Fornilda vs. Br. 164, RTC Ivth Judicial Region, Pasig

11/1/2020 SUPREME COURT REPORTS ANNOTATED VOLUME 166
VOL. 166, OCTOBER 5, 1988 281

Fornilda vs. Br. 164, RTC IVth Judicial Region, Pasig
*
No. L-72306. October 5, 1988.
DAVID P. FORNILDA, JUAN P. FORNILDA, EMILIA P.

FORNILDA OLILI, LEOCADIA P. FORNILDA LABAYEN
and ANGELA P. FORNILDA GUTIERREZ, petitioners, vs.
THE BRANCH 164, REGIONAL TRIAL COURT IVTH
JUDICIAL REGION, PASIG, JOAQUIN C. ANTONIL,
Deputy Sheriff, RTC, 4JR Tanay, Rizal and ATTY.
SERGIO I. AMONOY, respondents.
Sales; Public Policy; Attorneys; Under Art. 1491, a lawyer is

prohibited from acquiring either by purchase or assignment of the
property or rights involved which are object of the litigation in
which they intervene by virtue of their profession; Rationale for the
prohibition.—Under the aforequoted provision, a lawyer is
prohibited from acquiring either by purchase or assignment the
property or rights involved which are the object of the litigation in
which they intervene by virtue of their profession (Padilla, Vol. II
Civil Law, 1974 Ed., p. 230 citing Hernandez vs. Villanueva, 40
Phil. 773 and Rubias vs. Batiller; 51 SCRA 130). The prohibition
on purchase is all embracing to include not only sales to private
individuals but also public or judicial sales. (ibid., p. 221). The
rationale advanced for the prohibition is that public policy
disallows the transactions in view of the fiduciary relationship
involved i.e., the relation of trust and confidence and the peculiar
control exercised by these persons (Paras, Civil Code, Vol. V, 1973
ed., p. 70).
Same; Same; Same; The fact that the properties were first
mortgaged and only subsequently acquired in an auction sale will
not remove it from the scope of the prohibition; Reason.—The fact
that the properties were first mortgaged and only subsequently
acquired in an auction sale long after the termination of the
intestate proceedings will not remove it from the scope of the
prohibition. To rule otherwise would be to countenance indirectly
what cannot be done directly.
Same; Same; Same; The action or defense for the declaration
of the inexistence of a void contract is imprescriptible.—Being a
www.central.com.ph/sfsreader/session/0000017581bd9671b50b36a1003600fb002c009e/t/?o=False 1/11
void contract, the action or defense for the declaration of its

inexistence is imprescriptible (Article 1410, Civil Code). The
defect of a void or
_______________
* SECOND DIVISION.
282
282 SUPREME COURT REPORTS ANNOTATED
inexistent contract is permanent. Mere lapse of time cannot give

it efficacy. Neither can the right to set up the defense of illegality
be waived (Article 1409, Civil Code).
Same; Same; Same; Doctrine of prior judgment as a bar to a
subsequent case, cannot be invoked in the case at bar; Reasons.—
The Controverted Parcels could not have been the object of any
mortgage contract in favor of Respondent Amonoy and
consequently neither of a foreclosure sale. By analogy, the
illegality must be held to extend to whatever results directly from
the illegal source (Article 1422, Civil Code). Such being the case,
the Trial Court did not acquire any jurisdiction over the subject
matter of the Foreclosure Case and the judgment rendered
therein could not have attained any finality and could be attacked
at any time. Neither could it have been a bar to the action brought
by petitioners for its annulment by reason of res judicata.
(Municipality of Antipolo vs. Zapanta, No. L-65334, December 26,
1984, 133 SCRA 820). Two of the requisites of the rule of prior
judgment as a bar to a subsequent case, namely, (1) a final
judgment and (2) that it must have been rendered by a Court
having jurisdiction over the subject matter, are conspicuously
absent.
PETITION for certiorari to review the order of the Regional

Trial Court of Pasig, Br. 164.
The facts are stated in the opinion of the Court.

Irene C. Ishiwata for petitioner A. Gutierrez.
Sergio I. Amonoy for and in his own behalf.
MELENCIO-HERRERA, J.:
The Petition entitled “Petisiyung Makapagpasuri Taglay

ang Pagpapapigil ng Utos”, translated as one for Certiorari
with Preliminary Injunction, was filed on 27 September
1985 by three (3) petitioners, namely David P. Fornilda,
Emilia P. Fornilda-Olili, and Angela P. Fornilda-Gutierrez.
They seek the reversal of the Order of respondent Trial
Court, dated 25 July 1985, granting a Writ of Possession,
as well as its Orders, dated 25 April 1986 and 16 May 1986
(p. 241, Rollo), directing and authorizing respondent Sheriff
to demolish the houses of petitioners Angela and Leocadia
Fornilda (who is listed as a petitioner but who did not sign
the Petition). Neither is Juan P. Fornilda a signatory.
283
VOL. 166, OCTOBER 5, 1988 283

The facts disclose that the deceased, Julio M. Catolos,

formerly owned six (6) parcels of land located in Tanay,
Rizal, which are the controverted properties in the present
litigation. His estate was the subject of settlement in
Special Proceedings No. 3103 of the then Court of First
Instance of Rizal, at Pasig, Branch I. Francisca Catolos,
Agnes Catolos, Alfonso I. Fornilda and Asuncion M.
Pasamba were some of the legal heirs and were
represented in the case by Atty. Sergio Amonoy
(hereinafter referred to as Respondent Amonoy). A Project
of Partition was filed in the Intestate Court whereby the
Controverted Parcels were adjudicated to Alfonso I.
Fornilda and Asuncion M. Pasamba.
On 12 January 1965, the Court approved the Project of
Partition. It was not until 6 August 1969, however, that the
estate was declared closed and terminated after estate and
inheritance taxes had been paid, the claims against the
estate settled and all properties adjudicated.
Eight (8) days thereafter, or on 20 January 1965,
Alfonso I. Fornilda and Asuncion M. Pasamba executed a
Contract of Mortgage wherein they mortgaged the
Controverted Parcels to Respondent Amonoy as security for
the payment of his attorney’s fees for services rendered in
the aforementioned intestate proceedings, in the amount of
P27,600.00 (Annex “A”, Comment).
Asuncion M. Pasamba died on 24 February 1969 while
Alfonso I. Fomilda passed away on 2 July 1969. Petitioners
are some of the heirs of Alfonso I. Fornilda.
Since the mortgage indebtedness was not paid, on 21
January 1970, Respondent Amonoy instituted foreclosure
proceedings before the Court of First Instance of Rizal, at

Pasig, Branch VIII, entitled “Sergio I. Amonoy vs. Heirs of
Asuncion M. Pasamba and Heirs of Alfonso L. Fornilda”
[Civil Case No. 12726] (Annex “B”, ibid.). Petitioners, as
defendants therein, alleged that the amount agreed upon
as attorney’s fees was only P11,695.92 and that the sum of
P27,600.00 was unconscionable and unreasonable.
Appearing as signatory counsel for Respondent Amonoy
was Atty. Jose S. Balajadia. 1
On 28 September 1972, the Trial Court rendered
judgment
_______________
1 Judge Benjamin H. Aquino, presiding.
284

in the Foreclosure Case ordering the Pasamba and

Fornilda heirs to pay Respondent Amonoy, within ninety
(90) days from receipt of the decision, the sums of
P27,600.00 representing the attorney’s fees secured by the
mortgage; P11,880.00 as the value of the harvest from two
(2) parcels of land; and 25% of the total of the two amounts,
or P9,645.00, as attorney’s fees, failing which the
Controverted Parcels would be sold at public auction
(Annex “C”, ibid.).
On 6 February 1973, the Controverted Parcels were
foreclosed and on 23 March 1973, an auction sale was held
with Respondent Amonoy as the sole bidder for P23,760.00
(Annex “D”, ibid.). Said sale was confirmed by the Trial
Court on 2 May 1973 (Annex “E”, ibid.). To satisfy the
deficiency, another execution sale was conducted with
Respondent Amonoy as the sole bidder for P12,137.50. On
the basis of an Affidavit of Consolidation of Ownership by
Respondent Amonoy, the corresponding tax declarations
covering the Controverted Parcels were consolidated in his
name.
On 19 December 1973, or a year after the judgment in
the Foreclosure Case, an action for Annulment of
Judgment entitled “Maria Penano, et al. vs. Sergio
Amonoy, et al.” (Civil Case No. 18731) was filed before the
then Court of First Instance of Rizal, at Pasig [the
Annulment Case] (Annex “F”, ibid.) Petitioners were also
included as plaintiffs. Appearing for the plaintiffs in that
case was Atty. Jose F. Tiburcio. Squarely put in issue were

the propriety of the mortgage, the validity of the judgment
in the Foreclosure Case, and the tenability of the
acquisitions by Respondent Amonoy at the Sheriffs sale. Of
particular relevance to the instant Petition is the
contention that the mortgage and the Sheriffs sales were
null and void as contrary to the positive statutory
injunction in Article 1491 (5) of the Civil Code, which
prohibits attorneys from purchasing, even at a public or
judicial auction, properties and rights in litigation, and
that the Trial Court, in the Foreclosure Case, had never
acquired jurisdiction over the subject matter of the action,
i.e., the Controverted Parcels. 2
On 7 November 1977, the Trial Court dismissed the
Annulment Case holding that the particular
disqualification in Ar-
_______________
2 Decision penned by Judge Serafin E. Camilon.
285
VOL. 166, OCTOBER 5, 1988 285

tide 1491 of the Civil Code is not of general application nor

of universal effect but must be reconciled with the rule that
permits judgment creditors to be bidders at sheriffs sales,
so that Respondent Amonoy was “clearly not prohibited
from bidding his judgment and his acquisitions therefore
are sanctioned by law” (Annex “G”, ibid.).
On 22 July 1981, the Court of3 Appeals (in CA-G.R. No.
63214-R) (the Appealed Case) affirmed the aforesaid
judgment predicated on three principal grounds: (1) that no
legal impediment exists to bar an heir from encumbering
his share of the estate after a project of partition has been
approved, that act being a valid exercise of his right of
ownership; (2) res judicata, since petitioners never
questioned the capacity of Respondent Amonoy to acquire
the property in the Foreclosure Case; and (3) the complaint
in the Annulment Case did not allege extrinsic fraud nor
collusion in obtaining the judgment so that the action must
fail.
Upon remand of the Foreclusure Case to respondent
Regional Trial Court, Branch 164, at Pasig, Respondent
Sheriff, on 26 August 1985, notified petitioners to vacate
the premises (p. 17, Rollo), subject of the Writ of Possession

issued on 25 July 1985 (p. 18, Rollo).
On 27 September 1985, petitioners came to this Court in
a pleading entitled “Petisiyung Makapagpasuri Taglay ang
Pagpapapigil ng Utos”. On 11 November 1985, we
dismissed the petition for non-payment of docket and other
fees. However, upon payment thereof, the Order of
dismissal was set aside and respondents were directed to
submit their Comment.
In his Comment, Respondent Amonoy denies that he
had acquired the Controverted Parcels through immoral
and illegal means contending that “the question of
attorney’s fees, the mortgage to secure the same, the sale of
the mortgaged properties at public auction, which was
confirmed by the Court, and ultimately, the ownership and
possession over them, have all been judicially adjudicated.”
(p. 146, Rollo)
_______________
3 Decision penned by Justice Guillermo F. Villasor, and concurred in by

Justices Mama D. Busran, Chairman, and Jose A. R. Melo, Members.
286

We gave due course to the petition and required the filing

of the parties’ respective memoranda.
Meanwhile, on motion of Respondent Amonoy, dated 24
April 1986, respondent Trial Court, in the Foreclosure
Case, issued Orders dated 25 April and 16 May 1986
authorizing the demolition of the houses and other
structures of petitioners Leocadia and Angela Fornilda (p.
241, Rollo). On 1 June 1986 the house of Angela Fornilda
was totally demolished while that of Leocadia was spared
due to the tatter’s assurance that she would seek
postponement.
On 1 June 1986, in a pleading entitled “Mahigpit na
Musiyun Para Papanagutin Kaugnay ng
Paglalapastangan”, followed by a “Musiyung Makahingi ng
Utos sa Pagpapapigil ng Pagpapagiba at Papanagutin sa
Paglalapastangan” petitioners applied for a Restraining
Order, which we granted on 2 June 1986, enjoining
respondents and the Sheriff of Rizal from demolishing
petitioners’houses (p. 221, Rollo). In a pleading entitled
“Mahigpit na Musiyun para Papanagutin Kaugnay ng
Paglalapastangan” and “Masasamang Gawain (Mal-

Practices)” and “Paninindigan (Memorandum)” both filed
on 16 June 1988, petitioners likewise charged Respondent
Amonoy with malpractice and prayed for his disbarment
(pp. 224; 226, Rollo).
In Respondent Amonoy’s “Comment and Manifestations”
filed on 30 June 1986, he indicated that the Restraining
Order received by the Deputy Sheriff of Rizal only on 6
June 1986 had already become moot and academic as
Angela Fornilda’s house had been demolished on 2 June
1986 while Leocadia offered to buy the small area of the
land where her house is built and he had relented.
In the interim, Respondent Amonoy was appointed as
Assistant Provincial Fiscal of Rizal, and subsequently as a
Regional Trial Court Judge in Pasay City.
The threshold issue is whether or not the mortgage
constituted on the Controverted Parcels in favor of
Respondent Amonoy comes within the scope of the
prohibition in Article 1491 of the Civil Code.
The pertinent portions of the said Articles read:
“Art. 1491. The following persons cannot acquire by purchase even

at a public or judicial or auction, either in person or through the
287
VOL. 166, OCTOBER 5, 1988 287

mediation of another:
x x x x x x
(5) Justices, judges, prosecuting attorneys, x x x the property
and rights in litigation or levied upon on execution before the
court within whose jurisdiction or territory they exercise their
respective functions; this prohibition includes the act of acquiring
by assignment and shall apply to lawyers, with respect to the
property and rights which may be the object of any litigation in
which they may take part by virtue of their profession.” (Italics
supplied)
Under the aforequoted provision, a lawyer is prohibited

from acquiring either by purchase or assignment the
property or rights involved which are the object of the
litigation in which they intervene by virtue of their
profession (Padillfi, Vol. II Civil Law, 1974 Ed., p. 230
citing Hernandez vs. Villanueva, 40 Phil. 773 and Rubias
vs. Batiller; 51 SCRA 130;. The prohibition on purhase is
all embracing to include not only sales to private
individuals but also public or judicial sales (ibid., p. 221).
The rationale advanced for the prohibition is that public

policy disallows the transactions in view of the fiduciary
relationship involved i.e., the relation of trust and
confidence and the peculiar control exercised by these
persons (Paras, Civil Code, Vol. V, 1973., p. 70).
In the instant case, it is undisputed that the
Controverted Parcels were part of the estate of the late
Julio M. Catolos, subject of intestate estate proceedings,
wherein Respondent Amonoy acted as counsel for some of
the heirs from 1959 until 1968 by his own admission
(Comment, p. 145, Rollo); that these properties were
adjudicated to Alfonso Fornilda and Asuncion M. Pasamba
in the Project of Partition approved by the Court on 12
January 1965; that on 20 January 1965, or only eight (8)
days thereafter, and while he was still intervening in the
case as counsel, these properties were mortgaged by
petitioners’ predecessor-in-interest to Respondent Amonoy
to secure payment of the latter’s attorney’s fees in the
amount of P27,600.00; that since the mortgage
indebtedness was not paid, Respondent Amonoy instituted
an action for judicial foreclosure of mortgage on 21 January
1970; that the mortgage was subsequently ordered
foreclosed and auction sale followed where Respondent
Amonoy was the sole bidder for P23,600.00; and
288

that being short of the mortgage indebtedness, he applied

for and further obtained a deficiency judgment.
Telling, therefore, is the fact that the transaction
involved falls squarely within the prohibition against any
acquisition by a lawyer of properties belonging to parties
they represent which are still in suit. For, while the Project
of Partition was approved on 12 January 1965, it was not
until 6 August 1969 that the estate was declared closed and
terminated (Record on Appeal, Civil Case No. 3103, p. 44).
At the time the mortgage was executed, therefore, the
relationship of lawyer and client still existed, the very
relation of trust and confidence sought to be protected by
the prohibition, when a lawyer occupies a vantage position
to press upon or dictate terms to an harassed client. What
is more, the mortgage was executed only eight (8) days
after approval of the Project of Partition thereby evincing a
clear intention on Respondent Amonoy’s part to protect his
own interests and ride roughshod over that of his clients.
From the time of the execution of the mortgage in his favor,

Respondent Amonoy had already asserted a title adverse to
his clients’ interests at a time when the relationship of
lawyer and client had not yet been severed.
The fact that the properties were first mortgaged and
only subsequently acquired in an auction sale long after the
termination of the intestate proceedings will not remove it
from the scope of the prohibition. To rule otherwise would
be to countenance indirectly what cannot be done directly.
There is no gainsaying that petitioners’ predecessor-in-
interest, as an heir, could encumber the property
adjudicated to him; that the Complaint in the Annulment
Case did not contain any specific allegation of fraud or
collusion in obtaining the judgment appealed from as
opined by the Court of Appeals in the Appealed Case; and
that the auction sale of the properties to Respondent
Amonoy was judicially confirmed and ownership and
possession of the Controverted Parcels ultimately
transferred to him.
Nonetheless, considering that the mortgage contract,
entered into in contravention of Article 1491 of the Civil
Code, supra, is expressly prohibited by law, the same must
be held inexistent and void ab initio (Director of Lands vs.
Abagat, 53 Phil. 147).
289
VOL. 166, OCTOBER 5, 1988 289

“Art. 1409. The following contracts are inexistent and void from
the beginning:
(1) Those whose cause, object or purpose is contrary to law,
morals, good customs, public order or public policy;
x x x x x x
(7) Those expressly prohibited or declared void by law. These
contracts cannot be ratified. Neither can the right to set up the
defense of illegality be waived.” (Civil Code)
Being a void contract, the action or defense for the

declaration of its inexistence is imprescriptible (Article
1410, Civil Code). The defect of a void or inexistent contract
is permanent. Mere lapse of time cannot give it efficacy.
Neither can the right to set up the defense of illegality be
waived (Article 1409, Civil Code).
The Controverted Parcels could not have been the object
of any mortgage contract in favor of Respondent Amonoy
and consequently neither of a foreclosure sale. By analogy,
the illegality must be held to extend to whatsover results

directly from the illegal source (Article 1422, Civil Code).
Such being the case, the Trial Court did not acquire any
jurisdiction over the subject matter of the Foreclosure Case
and the judgment rendered therein could not have attained
any finality and could be attacked at any time. Neither
could it have been a bar to the action brought by
petitioners for its annulment by reason of res judicata.
(Municipality of Antipolo vs. Zapanta, No. L-65334,
December 26, 1984, 133 SCRA 820). Two of the requisites
of the rule of prior judgment as a bar to a subsequent case,
namely, (1) a final judgment and (2) that it must have been
rendered by a Court having jurisdiction over the subject
matter, are conspicuously absent.
And since the nullity of the transaction herein involved
proceeds from the illegality of the cause or object of the
contract, and the act does not constitute a criminal offense,
the return to petitioners of the Controverted Parcels is in
order.
“Art. 1412. If the act in which the unlawful or forbidden cause

consists does not constitute a criminal offense, the following rules
shall be observed:
x x x x x x
(2) When only one of the contracting parties is at fault, he
290

cannot recover what he has given by reason of the contract, or ask

for the fulfillment of what has been promised him. The other, who
is not at fault, may demand the return of what he has given
without any obligation to comply with his promise.” (Civil Code).
WHEREFORE, Certiorari is granted; the Order of

respondent Trial Court, dated 25 July 1985, granting a
Writ of Possession, as well as its Orders, dated 25 April
1986 and 16 May 1986, directing and authorizing
respondent Sheriff to demolish the houses of petitioners
Angela and Leocadia Foruilda are hereby set aside, and the
Temporary Restraining Order heretofore issued, is made
permanent. The six (6) parcels of land herein controverted
are hereby ordered returned to petitioners unless some of
them have been conveyed to innocent third persons.
With respect to petitioners’ prayer for disbarment by
reason of malpractice of Respondent Amonoy embodied in
their pleading entitled “Mahigpit na Musiyun para
Papanagutin Kaugnay ng Paglalapastangan” and

“Masasamang Gawain (Mad-Practices)” and “Paninindigan
(Memorandum)” both filed on 16 June 1988, Respondent
Sergio I. Amonoy is hereby required, within fifteen (15)
days from notice hereof, to submit an Answer thereto. After
receipt of the same, a new docket number will be assigned
to the case.
Costs against respondent, Sergio I. Amonoy.
SO ORDERED.
Paras, Sarmiento and Regalado, JJ., concur.

Padilla, J., no part in deliberations.
Certiorari granted.
Notes.—Vendor becomes entitled to rescission of sales

contract where vendee actually did not pay the price with
the period agreed upon. (Siy vs. CA, 138 SCRA 536.)
No privity of contract between the petitioners and the
buyers of property where the buyers were not parties to the
contract of sale in favor of the petitioners. (Centeno vs. CA,
139 SCRA 545.)
——o0o——
291
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11/1/2020 SUPREME COURT REPORTS ANNOTATED VOLUME 166

VOL. 166, OCTOBER 5, 1988 281

DAVID P. FORNILDA, JUAN P. FORNILDA, EMILIA P.

Sales; Public Policy; Attorneys; Under Art. 1491, a lawyer is

void contract, the action or defense for the declaration of its

282 SUPREME COURT REPORTS ANNOTATED

Fornilda vs. Br. 164, RTC IVth Judicial Region, Pasig

inexistent contract is permanent. Mere lapse of time cannot give

PETITION for certiorari to review the order of the Regional

The facts are stated in the opinion of the Court.

The Petition entitled “Petisiyung Makapagpasuri Taglay

VOL. 166, OCTOBER 5, 1988 283

The facts disclose that the deceased, Julio M. Catolos,

proceedings before the Court of First Instance of Rizal, at

1 Judge Benjamin H. Aquino, presiding.

284 SUPREME COURT REPORTS ANNOTATED

in the Foreclosure Case ordering the Pasamba and

case was Atty. Jose F. Tiburcio. Squarely put in issue were

2 Decision penned by Judge Serafin E. Camilon.

VOL. 166, OCTOBER 5, 1988 285

tide 1491 of the Civil Code is not of general application nor

the premises (p. 17, Rollo), subject of the Writ of Possession

3 Decision penned by Justice Guillermo F. Villasor, and concurred in by

286 SUPREME COURT REPORTS ANNOTATED

We gave due course to the petition and required the filing

Paglalapastangan” and “Masasamang Gawain (Mal-

“Art. 1491. The following persons cannot acquire by purchase even

VOL. 166, OCTOBER 5, 1988 287

Under the aforequoted provision, a lawyer is prohibited

The rationale advanced for the prohibition is that public

288 SUPREME COURT REPORTS ANNOTATED

that being short of the mortgage indebtedness, he applied

From the time of the execution of the mortgage in his favor,

VOL. 166, OCTOBER 5, 1988 289

Being a void contract, the action or defense for the

the illegality must be held to extend to whatsover results

“Art. 1412. If the act in which the unlawful or forbidden cause

290 SUPREME COURT REPORTS ANNOTATED

cannot recover what he has given by reason of the contract, or ask

WHEREFORE, Certiorari is granted; the Order of

Papanagutin Kaugnay ng Paglalapastangan” and

Paras, Sarmiento and Regalado, JJ., concur.

Notes.—Vendor becomes entitled to rescission of sales

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