ACQUISITION OF PROPERTY

ACQUISITION OF PROPERTIES SUBJECT OF LITIGATIONSONNY C.GIANAN IIJENDER L. MERCADOAs a rule, the lawyer should not purchaseany interest in the subject matter of thelitigation which he is conductingApplicable Canons, Rules, Laws and JurisprudenceCode of Professional ResponsibilityCanon 1 A lawyer shall uphold the Constitution, obey the laws of the land and promote respect for law and legal processesRule 1.01 A lawyer shall not engage in unlawful, dishonest, immoral or deceitful conduct.

Canon 10 A lawyer owes candor, fairness and good faith to the court Rule 10.01 A lawyer shall not do any falsehood, nor consent to the doing of any in court, nor shall he mislead, or allow the Court to be mislead by any artifice

Canon 16 A lawyer shall hold in trust all moneys and properties of his client that may come into his possession

Code of Professional ResponsibilityRule 16.01- A lawyer shall account for all money or property collected or received for or from the client

Rule 16.03 A lawyer shall deliver funds and property of his clients when due or upon demand.

Canon 17 - A lawyer owes fidelity to the cause of his client and he shall be mindful of the trust and confidence reposed in him.

Infidelty in the custody of properties in custodia legisAtty. Frial was remiss in his obligation of taking good care of the attached cars. He also allowed the use of the Nissan Sentra car by persons who had no business using it. He did not inform the court or at least the sheriff of the destruction of the Volvo car. What is worse is that he took custody of them without so much as informing the court, let alone securing, its authority.

The lawyer should refrain from any action whereby for his personal benefit or gain he abuses or takes advantage of the confidence reposed in him by his client. Money of the client or collected for the clientor other trust property coming into the possession of the lawyer should be reported and accounted for promptlyand should not under any circumstances be commingled with his own or be used by him. (Atty. Salomon Jr. vs. Atty. Frial, A.C. No. 7820, September 12, 2008)

Transfer of Rightsa breach of professional ethicsIn executing the document transferring one-half (1/2) of the subject properties to himself, respondent violated the law expressly prohibiting a lawyer from acquiring his client's property or interest involved in any litigation in which he may take part by virtue of his profession. This Court has held that the purchase by a lawyer of his client's property or interest in litigation is a breach of professional ethics and constitutes malpractice. (Angel L. Bautista vs. Atty. Ramon A. Gonzales, A.M.No. 1625, February 12, 1990)

Moreover, Rule 138, Sec. 3 of the Revised Rules of Court requires every lawyer to take an oath to obey the laws [of the Republic of the Philippines] as well as the legal orders of the duly constituted authorities therein." And for any violation of this oath, a lawyer may be suspended or disbarred by the Supreme Court [Rule 138, Sec. 27, Revised Rules of Court]. All of these underscore the role of the lawyer as the vanguard of our legal system. The transgression of any provision of law by a lawyer is a repulsive and reprehensible act which the Court will not countenance. (Angel L. Bautista vs. Atty. Ramon A. Gonzales, A.M.No. 1625, February 12, 1990)

Property assigned to a lawyer inconsideration of his legal services In the case at bar, the property (which includes the more than 20 hectares of land allegedly conveyed to the respondent) was already in actual litigation first in the lower court and then in the Court of Appeals. Whether the deed of conveyance was executed at the instance of the client driven by financial necessity or of the lawyers is of no moment. "In either case, an attorney occupies a vantage position to press upon or dictate his terms to a harassed client, in breach of the rule so amply protective of the confidential relations, which must necessarily exist between attorney and client, and of the rights of both." The act constitutes malpractice, even if the lawyer had purchased the property in litigation.(Domingo Velasco Ordonio vs. Atty. Josephine Palogan Eduarte, A.M.No. 3216,March 16, 1992)

For having improperly acquired the subject property, under the foregoing circumstances, respondent has violated not only Art. 1491 of the Civil Code but also Rule 10 of the Canons of Professional Ethics which provides that "the lawyer should not purchase any interest in the subject matter of the litigation which he is conducting.(Domingo Velasco Ordonio vs. Atty. Josephine Palogan Eduarte, A.M.No. 3216,March 16, 1992)

Leonardo Umale vs. Atty. Alfred Villamor, Jr., Gr.No.171634, August 17, 2011The cases cited by petitioner (Bautista v. Gonzales / Ordonio v. Eduarte) involved the prohibited acquisition by a lawyer of his clients property that was the object of the litigation in which the lawyer represented his client. However, in this case, the property occupied by MC Home Depot is registered under Mid-Pasig, and the records show that the litigation over the property was between Rockland Construction Company, Inc. and Mid-Pasig. Petitioner failed to prove that respondents case is within the ambit or is violative of Article 1491 of the Civil CodeIN RE: SUSPENSION FROM THE PRACTICE OF LAW IN THE TERRITORY OF GUAM OF ATTY. LEON G. MAQUERA

It bears stressing that the Guam Superior Courts judgment ordering Maqueras suspension from the practice of law in Guam does not automatically result in his suspension or disbarment in the Philippines.Under Section 27,Rule 138 of the Revised Rules of Court, the acts which led to his suspension in Guam are mere grounds for disbarment or suspension in this jurisdiction, at that only if the basis of the foreign courts action includes any of the grounds for disbarment or suspension in this jurisdiction.Likewise, the judgment of the Superior Court of Guam only constitutesprima facieevidence of Maqueras unethical acts as a lawyer.More fundamentally, due process demands that he be given the opportunity to defend himself and to present testimonial and documentary evidence on the matter in an investigation to be conducted in accordance with Rule 139-B of the Revised Rules of Court.Said rule mandates that a respondent lawyer must in all cases be notified of the charges against him.It is only after reasonable notice and failure on the part of the respondent lawyer to appear during the scheduled investigation that an investigation may be conductedex parte.

Republic Act No. 3019 (Anti-Graft and Corrupt Practices Act, Paragraph H, Section 3Sec. 3. Corrupt practices of public officers. In addition to acts or omissions of public officers already penalized by existing law, the following shall constitute corrupt practices of any public officer and are hereby declared to be unlawful:xxx xxx xxx

(h)Directly or indirectly having financial or pecuniary interest in any business, contract or transaction in connection with which he intervenes or takes part in his official capacity, or in which he is prohibited by the Constitution or by any law from having any interest.

Article 1491 (5) of the Civil CodeThe following persons cannot acquire by purchase, even at a public or judicial auction, either in person or through the mediation of another:

X x x

(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;

RationaleThe rationale advanced for the prohibition is that public policy disallows the transactions in view of the fiduciary relationship involved,i.e., the relation of trust and confidence and the peculiar control exercised by these persons.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.However, the said prohibition applies only if the sale or assignment of the property takes place during the pendency of the litigation involving the clients property. Consequently, where the property is acquired after the termination of the case, no violation of paragraph 5, Article 1491 of the Civil Code attaches. FEDERICO N. RAMOS,complainant, vs. ATTY. PATRICIO A. NGASEO,respondent. [A.C. No. 6210. December 9, 2004]

When is property considered under pending litigation?Athing is said to be in litigation not only if there is some contest or litigation over it in court, but also from the moment that it becomes subject to the judicial action of the judge. A.M. Nos. 1302, 1391 and 1543 April 26, 1991 consolidated case against ATTY. DIONISIO C. ANTINIW, ATTY. EDUARDO U. JOVELLANOS and ATTY. ARSENIO FER. CABANTING

Is purchased of lot pendingcertiorariproceeding violates Article 1491 (5) of the Civil Code?Logic indicates, incertiorariproceedings, that the appellate court may either grant or dismiss the petition. Hence, it is not safe to conclude, for purposes under Art. 1491 that the litigation has terminated when the judgment of the trial court become final while acertiorariconnected therewith is still in progress. A.M. Nos. 1302, 1391 and 1543 April 26, 1991 consolidated case against ATTY. DIONISIO C. ANTINIW, ATTY. EDUARDO U. JOVELLANOS and ATTY. ARSENIO FER. CABANTING

Is demand for delivery of the litigated property violates Article 1491 (5) of the Civil Code?Mere demand for delivery of the litigated property does not cause the transfer of ownership, hence, not a prohibited transaction within the contemplation of Article 1491. Even assuming arguendo that such demand for delivery is unethical, respondents act does not fall within the purview of Article 1491. FEDERICO N. RAMOS,complainant, vs. ATTY. PATRICIO A. NGASEO,respondent. [A.C. No. 6210. December 9, 2004]

Maybe found guilty of conduct unbecoming a member of the legal profession in violation of Rule 20.04 of Canon 20 of the Code of Professional Responsibility. Rule 20.04 - A lawyer shall avoid controversies with clients concerning his compensation and shall resort to judicial action only to prevent imposition, injustice or fraud. FEDERICO N. RAMOS,complainant, vs. ATTY. PATRICIO A. NGASEO,respondent. [A.C. No. 6210. December 9, 2004]

Is assignment made pursuant to a contingent fee contract during the pendency of litigation violates Article 1491 (5) of the Civil Code?True, a contract for a contingent fee is generally not covered by Article 1491 and is valid because the transfer or assignment of the property in litigation takes effect only after the finality of a favorable judgment.However, as aforesaid respondent caused the transfer of the subject property in his nameduring the pendencyof Special Proceedings No. 98037.Thus, the prohibition in Article 1491 clearly applies. ROSALINA BIASCAN,complainant, vs.ATTY. MARCIAL F. LOPEZ,respondent. [A.C. No. 4650.August 14, 2003]

Is acquiring by purchaseofproperty in a Civil Case previously handled by aJudge violates Article 1491 (5) of the Civil Code?The prohibition in the aforesaid Article applies only to the sale or assignment of the property which is the subject of litigation to the persons disqualified therein. A.M. No. 133-J May 31, 1982 BERNARDITA R. MACARIOLA,complainant,vs. HONORABLE ELIAS B. ASUNCION, Judge of the Court of First Instance of Leyte,respondent.

A.M. No. 133-J May 31, 1982 BERNARDITA R. MACARIOLA,complainant,vs. HONORABLE ELIAS B. ASUNCION, Judge of the Court of First Instance of Leyte,respondentIn the case at bar, when the respondent Judge purchased onMarch 6, 1965a portion of Lot 1184-E, the decision in Civil Case No. 3010 which he rendered onJune 8, 1963was already final because none of the parties therein filed an appeal within the reglementary period; hence, the lot in question was no longer subject of the litigationSUMMARYGeneral Rule:A lawyer may not purchase, even at a public or judicial auction, in person or through the mediation of another, any property or interest involved in any litigation in which he may take part by virtue of his profession. This prohibition is entirely independent of fraud and such need not be alleged or proven.

Article 1491 of Civil Code of the PhilippinesThe following persons are prohibited from acquiring property under litigation by reason of the relation of trust or their peculiar control either directly or indirectly and even at a public or judicial auction:

1. guardians;2. agents3. administrators4. public officers and employees5. judicial officers and employees6. prosecuting attorneys and lawyers7. those specially disqualified by law

Elements of Article 1491

there must be an attorney-client relationshipthe property or interest of the client must be in litigationthe attorney takes part as counsel in the casethe attorney by himself or through another purchases such property or interest during the pendency of the litigation.

Exceptions:

property is acquired by lawyer through a contingent fee arrangementany of the 4 elements of Art. 1491 is missing

Effectsmalpractice on the part of the lawyer and may be disciplined for misconducttransaction is null and void