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    46 Canlas vs. Court of Appeals

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    Jem
    This case involves a dispute over ownership of parcels of land that were subject to a mortgage. Francisco Herrera owned the land but took out loans secured by mortgages from L&R Corporation. When Herrera defaulted on the loans, L&R foreclosed on the mortgages. Herrera then sued to stop the foreclosure, represented by attorney Paterno Canlas. They later reached a compromise where Herrera was given more time to repay the loans. When Herrera again failed to repay, he and Canlas agreed that Canlas would advance the payment in exchange for transfer of the mortgage. The Court of Appeals denied Canlas' motion to dismiss Herrera's suit to invalidate the transfer. The Supreme

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    46 Canlas vs. Court of Appeals

    Uploaded by

    Jem
    34 views2 pages
    This case involves a dispute over ownership of parcels of land that were subject to a mortgage. Francisco Herrera owned the land but took out loans secured by mortgages from L&R Corporation. When Herrera defaulted on the loans, L&R foreclosed on the mortgages. Herrera then sued to stop the foreclosure, represented by attorney Paterno Canlas. They later reached a compromise where Herrera was given more time to repay the loans. When Herrera again failed to repay, he and Canlas agreed that Canlas would advance the payment in exchange for transfer of the mortgage. The Court of Appeals denied Canlas' motion to dismiss Herrera's suit to invalidate the transfer. The Supreme

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    This case involves a dispute over ownership of parcels of land that were subject to a mortgage. Francisco Herrera owned the land but took out loans secured by mortgages from L&R Corporation. When Herrera defaulted on the loans, L&R foreclosed on the mortgages. Herrera then sued to stop the foreclosure, represented by attorney Paterno Canlas. They later reached a compromise where Herrera was given more time to repay the loans. When Herrera again failed to repay, he and Canlas agreed that Canlas would advance the payment in exchange for transfer of the mortgage. The Court of Appeals denied Canlas' motion to dismiss Herrera's suit to invalidate the transfer. The Supreme

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    34 views2 pages

    46 Canlas vs. Court of Appeals

    Uploaded by

    Jem
    This case involves a dispute over ownership of parcels of land that were subject to a mortgage. Francisco Herrera owned the land but took out loans secured by mortgages from L&R Corporation. When Herrera defaulted on the loans, L&R foreclosed on the mortgages. Herrera then sued to stop the foreclosure, represented by attorney Paterno Canlas. They later reached a compromise where Herrera was given more time to repay the loans. When Herrera again failed to repay, he and Canlas agreed that Canlas would advance the payment in exchange for transfer of the mortgage. The Court of Appeals denied Canlas' motion to dismiss Herrera's suit to invalidate the transfer. The Supreme

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    Canlas vs.

    Court of Appeals
    No. L-77691. August 8, 1988
    SARMIENTO, J.:
    Facts:
    Francisco Herrera, private respondent, owned the parcels of land obtained through loan from
    L&R Corporation in various sums totaling P420,000.00 and secured by deeds of mortgage over
    the said parcels. Upon maturing of the loans, L&R caused an extrajudicial foreclosure of the
    mortgages and it became the highest bidder. Pending redemption, Herrera filed a complaint for
    injunction represented by Atty Paterno Canlas, petitioner, which later on entered into a
    compromise agreement wherein L&R gave Herrera another year to redeem the foreclosed
    properties. However, Herrera failed to repay the loan as well as the P100,000.00 attorney’s fees.
    Herrera and Canlas entered into an agreement that Canlas would advance the payment provided
    there would be transfer of mortgage. They executed a Deed of Sale and Transfer of Rights of
    Redemption and/or to redeem. When Herrera went it Family Savings Bank to obtain a loan, he
    found out that the properties were already under the name of Canlas. Herrera filed, among others,
    an action for reconveyance which the trial court denied. Upon appeal, he filed an annulment of
    judgment while petitioner filed for motion to dismiss. CA denied the motion to dismiss. Thus,
    this petition.
    Issue:
    Whether or not the conveyance in favor of the petitioner is subject to the ban on
    acquisition by attorneys of things in litigation?
    Rule of law:
    Art. 1491
    Application:
    In the instant case, the Court observes that the “Deed of Sale and Transfer of Rights of
    Equity of Redemption and/or to Redeem” was executed following the finality of the decision
    approving the compromise agreement. It is actually a new contract—not one in pursuance of
    what had been agreed upon on compromise—in which, as we said, the petitioner purportedly
    assumed redemption rights over the disputed properties (but in reality, acquired absolute
    ownership thereof). By virtue of such a subsequent agreement, the lands had ceased to be
    properties which are “the object of any litigation.”
    At any rate, the transfer, so we hold, is not subject to the injunction of Article 1491 of the
    Civil Code. But like all voidable contracts, it is open to annulment on the ground of mistake,
    fraud, or undue influence, which is in turn subject to the rights of innocent purchasers for value.
    For this reason, we invalidate the transfer in question specifically for undue influence as earlier
    detailed. While the respondent Herrera has not specifically prayed for invalidation, this is the
    clear tenor of his petition for annulment in the Appellate Court. It appearing, however, that the
    properties have been conveyed to third persons whom we presume to be innocent purchasers for
    value, the petitioner, Atty. Paterno Canlas, must be held liable, by way of actual damages, for
    such a loss of properties.
    Conclusion:
    WHEREFORE, judgment is hereby rendered, DISMISSING this petition and
    REMANDING the case to the respondent Court of Appeals for execution.

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