Ariaga vda. De Guerrea, Et al. vs. SuplicoG.r. No 144320 April 26, 2006

Facts:

Ricardo Gurrea, represented by and through his counsel Atty. Enrique Suplico (the defendant), filed an Opposition in Special Proc. No. 7185. In consideration of said representation, Ricardo Gurrea agreed to pay Atty. Suplico "a contingent fee of twenty (20%) of whatever is due me, either real or personal property" (Exhibit "5"). During the pendency of the proceedings and upon the oral instructions of Ricardo Gurrea, Atty. Suplico negotiated with the other heirs of Adelina Gurrea regarding the transfer of the piso (apartment building) in Spain to Ricardo Gurrea’s daughter, Juliet Gurrea de Melendres. Ricardo Gurrea further instructed Atty. Suplico not to enter into any settlement with the heirs unless the piso is transferred to his daughter. Finally, the transfer of the piso worth P64,000.00 was executed and the heirs arrived at an amicable settlement regarding the estate of Adelina Gurrea. Hence, Ricardo Gurrea withdrew his Opposition and the heirs then drew up a project of partition which was eventually approved by the probate court.

As payment of his attorney’s fees, Ricardo Gurrea offered the San Juan lot to Atty. Suplico who was initially hesitant to accept the same as the property is occupied by squatters. However, in order not to antagonize his client, Atty. Suplico agreed to Ricardo Gurrea’s proposal with the further understanding that he will receive an additional commission of 5% if he sells the Baguio property. Thereafter, the deed of Transfer of Rights and Interest was drafted. The said deed was presented to Ricardo Gurrea for his signature.. On August 20, 1975, the deed was finally signed by Ricardo Gurrea at the office of Atty. Pama, in the presence of the latter, Atty. Suplico, Victor Tupas and another person, the last two acting as witnesses. Later, on October 7, 1980, Atty. Suplico registered the deed and obtained a title/TCT to the San Juan property under his name. Ricardo Gurrea died on October 22, 1980. After his death, his heirs instituted Special Pro. No. 2722 for the settlement of Ricardo Gurrea’s estate. In the said proceedings, Atty. Suplico filed several claims for unpaid attorney’s fees (no claim was filed relative to Special Proc. No. 7185); however, all were dismissed with finality (Exhibits "I" and "J"). Also in the same case, the estate’s administrator, Carlos Gurrea, filed an Inventory of Properties left by the decedent, which did not initially include the property subject of this case. The said lot was included only subsequently in the Amended Inventory (Exhibit "G").

Issue:

WHETHER OR NOT, ASSUMING THE ‘TRANSFER OF RIGHTS AND INTERESTS’ DULY EXECUTED BY RICARDO GURREA VIOLATES ARTICLE 1491 OF THE NEW CIVIL CODE AND, THEREFORE, NULL AND VOID.

Ruling:

Article 1491(5) of the Civil Code provides:

1491. The following persons cannot acquire by 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 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.

According to the evidence for the defendant, a Motion for Termination of Proceeding and Discharge of the Executor and Bond dated June 20, 1975 was filed in the case, alleging in paragraphs 3 and 5 thereof, that the executor Angel E. Ordoñez has already turned over to the respective heirs and devisees all their respective shares in accordance with the Project of Partition duly approved by the Court. Thereafter, more than one month from the filing thereof, the Transfer of Rights and Interest was executed on August 20, 1975. Hence, at the time of the execution of the questioned document, it may be concluded that Special Proceedings No. 7185 had been terminated. The property in San Juan is no longer the subject of a litigation and may be alienated by the client to his lawyer as payment of attorney’s fees rendered. It is clear from the above-quoted ruling of the trial court that its sole basis in concluding that Special Proceedings No. 7185 had been terminated and that the subject property is no longer the object of litigation at the time the deed of Transfer of Rights and Interest was executed on August 20, 1975 is the allegation of the executor, Angel E. Ordoñez, in his Motion for Termination of Proceeding and Discharge of the Executor and Bond dated June 20, 1975, that he had already turned over to the respective heirs and devisees all their respective shares in accordance with the project of partition duly approved by the probate court.

In the present case, there is no proof to show that at the time the deed of Transfer of Rights and Interest was executed, the probate court had issued an order granting the Motion for Termination of Proceeding and Discharge of the Executor and Bond. Since the judge has yet to act on the above-mentioned motion, it follows that the subject property which is the subject matter of the deed of Transfer of Rights and Interest, is still the object of litigation, that is Special Proceedings No. 7185. Furthermore, we agree with the petitioners’ undisputed contention that when the deed of Transfer of Rights and Interest was executed, the title over the subject lot was still in the name of Adelina Gurrea and that it was only on October 7, 1980 that the title was transferred in the name of Ricardo. The probate court loses jurisdiction of an estate under administration only after the payment of all the debts and the remaining estate delivered to the heirs entitled to receive the same. In the present case, while the subject lot was assigned as Ricardo’s share in the project of partition executed by the heirs of Adelina Gurrea, the title over the subject lot was still in the name of the latter and was not yet conveyed to Ricardo when the Transfer of Rights and Interest was executed. It having been established that the subject property was still the object of litigation at the time the subject deed of Transfer of Rights and Interest was executed, the assignment of rights and interest over the subject property in favor of respondent is null and void for being violative of the provisions of Article 1491 of the Civil Code which expressly prohibits lawyers from acquiring property or rights which may be the object of any litigation in which they may take part by virtue of their profession.

Macariola vs. Asuncion

Facts:

Complainant Bernardita R. Macariola filed on August 9, 1968 the instant complaint dated August 6, 1968 alleging four causes of action, to wit: [1] that respondent Judge 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 decided by him; [2] that he likewise violated Article 14, paragraphs I and 5 of the Code of Commerce, Section 3, paragraph H, of R.A. 3019, otherwise known as the Anti-Graft and Corrupt Practices Act, Section 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; [3] that respondent was guilty of coddling an impostor and acted in disregard of judicial decorum by closely fraternizing with a certain Dominador Arigpa Tan who openly and publicly advertised himself as a practising attorney when in truth and in fact his name does not appear in the Rolls of Attorneys and is not a member of the Philippine Bar; and [4] that there was a culpable defiance of the law and utter disregard for ethics by respondent Judge.

Issue:

Whether or not respondent judge’s acquisition of the property is null and void?

Ruling:

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. WE have already ruled that "... for the prohibition to operate, the sale or assignment of the property must take place during the pendency of the litigation involving the property.

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 within the reglementary period; hence, the lot in question was no longer subject of the litigation. Moreover, at the time of the sale on March 6, 1965, respondent's order dated October 23, 1963 and the amended order dated November 11, 1963 approving the October 16, 1963 project of partition made pursuant to the June 8, 1963 decision, had long become final for there was no appeal from said orders.

Furthermore, respondent Judge did not buy the lot in question on March 6, 1965 directly from the plaintiffs in Civil Case No. 3010 but from Dr. Arcadio Galapon who earlier purchased on July 31, 1964 Lot 1184-E from three of the plaintiffs, namely, Priscilla Reyes, Adela Reyes, and Luz R. Bakunawa after the finality of the decision in Civil Case No. 3010. It may be recalled that Lot 1184 or more specifically one-half thereof was adjudicated in equal shares to Priscilla Reyes, Adela Reyes, Luz Bakunawa, Ruperto Reyes and Anacorita Reyes in the project of partition, and the same was subdivided into five lots denominated as Lot 1184-A to 1184-E.

The fact remains that respondent Judge purchased on March 6, 1965 a portion of Lot 1184-E from Dr. Arcadio Galapon; hence, after the finality of the decision which he rendered on June 8, 1963 in Civil Case No. 3010 and his two questioned orders dated October 23, 1963 and November 11, 1963. Therefore, the property was no longer subject of litigation.

Heirs of Quisumbing vs. Philipine National Bank

Facts:

In 1984, spouses Ricardo C. Silverio and Beatriz Sison-Silverio (spouses Silverio) and Ricardo C. Silverio as Chairman of the Board of the following companies, namely Delta Motors Corporation (Delta Motors), Komatsu Industries (Komatsu), R.C. Silverio Management Corporation (RCSMC), through Deeds of Assignment, assigned to Atty. Norberto J. Quisumbing (Quisumbing) their rights of redemption with respect to various real properties which herein respondent Philippine National Bank (PNB) had foreclosed and acquired as the highest bidder. The properties included lots in Quezon City, Manila, Pampanga and Bulacan in the name of Ricardo C. Silverio, married to Beatriz Sison; a lot in Tagaytay in the name of Ricardo C. Silverio; lots in Nueva Ecija in the name of RCSMC; lots in Baguio and Benguet in the name of Delta Motors; a lot in Zambales in the name of RCSMC; and a lot in Rizal (actually Pasong Tamo, Makati) including improvements in the name of Komatsu (hereafter referred to as Pasong Tamo property)

Quisumbing made a formal tender of redemption to PNB for the abovementioned properties, with the request that he be informed within 10 days of the total amount of the redemption prices so "he would know how much to pay." Quisumbing furnished the sheriffs who conducted the sales, as well as the registers of deeds in the various localities where the properties are situated, with a copy of said tender letter. The PNB, requested copies of the Deeds of Assignment so that it may "have a basis to reply to" his request. Quisumbing furnished PNB with copies of the Deeds, requesting a reply to his tender letter and requested for the computation of the total amount of redemption price for which he gave PNB until April 30, 1985 to do so. Before PNB could reply, however, or on April 23, 1985, Quisumbing executed an Affidavit of Redemption furnishing PNB, the sheriffs and the registers of deeds a copy thereof. Before the one-year redemption period expired, PNB denied Quisumbing’s offer of redemption on the ground that the Deeds of Assignment were invalid for not having been registered and for being against Art. 1491 (5) of the Civil Code; that the tender was not proper because it was not accompanied by actual money payment; and that the amount Quisumbing offered was way below that required under Sec. 25 of P.D. No. 694. Quisumbing thus filed a Complaint before the Regional Trial Court (RTC) of Makati against PNB to compel it to allow him to exercise his right of redemption over the foreclosed properties and to inform him of the total amount of redemption price. At the same time, he caused the annotation of a notice of lis pendens on the certificates of title of the properties.

Issue:

Whether or not there was a valid redemption?

Ruling:

Evidently, whether the redemption is being made under Act No. 3135 or the General Banking Act, as amended by Presidential Decree No. 1828, or under P.D. No. 694, the mortgagor or his assignee is required to tender payment to make said redemption valid – something which petitioners’ predecessor failed to do. The only instance when this rule may be construed liberally, i.e., allow the non-simultaneous tender of payment, is if a judicial action is instituted by the redemptioner.

Petitioner however claims, citing Banco Filipino Savings and Mortgage Bank v. Court of Appeals and Lee Chuy Realty Corporation v. Court of Appeals that in case of disagreement over the redemption price, the redemptioner may preserve his right of redemption through judicial action which must be filed within the one-year period of redemption. The filing of a court action to enforce redemption, being equivalent to a formal offer to redeem, would have the effect of preserving his redemptive rights and "freezing" the expiration of the one-year period. Bona fide tender of the redemption price, within the prescribed period is only essential to preserve the right of redemption for future enforcement beyond such period of redemption and within the period prescribed for the action by the statute of limitations. Where the right to redeem is exercised through judicial action within the reglementary period, the offer to redeem, accompanied by a bona fide tender of the redemption price, while proper, may be unessential.

It should, however, be noted that in Hi-Yield Realty, Inc. v. Court of Appeals, we held that the action for judicial redemption should be filed on time and in good faith, the redemption price is finally determined and paid within a reasonable time, and the rights of the parties are respected. Stated otherwise, the foregoing interpretation has three critical dimensions: (1) timely redemption or redemption by expiration date; (2) good faith as always, meaning, the filing of the action must have been for the sole purpose of determining the redemption price and not to stretch the redemptive period indefinitely; and (3) once the redemption price is determined within a reasonable time, the redemptioner must make prompt payment in full.