RUBIAS vs BATILLER

G.R. NO. L-35702

May 29, 1973
Facts:
Francisco Militante claimed that he owned a parcel of land located in Iloilo.
He filed with the RTC of Ililo an application for the registration of title of the
land. This was opposed by the Director of Lands, the Director of Foresrty ,
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. Pending that appeal, he sold to Rubias(his son-in-law and a
lawyer) the land. The CA rendered a decision, dismissing the application for
registration. Rubias filed a Forcible Entry and Detainer case against Batiller. 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 Art 1491 of the Civil Code. Hence, this
appeal.
Issue:
Whether the contract of sale between the petitioner 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
 Ruling: Yes.
The purchase by a lawyer of the property in litigation from his clients is
categorically prohibited by Article 1491, paragraph 5 of the Civil Code, and
that consequently, plaintiffs purchase of the property in litigation from his
client was void and could produce no legal effect by virtue of Article 1409,
paragraph 7 of the Civil Code which provides that contracts expressly
prohibited or declared void by law are inexistent and void from the
beginning and that these contracts cannot be ratified.
The Court cited Director of Lands vs. Abagat (53 Phil 147; March 27, 1929),
which the Court again affirming the invalidity and nullity of the lawyers
purchase of the land in litigation from his client, ordered the issuance of
writ of possession for the return of the land by the lawyer to the adverse
parties without reimbursement of the price paid by him and other
expenses.
Article 1491 of the Civil Code prohibits 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
directly or indirectly and even at a public or judicial auction as
follows: a.) guardians, b.) agents, c.) administrators, d.) public
officers and employees, judicial officers and employees,
prosecuting attorneys, and lawyers, and e.) others especially
disqualified by law.
 TONGOY
vs
Honorable Court of Appeals
G.R. NO. L-45645
June 28, 1983
Facts:
Patricio D. Tongoy and Luis Tongoy executed a Declaration of
Inheritance wherein they declared themselves as the only
heirs of the late Francisco Tongoy and thereby entitled to the
latter's share in Hacienda Pulo. Ana Tongoy et al. executed an
"Escritura de Venta", which by its terms transferred for
consideration their rights and interests over Hacienda Pulo in
favor of Luis D. Tongoy. Thereafter, Jesus Sonora and Jose
Tongoy followed suit by each executing a similar "Escritura de
Venta" pertaining to their corresponding rights and interests
over Hacienda Pulo in favor also of Luis D. Tongoy.
Luis Tongoy died, leaving as heirs his wife Maria Rosario Araneta
and his son Francisco A. Tongoy. Just before his death, however,
Luis D. Tongoy received a letter from Jesus T. Sonora,
demanding the return of the shares in the properties to the co-
owners. Alleging in sum that plaintiffs and/or their predecessors
transferred their interests on the two lots in question to Luis D.
Tongoy by means of simulated sales, pursuant to a trust
arrangement whereby the latter would return such interests
after the mortgage obligations thereon had been settled.
Issue:
Whether the rights of herein respondents over subject properties,
which were the subjects of simulated or fictitious transactions,
have already prescribed
Ruling: No.
Article 1409 (2): "Those which are absolutely simulated or fictitious"
xxx These contracts cannot be ratified. Neither can the right to set
up the defense of illegality be waived; and Art. 1410. The action or
defense for the declaration of the inexistence of a contract does not
prescribe. Evidently, the deeds of transfer executed in favor of Luis
Tongoy were from the very beginning absolutely simulated or
fictitious, since the same were made merely for the purpose of
restructuring the mortgage over the subject properties and thus
preventing the foreclosure by the bank.
Considering the law and jurisprudence on simulated or fictitious
contracts as aforestated, the within action for reconveyance
instituted by herein respondents which is anchored on the said
simulated deeds of transfer cannot and should not be barred by
prescription. No amount of time could accord validity or efficacy to
such fictitious transactions, the defect of which is permanent.