G.R. No. 156846, 23 February 2004


Assailed in this petition for review on certiorari is the January 16, 2003 Amended Decision of the Court of Appeals in CA-G.R. CV No. 55740 which set aside the November 29, 1996 Decision of the Regional Trial Court of Makati, Branch 64, in Civil Case No. 94-2363.

Pursuant to an “Agreement And Undertaking” dated December 3, 1993, petitioner Teddy G. Pabugais, in consideration of the amount of Fifteen Million Four Hundred Eighty Seven Thousand Five Hundred Pesos (P15,487,500.00), agreed to sell to respondent Dave P. Sahijwani a lot containing 1,239 square meters located at Jacaranda Street, North Forbes Park, Makati, Metro Manila.

The parties further agreed that failure on the part of respondent to pay the balance of the purchase price entitles petitioner to forfeit the P600,000.00 option/reservation fee; while non-delivery by the latter of the necessary documents obliges him to return to respondent the said option/reservation fee with interest at 18% per annum, thus – 5. DEFAULT – In case the FIRST PARTY [herein respondent] fails to pay the balance of the purchase price within the stipulated due date, the sum of P600,000.00 shall be deemed forfeited, on the other hand, should the SECOND PARTY [herein petitioner] fail to deliver within the stipulated period the documents hereby undertaken, the SECOND PARTY shall return the sum of P600,000.00 with interest at 18% per annum.

Petitioner failed to deliver the required documents. In compliance with their agreement, he returned to respondent the latter’s P600,000.00 option/reservation fee. Meanwhile, his counsel, Atty. Wilhelmina V. Joven, died and she was substituted by Atty. Salvador P. De Guzman, Jr.

On December 20, 2001, petitioner executed a “Deed of Assignment” assigning in favor of Atty. De Guzman, Jr., part of the P672,900.00 consigned with the trial court as partial payment of the latter’s attorney’s fees. Thereafter, on January 7, 2002, petitioner filed an Ex Parte Motion to Withdraw Consigned Money. This was followed by a “Motion to Intervene” filed by Atty. De Guzman, Jr., praying that the amount consigned be released to him by virtue of the Deed of Assignment.

Petitioner’s motion to withdraw the amount consigned was denied by the Court of Appeals and the decision of the trial court was affirmed with modification as to the amount of moral damages and attorney’s fees.


Can petitioner withdraw the amount consigned as a matter of right?


The withdrawal of the amount deposited in order to pay attorney’s fees to petitioner’s counsel, Atty. De Guzman, Jr., violates Article 1491 of the Civil Code which forbids lawyers from acquiring by assignment, property and rights which are the object of any litigation in which they may take part by virtue of their profession.

Furthermore, Rule 10 of the Canons of Professional Ethics provides that “the lawyer should not purchase any interest in the subject matter of the litigation which he is conducting.” The assailed transaction falls within the prohibition because the Deed assigning the amount of P672,900.00 to Atty. De Guzman, Jr., as part of his attorney’s fees was executed during the pendency of this case with the Court of Appeals. In his Motion to Intervene, Atty. De Guzman, Jr., not only asserted ownership over said amount, but likewise prayed that the same be released to him.

That petitioner knowingly and voluntarily assigned the subject amount to his counsel did not remove their agreement within the ambit of the prohibitory provisions. To grant the withdrawal would be to sanction a void contract.

*Case digest by Bryne Angelo M. Brillantes, JD-IV, Andres Bonifacio Law School, SY 2019-2020