09 Ribias V Batiller (CDAsia)
09 Ribias V Batiller (CDAsia)
DECISION
TEEHANKEE , J : p
In this appeal certi ed by the Court of Appeals to this Court as involving purely
legal questions, we a rm the dismissal order rendered by the Iloilo court of rst
instance after pre-trial and submittal of the pertinent documentary exhibits.
Such dismissal was proper, plaintiff having no cause of action, since it was duly
established in the record that the application for registration of the land in question
led by Francisco Militante, plaintiff's vendor and predecessor in interest, had been
dismissed by decision of 1952 of the land registration court as a rmed by nal
judgment in 1958 of the Court of Appeals and hence, there was no title or right to the
land that could be transmitted by the purported sale to plaintiff.
As late as 1964, the Iloilo court of rst instance had in another case of ejectment
likewise upheld by nal judgment defendant's "better right to possess the land in
question . . . having been in the actual possession thereof under a claim of title many
years before Francisco Militante sold the land to the plaintiff."
Furthermore, even assuming that Militante had anything to sell, the deed of sale
executed in 1956 by him in favor of plaintiff at a time when plaintiff was concededly his
counsel of record in the land registration case involving the very land in dispute
(ultimately decided adversely against Militante by the Court of Appeals' 1958 judgment
a rming the lower court's dismissal of Militante's application for registration) was
properly declared inexistent and void by the lower court, as decreed by Article 1409 in
relation to Article 1491 of the Civil Code.
The appellate court, in its resolution of certi cation of 25 July 1972, gave the
following backgrounder of the appeal at bar:
"On August 31, 1964, plaintiff Domingo D. Rubias, a lawyer, led a suit to
recover the ownership and possession of certain portions of lot under Psu-99791
located in Barrio General Luna, Barotac Viejo, Iloilo which he bought from his
father-in-law, Francisco Militante in 1956 against its present occupant defendant,
Isaias Batiller, who allegedly entered said portions of the lot on two occasions —
in 1945 and in 1959. Plaintiff prayed also for damages and attorney's fees. (pp. 1-
7, Record on Appeal). In his answer with counter-claim defendant claims the
complaint of the plaintiff does not state a cause of action, the truth of the matter
being that he and his predecessors-in-interest have always been in actual, open
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and continuous possession since time immemorial under claim of ownership of
the portions of the lot in question and for the alleged malicious institution of the
complaint he claims he has suffered moral damages in the amount of P2,000.00,
as well as the sum of P500.00 for attorney's fees. . . .
"On December 9, 1964, the trial court issued a pre-trial order, after a pre-trial
conference between the parties and their counsel which order reads as follows:
'When this case was called for a pre-trial conference today, the
plaintiff appeared assisted by himself and Atty. Gregorio M. Rubias. The
defendant also appeared, assisted by his counsel Atty. Vicente R. Acsay.
(NOTE: As per Exh. 4-B, which is the Iloilo court of rst instance
decision of 26 November 1964 dismissing plaintiffs therein complaint for
ejectment against defendant, the Iloilo court expressly found "that
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plaintiff's complaint is unjusti ed, intended to harass the defendant " and
"that the defendant, Isaias Batiller, has a better right to possess the land in
question described in Psu 155241 (Exh. "3"), Isaias Batiller having been in
the actual physical possession thereof under a claim of title many years
before Francisco Militante sold the land to the plaintiff; hereby dismissing
plaintiff's complaint and ordering the plaintiff to pay the defendant
attorney's fees . . .")
B. During the trial of this case on the merit, the plaintiff will prove by
competent evidence the following:
The appellate court further related the developments of the case, as follows:
"On August 17, 1965, defendant's counsel manifested in open court that
before any trial on the merit of the case could proceed he would le a motion to
dismiss plaintiff's complaint which he did, alleging that plaintiff does not have a
cause of action against him because the property in dispute which he (plaintiff)
allegedly bought from his father-in-law, Francisco Militante was the subject
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matter of LRC No. 695 led in the CFI of Iloilo, which case was brought on appeal
to this Court and docketed as CA-G.R. No. 13497-R in which aforesaid case
plaintiff was the counsel on record of his father-in-law, Francisco Militante .
Invoking Arts. 1409 and 1491 of the Civil Code which reads:
'Art. 1409. The following contracts are inexistent and void from the
beginning:
xxx xxx xxx
The appellate court concluded that plaintiff's "assignment of errors gives rise to
two (2) legal posers — (1) whether or not the contract of sale between appellant and
his father-in-law, the late Francisco Militante over the property subject of Plan Psu-
99791 was void because it was made when plaintiff was counsel of his father-in-law in
a land registration case involving the property in dispute; and (2) whether or not the
lower court was correct in entertaining defendant-appellee's motion to dismiss after
the latter had already led his answer and after he (defendant) and plaintiff-appellant
had agreed on some matters in a pre-trial conference. Hence, its elevation of the appeal
to this Court as involving pure questions of law.
It is at once evident from the foregoing narration that the pre-trial conference
held by the trial court at which the parties with their counsel agreed and stipulated on
the material and relevant facts and submitted their respective documentary exhibits as
referred to in the pre-trial order, supra, 2 practically amounted to a fulldress trial which
placed on record all the facts and exhibits necessary for adjudication of the case.
The three points on which plaintiff reserved the presentation of evidence at the
trial dealing with the source of the alleged right and title of Francisco Militante's
predecessors, supra, 3 actually are already made of record in the stipulated facts and
admitted exhibits. The chain of Militante's alleged title and right to the land as
supposedly traced back to Liberato Demontaño was actually asserted by Militante (and
his vendee, lawyer and son-in-law, herein plaintiff) in the land registration case and
rejected by the Iloilo land registration court which dismissed Militante's application for
registration of the land. Such dismissal, as already stated, was a rmed by the nal
judgment in 1958 of the Court of Appeals. 4
The four points on which defendant on his part reserved the presentation of
evidence at the trial dealing with his and his ancestors' continuous, open, public and
peaceful possession in the concept of owner of the land and the Director of Lands'
approval of his survey plan thereof, supra, 5 are likewise already duly established facts
of record, in the land registration case as well as in the ejectment case wherein the
Iloilo court of rst instance recognized the superiority of defendant's right to the land
as against plaintiff.
No error was therefore committed by the lower court in dismissing plaintiff's
complaint upon defendant's motion after the pre-trial.
1. The stipulated facts and exhibits of record indisputably established
plaintiff s lack of cause of action and justi ed the outright dismissal of the complaint.
Plaintiff's claim of ownership to the land in question was predicated on the sale thereof
for P2,000.00 made in 1956 by his father-in-law, Francisco Militante, in his favor, at a
time when Militante's application for registration thereof had already been dismissed
by the Iloilo land registration court and was pending appeal in the Court of Appeals.
With the Court of Appeals' 1958 nal judgment a rming the dismissal of
Militante's application for registration, the lack of any rightful claim or title of Militante
to the land was conclusively and decisively judicially determined. Hence, there was no
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right or title to the land that could be transferred or sold by Militante's purported sale in
1956 in favor of plaintiff.
Manifestly, then plaintiff's complaint against defendant, to be declared absolute
owner of the land and to be restored to possession thereof with damages was bereft
of any factual or legal basis.
2. No error could be attributed either to the lower court's holding that the
purchase by a lawyer of the property in litigation from his client is categorically
prohibited by Article 1491, paragraph (5) of the Philippine Civil Code, reproduced supra;
6 and that consequently, plaintiff's purchase of the property in litigation from his client
(assuming that his client could sell the same, since as already shown above, his client's
claim to the property was defeated and rejected) was void and could produce no legal
effect, by virtue of Article 1409, paragraph (7) of our Civil Code which provides that
contracts "expressly prohibited or declared void by law" are "inexistent and void from
the beginning" and that "(T)hese contracts cannot be rati ed. Neither can the right to
set up the defense of illegality be waived."
The 1911 case of Wolfson vs. Estate of Martinez 7 relied upon by plaintiff as
holding that a sale of property in litigation to the party litigant's lawyer "its not void but
voidable at the election of the vendor" was correctly held by the lower court to have
been superseded by the later 1929 case of Director of Lands vs. Abagat. 8 In this later
case of Abagat, the Court expressly cited two antecedent cases involving the same
transaction of purchase of property in litigation by the lawyer which was expressly
declared invalid under Article 1459 of the Civil Code of Spain (of which Article 1491 of
our Civil Code of the Philippines is the counterpart) upon challenge thereof not by the
vendor-client but by the adverse parties against whom the lawyer was seeking to
enforce his rights as vendee thus acquired.
These two antecedent cases thus cited in Abagat clearly superseded (without so
expressly stating) the previous ruling in Wolfson:
"The spouses, Juan Soriano and Vicenta Macaraeg, were the owners of
twelve parcels of land. Vicenta Macaraeg died in November, 1909, leaving a large
number of collateral heirs but no descendants. Litigation between the surviving
husband Juan Soriano, and the heirs of Vicenta Macaraeg immediately arose,
and the herein appellant Sisenando Palarca acted as Soriano's lawyer. On May 2,
1918, Palarca led an application for the registration of the land described in the
deed. After hearing, the Court of First Instance declared that the deed was invalid
by virtue of the provisions of article 1459 of the Civil Code, which provides
lawyers and solicitors from purchasing property rights involved in any litigation in
which they may take part by virtue of their profession. The application for
registration was consequently denied, and upon appeal by Palarca to the
Supreme Court, the judgment of the lower court was a rmed by a decision
promulgated November 16, 1925. (G.R. No. 24329, Palarca vs. Director of Lands,
not reported.)
"In the meantime cadastral case No. 30 of the Province of Tarlac was
instituted, and on August 21, 1923, Eleuteria Macaraeg, as administratrix of the
estate of Vicenta Macaraeg, filed claims for the parcels in question. Buenaventura
Lavitoria, administrator of the estate of Juan Soriano, did likewise and so did
Sisenando Palarca. In a decision dated June 21, 1927, the Court of First Instance,
Judge Carballo presiding, rendered judgment in favor of Palarca and ordered the
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registration of the land in his name. Upon appeal to this court by the
administrators of the estates of Juan Soriano and Vicenta Macaraeg, the
judgment of the court below was reversed and the land adjudicated to the two
estates as conjugal property of the deceased spouses. (G.R. No. 28226, Director
of Lands vs. Abagat, promulgated May 21, 1928, not reported.)" 9
In the very case of Abagat itself, the Court, again a rming the invalidity and
nullity of the lawyer's purchase of the land in litigation from his client, ordered the
issuance of a writ of possession for the return of the land by the lawyer to the adverse
parties without reimbursement of the price paid by him and other expenses, and ruled
that "the appellant Palarca is a lawyer and is presumed to know the law. He must,
therefore, from the beginning, have been well aware of the defect in his title and is,
consequently, a possessor in bad faith."
As already stated, Wolfson and Abagat were decided with relation to Article
1459 of the Civil Code of Spain then adopted here, until it was superseded on August
30, 1950 by the Civil Code of the Philippines whose counterpart provision is Article
1491.
Article 1491 of our Civil Code (like Article 1459 of the Spanish Civil Code)
prohibits in its six paragraphs certain persons, by reason of the relation of trust or their
peculiar control over the property, from acquiring such property in their trust or control
either directly or indirectly and "even at a public or judicial auction," as follows: (1)
guardians; (2) agents; (3) administrators; (4) public o cers and employees; judicial
o cers and employees, prosecuting attorneys, and lawyers; and (6) others especially
disqualified by law.
In Wolfson, which involved the sale and assignment of a money judgment by the
client to the lawyer, Wolfson, whose right to so purchase the judgment was being
challenged by the judgment debtor, the Court, through Justice Moreland, then expressly
reserved decision on "whether or not the judgment in question actually falls within the
prohibition of the article" and held only that the sale's "voidability can not be asserted by
one not a property to the transaction or his representative," citing from Manresa 1 0 that
"(C)onsidering the question from the point of view of the civil law, the view taken by the
code, we must limit ourselves to classifying as void all acts done contrary to the
express prohibition of the statute. Now then: As the code does not recognize such
nullity by the mere operation of law, the nullity of the acts hereinbefore referred to must
be asserted by the person having the necessary legal capacity to do so and decreed by
a competent court." 1 1
The reason thus given by Manresa in considering such prohibited acquisitions
under Article 1459 of the Spanish Civil Code as merely voidable at the instance and
option of the vendor and not void — "that the Code does not recognize such nullity de
pleno derecho" — is no longer true and applicable to our own Philippine Civil Code which
does recognize the absolute nullity of contracts "whose cause, object, or purpose is
contrary to law, morals, good customs, public order or public policy" or which are
"expressly prohibited or declared void by law" and declares such contracts "inexistent
and void from the beginning." 1 2
The Supreme Court of Spain and modern authors have likewise veered from
Manresa's view of the Spanish codal provision itself. In its sentencia of 11 June 1966,
the Supreme Court of Spain ruled that the prohibition of Article 1459 of the Spanish
Civil Code is based on public policy, that violation of the prohibition contract cannot be
validated by confirmation or ratification, holding that:
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". . . la prohibicion que el articulo 1459 del C.C. establece respecto a los
administradores y apoderados, la cual tiene conforme a la doctrina de esta Sala,
contenida entre otras, en S. de 27-5-1959, un fundamento de orden moral, dando
lugar la violacion de esta regla a la nulidad de pleno derecho del acto " negocio
celebrado, . . . y porque al realizarse el acto juridico en contravencion con una
prohibicion legal, afectante al orden publico, no cabe con efecto alguno la aludida
ratificacion . . ." 1 3
The criterion of nullity of such prohibited contracts under Article 1459 of the
Spanish Civil Code (Article 1491 of our Civil Code) as a matter of public order and
policy as applied by the Supreme Court of Spain to administrators and agents in its
above-cited decision should certainly apply with greater reason to judges, judicial
officers, fiscals and lawyers under paragraph 5 of the codal article.
Citing the same decision of the Supreme Court of Spain, Gullon Ballesteros, in his
"Curso de Derecho Civil, (Contratos Especiales)" (Madrid, 1968) p. 18, a rms that, with
respect to Article 1459, Spanish Civil Code:
"Que caracter tendra la compra que se realice por estas personas? Por
supuesto no cabe duda de que en el caso del (art.) 1459, 4º y 5º, la nulidad es
absoluta porque el motivo de la prohibicion es de orden publico." 1 4
Perez Gonzales concurs in such view, stating that "Dado el caracter prohibitivo
del precepto, la consequencia de la infraccion es la nulidad radical y ex lege." 1 5
Castan, quoting Manresa's own observation that
"El fundamento de esta prohibicion es clarisimo. No se trata con este
precepto tan solo de quitar la ocasion al fraude; persiguese, ademas, el proposito
d e rodear a las personas que intervienen en la admunistracion de justicia de
todos los restigios que necesitan para ejercer su ministerio, librandolos de toda
sospecha, que aunque fuere infundada, redundar!a en descredito de la
institucion." 1 6
arrives at the contrary and now accepted view that "Puede considerarse en nuestro
derecho inexistente o radicalmente nulo el contrato en los siguentes cases: a) . . . ; b)
cuando el contrato se ha celebrado en violacion de una prescripcion o prohibicion legal,
fundada sobre motivos de orden publico (hipotesis del art. 4 del Codigo) . . ." 1 7
It is noteworthy that Castan's rationale for his conclusion that fundamental
considerations of public policy render void and inexistent such expressly prohibited
purchase (e.g. by public o cers and employees of government property entrusted to
them and by justices, judges, scals and lawyers of property and rights in litigation
submitted to or handled by them, under Article 1491, paragraphs (4) and (5) of our Civil
Code) has been adopted in a new article of our Civil Code, viz, Article 1409 declaring
such prohibited contracts as "inexistent and void from the beginning ." 1 8
Indeed, the nullity of such prohibited contracts is de nite and permanent and
cannot be cured by rati cation. The public interest and public policy remain paramount
and do not permit of compromise or rati cation. In this aspect, the permanent
disquali cation of public and judicial o cers and lawyers grounded on public policy
differs from the rst three cases of guardians, agents and administrators (Article 1491,
Civil Code), as to whose transactions, it has been opined that they may be "rati ed" by
means of and in "the form of a new contract, in which case its validity shall be
determined only by the circumstances at the time of execution of such new contract.
The causes of nullity which have ceased to exist cannot impair the validity of the new
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contract. Thus, the object which was illegal at the time of the rst contract, may have
already become lawful at the time of the rati cation or second contract; or the service
which v. as impossible may have become possible; or the intention which could not be
ascertained may have been clari ed by the parties. The rati cation or second contract
would then be valid from its execution; however, it does not retroact to the date of the
first contract." 1 9
As applied to the case at bar, the lower court therefore properly acted upon
defendant appellant's motion to dismiss on the ground of nullity of plaintiff's alleged
purchase of the land, since its juridical effects and plaintiff's alleged cause of action
founded thereon were being asserted against defendant-appellant. The principles
governing the nullity of such prohibited contracts and judicial declaration of their nullity
have been well restated by Tolentino in his treatise on our Civil Code, as follows:
"Parties Affected. — Any person may invoke the inexistence of the contract
whenever juridical effects founded thereon are asserted against him. Thus, if
there has been a void transfer of property, the transferor can recover it by the
accion reivindicatoria; and any possessor may refuse to deliver it to the
transferee, who cannot enforce the contract. Creditors may attach property of the
debtor which has been alienated by the latter under a void contract; a mortgagee
can allege the inexistence of a prior encumbrance; a debtor can assert the nullity
of an assignment of credit as a defense to an action by the assignee.
"Action On Contract. — Even when the contract is void or inexistent, an
action is necessary to declare its inexistence, when it has already been ful lled.
Nobody can take the law into his own hands; hence, the intervention of the
competent court is necessary to declare the absolute nullity of the contract and to
decree the restitution of what has been given under it. The judgment, however, will
retroact to the very day when the contract was entered into.
"If the void contract is still fully executory, no party need bring an action to
declare its nullity; but if any party should bring an action to enforce it, the other
party can simply set up the nullity as a defense." 2 0
Footnotes
6. At page 7.
7. 20 Phil. 340, 342-343 (Oct. 13, 1911).
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8. 53 Phil. 147 (March 27, 1929).
9. 53 Phil. at pp. 147-148; emphasis added.
10. Vol. 10, p. 108.
11. 20 Phil. at p. 343.
12. Article 1409, pars. (1) and (7), Philippine Civil Code.
13. Rodriguez Navarro, Doctrina Civil del Tribunal Supremo, Appendice de 1961-1966, pp.
693-694; emphasis added.