Basic Legal Ethics

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

32

Canon 14- Duty to render legal service to the needy

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

-Santiago vs Fojas AC No. 4103

9/7/1995

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

34

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

-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

Canon 20- Duty to charge only fair and reasonable fees

3/28/1995

8
-Regala vs Sandiganbayan GR#105938 9/20/1996

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

10

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

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

37
-Retuya vs Gordiuz AC No. 1388 3/28/1980
40
-Ramos vs Ngaseo AC No. 6210 12/9/2004
41
-Director of Lands vs Ababa GR#L-26096 2/23/1979

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

17
-Junio vs Atty. Grupo AC No. 5020

12/18/2001

43

21
-Pelmoka vs judge Diaz, Jr.

AC No. 2662-CFI 11/25/82

Canon 21- Duty to Preserve the clients confidence & secrets

23
-Lemoine vs Balon, Jr.

AC No. 5829

10/28/2003

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

25

48

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

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

-Rosacia vs Atty. Bulalacao AC No. 3754

10/2/1995

-Lorenzana Food Corp. vs Daria AC No. 2736

5/27/1991

28

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

-Canoy vs Ortiz AC No. 5485 3/16/2005

29
Canon 18- Duty to serve with competence and due diligence
-Adarne vs Aldaba AC No. 801 6/27/1978
31

50
53

Republic
SUPREME
Manila

of

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.

Philippines
COURT

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.

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.

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.
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-9010-050. 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

DAVIDE JR., J.:

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:
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

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.

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 complainants filed a Reply to the respondent's Comment.

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.

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.

The facts in this case are not disputed.

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.

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 exparte.

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.

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

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.

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 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:
[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. . . .

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.
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.

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. . . . "
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.

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

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.
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.

he should have seasonably informed the complainants thereof. Rule

15.05, Canon 15 of the Code of Professional Responsibility
expressly provides:

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.

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.
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.

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.

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.

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."

SO ORDERED.

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,

Republic
SUPREME COURT

of

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

the

Philippines

NORTHWESTERN
UNIVERSITY,
INC.,
NICOLAS, Complainant,
vs.
Atty. MACARIO D. ARQUILLO, Respondent.

and

BEN

A.

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.

DECISION
PANGANIBAN, J.:

"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)

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 Case and the Facts

Respondent failed to file his Answer to the Complaint despite a June

24 1998 Order3 of the IBP-CBD 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.

This administrative case stems from a sworn Letter-Complaint 1 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:
"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.

Report and Recommendation of the IBP

"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).

In his Report,6 Commissioner Dennis B. Funa found respondent

guilty of violating the conflict-of-interests 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 a consolidation of NLRC Cases [Nos.] 1-05-1086-97, 1-05-108797, 1-05-1088-97, 1-05-1091-97, 1-05-1092-97, 1-05-1097-97, 1-

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.

position paper was filed by Atty. Arquillo as counsel for several

complainants in consolidated NLRC Case Nos. I-05-1087-97, I-051088-97, I-05-1091-97, I-05-1092-97, I-05-1096-97, 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:

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-2004-415. The IBP denied the Motion.

"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

The Courts Ruling

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

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.

Administrative Liability of Respondent

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
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

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:
"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

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-051109-97, filed a Motion to Dismiss those cases. Shortly thereafter, a

[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.

Republic
SUPREME
Baguio City

of

the

Philippines
COURT

FIRST DIVISION
"Thus it has been noted
A.C. No. 4354
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

April 22, 2002

LOLITA
ARTEZUELA, complainant,
vs.
ATTY. RICARTE B. MADERAZO, respondent.
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

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 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

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 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-in-law, Jun
Anthony Villapez. The car rammed into a small carinderia owned by
complainant Lolita Artezuela.3

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.
SO ORDERED.

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

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

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

Respondent alleged that he sought the postponement of the PreTrial 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

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
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 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

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.
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.

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

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.

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 sixmonth suspension, which he claims to be harsh considering that his
private practice is his only source of income.15

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
It is by his own negligence that the respondent was deemed to
have waived his right to cross-examine 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.
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:

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
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

"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?

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:

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.

"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.

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 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.

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

10

Nevertheless, the issue in this case is not whether the respondent

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

an officer of the court and his actions are governed by the

uncompromising rules of professional ethics. Thus:
"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

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.

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:

Canon 6 of the Code of Professional Ethics states:

"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.

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

"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)

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."

xxx

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

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

11

A perusal of Echavia's Answer to the Amended Complaint shows

that it indeed conflicts with the complainant's claims. It reads:

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.

"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

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.
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.

By way of prayer, Echavia states:

"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.

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

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.

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.
SO ORDERED.

12

by appearing as counsel for individuals who had transactions with

complainant bank in which respondent during his employment with
aforesaid bank, had intervened.

Republic
SUPREME
Manila

of

the

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.

Philippines
COURT

EN BANC

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.

A.C. No. 3701 March 28, 1995

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

BANK, complainant,

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.

RESOLUTION

BIDIN, J.:

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

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:
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.

13

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.

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 IBP thus recommended the suspension of respondent from the
practice of law for 3 years.

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.

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 to Set
Hearing"
before
this
Court,
the
aforesaid
Motion
for
Reconsideration. In resolving this case, the Court took into
consideration the aforesaid pleadings.

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."
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.

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 anti-graft 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:

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

14

"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."

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
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.
ACCORDINGLY, this Court resolves to SUSPEND respondent ATTY.
TELESFORO S. CEDO from the practice of law for THREE (3) YEARS,
effective immediately.

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:

Let copies of this resolution be furnished the Integrated Bar of the

Philippines and all courts in Metro Manila.
SO ORDERED.

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.

Republic
SUPREME
Manila

of

the

Philippines
COURT

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.

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:

G.R. No. 108113 September 20, 1996

PARAJA
vs.

15

G.

HAYUDINI, petitioner,

THE SANDIGANBAYAN and

PHILIPPINES, respondents.

THE

REPUBLIC

OF

THE

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

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.

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
party3
defendant. Respondent 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

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

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

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

16

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 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

that respondent PCGG similarly grant the same treatment to them

(exclusion as parties-defendants) as accorded private respondent
Roco. 8 The Counter-Motion 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.
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

In their answer to the Expanded Amended Complaint, petitioners

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

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

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.
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

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 nominee-stockholder. 11

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

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:

Petitioners ACCRA lawyers subsequently filed their "COMMENT

AND/OR OPPOSITION" dated October 8, 1991 with Counter-Motion

xxx xxx xxx

17

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.

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
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.

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

II
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.

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.

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.

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.

3. Respondent Sandiganbayan sanctioned favoritism and undue

preference in favor of Mr. Roco in violation of the equal protection
clause.

Neither can this Court.

III

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

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.

18

1. Under the peculiar facts of this case, the attorney-client privilege

includes the identity of the client(s).
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.

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

IV

Petitioners' contentions are impressed with merit.

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.

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:

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.

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.

Petitioners contend that the exclusion of respondent Roco as partydefendant in PCGG Case No. 33 grants him a favorable treatment,
on the pretext of his alleged undertaking to divulge the 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.

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

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

19

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.

petitioners and should exclude them from the Third Amended

Complaint.

We quote Atty. Ongkiko:

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 lessorlessee.

II

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

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.
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 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

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 co-defendants 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

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

20

and stable tradition.

Court held:

25

In Stockton v. Ford, 26 the U. S. Supreme

his client, and to accept no compensation in connection with his

client's business except from him or with his knowledge and
approval.

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

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

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:

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.

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
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

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

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

21

sacrosanct individual right, the right to be presumed innocent is at

once self-evident.

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

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.

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.
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.

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.
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
The reasons advanced for the general rule are well established.

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.

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 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.

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

relationship.

22

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:

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:

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.

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

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 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

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. . .

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.

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

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

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

23

the question to the State Supreme Court. Upholding the lawyer's

refusal to divulge the names of his clients the court held:

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:

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 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

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

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 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

Apart from these principal exceptions, there exist other situations

which could qualify as exceptions to the general rule.
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

24

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

others, the aforementioned deeds of assignment covering their

client's shareholdings.
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.

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
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 attorney-client relationship).

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

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 non-prosecution should they accede thereto:
(a) the disclosure of the identity of its clients;
(b) submission of documents substantiating the lawyer-client
relationship; and

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 attorneyclient privilege, in general, exists.

(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

25

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.

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.
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.

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.

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

26

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.

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 utmost zeal given by Courts to the protection of the lawyerclient 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

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.

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:
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, 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.

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."

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

III

27

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

at ACCRA, and were not the clients which the PCGG wanted
disclosed for the alleged questioned transactions. 61
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.

First, as to the bare statement that private respondent merely

acted as a lawyer and nominee, a statement made in his out-ofcourt settlement with the PCGG, it is sufficient to state that
petitioners have likewise made the same claim not merely out-ofcourt 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 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.

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.

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 reinvestigation 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

. . . 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
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

28

only touches upon the question of the identity of their clients but
also on documents related to the suspected transactions, not only
in violation of the attorney-client privilege but also of the
constitutional right against self-incrimination. Whichever way one
looks at it, this is a fishing expedition, a free ride at the expense of
such rights.

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."

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.

SO ORDERED.

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.

UNITY FISHING DEVELOPMENT CORPORATION, complainant,

vs.
ATTY. DANILO G. MACALINO, respondent.

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 self-incrimination and
subvert the lawyer-client confidentiality privilege.

GARCIA, J.:

Republic
SUPREME
Manila

of

the

Philippines
COURT

THIRD DIVISION
A.C. No. 4566

December 10, 2004

RESOLUTION

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.

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.

29

In its resolution of June 26, 1996, the Court required respondent to

comment on the complaint within ten (10) days from notice. 1

On November 5, 1998, respondent filed an urgent motion for

extension of time to file 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 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.

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

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.

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 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.

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.

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.

Acting on the referral, the IBP Commission on Bar Discipline

designated Atty. Cesar R. Dulay as investigating commissioner.

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.

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:

On January 7, 2000, the complainant filed a Memorandum, a copy

of which was furnished to respondent and which was not
controverted by respondent.

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, 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.

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

30

on account of which the investigating commissioner considered the

case as "now ready for resolution".11

check was crossed and made payable to the Wheels Distributors,

Inc. (Annex "A").

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:

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;

"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;

Respondents representative duly received the said check from

Petitioner, as proof of which he signed Check Voucher No. 3-012
(Annex "B");
Thereafter, Respondent represented to Petitioner that he was able
to deliver the check to Wheels Distributors, Inc.;

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 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;

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 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;

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;

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-4833. United Savings Bank has since been acquired by the United
Coconut Planters Bank (UCPB) and is now known as UCPB Savings
Bank;

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;
On March 2, 1988, Petitioner prepared Metrobank Check No.
MB350288 dated March 8, 1988 for the amount of P50,000.00. The

31

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;

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.

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");

On the basis of the above, the investigating commissioner

concluded his Report with the following -

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;

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

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;
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 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:
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.

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").
DISCUSSION AND FINDINGS:
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

32

This resolution is now before us for confirmation.

misappropriated the money entrusted to him and which he failed to

account for to his client despite demand therefor.

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:

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:

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.

"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;

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.

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);
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

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.

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.

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)
Here, we are in full accord with the findings, conclusion and
recommendation of the IBP Board of Governors that respondent

33

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,

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.

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.
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

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.

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

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.

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

SO ORDERED.

Republic
SUPREME
Manila
SECOND DIVISION

34

of

the

Philippines
COURT

Adm. Case No. 5020

December 18, 2001

ROSARIO
vs.
ATTY. SALVADOR M. GRUPO, respondent.

In his Answer, petitioner admitted receiving the amount in question

for the purpose for which it was given. However, he alleged that

JUNIO, complainant,
6. The subject land for which the money of complainant was initially
intended to be applied could really not be redeemed anymore . .;

MENDOZA, J.:

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;

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.

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.

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".

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.

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.
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.

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 . . . .

7. Despite repeated demands made by the complainant and

without justifiable cause, respondent has continuously refused to
refund the money entrusted to him.1

35

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

reprimanded and ordered to pay the amount of P25,000.00 loan

plus interest at the legal rate.
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

xxx
[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 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

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
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

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;

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 Commissioner 4 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.

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

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

He argues that the Court should adopt the report

recommendation of the IBP Investigating Commissioner.

and

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.

36

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

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).

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:
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).

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."

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).
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 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."

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.
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."

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.

37

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

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

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

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 clientattorney relationship between them. This contention has no merit.
As explained in Hilado v. David,9

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.

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 . . .
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

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

38

the filing of the appellee's brief, as agreed by them, because of an

alleged quarrel with his clients.

Garampil, Sr. with serious misconduct in connection with Civil Case

No. 279-G, entitled Eustacio Nepomuceno, et al. vs. Ester Garampil,
et al.

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.

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.

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.

The Rollo of the case reveals, according to Deputy Court

Administrator Romeo D. Mendoza, the following:

SO ORDERED.
Republic
SUPREME
Manila

of

the

Philippines
COURT

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.)

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.

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.

39

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.)

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 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.
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.

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. 113-119.)

Respondent judge, in his Answer dated January 13, 1982, (pp. 6271.) 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.

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.)

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

40

estate in order to implement the compromise agreement entered

into by all the parties and their respective lawyers.

In the case of Bongco vs. Judge Serapio, (Adm. Matter No. 1804CAR, 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.

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.

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.

Deputy Court Administrator Mendoza has assessed the charges

against Judge Diaz in the light of the record as follows:

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.

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.

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.

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
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.

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.

41

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.

WHEREFORE, for his failure to protect the complainant's charging

lien, the respondent is hereby reprimanded.
SO ORDERED.

Republic
SUPREME
Manila

of

the

Philippines
COURT

EN BANC
A.C. No. 5829

October 28, 2003

DANIEL
LEMOINE, complainant,
vs.
ATTY. AMADEO E. BALON, JR., respondent.

The letter-proposal of respondent regarding attorneys fees does

not bear complainants conformity, he not having agreed therewith.
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."

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.

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 Attorney 6 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.

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

In the meantime, complainant returned to the Philippines in early

January 1999 but left again on the 24th of the same month. 8 On

42

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.

the peaceful settlement of this matter. (Underscoring and emphasis

supplied)

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

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

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.

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

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 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

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...

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

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

43

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.

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 coRotarian and co-attorney-in-fact and whom he really dealt with
regarding complainants claim.29
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

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

Finally, respondent declared that he, in connection with his followup 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 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
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.
The Board of Govenors of the Integrated Bar of the Philippines,
acting on the Investigators Report, issued Resolution No. XV-200240134 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

44

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)

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 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.

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.

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.

There is no need for a reopening of the case. The facts material to

its resolution are either admitted or documented.

xxx
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:

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.

RULE 1.01 - A lawyer shall not engage in unlawful, dishonest,

immoral or deceitful conduct.

xxx

xxx

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.

CANON 15 - A lawyer shall observe candor, fairness and loyalty in

all his dealings and transactions with his clients.
RULE 15.06 - A lawyer shall not state or imply that he is able to
influence any public official, tribunal or legislative body.

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

xxx

45

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

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.

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.

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.

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

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.

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

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
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

46

part of the P233,000.00 are thus highly suspect and merit no

consideration.

the Roll of Attorneys and to inform all courts and the Integrated Bar
of the Philippines of this Decision.

The proven ancillary charges against respondent reinforce the

gravity of his professional misconduct.

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

The intercalation of respondents name to the Chinabank check

that was issued payable solely in favor ofcomplainant as twice
certified by Metropolitan Insurance 44 is clearly a brazen act of
falsification of a commercial document which respondent resorted
to in order to encash the check.

SO ORDERED.

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.

Republic
SUPREME
Manila

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

SECOND DIVISION

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.

FRANCISCO, J.:

of

the

Philippines
COURT

A.C. No. 3745 October 2, 1995

CYNTHIA
B.
ROSACIA, complainant,
vs.
ATTY. BENJAMIN B. BULALACAO, respondent.
RESOLUTION

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

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

47

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

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.

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.

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

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").
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
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;

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 attorneyclient relation is terminated 10 must have been still fresh in his

48

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.

The respondent lawyer, Atty. Francisco L. Daria, is administratively

charged 1 on two counts, to wit:

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.

2. Betrayal of his former client's confidences.

Republic
SUPREME
Manila

of

the

1. Negligence and

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.

Philippines
COURT

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.

SECOND DIVISION

From the findings made by the Solicitor General, the pertinent facts
may be summarized as follows:
A.C. No. 2736 May 27, 1991
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:

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,

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).

vs.
ATTY. FRANCISCO L. DARIA, respondent.
Jose Feliciano Loy, Jr. for petitioners.
RESOLUTION

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

PER CURIAM:p

49

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).

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).
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).

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.

In connection with the other charge of betrayal by respondent of

his former client's confidences, the following facts appear on
record:

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.

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).

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).
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).

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

During the hearings in the Hanopol case on July 27, 1984 and
August 8, 1984, no one appeared for complainant. So, on August

50

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

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:

xxx xxx xxx

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
successor-counsel 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

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
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.

From the foregoing, it is manifest that the respondent is indeed

guilty of negligence, a clear violation of the Code of Professional
Responsibility: 11
CANON 18 A LAWYER SHALL
COMPETENCE AND DILIGENCE

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:

SERVE

HIS

CLIENT

WITH

Rule 18.03 A lawyer shall not neglect a legal matter entrusted to

him and his negligence in connection therewith shall render him
liable.
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:

. . . 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

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

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

51

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.

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

xxx xxx xxx

We are convinced that the respondent had

confidences of the complainant, his former client.

Superseded by the Code of Professional

appropriate Canon now is:

betrayed

the

Responsibility, the
. . . 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 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 counteraffidavit, 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

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 respondent is hereby SUSPENDED from the practice of law for a
period of six (6) months.

Again, we concur with the findings and evaluation of the Office of

the Solicitor General:

Let this Decision be entered in the personal records of the

respondent and copies thereof furnished to all courts and IBP
chapters.

. . . 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).

SO ORDERED.

Republic
SUPREME
Manila

of

SECOND DIVISION
A.M. No. 801 June 27, 1978

52

the

Philippines
COURT

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

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.

CONCEPCION JR., J.:

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.

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 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

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

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

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

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

53

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.

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
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

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 nonavailability of the complainant's lawyers on said dates.

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.

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
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 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.

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

WHEREFORE, the present administrative complaint is hereby

DISMISSED.

54

SO ORDERED.

Republic
SUPREME
Manila

of

the

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.

Philippines
COURT

THIRD DIVISION
A.C. No. 5835

April 15, 2005

CARLOS
B.
vs.
ATTY. JEREMIAS R. VITAN, respondent.

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.

REYES, Complainant,

DECISION

On April 18, 2001,3 IBP Commissioner Navarro submitted to the IBP

Board of Governors her Report and Recommendation quoted as
follows:

SANDOVAL-GUTIERREZ, J.:
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

"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.

This is an administrative complaint for disbarment filed by Carlos

Reyes against Atty. Jeremias Vitan for gross negligence.

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.
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

55

to a mere scrap of paper and not a pleading or authenticated

document in the legal parlance.

serve his client with competence and diligence. More specifically,

Rule 18.03 states:

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.

"Rule 18.03. A lawyer shall not neglect a legal matter entrusted to

him, and his negligence in connection therewith shall render him
liable."
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.

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 reasons which amounted to utter disrespect of authority
and unethical conduct in the practice of his profession, thus, should
be sanctioned.

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

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."
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.

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.

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.

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.

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

56

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.

SECOND DIVISION

A.C. No. 4380 October 13, 1995

NICANOR
GONZALES
and
PANTANOSAS, complainants,
vs.
ATTY. MIGUEL SABACAJAN, respondent.

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.

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:
xxx xxx xxx
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;

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.

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;

SO ORDERED.

of

the

B.

REGALADO, J.:

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.

Republic
SUPREME
Manila

SALUD

Philippines
COURT

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

arrogance taking undue advantage of his legal profession over the

57

simplicity, innocence and ignorance of the complainants, one of

whom is his blood relative, his aunt, for which complainants
shudder with mental anguish;

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

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;

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.

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
xxx xxx xxx

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

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

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.

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

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.
As a lawyer, respondent should know that there are lawful remedies
provided by law to protect the interests of his client. The records do

58

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.

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.

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.

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.
SO ORDERED.

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.

Republic
SUPREME
Manila

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.

of

the

Philippines
COURT

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

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.

Benedicto Leviste for and in his own behalf.

59

Gatchalian, Ignacio & Associates for respondents de Guzman.

d) Rita Banu
e) Jesus Lulod.

GRIO-AQUINO, J.:

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 brotherin-law, Gaudencio M. Llanes, whom Del Rosario and the other
parties in the probate proceeding intended to eject as lessee of the
property which was bequeathed to Del Rosario under the will
(Annex "B", p. 60, Rollo).

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).

On September 20, 1965, petitioner filed a "Motion to Intervene to

Protect His Rights to Fees for Professional Services." (Annex "B", p.
60, Rollo.)
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.)

In accordance with their agreement, Leviste performed the

following services as Del Rosario's counsel:

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).

(1) Thoroughly researched and studied the law on probate and

succession;

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.

(2) Looked for and interviewed witnesses, and took their affidavits;
(3) Filed the petition for. probate is Special Proceeding No. 58325;
(4) Made the proper publications;

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.)

(5) Presented at the trial the following witnesses:

a) Eleuterio de Jesus
b) Lucita de Jesus
c) Purita L. Llanes

60

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).

2. Assuming the petitioner's right of appeal is doubtful, the Court of

Appeals erred in dismissing his petition for mandamus; and
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.

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.

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:

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.

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.

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 partypetitioner, in lieu of his former client, Ms. Del Rosario.

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.

On March 28, 1968, the trial judge dismissed the appeal and denied
petitioner's motion for substitution.
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.

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 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.

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).
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:

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.

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.

61

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."

WHEREFORE, the petition for certiorari is denied for lack of merit.

Costs against the petitioner.

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.

Republic
SUPREME
Manila

SO ORDERED.

of

the

Philippines
COURT

THIRD DIVISION

G.R. No. 91958 January 24, 1991

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

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:

Arnold V. Guerrero & Associates for petitioners.

... 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.)

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

GUTIERREZ, JR., J.:p

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.

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

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.

This petition for review on certiorari assails:

62

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

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:

2) The Resolution of the public respondent dated January 30, 1990

which denied the petitioners' motion for reconsideration.

a) The undersigned counsel is entitled to own 97.5 square meters

of the plaintiff's share of the lot in question.

The grounds relied upon by the petitioners are as follows:

b) The undersigned counsel shall have a usufructuary right for a

period of ten (10) years of plaintiffs' share of the lot in question.

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.

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)

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.

On September 19, 1979, the trial court handling Civil Case No. Q12254 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 Licudan-Campos.
The said trial court's Order, being one of two Orders being
essentially challenged in this petition, is reproduced below:

The respondent Court, in failing to declare the attorney's fees

claimed by the private respondent-attorney 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)

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.

The following are the antecedent facts pertinent to the case at bar:
The respondent lawyer was retained as counsel by his brother-inlaw 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.

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.

63

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)

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.

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)

On October 21, 1985, the trial court issued the second Order being
assailed in this petition. The said Order reads:
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 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 of Absolute Sale dated May 1, 1983 executed
by Aurelio Licudan in favor of the respondent lawyer.

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.

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.
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.

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 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 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 October 4, 1985, the respondent lawyer filed a second motion

for reconsideration of the Order dated September 6, 1985

64

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.

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.
The aforesaid
consideration.

submissions

by

the

petitioners

merit

our

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]).

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)

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]):

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.

. . . 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]).

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.

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:

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

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

65

disturbed, not even by the court which rendered them (Taada v.

Court of Appeals, 139 SCRA 419). (CA Decision p. 7; Rollo, p. 36)

American Life Insurance Company v. Pineda, 175 SCRA 416 [1989];

Syjuco v. Court of Appeals, 172 SCRA 111 [1989]).

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:

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 20-01 of the
same Code enumerates the factors to be considered in resolving
the said issue. They are as follows:
a) The time spent and the extent of the services rendered or
required;

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).

b) The novelty and difficulty of the questions involved;

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.

e) The probability of losing other employment as a result of

acceptance of the proferred case;

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 exception
that the stipulations therein are not contrary to law, good morals,
good customs, public policy or public order (see Philippine

h) The contingency or certainty of compensation;

c) The importance of the subject matter;

d) The skill demanded;

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;

i) The character of the employment, whether occasional or

established; and
j) The professional standing of the lawyer.
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

66

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.

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 money-making. 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.

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 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.

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.
SO ORDERED.

Republic
SUPREME
Manila

of

the

Philippines
COURT

SECOND DIVISION

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.

A.M. No. 1388 March 28, 1980

ANA
F.
RETUYA,
vs.
ATTY. IEGO A. GORDUIZ, respondent.

AQUINO, J:

67

complainant,

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 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.

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).

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.

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.

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.
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.

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.

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.

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.

The case against Judge Equipilag was investigated by the Judge of

the Court of First Instance of Southern Leyte.

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.

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

68

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.

one hundred pesos of his own money in gathering evidence which

was presented in the 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.

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.

After reflecting on the conflicting contentions of the parties, the

Court finds that there is justification for suspending the respondent.
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.

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.
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.

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 selfrespect 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."

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).

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.
SO ORDERED.

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.

Republic
SUPREME
Manila

of

the

FIRST DIVISION
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

A.C. No. 6210

69

December 9, 2004

Philippines
COURT

FEDERICO
N.
RAMOS, complainant,
vs.
ATTY. PATRICIO A. NGASEO, respondent.

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.
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.

DECISION

YNARES-SANTIAGO, J.:

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.

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.
The facts as narrated by the complainant are as follows:
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

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 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

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

70

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.

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.

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 December 11, 2003, respondent filed a petition for review

assailing IBP Resolution No. XVI-2003-47 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.

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.

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.

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.

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

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
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

71

disbarment or suspension be imposed as a penalty. 12 All considered,

a reprimand is deemed sufficient and reasonable.

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.

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 the Code
of Professional Responsibility. He is REPRIMANDED with a warning
that repetition of the same act will be dealt with more severely.

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.

SO ORDERED.

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.

Republic
SUPREME
Manila

of

the

Philippines
COURT

FIRST DIVISION
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.

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

Juanito Ll. Abao for petitioners-appellants.

Alberto R Fernandez in his own behalf.

72

MAKASIAR, J.:

adjudged to me from Agripina Abarquez, except

'Attorney's Fees', the same shall pertain to me and
not to said lawyer.

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.

IN WITNESS WHEREOF, I have caused my right

thumb. mark to be affixed hereto this 10th of June,
1961, at the City of Cebu.

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.

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

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:

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.

AGREEMENT
KNOW ALL MEN BY THESE PRESENTS:
That I, MAXIMO ABARQUEZ, Plaintiff in Case No. R6573 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

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

73

January 7, 1964 (p. 66, Record on Appeal; p. 13, Rec.) and the
judgment became final and executory on January 22,1964.

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:

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 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.).

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.
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.

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.
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.

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 onehalf () of the lots covered by the June 10, 1961 document was
annotated on TCT No. 31841.

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.

Notwithstanding the annotation of the adverse claim, petitionerspouse 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

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.

74

Fernandez, is prohibited by the Article 1491 of the New Civil Code

and Canon 13 of the Canons of Professional Ethics.

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).

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:

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.

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.
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).

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

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., L26882, November 21, 1978).
Likewise, under American Law, the prohibition does not apply to
"cases where after completion of litigation the lawyer accepts on

75

nulidad de ese pacto tradicionalmente considerado

como ilicito.

que, aunque fuere infundada,

descredito de la institucion.

xxx xxx xxx

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.

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).

redundaria

en

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).

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.'

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:

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 no es susceptible de aplicarse el precepto

contenido en el num. 5 del art. 1.459 a un contrato

76

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).

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:

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]).

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).

Dr. Tolentino merely restated the views of Castan and Manresa as

well as the state of jurisprudence in Spain, as follows:
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).

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

77

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
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).

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]).
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 one-half () 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."

Justice George Malcolm, writing on contingent fees, also stated

that:
... 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).

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:

Stressing further the importance of contingent fees, Professor Max

Radin of the University of California, said 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

78

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).

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 ...

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:

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 one-half () 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.

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.

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:

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

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

79

payment of money, and executions issued in

pursuance of such judgments, which he has secured
in a litigation of his client ... (emphasis supplied).

PETITIONER-APPELLANTS JUAN LARRAZABAL AND MARTA C. DE

LARRAZABAL.
SO ORDERED.

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]).

Republic
SUPREME
Manila

of

the

Philippines
COURT

EN BANC

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:

A.C. No. 1890

August 7, 2002

FEDERICO
C.
vs.
ATTY. RAFAEL G. SUNTAY, respondent.

SUNTAY, complainant,

DECISION
BELLOSILLO, J.:

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).

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.

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.

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

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

80

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.

client-lawyer relationship and one count of engaging in unethical

conduct.
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).
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.

In addition, complainant alleged that respondent relentlessly

pursued a case against him for violation of PD No. 296 4 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.

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.

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
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.

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).

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

Respondents representation of Magno Dinglasan in I.S. No. 771523 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

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

81

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.

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)

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.

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).

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.

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).

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.

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.

In his capacity as lawyer of complainant from 1956 to 1964,

respondent had the following functions:

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)

"Witness
"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.

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. T15674 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

"ATTY. AQUINO:
"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?
"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

82

was a lawyer and part administrator of complainant. Under the

circumstances, there is a violation of professional confidence.

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

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:

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

1. Carlos Panganiban v. Federico Suntay, Civil Case No. 4306-M, CFI,

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

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.

3. Magno Dinglasan v. Federico Suntay, I.S. No. 77-1523, Office of

the Provincial Fiscal of Bulacan;
4. Magno Dinglasan v. Federico Suntay, Civil Case No. 112764, CFI,
Branch XX, Manila; and
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.

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

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.

83

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.

a) When authorized by the client after acquainting him of the

consequences of the disclosure;
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.

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.

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

As the Code of Professional Responsibility provides:

Rule 21.01. - A lawyer shall not reveal the confidences or secrets of
his client except:

84

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

A.C. No. 4215

FELICISIMO
M.
MONTANO, complainant,
vs.
INTEGRATED BAR OF THE PHILIPPINES and Atty. JUAN S.
DEALCA, respondents.

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.

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.

WHEREFORE, in view of the foregoing, IBP Resolution No. XIV2001-169 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.

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.

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.

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.

SO ORDERED.

Republic
SUPREME
Manila

of

the

May 21, 2001

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:

Philippines
COURT

FIRST DIVISION

85

1. Complainant is being represented by Atty. Ronando L. Gerona in

his case on appeal;

28 February
1994

2. Due to the ailment of Atty. Gerona's daughter, he could not

prepare and submit complainant's appellant's brief on time;

Pepe and Del Montano,

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;

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.

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.

Johnny
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.

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;

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.
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."

6. Even without being paid completely, respondent, of his own free

will and accord, filed complainant's brief on time;
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;
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;

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.

86

9. However, instead of seeing the respondent, complainant filed

this case;

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;

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;
xxx

xxx

(a) complainant's motion praying for the imposition of the

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

for

xxx.4
(c) comment/opposition of respondent praying that the motion for
the imposition of the maximum penalty be denied;

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.

(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. XII97-154 be raised to a heavier penalty;
(e) comment/manifestation/opposition of complainant praying that
the respondent be disbarred; and

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

(g) rejoinder of respondent praying that this case be dismissed for

being baseless.6

xxx
and referred the same to the IBP for evaluation and report.
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

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."
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:

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

87

RESOLUTION NO. XIII-99-48

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.

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

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.

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.

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.
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

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.

Given the above circumstances, was Atty. Dealca's conduct just and
proper?

88

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

SECOND DIVISION
A.C. No. 5485

ELMER
vs.
ATTY. JOSE MAX ORTIZ, respondent.

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.
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 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 followup 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

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.

of

the

CANOY, Complainant,

DECISION

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.

Republic
SUPREME
Manila

March 16, 2005

Philippines
COURT

89

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.

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

The Comment4 filed by Atty. Ortiz is the epitome of selfhagiography. 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 nonpaying 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

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

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

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 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.
The Court is sensitive to the difficulties in obtaining legal
representation for indigent or low-income 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

90

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.

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.

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.

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.

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.

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

CANON 17A LAWYER OWES FIDELITY TO THE CAUSE OF HIS CLIENT

AND HE SHALL BE MINDFUL OF THE TRUST AND CONFIDENCE
REPOSED IN HIM.
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.
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.

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

...
CANON 22A LAWYER SHALL WITHDRAW HIS SERVICES ONLY FOR
GOOD CAUSE AND UPON NOTICE APPROPRIATE IN THE
CIRCUMSTANCES.
...

91

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.

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.
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

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
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

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.
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.

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

92

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.
SO ORDERED.

93