G.R. No. 62773 - Reyes vs. Zubiri

In the context of cession or assignment of lease rights on real property, the lessee completely transmits their rights, resulting in the lessee's personality disappearing.
The legal relationship is then solely between the lessor and the assignee, who becomes the new lessee.
As of October 10, 1961, Cecilio M. Rafael ceased to be the lessee because Republic Bank, as the assignee, took over his rights.
Consequently, Rafael had no rights left to assign to private respondent Oscar Zubiri, who was merely a creditor.
Zubiri could not claim ignorance of the first assignment since it was duly registered, providing constructive notice to all parties.

The evidence indicated that petitioner Olimpio Reyes was aware of the nature of his transactions with Zubiri.
The lower court's award of moral damages to the petitioners was deemed inappropriate because Olimpio contributed to the injuries he suffered.
As a result, moral damages were not available to him.

Despite the denial of moral damages, the court found it appropriate to award attorney's fees.
This decision was based on the demonstration that private respondents acted in gross and evident bad faith by refusing the petitioners' just and demandable claims.

Private respondent Zubiri, serving as counsel for Cecilio Rafael, was prohibited from acquiring Rafael's rights over the improvements due to public policy considerations.
This prohibition exists because Rafael's rights could be subject to a writ of execution if he lost his case.
Consequently, the transfer of rights from Rafael to Zubiri was declared null and void from the outset.

The Supreme Court found that Zubiri's appeal was not meritorious on equitable grounds.
Evidence indicated that Zubiri was guilty of falsifying public documents and knowingly submitting such falsified documents in court.
Zubiri's actions constituted fraud, deceit, and misrepresentation against the petitioners.

The petitioners, Olimpio Reyes and Eulogia Gutierrez, were the registered owners of a parcel of land leased to a partnership named "Capiz and Rafael" for ten years.
The lease agreement stipulated that any improvements made by the lessee would belong to the lessor if not removed within sixty days after the lease's expiration.
The lease was registered and annotated on the title, and improvements were made on the property.

On October 10, 1961, Rafael assigned his leasehold rights to Republic Bank and mortgaged the improvements to secure a loan.
Six years later, Rafael assigned his rights to Zubiri as payment for legal services, but this assignment was not registered.
Following Rafael's default on his loan, Republic Bank scheduled a public auction for the properties.

The petitioners claimed they were misled by Zubiri into purchasing the improvements, believing they were signing necessary documents for a bank loan.
Zubiri contended that the petitioners initiated the sale of the improvements after negotiations.
The trial court ruled in favor of the petitioners, declaring the documents related to the sale null a...continue reading