G.R. No. 202223 - Pena vs. Delos Santos

Case Summary (G.R. No. 202223)

Factual Background

The RTC adjudicated ownership of four adjoining lots in Boracay and awarded a two-thirds share or 9,915 square meters to Jesus Delos Santos and Rosita Delos Santos Flores in its April 29, 1996 judgment in Civil Case No. 3683. Subsequent appeals by other parties were dismissed and the Supreme Court ultimately denied a petition for review on February 2, 2007, rendering the judgment final. During the pendency and before final execution of the judgment, Jesus and Rosita executed a series of instruments conveying portions of their adjudged allotments to their counsel, Atty. Romeo Robiso, including a Deed of Transfer and a Deed of Absolute Sale dated May 4, 2005, and a Confirmation of Sale dated December 5, 2006. Atty. Robiso later sold certain lots to Joey R. Pena by a Deed of Absolute Sale dated December 15, 2006. Tax declarations were thereafter registered in Pena's name.

Trial Court Proceedings

After the Supreme Court issued the Entry of Judgment and the case was remanded for execution, Joey R. Pena moved for substitution and for issuance of a writ of execution and demolition, asserting he had acquired the adjudged portions through Atty. Robiso. The RTC, in an Order dated June 11, 2008, partially granted the motion, joined Pena with the original party-intervenors under Section 19, Rule 3 of the Rules of Court, and directed issuance of a writ of execution to implement the April 29, 1996 decision. The RTC held that the conveyance to Atty. Robiso was valid because it was executed after judgment and therefore did not affect the adjudged ownership.

Proceedings in the Court of Appeals

Jesus and the heirs of Rosita filed a special civil action for certiorari before the Court of Appeals challenging the RTC's orders and the issuance of the writ of execution. In its Decision dated February 20, 2012, the CA reversed the RTC and set aside the writ of execution, ruling that the conveyances to Atty. Robiso were prohibited transactions under Article 1491(5) of the Civil Code because the properties were still the object of litigation when the deeds were executed. The CA directed the trial court to effect execution of the final judgment in favor of Jesus and the heirs of Rosita.

Supreme Court Proceedings

Joey R. Pena sought relief by petition for review on certiorari which the Court denied in a Minute Resolution dated September 9, 2013 for lack of reversible error. Pena filed a Motion for Reconsideration on December 23, 2013. The Supreme Court resolved the motion on March 2, 2016 by denying reconsideration and affirming the CA's ruling that the conveyances to Atty. Robiso were inexistent and void ab initio.

Issues Presented

The principal issue presented was whether the deeds of conveyance executed by Jesus and Rosita in favor of Atty. Robiso during the pendency of appellate proceedings were valid and sufficient to support Pena's substitution and request for execution. Subsidiary issues were whether a separate action to declare nullity was necessary, whether the contingent fee arrangement validated the transfer, and whether Jesus and Rosita were estopped from attacking the conveyances.

Parties' Contentions

Pena contended that the challenged deeds of conveyance were executed after the trial court judgment became final and executory and that, in any event, a declaratory action was required to nullify them because their terms had been performed. He further relied on principles of estoppel and invoked Article 1437 to assert that Jesus and Rosita were precluded from denying the transfers. Jesus and the heirs of Rosita maintained that the transfers to their counsel were prohibited by law while the litigation was still pending and that the deeds were therefore inexistent and incapable of passing valid title to Pena.

Ruling of the Supreme Court

The Court denied the motion for reconsideration and affirmed the Court of Appeals. The Court held that the conveyances to Atty. Robiso were prohibited under Article 1491(5) of the Civil Code because the subject property remained the object of litigation when the deeds were executed prior to the termination of appellate proceedings on February 2, 2007. The Court declared the challenged deeds inexistent under Article 1409 and ruled that inexistent contracts cannot be validated by lapse of time or ratification. Consequently, Pena had no legal standing to be substituted for or joined with the original intervenors or to seek execution.

Legal Basis and Reasoning

The Court applied Article 1491(5), which forbids acquisition by purchase of property in litigation by lawyers who may take part in the case, and Rule 10 of the Canons of Professional Ethics, which proscribes acquiring an interest in the subject matter of litigation conducted by the lawyer. Records showed that the Deed of Transfer and the Deed of Absolute Sale dated May 4, 2005 and the Confirmation of Sale dated December 5, 2006 were executed while the case was still pending before the Supreme Court; thus the transactions were prohibited and the deeds inexistent. Citing Article 1409, the Court explained that contracts expressly prohibited by law are void from the beginning. The Court reasoned that when a contract is still fully executory, no separate action to declare its nullity is necessary; the nullity may be set up when enforcement is sought. The Court acknowledged the recognized exception for contingent fee agreements but found it inapplicable because payment to Atty. Robiso occurred during the pendency of the litigation rather than after rendition of judgment. The Court further rejected Pena's reliance on estoppel and Article 1437, observing that estoppel

Case Syllabus (G.R. No. 202223)

Parties and Procedural Posture

Joey R. Pena filed a petition for review challenging the Court of Appeals decision upholding the nullity of conveyances from judgment awardees to their counsel.
Jesus Delos Santos and the heirs of Rosita Delos Santos Flores defended the annulment of the conveyances and the reinstatement of the execution in their favor.
The petition for review contested the CA Decision in CA-G.R. CEB SP No. 03886 and the Court denied the petition in a Minute Resolution dated September 9, 2013.
Joey R. Pena filed a Motion for Reconsideration of the Court's Minute Resolution, which the Court resolved on March 2, 2016 by denying reconsideration.

Key Factual Allegations

The Regional Trial Court rendered judgment on April 29, 1996 awarding Jesus and Rosita two-thirds or 9,915 square meters of four adjoining lots in Boracay Island as their intestate shares.
The adverse parties appealed to the Court of Appeals and ultimately to the Supreme Court where the appeals were disposed and the judgment became final on February 2, 2007.
While the appellate proceedings were still pending, Jesus and Rosita executed a Deed of Transfer and a Deed of Absolute Sale dated May 4, 2005 and a Confirmation of Sale dated December 5, 2006 in favor of Atty. Romeo Robiso, their counsel.
Atty. Romeo Robiso later sold portions of the awarded lots to Joey R. Pena by a Deed of Absolute Sale dated December 15, 2006, and tax declarations were thereafter placed in Pena's name.
Atty. Robiso had an Attorney's Agreement dated July 11, 1998 that obligated Jesus and Rosita to pay contingent professional fees consisting of two thousand square meters of any lands that the courts would award them.

Lower Court Rulings

The RTC, in an Order dated June 11, 2008, held that the conveyance to Atty. Robiso was valid because it was executed after judgment and partially granted Pena's Motion for Substitution, joining him with the original intervenors and directing issuance of a writ of execution.
The RTC issued the writ of execution on July 10, 2008 and denied reconsideration in an Order dated September 8, 2008.
Jesus and the heirs of Rosita filed a petition for certiorari with the Court of Appeals to annul the RTC orders and the writ of execution.

Appellate Rulings

The Court of Appeals, in a Decision dated February 20, 2012, reversed the RTC and held that the conveyances in favor of Atty. Robiso were null and void under Article 1491(5) of the Civil Code because they were made while the property was still the object of litigation and while Atty. Robiso represented the vendor-clients.
The CA annulled the RTC orders and the alias writ of execution and directed the trial court to execute the final judgment in favor of Jesus and the heirs of Rosita.
The CA denied Pena's motion for reconsideration in a Resolution dated May 24, 2012.

Issues Presented

Whether the conveyances from Jesus and Rosita to their counsel, Atty