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DAVID P. FORNILDA P. FORNILDA, EMILIA P. FORNILDA OLILI, LEODADIA 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.

Irene C. Ishiwata for petitioner A. Gutierrez.


Sergio I. Amonoy for and in his own behalf.

SYLLABUS
1. CIVIL LAW; ARTICLE 1491 CIVIL CODE; PROHIBITION TO LAWYERS WITH RESPECT TO
PROPERTIES OR RIGHTS UNDER LITIGATION; RATIONALE. 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., p. 70).
2. ID.; ID.; ID.; SUBJECT TRANSACTION FALLS SQUARELY WITHIN THE STATUTORY PROHIBITION.
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. 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.
3. ID.; MORTGAGE CONTRACT, NULL AND VOID AB INITIO; ACTION FOR DECLARATION OF
INEXISTENCE OF CONTRACTS DOES NOT PRESCRIBE. 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 voidab initio (Director of Lands vs. Abagat, 53 Phil. 147). 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).
4. REMEDIAL LAW; ACTIONS; TRIAL COURT DID NOT ACQUIRE JURISDICTION OVER SUBJECT
MATTER; JUDGMENT RENDERED DID NOT ATTAIN FINALITY; RES JUDICATA NO APPLICABLE.
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 whatsoever 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.
5. CIVIL LAW; CONTRACTS; ARTICLE 1412, CIVIL CODE; RECOVERY OF WHAT HAS BEEN GIVEN
TO PARTY AT FAULT, WARRANTED. 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: . . .
When only one of the contracting parties is at fault, he 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)

DECISION

MELENCIO-HERRERA, J p:
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. LLjur
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, Agues 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. Fornilda 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 I. 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. prLL
On 28 September 1972, the Trial Court 1 rendered judgment 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. LLphil
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 Sheriff's sale. Of particular relevance to the
instant Petition is the contention that the mortgage and the Sheriff's 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. LLjur

On 7 November 1977, the Trial Court 2 dismissed the Annulment Case holding that the particular
disqualification in Article 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 of Appeals (in CA-G.R. No. 63214-R) (the Appealed Case) 3 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. prLL
Upon remand of the Foreclosure 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. cdrep
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)
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 latter's
assurance that she would seek postponement. llcd
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 "Parinindigan (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. cdphil
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 mediation of another:
xxx xxx xxx
(5) Justices, judges, prosecuting attorneys, . . . 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." (Emphasis 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 (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., 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 that being short of the mortgage indebtedness, he applied for and further
obtained a deficiency judgment.prcd
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 a 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. LLphil
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).
"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;
xxx xxx xxx
(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 whatsoever 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. LLpr

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:
xxx xxx xxx
(2) When only one of the contracting parties is at fault, he 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 Fornilda 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 (Mal-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., took no part.
||| (Fornilda v. Br. 164, RTC IVth Judicial Region, Pasig, G.R. No. 72306, [October 5, 1988], 248 PHIL
523-534)