In Daniel Scott McKinney v. Attys. Jerry Bañares and Rachel S. Miñon-Bañares, the Supreme Court addressed the ethical responsibilities of lawyers, particularly concerning conflicts of interest and adherence to the Code of Professional Responsibility (CPR). The Court found Atty. Rachel S. Miñon-Bañares guilty of violating Rule 1.01 and Canon 9 of the CPR for participating in a scheme to circumvent land ownership restrictions and engaging in the unauthorized practice of law while serving as a municipal mayor. This decision underscores the high ethical standards expected of legal professionals and the serious consequences of failing to meet those standards.

Can Lawyers Circumvent Constitutional Land Ownership Restrictions?

Daniel Scott McKinney, an American, filed a disbarment complaint against Attys. Jerry Bañares and Rachel S. Miñon-Bañares, alleging violations of the CPR. The case arose from engagements where Atty. Bañares agreed to act as the buyer of several lots on behalf of Tinaga Resorts Corporation, with the understanding that the lots would eventually be transferred to the corporation. McKinney provided funds for the purchase and titling of these lots. Simultaneously, Atty. Miñon-Bañares was accused of practicing law while serving as the Municipal Mayor of Corcuera, Romblon, in violation of the Local Government Code.

The central issue revolved around whether the attorneys were administratively liable for violating the CPR, specifically by circumventing constitutional restrictions on land ownership by corporations and engaging in unauthorized practice of law. The Court had to determine whether Atty. Bañares, in acting as a “dummy” to facilitate the corporation’s acquisition of land, and Atty. Miñon-Bañares, in allegedly practicing law while holding public office, had breached their ethical duties.

Before delving into the specifics of Atty. Miñon-Bañares’s involvement, the Court addressed the complaint against Atty. Bañares. It was noted that Atty. Bañares had passed away during the pendency of the administrative case. Referencing established jurisprudence, the Court acknowledged that disbarment proceedings are personal and that the death of the respondent lawyer warrants the dismissal of the case. In line with the principle of actio personalis moritur cum persona, the action is extinguished with the person. The Court dismissed the complaint against Atty. Bañares, focusing its analysis on the allegations against Atty. Miñon-Bañares.

Turning to Atty. Miñon-Bañares, the Court examined the allegations of misappropriation of funds, complicity in circumventing land ownership laws, and unauthorized practice of law. While the Court found insufficient evidence to support the claim of misappropriation, it determined that Atty. Miñon-Bañares was indeed complicit in the scheme to circumvent the constitutional prohibition on corporations owning public lands. The prohibition is rooted in Section 3, Article XII of the Constitution. As the court in Republic v. T.A.N. Properties, Inc.^[58], elucidates:

In actual practice, the constitutional ban strengthens the constitutional limitation on individuals from acquiring more than the allowed area of alienable lands of the public domain. Without the constitutional ban, individuals who already acquired the maximum area of alienable lands of the public domain could easily set up corporations to acquire more alienable public lands.

The Court scrutinized Atty. Miñon-Bañares’s defense that she was unaware of the scheme. However, the Court cited portions of her own Comment, which revealed her knowledge and involvement in the titling process, as well as her communication with both McKinney and Atty. Bañares regarding the progress and limitations of transferring the land to the corporation. This involvement, the Court reasoned, demonstrated her complicity in the misrepresentation committed by Atty. Bañares, thereby violating Rule 1.01 of the CPR, which prohibits lawyers from engaging in unlawful or deceitful conduct.

Moreover, the Court addressed the allegation that Atty. Miñon-Bañares engaged in the unauthorized practice of law while serving as a municipal mayor. Section 90(a) of the Local Government Code (LGC) expressly forbids local chief executives from practicing their profession or engaging in any occupation other than the exercise of their official functions. As the Court held in Fajardo v. Alvarez,^[70] the practice of law encompasses activities that require the application of legal knowledge, procedure, training, and experience, whether in or out of court.

The Court found that Atty. Miñon-Bañares had indeed violated this provision. Her actions, such as following up on the status of the free patents, signing acknowledgment receipts for land purchase transactions, answering legal queries from McKinney, and reminding him of the five-year prohibition on free patents, were all deemed characteristic of the legal profession and required the use of legal knowledge and skill. These actions were substantial evidence of her rendering legal services while holding public office, thereby contravening Sec. 90(a) of the LGC and Canon 9 of the CPR, which prohibits lawyers from assisting in the unauthorized practice of law.

Drawing parallels with similar cases, such as Yap-Paras v. Paras,^[66] where a lawyer was suspended for deceitful conduct related to land transactions, and Stemmerik v. Mas,^[78] where a lawyer was disbarred for advising a foreigner on illegal real estate acquisition, the Court emphasized the high ethical standards expected of legal professionals. The Court concluded that Atty. Miñon-Bañares’s actions warranted disciplinary action. She failed to uphold her duties as a lawyer in accordance with the lawyer’s oath and the CPR, thereby meriting suspension from the practice of law. Furthermore, the Court expounded on the duty of lawyers to respect and uphold the law. As expressed in Gonzales v. Bañares,^[83]:

The Court must reiterate that membership in the legal profession is a privilege that is bestowed upon individuals who are not only learned in law, but also known to possess good moral character. Lawyers should act and comport themselves with honesty and integrity in a manner beyond reproach, in order to promote the public’s faith in the legal profession.

In light of these considerations, the Court found Atty. Miñon-Bañares guilty of violating Rule 1.01 and Canon 9 of the Code of Professional Responsibility. She was suspended from the practice of law for a period of two years, with a stern warning that any repetition of similar acts would be dealt with more severely. The Court directed her to report the date of her receipt of the decision to enable the Court to determine when her suspension would take effect.

FAQs

What was the key issue in this case?	The key issue was whether Attys. Bañares and Miñon-Bañares violated the Code of Professional Responsibility by circumventing land ownership restrictions and engaging in the unauthorized practice of law. The court focused its decision on Atty. Miñon-Bañares’ actions.
Why was Atty. Bañares’s case dismissed?	Atty. Bañares’s case was dismissed because he passed away during the pendency of the administrative case. The Court recognized that disbarment proceedings are personal and that the death of the respondent lawyer warrants the dismissal of the case.
What constitutional provision was allegedly violated?	The attorneys allegedly circumvented Section 3, Article XII of the Constitution, which restricts corporations from owning lands of the public domain. The strategy was to have Atty. Bañares, a private individual, acquire the land with the eventual goal of transferring it to the corporation.
How did Atty. Miñon-Bañares participate in the scheme?	Atty. Miñon-Bañares, despite being a municipal mayor, facilitated the transaction by communicating with McKinney and Atty. Bañares about the progress and limitations of transferring the land to the corporation, thus showing her complicity.
What constitutes the unauthorized practice of law?	The unauthorized practice of law includes activities requiring legal knowledge, procedure, training, and experience. Atty. Miñon-Bañares’s actions, such as providing legal advice and facilitating land transactions, were considered the unauthorized practice of law.
What specific laws did Atty. Miñon-Bañares violate?	Atty. Miñon-Bañares violated Section 90(a) of the Local Government Code, which prohibits local chief executives from practicing their profession, and Canon 9 of the CPR, which prohibits lawyers from assisting in the unauthorized practice of law.
What was the penalty imposed on Atty. Miñon-Bañares?	Atty. Miñon-Bañares was suspended from the practice of law for two years, with a stern warning against any future repetition of similar acts.
What ethical duties do lawyers have regarding land transactions?	Lawyers must uphold honesty and integrity in all dealings, respect and uphold the law, and avoid engaging in or facilitating illegal activities. They must also avoid conflicts of interest and ensure compliance with constitutional and statutory restrictions.
Can an Affidavit of Desistance lead to the dismissal of an administrative case against a lawyer?	No, an Affidavit of Desistance does not automatically lead to the dismissal of an administrative case against a lawyer. The Supreme Court still proceeds with its investigation based on the facts and evidence.

This case serves as a reminder of the stringent ethical standards imposed on lawyers in the Philippines. It underscores the importance of upholding the law, avoiding conflicts of interest, and ensuring that legal professionals do not abuse their positions for personal gain or to circumvent legal restrictions.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: DANIEL SCOTT MCKINNEY VS. ATTYS. JERRY BAÑARES AND RACHEL S. MIÑON-BAÑARES, A.C. No. 10808, April 25, 2023