UCPB Savings Bank v. Vitorillo

FIRST DIVISION

[A.C. No. 12636. May 14, 2021.]

UCPB SAVINGS BANK, REPRESENTED BY MA. ELLEN A. VICTOR, complainant,vs. ATTY. REYNALDO A. VITORILLO, respondent.

NOTICE

Sirs/Mesdames :

Please take notice that the Court, First Division, issued a Resolution dated May 14, 2021which reads as follows:

"A.C. No. 12636 (UCPB Savings Bank, represented by Ma. Ellen A. Victor v. Atty. Reynaldo A. Vitorillo). — Before Us is an administrative complaint 1 filed by UCPB Savings Bank, represented by Ma. Ellen A. Victor (complainant) against Atty. Reynaldo A. Vitorillo (respondent) for violation of Article 1491 (5) of the Civil Code, Canons 7, 15, and 17 of the Code of Professional Responsibility (CPR).

Facts of the Case

Respondent was the counsel of Marymount Academy of Pinnacle Group (Marymount Academy) in a case filed by complainant against Marymount Academy for ejectment with the Municipal Trial Court in Cities, Cagayan de Oro City, Branch 4 (MTCC). Complainant was able to obtain a favorable judgment against Marymount Academy. Such decision became final. As such, the trial court issued a writ of execution directing Marymount Academy to vacate the premises. 2

While complainant was coordinating with the court sheriff for the implementation of the writ of execution, respondent through his company Franrest Vitorillo Sons & Daughters (Franrest) offered to purchase the property from the bank. 3

Complainant held in abeyance the implementation of the writ of execution against Marymount Academy due to the offer to purchase made by respondent. Then, on October 7, 2011, the bank approved the offer to purchase the property for P15 million in instalment basis. 4

Upon payment of the 20% downpayment, a Contract to Sell was signed on June 25, 2013 between complainant and Franrest, represented by respondent, wherein the latter agreed to submit itself to the jurisdiction of the MTCC, where complainant obtained a final and executory judgment for ejectment. 5

Respondent failed to pay the first amortization due on June 15, 2013. The latter explained in a letter dated September 6, 2013 that his failure to pay the loan was not intended but due to an unrealized but expected income from a real estate transaction. Despite repeated demands from the bank, respondent failed to pay. Hence, the bank served a Notice of Cancellation/Demand for Rescission on January 23, 2014. Due to the respondent's failure to vacate the premises, the bank filed a Motion to Issue Alias Writ of Execution against respondent by virtue of the provision in the Contract to Sell. 6

In order to deny liability, respondent argued that the Contract to Sell was a contract of adhesion. There was no written conformity nor participation made by Marymount Academy to the Contract to Sell, hence, neither respondent nor Franrest was an assignee of Marymount Academy in order to be subjected to the jurisdiction of the court. The MTCC on August 20, 2014 sided with the respondent. 7

Complainant claimed that respondent was guilty of circumventing the prohibition mandated by Article 1491 (5) of the Civil Code which prohibits lawyers from acquiring, by purchase or assignment, the property that has been the subject of litigation which they have taken part by virtue of their profession. Further, respondent's deliberate failure to pay just debts constitutes gross misconduct. Also, respondent violated Canons 7 and 15 of the CPR. 8

Respondent, on the other hand, argued that he was acting as the President of Franrest and not in his personal or professional capacity as an attorney. He is not personally or professional indebted to complainant since Franrest is a separate entity. 9

Franrest was merely enticed to offer to buy the property from complainant, by the bank's broker, Capital Servicing Advisor's Phils., Special Asset Management Team, Maria Therese A. de Leon. The agency, actively prepared, presented and had the documents signed without respondent or any representative of Franrest ever going to the bank's office. Respondent further questions the contract to sell, as the same is a contract of adhesion. 10

On May 25, 2017, 11 the Integrated Bar of the Philippines Commission on Bar Discipline (IBP-CBD) recommended that respondent be suspended for a period of six months. 12 The IBP-CBD found that respondent violated Article 1491 (5) of the Civil Code. Respondent used Franrest to purchase on instalments the property subject of litigation between Marymount Academy, to which respondent is the counsel, and the complainant. Because of the transaction, the writ of execution was held in abeyance. The property is still pending litigation as the case has not yet been terminated since the delivery of the property to the complainant is yet to be complied with. 13

As to the allegation that it was Franrest who is liable to complainant since it is a separate legal entity, is belied by the evidence. Be it noted that Franrest is composed of the sons and daughters of respondent, wherein the latter is the President. Clearly, the veil of corporate fiction should be pierced. 14

Thus, with all the foregoing circumstances, respondent violated Canons 15 and 17 of the CPR. 15

On February 22, 2018, the IBP Board of Governors issued a Resolution 16 adopting the recommendation of the IBP-CBD suspending respondent from the practice of law for a period of six months.

Issue

The issue in this case is whether respondent should be administratively sanctioned.

Ruling of the Court

Upon review of the records of the case, We reverse the findings and recommendation of the Board insofar as it found respondent guilty of violating Article 1491 of the Civil Code as well as Canon 1 of the CPR.

Disbarment and suspension of a lawyer is always considered as the most severe form of disciplinary action which should be imposed to an erring lawyer. It is well-settled that in administrative cases against lawyers, the burden of proof rests upon the complainant; and the Court will exercise its disciplinary power only if the complainant establishes the complaint with substantial evidence. 17 It is therefore necessary that complainant prove with substantial evidence that respondent has to be administratively sanctioned by the Court.

Article 1491 (5) 18 of the Civil Code prohibits lawyers, among others, from acquiring properties subject of the litigation which they took part by virtue of their profession. The purpose of this prohibition that public policy disallows this transaction in view of the relation of trust and confidence and the peculiar control exercised by a lawyer with respect to the properties subject of the litigation. It is founded on public policy because, by virtue of his office, an attorney may easily take advantage of the credulity and ignorance of his client and unduly enrich himself at the expense of his client. 19

The prohibition contained in Article 1491 of the Civil Code does not apply in the present case. First, there is no trust and confidence involved since the property involved in this case is not the property of respondent's client, Marymount Academy. Rather, it was the property of the opposing party, UCPB. Thus, it cannot be said that respondent took advantage of the credulity and ignorance of his client. While it may be said that the company was owned by the family of respondent, there is no evidence that will show that the separate personality of the corporation was used to evade or circumvent the law. Lastly, complainant was already estopped from questioning the transaction. Nothing in the records would show that the purchase price was lower than the fair market value to evidence that respondent used his profession and undue influence with the case to acquire the property less than its proper price. There is also no evidence that complainant was unduly prejudiced by the sale transaction with Franrest. With the following circumstances, the purchase of the subject property by Franrest is not prohibited by Article 1491 (5) of the Civil Code.

WHEREFORE, premises considered, the instant Petition is GRANTED. The Resolution dated February 22, 2018 of the Integrated Bar of the Philippines Board of Governors in CBD Case No. 15-4522 recommending the suspension of respondent Atty. Reynaldo A. Vitorillo from the practice of law for a period of six (6) months is hereby REVERSED and SET ASIDE. Accordingly, the administrative complaint against respondent Atty. Reynaldo A. Vitorillo is DISMISSED for lack of merit.

SO ORDERED."

By authority of the Court:

(SGD.) LIBRADA C. BUENADivision Clerk of Court

By:

MARIA TERESA B. SIBULODeputy Division Clerk of Court

 

Footnotes

1.Rollo [Vol. I], pp. 1-9.

2.Id. at 52.

3.Id. at 45, 52.

4.Id. at 52-53.

5.Id. at 53-54.

6.Id. at 54.

7.Id. at 134-137.

8.Rollo [Vol. II], pp. 2-3.

9.Id. at 3.

10.Id. at 3-4.

11.Id. at 2-7.

12.Id. at 7.

13.Id. at 5.

14.Id. at 5-6.

15.Id. at 6.

16. Additional rollo, p. 4.

17.Rico v. Atty. Salutan, 827 Phil. 1, 6 (2018).

18. Article 1491. The following persons cannot acquire by purchase, even at a public or judicial auction, either in person or 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 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 by 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.

19.Peña v. Delos Santos, 782 Phil. 123, 134 (2016).