D. To the clients (Canons 14 to 22)

Atty. Jericho Del Puerto

Atty. Jericho Del Puerto

Lawyer, Author, Mentor
Canon 14: A lawyer shall not refuse his service to the needy.

Frequency: ★★☆☆☆

Canon 14: A lawyer shall not refuse his service to the needy.

1) Not refuse his service to the needy

It is settled that a lawyer is not obliged to act as counsel for every person who may wish to become his client. He has the right to decline employment subject, however, to the provisions of Canon 14 of the Code of Professional Responsibility. (Navarro v. Meneses, En Banc, CBD A.C. No. 313, 30 January 1998)

a. Availability of service without discrimination

i. Services regardless of person’s status
Rule 14.01: A lawyer shall not decline to represent a person solely on account of the latter’s race, sex. creed or status of life, or because of his own opinion regarding the guilt of said person.

1) No discrimination

The Supreme Court does not appreciate the offensive appellation respondent-lawyer called the shooting incident that the accused was engaged in. He described the incident, thus: “the accused police officers who had been convicted of [h]omicide for the ‘salvage’ of Froilan G. Cabiling and Jose M. Chua and [a]ttempted [h]omicide of Mario C. Macato” Rule 14.01 of the Code of Professional Responsibility clearly directs lawyers not to discriminate clients as to their belief of the guilt of the latter. It is ironic that it is the defense counsel that actually branded his own clients as being the culprits that “salvaged” the victims. Though he might think of his clients as that, still it is unprofessional to be labeling an event as such when even the Sandiganbayan had not done so. (Francisco v. Portugal, A.C. No. 6155, 14 March 2006)

ii. Services as counsel de oficio
Rule 14.02: A lawyer shall not decline, except for serious and sufficient cause, an appointment as counsel de officio or as amicus curiae, or a request from the Integrated Bar of the Philippines or any of its chapters for rendition of free legal aid.

1) Counsel de officio

A counsel de oficio is expected to do his utmost. A mere pro-forma appointment of de oficio counsel who fails to genuinely protect the interests of the accused merits disapprobation. The exacting demands expected of a lawyer should be no less than stringent when one is a counsel de officio. He must take the case not as a burden but as an opportunity to assist in the proper dispensation of justice. No lawyer is to be excused from this responsibility except only for the most compelling and cogent reasons. (People v. Bermas, G.R. No. 120420, 21 April 1999)

2) Enjoys presumption

The accused-appellant’s right to due process has been observed and the trial was conducted in a fair manner. Corollarily, this Court sees no reason to doubt or overcome the presumption that counsel de officio reasonably assisted accused-appellant in accordance with the prevailing norms of professional conduct and his sworn duties as an officer of the court. (People v. Buenaventura, G.R. No. 120468, 15 August 2001)

3) Not mandatory for court to appoint

The duty of the court to appoint a counsel de oficio is not mandatory where the accused has proceeded with the arraignment and the trial with a counsel of his choice but, when the time for the presentation of the evidence for the defense was due, he appears by himself alone because of the inexcusable absence of his counsel. In another case, this Court held that the right to be heard and to reopen the case (and send it to trial anew) could not be allowed if doing so would sanction a plainly dilatory tactic and a reprehensible trifling with the orderly administration of justice. (People v. Serzo, G.R. No. 118435, 20 June 1997)

4) Applies to PAO lawyers

The Supreme Court cannot right finis to this discussion without making known our displeasure over the manner by which the PAO lawyers dispensed with their duties. All three (3) of them displayed manifest disinterest on the plight of their client. Canon 18 of the Code of Professional Responsibility requires every lawyer to serve his client with utmost dedication, competence and diligence. He must not neglect a legal matter entrusted to him, and his negligence in this regard renders him administratively liable. Obviously, in the instant case, the aforenamed defense lawyers did not protect, much less uphold, the fundamental rights of the accused. Instead, they haphazardly performed their function as counsel de oficio to the detriment and prejudice of the accused Sevilleno, however guilty he might have been found to be after trial. Inevitably, this Court must advise Attys. Agravante, Pabalinas and Saldavia to adhere closely and faithfully to the tenets espoused in the Code of Professional Responsibility, otherwise, commission of any similar act in the future will be severely sanctioned. (People v. Bermas, G.R. No. 120420, 21 April 1999)

5) Nullifies judgment if not done properly

Where it appears that a counsel de officio resorted to procedural shortcuts that amounted to inadequate counseling, the Court will strike down the proceedings had in order to promote a judicious dispensation of justice. (People v. Agquiz, G.R. No. 144404, 24 September 2001)

When the case was heard, Section 8 Rule 116 of the 1985 Rules of Criminal Procedure provides that when a counsel de officio is assigned by the court to defend the accused at the arraignment, he shall be given at least one (1) hour to consult with the accused as to his plea before proceeding with the arraignment. In this case, the substance of the lawyer-client conference made before the arraignment is being challenged. Both the OSG and accused-appellant cry foul to the hasty consultation made by counsel de officio. It appears from the records that after the appointment of a counsel de officio, the arraignment immediately followed. Under the present Revised Rules of Criminal Procedure, whenever a counsel de officio is appointed by the court to defend the accused at the arraignment, he shall be given a reasonable time to consult with the accused as to his plea before proceeding with the arraignment. Counsel de officio’s haste in proceeding with the arraignment falls short of the standard mandated by the rules for an effective and adequate counseling. The limited time allotted for consultation with accused-appellant seriously casts doubt on whether counsel de officio has indeed sufficiently explained to the accused-appellant the crime charged, the meaning of his plea, and its consequences. Verily, a judgment of conviction cannot stand upon an invalid arraignment. In the interest of substantial justice then, this Court has no recourse but to remand the case to the trial court for further and appropriate proceedings. (Ibid.)

6) Right to counsel de parte not absolute

An accused may exercise his right to counsel by electing to be represented either by a court-appointed lawyer or by one of his own choice. While his right to be represented by counsel is immutable, his option to secure the services of counsel de parte, however, is not absolute. The court is obliged to balance the privilege to retain a counsel of choice against the states’s and the offended party’s equally important right to speedy and adequate justice. Thus, the court may restrict the accused’s option to retain a counsel de parte if the accused insists on an attorney he cannot afford, or the chosen counsel is not a member of the bar, or the attorney declines to represent the accused for a valid reason, e.g. conflict of interest and the like. (People v. Serzo, G.R. No. 118435, 20 June 1997)

Also, the right to counsel de parte is, like other personal rights, waivable so long as (1) the waiver is not contrary to law, public order, public policy, morals or good customs; or prejudicial to a third person with a right recognized by law and (2) the waiver is unequivocally, knowingly and intelligently made. (Ibid.)

7) Absence of counsel de parte

There is no denial of the right to counsel where a counsel de oficio was appointed during the absence of the accused’s counsel de parte pursuant to the court’s desire to finish the case as early as practicable under the continuous trial system. (Amion v. Chiongson, A.M. No. RTJ-97-1371, 22 January 1999)

8) Amicus curiae

The term amicus curiae refers to a qualified expert who is a friend of the court. (Section 6 (l), Rule 3, Rules of Court)

Rule 14.04: A lawyer who accepts the cause of a person unable to pay his professional fees shall observe the same standard of conduct governing his relations with paying clients.

1) Pro bono lawyering

a) Same standard as with high paying client

The professional relationship between a lawyer and a client remains the same regardless of the reasons for the acceptance by counsel, and regardless of whether the case is highly paying or pro bono. (Vargas v. Arcilla, Jr., A.C. No. 10456, 08 September 2020)

A lawyer is bound to protect his client’s interests to the best of his ability and with utmost diligence. He should serve his client in a conscientious, diligent, and efficient manner; and provide the quality of service at least equal to that which he, himself, would expect from a competent lawyer in a similar situation. By consenting to be his client’s counsel, a lawyer impliedly represents that he will exercise ordinary diligence or that reasonable degree of care and skill demanded by his profession, and his client may reasonably expect him to perform his obligations diligently. (Violago v. Aranjuez, Jr., A.C. No. 10254, 09 March 2020)

b) Employment, express or implied

Formality is not an essential element of the employment of an attorney. The contract may be express or implied and it is sufficient that the advice and assistance of the attorney is sought and received, in matters pertinent to his profession. An acceptance of the relation is implied on the part of the attorney from his acting in behalf of his client in pursuance of a request by the latter. (Hilado v. David, G.R. No. L-961, 21 September 1949)

c) Engagement when lawyer voluntarily permits or acquiesces to consultation

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. (Ibid.)

Rule 2.01: A lawyer shall not reject, except for valid reasons, the cause of the defenseless or the oppressed.

1) Limitations

Where a respondent-lawyer appeared as legal counsel for the accused in the same case which he previously appeared as prosecutor, arguing the applicability of Rule 2.01, it was held that he violated Rule 6.03. When he entered his appearance on the Motion to Post Bail Bond Pending Appeal, Atty. Silvosa conveniently forgot Rule 15.03 which provides that “A lawyer shall not represent conflicting interests except by written consent of all concerned given after a full disclosure of facts.” (Catalan v. Silvosa, A.C. No. 7360, 24 July 2012)

Indeed, the prohibition against representation of conflicting interests applies although the attorney’s intentions were honest and he acted in good faith. (Ibid.)

Rule 2.02: In such cases, even if the lawyer does not accept a case, he shall not refuse to render legal advice to the person concerned if only to the extent necessary to safeguard the latter’s rights.

1) To safeguard one’s rights

Rule 2.02 does not extend to a client who is already represented by another counsel. Respondent-lawyer was well aware that Rodica was represented by another counsel in the RTC case. As a practicing lawyer, he should know that it is the said counsel, Atty. Ibutnande, who has the duty to prepare the said motion. In fact, he himself stated that it is Atty. Ibutnande who is in a better position to evaluate the merit of the withdrawal of the Motion for Reconsideration. Atty. Espejo’s claim that he drafted and signed the pleading just to extend assistance to Rodica deserves scant consideration. It is true that under Rules 2.01 and 2.02, Canon 2 of the Code of Professional Responsibility, a lawyer shall not reject, except for valid reasons, the cause of the defenseless or the oppressed, and in such cases, even if he does not accept a case, shall not refuse to render legal advise to the person concerned if only to the extent necessary to safeguard the latter’s right. (Rodica v. Lazaro, A.C. No. 9259, 23 August 2012)

iii. Valid grounds for refusal
Rule 14.03: A lawyer may not refuse to accept representation of an indigent client if: (a) he is not in a position to carry out the work effectively or competently; (b) he labors under a conflict of interest between him and the prospective client or between a present client and the prospective client.

1) Grounds for refusing representation to an indigent client

Grounds for refusing representation to an indigent client:

1) The lawyer is not in a position to carry out the work effectively or competently; or

2) He labors under a conflict of interest between him and the prospective client or between a present client and the prospective client. (Rule 14.03, Code of Professional Responsibility)

b. Candor, fairness, and loyalty to clients

Canon 15: A lawyer shall observe candor, fairness and loyalty in all his dealings and transactions with his clients.
i. Confidentiality rule
Rule 15.02: A lawyer shall be bound by the rule on privilege communication in respect of matters disclosed to him by a prospective client.

1) Attorney-client privilege

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. (Section 24 [b], Rule 130, Rules of Court)

a) Applies to attorney’s secretary, stenographer, or clerk

An attorney’s secretary, stenographer, or clerk cannot be examined, without the consent of the client and his employer, concerning any fact the knowledge of which has been acquired in such capacity. (Ibid.)

b) Applies to law student practice rule

The Rules safeguarding privileged communications between attorney and client shall apply to similar communications made to or received by the law student, acting for the legal clinic. (Section 3, Rule 138-A, Ibid.)

•••••

BAR EXAM QUESTION

(Question VIII-A, Legal and Judicial Ethics, 2017 Bar Exam)

Sancho Mahilig went to the office of Atty. Charm to engage her legal representation in the criminal case for adultery that the husband of his socialite friend had brought against him in the City Prosecutor’s Office in Manila. Atty. Charm thoroughly interviewed Sancho in her office with only Linda, the secretary/stenographer of Atty. Charm, the only other person present. On that occasion, Sancho candidly informed Atty. Charm about his illicit affair with the socialite wife, and gave many details. Linda faithfully recorded the interview.

During the trial of the criminal case for adultery, the trial prosecutor requested the court to issue a subpoena duces tecum to compel the production of the record of the interview and a subpoena ad testificandum to compel Linda to testify on the admission of the affair by Sancho. Atty. Charm objected to the request on the basis of lawyer-client confidentiality.

If you were the trial judge, how will you resolve the objection of Atty. Charm? Justify your answer. (4%)

Suggested Answer:

I will sustain the objection. Answer

Under the Rules of Court, an attorney’s secretary, stenographer, or clerk cannot be examined, without the consent of the client and his employer, concerning any fact the knowledge of which has been acquired in such capacity. Rule

In the case at bar, Linda acquired knowledge of the adultery, as well as presumably recorded or wrote down the interview, in her capacity as a secretary/stenographer of Atty. Charm. Accordingly, the attorney-client confidentiality extends to her prohibiting her from testifying against the client, Mr. Sancho Mahilig. Apply

Thus, Atty. Charm’s objection will be sustained. Conclusion

•••••

2) Factors to establish attorney-client privilege

Factors to establish attorney-client relationship:

1) There exists an attorney-client relationship, or a prospective attorney-client relationship, and it is by reason of this relationship that the client made the communication.

2) The client made the communication in confidence.

3) The legal advice must be sought from the attorney in his professional capacity. (Mercado v. Vitriolo, A.C. No. 5108, 26 May 2005)

a) 1st Factor: There exists an attorney-client relationship, or a prospective attorney-client relationship, and it is by reason of this relationship that the client made the communication.

Matters disclosed by a prospective client to a lawyer are protected by the rule on privileged communication even if the prospective client does not thereafter retain the lawyer or the latter declines the employment. The reason for this is to make the prospective client free to discuss whatever he wishes with the lawyer without fear that what he tells the lawyer will be divulged or used against him, and for the lawyer to be equally free to obtain information from the prospective client. (Ibid.)

1) If for other purpose; not privileged communication

On the other hand, a communication from a (prospective) client to a lawyer for some purpose other than on account of the (prospective) attorney-client relation is not privileged. (Ibid.)

In one case, where the client and his wife leased to their attorney a 1,328-hectare agricultural land for a period of ten years. In their contract, the parties agreed, among others, that a specified portion of the lease rentals would be paid to the client-lessors, and the remainder would be delivered by counsel-lessee to client’s listed creditors. The client alleged that the list of creditors which he had “confidentially” supplied counsel for the purpose of carrying out the terms of payment contained in the lease contract was disclosed by counsel, in violation of their lawyer-client relation, to parties whose interests are adverse to those of the client. As the client himself, however, states, in the execution of the terms of the aforesaid lease contract between the parties, he furnished counsel with the “confidential” list of his creditors. The Court ruled that this indicates that client delivered the list of his creditors to counsel not because of the professional relation then existing between them, but on account of the lease agreement. It was then held that a violation of the confidence that accompanied the delivery of that list would partake more of a private and civil wrong than of a breach of the fidelity owing from a lawyer to his client. (Ibid.)

b) 2nd Factor: The client made the communication in confidence.

The mere relation of attorney and client does not raise a presumption of confidentiality. The client must intend the communication to be confidential. (Ibid.)

A confidential communication refers to information transmitted by voluntary act of disclosure between attorney and client in confidence and by means which, so far as the client is aware, discloses the information to no third person other than one reasonably necessary for the transmission of the information or the accomplishment of the purpose for which it was given. (Ibid.)

Our jurisprudence on the matter rests on quiescent ground. Thus, a compromise agreement prepared by a lawyer pursuant to the instruction of his client and delivered to the opposing party, an offer and counter-offer for settlement, or a document given by a client to his counsel not in his professional capacity, are not privileged communications, the element of confidentiality not being present. (Ibid.)

c) 3rd Factor: The legal advice must be sought from the attorney in his professional capacity.

The communication made by a client to his attorney must not be intended for mere information, but for the purpose of seeking legal advice from his attorney as to his rights or obligations. The communication must have been transmitted by a client to his attorney for the purpose of seeking legal advice. (Ibid.)

If the client seeks an accounting service, or business or personal assistance,36 and not legal advice, the privilege does not attach to a communication disclosed for such purpose. (Ibid.)

3) No privilege to possible commission of a crime

The privilege cannot be invoked or used as a shield for an illegal act. It is not within the professional character of a lawyer to give advice on the commission of a crime. (Regala v. Sandiganbayan, En Banc, G.R. No. 105938, 20 September 1996)

The privilege against disclosure of confidential communications or information is limited only to communications which are legitimately and properly within the scope of a lawful employment of a lawyer. It does not extend to those made in contemplation of a crime or perpetration of a fraud. (Genato v. Silapan, A.C. No. 4078, 14 July 2003)

If the unlawful purpose is avowed, such as the client’s alleged intention to bribe government officials in relation to his case, the communication is not covered by the privilege as the client does not consult the lawyer professionally. It is not within the profession of a lawyer to advise a client as to how he may commit a crime as a lawyer is not a gun for hire. Thus, the attorney-client privilege does not attach, there being no professional employment in the strict sense. (Ibid.)

a) Privilege covers consultation of possible crime already committed

An important distinction must be made between (1) 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 (2) 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 is covered by the attorney-client privilege 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. (Regala v. Sandiganbayan, supra.)

•••••

BAR EXAM QUESTION

(Question II-A, Legal and Judicial Ethics, 2017 Bar Exam)

Pedro Tigas, a known toughie, asked Atty. Chloe to meet with him in the Jollibee Restaurant in Harrison Plaza because he wanted to seek her legal advice on an important matter. Atty. Chloe had once before been consulted by Pedro Tigas, who had then paid her well. When they met in Jollibee Restaurant, he confided his planned assassination of Pepeng Taga, his rival for control of the neighborhood in San Andres Bukid, Manila. He wanted her to represent him should he be apprehended for the assassination. Atty. Chloe did not agree, and left the restaurant in a hurry before Pedro Tigas could utter anything more.

A few days afterwards, Pepeng Taga was killed near his house in San Andres Bukid, Manila. The police follow-up team arrested Pedro Tigas on the basis of testimony by at least two residents that they had heard him saying two days before the killing that Pepeng Taga would not live beyond 48 hours. Should Atty. Chloe reveal to the police investigator what Pedro Tigas had stated to her at the Jollibee Restaurant without violating the confidence of the latter as a client? Explain your answer. (4%)

Suggested Answer:

Yes. Answer

Under jurisprudence, the attorney-client privilege cannot be invoked or used as a shield for an illegal act. It is not within the professional character of a lawyer to give advice on the commission of a crime. Rule

In the case at bar, Atty. Chloe is not bound by the attorney-client privilege. Mr. Tigas was consulting on a possible commission of a crime which is not covered by the privilege. Apply

Thus, Atty. Chloe may reveal to the police investigator what Mr. Tigas had stated to her. Conclusion

(Question II-B, Legal and Judicial Ethics, 2017 Bar Exam)

Assuming that the meeting between Pedro Tigas and Atty. Chloe in Jollibee Restaurant occurred after the killing of Pepeng Taga, and in that meeting Pedro Tigas expressly admitted to Atty. Chloe in strict confidence as his lawyer that he had shot Pepeng Taga. Is Atty. Chloe ethically bound to reveal the admission of Pedro Tigas to the police investigator what Pedro Tigas had stated to her at the Jollibee Restaurant? Explain your answer. (4%)

Suggested Answer:

No. Answer

Under jurisprudence, consulting a lawyer for representation from a criminal charge is covered by the attorney-client privilege. Rule

In the case at bar, the killing had already happened prior to consulting Atty. Chloe. Accordingly, when Mr. Tigas consulted Atty. Chloe as his lawyer and admitted to the killing in confidence, she was bound by attorney-client privilege. Apply

Thus, Atty. Chloe is not ethically bound to reveal the admission of Mr. Tigas to the police investigator. Conclusion

•••••

ii. Privileged communication

1) Special powers of trust and confidence

In engaging the services of an attorney, the client reposes on him special powers of trust and confidence. (Mercado v. Vitriolo, supra.)

Their relationship is strictly personal and highly confidential and fiduciary. The relation is of such delicate, exacting and confidential nature that is required by necessity and public interest. Only by such confidentiality and protection will a person be encouraged to repose his confidence in an attorney. (Ibid.)

The hypothesis is that abstinence from seeking legal advice in a good cause is an evil which is fatal to the administration of justice. Thus, the preservation and protection of that relation will encourage a client to entrust his legal problems to an attorney, which is of paramount importance to the administration of justice. (Ibid.)

2) Confidentiality: Attorney-client privilege

One rule adopted to serve this purpose is the attorney-client privilege: an attorney is to keep inviolate his client’s secrets or confidence and not to abuse them. Thus, the duty of a lawyer to preserve his client’s secrets and confidence outlasts the termination of the attorney-client relationship, and continues even after the client’s death. (Ibid.)

It is the glory of the legal profession that its fidelity to its client can be depended on, and that a man may safely go to a lawyer and converse with him upon his rights or supposed rights in any litigation with absolute assurance that the lawyer’s tongue is tied from ever disclosing it. With full disclosure of the facts of the case by the client to his attorney, adequate legal representation will result in the ascertainment and enforcement of rights or the prosecution or defense of the client’s cause. (Ibid.)

a) Prohibition against being a witness against a client

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, nor 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. (Section 24 (b), Rule 130, Rules of Court)

b) Extends even after attorney-client relations

A lawyer shall preserve the confidence and secrets of his client even after the attorney-client relations is terminated. (Canon 21, Code of Professional Repsonsibility)

NB: See Part I – Legal Ethics > B. Duties and Responsibilities of a Lawyer > 4. The clients > h. Preservation of client’s confidences (Canon 21)

3) Disclosure of client’s name

GENERAL RULE: As a matter of public policy, a client’s identity should not be shrouded in mystery. Under this premise, the general rule in our jurisdiction is that a lawyer may not invoke the privilege and refuse to divulge the name or identity of this client. (Regala v. Sandiganbayan, supra.)

The reasons advanced for the general rule are well established:

1) The court has a right to know that the client whose privileged information is sought to be protected is flesh and blood. (Ibid.)

2) 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. (Ibid.)

3) The privilege generally pertains to the subject matter of the relationship. (Ibid.)

4) 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.” He cannot be obliged to grope in the dark against unknown forces. (Ibid.)

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. (Ibid.)

2) Where disclosure would open the client to civil liability; his identity is privileged. (Ibid.)

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. (Ibid.)

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. (Ibid.)

4) Criminal liability

a) Betrayal of trust by an attorney or solicitor

In addition to the proper administrative action, a fine or imprisonment, or both, shall be imposed upon any attorney-at-law or solicitor who, by any malicious breach of professional duty or of inexcusable negligence or ignorance, shall prejudice his client, or reveal any of the secrets of the latter learned by him in his professional capacity. (Paragraph 1, Article 209, Revised Penal Code)

b) Revelation of secrets

The same penalty shall be imposed upon an attorney-at-law or solicitor who, having undertaken the defense of a client or having received confidential information from said client in a case, shall undertake the defense of the opposing party in the same case, without the consent of his first client. (Paragraph 2, Article 209, Revised Penal Code)

Related: Rule 15.02 is related to Canon 21 and rules therein.

•••••

BAR EXAM QUESTION

(Question I-A, Legal and Judicial Ethics, 2017 Bar Exam)

Brando & Luzon Law Office had a retainer agreement with Gregory, a businessman with shady connections. Gregory was recently charged in the RTC in Manila with money laundering in relation to an illegal drugs syndicate using Cable Co., his holding company, as its money laundering conduit. The members of the Brando & Luzon Law Office assigned to handle Gregory’s account, including yourself, were implicated in the money laundering case for their role in the incorporation of Cable Co. and in the active management of its business affairs.

In a bid to fortify the case against Gregory and the others, the public prosecutor approaches you (as the least guilty person who will qualify for a discharge as a state witness) and offers to make you a state witness. Should you accept the offer? Explain your answer. (5%)

Suggested Answer:

No. Answer

Under the Code of Professional Responsibility, 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. This is the rule on attorney-client privilege. Rule

In the case at bar, I am covered by the attorney-client privilege. Accordingly, without the consent of the client, I cannot be a witness to any communication made by him to me, or any advice I may have given in the course of, or with a view to, the professional employment of the law firm. Apply

Thus, I should not accept the offer. Conclusion

•••••

iii. Conflict of interest
Rule 15.01: A lawyer, in conferring with a prospective client, shall ascertain as soon as practicable whether the matter would involve a conflict with another client or his own interest, and if so, shall forthwith inform the prospective client.

1) Conflict of interest

Conflict of interest exists when a lawyer represents inconsistent interests of two or more opposing parties.  (Paces Industrial Corporation v. Salandanan, A.C. No. 1346, 25 July 2017)

The prohibition is founded on the principles of public policy and good taste. (Ibid.)

The rule prohibiting conflict of interest was fashioned to prevent situations wherein a lawyer would be representing a client whose interest is directly adverse to any of his present or former clients. In the same way, a lawyer may only be allowed to represent a client involving the same or a substantially related matter that is materially adverse to the former client only if the former client consents to it after consultation. The rule is grounded in the fiduciary obligation of loyalty. Throughout the course of a lawyer-client relationship, the lawyer learns all the facts connected with the client’s case, including the weak and strong points of the case. Knowledge and information gathered in the course of the relationship must be treated as sacred and guarded with care. It behooves lawyers, 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 lawyers, which is of paramount importance in the administration of justice. The nature of that relationship is, therefore, one of trust and confidence of the highest degree. (Ibid.)

a) Test on conflict of interest

The test is whether or not in behalf of one client, it is the lawyer’s duty to fight for an issue or claim, but it is his duty to oppose it for the other client. In short, if he argues for one client, this argument will be opposed by him when he argues for the other client. This rule covers not only cases in which confidential communications have been confided, but also those in which no confidence has been bestowed or will be used. Also, there is conflict of interests if the acceptance of the new retainer will require the attorney to perform an act which will injuriously affect his first client in any matter in which he represents him and also whether he will be called upon in his new relation to use against his first client any knowledge acquired through their connection. (Ibid.)

Another test of the inconsistency of interests is whether the acceptance of a new relation will prevent an attorney from the full discharge of his duty of undivided fidelity and loyalty to his client or invite suspicion of unfaithfulness or double-dealing in the performance of said duty. (Ibid.)

b) The 5 Rationales

1) The law seeks to assure clients that their lawyers will represent them with undivided loyalty. A client is entitled to be represented by a lawyer whom the client can trust. Instilling such confidence is an objective important in itself.

2) The prohibition against conflicts of interest seeks to enhance the effectiveness of legal representation. To the extent that a conflict of interest undermines the independence of the lawyer’s professional judgment or inhibits a lawyer from working with appropriate vigor in the client’s behalf, the client’s expectation of effective representation could be compromised.

3) A client has a legal right to have the lawyer safeguard confidential information pertaining to it. Preventing the use of confidential information against the interests of the client to benefit the lawyer’s personal interest, in aid of some other client, or to foster an assumed public purpose, is facilitated through conflicts rules that reduce the opportunity for such abuse.

4) Conflicts rules help ensure that lawyers will not exploit clients, such as by inducing a client to make a gift or grant in the lawyer’s favor.

5) Some conflict-of-interest rules protect interests of the legal system in obtaining adequate presentations to tribunals. In the absence of such rules, for example, a lawyer might appear on both sides of the litigation, complicating the process of taking proof and compromise adversary argumentation. (Ibid.)

c) Extends even after termination

Even the termination of the attorney-client relationship does not justify a lawyer to represent an interest adverse to or in conflict with that of the former client. The spirit behind this rule is that the client’s confidence once given should not be stripped by the mere expiration of the professional employment. Even after the severance of the relation, a lawyer should not do anything that will injuriously affect his former client in any matter in which the lawyer previously represented the client. Nor should the lawyer disclose or use any of the client’s confidences acquired in the previous relation. (Ibid.)

In this regard, Canon 17 of the CPR expressly declares that: “A lawyer owes fidelity to the cause of his client and he shall be mindful of the trust and confidence reposed in him.” The lawyer’s highest and most unquestioned duty is to protect the client at all hazards and costs even to himself. (Ibid.)

The protection given to the client is perpetual and does not cease with the termination of the litigation, nor is it affected by the client’s ceasing to employ the attorney and retaining another, or by any other change of relation between them. It even survives the death of the client. (Ibid.)

f) Limitations

A lawyer’s immutable duty to a former client does not cover transactions that occurred beyond the lawyer’s employment with the client. The intent of the law is to impose upon the lawyer the duty to protect the client’s interests only on matters that he previously handled for the former client and not for matters that arose after the lawyer-client relationship has terminated. (Ibid.)

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.

1) Opposing interests

Under the Rules 15.03, Canon 15, and Canon 21, it is explicit that a lawyer is prohibited from representing new clients whose interests oppose those of a former client in any manner, whether or not they are parties in the same action or on totally unrelated cases. (Ibid.)

a) Written consent required to represent both

A lawyer must secure the written consent of all concerned parties after a full disclosure of the facts. Respondent-lawyer, however, failed to present any such document. He points to the fact that complainant approved several transactions between him and the complainant.

(1) Good faith not a defense against double-dealing

The claim of respondent-lawyer that he acted in good faith and with honest intention will also not exculpate him as such claim does not render the prohibition inoperative. In the same manner, his claim that he could not turn down the spouses as no other lawyer is willing to take their case cannot prosper as it is settled that while there may be instances where lawyers cannot decline representation they cannot be made to labor under conflict of interest between a present client and a prospective one. Granting also that there really was no other lawyer who could handle the spouses’ case other than him, still he should have observed the requirements laid down by the rules by conferring with the prospective client to ascertain as soon as practicable whether the matter would involve a conflict with another client then seek the written consent of all concerned after a full disclosure of the facts. This respondent failed to do thus exposing himself to the charge of double-dealing. (Gonzales v. Cabucana, A.C. No. 6836, 23 January 2006)

2) Previous consultation bars lawyer

That Attorney Francisco’s law firm mailed to the plaintiff a written opinion over his signature on the merits of her case; that this opinion was reached on the basis of papers she had submitted at his office; that Mrs. Hilado’s purpose in submitting those papers was to secure Attorney Francisco’s professional services. Granting the facts to be no more than these, the relation of attorney and client between Attorney Francisco and Mrs. Hilado ensued. (Hilado v. David, G.R. No. L-961, 21 September 1949)

The principle which forbids an attorney who has been engaged to represent a client from thereafter appearing on behalf of the client’s opponent applies equally even though during the continuance of the employment nothing of a confidential nature was revealed to the attorney by the client. (Ibid. citing Christian vs. Waialua Agricultural Co., 30 Hawaii, 553, Footnote 7, C. J. S., 828.)

Where it appeared that an attorney, representing one party in litigation, had formerly represented the adverse party with respect to the same matter involved in the litigation, the court need not inquire as to how much knowledge the attorney acquired from his former during that relationship, before refusing to permit the attorney to represent the adverse party. (Ibid. citing Brown vs. Miller, 52 App. D. C. 330; 286, F. 994.)

In order that a court may prevent an attorney from appearing against a former client, it is unnecessary that the ascertain in detail the extent to which the former client’s affairs might have a bearing on the matters involved in the subsequent litigation on the attorney’s knowledge thereof. (Ibid. citing Boyd vs. Second Judicial Dist. Court, 274 P., 7; 51 Nev., 264.)

This rule has been so strictly that it has been held an attorney, on terminating his employment, cannot thereafter act as counsel against his client in the same general matter, even though, while acting for his former client, he acquired no knowledge which could operate to his client’s disadvantage in the subsequent adverse employment. (Ibid. citing Pierce vs. Palmer [1910], 31 R. I., 432; 77 Atl., 201, Ann. Cas., 1912S, 181.)

•••••

BAR EXAM QUESTION

(Question X, Legal and Judicial Ethics, 2018 Bar Exam)

In a complaint for disbarment, Connie alleged that she engaged the services of Atty. Cesar Corpuz in the preparation and execution in her favor of a Deed of Sale over a parcel of land from her common-law husband. Subsequently, Atty. Corpuz filed a civil case on behalf of Constancia, the legal wife of Connie’s common-law husband, for the annulment of the Deed of Sale, impleading Connie as defendant.

In his defense, Atty. Corpuz asserted that, with the permission of Constancia, he wrote a letter to Connie informing the latter of Constancia’s adverse claim and urging her to settle the same, but Connie ignored his letter. He also said that Connie did not object to his handling of the case on behalf of Constancia; therefore, he felt free to file the complaint against her.

Is Atty. Corpuz guilty of misconduct for representing conflicting interests? (5%)

Suggested Answer:

Yes. Answer

Under the Code of Professional Responsibility, a lawyer shall not represent conflicting interests except by written consent of all concerned given after a full disclosure of the facts. Rule

In the case at bar, there is no showing that Atty. Corpuz obtaining a written consent of all concerned parties after a full disclosure of the facts. His letter to Connie is only a notice. As to the claim that she did not object, if true, it appears to be verbal only. Similarly, on the side of Constancia, Atty. Corpuz did not obtain a written consent as well. Both parties should have given their written consent. Apply

Thus, Atty. Corpuz is guilty of misconduct for representing conflicting interest. Conclusion

•••••

Rule 15.04: A lawyer may, with the written consent of all concerned, act as mediator, conciliator or arbitrator in settling disputes.

•••••

BAR EXAM QUESTION

(Question V, Legal and Judicial Ethics, 2017 Bar Exam)

Eva consulted Atty. Doble Kara, a well-known solo practitioner, to represent her as a probable heir to the huge estate of her late lamented grandaunt who died without issue. After Atty. Doble Kara perused the documents relevant to the estate presented by Eva, he told Eva that he could not be of help to her.

A few days later, Eva learned that Atty. Doble Kara had just initiated intestate proceedings involving the same estate in the RTC, and the petitioner seeking appointment as administratrix was Mely, Eva’s hostile cousin and co-heir to the estate.

Eva moved to immediately disqualify Atty. Doble Kara from representing Mely on the ground of conflict of interest, but Atty. Doble Kara explained to the estate court that there was no conflict of interest because he had no lawyer-client relationship with Eva. He further indicated that Eva had not also paid him any retainer fee.

Given his explanations to the estate court, may Atty. Doble Kara ethically represent Mely? (4%)

Suggested Answer:

No. Answer

Under jurisprudence, previous consultation bar a lawyer from representing another party on the ground of conflict of interest. Otherwise stated, if a lawyer is consulted on a matter and turned down the engagement, he/she may not accept engagement on the same matter for an opposing party on the ground of conflict of interest. Rule

In the case at bar, Eva consulted Atty. Kara for the purpose of being represented in the estate proceeding of her grandaunt resulting in giving the lawyer the documents to be reviewed. While Atty. Kara declined representation, she is barred from representing an opposing party, in this case refers to Mely, on the same matter that she was previously consulted on. Apply

Thus, Atty. Kara cannot ethically represent Mely. Conclusion

•••••

iv. Candid and honest advice to clients
Rule 15.05: 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 understating the prospects of the case.
v. Compliance with laws
Rule 15.06: A lawyer shall not state or imply that he is able to influence any public official, tribunal or legislative body.

1) Influence peddling

In their conversations, the respondent-lawyer told the complainant that the judge handling the case would rule in their favor only if he would be given 10% of the value of the property at Better Living Subdivision, Parañaque, and that the handling judge consequently agreed on the fee of ₱200,000.00 but needed an additional ₱50,000.00 “for the boys” in the Court of Appeals and the Supreme Court. In doing so, the respondent committed calumny, and thereby violated Rules 15.06 and 15.07 of Canon 15 of the Code of Professional Responsibility. (Domingo v. Revilla, A.C. No. 5473, 23 January 2018)

By implying that he can negotiate a favorable ruling for the sum of ₱8,000.00, respondent-lawyer trampled upon the integrity of the judicial system and eroded confidence on the judiciary. This gross disrespect of the judicial system shows that he is wanting in moral fiber and betrays the lack of integrity in his character. The practice of law is a privilege, and respondent has repeatedly shown that he is unfit to exercise it. (Plumptre v. Rivera, A.C. No. 11350, 09 August 2016)

Respondent likewise stated that his “experience with [DOJ] Secretary Gonzales is, he is very open;” and that “because of my practice and well, candidly I belong also to a political family, my father was a Congressman. So, he (Gonzalez) knows of the family and he knows my sister was a Congresswoman of Pasay and they were together in Congress. In other words, I am not a complete stranger to him.” Upon questioning by Commissioner Rico A. Limpingco, respondent admitted that he was personally acquainted with the Secretary; however, they were not that close. These statements and others made during the hearing establish respondent’s admission that 1) he personally approached the DOJ Secretary despite the fact that the case was still pending before the latter; and 2) respondent caused the preparation of the draft release order on official DOJ stationery despite being unauthorized to do so, with the end in view of “expediting the case.” The way respondent conducted himself manifested a clear intent to gain special treatment and consideration from a government agency. This is precisely the type of improper behavior sought to be regulated by the codified norms for the bar. Respondent’s duty-bound to actively avoid any act that tends to influence, or may be seen to influence, the outcome of an ongoing case, lest the people’s faith in the judicial process is diluted. (Jimenez v. Verano, A.C. No. 8108, 15 July 2014)

Rule 15.07: A lawyer shall impress upon his client compliance with the laws and the principles of fairness.

1) Fair and honest means

A lawyer must employ only fair and honest means to attain the lawful objectives of his client. It is his duty to counsel his clients to use peaceful and lawful methods in seeking justice and refrain from doing an intentional wrong to their adversaries. (Rural Bank of Calape, Inc. v. Florido, A.C. No. 5736, 18 June 2010)

Rule 15.07 thereof mandates a lawyer to impress upon his client compliance with the laws and principles of fairness. Indeed, in preparing and notarizing a deed of sale within the prohibited period to sell the subject property under the law, respondent assisted, if not led, the contracting parties, who relied on her knowledge of the law being their lawyer, to an act constitutive of a blatant disregard for or defiance of the law. (Dimayuga v. Rubia, A.C. No. 8854, 03 July 2018)

vi. Concurrent practice with another profession
Rule 15.08: A lawyer who is engaged in another profession or occupation concurrently with the practice of law shall make clear to his client whether he is acting as a lawyer or in another capacity.

1) Express and make clear another capacity

Another misconduct committed by Atty. Linsangan was his act of selling the entire 12,331 square meters property and making it appear that he was specifically authorized to do so by complainants as well as by the other persons to whom portions of the property had been previously adjudicated. However, a perusal of the supposed Special Power of Attorney attached to the Deed of Absolute Sale, save for that executed by his wife and children, only authorizes Atty. Linsangan to represent complainants in the litigation of cases involving Juan’s properties. Nothing in said Special Power of Attorney authorizes Atty. Linsangan to sell the entire property including complainants’ undivided share therein. Atty. Linsangan’s reasoning that he only took it upon himself to sell the property because complainants were unfamiliar with real estate transactions does not exculpate him from liability. If indeed that were the case, then it is incumbent upon Atty. Linsangan to make it clear to the complainants that he was acting in such capacity and not as their lawyer. But even this, Atty. Linsangan failed to do. (Heirs of Juan De Dios E. Carlos v. Linsangan, A.C. No. 11494, 24 July 2017)

2) Not barred from dealing with clients

As a rule, a lawyer is not barred from dealing with his client but the business transaction must be characterized with utmost honesty and good faith.  The measure of good faith which an attorney is required to exercise in his dealings with his client is a much higher standard than is required in business dealings where the parties trade at “arms length.”  Business transactions between an attorney and his client are disfavored and discouraged by the policy of the law. Hence, courts carefully watch these transactions to assure that no advantage is taken by a lawyer over his client. This rule is founded on public policy for, by virtue of his office, an attorney is in an easy position to take advantage of the credulity and ignorance of his client. Thus, no presumption of innocence or improbability of wrongdoing is considered in an attorney’s favor. (Nakpil v. Valdes, A.C. No. 2040, 04 March 1998)

c. Client’s money and properties

Canon 16: A lawyer shall hold in trust all moneys and properties of his client that may come to his profession.

1) Fiduciary relationship

The relationship between a lawyer and his client is highly fiduciary and prescribes on a lawyer a great fidelity and good faith. The highly fiduciary nature of this relationship imposes upon the lawyer the duty to account for the money or property collected or received for or from his client. Thus, a lawyer’s failure to return upon demand the funds held by him on behalf of his client, as in this case, gives rise to the presumption that he has appropriated the same for his own use in violation of the trust reposed in him by his client. (Yuzon v. Agleron, G.R. No. 10684, 24 January 2018)

Where a client gives money to his lawyer for a specific purpose, such as: to file an action, to appeal an adverse judgment, to consummate a settlement, or to pay a purchase price for a parcel of land, the lawyer, upon failure to spend the money entrusted to him or her for the purpose, must immediately return the said money entrusted by the client. (Gutierrez v. Maravilla-Ona, A.C. No. 10944, 12 July 2016)

i. Fiduciary relationship
Rule 16.01: A lawyer shall account for all money or property collected or received for or from the client.

1) Accountability

The highly fiduciary nature of an attorney-client relationship imposes on a lawyer the duty to account for the money or property collected or received for or from his client. (Sison v. Valdez, A.C. No. 11663, 31 July 2017)

Verily, when a lawyer receives money from the client for a particular purpose, the lawyer is bound to render an accounting to the client showing that the money was spent for the intended purpose. Consequently, if not used accordingly, the money must be returned immediately to the client.16 As such, a lawyer’s failure to return the money to his client despite numerous demands is a violation of the trust reposed on him and is indicative of his lack of integrity. (Olayta-Camba v. Bongon, A.C. No. 8826, 25 March 2015)

Respondent’s misappropriation of the money entrusted to him and his refusal to account for it to his client despite repeated demands were competent proof of his unfitness for the confidence and trust reposed on him. His acts showed a lack of personal honesty and good moral character as to render him unworthy of public confidence. He held the money in trust for his client as settlement of the case he was handling. Upon receipt thereof, he was under obligation to immediately turn it over, in the absence of a showing that he had a lien over it. As a lawyer, he should have been scrupulously careful in handling money entrusted to him in his professional capacity, because a high degree of fidelity and good faith on his part is exacted. (Ong v. Grijaldo, A.C. No. 4724, 30 April 2003)

ii. Co-mingling of funds
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.

1) No commingling of funds

Regarding the issue of commingling of funds, a client’s funds for the lawyer’s personal use and depositing the same in his personal account is prohibited. (Aguilar-Dyquiangco v. Arellano, En Banc, A.C. No. 10541, 12 July 2016)

It is not only important to serve their clients with utmost zeal and competence. It is also an equally important responsibility for them to properly separate and account for any money given to them by their clients, and to resist the temptation to borrow money from their clients, in order to preserve the trust and confidence reposed upon lawyers by every person requiring their legal advice and services. (Ibid.)

A lawyer is obliged to hold in trust money of his client that may come to his possession. As trustee of such funds, he is bound to keep them separate and apart from his own. (Mundo v. Capistrano, A.C. No. 6903, 16 April 2012)

iii. Delivery of funds
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.

1) Judicial protection to lawyers and his attorney’s fees

A lawyer is as much entitled to judicial protection against injustice, imposition or fraud on the part of his client as the client against abuse on the part of his counsel. The duty of the court is not alone to see that a lawyer acts in a proper and lawful manner; it is also its duty to see that a lawyer is paid his just fees. With his capital consisting of his brains and with his skill acquired at tremendous cost not only in money but in expenditure of time and energy, he is entitled to the protection of any judicial tribunal against any attempt on the part of his client to escape payment of his just compensation. It would be ironic if after putting forth the best in him to secure justice for his client he himself would not get his due. (Villarama v. De Jesus, G.R. No. 217004, 17 April 2017)

2) The 2 kinds of attorney’s lien

1) Retaining alien; and

2) The other charging lien. (De Caiña v. Victoriano, G.R. No. L-12905, 26 February 1959)

The right of a lawyer to insure the payment of his professional fee is either to retain the funds, documents, and papers of his client which may have lawfully come into his possession, or to enforce it upon any judgment for the payment of money he may secure in favor of his client. (Ibid.)

a) Retaining lien

The retaining lien is the right of the attorney to retain the funds, documents, and papers of his client which have lawfully come into his possession until his lawful fees and disbursements have been paid and to apply such funds to the satisfaction thereof. (Ibid.)

The retaining lien is dependent upon possession and does not attach to anything not in attorney’s hands. The lien exists only so long as the attorney retains possession ends. (Ibid.)

b) Charging lien

The charging lien is the right which the attorney has upon all judgments for the payment of money, and executions issued in pursuance of said judgments, which he has secured in litigation of his client. (Ibid.)

In the instant case, the lien which respondent attorney tried to enforce for the satisfaction of his professional fee is charging in the sense that his purpose is to make of record his claim in order that it may be considered in the execution of the judgment that may be rendered in the case, and this he has already done. Thus, he had already caused a statement of his claim to be entered in the record of the ejectment case and that is all what the rule requires of him to do. Certainly, he cannot go any further, such as what he led the trial court to do, that is, to have his lien annotated on the back of the title of petitioners which is beyond the province of the court. The lien of respondent is not of a nature which attaches to the property in litigation but is at most a personal claim enforceable by a writ of execution. (Ibid.)

•••••

BAR EXAM QUESTION

(Question XV, Legal and Judicial Ethics, 2018 Bar Exam)

Charo Conti engaged the services of Atty. Cesar Compostela for the registration of a property located in Cebu, and which property she had inherited together with her siblings. It was agreed in writing that Charo would pay Atty. Compostela PhP 20,000 as acceptance fee and PhP 2,000 as appearance fee. During the last hearing of the case, Atty. Compostela demanded an additional amount of PhP 20,000 for the preparation of a memorandum, which he said would further strengthen Charo’s position, plus 20% of the total area of the property as additional fees for his services. Charo did not agree to Atty. Compostela’s demands since they were contrary to their agreement. Besides, the property was co-owned with her siblings and she could not agree to Atty. Compostela’s demands without the consent of her co-heirs.

Four (4) years later, the petition for registration was approved and the Land Registration Authority notified Charo that the decree of registration and the original of the owner’s duplicate copy of the title had already been transmitted to the Register of Deeds (RD). When Charo went to the RD, she was surprised to discover that the owner’s duplicate copy of the title had already been claimed by, and released to, Atty. Compostela. Despite demand, Atty. Compostela refused to deliver the title to Charo until she paid the additional attorneys’ fees that he was demanding. Charo then instituted a complaint for disbarment against him. In his defense, Atty. Compostela claimed that:

(a) he had a right to retain the owner’s duplicate of the title as his retaining lien; and

Rule on Atty. Compostela’s defenses. (2.5% each)

Suggested Answer:

(a) On Atty. Compostela’s claim that he had a right to retain the owner’s duplicate of the title as his retaining lien:

His claim is not correct. Answer

Under the Code of Professional Responsibility, a retaining lien is the right of the attorney to retain the funds, documents, and papers of his client which have lawfully come into his possession until his lawful fees and disbursements have been paid and to apply such funds to the satisfaction thereof. Rule

In the case at bar, Ms. Conti as the client did not agree to the additional fees demanded by Atty. Compostela. Accordingly, Atty. Compostela as no basis for his retaining lien. His possession is unlawful. Apply

Thus, Atty. Compostela may be subject to disciplinary action. Conclusion

•••••

3) Registration of lien

The attorney may cause a statement of his lien to be registered even before the rendition of any judgment, the purpose being merely to establish his right to the lien. The recording is distinct from the enforcement of the lien, which may take place only after judgment is secured in favor of the client. (Palanca v. Pecson, En Banc, G.R. Nos. L-6334 and L-6346, 25 February 1954)

a) Effective upon entry in the record and notice to adverse party

Under this Section 33, Rule 127 of the Rules of Court, this lien, whether retaining or charging, takes legal effect only from and after, but not before, notice of said lien has been entered in the record and served on the adverse party. (De Caiña v. Victoriano, supra.)

b) Protection extends even to lawyer who does not finish the case

It also permits the registration of an attorney’s lien, although the lawyer concerned does not finish the case successfully in favor of his client, because an attorney who quits or is dismissed before the conclusion of his assigned task is as much entitled to the protection of the rule. Otherwise, a client may easily frustrate its purpose. (Palanca v. Pecson, En Banc, supra.)

4) How attorney’s fees may be asserted

Counsel’s claim for attorney’s fees may be asserted either:

1) In the very action in which the services in question have been rendered; or,

2) In a separate action. (Quirante v. IAC, G.R. No. 73886, 31 January 1989)

If the first alternative is chosen, the Court may pass upon said claim, even if its amount were less than the minimum prescribed by law for the jurisdiction of said court, upon the theory that the right to recover attorney’s fees is but an incident of the case in which the services of counsel have been rendered . It also rests on the assumption that the court trying the case is to a certain degree already familiar with the nature and extent of the lawyer’s services. The rule against multiplicity of suits will in effect be subserved. (Ibid.)

•••••

BAR EXAM QUESTION

(Question III, Legal and Judicial Ethics, 2018 Bar Exam)

Carina was dismissed by her employer for breach of trust and confidence, and for willful violation of company rules and policies. She filed an action for illegal dismissal claiming that her termination was without legal basis. The Labor Arbiter found that she was illegally dismissed and awarded her the amount of PhP 80 million. On appeal to the National Labor Relations Commission (NLRC), the award was reduced to PhP 40 million as separation pay, plus PhP 5 million for the value of her stock option plans which would have vested if she were not illegally dismissed from her job. Unsatisfied with the NLRC’s decision, she appealed to the Court of Appeals (CA) the amount of monetary award granted by the NLRC. She engaged the services of Casal, Casos and Associates to handle her appeal. Her retainer agreement with Casal, Casos and Associates provided for contingent fees equivalent to 10% of her claim for separation pay and 10% of the value of stock options to be awarded to her.

The CA decision was not favorable to Carina, so she appealed the same to the Supreme Court (the Court). While the case was pending appeal with the Court, Carina entered into a compromise agreement with her employer to terminate the case upon payment to her of the full amount of PhP 40 million, less the PhP 15 million previously paid to her by her employer. Before the compromise agreement was finalized, Carina terminated the services of Casal, Casos and Associates and asked them to withdraw from the case pending before the Court. The parties negotiated the compromise agreement without the participation of their lawyers since the employer imposed the condition that no lawyers should be involved in the compromise negotiation. She, together with her employer, then filed the Compromise Agreement for approval by the Court, and sought the termination of the case, with prejudice.

Casal, Casos and Associates filed a motion to intervene in the case pending with the Court, praying that Carina be ordered to pay them PhP 4 million, representing 10% of the amount received by Carina from her employer in settlement of the case, plus 6% legal interest from the date of filing of the motion for intervention, until fully paid. The intervenors claimed that they were dismissed without justifiable cause prior to the signing of the compromise agreement for the reason that Carina, their client, wanted to evade payment of their legal fees. Carina claimed they were dismissed because Attys. Casal and Casos, who personally handled her case, had resigned from the law firm to join the government, and because of the negligence and failure of her lawyers to attend to her case. In reply, the intervenors said that the engagement was with the law firm and not with individual lawyers. The law firm also presented letters signed by their client commending them for work done well in the case.

(b) Should Casal, Casos and Associates be allowed to intervene in the case pending before the Court in order to collect their fees from Carina? (2.5%)

(c) Can Carina refuse to pay attorneys’ fees on the ground that the lawyers who personally handled her case had already resigned from the law firm with which she had contracted? (2.5%)

(d) May Carina’s employer, defendant in this case, be held solidarily liable with Carina for the payment of the attorneys’ fees of Carina’s lawyers? (2.5%)

(e) May the intervenors collect legal interest in addition to their attorneys’ fees? (2.5%)

Suggested Answer:

Yes. Answer

Under the Code of Professional Responsibility and jurisprudence, a lawyer is entitled to an attorney’s lien and the same may be asserted in the very action in which the services in question have been rendered. It has been held that a lawyer is as much entitled to judicial protection against injustice, imposition or fraud on the part of his client, particularly against evading payment of attorney’s fees.

In the case at bar, Casal, Casos and Associates (the “Law Firm”) extended legal services to Carina. Accordingly, the Law Firm may assert their claim to attorney’s fees in the very case pending before the Supreme Court. Apply

Thus, Casal, Casos and Associates should be allowed to intervene in the case pending before the Court in order to collect their fees from Carina. Conclusion

•••••

iv. Borrowing or lending
Rule 16.04: A lawyer shall not borrow money from his client unless the client’s interests are fully protected by the nature of the case or by independent advice. Neither shall a lawyer lend money to a client except, when in the interest of justice, he has to advance necessary expenses in a legal matter he is handling for the client.

1) Unethical to borrow from client

It is unethical for a lawyer to obtain loans from the Complainant during the existence of a lawyer-client relationship. (Aguilar-Dyquiangco v. Arellano, A.C. No. 10541, 12 July 2016)

The rule against borrowing of money by a lawyer from his client is intended to prevent the lawyer from taking advantage of his influence over his client. The rule presumes that the client is disadvantaged by the lawyer’s ability to use all the legal maneuverings to renege on his obligation. Suffice it to say, the borrowing of money or property from a client outside the limits laid down in the CPR is an unethical act that warrants sanction. (Yu v. Dela Cruz, A.C. No. 10912, 19 January 2016)

d. Fidelity to client’s cause

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.

1) Fidelity to clients

The Code does not only exact from lawyers a firm respect for the law, legal processes, and the courts, but also mandates the utmost degree of fidelity and good faith in dealing with the moneys entrusted to them pursuant to their fiduciary relationship. (Padilla v. Samson, A.C. No. 10253, 22 August 2017)

Once a lawyer 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. 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. (Santiago v. Fojas, A.C. No. 4103, 07 September 1995)

i. Use of fair and honest means
Rule 19.01: 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 criminal charges to obtain an improper advantage in any case or proceeding.

1) Fair and honest means

Clients are led to expect that lawyers would always be mindful of their cause and, accordingly, exercise the required degree of diligence in handling their affairs. On the other hand, the lawyer is expected to maintain, at all times, a high standard of legal proficiency, and to devote his full attention, skill, and competence to the case, regardless of its importance and whether or not he accepts it for a fee. To this end, he is enjoined to employ only fair and honest means to attain lawful objectives.. (Padilla v. Samson, A.C. No. 10253, 22 August 2017)

ii. Client’s fraud
Rule 19.02: A lawyer who has received information that his client has, in the course of the representation, perpetrated a fraud upon a person or tribunal, shall promptly call upon the client to rectify the same, and failing which he shall terminate the relationship with such client in accordance with the Rules of Court.

1) When fraud is perpetuated by a client

Canon 19 outlines the procedure in dealing with clients who perpetrated fraud in the course of a legal proceeding. This is consistent with the mandate that a lawyer shall represent his client with zeal and only within the bounds of the law, Rule 19.02 of the same Canon. As a lawyer, respondent is expected to know this Rule. Instead of inaction, he should have confronted complainant and ask her to rectify her fraudulent representation. If complainant refuses, then he should terminate his relationship with her. (Dalisay v. Mauricio, A.C. No. 5655, 23 January 2006)

•••••

BAR EXAM QUESTION

(Question A.4, Legal and Judicial Ethics, 2019 Bar Exam)

Mr. L sought legal advice from his lawyer, Atty. M, regarding the possibility of annulling his marriage. In the course of their conversation, Mr. L mentioned that he would be able to immediately pay Atty. M’s legal fees because he received a huge kickback from a favored supplier in relation to his work as member of his Municipality’s Bids and Awards Committee.

(a) Is the communication made by Mr. L to Atty. M regarding the kickback he received presumed to be confidential? Explain. (3%)

Suggested Answer:

Yes. Answer

Under the Code of Professional Responsibility and jurisprudence, a lawyer shall be bound by the rule on privilege communication in respect of matters disclosed to him by a prospective client. One of the factors to determine whether there is an attorney-client relationship is that the client made the communication anticipating a prospective attorney-client relationship. Rule

In the case at bar, Mr. L was in the process of seeking legal advice from Atty. M when Mr. L mentioned of the kickback. The revelation was hence in the context of a prospective attorney-client relationship which is covered by the rule on privilege communication. Apply

Thus, the communication made by Mr. L to Atty. M regarding the kickback he received is presumed to be confidential. Conclusion

(b) What is the duty of a lawyer when, in the course of his representation, he discovered that his client committed fraud upon a person or a tribunal? (2%)

Suggested Answer:

Under the Code of Professional Responsibility, a lawyer who has received information that his client has, in the course of the representation, perpetrated a fraud upon a person or tribunal, shall promptly call upon the client to rectify the same, and failing which he shall terminate the relationship with such client in accordance with the Rules of Court.

•••••

iii. Procedure in handling cases
Rule 19.03: A lawyer shall not allow his client to dictate the procedure in handling the case.

1) Not to be dictated on procedure in handling case

The Supreme Court was appalled at the respondent-lawyer’s boldness in saying that his failure to file the position paper in the tenancy case was due to the complainant’s fault. He lost sight of the fact that he was engaged by the complainant to plead his case in the tenancy dispute in the way he (respondent) believed the case should be handled, not in any other way. Under the Code of Professional Responsibility, a lawyer “shall not allow his client to dictate the procedure in handling the case.” Thus, we cannot accept his lame excuse that the complainant failed to provide him with the documents he needed in the preparation of the position paper and that he and the complainant had a difference of opinion on how the case should be handled. Notably, even the Investigator recognized that the complainant submitted documents to the respondent; whatever was lacking could not be submitted as the complainant could not even contact the respondent despite repeated attempts. (Olvida v. Gonzales, En Banc, A.C. No. 5732, 16 June 2015)

Respondent-lawyer refers to the alleged obnoxious attitude of complainant in trying to manipulate the manner in which he was handling the case as the main reason for his failure to formally offer his exhibits in contravention of the order of the court. But respondent should bear in mind that while a lawyer owes utmost zeal and devotion to the interest of his client, he also has the responsibility of employing only fair and honest means to attain the lawful objectives of his client and he should not allow the latter to dictate the procedure in handling the case. (Fernandez v. Novero, A.C. No. 5394, 02 December 2002)

e. Competence and diligence

Canon 18: A lawyer shall serve his client with competence and diligence.

1) Diligence

Diligence is “the attention and care required of a person in a given situation and is the opposite of negligence.” A lawyer serves his client with diligence by adopting that norm of practice expected of men of good intentions. He thus owes entire devotion to the interest of his client, warm zeal in the defense and maintenance of his rights, and the exertion of his utmost learning, skill, and ability to ensure that nothing shall be taken or withheld from him, save by the rules of law legally applied. It is axiomatic in the practice of law that the price of success is eternal diligence to the cause of the client. (Edquibal v. Ferrer, A.C. No. 5687, 03 February 2005)

a) Ordinary diligence, not extraordinary diligence

The practice of law does not require extraordinary diligence (exactissima diligentia) or that “extreme measure of care and caution which persons of unusual prudence and circumspection use for securing and preserving their rights.” All that is required is ordinary diligence (diligentia) or that degree of vigilance expected of a bonus pater familias.. (Ibid.)

b) Competence and diligence once engaged

Canon 18 of the CPR mandates that once a lawyer agrees to handle a case, it is the lawyer’s duty to serve the client with competence and diligence. (Ignacio v. Alviar, A.C. No. 11482, 17 July 2017)

Atty. Millo’s acceptance of the sums of money from Johnny and Abella to enable him to attend to the transfer of title and to complete the adoption case initiated the lawyer-client relationship between them. From that moment on, Atty. Millo assumed the duty to render competent and efficient professional service to them as his clients. Yet, he failed to discharge his duty. He was inefficient and negligent in going about what the professional service he had assumed required him to do. He concealed his inefficiency and neglect by giving false information to his clients about having already paid the capital gains tax. In reality, he did not pay the capital gains tax, rendering the clients liable for a substantial financial liability in the form of penalties. (Pesto v. Millo, A.C. No. 9612, 13 March 2013)

i. Adequate protection
Rule 18.02: A lawyer shall not handle any legal matter without adequate preparation.

1) Adequate preparation, required

Rule 18.02 of the Code provides that a lawyer shall not handle any legal matter without adequate preparation. While it is true that respondent was not complainant’s lawyer from the trial to the appellate court stage, this fact did not excuse him from his duty to diligently study a case he had agreed to handle. If he felt he did not have enough time to study the pertinent matters involved, as he was approached by complainant’s husband only two days before the expiration of the period for filing the Appellant’s Brief, respondent should have filed a motion for extension of time to file the proper pleading instead of whatever pleading he could come up with, just to “beat the deadline set by the Court of Appeals.” (Hernandez v. Padilla, A.C. No. 9387, 20 June 2012)

2) Adequate attention

A lawyer should give adequate attention, care and time to his case. Once he agrees to handle a case, he should undertake the task with dedication and care. If he fails in this duty, he is not true to his oath as a lawyer. Hence, a lawyer must accept only as much cases as he can efficiently handle, otherwise his clients’ interests will suffer. It is not enough that a lawyer possesses the qualification to handle the legal matter. He must also give adequate attention to his legal work. (Pariñas v. Paguinto, A.C. No. 6297, 13 July 2004)

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

1) Client is bound by counsel’s actions

A client is bound by the action of his counsel in the conduct of the case and cannot be heard to complain that the result might have been different had he proceeded differently. (Mendoza v. CA, G.R. No. 182814, 15 July 2015)

Every counsel has the implied authority to do all acts which are necessary or, at least, incidental to the prosecution and management of the suit in behalf of his client. And, any act performed by · counsel within the scope of his general and implied authority is, in the eyes of law, regarded as the act of the client himself and consequently, the mistake or negligence of the client’s counsel may result in the rendition of unfavorable judgment against him. (Ibid.)

To rule otherwise would result to a situation that every defeated party, in order to salvage his case, would just have to claim neglect or mistake on the part of his counsel as a ground for reversing an adverse judgment. There would be no end to litigation if this were allowed as every shortcoming of counsel could be the subject of challenge of his client through another counsel who, if he is also found wanting, would likewise be disowned by the same client through another counsel, and so on ad infinitum. This would render court proceedings indefinite, tentative and subject to reopening at any time by the mere subterfuge of replacing counsel. (Ibid.)

1) Negligence of counsel binds client

The general rule is that the negligence of counsel binds the client, even mistakes in the application of procedural rules. (Ong Lay Hin v. CA, G.R. No. 191972, 26 January 2015)

a) Exception: reckless or gross negligence

The exception to the rule is “when the reckless or gross negligence of the counsel deprives the client of due process of law.” (Ibid.)

When the negligence of counsel is so gross, almost bordering on recklessness and utter incompetence, that the Supreme Court can safely conclude that the due process rights of the client were violated, then the exception will apply. (Ibid.)

(1) Clear and convincing evidence, w/ client’s own negligence or malice

Even so, there must be a clear and convincing showing that the client was so maliciously deprived of information that he or she could not have acted to protect his or her interests. The error of counsel must have been both palpable yet maliciously exercised that it should viably be the basis for disciplinary action. (Ibid.)

For the exception to apply, the gross negligence should not be accompanied by the client’s own negligence or malice, considering that the client has the duty to be vigilant in respect of his interests by keeping himself up-to-date on the status of the case. Failing in this duty, the client should suffer whatever adverse judgment is rendered against him. (Ibid.)

2) Liable over law firm associates and employees

Law practitioners are acutely aware of the responsibilities that are naturally taken on by partners and supervisory lawyers over the lawyers and non-lawyers of the law office. It has been held that lawyers are administratively liable for the conduct of their employees in failing to timely file pleadings. (Solatan v. Inocentes, A.C. No. 6504, 09 August 2005)

Partners and practitioners who hold supervisory capacities are legally responsible to exert ordinary diligence in apprising themselves of the comings and goings of the cases handled by the persons over which they are exercising supervisory authority and in exerting necessary efforts to foreclose the occurrence of violations of the Code of Professional Responsibility by persons under their charge. (Ibid.)

Nonetheless, the liability of the supervising lawyer in this regard is by no means equivalent to that of the recalcitrant lawyer. The actual degree of control and supervision exercised by said supervising lawyer varies, inter alia, according to office practice, or the length of experience and competence of the lawyer supervised. Such factors can be taken into account in ascertaining the proper penalty. (Ibid.)

Certainly, a lawyer charged with the supervision of a fledgling attorney prone to rookie mistakes should bear greater responsibility for the culpable acts of the underling than one satisfied enough with the work and professional ethic of the associate so as to leave the latter mostly to his/her own devises. (Ibid.)

3) Client’s responsibility to choose competent counsel, when able

Finding good counsel is also the responsibility of the client especially when he or she can afford to do so. Upholding client autonomy in these choices is infinitely a better policy choice than assuming that the state is omniscient. Some degree of error must, therefore, be borne by the client who does have the capacity to make choices. (Ong Lay Hin v. CA, supra.)

The State does not guarantee to the client that they will receive the kind of service that they expect. Through this Supreme Court, the standard on competence and integrity is set through the application requirements and its disciplinary powers. (Ibid.)

The agency created between a counsel and a client is a highly fiduciary relationship. A counsel becomes the eyes and ears in the prosecution or defense of his or her client’s case. This is inevitable because a competent counsel is expected to understand the law that frames the strategies he or she employs in a chosen legal remedy. Counsel carefully lays down the procedure that will effectively and efficiently achieve his or her client’s interests. Counsel should also have a grasp of the facts, and among the plethora of details, he or she chooses which are relevant for the legal cause of action or defense being pursued. It is these indispensable skills, among others, that a client engages. Of course, there are counsels who have both wisdom and experience that give their clients great advantage. There are still, however, counsels who wander in their mediocrity whether consciously or unconsciously. (Ibid.)

•••••

BAR EXAM QUESTION

(Question A.2, Legal and Judicial Ethics, 2019 Bar Exam)

Y, who is a businessman, and Atty. X are good friends. Due to their closeness, Atty. X was able to borrow ₱300,000.00 from Y, which amount was intended to refurbish Atty. X’s law office.

Months after, Y got into a contractual dispute with Z, one of his business partners. Hence, Y sought the legal services of Atty. X for the filing of the proper action against Z. In consideration for his legal services, Y paid Atty. X an acceptance fee of ₱50,000.00.

Unfortunately, Atty. X and Y’s relationship turned sour. Thus, all communications between them were cut, and worse, Atty. X failed to file the required initiatory pleading against Z on the date agreed upon. Aggrieved, Y filed an administrative complaint, seeking that Atty. X be sanctioned and that the ₱50,000.00 acceptance fee and the ₱300,000.00 personal loan be returned to him.

(a) What administrative violation/s did Atty. X commit, if any? Explain. (3%)

Suggested Answer:

Atty. X violated the prohibition against negligence. Answer

Under the Code of Professional Responsibility, a lawyer shall not neglect a legal matter entrusted to him, and his negligence in connection therewith shall render him liable. Rule

In the case at bar, Atty. X had accepted the engagement and has already been paid by Y to initiate a case against Z. Failure on the part of Atty. X to file the required pleading against Z on the date agreed upon renders Atty. X liable for violation. Apply

Thus, Atty. X may be held liable for his negligence. Conclusion

As to the Php300,000.00 loan, based on the facts, Atty. X borrowed the sum prior to Y being made a client. There was no attorney-client relationship between them yet. Further, there is also no indication that Atty. X refused to pay the loan nor are there any interests of Y as a client were prejudiced. Under the Code of Professional Responsibility, 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. Thus, there was no violation resulting from the loan.

(b) May Y’s prayer for the return of the ₱50,000.00 acceptance fee and the ₱300,000.00 personal loan prosper? Explain. (5%)

Suggested Answer:

The prayer for acceptance fee may prosper, but not the personal loan. Answer

Under the Code of Professional Responsibility, a lawyer shall deliver the funds and property of his client when due or upon demand. Rule

In the case at bar, Y as a client made a judicial demand for the acceptance fee via the administrative case. Since Atty. X did not perform any professional service, he must return the amount to Y. As for the personal loan, Y has to institute a separate action for a collection of sum of money since the amount was not given under an attorney-client relationship. Instead, the personal loan is an ordinary loan by a borrower from a creditor Apply

Thus, the prayer for the acceptance fee may prosper. However, the prayer for personal loan will not prosper. Conclusion

•••••

iii. Collaborating counsel
Rule 18.01: A lawyer shall not undertake a legal service which he knows or should know that he is not qualified to render. However, he may render such service if, with the consent of his client, he can obtain as collaborating counsel a lawyer who is competent on the matter.

1) Implied acceptance of qualification

When a lawyer accepts a case, his acceptance is an implied representation that he possesses the requisite academic learning, skill and ability to handle the case.  The lawyer has the duty to exert his best judgment in the prosecution or defense of the case entrusted to him and to exercise reasonable and ordinary care and diligence in the pursuit or defense of the case. (Pariñas v. Paguinto, A.C. No. 6297, 13 July 2004)

2) Not to accept engagement above ability and competence

Equally without question is that the attorney should not accept the engagement that is way above his ability and competence to handle, for there will then be no basis for him to accept any amount as attorney’s fees; or that he should at least begin to perform the contemplated task undertaken for the client to entitle him to be compensated on the basis of quantum meruit. (Jacinto v. Bangot, A.C. No. 8494, 05 October 2016)

3) Collaborating counsel, same diligence w/lead counsel

Although working merely as a collaborating counsel who entered his appearance for petitioner as early as May 1996, i.e., more or less six (6) months before the termination of the proceedings a quo, Atty. Alikpala had the bounden duty to monitor the progress of the case. A lawyer has the responsibility of monitoring and keeping track of the period of time left to file an appeal. He cannot rely on the courts to appraise him of the developments in his case and warn him against any possible procedural blunder. Knowing that the lead counsel was no longer participating actively in the trial of the case several months before its resolution, Atty. Alikpala who alone was left to defend petitioner should have put himself on guard and thus anticipated the release of the Labor Arbiter’s decision. (Sublay v. NLRC, Euro-Swiss Food, Inc., G.R. No. 130104, 31 January 2000)

a) If no entry of appearance, pleading still valid

While it may be desirable in the in interest of an orderly conduct of judicial proceedings that a counsel for a party should file with the court his formal written appearance in the case, before filing a pleading therein, or mention in said pleading that he is submitting the same in collaboration with the counsel of record, the mere circumstance that such acts were not done does not warrant the conclusion that the pleading filed by such collaborating counsel has no legal effect whatsoever. (Cebu Stevedoring Company, Inc. v. Ramolete, G.R. No. L-56627, 17 August 1981)

It has been held that as a logical corollary of the presumption that a lawyer is authorized to appear for the party he represents, it is also presumed that the lawyer is authorized by, and has conferred with, his client regarding the case before he files an important responsive pleading for and on behalf of the latter. (Ibid.)

iv. Duty to apprise client
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 client’s request for information.

1) Information asymmetry

A problem arises whenever agents, entrusted to manage the interests of another, use their authority or power for their benefit or fail to discharge their duties. In many agencies, there is information assymetry between the principal and the entrusted agent. That is, there are facts and events that the agent must attend to that may not be known by the principal. (Ramirez v. Buhayang-Margallo, A.C. No. 10537, 03 February 2015, citing Caranza Vda. De Saldivar v. Cabanes, Jr., A.C. No. 7749, 08 July 2013)

This information assymetry is even more pronounced in an attorney client relationship. Lawyers are expected not only to be familiar with the minute facts of their cases but also to see their relevance in relation to their causes of action or their defenses. The salience of these facts is not usually patent to the client. It can only be seen through familiarity with the relevant legal provisions that are invoked with their jurisprudential interpretations. More so with the intricacies of the legal procedure. It is the lawyer that receives the notices and must decide the mode of appeal to protect the interest of his or her client. (Ibid.)

A lawyer was suspended after failing to justify his absence in a scheduled preliminary conference, which resulted in the case being submitted for resolution. This was aggravated by the lawyer’s failure to inform his client about the adverse ruling of the Court of Appeals, thereby precluding the litigant from further pursuing an Appeal. (Ibid.)

f. Representation with zeal within legal bounds

Canon 19: A lawyer shall represent his client with zeal within the bounds of the law.

1) Represent clients with zeal

After Complainant paid the filing fees and also part of the acceptance fees, Respondent-lawyer did not bother to file any complaint before the court. Worse, Respondent knew for a long time that she required additional documents from Complainant before filing the complaint, yet Respondent did not appear to exert any effort to contact Complainant in order to obtain the said documents and finally file the said case.46 In fact, in the occasions Respondent met with Complainant in order to obtain a loan or discuss the magnetic bracelet business, Respondent never brought up the needed documents for the case to Complainant. Respondent displayed a lack of zeal in handling the case of Complainant in neglecting to remind the latter of the needed documents in order to file the complaint in court. (Aguilar-Dyquiangco v. Arellano, supra.)

Atty. Elayda even admitted that the spouses Aranda never knew of the scheduled hearings because said spouses never came to him and that he did not know the spouses’ whereabouts. While it is true that communication is a shared responsibility between a counsel and his clients, it is the counsel’s primary duty to inform his clients of the status of their case and the orders which have been issued by the court. He cannot simply wait for his clients to make an inquiry about the developments in their case. Close coordination between counsel and client is necessary for them to adequately prepare for the case, as well as to effectively monitor the progress of the case. Besides, it is elementary procedure for a lawyer and his clients to exchange contact details at the initial stages in order to have constant communication with each other. Again, Atty. Elayda’s excuse that he did not have the spouses Aranda’s contact number and that he did not know their address is simply unacceptable. (Virgilio v. Elayda, A.C. No. 7907, 15 December 2010)

2) Candid and best opinion

The CPR requires lawyers to give their candid and best opinion to their clients on the merit or lack of merit of the case. Knowing whether a case would be potentially successful is not only a function, but also an obligation on the part of lawyers. (Padilla v. Samson, A.C. No. 10253, 22 August 2017)

g. Attorney’s fees

Canon 20: A lawyer shall charge only fair and reasonable fees.

1) Compensation of attorneys; agreement as to fees

An attorney shall be entitled to have and recover from his client no more than a reasonable compensation for his services, with a view to the importance of the subject matter of the controversy, the extent of the services rendered, and the professional standing of the attorney. No court shall be bound by the opinion of attorneys as expert witnesses as to the proper compensation, but may disregard such testimony and base its conclusion on its own professional knowledge. A written contract for services shall control the amount to be paid therefor unless found by the court to be unconscionable or unreasonable. (Section 24, Rule 138, Rules of Court)

2) Fair and reasonable fees

A lawyer shall charge only fair and reasonable fees. (Canon 20, Code of Professional Responsibility)

3) Guide/factors in determining fees:

A lawyer shall be guided by the following factors in determining his fees:

1) The time spent and the extent of the service rendered or required;

2) The novelty and difficulty of the questions involved;

3) The importance of the subject matter;

4) The skill demanded;

5) The probability of losing other employment as a result of acceptance of the proffered case;

6) The customary charges for similar services and the schedule of fees of the IBP chapter to which he belongs;

7) The amount involved in the controversy and the benefits resulting to the client from the service;

8) The contingency or certainty of compensation;

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

10) The professional standing of the lawyer. (Rule 20.01, Canon 20, Ibid.)

4) Referral and division fees

A lawyer shall, in case of referral, with the consent of the client, be entitled to a division of fees in proportion to the work performed and responsibility assumed. (Rule 20.01, Canon 20, Ibid.)

5) No dividing a fee w/ persons not licensed to practice law

GENERAL RULE: A lawyer shall not divide or stipulate to divide a fee for legal services with persons not licensed to practice law. (Rule 9.02, Canon 9, Ibid.)

EXCEPTIONS:

1) Where there is a pre-existing agreement with a partner or associate that, upon the latter’s death, money shall be paid over a reasonable period of time to his estate or to persons specified in the agreement; or

2) Where a lawyer undertakes to complete unfinished legal business of a deceased lawyer; or

3) Where a lawyer or law firm includes non-lawyer employees in a retirement plan even if the plan is based in whole or in part, on a profit-sharing agreement. (Ibid.)

6) Same standard of conduct for non-paying clients

A lawyer who accepts the cause of a person unable to pay his professional fees shall observe the same standard of conduct governing his relations with paying clients. (Rule 14.04, Canon 14, Ibid.)

7) Allowed to withdraw services for deliberate failure to pay pfees

When the client deliberately fails to pay the fees for the services or fails to comply with the retainer agreement, a lawyer may withdraw his services. (Rule 22.01[e], Canon 22, Ibid.)

8) Non-acceptance of payment other than the client

A lawyer shall not, without the full knowledge and consent of the client, accept any fee, reward, costs, commission, interest, rebate or forwarding allowance or other compensation whatsoever related to his professional employment from anyone other than the client. (Rule 22.02, Canon 22, Ibid.)

9) Allowed to reveal confidences when recovering judicial action

A lawyer shall not reveal the confidences or secrets of his client except when necessary to collect his fees or to defend himself, his employees or associates or by judicial action.

(Rule 21.02, Canon 22, Ibid.)

10) No hidden fees

It is highly improper for a lawyer to impose additional professional fees upon his client which were never mentioned nor agreed upon at the time of the engagement of his services. At the outset, respondent should have informed the complainant of all the fees or possible fees that he would charge before handling the case and not towards the near conclusion of the case. This is essential in order for the complainant to determine if he has the financial capacity to pay respondent before engaging his services. (Miranda v. Carpio, A.C. No. 6281, 26 September 2011)

11) Supreme Court as arbiter

There is, however, no hard and fast rule which will serve as guide in determining what is or what is not a reasonable fee. That must be determined from the facts of each case. The power to determine the reasonableness or the unconscionable character of a lawyer’s fee is a matter falling within the regulatory prerogative of the Supreme Court. (Dalisay v. Mauricio, A.C. No. 5655, 22 April 2005)

12) Quantum meruit

Quantum meruit – literally meaning as much as he deserves – is used as basis for determining an attorney’s professional fees in the absence of an express agreement. The recovery of attorney’s fees on the basis of quantum meruit is a device that prevents an unscrupulous client from running away with the fruits of the legal services of counsel without paying for it and also avoids unjust enrichment on the part of the attorney himself. An attorney must show that he is entitled to reasonable compensation for the effort in pursuing the client’s cause, taking into account certain factors in fixing the amount of legal fees. (Villarama v. De Jesus, G.R. No. 217004, 17 April 2017)

Under the principle of quantum meruit, a contractor is allowed to recover the reasonable value of the services rendered despite the lack of a written contract. The measure of recovery under the principle should relate to the reasonable value of the services performed. The principle prevents undue enrichment based on the equitable postulate that it is unjust for a person to retain any benefit without paying for it. Being predicated on equity, the principle should only be applied if no express contract was entered into, and no specific statutory provision was applicable. (International Hotel Corporation v. Joaquin, G.R. No. 158361, 10 April 2013)

a) Purpose

To avoid unjust enrichment to a party from resulting out of a substantially performed contract, the principle of quantum meruit may be used to determine his compensation in the absence of a written agreement for that purpose. The principle of quantum meruit justifies the payment of the reasonable value of the services rendered by him. (Ibid.)

In the absence of the written agreement, the lawyer’s compensation shall be based on quantum meruit, which means “as much as he deserved.” The determination of attorney’s fees on the basis of quantum meruit is also authorized “when the counsel, for justifiable cause, was not able to finish the case to its conclusion.” Moreoyer, quantum meruit becomes the basis of recovery of compensation by the attorney where the circumstances of the engagement indicate that it will be contrary to the parties’ expectation to deprive the attorney of all compensation. In this case, since respondent was not able to fulfill one of the conditions provident in the Contract for Legal Services, his attorney’s fees shall be based on quantum meruit. (Villarama v. De Jesus, G.R. No. 217004, 17 April 2017)

b) Not applicable if there is an existing agreement

Where a respondent-lawyer defended the imposition of additional professional fees upon his client which were never mentioned nor agreed upon at the time of the engagement of his services, his argument on quantum meruit was denied. The principle of quantum meruit applies if a lawyer is employed without a price agreed upon for his services. In such a case, he would be entitled to receive what he merits for his services, as much as he has earned. In the present case, the parties had already entered into an agreement as to the attorney’s fees of the respondent, and thus, the principle of quantum meruit does not fully find application because the respondent is already compensated by such agreement. (Miranda v. Carpio, supra.)

•••••

BAR EXAM QUESTION

(Question XV, Legal and Judicial Ethics, 2018 Bar Exam)

Charo Conti engaged the services of Atty. Cesar Compostela for the registration of a property located in Cebu, and which property she had inherited together with her siblings. It was agreed in writing that Charo would pay Atty. Compostela PhP 20,000 as acceptance fee and PhP 2,000 as appearance fee. During the last hearing of the case, Atty. Compostela demanded an additional amount of PhP 20,000 for the preparation of a memorandum, which he said would further strengthen Charo’s position, plus 20% of the total area of the property as additional fees for his services. Charo did not agree to Atty. Compostela’s demands since they were contrary to their agreement. Besides, the property was co-owned with her siblings and she could not agree to Atty. Compostela’s demands without the consent of her co-heirs.

Four (4) years later, the petition for registration was approved and the Land Registration Authority notified Charo that the decree of registration and the original of the owner’s duplicate copy of the title had already been transmitted to the Register of Deeds (RD). When Charo went to the RD, she was surprised to discover that the owner’s duplicate copy of the title had already been claimed by, and released to, Atty. Compostela. Despite demand, Atty. Compostela refused to deliver the title to Charo until she paid the additional attorneys’ fees that he was demanding. Charo then instituted a complaint for disbarment against him. In his defense, Atty. Compostela claimed that:

(b) he was entitled to the payment of additional professional fees on the basis of the principle of quantum meruit.

Rule on Atty. Compostela’s defenses. (2.5% each)

Suggested Answer:

On Atty. Compostela’s claim that he is entitled to the payment of additional professional fees on the basis of the principle of quantum meruit:

His claim is not correct. Answer

Under jurisprudence, quantum meruit – literally meaning as much as he deserves – is used as basis for determining an attorney’s professional fees in the absence of an express agreement. Rule

In the case at bar, Atty. Compostela and his client Ms. Conti had an express agreement on the attorney’s fees. Accordingly, the principle of quantum meruit does not apply. Apply

Thus, Atty. Compostela may be subject to disciplinary action. Conclusion

•••••

Rule 20.01: A lawyer shall be guided by the following factors in determining his fees: (a) the time spent and the extent of the service rendered or required; (b) the novelty and difficulty of the questions involved; (c) The importance of the subject matter; (d) The skill demanded; (e) The probability of losing other employment as a result of acceptance of the proffered case; (f) The customary charges for similar services and the schedule of fees of the IBP chapter to which he belongs; (g) The amount involved in the controversy and the benefits resulting to the client from the service; (h) The contingency or certainty of compensation; (i) The character of the employment, whether occasional or established; and (j) The professional standing of the lawyer.

1) Factors in determining attorney’s fees

1) The time spent and the extent of the service rendered or required;

2) The novelty and difficulty of the questions involved;

3) The importance of the subject matter;

4) The skill demanded;

5) The probability of losing other employment as a result of acceptance of the proffered case;

6) The customary charges for similar services and the schedule of fees of the IBP chapter to which he belongs;

7) The amount involved in the controversy and the benefits resulting to the client from the service;

8) The contingency or certainty of compensation;

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

10) The professional standing of the lawyer. (Rule 20.01, Code of Professional Responsibility)

2) Entitled to just and reasonable compensation

Every attorney is entitled to have and receive a just and reasonable compensation for services performed at the special instance and request of his client; and that for as long as the attorney is in good faith and honestly trying to represent and serve the interests of the client, he should have a reasonable compensation for such services. (Jacinto v. Bangot, A.C. No. 8494, 05 October 2016)

a) Judicial protection

A lawyer is as much entitled to judicial protection against injustice, imposition or fraud on the part of his client as the client against abuse on the part of his counsel. The duty of the court is not alone to see that a lawyer acts in a proper and lawful manner; it is also its duty to see that a lawyer is paid his just fees. (Aquino v. Casabar, G.R. No. 191470, 26 January 2015)

With his capital consisting of his brains and with his skill acquired at tremendous cost not only in money but in expenditure of time and energy, he is entitled to the protection of any judicial tribunal against any attempt on the part of his client to escape payment of his just compensation. It would be ironic if after putting forth the best in him to secure justice for his client he himself would not get his due. (Villarama v. De Jesus, G.R. No. 217004, 17 April 2017)

3) Agreement on professional fees upon commencement

As regards his professional fees, the proper time to deal with this delicate issue is upon the commencement of the lawyer-client relationship. (De Fajardo v. Bugaring, A.C. No. 5113, 07 October 2004)

An attorney shall be entitled to have and recover from his client no more than a reasonable compensation for his services, with a view to the importance of the subject matter of the controversy, the extent of the services rendered, and the professional standing of the attorney. No court shall be bound by the opinion of attorneys as expert witnesses as to the proper compensation, but may disregard such testimony and base its conclusion on its own professional knowledge. A written contract for services shall control the amount to be paid therefor unless found by the court to be unconscionable or unreasonable. (Section 24, Rule 138, Rules of Court)

a) Agreement, controlling

Generally, the amount of attorney’s fees due is that stipulated in the retainer agreement which is conclusive as to the amount of the lawyer’s compensation. A stipulation on a lawyer’s compensation in a written contract for professional services ordinarily controls the amount of fees that the contracting lawyer may be allowed, unless the court finds such stipulated amount unreasonable or unconscionable. (Rayos v. Hernandez, G.R. No. 169079, 12 February 2007)

4) Unconscionable fees

Stipulated attorney’s fees are unconscionable whenever the amount is by far so disproportionate compared to the value of the services rendered as to amount to fraud perpetrated upon the client. This means to say that the amount of the fee contracted for, standing alone and unexplained would be sufficient to show that an unfair advantage had been taken of the client, or that a legal fraud had been perpetrated on him. (Ibid.)

Attorney’s fees are unconscionable if they affront one’s sense of justice, decency or reasonableness. The decree of unconscionability or unreasonableness of a stipulated amount in a contingent fee contract will not preclude recovery. It merely justifies the fixing by the court of a reasonable compensation for the lawyer’s services. (Masmud v. NLRC, G.R. No. 183385, 13 February 2009)

Courts must guard against the charging of unconscionable and excessive fees by lawyers for their services when engaged as counsel. (Licudan v. CA, G.R. No. 91958, 24 January 1991)

Respondent-lawyer actually collected fifty-three percent (53%) or more than half of the total amount due the petitioner; indeed, he appropriated for himself more than the amount which he had already turned over to and actually received by his client. The complainant was unschooled and frustrated and hopeless with the tragic loss of his loved ones (10 family members perished) caused by the inundation of the town of Norzagaray, Bulacan because of the negligent release by NAPOCOR of the water through the spillways of the Angat Dam. Petitioner also had to face the loss and destruction of his family’s properties. Under such circumstances and given his understandable desire to recover the damages for the loss of his loved ones and properties, petitioner would easily succumb and readily agree to the demands of respondent lawyer regarding his attorney’s fees. The the contingent fee here claimed was, under the facts obtaining in this case, grossly excessive and unconscionable. (Rayos v. Hernandez, G.R. No. 169079, 12 February 2007)

5) Joint tortfeasors; when adverse party may be liable for attorney’s fees

Where the adverse party connived with a client to avoid payment of legal fees to the client’s lawyer, it was held that the adverse party would be liable if they were shown to have connived with the client in the execution of the compromise agreement, with the intention of depriving the Intervenor (client’s lawyer) of its attorney’s fees. Thereby, the adverse party would be solidarily liable with the client for the attorney’s fees as stipulated in the written agreement under the theory that they unfairly and unjustly interfered with the Intervenor’s professional relationship with the client. (Malvar v. Kraft Food Phils. Inc., G.R. No. 183952, 09 September 2013)

The client and the respondents (or the adverse party) needed an escape from greater liability towards the Intervenor, and from the possible obstacle to their plan to settle to pay. It cannot be simply assumed that only the client would be liable towards the Intervenor (client’s lawyer) at that point, considering that the Intervenor, had it joined the negotiations as her lawyer, would have tenaciously fought all the way for her to receive literally everything that she was entitled to, especially the benefits from the stock option. Her rush to settle because of her financial concerns could have led her to accept the respondents’ offer, which offer could be further reduced by the Intervenor’s expected demand for compensation. Thereby, she and the respondents became joint tort-feasors who acted adversely against the interests of the Intervenor. Joint tort-feasors are those who command, instigate, promote, encourage, advise, countenance, cooperate in, aid or abet the commission of a tort, or who approve of it after it is done, if done for their benefit. (Ibid.)

Joint tort-feasors are also referred to as those who act together in committing wrong or whose acts, if independent of each other, unite in causing a single injury Under Article 2194 of the Civil Code, joint tort-feasors are solidarily liable for the resulting damage. (Ibid.)

Joint tort-feasors are each liable as principals, to the same extent and in the same manner as if they had performed the wrongful act themselves. It is likewise not an excuse for any of the joint tort-feasors that individual participation in the tort was insignificant as compared to that of the other. To stress, joint tort-feasors are not liable pro rata. The damages cannot be apportioned among them, except by themselves. They cannot insist upon an apportionment, for the purpose of each paying an aliquot part. They are jointly and severally liable for the whole amount. (Ibid.)

6) No legal interest on attorney’s fees

The imposition of legal interest on the amount payable as attorney’s fees is unwarranted. Even if the parties can freely stipulate on the terms of payment, still the imposition of interest in the payment of attorney’s fees is not justified. Article 2209 of the Civil Code does not even justify the imposition of legal interest on the payment of attorney’s fees as it is a provision of law governing ordinary obligations and contracts. (Bach v. Ongkiko Kalaw Manhit & Accorda Law Offices, G.R. No. 160334, 11 September 2006)

Contracts for attorney’s services in this jurisdiction stands upon an entirely different footing from contracts for the payment of compensation for any other services. An attorney is not entitled in the absence of express contract to recover more than a reasonable compensation for his services; and even when an express contract is made, the court can ignore it and limit the recovery to reasonable compensation if the amount of the stipulated fee is found by the court to be unreasonable. This is a very different rule from that announced in section 1091 of the Civil Code with reference to the obligation of contracts in general, where it is said that such obligation has the force of law between the contracting parties. (Mambulao Lumber Company v. PNB, En Banc, G.R. No. L-22973, 30 January 1968)

•••••

BAR EXAM QUESTION

(Question III, Legal and Judicial Ethics, 2018 Bar Exam)

Carina was dismissed by her employer for breach of trust and confidence, and for willful violation of company rules and policies. She filed an action for illegal dismissal claiming that her termination was without legal basis. The Labor Arbiter found that she was illegally dismissed and awarded her the amount of PhP 80 million. On appeal to the National Labor Relations Commission (NLRC), the award was reduced to PhP 40 million as separation pay, plus PhP 5 million for the value of her stock option plans which would have vested if she were not illegally dismissed from her job. Unsatisfied with the NLRC’s decision, she appealed to the Court of Appeals (CA) the amount of monetary award granted by the NLRC. She engaged the services of Casal, Casos and Associates to handle her appeal. Her retainer agreement with Casal, Casos and Associates provided for contingent fees equivalent to 10% of her claim for separation pay and 10% of the value of stock options to be awarded to her.

The CA decision was not favorable to Carina, so she appealed the same to the Supreme Court (the Court). While the case was pending appeal with the Court, Carina entered into a compromise agreement with her employer to terminate the case upon payment to her of the full amount of PhP 40 million, less the PhP 15 million previously paid to her by her employer. Before the compromise agreement was finalized, Carina terminated the services of Casal, Casos and Associates and asked them to withdraw from the case pending before the Court. The parties negotiated the compromise agreement without the participation of their lawyers since the employer imposed the condition that no lawyers should be involved in the compromise negotiation. She, together with her employer, then filed the Compromise Agreement for approval by the Court, and sought the termination of the case, with prejudice.

Casal, Casos and Associates filed a motion to intervene in the case pending with the Court, praying that Carina be ordered to pay them PhP 4 million, representing 10% of the amount received by Carina from her employer in settlement of the case, plus 6% legal interest from the date of filing of the motion for intervention, until fully paid. The intervenors claimed that they were dismissed without justifiable cause prior to the signing of the compromise agreement for the reason that Carina, their client, wanted to evade payment of their legal fees. Carina claimed they were dismissed because Attys. Casal and Casos, who personally handled her case, had resigned from the law firm to join the government, and because of the negligence and failure of her lawyers to attend to her case. In reply, the intervenors said that the engagement was with the law firm and not with individual lawyers. The law firm also presented letters signed by their client commending them for work done well in the case.

(d) May Carina’s employer, defendant in this case, be held solidarily liable with Carina for the payment of the attorneys’ fees of Carina’s lawyers? (2.5%)

(e) May the intervenors collect legal interest in addition to their attorneys’ fees? (2.5%)

Suggested Answer:

No. Answer

Under jurisprudence, when an adverse party connives with a client to avoid payment of legal fees to the client’s lawyer, both of them shall be considered as joint tort-feasors and shall be held solidarily liable. Notwithstanding, under the rules of mediation, parties are not prohibited from discussing a compromise agreement without their respective counsels. Under the Code of Professional Responsibility, what is prohibited is for a counsel of one party directly communicating to a party without the latter’s counsel. Rule

In the case at bar, there is no indication that Carina’s employer connived with her to avoid payment of legal fees to Casal, Casos and Associates (the “Law Firm”). While not desirable, the condition imposed by Carina’s employer is not prohibited as parties are allowed to discuss a settlement without their respective counsels. There is also no showing that Carina’s employer exercised any force, threat, intimidation, or undue influence on Carina.

Thus, Carina’s employer may be held solidarily liable with Carina. Conclusion

(e) No. Answer

Under jurisprudence, the imposition of legal interest on the amount payable as attorney’s fees is unwarranted. The Civil Code provision imposing legal interest is a provision of law governing ordinary obligations and contracts. Contracts for attorney’s services in this jurisdiction stands upon an entirely different footing from contracts for the payment of compensation for any other services. Rule

In the case at bar, Casal, Casos and Associates (the “Law Firm”) cannot seek legal interest on the attorney’s fees as it is not covered by the Civil Code provision on interest resulting from a liability based on ordinary contracts. Apply

Thus, the intervenors may not collect legal interest in addition to their attorney’s fees. Conclusion

•••••

i. Acceptance fees

1) Difference between attorney’s fees and acceptance fees

It necessary to first distinguish between an attorney’s fee and an acceptance fee as the former depends on the nature and extent of the legal services rendered, while the other does not. (Ignacio v. Alviar, A.C. No. 11482, 17 July 2017)

Attorney’s fee is understood both in its ordinary and extraordinary concept.35 In its ordinary concept, attorney’s fee refers to the reasonable compensation paid to a lawyer by his client for legal services rendered. While, in its extraordinary concept, attorney’s fee is awarded by the court to the successful litigant to be paid by the losing party as indemnity for damages. (Ibid.)

Acceptance fee refers to the charge imposed by the lawyer for mere acceptance of the case. The rationale for the fee is because once the lawyer agrees to represent a client, he is precluded from handling cases of the opposing party based on the prohibition on conflict of interest. The opportunity cost of mere acceptance is thus indemnified by the payment of acceptance fee. However, since acceptance fee compensates the lawyer only for lost opportunity, the same is not measured by the nature and extent of the legal services rendered. (Ibid.)

Where a complainant failed to present any evidence showing that respondent lawyer committed abandonment or neglect of duty in handling of cases, the Court saw no legal basis for the return of the subject acceptance fees. (Yu v. Dela Cruz, A.C. No. 10912, 19 January 2016)

2) When acceptance fee may be ordered returned

Be that as it may, the Court had not shied from ordering a return of acceptance fees in cases wherein the lawyer had been negligent in the handling of his client’s case. Thus, in Carino v. Atty. De Los Reyes, the respondent lawyer who failed to file a complaint-affidavit before the prosecutor’s office, returned the Php10,000 acceptance fee paid to him and was admonished to be more careful in the performance of his duty to his clients. Likewise, in Voluntad-Ramirez v. Baustista, the respondent lawyer was ordered to return the Php14,000 acceptance fee because he did nothing to advance his client’s cause during the six-month period that he was engaged as counsel. (Ignacio v. Alviar, supra.)

3) Consequence for receiving acceptance fees

Once a lawyer receives the acceptance fee for his legal services, he is expected to serve his client with competence, and to attend to his client’s cause with diligence, care and devotion. (Voluntad-Ramirez v. Bautista, A.C. No. 6733, 10 October 2012)

The act of receiving money as acceptance fee for legal services in handling complainant’s case and subsequently failing to render such services is a clear violation of Canon 18 of the Code of Professional Responsibility which provides that a lawyer shall serve his client with competence and diligence. More specifically, Rule 18.03 states: “Rule 18.03. A lawyer shall not neglect a legal matter entrusted to him, and his negligence in connection therewith shall render him liable.” (Aguilar-Dyquiangco v. Arellano, A.C. No. 10541, 12 July 2016)

ii. Contingency fee arrangements

Recognized by the Code of Professional Responsibility

Contingency fee arrangements are recognized by Rule 20.01 (h) of the Code of Professional Responsibility.

1) Ordinary sense

Where the contingency fees that the lawyer required is in the ordinary sense as it represents reasonable compensation for legal services he rendered for complainant, the 10% limitation of the Labor Code would not be applicable. Beyond the limit fixed by Article 111, such as between the lawyer and the client, the attorney’s fees may exceed 10% on the basis of quantum meriut. We, however, are hard-pressed to accept the justification of the 50% contingency fee that the lawyer is insisting on for being exorbitant. (Cortez v. Cortes, A.C. No. 9119, 12 March 2018)

Where a complainant was amenable to a 12% contingency fee based on a handshake agreement, and which we likewise deem to be the reasonable worth of the attorney’s services rendered by the lawyer under the circumstances, the lawyer (who imposed a 50% contingency fee later on) was adjudged to return to complainant the amount he received in excess of 12% of the total award. If the Law has to remain an honorable profession and has to attain its basic ideal, those enrolled in its ranks should not only master its tenets and principles but should also, by their lives, accord continuing fidelity to such tenets and principles. (Ibid.)

2) Subject to court review

Contingent fee contracts are subject to the supervision and close scrutiny of the court in order that clients may be protected from unjust charges. The amount of contingent fees agreed upon by the parties is subject to the stipulation that counsel will be paid for his legal services only if the suit or litigation prospers. A much higher compensation is allowed as contingent fees because of the risk that the lawyer may get nothing if the suit fails. (Masmud v. NLRC, G.R. No. 183385, 13 February 2009)

The Supreme Court found nothing illegal in the contingent fee contract between Atty. Go and Evangelina’s husband. The CA committed no error of law when it awarded the attorney’s fees of Atty. Go and allowed him to receive an equivalent of 39% of the monetary award. (Ibid.)

•••••

BAR EXAM QUESTION

(Question III, Legal and Judicial Ethics, 2018 Bar Exam)

Carina was dismissed by her employer for breach of trust and confidence, and for willful violation of company rules and policies. She filed an action for illegal dismissal claiming that her termination was without legal basis. The Labor Arbiter found that she was illegally dismissed and awarded her the amount of PhP 80 million. On appeal to the National Labor Relations Commission (NLRC), the award was reduced to PhP 40 million as separation pay, plus PhP 5 million for the value of her stock option plans which would have vested if she were not illegally dismissed from her job. Unsatisfied with the NLRC’s decision, she appealed to the Court of Appeals (CA) the amount of monetary award granted by the NLRC. She engaged the services of Casal, Casos and Associates to handle her appeal. Her retainer agreement with Casal, Casos and Associates provided for contingent fees equivalent to 10% of her claim for separation pay and 10% of the value of stock options to be awarded to her.

The CA decision was not favorable to Carina, so she appealed the same to the Supreme Court (the Court). While the case was pending appeal with the Court, Carina entered into a compromise agreement with her employer to terminate the case upon payment to her of the full amount of PhP 40 million, less the PhP 15 million previously paid to her by her employer. Before the compromise agreement was finalized, Carina terminated the services of Casal, Casos and Associates and asked them to withdraw from the case pending before the Court. The parties negotiated the compromise agreement without the participation of their lawyers since the employer imposed the condition that no lawyers should be involved in the compromise negotiation. She, together with her employer, then filed the Compromise Agreement for approval by the Court, and sought the termination of the case, with prejudice.

Casal, Casos and Associates filed a motion to intervene in the case pending with the Court, praying that Carina be ordered to pay them PhP 4 million, representing 10% of the amount received by Carina from her employer in settlement of the case, plus 6% legal interest from the date of filing of the motion for intervention, until fully paid. The intervenors claimed that they were dismissed without justifiable cause prior to the signing of the compromise agreement for the reason that Carina, their client, wanted to evade payment of their legal fees. Carina claimed they were dismissed because Attys. Casal and Casos, who personally handled her case, had resigned from the law firm to join the government, and because of the negligence and failure of her lawyers to attend to her case. In reply, the intervenors said that the engagement was with the law firm and not with individual lawyers. The law firm also presented letters signed by their client commending them for work done well in the case.

(a) May lawyers legally charge their clients based on contingent fees? (2.5%)

Suggested Answer:

(a) Yes. Under the Code of Professional Responsibility and Rules of Court, contingent fees arrangements are recognized and allowed. The contingency or certainty of compensation is even one of the factors in determining fees. Contingent fee contracts are subject to the supervision and close scrutiny of the court in order that clients may be protected from unjust charges. The amount of contingent fees agreed upon by the parties is subject to the stipulation that counsel will be paid for his legal services only if the suit or litigation prospers.

•••••

iii. Champertous contracts

1) Champerty, prohibited

Champerty, along with maintenance (of which champerty is an aggravated form), is a common law doctrine that traces its origin to the medieval period. The doctrine of maintenance was directed “against wanton and in officious intermeddling in the disputes of others in which the intermeddler has no interest whatever, and where the assistance rendered is without justification or excuse.” Champerty, on the other hand, is characterized by “the receipt of a share of the proceeds of the litigation by the intermeddler.” Some common law court decisions, however, add a second factor in determining champertous contracts, namely, that the lawyer must also, “at his own expense maintain, and take all the risks of, the litigation.” (The Conjugal Partnership of the Spouses Vicente Cadavedo and Benita Arcoy-Cadavedo v. Lacaya, G.R. No. 173188, 15 January 2014)

In this jurisdiction, we maintain the rules on champerty, as adopted from American decisions, for public policy considerations. As matters currently stand, any agreement by a lawyer to “conduct the litigation in his own account, to pay the expenses thereof or to save his client therefrom and to receive as his fee a portion of the proceeds of the judgment is obnoxious to the law.” The rule of the profession that forbids a lawyer from contracting with his client for part of the thing in litigation in exchange for conducting the case at the lawyer’s expense is designed to prevent the lawyer from acquiring an interest between him and his client. To permit these arrangements is to enable the lawyer to “acquire additional stake in the outcome of the action which might lead him to consider his own recovery rather than that of his client or to accept a settlement which might take care of his interest in the verdict to the sacrifice of that of his client in violation of his duty of undivided fidelity to his client’s cause.” (Ibid.)

2) Champerty v. contingency fee

a) Champerty: void

The lawyer undertakes to pay all expenses of litigation. Attorney’s fees is based on what may be recovered and thus the lawyer is considered to be gambling on the outcome of the case.

b) Contingency fee: valid

The lawyer does not undertake to pay all expenses of litigation. A portion of the attorney’s fees is based on what may be recovered.

•••••

BAR EXAM QUESTION

(Question XI-A, Legal and Judicial Ethics, 2017 Bar Exam)

Define champerty. (3%)

Champerty is any agreement by a lawyer to conduct the litigation in his own account, to pay the expenses thereof or to save his client therefrom and to receive as his fee a portion of the proceeds of the judgment is obnoxious to the law. Champerty is prohibited.

•••••

iv. Attorney’s liens

1) Attorneys’ liens

An attorney shall have a lien upon the funds, documents and papers of his client which have lawfully come into his possession and may retain the same until his lawful fees and disbursements have been paid, and may apply such funds to the satisfaction thereof. He shall also have a lien to the same extent upon all judgments for the payment of money, and executions issued in pursuance of such judgments, which he has secured in a litigation of his client, from and after the time when he shall have the caused a statement of his claim of such lien to be entered upon the records of the court rendering such judgment, or issuing such execution, and shall have the caused written notice thereof to be delivered to his client and to the adverse paty; and he shall have the same right and power over such judgments and executions as his client would have to enforce his lien and secure the payment of his just fees and disbursements. (Section 37, Rule 138, Rules of Court)

2) Extent of attorney’s lien

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. (Rule 16.03, Canon 14, Code of Professional Responsibility)

3) Unlawful retention of client’s funds; contempt.

When an attorney unjustly retains in his hands money of his client after it has been demanded, he may be punished for contempt as an officer of the Court who has misbehaved in his official transactions; but proceedings under this section shall not be a bar to a criminal prosecution. (Section 25, Rule 138, Rules of Court)

v. Fees and controversies with clients
Rule 20.02: A lawyer shall, in case of referral, with the consent of the client, be entitled to a division of fees in proportion to the work performed and responsibility assumed.

1) Requisites for referral fee

1) That it is with the consent of the client; and

2) That the referring lawyer performed work and assumed responsibility.

NB: Mere referral is not sufficient to justify a referral fee.

•••••

BAR EXAM QUESTION

(Question XI-B, Legal and Judicial Ethics, 2017 Bar Exam)

Atty. Andy and Atty. Valeriano were classmates in law school. As such, they developed a close friendly relationship. They agreed that they would refer clients to each other, and whoever referred clients would receive a commission or portion of the attorney’s fees. Atty. Andy referred a client to Atty. Valeriano, who charged the client ₱100,000.00 as initial attorney’s fees. Thereafter, Atty. Valeriano sent 15% of ₱100,000.00, or ₱15,000.00, to Atty. Andy as the latter’s referral fee.

Explain if the agreement on the referral fee is ethical. (3%)

Suggested Answer:

The agreement is unethical. Answer

Under the Code of Professional Responsibility, a lawyer shall, in case of referral, with the consent of the client, be entitled to a division of fees in proportion to the work performed and responsibility assumed. Rule

In the case at bar, there is no indication that Atty. Andy performed any service for which he is compensated via the referral fee. There is also no indication that the client gave consent thereto. Apply

Thus, it is unethical for Atty. Valeriano to pay referral fee to Atty. Andy. Conclusion

•••••

Rule 20.03: A lawyer shall not, without the full knowledge and consent of the client, accept any fee, reward, costs, commission, interest, rebate or forwarding allowance or other compensation whatsoever related to his professional employment from anyone other than the client.
Rule 20.04: A lawyer shall avoid controversies with clients concerning his compensation and shall resort to judicial action only to prevent imposition, injustice or fraud.

1) Avoid controversy, resort to judicial action

A lawyer shall avoid controversies with clients concerning his compensation and shall resort to judicial action only to prevent imposition, injustice or fraud. (Rule 20.04, Canon 20, Code fo Professional responsibility)

2) Prohibition on acquiring property subject of litigation

Those who cannot acquire by purchase, even at a public or judicial auction, either in person or through the mediation of another, include: justices, judges, prosecuting attorneys, clerks of superior and inferior courts, and other officers 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; (Article 1491 [5], Civil Code)

•••••

BAR EXAM QUESTION

(Question VI, Legal and Judicial Ethics, 2017 Bar Exam)

For services to be rendered by Atty. Hamilton as counsel for Gener in a civil case involving the recovery of the ownership and possession of a parcel of land with an area of 5,000 square meters, the two of them agreed on a success fee for Atty. Hamilton of ₱50,000.00 plus 500 square meters of the land. The trial court ultimately rendered judgment in favor of Gener, and the judgment became final and executory. After receiving ₱50,000.00, Atty. Hamilton demanded the transfer to him of the promised 500 square meters of the land.

Instead of complying, Gener brought an administrative complaint charging Atty. Hamilton with violation of the Code of Professional Responsibility and Art. 1491(5) of the Civil Code for demanding the delivery of a portion of the land subject of the litigation.

Is Atty. Hamilton liable under the Code of Professional Responsibility and the Civil Code? Explain your answer. (4%)

Suggested Answer:

No. Answer

Under the Civil Code, lawyers representing clients are prohibited from acquiring properties under litigation or subject of the dispute to which they represent clients. The prohibition does not apply where the case is already final and executory. Rule

In the case at bar, the cases involving the subject property has already reached finality. Accordingly, the prohibition no longer applies. Atty. Hamilton may thus demand the transfer to him of the promised 500 square meters of the land. Apply

Thus, Atty. Hamilton is not liable under the Code of Professional Responsibility. Conclusion

•••••

vi. Concepts of attorney’s fees

1) The 2 concepts of attorney’s fees

1) Ordinary; and

2) Extraordinary. (Rosario v. De Guzman, G.R. No. 191247, 10 July 2013)

They both require, as a prerequisite to their grant, the intervention of or the rendition of professional services by a lawyer. As a client may not be held liable for counsel fees in favor of his lawyer who never rendered services, so too may a party be not held liable for attorney’s fees as damages in favor of the winning party who enforced his rights without the assistance of counsel. Moreover, both fees are subject to judicial control and modification. And the rules governing the determination of their reasonable amount are applicable in one as in the other. (Ibid.)

a) Ordinary sense

In its ordinary sense, it is the reasonable compensation paid to a lawyer by his client for legal services rendered. (Ibid.)

What a client pays his counsel are for the latter’s professional services. (Ibid.)

b) Extraordinary concept

In its extraordinary concept, it is awarded by the court to the successful litigant to be paid by the losing party as indemnity for damages. (Ibid.)

The attorney’s fee which a court may, in proper cases, award to a winning litigant is, strictly speaking, an item of damages. (Ibid.)

The award that the court may grant to a successful party by way of attorney’s fee is an indemnity for damages sustained by him in prosecuting or defending, through counsel, his cause in court. It may be decreed in favor of the party, not his lawyer, in any of the instances authorized by law. (Ibid.)

The losing party against whom damages by way of attorney’s fees may be assessed is not bound by, nor is his liability dependent upon, the fee arrangement of the prevailing party with his lawyer. The amount stipulated in such fee arrangement may, however, be taken into account by the court in fixing the amount of counsel fees as an element of damages. (Ibid.)

The fee as an item of damages belongs to the party litigant and not to his lawyer. It forms part of his judgment recoveries against the losing party. (Ibid.)

The client and his lawyer may, however, agree that whatever attorney’s fee as an element of damages the court may award shall pertain to the lawyer as his compensation or as part thereof. In such a case, the court upon proper motion may require the losing party to pay such fee directly to the lawyer of the prevailing party. (Ibid.)

h. Preservation of client’s confidences

Canon 21: A lawyer shall preserve the confidence and secrets of his client even after the attorney-client relations is terminated.

1) Special powers of trust and confidence

In engaging the services of an attorney, the client reposes on him special powers of trust and confidence. Their relationship is strictly personal and highly confidential and fiduciary. The relation is of such delicate, exacting and confidential nature that is required by necessity and public interest. Only by such confidentiality and protection will a person be encouraged to repose his confidence in an attorney. The hypothesis is that abstinence from seeking legal advice in a good cause is an evil which is fatal to the administration of justice. Thus, the preservation and protection of that relation will encourage a client to entrust his legal problems to an attorney, which is of paramount importance to the administration of justice. (Mercado v. Vitriolo, A.C. No. 5108, 26 May 2005)

2) Constitutional and policy concerns on the confidentiality

Considerations favoring confidentially in lawyer-client relationships are many and serve several constitutional and policy concerns. In the constitutional sphere, the privilege gives flesh to one of the most sacrosanct rights available to the accused, the right to counsel. If a client were made to choose between legal representation without effective communication and disclosure and legal representation with all his secrets revealed then he might be compelled, in some instances, to either opt to stay away from the judicial system or to lose the right to counsel. If the price of disclosure is too high, or if it amounts to self incrimination, then the flow of information would be curtailed thereby rendering the right practically nugatory. The threat this represents against another sacrosanct individual right, the right to be presumed innocent is at once self-evident. (Regala v. Sandiganbayan, G.R. No. 105938, 20 September 1996)

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. (Ibid.)

3) Attorney-client privilege

One rule adopted to serve this purpose is the attorney-client privilege: an attorney is to keep inviolate his client’s secrets or confidence and not to abuse them. Thus, the duty of a lawyer to preserve his client’s secrets and confidence outlasts the termination of the attorney-client relationship, and continues even after the client’s death.  (Mercado v. Vitriolo, A.C. No. 5108, 26 May 2005)

It is the glory of the legal profession that its fidelity to its client can be depended on, and that a man may safely go to a lawyer and converse with him upon his rights or supposed rights in any litigation with absolute assurance that the lawyer’s tongue is tied from ever disclosing it. With full disclosure of the facts of the case by the client to his attorney, adequate legal representation will result in the ascertainment and enforcement of rights or the prosecution or defense of the client’s cause..(Ibid.)

a) Factors to determine existence

1) There exists an attorney-client relationship, or a prospective attorney-client relationship, and it is by reason of this relationship that the client made the communication;

2) The client made the communication in confidence; and

3) The legal advice must be sought from the attorney in his professional capacity..(Ibid.)

(1) Existing or prospective attorney-client relationship

Matters disclosed by a prospective client to a lawyer are protected by the rule on privileged communication even if the prospective client does not thereafter retain the lawyer or the latter declines the employment. The reason for this is to make the prospective client free to discuss whatever he wishes with the lawyer without fear that what he tells the lawyer will be divulged or used against him, and for the lawyer to be equally free to obtain information from the prospective client..(Ibid.)

On the other hand, a communication from a (prospective) client to a lawyer for some purpose other than on account of the (prospective) attorney-client relation is not privileged. Instructive is the case of Pfleider v. Palanca, where the client and his wife leased to their attorney a 1,328-hectare agricultural land for a period of ten years. In their contract, the parties agreed, among others, that a specified portion of the lease rentals would be paid to the client-lessors, and the remainder would be delivered by counsel-lessee to client’s listed creditors. The client alleged that the list of creditors which he had “confidentially” supplied counsel for the purpose of carrying out the terms of payment contained in the lease contract was disclosed by counsel, in violation of their lawyer-client relation, to parties whose interests are adverse to those of the client. As the client himself, however, states, in the execution of the terms of the aforesaid lease contract between the parties, he furnished counsel with the “confidential” list of his creditors. The Supreme Court ruled that this indicates that client delivered the list of his creditors to counsel not because of the professional relation then existing between them, but on account of the lease agreement. It was then held that a violation of the confidence that accompanied the delivery of that list would partake more of a private and civil wrong than of a breach of the fidelity owing from a lawyer to his client..(Ibid.)

(2) Communication made in confidence

The mere relation of attorney and client does not raise a presumption of confidentiality. The client must intend the communication to be confidential..(Ibid.)

A confidential communication refers to information transmitted by voluntary act of disclosure between attorney and client in confidence and by means which, so far as the client is aware, discloses the information to no third person other than one reasonably necessary for the transmission of the information or the accomplishment of the purpose for which it was given..(Ibid.)

Our jurisprudence on the matter rests on quiescent ground. Thus, a compromise agreement prepared by a lawyer pursuant to the instruction of his client and delivered to the opposing party, an offer and counter-offer for settlement, or a document given by a client to his counsel not in his professional capacity, are not privileged communications, the element of confidentiality not being present..(Ibid.)

(3) Professional capacity

The communication made by a client to his attorney must not be intended for mere information, but for the purpose of seeking legal advice from his attorney as to his rights or obligations. The communication must have been transmitted by a client to his attorney for the purpose of seeking legal advice..(Ibid.)

If the client seeks an accounting service, or business or personal assistance, and not legal advice, the privilege does not attach to a communication disclosed for such purpose..(Ibid.)

b) Breach requires specifics from client

Such confidential information is a crucial link in establishing a breach of the rule on privileged communication between attorney and client. It is not enough to merely assert the attorney-client privilege. The burden of proving that the privilege applies is placed upon the party asserting the privilege..(Ibid.)

The evidence on record fails to substantiate complainant’s allegations. The complainant did not even specify the alleged communication in confidence disclosed by respondent-lawyer. All her claims were couched in general terms and lacked specificity. She contends that respondent-lawyer violated the rule on privileged communication when he instituted a criminal action against her for falsification of public documents because the criminal complaint disclosed facts relating to the civil case for annulment then handled by respondent. She did not, however, spell out these facts which will determine the merit of her complaint. The Court cannot be involved in a guessing game as to the existence of facts which the complainant must prove..(Ibid.)

The cases filed by the respondent-lawyer against his former client involved matters and information acquired by the respondent during the time when he was still Rosario’s counsel. Information as to the structure and operations of the family corporation, private documents, and other pertinent facts and figures used as basis or in support of the cases filed by the respondent in pursuit of his malicious motives were all acquired through the attorney-client relationship with herein complainants. Such act is in direct violation of the Canons and will not be tolerated by the Court. (Alcantara v. De Vera, A.C. No. 5859, 23 November 2010)

c) General rule on disclosing of lawyer’s clients

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. (Regala v. Sandiganbayan, G.R. No. 105938, 20 September 1996)

(1) Reasons

1) The court has a right to know that the client whose privileged information is sought to be protected is flesh and blood.

2) 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.

3) The privilege generally pertains to the subject matter of the relationship.

4) 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.” He cannot be obliged to grope in the dark against unknown forces. (Ibid.)

(2) 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.

2) Where disclosure would open the client to civil liability; his identity is privileged.

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.

4) Where the content of any client communication to a lawyer lies within the privilege if it is relevant to the subject matter of the legal problem on which the client seeks legal assistance.

5) 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. (Ibid.)

(3) Strong probability of implicating client

In Ex-Parte Enzor, 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. (Ibid., citing Ex-Parte Enzor, 270 ALA 254 [1960])

U.S. v. Hodge and Zweig, involved the same exception, i.e. that client identity is privileged in those instances where a strong probability exists that the disclosure of the client’s identity would implicate the client in the very criminal activity for which the lawyer’s legal advice was obtained. The Hodge case involved federal grand jury proceedings inquiring into the activities of the “Sandino Gang,” a gang involved in the illegal importation of drugs in the United States. The respondents, law partners, represented key witnesses and suspects including the leader of the gang, Joe Sandino. 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: 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 sought. (Ibid., citing U.S. v. Hodge and Zweig, 548 F 2d 1347 [9th Cir. 197])

(4) Opens client to civil liability

For instance, the peculiar facts and circumstances of Neugass v. Terminal Cab Corporation, 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. In the said case, Neugass, the plaintiff, suffered injury when the taxicab she was riding, owned by respondent corporation, collided with a second taxicab, whose owner was unknown. Plaintiff brought action both against defendant corporation and the owner of the second cab, identified in the information only as John Doe. It turned out that when the attorney of defendant corporation appeared on preliminary examination, the fact was somehow revealed that the lawyer came to know the name of the owner of the second cab when a man, a client of the insurance company, prior to the institution of legal action, came to him and reported that he was involved in a car accident. It was apparent under the circumstances that the man was the owner of the second cab. The state supreme court held that the reports were clearly made to the lawyer in his professional capacity. The court said: 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. All communications made by a client to his counsel, for the purpose of professional advice or assistance, are privileged, whether they relate to a suit pending or contemplated, or to any other matter proper for such advice or aid; And whenever the communication made, relates to a matter so connected with the employment as attorney or counsel as to afford presumption that it was the ground of the address by the client, then it is privileged from disclosure. It appears that the name and address of the owner of the second cab came to the attorney in this case as a confidential communication. His client is not seeking to use the courts, and his address cannot be disclosed on that theory, nor is the present action pending against him as service of the summons on him has not been effected. The objections on which the court reserved decision are sustained. (Ibid., citing Neugass v. Terminal Cab Corporation, 249 NYS 631 [1931])

In the case of Matter of Shawmut Mining Company, the lawyer involved was required by a lower court to disclose whether he represented certain clients in a certain transaction. The purpose of the court’s request was to determine whether the unnamed persons as interested parties were connected with the purchase of properties involved in the action. The lawyer refused and brought the question to the State Supreme Court. Upholding the lawyer’s refusal to divulge the names of his clients the court held: If it can compel the witness to state, as directed by the order appealed from, that he represented certain persons in the purchase or sale of these mines, it has made progress in establishing by such evidence their version of the litigation. As already suggested, such testimony by the 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. (Ibid., citing Matter of Shawmut Mining Company, 87 NYS 1059 [1904])

(5) Government has no case unless client’s name is revealed

In Baird vs. Korner, 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). (Ibid., citing Baird vs. Korner, 279 F. 2d 623 [1960])

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

(6) Relevant to the subject matter of the client’s legal problem

Added by the Supreme Court to the first 3 principal exceptions

(7) The identity is previously disclosed and intended to be confidential

Added by the Supreme Court to the first 3 principal exceptions

(8) Summary of exceptions

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. (Ibid.)

•••••

BAR EXAM QUESTION

(Question I-B, Legal and Judicial Ethics, 2017 Bar Exam)

Under the facts of the preceding question, assume that you had resigned from the Brando & Luzon Law Office prior to the filing of the money laundering case against Gregory and the others, and that you were not implicated in the case. However, you had assisted in handling the Cobra Co. account during your time with the law firm. Cobra Co. was largely owned by Cable Co.

The public prosecutor handling the case against Gregory and the others asks you, as a former member of the Brando & Luzon Law Office, to help strengthen the case for the Government, and hints that you may be implicated in the case if you do not cooperate. What is your legal and ethical course of action? Explain your answer. (5%)

Suggested Answer:

I will still decline to be a witness due to the application of the attorney-client privilege. Answer

Under the Code of Professional Responsibility, a lawyer shall preserve the confidence and secrets of his client even after the attorney-client relations is terminated. Answer

In the case at bar, I handled Gregory’s account, including Cable Co., and assisted in handling the Cobra Co., which is largely owned by Cable Co. Accordingly, the rule on attorney-client privilege prohibits me from being a witness to the clients even after the termination of my employment. Apply

Thus, I cannot be a witness against the said clients. Conclusion

•••••

i. Prohibited disclosures and use
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 own advantage or that of a third person, unless the client with full knowledge of the circumstances consents thereto.

1) Using information, a serious violation

Where respondent-lawyer filed against his former client, her family members, the family corporation of his former client, the Chairman and members of the Board of Governors of the IBP who issued the said Resolution, the Regional Trial Court Judge in the case where his former client received a favorable judgment, and the present counsel of his former client, a total of twelve (12) different cases in various fora which included the Securities and Exchange Commission; the Provincial Prosecutors Office of Tagum, Davao; the Davao City Prosecutors Office; the IBP-Commission on Bar Discipline; the Department of Agrarian Reform; and the Supreme Court. In addition to the twelve (12) cases filed, the respondent also re-filed cases which had previously been dismissed. The respondent filed six criminal cases against members of the Mercado family separately docketed as I.S. Nos. 97-135; 97-136; 97-137; 97-138; 97-139; and 97-140. With the exception of I.S. No. 97-139, all the aforementioned cases are re-filing of previously dismissed cases. The cases filed by the respondent against his former client involved matters and information acquired by the respondent during the time when he was still Rosario’s counsel. Information as to the structure and operations of the family corporation, private documents, and other pertinent facts and figures used as basis or in support of the cases filed by the respondent in pursuit of his malicious motives were all acquired through the attorney-client relationship with herein complainants. Such act is in direct violation of the Canons and will not be tolerated by the Court. The lawyer was disbarred. (Alcantara v. De Vera, En Banc, A.C. No. 5859, 23 November 2010).

Rule 21.03: A lawyer shall not, without the written consent of his client, give information from his files to an outside agency seeking such information for auditing, statistical, bookkeeping, accounting, data processing, or any similar purpose.

1) Lawyer files kept on storage devices

It is clear that the court could not and can not order the opening of the art metal filing cabinet in question because, it having been proven that it belongs to the appellant attorney and that in it he keeps the records and documents of his clients, to do so would be in violation of his right as such attorney, since it would be tantamount to compelling him to disclose or divulge facts or things belonging to his clients, which should be kept secret, unless she is authorized by them to make such disclosure, it being a duty imposed by law upon an attorney to strictly preserve the secrets or communications made to him. (People v. Sy Juco, G.R. No. L-41957, 28 August 1937)

Rule 21.04: A lawyer may disclose the affairs of a client of the firm to partners or associates thereof unless prohibited by the client.

1) Only to partners or associates, unless prohibited

Canon 21, Rule 21.04 of the Code of Professional Responsibility generally allows disclosure of a client’s affairs only to partners or associates of the law firm, unless the client prohibits it. Respondent-lawyer is not a partner or associate of MFV Jose Law Office. (In Re: Resolution dated August 14, 2013 of the Court of Appeals in CA, G.R. CV No. 94656 v. Mortel, A.C. No. 10117, 25 July 2016)

Rule 21.05: A lawyer shall adopt such measures as may be required to prevent those whose services are utilized by him, from disclosing or using confidences or secrets of the clients.

1) Measures

This may include requiring the signing of confidentiality or non-disclosure agreements of employees, independent contractors, vendors, and other third parties.

Rule 21.06: A lawyer shall avoid indiscreet conversation about a client’s affairs even with members of his family.
Rule 21.07: A lawyer shall not reveal that he has been consulted about a particular case except to avoid possible conflict of interest.

1) Confidentiality rules attach once consultation is rendered

An attorney is employed — that is, he is engaged in his professional capacity as a lawyer or counselor — when he is listening to his client’s preliminary statement of his case, or when he is giving advice thereon, just as truly as when he is drawing his client’s pleadings, or advocating his client’s cause in open court. (Hilado v. Gutierrez, G.R. No. L-961, 21 September 1949)

ii. Disclosures, when allowed
Rule 21.01: A lawyer shall not reveal the confidences or secrets of his client except: (a) When authorized by the client after acquainting him of the consequences of the disclosure; (b) When required by law; (c) When necessary to collect his fees or to defend himself, his employees or associates or by judicial action.

1) Rules on disclosures

GENERAL RULE: A lawyer shall not reveal the confidences or secrets of his client. (Rule 21.01, Code of Professional Responsibility)

EXCEPTIONS:

1) When authorized by the client after acquainting him of the consequences of the disclosure;

2) When required by law;

3) When necessary to collect his fees or to defend himself, his employees or associates or by judicial action. (Ibid.)

The privilege against disclosure of confidential communications or information is limited only to communications which are legitimately and properly within the scope of a lawful employment of a lawyer. It does not extend to those made in contemplation of a crime or perpetration of a fraud. (Genato v. Silapan, A.C. No. 4078, 14 July 2003)

•••••

BAR EXAM QUESTION

(Question IX, Legal and Judicial Ethics, 2017 Bar Exam)

Atty. Miriam rents her office space in a building owned by Winston. Eventually, Atty. Miriam became Winston’s regular legal counsel. Because of their good relationship, Atty. Miriam did not hesitate to borrow money from Winston. Atty. Miriam issued postdated checks covering the interest of her loans. Unfortunately, Atty. Miriam failed to pay her obligations to Winston. Her postdated checks with Winston also bounced. Hence, he filed a criminal case for violation of the Bouncing Checks Law against her.

In her counter-affidavit, Atty. Miriam averred that Winston was “a businessman who is engaged in the real estate business, trading and buy and sell of deficiency taxed imported cars, shark loans and other shady deals and has many cases pending in court.”

Hurt by the allegations, Winston filed a disbarment complaint against Atty. Miriam arguing that her allegations in the counter-affidavit constituted a breach of their confidential lawyer-client relationship.

Discuss whether or not the disclosures in Atty. Miriam’s counter-affidavit constitute a breach of fidelity towards her client. (4%)

Suggested Answer:

The disclosures in Atty. Miriam’s counter-affidavit constituted a breach of fidelity towards her client. Answer

Under the Code of Professional Responsibility, and as a general rule, a lawyer shall not reveal the confidences or secrets of his client. One of the exceptions is when it is necessary for the lawyer to defend himself. Rule

In the case at bar, the disclosures made by Atty. Miriam were not necessary to defend himself. She was charged for violating the Bouncing Checks Law. That Mr. Winston may be engaged in some unlawful activities is not relevant nor material to the Bouncing Checks case. Apply

Thus, Atty. Miriam committed a breach of fidelity against her client. Conclusion

•••••

2) Using information acquired from engagement w/ old client

By causing the filing of the complaint before the HLURB, the respondent-lawyer must have necessarily divulged to Phil Golf (as the new client) and used information that he gathered while he was complainant’s (old client) counsel in violation of Rules 21.01 and 21.02 of the CPR. (Palacios v. Amora, A.C. No. 11504, 01 August 2017)

i. Withdrawal of services

Canon 22: A lawyer shall withdraw his services only for good cause and upon notice appropriate in the circumstances.

1) Reasonable notice, required

A lawyer is not at liberty to abandon his client and withdraw his services without reasonable cause and only upon notice appropriate in the circumstances. (Venterez v. Cosme, A.C. No. 7421, 10 October 2007)

Any dereliction of duty by a counsel affects the client. This means that his client is entitled to the benefit of any and every remedy and defense that is authorized by the law and he may expect his lawyer to assert every such remedy or defense..(Ibid.)

Rule 22.01: A lawyer may withdraw his services in any of the following case: (a) When the client pursues an illegal or immoral course of conduct in connection with the matter he is handling; (b) When the client insists that the lawyer pursue conduct violative of these canons and rules; (c) When his inability to work with co-counsel will not promote the best interest of the client; (d) When the mental or physical condition of the lawyer renders it difficult for him to carry out the employment effectively; (e) When the client deliberately fails to pay the fees for the services or fails to comply with the retainer agreement; (f) When the lawyer is elected or appointed to public office; and (g) Other similar cases.

1) Grounds for withdrawing services

1) When the client pursues an illegal or immoral course of conduct in connection with the matter he is handling;

2) When the client insists that the lawyer pursue conduct violative of these canons and rules;

3) When his inability to work with co-counsel will not promote the best interest of the client;

4) When the mental or physical condition of the lawyer renders it difficult for him to carry out the employment effectively;

5) When the client deliberately fails to pay the fees for the services or fails to comply with the retainer agreement;

6) When the lawyer is elected or appointed to public office; and

7) Other similar cases. (Rule 22.01, Code of Professional Responsibility)

1) Client vs. lawyer’s right to terminate

While the right of the client to terminate the relation is absolute, i.e., with or without cause, the right of the attorney to withdraw or terminate the relation other than for sufficient cause is considerably restricted. (Santeco v. Avance, A.C. No. 5834, 11 December 2003)

2) Legal representation in cases, how to withdraw/retire

An attorney may only retire from the case either by a written consent of his client or by permission of the court after due notice and hearing, in which event, the attorney should see to it that the name of the new attorney is recorded in the case. (Venterez v. Cosme, A.C. No. 7421, 10 October 2007)

If without written consent, a lawyer may still file a motion to withdraw citing any of the grounds.

a) Court-approval required

The lawyer has no right to presume that his petition for withdrawal will be granted by the court. Until his withdrawal shall have been approved, the lawyer remains counsel of record who is expected by his clients, as well as by the court, to do what the interests of his clients require. He must still appear before the court to protect the interest of his clients by availing himself of the proper remedy, for the attorney-client relations are not terminated formally until there is a withdrawal of record. (Ibid.)

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. (Canoy v. Ortiz, A.C. No. 5485, 16 March 2005)

b) Client’s consent must be express

Turnover of records is not one of the grounds. Contrary to respondent-lawyer’s contention, his professional relations as a lawyer with his clients are not terminated by the simple turnover of the records of the case to his clients. Respondent’s defense completely crumbles in face of the fact that Salvador Ramirez is not even a party in Civil Case No. 981 and, hence, had no authority to withdraw the records of the said case from respondent or to terminate the latter’s services. (Venterez v. Cosme, supra.)

This case arose from a simple misunderstanding between complainant and respondent-lawyer. Complainant was upset by respondent’s absence at the hearing where bail was granted to the suspected killers of her husband. She vehemently opposed the grant of bail. It was thus a spontaneous and natural reaction for her to confront respondent with his absence. Her belligerence arose from her overzealousness, nothing more. Complainant’s words and actions may have hurt respondent’s feelings considering the work he had put into the case. But her words were uttered in a burst of passion. And even at that moment, complainant did not expressly terminate respondent’s services. She made this clear when she refused to sign his “Motion to Withdraw as Counsel.” (Orcino v. Gaspar, A.C. No. 3773, 24 September 1997)

c) Client’s failure to pay

Although he may withdraw his services when the client deliberately fails to pay the fees for the services, 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. (Montano v. IBP, Dealca, A.C. No. 4215, 21 May 2001)

d) Election or appointment to public office

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. (Canoy v. Ortiz, A.C. No. 5485, 16 March 2005)

Statutes expressly prohibit the occupant of particular public offices from engaging in the practice of law, such as governors and mayors, and in such instance, the attorney-client relationship is terminated. (Ibid.)

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. In such case, the lawyer nevertheless has the choice to withdraw his/her services. 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. (Ibid.)

(1) Still required to observe rules on severance and withdrawing representation

Despite election or appointment, 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. (Ibid.)

1) Substitution of counsel

Under Section 26, Rule 138 of the Rules of Court and established jurisprudence, a valid substitution of counsel has the following requirements: (1) the filing of a written application for substitution; (2) the client’s written consent; (3) the consent of the substituted lawyer if such consent can be obtained; and, in case such written consent cannot be procured, (4) a proof of service of notice of such motion on the attorney to be substituted in the manner required by the Rules. Where death of the previous attorney is the cause of substitution of the counsel, a verified proof of the death of such attorney (usually a death certificate) must accompany the notice of appearance of the new counsel. (Bernardo v. CA, G.R. No. 106153, 14 July 1997)

Unless the procedure prescribed in the abovementioned section is complied with, the attorney of record is regarded as the counsel who should be served with copies of the judgments, orders and pleadings and who should be held responsible for the case. For its part, the court could recognize no other representation on behalf of the client except such counsel of record until a formal substitution of attorney is effected. (Anastacio-Briones v. Zapanta, A.C. No. 6566, 16 November 2006)

Courts may not presume that the counsel of record has been substituted by a second counsel merely from the filing of a formal appearance by the latter. (Bernardo v. CA, supra.)

a) At least notice to other counsel if consent cannot be obtained

In case the consent of the attorney to be substituted cannot be obtained, there must at least be proof that notice of the motion for substitution has been served upon him in the manner prescribed by our rules. (Ibid.)

•••••

BAR EXAM QUESTION

(Question IV, Legal and Judicial Ethics, 2017 Bar Exam)

Atty. Jessa was the counsel for Mr. Nolan, a cantankerous millionaire, in the latter’s personal case. Soon after the case was submitted for decision, Mr. Nolan withdrew the files from Atty. Jessa and informed her that he was engaging another lawyer. On that same day, a copy of the decision in the case was received by Atty. Jessa but she did not do anything anymore with the decision. She did not also file a withdrawal of her appearance. Mr. Nolan’s new counsel did not file any notice of his appearance. By the time Mr. Nolan found out about the adverse decision, his period to appeal had lapsed.

Was the service of the decision on Atty. Jessa still effective? Explain your answer. (4%)

Suggested Answer:

Yes. Answer

Under jurisprudence, until the withdrawal of counsel shall have been approved by the court, the lawyer remains counsel of record who is expected by his clients, as well as by the court, to do what the interests of his clients require. S/he must still appear before the court to protect the interest of his/her clients by availing himself of the proper remedy, for the attorney-client relations are not terminated formally until there is a withdrawal of record. Rule

In the case at bar, Atty. Jesa did not file a withdrawal of counsel and thus she remained as counsel on record. She has to discharge her duties and responsibilities as the counsel-on-record until she is properly discharged via a withdrawal of record. Apply

Thus, the service of the decision on Atty. Jessa is still effective. Conclusion

•••••

BAR EXAM QUESTION

(Question VI, Legal and Judicial Ethics, 2018 Bar Exam)

Mrs. Conchita Conchu engaged the services of Atty. Carlo Colorado to act as private prosecutor to handle a criminal case against persons suspected of slaying her husband. Atty. Colorado performed his duties – he interviewed witnesses to build up his case and religiously attended hearings. However, he failed to attend one hearing (allegedly because he did not receive a notice) in which the court, over Mrs. Conchu’s objections, granted bail to all the accused. Mrs. Conchu belligerently confronted Atty. Colorado about his absence. Stung by Mrs. Conchu’s words, Atty. Colorado filed with the court a “Motion to Withdraw as Counsel”. The motion did not bear the consent of Mrs. Conchu, as in fact, Mrs. Conchu refused to sign her conformity to Atty. Colorado’s withdrawal. Meanwhile, the hearing in the criminal case continued, but Atty. Colorado no longer appeared at the hearings nor did he contact Mrs. Conchu. Mrs. Conchu then filed a complaint seeking disciplinary sanctions against Atty. Colorado. Atty. Colorado cited “loss of confidence” and “serious differences” with the client as his reasons for withdrawing his services unilaterally.

Can Atty. Colorado be sanctioned for his actions? (2.5%)

Suggested Answer:

Yes. Answer

Under jurisprudence, until the withdrawal of counsel shall have been approved by the court, the lawyer remains counsel of record who is expected by his clients, as well as by the court, to do what the interests of his clients require. S/he must still appear before the court to protect the interest of his/her clients by availing himself of the proper remedy, for the attorney-client relations are not terminated formally until there is a withdrawal of record. Rule

In the case at bar, Atty. Colorado submitted a motion to withdraw without the signature of his Mrs. Conchu indicating her approval. Further, the court has not approved the motion. Accordingly, he remained counsel until it is approved by the court and there is a proper withdrawal of record. Apply

Thus, Atty. Colorado can be sanctioned for his actions. Conclusion

•••••

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 cooperative with his successor in the orderly transfer of the matter, including all information necessary for the proper handling of the matter.

1) Immediate turn over

The Supreme Court did not find respondent guilty of violating Rule 22.02 of the Code of Professional Responsibility since respondent immediately turned over to complainant the folder containing the documents and letters pertaining to her case upon the severance of respondent’s legal services. (Voluntad-Ramirez v. Bautista, A.C. No. 6733, 10 October 2012)

Since respondent-lawyer had been advised by complainant through counsel Chavez Laureta and Associates, by letter of July 18, 2001, that she intended to terminate his services, as of said date, he was obliged, under Rule 22.02 of the Code of Professional Responsibility, including immediate turn over of all papers and property to which the client is entitled.

j. Duties of lawyers in case of death of parties represented

1) To inform the court

Whenever a party to a pending action dies, and the claim is not thereby extinguished, it shall be the duty of his counsel to inform the court within thirty (30) days after such death of the fact thereof, and to give the name and address of his legal representative or representatives. Failure of counsel to comply with his duty shall be a ground for disciplinary action. (Section 16, Rule 3, Rules of Court)

a) Heirs as substitutes

The heirs of the deceased may be allowed to be substituted for the deceased, without requiring the appointment of an executor or administrator and the court may appoint a guardian ad litem for the minor heirs. (Ibid.)

The court shall forthwith order said legal representative or representatives to appear and be substituted within a period of thirty (30) days from notice. (Ibid.)

b) If no legal representative is named or appears

If no legal representative is named by the counsel for the deceased party, or if the one so named shall fail to appear within the specified period, the court may order the opposing party, within a specified time to procure the appointment of an executor or administrator for the estate of the deceased and the latter shall immediately appear for and on behalf of the deceased. The court charges in procuring such appointment, if defrayed by the opposing party, may be recovered as costs. (Ibid.)

•••••

BAR EXAM QUESTION

(Question VII-B, Legal and Judicial Ethics, 2017 Bar Exam)

The plaintiff died during the pendency of the case in the RTC. If you were the counsel of the plaintiff, what is the last duty you need to discharge in behalf of the late client before your professional engagement for the case may be deemed terminated? Explain briefly your answer. (4%)

Suggested Answer:

Under the Rules of Court, whenever a party to a pending action dies, and the claim is not thereby extinguished, it shall be the duty of his counsel to inform the court within thirty (30) days after such death of the fact thereof, and to give the name and address of his legal representative or representatives. Rule

In the case at bar, I will inform the court within thirty (30) days after the death of the plaintiff and give the name and address of his legal representative or representatives. Apply

•••••

k. Duties of law firms Added

1) To represent clients, regardless if handling lawyer is unable to do so

A client who employs a law firm engages the entire law firm; hence, the resignation, retirement or separation from the law firm of the handling lawyer does not terminate the relationship, because the law firm is bound to provide a replacement. (Malvar v. Kraft Food Phils., Inc., G.R. No. 183952, 09 September 2013)

When a law firm represents a client, it is the law firm that is engaged as the counsel and not the handling lawyer/s appearing on behalf of the client. Hence, the death of the handling lawyer does not extinguish the lawyer-client relationship between the law firm and the client. (B.R. Sebastian Enterprises, Inc. v. CA, G.R. No. L-41862, 07 February 1992)

2) To adopt a system of distributing pleadings and notices

Time and again the Court has admonished law firms to adopt a system of distributing pleadings and notices, whereby lawyers working therein receive promptly notices and pleadings intended for them, so that they will always be informed of the status of their cases. Their Court has also often repeated that the negligence of clerks which adversely affect the cases handled by lawyers, is binding upon the latter. (Negros Stevedoring Co., Inc. v. CA, G.R. No. L-36003, 21 June 1988)

•••••

BAR EXAM QUESTION

(Question A.5, Legal and Judicial Ethics, 2019 Bar Exam)

P was dismissed by his former employer, Company X, for allegedly misappropriating company funds entrusted to him. P alleged that there was no proof to substantiate the same; hence, his dismissal was invalid.

Aggrieved, P engaged the services of ABCDE Law Office to represent him in an illegal dismissal case against Company X. Atty. A, a partner of the said law firm, was assigned to handle P’s case. Eventually, the illegal dismissal case was terminated upon settlement by all parties, and thus, P’s engagement with ABCDE Law Office ceased.

Two (2) years after, a criminal case for Qualified Theft was filed by Company X against P based on the same events which led to his dismissal. To his surprise, P found out that Company X was being represented by ABCDE Law Office in the criminal case. Decrying a violation of the rule on conflict of interest, P filed an administrative complaint against Attys. A, B, C, D, and E, the partners of ABCDE Law Office.

(a) Was the rule on conflict of interest violated in this case? Explain. (3%)

Suggested Answer:

Yes. Answer

Under the Code of Professional Responsibility, a lawyer shall not represent conflicting interests except by written consent of all concerned given after a full disclosure of the facts. Rule

In the case at bar, ABCDE Law Office previously represented P for an illegal dismissal case on the same subject matter that the law office was subsequently engaged by Company X for qualified theft. Due to the previous engagement, the lawyers of ABCDE would have obtained various information from P that might prejudice the latter and give an unfair advantage to Company X. There is also no indication that both parties gave their written consent to ABCDE Law Office Apply

Thus, the rule on conflict of interest was violated in this case. Conclusion

(b) Is the prior termination of P’s engagement with ABCDE Law Office a valid defense to the administrative charge against Attys. A, B, C, D, and E? Explain. (2.5%)

Suggested Answer:

No. Answer

Under jurisprudence, the protection given to the client is perpetual and does not cease with the termination of the litigation, nor is it affected by the client’s ceasing to employ the attorney and retaining another, or by any other change of relation between them. It even survives the death of the client. Rule

In the case at bar, ABCDE Law Office is required to protect the interest of their client P even after the termination of the engagement. Accordingly, the law office should not represent Company X on the same subject matter to avoid violating the prohibition against conflict of interest. Apply

Thus, the prior termination of P’s engagement with ABCDE Law Office is not a valid defense to the administrative charge against Atty. A, B, C, D, and E. Conclusion

(c) May Attys. B, C, D, and E be held administratively liable for violating the rule on conflict of interest despite the fact that it was only Atty. A, the handling lawyer, who had knowledge of P’s engagement as a client? Explain. (2.5%)

Suggested Answer:

Yes. Answer

Under jurisprudence, when a law firm represents a client, it is the law firm that is engaged as the counsel and not the handling lawyer/s appearing on behalf of the client. Rule

In the case at bar, ABCDE Law Office represented P. It is the entire law office, including all its lawyers, that is considered as the legal counsel of the P. All of the lawyers of the law office are thus covered by the attorney-client privilege and the prohibition against conflict of interest. Apply

Thus, Attys. B, C, D, and E may be held administratively liable for violating the rule on conflict of interest. Conclusion

•••••

BAR EXAM QUESTION

(Question III, Legal and Judicial Ethics, 2018 Bar Exam)

Carina was dismissed by her employer for breach of trust and confidence, and for willful violation of company rules and policies. She filed an action for illegal dismissal claiming that her termination was without legal basis. The Labor Arbiter found that she was illegally dismissed and awarded her the amount of PhP 80 million. On appeal to the National Labor Relations Commission (NLRC), the award was reduced to PhP 40 million as separation pay, plus PhP 5 million for the value of her stock option plans which would have vested if she were not illegally dismissed from her job. Unsatisfied with the NLRC’s decision, she appealed to the Court of Appeals (CA) the amount of monetary award granted by the NLRC. She engaged the services of Casal, Casos and Associates to handle her appeal. Her retainer agreement with Casal, Casos and Associates provided for contingent fees equivalent to 10% of her claim for separation pay and 10% of the value of stock options to be awarded to her.

The CA decision was not favorable to Carina, so she appealed the same to the Supreme Court (the Court). While the case was pending appeal with the Court, Carina entered into a compromise agreement with her employer to terminate the case upon payment to her of the full amount of PhP 40 million, less the PhP 15 million previously paid to her by her employer. Before the compromise agreement was finalized, Carina terminated the services of Casal, Casos and Associates and asked them to withdraw from the case pending before the Court. The parties negotiated the compromise agreement without the participation of their lawyers since the employer imposed the condition that no lawyers should be involved in the compromise negotiation. She, together with her employer, then filed the Compromise Agreement for approval by the Court, and sought the termination of the case, with prejudice.

Casal, Casos and Associates filed a motion to intervene in the case pending with the Court, praying that Carina be ordered to pay them PhP 4 million, representing 10% of the amount received by Carina from her employer in settlement of the case, plus 6% legal interest from the date of filing of the motion for intervention, until fully paid. The intervenors claimed that they were dismissed without justifiable cause prior to the signing of the compromise agreement for the reason that Carina, their client, wanted to evade payment of their legal fees. Carina claimed they were dismissed because Attys. Casal and Casos, who personally handled her case, had resigned from the law firm to join the government, and because of the negligence and failure of her lawyers to attend to her case. In reply, the intervenors said that the engagement was with the law firm and not with individual lawyers. The law firm also presented letters signed by their client commending them for work done well in the case.

(c) Can Carina refuse to pay attorneys’ fees on the ground that the lawyers who personally handled her case had already resigned from the law firm with which she had contracted? (2.5%)

Suggested Answer:

No. Answer

Under jurisprudence, when a law firm represents a client, it is the law firm that is engaged as the counsel and not the handling lawyer/s appearing on behalf of the client. Rule

In the case at bar, Carina engaged as her counsel Casal, Casos and Associates (the “Law Firm”), and not the individual lawyers, Attys. Casal and Casos Accordingly, the fact that Attys. Casal and Casos resigned from the Law Firm and joined Government service did not terminate the attorney-client relationship between Carina and the Law Firm . Apply

Thus, Carina cannot refuse to pay attorney’s fees. Conclusion

•••••

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