PROBLEM AREAS IN LEGAL ETHICS | ATTY. J. G.
CAPANAS
EH 401 | 2019-2020
TOPIC: LAWYER-CLIENT RELATIONSHIP
CAPINPIN, JR. VS. CESA, JR.
A.C. NO. 6933, July 5, 2017
FACTS:
Complainant (Capinpin Jr.) executed a real estate mortgage
on 2 of his two lots in favor of Family Lending Corporation
(FLC) as security for a loan amounting to PhP5 Million with
interest at two percent (2%) per month. FLC through its
President, Dr. Malaya initiated foreclosure proceedings due
to default in payment. Complainant availed of several legal
remedies, but the auction sale still proceeded. For these
cases, FLC engaged respondent Cesa’s legal services.
Complaint:
Alleged that during the proceedings, Cesa approached
complainant to negotiate the deferment of the auction sale
and the possible settlement of the loan obligation.
Cesa allegedly represented himself as being capable of
influencing the sheriff to defer the auction sale, as well as
his client FLC through Dr. Malaya to accept the amount of
PhP7 Million to fully settle the loan obligation.
Respondent’s Contention:
Cesa denied the allegations and alleged that it was
complainant who asked for his help to be given more time
to raise funds to pay the loan obligation and that Cesa
communicated said request to FLC. That the payments
alleged in the complaint are advance payments of his
Attorney’s Fees, as evidenced by a Letter signed by
complainant and addressed to FLC thru Dr. Malaya in
which complainant expressly stated that he will negotiate
for the payment of respondent’s fees as FLC’s counsel.
IBP FINDINGS
Suspended Cesa for 1 year for violation of Canon 15.03, for
representing conflicting interests, and Canon 16.01, for not
accounting the money received from Capinpin in favor of
FLC.
ISSUE:
Should Atty. Cesa, Jr. be administratively disciplined based
on the allegations in the complaint and evidence on record?
RULING:
YES. Respondent violated Canon 15, Rule 15.03 and Canon
16, Rule 16.01 of the CPR:
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.
Rule 16.01 — A lawyer shall account for all money or
property collected or received for or from the client.
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Violation of Rule 15.03:
FLC engaged respondent's legal services to represent it in
opposing complainant's actions to forestall the foreclosure
proceedings. As can be gleaned from respondent's position
paper, however, it is admitted that respondent extended
help to the complainant in negotiating with FLC for the
reduction of the loan payment and cessation of the
foreclosure proceedings.
There is conflict of interest when a lawyer represents
inconsistent interests of two or more opposing parties. The
test is whether or not in behalf of one client, it is the lawyer's
duty to fight for an issue or claim, but it is his duty to
oppose it for the other client.
The relationship between a lawyer and his client is imbued
with the highest level of trust and confidence. The reason
for the prohibition on conflict of interest is to avoid the
appearance of treachery and double-dealing for only then
can litigants be encouraged to entrust their secrets to their
lawyers.
Evidently, Cesa was working on conflicting interests — that
of his client, which was to be able to foreclose and obtain
the best amount they could get to cover the loan obligation,
and that of the complainant's, which was to forestall the
foreclosure and settle the loan obligation for a lesser
amount.
As to the allegation the FLC had knowledge of Cesa’s
dealings, the court found no record of any consent from any
parties allowing Cesa to negotiate. As to respondent’s
admission that he received payments of professional fees
from complainant, this only made matters worse for him
since it was highly improper. Respondent’s professional
fees must come from his client, even if eventually such fees
will be reimbursed by the adverse party depending on their
agreement. Furthermore, the Letter presented does not, in
any way, prove that there was an agreement between
Capinpin and FLC. It is also suspicious that respondent was
already receiving several amounts even before the date of
the said Letter, supposedly stating an agreement between
Capinpin and FLC as regards the settlement of the loan
obligation and the payment of Cesa’s professional fees.
Violation of Rule 16.01:
At any rate, even assuming that there was indeed an
arrangement between FLC and complainant that Cesa's
professional fees shall be paid by the complainant, which
will be later on deducted from whatever the latter will pay
FLC for the settlement of his loan obligation, respondent's
act of accepting such payments from the complainant and
appropriating the same for his professional fees is still
reprehensible.
Such payments from the complainant are still considered
FLC's money; as such respondent should have accounted
the same for his client. IBP Resolution Affirmed.
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PROBLEM AREAS IN LEGAL ETHICS | ATTY. J. G. CAPANAS
EH 401 | 2019-2020
HEIRS OF CARLOS VS. LINSANGAN
A.C. NO. 11494, July 24, 2017
FACTS:
The complainants alleged that Atty. Linsangan forced them
to sign pleadings and documents, sold the parcel of land in
Muntinlupa City in cahoots with complainants' estranged
mother, and evaded payment of income taxes when he
divided his share in the subject property as his supposed
attorney's fees to his wife and children, all in violation of
his oath as lawyer.
 The parcel of land, with an area of 12,331 square
meters, was previously owned by the Spouses
Felix and Felipa Carlos. Their son, Teofilo,
convinced them to transfer said title to his name
with a promise to distribute the same to his
brothers and sisters.
 Teofilo delivered the owner's duplicate copy of
the title to his brother, Juan. However, Teofilo
sold the entire property to Pedro Balbanero
(Pedro). Pedro, however, failed to pay the agreed
installment payments.
For purposes of recovering the subject property from
Teofilo (and Teofilo's supposed wife, Felicidad), and from
Pedro, Juan engaged the services of Atty. Linsangan. It
appears that Atty. Linsangan, for Juan, filed the following
cases:
 a case against Felicidad which was settled with
the latter acknowledging Juan's one-half interest
and ownership over the property;
 a case against Pedro which was concluded on
September 12, 1997; and
 another case against Felicidad, albeit filed by
another lawyer who acted under the direct
control and supervision of Atty. Linsangan. In
this case against Felicidad, it appears that the
other half of the property was adjudicated to
Juan, as Teofilo's sole heir. Said adjudication was
appealed to the CA.
 an action for partition filed by Bernard Rillo
against Pedro;
 an ejectment case filed by Juan against Pedro;
 Juan's intervention in the case between Pedro
and Teofilo; and
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 also represented Juan in the certiorari cases and
petitions for review filed before the CA and this
Court, likewise involving the same property.
During the pendency of the above cases, Atty. Linsangan
and Juan executed a Contract for Professional
Services enumerating the above cases being handled by
Atty. Linsangan for Juan. In said Contract, Atty. Linsangan
and Juan agreed, as follows:
xxxx
5. That considering, among others, the
extent of services rendered by
ATTORNEY; the value of the property
sought to be recovered; the importance of
the case to CLIENT; the difficulty of
recovery (considering that the Balbanero
spouses have a favorable Court of
Appeals['] Decision in C.V. No. 29379,
while Felicidad Sandoval's name appears
in the TCT No.139061 as wife of the
registered owner, Teofila Carlos), the
professional ability and experience of
ATTORNEY; as well as other
considerations, CLIENT hereby confirms
and ratifies that he has agreed and bound
himself to pay ATTORNEY a contingent
fee in an amount equivalent to FIFTY
PERCENT (50%) of the market value of
the property, or portion thereof, which
may be recovered, or the zonal value
thereof, whichever is higher.
xxxx
However, it was not only Juan who went after the property,
but also Bernard Rillo and Alicia Carlos, a sister-in-law. The
latter also filed an action for recovery of their share and by
Compromise Agreement, an area of 2,331 square meters
was awarded in their favor, leaving a 10,000 square meter
portion of the property.
This remaining 10,000 square meter portion was eventually
divided in the case filed by Juan against Felicidad (which
Atty. Linsangan admits to have filed albeit through another
lawyer who acted under his control and supervision),
through a Compromise Agreement wherein 7,500 square
meters of the subject property was given to the heirs of Juan
while the remaining 2,500 square meters thereof was given
to Felicidad. In said Compromise Agreement, the parties
likewise agreed to waive as against each other any and all
other claims which each may have against the other,
including those pending in the CA and this Court. This
Compromise Agreement was approved by the trial court.
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EH 401 | 2019-2020
Subsequently, a Supplemental Compromise Agreement
was submitted by the heirs of Juan and Atty. Linsangan,
dividing among them the 7,500 square meter-portion of the
property as follows: 3,750 square meters to the heirs of Juan
and 3,750 square meters to Atty. Linsangan pursuant to the
Contract for Professional Services. In said Supplemental
Compromise Agreement, Atty. Linsangan waived in favor
of his wife and children his 3,750 square meter share, except
as to the 250 square meters thereof.
 Said Supplemental Compromise Agreement was
likewise approved by the trial court in its
Decision.
 There was no mention in the record, however,
that the Compromise Agreement and the
Supplemental Compromise Agreement were
likewise presented for approval before the
several courts where the other cases were
pending.
Atty. Linsangan executed a Deed of Absolute
Sale with a certain Helen S. Perez (Helen) covering
the entire 12,331 square meters of the subject
property for a purchase price of Php 150,000,000.
Helen issued several checks in varying amounts either
made payable to Cash or to Jaime S. Linsangan or Loma O.
Linsangan and simultaneous thereto, Atty. Linsangan
released the owner's duplicate original of the TCT to Helen.
 It further appears that in lieu of one check in the
amount of PhP2,500,000, Atty. Linsangan
received, in cash, the amounts of PhP2,000,000
and PhP500,000 from Helen.
Upon learning of the sale, complainants allegedly
requested from Atty. Linsangan for their shares in the
proceeds and for the copies of the Special Power of
Attorney as well as the case records, but that Atty.
Linsangan refused.
 Complainants also requested from Atty.
Linsangan, this time through another lawyer,
Atty. Victor D. Aguinaldo, that their shares in
the subject property be at least segregated from
the portion sold.
The ccomplainants wrote a letter to Atty. Linsangan
revoking the Special Power of Attorney which they
executed in the latter's favor.
 In said letter, complainants accused Atty.
Linsangan of conniving with their mother, Bella
N. Vda. De Carlos, in submitting the
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Compromise Agreement and in selling the
subject property.
 The complainants, however, recognized Atty.
Lisangan's services for which they proposed that
the latter be paid on the basis of quantum
meruit instead of fifty percent (50%) of the subject
property.
The complainants filed the instant administrative
complaint against Atty. Linsangan accusing the latter of:
 forcing them to sign pleadings filed in court,
copies of which were not furnished them;
 selling the subject property in cahoots with their
mother;
 evading the payment of income taxes when he
apportioned his share in the subject property to
his wife and children.
Atty. Linsangan:
 the Supplemental Compromise Agreement was
never questioned by the complainants until now
and that they had never requested for a copy
thereof from him
 admits that the subject of the sale with Helen is
the property in Alabang, Muntinlupa City and
that complainants were not given a share from
the payments because such were specifically
made applicable to his and his family's share in
the subject property only
 contends that the proposal that he be paid on the
basis of quantum meruit is only for the purpose of
reducing his 50% share as stated in the Contract
for Professional Services he executed with Juan,
so that the balance thereof may accrue to
complainants.
ISSUE:
Whether or not respondent is guilty of violating his
lawyer's oath.
RULING:
YES. The rrespondent committed acts in violation of his
oath as an attorney thereby warranting the Court's exercise
of its disciplinary power.
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PROBLEM AREAS IN LEGAL ETHICS | ATTY. J. G. CAPANAS
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1. The practice of law is not a right but a privilege bestowed
by the State upon those who show that they possess, and
continue to possess, the qualifications required by law for
the conferment of such privilege.
 Whether or not a lawyer is still entitled to
practice law may be resolved by a proceeding to
suspend or disbar him, based on conduct
rendering him unfit to hold a license or to
exercise the duties and responsibilities of an
attorney.
 The avowed purpose of suspending or
disbarring an attorney is not to punish the
lawyer, but to remove from the profession a
person whose misconduct has proved him unfit
to be entrusted with the duties and
responsibilities belonging to an office of an
attorney, and thus to protect the public and those
charged with the administration of justice.
 The lawyer's oath is a source of obligations and
its violation is a ground for suspension,
disbarment or other disciplinary action.
2. The record shows and Atty. Linsangan does not deny,
that while the cases involving the subject property were still
pending resolution and final determination, Atty.
Linsangan entered into a Contract for Professional Services
with Juan wherein his attorney's fees shall be that
equivalent to 50% of the value of the property, or a portion
thereof, that may be recovered.
 It is likewise not denied by Atty. Linsangan that
he apportioned upon himself, and to his wife
and children, half of the property awarded to
complainants as heirs of Juan, through a
Supplemental Compromise Agreement.
 Similarly, such Supplemental Compromise
Agreement was entered into by Atty. Linsangan
and the heirs of Juan concurrently with the
pendency of several cases before the CA and this
Court involving the very same property.
 What is more, Atty. Linsangan, probably
anticipating that he may be charged of having
undue interest over his client's property in
litigation, caused another lawyer to appear but
all the while making it absolutely clear to Juan
that the latter's appearance was nevertheless
under Atty. Linsangan's "direct control and
supervision."
3. Plainly, these acts are in direct contravention of Article
1491(5) of the Civil Code which forbids lawyers from
acquiring, by purchase or assignment, the property that has
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been the subject of litigation in which they have taken part
by virtue of their profession.
 While Canon 10 of the old Canons of
Professional Ethics, which states that "[t]he
lawyer should not purchase any interests in the
subject matter of the litigation which he is
conducting," is no longer reproduced in the new
Code of Professional Responsibility (CPR), such
proscription still applies considering that Canon
1 of the CPR is clear in requiring that "a lawyer
shall uphold the Constitution, obey the laws of the
land and promote respect for law and legal process "
and Rule 13 8, Sec. 3 which requires every lawyer
to take an oath to "obey the laws as well as the
legal orders of the duly constituted authorities
therein."
 Here, the law transgressed by Atty. Linsangan is
Article 1491(5) of the Civil Code, in violation of
his lawyer's oath.
4. While jurisprudence provides an exception to the above
proscription, i.e., if the payment of contingent fee is not
made during the pendency of the litigation involving the
client's property but only after the judgment has been
rendered in the case handled by the lawyer, such is not
applicable to the instant case.
 the transfer to Atty. Linsangan was made while
the subject property was still under litigation, or
at least concurrently with the pendency of
the certiorari proceedings in the CA and the
petitions for review in this Court.
 there was nothing in the record which would
show that these cases were likewise dismissed
with finality either before the execution of, or by
virtue of, the Compromise Agreement and the
Supplemental Compromise Agreement between
complainants and Atty. Linsangan.
 Atty. Linsangan, at the guise of merely waiving
portions of the subject property in favor of his
wife and children, actually divided his attorney's
fee with persons who are not licensed to practice
law in contravention of Rule 9.02, Canon 9 of the
CPR.
5. Another misconduct committed by Atty. Linsangan was
his act of selling the entire 12,331 square meters property
and making it appear that he was specifically authorized to
do so by complainants as well as by the other persons to
whom portions of the property had been previously
adjudicated.
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 However, a perusal of the supposed Special
Power of Attorney attached to the Deed of
Absolute Sale, save for that executed by his wife
and children, only authorizes Atty. Linsangan to
represent complainants in the litigation of cases
involving Juan's properties.
 Nothing in said Special Power of Attorney
authorizes Atty. Linsangan to sell the entire
property including complainants' undivided
share therein.
6. Worse, Atty. Linsangan does not deny having received
the down-payment for the property from Helen.
 Atty. Linsangan does not also deny failing to
give complainants' share for the reason that he
applied said payment as his share in the
property. In so doing, Atty. Linsangan
determined all by himself that the down-
payment accrues to him and immediately
appropriated the same, without the knowledge
and consent of the complainants. Such act
constitutes a breach of his client's trust and a
violation of Canon 16 of the CPR.
 Indeed, a lawyer is not entitled to unilaterally
appropriate his client's money for himself by the
mere fact that the client owes him attorney’s fees.
 The failure of an attorney to return the client's
money upon demand gives rise to the
presumption that he has misappropriated it for
his own use to the prejudice and violation of the
general morality, as well as of professional
ethics; it also impairs public confidence in the
legal profession and deserves punishment. In
short, a lawyer's unjustified withholding of
money belonging to his client, as in this case,
warrants the imposition of disciplinary action.
7. The relationship of attorney and client has consistently
been treated as one of special trust and confidence.
 An attorney must therefore exercise utmost good
faith and fairness in all his relationship with his
client.
 Measured against this standard, respondent's act
clearly fell short and had, in fact, placed his
personal interest above that of his clients.
Considering the foregoing violations of his
lawyer's oath, Article 1491 (5) of the Civil Code,
Rule 9.02, Canon 9, and Canon 16 of the CPR, the
Court deems it appropriate to impose upon
respondent the penalty of six (6) months
suspension from the practice of law.
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ISALOS VS. CRISTAL
A.C. NO. 11822, November 22, 2017
FACTS:
This administrative case arose from a verified complaint for
disbarment filed by complainant Vicka Marie D. Isalos
(complainant) against respondent Atty. Ana Luz B. Cristal.
Complainant alleged that she is the Director and Treasurer
of C Five Holdings, Management & Consultancy, Inc.
Respondent was C Five's Corporate Secretary and Legal
Counsel who handled its incorporation and registration
with the Securities and Exchange Commission
When C Five was exploring investment options,
respondent recommended the purchase of a resort in
Laguna, with the assurances that the title covering the
property was "clean" and the taxes were fully paid. C Five
agreed to acquire the property and completed the payment
of the purchase price.
Respondent volunteered and was entrusted to facilitate the
transfer and registration of the title of the property in C
Five's name.
More than a year thereafter, however, no title was
transferred in C Five's name. It was then discovered that the
title covering the property is a Free Patent6 issued on
August 13, 2009, rendering any sale, assignment, or transfer
thereof within a period of five (5) years from issuance of the
title null and void. Thus, formal demand was made upon
respondent to return the P1,200,000.00 entrusted to her for
the expenses which remained unheeded, resulting to the
filing of the complainant of a criminal case for estafa and a
disbarment case.
IBP REPORT AND RECOMMENDATION: IBP
concluded that there was dishonesty on the part of
respondent and accordingly, recommended the penalty of
suspension. A penalty of suspension from the practice of
law for one (1) year and directing the return of the amount
of P1,200,000.00 to complainant.
(take note: in this case, there was a return of the P1.2M to
the complainant, which prompted the complainant to file a
motion to withdraw the disbarment complaint)
ISSUE:
Whether or not grounds exist to hold respondent
administratively liable.
RULING:
YES. In this case, it is indubitable that respondent received
the amount of P1,200,000.00 from complainant to be used to
cover the expenses for the transfer of title of the subject
property under C Five's name. Respondent admitted
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having received the same, but claimed that she had spent a
portion of it for various expenses, such as documentation,
permits, and licenses, among others, as evidenced by the
Statement of Expenses with attached receipts. However, it
has been established that the registration of the property in
C Five's name could not have materialized, as the subject
property was covered by a Free Patent issued on August 13,
2009 which, consequently, bars it from being sold, assigned,
or transferred within a period of five (5) years therefrom.
Lawyers are expected to maintain at all times a high
standard of legal proficiency, morality, honesty, integrity
and fair dealing, and must perform their four-fold duty to
society, the legal profession, the courts and their clients, in
accordance with the values and norms embodied in the
Code. Lawyers may, thus, be disciplined for any conduct
that is wanting of the above standards whether in their
professional or in their private capacity
In this case, there is a violation of the following rules:
RULE 16.01 - A lawyer shall account for all money or
property collected or received for or from the client.
RULE 16.03 - A lawyer shall deliver the funds and property
of his client when due or upon demand.
Money entrusted to a lawyer for a specific purpose, such as
for the processing of transfer of land title, but not used for
the purpose, should be immediately returned. A lawyer's
failure to return upon demand the funds held by him on
behalf of his client gives rise to the presumption that he has
appropriated the same for his own use in violation of the
trust reposed to him by his client.
Respondent's assertion that the instant disbarment case
should be dismissed, in view of the return of the full
amount to complainant and the latter's withdrawal of the
complaint against her is specious. It is settled that a case of
suspension or disbarment may proceed regardless of
interest or lack of interest of the complainant.
Respondent SUSPENDED from the practice of law for a
period of one (1) year, and is STERNLY WARNED that a
repetition of the same or similar acts will be dealt with more
severely.
PALENCIA VS. LINSANGAN, ET AL.
A.C. NO. 10557, July 10, 2018
FACTS:
Jerry Palencia (“COMPLAINANT”) was an OFW-seafarer
who was seriously injured during work, when he fell into
the elevator shaft of the vessel M/T "PANOS G" flying a
Cyprus flag. He was initially treated in Singapore, and
thereafter discharged and flown to the Philippines to
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continue his medical treatment and rehabilitation. While
being confined at the Manila Doctors Hospital, Moises and
Jesherel, paralegals in respondents' law office,
approached the complainant and convinced him to engage
the services of the respondents’ law office; in filing a suit for
indemnity against his employers.
After several visits of the said paralegals and respondent
Atty. Pedro Linsangan (“ATTY. PEDRO”), the
complainant executed (1) an Attorney-Client Contract; and
(2) a Special Power of Attorney, where he engaged the
legal services of the respondents and Gurbani & Co., a law
firm based in Singapore. An agreement was made, wherein,
the complainant is to pay attorney's fees of 35% of any
recovery or settlement obtained for both. After the
execution of the contract, the complainant was able to
recover US$60K as indemnity and US$20K under their
Collective Bargaining Agreement (CBA). From these
amounts, the respondents charged complainant attorney's
fees of 35% as agreed.
Further, the respondents (ATTY. PEDRO, ATTY.
GERARD AND ATTY. GLENDA, all surnamed
Linsangan) and Gurbani & Co. also filed a tort case
(Singapore case) against the owners of "Panos G" before the
High Court of Singapore, wherein, the respondents
engaged the services of a law firm based in Cyprus, in order
to draft a written opinion on the issues involving Cyprus
law, among others. They also engaged the services of the
retired Justice Gancayco for his expert opinion regarding
various issues raised by defendant's lawyer and
representatives. Negotiations were then made, leading to a
settlement where the complainant was awarded with
US$95K. Gurbani & Co. remitted to the respondents the
amount of US$59,608.40. From this amount, respondents
deducted: (1) US$5K as payment to Justice Gancayco; (2)
their attorney's fees equivalent to 35%; and (3) other
expenses, leaving the net amount of US$ l 8, 132.43 for
complainant.
When the respondents tendered the net amount to the
complainant, the latter refused. He then contested the
amount comprised of the expenses and attorney's fees
deducted which led to two (2) civil cases:
1. Civil Case No. 05113475 (consignation case); this was
filed by the respondents to compel the complainant to
receive the amount tendered, dismissed by the RTC.
2. Civil Case No. 2401 (accounting case); filed by the
complainant where the RTC ruled in favor of complainant
and ordered respondents to make proper accounting,
among others. It also upheld the stipulated attorney's fees
as binding between the parties, and determined that the
fees are lumped for both respondents and Gurbani &
Co. On appeal, the Court of Appeals (CA) reduced the
Attorney’s fees to 10%.
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Thereafter, the complainant filed the letter-complaint
before the Bar of the Philippines’ Commission on Bar
Discipline (“IBP-CBD”), wherein, he requested that an
investigation be conducted and the corresponding
disciplinary action be imposed upon respondents for
committing the following unethical acts: (1) refusing to
remit the amount collected in the Singapore case worth
US$95K, and in offering only the net amount (2) depositing
complainant's money into their own account; and (3)
engaging in "ambulance chasing" by deploying their
agents to convince complainant to hire respondents'
services while the former was still bedridden in the
hospital.
RESPONDENTS’ ANSWER
They alleged the following:
(1) That the complainant retained the respondents and
Gurbani & Co. 's services for purposes of filing a claim
against the ship owner, its agents and principals which led
to the filing of the Singapore case. That, when they received
the settlement amount from the Singapore case, they sent a
letter to the complainant informing him about it and
requested him to come to the former' s office to get his net
share. That, the complainant unjustly refused to accept the
amount, also, refused their tender of payment in their letter
dated sometime in August 2005. After that, the respondents
filed the consignation case.
(2) The respondents denied that they deposited the
amount to their own account. They claimed that the
amount has been placed for safekeeping in a vault located
inside their office ever since. That, after their receipt of the
complaint and the IBP-CBD's Order, they decided to
deposit the money with Bank of the Philippine Islands in an
interest savings account, in trust for complainant.
(3) As to the allegations of ambulance chasing, the
respondents averred that they provided free legal advice
to the public. It was in the course of this public service
when they met the complainant.
IBP-CBD
It ruled that the respondents violated the canons of the
Code of Professional Responsibility (CPR): (1) in soliciting
legal business through their agents while complainant
was in the hospital; (2) in failing to account for, and deliver
the funds and property of his client when due or upon
demand; and (3) in hiring the services of a foreign law
firm and another lawyer without prior knowledge and
consent of complainant of the fees and expenses to be
incurred. It found that all three respondents connived and
thus recommended that all respondents be suspended from
the practice of law for a period of one (1) year.
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IBP-BOARD OF GOVERNORS
It adopted the above report and recommendation but
modified the penalty and increased respondents'
suspension from the practice of law to two (2) years with
warning, against Atty. Pedro and Atty. Gerard. However,
it absolved Atty. Glenda for lack of any evidence as to her
participation in the acts complained of.
ISSUES:
1. Whether or not the respondents are guilty for
violating the Canons of the CPR?
2. Whether or not the respondents were paid more
than what is due upon them under the “Attorney-
Client Contract” with respect to the 35%
attorney’s fees?
RULING:
FIRST ISSUE: YES. The Supreme Court (SC) found Atty.
Pedro and Atty. Gerard to have violated Rule 1.03, Rule
2.03, Canon 3, Canon 16, Rule 16.01, and Rule 16.03 of the
CPR, while the records do not support Atty. Glenda’s
participation in their unethical activities, hence, C
dismissed the case against her. The complainant himself
admitted that he only dealt with Atty. Pedro and Atty.
Gerard.
The penalty for gross misconduct consisting in the failure
or refusal, despite demand, of a lawyer to account for and
to return money or property belonging to a client carries a
suspension from the practice of law for 2 years. In this case,
the complainant, who was impaired for life, was
constrained to file this complaint and the action for
accounting because of his lawyers' lack of fidelity and good
faith in handling the award he received. However, the
respondents' efforts in tendering payment, albeit of an
improper amount, to the complainant, warrants the
imposition of a 1-year suspension.
More importantly, the respondents’ acts do not merely
constitute a violation of Canon 16 and its rules, but already
amounts to gross misconduct, to wit:
First, the respondents breached the trust reposed in them
when they betrayed the express language of their
Attorney-Client Contract that they are only entitled to a
single 35% attorney's fees together with the Singapore
counsels. In the process, respondents have also unjustly
retained for themselves the 35% of the settlement award
amounting to US$95K, which is more or less around ₱1.5
million pocketed, and also immensely disparaging to the
amount of US$ l 8, 132.43 they tendered to complainant.
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Second, their actions following the complainant's objection
manifests their disregard of their fiduciary duties. For two
years, the respondents insisted on, and forcibly deducted
the amount when there are alternative avenues to
determine the correct amount of attorney's fees. They
instead treaded to a path where they advanced their own
interests ahead of their client's.
Third, the respondents also mishandled their client's
money when they did not exercise proper safekeeping over
it; they failed to deposit it in a separate trust account in a
bank or trust company of good repute for safekeeping but
co-mingled it with their own funds. Undoubtedly, the
gravity of these acts amounts to gross misconduct that
warrants, at the very least, a suspension.
SECOND ISSUE: YES. The relationship between a lawyer
and his client is highly fiduciary. This relationship holds a
lawyer to a great degree of fidelity and good faith especially
in handling money or property of his clients. Thus, Canon
16 and its rules remind a lawyer to: (1) hold in trust all
moneys and properties of his client that may come into his
possession; (2) deliver the funds and property of his client
when due or upon demand subject to his retaining lien; and
(3) account for all money or property collected or received
for or from his client.
It is the lawyer's duty to give a prompt and accurate
account to his client. Upon the collection or receipt of
property or funds for the benefit of the client, his duty is to
notify the client promptly and, absent a contrary
understanding, pay or remit the same to the client, less
only proper fees and disbursements, as soon as reasonably
possible. He is under absolute duty to give his client a full,
detailed, and accurate account of all money and property
which has been received and handled by him, and must
justify all transactions and dealings concerning them.
In this case, the respondents claimed that they promptly
accounted for the total award of US$95K and after
deducting their fees, tendered the net amount of US$ l8,
132.43 to the complainant, however, the latter refused to
accept the amount because he contested both the expenses
and the separate deduction of attorney's fees by
respondents and Gurbani & Co.
The Attorney-Client Contract between the parties states
that:
"We/I hereby voluntarily agree and bind ourselves, our
heirs and assigns to pay Atty. Pedro L. Linsangan and his
collaborating Singapore counsels, the sum equivalent to
thirty-five [35%] percent of any recovery or settlement
obtained."
Clearly, the stipulated rate referred to the combined
professional fees of both respondents and their
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collaborating Singapore counsel, Gurbani & Co.
Nevertheless, the respondents proceeded to deduct
separate fees on top of the amount already deducted by
Gurbani & Co. Since a claim for attorney's fees may be
asserted either in the very action in which the services of a
lawyer had been rendered, or in a separate action, the
respondents, instead of forcibly deducting their share,
should have moved for the judicial determination and
collection of their attorney's fees. The fact alone that a
lawyer has a lien for his attorney's fees on money in his
hands collected for his client does not entitle him to
unilaterally appropriate his client's money for himself.
Worse, the respondents allegedly kept the money inside the
firm's vault for 2 years until they were made aware of the
disciplinary complaint against them before the IBP-CBD.
However, as noted by the IBP-CBD in its Report and
Recommendation:
“[T]he defense of respondents that they kept in their office
vault the share of complainant as computed by them in the
amount of US$18, 132.43, hence, they forgot the same and
remembered it only when they received the Order of this
Commission for them to file an Answer to complainant's
Complaint [which is more than 2 years] is rather highly
incredible considering that it involves a substantial
amount, the series of communications between the parties,
and the Civil cases subsequently filed.”
The SC held that even they will give credence to this
explanation, it is still improper for the lawyer to put his
client's funds in his personal safe deposit vault. Funds
belonging to the client should be deposited in a separate
trust account in a bank or trust company of good repute for
safekeeping. It is apparent from the foregoing that
respondents failed to handle their client's money with great
degree of fidelity. They also showed their lack of good faith
when they appropriated for themselves more than what is
allowed under their contract. They have demonstrated that
the payment of their attorney's fees is more important than
their fiduciary and faithful duty of accounting and
returning what is rightfully due to their client. More, they
also failed to observe proper safekeeping of their client's
money. They clearly violated the trust reposed in them, and
demonstrated their lack of integrity and moral soundness.
The SC adopted the recommendation of the IBP-Board of
Governors of the imposition of two-year suspension for
Atty. Pedro and Atty. Gerard. This penalty corresponds to
the compounded infractions of the violations of Rule 1.03,
Rule 2.03, Canon 3, Canon 16, Rule 16.01, and Rule 16.03 of
the CPR: (1) one-year suspension for ambulance chasing;
and (2) one-year suspension for gross misconduct
consisting in the failure or refusal, despite demand, of a
lawyer to account for and to return money or property
belonging to a client.
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HDI HOLDINGS PHIL., INC. VS. CRUZ
A.C. NO. 11724, July 31, 2018
FACTS:
HDI is a domestic corporation duly organized and
existing under the laws of the Philippines.
In its complaint, HDI alleged that on July 10, 2010, they
retained the services of Atty. Cruz as its in-house
corporate counsel and corporate secretary. In the
beginning, HDI's directors and officers were pleased
with Atty. Cruz's performance, thus, in time, he earned
their trust and confidence that he was eventually tasked
to handle the corporation's important and confidential
matters. Ultimately, Atty. Cruz became a friend to most
of HDI's directors, officers and staff members.
However, HDI lamented that Atty. Cruz's seeming
friendliness was apparently a mere façade in order to
gain the trust of HDI's officers and directors for his
financial gain. HDI averred that through Atty. Cruz's
deception and machinations, he managed to
misappropriate a total of (P41,317,167.18), in the
following manner, to wit:
(a) misappropriation of the cash bid in the total
amount of P6,000,000.00 which remains unpaid;
(b) contracting unsecured personal loans with
HDI in the total amount of P8,000,000.00 which
remains unpaid;
(c) deceiving HDI as to the true selling price of
the Q.C. property which resulted in
overpayment in the amount of P1,689,100.00
which remains unpaid;
(d) fabricating a fictitious sale by executing a
fictitious contract to sell and deed of sale in
order to obtain money in the amount of
P21,250,000.00 from HDI which remains
unpaid;
(e) collecting rental payments amounting to
P4,408,067.18, without authority, and thereafter,
failed to turn over the same to HDI; and
(f) executing a fake Secretary's Certificate
appointing himself as the authorized person to
receive the payments of the lease rentals.
Later, HDI finally decided to confront him about his
actions. Atty. Cruz went to HDI's office where he broke
down and admitted to everything. After writing his
confession, Atty. Cruz likewise tendered his resignation
from HDI. On the same occasion, Atty. Cruz's relatives
were present and also expressed their commitment to
help pay Atty. Cruz's debts with HDI.
However, even after several demand letters, Atty. Cruz
failed to return the misappropriated money.
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Considering the above-cited actuations of Atty. Cruz, it
is evident that he violated Canon 1, Rule 1.01, Rule 1.02,
Canon 7, Rule 7.03, Rules 16.01, 16.02, 16.03, 16.04 and 17
of the Code of Professional Responsibility. HDI alleged
that Atty. Cruz failed to live up to the standards expected
of a lawyer, thus, he should be disbarred from the
practice of law.
The Integrated Bar of the Philippines (IBP) directed Atty.
Cruz to file his Answer on the complaint against him.
In its Report and Recommendation, the IBP-CBD
recommended that Atty. Cruz be disbarred from the
practice of law.
The IBP-Board of Governors resolved to adopt and
approve the report and recommendation of the IBP-CBD.
ISSUE:
Whether Atty. Cruz is guilty of gross misconduct?
RULING: YES.
We adopt the findings and recommendation of the IBP.
In the instant case, Atty. Cruz has chosen to remain silent
despite the severity of the allegations against him. He
was given several opportunities to comment on the
charges yet no comment came. The natural instinct of
man impels him to resist an unfounded claim or
imputation and defend himself. It is totally against our
human nature to just remain silent and say nothing in the
face of false accusations. Silence in such cases is almost
always construed as implied admission of the truth
thereof. Consequently, we are left with no choice but to
deduce his implicit admission of the charges levelled
against him. Qui tacet consentive videtur. Silence gives
consent.
Thus, we find that the evidence submitted by
HDI, albeit secondary evidence only being mere
photocopies, when put together with Atty. Cruz' written
confession and his subsequent non-cooperation during
the proceedings before the IBP, would give a convincing
conclusion that indeed Atty. Cruz. is guilty of the
reprehensible acts abovementioned.
CANON 1 — A LAWYER SHALL
UPHOLD THE CONSTITUTION,
OBEY THE LAWS OF THE LAND
AND PROMOTE RESPECT FOR LAW
AND LEGAL PROCESSES.
Rule 1.0 — A lawyer shall not engage
in unlawful, dishonest, immoral or
deceitful conduct.
Good moral character is necessary for a lawyer to practice
the profession. An attorney is expected not only to be
professionally competent, but to also have moral
integrity. Deceit and lack of accountability and integrity
reflect on his ability to perform his functions as a lawyer,
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who is always expected to act and appear to act lawfully
and honestly, and must uphold the integrity and dignity
of the legal profession. Atty. Cruz failed in these respects
as a lawyer.
In the instant case, considering all the above-cited
infractions, it is beyond dispute that Atty. Cruz is guilty
of engaging in dishonest and deceitful conduct. In several
occasions, he manifested a propensity to lie and deceive
his client in order to obtain money. Obviously, his
misrepresentations in order to compel HDI to release
money for cash bids, fictitious purchase of a property, the
overpriced purchase price of the Q.C. property and his
misrepresentation that he had authority to collect rentals
in behalf of HDI and CGI, as well as his execution of
fictitious documents to give semblance of truth to his
misrepresentations, constitute grave violations of
the CPR and the lawyer's oath. These reprehensible
conduct of Atty. Cruz without doubt breached the
highly fiduciary relationship between lawyers and
clients.
This Court also sees it fit to note that the CPR strongly
condemns Atty. Cruz's conduct in handling the funds of
HDI. Rules 16.01 and 16.02 of the Code provides:
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 others
kept by him.
The fiduciary nature of the relationship between the
counsel and his client imposes on the lawyer the duty to
account for the money or property collected or received
for or from his client. When a lawyer collects or receives
money from his client for a particular purpose as in cash
for biddings and purchase of properties, as in this case,
he should promptly account to the client how the money
was spent. If he does not use the money for its intended
purpose, he must immediately return it to the client. His
failure either to render an accounting or to return the
money if the intended purpose of the money does not
materialize constitutes a blatant disregard of Rule 16.01
of the Code of Professional Responsibility.
Atty. Cruz's failure to return the client's money upon
demand gives rise to the presumption that he has
misappropriated it for his own use to the prejudice of and
in violation of the trust reposed in him by the client.
Atty. Cruz's unbecoming conduct towards complainant
did not stop here. Records reveal that he likewise
violated Canon 16.04 of the CPR, which states that "[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. Neither shall a lawyer lend money to a
client except, when in the interest of justice, he has to advance
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necessary expenses in a legal matter he is handling for the
client."
In his private capacity, Atty. Cruz requested from HDI,
not just one, but two loans of considerable amounts as
evidenced by contracts of loan and acknowledgement
receipts, the authenticity of which was undisputed. The
first time, he borrowed P4,000,000.00 for the purchase of
his house; and the second time, he borrowed another
P4,000,000.00 in order to help his brother who allegedly
has serious gambling debts. Apparently, these acts of
borrowing money were committed by Atty. Cruz in his
private capacity but were assented to by HDI because of
the trust and confidence it has in him as a lawyer. Worse,
the loans were unsecured which left HDI unprotected.
As a rule, a lawyer is not barred from dealing with his
client but the business transaction must be characterized
with utmost honesty and good faith. The measure of
good faith which an attorney is required to exercise in his
dealings with his client is a much higher standard that is
required in business dealings where the parties trade at
arm’s length. Business transactions between an attorney
and his client are disfavored and discouraged by the
policy of the law. Hence, courts carefully watch these
transactions to assure that no advantage is taken by a
lawyer over his client. This rule is founded on public
policy for, by virtue of his office, an attorney is in an easy
position to take advantage of the credulity and ignorance
of his client. Thus, no presumption of innocence or
improbability of wrongdoing is considered in an
attorney's favor. Clearly, in the instant case, Atty. Cruz's
acts of contracting unsecured personal loans and
receiving money as loan proceeds from HDI, and
thereafter failing to pay the same are indicative of his lack
of integrity and sense of fair dealing.
The Court has repeatedly emphasized that the
relationship between a lawyer and his client is one
imbued with trust and confidence. And as true as any
natural tendency goes, this "trust and confidence" is
prone to abuse. The rule against borrowing of money by
a lawyer from his client is intended to prevent the lawyer
from taking advantage of his influence over his client.
The rule presumes that the client is disadvantaged by the
lawyer's ability to use all the legal maneuverings to
renege on his obligation. In Frias v. Atty. Lozada, the
Court categorically declared that a lawyer's act of asking
a client for a loan, as what Atty. Cruz did, is unethical
and that the act of borrowing money from a client was a
violation of Canon 16.04 of the CPR.
Corollary, in borrowing money from HDI and thereafter
failing to pay the same within the agreed period, Atty.
Cruz failed to uphold the integrity and dignity of the
legal profession. We, thus, likewise find Atty. Cruz
equally liable for violating Canon 7 of the CPR which
reads: Canon 7 — A lawyer shall at all times uphold the
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integrity and dignity of the legal profession and support
the activities of the Integrated Bar.
That being said, the Court has consistently held that
deliberate failure to pay just debts constitutes gross
misconduct, for which a lawyer may be sanctioned.
Lawyers are instruments for the administration of justice
and vanguards of our legal system. They are expected to
maintain not only legal proficiency, but also a high
standard of morality, honesty, integrity and fair dealing
so that the people's faith and confidence in the judicial
system is ensured. They must, at all times, faithfully
perform their duties to society, to the bar, the courts and
to their clients, which include prompt payment of
financial obligations.
Considering the above-cited infractions, it is, thus,
beyond dispute that Atty. Cruz demonstrated not just
disregard of his duties as a lawyer but a wanton betrayal
of the trust of his client and, in general, the public. For
taking advantage of the trust and confidence of the
complainant, for engaging in dishonest and deceitful
conduct and fraudulent acts for personal gain, and
disrespecting the IBP due to non-compliance of its
directive to file comment. His acts constitute malpractice
and gross misconduct in his office as attorney. His
propensity to defraud his client, and the public in
general, render him unfit to continue discharging the
trust reposed in him as a member of the Bar. Atty. Cruz,
indeed, deserves no less than the penalty of disbarment.
However, insofar as the return of the misappropriated
money, the same should be qualified. As to the money
which Atty. Cruz borrowed as personal loan, the Court
cannot order him to return the money the borrowed from
complainant in his private capacity. Complainant may
file a separate civil case against Atty. Cruz for this
purpose.
However, insofar as the money received by Atty. Cruz
from HDI, in his professional capacity, to wit:
P6,000,000.00, representing the total amount released for
bidding; P21,250,000.00, representing the total amount
released for the purported purchase of a property which
turned out to be fictitious; P4,408,067.18 representing the
unremitted rentals from Petron, and P1,689,100.00
representing the overpayment in the overpriced Q.C.
property, these amounts should be returned as it was
borne out of their professional relationship.
YOSHIMURA VS. PANAGSAGAN
A.C. NO. 12460, Sept. 11, 2018
FACTS:
Yoshimura and his common-law wife Bernadette Tugadi
(Bernadette) went to Tierra, Panagsagan and Associates,
Atty. Panagsagan's office to seek legal assistance because
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Bernadette decided to become a member of the Lesambah
Transport Cooperative.
During said meeting, Yoshimura gave Atty. Panagsagan
the amount of P5,000.00 for the preparation of documents
needed for his two (2) units of buses. Atty. Panagsagan
received and acknowledged said amount April 2009. After
a month, Bernadetted gave Atty. Panagsagan 24,000 as
payment for the LTO apprehension tickets of the 4 buses.
However, up until the filing of the instant complaint, the
license plates of the four buses have not been given to them.
Yoshimura claimed that Atty. Panagsagan convinced him
to give ‘’ under the table’’ money of 40,000 to expedite the
registration of 2 buses earlier mentioned under the name of
the cooperative. They conceded to this and gave 40k to
Atty. Panagsagan which the latter received and
acknowledged.
Dec. of 2009, Yoshimura received the registration of the 2
units of buses. But, upon inquiry with the LTO, they found
out that the approval of registration could be easily done
legally.
Later, Yoshimura alleged that Atty. Panagsagan again
asked and received from him the amount of P5,000.00 for
the purpose of securing a Dropping and Substitution Order
from the LTO. Yoshimura averred that said Atty. told him
that another two buses can be included in the said
Cooperative franchise and processing of yellow plates
would be 80,000. Yoshimura paid the amount on the same
day. However, no yellow plates were released for the
buses. He then demanded the return of his money, but
Atty. Panagsagan refused to return the same.
Instead, Atty. Panagsagan convinced Yoshimura that their
buses should join another cooperative, the Sta. Monica
Transport Cooperative (Sta. Monica), which operates on a
different route - Divisoria-Angat, while the processing of
their Lesambah documents are still ongoing. Yoshimura
was convinced and made further payments to Atty.
Panagsagan totalling to P380,000.00 purportedly for "stock
membership and bus membership.
Subsequently, as part of the documentation of their
membership with Sta. Monica, Yoshimura alleged that a
Management Agreement was executed between him and
Bernadette and Sta. Monica Transport. That said agreement
was signed by Correa, the Chairman of the Cooperative
(this was denied by Correa in the prosecution’s office in the
estafa case filed by Yoshimura against him). However,
Yoshimura later discovered that the office of Sta. Monica in
Quezon City was already closed. Upon inquiry with the
LTO, they were also told that Sta. Monica was no longer
operating buses. Frustrated, Yoshimura demanded the
return of their money but was refused by Atty. Panagsagan.
Yoshimura claimed that he employed the services of Atty.
Panagsagan to file an estafa case against certain
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individual giving him 50,000, which took him 5 months to
prepare the complaint. But later Yoshimura decided not to
pursue the complaint anymore and demanded the return
of 50k, but this was refused by Atty. Panagsagan.
Due to the actuations of Atty. Panagsagan, Yoshimura filed
the instant complaint for disciplinary action due to grave
misconduct against the former.
(IBP-CBD) ordered Atty. Panagsagan to submit his Answer,
despite receipt of several notices to file his Answer, Atty.
Panagsagan failed to submit his Answer. Hence default.
IBP-CBD recommended that Atty. Panagsagan be
suspended for 3 years. However, in Resolution No. XXI-
2014-724,15 the IBP-Board of Governors instead
recommended that Atty. Panagsagan be disbarred from the
practice of law.
ISSUE:
WON Atty. Panagsagan failed to comply with the duty of a
lawyer, in a lawyer-client relationship.
RULING: YES.
A disbarment case is sui generis for it is neither purely civil
nor purely criminal but is rather an investigation by the
court into the conduct of its officers.
Atty. Panagsagan was given several opportunities to
answer the complaint against him, yet no answer came. The
natural instinct of man impels him to resist an unfounded
claim or imputation and defend himself. Silence in such
cases is almost, always construed as implied admission of
the truth thereof.
Consequently, we are left with no choice but to deduce his
implicit admission of the charges levelled against him. Qui
tacet consentire videtur. Silence gives consent. This instant
disbarment case will, thus, proceed despite Atty.
Panagsagan's unwillingness to cooperate in the
proceedings.
Atty. Panagsagan's conduct in handling the monies given
to him by his client is undisputably condemnable. Records
show that Yoshimura engaged the services of Atty.
Panagsagan for specific purposes. (payments made as
earlier mentioned)
However, despite receipt of the above-mentioned amounts,
Yoshimura lamented that Atty. Panagsagan failed to
comply with his undertakings without giving any valid
reason. Atty. Panagsagan also failed to account all the
monies he has received from Yoshimura and Bernadette.
Worse, when Yoshimura demanded the return of their
monies, Atty. Panagsagan failed to return the same.
The rule on the accounting of monies and properties
received by lawyers from clients as well as their return
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upon demand is explicit. Canon 16, Rules 16.01, 16.02 and
16.03 of the CPR.
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.
Rule 16.02 — A lawyer shall keep the funds of each client
separate and apart from his own and those others kept by
him.
Rule 16.03 — A lawyer shall deliver the funds and property
of his client when due or upon demand.
The fiduciary nature of the relationship between the
counsel and his client imposes on the lawyer the duty to
account for the money or property collected or received
for or from his client. If he does not use the money for its
intended purpose, he must immediately return it to the
client. is failure either to render an accounting or to return
the money constitutes a blatant disregard of Rule 16.01 of
the CPR.
Atty. Panagsagan's failure to return Yoshimura's money
despite repeated demands gives rise to the presumption
that he has misappropriated it for his own use to the
prejudice of, and in violation of, the trust reposed in him by
the client. It is a gross violation of general morality as well
as of professional ethics it impairs public confidence in the
legal profession.
As to the ‘’under the table’’ money he asked, undoubtedly,
this act of Atty. Panagsagan is tantamount to grave
misconduct. Such act is not only an abuse of his client's
trust but an overt act of undermining the trust and faith of
the public in the legal profession.
Also, Atty. Panagsagan's act in convincing Yoshimura and
Bernadette to join a cooperative which no longer operate, in
order to obtain money from them, speaks of his dishonest
and deceitful character. This constitute grave violations of
the CPR which mandates lawyers not to do any falsehood.
Adding to Atty. Panagsagan's list of infractions was his
violation of the notarial law. He notarized the management
contract between Yoshimura and Bernadette and Sta.
Monica without all the affiant's personal appearance.
Yoshimura and Bernadette maintained that they never met
Correa, the latter also claimed the same.
We also find deplorable his defiant stance against the IBP
as demonstrated by his repetitive disregard of the IBP's
directives to file his comment on the complaint, and
scheduled hearings set by IBP.
Atty. Panagsagan's propensity to disregard not only the
laws of the land but also the lawful orders of the Court, it
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only shows him to be wanting in moral character, honesty,
probity and good demeanor. He proved himself unworthy
of membership in the Philippine Bar. DISBARRED.
MARIANO VS. LAKI
A.C. NO. 1978, Sept. 25, 2018
FACTS:
Mariano allegedly engaged Atty. Laki's legal services for
the filing of a petition for annulment of his marriage. Atty.
Laki informed him to prepare the amount of P160,000.00
representing a package deal for his professional fee, docket
fee and expenses for the preparation and filing of the
petition, subject to an advance payment of P50,000.00.
Mariano expressed his surprise over the huge amount that
Atty. Laki was asking, thus, the latter assured him that he
could secure a favorable decision even without Mariano's
personal appearance since he will file the petition for
annulment before the RTC of Tarlac which is presided by a
"friendly judge" and is known to be receptive to annulment
cases.
Relying on Atty. Laki's assurance, Mariano initially paid
Atty. Laki P50,000.00. Due to the latter's relentless follow-
ups of the remaining balance, Mariano made succeeding
payments in the amounts of P40,000.00 and P60,000.00, all
evidenced by receipts issued by Atty. Laki.
Almost a year after, Mariano followed up the status of the
petition only to know that the petition has yet to be filed as
Atty. Laki withdrew the case for the reason that the
Presiding Judge of RTC - Tarlac has been dismissed by the
SC and he did not expect the new presiding judge to be
"friendly".
Mariano attempted to get a copy of the petition but Atty.
Laki told him that he still has to locate the copy in his office.
He tried several times to get hold of a copy of the petition
but nevertheless failed, as it became very difficult to meet
nor reach Atty. Laki through his cell phone.
This prompted Mariano to demand from Atty. Laki the
return of his money but to no avail. Calls were rejected, and
his office was always closed. Hence the instant petition for
disbarment.
ISSUE:
WON Atty. Laki failed to comply with his duty in a lawyer-
client relationship.
RULING: Yes.
CANON 16 — A LAWYER SHALL HOLD IN TRUST ALL
MONEY 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.
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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.
The rule on the accounting of monies and properties
received by lawyers from clients as well as their return
upon demand is explicit.
The fiduciary nature of the relationship between the
counsel and his client imposes on the lawyer the duty to
account for the money or property collected or received
for or from his client. When a lawyer collects or receives
money from his client for a particular purpose, he should
promptly account to the client how the money was spent. If
he does not use the money for its intended purpose, he
must immediately return it to the client.
ITC, it is clear that Atty. Laki violated his sworn duties
under the CPR. Not only did he fail to file the petition for
annulment of marriage despite receipt of the acceptance fee
in the amount of P150,000.00, he also failed to account for
the money he received. He also failed to keep his client
abreast with the developments and status of the case as he
actually never provided Mariano a copy of the petition
despite demand. Worse, after receiving his acceptance fee,
Atty. Laki also made it difficult for his client to contact him,
as in fact Mariano felt that he was being avoided.
Receiving payment for services not rendered, Atty. Laki
was unjustified in keeping Mariano's money. He is obliged
to immediately return the it. His refusal to do so despite
repeated demands constitutes a violation of his oath where
he pledges not to delay any man for money and swears to
conduct himself with good fidelity to his clients. It also
gives rise to the presumption that he has misappropriated
it for his own use to the prejudice of, and in violation of, the
trust reposed in him by the client.
Such acts constitute a blatant disregard of Rule 16.01 of the
CPR. But what the Court finds more deplorable was Atty.
Laki's act of giving assurance to Mariano that he can secure
a favorable decision without the latter's personal
appearance because the petition will be led in the RTC of
Tarlac, which is allegedly presided by a "friendly" judge
who is receptive to annulment cases.
His deceitful assurances give the implication that a
favorable decision can be obtained by being in cahoots with
a "friendly" judge. It gives a negative impression that
decisions of the courts can be decided merely on the basis
of close ties with the judge and not necessarily on the
merits. Atty. Laki's statements cast doubts on the integrity
of the courts in the eyes of the public. By making false
representation to his client, Atty. Laki not only betrayed his
client's trust but he also undermined the trust and faith of
the public in the legal profession
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To summarize, first , Atty. Laki received money from his
client for the purpose of filing a petition but he failed to do
so; second , after his failure to render legal service despite
the receipt of acceptance fee, he also unjustifiably refused
to return the money he received; third , he grossly
disrespected the IBP by ignoring its directives to file his
answer to the complaint and appear at the mandatory
hearings; and lastly, Atty. Laki maligned the Judiciary by
giving the impression that court cases are won, not on the
merits, but through close ties with the judges.
From these actuations, it is undisputed that Atty. Laki
wronged his client and the Judiciary as an institution, and
the IBP of which he is a member. He disregarded his duties
as a lawyer and betrayed the trust of his client, the IBP, and
the courts.
The Court, thus, rules that Atty. Laki be disbarred and
ordered to return to Mariano the P150,000.00 plus 6%
interest.
HUANG VS. ZAMBRANO
A.C. NO. 12460, March 26, 2019
FACTS:
Huang is a citizen of Singapore, who is abroad at most
times and comes to the Philippines only for business.
In October 2014, Huang engaged the services of Atty
Zambrano for money claims. Subsequently a case for estafa
was filed before the office of the prosecutor. Huang paid
Zambrano 50,000 for his legal services. As he was usually
abroad, they communicate through electronic messages or
Facebook chat messages.
Zambrano informed Huang that the respondents in estafa
case are willing to settle the matter and pay Huang 250,000.
Huang accepted the proposal.
Huang asked Atty. Zambrano how the settlement would be
facilitated. Being abroad at that time, Huang suggested that
either: (1) Atty. Zambrano would relay Huang's bank
account details to the respondents in the Estafa Case so they
could directly deposit the settlement money to the said
account; or (2) Huang's friend, Ang Kevin Kar Wai (Ang),
could personally collect the amount after Atty. Zambrano
had secured the same from the respondents in the Estafa
Case. However, Atty. Zambrano rejected both of Huang's
suggestions. He rebuffed the first option, insisting that the
payment should be coursed through him before it was to be
transferred to Huang; while he disagreed with the second
option as he would be unable to track the money once, he
has transferred it to Ang, whom he does not know.
The respondents in the Estafa Case eventually paid Huang
the settlement money via Atty. Zambrano. When Huang
inquired as to how he could get his money, Atty. Zambrano
answered that the dismissal of the Estafa Case should first
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be processed. For two months, Huang constantly followed-
up and demanded his money from Atty. Zambrano but to
no avail. Atty. Zambrano would proffer to Huang various
excuses, to wit: the Estafa Case has not yet been formally
dismissed; his busy schedule; or he was dealing with
personal and family issues.
Huang then filed a disbarment case against before CBD –
IBP. Asserting that Huang violated Canon 16.01 and 16.03
of the CPR. The CBD-IBP Investigating Commissioner
eventually ruled in Huang's favor.
ISSUE:
1. Did Zambrano Violated Canon 16?
2. Is disbarment the applicable penalty?
RULING:
1. Yes, He violated Canon 16.
Rules 16.01 and 16.03, Canon 16 of the CPR state:
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.
Rule 16.03 - A lawyer shall deliver the funds and property
of his client when due or upon demand…….
As decided in the case of Egger v. Duran “"The relationship
between a lawyer and his client is highly fiduciary and
prescribes on a lawyer a great fidelity and good faith. The
highly fiduciary nature of this relationship imposes upon
the lawyer the duty to account for the money or property
collected or received for or from his client. Thus, a lawyer's
failure to return upon demand the funds held by him on
behalf of his client, as in this case, gives rise to the
presumption that he has appropriated the same for his own
use in violation of the trust reposed in him by his client.
Such act is a gross violation of general morality, as well as
of professional ethics."
Once money or property is received by a lawyer on behalf
of his client, the former has the obligation to account for the
said money or property and remit the same immediately to
the latter. To ignore consecutive follow-ups and demands
from the client without any acceptable reason corrodes the
client's trust and stains the legal profession.
In the case at bar; he had received the money from
respondents 250,000. He rejected the sound suggestion of
Mr. Huang to have the money deposited directly by
respondents to his account. He also refused Huang’s
alternative option to have his friend received the account.
There is an evident effort by Zambrano to ensure that the
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money would be given to him. Therefore, he damages his
reliability and reputation as a lawyer.
Moreover, there is no law or jurisprudence which requires
the formal dismissal of the case before the lawyer yields
possession of his client's money. In advising Huang of the
same, he had acted deceitfully - willfully misleading Huang
and abusing the trust and confidence his client reposed in
him.
As to his defense that he failed to remit due to heavy
workload and family problems is doubtful. These are
seemingly meant only to further thwart Huang's efforts to
get his money. Even if this are true, these does not absolve
him. Given the different remote and online options now
available, it would not take much time to transfer the
money.
Worse, Atty. Zambrano exhibited disrespect to the IBP by
disregarding the orders of the CBD-IBP as an investigating
body and failing to participate in much of the investigation
proceedings.
2. Disbarment is the applicable penalty. In the 3 cited cases
the lawyers were disbarred:
In Suarez v. Maravilla-ona, Respondent failed to facilitate
the transfer and never reimbursed complainant for the
amounts earlier paid despite multiple demands. She also
did not participate at all in the investigative proceedings.
In Overgaard V. Valdez, who, despite receipt of legal fees,
refused to perform any of his obligations under his Retainer
Agreement with complainant, ignored complainant's
requests for a report of the status of the cases entrusted to
his care, and rejected complainant's demands for return of
the money paid to him.
In Arellano University, Inc. v. Mijares III. The lawyer
failed to render the titling services initially agreed upon
with complainant and to account for and return
complainant's money despite repeated demands.
In the case at bar, Atty. Zambrano's unprofessional and
unethical actuations in breach of his attorney-client
relationship with Huang and his insolent comportment
towards the IBP which was investigating the administrative
complaint against him demonstrate attitude and conduct
unbecoming a member of the legal profession and an officer
of the Court, thus, justifying his disbarment. The practice of
law is a privilege given to few, and it is granted only to
those of good moral character. The Bar maintains and aims
to uphold a high standard of honesty and fair dealing.
Lawyers must conduct themselves beyond reproach at all
times, whether they are dealing with their clients or the
public at large, and a violation of the high moral standards
of the legal profession justifies the imposition of the
appropriate penalty. Atty. Zambrano's alarming
propensity for duplicity and lack of atonement render him
unworthy of the privilege to continue in the practice of law.
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SPS. VARGAS, ET AL. VS. ORIÑO
A.C. NO. 8907, June 3, 2019
FACTS:
Complainants were defendants in a case for Forcible Entry
and Damages before MCTC in Camarines Sur. They were
initially represented by a lawyer from PAO who later
withdrew his appearance, and was substituted by
respondent Atty. Ariel Oriño. Complainants alleged that:
- Oriño entered his appearance at the time MCTC
had already appointed a commissioner to conduct
a relocation survey of the lot in dispute and set the
hearing on the Commissioner’s Report. However,
Oriño failed to appear such.
- MCTC issued an order directing parties to submit
their position papers but Oriño also failed to due
so which resulted to the judgment against the
complainants.
- Respondent filed a notice of appeal. RTC directed
complainants to file their memorandum but
respondent again failed to file such.
- Complainants paid Oriño 20,000 as acceptance fee,
and 1,500 as appearance fee and live chickens and
root crops.
- When asked why he did not submit the aforesaid
position paper, Oriño simply replied, "Hindi ko na
sinagot dahil talo na kayo s forcible entry. Sa lupa na
lang kayo maghabol.”
Respondent’s Contention:
- Oriño countered that he was a known politician
and that he merely accepted the case because
complainants were his supporters when he ran for
Provincial Board Member and for Mayor.
- He believed that the case was weak and informed
the complainants of his intention to withdraw but
failed to do so because he was overtaken by his
activities during 2010 elections. The draft position
paper was also not finished because complainants
were “uncooperative.”
- Denied receiving 20K and denied the alleged
utterances saying he rarely spoke in Tagalog.
IBP Decision – Guilty of violating Rule 18.03. Suspended for
6 months.
ISSUE:
Whether respondent violated Canon 18 of CPR.
RULING: YES – Penalty increased to one-year suspension.
Canon 18 of the CPR provides that a lawyer shall serve his
client with competence and diligence, while Rule 18.03
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thereof explicitly decrees that a lawyer ought not to neglect

a legal matter entrusted to him, and his negligence in
connection therewith shall render him liable. Until the
lawyer's withdrawal is properly done, the lawyer is
expected to do his or her best for the interest of the client.

ITCAB, it is undisputed that a lawyer-client relationship

was created when Orino agreed to accept the complainants’
case and, in consideration thereof, received from
complainants’ payment in cash and in kind. A lawyer-client
relationship commences when a lawyer signifies his agreement to
handle a client's case and accepts money representing legal fees
from the latter." Once a member of the Bar agrees to provide his
legal services to a client, but does not perform or deliver as
promised, then he reneges upon the oath he took as a lawyer.

It has been held that the mere failure of the lawyer to

perform the obligations due to his client is considered per
se a violation of the lawyer's oath. Lawyers are duty bound
to attend to their client's cause with diligence, care and
devotion, whether they accept it for a fee or for free.

ITCAB, respondent lawyer failed to serve complainants

with industry and diligence. Respondent lawyer clearly fell
short of the circumspection and diligence required of those
privileged to practice law. He attributed his shortcomings
as a lawyer to his being a politician. The Court finds such
reason unacceptable, if not a display of insolence and
arrogance.

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