MANUEL ENRIQUE L. ZALAMEA, AND MANUEL JOSE L. ZALAMEA v. ATTY. RODOLFO P. DE GUZMAN, JR. AND PERLAS DE GUZMAN, ANTONIO, VENTURANZA, QUIZON-VENTURANZA, AND HERROSA LAW FIRM
A.C. No. 7387, November 07, 2016
Facts:
Petitioners sought respondent Atty. de Guzman, Jr.'s advice on the properties of their ailing mother under her name. When Merlinda passed away, De Guzman then prepared a letter for a possible tax-free transfer of the Scout Limbaga property to the Merlinda Holding Corporation which was sought to be incorporated to handle Merlinda's estate, and notarized the incorporation papers of said corporation.
Then Zalameas put up EMZEE FOODS INC., a corporation engaged in lechon business, with De Guzman providing the capital and operational funds. Sometime in 2002, Manuel Enrique informed De Guzman about the property located at Speaker Perez St. which was then under the name of Elarfoods, Inc., a corporation owned and run by the Zalamea brothers' aunts and uncles. Since said property had been mortgaged to BDO, the bank foreclosed it when Elarfoods failed to pay the loan. Elarfoods likewise failed to redeem the property, resulting in the consolidation of the ownership over the property in BDO's name.
Later, Manuel Enrique approached De Guzman and convinced him to help in the reacquisition of the Speaker Perez property from BDO. De Guzman thus negotiated with BDO and was able to secure a deal over the property for P20 Million. The bank required 10% downpayment of the total price or P2 Million, to be paid in 36 monthly installments, without interest. Due to lack of funds on Manuel Enrique's part, De Guzman's wife, Angel, agreed to shoulder the P2 Million downpayment in order not to lose the good opportunity, but under the condition that the Speaker Perez property would later be transferred in the name of a new corporation they had agreed to form, the EMZALDEK Venture Corporation, a combination of the names EMZEE Foods, Zalamea, and Dek de Guzman. By this time, EMZEE had also relocated to Speaker Perez.
Not long after, the relationship, between the Zalamea brothers and the Spouses De Guzman turned sour. The Spouses De Guzman wanted reimbursement of the amounts which they had advanced for the corporation, while the Zalamea brothers claimed sole ownership over the Speaker Perez property. Hence, the brothers filed a disbarment case against De Guzman for allegedly buying a client's property which was subject of litigation.
Issue:
Whether or not Atty. De Guzman violated Canon 1, 16 and 17 of the CPR
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Ruling:
No. An attorney may be disbarred or suspended for any violation of his oath or of his duties as an attorney and counselor, which include statutory grounds enumerated in Section 27, Rule 138 of the Rules of Court.
Under Article 1491 of the Civil Code, lawyers are prohibited to acquire by purchase, even at a public or judicial auction, either in person or through the mediation of another, their client's property and rights in litigation.
A lawyer is disqualified from acquiring by purchase the property and rights in litigation because of his fiduciary relationship with such property and rights, as well as with the client.
The very first Canon of the Code of Professional Responsibility provides that "a lawyer shall uphold the Constitution, obey the laws of the land and promote respect for law and legal process." Canon 17 states that a lawyer owes fidelity to the cause of his client and he shall be mindful of the trust and confidence reposed in him, while Canon 16 provides that "a lawyer shall hold in trust all moneys and properties of his client that may come into his possession." Further, Section 3, Rule 138 of the Revised Rules of Court requires every lawyer to take an oath to obey the laws as well as the legal orders of the duly constituted authorities. And for any violation of this oath, a lawyer may be suspended or disbarred by the Court. All of these underscore the role of the lawyer as the vanguard of our legal system.
However, the prohibition which the Zalameas invoke does not apply where the property purchased was not involved in litigation. De Guzman clearly never acquired any of his client's properties or interests involved in litigation in which he may take part by virtue of his profession. There exists not even an iota of proof indicating that said property has ever been involved in any litigation in which De Guzman took part by virtue of his profession. True, they had previously sought legal advice from De Guzman but only on how to handle their mother's estate, which likewise did not involve the contested property. Neither was it shown that De Guzman's law firm had taken part in any litigation involving the Speaker Perez property.
However, the prohibition which the Zalameas invoke does not apply where the property purchased was not involved in litigation. De Guzman clearly never acquired any of his client's properties or interests involved in litigation in which he may take part by virtue of his profession. There exists not even an iota of proof indicating that said property has ever been involved in any litigation in which De Guzman took part by virtue of his profession. True, they had previously sought legal advice from De Guzman but only on how to handle their mother's estate, which likewise did not involve the contested property. Neither was it shown that De Guzman's law firm had taken part in any litigation involving the Speaker Perez property.
Clearly, the relationship between the Spouses De Guzman and the Zalamea brothers is actually one of business partners rather than that of a lawyer and client. Atty. De Guzman's acquisition of the Speaker Perez property was a valid consequence of a business deal, not by reason of a lawyer-client relationship, for Which he could not be penalized by the Court.
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