent, throu"h %omeo !amisola !r., whose printed 0name1 was pre0ceded1 by the word .(y., indicatin" that he received the sum of money on behalf of or in representation of the 0r1espondent, is hereto 0attached1 and mar6ed as #77GL .5., to form part hereofE 39*. &hat it was perhaps due to the belief 0in1 and the immediate impression of !ud"e #doracion $. #n"eles 0of the1 answer of 7orma &raiano that prompted !ud"e #n"eles to as6, instantaneously in a loud manner, -rimitiva @el %osario MI7 &#$#LO$., the Auestion, .7#&#7$$#- MO (# D#K #&&K. +K #7$ -G%# 7# -1,,5//.//N.. -rimitiva @el %osario, a seventy8year8 old, who was shoc6ed by the tone and the manner she was as6ed by !ud"e #n"eles simply just answered .?I7@I -O, D#>I $+>&O 0DO1 -O 7# M#(+O #7$ -G%#.. -rimitiva @el %osario, however, tried to e<plain her answer .?I7@I -O. and why she did not yet 0receive1 the money from the 0r1espondent by raisin" her hand but was prevented by !ud"e #doracion $. #n"eles from further answerin" by tellin" -rimitiva @el %osario to stop. 4ith that answer of -rimitiva @el %osario, 0r1espondent butted in to e<plain -rimitiva @el %osario.s answer of .?I7@I -O. and her havin" not yet received the sum of money, subject of the inAuisition of !ud"e #n"eles by manifestin" to witE < < < that -rimitiva @el %osario did not "et the money when < < < handed the same on @ecember 15, 199; because she wanted 0it1 to be save0d1 in whole to"ether with the future installment payments of 7orma &rajano and to be 6ept in the office of the 0r1espondent as wished by her son (on" @el %osarioE and, that the said sum of money 0was1 6ept in the filin" cabinet in the office of the 0r1espondent. #ll e<planation0s1 of the 0r1espondent went to < < < nau"ht as the 0r1espondent was cut short by < < < !ud"e #n"eles, 0who1 in a loud and an"ry voice orally directed the 0r1espondent to "et the money from 0r1espondent.s office and "ive the same to -rimitiva @el %osario. It was already 11 295 o.cloc6 in the mornin", more or less, an the 0r1espondent was "iven fifteen '15* minutes to complyE 0r1espondent reAuested !ud"e #n"eles to be accompanied by -rimitiva @el %osario and her dau"hter #urora @el %osario but both were ordered to stay in court by !ud"e #n"elesE 7cmC 31/*. %espondent in compliance with the oral order of !ud"e #n"eles immediately proceeded 0to1 his office but only to find out that %omeo !amisola !r., who 0held1 the only 6ey 0to r1esponddnt.s filin" cabinet, was on errand < < < that mornin" of February 1/, 1999 0for1 #tty. #n"el (. @e Feyra 'the +ndersi"ned ounsel* 0who had sent him1 to the offices of the solicitor "eneral in Ma6ati ity, and, the ity -rosecutor.s Office of Manila to 0furnish copies to1 both officesE < < <E

311*. %espondent, e<pectin" that %omeo !amisola !r. would 0arrive1 before 1)021// noon, < < < waited for %omeo !amisola !r. while at the same time called up 0his1 wife to immediately 0come1 to his office to spare the sum of -1,,5//.// as %omeo !a0mi1sola may not 0arrive1 0within1 the time allotted by !ud"e #n"eles. &he wife of respondent, however, arrived at about 1)2)5 - .M., more or less, ahead of %omeo !amisola !r. and spared 0r1espondent the sum of -1,,5//.// and 0r1espondent immediately went 0to1 the fourth floor, where the sala of !ud"e #n"eles 0was1 located but unfortunately the session was already adjourned. %espondent then tal6ed to .#rmand., one .of the court personnel and is 6nown as the door 6eeper of the chamber of !ud"e #n"eles, and 0reAuested that he be allowed to "o inside the chamber to show 0his1 compliance, thou"h late. %espondent, however, was told by .#rmand. that !ud"e #n"eles was on her lunch brea6 an that it 0was1 better for 0r1espondent to ta6e his lunch too and return a little laterE 7cmmisO 31)*. #t about 12=/ o.cloc6 in the afternoon of that day 'February 1/, 1999* 0r1espondent returned 0to1 the sala of !ud"e #n"eles to"ether with -rimitiva @el %osario and her dau"hter #urora @el %osario, who li6ewise returned to the court, to see6 an audience in 0the1 chamber 0of1 !ud"e #n"eles. >aid audience with !ud"e #n"eles was desired by -rimitiva @el %osario to let !ud"e #n"eles 0witness1 the "ivin" of the money to -rimitiva @el %osario. (ut reAuest0s1 for the same, throu"h .#rmand., were twice denied by !ud"e #n"eles because at that time !ud"e #n"eles was bein" interviewed by several media personnel of some &F stations. &he @el 0%osarios1, however, left earlier upon 6nowin" that !ud"e #n"eles denied their reAuest for an audience. 0&hey1 told 0r1espondent that they will be bac6 the followin" day. It was only when %omeo !amisola arrived at about =2// o.cloc6, more or less, in the afternoon and went at the fourth floor at the premises of the sala of !ud"e #n"eles and informed the 0r1espondent that he carried with him the 6ey to 0r1espondent.s cabinet and the presence of some 0sAuatter1 families of (atasan ?ills, PueBon ity at the office of the 0r1espondent, who has an appointment with the 0r1espondent, that the 0r1espondent left the premises of the sala of !ud"e #n"eles. 0sic1 %espondent, at his office ordered %omeo !amisola !r. to open the filin" cabinet and returned to the premises of the sala of !ud"e #n"eles alone at about 92// o.cloc6 - .M. after his meetin" with the sAuatter families. (ut a"ain, his reAuest to .#rmand. to tal6 with !ud"e #n"eles, after the media interview, was denied. #t about 52=/ o.cloc6 in the afternoon, .#rmand., the court personnel, served the Order, of said date, February 1/, 1999 at the office of the 0r1espondentE 31=*. In the early afternoon of the followin" day, February 11, 1999, 0r1espondent to"ether with -rimitiva @el %osario and her dau"hter #urora @el %osario went a"ain 0to1 the sala of !ud"e #n"eles < < < to see6 an audience with !ud"e #n"eles. &heir reAuest < < < w0as1 li6ewise in vain. -rimitiva @el %osario, after the last attempt to see6 audience with !ud"e #n"eles and already tired of "oin" 0to1 and 0from1 the sala of !ud"e #n"eles, decided on February 1), 1999, to receive the sum of money in the

amount of -1,,5//.// from the office of the 0r1espondent, throu"h, %omeo !amisola !r. and e<ecuted a >inumpaan" >alaysay. < < <E 319*. &he >inumpaan" >alaysay of -rimitiva @el %osario, dated February 1,, 1999 as well as the #c6nowled"ment %eceipt, dated February 1), 199091 was attached to a Manifestation caused to be filed by the 0r1espondent on March =, 1999 when the respondent was confined in Fatima ?ospital in FalenBuela ity, Metro Manila on March ), 1999E>cncI m 315*. Learnin" of the instant administrative case a"ainst the 0r1espondent, (on" @el %osario, the son of -rimitiva @el %osario, upon whose wish the subject sum of money was 6ept at the office of the 0r1espondent to save the same in whole as well as the future in0s1tallment payments of 7orma &rajano e<ecuted a >inumpaan" >alaysay, attestin" 0to1 and confirmin" the statement of 0his1 mother -rimitiva @el %osario. < < <30=1 >tripped of unnecessary verbia"e, the omment contends that the respondent 6ept the money in his office because that was the alle"ed wish of both his client and her son. ?e alle"edly informed them of such money and tried to "ive it to them, but they insisted that he retain it. ?e further maintained that it was only after !ud"e #n"eles issue the February 1/, 1999 Order that his client relented and accepted the money on February 1), 1999. #fter the jud"e filed her %eply on !une =/, 1999, this ourt referred the case to the Office of the (ar onfidant for report and recommendation. &he ourt dispensed with the normal referral to the Inte"rated (ar of the -hilippines because the records were complete and the Auestion raised was simple. 7o further factual investi"ation was necessary in the premises. B0r Co24i&02)51 R(por) 02& R(3o66(2&0)io2 %ecommendin" that #tty. &homas . +y !r .be suspended from the practice of law for one month, the Office of the (ar onfidant in its %eport and %ecommendation dated @ecember 15, 1999 said2 >daaO miso 3< < < 0I1t is clear that it is the sworn duty of a member of the bar to be accountable, at all times, for anythin" which he receives for and in behalf of his client. 3In the case at bar, this Office is more inclined to believe the story of the complainant. 3First, it cannot be disputed that the transcript of steno"raphic notes is the most reliable record of what indeed transpired 'and what words were uttered by the parties involved* on February 1/, 1999 at the hearin" of rim. ase 7o. 8591:,8:: '9;*. %ecords clearly show that the private complainant in the criminal case, when as6ed by !ud"e #n"eles as to the whereabouts of the -1,,5//.//, spontaneously replied that she had no 6nowled"e of the sameE in effect sayin" that #tty. +y has not "iven her the subject 1,,5//.//. If, indeed, -rimitiva

@el %osario reAuested #tty. +y to 6eep the money as far bac6 as @ecember 199;, then she should have told the same to !ud"e #n"eles. 3#tty. +y.s alle"ation that !ud"e #n"eles prevented -rimitiva @el %osario from sayin" in open court the words .?I7@I -O D#>I $+>&O DO -O 7# M#(+O #7$ -G%#. does not have any proof as nothin" of that sort appears in the transcript of steno"raphic notes. #tty. +y has not even bothered to refute the truth of the contents of the steno"raphic notes, all the more bolsterin" this Office.s opinion that the said notes are accurate and truthful. >daad 3>econd, the affidavits e<ecuted by -rimitiva @el %osario and her son, Fernando @el %osario, dated February 1,, 1999 and !une :, 1999, respectively, attestin" to #tty. +y.s averment that his act of personally 6eepin" the subject -1,,5//.// was with and at their reAuest cannot be "iven much credence to outwei"h the ar"uments of !ud"e #n"eles. &he said affidavits, both e<ecuted after February 1/, 1999, are suspect. au"ht by surprise when !ud"e #n"eles inAuired of the whereabouts of his client.s money, #tty. +y < < < resorted to see6in" the help of his client to corroborate his defense. (ein" the clients of #tty. +y, -rimitiva @el %osario and her son could have been persuaded to help e<tricate their counsel from the latter.s predicament. 3In the absence of any contradictin" evidence to dispute the alle"ation that #tty. +y failed to immediately remit to his client the money due the latter, it is safe to conclude that #tty. +y has violated his sworn duty to uphold, at all times, the trust and confidence reposed in him by his client's*. <<< <<< <<<

3In the instant case, #tty. +y, upon receipt of the -1,,5//.// from the accused in the criminal case, should have promptly remitted the same to his client, -rimitiva @el %osario. ?ad !ud"e #n"eles not inAuired of the whereabouts of the money, the same would have remained with #tty. +y, to the prejudice of the latter.s client.3091 T/i1 Co%r)51 R%li2' 4e a"ree with the findin"s and the recommendation of the Office of the (ar onfidant. >csI daad A&6i2i1)r0)i7( Li08ili)* o4 R(1po2&(2) &he relationship between a lawyer and a client is hi"hly fiduciaryE it reAuires a hi"h de"ree of fidelity and "ood faith. It is desi"ned 3to remove all such temptation and to prevent everythin" of that 6ind from bein" done for the protection of the client.3051 &hus, anon 1, of the ode of -rofessional %esponsibility provides that 3a lawyer shall hold in trust all moneys and

properties of his client that may come into his possession.3 Furthermore, %ule 1,./1 of the ode also states that 3a lawyer shall account for all money or property collected or received for or from the client.3 &he anons of -rofessional Gthics is even more e<plicit2 3&he lawyer should refrain from any action whereby for his personal benefit or "ain he abuses or ta6es advanta"e of the confidence reposed in him by his client. >upO rema 3Money of the client collected for the client or other trust property comin" into the possession of the lawyer should be reported and accounted for promptly and should not under any circumstances be commin"led with his own or be used by him.30,1 In the present case, it is clear that respondent failed to promptly report and account for the -1,,5// he had received from 7orma &rajano on behalf of his client, -rimitiva @el %osario. #lthou"h the amount had been entrusted to respondent on @ecember 19, 199;, his client revealed durin" the February 1/, 1999 hearin" that she had not yet received it. 4orse, she did not even 6now where it was. %espondent maintains that on @ecember 15, 199; he informed Mrs. @el %osario about the payment. ?e further avers that he 6ept the money up n her instruction, as she had alle"edly wanted 3future payments < < 0to1 be saved in whole and for them to avoid spendin" the same as what had happened to the past installment payments < < <.30:1 &his assertion alle"edly finds support in her answer to the Auestion of !ud"e #n"eles, who had as6ed her whether she had received the disputed payment2 3Hindi po, kasi gusto [ko] po na mabuo ang pera." &he ourt is not persuaded. %espondent.s assertions are contradicted by the followin" transcript of steno"raphic notes2 3 ourt2 &his -1,,5//, did you turn it over to the private complainantN #tty. +y2 7o your ?onor, because she wanted the full amount of the settlement. ourt2 -rivate complainant, is it true that you did not want to accept the moneyN Mrs. @el %osario2 ?indi po, sila po an" na"bi"ayan. !urisI ourt2 ?indi po ibinibi"ay sa inyo ni #tty. +yN Mrs. @el %osario2 ?indi po. <<< <<< <<< ourt2 7asaan iyon" -1,,5//N ?uwa" 6ayon" mata6ot. Mrs. @el %osario2 Aywan ko po sa kanilang dalawa.30;1 If it were true that Mrs. @el %osario was informed about the payment and that she entrusted it to respondent, she would have 6nown its whereabouts. &hat she did not 6now it showed the falsity of his claim. It is noteworthy that respondent did not dispute the fore"oin" transcript althou"h it belied his alle"ation that Mrs. @el %osario.s e<press wish was to have the payments in full. >cI juris

7either are we convinced by the affidavits of Mrs. @el %osario and her son, both of whom affirmed their intention to have their money in the safe6eepin" of respondent. It should be stressed that he was her counsel and the compadre of her son. Moreover, the affidavits were e<ecuted after the filin" of this omplaint. #s the Office of the (ar onfidant observed, these considerations militate a"ainst the credibility of the affiants. In any event, their affidavits fail to e<plain adeAuately why Mrs. @el %osario, durin" the hearin" on February 1/, 1999, did not 6now where her money was. &he records do not clearly show whether #ttorney +y had in fact appropriated the said amountE in fact, Mrs, @el %osario ac6nowled"e that she had received it on February 1), 1999. &hey do show, however, that respondent failed to promptly report that amount to her. &his is clearly a violation of his professional responsibility. Indeed, in Aya v. Bigornia,091 the ourt ruled that money collected by a lawyer in favor of his clients must be immediately turned over to them. In Daroy v. Legaspi,01/1 the ourt held that 3lawyers are bound to promptly account for money or property received by them on behalf of their clients and failure to do so constitutes professional misconduct.3 Ferily, the Auestion is not necessarily whether the ri"hts of the clients have been prejudiced, but whether the lawyer has adhered to the ethical standards of the bar.0111 In this case, respondent has not done so. Indeed, we a"ree with the followin" observation of the Office of the (ar onfidant2 3Deepin" the money in his possession without his client.s 6nowled"e only provided #tty. +y the temptin" opportunity to appropriate for himself the money belon"in" to his client. &his situation should, at all times, be avoided by members of the bar. Li6e jud"es, lawyers must not only be cleanE they must also appear clean. &his way, the people.s faith in the justice system would remain undisturbed.301)1!urisI sc In this li"ht, the ourt must stress that it has the duty to loo6 into dealin"s between attorneys and their clients and to "uard the latter from any undue conseAuences resultin" from a situation in which they may stand uneAual.01=1 &he present situation calls for the e<ercise of this duty. For misappropriatin" and failin" to promptly report and deliver money they received on behalf of their clients, some lawyers have been disbarred0191 and others have been suspended for si< months.0151 In the present case, the records merely show that respondent did not promptly report that he received money on behalf of his client. &here is no clear evidence of misappropriation. +nder the circumstances, we rule that he should be suspended for one month. W+EREFORE, #tty. &homas . +y !r .is hereby ! "#$D#D for one month. ?e is warned that a repetition of the same or similar acts will be dealt with more severely. Let copies of this @ecision be served on #tty. &homas . +y !r. at his "iven address or any other 6nown one. opies of this @ecision shall also be entered in his record as attorney and

served on the I(-, as well as the ourt #dministrator who shall circulate them to all the courts in the country for their information and "uidance. SO ORDERED. [A.C. No. 5"95. ,0r3/ ""! "000# FERNANDO C. CRU: AND A,ELIA CRU:! complainants, vs. ATTY. ERNESTO C. $ACINTO! respondents. $%ri1; RESOLUTION ,ELO! J.. In their sworn complaint, spouses Fernando . ruB and #melia Manimbo ruB see6 the disbarment of #tty. Grnesto . !acinto. &he Inte"rated (ar of the -hilippines, throu"h ommissioner !esulito #. Manalo of the ommissioner on (ar discipline, conducted an investi"ation. &hereafter, he submitted his Findin"s and %ecommendation, thusly2 &his is a disbarment case filed by the spouses Fernando and #melia ruB a"ainst #tty. Grnesto . !acinto. &his case was filed with the ommission on (ar @iscipline last =/ !anuary 1991. &he evidence of the complainants show that sometime in !une 199/, #tty. Grnesto !acinto, lawyer of the couple in an unrelated case, reAuested the ruB spouses for a loan in behalf of a certain oncepcion $. -adilla, who he claimed to be an old friend as she was alle"edly in need of money. &he loan reAuested was for -h- );5,///.// payable after 1// days for -h- =,/,/// to be secured by a real estate mort"a"e on a parcel of land located at PueBon ity. >cI juris &he spouses, believin" and trustin" the representations of their lawyer that -adilla was a "ood ris6, authoriBed him to start preparin" all the necessary documents relative to the re"istration of the %eal Gstate Mort"a"e to secure the payment of the loan in favor of the ruB spouses. On 9 !uly 199/, the complainants a"reed to the reAuest of #tty. !acinto and were presented by the latter with a %eal Gstate Mort"a"e ontract and a &ransfer ertificate of &itle 7o. 1):):5 in the name of oncepcion $. -adilla. &he amount of -h);5,///.// was "iven by the spouses to the respondent in cash '-h- ):/,///.//* and a -( om chec6 no. :1=9)9 for -h- 15,///.//. +pon maturity of the loan on 15 October 199/, the spouses demanded payment from oncepcion $. -adilla by "oin" to the address "iven by the respondent but there proved to be no person by that name livin" therein. 4hen the complainants verified the "enuineness of & & 7o. 1):):5 with %e"ister of

@eeds of PueBon ity, it was certified by the said office to be a fa6e and spurious title. Further efforts to locate the debtor8mort"a"or li6ewise proved futile. !urisI sc In their sworn affidavits "iven before the 7ational (ureau of Investi"ation '7(I*, the spouses claim that they relied much on the reassurances made by #tty. !acinto as to oncepcion $. -adillaJs credit, considerin" that he was their lawyer. It was also their trust and confidence in #tty. !acinto that made them decide to fore"o meetin" the debtor8mort"a"or. &he complainantsJ evidence also included the sworn statements of Gstrella Grmino8-alipada, the secretary of the respondent at the 7eri Law Office, and #ve"ail -ayos, a housemaid of #tty. !acinto. Ms. -alipada stated that2 1. she was the one who prepared the %eal Gstate Mort"a"e ontract and the %eceipt of the loan upon the instruction of the respondentsE ). she was a witness to the transaction and never once saw the person of oncepcion $. -adilla, the alle"ed mort"a"orE and that =. 1/( <01 i21)r%3)(& 8* A))*. $03i2)o )o 2o)0ri=( )/( 10i& 3o2)r03) 8* 1i'2i2' )/( 206( o4 o2( A))*. Ri30r&o N(ri. #ve"ail -ayos, the housemaid of the respondent, in turn stated that she was the one who simulated the si"nature of one Gmmanuel $imarino, the @eputy %e"ister of @eeds of PueBon ity upon the instruction of #tty. !acinto. &his was done to ma6e it appear that the real estate mort"a"e was re"istered and the annotation to appear at the bac6 of the & & as an encumbrance. On 19 7ovember 199:, a case for Gstafa thru Falsification of -ublic documents under #rt. =15 was filed a"ainst #tty. !acinto. ?e was arrested and detained by the 7(I. &he defense of the respondent, on the other hand, was embodied in his #nswer with Motion to @ismiss filed with the ommission on (ar @iscipline. &herein, he alle"ed that the criminal information for estafa thru falsification filed a"ainst him had already been dismissed because of the voluntary desistance of the complainants. MisjO uris In his version of the facts, #tty. !acinto averred that while he indeed facilitated the loan a"reement between the ruB spouses and oncepcion $. -adilla, he had no idea that the latter would "ive a falsified ertificate of &itle and use it to obtain a loan. ?e claimed that he himself was a victim under the circumstances.

%espondent further alle"ed that he had not been remiss nor ne"li"ent in collectin" the proceeds of the loanE that in fact, he had even advanced the full payment of the loan due to the complainants from his own savin"s, even if oncepcion $. -adilla had not yet paid, much less found. %G OMMG7@#&IO7> It is every lawyerJs sworn duty to obey the laws of the land to promote respect for law and le"al processes. &he ode of -rofessional %esponsibility command that he shall not en"a"e in unlawful, dishonest, immoral or deceitful conduct. '%ule 1./1, ode of -rofessional %esponsibility* !jI le< In the instant case, there was a clear yet unrebutted alle"ation in the complaint that the %espondent had ordered his secretary and housemaid to falsify the si"natures of the notary public and the @eputy %e"ister of @eeds respectively to ma6e it appear that the real estate mort"a"e contract was duly re"istered and thus bindin". 4hile it may be true that the complaint for Gstafa thru Falsification filed a"ainst the %espondent had been dismissed, the dismissal was because of the complainantJs voluntary desistance and not a findin" of innocence. It neither confirms nor denies %espondentJs non8culpability. Furthermore, it is well8 settled that disciplinary proceedin"s are 3sui "eneris3, the primary object of which is not so much to punish the individual attorney himself, as to safe"uard the administration of justice by protectin" the court and the public from the misconduct of lawyers, and to remove from the professions persons whose disre"ard of their oath have proven them unfit to continue dischar"in" the trust reposed in them as members of the bar. &hus, disciplinary cases may still proceed despite the dismissal of civil andQor criminal cases a"ainst a lawyer. # lawyer who does any unlawful fraudulent or dishonest act may and should be held administratively liable therefor. In the case at bar, the %espondent should not be made an e<ception. 4hile it may be shown that he indeed advanced the payment due to his erstwhile clients, such will not e<empt him from administrative liability. #t best it can only miti"ate. %espondent is recommended to be suspended for si< ',* months from the practice of law. 'Findin"s and %ecommendation, pp. 189* 7ewO miso On February );, 199;, the (oard of $overnors of the I(passed %esolution LIII89:8199 adoptin" and approvin" the Findin"s and %ecommendation of the Investi"atin" ommissioner, which reads2

%G>OLFG@ to #@O-& and #--%OFG, as it is hereby #@O-&G@ and #--%OFG@, the %eport and %ecommendation of the Investi"atin" ommissioner in the above8entitled case, herein made part of this %esolutionQ@ecision as #nne< 3#3 and, findin" the recommendation fully supported by the evidence on record and the applicable laws and rules, respondent #tty. Grnesto . !acinto is >+>-G7@G@ from the practice of law for si< ',* months for his unlawful, fraudulent or dishonest act. '7otice of resolution 0dated Feb. );, 199;1*. In his omment and #nswer with Motion to @ismiss, respondent averred that complainants have no cause of action a"ainst him as the same has been waived, settled, and e<tin"uished on account of the affidavits of voluntary desistance and Auitclaim e<ecuted by them in the criminal case filed a"ainst him. 7cmmis &he assertion must necessarily fail. &he practice of law is so intimately affected with public interest that it is both a ri"ht and a duty of the >tate to control and re"ulate it in order to promote the public welfare. &he onstitution vests this power of control and re"ulation in this ourt. >ince the practice of law is inseparably connected with the e<ercise of its judicial power in administration of justice, the ourt cannot be divested of its constitutionally ordained prero"ative which includes the authority to discipline, suspend or disbar any unfit and unworthy member of the (ar by a mere e<ecution of affidavits of voluntary desistance and Auitclaim 'par. 051, >ec. 5, 19;: onstitution*. # lawyer may be disciplined or suspended for any misconduct, whether in his professional or private capacity, which shows him to be wantin" in moral character, in honesty, in probity and "ood demeanor, thus renderin" unworthy to continue as an officer of the court 'Mali"sa vs. abantin", ):) > %# 9/; 0199:1*, and the complainants who called the attention of the ourt to the attorneyJs alle"ed misconduct are in no sense a party, and have "enerally no interest in the outcome e<cept as all "ood citiBens may have in the proper administration of justice '%ayos8Ombac vs. %ayos, );5 > %# 9= 0199;1*. +ndeniably, respondent represented complainants in the loan transaction. (y his own admission, he was the one who ne"otiated with the borrower, his lon"8time friend and a former client. ?e acted not merely as an a"ent but as a lawyer of complaints, thus, the e<ecution of the real estate mort"a"e contract, as well as its re"istration and annotation on the title were entrusted to him. In fact, respondent even received his share in the interest earnin"s which complainants realiBed from the transaction. ?is refusal to reco"niBe any wron"doin" or carelessness by claimin" that he is li6ewise a victim when it was shown that the title to the property, the re"istration of the real estate mort"a"e contract, and the annotation thereon were all fei"ned, will not at all e<onerate him. >cncm #s a rule, a lawyer is not barred from dealin" with his client but the business transaction must be characteriBed with utmost

honesty and "ood faith. ?owever, the measure of "ood faith which an attorney is reAuired to e<ercise in his dealin"s with this client is a much hi"her standard than is reAuired in business dealin"s where the parties trade at arms len"th. (usiness transactions between an attorney and his client are disfavored and discoura"ed by the policy of the law. ?ence, courts carefully watch these transactions to be sure that no advanta"e is ta6en by a lawyer over his client. &his rule is founded on public policy for, by virtue of his office, an attorney is in an easy position to ta6e advanta"e of the credulity and i"norance of his client. &hus, no presumption of innocence or improbability of wron"doin" is considered in an attorneyJs favor '7a6pit vs. Faldes, );, > %# :5; 0199;1*. Further, his fidelity to the cause of his client reAuires him to be evermindful of the responsibilities that should be e<pected of him. Ferily, a lawyer may not, without bein" "uilty of professional misconduct, act as counsel for a person whose interest conflicts with that of his former client. &he reason for the prohibition is found in the relation of attorney and client, which is one of trust and confidence at the hi"hest de"ree 'Maturan vs. $onBales, );: > %# 99= 0199;1*. >daamiso %espondent utterly failed to perform his duties and responsibilities faithfully and well as to protect the ri"hts and interests of his clients and by his deceitful actuations constitutin" violations of the ode of -rofessional %esponsibilities must be subjected to disciplinary measures for his own "ood, as well as for the "ood of the entire membership of the (ar as a whole. W+EREFORE, the ourt hereby adopts the resolution of the (oard of $overnors of the Inte"rated (ar of the -hilippines and orders respondent #tty. Grnesto . !acinto suspended from the practice of law for si< ',* months with the warnin" that a repetition of the same or similar offense will be dealt with more severely. >daad SO ORDERED. D(3(68(r >! 19"9 ?ICENTE DIA:! 3o6pl0i202)! 71. RU-ERTO @A-UNAN! r(1po2&(2). #ttorney8$eneral Filla8%eal for the $overnment. -erfecto $abriel and %afael -alma for respondent. M#L OLM, !.2 &his action for malpractice brou"ht by Ficente @iaB a"ainst #ttorney %uperto Dapunan, has to do with the conduct of #ttorney Dapunan durin" the le"al proceedin"s which followed the business troubles of Ficente @iaB and >ecundino de MendeBona, and particularly relates to the conduct of #ttorney Dapunan in civil case 7o. )/9; of the ourt of First Instance of Leyte. &he ultimate Auestion on which we would concentrate attention concerns the a"reement between @iaB

and Dapunan at the time of the sale of the property of MendoBa, whereby Dapunan, on the promise of @iaB to pay him -1,///, a"reed to desist from further participation in the sale, all in alle"ed violation of article 1959 of the ivil ode and article 59) of the -enal ode. Omittin" the irrelevant matter interjected into this case, the principal facts of record are the followin"2 In 191:, Ficente @iaB and >ecundino de MendeBona formed a partnership and entered into e<tensive business transactions in the -rovince of Leyte. &he capital of the partnership was -=;/,///. +nfortunately, however, the business failed to prosper, with the result that on liAuidation, it was found to have suffered a loss of -,:,///. 4hen @iaB and MendeBona came to settle up their affairs, they eventually formulated a document of sale and mort"a"e in which MendeBona reco"niBed a debt in favor of @iaB in the sum of -;/,/// and an additional sum of -1/,/// owin" to @iaB, laid upon the hacienda 3Mapuyo,3 and to be paid within the term of one year. 4hen the year had e<pired MendeBona was not to be found and his family was unable to meet the payment. &here followed the usual proceedin"s for foreclosure and sale, which, after considerable delay, resulted in the hacienda.s bein" offered for sale at public auction. #t the time fi<ed for the sale, @ecember )=, 19)), there appeared Ficente @iaB, accompanied by his lawyer Gmilio (eniteB, and #ttorney %uperto Dapunan. Luis Felarde, the deputy sheriff of Leyte, is authority for the statement that Dapunan told him that he, Dapunan, was ready to bid on the property up to -1,,/// in order to assist the MendeBona family which was in financial straits. #t any rate, the biddin" was opened by Dapunan offerin" -1),/// for the property and with @iaB and Dapunan raisin" the bids until finally @iaB offered -1),5//. &here the bids stopped on account of @iaB and Dapunan enterin" into the a"reement, of decisive importance, which we ne<t Auote in full2 4e, Ficente @iaB and %uperto Dapunan, both bein" the bidders at the auction held for the sale of the properties of >ecundino MendeBona, do hereby a"reed that @on %uperto Dapunan should withdraw his bid and refrain from biddin" at the said auction as he does hereby withdraw his bid, and in consideration thereof, the said Mr. @iaB offers him a premium of one thousand pesos '-1,///* which, out of consideration to said @on Ficente @iaB, Mr. Dapunan accepts and has, for this reason, refrained from biddin" in competition with said Mr. @iaB.lawphi1.net &acloban, Leyte, @ecember )=, 19)). '>"d.* 3F. @I#H. %+-G%&O D#-+7#7.3 '>"d.*

Followin" the termination of the sheriff.s sale, @iaB on @ecember ),, 19)), "ave Dapunan -5// of the -1,/// mentioned in the above Auoted document. @iaB further followed the usual procedure to ta6e over the property of MendeBona pursuant to his bid of -1),5//, which covered the amount of the mort"a"e with its accumulated interest and with the judicial e<penses.

#lthou"h it was on @ecember )=, 19)), that @iaB and Dapunan entered into the a"reement, @iaB could only wait until !anuary 9, 19)=, followin", to lay before this court char"es a"ainst #ttorney Dapunan for alle"ed unprofessional conduct. +ndoubtedly, before Dapunan had 6nowled"e of the disbarment proceedin"s, on !anuary 1/, 19)=, he presented a motion in the ourt of First Instance of Leyte as6in" that he be permitted to retain the -5// in Auestion, in part payment of his professional fees. Later, on February 9, 19)=, when Dapunan must have had 6nowled"e of the disbarment proceedin"s, he filed another motion, withdrawin" his former motion and as6in" the court to permit him to turn over the -5// to @iaB, which !ud"e ausin" refused to do on the "round that it was a personal matter. 7evertheless, on !uly 1/, 19)=, the cler6 of the ourt of First Instance of Leyte handed the -5// to @iaB who, in turn, receipted for that amount. lawphil.net From correspondence, it further is evident that the family of MendeBona was led to believe that the -5// would shortly be sent them. 4ithout doubt, the MendeBona family would have been "ratified to receive even the -5// pittance out of the business wrec6 in Leyte of the senior MendeBona. @urin" much of the time here mentioned, Dapunan was the attorney of MendeBona. Dapunan was "iven e<tensive authority by the letter of MendeBona of #pril 1), 1919. 4hen Dapunan too6 part in the sale, it must be assumed that he was biddin" in representation of his client and for the benefit of the client. It remains to be said that followin" the presentation of the char"es a"ainst #ttorney Dapunan in this court, he was "iven an opportunity to answer, and the usual investi"ation of his professional conduct was made by the provincial fiscal of Leyte actin" under the supervision of the #ttorney8$eneral. From the report of the fiscal, indorsed by the #ttorney8 $eneral, three char"es seem to have been considered. &he first two, relatin" to Dapunan.s attempt to represent both the parties in the case, and to molest and disturb @iaB by frivolous motions, the law officer of the $overnment finds not substantiatedE and with this conclusion we fully a"ree. &he third char"e is more serious and has to do with Dapunan havin" intervened in the manner in which he did in the sale of the property of his client MendeBona. &he #ttorney8$eneral is of the opinion on this point that the facts constitute a fla"rant violation of the provisions of article 1959 of the ivil ode and article 59) of the -enal ode. 3In view thereof, it is recommended that corrective measures commensurate with the irre"ularity committed by #ttorney Dapunan, be ta6en a"ainst him.3 #rticle 1959 of the ivil ode was held in force in the case of ?ernandeB vs. Fillanueva '019)/1, 9/ -hil., ::5*. It provides that the followin" persons, namin" them, 3cannot ta6e by purchase, even at a public or judicial auction, either in person or throu"h the mediation of another.3 &he provision contained in the last para"raph of said article is made to include lawyers, with respect to any property or ri"hts involved in any liti"ation in which they may ta6e party by virtue of their profession and office. 4e do not believe this article has been infrin"ed by the

respondent because he has not purchased property at a public or judicial auction and because his participation in the auction was in representation of his client. It has been held that an e<ecution sale to the attorney of the defendant is not unlawful if made in "ood faith, with the consent of the client, and without any purpose of defraudin" the latter.s creditors. ') %. . L., 1/11E 1 &hornton on #ttorneys at Law, pp. )9;, )99E >mith vs. >mith 01;9;1, 1 Iowa, =/:.* &he more puBBlin" Auestion relates to the alle"ed violation by #ttorney Dapunan of article 59) of the -enal ode. &his article punishes 3any person who shall solicit any "ift or promise as a consideration for a"reein" to refrain from ta6in" part in any public auction.3 &he crime is consummated by the mere act of solicitin" a "ift or promise for the purpose of abstainin" from ta6in" part in the auction. 7ot permittin" our minds to be confused by the varied e<planations of @iaB and Dapunan, the document formulated by them and hereinbefore Auoted, demonstrates that Dapunan, on the promise of @iaB to pay -1,///, refrained from further participation in the sale of the property of MendeBona, which is e<actly the situation covered by article 59) of the -enal ode. -ublic policy discountenances combinations or a"reements on the part of bidders at e<ecution sales, the objects and effects of which are to stifle competition. &he courts will consider an a"reement between a jud"ment creditor and one claimin" an interest in the thin" about to be sold under an e<ecution, that neither shall bid a"ainst the other, as void, unless all parties concerned 6now of the arran"ement and consent thereto. G<ecution sales should be open to free and full competition, in order to secure the ma<imum benefit for the debtor. #rticle 59) of the -enal ode is, therefore, a wise provision even thou"h rarely invo6ed, and should be used to discoura"e the stiflin" of bids at judicial sales. ')= .!., ,9:E -ac6ard vs. (ird and hapman 01;:/1, 9/ al., =:;E = Fiada, odi"o -enal, 599.* 4e conclude that #ttorney Dapunan has been "uilty of a technical violation of article 59) of the -enal ode. (ut we cannot adopt the vi"orous recommendation of the #ttorney8 $eneral, for we consider present certain miti"atin" circumstances which e<ert an influence in favor of the respondent. In the first place, as disclosed by the judicial records, no reported prosecution under article 59) has been attempted, which is eloAuent proof of the practical disuse of this articleE and the >panish jurisprudence, while indicative of the meanin" of the article, relies principally on the decisions of the French ourt of assation. '>ee ode of 7apoleon, arts. ))), ))=E decisions of the French ourt of assation of October 1,, 1;99, May 15, 1;5:, and !anuary ;, 1;,=.* In the ne<t place, the complainant @iaB is eAually "uilty with the respondent Dapunan. #nd lastly, Dapunan appears to have been actin" in "ood faith for his client, althou"h adoptin" an irre"ular procedure, and althou"h attemptin" to ma6e tardy restitution of the money received by him. Our jud"ment is that #ttorney %uperto Dapunan shall stand reprimanded and that the complainant, Ficente @iaB, shall immediately return to the cler6 of the ourt of First Instance of Leyte the -5// received by @iaB from the cler6 and

receipted for by @iaB, and the cler6 of court shall transmit the -5// to >ecundino de MendeBona or, in case of his absence, to Miss armen de MendeBona. osts shall be ta<ed in accordance with the provisions of the ode of ivil -rocedure. >o ordered. !ohnson, #vanceRa, Fillamor, Ostrand and !ohns, !!., concur. %omualdeB, !., too6 no part.

B. ACCOUNTING OF CLIENTS FUNDS

[A.C. No. A0>9. ,0r3/ "B! "000# LEONITO GONATO 02& -RI,ROSE GONATO complainants, vs. ATTY. CESILO A. ADA:A! respondent. RESOLUTION ,ELO! J.. >claw #t bar is an administrative complaint for disbarment filed by the complainant spouses Leonito and -rimrose $onato a"ainst their former counsel, #tty. esilo #. #daBa, char"in" him with malpractice and violation of trust. -ursuant to %ule 1=98 ( of the %ules of ourt and the %esolution of the ourt dated @ecember 1, 199=, the present administrative case was referred to the Inte"rated (ar of the -hilippines 'I(-* for investi"ation, report, and recommendation. It appears that sometime in February, 199=, complainants en"a"ed the services of respondent as their counsel in ivil ase 7o. 9)8),= entitled $o6in" vs. Kacapin, et al.3 filed with the %e"ional &rial ourt of Misamis Oriental, wherein complainants were amon" the defendants in said case. omplainants alle"ed that respondent demanded from them the sum of -15,9;/.// to be used in payin" the doc6et fee and other court fees in connection with the aforementioned case. >aid amount was loaned to complainants by a friend, Fic ManBano, who delivered the same to respondent, as evidenced by an ac6nowled"ment receipt dated February 1/, 199= and si"ned by respondent.s secretary, Mayette >alceda. &hereafter, complainants as6ed for the official receipts evidencin" the amount of court fees purportedly paid by respondent. Fic ManBano told complainants that respondent only "ave him photocopies of two %epublic of the -hilippines receipts with numbers 9,):19= 'G<hibit 3 3* dated February 11, 199=, in the amount of -15,;=/.//E and :99:;,; 'G<hibit 3@3* also dated February 11, 199=, in the amount of -15/.//. @issatisfied, complainant -rimrose $onato personally went to respondent.s law office at least three times, and as6ed for the ori"inal copies of the receipts, but to no avail. -rimrose.s suspicion "rew stron"er, and this prompted her to verify the authenticity of said receipts with the office of the ler6 of ourt of the %e"ional &rial ourt of a"ayan de Oro ity. &here, it was discovered that the triplicate ori"inal copies of the receipts did not reflect the same amount contained on the photocopies of the receipts "iven by respondent. %eceipt 7o. 9,):19= in the ler6 of ourt.s Office showed only the

amount of -),9:/.// and was @ated May 15, 199), while that "iven by respondent bore the amount of -15,;=/.//. On the other hand, %eceipt 7o. :99:;,; per Office of ler6 of ourt records revealed the sum of -9,///.//, while that provided by respondent disclosed the sum of -15/.//, presumably to conform to the amount paid by complainant which was -15,9;/.//. omplainants demanded the return of -15,9;/.// but respondent refused to do so. &hus, in #pril, 199=, complainants ur"ed respondent to withdraw as counsel due to loss of trust and confidence. For his part, respondent lawyer admits that he received from Fic ManBano the amount of -15,9;/.// which was initially intended to cover the filin" fees, sheriff fees, and +.-. Law enter fees in the filin" of counterclaim on behalf of herein complainants. (ut accordin" to him, after careful study, he realiBed that the counterclaim is compulsory and not permissive, and so he applied instead the aforesaid sum of -15,9;/.// to his acceptance and appearance fees, which fact was even communicated to Fic ManBano, who was complainants. contact or liason person with respondent. %espondent also specifically denied that he caused the delivery of the falsified photocopies of O.%. 7os. 9,):19= and :99:;,; to complainant spouses. >cle< In its %esolution dated !anuary );, 1999, the (oard of $overnors of the Inte"rated (ar of the -hilippines adopted and approved the Investi"atin" ommissioner.s report and recommendation with an amendment that respondent be suspended from the practice of law for three '=* months. &he I(- ommission on (ar @iscipline found sufficient evidence to sustain complainants. claim that respondent char"ed them the amount of -15,9;/.// for filin" fees when in fact no such fees were due. It rejected respondent.s claim that the subject amount was applied to his attorney.s fees as this is belied by the statement of account he issued to complainants indubitably showin" that complainants were char"ed of said amount for filin" fees. &his ourt is in full accord with the findin"s and recommendation of the I(- that respondent lawyer has sufficiently demonstrated conduct showin" his unfitness for the confidence and trust which characteriBe the attorney8client relationship. ?is act of reAuirin" complainants to pay an e<orbitant amount on the prete<t that it was needed for the payment of court fees which were not even substantiated by proper official receipts, constitutes malpractice which is a serious breach of professional duty toward complainants whose trust respondent disre"arded and violated. %espondent e<pressly admitted havin" received the money, but he persistently refused to return the same despite repeated demands by the complainants. &his conduct of the respondent is clearly indicative of lac6 of inte"rity and moral soundness, as he was clin"in" to somethin" which was not his and to which he absolutely had no ri"ht. %espondentJs shallow e<cuse that he applied said money to his attorney.s fees is merely an afterthou"ht and cannot justify his refusal to return the same, as this was made without the acAuiescence of the complainants. It is settled that the conversion by a lawyer of funds entrusted to him is a "ross violation of professional

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ethics and a betrayal of public confidence in the le"al profession %&bia vs. 'atimbang, 19, > %# )= 019911*. Li6ewise, respondent offered no solid proof to support his denial that he delivered the two falsified receipts to complainants. Llaw anon : of the ode of -rofessional %esponsibility mandates that 3a lawyer shall at all times uphold the inte"rity and di"nity of the le"al profession.3 &he trust and confidence necessarily reposed by clients reAuire in the lawyer a hi"h standard and appreciation of his duty to them. &o this end, nothin" should be done by any member of the le"al fraternity which mi"ht tend to lessen in any de"ree the confidence of the public in the fidelity, honesty, and inte"rity of the profession '(arcelo vs. )avier, r., )19 > %# 1 0199)1*. &he facts and evidence obtainin" in this case "larin"ly reveal respondent.s failure to live up to his duties as a lawyer in consonance with the strictures of his oath and the ode of -rofessional %esponsibility, particularly anon 1, which provides that 3a lawyer shall hold in trust all moneys and properties of his client that may come into his possession.3 #s a member of the (ar, respondent was and is e<pected to always live up to the standards embodied in said ode particularly anons 15, 1,, 1: and )/, for the relationship between an attorney and his client is hi"hly fiduciary in nature and demands utmost fidelity and "ood faith '*gual vs. )avier )59 > %# 91, 0199,1*. &he ourt believes that a lon"er period of suspension than that recommended by the I(- is called for under the circumstances. W+EREFORE, respondent #tty. esilo #. #daBa is hereby suspended from the practice of law for a period of si< ',* months from notice, with the warnin" that a repetition of the same or similar acts will be dealt with more severely. %espondent is further ordered to restitute to complainants the amount of -15,9;/.// within =/ days from notice, without prejudice to whatever judicial action he may ta6e to recover his unsatisfied attorney.s fees, if any. Let copies of this resolution be furnished all courts in the land, the Inte"rated (ar of the -hilippines, the Office of the (ar onfidant, and let it be spread in respondent.s personal record. SO ORDERED. Lsc A.C. No. BA1> O3)o8(r 9! "00B

put up as an injunction bond, which complainant found out later, however, to be unnecessary as the application for the writ was denied by the trial court. %espondent also as6ed for money on several occasions alle"edly to spend for or to be "iven to the jud"e handlin" their case, !ud"e Mila"ros Puijano, of the %e"ional &rial ourt, Iri"a ity, (ranch =,. 4hen complainant approached !ud"e Puijano and as6ed whether what respondent was sayin" was true, !ud"e Puijano outri"htly denied the alle"ations and advised her to file an administrative case a"ainst respondent.1 In his #nswer, respondent denied the char"es a"ainst him and averred that the same were merely concocted by complainant to destroy his character. ?e also contended that it was complainant who boasted that she is a professional fi<er in administrative a"encies as well as in the judiciaryE and that complainant promised to pay him lar"e amounts of attorney.s fees which complainant however did not 6eep.) (oth parties appeared in the Mandatory onference and ?earin" on !anuary 1;, )//,. &hereafter, the case was submitted for decision.= In the %eport and %ecommendation dated !anuary )9, )//,, I(-8 ommission on (ar @iscipline ommissioner @ennis #.(. Funa found respondent "uilty of $ross Misconduct in his relations with his client and recommended that respondent be suspended for three years from the practice of law.9 In the %eport, ommissioner Funa found that2 @urin" the hearin" conducted, omplainant alle"ed that she has remitted to %espondent, on various dates, amounts of money totalin" to more or less -):/,///.//. #ccordin" to omplainant the amounts "iven in several instances were all undocumented and not ac6nowled"ed in writin". ?owever, for the alle"ed amount of -19,///.// intended for an injunction bond, some documents in writin" were made. <<<< 4hile the amounts remitted by omplainant to %espondent were never ac6nowled"ed in writin" and were not documented, due credence must be "iven to omplainant.s alle"ations especially over the amount of -19,;//.// intended for the injunction. Indeed, there is no ill8motive at all on the part of omplainant to fabricate char"es a"ainst %espondent. +nfortunately, none of the -):/,///.// "iven by omplainant to %espondent was ever documented and therefore accuracy of the amounts could not be established and substantiated. 4hat has been documented only pertains to the unpaid -5,;//.// intended for the injunction bond. ?owever, it has been established that indeed an accumulated amount of -9,///.// has been remitted by %espondent to Falentina %amos and only the unpaid -5,;//.// remains unaccounted for by the %espondent.

ANDREA BALCE CELA$E! 3o6pl0i202)! 71. ATTY. SANTIAGO C. SORIANO! r(1po2&(2). %G>OL+&IO7 #+>&%I#8M#%&I7GH, !.2 (efore this ourt is a disbarment case filed a"ainst #tty. >antia"o . >oriano 'respondent* for "ross misconduct. In the omplaint dated !une 1, )//5 filed before the Inte"rated (ar of the -hilippines 'I(-*, #ndrea (alce elaje 'complainant* alle"ed that respondent as6ed for money to be

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@urin" the hearin" conducted, omplainant reiterated her accusations a"ainst the %espondent and e<pressed that she has been a""rieved and misled by %espondent. #ccordin" to omplainant, this was made possible because she was not aware of or 6nowled"eable on le"al matters and practices. %espondent has only offered denials to the char"es. ?owever, the circumstances "ives credibility to herein omplainant in the absence of any evil motive on her part. #ccordin"ly, %espondent is clearly "uilty of misappropriatin" his client.s funds in the amount of -5,;//.//. 4hile other amounts may have been misappropriated, omplainant alle"es -):/,///.//, the e<actness of the amounts could not be established. %espondent is also "uilty of deceivin" his client and abusin" his client.s confidence in reAuestin" for several amounts of money on the pretense that he had to spend for and pay the trial jud"e. %espondent is hereby O%@G%G@ to immediately deliver the unaccounted for amount of Five &housand Gi"ht ?undred -esos '-5,;//.//* to omplainant, submittin" a ompliance %eport thereon.5 On >eptember ;, )//,, the (oard of $overnors of the I(passed a %esolution thus2 %G>OLFG@ to #@O-& and #pprove, as it is hereby #@O-&G@ and #--%OFG@, with modification, the %eport and %ecommendation of the Investi"atin" ommissioner of the above8entitled case, herein made part of this %esolution as #nne< 3#8E and, findin" the recommendation fully supported by the evidence on record and the applicable laws and rules, and considerin" that %espondent is "uilty of "ross misconduct for misappropriatin" his client.s funds, #tty. >antia"o . >oriano is hereby >+>-G7@G@ from the practice of law for two ')* years and li6ewise Ordered to immediately deliver that unaccounted amount of -5,;//.// to complainant., &he I(- transmitted the 7otice of %esolution issued by the I(- (oard of $overnors as well as the records of the case, pursuant to %ule 1=98(.: &hen in compliance with the ourt.s %esolution dated February )/, )//:, the I(- throu"h @irector for @iscipline %o"elio Finluan informed the ourt that per records of the I(-, no Motion for %econsideration was filed by either party. &he ourt a"rees with the I(- %esolution. &he ode of -rofessional %esponsibility ' -%*, particularly anon 1, thereof, mandates that a lawyer shall hold in trust all moneys and properties of his client that may come into his possession. ?e shall account for all money or property collected or received from his client; and shall deliver the funds and property of his client when due or upon demand.9 #s found by ommissioner Funa, it was established that respondent could not account for -5,;//.// which was part of the sum "iven by complainant to him for the purpose of filin" an injunctive bond. %espondent admitted havin" received from complainant -1:,;//.// on #pril 19, )//) for the

preliminary injunction1/ and admitted to havin" a balance of -9,///.// in his promissory note to the Manila Insurance o., Inc. dated #pril )=, )//), which was reduced to -5,;//.// by reason of an additional payment of -9,///.//,11 leavin" an amount of -5,;//.// unaccounted for. &he affidavit of the insurance a"ent, Falentina %amos, dated @ecember ;, )//5 also states that even up to said date, respondent had not yet paid the balance of -5,;//.//.1) %espondent.s failure to return the money to complainant upon demand "ave rise to the presumption that he misappropriated it for his own use to the prejudice of, and in violation of the trust reposed in him by his client.1= It is a "ross violation of "eneral morality and of professional ethics and impairs public confidence in the le"al profession which deserves punishment.19 #s the ourt has pronounced, when a lawyer receives money from the client for a particular purpose, the lawyer is bound to render an accountin" to the client showin" that the money was spent for a particular purpose. #nd if he does not use the money for the intended purpose, the lawyer must immediately return the money to his client.15 &he ourt has been e<actin" in its demand for inte"rity and "ood moral character of members of the (ar who are e<pected at all times to uphold the inte"rity and di"nity of the le"al profession and refrain from any act or omission which mi"ht lessen the trust and confidence reposed by the public in the fidelity, honesty, and inte"rity of the le"al profession. Indeed, membership in the le"al profession is a privile"e.1, &he attorney8client relationship is hi"hly fiduciary in nature. #s such, it reAuires utmost "ood faith, loyalty, fidelity and disinterestedness on the part of the lawyer.1: In >mall v. (anares1; the respondent was suspended for two years for violatin" anon 1, of the -%, particularly for failin" to file a case for which the amount of -;/,///.// was "iven him by his client, and for failin" to return the said amount upon demand. onsiderin" that similar circumstances are attendant in this case, the ourt finds the %esolution of the I(- imposin" on respondent a two8year suspension to be in order. 4?G%GFO%G, respondent #tty. >antia"o . >oriano is found $+IL&K of violatin" anon 1, of the ode of -rofessional %esponsibility and is hereby >+>-G7@G@ from the practice of law for a period of two ')* years from notice, with a >&G%7 4#%7I7$ that a repetition of the same or similar acts shall be dealt with more severely. %espondent is further ordered to restitute to his clients throu"h #ndrea (alce elaje, within =/ days from notice, the amount of -5,;//.//. %espondent is directed to submit to the ourt proof of payment within fifteen days from payment of the full amount. Let copies of this %esolution be furnished all courts of the land, the Inte"rated (ar of the -hilippines, as well as the Office of the (ar onfidant for their information and

12

"uidance, and let it be entered in respondent.s record in this ourt. >O O%@G%G@.

there is no doubt that payment of the contested amount had been effected to the >>> on 7ovember )=, 199/, it is clear however, that the same was made only after a complaint had been filed a"ainst respondent. Furthermore, the duties of a provincial prosecutor do not include receivin" money from persons with official transactions with his office. &his ourt has repeatedly admonished lawyers that a hi"h sense of morality, honesty and fair dealin" is e<pected and reAuired of a member of the bar. %ule 1./1 of the ode of -rofessional %esponsibility provides that S0a1 lawyer shall not en"a"e in unlawful, dishonest, immoral or deceitful conduct.T It is "larin"ly clear that respondentJs non8remittance for over one year of the funds comin" from Gncarnacion -ascual constitutes conduct in "ross violation of the above canon. &he belated payment of the same to the >>> does not e<cuse his misconduct. 4hile -ascual may not strictly be considered a client of respondent, the rules relatin" to a lawyerJs handlin" of funds of a client is applicable. In Daroy v. Legaspi,011 this court held that S't*he relation between an attorney and his client is hi"hly fiduciary in nature...0thus1 lawyers are bound to promptly account for money or property received by them on behalf of their clients and failure to do so constitutes professional misconduct.T &he failure of respondent to immediately remit the amount to the >>> "ives rise to the presumption that he has misappropriated it for his own use. &his is a "ross violation of "eneral morality as well as professional ethicsE it impairs public confidence in the le"al profession and deserves punishment.0)1 %espondentJs claim that he may not be held liable because he committed such acts, not in his capacity as a private lawyer, but as a prosecutor is unavailin". anon , of the ode of -rofessional %esponsibility provides2 S&hese canons shall apply to lawyers in "overnment service in the dischar"e of their official tas6s.T #s stated by the I(- ommittee that drafted the ode, Sa lawyer does not shed his professional obli"ations upon assumin" public office. In fact, his public office should ma6e him more sensitive to his professional obli"ations because a lawyerJs disreputable conduct is more li6ely to be ma"nified in the publicJs eye. 0=1 4ant of moral inte"rity is to be more severely condemned in a lawyer who holds a responsible public office.091 ACCORDINGLY, this ourt %G-%IM#7@> respondent with a >&G%7 4#%7I7$ that a commission of the similar offense will be dealt with more severely in the future. LG& copies of this decision be spread in his records and copies be furnished the @epartment of !ustice and the Office of the (ar onfidant. SO ORDERED.

[A.C. CBD No. 1 B. ,0r3/ 9! 1999# ATTY. -RUDENCIO S. -ENTICOSTES! complainant, vs. -ROSECUTOR DIOSDADO S. IBACE:! respondent. RESOLUTION RO,ERO! J.. >ometime in 19;9, Gncarnacion -ascual, the sister8in8 law of #tty. -rudencio >. -enticostes 'herein complainant* was sued for non8remittance of >>> payments. &he complaint was doc6eted as I.>. ;98=5= and assi"ned to -rosecutor @iosdado >. IbaReB 'herein respondent* for preliminary investi"ation. In the course of the investi"ation, Gncarnacion -ascual "ave -1,;/9.// to respondent as payment of her >ocial >ecurity >ystem '>>>* contribution in arrears. %espondent, however, did not remit the amount to the system. &he fact of non8payment was certified to by the >>> on October ), 19;9. On 7ovember 1,, 199/ or over a year later, complainant filed with the %e"ional &rial ourt of &arlac a complaint for professional misconduct a"ainst IbaReB due to the latterJs failure to remit the >>> contributions of his sister8in8law. &he complaint alle"ed that respondentJs misappropriation of Gncarnacion -ascualJs >>> contributions amounted to a violation of his oath as a lawyer. >even days later, or on 7ovember )=, 199/, respondent paid -1,;/9.// to the >>> on behalf of Gncarnacion -ascual. In the meantime, the case was referred to the Inte"rated (ar of the -hilippines8&arlac hapter, the court observin" that it had no competence to receive evidence on the matter. +pon receipt of the case, the &arlac hapter forwarded the same to I(-Js ommission on (ar @iscipline. In his defense, respondent claimed that his act of accommodatin" Gncarnacion -ascualJs reAuest to ma6e payment to the >>> did not amount to professional misconduct but was rather an act of hristian charity. Furthermore, he claimed that the action was moot and academic, the amount of -1,;/9.// havin" already been paid by him to the >>>. Lastly, he disclaimed liability on the "round that the acts complained were not done by him in his capacity as a practicin" lawyer but on account of his office as a prosecutor. On >eptember =, 199;, the ommission recommended that the respondent be reprimanded, with a warnin" that the commission of the same or similar offense would be dealt with more severely in the future. On 7ovember 5, 199;, the (oard of $overnors of the Inte"rated (ar of the -hilippines adopted and approved its ommissionJs recommendation. &his ourt adopts the recommendation of the I(- and finds respondent "uilty of professional misconduct. 4hile

C. RESTRICTION AGAINST BUYING CLIENTS -RO-ERTY

G.R. No. LD95B0" ,0* "9! 19B9

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DO,INGO D. RUBIAS! pl0i2)i44D0pp(ll02)! 71. ISAIAS BATILLER! &(4(2&02)D0pp(ll((. $re"orio M. %ubias for plaintiff8appellant. Ficente %. #csay for defendant8appellee.

alle"ed malicious institution of the complaint he claims he has suffered moral dama"es in the amount of - ),///.//, as well as the sum of -5//.// for attorney.s fees. ... On @ecember 9, 19,9, the trial court issued a pre8trial order, after a pre8trial conference between the parties and their counsel which order reads as follows.. .4hen this case was called for a pre8trial conference today, the plaintiff appeared assisted by himself and #tty. $re"orio M. %ubias. &he defendant also appeared, assisted by his counsel #tty. Ficente %. #csay. #. @urin" the pre8trial conference, the parties have a"reed that the followin" facts are attendant in this case and that they will no lon"er introduced any evidence, testimonial or documentary to prove them2 1. &hat Francisco Militante claimed ownership of a parcel of land located in the (arrio of $eneral Luna, municipality of (arotac Fiejo province of Iloilo, which he caused to be surveyed on !uly 1;8=1, 19=9, whereby he was issued a plan -su899:91 'G<hibit 3(3*. '&he land claimed contained an area of 1:12=5,1 hectares.* ). (efore the war with !apan, Francisco Militante filed with the ourt of First Instance of Iloilo an application for the re"istration of the title of the land technically described in psu8 99:91 'G<h. 3(3* opposed by the @irector of Lands, the @irector of Forestry and other oppositors. ?owever, durin" the war with !apan, 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. &he record was reconstituted on the ourt of the First Instance of Iloilo and doc6eted as Land ase 7o. %8,95, $L%O %ec. 7o. 59;5). &he ourt of First Instance heard the land re"istration case on 7ovember 19, 195), and after the trial this court dismissed the application for re"istration. &he appellant, Francisco Militante, appealed from the decision of this ourt to the ourt of #ppeals where the case was doc6eted as #8$% 7o. 1=99:8 %.. =. -endin" the disposal of the appeal in #8$% 7o. 1=99:8% and more particularly on !une 1;, 195,, Francisco Militante sold to the plaintiff, @omin"o %ubias the land technically described in psu899:91 'G<h. 3#3*. &he sale was duly recorded in the Office of the %e"ister of @eeds for the province of Iloilo as Gntry 7o. 1=,/9 on !uly 11, 19,/ 'G<h. 3#813*. '7O&G2 #s per deed of sale, G<h. #, what Militante purportedly sold to plaintiff8appellant, his son8in8law, for the sum of -),///.// was 3a parcel of untitled land havin" an area Of 199.9/:) hectares ... surveyed under -su 99:91 ... 'and* subject to the e<clusions made by me, under 'case* #8i=99:, Land %e"istration ase 7o. %8,95, $.L.%.O. 7o. 59;5), ourt of First Instance of the province of Iloilo. &hese e<clusions referred to portions of the ori"inal area of over 1:1 hectares ori"inally claimed by Militante as applicant, but which he e<pressly reco"niBed durin" the trial to pertain to some oppositors, such as the (ureau of -ublic 4or6s and (ureau of Forestry and several other individual occupants and

&GG?#7DGG, !.2 In this appeal certified by the ourt of #ppeals to this ourt as involvin" purely le"al Auestions, we affirm the dismissal order rendered by the Iloilo court of first instance after pre8trial and submittal of the pertinent documentary e<hibits. >uch dismissal was proper, plaintiff havin" no cause of action, since it was duly established in the record that the application for re"istration of the land in Auestion filed by Francisco Militante, plaintiff.s vendor and predecessor interest, had been dismissed by decision of 195) of the land re"istration court as affirmed by final jud"ment in 195; of the ourt of #ppeals and hence, there was no title or ri"ht to the land that could be transmitted by the purported sale to plaintiff. #s late as 19,9, the Iloilo court of first instance had in another case of ejectment li6ewise upheld by final jud"ment defendant.s 3better ri"ht to possess the land in Auestion . havin" been in the actual possession thereof under a claim of title many years before Francisco Militante sold the land to the plaintiff.3 Furthermore, even assumin" that Militante had anythin" to sell, the deed of sale e<ecuted in 195, by him in favor of plaintiff at a time when plaintiff was concededly his counsel of record in the land re"istration case involvin" the very land in dispute 'ultimately decided adversely a"ainst Militante by the ourt of #ppeals. 195; jud"ment affirmin" the lower court.s dismissal of Militante.s application for re"istration* was properly declared ine<istent and void by the lower court, as decreed by #rticle 19/9 in relation to #rticle 1991 of the ivil ode. &he appellate court, in its resolution of certification of )5 !uly 19:), "ave the followin" bac6"rounder of the appeal at bar2 On #u"ust =1, 19,9, plaintiff @omin"o @. %ubias, a lawyer, filed a suit to recover the ownership and possession of certain portions of lot under -su899:91 located in (arrio $eneral Luna, (arotac Fiejo, Iloilo which he bou"ht from his father8 in8law, Francisco Militante in 195, a"ainst its present occupant defendant, Isaias (atiller, who ille"ally entered said portions of the lot on two occasions U in 1995 and in 1959. -laintiff prayed also for dama"es and attorneys fees. 'pp. 18:, %ecord on #ppeal*. In his answer with counter8claim defendant claims the complaint of the plaintiff does not state a cause of action, the truth of the matter bein" that he and his predecessors8in8interest have always been in actual, open and continuous possession since time immemorial under claim of ownership of the portions of the lot in Auestion and for the

14

accordin"ly withdrew his application over the same. &his is e<pressly made of record in G<h. #, which is the ourt of #ppeals. decision of )) >eptember 195; confirmin" the land re"istration court.s dismissal of Militante.s application for re"istration.* 9. On >eptember )),195; the ourt of appeals in #8 $.%. 7o. 1=99:8% promul"ated its jud"ment confirmin" the decision of this ourt in Land ase 7o. %8,95, $L%O %ec. 7o. 59;5) which dismissed the application for %e"istration filed by Francisco Militante 'G<h. 3I3*. 5. @omin"o %ubias declared the land described in G<h. .(. for ta<ation purposes under &a< @ec. 7o. ;5;5 'G<h. 3 3* for 195:E &a< @ec. 7os. 95== 'G<h. 3 813* and 1//19 'G<h. 3 8=3*for the year 19,1E &a< @ec. 7o. 9;,; 'G<h. 3 8)3* for the year 19,9, payin" the land ta<es under &a< @ec. 7o. ;5;5 and 95== 'G<h. 3@3, 3@813, 3$8,3*. ,. Francisco Militante immediate predecessor8in8 interest of the plaintiff, has also declared the land for ta<ation purposes under &a< @ec. 7o. 51:) in 199/ 'G<h. 3G3* for 1995E under &a< @ec. 7o. &8;, 'G<h. 3G813* for 199;E under &a< @ec. 7o. :1)) 'G<h. 3)3*, and paid the land ta<es for 199/ 'G<hs. 3$3 and 3$8:3*, for 1995 9, 'G<h. 3$813* for 199: 'G<h. 3$8)3*, for 199: V 199; 'G<h. 3$8=3*, for 199; 'G<h. 3$893*, and for 199; and 1999 'G<h. 3$853*. :. &a< @eclaration 7o. )9=9 in the name of Liberato @emontaRo for the land described therein 'G<h. 3F3* was cancelled by &a<. @ec. 7o. 51:) of Francisco Militante 'G<h. 3G3*. Liberato @emontaRo paid the land ta< under &a< @ec. 7o. )9=9 on @ec. )/, 19=9 for the years 19=; '5/W* and 1959 'G<h. 3?3*. ;. &he defendant had declared for ta<ation purposes Lot 7o. ) of the -su8155)91 under &a< @ec. 7ot. ;5;= for 195: and a portion of Lot 7o. ), -su8155)91, for 1995 under &a< @ec. 7o. ;5;9 'G<h. 3)8#3 &a< 7o. ;5;= 'G<h. 3)3* was revised by &a< @ec. 7o. 999; in the name of the defendant 'G<h. 3)8(3* and &a< @ec. 7o. ;5;9 'G<h. 3)8#3* was cancelled by &a< @ec. 7o. 95;9 also in the name of the defendant 'G<h. 3)8 3*. &he defendant paid the land ta<es for Lot ), -su8155)91, on 7ov. 9, 19,/ for the years 1995 and 199,, for the year 195/, and for the year 19,/ as shown by the certificate of the treasurer 'G<h. 3=3*. &he defendant may present to the ourt other land ta<es receipts for the payment of ta<es for this lot. 9. &he land claimed by the defendant as his own was surveyed on !une , and :,195,, and a plan approved by @irector of Land on 7ovember 15, 195, was issued, identified as -su 155)91 'G<h. 353*. 1/. On #pril )), 19,/, the plaintiff filed forcible Gntry and @etainer case a"ainst Isaias (atiller in the !ustice of the -eace ourt of (arotac Fiejo -rovince of Iloilo 'G<h. 393* to which the defendant Isaias (atiller riled his answer on #u"ust )9, 19,/ 'G<h. 398#3*. &he Municipal ourt of (arotac Fiejo after trial, decided the case on May 1/, 19,1 in favor of the defendant and a"ainst the plaintiff 'G<h. 398(3*. &he plaintiff appealed from the decision of the Municipal ourt of (arotac

Fiejo which was doc6eted in this ourt as ivil ase 7o. 5:5/ on !une =, 19,1, to which the defendant, Isaias (atiller, on !une 1=, 19,1 filed his answer 'G<h. 398 3*. #nd this ourt after the trial. decided the case on 7ovember ),, 19,9, in favor of the defendant, Isaias (atiller and a"ainst the plaintiff 'G<h. 398@3*. '7O&G2 #s per G<h. 98(, which is the Iloilo court of first instance decision of ), 7ovember 19,9 dismissin" plaintiff.s therein complaint for ejectment a"ainst defendant, the iloilo court e<pressly found 3that plaintiff.s complaint is unjustified, intended to harass the defendant3 and 3that the defendant, Isaias (atiller, has a better ri"ht to possess the land in Auestion described in -su 155)91 'G<h. 3=3*, Isaias (atiller havin" been in the actual physical possession thereof under a claim of title many years before Francisco Militante sold the land to the plaintiff8hereby dismissin" plaintiff.s complaint and orderin" the plaintiff to pay the defendant attorney.s fees ....3* (. @urin" the trial of this case on the merit, the plaintiff will prove by competent evidence the followin"2 1. &hat the land he purchased from Francisco Militante under G<h. 3#3 was formerly owned and possessed by Liberato @emontaRo but that on >eptember ,, 1919 the land was sold at public auction by virtue of a jud"ment in a ivil ase entitled 3Gdw !. -flieder plaintiff vs. Liberato @emontaRo Francisco (alladeros and $re"orio Kulo, defendants3, of which Kap -on"co was the purchaser 'G<h. 318=3*. &he sale was re"istered in the Office of the %e"ister of @eeds of Iloilo on #u"ust 9, 19)/, under -rimary Gntry 7o. ,9 'G<h. 313*, and a definite @eed of >ale was e<ecuted by onstantino #. anto, provincial >heriff of Iloilo, on !an. 19, 19=9 in favor of Kap -on"co 'G<h. 3I3*, the sale havin" been re"istered in the Office of the %e"ister of @eeds of Iloilo on February 1/, 19=9 'G<h. 31813*. ). On >eptember )), 19=9, Kap -on"co sold this land to Francisco Militante as evidenced by a notarial deed 'G<h. 3!3* which was re"istered in the %e"istry of @eeds on May 1=, 199/ 'G<h. 3!813*. =. &hat plaintiff suffered dama"es alle"ed in his complaint. . @efendants, on the other hand will prove by competent evidence durin" the trial of this case the followin" facts2 1. &hat lot 7o. ) of the -su8155) it 'G<h. .5.* was ori"inally owned and possessed by Felipe (atiller, "randfather of the defendant (asilio (atiller, on the death of the former in 19)/, as his sole heir. Isaias (atiller succeeded his father , (asilio (atiller, in the ownership and possession of the land in the year 19=/, and since then up to the present, the land remains in the possession of the defendant, his possession bein" actual, open, public, peaceful and continuous in the concept of an owner, e<clusive of any other ri"hts and adverse to all other claimants. ). &hat the alle"ed predecessors in interest of the plaintiff have never been in the actual possession of the land and that they never had any title thereto.

15

=. &hat Lot 7o. ), -su 155)91, the subject of Free -atent application of the defendant has been approved. 9. &he dama"es suffered by the defendant, as alle"ed in his counterclaim.3. 1 &he appellate court further related the developments of the case, as follows2 On #u"ust 1:, 19,5, 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, alle"in" that plaintiff does not have cause of action a"ainst him because the property in dispute which he 'plaintiff* alle"edly bou"ht from his father8in8law, Francisco Militante was the subject matter of L% 7o. ,95 filed in the FI of Iloilo, which case was brou"ht on appeal to this ourt and doc6eted as #8$.%. 7o. 1=99:8% in which aforesaid case plaintiff was the counsel on record of his father8in8law, Francisco Militante. Invo6in" #rts. 19/9 and 1991 of the ivil ode which reads2 .#rt. 19/9. &he followin" contracts are ine<istent and void from the be"innin"2 <<< ':* <<< <<<

and void. In due season plaintiff filed a motion for reconsideration 'pp. 5/85, %ecord on #ppeal* which was denied by the lower court on !anuary 19, 19,, 'p. 5:, %ecord on #ppeal*. ?ence, this appeal by plaintiff from the orders of October 1;, 19,5 and !anuary 19, 19,,. -laintiff8appellant imputes to the lower court the followin" errors2 .1. &he lower court erred in holdin" that the contract of sale between the plaintiff8appellant and his father8in8law, Francisco Militante, >r., now deceased, of the property covered by -lan -su899:91, 'G<h. 3#3* was void, not voidable because it was made when plaintiff8appellant was the counsel of the latter in the Land %e"istration case. .). &he lower court erred in holdin" that the defendant8 appellee is an interested person to Auestion the validity of the contract of sale between plaintiff8appellant and the deceased, Francisco Militante, >r. .=. &he lower court erred in entertainin" the motion to dismiss of the defendant8appellee after he had already filed his answer, and after the termination of the pre8trial, when the said motion to dismiss raised a collateral Auestion. .9. &he lower court erred in dismissin" the complaint of the plaintiff8appellant.. &he appellate court concluded that plaintiffs 3assi"nment of errors "ives rise to two ')* le"al posers U '1* whether or not the contract of sale between appellant and his father8in8law, the late Francisco Militante over the property subject of -lan -su899:91 was void because it was made when plaintiff was counsel of his father8in8law in a land re"istration case involvin" the property in disputeE and ')* whether or not the lower court was correct in entertainin" defendant8appellee.s motion to dismiss after the latter had already filed his answer and after he 'defendant* and plaintiff8appellant had a"reed on some matters in a pre8trial conference. ?ence, its elevation of the appeal to this ourt as involvin" pure Auestions of law. It is at once evident from the fore"oin" narration that the pre8 trial conference held by the trial court at which the parties with their counsel a"reed and stipulated on the material and relevant facts and submitted their respective documentary e<hibits as referred to in the pre8trial order, supra, ) practically amounted to a fulldress trial which placed on record all the facts and e<hibits necessary for adjudication of the case. &he three points on which plaintiff reserved the presentation of evidence at the8trial dealin" with the source of the alle"ed ri"ht and title of Francisco Militante.s predecessors, supra, = actually are already made of record in the stipulated facts and admitted e<hibits. &he chain of Militante.s alle"ed title and ri"ht to the land as supposedly traced bac6 to Liberato @emontaRo was actually asserted by Militante 'and his vendee, lawyer and son8in8law, herein plaintiff* in the land re"istration case and rejected by the Iloilo land re"istration court which dismissed Militante.s application for re"istration

&hose e<pressly prohibited by law.

.#%&. 1991. &he followin" persons cannot acAuire any purchase, even at a public auction, either in person of throu"h the mediation of another2 . <<< <<< <<<

'5* !ustices, jud"es, prosecutin" attorneys, cler6s of superior and inferior courts, and other officers and employees connected with the administration of justice, the property and ri"hts of in liti"ation or levied upon an e<ecution before the court within whose jurisdiction or territory they e<ercise their respective functionsE this prohibition includes the act of acAuirin" an assi"nment and shall apply to lawyers, with respect to the property and ri"hts which may be the object of any liti"ation in which they may ta6e part by virtue of their profession.. defendant claims that plaintiff could not have acAuired any interest in the property in dispute as the contract he 'plaintiff* had with Francisco Militante was ine<istent and void. '>ee pp. ))8=1, %ecord on #ppeal*. -laintiff stron"ly opposed defendant.s motion to dismiss claimin" that defendant can not invo6e #rticles 19/9 and 1991 of the ivil ode as #rticle 19)) of the same ode provides that .&he defense of ille"ality of contracts is not available to third persons whose interests are not directly affected. '>ee pp. =)8=5 %ecord on #ppeal*. On October 1;, 19,5, the lower court issued an order disclaimin" plaintiffs complaint 'pp. 9)899, %ecord on #ppeal.* In the aforesaid order of dismissal the lower court practically a"reed with defendant.s contention that the contract 'G<h. #* between plaintiff and Francism Militante was null

16

of the land. >uch dismissal, as already stated, was affirmed by the final jud"ment in 195; of the ourt of #ppeals. 9 &he four points on which defendant on his part reserved the presentation of evidence at the trial dealin" with his and his ancestors. continuous, open, public and peaceful possession in the concept of owner of the land and the @irector of Lands. approval of his survey plan thereof, supra, 5 are li6ewise already duly established facts of record, in the land re"istration case as well as in the ejectment case wherein the Iloilo court of first instance reco"niBed the superiority of defendant.s ri"ht to the land as a"ainst plaintiff. 7o error was therefore committed by the lower court in dismissin" plaintiff.s complaint upon defendant.s motion after the pre8trial. 1. &he stipulated facts and e<hibits of record indisputably established plaintiff.s lac6 of cause of action and justified the outri"ht dismissal of the complaint. -laintiff.s claim of ownership to the land in Auestion was predicated on the sale thereof for -),///.// made in 195, by his father8in8 law, Francisco Militante, in his favor, at a time when Militante.s application for re"istration thereof had already been dismissed by the Iloilo land re"istration court and was pendin" appeal in the ourt of #ppeals. 4ith the ourt of #ppeals. 195; final jud"ment affirmin" the dismissal of Militante.s application for re"istration, the lac6 of any ri"htful claim or title of Militante to the land was conclusively and decisively judicially determined. ?ence, there was no ri"ht or title to the land that could be transferred or sold by Militante.s purported sale in 195, in favor of plaintiff. Manifestly, then plaintiff.s complaint a"ainst defendant, to be declared absolute owner of the land and to be restored to possession thereof with dama"es was bereft of any factual or le"al basis. ). 7o error could be attributed either to the lower court.s holdin" that the purchase by a lawyer of the property in liti"ation from his client is cate"orically prohibited by #rticle 1991, para"raph '5* of the -hilippine ivil ode, reproduced supraE , and that conseAuently, plaintiff.s purchase of the property in liti"ation from his client 'assumin" 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 le"al effect, by virtue of #rticle 19/9, para"raph ':* of our ivil ode which provides that contracts 3e<pressly prohibited or declared void by law. are 3ine<istent and that 3'&*hese contracts cannot be ratified. 7either can the ri"ht to set up the defense of ille"ality be waived.3 &he 1911 case of 4olfson vs. Gstate of MartineB : relied upon by plaintiff as holdin" that a sale of property in liti"ation to the party liti"ant.s lawyer 3is not void but voidable at the election of the vendor3 was correctly held by the lower court to have been superseded by the later 19)9 case of @irector of Lands vs. #ba"at. ; In this later case of #ba"at, the ourt e<pressly cited two antecedent cases involvin" the same transaction of purchase of property in liti"ation by the lawyer

which was e<pressly declared invalid under #rticle 1959 of the ivil ode of >pain 'of which #rticle 1991 of our ivil ode of the -hilippines is the counterpart* upon challen"e thereof not by the vendor8client but by the adverse parties a"ainst whom the lawyer was to enforce his ri"hts as vendee thus acAuired. &hese two antecedent cases thus cited in #ba"at clearly superseded 'without so e<pressly statin" the previous rulin" in 4olfson2 &he spouses, !uan >oriano and Ficente Macarae", were the owners of twelve parcels of land. Ficenta Macarae" died in 7ovember, 19/9, leavin" a lar"e number of collateral heirs but no descendants. Liti"ation between the survivin" husband, !uan >oriano, and the heirs of Ficenta immediately arose, and the herein appellant >isenando -alarca acted as >oriano.s lawyer. On May ), 191;, >oriano e<ecuted a deed for the aforesaid twelve parcels of land in favor of >isenando -alarca and on the followin" day, May =, 191;, -alarca filed an application for the re"istration of the land in the deed. #fter hearin", the ourt of First Instance declared that the deed was invalid by virtue of the provisions of article 1959 of the ivil ode, which prohibits lawyers and solicitors from purchasin" property ri"hts involved in any liti"ation in which they ta6e part by virtue of their profession. &he application for re"istration was conseAuently denied, and upon appeal by -alarca to the >upreme ourt, the jud"ement of the lower court was affirmed by a decision promul"ated 7ovember 1,,19)5. '$.%. 7o. )9=)9, -alarca vs. @irector of Lands, not reported.* In the meantime cadastral case 7o. =/ of the -rovince of &arlac was instituted, and on #u"ust )1, 19)=, Gleuteria Macarae", as administratri< of the estate of Ficente Macarae", filed claims for the parcels in Auestion. (uenaventura Lavitoria administrator of the estate of !uan >oriano, did li6ewise and so did >isenando -alarca. In a decision dated !une )1, 19):, the ourt of First Instance, !ud"e arballo presidin", rendered jud"ment in favor of -alarea and ordered the re"istration of the land in his name. +pon appeal to this court by the administration of the estates of !uan >oriano and Ficente Macarae", the jud"ment of the court below was reversed and the land adjudicated to the two estates as conju"al property of the deceased spouses. '$.%. 7o. );)),, @irector of Lands vs. #ba"at, promul"ated May )1, 19);, not reported.* 9 In the very case of #ba"at itself, the ourt, a"ain affirmin" the invalidity and nullity of the lawyer.s purchase of the land in liti"ation 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 e<penses, and ruled that 3the appellant -alarca is a lawyer and is presumed to 6now the law. ?e must, therefore, from the be"innin", have been well aware of the defect in his title and is, conseAuently, a possessor in bad faith.3 #s already stated, 4olfson and #ba"at were decided with relation to #rticle 1959 of the ivil ode of >pain then adopted here, until it was superseded on #u"ust =/, 195/ by

17

the ivil ode of the -hilippines whose counterpart provision is #rticle 1991. #rticle 1991 of our ivil ode 'li6e #rticle 1959 of the >panish ivil ode* prohibits in its si< para"raphs certain persons, by reason of the relation of trust or their peculiar control over the property, from acAuirin" such property in their trust or control either directly or indirectly and 3even at a public or judicial auction,3 as follows2 '1* "uardiansE ')* a"entsE '=* administratorsE '9* public officers and employeesE judicial officers and employees, prosecutin" attorneys, and lawyersE and ',* others especially disAualified by law. In 4olfson which involved the sale and assi"nment of a money jud"ment by the client to the lawyer, 4olfson, whose ri"ht to so purchase the jud"ment was bein" challen"ed by the jud"ment debtor, the ourt, throu"h !ustice Moreland, then e<pressly reserved decision on 3whether or not the jud"ment in Auestion actually falls within the prohibition of the article3 and held only that the sale.s 3voidability can not be asserted by one not a party to the transaction or his representative,3 citin" from Manresa 1/ that 3' *onsiderin" the Auestion from the point of view of the civil law, the view ta6en by the code, we must limit ourselves to classifyin" as void all acts done contrary to the e<press prohibition of the statute. 7ow then2 #s the code does not reco"niBe such nullity by the mere operation of law, the nullity of the acts hereinbefore referred to must be asserted by the person havin" the necessary le"al capacity to do so and decreed by a competent court.3 11 &he reason thus "iven by Manresa in considerin" such prohibited acAuisitions under #rticle 1959 of the >panish ivil ode as merely voidable at the instance and option of the vendor and not void U 3that the ode does not reco"niBe such nullity de pleno derecho3 U is no lon"er true and applicable to our own -hilippine ivil ode which does reco"niBe the absolute nullity of contracts 3whose cause, object, or purpose is contrary to law, morals, "ood customs, public order or public policy3 or which are 3e<pressly prohibited or declared void by law3 and declares such contracts 3ine<istent and void from the be"innin".3 1) &he >upreme ourt of >pain and modern authors have li6ewise veered from Manresa.s view of the >panish codal provision itself. In its sentencia of 11 !une 19,,, the >upreme ourt of >pain ruled that the prohibition of #rticle 1959 of the >panish ivil ode is based on public policy, that violation of the prohibition contract cannot be validated by confirmation or ratification, holdin" that2 ... la prohibicion Aue el articulo 1959 del . . establece respecto a los administradores y apoderados, la cual tiene conforme a la doctrina de esta >ala, contendia entre otras, en >. de ):8581959, un fundamento de orden moral lu"ar la violacion de esta a la nulidad de pleno derecho del acto o ne"ocio celebrado, ... y prohibicion le"al, afectante orden publico, no cabe con efecto al"uno la aludida retification ... 1= &he criterion of nullity of such prohibited contracts under #rticle 1959 of the >panish ivil ode '#rticle 1991 of our ivil ode* as a matter of public order and policy as applied

by the >upreme ourt of >pain to administrators and a"ents in its above cited decision should certainly apply with "reater reason to jud"es, judicial officers, fiscals and lawyers under para"raph 5 of the codal article. itin" the same decisions of the >upreme ourt of >pain, $ullon (allesteros, his 3 urso de @erecho ivil, ' ontratos Gspeciales*3 'Madrid, 19,;* p. 1;, affirms that, with respect to #rticle 1959, >panish ivil ode2. Pue caracter tendra la compra Aue se realice por estas personasN -orsupuesto no cabe duda de Aue el caso 'art.* 1959, 9/ y 5/, la nulidad esabsoluta porAue el motivo de la prohibicion es de orden publico. 19 -ereB $onBales in such view, statin" that 3@ado el caracter prohibitivo delprecepto, la conseAuencia de la infraccion es la nulidad radical y e< le"e.3 15 astan, Auotin" Manresa.s own observation that. 3Gl fundamento do esta prohibicion es clarisimo. 7o sa trata con este precepto tan solo de "uitar la ocasion al fraudeE persi"uese, ademasel proposito de rodear a las personas Aue intervienen en la administrcionde justicia de todos los reti"ios Aue necesitan pora ejercer su ministerio librandolos de toda suspecha, Aue aunAue fuere in fundada, redundura endescredito de la institucion.3 1, arrives at the contrary and now accepted view that 3-uede considerace en nuestro derecho ine<istente .o radicalmente nulo el contrato en los si"uentes cases2 a* ...E b* cuando el contrato se ha celebrado en violacion de una prescripcion .o prohibicion le"al, fundada sobre motivos de orden publico 'hipotesis del art. 9 del codi"o* ...3 1: It is noteworthy that altan.s rationale for his conclusion that fundamental consideration of public policy render void and ine<istent such e<pressly prohibited purchase 'e.". by public officers and employees of "overnment property intrusted to them and by justices, jud"es, fiscals and lawyers of property and ri"hts in liti"ation and submitted to or handled by them, under #rticle 1991, para"raphs '9* and '5* of our ivil ode* has been adopted in a new article of our ivil ode, viB, #rticle 19/9 declarin" such prohibited contracts as 3ine<istent and void from the be"innin".3 1; Indeed, the nullity of such prohibited contracts is definite and permanent and cannot be cured by ratification. &he public interest and public policy remain paramount and do not permit of compromise or ratification. In his aspect, the permanent disAualification of public and judicial officers and lawyers "rounded on public policy differs from the first three cases of "uardians, a"ents and administrators '#rticle 1991, ivil ode*, as to whose transactions it had been opined that they may be 3ratified3 by means of and in 3the form of a new contact, in which cases its validity shall be determined only by the circumstances at the time the e<ecution of such new contract. &he causes of nullity which have ceased to e<ist cannot impair the validity of the new contract. &hus, the object which was ille"al at the time of the first contract, may have already become lawful at the time of the ratification or second contractE or the service which was impossible may have

18

become possibleE or the intention which could not be ascertained may have been clarified by the parties. &he ratification or second contract would then be valid from its e<ecutionE however, it does not retroact to the date of the first contract.3 19 #s applied to the case at bar, the lower court therefore properly acted upon defendant8appellant.s motion to dismiss on the "round of nullity of plaintiff.s alle"ed purchase of the land, since its juridical effects and plaintiff.s alle"ed cause of action founded thereon were bein" asserted a"ainst defendant8 appellant. &he principles "overnin" the nullity of such prohibited contracts and judicial declaration of their nullity have been well restated by &olentino in his treatise on our ivil ode, as follows2 -arties #ffected. U #ny person may invo6e the in e<istence of the contract whenever juridical effects founded thereon are asserted a"ainst him. &hus, if there has been a void transfer of property, the transferor can recover it by the accion reinvindicatoriaE and any prossessor may refuse to deliver it to the transferee, who cannot enforce the contract. reditors may attach property of the debtor which has been alienated by the latter under a void contractE a mort"a"ee can alle"e the ine<istence of a prior encumbranceE a debtor can assert the nullity of an assi"nment of credit as a defense to an action by the assi"nee. #ction On ontract. U Gven when the contract is void or ine<istent, an action is necessary to declare its ine<istence, when it has already been fulfilled. 7obody can ta6e the law into his own handsE 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 "iven under it. &he jud"ment, however, will retroact to the very day when the contract was entered into. If the void contract is still fully e<ecutory, no party need brin" an action to declare its nullityE but if any party should brin" an action to enforce it, the other party can simply set up the nullity as a defense. )/ # O%@I7$LK, the order of dismissal appealed from is hereby affirmed, with costs in all instances a"ainst plaintiff8 appellant. >o ordered. G.R. No. LD" >>" April 5! 19B>

-(&ro A. ?(2i&0 4or pri70)( r(1po2&(2)1. Office of the >olicitor $eneral for respondents &he @irector of Lands, etc., et al.

M#D#>I#%, !.2 #ppeal by certiorari from the decision of respondent ourt of #ppeals which affirmed the jud"ment of the ourt of First Instance of amarines 7orte in ivil ase 7o. 5:: entitled 3%osario Fda. de Lai", et al. vs. armen FerBo, et al.,3 dismissin" herein petitioners. complaint for the reconveyance of a parcel of land with dama"es, and declarin" herein respondent armen FerBo as the lawful owner of the land in issue. It appears that on March ):, 19=9, one -etre $alero obtained rained from the (ureau of Lands ?omestead -atent 7o. 5=8 1:, coverin" )19,999 sAuare meters of land located at (arrio -ina"tamban"an, Labo, amarines 7orte, for which Ori"inal ertificate of &itle 7o. 1/9: was issued in $alero.s name. On !une )5, 199/, $alero sold the land to a certain Mario Gscuta for -=//.//. Gscuta in turn, sold the same land to Florencio aramoan in @ecember, 199), Later, however, -etre $alero, throu"h proper court action, and with #tty. (enito D. Lai" U the deceased husband of herein petitioner %osario Fda. de Lai" U as counsel recovered the land, the court havin" been convinced that its alienation violated >ection 11; of the -ublic Land #ct, which reads2 7o alienation, transfer, or conveyance of any homestead after five years and before twenty8five years after issuance of title shall be valid without the approval of the >ecretary of #"riculture and ommerce, which approval shall not be denied e<cept on constitutional and le"al "rounds '>ec. 11;, # 7o. 191, as amended by # 7o. 95,*. On !une 1, 199;, a deed of sale was e<ecuted by and between -etre $alero as vendor and #tty. (enito D. Lai" as vendee, whereby the former sold to the latter the land in Auestion with its improvements, for -1,5//.// plus attorney.s fees due #tty. Lai" for his le"al services as counsel for $alero in the successful reconveyance case 'p. ;:, rec.E -eople vs. -etre $alero, #8$.%. 7o. 1)/9=8%*. &his deed of sale was e<ecuted in the house of armen FerBo and witnessed by one laudio Muratalla and %osario FerBo Fillarente 'p. ;:, bac6, rec., -eople vs. -etre $alero, supra*, sister of herein respondent armen FerBo, who was livin" with her in the same house at that time. Ori"inal ertificate of &itle 7o. 1/9: was delivered by $alero to #tty. Lai" 'G<h. ! and #nne< (, p. ,, # (rief for -etitioners, p. 1=:, bac6, rec.*. +nfortunately, vendee #tty. (enito D. Lai" failed to solicit the approval of the >ecretary of #"riculture and 7atural %esources 'then >ecretary of #"riculture and ommerce*, as reAuired by >ection 11; of the -ublic Land #ct, as amended.

ROSARIO ?DA. DE LAIG! RO,EO! $OSE! NESTOR 02& BENITO! $R.! 0ll 1%r206(& LAIG! 6i2or1! 011i1)(& 8* Ro10rio ?&0. &( L0i'! T/(ir G%0r&i02 A& Li)(6! p()i)io2(r1! 71. COURT OF A--EALS! CAR,EN ?ER:O! -ETRE GALERO! T+E REGISTER OF DEEDS OF CA,ARINES NORTE! T+E DIRECTOR OF LANDS! AND T+E SECRETARY OF AGRICULTURE AND NATURAL RESOURCES! r(1po2&(2)1. G(l01io L. Di6002o 4or p()i)io2(r1.

19

It was only after #tty. Lai".s death in 1951 that his wife, herein petitioner %osario, noticed the deficiency. On 7ovember 5, 1951, herein petitioner Fda. de Lai" wrote the then %e"ister of @eeds of amarines 7orte, respondent (aldomero M. Lapa6, statin" that the disputed parcel of land covered by ori"inal ertificate of &itle 7o. 1/9: in the same of -etre $alero, had been sold to her late husband, reAuestin" that she be informed of any claim of ownership by other parties so that she could ta6e the necessary steps, and servin" notice of her claim over the said property as survivin" spouse of the late #tty. Lai" and as natural "uardian of their children. On 7ovember 1), 1951, %e"ister of @eeds Lapa6 replied that Ori"inal ertificate of &itle 7o. 1/9: was still intact and too6 note of her letter. On March )9, 195), petitioner Fda. de Lai" filed with the (ureau of Lands an affidavit to"ether with copy of the deed of sale in her husband.s favor. >aid affidavit stated that she wanted to have the ownership over the land transferred to her husband.s name. On #u"ust 19, 195), the (ureau of Lands forwarded the said affidavit of Fda. de Lai", to"ether with the deed of sale, to the Office of the >ecretary of #"riculture and 7atural %esources with a recommendation that the said deed of sale be approved as the same does not violate any pertinent provisions of the -ublic Land #ct or the correspondin" rules and re"ulations thereunder promul"ated. On the same day, the Office of the >ecretary of #"riculture and 7atural %esources, thru then +ndersecretary !ose >. amus, approved the deed of sale. #nd also on the same day, the Office of the @irector of Lands, thru Ficente &ordesillas, hief of the -ublication Lands @ivision, addressed a letter to #tty. (enito Lai" informin" him of the approval of the deed of sale e<ecuted by and between him and -etre $alero. Meanwhile, however, on !uly 15, 195), -etre $alero, with the assistance of #tty. !ose L. Lapa6, son of respondent %e"ister of @eeds (aldomero M. Lapa6 sou"ht in court the issuance of a second owner.s duplicate copy of O & 7o. 1/9:, claimin" that his first duplicate of said O & was lost durin" 4orld 4ar 11. On !uly 19, 195) U or in a span of only four days 8 a second owner.s duplicate copy of O & 7o. 1/9: was issued by respondent %e"ister of @eeds (aldomero M. Lapa6 in favor of -etre $alero. #nd ri"ht on that same day, $alero e<ecuted in favor of respondent armen FerBo a deed of sale of the land in issue for the sum of -,//.//. It was claimed that previously, the additional consideration of -5//.// in !apanese war notes was received by $alero from armen FerBo, althou"h this amount, or anythin" to that effect, was not mentioned in the deed of sale e<ecuted by and between them. +pon bein" informed that the sale necessitates the approval of the >ecretary of #"riculture and 7atural %esources before it could be re"istered in the %e"ister of @eeds, herein respondent armen FerBo, on !uly =/, 195), addressed a letter to the >ecretary of #"riculture and 7atural %esources, throu"h the

@irector of Lands, see6in" the former.s reAuired approval Gnclosed in the letter was a copy of the deed of sale in FerBo.s favor, and an affidavit that the land in point was sold to FerBo by homestead "rantee -etre $alero. On #u"ust =/, 195), #ssistant @irector of Lands Hoilo astrillo forwarded FerBo.s papers to the >ecretary of #"riculture and 7atural %esources and recommended that the sale, not bein" violative of the pertinent provisions of the -ublic Land #ct nor the rules and re"ulations promul"ated thereunder, be approved. On >eptember 1), 195), #ctin" >ecretary of #"riculture !ose >. amus approved the sale in favor of armen FerBo. On >eptember ):, 195), the office of the @irector of Lands notified armen FerBo of such approval. 4hereupon, on October 1=, 195), FerBo declared the land in her name for ta<ation purposes, and since then, had been payin" the realty ta<es thereon. On October 19, 195), the deed of sale in FerBo.s favor was re"istered, and &ransfer ertificate of &itle 7o. &81/55, in lieu of O & 7o. 1/9:, which was cancelled, was issued in her name. On !anuary ),, 195=, petitioner Fda. de Lai", thru counsel, her brother #tty. @imaano, inAuired from the %e"ister of @eeds of amarines 7orte if it was true that O & 7o. 1/9: in favor of $alero had already been cancelled and a transfer certificate of title had been issued in favor of another person. %espondent %e"ister of @eeds Lapa6 replied in the affirmative. In no time at all, petitioners called the attention of the @irector of Lands to the e<istence of two deeds of sale, one in favor of #tty. (enito Lai", and another in favor of armen FerBo. On February )5, 195=, the @irector of Lands reAuested -etre $alero to e<plain within =/ days such double sale, and ordered the -rovincial Land Officer in @aet, amarines 7orte to investi"ate the matter and immediately submit findin"s thereon. On March 1), 195=, in reply to the @irector of Land.s reAuest, -etre $alero denied havin" sold the land in issue to #tty. (enito D. Lai". On March 15, 195=, the (ureau of Lands in amarines 7orte reported to the @irector of Lands that second vendee armen FerBo had already successfully obtained a transfer certificate of title over the land in Auestion, with the recommendation that the heirs of the first vendee, (enito D. Lai", see6 their remedy in court as the status of the property at that sta"e does not anymore fall within the jurisdiction of the (ureau of Lands. -etre $alero was char"ed in riminal ase 7o. 5== before the ourt of First Instance of amarines with estafa thru falsification of public documents in connection with the sale in favor of armen FerBo of the land in point. $alero was convicted on October )9, 195=, which conviction was later

20

affirmed by the ourt of #ppeals in -eople vs. -etre $alero ' #8$.%. 7o. 1)/9=8%, @ecember ), 1959*. On #pril 1=, 1959, petitioner Fda. de Lai", to"ether with her minor children, filed the present action, doc6eted as ivil ase 7o. 5:: in the ourt of First Instance of amarines 7orte a"ainst respondents armen FerBo, -etre $alero, the @irector of Lands, the %e"ister of @eeds of amarines 7orte and the >ecretary of #"riculture and 7atural %esources prayin" for the annulment of the sale in favor of armen FerBo and the cancellation of the second owner.s duplicate of Ori"inal ertificate of &itle 7o. 1/9: and &ransfer ertificate of &itle 7o. &81/55 by declarin" the first O & 7o. 1/9: valid and effective or in the alternative, by orderin" armen FerBo to reconvey the land in Auestion to petitioners, plus -5,///.// by way of dama"es. >ometime in 195;, $alero died while servin" his sentence at the 7ational -enitentiary, and was, on 7ovember 11, 195;, substituted by his wife, -erpetua @ar, as party defendant 'p. ):, %O#E p. 119, rec.*. On 7ovember )1, 19,1, the trial court, in a decision, dismissed the complaint and declared that the land described in & & 7o. 1/55 to be ri"htfully owned by armen FerBo. &he lower court also found (aldomero M. Lapa6, then the %e"ister of @eeds of amarines 7orte, "uilty of ne"li"ence, but e<empted him from any liabilityE found the @irector of Lands and the >ecretary of #"riculture and 7atural %esources li6ewise "uilty of ne"li"ence, but e<empted them from any liability on the theory that they are not responsible for the acts of their subordinatesE held that the approval of two deeds of sale in favor of two different vendees in a space of less than one month is but a ministerial duty which e<culpates the @irector of Lands and the >ecretary of #"riculture and 7atural %esources from liability, and that plaintiffs8appellants slept on their ri"hts in not havin" the first deed of sale in favor of #tty. Lai" re"istered in the %e"istry of property, and therefore, have only themselves to blame for losin" the landE and e<empted $alero from liability 'pp. ;;89:, %O#E pp. 11981)9, rec.*. On #pril 1), 19,), petitioners appealed the decision of the lower court to the ourt of #ppeals. On >eptember );, 19,, 'p. =), rec.*, the Fifth @ivision of the ourt of #ppeals, thru !ustice !esus K. -ereB, affirmed the decision of the ourt of First Instance of amarines 7orte. &he case unveils a couple of issues to resolve, to wit2 1. 4ho between petitioner Fda. de Lai" and respondent armen FerBo should be considered as the ri"htful owner of the land in AuestionE and ). >hould the respondents re"ister of deeds, @irector of Lands and the >ecretary of #"riculture and 7atural %esources, to"ether with respondent armen FerBo, be held liable for dama"es for approvin" the sale of one and the same piece of land in favor of two different personsN I

#s in the present case of %osario arbonell vs. ?on. ourt of #ppeals, et al. 'L8)99:), !an. ),, 19:,*, the first issue calls for the application of #rticle 1599, para"raph ), of the 7ew ivil ode re"ardin" double sale. &he above8said provision reads2 >hould it be immovable property, the ownership shall belon" to the person acAuirin" it who in "ood faith recorded it in the %e"ister of -roperty 'emphasis supplied*. In the arbonell case, supra, 4G held that to be under the protective umbrella of para"raph ), #rticle 1599, of the 7ew ivil ode, it is essential that the vendee of the immovable must act in "ood faith in re"isterin" his deed of sale. In other words, "ood faith must characteriBe the vendee.s act of prior re"istration. &o this effect was Our rulin" in a 191; case that &he force and effect "iven by law to an inscription in a public record presupposes the "ood faith of him who enters such inscriptionE and ri"hts created by statute, which are predicated upon an inscription in a public re"istry, do not and cannot accrue under an inscription .in bad faith,. to the benefit of the person who thus ma6es the inscription 'Leun" Kee vs. F.L. >tron" Machinery o. and 4illiamson, 7o. 11,5;, Feb. 15, 191;, =: -hil. ,99, ,99*. &he records reveal that respondent armen FerBo was not in "ood faith when she facilitated the re"istration of her deed of sale. &he followin" indicia of bad faith characteriBed 7O& O7LK her act of re"isterin" her deed of sale, (+& #L>O her purchase of the disputed realty2 1. #t the time of the sale of the land in Auestion by -etre $alero to #tty. (enito D. Lai" in 199;, the latter was a boarder of armen FerBo in her house. #s a matter of fact, #tty. Lai" maintained his law office, and received his clients 'amon" whom was -etre $alero* therein 0p. ;1, t.s.n., session of #u". )=, 19,1 1. #tty. (enito D. Lai", as her boarder, must have mentioned to armen FerBo, his landlady, the land sold to him by $alero. (y the same to6en, armen FerBo must have 6nown such saleE because transactions of this sort in the rural areas do not escape the 6nowled"e of persons livin" under one roof with a party to the document, more especially when there e<ists between such persons and party the peculiarly intimate relationship of landlady and boarder in a small town. ). One of the witnesses to the deed of sale e<ecuted by and between #tty. Lai" and -etre $alero was %osario FerBo Fillarente, armen FerBo.s very own sister who was at that time livin" with her in her house, where #tty. Lai" then boarded. %osario FerBo Fillarente, bein" in the household of her sister armen FerBo, must have li6ewise informed the latter about the deed of sale e<ecuted by -etre in favor of #tty. Lai" which she si"ned as witness. # formal act, such as witnessin" a deed

21

of sale, is not a common daily e<perience. Laymen, especially rural fol6 li6e %osario FerBo Fillarente, who participate in the same, ordinarily re"ard the same as a memorable event. It is not therefore unreasonable to assume that her si"nificant role as an instrumental witness to the deed of sale between #tty. Lai" and -etre $alero must have moved %osario to confide to her sister armen the fact of her participation therein. =. -etre $alero was able to procure another copy of the duplicate of Ori"inal ertificate of &itle 7o. 1/9: coverin" the disputed land throu"h the aid of #tty. !ose Lapa6 who is the son of the respondent re"ister of deeds, (aldomero Lapa6, under clearly dubious circumstances. For one, it was done without observin" the reAuired formalities of notice and hearin" '>ec. 11:, #ct 7o. 99,*. >econdly, it was an over in a record8settin" period of O7LK four 091 days. #dd to this the fact that respondent re"ister of deeds (aldomero Lapa6 issued said duplicate of O & 1/9: despite his havin" received about ei"ht months earlier and ta6en note on 7ovember 1), 1951 of the letter of petitioner %osario Fda. de Lai" inAuirin" about the status of the title to the Auestioned land which was purchased by her husband from -etre $aleroE and the process, indeed, ree6s with an unpleasant scent. If #tty. !ose Lapa6 were not the son of respondent (aldomero Lapa6, the latter as re"ister of deeds would not have facilitated the issuance of the duplicate copy of the title with such 3scandalous haste.3 ?e should have informed his son, #tty. Lapa6, and -etre $alero about the previous inAuiry of petitioner as early as 7ovember 5, 1951, to which he replied on 7ovember 1), 1951 that O & 7o. 1/9: was still intact. Moreover, the e<peditious disposal of the land in liti"ation by -etre $alero to armen FerBo was done immediately after the death of #tty. (enito Lai", and durin" the time that his wife %osario Fda. de Lai", who was residin" in faraway Manila, was see6in" all le"al means to have the title over the property transferred to her name. >uch bad faith on the part of respondent armen FerBo and (aldomero Lapa6 is further underscored by the fact that #tty. !ose Lapa6 himself 'a* was the notary public before whom the deed of sale e<ecuted by and between -etre $alero and armen FerBo was ac6nowled"ed, and 'b* was the same lawyer who assisted armen FerBo in writin" the @irector of Lands and the >ecretary of #"riculture and 7atural %esources, enclosin" therewith an affidavit also sworn before said #tty. Lapa6, prayin" that the deed of sale be approved. &his conspiracy amon" -etre $alero, re"ister of deeds (aldomero Lapa6, his son #tty. !ose Lapa6, and armen FerBo, could not have been 6nown to petitioner %osario Fda. de Lai", who was then as now, residin" in Manila. 9. armen FerBo was familiar with the property in dispute and with the previous le"al battle over the same. In fact in her special defense 'par. ), p. 9:, %O#*, she stated that she "ave sums of money to -etre $alero to enable him to institute ivil ase 7o. 1,98%819 entitled 3-etre $alero vs. Macario Gscuta and Florendo aramoan,3 for the recovery of said parcel of land. Dnowin" that said case was for the reconveyance from defendants therein of the land in issue and that #tty. Lai" was the counsel of -etre $alero, armen FerBo must have 6nown

li6ewise that a torrens title to the same was e<istin" and intact and the same was delivered by -etre to #tty. Lai" as the buyer of the land. #nd if she inAuired from the wife of #tty. Lai", which was incumbent upon her as she was aware of the antecedent circumstances, she would have been told by petitioner %osario Fda. de Lai" that the owner.s copy of the ori"inal certificate of title was then in her possession %espondent armen FerBo could not pretend that she believed that said owner.s duplicate was lost durin" the war because ivil ase 7o. 1,98%819 involvin" the land in point was instituted only #F&G% the war and the owner .s duplicate copy of the title was intact and returned to -etre after he won in 199; the suit for reconveyance. >he could have also as6ed about said title the first buyer, Florencio aramoan, who was ordered by the court to reconvey the land and return the owner.s duplicate of the to title. 5. -rior to the sale in her favor, armen FerBo 6new that the disputed property belon"s to #tty. Lai", because whenever #tty. Lai" was in Manila, armen FerBo attended to said property and communicated with #tty. Lai" in Manila about his share of the harvest from the land 'pp. ==8=9, t.s.n., session of #u". 9, 19,9*. ?ow can armen FerBo spea6 of #tty. Lai".s share of the harvest without first 6nowin" that the land from where the crop was harvested was owned by #tty. (enito Lai"N (ad faith can be demonstrated, not O7LK by direct proof, but also by substantial evidence. (ad faith is a state of mind indicated by acts and circumstances and is provable by I% +M>&#7&I#L ... evidence 'Humwalt v. +tilities Ins. o., )); >.4. )d :5/, :59, =,/ Mo. =,)E 4ords and -hrases -ermanent Gd., Fol. 5, p. ),1*. Lo"ically, therefore, since, as has already been earlier shown, respondent armen FerBo was not a purchaser in "ood faith, she could never have been a re"istrant in "ood faith of the deed of sale of said land in her favor. onseAuently, she cannot claim the protection accorded to a re"istrant in "ood faith by para"raph ), #rticle 1599 of the 7ew ivil ode. Finally, since there is no valid inscription to spea6 of in the present case, the applicable provision of law is para"raph =, #rticle 1599, 7ew ivil ode ' arbonell vs. ?on. ourt of #ppeals, supra*, which states2 >hould there be no insciption, the ownership shall pertain to the person who in "ood faith was first in the possessionE and, in the ab thereat to the person who presents the oldest title, provided there is "ood faith 'emphasis supplied*. In the present case, the fact of #tty. (enito Lai".s havin" been the first possessor in "ood faith of the property in issue was never disputed by respondent armen FerBo. Moreover, the deed of sale in favor of the late #tty. (enito Lai" was e<ecuted on !une 1, 199;, over 9 years earlier than the deed of sale e<ecuted on !uly 19, 195) in favor of respondent armen FerBo. It is Our view that the offices of the >ecretary of #"riculture and 7atural %esources and the @irector of Lands should be

22

cleared of any liability. It is not difficult to see that the reason why separate approvals concernin" two separate sale of the same piece of land were had was the fact that two sets of officials too6 char"e of both reAuests. (ut no malice can be "leaned from this fact. It should be borne in mind that both officials daily attend to thousands upon thousands of papers. It is also possible that their assistants failed to notice that two deeds of sale covered the same parcel of land or failed to advise these two officials of such fact. #s heretofore indicated, the malicious participation of respondent re"ister of deeds (aldomero Lapa6 and his son #tty. Lapa6 is evident. Dnowin" of the e<istence in his records of the ori"inal of O & 7o. 1/9:, (aldomero Lapa6 effected the issuance of the second duplicate of O & 7o. 1/9: to -etre $alero in just four '9* days, dispensin" with the reAuirements of notice and hearin" to interested parties. &he law in this re"ard is >ection 1/9 of #ct 7o. 99,, which reads2 If the duplicate certificate is lost or destroyed, or cannot be produced by a "rantee, heir, devisee, assi"nee, or other person applyin" for the entry of a new certificate to him ..., a su""estion may be filed by the re"istered owner or other person in interest and re"istered. &he court 'the ourt of First Instance actin" as land re"istration court* may thereupon, upon the petition of the re"istered owner or other person in interest, #F&G% 7O&I G #7@ ?G#%I7$, direct the issue of a new duplicate certificate, which shall contain a memorandum of the fact that it is issued in place of the lost duplicate certificate, but shall in all respects be entitled to li6e faith and credit as the ori"inal duplicate, and shall thereafter be re"arded as the ori"inal duplicate for all the purposes of this #ct 'Ocampo vs. $arcia, L811),/, #pril )9, 1959, 1/5 -hil. 55=*. For his malicious involvement, 4G find (aldomero Lapa6 liable under the followin" provision of the Land %e"istration #ct2 4hoever fraudulently procures, or assists in fraudulently procurin" or is privy to the fraudulent procurement of any certificate of title or owner.s duplicate certificate, shall be fined not e<ceedin" five thousand dollars 'ten thousand pesos* or imprisoned not e<ceedin" five years, or both, in the discretion of the court '>ec. 11:, #ct 7o. 99,*. (aldomero Lapa6 li6ewise stands liable under #rticle ): of the 7ew ivil ode, which states2 #ny person sufferin" material or moral loss because a public servant or employee refuses or ne"lects, without just cause, to perform his official duty may file an action for dama"es and other relief a"ainst the latter, without prejudice to any disciplinary administrative action that may be ta6en. For in essence, his refusal to follow the directive of law '#ct 7o. 99,* was a conduct injurious to the petitioner. &hus a chief of police is liable under #rticle ): of the 7ew ivil ode for refusal to "ive assistance to the complainants which was his official duty as an officer of the law '#marro, et al. vs.

>uman""it, L8199;,, !uly =1, 19,), 5 > %# :/:, :/;89*. >imilarly, a municipal mayor incurs the same liability for ne"lectin" to perform his official functions '!avellana vs. &ayo, L81;919, @ec. )9, 19,), , > %# 1/9), 1/51*. 4G also find #tty. !ose L. Lapa6 liable under the aboveAuoted >ection 11: of #ct 7o. 99, 'Land %e"istration #ct*, for which he should be, not only prosecuted but also, disciplined as a member of the (ar. Moreover, both (aldomero Lapa6 and his son #tty. !ose Lapa6 are li6ewise civilly liable for failure to observe honesty and "ood faith in the performance of their duties as public officer and as a member of the (ar '#rt. 19, 7ew ivil ode* or for wilfully or ne"li"ently causin" dama"e to another '#rt. )/, 7ew ivil ode*, or for wilfully causin" loss or injury to another in a manner that is contrary to morals, "ood customs andQor public policy '#rt. )1, 7ew ivil ode*. 4?G%GFO%G, &?G @G I>IO7 #--G#LG@ F%OM I> ?G%G(K %GFG%>G@ #7@ I. &?G %G$I>&G% OF @GG@> OF #M#%I7G> 7O%&G I> ?G%G(K @I%G &G@ '#* &O #7 GL & & 7O. &81/55E #7@

'(* &O I>>+G I7 LIG+ &?G%GOF # 7G4 &%#7>FG% G%&IFI #&G OF &I&LG I7 F#FO% OF &?G ?GI%> OF &?G L#&G (G7I&O D. L#I$E #7@ II. #LL &?G %G>-O7@G7&> ?G%GI7, GL G-& &?G @I%G &O% OF L#7@> #7@ &?G >G %G&#%K OF #$%I +L&+%G #7@ 7#&+%#L %G>O+% G>, #%G ?G%G(K O%@G%G@ &O -#K !OI7&LK #7@ >GFG%#LLK -G&I&IO7G%> I7 &?G #MO+7& OF &G7 &?O+>#7@ '-1/,///.//* -G>O> #> MO%#L @#M#$G>E &?G >+M OF FIFG &?O+>#7@ '-5,///.//* -G>O> #> #&&O%7GK.> FGG>E #7@ &?G O>&>2 >O O%@G%G@. A.,. No. "A90 A%'%1) 90! 1990

,AURO -. ,ANANEUIL! 3o6pl0i202)! 71. ATTY. CRISOSTO,O C. ?ILLEGAS! r(1po2&(2). $eminiano M. Gleccion for complainant. %G>OL+&IO7 O%&G>, !.2 In a verified complaint for disbarment dated !uly 5, 19;), Mauro -. MananAuil char"ed respondent #tty. risostomo . Fille"as with "ross misconduct or malpractice committed while actin" as counsel of record of one Feli< Leon" in the latter.s capacity as administrator of the &estate Gstate of the late Felomina Herna in >pecial -roceedin"s 7o. 9,/ before then ourt of First Instance of 7e"ros Occidental. &he complainant was appointed special administrator after Feli< Leon" died.

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In compliance with a resolution of this ourt, respondent filed his comment to the complaint on !anuary )/, 19;=. #fter complainant filed his reply, the ourt resolved to refer the case to the >olicitor $eneral for investi"ation, report and recommendation. In a hearin" conducted on May 15, 19;5 by the investi"atin" officer assi"ned to the case, counsel for the complainant proposed that the case be considered on the basis of position papers and memoranda to be submitted by the parties. %espondent a"reed. &hus, the investi"atin" officer reAuired the parties to submit their respective position papers and memoranda, with the understandin" that with or without the memoranda, the case will be deemed submitted for resolution after the e<piration of =/ days. In compliance, both parties submitted their respective position papersE but no memorandum was filed by either party. &hereafter, the case was deemed submitted. In the pleadin"s submitted before the ourt and the Office of the >olicitor $eneral, complainant alle"es that over a period of )/ years, respondent allowed lease contracts to be e<ecuted between his client Feli< Leon" and a partnership ?I!O> @G !O>G FILLG$#>, of which respondent is one of the partners, coverin" several parcels of land of the estate, i.e. Lots 7os. 11)9, 1));, )))1, )9/), =9=9, =99) and =95: of the &anjay adastre, under iniAuitous terms and conditions. Moreover, complainant char"es that these contracts were made without the approval of the probate court and in violation of #rticles 1991 and 1,9, of the new ivil ode. On the basis of the pleadin"s submitted by the parties, and other pertinent records of the investi"ation, the >olicitor $eneral submitted his report dated February )1, 199/, findin" that respondent committed a breach in the performance of his duties as counsel of administrator Feli< Leon" when he allowed the renewal of contracts of lease for properties involved in the testate proceedin"s to be underta6en in favor of ?I!O> @G !O>G FILLG$#> without notifyin" and securin" the approval of the probate court. ?owever, the >olicitor $eneral opined that there was no sufficient evidence to warrant a findin" that respondent had allowed the properties to be leased in favor of his family partnership at a very low rental or in violation of #rticles 1991 and 1,9, of the new ivil ode. &hus, the >olicitor $eneral recommended that respondent be suspended from the practice of law for a period of &?%GG '=* months with a warnin" that future misconduct on respondent.s part will be more severely dealt with 0%eport and %ecommendation of the >olicitor $eneral, pp. 181/E %ollo, pp. =:89,. #lso, omplaint of the >olicitor $eneral, pp. 18=E %ollo, pp. 9:8991. #s "leaned from the record of the case and the report and recommendation of the >olicitor $eneral, the followin" facts are uncontroverted2 &hat as early as March )1, 19,1, respondent was retained as counsel of record for Feli< Leon", one of the heirs of the late Felomina Herna, who was appointed as administrator of the &estate Gstate of the Felomina Herna in >pecial 7o. 9,/ on May )), 19,1E

&hat, a lease contract dated #u"ust 1=, 19,= was e<ecuted between Feli< Leon" and the 3?eirs of !ose Fille"as3 represented by respondent.s brother8in8law Marcelo -astrano involvin", amon" others, su"ar lands of the estate desi"nated as Lot 7os. 11)9, 1));, )))1, )9/), =9=9, =99) and =95: of the &anjay adastreE &hat Feli< Leon" was desi"nated therein as administrator and 3owner, by testamentary disposition, of 5Q, of all said parcels of land3E &hat, the lifetime of the lease contract was FO+% '9* su"ar crop years, with a yearly rental of &G7 -G% G7& '1/W* of the value of the su"ar produced from the leased parcels of landE &hat, on #pril )/, 19,5, the formal partnership of ?I!O> @G !O>G FILLG$#> was formed amon"st the heirs of !ose Fille"as, of which respondent was a memberE &hat, on October 1;, 19,5, another lease contract was e<ecuted between Feli< Leon" and the partnership ?I!O> @G !O>G FILLG$#>, containin" basically the same terms and conditions as the first contract, with Marcelo -astrano si"nin" once a"ain as representative of the lesseeE &hat, on March 19, 19,;, after the demise of Marcelo -astrano, respondent was appointed mana"er of ?I!O> @G !O>G FILLG$#> by the majority of partnersE &hat, renewals of the lease contract were e<ecuted between Feli< Leon" and ?I!O> @G !O>G FILLG$#> on !anuary 1=, 19:5 and on @ecember 9, 19:;, with respondent si"nin" therein as representative of the lesseeE and, &hat, in the later part of 19;/, respondent was replaced by his nephew $eronimo ?. Fille"as as mana"er of the family partnership. +nder the above circumstances, the ourt finds absolutely no merit to complainant.s char"e, and the >olicitor $eneral.s findin", that respondent committed acts of misconduct in failin" to secure the approval of the court in >pecial -roceedin"s 7o. 9,/ to the various lease contracts e<ecuted between Feli< Leon" and respondent.s family partnership. -ursuant to >ection = of %ule ;9 of the %evised %ules of ourt, a judicial e<ecutor or administrator has the ri"ht to the possession and mana"ement of the real as well as the personal estate of the deceased so lon" as it is necessary for the payment of the debts and the e<penses of administration. ?e may, therefore, e<ercise acts of administration without special authority from the court havin" jurisdiction of the estate. For instance, it has lon" been settled that an administrator has the power to enter into lease contracts involvin" the properties of the estate even without prior judicial authority and approval 0>ee Ferraris v. %odas, ,5 -hil. :=) '19=;*E !ocson de ?ilado v. 7ava, ,9 -hil. 1 '19=9*E >an @ie"o, >r. v. ?ombre, $.% 7o. L819),5, May )9, 19,9, 11 > %# 1,51. &hus, considerin" that administrator Feli< Leon" was not reAuired under the law and prevailin" jurisprudence to see6

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prior authority from the probate court in order to validly lease real properties of the estate, respondent, as counsel of Feli< Leon", cannot be ta6en to tas6 for failin" to notify the probate court of the various lease contracts involved herein and to secure its judicial approval thereto. 7evertheless, contrary to the opinion of the >olicitor $eneral, the ourt finds sufficient evidence to hold respondent subject to disciplinary sanction for havin", as counsel of record for the administrator in >pecial -roceedin"s 7o. 9,/, participated in the e<ecution in 19:5 and 19:; of renewals of the lease a"reement involvin" properties of the estate in favor of the partnership ?I!O> @G !O>G FILLG$#>, of which respondent is a member and in 19,; was appointed mana"in" partner. (y virtue of #rticle 1,9, of the new ivil ode, the persons referred to in #rticle 1991 are prohibited from leasin", either in person or throu"h the mediation of another, the properties or thin"s mentioned in that article, to wit2 <<< <<< <<<

these individuals over the properties or ri"hts covered 0>ee %ubias v. (atiller, $.%. 7o. L8=5:/), May )9, 19:=, 51 > %# 1)/E Maharli6a -ublishin" orporation v. &a"le, $.%. 7o. ,5599, !uly 9, 19;,, 19) > %# 55=E Fornilda v. &he (ranch 1,9, %& Fourth !udicial %e"ion, -asi", $.%. 7o. :)=/,, October 5, 19;;, 1,, > %# );1 and !anuary )9, 19;9, 1,9 > %# =511. &hus, even if the parties desi"nated as lessees in the assailed lease contracts were the 3?eirs of !ose Fille"as3 and the partnership ?I!O> @G !O>G FILLG$#>, and respondent si"ned merely as an a"ent of the latter, the ourt rules that the lease contracts are covered by the prohibition a"ainst any acAuisition or lease by a lawyer of properties involved in liti"ation in which he ta6es part. &o rule otherwise would be to lend a stamp of judicial approval on an arran"ement which, in effect, circumvents that which is directly prohibited by law. For, piercin" throu"h the le"al fiction of separate juridical personality, the ourt cannot i"nore the obvious implication that respondent as one of the heirs of !ose Fille"as and partner, later mana"er of, in ?I!O> @G !O>G FILLG$#> stands to benefit from the contractual relationship created between his client Feli< Leon" and his family partnership over properties involved in the on"oin" testate proceedin"s. In his defense, respondent claims that he was neither aware of, nor participated in, the e<ecution of the ori"inal lease contract entered into between his client and his family partnership, which was then represented by his brother8in8law Marcelo -astrano. #nd althou"h he admits that he participated in the e<ecution of subseAuent renewals of the lease contract as mana"in" partner of ?I!O> @G !O>G FILLG$#>, he ar"ues that he acted in "ood faith considerin" that the heirs of Filomena Herna consented or acAuiesced to the terms and conditions stipulated in the ori"inal lease contract. ?e further contends that pursuant to the rulin" of the ourt in &uason v. &uason 0;; -hil. 9); '1951*1 the renewal contracts do not fall within the prohibition of #rticles 1991 and 1,9, since he si"ned the same as a mere a"ent of the partnership. %espondent.s contentions do not provide sufficient basis to escape disciplinary action from this ourt. It ta<es this ourts ima"ination that respondent disclaims any 6nowled"e in the e<ecution of the ori"inal lease contract between his client and his family partnership represented by his brother8in8law. (e that as it may, it cannot be denied that respondent himself had 6nowled"e of and allowed the subseAuent renewals of the lease contract. In fact, he actively participated in the lease contracts dated !anuary 1=, 19:5 and @ecember 9, 19:; by si"nin" on behalf of the lessee ?I!O> @G !O>G FILLG$#>. Moreover, the claim that the heirs of Filomena Herna have acAuiesced and consented to the assailed lease contracts does not militate a"ainst respondent.s liability under the rules of professional ethics. &he prohibition referred to in #rticles 1991 and 1,9, of the new ivil ode, as far as lawyers are concerned, is intended to curtail any undue influence of the lawyer upon his client on account of his fiduciary and confidential association 0>otto v. >amson, $.%. 7o. L81,91:, !uly =1, 19,), 5 > %# :==1. &hus, the law ma6es the

'1* &he "uardian, the property of the person or persons who may be under his "uardianshipE ')* #"ents, the property whose administration or sale may have been intrusted to them, unless the consent of the principal have been "ivenE '=* G<ecutors and administrators, the property of the estate under administration '9* -ublic officers and employees, the property of the >tate or of any subdivision thereof, or of any "overnment owned or controlled corporation, or institution, the administration of which has been intrusted to themE this provision shall apply to jud"es and "overnment e<perts who, in any manner whatsoever, ta6e part in the saleE '5* !ustices, jud"es, prosecutin" attorneys, cler6s of superior and inferior courts, and other officers and employees connected with the administration of justice, the property or ri"hts in liti"ation or levied upon on e<ecution before the court within whose jurisdiction or territory they e<ercise their respective functionsE this prohibition includes the act of acAuirin" by assi"nment and shall apply to lawyers, with respect to the property and ri"hts which may be the object of any liti"ation in which they may ta6e part by virtue of their profession. ',* #ny others specially disAualified by law <<< <<< <<<

0#rticle 1991 of the new ivil odeE Gmphasis supplied.1 &he above disAualification imposed on public and judicial officers and lawyers is "rounded on public policy considerations which disallow the transactions entered into by them, whether directly or indirectly, in view of the fiduciary relationship involved, or the peculiar control e<ercised by

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prohibition absolute and permanent 0%ubias v. (atiller, supra1. #nd in view of anon 1 of the new ode of -rofessional %esponsibility and >ections = V ): of %ule 1=; of the %evised %ules of ourt, whereby lawyers are duty8bound to obey and uphold the laws of the land, participation in the e<ecution of the prohibited contracts such as those referred to in #rticles 1991 and 1,9, of the new ivil ode has been held to constitute breach of professional ethics on the part of the lawyer for which disciplinary action may be brou"ht a"ainst him 0>ee (autista v. $onBaleB, #dm. Matter 7o. 1,)5, February 1), 199/*. #ccordin"ly, the ourt must reiterate the rule that the claim of "ood faith is no defense to a lawyer who has failed to adhere faithfully to the le"al disAualifications imposed upon him, desi"ned to protect the interests of his client 0>ee In re %uste, :/ -hil. )9= '199/*E #lso, >everino v. >everino, 99 -hil. =9= '19)=*1. 7either is there merit in respondent.s reliance on the case of &uason v. &uason 0supra.1 It cannot be inferred from the statements made by the ourt in that case that contracts of sale or lease where the vendee or lessee is a partnership, of which a lawyer is a member, over a property involved in a liti"ation in which he ta6es part by virtue of his profession, are not covered by the prohibition under #rticles 1991 and 1,9,. ?owever, the ourt sustains the >olicitor $eneral.s holdin" that there is no sufficient evidence on record to warrant a findin" that respondent allowed the properties of the estate of Filomena Herna involved herein to be leased to his family partnership at very low rental payments. #t any rate, it is a matter for the court presidin" over >pecial -roceedin"s 7o. 9,/ to determine whether or not the a"reed rental payments made by respondent.s family partnership is reasonable compensation for the use and occupancy of the estate properties. onsiderin" thus the nature of the acts of misconduct committed by respondent, and the facts and circumstances of the case, the ourt finds sufficient "rounds to suspend respondent from the practice of law for a period of three '=* months. 4?G%GFO%G, findin" that respondent #tty. risostomo . Fille"as committed acts of "ross misconduct, the ourt %esolved to >+>-G7@ respondent from the practice of law for four '9* months effective from the date of his receipt of this %esolution, with a warnin" that future misconduct on respondent.s part will be more severely dealt with. Let copies of this %esolution be circulated to all courts of the country for their information and "uidance, and spread in the personal record of #tty. Fille"as. >O O%@G%G@.

71. ATTY. $OSE-+INE -ALOGAN EDUARTE! r(1po2&(2). %G>OL+&IO7 -G% +%I#M2 &his is a complaint for the disbarment of respondent #tty. !osephine -alo"an8Gduarte ori"inally filed with this ourt on #pril 1;, 19;;. On #u"ust 1/, 19;9, the ommission on (ar @iscipline of the Inte"rated (ar of the -hilippines, to which the case was referred for investi"ation, submitted a report confirmin" in substance the char"e of violation of #rt. 1991 of the ivil ode and part of the Oath of Office of a lawyer and recommendin" the suspension of herein respondent. &he evidence discloses that on !uly 1;, 19;=, #ntonia +libari filed with the %& , (ranch LLII, aba"an, Isabela, ivil ase 7o. =91 for annulment of a document '6nown as #ffidavit of #djudication of the Gstate of Felicisimo Felasco and Puitclaim &hereof* a"ainst her children. &he case was handled by #tty. ?enedino Gduarte, herein respondent.s husband, until his appointment as %& jud"e on October ),, 19;9. ?is wife, #tty. !osephine -alo"an8Gduarte, too6 over. On #u"ust )), 19;5, decision in ivil ase 7o. =91 was rendered in favor of #ntonia +libari. G<cept for @omin"a Felasco8Ordonio, one of the children of #ntonia +libari and complainant in the instant case, the rest of the defendants did not appeal. On !une 1=, 19;:, while ivil ase 7o. =91 was pendin" appeal in the ourt of #ppeals, #ntonia +libari conveyed some parcels of her land to her children in the form of deeds of absolute sale, prepared and notariBed by herein respondent. >i"nificantly, on the same day, #ntonia +libari also conveyed )/ hectares of land to herein respondent and her husband as their #ttorney.s fees for le"al services rendered. #ll the titles of the lands subject of the deeds of absolute sale and the deed of conveyance however remained in the name of #ntonia +libari. On #pril 9, 19;;, @omin"a Felasco8Ordonio filed this complaint for disbarment a"ainst herein respondent on the basis of an affidavit e<ecuted by her mother #ntonia +libari on March ), 19;; statin" that affiant never conveyed the subject parcel of land to respondent as her attorney.s fees and that the deeds of absolute sale e<ecuted in favor of her children were not 6nown to her 'and that she received no consideration therefor*. On #u"ust 1/, 19;9, the Investi"ation ommissioner submitted a report findin" the char"es to be true and recommendin" a one8year suspension of the respondent from the practice of law. &he first issue to be resolved is whether #ntonia +libari was defrauded into si"nin" the @eed of onveyance transferrin" to her lawyer 'herein respondent* the subject parcel of land containin" )9;,9)/ sAuare meters as the latter.s attorney.s fees. It is clear from #ntonia +libari.s affidavit and deposition that she never conveyed the said land to her lawyer as attorney.s fees.

A.,. No. 9"1

,0r3/ 1 ! 199"

DO,INGA ?ELASCO ORDONIO! p()i)io2(r!

Gven "rantin" for the sa6e ar"ument that #ntonia +libari 6nowin"ly and voluntarily conveyed the subject property in favor of the respondent and her husband, the respondent, in

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causin" the e<ecution of the @eed of onveyance durin" the pendency of the appeal of the case involvin" the said property, has violated #rt. 1991 of the ivil ode which prohibits lawyers from 3acAuirin" by assi"nment property and ri"hts which may be the object of any liti"ation in which they may ta6e part by virtue of their profession.3 In the case at bar, the property 'which includes the more than )/ hectares of land alle"edly conveyed to the respondent* was already in actual liti"ation first in the lower court and then in the ourt of #ppeals. 4hether the deed of conveyance was e<ecuted at the instance of the client driven by financial necessity or of the lawyers is of no moment 'In re2 #tty. Melchor G. %uste, :/ -hil. )9=*. 3In either case, an attorney occupies a vanta"e position to press upon or dictate his terms to a harrased client, in breach of the rule so amply protective of the confidential relations, which must necessarily e<ist between attorney and client, and of the ri"hts of both.3 &he act constitutes malpractice, even if the lawyer had purchased the property in liti"ation. '?ernandeB v. Fillanueva, 9/ -hil. ::5E In re2 alderon, : -hil. 9):*. 4e a"ree with the Investi"atin" ommissioner.s opinion that the prohibition applies when the lawyer has not paid money for it and the property was merely assi"ned to him in consideration of le"al services rendered at a time when the property is still the subject of a pendin" case. For havin" improperly acAuired the subject property, under the fore"oin" circumstances, respondent has violated not only #rt. 1991 of the ivil ode but also %ule 1/ of the anons of -rofessional Gthics which provides that 3the lawyer should not purchase any interest in the subject matter of the liti"ation which he is conductin".3 &he last issue to be resolved is whether respondent violated any law in preparin" and notariBin" the deeds of absolute sale in ma6in" it appear that there were considerations therefor, when in truth there were none so received by the seller. In her answer, respondent admitted that #ntonia +libari did not actually sell the parcels of land to her children for the considerations stated in the deeds of sale and that she 'respondent* 3utiliBed the form of deed of sale as the most convenient and appropriate document to effect the transfer of the parcels of land to #ntonia +libari.s children in accordance with her wish that said parcels of land be "iven to them. In so doin", respondent has manifestly violated that part of her oath as a lawyer that she shall not do any falsehood. 7ot only that. In preparin" the documents which do not reflect the true transaction, respondent has li6ewise violated %ule 1/./1 of the ode of -rofessional %esponsibility which provides2 %ule 1/./1. # lawyer shall not do any falsehood, nor consent to the doin" of any in courtE nor shall be mislead or allow the court to be mislead by any artifice. # O%@I7$LK, for havin" violated #rticle 1991 of the ivil ode, respondent is hereby ordered suspended from the practice of law for a period of si< ',* months, and, for havin" stated falsehoods in the four '9* deeds of absolute sale she prepared and notariBed, in violation of the lawyer.s oath and %ule 1/./1 of the ode of -rofessional %esponsibility, respondent is also ordered suspended from the practice or law

for a period of another si< ',* months, resultin" in a total period on one year, effective from the date this jud"ment becomes final. >+>-G7>IO7 O%@G%G@. Melencio8?errera, -aras, -adilla, %e"alado and 7ocon, !!., concur.

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