FLORENTINO B. DEL ROSARIO, COMPLAINANT, VS. EUGENIO MILLADO, RESPONDENT.

Del Rosario versus Millado

The Case

This is an administrative case for disbarment. Florentino B. del Rosario asked the Supreme Court to disbar Attorney Eugenio Millado on the ground of malpractice — that the lawyer acquired an interest in land involved in litigation in which he had taken part by reason of his profession, that this interest was adverse to his client's, and that he filed pleadings containing allegations that were inconsistent with a later pleading and false. The case matters because it is the classic illustration of the prohibition against a lawyer purchasing an interest in the subject matter of the litigation he handles, and of how strictly — or how sensibly — the Court applies it.

Procedural History

The charges were referred to the Office of the Solicitor General for investigation. After due investigation, the Solicitor General submitted a report exonerating the respondent in effect. The case then came before the Supreme Court as an original administrative matter for disbarment, and the Court resolved it directly on the record and the investigator's report.

Facts

One Eladio Tiburcio, now deceased, claimed title to a tract of about 430 hectares in Diliman, Quezon City. Parts of that land became the object of two ejectment cases in the City Court of Quezon City against La Paz Mesina Vda. de Pascual, one of the heirs of the deceased. One case was filed by the complainant, Florentino B. del Rosario, and the other by Leonor Sta. Clara.

Before those cases were instituted, one Conrado Baluyot, who claimed to be another heir of Eladio Tiburcio, offered to let the respondent build a house on part of the land in consideration of his professional services in defense of the Tiburcios' claim. Their understanding was that if the Tiburcios obtained a favorable decision, the respondent could buy the land on which his house stood, lots 4 and 5 of Block E-102 of Quezon City, by paying its current value. Mrs. Pascual, who occupied another lot in the same block and claimed an interest in the whole block, knew of this arrangement and asked the respondent to be her counsel in the ejectment cases. He filed her answer and then ceased to be her counsel.

In that answer he alleged that Mrs. Pascual was the owner and possessor of the lots involved. The complainant seized on this as inconsistent with the respondent's own claim over lots 4 and 5, and as a false allegation. The respondent answered that his interest was acquired before he intervened as counsel, that his client knew of it, that there was no conflict, and that there was neither falsity nor inconsistency in the pleadings.

Issues

• Whether or not the respondent violated the prohibition against a lawyer acquiring an interest in the subject matter of litigation in which he took part by reason of his profession.
• Whether or not the respondent's interest was adverse to that of his client, Mrs. Pascual.
• Whether or not the respondent made false or inconsistent allegations in the pleadings he filed in the ejectment cases.

Applicable Provisions

Article 1491 of the Civil Code of the Philippines provides:

The following persons cannot acquire by purchase, even at a public or judicial auction, either in person or through the mediation of another: (1) The guardian, the property of the person or persons who may be under his guardianship; (2) Agents, the property whose administration or sale may have been entrusted to them, unless the consent of the principal has been given; (3) Executors and administrators, the property of the estate under administration; (4) Public officers and employees, the property of the State or of any subdivision thereof, or of any government-owned or controlled corporation, or institution the administration of which has been entrusted to them; (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 in 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.

The last clause extends the prohibition to lawyers as to property and rights that are the object of litigation in which they take part by virtue of their profession, and it is this clause the complaint invokes.

Canon 10 of the Canons of Legal Ethics, also invoked by the complainant, is described in the decision as prohibiting the purchase by lawyers of any interest in the subject matter of the litigation in which they participated by reason of their profession.

Ruling

On the first issue, the Court held that no violation was established. The prohibition exists, but the respondent introduced uncontradicted evidence that his interest in lots 4 and 5 was acquired before he intervened as counsel for Mrs. Pascual. The arrangement with Baluyot preceded the ejectment cases.

On the second issue, the Court found no conflict between the respondent's interest and that of his client. His claim was not necessarily inconsistent with hers, and the absence of conflict was made more manifest by the circumstance that the charges were preferred not by Mrs. Pascual but by her opponent in one of the ejectment cases.

On the third issue, the Court found no substantial misrepresentation. There was no real inconsistency between the allegation that Mrs. Pascual was owner and possessor of the lots and his own claim over lots 4 and 5, because the issue in the ejectment cases hinged on the right of possession, and the alleged ownership merely tended to bolster up her alleged prior possession. Neither could he acquire title to lots 4 and 5 from the heirs of Eladio Tiburcio unless they, and hence Mrs. Pascual as one of them, were the true owners.

Doctrine

A lawyer may not purchase, even at public or judicial auction, property or rights that are the object of litigation in which he takes part by virtue of his profession. The prohibition, however, is not violated where the lawyer's interest in the property was acquired before he intervened as counsel in the litigation. Nor is it violated where that interest is not necessarily inconsistent with the client's interest, especially where the client herself does not complain and the charge is brought by her opponent. A pleading is not false or inconsistent merely because it asserts the client's ownership in an ejectment case while the lawyer asserts a separate claim, where the issue is possession and the client's ownership allegation merely supports her prior possession.

Disposition

The Court found no merit in the complaint and dismissed it, leaving the respondent without liability.

Remember This

Memorize this line: the prohibition against a lawyer acquiring an interest in the subject matter of litigation is not violated when the interest was acquired before he intervened as counsel and is not inconsistent with his client's. Examiners use this case to test the lawyer's disqualification under Article 1491 of the Civil Code and Canon 10 of the Canons of Legal Ethics, and the distinction between a genuine conflict of interest and a mere allegation of inconsistency in pleadings.