G.R. No. L-72306, January 24, 1989
DAVID P. FORNILDA, ET AL., petitioners, vs. THE BRANCH 164, REGIONAL TRIAL COURT, ET AL., respondents.

FACTS

The petitioners, the Fornilda heirs, sought to annul a mortgage and subsequent foreclosure over six parcels of land executed in favor of their former lawyer, respondent Atty. Sergio Amonoy. This Court, in a Decision dated October 5, 1988, granted the petition, set aside the writ of possession and demolition orders issued by the trial court, and ordered the return of the properties. The Court also required Atty. Amonoy to answer disbarment charges, which were later addressed in a separate administrative case.
Respondent Amonoy filed a Motion for Reconsideration, arguing primarily that Article 1491(5) of the Civil Code, which prohibits lawyers from acquiring property and litigation of their clients, does not apply to mortgage transactions or to foreclosure sales in favor of a judgment creditor. He contended the properties were no longer in litigation when mortgaged in 1965, as a Project of Partition had been approved earlier that year. He further asserted the petition was barred by res judicata, the trial court retained jurisdiction over the foreclosure case, and the Supreme Court lacked jurisdiction as annulment of judgment falls under the exclusive original jurisdiction of the Court of Appeals.

ISSUE

The core issue is whether the Motion for Reconsideration presents meritorious grounds to reverse the Court’s prior Decision annulling the mortgage and foreclosure.

RULING

The Motion for Reconsideration is denied. The Court found all submissions without merit. First, the prohibition under Article 1491(5) applies. While the Project of Partition was approved in January 1965, the estate proceedings were not closed and terminated until August 1969. Therefore, the properties remained “in litigation” when mortgaged to Amonoy in January 1965, and a fiduciary lawyer-client relationship still existed. Applying the prohibition to mortgages is essential to prevent circumvention through eventual foreclosure.
Second, Amonoy cannot claim the status of an ordinary judgment creditor insulated from Article 1491(5), as his mortgage was void from its inception due to the violation of that legal prohibition. Third, the defense of res judicata and the related question of the lower court’s jurisdiction over the foreclosure case were already thoroughly discussed and rejected in the main Decision, citing applicable jurisprudence. The cases Amonoy cited regarding jurisdiction are inapposite as they do not involve a void subject matter.
Finally, the Supreme Court properly took cognizance of the petition. While BP 129 grants the Court of Appeals original jurisdiction over annulment of judgments, the focal issue herein—the validity of the acquisition of property in litigation by a lawyer from his client—is a pure question of law, over which this Court has jurisdiction. Thus, the denial of the Motion for Reconsideration is final.