Introduction to Law: Legal Research,

Writing, and Analysis Workshop

Case Brief (Digest)
Details
Home Guaranty Corporation Vs. Atty. Lamberto T. Tagayuna, Atty. Jose A. Gangan, Atty.
Docket Number A.C. No. 13131 Case Title
Elmar A. Panopio, and Atty. Renato De Pano, Jr.

Facts
On November 5, 2015, Home Guaranty Corporation (HGC) filed a complaint for disbarment
against the respondents, Atty. Tagayuna, Atty. Gangan, Atty. Panopio, and Atty. De Pano, Jr.,
alleging they violated the conflict of interest rule in Canon 15 and for unlawful withholding of
documents in Canon 16 of the Code of Professional Responsibility (CPR). The respondents are
partners of Soliven, Tagayuna, Gangan, Panopio & De Pano Law Firm.

HGC engaged with E.S.P. Collection Agency (ESP), which was represented by Atty. Panopio
jointly with the law firm to efficiently collect the large volume of inactive and past due
receivables of the company. HGC, ESP, and the Law Firm agreed to a Collection Retainership
Agreement, where HGC endorsed accounts for collection. The Collection Retainership
Agreement was renewed annually until HGC and ESP terminated the contractual relationship in
2013. After this, HGC claimed that the respondents did not return the documents. In 2014 and
2015, HGC sent several demand letters.

HGC also claimed that Atty. Tagayuna was also the president of Blue Star Construction and
Development Corporation (BSCDC). In 2012, BSCDC through Atty. Tagayuna filed an
arbitration case against HGC while the Collection Retainership Agreement with ESP was still
subsisting.

The respondents claimed in defense that the Collection Retainership Agreement was never
extended until 2013 and expired in 2011 and was no longer renewed. Atty. Tagayuna stated
that he was not BSCDC’s counsel when the arbitration case was filed. The Collection
Retainership Agreement also expired when BSCDC filed the arbitration case in 2012.
Communication between HGC, ESP, and the Law Firm beyond 2011 was purely for fulfilling
the obligations of the parties. Respondents also stated that HGC still owed ESP and the Law
Firm ₱ 846,212.39, which the Law Firm exercised its lien by withholding some of HGC’s
documents. They also stated that they returned the documents to HGC except for a few
unaccounted ones to exercise retaining lien because HGC had unpaid amounts on legal fees.

The IBP Commission on Bar Discipline (CBD) recommended that Atty. Tagayuna and Atty.
Panopio be suspended from practicing law for six months. Their representation with BSCDC in
the filing of an arbitration case against HGC violated the conflict of interest rule. They also
stated that the Law Firm had legal grounds to withhold certain HGC documents in the exercise
of retaining lien. Furthermore, they recommended the dismissal of the complaints against Atty.
De Pano in view of his resignation in 2011, and Atty. Gangan in view of his death.

The 2020 Extended Resolution resolved to set aside the Report Recommendation of CBD,
except for the dismissal of the complaints against Atty. De Pano and Atty. Gangan. It was ruled
that the respondents are not guilty of violating the conflict of interest rule and the charge of
unlawful withholding of documents. Evidence proved that the Law Firm was retained as
counsel only until December 2011 and the arbitration was filed in May 2012. This proves that
the Law Firm was no longer HGC’s counsel when the case was commenced. The respondents
also returned the demanded documents to HGC.

Issue
Issue: Did the respondents violate the conflict of interest rule (Canon 15) and unlawfully
withheld HGC’s documents (Canon 16)?

Canon 15 of the Code of Professional Responsibility (CPR) explains if one violates the conflict
of interest rule. The Court decided that the respondents did not violate the conflict of interest
rule through the performance of three tests.

Firstly, conflict of interest is present if the lawyer represents both opposing parties. In this case,
there was no violation since the respondents did not represent both HGC’s and BSCDC’s
interests. The arbitration was signed by another Attorney not related to the Law Firm. Secondly,
if the acceptance of a new engagement prevents the lawyer from faithfully performing his
duties to a client, then there is a conflict of interest. There is no evidence showing that BSCDC
is a new client of the Law Firm. Lastly, if the lawyer would be called to use confidential
information about the previous client for the benefit of the new client, then a conflict of interest
is present. HGC and the Law Firm’s professional relationship ended in 2011. The Law Firm
was also engaged for collection purposes only, which is made clear in the Collection
Retainership Agreement. There is also no new relationship to speak of since BSCDC is not a
client of the Law Firm.

However, the Court finds the charge of unlawful withholding of documents partly meritorious.
Canon 16 Rule 16.01 of the CPR declares that lawyers should account for all the money and
properties of the client that may come into their possession. Canon 16 Rule 16.03 of the CPR
states that money or property collected from the client should be promptly declared to the
client. Section 37, Rule 138 of the Rules of Court also provides this. Since the Law Firm did
not receive proper consent from HGC to withhold the documents, regardless of whether these
documents are unaccounted titles and are under the custody of third parties, the requisites to
exercise lien were not properly met. It is essential that the client’s consent be made for it to be
considered legal withholding. There is also no proof that HGC consented to the Law Firm’s