SPECIAL DISABILITIES OF LAWYERS

Reported by: Sheila Mae Cabahug

Purchase of Property or Rights of Clients Subject to Litigation, Prohibited: Purchase is VOID.

ARTICLE

1491 of the CIVIL CODE OF THE PHILIPPINES.

The following persons cannot acquire by purchase, even at a public or judicial auction, either in person or through the mediation of another:
1.) Guardians 2.) Agents 3.) Administrators 4.) Public Officers and Employees 5.) Judicial Officers and Employees 6.) Prosecuting Attorneys and Lawyers 7.) Others specially disqualified by law

Purchase Cannot Be Ratified

The nullity of such definitive contracts is definite and permanent and cannot be cured by ratification. The public interest and public policy remain paramount and do not permit of compromise or ratification.

Lawyer Shall Hold The Property In Trust For The Client.

Any contract of sale in violation of the statutory

prohibition ( Art. 1491, NCC ) is VOID and the lawyerpurchaser shall hold the same in trust for the client and he cannot acquire it by prescription.
The client can recover the property including the

fruits but he must return the purchase price with legal intersest.

There is Violation Even If the Lawyer Did Not Pay Money For It.
The prohibition under article 1491 applies even if

the lawyer has not paid money for the property.

It does not matter whether the sale was at the

behest of the client.

Lawyers good faith is no defense .

In re: RUSTE 70 Phil. 243

Facts: In cadastral case No. 6, G. L. R. O. Record No. 483 of the Court of First Instance of Zamboanga, the respondent, Melchor E. Ruste, appeared for and represented, as counsel, Severa Ventura and her husband, Mateo San Juan, the herein complainant, who claimed lot No. 3765; and as a result of said cadastral proceedings, an undivided eleven-twentieth (11/20) share of said lot was adjudicated by said court to said claimants. There was no agreement the respondent and his said clients as to the amount of his fees; but that they paid to him upon demand on different occasions the sums of (30 and P25 as attorney's fees. After said payments, the respondent again demanded of the complainant and his wife as additional fees the sum of P25, but they had no money to pay, him, and so he asked them to execute in his favour a contract of lease, and a contract of sale, of their share in said lot No. 3764 in order that he may be able to borrow or raise said sum of P25;
Issue: Whether or not the respondent has failed to account to the aggrieved spouses for the various amounts received by him on account of the transactions effected by him pertaining to the portion of lot No. 3764? Held:There is evidence to show that the respondent has failed to account to the aggrieved spouses for the various amounts received by him on account of the transactions effected by him pertaining to the portion of lot No. 3764. However, as the evidence is conflicting and the statements of the parties are contradictory on this point, it is believed that the determination of the exact amount due them by the respondent should better elucidated and determined in an appropriate action which the complaint and his spouse may institute against the respondent for this purpose. The property being thus in suit, which the respondent was waging on behalf of his clients, his acquisition thereof by the deed of sale, Exhibit B, constitutes malpractice. (Hernandez vs. Villanueva, 40 Phil., 775; In re Calderon, 7 Phil. 427.) Whether the deed of sale in question was executed at the instance of the spouses driven by financial necessity, as contended by the respondent, or at the latter's behest, as contended by the complainant, is of no moment. In either case as 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." (Hernandez vs. Villanueva, supra.). The respondent is found guilty of malpractice and is hereby suspended for a period of one year.

When Purchase Of The Clients Property Is Not Violation Of The Law?

When the property he purchased from the client is

not subject of a litigation

If he acquired it before he become counsel for the

client.
He acquired it after the case involving the property

had terminated.

Extension of Prohibition In Article 1491:

1.) Legal Redemption

It is when the debtor obtains legal title to collateral for a debt by paying the creditor the replacement value of the collateral in a lump sum.

2.)Compromises

A settlement of differences by arbitration or by consent reached by mutual agreement.

3.)Renunciation

Give up, refuse, or resign usually by formal declaration.

( Article 1492, NCC )

In re: Suspension from the Practice of Law in the Territory of Guam of Atty. Leon G. Maquera.
FACTS: Atty. Leon G. Maquera was suspended from the practice of law in Guam for misconduct, as he acquired his client's property as payment for his legal services, then sold it and as a consequence obtained an unreasonably high fee for handling his client's case. Edward Benavente, the creditor of a certain Castro, obtained a judgment against Castro in a civil case. Maquera served as Castro's counsel in said case. Castro's property subject of the case, a parcel of land, was to be sold at a public auction in satisfaction of his obligation to Benavente. Castro, however, retained the right of redemption over the property for one year. The right of redemption could be exercised by paying the amount of the judgment debt within the aforesaid period.At the auction sale, Benavente purchased Castro's property for Five Hundred U.S. Dollars (US$500.00), the amount which Castro was adjudged to pay him.On December 21, 1987, Castro, in consideration of Maquera's legal services in the civil case involving Benavente, entered into an oral agreement with Maquera and assigned his right of redemption in favor of the latter.On January 8, 1988, Maquera exercised Castro's right of redemption by paying Benavente US$525.00 in satisfaction of the judgment debt. Thereafter, Maquera had the title to the property transferred in his name. On December 31, 1988, Maquera sold the property to C.S. Chang and C.C. Chang for Three Hundred Twenty Thousand U.S. Dollars (US$320,000.00). ISSUE: Whether or not n Atty. Maquera is liable for misconduct and within the power of the Court to disbar or suspend a lawyer for acts or omissions committed in a foreign jurisdiction? HELD: Yes. The disbarment or suspension of a member of the Philippine Bar by a competent court or other disciplinatory agency in a foreign jurisdiction where he has also been admitted as an attorney is a ground for his disbarment or suspension if the basis of such action includes for any deceit, malpractice, or other gross misconduct in such office (Section 27, Rule 138 of the Revised Rules of Court). The Superior Court of Guam found that Maquera acquired his client's property by exercising the right of redemption previously assigned to him by the client in payment of his legal services. Such transaction falls squarely under Article 1492 in relation to Article 1491, paragraph 5 of the Civil Code of the Philippines. Paragraph 5 of Article 1491 prohibits the lawyer's acquisition by assignment of the client's property which is the subject of the litigation handled by the lawyer. Under Article 1492,the prohibition extends to sales in legal redemption.The prohibition ordained in paragraph 5 of Article 1491 and Article 1492 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.

The Prohibition Also Includes The Leasing of Clients Property Subject Of Litigation.
Article 1646, NCC

- The persons disqualified to buy referred to in Articles 1490 and 1491, are also disqualified to become lessees of the things mentioned therein.

Mananquil Vs. Villegas 189 SCRA 341

FACTS: In a verified complaint for disbarment dated July 5, 1982, Mauro P. Mananquil charged respondent Atty. Crisostomo C. Villegas with gross misconduct or malpractice committed while acting as counsel of record of one Felix Leong in the latter's capacity as administrator of the Testate Estate of the late Felomina Zerna in Special Proceedings No. 460 before then Court of First Instance of Negros Occidental. The complainant was appointed special administrator after Felix Leong died. Respondent committed a breach in the performance of his duties as counsel of administrator Felix Leong when he allowed the renewal of contracts of lease for properties involved in the testate proceedings to be undertaken in favor of HIJOS DE JOSE VILLEGAS without notifying and securing the approval of the probate court. ISSUE: Whether or not the lease contracts are covered by the prohibition against any acquisition or lease by a lawyer of properties involved in litigation in which he takes part? HELD: Yes. Even if the parties designated as lessees in the assailed lease contracts were the "Heirs of Jose Villegas" and the partnership HIJOS DE JOSE VILLEGAS, and respondent signed merely as an agent of the latter, the Court rules that the lease contracts are covered by the prohibition against any acquisition or lease by a lawyer of properties involved in litigation in which he takes part. To rule otherwise would be to lend a stamp of judicial approval on an arrangement which, in effect, circumvents that which is directly prohibited by law. For, piercing through the legal fiction of separate juridical personality, the Court cannot ignore the obvious implication that respondent as one of the heirs of Jose Villegas and partner, later manager of, in HIJOS DE JOSE VILLEGAS stands to benefit from the contractual relationship created between his client Felix Leong and his family partnership over properties involved in the ongoing testate proceedings.

Mortgage A loan in which the borrower puts up the title to real estate as security (collateral)for a loan. If the borrower doesnt pay back the debt on time, the lender Can foreclose on the real estate and have it sold to pay off the loan. It is deemed included within the prohibition of Article 1491 because the mortgage maybe foreclosed and the property sold at public auction, where the lawyer may bid to be able to collect the loan and interests. The ultimate end is purchased. CASE: Fornilda Vs. RTC, Pasig, 169 SCRA 351

Other Special Disabilities:

Betrayal of Public Trust
This is committed when the lawyer undertakes the defense of a client or having received confidential information of said client in a case, shall undertake the defense of the opposing party in the same case, without the consent of his first client. This is representing conflict of interests. Art. 209 of RPC penalizes the lawyer with prision correctional (minimum).

 Revelation of Secrets
A lawyer is prohibited from revealing the secrets of his client learned in his professional capacity.
o Also punishable under Art. 209 of The Revised Penal

Code.

Presentation Of Inadmissible Affidavits Under The Rule Of Summary Procedure.

A lawyer maybe disciplined also for a violation of Sec. 20 of the Rule on Summary Procedure, if he submits affidavits stating facts which are not of the direct knowledge of the affiants and which are not admissible in evidence and do not show the competence of the affiants to testify thereto.

Deliberate Non-Signing and Signing of Pleadings In Violation Of the Rules:

Effects: An unsigned pleading has no legal effect. *However, The court may in its discretion, allow such deficiency to be remedied if it shall appear that the same was due to mere inadvertence and not intended for delay.
Counsel who deliberately files an unsigned pleading, or signs a pleading in violation of this Rule, alleges scandalous or indecent matter therein, or fails to promptly report to the court a change of his address, shall be subject to appropriate disciplinary action. (Rule 7, Sec. 3, Revised Rules on Summary Proceedings)

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