Basic Legal Ethics

Canon 18- Duty to serve with competence and due diligence

-Adarne vs Aldaba AC No. 801 6/27/1978
31

Canon 14- Duty to render legal service to the needy

-Santiago vs Fojas AC No. 4103

-Reyes vs Vitan AC No. 5835 4/15/2005

9/7/1995

32

2
Canon 15- Duty of candor, fairness and loyalty to the client

Canon 19- Duty to serve only within the bounds of law

-Northwestern Univ., Inc vs Arquillo AC No. 6632

8/2/2005
4
-Artezuela vs Maderazo AC No. 4354 4/22/2002
5
-PNB vs Cedo AC No. 3701 3/28/1995
8
-Regala vs Sandiganbayan GR#105938 9/20/1996
10

-Gonzales vs Sabacajan AC No. 4380 10/13/1995

34

Canon 20- Duty to charge only fair and reasonable fees

Canon 16- Duty to be a trustee of clients moneys &
properties

-Leviste vs CA GR#L-29184 1/30/1989

35
-Licudan vs CA GR# 91958 1/24/1991

-Unity Fishing vs Atty. Macalino AC No. 4566 12/10/2004

17
-Junio vs Atty. Grupo AC No. 5020 12/18/2001

37
-Retuya vs Gordiuz AC No. 1388 3/28/1980
40

21

-Ramos vs Ngaseo AC No. 6210 12/9/2004

-Pelmoka vs judge Diaz, Jr. AC No. 2662-CFI 11/25/82

41

23

-Director of Lands vs Ababa GR#L-26096 2/23/1979

43

-Lemoine vs Balon, Jr. AC No. 5829 10/28/2003

25

Canon 21- Duty to Preserve the clients confidence & secrets

Canon 17- Duty of fidelity to the cause of the client

-Rosacia vs Atty. Bulalacao AC No. 3754 10/2/1995

-Suntay vs Suntay AC No. 1890 8/7/2002

28

48

-Lorenzana Food Corp. vs Daria AC No. 2736 5/27/1991

29
1

Canon 22- Duty to withdraw services only for good cause &
upon notice

DAVIDE JR., J.:

-Montano vs IBP AM No. 4215 5/21/2001

In their letter of 8 September 1993, the complainants, former clients of the respondent, pray that
the latter be disbarred for "malpractice, neglect and other offenses which may be discovered
during the actual investigation of this complaint." They attached thereto an Affidavit of Merit
wherein they specifically allege:

50
-Canoy vs Ortiz

AC No. 5485 3/16/2005

53

1. That we are Defendants-Appellates [sic] in the Court of Appeals Case No.

CA-G.N. CV No. 38153 of which to our surprise lost unnecessarily the
aforesaid Petition [sic]. A close perusal of the case reveals the serious
misconduct of our attorney on record, Atty. Amado Fojas tantamount to
malpractice and negligence in the performance of his duty obligation to us,
to defend us in the aforesaid case. That the said attorney without informing
us the reason why and riding high on the trust and confidence we repose on
him either abandoned, failed to act accordingly, or seriously neglected to
answer the civil complaint against us in the sala of Judge Teresita Capulong
Case No. 3526-V-91 Val. Metro Manila so that we were deduced [sic] in
default.
2. That under false pretenses Atty. Fojas assured us that everything was in
order. That he had already answered the complaint so that in spite of the
incessant demand for him to give us a copy he continued to deny same to
us. Only to disclose later that he never answered it after all because
according to him he was a very busy man. Please refer to Court of Appeals
decision dated August 17, 1993.
3. That because of Atty. Amado Foja's neglect and malpractice of law we
lost the Judge Capulong case and our appeal to the Court of Appeals. So
that it is only proper that Atty. Fojas be disciplined and disbarred in the
practice of his profession.

Republic of the Philippines

SUPREME COURT
Manila

In his Comment, the respondent admits his "mistake" in failing to file the complainants' answer in
Civil Case No. 3526-V-91, but he alleges that it was cured by his filing of a motion for
reconsideration, which was unfortunately denied by the court. He asserts that Civil Case No.
3526-V-91 was a "losing cause" for the complainants because it was based on the expulsion of
the plaintiff therein from the Far Eastern University Faculty Association (FEUFA) which was
declared unlawful in the final decision in NCR-OD-M-90-10-050. Thus, "[t]he unfavorable
judgment in the Regional Trial Court is not imputable to [his] mistake but rather imputable to the
merits of the case, i.e., the decision in the Expulsion case wherein defendants (complainants
herein) illegally removed from the union (FEUFA) membership Mr. Paulino Salvador. . . ." He
further claims that the complainants filed this case to harass him because he refused to share
his attorney's fees in the main labor case he had handled for them. The respondent then prays
for the dismissal of this complaint for utter lack of merit, since his failure to file the answer was
cured and, even granting for the sake of argument that such failure amounted to negligence, it
cannot warrant his disbarment or suspension from the practice of the law profession.

FIRST DIVISION

A.C. No. 4103 September 7, 1995

VERONICA S. SANTIAGO, BENJAMIN Q. HONTIVEROS, MR. SOCORRO F. MANAS, and
TRINIDAD NORDISTA, complainants,
vs.
ATTY. AMADO R. FOJAS, respondent.

The complainants filed a Reply to the respondent's Comment.

Thereafter, the trial court rendered a decision ordering the complainants herein to pay, jointly
and severally, plaintiff Salvador the amounts of P200,000.00 as moral damages; P50,000.00 as
exemplary damages or corrective damages; and P65,000.00 as attorney's fees; plus cost of suit.

Issues having been joined, we required the parties to inform us whether they were willing to
submit this case for decision on the basis of the pleadings they have filed. In their separate
compliance, both manifested in the affirmative.

The complainants, still assisted by the respondent, elevated the case to the Court of Appeals,
which, however, affirmed in toto the decision of the trial court.

The facts in this case are not disputed.

The respondent asserts that he was about to appeal the said decision to this Court, but his
services as counsel for the complainants and for the union were illegally and unilaterally
terminated by complainant Veronica Santiago.

Complainants Veronica Santiago, Benjamin Hontiveros, Ma. Socorro Manas, and Trinidad
Nordista were the President, Vice-President, Treasurer, and Auditor, respectively, of the FEUFA.
They allegedly expelled from the union Paulino Salvador. The latter then commenced with the
Department of Labor and Employment (DOLE) a complaint (NCR-OD-M-90-10-050) to declare
illegal his expulsion from the union.

The core issue that presents itself is whether the respondent committed culpable negligence, as
would warrant disciplinary action, in failing to file for the complainants an answer in Civil Case
No. 3526-V-91 for which reason the latter were declared in default and judgment was rendered
against them on the basis of the plaintiff's evidence, which was received ex-parte.

In his resolution of 22 November 1990, Med-Arbiter Tomas Falconitin declared illegal Salvador's
expulsion and directed the union and all its officers to reinstate Salvador's name in the roll of
union members with all the rights and privileges appurtenant thereto. This resolution was
affirmed in toto by the Secretary of Labor and Employment.

It is axiomatic that no lawyer is obliged to act either as adviser or advocate for every person who
may wish to become his client. He has the right to decline employment, 1 subject, however, to
Canon 14 of the Code of Professional Responsibility. Once he agrees to take up the cause of a
client, the lawyer owes fidelity to such cause and must always be mindful of the trust and
confidence reposed in him. 2 He must serve the client with competence and diligence, 3 and
champion the latter's cause with wholehearted fidelity, care, and devotion. 4 Elsewise stated, he
owes entire devotion to the interest of the client, warm zeal in the maintenance and defense of
his client's rights, and the exertion of his utmost learning and ability to the end that nothing be
taken or withheld from his client, save by the rules of law, legally applied. 5 This simply means
that his client is entitled to the benefit of any and every remedy and defense that is authorized by
the law of the land and he may expect his lawyer to assert every such remedy or defense. 6 If
much is demanded from an attorney, it is because the entrusted privilege to practice law carries
with it the correlative duties not only to the client but also to the court, to the bar, and to the
public. A lawyer who performs his duty with diligence and candor not only protects the interest of
his client; he also serves the ends of justice, does honor to the bar, and helps maintain the
respect of the community to the legal profession. 7

Subsequently, Paulino Salvador filed with the Regional Trial Court (RTC) of Valenzuela, Metro
Manila, Branch 172, a complaint against the complainants herein for actual, moral, and
exemplary damages and attorney's fees, under Articles 19, 20, and 21 of the Civil Code. The
case was docketed as Civil Case No. 3526-V-91.
As the complainants' counsel, the respondent filed a motion to dismiss the said case on grounds
of (1) res judicata by virtue of the final decision of the Med-Arbiter in NCR-OD-M-90-10-050 and
(2) lack of jurisdiction, since what was involved was an intra-union issue cognizable by the
DOLE. Later, he filed a supplemental motion to dismiss.
The trial court, per Judge Teresita Dizon-Capulong, granted the motion and ordered the
dismissal of the case. Upon Salvador's motion for reconsideration, however, it reconsidered the
order of dismissal, reinstated the case, and required the complainants herein to file their answer
within a nonextendible period of fifteen days from notice.

The respondent admits that it was his duty to file an answer in Civil Case No. 3526-V-91. He
justifies his failure to do so in this wise:

Instead of filing an answer, the respondent filed a motion for reconsideration and dismissal of the
case. This motion having been denied, the respondent filed with this Court a petition
for certiorari, which was later referred to the Court of Appeals and docketed therein as CA-G.R.
SP No. 25834.

[I]n his overzealousness to question the Denial Order of the trial court, 8 [he]
instead, thru honest mistake and excusable neglect, filed a PETITION
FOR CERTIORARI with the Honorable Court, docketed as G.R. No.
100983. . . .

Although that petition and his subsequent motion for reconsideration were both denied, the
respondent still did not file the complainants' answer in Civil Case No. 3526-V-91. Hence, upon
plaintiff Salvador's motion, the complainants were declared in default, and Salvador was
authorized to present his evidence ex-parte.

And, when the Court of Appeals, to which G.R. No. 100983 was referred, dismissed
the petition, he again "inadvertently" failed to file an answer "[d]ue to honest mistake
and because of his overzealousness as stated earlier. . . . "

The respondent then filed a motion to set aside the order of default and to stop the exparte reception of evidence before the Clerk of Court, but to no avail.

In their Reply, the complainants allege that his failure to file an answer was not an honest
mistake but was "deliberate, malicious and calculated to place them on the legal disadvantage,
to their damage and prejudice" for, as admitted by him in his motion to set aside the order of

default, his failure to do so was "due to volume and pressure of legal work." 9 In short, the
complainants want to impress upon this Court that the respondent has given inconsistent
reasons to justify his failure to file an answer.

A lawyer, when advising his client, shall give a candid and honest opinion on
the merits and probable results of the client's case, neither overstating nor
understanding the prospects of the case.

We agree with the complainants. In his motion for reconsideration of the default order, the
respondent explained his non-filing of the required answer by impliedly invoking forgetfulness
occasioned by a large volume and pressure of legal work, while in his Comment in this case he
attributes it to honest mistake and excusable neglect due to his overzealousness to question the
denial order of the trial court.

Then too, if he were unconvinced of any defense, we are unable to understand why
he took all the trouble of filing a motion to dismiss on the grounds of res judicata and
lack of jurisdiction and of questioning the adverse ruling thereon initially with this Court
and then with the Court of Appeals, unless, of course, he meant all of these to simply
delay the disposition of the civil case. Finally, the complainants were not entirely
without any valid or justifiable defense. They could prove that the plaintiff was not
entitled to all the damages sought by him or that if he were so, they could ask for a
reduction of the amounts thereof.

Certainly, "overzealousness" on the one hand and "volume and pressure of legal work" on the
other are two distinct and separate causes or grounds. The first presupposes the respondent's
full and continuing awareness of his duty to file an answer which, nevertheless, he subordinated
to his conviction that the trial court had committed a reversible error or grave abuse of discretion
in issuing an order reconsidering its previous order of dismissal of Salvador's complaint and in
denying the motion to reconsider the said order. The second ground is purely based on
forgetfulness because of his other commitments.

We do not therefore hesitate to rule that the respondent is not free from any blame for the sad
fate of the complainants. He is liable for inexcusable negligence.
WHEREFORE, ATTY. AMADO R. FOJAS is hereby REPRIMANDED and ADMONISHED to be,
henceforth, more careful in the performance of his duty to his clients.

Whether it be the first or the second ground, the fact remains that the respondent did not comply
with his duty to file an answer in Civil Case No. 3526-V-91. His lack of diligence was
compounded by his erroneous belief that the trial court committed such error or grave abuse of
discretion and by his continued refusal to file an answer even after he received the Court of
Appeals' decision in the certiorari case. There is no showing whatsoever that he further assailed
the said decision before this Court in a petition for review under Rule 45 of the Rules of Court to
prove his claim of overzealousness to challenge the trial court's order. Neither was it shown that
he alleged in his motion to lift the order of default that the complainants had a meritorious
defense. 10 And, in his appeal from the judgment by default, he did not even raise as one of the
errors of the trial court either the impropriety of the order of default or the court's grave abuse of
discretion in denying his motion to lift that order.

SO ORDERED.

Republic of the Philippines

SUPREME COURT
EN BANC
A.C. No. 6632. August 2, 2005

Pressure and large volume of legal work provide no excuse for the respondent's inability to
exercise due diligence in the performance of his duty to file an answer. Every case a lawyer
accepts deserves his full attention, diligence, skill, and competence, regardless of its importance
and whether he accepts it for a fee or for free.

NORTHWESTERN UNIVERSITY, INC., and BEN A. NICOLAS, Complainant,

vs.
Atty. MACARIO D. ARQUILLO, Respondent.

All told, the respondent committed a breach of Canon 18 of the Code of Professional
Responsibility which requires him to serve his clients, the complainants herein, with diligence
and, more specifically, Rule 18.03 thereof which provides: "A lawyer shall not neglect a legal
matter entrusted to him, and his negligence in connection therewith shall render him liable."

DECISION
PANGANIBAN, J.:
Representing conflicting interests is prohibited by the Code of Professional Responsibility.
Unless all the affected clients written consent is given after a full disclosure of all relevant facts,
attorneys guilty of representing conflicting interests shall as a rule be sanctioned with
suspension from the practice of law.

The respondent's negligence is not excused by his claim that Civil Case No. 3526-V-91 was in
fact a "losing cause" for the complainants since the claims therein for damages were based on
the final decision of the Med-Arbiter declaring the complainants' act of expelling Salvador from
the union to be illegal. This claim is a mere afterthought which hardly persuades us. If indeed the
respondent was so convinced of the futility of any defense therein, he should have seasonably
informed the complainants thereof. Rule 15.05, Canon 15 of the Code of Professional
Responsibility expressly provides:

The Case and the Facts

This administrative case stems from a sworn Letter-Complaint1 filed with the Integrated Bar of
the Philippines-Commission on Bar Discipline (IBP-CBD) by Ben A. Nicolas, acting for himself
and on behalf of Northwestern University, Inc. In that Letter-Complaint, Atty. Macario D. Arquillo
was charged with deceit, malpractice, gross misconduct and/or violation of his oath as attorney
by representing conflicting interests. The material averments of the Complaint are summarized
by the IBP-CBD as follows:

On December 12, 2004, the Resolution and the records of the case were transmitted to this
Court for final action, pursuant to Section 12(b) of Rule 139-B of the Rules of Court. On January
20, 2005, respondent filed a Motion for Reconsideration to set aside Resolution No. XVI-2004415. The IBP denied the Motion.

"Herein [c]omplainants, Northwestern University, Inc. and Mr. Ben A. Nicolas, accuses (sic)
herein [r]espondent, Atty. Macario D. Arquillo, of engaging in conflicting interest in a case
before the National Labor Relations Commission, Regional Arbitration Branch No. 1, San
Fernando, La Union.

We agree with the findings of the IBP Board of Governors, but reduce the recommended period
of suspension to one year.

The Courts Ruling

Administrative Liability of Respondent

"Complainant alleges that in a consolidated case, herein [r]espondent appeared and acted as
counsels for both complainants (eight out of the eighteen complainants therein) and respondent
(one out of the ten respondents therein).

The Code of Professional Responsibility requires lawyers to observe candor, fairness and loyalty
in all their dealings and transactions with their clients.7 Corollary to this duty, lawyers shall not
represent conflicting interests, except with all the concerned clients written consent, given after
a full disclosure of the facts.8

"In a consolidation of NLRC Cases [Nos.] 1-05-1086-97, 1-05-1087-97, 1-05-1088-97, 1-051091-97, 1-05-1092-97, 1-05-1097-97, 1-05-1109-97, 1-05-1096-97 ("consolidated cases"),
herein [r]espondent appeared as counsel for complainants therein, Teresita A. Velasco, Gervacio
A. Velasco, Mariel S. Hernando, Virginio C. Rasos, Bonifacio S. Blas, Ronald A. Daoang,
Luzviminda T. Urcio and Araceli Quimoyog. In the very same consolidated case, [r]espondent
was also the counsel of one of the respondents therein, Jose G. Castro.

When a lawyer represents two or more opposing parties, there is a conflict of interests, the
existence of which is determined by three separate tests: (1) when, in representation of one
client, a lawyer is required to fight for an issue or claim, but is also duty-bound to oppose it for
another client; (2) when the acceptance of the new retainer will require an attorney to perform an
act that may injuriously affect the first client or, when called upon in a new relation, to use
against the first one any knowledge acquired through their professional connection; or (3) when
the acceptance of a new relation would prevent the full discharge of an attorneys duty to give
undivided fidelity and loyalty to the client or would invite suspicion of unfaithfulness or double
dealing in the performance of that duty.9

"Complainants, as their evidence, submitted the Motion to Dismiss dated August 12, 1997 filed
by Jose G. Castro, represented by his counsel, herein [r]espondent filed before the NLRC of
San Fernando, La Union. Sixteen (16) days later or on August 28, 1997, [r]espondent filed
a Complainants Consolidated Position Paper, this time representing some of the
complainants in the very same consolidated case."2 (Citations omitted)

In the present case, Atty. Macario D. Arquillo, as counsel for Respondent Jose C. Castro in
NLRC Case Nos. I-05-1083-97 to I-05-1109-97, filed a Motion to Dismiss those cases. Shortly
thereafter, a position paper was filed by Atty. Arquillo as counsel for several complainants in
consolidated NLRC Case Nos. I-05-1087-97, I-05-1088-97, I-05-1091-97, I-05-1092-97, I-051096-97, I-05-1097-97, and I-05-1109-97. All the cases in the second set were included in the
first one, for which he had filed the subject Motion to Dismiss. Furthermore, in his position paper
for the complainants, Atty. Arquillo protected his other client, Respondent Jose C. Castro, in
these words:

Respondent failed to file his Answer to the Complaint despite a June 24 1998 Order of the IBPCBD directing him to do so. Even after receiving five notices, he failed to appear in any of the
scheduled hearings. Consequently, he was deemed to have waived his right to participate in the
proceedings. Thereafter, the complainants were ordered to submit their verified position paper
with supporting documents, after which the case was to be deemed submitted for decision. 4 In
their Manifestation5 dated August 30, 2004, they said that they would no longer file a position
paper. They agreed to submit the case for decision on the basis of their Letter-Affidavit dated
March 16, 1998, together with all the accompanying documents.

"3. More than lack of valid cause for the dismissal of complainants, respondents, except Atty.
Jose C. Castroand Atty. Ernesto B. Asuncion, should be made accountable for not according
complainants their right to due process."10

Report and Recommendation of the IBP

In his Report,6 Commissioner Dennis B. Funa found respondent guilty of violating the conflict-ofinterests rule under the Code of Professional Responsibility. Thus, the former recommended the
latters suspension from the practice of law for a period of six (6) months.

In his two-page Motion for Reconsideration, Atty. Arquillo claims that there was no conflict of
interest in his representation of both the respondent and the complainants in the same
consolidated cases, because all of them were allegedly on the same side. Attaching to the
Motion the Decision of Labor Arbiter Norma C. Olegario on the consolidated NLRC cases, Atty.
Arquillo theorizes that her judgment absolved Castro of personal liability for the illegal dismissal
of the complainants; this fact allegedly showed that there was no conflict in the interests of all
the parties concerned.

In Resolution No. XVI-2004-415 dated October 7, 2004, the Board of Governors of the IBP
adopted the Report and Recommendation of Commissioner Funa, with the modification that the
period of suspension was increased to two (2) years.

This Court does not agree. Atty. Arquillos acts cannot be justified by the fact that, in the end,
Castro was proven to be not personally liable for the claims of the dismissed employees. Having
agreed to represent one of the opposing parties first, the lawyer should have known that there
was an obvious conflict of interests, regardless of his alleged belief that they were all on the
same side. It cannot be denied that the dismissed employees were the complainants in the
same cases in which Castro was one of the respondents. Indeed, Commissioner Funa correctly
enounced:

FIRST DIVISION
A.C. No. 4354

April 22, 2002

LOLITA ARTEZUELA, complainant,

vs.
ATTY. RICARTE B. MADERAZO, respondent.

"As counsel for complainants, [r]espondent had the duty to oppose the Motion to Dismiss filed by
Jose G. Castro. But under the circumstance, it would be impossible since [r]espondent is also
the counsel of Jose G. Castro. And it appears that it was [r]espondent who prepared the Motion
to Dismiss, which he should be opposing [a]s counsel of Jose G. Castro, Respondent had the
duty to prove the Complaint wrong. But Respondent cannot do this because he is the counsel
for the complainants. Here lies the inconsistency. The inconsistency of interests is very
clear.

PUNO, J.:
For his failure to meet the exacting standards of professional ethics, the Board of Governors of
the Integrated Bar of the Philippines (IBP) in its Resolution of May 2, 2000 recommended the
suspension from the practice of law of respondent Atty. Ricarte B. Maderazo for the period of six
(6) months, with a stern warning that repetition of the same act will be dealt with more severely.
Respondent allegedly represented conflicting interests in violation of Canon 6 of the Code of
Professional Ethics, and Canon 15 and Rule 15.03 of the Code of Professional Responsibility.1

"Thus it has been noted

By way of a Motion for Reconsideration,2 respondent now comes before this Court to challenge
the basis of the IBP's resolution, and prays for its reversal.

The attorney in that situation will not be able to pursue, with vigor and zeal, the clients claim
against the other and to properly represent the latter in the unrelated action, or, if he can do so,
he cannot avoid being suspected by the defeated client of disloyalty or partiality in favor of the
successful client. The foregoing considerations will strongly tend to deprive the relation of
attorney and client of those special elements which make it one of trust and confidence[.] (Legal
Ethics, Agpalo, p. 230, 4th ed.; In re De la Rosa, 21 Phil. 258)"11

The factual antecedents of the case are as follows: On or about 3:00 in the early morning of
December 24, 1992, Allan Echavia had a vehicular accident at Caduman St., corner H. Abellana
St., Mandaue City. At the time of the accident, Echavia was driving a Ford Telstar car owned by
a Japanese national named Hirometsi Kiyami, but was registered in the name of his brother-inlaw, Jun Anthony Villapez. The car rammed into a small carinderia owned by complainant Lolita
Artezuela.3

An attorney cannot represent adverse interests. It is a hornbook doctrine grounded on public

policy that a lawyers representation of both sides of an issue is highly improper. The
proscription applies when the conflicting interests arise with respect to the same general matter,
however slight such conflict may be. It applies even when the attorney acts from honest
intentions or in good faith.12

The destruction of the complainant's carinderia caused the cessation of the operation of her
small business, resulting to her financial dislocation. She incurred debts from her relatives and
due to financial constraints, stopped sending her two children to college. 4

The IBP Board of Governors recommended that respondent be suspended from the practice of
law for two years. Considering, however, prior rulings in cases also involving attorneys
representing conflicting interests, we reduce the suspension to one (1) year.13

Complainant engaged the services of the respondent in filing a damage suit against Echavia,
Villapez and one Bernardo Sia.5 Docketed as Civil Case No. 13666, the case was assigned to
Branch 14 of the Regional Trial Court of Cebu. An Amended Complaint was thereafter filed,
impleading Echavia, Kiyami and Villapez, and dropping Sia as a party-defendant.6 For his
services, complainant paid the respondent the amount of Ten Thousand Pesos (P10,000.00) as
attorney's fees and Two Thousand Pesos (P2,000.00) as filing fee.7 However, the case was
dismissed on March 22, 1994, allegedly upon the instance of the complainant and her husband.8

WHEREFORE, Atty. Macario D. Arquillo is found GUILTY of misconduct and is

hereby SUSPENDED from the practice of law for a period of one (1) year effective upon his
receipt of this Decision, with a warning that a similar infraction shall be dealt with more severely
in the future.

Because of the dismissal of Civil Case No. 13666, complainant filed a civil case for damages
against the respondent. It was docketed as CEB-18552 and assigned to Branch 57, Regional
Trial Court of Cebu City. The case was dismissed on June 12, 2001.9

SO ORDERED.

On November 24, 1994, Artezuela filed before this Court a verified complaint for disbarment
against the respondent. She alleged that respondent grossly neglected his duties as a lawyer
and failed to represent her interests with zeal and enthusiasm. According to her, when Civil Case
No. 13666 was scheduled for pre-trial conference on August 20, 1993, respondent asked for its

Republic of the Philippines

SUPREME COURT
Baguio City

postponement although all the parties were present. Notwithstanding complainant's persistent
and repeated follow-up, respondent did not do anything to keep the case moving. He withdrew
as counsel without obtaining complainant's consent.10

suspension, which he claims to be harsh considering that his private practice is his only source
of income.15
After carefully examining the records, as well as the applicable laws and jurisprudence on the
matter, this Court is inclined to uphold the IBP's resolution.1wphi1.nt

Complainant also claimed that respondent engaged in activities inimical to her interests. While
acting as her counsel, respondent prepared Echavia's Answer to the Amended Complaint. The
said document was even printed in respondent's office. Complainant further averred that it was
respondent who sought the dismissal of the case, misleading the trial court into thinking that the
dismissal was with her consent.11

In administrative cases, the requirement of notice and hearing does not connote full adversarial
proceedings, as "actual adversarial proceedings become necessary only for clarification or when
there is a need to propound searching questions to witnesses who give vague
testimonies."16 Due process is fulfilled when the parties were given reasonable opportunity to be
heard and to submit evidence in support of their arguments.17

Respondent denied the complainant's allegations and averred that he conscientiously did his
part as the complainant's lawyer in Civil Case No. 13666. He withdrew as counsel because the
complainant was uncooperative and refused to confer with him. He also gave several notices to
the complainant and made known his intention before he filed his Manifestation to withdraw as
counsel. Because of the severed relationship, the lower court, after holding a conference,
decided to grant respondent's manifestation and advised the complainant to secure the services
of a new lawyer. Complainant, however, refused and instead, sought the dismissal of the case. 12

In the case at bar, records show that respondent repeatedly sought the postponement of the
hearings, prompting the Investigating Commissioner to receive complainant's evidence ex
parte and to set the case for resolution after the parties have submitted their respective
memorandum. Hence:
"The records show that this is already the third postponement filed by respondent namely
December 12, 1996 (sic), January 3, 1996 and April 1, 1996.

Respondent alleged that he sought the postponement of the Pre-Trial Conference scheduled on
August 20, 1993 so that he could file the Amended Complaint. He admitted that Echavia's
Answer to the Amended Complaint was printed in his office but denied having prepared the
document and having acted as counsel of Echavia. He claimed that complainant requested him
to prepare Echavia's Answer but he declined. Echavia, however, went back to his office and
asked respondent's secretary to print the document. Respondent intimated that the complainant
and Echavia have fabricated the accusations against him to compel him to pay the amount
ofP500,000.00.13

The Commission for the last time, will cancel today's hearing and can no longer tolerate any
further postponement. Notify respondent by telegram for the hearing for (sic) April 22, 1996 at
2:00 P.M. Said hearing is intransferable in character.
In the meantime, complainant affirmed her complaint and likewise her witness, Allan Echavia,
also affirmed the contents of his affidavit and further stated that he had executed the same and
understood the contents thereof."18

This Court referred the complaint to the Integrated Bar of the Philippines (IBP). The IBP-Visayas
Regional Committee on Bar Discipline formed an Investigating Committee to hear the
disbarment complaint.

It is by his own negligence that the respondent was deemed to have waived his right to crossexamine the complainant and her witness. He cannot belatedly ask this Court to grant new trial
after he has squandered his opportunity to exercise his right.

On October 6, 1999, Commissioner Gabriel T. Ingles issued a Report finding the respondent
guilty of representing conflicting interests, in violation of Canon 15 and Rule 15.03 of the Code of
Professional Responsibility, as well as, of Canon 6 of the Code of Professional Ethics. He
recommended that the respondent be suspended from the practice of law for a period of one (1)
year.14 Commissioner Ingles did not rule on the other issues.

Respondent's contention that the finding of the Investigating Committee was contrary to the
records and the complainant's own admission in CEB-18552 is without merit. It is true that Atty.
Aviola was Echavia's counsel-of-record in Civil Case No. 13666 as evidenced by the certification
from the clerk of court,19 and as admitted by the complainant in CEB-18552, viz:

As aforesaid, the Board of Governors of the Integrated Bar of the Philippines upheld the findings
of the Committee with modification only as to the penalty.

"ATTY. MADERAZO: (To witness- ON CROSS)

Q:
Madam witness, you mentioned that the defendant in this case was the counsel of Allan
Echavia as early as August 20, 1993, wherein you learned for the first time of this fact when you
say he is counsel of Allan Echavia. (sic) You mean he is the counsel of record of Allan Echavia in
the Civil Case before Judge Dacudao? Is that what you mean?

Seeking reconsideration of the IBP's resolution, respondent contends that the Investigating
Committee did not conduct trial; hence, he was not able to confront and examine the witnesses
against him. He argues that the Investigating Committee's finding that he represented Echavia is
contrary to court records and the complainant's own testimony in CEB-18552. He also casts
doubt on the credibility of the Investigating Committee to render just and fair recommendations
considering that the Investigating Commissioner and the respondent are counsel-adversaries in
another case, Civil Case No. R-33277. Finally, he questions the imposition of a six-month

A:
What I learned was that Atty. Alviola was the counsel of Allan Echavia in the case before
Judge Dacudao but I heard Atty. Maderazo telling Allan Echavia not to admit that Atty. Maderazo
is appearing for me because he will be the one to coordinate with Allan's case.

Q:
So it is clear that the defendant in this case is not the counsel of record of Allan Echavia.
It was Atty. Alviola stated by you now?

The professional obligation of the lawyer to give his undivided attention and zeal for his client's
cause is likewise demanded in the Code of Professional Responsibility. Inherently
disadvantageous to his client's cause, representation by the lawyer of conflicting interests
requires disclosure of all facts and consent of all the parties involved. Thus:

A:
Atty. Maderazo was not Allan Echavia's counsel but it was Atty. Alviola who was the
counsel of record of Allan Echavia."20

"CANON 15- All lawyers shall observe candor, fairness and loyalty in all his dealings and
transactions with his clients.

Nevertheless, the issue in this case is not whether the respondent also acted as the counsel-ofrecord of Echavia. Rather, it is whether or not he had a direct hand in the preparation of
Echavia's Answer to the Amended Complaint.

xxx

To be guilty of representing conflicting interests, a counsel-of-record of one party need not also
be counsel-of-record of the adverse party. He does not have to publicly hold himself as the
counsel of the adverse party, nor make his efforts to advance the adverse party's conflicting
interests of record--- although these circumstances are the most obvious and satisfactory proof
of the charge. It is enough that the counsel of one party had a hand in the preparation of the
pleading of the other party, claiming adverse and conflicting interests with that of his original
client. To require that he also be counsel-of-record of the adverse party would punish only the
most obvious form of deceit and reward, with impunity, the highest form of disloyalty.

Rule 15.03- A lawyer shall not represent conflicting interests except by written consent of all
concerned given after a full disclosure of the facts."

Canon 6 of the Code of Professional Ethics states:

A perusal of Echavia's Answer to the Amended Complaint shows that it indeed conflicts with the
complainant's claims. It reads:

While the Resolution of the IBP is purely recommendatory, we find no reason to reverse the
same. In disciplinary proceedings against members of the bar, only clear preponderance of
evidence is required to establish liability. As long as the evidence presented by complainant or
that taken judicial notice of by the Court is more convincing and worthy of belief than that which
is offered in opposition thereto, the imposition of disciplinary sanction is justified.23

"It is the duty of a lawyer at the time of the retainer to disclose to the client the circumstances of
his relations to the parties and any interest in or in connection with the controversy, which might
influence the client in the selection of the counsel.

"1. The allegations (sic) in Paragraph One (1) of the Complaint is admitted in so far as it pertains
to the personal circumstance and residence of the answering defendant. The rest of the
allegations in Paragraph One (1), and all the allegations in Paragraph Two (2) , THREE (3),
FOUR (4), FIVE (5), SIX (6), ELEVEN (11), TWELVE (12), and FOURTEEN (14), of the
Complaint are DENIED for lack of knowledge sufficient to form a belief as to the truth of such
allegations."24

"It is unprofessional to represent conflicting interests, except by express consent of all

concerned given after a full disclosure of the facts. Within the meaning of this Canon, a lawyer
represents conflicting interests when in behalf of one of the clients, it is his duty to
contend for that which duty to another client requires him to oppose." (emphasis supplied)

By way of prayer, Echavia states:

An attorney owes his client undivided allegiance. Because of the highly fiduciary nature of the
attorney-client relationship, sound public policy dictates that a lawyer be prohibited from
representing conflicting interests or discharging inconsistent duties. He may not, without being
guilty of professional misconduct, act as counsel for a person whose interest conflicts with that
of his present or former client. Indeed, good faith and honest intention on the part of the erring
lawyer does not make this rule inoperative.21 The lawyer is an officer of the court and his actions
are governed by the uncompromising rules of professional ethics. Thus:

"WHEREFORE, it is respectfully prayed that after hearing, judgment be rendered dismissing

plaintiff's complaint."25
Anent the authorship by the respondent of the document quoted above, the Investigating
Committee found the testimonies of the complainant and Echavia credible as opposed to
respondent's bare denial. As pointed out by Echavia, he was approached by Atty. Maderazo,
introduced himself as his lawyer and after some sessions in the latter's office, asked him to
return and sign a document which he later identified as the Answer to the Amended Complaint.

"The relations of attorney and client is founded on principles of public policy, on good taste. The
question is not necessarily one of the rights of the parties, but as to whether the attorney has
adhered to proper professional standard. With these thoughts in mind, it behooves attorneys,
like Ceasar's wife, not only to keep inviolate the client's confidence, but also to avoid the
appearance of treachery and double-dealing. Only thus can litigants be encouraged to entrust
their secrets to their attorneys which is of paramount importance in the administration of
justice."22

The Investigating Committee found respondent's defense weak. Respondent did not bother to
present his secretary as witness, nor obtain her affidavit to prove his allegations. Instead, he
offered a convenient excuse--- that he cannot anymore locate his secretary.
Respondent argued that it was the complainant who asked him to prepare Echavia's Answer to
the Amended Complaint, after reaching an agreement whereby Echavia would testify in favor of
the complainant. After he declined the request, he claimed that it was the complainant who

prepared the document and asked his secretary to print the same. But as shown, Echavia's
Answer to the Amended Complaint was in no way favorable to the complainant.

EN BANC

With the dismissal of Civil Case No. 13666, Echavia is practically off the hook. We cannot find
any reason why Echavia would commit perjury and entangle himself, once again, with the law.
He does not stand to profit at all by accusing the respondent falsely.

A.C. No. 3701 March 28, 1995

PHILIPPINE NATIONAL BANK, complainant,
vs.
ATTY. TELESFORO S. CEDO, respondent.

Furthermore, considering complainant's stature and lack of legal education, we can not see how
she could have prepared Echavia's Answer to the Amended Complaint and device a legal
maneuver as complicated as the present case.

RESOLUTION

Respondent's attack on the credibility of Investigating Commissioner Ingles to render an

impartial decision, having been an adversary in Civil Case No. R-33277, does not convince us to
grant new trial. This is the first time that respondent questions the membership of Commissioner
Ingles in the Investigating Committee. If respondent really believed in good faith that
Commissioner Ingles would be biased and prejudiced, he should have asked for the latter's
inhibition at the first instance. Moreover, we could not find any hint of irregularity, bias or
prejudice in the conduct of the investigation that would lead us to set it aside.

BIDIN, J.:
In a verified letter-complaint dated August 15, 1991, complainant Philippine National Bank
charged respondent Atty. Telesforo S. Cedo, former Asst. Vice-President of the Asset
Management Group of complainant bank with violation of Canon 6, Rule 6.03 of the Code of
Professional Responsibility, thus:

Finally, we remind the respondent that the practice of law is not a property right but a mere
privilege, and as such, must bow to the inherent regulatory power of the Court to exact
compliance with the lawyer's public responsibilities.26 The suspension of the respondent's
privilege to practice law may result to financial woes. But as the guardian of the legal profession,
we are constrained to balance this concern with the injury he caused to the very same
profession he vowed to uphold with honesty and fairness.1wphi1.nt

A lawyer shall not, after leaving government service, accept engagement or employment in
connection with any matter in which he had intervened while in said service.
by appearing as counsel for individuals who had transactions with complainant bank in which
respondent during his employment with aforesaid bank, had intervened.

IN VIEW WHEREOF, the Resolution of the IBP finding the respondent guilty of violating Canon 6
of the Code of Professional Ethics, and Canon 15 and Rule 15.03 of the Code of Professional
Responsibility is affirmed. Respondent is suspended from the practice of law for six (6) months
with a stern warning that a similar act in the future shall be dealt with more severely.

Complainant averred that while respondent was still in its employ, he participated in arranging
the sale of steel sheets (denominated as Lots 54-M and 55-M) in favor of Milagros Ong Siy for
P200,000. He even "noted" the gate passes issued by his subordinate, Mr. Emmanuel Elefan, in
favor of Mrs. Ong Siy authorizing the pull-out of the steel sheets from the DMC Man Division
Compound. When a civil action arose out of this transaction between Mrs. Ong Siy and
complainant bank before the Regional Trial Court of Makati, Branch 146, respondent who had
since left the employ of complainant bank, appeared as one of the counsels of Mrs. Ong Siy.

SO ORDERED.

Similarly, when the same transaction became the subject of an administrative case filed by
complainant bank against his former subordinate Emmanuel Elefan, for grave misconduct and
dishonesty, respondent appeared as counsel for Elefan only to be later disqualified by the Civil
Service Commission.
Moreover, while respondent was still the Asst. Vice President of complainants Asset
Management Group, he intervened in the handling of the loan account of the spouses Ponciano
and Eufemia Almeda with complainant bank by writing demand letters to the couple. When a
civil action ensued between complainant bank and the Almeda spouses as a result of this loan
account, the latter were represented by the law firm "Cedo, Ferrer, Maynigo & Associates" of
which respondent is one of the Senior Partners.

Republic of the Philippines

SUPREME COURT
Manila

In his Comment on the complaint, respondent admitted that he appeared as counsel for Mrs.
Ong Siy but only with respect to the execution pending appeal of the RTC decision. He alleged
that he did not participate in the litigation of the case before the trial court. With respect to the
case of the Almeda spouses, respondent alleged that he never appeared as counsel for them.
He contended that while the law firm "Cedo Ferrer, Maynigo & Associates" is designated as
counsel of record, the case is actually handled only by Atty. Pedro Ferrer. Respondent averred
that he did not enter into a general partnership with Atty. Pedro Ferrer nor with the other lawyers
named therein. They are only using the aforesaid name to designate a law firm maintained by
lawyers, who although not partners, maintain one office as well as one clerical and supporting
staff. Each one of them handles their own cases independently and individually receives the
revenues therefrom which are not shared among them.

to Set Hearing" before this Court, the aforesaid Motion for Reconsideration. In resolving this
case, the Court took into consideration the aforesaid pleadings.
In addition to the findings of the IBP, this Court finds this occasion appropriate to emphasize the
paramount importance of avoiding the representation of conflicting interests. In the similar case
of Pasay Law and Conscience Union, Inc. vs. Paz, (95 SCRA 24 [1980]) where a former Legal
Officer and Legal Prosecutor of PARGO who participated in the investigation of the Anti-Graft
case against Mayor Pablo Cuneta later on acted as counsel for the said Mayor in the same antigraft case, this Court, citing Nombrado vs. Hernandez (26 SCRA 13 119681) ruled:
The Solicitor General is of the opinion, and we find no reason to disagree with him, that even if
respondent did not use against his client any information or evidence acquired by him as
counsel it cannot be denied that he did become privy to information regarding the ownership of
the parcel of land which was later litigated in the forcible entry case, for it was the dispute over
the land that triggered the mauling incident which gave rise to the criminal action for physical
injuries. This Court's remarks in Hilado vs. David, 84 Phil. 571, are apropos:

In the resolution of this Court dated January 27, 1992, this case was referred to the Integrated
Bar of the Philippines (IBP), for investigation, report and recommendation.
During the investigation conducted by the IBP, it was discovered that respondent was previously
fined by this Court in the amount of P1,000.00 in connection with G.R. No. 94456 entitled
"Milagros Ong Siy vs. Hon. Salvador Tensuan, et al." for forum shopping, where respondent
appeared as counsel for petitioner Milagros Ong Siy "through the law firm of Cedo Ferrer
Maynigo and Associates."

"Communications between attorney and client are, in a great number of litigations, a complicated
affair, consisting of entangled relevant and irrelevant, secret and well-known facts. In the
complexity of what is said in the course of dealings between an attorney and client, inquiry of the
nature suggested would lead to the revelation, in advance of the trial, of other matters that might
only further prejudice the complainant's cause."

The IBP further found that the charges herein against respondent were fully substantiated.
Respondent's averment that the law firm handling the case of the Almeda spouses is not a
partnership deserves scant consideration in the light of the attestation of complainant's counsel,
Atty. Pedro Singson, that in one of the hearings of the Almeda spouses' case, respondent
attended the same with his partner Atty. Ferrer, and although he did not enter his appearance,
he was practically dictating to Atty. Ferrer what to say and argue before the court. Furthermore,
during the hearing of the application for a writ of injunction in the same case, respondent
impliedly admitted being the partner of Atty. Ferrer, when it was made of record that respondent
was working in the same office as Atty. Ferrer.

Whatever may be said as to whether or not respondent utilized against his former client
information given to him in a professional capacity, the mere fact of their previous relationship
should have precluded him from appearing as counsel for the other side in the forcible entry
case. In the case ofHilado vs. David, supra, this Tribunal further said:
Hence the necessity of setting the existence of the bare relationship of attorney and client as the
yardstick for testing incompatibility of interests. This stern rule is designed not alone to prevent
the dishonest practitioner from fraudulent conduct, but as well to protect the honest lawyer from
unfounded suspicion of unprofessional practice. . . . It is founded on principles of public policy, of
good taste. As has been said in another case, the question is not necessarily one of the rights of
the parties, but as to whether the attorney has adhered to proper professional standard. With
these thoughts in mind, it behooves attorney, like Caesar's wife, not only to keep inviolate the
client's confidence, but also to avoid the appearance of treachery and double dealing. Only thus
can litigants. be encouraged to entrust their secrets to their attorneys which is of paramount
importance in the administration of justice.

Moreover, the IBP noted that assuming the alleged set-up of the firm is true, it is in itself a
violation of the Code of Professional Responsibility (Rule 15.02) since the clients secrets and
confidential records and information are exposed to the other lawyers and staff members at all
times.
From the foregoing, the IBP found a deliberate intent on the part of respondent to devise ways
and means to attract as clients former borrowers of complainant bank since he was in the best
position to see the legal weaknesses of his former employer, a convincing factor for the said
clients to seek his professional service. In sum, the IBP saw a deliberate sacrifice by respondent
of his ethics in consideration of the money he expected to earn.

The foregoing disquisition on conflicting interest applies with equal force and effect to
respondent in the case at bar. Having been an executive of complainant bank, respondent now
seeks to litigate as counsel for the opposite side, a case against his former employer involving a
transaction which he formerly handled while still an employee of complainant, in violation of
Canon 6 of the Canons of Professional Ethics on adverse influence and conflicting interests, to
wit:

The IBP thus recommended the suspension of respondent from the practice of law for 3 years.
The records show that after the Board of Governors of the IBP had, on October 4, 1994,
submitted to this Court its Report and recommendation in this case, respondent filed a Motion
for Reconsideration dated October 25, 1994 of the recommendation contained in the said Report
with the IBP Board of Governors. On December 12, 1994, respondent also filed another "Motion

It is unprofessional to represent conflicting interests, except by express conflicting consent of all

concerned given after a full disclosure of the facts. Within the meaning of this canon, a lawyer

10

represents conflicting interest when, in behalf on one client, it is his duty to contend for that
which duty to another client requires him to oppose.

The facts of the case are undisputed.

The matters raised herein are an offshoot of the institution of the Complaint on July 31, 1987
before the Sandiganbayan by the Republic of the Philippines, through the Presidential
Commission on Good Government against Eduardo M. Cojuangco, Jr., as one of the principal
defendants, for the recovery of alleged ill-gotten wealth, which includes shares of stocks in the
named corporations in PCGG Case No. 33 (Civil Case No. 0033), entitled "Republic of the
Philippines versus Eduardo Cojuangco, et al." 1

ACCORDINGLY, this Court resolves to SUSPEND respondent ATTY. TELESFORO S. CEDO

from the practice of law for THREE (3) YEARS, effective immediately.
Let copies of this resolution be furnished the Integrated Bar of the Philippines and all courts in
Metro Manila.

Among the dependants named in the case are herein petitioners Teodoro Regala, Edgardo J.
Angara, Avelino V. Cruz, Jose C. Concepcion, Rogelio A. Vinluan, Victor P. Lazatin, Eduardo U.
Escueta and Paraja G. Hayudini, and herein private respondent Raul S. Roco, who all were then
partners of the law firm Angara, Abello, Concepcion, Regala and Cruz Law Offices (hereinafter
referred to as the ACCRA Law Firm). ACCRA Law Firm performed legal services for its clients,
which included, among others, the organization and acquisition of business associations and/or
organizations, with the correlative and incidental services where its members acted as
incorporators, or simply, as stockholders. More specifically, in the performance of these services,
the members of the law firm delivered to its client documents which substantiate the client's
equity holdings, i.e., stock certificates endorsed in blank representing the shares registered in
the client's name, and a blank deed of trust or assignment covering said shares. In the course of
their dealings with their clients, the members of the law firm acquire information relative to the
assets of clients as well as their personal and business circumstances. As members of the
ACCRA Law Firm, petitioners and private respondent Raul Roco admit that they assisted in the
organization and acquisition of the companies included in Civil Case No. 0033, and in keeping
with the office practice, ACCRA lawyers acted as nominees-stockholders of the said
corporations involved in sequestration proceedings. 2

SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC

G.R. No. 105938 September 20, 1996

TEODORO R. REGALA, EDGARDO J. ANGARA, AVELINO V. CRUZ, JOSE C.
CONCEPCION, ROGELIO A. VINLUAN, VICTOR P. LAZATIN and EDUARDO U.
ESCUETA, petitioners,
vs.
THE HONORABLE SANDIGANBAYAN, First Division, REPUBLIC OF THE PHILIPPINES,
ACTING THROUGH THE PRESIDENTIAL COMMISSION ON GOOD GOVERNMENT, and
RAUL S. ROCO, respondents.

On August 20, 1991, respondent Presidential Commission on Good Government (hereinafter

referred to as respondent PCGG) filed a "Motion to Admit Third Amended Complaint" and "Third
Amended Complaint" which excluded private respondent Raul S. Roco from the complaint in
PCGG Case No. 33 as party-defendant. 3Respondent PCGG based its exclusion of private
respondent Roco as party-defendant on his undertaking that he will reveal the identity of the
principal/s for whom he acted as nominee/stockholder in the companies involved in PCGG Case
No. 33. 4

G.R. No. 108113 September 20, 1996

PARAJA G. HAYUDINI, petitioner,
vs.
THE SANDIGANBAYAN and THE REPUBLIC OF THE PHILIPPINES, respondents.

Petitioners were included in the Third Amended Complaint on the strength of the following
allegations:
14. Defendants Eduardo Cojuangco, Jr., Edgardo J. Angara, Jose C. Concepcion, Teodoro
Regala, Avelino V. Cruz, Rogelio A. Vinluan, Eduardo U. Escueta, Paraja G. Hayudini and Raul
Roco of the Angara Concepcion Cruz Regala and Abello law offices (ACCRA) plotted, devised,
schemed conspired and confederated with each other in setting up, through the use of the
coconut levy funds, the financial and corporate framework and structures that led to the
establishment of UCPB, UNICOM, COCOLIFE, COCOMARK, CIC, and more than twenty other
coconut levy funded corporations, including the acquisition of San Miguel Corporation shares
and its institutionalization through presidential directives of the coconut monopoly. Through
insidious means and machinations, ACCRA, being the wholly-owned investment arm, ACCRA
Investments Corporation, became the holder of approximately fifteen million shares representing
roughly 3.3% of the total outstanding capital stock of UCPB as of 31 March 1987. This ranks

KAPUNAN, J.:
These case touch the very cornerstone of every State's judicial system, upon which the workings
of the contentious and adversarial system in the Philippine legal process are based the
sanctity of fiduciary duty in the client-lawyer relationship. The fiduciary duty of a counsel and
advocate is also what makes the law profession a unique position of trust and confidence, which
distinguishes it from any other calling. In this instance, we have no recourse but to uphold and
strengthen the mantle of protection accorded to the confidentiality that proceeds from the
performance of the lawyer's duty to his client.

11

ACCRA Investments Corporation number 44 among the top 100 biggest stockholders of UCPB
which has approximately 1,400,000 shareholders. On the other hand, corporate books show the
name Edgardo J. Angara as holding approximately3,744 shares as of February, 1984. 5

It is noteworthy that during said proceedings, private respondent Roco did not refute petitioners'
contention that he did actually not reveal the identity of the client involved in PCGG Case No.
33, nor had he undertaken to reveal the identity of the client for whom he acted as nomineestockholder. 11

In their answer to the Expanded Amended Complaint, petitioners ACCRA lawyers alleged that:
On March 18, 1992, respondent Sandiganbayan promulgated the Resolution, herein questioned,
denying the exclusion of petitioners in PCGG Case No. 33, for their refusal to comply with the
conditions required by respondent PCGG. It held:

4.4 Defendants-ACCRA lawyers' participation in the acts with which their codefendants are
charged, was in furtherance of legitimate lawyering.

xxx xxx xxx

4.4.1 In the course of rendering professional and legal services to clients, defendants-ACCRA
lawyers, Jose C. Concepcion, Teodoro D. Regala, Rogelio A. Vinluan and Eduardo U. Escueta,
became holders of shares of stock in the corporations listed under their respective names in
Annex "A" of the expanded Amended Complaint as incorporating or acquiring stockholders only
and, as such, they do not claim any proprietary interest in the said shares of stock.

ACCRA lawyers may take the heroic stance of not revealing the identity of the client for whom
they have acted, i.e. their principal, and that will be their choice. But until they do identify their
clients, considerations of whether or not the privilege claimed by the ACCRA lawyers exists
cannot even begin to be debated. The ACCRA lawyers cannot excuse themselves from the
consequences of their acts until they have begun to establish the basis for recognizing the
privilege; the existence andidentity of the client.

4.5 Defendant ACCRA-lawyer Avelino V. Cruz was one of the incorporators in 1976 of Mermaid
Marketing Corporation, which was organized for legitimate business purposes not related to the
allegations of the expanded Amended Complaint. However, he has long ago transferred any
material interest therein and therefore denies that the "shares" appearing in his name in Annex
"A" of the expanded Amended Complaint are his assets. 6

This is what appears to be the cause for which they have been impleaded by the PCGG as
defendants herein.

Petitioner Paraja Hayudini, who had separated from ACCRA law firm, filed a separate answer
denying the allegations in the complaint implicating him in the alleged ill-gotten wealth. 7

5. The PCGG is satisfied that defendant Roco has demonstrated his agency and that Roco has
apparently identified his principal, which revelation could show the lack of cause against him.
This in turn has allowed the PCGG to exercise its power both under the rules of Agency and
under Section 5 of E.O. No. 14-A in relation to the Supreme Court's ruling in Republic
v. Sandiganbayan (173 SCRA 72).

Petitioners ACCRA lawyers subsequently filed their "COMMENT AND/OR OPPOSITION" dated
October 8, 1991 with Counter-Motion that respondent PCGG similarly grant the same treatment
to them (exclusion as parties-defendants) as accorded private respondent Roco. 8 The CounterMotion for dropping petitioners from the complaint was duly set for hearing on October 18, 1991
in accordance with the requirements of Rule 15 of the Rules of Court.

The PCGG has apparently offered to the ACCRA lawyers the same conditions availed of by
Roco; full disclosure in exchange for exclusion from these proceedings (par. 7, PCGG's
COMMENT dated November 4, 1991). The ACCRA lawyers have preferred not to make the
disclosures required by the PCGG.

In its "Comment," respondent PCGG set the following conditions precedent for the exclusion of
petitioners, namely: (a) the disclosure of the identity of its clients; (b) submission of documents
substantiating the lawyer-client relationship; and (c) the submission of the deeds of assignments
petitioners executed in favor of its client covering their respective
shareholdings. 9

The ACCRA lawyers cannot, therefore, begrudge the PCGG for keeping them as party
defendants. In the same vein, they cannot compel the PCGG to be accorded the same
treatment accorded to Roco.

Consequently, respondent PCGG presented supposed proof to substantiate compliance by

private respondent Roco of the conditions precedent to warrant the latter's exclusion as partydefendant in PCGG Case No. 33, to wit: (a) Letter to respondent PCGG of the counsel of
respondent Roco dated May 24, 1989 reiterating a previous request for reinvestigation by the
PCGG in PCGG Case No. 33; (b) Affidavit dated March 8, 1989 executed by private respondent
Roco as Attachment to the letter aforestated in (a); and (c) Letter of the Roco, Bunag, and
Kapunan Law Offices dated September 21, 1988 to the respondent PCGG in behalf of private
respondent Roco originally requesting the reinvestigation and/or re-examination of the evidence
of the PCGG against Roco in its Complaint in PCGG Case No. 33. 10

Neither can this Court.

WHEREFORE, the Counter Motion dated October 8, 1991 filed by the ACCRA lawyers and
joined in by Atty. Paraja G. Hayudini for the same treatment by the PCGG as accorded to Raul
S. Roco is DENIED for lack of merit. 12
ACCRA lawyers moved for a reconsideration of the above resolution but the same was denied
by the respondent Sandiganbayan. Hence, the ACCRA lawyers filed the petition for certiorari,
docketed as G.R. No. 105938, invoking the following grounds:
I

12

The Honorable Sandiganbayan gravely abused its discretion in subjecting petitioners ACCRA
lawyers who undisputably acted as lawyers in serving as nominee-stockholders, to the strict
application of the law of agency.

identity of his client, giving him an advantage over them who are in the same footing as partners
in the ACCRA law firm. Petitioners further argue that even granting that such an undertaking has
been assumed by private respondent Roco, they are prohibited from revealing the identity of
their principal under their sworn mandate and fiduciary duty as lawyers to uphold at all times the
confidentiality of information obtained during such lawyer-client relationship.

II

Respondent PCGG, through its counsel, refutes petitioners' contention, alleging that the
revelation of the identity of the client is not within the ambit of the lawyer-client confidentiality
privilege, nor are the documents it required (deeds of assignment) protected, because they are
evidence of nominee status. 13

The Honorable Sandiganbayan committed grave abuse of discretion in not considering

petitioners ACCRA lawyers and Mr. Roco as similarly situated and, therefore, deserving of equal
treatment.
1. There is absolutely no evidence that Mr. Roco had revealed, or had undertaken to reveal, the
identities of the client(s) for whom he acted as nominee-stockholder.

In his comment, respondent Roco asseverates that respondent PCGG acted correctly in
excluding him as party-defendant because he "(Roco) has not filed an Answer. PCGG had
therefore the right to dismiss Civil Case No.0033 as to Roco 'without an order of court by filing a
notice of dismissal'," 14 and he has undertaken to identify his principal. 15

2. Even assuming that Mr. Roco had revealed, or had undertaken to reveal, the identities of the
client(s), the disclosure does not constitute a substantial distinction as would make the
classification reasonable under the equal protection clause.

Petitioners' contentions are impressed with merit.

3. Respondent Sandiganbayan sanctioned favoritism and undue preference in favor of Mr. Roco
in violation of the equal protection clause.

I
It is quite apparent that petitioners were impleaded by the PCGG as co-defendants to force them
to disclose the identity of their clients. Clearly, respondent PCGG is not after petitioners but the
"bigger fish" as they say in street parlance. This ploy is quite clear from the PCGG's willingness
to cut a deal with petitioners the names of their clients in exchange for exclusion from the
complaint. The statement of the Sandiganbayan in its questioned resolution dated March 18,
1992 is explicit:

III
The Honorable Sandiganbayan committed grave abuse of discretion in not holding that, under
the facts of this case, the attorney-client privilege prohibits petitioners ACCRA lawyers from
revealing the identity of their client(s) and the other information requested by the PCGG.
1. Under the peculiar facts of this case, the attorney-client privilege includes the identity of the
client(s).

ACCRA lawyers may take the heroic stance of not revealing the identity of the client for whom
they have acted, i.e, their principal, and that will be their choice. But until they do identify their
clients, considerations of whether or not the privilege claimed by the ACCRA lawyers exists
cannot even begin to be debated. The ACCRA lawyers cannot excuse themselves from the
consequences of their acts until they have begun to establish the basis for recognizing the
privilege; the existence and identity of the client.

2. The factual disclosures required by the PCGG are not limited to the identity of petitioners
ACCRA lawyers' alleged client(s) but extend to other privileged matters.
IV

This is what appears to be the cause for which they have been impleaded by the PCGG as
defendants herein. (Emphasis ours)

The Honorable Sandiganbayan committed grave abuse of discretion in not requiring that the
dropping of party-defendants by the PCGG must be based on reasonable and just grounds and
with due consideration to the constitutional right of petitioners ACCRA lawyers to the equal
protection of the law.

In a closely related case, Civil Case No. 0110 of the Sandiganbayan, Third Division, entitled
"Primavera Farms, Inc., et al. vs. Presidential Commission on Good Government" respondent
PCGG, through counsel Mario Ongkiko, manifested at the hearing on December 5, 1991 that the
PCGG wanted to establish through the ACCRA that their "so called client is Mr. Eduardo
Cojuangco;" that "it was Mr. Eduardo Cojuangco who furnished all the monies to those
subscription payments in corporations included in Annex "A" of the Third Amended Complaint;
that the ACCRA lawyers executed deeds of trust and deeds of assignment, some in the name of
particular persons; some in blank.

Petitioner Paraja G. Hayudini, likewise, filed his own motion for reconsideration of the March 18,
1991 resolution which was denied by respondent Sandiganbayan. Thus, he filed a separate
petition for certiorari, docketed as G.R. No. 108113, assailing respondent Sandiganbayan's
resolution on essentially the same grounds averred by petitioners in G.R. No. 105938.
Petitioners contend that the exclusion of respondent Roco as party-defendant in PCGG Case
No. 33 grants him a favorable treatment, on the pretext of his alleged undertaking to divulge the

We quote Atty. Ongkiko:

13

is required by reason of necessity and public interest 23based on the hypothesis that abstinence
from seeking legal advice in a good cause is an evil which is fatal to the administration of
justice. 24

ATTY. ONGKIKO:
With the permission of this Hon. Court. I propose to establish through these ACCRA lawyers
that, one, their so-called client is Mr. Eduardo Cojuangco. Second, it was Mr. Eduardo
Cojuangco who furnished all the monies to these subscription payments of these corporations
who are now the petitioners in this case. Third, that these lawyers executed deeds of trust, some
in the name of a particular person, some in blank. Now, these blank deeds are important to our
claim that some of the shares are actually being held by the nominees for the late President
Marcos. Fourth, they also executed deeds of assignment and some of these assignments have
also blank assignees. Again, this is important to our claim that some of the shares are for Mr.
Conjuangco and some are for Mr. Marcos. Fifth, that most of thes e corporations are really just
paper corporations. Why do we say that? One: There are no really fixed sets of officers, no fixed
sets of directors at the time of incorporation and even up to 1986, which is the crucial year. And
not only that, they have no permits from the municipal authorities in Makati. Next, actually all
their addresses now are care of Villareal Law Office. They really have no address on records.
These are some of the principal things that we would ask of these nominees stockholders, as
they called themselves. 16

It is also the strict sense of fidelity of a lawyer to his client that distinguishes him from any other
professional in society. This conception is entrenched and embodies centuries of established
and stable tradition. 25 In Stockton v. Ford, 26 the U. S. Supreme Court held:
There are few of the business relations of life involving a higher trust and confidence than that of
attorney and client, or generally speaking, one more honorably and faithfully discharged; few
more anxiously guarded by the law, or governed by the sterner principles of morality and justice;
and it is the duty of the court to administer them in a corresponding spirit, and to be watchful and
industrious, to see that confidence thus reposed shall not be used to the detriment or prejudice
of the rights of the party bestowing it. 27
In our jurisdiction, this privilege takes off from the old Code of Civil Procedure enacted by the
Philippine Commission on August 7, 1901. Section 383 of the Code specifically "forbids counsel,
without authority of his client to reveal any communication made by the client to him or his
advice given thereon in the course of professional employment." 28 Passed on into various
provisions of the Rules of Court, the attorney-client privilege, as currently worded provides:

It would seem that petitioners are merely standing in for their clients as defendants in the
complaint. Petitioners are being prosecuted solely on the basis of activities and services
performed in the course of their duties as lawyers. Quite obviously, petitioners' inclusion as codefendants in the complaint is merely being used as leverage to compel them to name their
clients and consequently to enable the PCGG to nail these clients. Such being the case,
respondent PCGG has no valid cause of action as against petitioners and should exclude them
from the Third Amended Complaint.

Sec. 24. Disqualification by reason of privileged communication. The following persons

cannot testify as to matters learned in confidence in the following cases:
xxx xxx xxx

II
An attorney cannot, without the consent of his client, be examined as to any communication
made by the client to him, or his advice given thereon in the course of, or with a view to,
professional employment, can an attorney's secretary, stenographer, or clerk be examined,
without the consent of the client and his employer, concerning any fact the knowledge of which
has been acquired in such capacity. 29

The nature of lawyer-client relationship is premised on the Roman Law concepts of locatio
conductio operarum(contract of lease of services) where one person lets his services and
another hires them without reference to the object of which the services are to be performed,
wherein lawyers' services may be compensated by honorariumor for
hire, 17 and mandato (contract of agency) wherein a friend on whom reliance could be placed
makes a contract in his name, but gives up all that he gained by the contract to the person who
requested him. 18 But the lawyer-client relationship is more than that of the principal-agent and
lessor-lessee.

Further, Rule 138 of the Rules of Court states:

Sec. 20. It is the duty of an attorney: (e) to maintain inviolate the confidence, and at every peril
to himself, to preserve the secrets of his client, and to accept no compensation in connection
with his client's business except from him or with his knowledge and approval.

In modern day perception of the lawyer-client relationship, an attorney is more than a mere
agent or servant, because he possesses special powers of trust and confidence reposed on him
by his client. 19 A lawyer is also as independent as the judge of the court, thus his powers are
entirely different from and superior to those of an ordinary agent. 20 Moreover, an attorney also
occupies what may be considered as a "quasi-judicial office" since he is in fact an officer of the
Court 21 and exercises his judgment in the choice of courses of action to be taken favorable to
his client.

This duty is explicitly mandated in Canon 17 of the Code of Professional Responsibility which
provides that:
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.

Thus, in the creation of lawyer-client relationship, there are rules, ethical conduct and duties that
breathe life into it, among those, the fiduciary duty to his client which is of a very delicate,
exacting and confidential character, requiring a very high degree of fidelity and good faith, 22 that

Canon 15 of the Canons of Professional Ethics also demands a lawyer's fidelity to client:

14

The lawyers owes "entire devotion to the interest of the client, warm zeal in the maintenance and
defense of his rights and the exertion of his utmost learning and ability," to the end that nothing
be taken or be withheld from him, save by the rules of law, legally applied. No fear of judicial
disfavor or public popularity should restrain him from the full discharge of his duty. In the judicial
forum the client is entitled to the benefit of any and every remedy and defense that is authorized
by the law of the land, and he may expect his lawyer to assert every such remedy or defense.
But it is steadfastly to be borne in mind that the great trust of the lawyer is to be performed within
and not without the bounds of the law. The office of attorney does not permit, much less does it
demand of him for any client, violation of law or any manner of fraud or chicanery. He must obey
his own conscience and not that of his client.

Finally, due process considerations require that the opposing party should, as a general rule,
know his adversary. "A party suing or sued is entitled to know who his opponent is." 32 He cannot
be obliged to grope in the dark against unknown forces. 33

Considerations favoring confidentially in lawyer-client relationships are many and serve several
constitutional and policy concerns. In the constitutional sphere, the privilege gives flesh to one of
the most sacrosanct rights available to the accused, the right to counsel. If a client were made to
choose between legal representation without effective communication and disclosure and legal
representation with all his secrets revealed then he might be compelled, in some instances, to
either opt to stay away from the judicial system or to lose the right to counsel. If the price of
disclosure is too high, or if it amounts to self incrimination, then the flow of information would be
curtailed thereby rendering the right practically nugatory. The threat this represents against
another sacrosanct individual right, the right to be presumed innocent is at once self-evident.

In Ex-Parte Enzor, 34 a state supreme court reversed a lower court order requiring a lawyer to
divulge the name of her client on the ground that the subject matter of the relationship was so
closely related to the issue of the client's identity that the privilege actually attached to both.
In Enzor, the unidentified client, an election official, informed his attorney in confidence that he
had been offered a bribe to violate election laws or that he had accepted a bribe to that end. In
her testimony, the attorney revealed that she had advised her client to count the votes correctly,
but averred that she could not remember whether her client had been, in fact, bribed. The lawyer
was cited for contempt for her refusal to reveal his client's identity before a grand jury. Reversing
the lower court's contempt orders, the state supreme court held that under the circumstances of
the case, and under the exceptions described above, even the name of the client was privileged.

Notwithstanding these considerations, the general rule is however qualified by some important
exceptions.
1) Client identity is privileged where a strong probability exists that revealing the client's name
would implicate that client in the very activity for which he sought the lawyer's advice.

Encouraging full disclosure to a lawyer by one seeking legal services opens the door to a whole
spectrum of legal options which would otherwise be circumscribed by limited information
engendered by a fear of disclosure. An effective lawyer-client relationship is largely dependent
upon the degree of confidence which exists between lawyer and client which in turn requires a
situation which encourages a dynamic and fruitful exchange and flow of information. It
necessarily follows that in order to attain effective representation, the lawyer must invoke the
privilege not as a matter of option but as a matter of duty and professional responsibility.

U .S. v. Hodge and Zweig, 35 involved the same exception, i.e. that client identity is privileged in
those instances where a strong probability exists that the disclosure of the client's identity would
implicate the client in the very criminal activity for which the lawyer's legal advice was obtained.
The Hodge case involved federal grand jury proceedings inquiring into the activities of the
"Sandino Gang," a gang involved in the illegal importation of drugs in the United States. The
respondents, law partners, represented key witnesses and suspects including the leader of the
gang, Joe Sandino.

The question now arises whether or not this duty may be asserted in refusing to disclose the
name of petitioners' client(s) in the case at bar. Under the facts and circumstances obtaining in
the instant case, the answer must be in the affirmative.

In connection with a tax investigation in November of 1973, the IRS issued summons to Hodge
and Zweig, requiring them to produce documents and information regarding payment received
by Sandino on behalf of any other person, and vice versa. The lawyers refused to divulge the
names. The Ninth Circuit of the United States Court of Appeals, upholding non-disclosure under
the facts and circumstances of the case, held:

As a matter of public policy, a client's identity should not be shrouded in mystery 30 Under this
premise, the general rule in our jurisdiction as well as in the United States is that a lawyer may
not invoke the privilege and refuse to divulge the name or identity of this client. 31

A client's identity and the nature of that client's fee arrangements may be privileged where the
person invoking the privilege can show that a strong probability exists that disclosure of such
information would implicate that client in the very criminal activity for which legal advice was
soughtBaird v. Koerner, 279 F. 2d at 680. While in Baird Owe enunciated this rule as a matter of
California law, the rule also reflects federal law. Appellants contend that the Baird exception
applies to this case.

The reasons advanced for the general rule are well established.
First, the court has a right to know that the client whose privileged information is sought to be
protected is flesh and blood.
Second, the privilege begins to exist only after the attorney-client relationship has been
established. The attorney-client privilege does not attach until there is a client.

The Baird exception is entirely consonant with the principal policy behind the attorney-client
privilege. "In order to promote freedom of consultation of legal advisors by clients, the
apprehension of compelled disclosure from the legal advisors must be removed; hence, the law
must prohibit such disclosure except on the client's consent." 8 J. Wigmore, supra sec. 2291, at

Third, the privilege generally pertains to the subject matter of the relationship.

15

545. In furtherance of this policy, the client's identity and the nature of his fee arrangements are,
in exceptional cases, protected as confidential communications. 36

witness would compel him to disclose not only that he was attorney for certain people, but that,
as the result of communications made to him in the course of such employment as such
attorney, he knew that they were interested in certain transactions. We feel sure that under such
conditions no case has ever gone to the length of compelling an attorney, at the instance of a
hostile litigant, to disclose not only his retainer, but the nature of the transactions to which it
related, when such information could be made the basis of a suit against his client. 41

2) Where disclosure would open the client to civil liability; his identity is privileged. For instance,
the peculiar facts and circumstances of Neugass v. Terminal Cab Corporation, 37 prompted the
New York Supreme Court to allow a lawyer's claim to the effect that he could not reveal the
name of his client because this would expose the latter to civil litigation.

3) Where the government's lawyers have no case against an attorney's client unless, by
revealing the client's name, the said name would furnish the only link that would form the chain
of testimony necessary to convict an individual of a crime, the client's name is privileged.

In the said case, Neugass, the plaintiff, suffered injury when the taxicab she was riding, owned
by respondent corporation, collided with a second taxicab, whose owner was unknown. Plaintiff
brought action both against defendant corporation and the owner of the second cab, identified in
the information only as John Doe. It turned out that when the attorney of defendant corporation
appeared on preliminary examination, the fact was somehow revealed that the lawyer came to
know the name of the owner of the second cab when a man, a client of the insurance company,
prior to the institution of legal action, came to him and reported that he was involved in a car
accident. It was apparent under the circumstances that the man was the owner of the second
cab. The state supreme court held that the reports were clearly made to the lawyer in his
professional capacity. The court said:

In Baird vs. Korner, 42 a lawyer was consulted by the accountants and the lawyer of certain
undisclosed taxpayers regarding steps to be taken to place the undisclosed taxpayers in a
favorable position in case criminal charges were brought against them by the U.S. Internal
Revenue Service (IRS).
It appeared that the taxpayers' returns of previous years were probably incorrect and the taxes
understated. The clients themselves were unsure about whether or not they violated tax laws
and sought advice from Baird on the hypothetical possibility that they had. No investigation was
then being undertaken by the IRS of the taxpayers. Subsequently, the attorney of the taxpayers
delivered to Baird the sum of $12, 706.85, which had been previously assessed as the tax due,
and another amount of money representing his fee for the advice given. Baird then sent a check
for $12,706.85 to the IRS in Baltimore, Maryland, with a note explaining the payment, but
without naming his clients. The IRS demanded that Baird identify the lawyers, accountants, and
other clients involved. Baird refused on the ground that he did not know their names, and
declined to name the attorney and accountants because this constituted privileged
communication. A petition was filed for the enforcement of the IRS summons. For Baird's
repeated refusal to name his clients he was found guilty of civil contempt. The Ninth Circuit
Court of Appeals held that, a lawyer could not be forced to reveal the names of clients who
employed him to pay sums of money to the government voluntarily in settlement of
undetermined income taxes, unsued on, and with no government audit or investigation into that
client's income tax liability pending. The court emphasized the exception that a client's name is
privileged when so much has been revealed concerning the legal services rendered that the
disclosure of the client's identity exposes him to possible investigation and sanction by
government agencies. The Court held:

That his employment came about through the fact that the insurance company had hired him to
defend its policyholders seems immaterial. The attorney is such cases is clearly the attorney for
the policyholder when the policyholder goes to him to report an occurrence contemplating that it
would be used in an action or claim against him. 38
xxx xxx xxx
All communications made by a client to his counsel, for the purpose of professional advice or
assistance, are privileged, whether they relate to a suit pending or contemplated, or to any other
matter proper for such advice or aid; . . . And whenever the communication made, relates to a
matter so connected with the employment as attorney or counsel as to afford presumption that it
was the ground of the address by the client, then it is privileged from disclosure. . .
It appears . . . that the name and address of the owner of the second cab came to the attorney in
this case as a confidential communication. His client is not seeking to use the courts, and his
address cannot be disclosed on that theory, nor is the present action pending against him as
service of the summons on him has not been effected. The objections on which the court
reserved decision are sustained. 39

The facts of the instant case bring it squarely within that exception to the general rule. Here
money was received by the government, paid by persons who thereby admitted they had not
paid a sufficient amount in income taxes some one or more years in the past. The names of the
clients are useful to the government for but one purpose to ascertain which taxpayers think
they were delinquent, so that it may check the records for that one year or several years. The
voluntary nature of the payment indicates a belief by the taxpayers that more taxes or interest or
penalties are due than the sum previously paid, if any. It indicates a feeling of guilt for
nonpayment of taxes, though whether it is criminal guilt is undisclosed. But it may well be the
link that could form the chain of testimony necessary to convict an individual of a federal crime.
Certainly the payment and the feeling of guilt are the reasons the attorney here involved was
employed to advise his clients what, under the circumstances, should be done. 43

In the case of Matter of Shawmut Mining Company, 40 the lawyer involved was required by a
lower court to disclose whether he represented certain clients in a certain transaction. The
purpose of the court's request was to determine whether the unnamed persons as interested
parties were connected with the purchase of properties involved in the action. The lawyer
refused and brought the question to the State Supreme Court. Upholding the lawyer's refusal to
divulge the names of his clients the court held:
If it can compel the witness to state, as directed by the order appealed from, that he represented
certain persons in the purchase or sale of these mines, it has made progress in establishing by
such evidence their version of the litigation. As already suggested, such testimony by the

16

Apart from these principal exceptions, there exist other situations which could qualify as
exceptions to the general rule.

the link, in the words of Baird, "that would inevitably form the chain of testimony necessary to
convict the (client) of a . . . crime." 47

For example, the content of any client communication to a lawyer lies within the privilege if it is
relevant to the subject matter of the legal problem on which the client seeks legal
assistance. 44 Moreover, where the nature of the attorney-client relationship has been previously
disclosed and it is the identity which is intended to be confidential, the identity of the client has
been held to be privileged, since such revelation would otherwise result in disclosure of the
entire transaction. 45

An important distinction must be made between a case where a client takes on the services of
an attorney for illicit purposes, seeking advice about how to go around the law for the purpose of
committing illegal activities and a case where a client thinks he might have previously committed
something illegal and consults his attorney about it. The first case clearly does not fall within the
privilege because the same cannot be invoked for purposes illegal. The second case falls within
the exception because whether or not the act for which the client sought advice turns out to be
illegal, his name cannot be used or disclosed if the disclosure leads to evidence, not yet in the
hands of the prosecution, which might lead to possible action against him.

Summarizing these exceptions, information relating to the identity of a client may fall within the
ambit of the privilege when the client's name itself has an independent significance, such that
disclosure would then reveal client confidences. 46

These cases may be readily distinguished, because the privilege cannot be invoked or used as
a shield for an illegal act, as in the first example; while the prosecution may not have a case
against the client in the second example and cannot use the attorney client relationship to build
up a case against the latter. The reason for the first rule is that it is not within the professional
character of a lawyer to give advice on the commission of a crime.48 The reason for the second
has been stated in the cases above discussed and are founded on the same policy grounds for
which the attorney-client privilege, in general, exists.

The circumstances involving the engagement of lawyers in the case at bench, therefore, clearly
reveal that the instant case falls under at least two exceptions to the general rule. First,
disclosure of the alleged client's name would lead to establish said client's connection with the
very fact in issue of the case, which is privileged information, because the privilege, as stated
earlier, protects the subject matter or the substance (without which there would be not attorneyclient relationship).

In Matter of Shawmut Mining Co., supra, the appellate court therein stated that "under such
conditions no case has ever yet gone to the length of compelling an attorney, at the instance of a
hostile litigant, to disclose not only his retainer, but the nature of the transactions to which it
related, when such information could be made the basis of a suit against his
client." 49 "Communications made to an attorney in the course of any personal employment,
relating to the subject thereof, and which may be supposed to be drawn out in consequence of
the relation in which the parties stand to each other, are under the seal of confidence and
entitled to protection as privileged communications." 50 Where the communicated information,
which clearly falls within the privilege, would suggest possible criminal activity but there would be
not much in the information known to the prosecution which would sustain a charge except that
revealing the name of the client would open up other privileged information which would
substantiate the prosecution's suspicions, then the client's identity is so inextricably linked to the
subject matter itself that it falls within the protection. The Baird exception, applicable to the
instant case, is consonant with the principal policy behind the privilege, i.e., that for the purpose
of promoting freedom of consultation of legal advisors by clients, apprehension of compelled
disclosure from attorneys must be eliminated. This exception has likewise been sustained in In
re Grand Jury Proceedings 51 and Tillotson v. Boughner. 52 What these cases unanimously seek
to avoid is the exploitation of the general rule in what may amount to a fishing expedition by the
prosecution.

The link between the alleged criminal offense and the legal advice or legal service sought was
duly establishes in the case at bar, by no less than the PCGG itself. The key lies in the three
specific conditions laid down by the PCGG which constitutes petitioners' ticket to nonprosecution should they accede thereto:
(a) the disclosure of the identity of its clients;
(b) submission of documents substantiating the lawyer-client relationship; and
(c) the submission of the deeds of assignment petitioners executed in favor of their clients
covering their respective shareholdings.
From these conditions, particularly the third, we can readily deduce that the clients indeed
consulted the petitioners, in their capacity as lawyers, regarding the financial and corporate
structure, framework and set-up of the corporations in question. In turn, petitioners gave their
professional advice in the form of, among others, the aforementioned deeds of assignment
covering their client's shareholdings.

There are, after all, alternative source of information available to the prosecutor which do not
depend on utilizing a defendant's counsel as a convenient and readily available source of
information in the building of a case against the latter. Compelling disclosure of the client's name
in circumstances such as the one which exists in the case at bench amounts to sanctioning
fishing expeditions by lazy prosecutors and litigants which we cannot and will not countenance.
When the nature of the transaction would be revealed by disclosure of an attorney's retainer,
such retainer is obviously protected by the privilege. 53 It follows that petitioner attorneys in the
instant case owe their client(s) a duty and an obligation not to disclose the latter's identity which
in turn requires them to invoke the privilege.

There is no question that the preparation of the aforestated documents was part and parcel of
petitioners' legal service to their clients. More important, it constituted an integral part of their
duties as lawyers. Petitioners, therefore, have a legitimate fear that identifying their clients would
implicate them in the very activity for which legal advice had been sought, i.e., the alleged
accumulation of ill-gotten wealth in the aforementioned corporations.
Furthermore, under the third main exception, revelation of the client's name would obviously
provide the necessary link for the prosecution to build its case, where none otherwise exists. It is

17

In fine, the crux of petitioners' objections ultimately hinges on their expectation that if the
prosecution has a case against their clients, the latter's case should be built upon evidence
painstakingly gathered by them from their own sources and not from compelled testimony
requiring them to reveal the name of their clients, information which unavoidably reveals much
about the nature of the transaction which may or may not be illegal. The logical nexus between
name and nature of transaction is so intimate in this case the it would be difficult to simply
dissociate one from the other. In this sense, the name is as much "communication" as
information revealed directly about the transaction in question itself, a communication which is
clearly and distinctly privileged. A lawyer cannot reveal such communication without exposing
himself to charges of violating a principle which forms the bulwark of the entire attorney-client
relationship.

wherein as in a magic mirror, we see reflected, not only in our lives, but the lives of all men that
have been. When I think on this majestic theme my eyes dazzle. If we are to speak of the law as
our mistress, we who are here know that she is a mistress only to be won with sustained and
lonely passion only to be won by straining all the faculties by which man is likened to God.
We have no choice but to uphold petitioners' right not to reveal the identity of their clients under
pain of the breach of fiduciary duty owing to their clients, because the facts of the instant case
clearly fall within recognized exceptions to the rule that the client's name is not privileged
information.
If we were to sustain respondent PCGG that the lawyer-client confidential privilege under the
circumstances obtaining here does not cover the identity of the client, then it would expose the
lawyers themselves to possible litigation by their clients in view of the strict fiduciary
responsibility imposed on them in the exercise of their duties.

The uberrimei fidei relationship between a lawyer and his client therefore imposes a strict liability
for negligence on the former. The ethical duties owing to the client, including confidentiality,
loyalty, competence, diligence as well as the responsibility to keep clients informed and protect
their rights to make decisions have been zealously sustained. In Milbank, Tweed, Hadley and
McCloy v. Boon, 54 the US Second District Court rejected the plea of the petitioner law firm that it
breached its fiduciary duty to its client by helping the latter's former agent in closing a deal for
the agent's benefit only after its client hesitated in proceeding with the transaction, thus causing
no harm to its client. The Court instead ruled that breaches of a fiduciary relationship in any
context comprise a special breed of cases that often loosen normally stringent requirements of
causation and damages, and found in favor of the client.

The complaint in Civil Case No. 0033 alleged that the defendants therein, including herein
petitioners and Eduardo Cojuangco, Jr. conspired with each other in setting up through the use
of coconut levy funds the financial and corporate framework and structures that led to the
establishment of UCPB, UNICOM and others and that through insidious means and
machinations, ACCRA, using its wholly-owned investment arm, ACCRA Investment Corporation,
became the holder of approximately fifteen million shares representing roughly 3.3% of the total
capital stock of UCPB as of 31 March 1987. The PCGG wanted to establish through the ACCRA
lawyers that Mr. Cojuangco is their client and it was Cojuangco who furnished all the monies to
the subscription payment; hence, petitioners acted as dummies, nominees and/or agents by
allowing themselves, among others, to be used as instrument in accumulating ill-gotten wealth
through government concessions, etc., which acts constitute gross abuse of official position and
authority, flagrant breach of public trust, unjust enrichment, violation of the Constitution and laws
of the Republic of the Philippines.

To the same effect is the ruling in Searcy, Denney, Scarola, Barnhart, and Shipley
P.A. v. Scheller 55 requiring strict obligation of lawyers vis-a-vis clients. In this case, a contingent
fee lawyer was fired shortly before the end of completion of his work, and sought
payment quantum meruit of work done. The court, however, found that the lawyer was fired for
cause after he sought to pressure his client into signing a new fee agreement while settlement
negotiations were at a critical stage. While the client found a new lawyer during the interregnum,
events forced the client to settle for less than what was originally offered. Reiterating the
principle of fiduciary duty of lawyers to clients in Meinhard v. Salmon 56 famously attributed to
Justice Benjamin Cardozo that "Not honesty alone, but the punctilio of an honor the most
sensitive, is then the standard of behavior," the US Court found that the lawyer involved was
fired for cause, thus deserved no attorney's fees at all.

By compelling petitioners, not only to reveal the identity of their clients, but worse, to submit to
the PCGG documents substantiating the client-lawyer relationship, as well as deeds of
assignment petitioners executed in favor of its clients covering their respective shareholdings,
the PCGG would exact from petitioners a link "that would inevitably form the chain of testimony
necessary to convict the (client) of a crime."

The utmost zeal given by Courts to the protection of the lawyer-client confidentiality privilege and
lawyer's loyalty to his client is evident in the duration of the protection, which exists not only
during the relationship, but extends even after the termination of the relationship. 57

III
In response to petitioners' last assignment of error, respondents alleged that the private
respondent was dropped as party defendant not only because of his admission that he acted
merely as a nominee but also because of his undertaking to testify to such facts and
circumstances "as the interest of truth may require, which includes . . . the identity of the
principal." 59

Such are the unrelenting duties required by lawyers vis-a-vis their clients because the law, which
the lawyers are sworn to uphold, in the words of Oliver Wendell Holmes, 58 ". . . is an exacting
goddess, demanding of her votaries in intellectual and moral discipline." The Court, no less, is
not prepared to accept respondents' position without denigrating the noble profession that is
lawyering, so extolled by Justice Holmes in this wise:

First, as to the bare statement that private respondent merely acted as a lawyer and nominee, a
statement made in his out-of-court settlement with the PCGG, it is sufficient to state that
petitioners have likewise made the same claim not merely out-of-court but also in the Answer to
plaintiff's Expanded Amended Complaint, signed by counsel, claiming that their acts were made
in furtherance of "legitimate lawyering." 60Being "similarly situated" in this regard, public

Every calling is great when greatly pursued. But what other gives such scope to realize the
spontaneous energy of one's soul? In what other does one plunge so deep in the stream of life
so share its passions its battles, its despair, its triumphs, both as witness and actor? . . . But
that is not all. What a subject is this in which we are united this abstraction called the Law,

18

respondents must show that there exist other conditions and circumstances which would warrant
their treating the private respondent differently from petitioners in the case at bench in order to
evade a violation of the equal protection clause of the Constitution.

in violation of the attorney-client privilege but also of the constitutional right against selfincrimination. Whichever way one looks at it, this is a fishing expedition, a free ride at the
expense of such rights.

To this end, public respondents contend that the primary consideration behind their decision to
sustain the PCGG's dropping of private respondent as a defendant was his promise to disclose
the identities of the clients in question. However, respondents failed to show and absolute
nothing exists in the records of the case at bar that private respondent actually revealed the
identity of his client(s) to the PCGG. Since the undertaking happens to be the leitmotif of the
entire arrangement between Mr. Roco and the PCGG, an undertaking which is so material as to
have justified PCGG's special treatment exempting the private respondent from prosecution,
respondent Sandiganbayan should have required proof of the undertaking more substantial than
a "bare assertion" that private respondent did indeed comply with the undertaking. Instead, as
manifested by the PCGG, only three documents were submitted for the purpose, two of which
were mere requests for re-investigation and one simply disclosed certain clients which
petitioners (ACCRA lawyers) were themselves willing to reveal. These were clients to whom both
petitioners and private respondent rendered legal services while all of them were partners at
ACCRA, and were not the clients which the PCGG wanted disclosed for the alleged questioned
transactions. 61

An argument is advanced that the invocation by petitioners of the privilege of attorney-client

confidentiality at this stage of the proceedings is premature and that they should wait until they
are called to testify and examine as witnesses as to matters learned in confidence before they
can raise their objections. But petitioners are not mere witnesses. They are co-principals in the
case for recovery of alleged ill-gotten wealth. They have made their position clear from the very
beginning that they are not willing to testify and they cannot be compelled to testify in view of
their constitutional right against self-incrimination and of their fundamental legal right to maintain
inviolate the privilege of attorney-client confidentiality.
It is clear then that the case against petitioners should never be allowed to take its full course in
the Sandiganbayan. Petitioners should not be made to suffer the effects of further litigation when
it is obvious that their inclusion in the complaint arose from a privileged attorney-client
relationship and as a means of coercing them to disclose the identities of their clients. To allow
the case to continue with respect to them when this Court could nip the problem in the bud at
this early opportunity would be to sanction an unjust situation which we should not here
countenance. The case hangs as a real and palpable threat, a proverbial Sword of Damocles
over petitioners' heads. It should not be allowed to continue a day longer.

To justify the dropping of the private respondent from the case or the filing of the suit in the
respondent court without him, therefore, the PCGG should conclusively show that Mr. Roco was
treated as species apart from the rest of the ACCRA lawyers on the basis of a classification
which made substantial distinctions based on real differences. No such substantial distinctions
exist from the records of the case at bench, in violation of the equal protection clause.

While we are aware of respondent PCGG's legal mandate to recover ill-gotten wealth, we will
not sanction acts which violate the equal protection guarantee and the right against selfincrimination and subvert the lawyer-client confidentiality privilege.

The equal protection clause is a guarantee which provides a wall of protection against uneven
application of status and regulations. In the broader sense, the guarantee operates against
uneven application of legal norms so
that all persons under similar circumstances would be accorded the same treatment. 62 Those
who fall within a particular class ought to be treated alike not only as to privileges granted but
also as to the liabilities imposed.

WHEREFORE, IN VIEW OF THE FOREGOING, the Resolutions of respondent Sandiganbayan

(First Division) promulgated on March 18, 1992 and May 21, 1992 are hereby ANNULLED and
SET ASIDE. Respondent Sandiganbayan is further ordered to exclude petitioners Teodoro D.
Regala, Edgardo J. Angara, Avelino V. Cruz, Jose C. Concepcion, Victor P. Lazatin, Eduardo U.
Escueta and Paraja G. Hayuduni as parties-defendants in SB Civil Case No. 0033 entitled
"Republic of the Philippines v. Eduardo Cojuangco, Jr., et al."

. . . What is required under this constitutional guarantee is the uniform operation of legal norms
so that all persons under similar circumstances would be accorded the same treatment both in
the privileges conferred and the liabilities imposed. As was noted in a recent decision:
"Favoritism and undue preference cannot be allowed. For the principle is that equal protection
and security shall be given to every person under circumstances, which if not identical are
analogous. If law be looked upon in terms of burden or charges, those that fall within a class
should be treated in the same fashion, whatever restrictions cast on some in the group equally
binding the rest. 63

SO ORDERED.

We find that the condition precedent required by the respondent PCGG of the petitioners for
their exclusion as parties-defendants in PCGG Case No. 33 violates the lawyer-client
confidentiality privilege. The condition also constitutes a transgression by respondents
Sandiganbayan and PCGG of the equal protection clause of the Constitution. 64 It is grossly
unfair to exempt one similarly situated litigant from prosecution without allowing the same
exemption to the others. Moreover, the PCGG's demand not only touches upon the question of
the identity of their clients but also on documents related to the suspected transactions, not only

THIRD DIVISION

Republic of the Philippines

SUPREME COURT
Manila

A.C. No. 4566

19

December 10, 2004

UNITY FISHING DEVELOPMENT CORPORATION, complainant,

vs.
ATTY. DANILO G. MACALINO, respondent.

respondent asked for fifteen days from October 8, 1998 to file his Answer. Complainant also
asked the same period within which to file his reply.
On November 5, 1998, respondent filed an urgent motion for extension of time to file answer.
On November 9, 1998, respondent again filed an urgent motion for last extension of time or a
period of fifteen (15) days from November 15, 1998 to file answer, which was granted by the
Commission.

RESOLUTION

Since the respondent has not filed his answer as required by the Honorable Supreme Court and
the Commission, the case was again set for hearing on November 9, 1999.
On said date, only the counsel for complainant appeared. Respondent was absent. However,
records show the notice sent to him was returned unserved with the annotation "Moved."
Records also show that respondent has not filed his answer and again he was given a last
chance to file his answer within ten (10) days from receipt of the Order dated November 9, 1999
and the hearing of the case was reset to December 9, 1999.

GARCIA, J.:
Under consideration is this petition by way of a complaint for disbarment filed by Unity Fishing
Development Corporation against Atty. Danilo Macalino for having violated Canon 16 of the
Code of Professional Responsibility.

On December 9, 1999, only counsel for complainant appeared and moved that respondents
right to file answer be deemed waived and that complainant be allowed to file Memorandum
after which, the case shall be deemed submitted for resolution.

In its resolution of June 26, 1996, the Court required respondent to comment on the complaint
within ten (10) days from notice.1

On December 14, 1999, respondent again filed an Urgent Motion for Extension of fifteen (15)
days from December 4, 1999 within which to file his answer.

On July 26, 1996, respondent filed a motion for extension of thirty (30) days within which to file
comment,2 which motion was granted by the Court in its resolution of August 21, 1996.3

On January 7, 2000, the complainant filed a Memorandum, a copy of which was furnished to
respondent and which was not controverted by respondent.

On August 26, 1996, respondent filed another motion for extension, this time for an additional
period of fifteen (15) days.4 The motion was similarly granted by the Court in its resolution of
October 7, 1996.5

All told, respondent filed six (6) motions for extension of time to file Answer and up to this time,
which is almost seven (7) years from the time the Honorable Supreme Court required
respondent to file his answer to the complaint, respondent has not filed any answer,10

Still, on September 19, 1996, respondent filed a third and "last extension of time to file
comment".6 Again, this was granted by the Court via its resolution of November 27, 1996.7

on account of which the investigating commissioner considered the case as "now ready for
resolution".11

Unfortunately, no comment was ever filed by respondent.

Hence, and taking note of complainants "Motion to Conduct Further Proceedings", filed on
March 23, 1998,8 the Court, in its resolution of April 27, 1998,9 referred the case to the Integrated
Bar of the Philippines (IBP), for investigation, report and recommendation.

Thereafter, the investigating commissioner submitted his Report. Dated January 20, 2003,12 the
Report recites the factual background of the case and the commissioners discussion and
findings thereon, thus:

Acting on the referral, the IBP Commission on Bar Discipline designated Atty. Cesar R. Dulay as
investigating commissioner.

"Frabal Fishing and Ice Plant Corporation (hereinafter, Frabal) was the owner of a parcel of land
located along Ramon Magsaysay Boulevard, Sta. Mesa, Manila which was leased to Wheels
Distributors, Inc. (hereinafter, Wheels), an authorized dealer of cars and motor vehicles of
various make;

It appears, however, that even while the case was already under formal investigation,
respondent displayed the same attitude of lack of concern. As reported by Atty. Dulay:

A dispute arose between Frabal and Wheels regarding the terms and conditions of the lease
contract. The dispute eventually led to a lawsuit. Frabal hired the services of respondent Atty.
Danilo G. Macalino as counsel for the purpose of representing its interest in the said lawsuit;

The Commission issued a notice setting the case for hearing on October 8, 1998, at which
hearing complainant represented by its legal counsel and respondent appeared. Again,

20

Frabal merged and was absorbed by Petitioner corporation on February 12, 1991, with the
former conveying, assigning and transferring all its business assets and liabilities to the latter,
including all judicial and extra-judicial claims. Hence, Petitioner was substituted in lieu of Frabal
in the formers lawsuit with Wheels;

Petitioner wrote to Respondent on May 19, 1994 to explain why the check in issue never
reached Wheels Distributors and how it was endorsed and encashed despite the fact that it was
a crossed check (Copy of said letter is Annex "C");
Despite receipt of said letter, however, Respondent never responded nor attempted to explain
his side to what strongly appears to be a gross misappropriation of the money for his own
personal use;

As Petitioners legal counsel, Respondent advised Petitioner to severe all contractual

relationship with Wheels as a step towards eventually evicting the latter from the property they
were occupying;

Hence, Petitioner was constrained to institute an action for damages against Respondent Danilo
G. Macalino as well as UCPB Savings Bank with the Regional Trial Court of Malabon, Branch 72
where the same is now docketed as Civil Case No. 2382-MN;

Hence, upon advice of Respondent, the contract of lease between Frabal and Wheels was
terminated. Respondent likewise advised Petitioner to return the guarantee deposit equivalent to
two (2) months rental or the amount of P50,000.00 to Wheels;

That Respondent misappropriated the amount of P50,000.00 for his own personal use cannot be
denied. An employee of UCPB in the person of Eduardo Estremadura testified in the aforestated
case for damages that Respondent Atty. Danilo G. Macalino was the one maintaining Account
No. CA-483-37 at UCPB, to which the crossed check payable to Wheels was deposited (TSN, p.
8, Aug. 24, 1995, copy of the TSN is Annex "D");

On March 2, 1988, Petitioner prepared Metrobank Check No. MB350288 dated March 8, 1988
for the amount of P50,000.00. The check was crossed and made payable to the Wheels
Distributors, Inc. (Annex "A").
Respondent volunteered to bring the check to the office of Wheels himself and to make them
accept it. Hence, on March 3, 1988, Respondent sent his representative to Petitioners office to
get the said check;

The Metrobank Check No. MB350288 dated March 8, 1988 for the amount of P50,000.00 was
deposited to Respondents account is further shown in United Savings Bank Current Account
Deposit Slip accomplished by Respondent when he deposited said check with United Savings
Bank on May 13, 1988 (Copy of said deposit slip is Annex "E").

Respondents representative duly received the said check from Petitioner, as proof of which he
signed Check Voucher No. 3-012 (Annex "B");

DISCUSSION AND FINDINGS:

Thereafter, Respondent represented to Petitioner that he was able to deliver the check to
Wheels Distributors, Inc.;

Respondent Atty. Danilo G. Macalino was given all the opportunity to answer and present his
defenses to the complaint. Regrettably, the records show that despite the orders of the Supreme
Court and this Commission respondent has not taken any step to verify and inquire as to the
status of the complaint against him. Almost three years since the submission of the
complainants memorandum, respondent has not reacted nor made any move to protect himself
and answer the complaint. Due process consists in being given the opportunity to be heard and
we believe that in this case respondent has been given all the opportunity to be heard.

The suit between Petitioner and Wheels continued for several years. In the meantime, Petitioner
changed counsels, replacing Respondent with someone else;
Finally, sometime in May 1994, the suit ended in amicable settlement. In the process of
negotiating the terms and conditions of the settlement, Wheels informed Petitioner that it never
received therefund (sic) guarantee deposit in the amount of P50,000.00;

On the basis of the above, the investigating commissioner concluded his Report with the
following -

Petitioner was shocked to learn this piece of information from Wheels Distributors as all along
Respondent had represented to Petitioner that Wheels has already received the guarantee
deposit of P50,000.00;

RECOMMENDATION
WHEREFORE, it is respectfully recommended that respondent be suspended from the practice
of law for two (2) years and be ordered to account to complainant the amount of P50,000.00.
Respondent should be warned that a similar offense will merit a more severe penalty.13

Petitioner searched its files for the subject check. After locating the check, Petitioner noted that
at the back of the check was a rubber stamp marking indicating that it was deposited with the
United Savings Bank Head Office on May 13, 1988 to Account No. CA-483-3. United Savings
Bank has since been acquired by the United Coconut Planters Bank (UCPB) and is now known
as UCPB Savings Bank;

On June 21, 2003, the IBP Board of Governors passed Resolution No. XV-2003-341,14 adopting
and approving the report and recommendation of the investigating commissioner with a
modification as to the penalty, to wit:

Petitioner checked with Wheels Distributors from whom it later learned that the latter never
maintained an account with the United Savings Bank, now the UCPB Savings Bank;

21

RESOLVED to ADOPT and APPROVE, as it is hereby ADOPTED, the Report and

Recommendation of the Investigating Commissioner of the above-entitled case, herein made
part of this Resolution/Decision as Annex "A"; and finding the recommendation fully supported
by the evidence on record and the applicable laws and rules, with modification as to the
penalty to conform to the evidence, and considering respondents failure to account for the funds
received by him in trust from complainant in gross violation of Canon 16 of the Code of
Professional Responsibility, as well as for respondents lax, remiss and untroubled attitude in this
case, Atty. Danilo G. Macalino is hereby SUSPENDED from the practice of law for one (1) year
and Ordered to account to complainant the amount of P50,000.00 with a Warning that a similar
offense will merit a more severe penalty.

Respondents failure to rebut complainants evidence clearly reveals his failure to live up to his
duties as a lawyer in consonance with the lawyers oath and the Code of Professional
Responsibility. His repeated failure without any valid reason to comply with the orders of the
Court requiring him to comment on the complaint lends credence to the allegations thereof and
manifests his tacit admission of the same. As aptly found by Commissioner Dulay, the following
uncontroverted facts as supported by the annexes of the complaint had been established:

This resolution is now before us for confirmation.

2. that the said Metrobank Check No. [MB350288] was deposited to Account No. 0110004833
under Account Name Danilo G. Macalino at the United Savings Bank (Annex "E" of Petition);

"1. that Metrobank Check No. MB350288 in the amount of P50,000.00 payable to Wheels
Distributors (Annex A of Petition) was prepared by Frabal Fishing & Ice Plant Corporation
(Annex B Petition) and released to respondents representative;

The relationship between a lawyer and a client is highly fiduciary; it requires a high degree of
fidelity and good faith. It is designed "to remove all such temptation and to prevent everything of
that kind from being done for the protection of the client".15 So it is that the Code of Professional
Responsibility provides:

3. that on 19 May 1994 complainant wrote a letter to respondent (Annex C of Petition) advising
the latter that the Metrobank Check intended for Wheel Distributors, Inc. was not received by
them (Wheels Distributors) yet it was endorsed and encashed. Respondent was therefore
requested to explain how the particular check was encashed. Respondent received the letter on
May 23, 1994 (Annex C-3 of Petition) and the records do not show that respondent replied to
the latter requiring him to explain; and

CANON 16 - A LAWYER SHALL HOLD IN TRUST ALL MONEYS AND PROPERTIES OF HIS
CLIENT THAT MAY COME INTO HIS POSSESSION.
Rule 16.01 - A lawyer shall account for all money or property collected or received for or from the
client.

4. that complainant filed a civil case against UCPB Savings Bank, and Danilo Macalino before
the Regional Trial Court of Malabon, Metro Manila docketed as Civil Case No. 2382-MN (Annex
D of Petition) and at the hearing of said case on August 24, 1995, witness Eduardo
Estremadura, a bookeeper of UCPB Bank positively testified that Danilo G. Macalino was the
maintainer of Account No. CA-483-3 of the UCPB Savings Bank, Legaspi Branch (page 8 & 9
Annex D, TSN of hearing of Civil Case No. 2382-MN) and that Check No. 350288 was
deposited to the Account of Danilo G. Macalino under CA-483-3 on May 13, 1988 (page 9 of
Annex D, TSN of hearing); and was credited to the account of Danilo G. Macalino (page 12 of
Annex D, TSN of hearing of Civil Case No. 2382-MN)"16,

Rule 16.02 - A lawyer shall keep the funds of each client separate and apart from his own and
those of others kept by him.
Rule 16.03 - A lawyer shall deliver the funds and property of his client when due or upon
demand. However, he shall have a lien over the funds and may apply so much thereof as may
be necessary to satisfy his lawful fees and disbursements, giving notice promptly thereafter to
his client. He shall also have a lien to the same extent on all judgments and executions he has
secured for his client as provided for in the Rules of Court.

from which established facts, the investigating commissioner made the following conclusions:
"1. that Metrobank Check No. 350288 in the amount of P50,000.00 which was intended for
Wheels Distributors, Inc. was deposited and the amount credited to Account No. 483-3 of
respondent Danilo G. Macalino with the UCPB Savings Bank.

The Canon of Professional Ethics is even more explicit when it states:

The lawyer should refrain from any action whereby for his personal benefit or gain he abuses or
takes advantages of the confidence reposed in him by his client.

2. that respondent when required by the complainant to explain and account for the amount of
P50,000.00 caused by Metrobank Check No. 350288 which was not intended for him failed to
reply and give any accounting of such funds to complainant".17

Money of the client or collected for the client or other trust property coming into the possession
of the lawyer should be reported and accounted for promptly, and should not under any
circumstances be commingled with his own or be used by him. (par. 11)

Respondents wanton failure to make an accounting and to return to his client the amount
entrusted to him upon demand give rise to the presumption that he misappropriated it, in
violation of the trust and confidence reposed on him. His act of holding on to complainants
money without its acquiescence is conduct indicative of lack of integrity and propriety.18 A lawyer,
under his oath, pledges himself not to delay any man for money and is bound to conduct himself
with all good fidelity to his client.19

Here, we are in full accord with the findings, conclusion and recommendation of the IBP Board of
Governors that respondent misappropriated the money entrusted to him and which he failed to
account for to his client despite demand therefor.

22

It is clear, therefore, that respondent, by depositing the check in his own account and
subsequently deceiving his client into believing that he delivered the same to Wheels is
undoubtedly guilty of deceit, malpractice, gross misconduct and unethical behavior. He caused
dishonor, not merely to himself but to the noble profession to which he belongs. For, it cannot be
denied that the respect of litigants to the profession is inexorably diminished whenever a
member of the Bar betrays their trust and confidence.20 Like judges, lawyers must not only be
clean; they must also appear clean. This way, the peoples faith in the justice system remains
undisturbed.21

MENDOZA, J.:
This is a complaint for disbarment filed against Atty. Salvador M. Grupo for malpractice and
gross misconduct.
Complainant Rosario N. Junio alleged that
3. Sometime in 1995, [she] engaged the services of [respondent], then a private practitioner, for
the redemption of a parcel of land covered by Transfer Certificate of Title No. 20394 registered in
the name of her parents, spouses Rogelio and Rufina Nietes, and located at Concepcion, Loay,
Bohol.

What is more, respondents repeated failures to comply with the orders of the Court requiring
him to comment on the complaint indicate a high degree of irresponsibility on his part.
We have no hesitance, then, in confirming the resolution passed by the IBP Board of Governors
suspending respondent from the practice of law for one (1) year. We could have taken a more
drastic action against respondent, but considering that he has no prior administrative record, it is
our sentiment that the recommended penalty serves the purpose of protecting the interest of the
public and the legal profession. After all, in Espiritu vs. Cabredo,22 we imposed the same penalty
on an attorney who similarly failed to account the money received from his client and to restitute
it without any reason.

4. On 21 August 1995, [complainant] entrusted to [respondent] the amount of P25,000.00 in

cash to be used in the redemption of the aforesaid property. Respondent received the said
amount as evidenced by an acknowledgment receipt, a copy of which is being hereto attached
as Annex "A".
5. Notwithstanding the foregoing and for no valid reason, respondent did not redeem the
property; as a result of which the right of redemption was lost and the property was eventually
forfeited.

WHEREFORE, Atty. Danilo G. Macalino is hereby declared guilty of violation of Canon 16 of the
Code of Professional Responsibility, for his failure to immediately return and deliver the funds of
his former client upon demand, and is hereby SUSPENDED from the practice of law for a period
of one (1) year effective immediately, with a STERN WARNING that a repetition of the same or
similar acts shall be dealt with more severely. He is likewise ordered to return the sum
of P50,000 to complainant within ten (10) hereof.

6. Because of respondent's failure to redeem the property, complainant had demanded [the]
return of the money which she entrusted to the former for the above-stated purpose.
7. Despite repeated demands made by the complainant and without justifiable cause,
respondent has continuously refused to refund the money entrusted to him.1

Let copies of the Resolution be entered into respondents record as an attorney and be furnished
the Integrated Bar of the Philippines (IBP) and all the courts in the country for their information
and guidance.

In his Answer, petitioner admitted receiving the amount in question for the purpose for which it
was given. However, he alleged that

SO ORDERED.

6. The subject land for which the money of complainant was initially intended to be applied could
really not be redeemed anymore . .;
7. Complainant knew the mortgage agreement between her parents and the mortgage-owner
had already expired, and what respondent was trying to do was a sort of [a] desperate, last-ditch
attempt to persuade the said mortgagee to relent and give back the land to the mortgagors with
the tender of redemption; but at this point, the mortgagee simply would not budge anymore. For
one reason or another, he would no longer accept the sum offered;

Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION
Adm. Case No. 5020

8. By the time that complainant was to return to Manila, it was already a foregone matter that
respondent's efforts did not succeed. And so, when transaction failed, respondent requested the
complainant that he be allowed, in the meantime, to avail of the money because he had an
urgent need for some money himself to help defray his children's educational expenses. It was
really a personal request, a private matter between respondent and complainant, thus,
respondent executed a promissory note for the amount, a copy of which is probably still in the
possession of the complainant.

December 18, 2001

ROSARIO JUNIO, complainant,

vs.
ATTY. SALVADOR M. GRUPO, respondent.

23

9. . . . [T]he family of the complainant and that of the respondent were very close and intimate
with each other. Complainant, as well as two of her sisters, had served respondent's family as
household helpers for many years when they were still in Manila, and during all those times they
were treated with respect, affection, and equality. They were considered practically part of
respondent's own family.

rate from the time the said amount was misappropriated, until full payment; provided that the
total suspension shall be at least one (1) year from the date of said full payment
On July 4, 2001, respondent filed a motion for reconsideration alleging that
(a) there was no actual hearing of the case wherein respondent could have fully ventilated and
defended his position;

That is why, when complainant requested . . . assistance regarding the problem of the
mortgaged property which complainant wanted to redeem, respondent had no second-thoughts
in extending a lending hand . . . .

(b) the subject Resolution gravely modified the Report and Recommendation of the Trial
Commissioner, Hon. Pedro Magpayo, Jr., . . . such that the resultant sanctions that are ordered
imposed are too leonine, unjust and cruel;

Respondent did not ask for any fee. His services were purely gratuitous; his acts [were] on his
own and by his own. It was more than pro bono; it was not even for charity; it was simply an act
of a friend for a friend. It was just lamentably unfortunate that his efforts failed.
xxx

xxx

(c) that the factual circumstances attending the matter which gave rise to the complaint were not
rightly or fairly appreciated.5

xxx

He argues that the Court should adopt the report and recommendation of the IBP Investigating
Commissioner.

Of course, respondent accepts his fault, because, indeed, there were occasions when
complainant's sisters came to respondent to ask for the payment in behalf of complainant, and
he could not produce the money because the circumstances somehow, did not allow it. [I]t does
not mean that respondent will not pay, or that he is that morally depraved as to wilfully and
deliberately re[nege] in his obligation towards the complainant.2

In its resolution of August 15, 2001, the Court resolved to treat respondent's motion for
reconsideration as a petition for review of IBP Resolution No. XIV 2001-183 and required
complainant to comment on the petition.

Complainant filed a reply denying that respondent informed her of his failure to redeem the
property and that respondent requested her to instead lend the money to him.3

In her comment, complainant states that her primary interest is to recover the amount of
P25,000.00 with interest and that she is leaving it to the Court to decide whether respondent
deserves the penalty recommended by the IBP.6

The case was thereafter referred to the Integrated Bar of the Philippines (IBP) for investigation,
report, and recommendation. However, while two hearings were set for this purpose, both were
postponed at the instance of respondent. For this reason, on August 28, 2000, complainant
asked the Investigating Commissioner4 to consider the case submitted for decision on the basis
of the pleadings theretofore filed. Respondent was required to comment on complainant's
motion, but he failed to do so. Consequently, the case was considered submitted for resolution.

The Court resolves to partially grant the petition. In his report and recommendation, Investigating
Commissioner Magpayo, Jr. made the following findings:
In his Answer, the respondent ADMITS all the allegations in paragraph 4 of the complaint which
avers:

In his report, dated January 5, 2001, the Investigating Commissioner found respondent liable for
violation of Rule 16.04 of the Code of Professional Responsibility which forbids lawyers from
borrowing money from their clients unless the latter's interests are "protected by the nature of
the case or by independent advice." The Investigating Commissioner found that respondent
failed to pay his client's money. However, in view of respondent's admission of liability and "plea
for magnanimity," the Investigating Commissioner recommended that respondent be simply
reprimanded and ordered to pay the amount of P25,000.00 loan plus interest at the legal rate.

4. On 21 August 1995, complainant entrusted to respondent the amount of P25,000.00 in cash

to be used in the redemption of the aforesaid property (parcel of land covered by TCT No. 20394
registered in the name of complainant's parents located at Concepcion, Loay, Bohol).
Respondent received the said amount as evidenced by an acknowledgment receipt (Annex A).
By way of confession and avoidance, the respondent, . . . however, contended that when the
mortgagee refused to accept the sum tendered as the period of redemption had already expired,
he requested the complainant to allow him in the meantime to use the money for his children's
educational expenses[,] to which request the complainant allegedly acceded and respondent
even executed a promissory note (please see 4th par. of Annex "B" of complaint).

In its Resolution No. XIV-2001-183, dated April 29, 2001, the IBP Board of Governors adopted
and approved the Investigating Commissioner's findings. However, it ordered
[R]espondent . . . suspended indefinitely from the practice of law for the commission of an act
which falls short of the standard of the norm of conduct required of every attorney and . . .
ordered [him] to return to the complainant the amount of P25,000.00 plus interest at the legal

Respondent takes further refuge in the intimate and close relationship existing between himself
and the complainant's family on the basis of which his legal services were purely gratuitous or
"simply an act of a friend for a friend" with "no consideration involved." Unfortunately, his efforts

24

to redeem the foreclosed property, as already stated, did not produce the desired result because
the mortgagee "would not budge anymore" and "would not accept the sum offered."

It would indeed appear from the records of the case that respondent was allowed to borrow the
money previously entrusted to him by complainant for the purpose of securing the redemption of
the property belonging to complainant's parents. Respondent, however, did not give adequate
security for the loan and subsequently failed to settle his obligation. Although complainant
denied having loaned the money to respondent, the fact is that complainant accepted the
promissory note given her by respondent on December 12,1996. In effect, complainant
consented to and ratified respondent's use of the money. It is noteworthy that complainant did
not attach this promissory note to her complaint nor explain the circumstances surrounding its
execution. She only mentioned it in her demand letter of March 12, 1998 (Annex B), in which
she referred to respondent's undertaking to pay her the P25,000.00 on or before January 1997.
Under the circumstances and in view of complainant's failure to deny the promissory note, the
Court is constrained to give credence to respondent's claims that the money previously
entrusted to him by complainant was later converted into a loan.

Thus, the respondent concluded that there was, strictly speaking, no attorney-client [relationship]
existing between them. Rather, right from the start[,] everything was sort of personal, he added.
Granting to the respondent the benefit of the doubt, we shall assume that there was in reality a
loan in the amount of P25,000.00. This is likewise confirmed by the execution of a promissory
note on 12 December 1996 by the respondent who "undertook to pay Mrs. Junio on or before
January 1997" (Annex B of complaint). Moreover, the demand letter of 12 March 1998 (Annex B)
mentions of "reimbursement of the sum received" and interest of "24% per annum until fully
paid" giving the impression that the funds previously intended to be used for the repurchase of a
certain property (Annex A of complaint) was converted into a loan with the consent of the
complainant who gave way to the request of the respondent "to help defray his children's
educational expenses" (par. 8 of Answer).

Respondent's liability is thus not for misappropriation or embezzlement but for violation of Rule
16.04 of the Code of Professional Responsibility which forbids lawyers from borrowing money
from their clients unless the latter's interests are protected by the nature of the case or by
independent advice. In this case, respondent's liability is compounded by the fact that not only
did he not give any security for the payment of the amount loaned to him but that he has also
refused to pay the said amount. His claim that he could not pay the loan "because
circumstances . . . did not allow it" and that, because of the passage of time, "he somehow
forgot about his obligation" only underscores his blatant disregard of his obligation which reflects
on his honesty and candor. A lawyer is bound to observe candor, fairness, and loyalty in all his
dealings and transactions with his client.8

Be that as it may, the duty and obligation to repay the loan remains unshaken. Having utilized
the sum to fulfill his "urgent need for some money," it is but just and proper that he return the
amount borrowed together with interest.
Five (5) years had already passed since respondent retained the cash for his own personal use.
But notwithstanding the same and his firm promise "to pay Mrs. Junio on or before January
1997" he has not demonstrated any volition to settle his obligation to his creditor[,] although
admittedly "there w[ere] occasions when complainant's sister came to respondent to ask for the
payment in behalf of complainant," worse, "the passage of time made respondent somehow
forgot about the obligation."

Respondent claims that complainant is a close personal friend and that in helping redeem the
property of complainant's parents, he did not act as a lawyer but as a friend, hence there is no
client-attorney relationship between them. This contention has no merit. As explained in Hilado
v. David,9

A lawyer shall not borrow money from his client unless the client's interests are fully protected by
the nature of the case or by independent advice (Rule 16.04, Code of Professional
Responsibility). This rule is intended to prevent the lawyer from taking advantage of his influence
over the client.

To constitute professional employment it is not essential that the client should have employed
the attorney professionally on any previous occasion . . . It is not necessary that any retainer
should have been paid. promised, or charged for; neither is it material that the attorney
consulted did not afterward undertake the case about which the consultation was had. If a
person, in respect to his business affairs or troubles of any kind, consults with his attorney in his
professional capacity with the view to obtaining professional advice or assistance, and the
attorney voluntarily permits or acquiesces in such consultation, then the professional
employment must be regarded as established . . .

This rule is especially significant in the instant case where the respondent enjoys an immense
ascendancy over the complainant who, "as well as two of his sisters, had served respondent's
family as household helpers for many years."
Having gained dominance over the complainant by virtue of such long relation of master and
servant, the respondent took advantage of his influence by not returning the money entrusted to
him. Instead, he imposed his will on the complainant and borrowed her funds without giving
adequate security therefor and mindless of the interest of the complainant

Considering the foregoing, the Investigating Commissioner's recommendation to impose on

respondent the penalty of reprimand and restitution of the amount loaned by him is clearly
inadequate. On the other hand, the penalty of indefinite suspension with restitution imposed by
the IBP Board of Governors is too harsh in view of respondent's apparent lack of intent to
defraud complainant and of the fact that this appears to be his first administrative transgression.
It is the penalty imposed in Igual v. Javier10 which applies to this case. In that case, this Court
ordered the respondent suspended for one month from the practice of law and directed him to
pay the amount given him by his clients within 30 days from notice for his failure to return the
money in question notwithstanding his admission that he did not use the money for the filing of
the appellee's brief, as agreed by them, because of an alleged quarrel with his clients.

In the light of the foregoing, . . . respondent has committed an act which falls short of the
standard of the norm of conduct required of every attorney. If an ordinary borrower of money is
required by the law to repay the loan failing which he may be subjected to court action, it is more
so in the case of a lawyer whose conduct serves as an example.7

25

Anent petitioner's allegation regarding the lack of hearing during the IBP investigation, suffice it
to say that he waived such right when he failed to comment on petitioner's motion to submit the
case for resolution on the basis of the pleadings theretofore filed despite due notice to him, not
to mention the fact that it was he who had requested the postponement of the two hearings
scheduled by the Investigating Commissioner.

Civil Case No. 279-G was a case for partition and reconveyance filed with the CFI of Nueva
Ecija, Branch IV, on March 4, 1972, long before respondent judge was appointed to the Bench.
When the respondent judge inherited the case in 1976, there were many side issues and/or
incidents pending to be resolved, among which were: (a) Motion to exclude defendant Ester
Garampil as an heir of the late Leon Arguelles; and (b) Motion for appointment of commissioners
to partition the properties, both filed by herein complainant. Respondent judge issued an order
denying the motion of the plaintiffs for exclusion of defendant Ester Garampil as heir so as to
avoid the piecemeal adjudication of the issues raised in the case. (p. 74.) The motion of the
plaintiffs for the appointment of commissioners was likewise denied by respondent judge for the
reason that there was then pending before the Court of Appeals, an appeal involving the same
parties and the same properties whereby the legality of a Deed of Donation concerning the
same properties being litigated, is the very issue to be resolved. (p. 75.) It was for this reason
that respondent judge held in abeyance the trial of Civil Case No. 279-G pending termination of
the appeal before the Court of Appeals. (p. 80.)

WHEREFORE, the Court finds petitioner guilty of violation of Rule 16.04 of the Code of
Professional Responsibility and orders him suspended from the practice of law for a period of
one (1) month and to pay to respondent, within 30 days from notice, the amount of P25,000.00
with interest at the legal rate, computed from December 12, 1996.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila

On May 4, 1981, a Motion to set the case for conference among the parties, was filed by
defendants Serranos, Rigors and Garcias who were represented by Atty. Facundo T. Bautista.
After a hearing on the aforesaid motion was held, the defendants moved for the approval of the
"Compromise Agreement" dated July 1, 1981, which was signed by all the parties to the case
(except defendant Ester Garampil), as well as by all the lawyers of the said parties, namely,
complainant himself, representing the plaintiffs, Atty. Facundo Bautista, representing the
defendants, and Atty. Inocencio Garampil, representing defendant Ester Garampil. (pp. 89-94.)
The parties agreed that they would partition the properties being litigated in the manner specified
in the "Compromise Agreement" and that they would be separately responsible for the payment
of the fees of their respective lawyers. On September 21, 1981, the respondent judge issued a
decision approving the said compromise agreement on July 1, 1981. (pp. 97-100.)

SECOND DIVISION
A.M. No. 2662-CFI November 25, 1982
FLAVIANO A. PELMOKA, complainant,
vs.
FELIX T. DIAZ, JR., Court of First Instance of Nueva Ecija, Branch IV, respondent.

Defendant Ester Garampil thereafter filed a motion to deposit in court, the purchase price of a
commercial property in the amount of P250,000.00 in order that the proceeds thereof may be
disposed of in accordance with the approved compromise agreement. Complainant then filed a
motion for the payment of his professional fee in the amount of P57,519.00, (pp. 104-105.)
which was later raised to P79,186.00 in two subsequent motions of the complainant. (pp. 113119.)

ABAD SANTOS, J.:

In a verified complaint dated December 4, 1981, Flaviano A. Pelmoka charged Judge Felix T.
Diaz, Jr. of the Court of First Instance of Nueva Ecija and Attorneys Facundo T. Bautista and
Inocencio B. Garampil, Sr. with serious misconduct in connection with Civil Case No. 279-G,
entitled Eustacio Nepomuceno, et al. vs. Ester Garampil, et al.

On October 22, 1981, defendant Ester Garampil filed a motion for the withdrawal of the sum of
P20,060.00 (p.109.) from the amount deposited with the court, representing partial payment of
her share in the estate pursuant to the expressed agreement of the heirs of the deceased
contained in the compromise agreement, which motion was granted by the respondent judge.
(p.110.) The other parties thereafter moved to withdraw their respective shares in the cash
deposit with the court, and on the basis of the said motions, respondent judge issued the Order
dated October 30, 1981, allowing the defendants to withdraw their shares; (p.120.) and the
Order dated November 20, 1981, granting the request of the other parties for the withdrawal of
their respective shares. (pp. 135-137.)

The charge against Judge Diaz is for gross ignorance of the law and judicial proceedings; failure
to protect the complainant's charging lien as one of the lawyers who intervened in the
aforementioned civil case; and partiality, bias prejudice or malicious motive.
This decision concerns Judge Diaz only who was required to file an answer to the complaint.
The answer denies the allegations of the complaint with a prayer that it be dismissed. The
complainant filed a reply to the answer and issues having been joined, it was ascertained that
the case could be decided on the basis of the documentary evidence submitted without resorting
to a formal hearing.

In his complaint, complainant charged respondent judge with gross ignorance of the law and
judicial proceedings committed in the following manner: (a) unduly delaying the disposition of
Civil Case No. 279-G when respondent judge denied plaintiffs' motion for the appointment of
commissioners to partition the properties; (b) not resolving plaintiffs' motion to exclude defendant
Ester Garampil as heir of deceased Leon Arguelles despite early pronouncement of Judge

The Rollo of the case reveals, according to Deputy Court Administrator Romeo D. Mendoza, the
following:

26

Placido Ramos, respondent judge's predecessor, that Ester Garampil is not an heir of the
deceased; (c) approving the compromise agreement of partition entered into by all the parties;
(d) allowing Ester Garampil to withdraw the amount of P20,000.00 from the cash deposit, with
the court, considering that she is not an heir of the deceased; and (e) ignoring complainant's
motion for payment of his fees out of the money deposited with the court.

responsible for the payment of the fees of their respective lawyers. Since the plaintiffs
(complainant's clients), refused to pay complainant's claim for attorney's fee in the amount of
P79,186.00 on the ground that the same is exorbitant, the remedy of the complainant is to file a
separate action for recovery of his fees where the parties win be afforded the chance to prove
their respective claims and defenses.

The complainant further alleged that the respondent judge failed to protect his charging lien for
his attorney's fees when he allowed plaintiffs to withdraw their share from the said deposit. He
likewise charged respondent judge with bias and partiality when he allowed all the parties to
withdraw their respective shares while the complainant was not allowed to do the same in so far
as his charging lien is concerned.

In the case of Bongco vs. Judge Serapio, (Adm. Matter No. 1804-CAR, Feb. 28, 1980.) this
Court held that where it does not appear from the facts in an administrative complaint that the
assailed judicial acts of respondent judge were corrupt or inspired by an intention to violate the
law, or were done in persistent disregard of well known legal rules, the complaint should be
dismissed for lack of merit.

Respondent judge, in his Answer dated January 13, 1982, (pp. 62-71.) denied all the charges in
the complaint. The respondent judge alleged that Civil Case No. 279-G was a case for
reconveyance and partition of the estate of deceased Leon Arguelles which had been heard and
tried by no less than four (4) judges before him. When he inherited the case in 1976, there were
several side issues and/or incidents pending to be resolved and while all these side issues were
pending before the court a quo, an appeal involving the same parties and the same properties
being litigated, was then pending before the Court of Appeals. It was for this reason that the
respondent judge denied complainant's motion for appointment of a commissioner as well as his
motion to exclude defendant Ester Garampil as an heir.

The assessment is well taken except in respect of the failure of the respondent to protect the
complainant's right to collect his professional fees.
The respondent should not have allowed the clients of the complainant to withdraw their shares
from the cash deposit without extending ample protection to the latter's claim. This error was
compounded by his order allowing even Ester Garampil to withdraw her share when she did not
sign the compromise agreement of July 1, 1981.
It was grossly unfair for the respondent to leave the complainant holding an empty bag, so to
speak, after he had rendered his professional services as counsel to the plaintiffs. True it is that
the compromise agreement stipulates that the parties shall be separately responsible for the
payment of the fees for their respective lawyers; nevertheless, the respondent should not have
improvidently allowed the clients of the complainant to withdraw their shares without first
determining his reasonable fees.

Respondent judge also stated that he allowed the parties, including defendant Ester Garampil
who is not a compulsory heir, to withdraw their respective shares from the cash portion of the
estate in order to implement the compromise agreement entered into by all the parties and their
respective lawyers.
With respect to the charge of the complainant that the respondent judge failed to protect his
charging lien or f& attorney's fees, the respondent judge explained that he did not grant
complainant's motion for payment of his professional fees because he could not ascertain the
exact amount of complainant's just, reasonable and fair fee, considering that his claim of
P79,186.00 was contested by the plaintiffs as being exorbitant.

A lawyer has the right to claim the fruits of his labor. He has the equitable right to be paid his
fees out of the judgment which he has obtained from a court of justice. Any allegation of
exorbitant or excessive fees should have been resolved by the respondent Judge on the basis
of quantum meruit. Or the respondent could have inquired from the plaintiffs what they
considered as reasonable attorney's fees for the services of complainant, direct the payment of
such "reasonable amount" as partial payment of his attorney's fees, and set for hearing the
disputed difference between the claim of the complainant and the amount considered
reasonable by the plaintiffs.

Deputy Court Administrator Mendoza has assessed the charges against Judge Diaz in the light
of the record as follows:
The respondent judge cannot be faulted for dismissing complainant's motion for appointment of
commissioners as well as his motion to exclude defendant Ester Garampil as an heir. The
respondent judge had to dismiss the said motions to avoid piecemeal adjudication of the issues
raised before him. In fact, respondent judge even suspended the trial of the case until after the
Court of Appeals shall have resolved the issue pending before it which involved the same parties
and the same properties being litigated.

WHEREFORE, for his failure to protect the complainant's charging lien, the respondent is
hereby reprimanded.
SO ORDERED.

The respondent judge was likewise justified in granting the motion of the parties to withdraw
their respective shares from the cash portion of the estate. The respondent judge only
implemented the compromise agreement entered into by all the parties and signed by all their
respective lawyers including complainant herein. With respect to complainant's professional
fees, it was specified in the compromise agreement that the parties would be separately

Republic of the Philippines

SUPREME COURT
Manila

27

Attorney6 authorizing respondent and/or Garcia to bring any action against Metropolitan
Insurance for the satisfaction of complainants claim as well as to "negotiate, sign, compromise[,]
encash and receive payment" from it. The Special Power of Attorney was later dated December
23, 1998 on which same date Metropolitan Insurance issued a Chinabank Check No. 841172
payable to complainant in the amount of P525,000.00 as full settlement of the claim.7 The check
was received by respondent.

EN BANC
A.C. No. 5829

October 28, 2003

DANIEL LEMOINE, complainant,

vs.
ATTY. AMADEO E. BALON, JR., respondent.

In the meantime, complainant returned to the Philippines in early January 1999 but left again on
the 24th of the same month.8 On inquiry about the status of his claim, Garcia echoed to
complainant what respondent had written him (Garcia) in respondents letter9 of March
26, 1999 that the claim was still pending with Metropolitan Insurance and that it was still subject
of negotiations in which Metropolitan Insurance offered to settle it forP350,000.00 representing
fifty percent thereof. In the same letter to Garcia, respondent suggested the acceptance of the
offer of settlement to avoid a protracted litigation.

DECISION
PER CURIAM:
On December 17, 1999, complainant Daniel Lemoine, a French national, filed a verified
complaint1 against respondent Atty. Amadeo E. Balon, Jr., for estafa and misconduct before the
Integrated Bar of the Philippines. The case, docketed as CBD Case No. 99-679, was referred by
the Commission on Bar Discipline to an Investigator for investigation, report and
recommendation.

On December 6, 1999, on complainants personal visit to the office of Metropolitan Insurance, he

was informed that his claim had long been settled via a December 23, 1998 check given to
respondent the year before.10Complainant lost no time in going to the law office of respondent
who was not around, however, but whom he was able to talk by telephone during which he
demanded that he turn over the proceeds of his claim.11

The facts that spawned the filing of the complaint are as follows:

Respondent thereupon faxed to complainant a December 7, 1999 letter12 wherein he

acknowledged having in his possession the proceeds of the encashed check which he retained,
however, as attorneys lien pending complainants payment of his attorneys fee, equivalent to
fifty percent (50%) of entire amount collected. In the same letter, respondent protested what he
branded as the "uncivilized and unprofessional behavior" complainant "reportedly demonstrated"
at respondents office. Respondent winded up his letter as follows, quoted verbatim:

In early 1998, complainant filed a car insurance claim with the Metropolitan Insurance Company
(Metropolitan Insurance), the insurer of his vehicle which was lost. As complainant encountered
problems in pursuing his claim which was initially rejected,2 his friend, a certain Jesus "Jess"
Garcia (Garcia), arranged for the engagement of respondents services.
By letter3 of October 21, 1998 addressed to Elde Management, Inc., "ATTN: Mr. Daniel
Lemoine," under whose care complainant could be reached, respondent advised complainant,
whom he had not before met, that for his legal services he was charging "25% of the actual
amount being recovered. . . payable upon successful recovery;" an advance payment of
P50,000.00 "to be charged [to complainant] to be deducted from whatever amount [would] be
successfully collected;" P1,000.00 "as appearance and conference fee for each and every court
hearings, conferences outside our law office and meetings before the Office of the Insurance
Commission which will be also charged to our 25% recovery fee;" and legal expenses "such as
but not limited to filing fee, messengerial and postage expenses . . . and other miscellaneous but
related expenses," to be charged to complainants account which would be reimbursed upon
presentation of statement of account.

We would like to make it clear that we cannot give you the aforesaid amount until and unless our
attorneys fees will be forthwith agreed and settled. In the same manner, should you be barbaric
and uncivilized with your approached, we will not hesitate to make a proper representation with
the Bureau of Immigration and Deportation for the authenticity of your visa, Department of Labor
and Employment for your working status, Bureau of Internal Revenue for your taxation
compliance and the National Bureau of Investigation [with] which we have a good network...
While it [is your] prerogative to file a legal action against us, it is also our prerogative to file a
case against you. We will rather suggest if you could request your lawyer to just confer with us
for the peaceful settlement of this matter. (Underscoring and emphasis supplied)

The letter-proposal of respondent regarding attorneys fees does not bear complainants
conformity, he not having agreed therewith.

As despite written demands,13 respondent refused to turn over the proceeds of the insurance
claim and to acknowledge the unreasonableness of the attorneys fees he was demanding,
complainant instituted the administrative action at bar on December 17, 1999.

It appears that Metropolitan Insurance finally offered to settle complainants claim, for by
letter4 of December 9,1998 addressed to it, respondent confirmed his acceptance of its offer to
settle the claim of complainant "in an ex-gratia basis of 75% of his policy coverage which is
therefore FIVE HUNDRED TWENTY FIVE THOUSAND (P525,000.00) PESOS."

In his Complaint-Affidavit, complainant alleged that "[i]t appears that there was irregularity with
the check," it having been issued payable to him, but "and/or AMADEO BALON" was therein
intercalated after his (complainants) name.141awphi1.nt

A day or a few days before December 23, 1998 when complainant left for France,5 he, on the
advice of respondent, signed an already prepared undated Special Power of

28

Maintaining that respondent was entitled to only P50,000.00 in attorneys fees,15 complainant
decried respondents continued possession of the proceeds of his claim16and his
misrepresentations that the recovery thereof was fraught with difficulties. 17

Explaining why no written memorandum of the turn over of various payments to Garcia was
made, respondent alleged that there was no need therefor since he very well knew Garcia who
is a co-Rotarian and co-attorney-in-fact and whom he really dealt with regarding complainants
claim.29

In his Counter-Affidavit18 of February 18, 2000, respondent asserted that his continued retention
of the proceeds of complainants claim is in lawful exercise of his lien for unpaid attorneys fees.
He expressed readiness, however, to account for and turn them over once he got paid fifty
percent (50%) thereof, he citing the so called contingent fee billing method of "no cure, no pay"
adopted by practicing lawyers in the insurance industry as the basis of the amount of his
attorneys fees,19 which to him was justified in the absence of an attorney-client contract between
him and complainant, the latter having rejected respondents letter-proposal of October 21,
1998.20

Respondent furthermore declared that he rejected complainants offer to pay him P50,000.00 for
his services, insisting that since there had been no clear-cut agreement on his professional fees
and it was through him that Metropolitan Insurance favorably reconsidered its initial rejection of
complainants claim, he is entitled to a contingent fee of 50% of the net proceeds thereof.30
Finally, respondent declared that he, in connection with his follow-up of the insurance claim,
incurred representation expenses of P35,000.00, entertainment and other representation
expenses on various occasions of P10,000.00, and transportation and gasoline expenses and
parking fees of P5,000.00;31 and that his retention of complainants money was justified in light of
his apprehension that complainant, being an alien without a valid working permit in the
Philippines, might leave the country anytime without settling his professional fees.32

Respondent also highlighted the value of the time and efforts he extended in pursuing
complainants claim and the expenses he incurred in connection therewith. He went on to assert
that his inability to contact complainant whose whereabouts he did not know prompted him to
encash the check and keep the proceeds thereof in conformity with the Special Power of
Attorney executed in his favor.21

The Investigating Commissioner, by Report and Recommendation33 of October 26, 2001, found
respondent guilty of misconduct and recommended that he be disbarred and directed to
immediately turn over to complainant the sum of P475,000.00 representing the amount of the
P525,000.00 insurance claim less respondents professional fees of P50,000.00, as proposed by
complainant.

During the hearings conducted by the IBP Investigator, complainant echoed his allegations in his
Complaint-Affidavit and stressed that he turned down as unreasonable respondents proposal in
his October 21, 1998 letter that he be paid 25% of the actual amount collected for his legal
services.22 And he presented documentary evidence, including the March 26, 1999 letter of
respondent informing his co-attorney-in-fact Garcia of the supposedly still unrecovered claim
and suggesting acceptance of the purported offer of Metropolitan Insurance to settle
complainants claim at P350,000.00.

The Board of Govenors of the Integrated Bar of the Philippines, acting on the Investigators
Report, issued Resolution No. XV-2002-40134 on August 3,2002, reading:
RESOLVED to ADOPT and APPROVE, as it is hereby ADOPTED and APPROVED, the Report
and Recommendation of the Investigating Commissioner of the above-entitled case, herein
made part of this Resolution/Decision as Annex "A"; and, finding the recommendation fully
supported by the evidence on record and the applicable laws and rules, with modification, and
considering respondents dishonesty which amounted to grave misconduct and grossly unethical
behavior which caused dishonor, not merely to respondent but the noble profession to which he
belongs, Respondent is hereby SUSPENDED from the practice of law for six (6) monthswith the
directive to turn over the amount of Five Hundred Twenty Five Thousand (P525,000.00)
Pesos to the complainant without prejudice to respondents right to claim attorneys fees which
he may collect in the proper forum. (Underscoring supplied)

Explaining how his above-mentioned March 26, 1999 letter to Garcia came about, respondent
declared that it was made upon Garcias request, intended for a certain Joel Ramiscal
(Ramiscal) who was said to be Garcias business partner.23
Respondent later submitted a June 13, 2001 Supplement24 to his Counter-Affidavit reiterating his
explanation that it was on Garcias express request that he wrote the March 26, 1999 letter,
which was directed to the fax number of Ramiscal.1vvphi1.nt
Additionally, respondent declared that in the first week of May 1999, on the representation of
Garcia that he had talked to complainant about respondents retention of fifty percent (50%) of
the insurance proceeds for professional fees less expenses,25 he gave Garcia, on a staggered
basis, the total amount of P233,000.00 which, so respondent averred, is the amount of
insurance claim complainant is entitled to receive less attorneys fees and expenses. 26 Thus,
respondent claimed that he gave Garcia the amount of P30,000.00 on May 31, 1999 at Dulcinea
Restaurant in Greenbelt, Makati; the amounts of P50,000.00, P20,000.00 and P30,000.00 on
different occasions at his (respondents) former address through his executive secretary Sally I.
Leonardo; the amount of P20,000.00 at the office of his (respondents) former employer
Commonwealth Insurance Company through his subordinate Glen V. Roxas; and several other
payments at Dulcinea, and at Manila Intercontinental Hotels coffee shop sometime in October
1999.27 Respondent submitted the separate sworn statements of Leonardo and Roxas.28

The records of the case are before this Court for final action.
Respondent, by a Motion for Reconsideration35 filed with this Court, assails the Investigating
Commissioners Report and Recommendation as not supported by clear, convincing and
satisfactory proof. He prays for the reopening of the case and its remand to the Investigator so
that Garcia can personally appear for his (respondents) confrontation.
There is no need for a reopening of the case. The facts material to its resolution are either
admitted or documented.

29

This Court is in full accord with the findings of the IBP Investigator that respondent violated the
following provisions of the Code of Professional Responsibility, to wit:

Specifically with respect to above-quoted provision of Canon 16 of the Code of Professional

Responsibility, the Filipino lawyers principal source of ethical rules, which Canon 16 bears on
the principal complaint of complainant, a lawyer must hold in trust all moneys and properties of
his client that he may come to possess. This commandment entails certain specific acts to be
done by a lawyer such as rendering an accounting of all money or property received for or from
the client36 as well as delivery of the funds or property to the client when due or upon
demand.37 Respondent breached this Canon when after he received the proceeds of
complainants insurance claim, he did not report it to complainant, who had a given address in
Makati, or to his co-attorney-in-fact Garcia who was his contact with respect to complainant.

RULE 1.01 - A lawyer shall not engage in unlawful, dishonest, immoral or deceitful conduct.
xxx
CANON 15 - A lawyer shall observe candor, fairness and loyalty in all his dealings and
transactions with his clients.

In fact, long after respondent received the December 23, 1998 check for P525,000.00 he, by his
letter of March 26, 1999 to Garcia, had even the temerity to state that the claim was still pending
and recommend "acceptance of the 50% offer . . . which is P350,000.00 pesos." His explanation
that he prepared and sent this letter on Garcias express request is nauseating. A lawyer, like
respondent, would not and should not commit prevarication, documented at that, on the mere
request of a friend.

RULE 15.06 - A lawyer shall not state or imply that he is able to influence any public official,
tribunal or legislative body.
xxx
CANON 16 - A lawyer shall hold in trust all moneys and properties of his client that may come
into his possession.

By respondents failure to promptly account for the funds he received and held for the benefit of
his client, he committed professional misconduct.38 Such misconduct is reprehensible at a
greater degree, for it was obviously done on purpose through the employment of deceit to the
prejudice of complainant who was kept in the dark about the release of the check, until he
himself discovered the same, and has to date been deprived of the use of the proceeds thereof.

RULE 16.01 - A lawyer shall account for all money or property collected or received for or from
the client.
RULE 16.02 - A lawyer shall keep the funds of each client separate and apart from his own and
those of others kept by him.

A lawyer who practices or utilizes deceit in his dealings with his client not only violates his duty of
fidelity, loyalty and devotion to the clients cause but also degrades himself and besmirches the
fair name of an honorable profession.39

RULE 16.03 - A lawyer shall deliver the funds and property of his client when due or upon
demand. However, he shall have a lien over the funds and may apply so much thereof as may
be necessary to satisfy his lawful fees and disbursements, giving notice promptly thereafter to
his client. He shall also have a lien to the same extent on all judgments and executions he has
secured for his client as provided for in the Rules of Court.

That respondent had a lien on complainants funds for his attorneys fees did not relieve him of
his duty to account for it.40 The lawyers continuing exercise of his retaining lien presupposes
that the client agrees with the amount of attorneys fees to be charged. In case of disagreement
or when the client contests that amount for being unconscionable, however, the lawyer must not
arbitrarily apply the funds in his possession to the payment of his fees.41 He can file, if he still
deems it desirable, the necessary action or proper motion with the proper court to fix the amount
of such fees.42

xxx
CANON 17 - A lawyer owes fidelity to the cause of his client and he shall be mindful of the trust
and confidence in him.

In respondents case, he never had the slightest attempt to bring the matter of his compensation
for judicial determination so that his and complainants sharp disagreement thereon could have
been put to an end. Instead, respondent stubbornly and in bad faith held on to complainants
funds with the obvious aim of forcing complainant to agree to the amount of attorneys fees
sought. This is an appalling abuse by respondent of the exercise of an attorneys retaining lien
which by no means is an absolute right and cannot at all justify inordinate delay in the delivery of
money and property to his client when due or upon demand.

xxx
RULE 18.04 - A lawyer shall keep the client informed of the status of his case and shall respond
within a reasonable time to the clients request for information.
xxx

Respondent was, before receiving the check, proposing a 25% attorneys fees. After he received
the check and after complainant had discovered its release to him, he was already asking for
50%, objection to which complainant communicated to him. Why respondent had to doubly
increase his fees after the lapse of about one year when all the while he has been in custody of

RULE 21.02 - A lawyer shall not, to the disadvantage of his client, use information acquired in
the course of employment, nor shall he use the same to his advantage or that of a third person,
unless the client with full knowledge of the circumstances consents thereto.

30

the proceeds of the check defies comprehension. At any rate, it smacks of opportunism, to say
the least.

recover his attorneys fees and purported expenses incurred in securing the release thereof from
Metropolitan Insurance.

As for respondents claim in his June 2001 Supplement to his Counter-Affidavit that he had on
several occasions from May 1999 to October 1999 already delivered a total of P233,000.00 out
of the insurance proceeds to Garcia in trust for complainant, this does not persuade, for it is
bereft of any written memorandum thereof. It is difficult to believe that a lawyer like respondent
could have entrusted such total amount of money to Garcia without documenting it, especially at
a time when, as respondent alleged, he and Garcia were not in good terms.43 Not only that. As
stated earlier, respondents Counter-Affidavit of February 18, 2000 and his December 7,
1999 letter to complainant unequivocally contained his express admission that the total amount
of P525,000.00 was in his custody. Such illogical, futile attempt to exculpate himself only
aggravates his misconduct. Respondents claim discredited, the affidavits of Leonardo and
Roxas who, acting allegedly for him, purportedly gave Garcia some amounts forming part of the
P233,000.00 are thus highly suspect and merit no consideration.

SO ORDERED.

The proven ancillary charges against respondent reinforce the gravity of his professional
misconduct.

A.C. No. 3745 October 2, 1995

Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION

CYNTHIA B. ROSACIA, complainant,

vs.
ATTY. BENJAMIN B. BULALACAO, respondent.

The intercalation of respondents name to the Chinabank check that was issued payable
solely in favor ofcomplainant as twice certified by Metropolitan Insurance44 is clearly a brazen act
of falsification of a commercial document which respondent resorted to in order to encash the
check.

RESOLUTION

Respondents threat in his December 7, 1999 letter to expose complainant to possible sanctions
from certain government agencies with which he bragged to have a "good network" reflects lack
of character, self-respect, and justness.
FRANCISCO, J.:
It bears noting that for close to five long years respondent has been in possession of
complainants funds in the amount of over half a million pesos. The deceptions and lies that he
peddled to conceal, until its discovery by complainant after about a year, his receipt of the funds
and his tenacious custody thereof in a grossly oppressive manner point to his lack of good moral
character. Worse, by respondents turnaround in his Supplement to his Counter-Affidavit that he
already delivered to complainants friend Garcia the amount of P233,000.00 which, so
respondent claims, is all that complainant is entitled to, he in effect has declared that he has
nothing more to turn over to complainant. Such incredible position is tantamount to a refusal to
remit complainants funds, and gives rise to the conclusion that he has misappropriated them.45

Complainant Cynthia B. Rosacia, president of Tacma, Phils., Inc., a duly registered corporation,
filed a complaint for disbarment dated October 25, 1991, against herein respondent Atty.
Benjamin B. Bulalacao. Acting on the complaint, the Court in a resolution dated February 24,
1992, resolved to refer the case to the Integrated Bar of the Philippines (IBP) for investigation,
report and recommendation. Commissioner Victor C. Fernandez, the IBP investigating
commissioner, found that respondent breached his oath of office and accordingly recommended
respondent's suspension from the practice of law for three (3) months. 1 In a resolution dated
July 30, 1994, the IBP Board of Governors resolved to adopt and approve the commissioner's
report and recommendation. 2

In fine, by respondents questioned acts, he has shown that he is no longer fit to remain a
member of the noble profession that is the law.

As found by the IBP, the undisputed facts are as follows:

On June 1, 1990, by virtue of a written Agreement (Exh. "3-a"), respondent Atty. Benjamin B.
Bulalacao was hired as retained counsel of a corporation by the name of Tacma Phils., Inc.

WHEREFORE, respondent Atty. Amadeo E. Balon, Jr., is found GUILTY of malpractice, deceit
and gross misconduct in the practice of his profession as a lawyer and he is hereby
DISBARRED. The Office of the Clerk of Court is directed to strike out his name from the Roll of
Attorneys and to inform all courts and the Integrated Bar of the Philippines of this Decision.

On October 31, 1990, the lawyer-client relationship between the respondent and Tacma Phils.,
Inc. was severed as shown by another agreement of even date (Exh. "3-b").

Respondent is ordered to turn over to complainant, Daniel Lemoine, the amount of P525,000.00
within thirty (30) days from notice, without prejudice to whatever judicial action he may take to

31

On July, 1991, or after almost nine (9) months from the date respondent's retainer agreement
with Tacma, Phils., Inc. was terminated, several employees of the corporation consulted the
respondent for the purpose of filing an action for illegal dismissal. Thereafter, he agreed to
handle the case for the said employees as against Tacma, Phils., Inc. by filing a complaint
before the National Labor Relations Commission, and appearing in their behalf. 3

ACCORDINGLY, respondent is hereby SUSPENDED from the practice of law for three months.
Let this resolution be attached to respondent's record in the Office of the Bar Confidant and
copies thereof furnished to all courts and to the Integrated Bar of the Philippines.

The sole issue to be addressed is whether or not respondent breached his oath of office for
representing the employees of his former client, Tacma, Phils., Inc., after the termination of their
attorney-client relationship. We agree with the findings of the IBP that respondent breached his
oath of office. Respondent does not now dispute this. In fact, in his motion for reconsideration,
respondent admitted that he "did commit an act bordering on grave misconduct, if not outright
violation of his attorney's oath". 4 However, respondent is pleading for the Court's compassion
and leniency to reduce the IBP recommended three months suspension to either fine or
admonition with the following proffered grounds: that he is relatively new in the profession having
been admitted to the Philippine Bar on April 10, 1990 at the age of 46 when the complained
conduct was committed on August 1991; that he is of humble beginnings and his suspension will
deprive his family of its only source of livelihood he being the sole bread winner in the family;
that he has fully realized his mistake and the gravity of his offense for which he is fully repentant;
that he has severed his attorney-client relationship with the employees of Tacma, Phils., Inc. by
inhibiting himself and withdrawing his appearance as counsel in the labor case against Tacma,
Phils., Inc.; and that he pledges not to commit the same mistake and to henceforth strictly
adhere to the professional standards set forth by the Code of Professional Responsibility.

Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION

A.C. No. 2736 May 27, 1991

LORENZANA FOOD CORPORATION represented by Mr. SOLOMON U. LORENZANA, JR.,
as its President and General Manager, and/or Mrs. ELIZABETH L. DIAZ, as its VicePresident, petitioners,
vs.

The Court reiterates that an attorney owes loyalty to his client not only in the case in which he
has represented him but also after the relation of attorney and client has terminated as it is not
good practice to permit him afterwards to defend in another case other person against his former
client under the pretext that the case is distinct from, and independent of the former case. 5 It
behooves respondent not only to keep inviolate the client's confidence, but also to avoid the
appearance of treachery and double dealing for only then can litigants be encouraged to entrust
their secrets to their attorneys which is of paramount importance in the administration of
justice. 6 The relation of attorney and client is one of confidence and trust in the highest
degree. 7 A lawyer owes fidelity to the cause of his client and he ought to be mindful of the trust
and confidence reposed in him. 8 An attorney not only becomes familiar with all the facts
connected with his client's cause, but also learns from his client the weak and strong points of
the case. No opportunity must be given attorneys to take advantage of the secrets of clients
obtained while the confidential relation of attorney and client exists. Otherwise, the legal
profession will suffer by the loss of the confidence of the people. 9

ATTY. FRANCISCO L. DARIA, respondent.

Jose Feliciano Loy, Jr. for petitioners.
RESOLUTION

PER CURIAM:p
The respondent lawyer, Atty. Francisco L. Daria, is administratively charged 1 on two counts, to
wit:

Respondent's plea for leniency cannot be granted. We note that respondent is new in the
profession as he was just admitted to the Philippine Bar on April 10, 1990, when the breach of
his oath of office occurred more than a year after. Having just hurdled the bar examinations
which included an examination in legal ethics, surely the precepts of the Code of Professional
Responsibility to keep inviolate the client's trust and confidence even after the attorney-client
relation is terminated 10 must have been still fresh in his mind. A lawyer starting to establish his
stature in the legal profession must start right and dutifully abide by the norms of conduct of the
profession. This will ineluctably redound to his benefit and to the upliftment of the legal
profession as well.

1. Negligence and
2. Betrayal of his former client's confidences.
A verified complaint dated February 22, 1985 was filed by Lorenzana Food Corporation LFC,
hereinafter), and received by the Court on February 25, 1985. 2
The Court, on June 10, 1985, resolved to refer this case to the Office of the Solicitor General for
investigation, report, and recommendation.

32

After proper proceedings, the Office of the Solicitor General submitted its "Report and
Recommendation," dated February 21, 1990 and received by the Court on February 26, 1990.

During the hearings in the Hanopol case on July 27, 1984 and August 8, 1984, no one appeared
for complainant. So, on August 15, 1984, Hanopol filed a "Manifestation and Motion" praying that
the earlier Decision of the Labor Arbiter dated July 29, 1983 be revived. (Exh. 5).

From the findings made by the Solicitor General, the pertinent facts may be summarized as
follows:

On September 1, 1984, Atty. Jose Loy, Jr. was hired by complainant LFC vice Atty. Udarbe and
he immediately came across the abovementioned "Manifestation and Motion". On September 5,
1984, he filed an Opposition (Exh. 6) thereto, and on September 19, 1984, he followed this up
with a position paper for LFC (Exh. 7). However, the Labor Arbiter had already revived his earlier
Decision dated July 29, 1983 in another Decision dated September 4, 1984, thereby prompting
Atty. Loy to appeal the latter Decision (Exh. 3). In a resolution dated May 9, 1985, the NLRC
ordered anew the remand of the case for further proceedings (Exh. 8).

Respondent Francisco L. Daria is charged with negligence and betrayal of his former client's
confidences. The following facts are in connection with the charge of negligence:
Respondent was hired by complainant Lorenzana Food Corporation (LFC) on January 8, 1981
as its legal counsel and was designated as its personnel manager six months later (tsn. pp. 6-7,
Dec. 9, 1985). On May 23, 1983, LFC employee, Violeta Hanopol, filed a complaint for illegal
dismissal and other monetary claims against complainant before the Ministry (now Department)
of Labor and Employment (MOLE). On May 30, 1983, summons was served on the parties with
the requirement that position papers be submitted (Exh. G).

In connection with the other charge of betrayal by respondent of his former client's confidences,
the following facts appear on record:
While respondent was still connected with complainant, its general manager, Sebastian Cortes,
issued a memorandum dated February 28, 1984 (Exh. C) to its employee, Roberto San Juan,
requiring him to submit a written explanation for his alleged double liquidation and unliquidated
cash advances. Another memorandum dated March 15, 1984 (Exh. D) was issued this time by
complainant's internal auditor, Rosario L. Bernardo, addressed to complainant's president,
summing up San Juan's unliquidated advances amounting to P9,351.15. Respondent was
furnished a copy of this memorandum (Exh. D-3). The executive committee, to which respondent
belongs, investigated San Juan on his unliquidated advances. On account of the gravity of the
charge, respondent placed San Juan under preventive suspension, per his letter to him dated
April 25, 1984 (Exh. E).

During the initial hearing on June 13, 1973 * (sic) Hanopol and respondent tried to explore the
possibility of an amicable settlement. Since no agreement was reached the hearing was reset to
June 17, 1983. On the pretext that Hanopol was supposed to go to his office on that date
respondent failed to appear for the second setting (tsn. pp. 14-15, Dec. 9, 1985). So, the Labor
Arbiter was constrained to further reset the hearing to June 28, 1983. Respondent received on
June 23, 1983 the Order for the resetting to June 1983 (Exh. J).
In the meantime, on June 20, 1983, respondent received an Order in another labor case, setting
the hearing therein also on June 28, 1983 (Exh. H-6). Faced with a conflicting schedule,
respondent decided to move to postpone the hearing in the Hanopol case. However, instead of
filing a written motion for postponement, he opted to call, through his secretary, the Office of the
Labor Arbiter to move for postponement (Exh. H-5; tsn. p. 16, Dec. 9, 1985). Respondent's
telephone message apparently failed to reach the Labor Arbiter, because at the hearing on June
28, 1983, he considered the case submitted for decision on the basis of Hanopol's complaint
and affidavit (Exh. G-1). Respondent had not submitted a position paper.

On September 20, 1984, when respondent had already resigned, complainant sent a demand
letter to San Juan requiring him to restitute the amount of P9,351.15 (Exh. N-2). Since he failed
to pay the amount demanded, a complaint for estafa was lodged against him before the Office of
the Provincial Fiscal. San Juan thereafter resigned and sought the assistance of respondent in
the preparation of his counteraffidavit in January 1985 (tsn. p. 35, Nov. 5, 1985). Respondent
prepared San Juan's counteraffidavit and signed it (Exh. F). San Juan then submitted his
counteraffidavit to the Office of the Provincial Fiscal (tsn. p. 42, Nov. 5, 1985). 3

After a month, on July 29, 1983, the Labor Arbiter issued a Decision directing LFC to pay
Hanopol the total sum of P6,469.60 in labor benefits, on the basis of Hanopol's evidence alone.

xxx xxx xxx

Respondent Daria appealed the Decision to the National Labor Relations Commission (NLRC)
on August 23, 1983 (Exh. 4). The case was remanded to the Labor Arbiter for further
proceedings. The case was set for hearing on June 25, 1984 and July 12, 1984 wherein
attempts for an amicable settlement still proved futile. The Labor Arbiter set two more dates for
hearing: July 27, 1984 and August 8, 1984 (tsn. pp. 21-22, Dec. 9, 1985).

For failure to appear in two consecutive hearings and to submit a position paper in the Hanopol
case which resulted in complainant LFC's default and judgment against it by the Labor Arbiter,
the respondent is faulted for negligence. The respondent avers that Hanopol should have seen
him in his office to work out a compromise agreement, on the scheduled day of the second
hearing, June 17, 1983, but did not. 4

In the meantime, the middle of June 1984, respondent signified to management his intention to
resign. In the light of this development, management hired Atty. Rogelio Udarbe to take his place
on July 16, 1984, the effective date of his resignation (Exh. 2). Respondent endorsed the cases
of complainant to Atty. Udarbe (tsn. pp. 23-25, Dec. 9, 1985).

It is the finding of the Solicitor General that this excuse by the respondent is not borne by the
Constancia 5 setting the case for hearing. The Constancia clearly states: "By agreement of the
parties, case reset to June 17, 1983 at 2:00 p.m. as previously scheduled." 6 Since it was signed
by both Hanopol and the respondent, the Solicitor General argues that the respondent's
explanation is manifestly unsatisfactory.

33

With regard to his second non-appearance for the hearing on June 2, 1983, the respondent
justified his absence by claiming that he had another hearing on the same date and that he told
his secretary to call up the Office of the Labor Arbiter to have the hearing of the Hanopol case
postponed. 7 The Solicitor General avers:

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.
The Solicitor General further found that the respondent assisted Roberto San Juan in the
preparation of the counter-affidavit, 12 submitted in defense of the latter in the accusation of
estafa filed against San Juan by LFC As a matter of fact, the respondent signed the jurat of the
San Juan counter-affidavit he (respondent) helped prepare. It is also a fact that the respondent
investigated this same charge of estafa while he was still the lawyer of the complainant and San
Juan still likewise an employee of LFC

. . . It is submitted that respondent's actuation was not warranted by the circumstances. As it

turned out, the telephone request apparently did not reach the Labor Arbiter, thereby
constraining him to declare complainant in default and render judgment against it. 8
In an effort to extricate himself from this charge, the respondent submits that since he was able
to persuade the National Labor Relations Commission (NLRC) on appeal to set aside the
Decision of the Labor Arbiter and to remand the case for further proceedings, then the charge of
negligence should be considered moot and academic already. 9 We find this submission not
meritorious. Instead, we agree ,with the position of the Solicitor General:

Again, we concur with the findings and evaluation of the Office of the Solicitor General:
. . . Respondent, however, tried to extricate himself from his predicament by testifying that the
counteraffidavit was prepared by a lawyer-friend, Atty. Joselito R. Enriquez, who had his
(respondent's) name typed on it; that after reading it, he called up Atty. Enriquez so that he will
delete his name and signature thereon; that he instructed San Juan to bring the counteraffidavit
to Atty. Enriquez so that he will delete his name and signature, but San Juan did not obey him;
and that San Juan filed the counteraffidavit with the office of the Provincial Fiscal with his name
and signature still on it (tsn. pp. 47-51, Dec. 9, 1985).

Respondent's plea is untenable. The setting aside of the adverse Decision of the Labor Arbiter
cannot obliterate the effects of respondent's negligence. Indeed, had respondent attended the
two scheduled hearings and filed the required position paper, then at least, there would have
been no delay in the resolution of the case, which, perhaps, would have been in favor of
complainant. The delay, by itself, was prejudicial to complainant because it deprived successorcounsel Atty. Loy of time which he should be devoting to other cases of complainant. In fact he
had to prepare complainant's position paper which respondent should have done earlier (Exh.
7). 10

It is submitted that, apart from being a mere afterthought, respondent's explanation is incredible.
His foregoing testimony is not reflected in his comment on the complaint . . . 13
We are convinced that the respondent had betrayed the confidences of the complainant, his
former client.

From the foregoing, it is manifest that the respondent is indeed guilty of negligence, a clear
violation of the Code of Professional Responsibility: 11

. . . An attorney owes loyalty to his client not only in the case in which he has represented him
but also after the relation of attorney and client has terminated, and it is not a good practice to
permit him afterwards to defend in another case other persons against his former client under
the pretext that the case is distinct from and independent of the former case. 14

CANON 18 A LAWYER SHALL SERVE HIS CLIENT WITH COMPETENCE AND DILIGENCE
Rule 18.03 A lawyer shall not neglect a legal matter entrusted to him and his negligence in
connection therewith shall render him liable.

WHEREFORE, premises considered, the respondent is found guilty of both the charge of
negligence, a transgression of Rule 18.03, Canon 18, and the charge of betrayal of his former
client's confidences, in violation of Canon 17 of the Code of Professional Responsibility.

The other accusation against the respondent by the Solicitor General was that he had betrayed
complainant LFC's confidences in violation of the then Canon 37 of the old Canons of
Professional Ethics, to wit:

The respondent is hereby SUSPENDED from the practice of law for a period of six (6) months.
It is the duty of a lawyer to preserve his client's confidences. This duty outlasts the lawyer's
employment, and extends as well to his employee's and neither of them should accept
employment which involves or may involve the disclosure or use of these confidences, either for
the private advantages of the client, without his knowledge and consent, and even though there
are other available sources of such information. A lawyer should not continue employment when
he discovers that this obligation prevents the performance of his full duty to his former or to his
new client.

Let this Decision be entered in the personal records of the respondent and copies thereof
furnished to all courts and IBP chapters.
SO ORDERED.

xxx xxx xxx

Republic of the Philippines
SUPREME COURT
Manila

Superseded by the Code of Professional Responsibility, the appropriate Canon now is:

34

SECOND DIVISION

interest of justice would best be served of the defendants were allowed to file an action for
quieting of title and the case heard jointly with the pending action for forcible entry. Finding merit
in the argument, the court ordered the defendant Cesario Adarne to file an action for quieting of
title within one (1) week and the plaintiffs to answer the same within the reglementary period,
after which both cases would be tried jointly. The hearing was deferred until after the filing of the
action for quieting of title. 5

A.M. No. 801 June 27, 1978

CESARIO ADARNE, complainant,
vs.
ATTY. DAMIAN V. ALDABA, respondent.

On June 17, 1965, the court declared the defendants in default for their failure to appeal at the
hearing set for that day and directed the plaintiffs to present evidence to support their
claim. 6 On September 17, 1965, the court rendered a decision and a writ of execution was
issued thereafter. 7

CONCEPCION JR., J.:

Because of this, Cesario Adarne filed the present complaint against the respondent Atty. Damian
V. Aldaba on August 3, 1967, praying:

Administrative action against the respondent attorney for gross negligence and misconduct, for
failure to give his entire devotion to the interest of his client, warm zeal in the . maintenance and
defense of his rights, and exertion of his utmost learning and ability in the prosecution and
defense of his client, and for not taking steps to protect the interests of his client in the face of an
adverse decision.

Dahil dito, isinusumbong ko po ang aking Abogado ng "Mal practice" pabaya at pahamak sa
kliente at sinisingil ko po siya ng pinsala katumbas sa sinisingil sa kin ng akin kalaban. O kaya
lakarin niya na mapigil and decision ng Hukom sa C.F.I. at ulitin and hearing sa Forcible Entry.
Kung hindi niya magagawa ito, ipinauubaya ko na po sa kataas taasan Hukoman and paglapat
ng parusa. Sapagkat kung hindi p susugpo-in and masamang gawa naito ng mga ibang
abogado na nabibili, lalala and sakit naito sa profession ng mga abogado, at lilikha ng
maraming api, at habang naghahari and pang-aapi, lalaganap and kriminalidad ng walang tigil,
at walang katahimikan ang ating Demukrasya, at kung magkakagayon ang mga mamamayan at
sapilitan sa kumunista sasamba.

The record shows that sometime in 1958, Raymunda Cumpio and her husband, Rufo Cumpio,
filed an action for forcible entry against herein complaint Cesario Adarne, Aning Arante, and
Miguel Inokando with the Justice of the Peace of Alang-alang Leyte. The case was docketed in
the said court as Civil Case No. 96. Atty. Isauro Marmita represented the defendants who raised
the issue of ownership of the land in question. After hearing the parties, the Justice of the Peace
dismissed the complaint for lack of jurisdiction. Consequently, the plaintiffs therein appealed to
the Court of First Instance of Leyte and the case was assigned to Branch VI of Carigara, where
it was docketed as Civil Case No. 556. Resolving the issue interposed by the appellants, the
Judge of the Court of First Instance found that the Justice of the Peace Court has jurisdiction
over the case and returned the same to the lower court for trial on the merits. After trial on the
merits, the Justice of the Peace again dismissed the case and the plaintiffs again appealed to
the Court of First Instance of Leyte where the case was docketed anew as Civil Case No, 632.
Attys. Arturo Mirales and Generoso Casimpan filed the answer for the defendants. 1

The respondent denied that he ever had any agreement with the complainant with respect to the
handling of the latter's case in the Court of First Instance of Leyte, Carigara Branch, except for
the "special appearance" that he entered for the complainant on August 7, 1961 and October 23,
1964, in view of the non-availability of the complainant's lawyers on said dates.
The case referred to the Solicitor General for investigation, report and recommendation, 8 after
which a complaint for the disbarment of the respondent attorney was filed. 9

At the hearing of the case on August 7, 1961, the herein complainant Cesario Adarne, one of the
defendants in the aforementioned Civil Case No. 632, noting that his attorneys had not yet
arrived, prevailed upon the respondent Atty. Damian Aldaba, who was then present in court to
attend the trial of an electoral case, to appear as counsel for them and ask for the Postponement
of the trial. The respondent, who is a third degree cousin of the complainant, agreed, and
entered a special appearance. Upon noticing that the plaintiffs and their counsel were not also
present in court, the respondent, instead of asking for a postponement, moved for the dismissal
of the case. "is motion was granted and the case was again dismissed. Thereafter, the plaintiff
filed a motion for the reconsideration of the order, 2 to which the respondent filed an opposition in
behalf of the defendants, 3 and the motion was denied. 4 Whereupon, the plaintiffs appealed to
the Court of Appeals. After appropriate. proceedings, the appellee court set aside the order of
dismissal and remanded the case to the lower court for further proceedings.

The judgment by default rendered against the complainant cannot be attributed to the
respondent attorney. The blame lies with the complainant for having engaged the services of
several lawyers to handle his case without formally withdrawing the authority he had given to
them to appear in his behalf as to place the responsibility upon the respondent. To add to the
confusion, the complainant had also requested the clerk of court of the Court of First Instance of
Leyte that he (complainant) be furnished with summons and subpoena accorded to him. 10 He
also filed a motion by himself, 11 thus implying that he was handling his case personally.
It appears that there have been three changes made of the attorneys for the complainant in the
forcible entry case. The complainant was originally represented by Atty. Isauro Marmita who,
upon his appointment to the Department of Labor, engaged Atty. de Veyra to take his
place. 12 Then came Atty. Arturo Mirales and later, Atty. Generoso Casimpan. However, no
formalities whatever were observed in those changes such that the respondent entered a
"special appearance" for the complainant in order that he could ask for the dismissal of the case
for the failure of the adverse party to prosecute. The rule followed on matters of substitution of

At the hearing of the case on October 23, 1964 before the Court of First Instance of Leyte, the
respondent was again prevailed upon by the complainant to appear in his behalf. The
respondent entered a "special appearance" for the complainant and thereafter argued that the

35

A lawyer shall serve his client with competence and diligence 1 and never neglect a legal matter
entrusted to him and his negligence in connection therewith shall render him liable. Indeed, it is
his sworn duty not to delay no man for money or malice; and to conduct himself in a proper
manner not only to his client, but also to the court, the legal profession and society at large.2

attorneys as laid down by this Court is that no substitution of attorneys will be allowed unless
there be filed: (1) a written application for such substitution; (2) the written consent of the client;
(3) the written consent of the attorney substituted; and (4) in case such written consent can not
be secured, there must be filed with the application proof of service of notice of such motion
upon the attorney to be substituted, in the manner prescribed by the rules. Unless the foregoing
formalities are complied with, substitution will not be permitted, and the attorney who properly
appeared last in the cause, before such application for substitution, will be regarded as the
attorney of record and will be held responsible for the proper conduct of the cause. 13

This is an administrative complaint for disbarment filed by Carlos Reyes against Atty. Jeremias
Vitan for gross negligence.
The complaint alleges that sometime in June 2001, complainant Carlos Reyes hired the services
of respondent Atty. Jeremias Vitan for the purpose of filing the appropriate complaint or charge
against his sister-in-law, Estelita Reyes, and the latter's niece, Julieta P. Alegonza; that both
women refused to abide with the Decision of Judge Juan C. Nabong, Jr., of the Regional Trial
Court, Branch 32, Manila, in Civil Case No. 99-92657 ordering the partition of the properties left
by complainant's brother Damaso B. Reyes; and that respondent, after receiving the amount
of P17,000.00, did not take any action on complainant's case.

Besides, the respondent honestly believed that he had appeared for the complainant only for a
special purpose and that the complainant had agreed to contact his attorney of record to handle
his case after the hearing of October 23, 1964, so that he did nothing more about it. 14 It was
neither gross negligence nor omission to have entertained such belief. An attorney is not bound
to exercise extraordinary diligence, but only a reasonable degree of care and skill, having
reference to the character of the business he undertakes to do. Prone to err like any other
human being, he is not answerable for every error or mistake, and will be protected as long as
he acts honestly and in good faith to the best of his skill and knowledge.

We referred the complaint to the Integrated Bar of the Philippines for investigation, report and
recommendation. IBP Commissioner Lydia A. Navarro issued several orders to respondent
directing him to file his answer to the complaint, but he failed to do so. He only sent his
secretary to represent him during the proceedings.

It is well settled that in disbarment proceedings, the burden of proof rests upon the complainant
and for the Court to exercise its disciplinary powers, the case against the respondent attorney
must be established by convincing proof. In the instant case, there is no sufficient proof to
warrant the disbarment of the respondent attorney. Neither is there culpable malpractice to
justify his suspension.

On April 18, 2001,3 IBP Commissioner Navarro submitted to the IBP Board of Governors her
Report and Recommendation quoted as follows:

WHEREFORE, the present administrative complaint is hereby DISMISSED.

"x x x. After going over the evidence on record, the undersigned noted that respondent ignored
all the Orders issued by this Commission and neither did he comply with any of those Orders.
Respondent even failed to submit the responsive pleadings he himself requested in his motion
and only sent his assistant secretary to represent him in the scheduled hearings of this case.
Up to and until the present, no pleadings was submitted despite respondent's allegations that he
was collating evidence to prove his side of the case.

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila

It was complainant who submitted the supposed letters of the respondent Estelita Reyes and
Juliet Alegonza but there were no proofs when they sent and when the same were received by
the addressee.

THIRD DIVISION
A.C. No. 5835

Likewise, the complaint submitted by the complainant was only a format in the sense that it was
not signed by the respondent; the RTC Branch No. was left blank; there was no Civil Case No.
and there was no proof that said pleading was filed which amounts only to a mere scrap of
paper and not a pleading or authenticated document in the legal parlance.

April 15, 2005

CARLOS B. REYES, Complainant,

vs.
ATTY. JEREMIAS R. VITAN, respondent.

As it is, nothing had been done by the respondent for the complainant as his client for the legal
fees he collected which was paid by the complainant as reflected in the receipts issued by the
respondent in handwritten forms and signed by him.

DECISION

Respondent not only violated Rule 18.03 and 18.04 of Cannon 18 of the Code of Professional
Responsibility for having neglected a legal matter entrusted to him and did not inform
complainant the status of his case but also disregarded the orders of the Commission without

SANDOVAL-GUTIERREZ, J.:

36

The facts of Sencio vs. Calvadores7 bear a striking similarity to the present case. Respondent
lawyer in Senciodid not return the money to complainant despite demand following his failure to
file the case. During the proceedings before the IBP, respondent did not file his answer to the
complaint nor appeared during the hearing notwithstanding his receipt of notices. We found him
guilty of violation of the lawyer's oath, malpractice and gross misconduct and suspended him for
six (6) months, and ordered to return to his client the amount of P12,000.00 with interest at 12%
per annum from the date of the promulgation of our Resolution until the return of the amount.

reasons which amounted to utter disrespect of authority and unethical conduct in the practice of
his profession, thus, should be sanctioned.
Wherefore, in view of the foregoing, the undersigned respectfully recommends that the
respondent be suspended from the practice of his profession for a period of two (2) years from
receipt hereof; and refund to the complainant the amount of P17,000.00 paid to him for not
having extended his legal services to the complainant on a lawyer-client relationship within six
(6) months from receipt hereof."

In Garcia vs. Manuel,8 we suspended respondent lawyer from the practice of law for six (6)
months and ordered him to render an accounting of all monies he received from the
complainant. We found him guilty of gross misconduct.

On August 3, 2002, the IBP Board of Governors passed Resolution No. XV-2002-406 adopting
and approving the above Report and Recommendation of IBP Commissioner Navarro.

WHEREFORE, respondent Atty. Jeremias R. Vitan is hereby declared guilty of violation of

Canon 18 of the Code of Professional Responsibility and is SUSPENDED from the practice of
law for a period of six (6) months effective upon notice of this Decision. He is ordered to return
to complainant within five (5) days from notice the sum ofP17,000.00 with interest of 12% per
annum from the date of the promulgation of this Decision until the full amount shall have been
returned.

When respondent accepted the amount of P17,000.00 from complainant, it was understood that
he agreed to take up the latter's case and that an attorney-client relationship between them was
established. From then on, it was expected of him to serve his client, herein complainant, with
competence and attend to his cause with fidelity, care and devotion.
The act of receiving money as acceptance fee for legal services in handling complainant's case
and subsequently failing to render such services is a clear violation of Canon 18 of the Code
of Professional Responsibility which provides that a lawyer shall serve his client with
competence and diligence. More specifically, Rule 18.03 states:

Let a copy of this Decision be furnished the Court Administrator for distribution to all courts of the
land, the IBP, the Office of the Bar Confidant, and entered into respondent's personal records as
an attorney and as a member of the Philippine Bar.

"Rule 18.03. A lawyer shall not neglect a legal matter entrusted to him, and his negligence in
connection therewith shall render him liable."

SO ORDERED.

A member of the legal profession owes his client entire devotion to his genuine interest, warm
zeal in the maintenance and defense of his rights.4 An attorney is expected to exert his best
efforts and ability to preserve his client's cause, for the unwavering loyalty displayed to his client
likewise serves the ends of justice. Verily, the entrusted privilege to practice law carries with it
the corresponding duties, not only to the client, but also to the court, to the bar and to the public.

Republic of the Philippines

SUPREME COURT
Manila

In Santos vs. Lazaro,5 we held that Rule 18.03 of the Code of Professional Responsibility,
above-quoted, is a basic postulate in legal ethics. Indeed, when a lawyer takes a client's cause,
he covenants that he will exercise due diligence in protecting his rights. The failure to exercise
that degree of vigilance and attention expected of a good father of a family makes such lawyer
unworthy of the trust reposed in him by his client and makes him answerable not just to his client
but also to the legal profession, the courts and society.6

A.C. No. 4380 October 13, 1995

Significantly, respondent also violated his oath as a lawyer, which declares in part, that he will
not delay any man for money or malice and will conduct himself as a lawyer according to the
best of his knowledge and discretion, with all good fidelity as well to the courts as to his client.

NICANOR GONZALES and SALUD B. PANTANOSAS, complainants,

vs.
ATTY. MIGUEL SABACAJAN, respondent.

However, the recommended penalty by the IBP is too harsh. Jurisprudence shows that lighter
sanctions have been imposed for violations of this nature, taking into consideration the gravity of
the offense and the necessity of preserving the integrity of the legal profession.

REGALADO, J.:

SECOND DIVISION

37

This resolves the administrative case filed by Nicanor Gonzales and Salud B. Pantanosas
against Atty. Miguel Sabacajan on February 14, 1995, 1 the verified complaint wherefor alleges:

Atty. Sabacajan stresses, by way of defense, that "the instant action was chosen precisely to
browbeat him into delivering the Certificates of Title to them without said certificates passing the
hands of Mr. Samto Uy with whom the complainants have some monetary obligations." 5

xxx xxx xxx

In its resolution dated June 26, 1995, 6 for internal administrative purposes the Court referred this
case to the Office of the Bar Confidant for the corresponding evaluation, report and
recommendation.

4. That sometime in October, 1994, complainants were informed by the Register of Deeds of
Cagayan de Oro City that the complainants' owner's duplicate of title covering their lands,
Transfer Certificate of Title Nos. T-91736 and T-91735 were entrusted to the office secretary of
the respondent who in torn entrusted the same to respondent;

From the foregoing proceedings taken on this matter, the Court finds that respondent admitted
having taken possession of the certificates of title of complainants but refused to surrender the
same despite demands made by the latter. It follows, therefore, that it was incumbent upon him
to show that he was legally justified in doing so. Instead, all he did was to inform this Court that
"his obligation to deliver the certificates to Mr. Samto Uy excludes the delivery of said certificates
to anyone else." 7

5. That respondent admitted and confirmed to the complainants that their titles are in his custody
and has even shown the same (to) the complainant Salud B. Pantanosas but when demanded
(sic) to deliver the said titles to the complainant in a formal demand letter, marked as ANNEX
"A," respondent refused and continues to refuse without any justification to give their titles (and)
when confronted, respondent challenged the complainants to file any case in any court even in
the Honorable Supreme Court;

Respondent attached some certifications to his "Answer" to support his contention that
complainants are notorious characters. However, the certifications indicate that most of the
cases stated therein, especially those involving fraud, have been dismissed. With respect to
those still pending, there is no indication as to the identity of the party who instituted the same,
aside from the consideration that the remedy thereon is judicial in nature. At any rate, these
aspersions on the character of complainants have no bearing on the misconduct of respondent
charged in the present case.

6. That respondent's dare or challeng(e) is a manifestation of his arrogance taking undue

advantage of his legal profession over the simplicity, innocence and ignorance of the
complainants, one of whom is his blood relative, his aunt, for which complainants shudder with
mental anguish;
7. That due to his challeng(e), the complainants sent a letter to the Honorable Supreme Court for
enlightenment, copy of which is attached as ANNEX "B", for which the Honorable Supreme
Court required 19 legible copies of a verified complaint;

Respondent likewise submitted xerox copies of certain certificates of title in an effort to explain
why he kept the certificates of title of complainants, that is, supposedly for the purpose of
subdividing the property. However, an examination of the same does not show any connection
thereof to respondent's claim. In fact, the two sets of certificates of title appear to be entirely
different from each other.

8. That in spite of repeated demands, request(s) and pleas towards (sic) respondent, respondent
still fail(ed) and stubbornly refused without justification to surrender the said titles to the rightful
owners, the complainants here(in), which act is tantamount to willful and malicious defiance of
legal and moral obligations emanating from his professional capacity as a lawyer who had sworn
to uphold law and justice, to the prejudice and damage of the complainants; 2

As a lawyer, respondent should know that there are lawful remedies provided by law to protect
the interests of his client. The records do not show that he or his client have availed of said
remedies, instead of merely resorting to unexplained, if not curt, refusals to accommodate the
requests of complainants. Also, he cannot be unaware of the imposable sanctions on a counsel
who resorts to unlawful means that would cause injustice to the adversaries of his client.

xxx xxx xxx

On March 22, 1995, the Court required respondent to comment on the foregoing complaint. In
his unverified "Answer" thereto, respondent admitted having met Salud Pantanosas but claims
that, to his recollection, "Nicanor Gonzales/Serdan" has never been to his office. Respondent
likewise denied that he challenged anyone to file a case in any court, much less the Supreme
Court. He also claims that he referred complainant Pantanosas to his client, Mr. Samto M. Uy of
Iponan, Cagayan de Oro City, for whom he worked out the segregation of the titles, two of which
are the subject of the instant case. 3

The Court accordingly finds that respondent has not exercised the good faith and diligence
required of lawyers in handling the legal affairs of their clients. If complainants did have the
alleged monetary obligations to his client, that does not warrant his summarily confiscating their
certificates of title since there is no showing in the records that the same were given as
collaterals to secure the payment of a debt. Neither is there any intimation that there is a court
order authorizing him to take and retain custody of said certificates of title.
Apparently, respondent has disregarded Canon 15, Rule 15.07 of the Code of Professional
Responsibility which provides that a lawyer shall impress upon his client the need for
compliance with the laws and principles of fairness. Instead, he unjustly refused to give to
complainants their certificates of titles supposedly to enforce payment of their alleged financial
obligations to his client and presumably to impress the latter of his power to do so.

Respondent likewise denies complainants' allegation that he is arrogant, in contrast to the

innocence, simplicity and ignorance of said complainants. He contends that the truth of the
matter is that complainants have been charged with a number of criminal and civil complaints
before different courts. He also asserts that he was holding the certificates of title in behalf of his
client, Samto M. Uy. 4

38

Canon 19, Rule 19.01 ordains that a lawyer shall employ only fair and honest means to attain
the lawful objectives of his client and shall not present, participate in presenting, or threaten to
present unfounded charges to obtain an improper advantage in any case or proceeding.
Respondent has closely skirted this proscription, if he has not in fact transgressed the same.

Gatchalian, Ignacio & Associates for respondents de Guzman.

GRIO-AQUINO, J.:

On the foregoing considerations, the Court desires and directs that respondent should forthwith
return the certificates of title of complainants. To ensure the same, he should be placed under
suspension until he presents to the Court proof of receipt by complainants of their respective
copies of Certificates of Title Nos. T-91735 and T-91736 or a judicial order or document
authorizing or justifying the retention of possession thereof by respondent or his aforenamed
client.

The issue in this case is whether or not an attorney who was engaged on a contingent fee basis
may, in order to collect his fees, prosecute an appeal despite his client's refusal to appeal the
decision of the trial court.
On September 7, 1963, the petitioner, a practicing attorney, entered into a written agreement
with the private respondent Rosa del Rosario to appear as her counsel in a petition for probate
of the holographic will of the late Maxima C. Reselva. Under the will, a piece of real property at
Sales Street, Quiapo, Manila, was bequeathed to Del Rosario. It was agreed that petitioner's
contigent fee would be thirty-five per cent (35%) of the property that Rosa may receive upon the
probate of the will (Annex "A", p. 59, Rollo).

WHEREFORE, Atty. Miguel Sabacajan is hereby SUSPENDED from the practice of law until he
can duly show to this Court that the disputed certificates of title have been returned to and the
receipt thereof duly acknowledged by complainants, or can present a judicial order or
appropriate legal authority justifying the possession by him or his client of said certificates. He is
further WARNED that a repetition of the same or similar or any other administrative misconduct
will be punished more severely.

In accordance with their agreement, Leviste performed the following services as Del Rosario's
counsel:

Let a copy of this resolution be spread on the personal records of respondent and have copies
thereof furnished to the Integrated Bar of the Philippines and duly circularized to all courts in the
country.

(1) Thoroughly researched and studied the law on probate and succession;
(2) Looked for and interviewed witnesses, and took their affidavits;

SO ORDERED.

(3) Filed the petition for. probate is Special Proceeding No. 58325;
(4) Made the proper publications;
(5) Presented at the trial the following witnesses:
a) Eleuterio de Jesus

Republic of the Philippines

SUPREME COURT
Manila

b) Lucita de Jesus

FIRST DIVISION

c) Purita L. Llanes

G.R. No. L-29184 January 30, 1989

d) Rita Banu

BENEDICTO LEVISTE, petitioner,

vs.
THE COURT OF APPEALS, HON. JUDGE LUIS B. REYES, COURT OF FIRST INSTANCE OF
MANILA, ROSA DEL ROSARIO, RITA BANU, CARMEN DE GUZMAN-MARQUEZ, JESUS R.
DE GUZMAN, RAMON R. DE GUZMAN, JACINTO R. DE GUZMAN and ANTONIO R. DE
GUZMAN, respondents.

e) Jesus Lulod.
On August 20, 1965, Leviste received a letter from Ms. Del Rosario, informing him that she was
terminating his services as her counsel due to "conflicting interest." This consisted, according to
the letter, in petitioner's moral obligation to protect the interest of his brother-in-law, Gaudencio
M. Llanes, whom Del Rosario and the other parties in the probate proceeding intended to eject

Benedicto Leviste for and in his own behalf.

39

as lessee of the property which was bequeathed to Del Rosario under the will (Annex "B", p. 60,
Rollo).

On May 22, 1968, the Court of Appeals dismissed the petition for being insufficient in form and
substance as the petitioner did not appear to be the proper party to appeal the decision in
Special Proceeding No. 58325 (Annex 1, p. 77, Rollo).

On September 20, 1965, petitioner filed a "Motion to Intervene to Protect His Rights to Fees for
Professional Services." (Annex "B", p. 60, Rollo.)

Upon the denial of his motion for reconsideration, petitioner appealed by certiorari to this Court,
assigning the following errors against the Court of Appeals' resolution:

In an order dated November 12, 1965 the trial court denied his motion on the ground that he had
"not filed a claim for attorney's fees nor recorded his attorney's lien." (p. 3, Rollo.)

1. The Court of Appeals erred in finding that the petitioner appears not to be the proper party to
appeal the decision in Sp. Proc. No. 58325 of the Court of First Instance of Manila.

On November 23, 1965, petitioner filed a "Formal Statement of Claim for Attorney's Fees and
Recording of Attorney's Lien,' which was noted in the court's order of December 20, 1965
(Annexes "D" and "E", pp. 63 & 64, Rollo).

2. Assuming the petitioner's right of appeal is doubtful, the Court of Appeals erred in dismissing
his petition for mandamus; and

Although the order denying his motion to intervene had become final, petitioner continued to
receive copies of the court's orders, as well the pleadings of the other parties in the case. He
also continued to file pleadings. The case was submitted for decision without the respondents'
evidence.

3. The Court of Appeals erred in not reversing the decision in Sp. Proc. No. 58325 denying the
probate of the holographic will of the late Maxima C. Reselva, said decision being patently
erroneous.
Under his first assignment of error, petitioner argues that by virtue of his contract of services with
Del Rosario, he is a creditor of the latter, and that under Article 1052 of the Civil Code which
provides:

On November 23, 1966, Del Rosario and Rita Banu, the special administratrix-legatee, filed a
"Motion To Withdraw Petition for Probate" alleging that Del Rosario waived her rights to the
devise in her favor and agreed that the De Guzman brothers and sisters who opposed her
petition for probate, shall inherit all the properties left by the decedent. (Annex "F", p. 65, Rollo.)

ART. 1052. If the heir repudiates the inheritance to the prejudice of his own creditors, the latter
may petition the court to authorize them to accept it in the name of the heir.

In an order of April 13, 1967 the trial court denied the motion to withdraw the petition for being
contrary to public policy (Annex "G", pp. 66-67, Rollo).

The acceptance shall benefit the creditors only to an extent sufficient to cover the amount of
their credits. The excess, should there be any, shall in no case pertain to the renouncer, but shall
be adjudicated to the persons to whom, in accordance with the rules established in this Code, it
may belong.

Nonetheless, on August 28, 1967, the court disallowed the will, holding that the legal
requirements for its validity were not satisfied as only two witnesses testified that the will and the
testatrix's signature were in the handwriting of Maxima Reselva.

he has a right to accept for his client Del Rosario to the extent of 35% thereof the devise in her
favor (which she in effect repudiated) to protect his contigent attorney's fees.

The petitioner filed an appeal bond, notice of appeal, and record on appeal. The private
respondents filed a motion to dismiss the appeal on the ground that petitioner was not a party in
interest.

The argument is devoid of merit. Article 1052 of the Civil Code does not apply to this case. That
legal provision protects the creditor of a repudiating heir. Petitioner is not a creditor of Rosa del
Rosario. The payment of his fees is contingent and dependent upon the successful probate of
the holographic will. Since the petition for probate was dismissed by the lower court, the
contingency did not occur. Attorney Leviste is not entitled to his fee.

The petitioner opposed the motion to dismiss his appeal, claiming that he has a direct and
material interest in the decision sought to be reviewed. He also asked that he be substituted as
party-petitioner, in lieu of his former client, Ms. Del Rosario.
On March 28, 1968, the trial judge dismissed the appeal and denied petitioner's motion for
substitution.

Furthermore, Article 1052 presupposes that the obligor is an heir. Rosa del Rosario is not a legal
heir of the late Maxima C. Reselva. Upon the dismissal of her petition for probate of the
decedent's will, she lost her right to inherit any part of the latter's estate. There is nothing for the
petitioner to accept in her name.

The petitioner filed in the Court of Appeals a petition for mandamus (CA-G.R. No. 41248)
praying that the trial court be ordered to give due course to his appeal and to grant his motion for
substitution.

This Court had ruled in the case of Recto vs. Harden, 100 Phil. 1427, that "the contract (for
contingent attorney's fees) neither gives, nor purports to give, to the appellee (lawyer) any right
whatsoever, personal or real, in and to her (Mrs. Harden's) aforesaid share in the conjugal
partnership. The amount thereof is simply a basis for thecomputation of said fees."

40

The Court of Appeals did not err in dismissing the petition for mandamus, for while it is true that,
as contended by the petitioner, public policy favors the probate of a will, it does not necessarily
follow that every will that is presented for probate, should be allowed. The law lays down
procedures which should be observed and requisites that should be satisfied before a will may
be probated. Those procedures and requirements were not followed in this case resulting in the
disallowance of the will. There being no valid will, the motion to withdraw the probate petition
was inconsequential.

Arnold V. Guerrero & Associates for petitioners.

Teodoro O. Domalanta for and on his behalf as private respondent.

GUTIERREZ, JR., J.:p

Petitioner was not a party to the probate proceeding in the lower court. He had no direct interest
in the probate of the will. His only interest in the estate is an indirect interest as former counsel
for a prospective heir. In Paras vs. Narciso, 35 Phil. 244, We had occassion to rule that one who
is only indirectly interested in a will may not interfere in its probate. Thus:

The practice of law is a profession rather than trade. Courts must guard against the charging of
unconscionable and excessive fees by lawyers for their services when engaged as counsel.
Whether or not the award of attorney's fees in this case is reasonable, being in the nature of
contingent fees, is the principal issue.

... the reason for the rule excluding strangers from contesting the will, is not that thereby the
court maybe prevented from learning facts which would justify or necessitate a denial of probate,
but rather that the courts and the litigants should not be molested by the intervention in the
proceedings of persons with no interest in the estate which would entitle them to be heard with
relation thereto. (Paras vs. Narciso, 35 Phil. 244, 246.)

This petition for review on certiorari assails:

1) The Decision of the public respondent dated September 12, 1989 which dismissed the
petitioners' appeal thereby upholding the reasonableness of the respondent lawyer's lien as
attorney's fees over the properties of his clients; and

Similary, in Morente vs. Firmalino, 40 O.G. 21st Supp. 1, We held:

2) The Resolution of the public respondent dated January 30, 1990 which denied the petitioners'
motion for reconsideration.

We are of the opinion that the lower court did not err in holding that notice of an attorney's lien
did not entitle the attorney-appellant to subrogate himself in lieu of his client. It only gives him
the right to collect a certain amount for his services in case his client is awarded a certain sum
by the court.

The grounds relied upon by the petitioners are as follows:

The respondent Court, in upholding the entitlement of private respondent-attorney on the
attorney's fees he claimed, decided the question in a manner not in accord with law or with the
applicable decisions of this Honorable Tribunal.

WHEREFORE, the petition for certiorari is denied for lack of merit. Costs against the petitioner.
SO ORDERED.

The respondent Court, in refusing to review and determine the propriety, reasonableness and
validity of the attorney's fees claimed by the private respondent-attorney, departed from the
usual course of judicial proceedings.
Republic of the Philippines
SUPREME COURT
Manila

The respondent Court, in failing to declare the attorney's fees claimed by the private respondentattorney as unconscionable, excessive, unreasonable, immoral and unethical, decided the
question in a way not in accord with law and with applicable decisions of this Honorable
Tribunal. (Petition, pp. 12-13; Rollo, pp. 16-17)

THIRD DIVISION

The following are the antecedent facts pertinent to the case at bar:
The respondent lawyer was retained as counsel by his brother-in-law and sister, the now
deceased petitioners' parents, spouses Aurelio and Felicidad Licudan. His services as counsel
pertained to two related civil cases docketed as Civil Case No. Q-12254 for partition and Civil
Case No. Q-28655 for a sum of money in connection with the redemption of the property subject
matter of the two cases covered by Transfer Certificate of Title No. 818 of the Register of Deeds
of Quezon City. In both cases, the respondent lawyer obtained a judgment in favor of his clients.

G.R. No. 91958 January 24, 1991

WILFREDO D. LICUDAN and CRISTINA LICUDAN-CAMPOS, petitioners,
vs.
THE HONORABLE COURT OF APPEALS and ATTY. TEODORO O.
DOMALANTA, respondents.

41

On August 13,1979, the respondent lawyer filed a Petition for Attorney's Lien with Notification to
his Clients which substantially alleged that his clients executed two written contracts for
professional services in his favor which provided that:

of Absolute Sale dated May 1, 1983 executed by Aurelio Licudan in favor of the respondent
lawyer.
On September 6, 1985, the trial court ordered the respondent lawyer to submit a subdivision
plan in conformity with his attorney's fees contract under which one-third (1/3) of the property or
90.5 square meters was alloted to him.

a) The undersigned counsel is entitled to own 97.5 square meters of the plaintiff's share of the
lot in question.
b) The undersigned counsel shall have a usufructuary right for a period of ten (10) years of
plaintiffs' share of the lot in question.

On September 23, 1985, the respondent lawyer filed a motion for reconsideration praying for the
amendment of the Order dated September 19, 1979 to conform with the Deed of Absolute Sale
dated May 1, 1983 which was executed after the annotation of the original attorney's lien of 90.5
square meters.

c) And that all damages accruing to plaintiffs to be paid by the defendant is for the undersigned
counsel.(Annex "H" of the Petition, Rollo, p. 54)

On September 30, 1985, the trial court denied the motion on the ground that the respondent
lawyer cannot collect attorney's fees for other cases in the action for partition.

On September 19, 1979, the trial court handling Civil Case No. Q-12254 ordered the annotation
at the back of TCT No. 818 of the Register of Deeds of Quezon City of the respondent lawyer's
Contract for Professional Services dated August 30, 1979 signed by petitioner Wilfredo Licudan
and Aurelio Licudan on his own behalf and on behalf of his daughter, petitioner Cristina LicudanCampos. The said trial court's Order, being one of two Orders being essentially challenged in
this petition, is reproduced below:

On October 4, 1985, the respondent lawyer filed a second motion for reconsideration of the
Order dated September 6, 1985 explaining that what he sought to be included in the Order
dated September 19, 1979 is the additional attorney's fees for handling the redemption case
which was but a mere offshoot of the partition case and further manifesting that the additional 31
square meters as compensation for the redemption case must be merged with the 90.5 square
meters for the partition case to enable the said respondent lawyer to comply with the Order
dated September 6,1985 which directed him to submit a subdivision plan as required.

Before the court for consideration is a Petition for Attorney's Lien filed by Atty. Teodoro D.
Domalanta, counsel for the plaintiff, praying that his attorney's fees be annotated as a lien at the
back of Transfer Certificate of Title No. 818 of the Register of Deeds of Quezon City, subject
matter of this case.

On October 21, 1985, the trial court issued the second Order being assailed in this petition. The
said Order reads:

For the protection of the plaintiffs, the court required the plaintiff Aurelio Licudan as well as his
son to appear this morning. Plaintiff Aurelio Licudan together with his son Wilfredo Licudan, who
appears to be intelligent and in fact he speaks (the) English language well, appeared. Both
Aurelio and Wilfredo Licudan manifested that they have freely and voluntarily signed the
Contract for Professional Services, dated August 30, 1979 and notarized before Notary Public
Amado Garrovillas as Doc. No. 32, Page 8, Book No. XIX, Series of 1979.

Acting on the "Second Motion for Reconsideration" filed by Atty. Teodoro Domalanta and finding
the same to be justified, let an attorney's lien be annotated in the title of the property for 31
square meters as attorney's fees of said Atty. Teodoro Domalanta in addition to the original 90.5
square meters. (CA Decision, p. 8; Rollo, p. 37)
On August 22, 1986, more than ten (10) months after the Orders of September 6, 1985 and
October 21, 1985 had become final and executory, the petitioners as substituted heirs of the
respondent lawyers' deceased clients filed a motion to set aside orders on the ground that the
award of professional fees covering 121.5 square meters of the 271.5 square meter lot is
unconscionable and excessive.

Considering the manifestation of plaintiff, Aurelio Licudan and Alfredo (sic) Licudan that they
have entered freely and voluntarily in the said contract of professional services, let the same be
annotated at the back of TCT 818 of the Register of Deeds of Quezon City, upon payment of the
required legal fees. (CA Decision, pp. 7-8; Rollo, pp. 36-37)
The Contract for Professional Services dated August 30, 1979 differs from the earlier contractual
provisions in that it entitled the respondent lawyer to one-third (1/3) of the subject property or
90.5 square meters and provided for usufructuary rights over the entire lot in question in favor of
the respondent lawyer's son, Teodoro M. Domalanta, Jr. for an agreed consideration. (Annex "J"
of the Petition; Rollo, p. 59)

After the respondent lawyer filed his Opposition to the above petitioners' motion, the lower court,
on August 29, 1986, finding that the petitioners as substituted plaintiffs are not in full agreement
with the respondent lawyer's claim for attorney's fees, set aside its Orders dated September 6,
1985 and October 21, 1985.
On September 16, 1986, the respondent lawyer filed a motion for reconsideration stressing the
fact that the payment of the professional services was pursuant to a contract which could no
longer be disturbed or set aside because it has already been implemented and had since then
become final. This motion was denied on October 3, 1986.

On July 25, 1985, the respondent lawyer filed a motion ex parte to amend the Order dated
September 19, 1979 so as to conform with an additional professional fee covering 31 square
meters more of the lot for services rendered in Civil Case No. Q-28655 as evidenced by a Deed

42

On November 15, 1986, the respondent lawyer filed a motion to set aside the orders dated
August 29, 1986 and October 3, 1986 reiterating his position that the Orders of September 6,
1985 and October 21, 1985 have become final and are already implemented. The respondent
lawyer further asked for the modification of the October 21, 1985 Order to reflect 60.32 square
meters instead of 31 square meters only since the stipulation in the Additional Contract for
Professional Services entitled him to 60.32 square meters.

. . . When it is shown that a contract for a contingent fee was obtained by undue influence
exercised by the attorney upon his client or by any fraud or imposition, or that the compensation
is clearly excessive, the Court must and will protect the aggrieved party. (Ulanday v. Manila
Railroad Co., 45 Phil. 540 [1923]; Grey v. Insular Lumber Co., 97 Phil. 833 [1955]).
In the case at bar, the respondent lawyer caused the annotation of his attorney's fees lien in the
main action for partition docketed as Civil Case No. Q-12254 on the basis of a Contract for
Professional Services dated August 30, 1979. We find reversible error in the Court of Appeals'
holding that:

After the petitioners' Opposition to the said motion was filed, the trial court, on February 26,
1987, rendered an Order with the following dispositive portion:
WHEREFORE, this Court has no alternative but to set aside its orders of 29 August 1986 and 3
October 1986 and declare its Orders of 19 September 1979 and 21 October 1985 irrevocably
final and executory. (CA Decision, p. 5; Rollo, p. 34)

When the reasonableness of the appellee's lien as attorney's fees over the properties of his
clients awarded to him by the trial court had not been questioned by the client, and the said
orders had already become final and executory, the same could no longer be disturbed, not even
by the court which rendered them (Taada v. Court of Appeals, 139 SCRA 419). (CA Decision p.
7; Rollo, p. 36)

On Appeal, the Court of Appeals ruled in favor of the respondent lawyer by dismissing the
appeal and the prayed for writ of preliminary injunction. Their subsequent motion for
reconsideration having been denied', the petitioners filed the instant petition.

On the contrary, we rule that the questioned Orders dated September 19, 1979 and October 21,
1985 cannot become final as they pertain to a contract for a contingent fee which is always
subject to the supervision of the Court with regard to its reasonableness as unequivocally
provided in Section 13 of the Canons of Professional Ethics which reads:

The petitioners fault the respondent Court for its failure to exercise its inherent power to review
and determine the propriety of the stipulated attorney's fees in favor of the respondent lawyer
and accuse the respondent lawyer of having committed an unfair advantage or legal fraud by
virtue of the Contract for Professional Services devised by him after the trial court awarded him
attorney's fees for P1,000.00 only instead of respecting the trust and confidence of the highest
level reposed on him considering the close blood and affinal relationship between him and his
clients.

13. Contingent Fees.

A contract for a contingent fee, where sanctioned by law, should be reasonable under all the
circumstances of the case including the risk and uncertainty of the compensation, but
should alwaysbe subject to the supervision of a court, as to its reasonableness. (Emphasis
supplied).

The petitioners contend that under the award for professional services, they may have won the
case but would lose the entire property won in litigation to their uncle-lawyer. They would be
totally deprived of their house and lot and the recovered damages considering that of the 271.5
square meters of the subject lot, the respondent lawyer is claiming 121.5 square meters and the
remaining portion of 150 square meters would also go to attorney's fees since the said portion
pertains to the lawyer's son by way of usufruct for ten (10) years.

There is no dispute in the instant case that the attorney's fees claimed by the respondent lawyer
are in the nature of a contingent fee. There is nothing irregular about the execution of a written
contract for professional services even after the termination of a case as long as it is based on a
previous agreement on contingent fees by the parties concerned and as long as the said
contract does not contain stipulations which are contrary to law, good morals, good customs,
public policy or public order.

The aforesaid submissions by the petitioners merit our consideration.

It is a well-entrenched rule that attorney's fees may be claimed in the very action in which the
services in question have been rendered or as an incident of the main action. The fees may be
properly adjudged after such litigation is terminated and the subject of recovery is at the
disposition of the court. (see Camacho v. Court of Appeals, 179 SCRA 604 [1989]; Quirante v.
Intermediate Appellate Court, 169 SCRA 769 [1989]).

Although the Contract for Professional Services dated August 30, 1979 was apparently
voluntarily signed by the late Aurelio Licudan for himself and on behalf of his daughter, petitioner
Cristina Licudan-Campos and by the petitioner Wilfredo Licudan who both manifested in open
court that they gave their free and willing consent to the said contract we cannot allow the said
contract to stand as the law between the parties involved considering that the rule that in the
presence of a contract for professional services duly executed by the parties thereto, the same
becomes the law between the said parties is not absolute but admits an exceptionthat the
stipulations therein are not contrary to law, good morals, good customs, public policy or public
order (see Philippine American Life Insurance Company v. Pineda, 175 SCRA 416 [1989];
Syjuco v. Court of Appeals, 172 SCRA 111 [1989]).

It is an equally deeply-rooted rule that contingent fees are not per se prohibited by law. They are
sanctioned by Canon 13 of the Canons of Professional Ethics and Canon 20, Rule 20.01 of the
recently promulgated Code of Professional Responsibility. However, as we have held in the case
of Tanhueco v. De Dumo (172 SCRA 760 [1989]):

Under Canon 20 of the Code of Professional Responsibility, a lawyer shall charge only fair and
reasonable fees. In determining whether or not the lawyer fees are fair and reasonable, Rule 20-

43

01 of the same Code enumerates the factors to be considered in resolving the said issue. They
are as follows:

respondent lawyer's son by way of usufruct for ten (10) years. There should never be an
instance where a lawyer gets as attorney's fees the entire property involved in the litigation. It is
unconscionable for the victor in litigation to lose everything he won to the fees of his own lawyer.

a) The time spent and the extent of the services rendered or required;
The respondent lawyer's argument that it is not he but his son Teodoro M. Domalanta, Jr. who is
claiming the usufructuary right over the remaining portion of the subject lot is inaccurate. The
records show that the matter of usufruct is tied up with this case since the basis for the said
usufructuary right is the contract for professional services the reasonableness of which is being
questioned in this petition. We find the ten-year usufruct over the subject lot part and parcel of
the attorney's fees being claimed by the respondent lawyer.

b) The novelty and difficulty of the questions involved;

c) The importance of the subject matter;
d) The skill demanded;

In resolving the issue of reasonableness of the attorney's fees, we uphold the time-honoured
legal maxim that a lawyer shall at all times uphold the integrity and dignity of the legal profession
so that his basic ideal becomes one of rendering service and securing justice, not moneymaking. For the worst scenario that can ever happen to a client is to lose the litigated property to
his lawyer in whom an trust and confidence were bestowed at the very inception of the legal
controversy. We find the Contract for Professional Services dated August 30, 1979,
unconscionable and unreasonable. The amount of P20,000.00 as attorney's fees, in lieu of the
121.5 square meters awarded to the respondent lawyer and the ten-year usufructuary right over
the remaining portion of 150 square meters by the respondent lawyer's son, is, in the opinion of
this Court, commensurate to the services rendered by Atty. Domalanta.

e) The probability of losing other employment as a result of acceptance of the proferred case;
f) The customary charges for similar services and the schedule of fees of the IBP Chapter to
which he belongs;
g) The amount involved in the controversy and the benefits resulting to the client from the
service;
h) The contingency or certainty of compensation;

WHEREFORE, IN VIEW OF THE FOREGOING, the instant petition is GRANTED. The Court of
Appeals' decision of September 12, 1989 is hereby REVERSED and SET ASIDE. Atty.
Domalanta is awarded reasonable attorney's fees in the amount of P20,000.00.

i) The character of the employment, whether occasional or established; and

j) The professional standing of the lawyer.

SO ORDERED.
A similar provision is contained under Section 24, Rule 138 of the Revised Rules of Court which
partly states that:
Sec. 24. Compensation of attorneys; agreement as to fees. An attorney shall be entitled to
have and recover from his client no more than a reasonable compensation for his services, with
a view to the importance of the subject matter of the controversy, the extent of the services
rendered, and the professional standing of the attorney. . . . A written contract for services shall
control the amount to be paid therefor unless found by the court to be unconscionable or
unreasonable.

Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION
A.M. No. 1388 March 28, 1980

All that the respondent lawyer handled for his deceased sister and brother-in-law was a simple
case of partition which necessitated no special skill nor any unusual effort in its preparation. The
subsequent case for redemption was admittedly but an offshot of the partition case. Considering
the close blood and affinal relationship between the respondent lawyer and his clients, there is
no doubt that Atty. Domalanta took advantage of the situation to promote his own personal
interests instead of protecting the legal interests of his clients. A careful perusal of the provisions
of the contract for professional services in question readily shows that what the petitioners won
was a pyrrhic victory on account of the fact that despite the successful turnout of the partition
case, they are now practically left with nothing of the whole subject lot won in the litigation. This
is because aside from the 121.5 square meters awarded to Atty. Domalanta as attorney's fees,
the said contract for professional services provides that the remaining portion shall pertain to the

ANA F. RETUYA, complainant,

vs.
ATTY. IEGO A. GORDUIZ, respondent.

AQUINO, J:

44

This disbarment case is linked to Administrative Case No. 1431-MJ which was filed by Ana F.
Retuya against Municipal Judge Paulo A. Equipilag of Maasin, Leyte and which was decided on
July 16, 1979 (Retuya vs. Equipilag). The facts of that case, which also gave rise to this
disbarment case, are as follows:

On November 22, 1973, the acting child of police filed a motion to dismiss the case on the basis
of the affidavit of Atty. Gorduiz ex. executed on that date stating that the prosecution witnesses
had allegedly become hostile and that he was no longer interested in further prosecuting the
case. Also, on that day, Judge Equipilag dismissed the case.

Ana F. Retuya, a widow with four minor children, filed a claim for workmen's compensation
against Eastern Shipping Lines, Inc., the employer of her husband who died in 1968. In a
decision dated December 4, 1970 the Workmen's Compensation Unit at Tacloban City awarded
to Ana the sum of P8,792.10 consisting of (a) P6,000 as compensation benefits, (b) P2,292.10
for medical and hospitalization expenses, (c) P200 as burial expenses and (d) P300 as
attorney's fees of Atty. Iego Gorduiz (Case No. 9728).

In spite of the dismissal of the estafa case Ana F. Retuya felt aggrieved by the proceedings
therein. In a complaint dated July 24, 1974 but filed in this Court on October 30, 1974, she
asked for the disbarment or suspension of Atty. Gorduiz and Judge Equipilag. The disbarment
case against Gorduiz was referred to the Solicitor General.
The case against Judge Equipilag was investigated by the Judge of the Court of First Instance of
Southern Leyte.

The employer appealed. During the pendency of the appeal, the employer proposed to
compromise the claim by paying P4,396.05 or only one-half of the total award. Ana accepted the
proposal and directed that the amount be remitted to Fiscal Mamerto Daclan through the
Philippine National Bank's branch at Maasin, Southern Leyte.

This Court found that there was no justification for suspending respondent Judge. However, he
was admonished to be more prudent and circumspect in the discharge of his duties so as to
obviate the suspicion that, for an ulterior motive, he wall in cahoots with the offended party in a
criminal case for the purpose of using the strong arm of the law that the accused in an
oppressive and vindictive manner.

The employer paid the reduced award on November 16, 1972. Ana sent to the employer the
receipt and release signed by her with a covering letter dated December 19, 1972 wherein she
explained that her lawyer, Gorduiz, did not sign the joint motion to dismiss the claim because he
wanted twenty percent of the award as his attorney's fees. She was willing to give him ten
percent.

The Solicitor General asked the provincial fiscal of Southern Leyte to investigate the case
against Gorduiz. The fiscal in her report of July 8, 1975 recommended the of the case.
The Solicitor General disagreeing with that recommendation, filed in this Court against Gorduiz a
complaint wherein he prayed that Gorduiz be suspended for six months because the latter, in
filing the estafa case, had promoted a groundless suit against his client.

After she had cashed the check for P4,396.05, she was not able to contact Gorduiz and pay his
fee. Then, unexpectedly, in February, 1973, she was served with a warrant of arrest issued in
Criminal Case No. R-2362 of the municipal court of Maasin. To avoid detention, she had to post
bail in the sum of one thousand pesos.

Ana F. Retuya testified before the investigation Fiscal that in December, 1972 she was willing to
pay Gorduiz six hundred fifty pesos as his attorney's few but he demanded a bigger amount.He
lodged a complaint for estafa against her and was arrests She had to post bail in the sum of one
thousand pesos. As already stated above, the estafa case was later dismissed when Ana paid
Gorduiz sum of five hundred pesos.

It turned out that on January 12, 1973 Atty. Gorduiz executed an affidavit stating that Ana had
misappropriated his attorney's fees amounting to three hundred pesos and that he had
demanded payment of the amount from her but, she refused to make payment and. instead, she
went to Cebu and starved there for a long time.

In his testimony before the investigating fiscal and this Court's legal officer, respondent Gorduiz
denied that he demanded as attorney's fees an amount higher than three hundred pesos. He
explained that he filed the estafa cam because after Ana had received payment of the award,
she did not turn over to him the attorney's fees of three hundred pesos in spite of her promises
to pay the same and his demands for payment (Exh. 7 and 8).

On the basis of that affidavit, the acting chief of police filed against Ana a complaint for estafa in
the municipal court of Maasin. After posting bail, she filed a motion to quash wherein she
explained that she did not pay the fees of Atty. Gorduiz because he was demanding one-third of
the award: that when she did not accede to his demand, he lowered his claim to eight hundred
pesos, and that she bargained for six hundred fifty pesos but he refused to accept that amount.
Ana averred that the estafa case was filed just to harass her.

Gorduiz declared that Ana filed the disbarment case against him in order that she could evade
the payment of his attorney's fees in the other cases which he had handled for her. It was also
possible that someone who had a score to settle with Gorduiz had instigated the filing of this
case against him.

Judge Paulo A. Equipilag denied the motion to quash. He granted the motion of Atty. Gorduiz
requiring Ana to produce a copy of the decision awarding her workmen's compensation for her
husband's death.

He further declared that he filed the estafa case because he thought that Ana had absconded
when she stayed in Cebu City for a long time (23-24 tsn, June 26, 1979). He claimed that he
spent one hundred pesos of his own money in gathering evidence which was presented in the

The estafa case was not tried. Atty. Erasmo M. Diola, as lawyer of Ana, offered to Atty. Gorduiz
the sum of five hundred pesos as settlement of the case. The offer was accepted.

45

workmen's compensation case. He had also advanced around two hundred pesos to cover the
expenses in the other cases which he had handled for Ana.

This is a complaint for suspension of respondent Atty. Patricio A. Ngaseo for violation of the
Code of Professional Responsibility and Article 1491 of the Civil Code by demanding from his
client, complainant Federico N. Ramos, the delivery of 1,000 square meters of land, a litigated
property, as payment for his appearance fees.

After reflecting on the conflicting contentions of the parties, the Court finds that there is
justification for suspending the respondent.

The facts as narrated by the complainant are as follows:

Respondent acted precipitately in filing a criminal action against his client for the supposed
misappropriation of his attomey's fees. It is not altogether clear that his client had swindled him
and, therefore, there is some basis for concluding that, contrary to his lawyer's oath, he had filed
a suit against her and had harassed and embarrassed her.

Sometime in 1998, complainant Federico Ramos went to respondent Atty. Patricio Ngaseo's
Makati office to engage his services as counsel in a case1 involving a piece of land in San
Carlos, Pangasinan. Respondent agreed to handle the case for an acceptance fee of
P20,000.00, appearance fee of P1,000.00 per hearing and the cost of meals, transportation and
other incidental expenses. Complainant alleges that he did not promise to pay the respondent
1,000 sq. m. of land as appearance fees.2

Paragraph 14 of the Canons of Legal Ethics prescribes that "controversies with clients
concerning compensation are to be avoided by the lawyer so far as shall be compatible with his
self- respect and with his right to receive reasonable recompense for his services; and lawsuits
with clients should be resorted to only to prevent injustice, imposition or fraud."

On September 16, 1999, complainant went to the respondent's office to inquire about the status
of the case. Respondent informed him that the decision was adverse to them because a
congressman exerted pressure upon the trial judge. Respondent however assured him that they
could still appeal the adverse judgment and asked for the additional amount of P3,850.00 and
another P2,000.00 on September 26, 2000 as allowance for research made.3

WHEREFORE, the respondent is from the practice of law for a period of six months counted
from notice of this decision. A copy of this decision should be attached to his record in the Bar
Confidant's office.

Although an appeal was filed, complainant however charges the respondent of purposely failing
to submit a copy of the summons and copy of the assailed decision. Subsequently, complainant
learned that the respondent filed the notice of appeal 3 days after the lapse of the reglementary
period.

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila

On January 29, 2003, complainant received a demand-letter from the respondent asking for the
delivery of the 1,000 sq. m. piece of land which he allegedly promised as payment for
respondent's appearance fee. In the same letter, respondent also threatened to file a case in
court if the complainant would not confer with him and settle the matter within 30 days.

FIRST DIVISION
A.C. No. 6210

Respondent alleged that sometime in the late 1997, a former client, Federico Ramos and his
brother, Dionisio, went to his Makati office to engage his professional services in connection with
a 2-hectare parcel of land situated in San Carlos, Pangasinan which the complainant's family
lost 7 years earlier through an execution sale in favor of one Alfredo T. Castro. Complainant, who
was deaf and could only speak conversational Tagalog haltingly, was assisted by his brother
Dionisio. They came all the way from Pangasinan because no lawyer in San Carlos City was
willing to handle the case. Complainant, through Dionisio, avers that he has consulted 2 local
lawyers but did not engage their services because they were demanding exorbitant fees. One
local lawyer was willing to handle the case for at least one-half of the land involved as his
attorney's fee, plus cash expenses, while the other asked for of the land in addition to a large
sum of money. Respondent agreed to handle the case for an acceptance fee of P60,000.00 plus
an appearance fee of P3,000.00 per hearing. Complainant told him that he would consult his
siblings on the matter.

December 9, 2004

FEDERICO N. RAMOS, complainant,

vs.
ATTY. PATRICIO A. NGASEO, respondent.

DECISION

Six months later, i.e., in April 1998, complainant, assisted by one Jose Castillo, went to
respondent's office to discuss the legal fees. Complainant, through Castillo, told respondent that
he was willing to pay an acceptance fee of P40,000.00, P20,000.00 of which shall be paid upon
engagement and the remaining P20,000.00 to be paid after their treasure hunt operations in

YNARES-SANTIAGO, J.:

46

Nueva Viscaya were terminated. Further, complainant offered, in lieu of P3,000.00 per
appearance, 1,000 sq. m. of land from the land subject matter of the case, if they win, or from
another piece of property, if they lose. In addition, complainant also offered to defray the
expenses for transportation, meals and other incidental expenses. Respondent accepted the
complainant's offer.

Respondent further contends that he can collect the unpaid appearance fee even without a
written contract on the basis of the principle of quantum meruit. He claims that his acceptance
and appearance fees are reasonable because a Makati based legal practitioner, would not
handle a case for an acceptance fee of only P20,000.00 and P1,000.00 per court appearance.
Under Article 1491(5) of the Civil Code, lawyers are prohibited from acquiring either by purchase
or assignment the property or rights involved which are the object of the litigation in which they
intervene by virtue of their profession.7 The prohibition on purchase is all embracing to include
not only sales to private individuals but also public or judicial sales. 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.8 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.9However, the said prohibition applies only if the sale or assignment of the
property takes place during the pendency of the litigation involving the client's 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.

Respondent claims that after the trial court dismissed Civil Case No. SCC 2128, he filed a timely
notice of appeal and thereafter moved to be discharged as counsel because he had colon
cancer. Complainant, now assisted by one Johnny Ramos, implored respondent to continue
handling the case, with an offer to double the 1,000 sq. m. piece of land earlier promised and the
remaining balance of P20,000.00 acceptance fee. Johnny Ramos made a written commitment
and gave respondent's secretary P2,000.00 of the P3,850.00 expenses for the preparation of the
appellant's brief.
On July 18, 2001, the Court of Appeals rendered a favorable decision ordering the return of the
disputed 2-hectare land to the complainant and his siblings. The said decision became final and
executory on January 18, 2002. Since then complainant allegedly failed to contact respondent,
which compelled him to send a demand letter on January 29, 2003.

Invariably, in all cases where Article 1491 was violated, the illegal transaction was consummated
with the actual transfer of the litigated property either by purchase or assignment in favor of the
prohibited individual. In Biascan v. Lopez, respondent was found guilty of serious misconduct
and suspended for 6 months from the practice of law when he registered a deed of assignment
in his favor and caused the transfer of title over the part of the estate despite pendency of
Special Proceedings No. 98037 involving the subject property.10 In the consolidated
administrative cases of Valencia v. Cabanting,11 the Court suspended respondent Atty. Arsenio
Fer Cabanting for six (6) months from the practice of law when he purchased his client's
property which was still the subject of a pending certiorari proceeding.

On February 14, 2003, complainant filed a complaint before the IBP charging his former counsel,
respondent Atty. Ngaseo, of violation of the Code of Professional Responsibility for demanding
the delivery of 1,000 sq. m. parcel of land which was the subject of litigation.
In a report dated July 18, 2003, IBP Commissioner Rebecca Villanueva-Maala found the
respondent guilty of grave misconduct and conduct unbecoming of a lawyer in violation of the
Code of Professional Responsibility and recommended that he be suspended from the practice
of law for 1 year.4

In the instant case, there was no actual acquisition of the property in litigation since the
respondent only made a written demand for its delivery which the complainant refused to
comply. 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, respondent's act does not fall
within the purview of Article 1491. The letter of demand dated January 29, 2003 was made long
after the judgment in Civil Case No. SCC-2128 became final and executory on January 18,
2002.

On August 30, 2003, the IBP Board of Governors passed Resolution No. XVI-2003-47 the full
text of which reads:5
RESOLVED to ADOPT and APPROVE, as it is hereby ADOPTED and APPROVED, the Report
and Recommendation of the Investigating Commissioner of the above-entitled case, herein
made part of this Resolution/Decision as Annex "A"; and, finding the recommendation fully
supported by the evidence on record and the applicable laws and rules, with modification, and
considering that respondent have violated the Code of Professional Responsibility for grave
misconduct and conduct unbecoming of a lawyer Atty. Patricio A. Ngaseo is hereby
SUSPENDED from the practice of law for six (6) months.

We note that the report of the IBP Commissioner, as adopted by the IBP Board of Governors in
its Resolution No. XVI-2003-47, does not clearly specify which acts of the respondent constitute
gross misconduct or what provisions of the Code of Professional Responsibility have been
violated. We find the recommended penalty of suspension for 6 months too harsh and not
proportionate to the offense committed by the respondent. The power to disbar or suspend must
be exercised with great caution. Only in a clear case of misconduct that seriously affects the
standing and character of the lawyer as an officer of the Court and member of the bar will
disbarment or suspension be imposed as a penalty.12 All considered, a reprimand is deemed
sufficient and reasonable.

On December 11, 2003, respondent filed a petition for review assailing IBP Resolution No. XVI2003-47 for having been issued without or in excess of jurisdiction.6
Respondent argues that he did not violate Article 1491 of the Civil Code because when he
demanded the delivery of the 1,000 sq. m. of land which was offered and promised to him in lieu
of the appearance fees, the case has been terminated, when the appellate court ordered the
return of the 2-hectare parcel of land to the family of the complainant.

WHEREFORE, in view of the foregoing, respondent Atty. Patricio A. Ngaseo is found guilty of
conduct unbecoming a member of the legal profession in violation of Rule 20.04 of Canon 20 of

47

the Code of Professional Responsibility. He is REPRIMANDED with a warning that repetition of

the same act will be dealt with more severely.

Litigating as a pauper in the lower court and engaging the services of his lawyer on a contingent
basis, petitioner, liable to compensate his lawyer whom he also retained for his appeal executed
a document on June 10, 1961 in the Cebuano-Visayan dialect whereby he obliged himself to
give to his lawyer one-half (1/2) of whatever he might recover from Lots 5600 and 5602 should
the appeal prosper. The contents of the document as translated are as follows:

SO ORDERED.

AGREEMENT
KNOW ALL MEN BY THESE PRESENTS:
That I, MAXIMO ABARQUEZ, Plaintiff in Case No. R-6573 of the Court of
First Instance of Cebu, make known through this agreement that for the
services rendered by Atty. Alberto B. Fernandez who is my lawyer in this
case, if the appeal is won up to the Supreme Court, I Promise and will
guarantee that I win give to said lawyer one-half (1/2) of what I may recover
from the estate of my father in Lots No. 5600 and 5602 which are located at
Bulacao Pardo, City of Cebu. That with respect to any money which may be
adjudged to me from Agripina Abarquez, except 'Attorney's Fees', the same
shall pertain to me and not to said lawyer.

Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION

IN WITNESS WHEREOF, I have caused my right thumb. mark to be affixed

hereto this 10th of June, 1961, at the City of Cebu.

G.R. No. L-26096 February 27, 1979

THE DIRECTOR OF LANDS, petitioner,
vs.
SILVERETRA ABABA, ET AL., claimants, JUAN LARRAZABAL, MARTA C. DE
LARRAZABAL, MAXIMO ABAROQUEZ and ANASTACIA CABIGAS, petitioners-appellants,
ALBERTO FERNANDEZ, adverse claimant-appellee.

THUMBMA
MAXIMO A
(p. 5, Petitioner-Appellant's Brief, p. 26, rec.)

Juanito Ll. Abao for petitioners-appellants.

The real Property sought to be recovered in Civil Case No. R6573 was actually the share of the
petitioner in Lots 5600 and 5602, which were part of the estate of his deceased parents and
which were partitioned the heirs which included petitioner Maximo Abarquez and his elder sister
Agripina Abarquez, the defendant in said civil case.

Alberto R Fernandez in his own behalf.

This partition was made pursuant to a project of partition approved by the Court which provided
am other that Lots Nos. 5600 and 5602 were to be divided into three equal Parts, one third of
which shall be given to Maximo Abarquez. However, Agripina Abarquez the share of her brother
stating that the latter executed an instrument of pacto de retroprior to the partition conveying to
her any or all rights in the estate of their parents. Petitioner discovered later that the claim of his
sister over his share was based on an instrument he was believe all along to be a mere
acknowledgment of the receipt of P700.00 which his sister gave to him as a consideration for g
care of their father during the latter's illness and never an instrument of pacto de retro. Hence,
he instituted an action to annul the alleged instrument of pacto de retro.

MAKASIAR, J.:
This is an appeal from the order of the Court of First Instance of Cebu dated March 19, 1966
denying the petition for the cancellation of an adverse claim registered by the adverse claimant
on the transfer certificate of title of the petitioners.
The adverse claimant, Atty. Alberto B. Fernandez was retained as counsel by petitioner, Maximo
Abarquez, in Civil Case No. R-6573 of the Court of First Instance of Cebu, entitled "Maximo
Abarquez vs. Agripina Abarquez", for the annulment of a contract of sale with right of repurchase
and for the recovery of the land which was the subject matter thereof. The Court of First Instance
of Cebu rendered a decision on May 29, 1961 adverse to the petitioner and so he appealed to
the Court of Appeals.

The Court of Appeals in a decision promulgated on August 27, 1963 reversed the decision of the
lower court and annulled the dead of pacto de retro. Appellee Agripina Abarquez filed a motion
for reconsideration but the same was denied in a resolution dated January 7, 1964 (p. 66,

48

Record on Appeal; p. 13, Rec.) and the judgment became final and executory on January
22,1964.

Counsel for the petitioner-spouses filed the printed record on appeal on July 12, 1966. Required
to file the appellants' brief, counsel filed one on August 29, 1966 while that of the appellee was
filed on October 1, 1966 after having been granted an extension to file his brief.

Subsequently, Transfer Certificate of Title No. 31841 was issued on May 19,1965 in the name of
Maximo Abarquez, married to Anastacia Cabigas, over his adjudged share in Lots Nos. 5600
and 5602 containing an area of 4,085 square meters (p. 110, ROA; p. 13, rec.). These parcels of
land later by the subject matter of the adverse claim filed by the claimant.

The case was submitted for decision on December 1, 1966. Counsel for the petitioners filed a
motion to expunge appellees' brief on December 8, 1966 for having been filed beyond the
reglementary period, but the same was denied by this Court in a resolution dated February 13,
1967.

The case having been resolved and title having been issued to petitioner, adverse claimant
waited for petitioner to comply with ha obligation under the document executed by him on June
10, 1961 by delivering the one-half () portion of the said parcels of land.

The pivotal issue to be resolved in the instant case is the validity or nullity of the registration of
the adverse claim of Atty. Fernandez, resolution of which in turn hinges on the question of
whether or not the contract for a contingent fee, basis of the interest of Atty. Fernandez, is
prohibited by the Article 1491 of the New Civil Code and Canon 13 of the Canons of
Professional Ethics.

Petitioner refused to comply with his obligation and instead offered to sell the whole parcels of
land covered by TCT No. 31841 to petitioner-spouses Juan Larrazabal and Marta C. de
Larrazabal. Upon being informed of the intention of the petitioner, adverse t claimant
immediately took stops to protect his interest by filing with the trial court a motion to annotate Ins
attorney's lien on TCT No. 31841 on June 10, 1965 and by notifying the prospective buyers of
his claim over the one-half portion of the parcels of land.

Petitioners contend that a contract for a contingent fee violates Article 1491 because it involves
an assignment of a property subject of litigation. That article provides:
Article 1491. The following persons cannot acquire by purchase even at a
public or judicial auction, either in person or through the petition of another.

Realizing later that the motion to annotate attorney's lien was a wrong remedy, as it was not
within the purview of Section 37, rule 138 of the Revised Rule of Court, but before the same was
by the trial court, adverse t by an affidavit of adverse claim on July 19, 1965 with the Register of
Deeds of Cebu (p. 14, ROA; p. 13, rec.). By virtue of the petition of mid affidavit the adverse
claim for one-half () of the lots covered by the June 10, 1961 document was annotated on TCT
No. 31841.

xxx xxx xxx

(5) Justices, judges, prosecuting attorneys, clerks of superior and inferior
and other o 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 (Emphasis supplied).

Notwithstanding the annotation of the adverse claim, petitioner-spouse Maximo Abarquez and
Anastacia Cabigas conveyed by deed of absolute sale on July 29, 1965 two-thirds (2/3) of the
lands covered by TCT No. 31841 to petitioner-spouses Juan Larrazabal and Marta C. de
Larrazabal. When the new transfer certificate of title No. 32996 was issued, the annotation of
adverse claim on TCT No. 31841 necessarily had to appear on the new transfer certificate of
title. This adverse claim on TCT No. 32996 became the subject of cancellation proceedings filed
by herein petitioner-spouses on March 7, 1966 with the Court of First Instance of Cebu (p. 2
ROA; p. 13, rec.). The adverse claimant, Atty. Alberto B. Fernandez, filed his opposition to the
petition for cancellation on March 18, 1966 (p. 20, ROA; p. 13 rec.). The trial court resolved the
issue on March 19, 1966, when it declared that:

This contention is without merit. Article 1491 prohibits only the sale or assignment between the
lawyer and his client, of property which is the subject of litigation. As WE have already stated.
"The prohibition in said article a only to applies stated: " The prohibition in said article applies
only to a sale or assignment to the lawyer by his client of the property which is the subject of
litigation. In other words, for the prohibition to operate, the sale or t of the property must take
place during the pendency of the litigation involving the property" (Rosario Vda. de Laig vs.
Court of Appeals, et al., L-26882, November 21, 1978).

...the petition to cancel the adverse claim should be denied. The admission
by the petitioners that the lawyers (Attys. Fernandez and Batiguin) are
entitled to only one-third of the lot described in Transfer Certificate of Title
No. 32966 is the best proof of the authority to maintain said adverse claim
(p. 57, ROA; p. 13, rec.).

Likewise, under American Law, the prohibition does not apply to "cases where after completion
of litigation the lawyer accepts on account of his fee, an interest the assets realized by the
litigation" (Drinker, Henry S., Legal Ethics, p. 100 [1953], citing App. A, 280; N.Y. Ciu 714).
"There is a clear distraction between such cases and one in which the lawyer speculates on the
outcome of the matter in which he is employed" (Drinker, supra, p. 100 citing A.B.A. Op. 279).

Petitioner-spouses decided to appeal the order of dismissal to this Court and correspondingly
filed the notice of appeal on April 1, 1966 with the trial court. On April 2, 1966, petitioner-spouses
filed the appeal bond and subsequently filed the record on appeal on April 6, 1966. The records
of the case were forwarded to this Court through the Land Registration Commission of Manila
and were received by this Court on May 5, 1966.

49

A contract for a contingent fee is not covered by Article 1491 because the tranfer or assignment
of the property in litigation takes effect only after the finality of a favorable judgment. In the
instant case, the attorney's fees of Atty. Fernandez, consisting of one-half (1/2) of whatever
Maximo Abarquez might recover from his share in the lots in question, is contingent upon the
success of the appeal. Hence, the payment of the attorney's fees, that is, the transfer or
assignment of one-half (1/2) of the property in litigation will take place only if the appeal
prospers. Therefore, the tranfer actually takes effect after the finality of a favorable judgment
rendered on appeal and not during the pendency of the litigation involving the property in
question. Consequently, the contract for a contingent fee is not covered by Article 1491.

El fundamento de esta prohibicion es clarismo. No solo se tratadice

Manresade quitar la ocasion al fraude; persiguese, ademas, el proposito
de rodear a las personas que intervienen en la administracion de justicia de
todos los prestigios que necesitan para ejercer su ministerio, librando los de
toda sospecha, que, aunque fuere infundada, redundaria en descredito de
la institucion.
Por no dor lugar a recelos de ninguna clase, admite el Codigo (en el
apartado penutimo del art. 1.459) algunos casos en que, por excepcion, no
se aplica el pricipio prohibitivo de que venimos hablando. Tales son los de
que se trate de acciones hereditarias entre coheredero, de cesion en pago
de creditos, o de garantia de los bienes que posean los funcionarios de
justicia.

While Spanish civilists differ in their views on the above issue whether or not a contingent fee
contract (quota litis agreement) is covered by Article 1491 with Manresa advancing that it is
covered, thus:
Se ha discutido si en la incapacidad de Ion Procumdam y Abogados asta o
el pecto de quota litis. Consiste este, como es sabido, en la estipulacion de
que el Abogado o el Procurador ban de hacer suyos una parte alicuota de
In cona que se li m la son es favorable. Con es te concepto a la vista, es
para nosortros que el articulo que comentamos no menciona ese
pacto; pero como la incapacidad de los Abogados y Procuradores se
extinede al acto de adquirir por cesion; y la efectividad del pacto dequota
litis implica necesariamente una cesion, estimamos que con solo el num. 5
del articulo 1459 podria con exito la nulidad de ese pacto tradicionalmente
considerado como ilicito.

Algunos autores (Goyena, Manresa, Valverde) creen

que en la prohibicion del art. 1.459 esta comprendido el
pacto de quota litis (o sea el convenio por el cual se
concede al Abogado o Procurador, para el caso de
obtener sentencia favorable una parte alicuota de la
cosa o cantidad que se litiga), porque dicho pacto
supone la venta o cesion de una parte de la cosa o
drecho que es objecto del litigio. Pero Mucius
Scaevola oberva, conrazon, que en el repetido pacto
no hay propiamente caso de compraventa ni de cesion
de derechos, y bastan para estimario nulo otros
preceptos del Codigo como los relativos a la ilicitud de
la causa (Castan, Derecho Civil Espol, Tomo 4, pp.
68-69, [9a ed., 1956], emphasis supplied).

xxx xxx xxx

Debe tenerse tambien en cuenta, respecto del ultimo parrafo del articulo
1459, la sentencia del Tribunal Supreme de 25 Enero de 1902, que delcara
que si bien el procurador no puede adquirir para si los bienes, en cuanto a
los cuales tiene incapacidad, puede adquirirlos para otra persona en quien
no concurra incapacidad alguna (Manresa, Comentarios al Codigo Civil
Espaol, Tomo X, p. 110 [4a ed., 1931] emphasis supplied).

The Supreme Court of Spain, in its sentencia of 12 November 1917, has ruled that Article 1459
of the Spanish Civil Code (Article 1491 of our Civil Code) does not apply to a contract for a
contingent fee because it is not contrary to morals or to law, holding that:
... que no es susceptible de aplicarse el precepto contenido en el num. 5 del
art. 1.459 a un contrato en el que se restrigen los honorarios de un
Abogado a un tanto por ciento de lo que se obtuviera en el litigio, cosa no
repudiada por la moral ni por la ley (Tolentino, Civil Code of the Philippines,
p. 35, Vol. V [1959]; Castan, supra; Manresa, supra).

Castan, maintaining that it is not covered, opines thus;

C. Prohibiciones impuestas a las personas encargadas, mas o menos
directamente, de la administracion de justicia.El mismo art. 1,459 del
Codigo civil prohibe a los Magistrados, Jueces, individuos del Minesterio
fiscal, Secretarios de Tribunales y Juzgados y Oficiales de Justicia adquirir
por compra (aunque sea en subasta publica o judicial, por si ni por persona
alguna intermedia). 'Los bienes y derechos que estuviesen en litigio ante el
Tribunal en cuya jurisdicion on teritorio ejercieran sus respectivas
funciones, extendiendo se esta prohibicion al acto de adquirir por cesion', y
siendo tambien extensiva ' Alos Abogados y Procuradores respecto a los
bienes y derecho que fueran objeto del un litigio en que intervengan pos su
profession y oficio.'

In the Philippines, among the Filipino commentators, only Justice Capistrano ventured to state
his view on the said issue, thus:
The incapacity to purchase or acquire by assignment, which the law also
extends to lawyers with t to the property and rights which may be the object
of any litigation in which they may take part by virtue of their profession, also
covers contracts for professional services quota litis. Such contracts,
however, have been declared valid by the Supreme Court" (Capistrano, Civil
Code of the Philippines, p. 44, Vol. IV [1951]).

50

Dr. Tolentino merely restated the views of Castan and Manresa as well as the state of
jurisprudence in Spain, as follows:

Likewise, it must be noted that this Court has already recognized this type of a contract as early
as the case ofUlanday vs. Manila Railroad Co. (45 PhiL 540 [1923]), where WE held that
"contingent fees are not prohibited in the Philippines, and since impliedly sanctioned by law
'Should be under the supervision of the court in order that clients may be protected from unjust
charges' (Canons of Profession 1 Ethics)". The same doctrine was subsequently reiterated in
Grey vs. Insular Lumber Co. (97 PhiL 833 [1955]) and Recto vs. Harden (100 PhiL 427 [1956]).

Attorneys-at-lawSome writers, like Goyena, Manresa and Valverde

believe that this article covers quota litis agreements, under which a lawyer
is to be given an aliquot part of the property or amount in litigation if he
should win the case for his client. Scaevola and Castan, however, believe
that such a contract does not involve a sale or assignment of right but it
may be void under other articles of the Code, such as those referring to
illicit cause- On the other hand the Spanish Supreme Court has held that
this article is not applicable to a contract which limits the fees of a lawyer to
a certain percentage of what may be recovered in litigation, as this is not
contrary to moral or to law. (Tolentino, Civil Code of the Philippines, p. 35,
Vol. V [1959]; Castan, supra, Emphasis supplied).

In the 1967 case of Albano vs. Ramos (20 SCRA 171 [19671), the attorney was allowed to
recover in a separate action her attomey's fee of one-third (1/3) of the lands and damages
recovered as stipulated in the contingent fee contract. And this Court in the recent case of
Rosario Vda de Laig vs. Court of Appeals, et al. (supra), which involved a contingent fee of onehalf () of the property in question, held than ,contingent fees are recognized in this i jurisdiction
(Canon 13 of the Canons of Professional Ethics adopted by the Philippine Bar association in
1917 [Appendix B, Revised Rules of Court)), which contingent fees may be a portion of the
property in litigation."

Petitioners her contend that a contract for a contingent fee violates the Canons of Professional
Ethics. this is likewise without merit This posture of petitioners overlooked Canon 13 of the
Canons which expressly contingent fees by way of exception to Canon 10 upon which
petitioners relied. For while Canon 10 prohibits a lawyer from purchasing ...any interest in the
subject matter of the litigation which he is conducting", Canon 13, on the other hand, allowed a
reasonable contingent fee contract, thus: "A contract for a con. tangent fee where sanctioned by
law, should be reasonable under all the circumstances of the ca including the risk and
uncertainty of the compensation, but should always be subject to the supervision of a court, as
to its reasonableness." As pointed out by an authority on Legal Ethics:

Contracts of this nature are permitted because they redound to the benefit of the poor client and
the lawyer "especially in cases where the client has meritorious cause of action, but no means
with which to pay for legal services unless he can, with the sanction of law, make a contract for a
contingent fee to be paid out of the proceeds of the litigation" (Francisco, Legal Ethics, p. 294
[1949], citing Lipscomb vs. Adams 91 S.W. 1046, 1048 [1949]). Oftentimes, contingent fees are
the only means by which the poor and helpless can redress for injuries sustained and have their
rights vindicated. Thus:
The reason for allowing compensation for professional services based on
contingent fees is that if a person could not secure counsel by a promise of
large fees in case of success, to be derived from the subject matter of the
suit, it would often place the poor in such a condition as to amount to a
practical denial of justice. It not infrequently happens that person are injured
through the negligence or willful misconduct of others, but by reason of
poverty are unable to employ counsel to assert their rights. In such event
their only means of redress lies in gratuitous service, which is rarely given,
or in their ability to find some one who will conduct the case for a contingent
fee. That relations of this king are often abused by speculative attorneys or
that suits of this character are turned into a sort of commercial traffic by the
lawyer, does not destroy the beneficial result to one who is so poor to
employ counsel (id, at p. 293, citing Warvelle, Legal Ethics, p. 92, Emphasis
supplied).

Every lawyer is intensely interested in the successful outcome of his case,

not only as affecting his reputation, but also his compensation. Canon 13
specifically permits the lawyer to contract for a con tangent fee which of
itself, negatives the thought that the Canons preclude the lawyer's having a
stake in his litigation. As pointed out by Professor Cheatham on page 170 n.
of his Case Book, there is an inescapable conflict of interest between lawyer
and client in the matter of fees. Nor despite some statements to the con in
Committee opinions, is it believed that, particularly in view of Canon 13,
Canon 10 precludes in every case an arrangement to make the lawyer's fee
payable only out of the results of the litigation. The distinction is between
buying an interest in the litigation as a speculation which Canon 10
condemns and agreeing, in a case which the lawyer undertakes primarily in
his professional capacity, to accept his compensation contingent on the
outcome (Drinker, Henry S Legal Ethics, p. 99, [1953], Emphasis supplied).

Justice George Malcolm, writing on contingent fees, also stated that:

These Canons of Professional Ethics have already received "judicial recognition by being cited
and applied by the Supreme Court of the Philippines in its opinion" Malcolm, Legal and Judicial
Ethics, p. 9 [1949]). And they have likewise been considered sources of Legal Ethics. More
importantly, the American Bar Association, through Chairman Howe of the Ethics Committee,
opined that "The Canons of Professional Ethics are legislative expressions of professional
opinion ABA Op. 37 [1912])" [See footnote 25, Drinker, Legal Ethics, p. 27]. Therefore, the
Canons have some binding effect

... the system of contingent compensation has the merit of affording to

certain classes of persons the opportunity to procure the prosecution of their
claims which otherwise would be beyond their means. In many cases in the
United States and the Philippines, the contingent fee is socially
necessary (Malcolm, Legal and Judicial Ethics, p. 55 [1949], emphasis
supplied).

51

Stressing further the importance of contingent fees, Professor Max Radin of the University of
California, said that:

Moreover, the interest or claim of Atty. Fernandez in the lots in question arose long after the
original petition which took place many years ago. And, there is no other provision of the Land
Registration Act under which the interest or claim may be registered except as an adverse claim
under Section 110 thereof. The interest or claim cannot be registered as an attorney's charging
lien. The lower court was correct in denying the motion to annotate the attomey's lien. A charging
lien under Section 37, Rule 138 of the Revised Rules of Court is limited only to money
judgments and not to judgments for the annulment of a contract or for delivery of real property
as in the instant case. Said Section provides that:

The contingent fee certainly increases the possibility that vexatious and
unfounded suits will be brought. On the other hand, it makes possible the
enforcement of legitimate claims which otherwise would be abandoned
because of the poverty of the claimants. Of these two possibilities, the
social advantage seems clearly on the side of the contingent fee. It may in
fact be added by way of reply to the first objection that vexations and
unfounded suits have been brought by men who could and did pay
substantial attorney's fees for that purpose (Radin, Contingent Fees in
California, 28 Cal. L. Rev. 587, 589 [1940], emphasis supplied).

Section 37. An attorney shall have a lien upon the funds, documents and
papers of his client which have lawfully come into his oppossession and
may retain the same until his lawful fees and disbursements have been
paid, and may apply such funds to the satisfaction thereof. He shall also
have a lien to the same extent upon all judgments, for the payment of
money, and executions issued in pursuance of such judgments, which he
has secured in a litigation of his client ... (emphasis supplied).

Finally, a contingent fee contract is always subject to the supervision of the courts with respect to
the stipulated amount and may be reduced or nullified. So that in the event that there is any
undue influence or fraud in the execution of the contract or that the fee is excessive, the client is
not without remedy because the court will amply protect him. As held in the case of Grey vs.
Insular Lumber Co., supra, citing the case of Ulanday vs. Manila Railroad Co., supra:

Therefore, as an interest in registered land, the only adequate remedy open to Atty. Fernandez
is to register such interest as an adverse claim. Consequently, there being a substantial
compliance with Section 110 of Act 496, the registration of the adverse claim is held to be valid.
Being valid, its registration should not be cancelled because as WE have already stated, "it is
only when such claim is found unmeritorious that the registration thereof may be cancelled" (Paz
Ty Sin Tei vs. Jose Lee Dy Piao 103 Phil. 867 [1958]).

Where it is shown that the contract for a contingent fee was obtained by any
undue influence of the attorney over the client, or by any fraud or imposition,
or that the compensation is so clearly excessive as to amount to extortion,
the court win in a proper case protect the aggrieved party.

The one-half () interest of Atty. Fernandez in the lots in question should therefore be
respected. Indeed, he has a better right than petitioner-spouses, Juan Larrazabal and Marta C.
de Larrazabal. They purchased their two-thirds (2/3) interest in the lots in question with the
knowledge of the adverse claim of Atty. Fernandez. The adverse claim was annotated on the old
transfer certificate of title and was later annotated on the new transfer certificate of title issued to
them. As held by this Court:

In the present case, there is no iota of proof to show that Atty. Fernandez had exerted any undue
influence or had Perpetrated fraud on, or had in any manner taken advantage of his client,
Maximo Abarquez. And, the compensation of one-half of the lots in question is not excessive nor
unconscionable considering the contingent nature of the attorney's fees.
With these considerations, WE find that the contract for a contingent fee in question is not
violative of the Canons of Professional Ethics. Consequently, both under the provisions of Article
1491 and Canons 10 and 13 of the Canons of Profession Ethics, a contract for a contingent fee
is valid

The annotation of an adverse claim is a measure designed to protect the

interest of a person over a piece of real property where the registration of
such interest or right is not otherwise provided for by the Land Registration
Act, and serves as a notice and warning to third parties dealing with said
property that someone is claiming an interest on the same or a better right
than the registered owner thereof (Sanchez, Jr. vs. Court of Appeals, 69
SCRA 332 [1976]; Paz Ty Sin Tei vs. Jose Le Dy Piao supra).

In resolving now the issue of the validity or nullity for the registration of the adverse claim,
Section 110 of the Land Registration Act (Act 496) should be considered. Under d section, an
adverse claim may be registered only by..
Whoever claims any part or interest in registered land adverse to the
registered owner, arising subsequent to the date of the o registration ... if no
other provision is made in this Act for registering the same ...

Having purchased the property with the knowledge of the adverse claim, they are therefore in
bad faith. Consequently, they are estopped from questioning the validity of the adverse claim.
WHEREFORE, THE DECISION OF THE LOWER COURT DENYING THE PETITION FOR THE
CANCELLATION OF THE ADVERSE CLAIM SHOULD BE, AS IT IS HEREBY AFFIRMED,
WITH COSTS AGAINST PETITIONER-APPELLANTS JUAN LARRAZABAL AND MARTA C. DE
LARRAZABAL.

The contract for a contingent fee, being valid, vested in Atty Fernandez an interest or right over
the lots in question to the extent of one-half thereof. Said interest became vested in Atty.
Fernandez after the case was won on appeal because only then did the assignment of the onehalf () portion of the lots in question became effective and binding. So that when he filed his
affidavit of adverse claim his interest was already an existing one. There was therefore a valid
interest in the lots to be registered in favor of Atty. Fernandez adverse to Mo Abarquez.

SO ORDERED.

52

intelligence" gained by him while the attorney-client relationship existed but which he allegedly
used against complainant when the relationship terminated. Complainant filed
his Comments thereon as required in our Resolution of 26 July 1978. Thereafter this case was
referred to the Office of the Solicitor General (OSG) for investigation, report, and
recommendation in our Resolution dated 23 October 1978.

Republic of the Philippines

SUPREME COURT
Manila

After almost four (4) years the OSG submitted its Report and Recommendation dated 14
October 1982 enumerating the following findings against respondent, to wit:

EN BANC
A.C. No. 1890

August 7, 2002

The evidence presented by complainant which was largely unrebutted by respondent establish
two counts of malpractice against respondent, one count of violating the confidentiality of clientlawyer relationship and one count of engaging in unethical conduct.

FEDERICO C. SUNTAY, complainant,

vs.
ATTY. RAFAEL G. SUNTAY, respondent.

1. Respondent committed malpractice when he represented Magno Dinglasan in the case for
false testimony and grave oral defamation filed by Magno Dinglasan against complainant before
the Office of the Provincial Fiscal of Bulacan (I.S. No. 77-1523).

DECISION
BELLOSILLO, J.:

The case stemmed from the testimony given by complainant on December 21, 1976, before the
Court of First Instance of Bulacan in Civil Case No. 3930-M. When asked why Magno Dinglasan
had testified against him in that case, complainant stated that he once declined the demand of
Magno Dinglasan, a former official of the Bureau of Internal Revenue, for P150,000.00 as
consideration for the destruction of complainants record in the Bureau.

This Complaint for disbarment was filed by Federico C. Suntay against his nephew, Atty. Rafael
G. Suntay, alleging that respondent was his legal counsel, adviser and confidant who was privy
to all his legal, financial and political affairs from 1956 to 1964. However, since they parted ways
because of politics and respondent's overweening political ambitions in 1964, respondent had
been filing complaints and cases against complainant, making use of confidential information
gained while their attorney-client relationship existed, and otherwise harassing him at every turn.

On account of that testimony, Magno Dinglasan charged complainant on July 29, 1977 with the
crime of false testimony and grave oral defamation (Exhibits G and G-1). During the preliminary
investigation of the case by the Office of the Provincial Fiscal of Bulacan, respondent acted as
counsel for Magno Dinglasan. When the case was dismissed by the Office of the Provincial
Fiscal of Bulacan and it was elevated to the Ministry of Justice on appeal, respondent continued
to be the lawyer of Magno Dinglasan.

Complainant enumerated the following cases filed by respondent to harass him: (a) Civil Case
No. 4306-M1 for injunction and damages in 1975, "Carlos Panganiban v. Dr. Federico Suntay,"
where respondent appeared as counsel for the plaintiff involving fishponds which respondent
had previously helped to administer; (b) Civil Case No. 4726-M,2 "Narciso Lopez v. Federico
Suntay," in 1970 where respondent appeared as counsel for the plaintiff to determine the real
contract between the parties likewise involving the two (2) fishponds which respondent had
previously helped to administer; (c) Civil Case No. 112764,3 "Magno Dinglasan v. Federico
Suntay," for damages where respondent appeared as counsel for the plaintiff; and, (d) I.S. No.
77-1523, "Magno Dinglasan v. Federico Suntay," for false testimony and grave oral defamation
before the Office of the Provincial Fiscal of Bulacan involving complainant's same testimony
subject of the complaint for damages in Civil Case No. 112764.

Complainant testified in this disbarment proceeding that he consulted respondent, who was then
his counsel, about the demand made in 1957 or 1958 by Magno Dinglasan for P150,000.00 as
consideration for the destruction of complainants record in the Bureau of Internal Revenue.
Respondents advice was for complainant to disregard the demand as it was improper. Later,
when Magno Dinglasan reduced the amount to P50,000.00, complainant again consulted
respondent. Respondent likewise advised complainant not to heed the demand (pp. 61-62, tsn,
May 21, 1981).

In addition, complainant alleged that respondent relentlessly pursued a case against him for
violation of PD No. 2964 for the alleged disappearance of two (2) creeks traversing complainant's
fishpond in Bulacan covered by TCT No. T-15674. Complainant alleged that respondent's
possession and examination of the TCT and the blueprint plan of the property while he was still
counsel for complainant provided him with the information that there used to be two (2) creeks
traversing the fishpond, and that since respondent helped in the administration of the fishpond,
he also came to know that the two (2) creeks had disappeared.

Respondents representation of Magno Dinglasan in I.S. No. 77-1523 constitutes malpractice

(Section 27, Rule 138, Rules of Court) for respondent was previously the lawyer of complainant
and respondent was consulted by complainant regarding the very matter which was the subject
of the case. By serving as the lawyer of Magno Dinglasan, in I.S. No. 77-1523, respondent thus
represented an interest which conflicted with the interest of his former client.
2. Respondent again committed malpractice when he served as lawyer of Magno Dinglasan in
Civil Case No. 112764 before the Court of First Instance of Manila.

Required to answer the charges respondent filed a "Motion to Order Complainant to Specify His
Charges" alleging that complainant failed to specify the alleged "confidential information or

53

Civil Case No. 112764 was an action for damages filed by Magno Dinglasan against
complainant based, among others, on the same testimony that complainant gave on December
21, 1976 before the Court of First Instance of Bulacan in Civil Case No. 3930-M.

From the foregoing facts, it is clear that respondent made use of the information he gained while
he was the lawyer of complainant as basis for his complaint for the building of illegal dikes. His
possession and examination of Transfer Certificate of Title No. T-15674 and the blueprint plan
provided him the information that there used to be two creeks traversing the fishpond covered by
the title. Since he helped in the administration of the fishpond, he also came to know that the two
creeks had disappeared. Thus, he gained the data which became the basis of his complaint
when he was a lawyer and part administrator of complainant. Under the circumstances, there is
a violation of professional confidence.

For the same reasons set forth above, respondents representation of Magno Dinglasan in Civil
Case No. 112764 constitutes malpractice as thereby he represented conflicting interests.
3. In filing a charge against complainant for alleged illegal destruction of dikes, respondent
violated the confidentiality of information obtained out of a client-lawyer relationship.

4. The evidence also establishes the commission of unethical conduct by respondent for serving
as lawyer of Panganiban and Lopez x x x and for himself filing criminal charges against
complainant which were later dismissed. The cases wherein respondent served as lawyer for the
adversary of complainant or filed by respondent himself against complainant are the following:

In his capacity as lawyer of complainant from 1956 to 1964, respondent had the following
functions:
"Witness

1. Carlos Panganiban v. Federico Suntay, Civil Case No. 4306-M, CFI, Branch VII, Malolos,
Bulacan;

"A: He was my lawyer from 1956 from the time he passed the bar up to sometime in 1964 and
my legal adviser on political matters and legal matters.

2. Narciso Lopez v. Federico Suntay, Civil Case No. 4726-M, CFI, Branch II, Malolos, Bulacan;

"ATTY. AQUINO:

3. Magno Dinglasan v. Federico Suntay, I.S. No. 77-1523, Office of the Provincial Fiscal of
Bulacan;

"Q: As your lawyer from 1956 to 1964, will you kindly inform the Honorable Hearing Officer what
was the nature of the work of Atty. Suntay?

4. Magno Dinglasan v. Federico Suntay, Civil Case No. 112764, CFI, Branch XX, Manila; and

"A: He handled my cases on the titling of our properties. He served as my legal counsel in the
Hagonoy Rural Bank of which my family is the majority stockholders. He used to help me
manage my fishpond. He is our legal adviser on legal matters. He is our confidant. We have no
secrets between us. He has complete access in our papers (tsn, May 21, 1981)

5. Rafael G. Suntay and Magno Dinglasan v. Federico C. Suntay, I.S. No. 74-193, Office of the
Provincial Fiscal of Bulacan, for violation of P.D. 296.
While there may be validity to respondents contention that it is not improper for a lawyer to file a
case against a former client, especially when the professional relationship had ended several
years before, yet under the over-all circumstances of the case at bar it can not be said that
respondent acted ethically. Complainant was not a mere client of respondent. He is an uncle and
a political benefactor. The parties for whom respondent filed cases against complainant were
former friends or associates of complainant whom respondent met when he was serving as the
lawyer and general adviser of complainant. The cases filed by respondent were about properties
which respondent had something to do with as counsel and administrator of complainant.

Complainant owned several fishponds in Bulacan, among them, the fishpond covered by
Transfer Certificate of Title No. T-15674. This fishpond was previously traversed by two creeks,
Sapang Malalim and Sapang Caluang. The existence of the creeks is shown by the certificate of
title and the blue print plan of the fishpond. In the certificate of title, the fishpond is bounded on
the north and northeast by Sapang Caluang and on the west by Sapang Malalim (please see
Exhibit 6).
In a letter dated March 17, 1973, respondent reported the disappearance of the two creeks to
the authorities. The Chief State Prosecutor referred the letter to the Office of the Provincial
Fiscal of Bulacan. The Office of the Provincial Fiscal of Bulacan required the Public Works to
conduct a re-survey. (Exhibit 6).

xxxx
IN VIEW OF THE FOREGOING, undersigned respectfully submit that the evidence establishes
commission by respondent of malpractice for violating the confidentiality of client-lawyer
relationship and engaging in unethical conduct x x x x5

In 1974, the Ministry of Public Works conducted a relocation survey of the fishpond.1wphi1 The
relocation survey disclosed that there were no more creeks traversing the fishpond. Sapang
Malalim and Sapang Caluang had disappeared.

Resolution of this case was delayed despite receipt of the foregoing Report and
Recommendation in view of theOmnibus Motion to Remand Case to the Office of the Solicitor
General; Motion to Disqualify Solicitor Rogelio Dancel to Act on this Case and Motion to
Suspend Period to File Answer dated 18 January 1983 filed by respondent principally accusing

Respondent was requested to file a formal complaint with supporting affidavits, for violation of
Presidential Decree No. 296. Respondent did so and the complaint was docketed as I.S. No. 74193. (Exhibit 6)

54

handling Solicitor Dancel of having given unwarranted advantage and preference to the
complainant in the investigation of the case.

Rule 21.01. - A lawyer shall not reveal the confidences or secrets of his client except:
a) When authorized by the client after acquainting him of the consequences of the disclosure;

After several pleadings on the issue were filed by both respondent and Solicitor Rogelio Dancel,
the Court in itsResolution dated 22 August 1983 denied respondent's motion to disqualify
Solicitor Dancel and required the OSG to proceed with the investigation of this
case.1wphi1 However, no further proceedings were conducted by the OSG until the records of
the case together with other cases were turned over to the Integrated Bar of the Philippines
(IBP) on 19 May 1988.

b) When required by law;

c) When necessary to collect his fees or to defend himself, his employees or associates or by
judicial action.
Rule 21.01. - A lawyer shall not, to the disadvantage of his client, use information acquired in the
course of employment, nor shall he use the same to his own advantage or that of a third person,
unless the client with full knowledge of the circumstances consents thereto.

After almost three (3) years from the time the records of this case were turned over to it, the IBP
Commission on Bar Discipline submitted to this Court on 11 May 2001 Resolution No. XIV-2001169 adopting and approving theReport and Recommendation of the Investigating Commissioner
finding respondent guilty as charged. The IBP recommended that respondent Atty. Suntay be
suspended from the practice of law for two (2) years for immoral conduct. In so recommending
the Investigating Commissioner adopted in toto the findings of the OSG in itsReport and
Recommendation dated 14 October 1982. In our Resolution of 5 September 2001 we noted the
foregoing IBP Resolution. However, in view of the penalty involved, this case was referred to the
Court En Bancfor final action pursuant to our Resolution dated 18 January 2000, Sec. 2, par. (b),
in A.M. No. 99-12-08-SC.6

A lawyer shall preserve the confidences and secrets of his clients even after termination of the
attorney-client relation.8 As his defense to the charges, respondent averred that complainant
failed to specify the alleged confidential information used against him. Such a defense is
unavailing to help respondent's cause for as succinctly explained in Hilado v. David - 9
Communications between attorney and client are, in a great number of litigations, a complicated
affair, consisting of entangled relevant and irrelevant, secret and well known facts. In the
complexity of what is said in the course of the dealings between an attorney and a client, inquiry
of the nature suggested would lead to the revelation, in advance of the trial, of other matters that
might only further prejudice the complainants cause. And the theory would be productive of
other unsalutary results. To make the passing of confidential communication a condition
precedent, i.e., to make the employment conditioned on the scope and character of the
knowledge acquired by an attorney in determining his right to change sides, would not enhance
the freedom of litigants, which is to be sedulously fostered, to consult with lawyers upon what
they believe are their rights in litigation. The condition would of necessity call for an investigation
of what information the attorney has received and in what way it is or it is not in conflict with his
new position. Litigants would in consequence be wary in going to an attorney, lest by an
unfortunate turn of the proceeding, if an investigation be held, the court should accept the
attorneys inaccurate version of the facts that came to him x x x x

After a review of the records of this case, the Court finds the IBP Recommendation to be well
taken. As found by both the OSG and the IBP Investigating Commissioner, respondent Atty.
Rafael G. Suntay acted as counsel for clients in cases involving subject matters regarding which
he had either been previously consulted by complainant or which he had previously helped
complainant to administer as the latter's counsel and confidant from 1956 to 1964. Thus in Civil
Cases Nos. 4306-M and 4726-M respondent acted as counsel for estranged business
associates of complainant, namely, Carlos Panganiban and Narciso Lopez, the subject matter of
which were the two (2) fishponds which respondent had previously helped to administer.
On the other hand, I.S. No. 77-1523 for false testimony and grave oral defamation before the
Office of the Provincial Fiscal of Bulacan, and Civil Case No. 112764 for damages before the
then Court of First Instance of Manila, were filed in behalf of Magno Dinglasan, a former Bureau
of Internal Revenue (BIR) official, regarding whose alleged demand for P150,000.00 from
complainant in exchange for the destruction of the latter's record in the BIR, respondent had
previously advised complainant to disregard. Civil Case No. 117624 and I.S. No. 77-1523 were
precisely filed against complainant because the latter had previously testified on the alleged
demand made by Dinglasan. Although respondent denied that there was ever such a demand
made by Dinglasan, the point is that his word on the matter, i.e., whether there was in fact such
a demand, would carry much weight against complainant considering that he was the latter's
counsel in 1957 or 1958 when the alleged demand was made. In addition, respondent initiated
the prosecution of complainant in I.S. No. 74-193 for violation of P.D. No. 296 7 for the
disappearance of the two (2) creeks, namely, Sapang Malalim and Sapang Caluang, previously
traversing complainant's fishpond in Bulacan covered by TCT No. T-15674 by using information
obtained while he was in possession of the certificate of title and the blueprint plan of the
property.

Hence, the necessity of setting down the existence of the bare relationship of attorney and client
as the yardstick for testing incompatibility of interests. This stern rule is designed not alone to
prevent the dishonest practitioner from fraudulent conduct, but as well to protect the honest
lawyer from unfounded suspicion of unprofessional practice x x x x It is founded on principles of
public policy, on good taste x x x x [T]he question is not necessarily one of the rights of the
parties, but as to whether the attorney has adhered to proper professional standard. With these
thoughts in mind, it behooves attorneys, like Caesars wife, not only to keep inviolate the clients
confidence, but also to avoid the appearance of treachery and double-dealing. Only thus can
litigants be encouraged to entrust their secrets to their attorneys which is of paramount
importance in the administration of justice.
WHEREFORE, in view of the foregoing, IBP Resolution No. XIV-2001-169 dated 29 April 2001 is
adopted and approved. For violating the confidentiality of lawyer-client relationship and for
unethical conduct, respondent Atty. Rafael G. Suntay is SUSPENDED from the practice of law
for two (2) years effective upon the finality hereof.

As the Code of Professional Responsibility provides:

55

Let copies of this Decision be furnished the Office of the Bar Confidant, the Integrated Bar of the
Philippines and all courts throughout the country.

28 February 1994

Pepe and Del Montano,

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION
A.C. No. 4215

May 21, 2001

FELICISIMO M. MONTANO, complainant,

vs.
INTEGRATED BAR OF THE PHILIPPINES and Atty. JUAN S. DEALCA, respondents.
KAPUNAN, J.:
In a verified complaint filed before this Court on March 9, 1994, complaint Felicisimo M. Montano
charged Atty. Juan Dealca with misconduct and prays that he be "sternly dealt with
administratively." The complaint1 is summarized as follows:
1. On November 14, 1992, the complainant hired the services of Atty. Juan S. Dealca as his
counsel in collaboration with Atty. Ronando L. Gerona in a case pending before the Court of
Appeals docketed as CA-G.R. CV No. 3767 wherein the complainant was the plaintiff-appellant.
2. The parties agreed upon attorney's fees in the amount of P15,000.00 fifty percent (50%) of
which was payable upon acceptance of the case and the remaining balance upon the
termination of the case. Accordingly, complainant paid respondent the amount of P7,500.00
representing 50% of the attorney's fee.
3. Thereafter, even before respondent counsel had prepared the appellant's brief and contrary to
their agreement that the remaining balance be payable after the termination of the case, Atty.
Dealca demanded an additional payment from complainant obliged by paying the amount of
P4,000.00.
4. Prior to the filing of the appellant's brief, respondent counsel again demanded payment of the
remaining balance of P3,500.00. When complainant was unable to do so, respondent lawyer
withdraw his appearance as complainant's counsel without his prior knowledge and/or
conformity. Returning the case folder to the complainant, respondent counsel attached a Note
dated February 28, 1993,2 stating:

56

6. Even without being paid completely, respondent, of his own free will and accord, filed
complainant's brief on time;

For breaking your promise, since you do not want to

fulfill your end of the bargain, here's your reward:
Henceforth, you lawyer for yourselves. Here are your
papers.

7. After the brief was filed, respondent tried to collect from the complainant the remaining
balance of P3,500.00, but the latter made himself scare. As the records would show, such
P3,500.00 remains unpaid until now;

Johnny
8. Sensing that something was amiss, respondent sent the February 28, 1993 note and case
folder to the complainant, hoping that the latter would see personally the former about it to settle
the matter between them;

Complainant claimed that such conduct by respondent counsel exceeded the ethical standards
of the law profession and prays that the latter be sternly dealt with administratively. Complainant
later on filed motions praying for the imposition of the maximum penalty of disbarment.

9. However, instead of seeing the respondent, complainant filed this case;

After respondent counsel filed his comment on the complaint, the Court in the Resolution of
August 1, 1994, referred the case of the Integrated Bar of the Philippines (IBP) for investigation,
report and recommendation.

10. Respondent was constrained to file his withdrawal with the Court of Appeals because of this
case to avoid further misunderstanding since he was the one who signed the appellant's brief
although Atty. Gerona was his counsel of record. Such withdrawal was accordingly granted by
the appellate court;

The Investigating Commissioner found respondent counsel guilty of unprofessional conduct and
recommended that he be "severely reprimanded." However, in a Resolution3 by the IBP Board of
Governors on July 26, 1997, it was resolved that the penalty recommended by the Investigating
Commissioner meted to respondent be amended to "three (3) months suspension from the
practice of law for having been found guilty of misconduct, which eroded the public confidence
regarding his duty as a lawyer."

xxx

xxx

xxx.4

Respondent counsel further averred that complainant's refusal to pay the agreed lawyer's fees,
measly as it was, was deliberate and in bad faith; hence, his withdrawal as counsel was "just,
ethical and proper." Respondent counsel concluded that not only was the penalty of suspension
harsh for his act of merely trying to collect payment for his services rendered, but it indirectly
would punish his family since he was the sole breadwinner with children in school and his wife
terminally ill with cancer.

Respondent counsel sought reconsideration of the aforementioned resolution of the IBP, alleging
that the latter misapprehended the facts and that, in any case, he did not deserve the penalty
imposed. The true facts, according to him, are the following.
1. Complainant is being represented by Atty. Ronando L. Gerona in his case on appeal;

In its Resolution No. XIII-97-129 dated October 25, 1997, the IBP denied Atty. Dealca's motion
for reconsideration, to wit:

2. Due to the ailment of Atty. Gerona's daughter, he could not prepare and submit complainant's
appellant's brief on time;

xxx

3. Complainant wen to the respondent to do just that, i.e., prepare and submit his appellant's
brief on time at the agreed fee of P15,000.00, 50% down and 50% upon its completion;

RESOLVED TO DENY Atty. Dealca's Motion For Reconsideration of the Board's Decision in the
above-entitled case there being no substantive reason to reverse the finding therein. Moreover,
the motion is improperly laid the remedy of the respondent is to file the appropriate pleading with
the Supreme Court within fifteen (15) days from receipt of notice of said Decision pursuant to
Sec. 12 [c] of Rule 139-B.5

4. Working overtime, respondent was able to finish the appellant's brief ahead of its deadline, so
he advised the complainant about its completion with the request that the remaining balance of
P7,500.00 be paid. Complainant paid P4,000.00 only, promising to pay the P3,500.00
"tomorrow" or on "later particular date." Please take note that, at this juncture, there was already
a breach of the agreement on complainant's part.

On December 10, 1997, this Court noted the following pleadings filed in the present complaint,
(a) notice and a copy of Resolution No. XII-97-154 dated July 26, 1997 of the Integrated Bar of
the Philippines amending the recommendation of the Investigating Commissioner of reprimand
to three (3) months suspension of respondent from the practice of law for having been found
guilty of misconduct which eroded the public confidence regarding his duty as a lawyer;

5. When that "tomorrow" or on a "later particular date" came, respondent, thru a messenger,
requested the complainant to pay the P3,500.00 as promised but word was sent that he will
again pay "tomorrow" or on a "later date." This promise-non-payment cycle went on repeatedly
until the last day of the filing of the brief. Please take note again that it was not the respondent
but the complainant who sets the date when he will pay, yet he fails to pay as promised;

(a) complainant's motion praying for the imposition of the maximum penalty of disbarment;

57

(b) motion dated September 15, 1997 of respondent for reconsideration of the aforesaid
resolution of July 26, 1997;

When the Court issued the resolution of December 10, 1997 treating the several pleadings filed
in the present complaint, it should be noted that the IBP resolution denying respondent's motion
for reconsideration (Resolution No. XIII-97-129) dated October 25, 1997, for some reason, had
not yet reached this Court. As of that date, the only IBP resolution attached to the records of the
case was Resolution No. XII-97-54 amending the administrative sanction from reprimand to
three months suspension. Hence, at the time the pleadings were referred back to the IBP in the
same resolution, the Court was not aware that the IBP had already disposed of the motion for
reconsideration filed by respondent counsel.

(c) comment/opposition of respondent praying that the motion for the imposition of the maximum
penalty be denied;
(d) comment of complainant praying that the penalty of three (3) months suspension from the
practice of law as recommended by the Integrated Bar of the Philippines pursuant to resolution
No. XII-97-154 be raised to a heavier penalty;

Thus, when the IBP was informed of the said Court resolution, it construed the same as granting
Atty. Dealca's motion for reconsideration and as an order for IBP to conduct a re-evaluation of
the case. The IBP assumed that its resolution of October 25, 1997 was already considered by
this Court when it referred the case back to the IBP. It failed to notice that its resolution denying
the motion for reconsideration was not among those pleadings and resolution referred back to it.

(e) comment/manifestation/opposition of complainant praying that the respondent be disbarred;

and
(g) rejoinder of respondent praying that this case be dismissed for being baseless.6

Hence, on the strength of this Court's resolution which it had inadvertently misconstrued, the IBP
conducted a re-evaluation of the case and came up with the assailed resolution now sought to
be reversed. The Court holds that the error is not attributable to the IBP. It is regrettable that the
procedural infirmity alleged by complainant actually arose from a mere oversight which was
attributable to neither party.

and referred the same to the IBP for evaluation and report.
In compliance therewith, on March 28, 1998, the IBP issued Resolution No. XIII-98-42 referring
the above-entitled case to Commissioner Vibar for evaluation, report and recommendation "in
view of the Motion for Reconsideration granted by the Supreme Court."

Going into the merits, we affirm the findings made by the IBP that complainant engaged the
services of respondent lawyer only for the preparation and submission of the appellant's brief
and the attorney's fees was payable upon the completion and submission of the appellant's brief
and not upon the termination of the case.

The Investigating Commissioner, after referring the case, recommended that his original
recommendation of the imposition of the penalty of reprimand be maintained, noting that
respondent counsel had served the IBP well as President of the Sorsogon Chapter.7 Accordingly,
on February 23, 1999, the IBP Board of Governors, issued the following resolution:

There is sufficient evidence which indicates complainant's willingness to pay the attorney's fees.
AS agreed upon, complainant paid half of the fees in the amount of P7,500.00 upon acceptance
of the case. And while the remaining balance was not yet due as it was agreed to be paid only
upon the completion and submission of the brief, complainant nonetheless delivered to
respondent lawyer P4,000.00 as the latter demanded. This, notwithstanding, Atty. Dealca
withdrew his appearance simply because of complainant's failure to pay the remaining balance
of P3,500.00 which does not appear to be deliberate. The situation was aggravated by
respondent counsel's note to complainant withdrawing as counsel which was couched in
impolite and insulting language.10

RESOLUTION NO. XIII-99-48

xxx
RESOLVED to ADOPT and APPROVE, as it is hereby ADOPTED and APPROVED, the Report
and Recommendation of the Investigating Commissioner in the above-entitled case, herein
made part of this Resolution/Decision as Annex "A"; and, finding the recommendation fully
supported by the evidence on record and the applicable laws and rules, the Motion for
Reconsideration be granted and that the penalty of REPRIMAND earlier recommended by the
Investigating Commissioner be imposed on Atty. Juan S. Dealca.8

Given the above circumstances, was Atty. Dealca's conduct just and proper?
We find Atty. Dealca's conduct unbecoming of a member of the legal profession. Under Canon
22 of the Code of Professional Responsibility, a lawyer shall withdraw his services only for good
cause and upon notice appropriate in the circumstances. Although he may withdraw his services
when the client deliberately fails to pay the fees for the services,11 under the circumstances of
the present case, Atty. Dealca's withdrawal was unjustified as complainant did not deliberately
fail to pay him the attorney's fees. In fact, complainant exerted honest efforts to fulfill his
obligation. Respondent's contemptuous conduct does not speak well of a member of the bar
considering that the amount owing to him was only P3,500.00. rule 20.4 of Canon 20, mandates
that a lawyer shall avoid controversies with clients concerning his compensation and shall resort
to judicial action only to prevent imposition, injustice or fraud. Sadly, for not so large a sum owed

Complainant asked the IBP to reconsider the foregoing resolution but the motion was denied.9
On April 10, 2000, complainant filed with this Court a petition for review on certiorari in
connection with Administrative Case No. 4215 against the IBP and respondent counsel averring
that the IBP Board of Governors committed grave abuse of discretion when it overturned its
earlier resolution and granted respondent counsel's motion for reconsideration on February 23,
1999. He claimed that the earlier resolution denying the motion for reconsideration issued on
October 25, 1997 had already become final and executory; hence, any further action or motion
subsequent to such final and executory judgment shall be null and void.

58

to him by complainant, respondent lawyer failed to act in accordance with the demands of the
Code.

proceeding. In 1998, the labor arbiter hearing the complaint ordered the parties to submit their
respective position papers. Canoy submitted all the necessary documents and records to Atty.
Ortiz for the preparation of the position paper. Thereafter, he made several unfruitful visits to the
office of Atty. Ortiz to follow-up the progress of the case. After a final visit at the office of Atty.
Ortiz in April of 2000, during which Canoy was told to come back as his lawyer was not present,
Canoy decided to follow-up the case himself with the NLRC. He was shocked to learn that his
complaint was actually dismissed way back in 1998, for failure to prosecute, the parties not
having submitted their position papers.3 The dismissal was without prejudice. Canoy alleged that
Atty. Ortiz had never communicated to him about the status of the case, much less the fact that
he failed to submit the position paper.

The Court, however, does not agree with complainant's contention that the maximum penalty of
disbarment should be imposed on respondent lawyer. The power to disbar must be exercised
with great caution. Only in a clear case of misconduct that seriously affects the standing and
character of the lawyer as an officer of the Court and member of the bar will disbarment be
imposed as a penalty. It should never be decreed where a lesser penalty, such as temporary
suspension, would accomplish the end desired.12 In the present case, reprimand is deemed
sufficient.

The Comment4 filed by Atty. Ortiz is the epitome of self-hagiography. He informs the Court that
since commencing his law practice in 1987, he has mostly catered to indigent and low-income
clients, at considerable financial sacrifice to himself. Atty. Ortiz claims that for more than ten
years, his law office was a virtual adjunct of the Public Attorney's Office with its steady stream of
non-paying clients in the "hundreds or thousands."5 At the same time, he hosted a legal
assistance show on the radio, catering to far-flung municipalities and reaching "the people who
need legal advice and assistance."6 Atty. Ortiz pursued on with this lifestyle until his election as
Councilor of Bacolod City, a victory which he generously attributes to the help "of the same
people whom he had helped by way of legal assistance before."7

WHEREFORE, in view of the foregoing, respondent Atty. Juan S. Dealca

is REPRIMANDED with a warning that repetition of the same act will be dealt with more
severely.1wphi1.nt
SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila

Canoy was among those low-income clients whom Atty. Ortiz deigned to represent. The lawyer
was apparently confident that the illegal dismissal case would eventually be resolved by way of
compromise. He claims having prepared the position paper of Canoy, but before he could submit
the same, the Labor Arbiter had already issued the order dismissing the case.8 Atty. Ortiz admits
though that the period within which to file the position paper had already lapsed. He attributes
this failure to timely file the position paper to the fact that after his election as Councilor of
Bacolod City, "he was frankly preoccupied with both his functions as a local government official
and as a practicing lawyer." Eventually, "his desire to help was beyond physical limitations," and
he withdrew from his other cases and his "free legal services."9

SECOND DIVISION
A.C. No. 5485

March 16, 2005

ELMER CANOY, Complainant,

vs.
ATTY. JOSE MAX ORTIZ, respondent.

According to Atty. Ortiz, "Mr. Canoy should have at least understood that during all that time, he
was free to visit or call the office and be entertained by the secretary as [he] would normally
report to the office in the afternoon as he had to attend to court trials and report to the
Sanggunian office."10 He states that it was his policy to inform clients that they should be the
ones to follow-up their cases with his office, as it would be "too difficult and a financial burden to
attend making follow-ups with hundreds of clients, mostly indigents" with only two office
personnel.11

DECISION
TINGA, J.:
There are no good reasons that would justify a lawyer virtually abandoning the cause of the
client in the midst of litigation without even informing the client of the fact or cause of desertion.
That the lawyer forsook his legal practice on account of what might be perceived as a higher
calling, election to public office, does not mitigate the dereliction of professional duty.
Suspension from the practice is the usual penalty, and there is no reason to deviate from the
norm in this case.

Nonetheless, Atty. Ortiz notes that the dismissal of Canoy's complaint was without prejudice,
thus the prescriptive period had been tolled. He claims not being able to remember whether he
immediately informed Canoy of the dismissal of the case, though as far as he could recall,
Canoy had conveyed a message to him that he had a lawyer to handle the case, thus his office
did not insist on refiling the same.12

A Complaint1 dated 10 April 2001 was filed with the Office of the Bar Confidant by Elmer Canoy
(Canoy) accusing Atty. Jose Max Ortiz (Atty. Ortiz) of misconduct and malpractice. It was alleged
that Canoy filed a complaint for illegal dismissal against his former employer, Coca Cola Bottlers
Philippines. The complaint was filed with the National Labor Relations Commission (NLRC)
Regional Arbitration Board VI in Bacolod City.2 Atty. Ortiz appeared as counsel for Canoy in this

The matter was referred to the Integrated Bar of the Philippines (IBP) for investigation, report
and recommendation.13 Canoy eventually submitted a motion withdrawing the complaint, but this
was not favorably acted upon by the IBP in view of the rule that the investigation of a case shall
not be interrupted or terminated by reason of withdrawal of the charges.14 Eventually, the

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investigating commissioner concluded that "clearly, the records show that [Atty. Ortiz] failed to
exercise that degree of competence and diligence required of him in prosecuting his clients' (sic)
claim," and recommended that Atty. Ortiz be reprimanded.15 The IBP Commission on Discipline
adopted the recommendation, with the slight modification that Atty. Ortiz be likewise warned that
a repetition of the same negligence shall be dealt with more severely in the future.

Atty. Ortiz should have filed the position paper on time, owing to his duty as counsel of Canoy to
attend to this legal matter entrusted to him. His failure to do so constitutes a violation of Rule
18.03 of the Code of Professional Responsibility.
Once he agrees to take up the cause of a client, a lawyer owes fidelity to such cause and must
always be mindful of the trust and confidence reposed in him. He must serve the client with
competence and diligence and champion the latter's cause with wholehearted fidelity, care and
devotion. Elsewise stated, he owes entire devotion to the interest of the client, warm zeal in the
maintenance and defense of his client's rights, and the exertion of his utmost learning and ability
to the end that nothing be taken or withheld from his client, save by the rules of law, legally
applied. This simply means that his client is entitled to the benefit of any and every remedy and
defense that is authorized by the law of the land and he may expect his lawyer to assert every
such remedy or defense. If much is demanded from an attorney, it is because the entrusted
privilege to practice law carries with it the correlative duties not only to the client but also to the
court, to the bar and to the public. A lawyer who performs his duty with diligence and candor not
only protects the interest of his client; he also serves the ends of justice, does honor to the bar
and helps maintain the respect of the community to the legal profession.16

The Court is sensitive to the difficulties in obtaining legal representation for indigent or lowincome litigants. Apart from the heroic efforts of government entities such as the Public
Attorney's Office, groups such as the IBP National Committee on Legal Aid and the Office of
Legal Aid of the UP College of Law have likewise been at the forefront in the quest to provide
legal representation for those who could not otherwise afford the services of lawyers. The efforts
of private practitioners who assist in this goal are especially commendable, owing to their
sacrifice in time and resources beyond the call of duty and without expectation of pecuniary
reward.
Yet, the problem of under-representation of indigent or low-income clients is just as grievous as
that of non-representation. Admirable as the apparent focus of Atty. Ortiz's legal practice may
have been, his particular representation of Canoy in the latter's illegal dismissal case leaves
much to be desired.

If indeed Atty. Ortiz's schedule, workload, or physical condition was such that he would not be
able to make a timely filing, he should have informed Canoy of such fact. The relationship of
lawyer-client being one of confidence, there is ever present the need for the client to be
adequately and fully informed of the developments of the case and should not be left in the dark
as to the mode and manner in which his/her interests are being defended.17

Several of the canons and rules in the Code of Professional Responsibility guard against the
sort of conduct displayed by Atty. Ortiz with respect to the handling of Canoy's case.
CANON 17A LAWYER OWES FIDELITY TO THE CAUSE OF HIS CLIENT AND HE SHALL BE
MINDFUL OF THE TRUST AND CONFIDENCE REPOSED IN HIM.

There could have been remedies undertaken to this inability of Atty. Ortiz to file on time the
position paper had Canoy been told of such fact, such as a request for more time to file the
position paper, or maybe even the hiring of collaborating counsel or substitution of Atty. Ortiz as
counsel. Since Atty. Ortiz did not exercise the necessary degree of care by either filing the
position paper on time or informing Canoy that the paper could not be submitted seasonably, the
ignominy of having the complaint dismissed for failure to prosecute could not be avoided.

CANON 18A LAWYER SHALL SERVE HIS CLIENT WITH COMPETENCE AND DILIGENCE.
...
Rule 18.03A lawyer shall not neglect a legal matter entrusted to him, and his negligence in
connection therewith shall render him liable.

That the case was dismissed without prejudice, thus allowing Canoy to refile the case, hardly
serves to mitigate the liability of Atty. Ortiz, as the failure to file the position paper is per se a
violation of Rule 18.03.18

Rule 18.04A lawyer shall keep the client informed of the status of his case and shall respond
within a reasonable time to the client's request for information.

Neither is the Court mollified by the circumstance of Atty. Ortiz's election as a City Councilor of
Bacolod City, as his adoption of these additional duties does not exonerate him of his negligent
behavior. The Code of Professional Responsibility does allow a lawyer to withdraw his legal
services if the lawyer is elected or appointed to a public office.19 Statutes expressly prohibit the
occupant of particular public offices from engaging in the practice of law, such as governors and
mayors,20 and in such instance, the attorney-client relationship is terminated.21 However, city
councilors are allowed to practice their profession or engage in any occupation except during
session hours, and in the case of lawyers such as Atty. Ortiz, subject to certain prohibitions
which are not relevant to this case.22 In such case, the lawyer nevertheless has the choice to
withdraw his/her services.23 Still, the severance of the relation of attorney-client is not effective
until a notice of discharge by the client or a manifestation clearly indicating that purpose is filed
with the court or tribunal, and a copy thereof served upon the adverse party, and until then, the
lawyer continues to be counsel in the case.24

...
CANON 22A LAWYER SHALL WITHDRAW HIS SERVICES ONLY FOR GOOD CAUSE AND
UPON NOTICE APPROPRIATE IN THE CIRCUMSTANCES.
...
Rule 22.02 A lawyer who withdraws or is discharged shall, subject to a retainer lien,
immediately turn over all papers and property to which the client is entitled, and shall cooperate
with his successor in the orderly transfer of the matter, including all information necessary for the
proper handling of the matter.

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Assuming that Atty. Ortiz was justified in terminating his services, he, however, cannot just do so
and leave complainant in the cold unprotected.25 Indeed, Rule 22.02 requires that a lawyer who
withdraws or is discharged shall, subject to a lien, immediately turn over all papers and property
to which the client is entitled, and shall cooperate with his successor in the orderly transfer of the
matter. Atty. Ortiz claims that the reason why he took no further action on the case was that he
was informed that Canoy had acquired the services of another counsel. Assuming that were
true, there was no apparent coordination between Atty. Ortiz and this new counsel.

Lawyers who devote their professional practice in representing litigants who could ill afford legal
services deserve commendation. However, this mantle of public service will not deliver the
lawyer, no matter how well-meaning, from the consequences of negligent acts. It is not enough
to say that all pauper litigants should be assured of legal representation. They deserve quality
representation as well.
WHEREFORE, respondent Atty. Jose Max S. Ortiz is ordered SUSPENDED from the practice of
law for one (1) month from notice, with the warning that a repetition of the same negligence will
be dealt with more severely. Let a copy of this decision be attached to respondent's personal
record in the Office of the Bar Confidant and copies be furnished to all chapters of the Integrated
Bar of the Philippines and to all the courts in the land.

In fact, it took nearly two years before Canoy had learned that the position paper had not been
filed and that the case had been dismissed. This was highly irresponsible of Atty. Ortiz, much
more so considering that Canoy was one of the indigent clients whom Atty. Ortiz proudly claims
as his favored clientele. It does not escape the Court's attention that Atty. Ortiz faults Canoy for
not adequately following up the case with his office.26 He cannot now shift the blame to
complainant for failing to inquire about the status of the case, since, as stated above, it was his
duty as lawyer to inform his clients of the status of cases entrusted to him.27

SO ORDERED.

The appropriate sanction is within the sound discretion of this Court. In cases of similar nature,
the penalty imposed by the Court consisted of either a reprimand, a fine of five hundred pesos
with warning, suspension of three months, six months, and even disbarment in aggravated
cases.28 Given the circumstances, the Court finds the penalty recommended by the IBP too
lenient and instead suspends Atty. Ortiz from the practice of law for one (1) month. The graver
penalty of suspension is warranted in lieu of an admonition or a reprimand considering that Atty.
Ortiz's undisputed negligence in failing to timely file the position paper was compounded by his
failure to inform Canoy of such fact, and the successive dismissal of the complaint.

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