CANLAS V CA and HERRERA

FACTS:

1. Private respondent own several parcels of land in Quezon City for which he is the
registered owner.
2. Between 1977 and 1978, he secured loans from L&R corporations and executed deeds of
mortgage in favour of the corporation.
3. By August 28, 1979, the loans matured and L&R Corp. initiated and extrajudicial
foreclosure of mortgage after private respondent failed to pay the loans.
4. Private respondent filed a complaint for injunction over the said foreclosure and for
redemptions of the parcels of land. Petitioner herein represented private respondent.
5. Two (2) years later, the parties (private respondent and L&R corp) entered into a
compromise agreement that renders privates respondent to be insured another year for the
said properties. Included in the stipulations were the attorneys fees amounting to
P100,000.
6. Private respondent, however, remained in dire of financial straits and was apparently
unable to pay the and secure the attorneys fees, more so the redemption liability.
7. Relief was discussed by petitioner and private respondent executed a Deed of Sale and
Transfer of Right of Redemption and/or to Redeem, a document that enabled the petition
to:
a. redeem the parcels in question
b. to register the same in petitioners name.
8. Allegations were made by the private respondent claiming the parcel of land to his name
but without prior notice, the properties were already registered under petitioners name.

9. On December 1, 1983, private respondent instituted an action for reconveyance and

reformation of document, praying that the certificates of title issued in the name of
petitioner be cancelled and that the "Deed of Sale and Transfer of Right of Redemption
and/or to Redeem be reformed to reflect the true agreement of Francisco Herrera and
Paterno R. Canlas
10. Trial court denied the private respondents petition. Basis for the judgment:
The alteration complained of did not change the meaning of the contract.
Petitioner himself had acquired an interest in the properties subject of
reconveyance based on the compromise agreement approved by Judge Casto in
the injunction case, pursuant to Section 29(b), of Rule 39, of the Rules of Court,
made him a judgment creditor in his own right
Private respondent had lost all right over the same arising from his failure to
redeem them from L&R Corp within the extended period.
the petitioner cannot be said to have violated the ban against the sale in question
took place after judgment in the injunction case above said had attained finality.
 11. Private respondent filed a suit for the annulment of judgment in the CA while petitioner
files a motion to dismiss. Ca denied petitioners motion to dismiss.

ISSUES:

1. Whether the conveyance in favour of the petitioner is subject to ban on acquisition by

attorneys of things in litigation
2. Whether the petition for annulment made by the private respondent will prosper

RULING:

1. No

Pertinent provisions in the Civil Code: Art. 1491(5)

In the instant case, the Court observes that the "Deed of Sale and Transfer of Right of
Redemption and/or to Redeem was executed following the finality of the decision approving the
compromise agreement. It is actually a new contract not one in pursuance of what had been
agreed upon on compromise in which, as we said, the petitioner purportedly assumed
redemption rights over the disputed properties (but in reality, acquired absolute ownership
thereof). By virtue of such a subsequent agreement, the land had ceased to be properties which
are the object of litigation. The transfer, therefore, is not subject to the injunction of article
1491 of the Civil code.

REGARDING THE CONCEPT OF WRIT OF POSSESSION: CASE AT BAR

The Court states that a writ of possession is improper to eject another from possession unless
sought in connection with:

1. a land registration proceeding

2. an extrajudicial foreclosure of mortgage of real property
3. in a judicial foreclosure of property provided that the mortgagor has possession and no
third party has intervened; and
4. in execution sales

It is noteworthy that in this case, the petitioner moved for the issuance of the writ pursuant to the
deed of sale between him and the private respondent and not the judgment on compromise.

The writ does not lie in such a case. His remedy is specific performance.

2. Yes.
Like all voidable contracts, it is open to annulment on the ground of mistake, fraud, or undue
influence, which in turn subject to the right of innocent purchasers for value.

For this reason, SC invalidated the transfer in question specifically for undue influence. While
respondent Herrera has not specifically prayed for invalidation, this is the clear tenor of his
petition for annulment in the Appellate Court. It appearing, however, that the purchasers for
value, the petitioner, Atty. Paterno Canlas, must be held liable, by way of actual damages, for
such a loss of properties.