Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. L-35702 May 29, 1973

DOMINGO D. RUBIAS, plaintiff-appellant,

vs.
ISAIAS BATILLER, defendant-appellee.

Gregorio M. Rubias for plaintiff-appellant.

Vicente R. Acsay for defendant-appellee.

TEEHANKEE, J.:

In this appeal certified by the Court of Appeals to this Court as involving purely legal questions,
we affirm the dismissal order rendered by the Iloilo court of first instance after pre-trial and
submittal of the pertinent documentary exhibits.

Such dismissal was proper, plaintiff having no cause of action, since it was duly established in
the record that the application for registration of the land in question filed by Francisco Militante,
plaintiff's vendor and predecessor interest, had been dismissed by decision of 1952 of the land
registration court as affirmed by final judgment in 1958 of the Court of Appeals and hence, there
was no title or right to the land that could be transmitted by the purported sale to plaintiff.

As late as 1964, the Iloilo court of first instance had in another case of ejectment likewise upheld
by final judgment defendant's "better right to possess the land in question . having been in the
actual possession thereof under a claim of title many years before Francisco Militante sold the
land to the plaintiff."

Furthermore, even assuming that Militante had anything to sell, the deed of sale executed in
1956 by him in favor of plaintiff at a time when plaintiff was concededly his counsel of record in
the land registration case involving the very land in dispute (ultimately decided adversely
against Militante by the Court of Appeals' 1958 judgment affirming the lower court's dismissal of
Militante's application for registration) was properly declared inexistent and void by the lower
court, as decreed by Article 1409 in relation to Article 1491 of the Civil Code.

The appellate court, in its resolution of certification of 25 July 1972, gave the following
backgrounder of the appeal at bar:

On August 31, 1964, plaintiff Domingo D. Rubias, a lawyer, filed a suit to recover
the ownership and possession of certain portions of lot under Psu-99791 located
in Barrio General Luna, Barotac Viejo, Iloilo which he bought from his father-in-
law, Francisco Militante in 1956 against its present occupant defendant, Isaias
Batiller, who illegally entered said portions of the lot on two occasions — in 1945
and in 1959. Plaintiff prayed also for damages and attorneys fees. (pp. 1-7,
Record on Appeal). In his answer with counter-claim 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 and for the alleged malicious institution of the
complaint he claims he has suffered moral damages in the amount of P 2,000.00,
as well as the sum of P500.00 for attorney's fees. ...

On December 9, 1964, the trial court issued a pre-trial order, after a pre-trial
conference between the parties and their counsel which order reads as follows..

'When this case was called for a pre-trial conference today, the
plaintiff appeared assisted by himself and Atty. Gregorio M.
Rubias. The defendant also appeared, assisted by his counsel
Atty. Vicente R. Acsay.

A. During the pre-trial conference, the parties have agreed that

the following facts are attendant in this case and that they will no
longer introduced any evidence, testimonial or documentary to
prove them:

1. That Francisco Militante claimed ownership of a parcel of land located in the

Barrio of General Luna, municipality of Barotac Viejo province of Iloilo, which he
caused to be surveyed on July 18-31, 1934, whereby he was issued a plan Psu-
99791 (Exhibit "B"). (The land claimed contained an area of 171:3561 hectares.)

2. Before the war with Japan, Francisco Militante filed with the Court of First
Instance of Iloilo an application for the registration of the title of the land
technically described in psu-99791 (Exh. "B") opposed by the Director of Lands,
the Director of Forestry and other oppositors. However, during the war with
Japan, the record of the case was lost before it was heard, so after the war
Francisco Militante petitioned this court to reconstitute the record of the case.
The record was reconstituted on the Court of the First Instance of Iloilo and
docketed as Land Case No. R-695, GLRO Rec. No. 54852. The Court of First
Instance heard the land registration case on November 14, 1952, and after the
trial this court dismissed the application for registration. The appellant, Francisco
Militante, appealed from the decision of this Court to the Court of Appeals where
the case was docketed as CA-GR No. 13497-R..

3. Pending the disposal of the appeal in CA-GR No. 13497-R and more
particularly on June 18, 1956, Francisco Militante sold to the plaintiff, Domingo
Rubias the land technically described in psu-99791 (Exh. "A"). The sale was duly
recorded in the Office of the Register of Deeds for the province of Iloilo as Entry
No. 13609 on July 11, 1960 (Exh. "A-1").
(NOTE: As per deed of sale, Exh. A, what Militante purportedly sold to plaintiff-
appellant, his son-in-law,for the sum of P2,000.00 was "a parcel of untitled land
having an area Of 144.9072 hectares ... surveyed under Psu 99791 ... (and)
subject to the exclusions made by me, under (case) CA-i3497, Land Registration
Case No. R-695, G.L.R.O. No. 54852, Court of First Instance of the province of
Iloilo. These exclusions referred to portions of the original area of over 171
hectares originally claimed by Militante as applicant, but which he expressly
recognized during the trial to pertain to some oppositors, such as the Bureau of
Public Works and Bureau of Forestry and several other individual occupants and
accordingly withdrew his application over the same. This is expressly made of
record in Exh. A, which is the Court of Appeals' decision of 22 September 1958
confirming the land registration court's dismissal of Militante's application for
registration.)

4. On September 22,1958 the Court of appeals in CA-G.R. No. 13497-R

promulgated its judgment confirming the decision of this Court in Land Case No.
R-695, GLRO Rec. No. 54852 which dismissed the application for Registration
filed by Francisco Militante (Exh. "I").

5. Domingo Rubias declared the land described in Exh. 'B' for taxation purposes
under Tax Dec. No. 8585 (Exh. "C") for 1957; Tax Dec. Nos. 9533 (Exh. "C-1")
and 10019 (Exh. "C-3")for the year 1961; Tax Dec. No. 9868 (Exh. "C-2") for the
year 1964, paying the land taxes under Tax Dec. No. 8585 and 9533 (Exh. "D",
"D-1", "G-6").

6. Francisco Militante immediate predecessor-in-interest of the plaintiff, has also

declared the land for taxation purposes under Tax Dec. No. 5172 in 1940 (Exh.
"E") for 1945; under Tax Dec. No. T-86 (Exh. "E-1") for 1948; under Tax Dec. No.
7122 (Exh. "2"), and paid the land taxes for 1940 (Exhs. "G" and "G-7"), for 1945
46 (Exh. "G-1") for 1947 (Exh. "G-2"), for 1947 & 1948 (Exh. "G-3"), for 1948
(Exh. "G-4"), and for 1948 and 1949 (Exh. "G-5").

7. Tax Declaration No. 2434 in the name of Liberato Demontaño for the land
described therein (Exh. "F") was cancelled by Tax. Dec. No. 5172 of Francisco
Militante (Exh. "E"). Liberato Demontaño paid the land tax under Tax Dec. No.
2434 on Dec. 20, 1939 for the years 1938 (50%) and 1959 (Exh. "H").

8. The defendant had declared for taxation purposes Lot No. 2 of the Psu-
155241 under Tax Dec. Not. 8583 for 1957 and a portion of Lot No. 2, Psu-
155241, for 1945 under Tax Dec. No. 8584 (Exh. "2-A" Tax No. 8583 (Exh. "2")
was revised by Tax Dec. No. 9498 in the name of the defendant (Exh. "2-B") and
Tax Dec. No. 8584 (Exh. "2-A") was cancelled by Tax Dec. No. 9584 also in the
name of the defendant (Exh. "2-C"). The defendant paid the land taxes for Lot 2,
Psu-155241, on Nov. 9, 1960 for the years 1945 and 1946, for the year 1950,
and for the year 1960 as shown by the certificate of the treasurer (Exh. "3"). The
defendant may present to the Court other land taxes receipts for the payment of
taxes for this lot.
 9. The land claimed by the defendant as his own was surveyed on June 6 and
7,1956, and a plan approved by Director of Land on November 15, 1956 was
issued, identified as Psu 155241 (Exh. "5").

10. On April 22, 1960, the plaintiff filed forcible Entry and Detainer case against
Isaias Batiller in the Justice of the Peace Court of Barotac Viejo Province of Iloilo
(Exh. "4") to which the defendant Isaias Batiller riled his answer on August 29,
1960 (Exh. "4-A"). The Municipal Court of Barotac Viejo after trial, decided the
case on May 10, 1961 in favor of the defendant and against the plaintiff (Exh. "4-
B"). The plaintiff appealed from the decision of the Municipal Court of Barotac
Viejo which was docketed in this Court as Civil Case No. 5750 on June 3, 1961,
to which the defendant, Isaias Batiller, on June 13, 1961 filed his answer (Exh.
"4-C"). And this Court after the trial. decided the case on November 26, 1964, in
favor of the defendant, Isaias Batiller and against the plaintiff (Exh. "4-D").

(NOTE: As per Exh. 4-B, which is the Iloilo court of first instance decision of 26
November 1964 dismissing plaintiff's therein complaint for ejectment against
defendant, the iloilo court expressly found "that plaintiff's complaint is unjustified,
intended to harass the defendant" and "that the defendant, Isaias Batiller, has a
better right to possess the land in question described in Psu 155241 (Exh. "3"),
Isaias Batiller having been in the actual physical possession thereof under a
claim of title many years before Francisco Militante sold the land to the plaintiff-
hereby dismissing plaintiff's complaint and ordering the plaintiff to pay the
defendant attorney's fees ....")

B. During the trial of this case on the merit, the plaintiff will prove by competent evidence the
following:

1. That the land he purchased from Francisco Militante under Exh. "A" was
formerly owned and possessed by Liberato Demontaño but that on September 6,
1919 the land was sold at public auction by virtue of a judgment in a Civil Case
entitled "Edw J. Pflieder plaintiff vs. Liberato Demontaño Francisco
Balladeros and Gregorio Yulo, defendants", of which Yap Pongco was the
purchaser (Exh. "1-3"). The sale was registered in the Office of the Register of
Deeds of Iloilo on August 4, 1920, under Primary Entry No. 69 (Exh. "1"), and a
definite Deed of Sale was executed by Constantino A. Canto, provincial Sheriff of
Iloilo, on Jan. 19, 1934 in favor of Yap Pongco (Exh. "I"), the sale having been
registered in the Office of the Register of Deeds of Iloilo on February 10, 1934
(Exh. "1-1").

2. On September 22, 1934, Yap Pongco sold this land to Francisco Militante as
evidenced by a notarial deed (Exh. "J") which was registered in the Registry of
Deeds on May 13, 1940 (Exh. "J-1").

3. That plaintiff suffered damages alleged in his complaint.

C. Defendants, on the other hand will prove by competent evidence during the trial of this case
the following facts:
 1. That lot No. 2 of the Psu-1552 it (Exh. '5') was originally owned and possessed
by Felipe Batiller, grandfather of the defendant Basilio Batiller, on the death of
the former in 1920, as his sole heir. Isaias Batiller succeeded his father , Basilio
Batiller, in the ownership and possession of the land in the year 1930, and since
then up to the present, the land remains in the possession of the defendant, his
possession being actual, open, public, peaceful and continuous in the concept of
an owner, exclusive of any other rights and adverse to all other claimants.

2. That the alleged predecessors in interest of the plaintiff have never been in the
actual possession of the land and that they never had any title thereto.

3. That Lot No. 2, Psu 155241, the subject of Free Patent application of the
defendant has been approved.

4. The damages suffered by the defendant, as alleged in his counterclaim."' 1

The appellate court further related the developments of the case, as follows:

On August 17, 1965, defendant's counsel manifested in open court that before
any trial on the merit of the case could proceed he would file a motion to
dismiss plaintiff's complaint which he did, alleging thatplaintiff does not have
cause of action against him because the property in dispute which he (plaintiff)
allegedly bought from his father-in-law, Francisco Militante was the subject
matter of LRC No. 695 filed in the CFI of Iloilo, which case was brought on
appeal to this Court and docketed as CA-G.R. No. 13497-R in which aforesaid
case plaintiff was the counsel on record of his father-in-law, Francisco Militante.
Invoking Arts. 1409 and 1491 of the Civil Code which reads:

'Art. 1409. The following contracts are inexistent and void from the
beginning:

xxx xxx xxx

(7) Those expressly prohibited by law.

'ART. 1491. The following persons cannot acquire any purchase,

even at a public auction, either in person of through the mediation
of another: .

xxx xxx xxx

(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 of 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 an 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.'
 defendant claims that plaintiff could not have acquired any interest in the property
in dispute as the contract he (plaintiff) had with Francisco Militante was inexistent
and void. (See pp. 22-31, Record on Appeal). Plaintiff strongly opposed
defendant's motion to dismiss claiming that defendant can not invoke Articles
1409 and 1491 of the Civil Code as Article 1422 of the same Code provides that
'The defense of illegality of contracts is not available to third persons whose
interests are not directly affected' (See pp. 32-35 Record on Appeal).

On October 18, 1965, the lower court issued an order disclaiming plaintiffs
complaint (pp. 42-49, Record on Appeal.) In the aforesaid order of dismissal the
lower court practically agreed with defendant's contention that the contract (Exh.
A) between plaintiff and Francism Militante was null and void. In due season
plaintiff filed a motion for reconsideration (pp. 50-56 Record on Appeal) which
was denied by the lower court on January 14, 1966 (p. 57, Record on Appeal).

Hence, this appeal by plaintiff from the orders of October 18, 1965 and January
14, 1966.

Plaintiff-appellant imputes to the lower court the following errors:

'1. The lower court erred in holding that the contract of sale
between the plaintiff-appellant and his father-in-law, Francisco
Militante, Sr., now deceased, of the property covered by Plan Psu-
99791, (Exh. "A") was void, not voidable because it was made
when plaintiff-appellant was the counsel of the latter in the Land
Registration case.

'2. The lower court erred in holding that the defendant-appellee is

an interested person to question the validity of the contract of sale
between plaintiff-appellant and the deceased, Francisco Militante,
Sr.

'3. The lower court erred in entertaining the motion to dismiss of

the defendant-appellee after he had already filed his answer, and
after the termination of the pre-trial, when the said motion to
dismiss raised a collateral question.

'4. The lower court erred in dismissing the complaint of the

plaintiff-appellant.'

The appellate court concluded that plaintiffs "assignment of errors gives rise to two (2) legal
posers — (1) whether or not the contract of sale between appellant and his father-in-law, the
late Francisco Militante over the property subject of Plan Psu-99791 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; and (2) whether or not the lower court was correct in entertaining defendant-
appellee's motion to dismiss after the latter had already filed his answer and after he
(defendant) and plaintiff-appellant had agreed on some matters in a pre-trial conference. Hence,
its elevation of the appeal to this Court as involving pure questions of law.
It is at once evident from the foregoing narration that the pre-trial conference held by the trial
court at which the parties with their counsel agreed and stipulated on the material and relevant
facts and submitted their respective documentary exhibits as referred to in the pre-trial
order, supra, 2 practically amounted to a fulldress trial which placed on record all the facts and
exhibits necessary for adjudication of the case.

The three points on which plaintiff reserved the presentation of evidence at the-trial dealing with
the source of the alleged right and title of Francisco Militante's predecessors, supra, 3 actually
are already made of record in the stipulated facts and admitted exhibits. The chain of Militante's
alleged title and right to the land as supposedly traced back to Liberato Demontaño was actually
asserted by Militante (and his vendee, lawyer and son-in-law, herein plaintiff) in the land
registration case and rejected by the Iloilo land registration court which dismissed Militante's
application for registration of the land. Such dismissal, as already stated, was affirmed by the
final judgment in 1958 of the Court of Appeals. 4

The four points on which defendant on his part reserved the presentation of evidence at the trial
dealing with his and his ancestors' continuous, open, public and peaceful possession in the
concept of owner of the land and the Director of Lands' approval of his survey plan
thereof, supra, 5 are likewise already duly established facts of record, in the land registration
case as well as in the ejectment case wherein the Iloilo court of first instance recognized the
superiority of defendant's right to the land as against plaintiff.

No error was therefore committed by the lower court in dismissing plaintiff's complaint upon
defendant's motion after the pre-trial.

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 for P2,000.00 made in 1956 by his father-in-
law, Francisco Militante, 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.

With the Court of Appeals' 1958 final judgment affirming the dismissal of Militante's application
for registration, the lack of any rightful claim or title of Militante to the land was conclusively and
decisively judicially determined. Hence, there was no right or title to the land that could be
transferred or sold by Militante's purported sale in 1956 in favor of plaintiff.

Manifestly, then plaintiff's complaint against defendant, to be declared absolute owner of the
land and to be restored to possession thereof with damages was bereft of any factual or legal
basis.

2. No error could be attributed either to the lower court's holding that the purchase by a lawyer
of the property in litigation from his client is categorically prohibited by Article 1491, paragraph
(5) of the Philippine Civil Code, reproduced supra; 6 and that consequently, plaintiff's purchase
of the property in litigation from his client (assuming that his client could sell the same since as
already shown above, his client's claim to the property was defeated and rejected) was void and
could produce no legal effect, by virtue of Article 1409, paragraph (7) of our Civil Code which
provides that contracts "expressly prohibited or declared void by law' are "inexistent and that
"(T)hese contracts cannot be ratified. Neither can the right to set up the defense of illegality be
waived."
The 1911 case of Wolfson vs. Estate of Martinez 7 relied upon by plaintiff as holding that a sale
of property in litigation to the party litigant's lawyer "is not void but voidable at the election of the
vendor" was correctly held by the lower court to have been superseded by the later 1929 case
of Director of Lands vs. Abagat. 8 In this later case of Abagat, the Court expressly cited two
antecedent cases involving the same transaction of purchase of property in litigation by the
lawyer which was expressly declared invalid under Article 1459 of the Civil Code of Spain (of
which Article 1491 of our Civil Code of the Philippines is the counterpart) upon challenge thereof
not by the vendor-client but by the adverse parties against whom the lawyer was to enforce his
rights as vendee thus acquired.

These two antecedent cases thus cited in Abagat clearly superseded (without so expressly
stating the previous ruling in Wolfson:

The spouses, Juan Soriano and Vicente Macaraeg, were the owners of twelve
parcels of land. Vicenta Macaraeg died in November, 1909, leaving a large
number of collateral heirs but no descendants. Litigation between the surviving
husband, Juan Soriano, and the heirs of Vicenta immediately arose, and the
herein appellant Sisenando Palarca acted as Soriano's lawyer. On May 2, 1918,
Soriano executed a deed for the aforesaid twelve parcels of land in favor of
Sisenando Palarca and on the following day, May 3, 1918, Palarca filed an
application for the registration of the land in the deed. After hearing, the Court of
First Instance declared that the deed was invalid by virtue of the provisions of
article 1459 of the Civil Code, which prohibits lawyers and solicitors from
purchasing property rights involved in any litigation in which they take part by
virtue of their profession. The application for registration was consequently
denied, and upon appeal by Palarca to the Supreme Court, the judgement of the
lower court was affirmed by a decision promulgated November 16,1925. (G.R.
No. 24329, Palarca vs. Director of Lands, not reported.)

In the meantime cadastral case No. 30 of the Province of Tarlac was instituted,
and on August 21, 1923, Eleuteria Macaraeg, as administratrix of the estate of
Vicente Macaraeg, filed claims for the parcels in question. Buenaventura
Lavitoria administrator of the estate of Juan Soriano, did likewise and so did
Sisenando Palarca. In a decision dated June 21, 1927, the Court of First
Instance, Judge Carballo presiding, rendered judgment in favor of Palarea and
ordered the registration of the land in his name. Upon appeal to this court by the
administration of the estates of Juan Soriano and Vicente Macaraeg, the
judgment of the court below was reversed and the land adjudicated to the two
estates as conjugal property of the deceased spouses. (G.R. No. 28226, Director
of Lands vs. Abagat, promulgated May 21, 1928, not reported.) 9

In the very case of Abagat itself, the Court, again affirming the invalidity and nullity of the
lawyer's purchase of the land in litigation from his client, ordered the issuance of a 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, and ruled that "the appellant Palarca is a lawyer
and is presumed to know the law. He must, therefore, from the beginning, have been well aware
of the defect in his title and is, consequently, a possessor in bad faith."
As already stated, Wolfson and Abagat were decided with relation to Article 1459 of the Civil
Code of Spain then adopted here, until it was superseded on August 30, 1950 by the Civil Code
of the Philippines whose counterpart provision is Article 1491.

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.

In Wolfson which involved the sale and assignment of a money judgment by the client to the
lawyer, Wolfson, whose right to so purchase the judgment was being challenged by the
judgment debtor, the Court, through Justice Moreland, then expressly reserved decision on
"whether or not the judgment in question actually falls within the prohibition of the article" and
held only that the sale's "voidability can not be asserted by one not a party to the transaction or
his representative," citing from Manresa 10 that "(C)onsidering the question from the point of
view of the civil law, the view taken by the code, we must limit ourselves to classifying as void all
acts done contrary to the express prohibition of the statute. Now then: As the code does not
recognize such nullity by the mere operation of law, the nullity of the acts hereinbefore referred
to must be asserted by the person having the necessary legal capacity to do so and decreed by
a competent
court." 11

The reason thus given by Manresa in considering such prohibited acquisitions under Article
1459 of the Spanish Civil Code as merely voidable at the instance and option of the vendor and
not void — "that the Code does not recognize such nullity de pleno derecho" — is no longer true
and applicable to our own Philippine Civil Code which does recognize the absolute nullity of
contracts "whose cause, object, or purpose is contrary 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." 12

The Supreme Court of Spain and modern authors have likewise veered from Manresa's view of
the Spanish codal provision itself. In its sentencia of 11 June 1966, the Supreme Court of Spain
ruled that the prohibition of Article 1459 of the Spanish Civil Code is based on public policy, that
violation of the prohibition contract cannot be validated by confirmation or ratification, holding
that:

... la prohibicion que el articulo 1459 del C.C. establece respecto a los
administradores y apoderados, la cual tiene conforme a la doctrina de esta Sala,
contendia entre otras, en S. de 27-5-1959, un fundamento de orden moral lugar
la violacion de esta a la nulidad de pleno derecho del acto o negocio celebrado,
... y prohibicion legal, afectante orden publico, no cabe con efecto alguno la
aludida retification ... 13

The criterion of nullity of such prohibited contracts under Article 1459 of the Spanish Civil Code
(Article 1491 of our Civil Code) as a matter of public order and policy as applied by the Supreme
Court of Spain to administrators and agents in its above cited decision should certainly apply
with greater reason to judges, judicial officers, fiscals and lawyers under paragraph 5 of the
codal article.
Citing the same decisions of the Supreme Court of Spain, Gullon Ballesteros, his "Curso de
Derecho Civil, (Contratos Especiales)" (Madrid, 1968) p. 18, affirms that, with respect to Article
1459, Spanish Civil Code:.

Que caracter tendra la compra que se realice por estas personas? Porsupuesto
no cabe duda de que el caso (art.) 1459, 40 y 50, la nulidad esabsoluta porque el
motivo de la prohibicion es de orden publico. 14

Perez Gonzales in such view, stating that "Dado el caracter prohibitivo delprecepto, la
consequencia de la infraccion es la nulidad radical y ex lege." 15

Castan, quoting Manresa's own observation that.

"El fundamento do esta prohibicion es clarisimo. No sa trata con este precepto tan solo de
guitar la ocasion al fraude; persiguese, ademasel proposito de rodear a las personas que
intervienen en la administrcionde justicia de todos los retigios que necesitan pora ejercer su
ministerio librandolos de toda suspecha, que aunque fuere in fundada, redundura endescredito
de la institucion." 16 arrives at the contrary and now accepted view that "Puede considerace en
nuestro derecho inexistente 'o radicalmente nulo el contrato en los siguentes cases: a) ...; b)
cuando el contrato se ha celebrado en violacion de una prescripcion 'o prohibicion legal,
fundada sobre motivos de orden publico (hipotesis del art. 4 del codigo) ..." 17

It is noteworthy that Caltan's rationale for his conclusion that 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." 18

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." 19

As applied to the case at bar, the lower court therefore properly acted upon defendant-
appellant's motion to dismiss on the ground of nullity of plaintiff's alleged purchase of the land,
since its juridical effects and plaintiff's alleged cause of action founded thereon were being
asserted against defendant-appellant. The principles governing the nullity of such prohibited
contracts and judicial declaration of their nullity have been well restated by Tolentino in his
treatise on our Civil Code, as follows:
 Parties Affected. — Any person may invoke the in existence of the contract
whenever juridical effects founded thereon are asserted against him. Thus, if
there has been a void transfer of property, the transferor can recover it by
the accion reinvindicatoria; and any prossessor may refuse to deliver it to the
transferee, who cannot enforce the contract. Creditors may attach property of the
debtor which has been alienated by the latter under a void contract; a mortgagee
can allege the inexistence of a prior encumbrance; a debtor can assert the nullity
of an assignment of credit as a defense to an action by the assignee.

Action On Contract. — Even when the contract is void or inexistent, an action is

necessary to declare its inexistence, when it has already been fulfilled. Nobody
can take the law into his own hands; hence, the intervention of the competent
court is necessary to declare the absolute nullity of the contract and to decree the
restitution of what has been given under it. The judgment, however, will retroact
to the very day when the contract was entered into.

If the void contract is still fully executory, no party need bring an action to declare
its nullity; but if any party should bring an action to enforce it, the other party can
simply set up the nullity as a defense. 20

ACCORDINGLY, the order of dismissal appealed from is hereby affirmed, with costs in all
instances against plaintiff-appellant. So ordered.