ACQUISITION OF

PROPERTIES SUBJECT OF
LITIGATION
SONNY C.GIANAN II
JENDER L. MERCADO

As a rule, the lawyer should not

purchase
any interest in the subject matter of
the
litigation which he is conducting

Applicable Canons,
Rules, Laws and
Jurisprudence

Code of Professional
Responsibility

Canon 1 A lawyer shall uphold the Constitution,

obey the laws of the land and promote respect for
law and legal processes
Rule 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

Code of Professional
Responsibility

Rule 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.

Infi delty in the custody of properti es

i n custodi a legi s

Atty. 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 ethics
In executing the document transferring onehalf (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 in

consideration 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

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, 2011
The 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 Code

IN 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 3
Sec. 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 Code

The following persons cannot acquire by purchase, even at a

public or judicial auction, either in person or through the
mediation of another:
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;

Rationale

The 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.
4650.August 14, 2003]

MARCIAL

F.

LOPEZ,respondent.

[A.C.

No.

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,respondent

In 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 litigation

SUMMARY

General 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

Philippines

The 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. agents
3. administrators
4. public officers and employees
5. judicial officers and employees
6. prosecuting attorneys and lawyers
7. those specially disqualified by law

Elements of Article 1491

there
must
be
an
attorney-client
relationship
the property or interest of the client must
be in litigation
the attorney takes part as counsel in the
case
the 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
arrangement
any of the 4 elements of Art. 1491 is
missing

 Effects

malpractice on the part of the lawyer

and
may
be
disciplined
for
misconduct
transaction is null and void