G.R. No.

L-57499 June 22, 1984

CALIMLIM- CANULLAS vs. FORTUN

FACTS:

Petitioner Mercedes Calimlim-Canullas was married to Fernando Canullas. They have 5 children and lived in the residential land in question which Fernando inherited the land after his father died.
Years after somewhat in 1978, Fernando abandoned his family and was living with private respondent Corazon. (Both were convicted of concubinage in a judgment rendered the Court of First Instance which has become final
during the pendency of this petition.)
In 1980, Fernado sold the said inherited land with the house thereon to Corazon. Unable to take possession of the said property, Corazon filed a complaint for quieting of title and damages against Mercedes.
However, Mercedes claimed that the sale of the land, with the house and improvements, was null and void because they are conjugal properties and she had not given her consent.
Respondent Court (Fortun as judge) principally declared Corazon as the lawful owner of the land in question and 1/2 of the house erected on said land.
Upon reconsideration prayed for by Mercedes, respondent Court amended its decision and resolved that indeed Corazon was the true and lawful owner of the land but declared the sale of the conjugal house and improvements null
and void.

ISSUES:
1. WON the construction of a conjugal house on the exclusive property of the husband ipso facto gave the land the character of conjugal property.
2. WON the sale of the lot together with the house and improvements thereon was valid under the circumstances surrounding the transaction
HELD:

On Issue No. 1
No.
Second paragraph of Article 158 of the Civil Code reads: Buildings constructed at the expense of the partnership during the marriage on land belonging to one of the spouses also pertain to the partnership, but the value of the land
shall be reimbursed to the spouse who owns the same.
The Court ruled that both the land and the building belong to the conjugal partnership but the conjugal partnership is indebted to the husband for the value of the land.
The spouse owning the lot becomes a creditor of the conjugal partnership for the value of the lot, which value would be reimbursed at the liquidation of the conjugal partnership. FERNANDO could not have alienated the house and
lot to DAGUINES since MERCEDES had not given her consent to said sale.

On Issue No. 2
No.
Article 1409 of the Civil Code states inter alia that: contracts whose cause, object, or purpose is contrary to law, morals, good customs, public order, or public policy are void and inexistent from the very beginning.
Article 1352 also provides that: "Contracts without cause, or with unlawful cause, produce no effect whatsoever. The cause is unlawful if it is contrary to law, morals, good customs, public order, or public policy."
In the case at bar, the sale was made by a husband in favor of a concubine after he had abandoned his family and left the conjugal home where his wife and children lived and from whence they derived their support. It was
subversive of the stability of the family, a basic social institution which public policy cherishes and protects. Hence, the Court ruled that the sale is null and void being contrary to morals and public policy.
Additionally, the law emphatically prohibits the spouses (also include couples living as husband and wife without benefit of marriage) from selling and donating property to each other during marriage subject to certain exceptions.
Such prohibitions were also designed to prevent the exercise of undue influence by one spouse over the other, as well as to protect the institution of marriage, which is the cornerstone of family law.
The contract of sale was null and void for being contrary to morals and public policy. The sale was made by a husband in favor of a concubine after he had abandoned his family and left the conjugal home where his wife and
children lived and from whence they derived their support. That sale was subversive of the stability of the family, a basic social institution which public policy cherishes and protects. The law emphatically prohibits the spouses from
selling property to each other subject to certain exceptions. Similarly, donations between spouses during marriage are prohibited. And this is so because if transfers or con conveyances between spouses were allowed during
marriage, that would destroy the system of conjugal partnership, a basic policy in civil law. It was also designed to prevent the exercise of undue influence by one spouse over the other, as well as to protect the institution of
marriage, which is the cornerstone of family law. The prohibitions apply to a couple living as husband and wife without benefit of marriage, otherwise, "the condition of those who incurred guilt would turn out to be better than those
in legal union." Those provisions are dictated by public interest and their criterion must be imposed upon the wig of the parties.
ANTONIO MEDINA, petitioner VS. COLLECTOR OF INTERNAL REVENUE AND THE COURT OF TAX APPEALS , respondents
G.R. No. L-15113
January 28, 1961

FACTS:
About May 20, 1944, petitioning taxpayer Antonio Medina married Antonia Rodriguez. Both spouses had neither property nor business of their own. Subsequent to marriage, petitioners engaged in forest concessions with the
government in Isabela. From 1946 to 1948, the logs cut and removed from his concessions were sold in Manila through his agent, Mariano Osorio. In 1949, Antonia, the petitioner’s wife, engaged in lumber business, and on 1952
petitioner sold to her almost all the logs produced. Antonia, in turn, sold the logs in Manila through the same agent. Upon assessment of their taxes, the Collector of Internal Revenue considered the sale from Antonio to Antonia as
null and void, thus, an additional tax of P4,533.54 was assessed under the NIRC. The spouses protested the assessment claiming that they had a prenuptial agreement of complete separation of properties.

ISSUE:
1. Whether or not the sale between Antonio and Antonia was valid
2. Whether or not the sales made by the petitioner to his wife could be considered as his original taxable sales

RULING:
1.
Article 1490. The husband and the wife cannot sell property to each other, except:
(1) When a separation of property was agreed upon in the marriage settlements; or
(2) When there has been a judicial separation of property under article 191. (1458a)
The validity of the prenuptial agreement was declared by court null because of material inconsistencies: First, at the time of marriage, the petitioner and his wife had neither property nor business of their own, as to have urged them
to enter into the supposed property agreement. Second, the spouses’ testimony that the separation of property agreement was recorded in the Registry of Property 3 months before the marriage, is absurd, since a pre-nuptial
agreement could not be effective before marriage is celebrated. Third, despite their insistence that the agreement contract exists, the spouses did not act in accordance with its alleged covenants; but that even during their taxable
years, the ownership, usufruct, and administration of their properties and business were in the husband. Fourth, the Day Book of the Register of Deeds, did not show that the document in question was among those recorded
therein.
The sale from Antonio to Antonia was null because it is expressly prohibited in the Article 1490 of the Civil Code.
2.
It appears that at the time of the marriage between petitioner and his wife, they neither had any property nor business of their own, as to have really urged them to enter into the supposed property agreement. Secondly, the
testimony that the separation of property agreement was recorded in the Registry of Property three months before the marriage, is patently absurd, since such a prenuptial agreement could not be effective before marriage is
celebrated, and would automatically be cancelled if the union was called off. In the third place, despite their insistence on the existence of the ante nuptial contract, the couple, strangely enough, did not act in accordance with its
alleged covenants. It was not until July of 1954 that he alleged, for the first time, the existence of the supposed property separation agreement. Finally, the Day Book of the Register of Deeds on which the agreement would have
been entered, had it really been registered as petitioner insists, and which book was among those saved from the ravages of the war, did not show that the document in question was among those recorded therein.
The wife is authorized to engage in business and for the incidents that flow therefrom when she so engages therein. But the transactions permitted are those entered into with strangers, and do not constitute exceptions to the
prohibitory provisions of Article 1490 against sales between spouses.
Contracts violative of the provisions of Article 1490 of the Civil Code are null and void. Being void transactions, the sales made by the petitioner to his wife were correctly disregarded by the Collector in his tax assessments that
considered as the taxable sales those made by the wife through the spouses' common agent, Mariano Osorio. In upholding that stand, the Court below committed no error.

DECISION:
WHEREFORE, the decision appealed from is affirmed, with costs against the petitioner. Contracts violative of the provisions of Article 1490 of the Civil Code are null and void.
Macariola v. Asuncion, A.M. No. 133-J

FACTS
On August 6, 1968 Bernardita R. Macariola charged respondent Judge Elias B. Asuncion of the Court of First Instance of Leyte, now Associate Justice of the Court of Appeals, with “acts unbecoming a judge when the latter
purchased a property which was previously the subject of litigation on which he rendered decision. Respondent and his wife were also members of Traders Manufacturing and Fishing Industries Inc. to which their shares and
interests in said property were conveyed.
According to the petitioner, respondent allegedly violated Article 1491, par. 5, of the New Civil Code in acquiring by purchase a portion of Lot No. 1184-E which was one of those properties involved in in a case decided by him and
that he likewise violated Article 14, par. 1 and 5 of the Code of Commerce, Section 3, par. H, of R.A. 3019, Sec. 12, Rule XVIII of the Civil Service Rules, and Canon 25 of the Canons of Judicial Ethics, by associating himself with
the Traders Manufacturing and Fishing Industries, Inc., as a stockholder and a ranking officer while he was a judge of the Court of First Instance of Leyte.

ISSUES
I. Whether or not respondent Judge violated Article 1491, paragraph 5, of the New Civil Code in acquiring by purchase a portion of Lot No. 1184-E.
II. Whether or not respondent Judge violated paragraphs 1 and 5, Article 14 of the Code of Commerce when he associated himself with the Traders Manufacturing and Fishing Industries, Inc.

HELD
I
NEGATIVE. [The Court] find that there is no merit in the contention of complainant that respondent Judge Elias B. Asuncion violated Article 1491, paragraph 5, of the New Civil Code in acquiring by purchase a portion of Lot No.
1184-E which was one of those properties involved in Civil Case No. 3010.
The prohibition in the aforesaid Article applies only to the sale or assignment of the property which is the subject of litigation to the persons disqualified therein. In the case at bar, when the respondent Judge purchased on March 6,
1965 a portion of Lot 1184-E, the decision in Civil Case No. 3010 which he rendered on June 8, 1963 was already final because none of the parties therein filed an appeal; hence, the lot in question was no longer subject of the
litigation.
Finally, while it is. true that respondent Judge did not violate paragraph 5, Article 1491 of the New Civil Code in acquiring by purchase a portion of Lot 1184-E which was in litigation in his court, it was, however, improper for him to
have acquired the same. He should be reminded of Canon 3 of the Canons of Judicial Ethics which requires that: “A judge’s official conduct should be free from the appearance of impropriety, and his personal behavior, not only
upon the bench and in the performance of judicial duties, but also in his everyday life, should be beyond reproach.”

II
NEGATIVE. Respondent Judge cannot be held liable under [paragraphs 1 and 5, Article 14 of the Code of Commerce] because there is no showing that respondent participated or intervened in his official capacity in the business or
transactions of the Traders Manufacturing and Fishing Industries, Inc. In the case at bar, the business of the corporation in which respondent participated has obviously no relation or connection with his judicial office. The business
of said corporation is not that kind where respondent intervenes or takes part in his capacity as Judge of the Court of First Instance.
It is [the Court’s] considered view that although [paragraphs 1 and 5, Article 14] is incorporated in the Code of Commerce which is part of the commercial laws of the Philippines, it, however, partakes of the nature of a political law
as it regulates the relationship between the government and certain public officers and employees, like justices and judges.
Article 14 of the Code of Commerce partakes more of the nature of an administrative law because it regulates the conduct of certain public officers and employees with respect to engaging in business: hence, political in essence. It
is significant to note that the present Code of Commerce is the Spanish Code of Commerce of 1885, with some modifications made by the “Commission de Codificacion de las Provincias de Ultramar,” which was extended to the
Philippines by the Royal Decree of August 6, 1888, and took effect as law in this jurisdiction on December 1, 1888.
Upon the transfer of sovereignty from Spain to the United States and later on from the United States to the Republic of the Philippines, Article 14 of this Code of Commerce must be deemed to have been abrogated because where
there is change of sovereignty, the political laws of the former sovereign, whether compatible or not with those of the new sovereign, are automatically abrogated, unless they are expressly re-enacted by affirmative act of the new
sovereign.
Likewise, in People vs. Perfecto (43 Phil. 887, 897 [1922]), this Court stated that: “It is a general principle of the public law that on acquisition of territory the previous political relations of the ceded region are totally abrogated. ”
There appears no enabling or affirmative act that continued the effectivity of the aforestated provision of the Code of Commerce after the change of sovereignty from Spain to the United States and then to the Republic of the
Philippines. Consequently, Article 14 of the Code of Commerce has no legal and binding effect and cannot apply to the respondent, then Judge of the Court of First Instance, now Associate Justice of the Court of Appeals.
Rubias v. Batiller

Facts:
Francisco Militante claimed that he owned a parcel of land located in Iloilo. Before the war with Japan, Francisco Militante filed an application for registration of the parcel of land in question with the CFI of Iloilo. This was opposed by the
Director of Lands, the Director of Forestry, and other oppositors. The case was docked as a land case, and after trial the court dismissed the application for registration. Militante appealed to the Court of Appeals. After the war, the petition was
heard and denied. Pending appeal, Militante sold the land to petitioner, his son-in-law. The CA rendered a decision, dismissing the application for registration. Plaintiff filed an action for forcible entry against respondent. 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 and continuous possession since time immemorial under claim of ownership of
the portions of the lot in question. In that case, the court held that Rubias has no cause of action because the property in dispute which Rubias allegedly bought from Militante was the subject matter of a land case, in which case Rubias was
the counsel on record of Militante himself. It thus falls under Article 1491 of the Civil Code. (Hence, this appeal.)

Issue:
1. Whether or not the contract of sale between appellant and his father-in-law 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
2. Whether the sale of the land is prohibited under Article 1491.

Held:
1. The stipulated facts and exhibits of record indisputably established plaintiff's lack of cause of action and justified the outright dismissal of the complaint. Plaintiff's claim of ownership to the land in question was predicated on the sale thereof
made by his father-in- law 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.
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 officers and employees; judicial officers and employees, prosecuting attorneys, and lawyers; and (6)
others especially disqualified by law.
Fundamental consideration of public policy render void and inexistent such expressly prohibited purchase (e.g. by public officers and employees of government property intrusted to them and by justices, judges, fiscals and lawyers of property
and rights in litigation and 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."
Indeed, the nullity of such prohibited contracts is definite and permanent and cannot be cured by ratification. The public interest and public policy remain paramount and do not permit of compromise or ratification. In his aspect, the permanent
disqualification of public and judicial officers and lawyers grounded on public policy differs from the first three cases of guardians, agents and administrators (Article 1491, Civil Code), as to whose transactions it had been opined that they may
be "ratified" by means of and in "the form of a new contact, in which cases its validity shall be determined only by the circumstances at the time the execution of such new contract. The causes of nullity which have ceased to exist cannot impair
the validity of the new contract. Thus, the object which was illegal at the time of the first contract, may have already become lawful at the time of the ratification or second contract; or the service which was impossible may have become
possible; or the intention which could not be ascertained may have been clarified by the parties. The ratification or second contract would then be valid from its execution; however, it does not retroact to the date of the first contract."

2. YES. Article 1491 says that “The following persons cannot acquire any purchase, even at a public or judicial auction, either in person or through the mediation of another…. (5) Justices, judges, prosecuting attorneys, clerks of superior and
inferior courts, and other officers and employees connected with the administration of justice, the property and rights in litigation or levied upon an 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 lawyesr, 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.” The
present case clearly falls under this, especially since the case was still pending appeal when the sale was made.

Issue: Legal effect of a sale falling under Article 1491?

Held: NULL AND VOID.CANNOT BE RATIFIED.
Manresa considered such prohibited acquisitions (which fell under the Spanish Civil Code) as merely voidable because the Spanish Code did not recognize nullity. But our Civil Code does recognize the absolute nullity of contracts
“whose cause, object or purpose is contract 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.” The nullity of such prohibited contracts is definite and permanent, and cannot be cured by ratification.
The public interest and public policy remain paramount and do not permit of compromise or ratification. In this aspect, the permanent disqualification of public and judicial officers and lawyers grounded on public policy differs from
the first three cases of guardians agents and administrators (under Art 1491). As to their transactions, it has been opined that they may be “ratified” 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.” In those cases, the object which was illegal at the time of the first contract may have already become lawful at the time of the ratification or
second contract, or the intent, or the service which was impossible. The ratification or second contract would then be valid from its execution; however, it does not retroact to the date of the first contract.
PAULINO VALENCIA v. ATTY. ARSENIO FER. CABANTING, Adm. Cases Nos. 1302, 1991-04-26

Facts:
On December 15, 1969 Serapia, assisted by Atty. Arsenio Fer Cabanting, filed a complaint against Paulino for the recovery of possession with damages.
On January 22, 1973, the Court of First Instance of Pangasinan, Branch V, rendered a decision in favor of plaintiff, Serapia Raymundo.
Paulino, thereafter, filed a Petition for Certiorari, under Rule 65, with Preliminary Injunction before the Court of Appeals alleging that the trial court failed to provide a workable solution concerning his house.
While the petition was pending, the trial court, on
March 9, 1973, issued an order of execution stating that "the decision in this case has already become final and executory
On March 20, 1973, Serapia sold 40 square meters of the litigated lot to Atty. Jovellanos and the remaining portion she sold to her counsel, Atty. Arsenio Fer Cabanting, on April 25, 1973.

Issues:
Whether or not Atty. Cabanting purchased the subject property in violation of Art. 1491 of the New Civil Code.

Ruling:
The following persons cannot acquire by purchase, even at a public or judicial auction, either in person or through the mediation of another:
(5) xxx 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.
Public policy prohibits the transactions in view of the fiduciary relationship involved. It is intended to curtail any undue influence of the lawyer upon his client. Greed may get the better of the sentiments of loyalty and
disinterestedness. Any violation of... this prohibition would constitute malpractice
Art. 1491, prohibiting the sale to the counsel concerned, applies only while the litigation is pending.
In the case at bar, while it is true that Atty. Arsenio Fer Cabanting purchased the lot after finality of judgment, there was still a pending certiorari proceeding. A thing is said to be in litigation not only if there is some contest or
litigation over it in... court, but also from the moment that it becomes subject to the judicial action of the judge. (Gan Tingco vs. Pabinguit, 35 Phil. 81).
Logic dictates, in certiorari proceedings, that the appellate court may either grant or dismiss the petition.

Principles:
Hence, it is not safe to conclude, for purposes under Art. 1491 that the litigation has terminated when the judgment of the trial court become final while a certiorari connected therewith is still in progress. Thus, purchase of the
property by Atty. Cabanting in... this case constitutes malpractice in violation of Art. 1491 and the Canons of Professional Ethics.

VALENCIA v CABANTING

FACTS
Administrative Cases No 1302 and 1391:
1. Paulino Valencia and his wife Romana bought a piece of land, where they built their residential house, from a certain Serapia Raymundo, an heir of Pedro Raymundo. However, they failed to register the sale or securea transfer
certificate of title in their names. Later on, a there was a dispute between Serapia and another heir of Pedro Raymundo. A conference was held between the Raymundos and the Valencia spouses in the house of Atty Jovellanos
(relative and distant kin of the Valencias).
2. Serapia was willing to relinquish ownership if the Valencias could show evidence of ownership. Paulino exhibited a deed of sale written in Ilocano. Serapia claims it covered a different property and they were not able to settle
their differences.
3. Serapia, assisted by Atty Cabanting, filed a complaint against Paulino forthe recovery of the property. Atty Antiniw advised the Valencias to present a notarized deed of sale in lieu of the private document written in Ilocano.
Paulino gave Atty Antiniw P200 to pay someone to forge the signature of the alleged vendor. The CFI decided in favor of Serapia, believing that the said document was not authentic.
4. Paulino appealed with the CA alleging that CFI did not provide for a solution concerning his house. While pending, the CFI decision became final and executory and a writ of execution was issued. Later on, CA also dismissed
petition.
5. Serapia sold 40 sq m of the litigated lot to Atty Jovellanos and the remaining portion to Atty Cabanting. Paulino filed a disbarment case against Atty Cabanting for violation of CPE, prohibiting the purchase of property under
ligitation by a counsel.
6. Constancia Valencia (daughter of Paulino) filed a disbarment proceeding against Atty Antiniw for his participation in the forgery of “Compraventa Definitiva” and its subsequent introduction as evidence for his client; She also filed
a disbarment case against Attys Jovellanos and Cabanting for purchasing the litigated land.
Administrative Case No 1543
1. A deed of donation propter nuptias executed by grandparents of Lydia Bernal in favor of her parents was lost during the last world war. Her grandmother (the donor) executed a deed confirming the donation with renunciation of
her rights over the property. Her grandmother also sold theproperty in favor of Lydia to strengthen the deed of donation and to prevent others from claiming the property.
2. Atty Antiniw advised them to execute a deed of sale. He allegedly prepares and noterized the deed in the name of Lydia’s grandfather (deceased at time of signing) with her grandmother’s approval.
3. Lydia’s aunt, Felicidad Bernal-Dizon (who had a claim over the property),filed a complaint against Lydia and Atty Antiniw for falsification of a public document. Fiscal exonerated Atty Antiniw for lack of evidence, but case was filed
against Lydia. Then, Lydia filed a disbarment proceeding against Atty Antiniw for illegal acts and bad advice.
4. (Cases now consolidated) RTC Judge recommended the dismissal of cases against Attys Jovellanos and Cabanting. However, he recommended suspension of Atty Antiniw for 6 months finding him guilty of falsifying the
“Compraventa Definitiva.”

ISSUE
1. Whether or not Atty Cabanting purchase the subject property in violation ofNCC (Art 1491)? – YES

HELD
1. Article 1491, prohibiting sale to the counsel concerned, applies only while the ligitation is pending. In this case, while Atty Cabanting purchase the land after the finality of judgment, there was still a pending certiorari proceeding.
A thing is said to be in litigation not only if there is some contest or litigation over it in court, but also from the moment that it becomes subject to the judicial action of the judge.
2. Purchase of Atty Jovellano does not constitute malpractice. There was noattorney-client relationship between Serapia and Atty Jovellanos, considering that he did not take part in the Civil Case. The transaction is not covered by
Art 1491 nor by the CPE.

ISSUE
2. Whether or not Attys Antiniw and Jovellanos are guilty of malpractice in falsifying notarial documents?

HELD 2
1. Paulino was a common farmer who finished only grade 4 but his testimony deserves credence and can be relied upon. His declaration dwelton a subject which was so delicate and confidential that it would be difficultto believe
that he fabricated his evidence. On the other hand, there is a clear preponderant evidence that Atty. Antiniw committed falsification of a deed of sale, and its subsequent introduction in court prejudices his prime duty in the
administration of justice as an officer of the court.
2. The other charges of malpractice against Atty. Antiniw and Atty. Jovellanos should be dismissed for lack of evidence. During the proceedings in Administrative Case No. 1543, Lydia Bernal testified in full on direct examination,
but she never submitted herself for cross-examination. Several subpoenas for cross-examination were unheeded. She eventually requested the withdrawal of her complaint.
3. The additional charge against Atty. Antiniw in Administrative Case No. 1391 is predicated on the information furnished by Lydia Bernal. It was not based on the personal knowledge of Constancia L. Valencia: hence, hearsay.
Being hearsay, the evidence presented is inadmissible. (Any evidence, whether oral or documentary, is hearsay if its probative value is not based on the personal knowledge of the witness but on the knowledge of some other
person not on the witness stand.)
4. Additional charge filed by Constancia Valencia against Atty Jovellanos was not proved at all.

ISSUE
3. Whether or not the three lawyers connived in rigging Civil Case No V-2170 (Forgery case)?

HELD 3
1. No evidence showing that they connived in executing the falsified “Compraventia Definitiva.”
2. Atty. Jovellanos is a distant kin of the Raymundos and Valencias. In fact, he and the Valencias are neighbors and only two meters separate their houses. It would not be believable that Atty. Jovellanos, a practicing lawyer, would
hold a meeting with the heirs of Pedro Raymundo in his house with the intention of inducing them to sue the Valencias. Atty. Jovellanos even tried to settle the differences between the parties in a meeting held in his house.
DISPO
1. Dionisio Antiniw DISBARRED from the practice of law, and his name is ordered stricken off from the roll of attorneys;
2. Arsenio Fer. Cabanting SUSPENDED from the practice of law for six months from finality of this judgment; and
3. Administrative Case No. 1391 against Attorney Eduardo Jovellanos and additional charges therein, and Administrative Case No. 1543 DISMISSED.
NOTES:
Article 1491 of the New Civil Code:
The following persons cannot acquire by purchase, even at a public of judicial auction, either in person or through the mediation of another:
xxx xxx xxx
(5) . . . 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 make take part by virtue of their profession.

Romulo Coronel vs Court of Appeals , Conception Alcaraz

FACTS:
This case is about a sale of land in Roosevelt Avenue, Quezon City by the vendor Romulo Coronel to the vendees Conception Alcaraz and her daughter Ramona Patricia Alcaraz with the following conditions:
The Coronel’s will immediately transfer the certificate of title in their name upon receipt of the downpayment which is ₱50,000 in favor of plaintiff Ramona Alcaraz, binding themselves to transfer the ownership of the land in their
name from their deceased father.
Upon the transfer in their names of the subject property, the Coronel’s will execute the deed of absolute sale in favor of Ramona and then Ramona shall immediately pay the Coronel’s the whole balance of ₱1,190,000.
On January 15, 1985, Conception paid the downpayment of ₱50,000 and then on February 6, 1985, the property was now registered under the name of Coronel’s. By Feb. 18, 1985, the Coronel’s sold the property to Catalina B.
Mabanag for ₱1,580,000 after she made a ₱300,000 downpayment. This is the reason why the Coronel’s cancelled and rescind the contract with the Alcaraz by depositing back the ₱50,000 to Ramona’s bank account.
On Feb. 22, Conception filed a complaint for specific performance against the Coronel’s. On April, the Coronel’s executed a deed of absolute sale over the subject property to Catalina after which on June Catalina was issued a new
title over the subject property.

ISSUE:
Whether or not the “Receipt of Down payment” embodied a perfected contract of sale or just a mere contract to sell?

HELD:
CONTRACT OF SALE- contracting parties obligates himself to transfer the ownership and to deliver a determinate thing and the other to pay a price certain in money or its equivalent.
CONTRACT TO SELL- the prospective seller explicitly reserves the transfer of the title to the prospective buyer, meaning the seller does not yet agree or consent to transfer the ownership of the property until the happening of a
contingent event like full payment of price.

SUPREME COURT RULING:

When the “Receipt of Down Payment” document was prepared and signed by Romulo Coronel, the parties had agreed to a conditional contract of sale the consummation of the contract is subject only to the successful
transfer of the certificate of Title.

According to Supreme Court, the receipt of down payment document manifests a clear intent of the Coronel’s to transfer the title to the buyer, but since the title is still in the name effect the transfer even though the buyers are able
and willing to immediately pay the purchase price. The agreement as well could not have been a contract to sell because the seller or the Coronel’s made no express reservation of ownership or the title of the land.
Sale, by its very nature, is a consensual contract because it is perfected by mere consent. The essential elements of a contract of sale are the following: a) Consent or meeting of the minds, that is, consent to transfer ownership in
exchange for the price; b) Determinate subject matter; and c) Price certain in money or its equivalent.
Under this definition, a Contract to Sell may not be considered as a Contract of Sale because the first essential element is lacking. In a contract to sell, the prospective seller explicity reserves the transfer of title to the prospective
buyer, meaning, the prospective seller does not as yet agree or consent to transfer ownership of the property subject of the contract to sell until the happening of an event, which for present purposes we shall take as the full
payment of the purchase price. What the seller agrees or obliges himself to do is to fulfill his promise to sell the subject property when the entire amount of the purchase price is delivered to him. In other words the full payment of
the purchase price partakes of a suspensive condition, the non-fulfillment of which prevents the obligation to sell from arising and thus, ownership is retained by the prospective seller without further remedies by the prospective
buyer. A contract to sell may thus be defined as a bilateral contract whereby the prospective seller, while expressly reserving the ownership of the subject property despite delivery thereof to the prospective buyer, binds himself to
sell the said property exclusively to the prospective buyer upon fulfillment of the condition agreed upon, that is, full payment of the purchase price.

A contract to sell may not even be considered as a conditional contract of sale where the seller may likewise reserve title to the property subject of the sale until the fulfillment of a suspensive condition, because in a conditional
contract of sale, the first element of consent is present, although it is conditioned upon the happening of a contingent event which may or may not occur. If the suspensive condition is not fulfilled, the perfection of the contract of
sale is completely abated. However, if the suspensive condition is fulfilled, the contract of sale is thereby perfected, such that if there had already been previous delivery of the property subject of the sale to the buyer, ownership
thereto automatically transfers to the buyer by operation of law without any further act having to be performed by the seller. In a contract to sell, upon the fulfillment of the suspensive condition which is the full payment of the
purchase price, ownership will not automatically transfer to the buyer although the property may have been previously delivered to him. The prospective seller still has to convey title to the prospective buyer by entering into a
contract of absolute sale.

It is essential to distinguish between a contract to sell and a conditional contract of sale specially in cases where the subject property is sold by the owner not to the party the seller contracted with, but to a third person, as in the
case at bench. In a contract to sell, there being no previous sale of the property, a third person buying such property despite the fulfillment of the suspensive condition such as the full payment of the purchase price, for instance,
cannot be deemed a buyer in bad faith and the prospective buyer cannot seek the relief of reconveyance of the property. There is no double sale in such case. Title to the property will transfer to the buyer after registration because
there is no defect in the owner-seller's title per se, but the latter, of course, may be used for damages by the intending buyer.

In a conditional contract of sale, however, upon the fulfillment of the suspensive condition, the sale becomes absolute and this will definitely affect the seller's title thereto. In fact, if there had been previous delivery of the subject
property, the seller's ownership or title to the property is automatically transferred to the buyer such that, the seller will no longer have any title to transfer to any third person. Such second buyer of the property who may have had
actual or constructive knowledge of such defect in the seller's title, or at least was charged with the obligation to discover such defect, cannot be a registrant in good faith. Such second buyer cannot defeat the first buyer's title. In
case a title is issued to the second buyer, the first buyer may seek reconveyance of the property subject of the sale.

The agreement could not have been a contract to sell because the sellers herein made no express reservation of ownership or title to the subject parcel of land. Furthermore, the circumstance which prevented the parties from
entering into an absolute contract of sale pertained to the sellers themselves (the certificate of title was not in their names) and not the full payment of the purchase price. Under the established facts and circumstances of the case,
the Court may safely presume that, had the certificate of title been in the names of petitioners-sellers at that time, there would have been no reason why an absolute contract of sale could not have been executed and
consummated right there and then.

What is clearly established by the plain language of the subject document is that when the said "Receipt of Down Payment" was prepared and signed by petitioners Romeo A. Coronel, et al., the parties had agreed to a conditional
contract of sale, consummation of which is subject only to the successful transfer of the certificate of title from the name of petitioners' father, Constancio P. Coronel, to their names.

The provision on double sale presumes title or ownership to pass to the first buyer, the exceptions being: (a) when the second buyer, in good faith, registers the sale ahead of the first buyer, and (b) should there be no inscription by
either of the two buyers, when the second buyer, in good faith, acquires possession of the property ahead of the first buyer. Unless, the second buyer satisfies these requirements, title or ownership will not transfer to him to the
prejudice of the first buyer. In a case of double sale, what finds relevance and materiality is not whether or not the second buyer was a buyer in good faith but whether or not said second buyer registers such second sale in good
faith, that is, without knowledge of any defect in the title of the property sold. If a vendee in a double sale registers that sale after he has acquired knowledge that there was a previous sale of the same property to a third party or
that another person claims said property in a pervious sale, the registration will constitute a registration in bad faith and will not confer upon him any right.
On Feb. 6, 1985, the Contract of Sale between the Coronel’s and the Alcaraz’ became obligatory.