chopsuey iii

8/10/2019 Chopsuey III

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75 Legal Ethics for Justice Hofilena by Jason Arteche

Feel free to use and share this digest with anyone who needs it

HiladovsDavid

FactsHilado brought an action against Selim Jacob Assad to annul the sale of several houses and lot executed during theJapanese occupation by Mrs. Hilado's now deceased husband.

Later Attorney Dizon (for Hilado) wrote Attorney Francisco (for Assad) a letter urging him to discontinue representingthe defendants on the ground that their client had consulted with him about her case, on which occasion, it was alleged,

"she turned over the papers" to Attorney Francisco, and the latter sent her a written opinion. Not receiving any answerto this suggestion, Attorney Dizon filed a formal motion with the court to disqualify Attorney Francisco.

Attorney Francisco's letter to plaintiff stated Atty. Francisco thought Hilados case was weak and the legal reasons forthe same. It also stated that Atty. Francisco couldnt represent Hilado in the case, if ever one is to be filed.

Stripped of disputed details and collateral matters, this much is undoubted: That Attorney Francisco's law firm mailedto the plaintiff a written opinion over his signature on the merits of her case; that this opinion was reached on the basisof papers she had submitted at his office; that Mrs. Hilado's purpose in submitting those papers was to secure AttorneyFrancisco's professional services.

Issue

Whether or not an attorney-client relationship created between Atty. Francisco and Hilado.

HeldThere was an attorney-client relationship || Disqualified from case

Mere relation of attorney and client ought to preclude the attorney from accepting the opposite party's retainer in thesame litigation regardless of what information was received by him from his first client.

Communications between attorney and client are a complicated affair. To make the passing of confidentialcommunication a condition precedent; i.e., to make the employment conditioned on the scope and character of theknowledge acquired by an attorney in determining his right to change sides would be prejudicial to the litigant. Hencethe necessity of setting down the existence of the bare relationship of attorney and client as the yardstick for testingincompatibility of interests. Only thus can litigants be encouraged to entrust their secrets to their attorneys that is of

paramount importance in the administration of justice.

So without impugning respondent's good faith, we nevertheless can not sanction his taking up the cause of theadversary of the party who had sought and obtained legal advice from his firm; this, not necessarily to prevent anyinjustice to the plaintiff but to keep above reproach the honor and integrity of the courts and of the bar.

The defense that Attorney Agrava wrote the letter and that Attorney Francisco did not take the trouble of reading it,would not take the case out of the interdiction. If this letter was written under the circumstances explained by AttorneyFrancisco and he was unaware of its contents, the fact remains that his firm did give Mrs. Hilado a formal professionaladvice from which, as heretofore demonstrated, emerged the relation of attorney and client. This letter binds andestops him in the same manner and to the same degree as if he personally had written it. Information obtained from aclient by a member or assistant of a law firm is information imparted to the firm. This is not a mere fiction or an

arbitrary rule; for such member or assistant, as in our case, not only acts in the name and interest of the firm, but hisinformation, by the nature of his connection with the firm is available to his associates or employers.


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LEGAL ETHICS DIGESTS JUSTICE HOFILENAALS2014B

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NATURE AND CREATION OF ATTORNEY-CLIENT RELATIONSHIP

64 - Hilado v. David (1949)(lawyer gave advice to opposing party)

Doctrines:

The mere relation of attorney and client precludes the attorney from accepting the opposite partys retainer in the

same litigation regardless of what information was received by him from his first client.

Facts:

Respondents are seeking the disqualification of Atty. Francisco in handling a case where he allegedly had given

prior legal advice to the opposing party.

Blandina Hilado brought an action against Selim Jacob Assad to annul a sale of several houses and lot.

Hilado - represented by Attys. Delgado, Dizon, Flores, and Rodrigo

Selim Jacob Assad- represented by Attys. Ohnick, Velilla, and Balonkita

Subsequently, Atty. Francisco entered his appearance as attorney of record for Assad in substitution of the latters

prior attorneys who have withdrawn from the case.

Atty. Dizon, in the name of his firm, wrote Atty. Francisco urging him to discontinue representing the defendants

on the ground that their client (Hilado) had consulted with him (Atty. Francisco) about her case, that she turned over

papers to him and that he had sent her a written opinion. Not receiving an answer to this letter, Atty. Delgado, Dizon,

Flores, and Rodrigo filed a formal motion to disqualify Atty. Francisco from handling the case.

In his answer, Atty. Francisco averred that Mrs. Hilado came to see him about a suit she had instituted against a

certain Syrian to annul the conveyance of a real estate. According to Francisco, he had told Hilado that it was a lost case.

Days after, Hilado dropped by the office and left papers with his (Franciscos) partner in the law firm, Atty. Agrava.

Francisco averred that he signed a letter (written by Atty. Agrava) without reading it which contained the reasons why the

case could not be handled by the law office. This letter was sent together with the papers that were returned to Hilado.

Months after, Assan requested Atty. Francisco to handle his case because his American lawyers had gone to the States and

left the case in the hands of other attorneys. Atty. Francisco accepted the offer and entered his appearance.

The judge trying the case dismissed the motion for disqualification on the ground that there was no attorney-clientrelationship that existed.

Issues:

1. W/N there existed an attorney-client relationship between Hilado and Francisco.

Held/Ratio:

1. YES.

In order to constitute the relation (of attorney and client) a professional one and not merely one of principal and

agent, the attorneys must be employed either to give advice upon a legal point, to prosecute or defend an action in

court of justice, or to prepare and draft, in legal form such papers as deeds, bills, contracts and the like. It is not

essential that the client should have employed the attorney professionally on any previous occasion nor is itnecessary 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.

There is no law or provision in the Rules of Court expressly prohibiting attorneys from acting on behalf of both

parties to a controversy whose interests are opposed to each other, but such prohibition is necessarily implied

from the duty of a lawyer to preserve the secrets of his clients. To permit the information obtained by the lawyer

to be used in the interest of another is to strike at the element of confidence which lies at the basis of the relation

of attorney and client.


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That only copies of pleadings already filed in court were furnished to Francisco and that there was no secret

communication transmitted would not vary the situation. The mere relation of attorney and client precludes

the attorney from accepting the opposite partys retainer in the same litigation regardless of what

information was received by him from his first client.

The court held: So without impugning respondents good faith, we nevertheless can not sanction his taking up

the cause of the adversary of the party who had sought and obtained legal advice from his firm; this, not

necessarily to prevent any injustice to the plaintiff but to keep above reproach the honor and integrity of

the courts and of the bar.Without condemning the respondents conduct as dishonest, corrupt, or fraudulent, we

do believe that upon the admitted facts it is highly in expedient. It had the tendency to bring the profession, of

which he is a distinguished member, into public disrepute and suspicion and undermine the integrity of justice.

Also, that it was his partner who wrote the letter and that he merely signed it without reading it would not save

Atty. Francisco in this case because an information obtained from a client by a member or assistant of a law firm

is information imparted to the firm.

The motion for disqualification should be allowed.


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NakpilvsValdes

FactsNakpil and Valdes were close friends since their student days. Their closeness extended to their families andrespondent became the business consultant, lawyer and accountant of the Nakpils. Later, Nakpil became interested in

purchasing a summer residence, the Moran property. For lack of funds, he requested respondent to purchase the Moranproperty for him. They agreed that respondent would keep the property in trust for the Nakpils until the latter couldbuy it back. Pursuant to their agreement, respondent obtained two (2) loans from a bank that he used to purchase and

renovate the property. Title was then issued in respondents name.

When Jose Nakpil died, respondent acted as the legal counsel and accountant of his widow, complainant Nakpil.Respondents law firm handled the proceeding for the settlement of Joses estate. The ownership of the Moran

property became an issue in the intestate proceedings. Respondent excluded the Moran property from the inventory ofJoses estate. Later, respondent transferred his title to the Moran property to his company, the Caval RealtyCorporation.

Complainant sought to recover the Moran property by filing an action for reconveyance. During the pendency of theaction for reconveyance, complainant filed this administrative case to disbar the respondent charging: I. Assigned tohis family corporation the Moran property (Pulong Maulap) that belonged to the estate he was settling as its lawyerand auditor. II. Excluded the Moran property from the inventory of real estate properties he prepared for a

client-estate and, at the same time, charged the loan secured to purchase the said excluded property as a liability of theestate, all for the purpose of transferring the title to the said property to his family corporation. III. Prepared anddefended monetary claims against the estate that retained him as its counsel and auditor

IssueWhether or not Valdes is guilty of ethical misconduct.

HeldGuilty || 1-year Suspension

Respondent initially acknowledged and respected the trust nature of the Moran property. But later, Respondent was inbad faith in transferring the property to his family corporation and repudiating the trust.

It ought to follow that respondents act of excluding Moran property from the estate which his law firm wasrepresenting evinces a lack of fidelity to the cause of his client. If respondent truly believed that the said property

belonged to him, he should have at least informed complainant of his adverse claim. If they could not agree on itsownership, respondent should have formally presented his claim in the intestate proceedings instead of transferring the

property to his own corporation and concealing it from complainant and the judge in the estate proceedings.

To make matters worse, respondent, through his accounting firm, charged the two loans of P65,000.00 and P75,000.00as liability of the estate, after said loans were obtained by respondent for the purchase and renovation of the propertywhich he claimed for himself.

Further, respondent is guilty of representing conflicting interests. It is generally the rule, based on sound public policy,that an attorney cannot represent adverse interests. However, representation of conflicting interests may be allowed

where the parties consent to the representation, after full disclosure of facts.

In the case at bar, there is no question that the interests of the estate and that of it creditors are adverse to each other.Respondents accounting firm prepared the list of assets and liabilities of the estate and, at the same time, computedthe claims of two creditors of the estate. Meanwhile, Respondents law firm represented the estate. There is clearly aconflict between the interest of the estate that stands as the debtor, and that of the two claimants who are creditors ofthe estate. In fact, at one instance, respondents law firm questioned the claims of creditor Angel Nakpil against theestate.


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NorthwesternUniversityvsAquilloFacts

Northwestern University, Inc. and Mr. Ben A. Nicolas accused Atty. Arquillo of engaging in conflicting interest in acase before the National Labor Relations Commission. In a consolidated case, respondent appeared and acted ascounsels for both complainants and respondent.

Complainants, as their evidence, submitted the Motion to Dismiss filed by Jose G. Castro, represented by his counsel,

herein respondent filed before the NLRC. Sixteen (16) days later, respondent filed a Complainants ConsolidatedPosition Paper, this time representing some of the complainants in the very same consolidated case.

IssueWhether or not Atty. Arquillo is guilty of representing conflicting interest.

HeldGuilty || 1-year Suspension.

When a lawyer represents two or more opposing parties, there is a conflict of interests, the existence of which isdetermined by three separate tests:

1. When, in representation of one client, a lawyer is required to fight for an issue or claim, but is also duty-

bound to oppose it for another client;2. When the acceptance of the new retainer will require an attorney to perform an act that may injuriously affect

the first client or, when called upon in a new relation, to use against the first one any knowledge acquiredthrough their professional connection; or

3. When the acceptance of a new relation would prevent the full discharge of an attorneys duty to giveundivided fidelity and loyalty to the client or would invite suspicion of unfaithfulness or double dealing in the

performance of that duty.

In his two-page Motion for Reconsideration, Atty. Arquillo claims that there was no conflict of interest in hisrepresentation of both the respondent and the complainants in the same consolidated cases, because all of them wereallegedly on the same side. Attaching to the Motion the Decision of Labor Arbiter Norma C. Olegario on theconsolidated NLRC cases, Atty. Arquillo theorizes that her judgment absolved Castro of personal liability for the

illegal dismissal of the complainants; this fact allegedly showed that there was no conflict in the interests of all theparties concerned.

Atty. Arquillos acts cannot be justified by the fact that, in the end, Castro was proven to be not personally liable forthe claims of the dismissed employees. Having agreed to represent one of the opposing parties first, the lawyer shouldhave known that there was an obvious conflict of interests, regardless of his alleged belief that they were all on thesame side. It cannot be denied that the dismissed employees were the complainants in the same cases in which Castrowas one of the respondents.


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71 - Northwestern University v. Arquillo (2005)(Memory Aid - maximum of 5 words only)

Doctrines:

Lawyers shall not represent conflicting interests, except with all the concerned clients written consent, given after

a full disclosure of facts.

Representing both sides will tend to deprive the relation of attorney and client of those special elements which

make it one of trust and confidence.

Facts:

Ben Nicolas, on behalf of Northwestern University, filed with the IBP a complaint. Nicolas charged Atty.

Arquillo with deceit, malpractice, gross misconduct and/or violation of his oath as attorney by representing conflicting

interests. They allege that Arquillo represented conflicting interests in a case before the NLRC. Arquillo allegedly acted as

counsels for both complainants (there were several) and respondent, Castro.

Arquillo failed to submit his answer nor appear in the scheduled hearing. He was deemed to have waived his right

to participate in the proceedings. The IBP found Arquillo guilty of violating the conflict-of-interests rule. The IBP

recommended that Arquillo be suspended from the practice of law for 2 years.

Issues:

1. W/N Arquillo should be suspended

Held/Ratio:

1. YES, but the SC reduced it to 1 year.

The Code of Professional Responsibility requires lawyers to observe candor, fairness and loyalty in all their

dealings and transactions with their clients. Corollary to this duty, lawyers shall not represent conflicting interests,

except with all the concerned clients written consent, given after a full disclosure of facts.

When a lawyer represents 2 or more opposing parties, there is a conflict of interests, the existence of which is

determined by three separate tests: (1) when, in representation of one client, a lawyer is required to fight for an

issue or claim, but is also duty-bound to oppose it for another client; (2) when the acceptance of the new retainer

will require an attorney to perform an act that may injuriously affect the first client or, (3) when the acceptance ofa new relation would prevent the full discharge of an attorneys duty to give undivided fidelity and loyalty to the

client or would invite suspicion of unfaithfulness or double dealing in the performance of that duty.

In his Motion for Reconsideration, Arquillo said that there was no conflict of interest because all those he

represented were allegedly on the same side. The SC said that having agreed to represent one of the opposing

parties, the lawyer should have known that there was an obvious conflict of interests, regardless of his alleged

belief that they were on the same side. Representing both sides will tend to deprive the relation of attorney and

client of those special elements which make it one of trust and confidence.


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Dr.TeresitaLeevsAtty.Simando

FactsAtty. Simando was the retained counsel of complainant Dr. Lee. Atty. Simando went to see Dr. Lee and asked if thelatter could help a certain Felicito M. Mejorado (Mejorado) for his needed funds. Mejorado was Atty. Simandos clientin a case claiming rewards against the Bureau of Customs. Dr. Lee initially refused to lend money but Atty. Simando

persisted and assured her that Mejorado will pay his obligation. He even offered to be the co-maker of Mejorado andassured her that Mejorado's obligation will be paid when due.

Due to Atty. Simando's persistence, his daily calls and frequent visits to convince Dr. Lee, the latter gave in to herlawyer's demands, and finally agreed to give Mejorado sizeable amounts of money.

When the said obligation became due, despite Dr. Lee's repeated demands, Mejorado failed and refused to complywith his obligation. Since Atty. Simando was still her lawyer then, Dr. Lee instructed him to initiate legal actionagainst Mejorado. Atty. Simando said he would get in touch with Mejorado and ask him to pay his obligation withouthaving to resort to legal action. However, even after several months, Mejorado still failed to pay Dr. Lee, so she againasked Atty. Simando why no payment has been made yet. Dr. Lee then reminded Atty. Simando that he was supposedto be the co-maker of the obligation of Mejorado, to which he replied: "Di kasuhan din ninyo ako!"

Despite complainant's repeated requests, respondent ignored her and failed to bring legal actions against Mejorado.

Thus, complainant was forced to terminate her contract with Atty. Simando and demand payment from him as well.

IssueWhether or not Respondent is guilty of representing conflicting interest.

HeldGuilty || 6-month Suspension.

Clearly, it is improper for respondent to appear as counsel for one party (complainant as creditor) against the adverseparty (Mejorado as debtor) who is also his client, since a lawyer is prohibited from representing conflicting interests.He may not, without being guilty of professional misconduct, act as counsel for a person whose interest conflict withthat of his present or former client.

Respondent's assertion that there is no conflict of interest because complainant and respondent are his clients inunrelated cases fails to convince. His representation of opposing clients in both cases, though unrelated, obviouslyconstitutes conflict of interest or, at the least, invites suspicion of double-dealing.

Moreover, with the subject loan agreement entered into by the complainant and Mejorado, who are both his clients,readily shows an apparent conflict of interest, moreso when he signed as co-maker.


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HeirsofFalamevsBaguio

FactsComplainants alleged that their father (Lydio) engaged the services of respondent to represent him in an action forforcible entry in which Lydio was one of the defendants. Respondent, as counsel for the defendants, filed the answer tothe complaint in the first civil case.

Complainants claimed that even after the Court had ruled in favor of the defendants in the first civil case, Lydio

retained the services of respondent as his legal adviser until Lydios death.

However, later, in representation of the Sps. Falame, respondent filed a case against complainants allegedly involvingthe property subject of the first civil case, (the second civil case). The complaint sought the declaration of nullity ofthe deed of sale, its registration in the registry of deeds, Transfer Certificate of Title No. 20241 issued as aconsequence of the registration of the deed of sale, and the real estate mortgage on the said property. Alternatively, it

prayed for specific performance and reconveyance or legal redemption and damages with preliminary injunction andrestraining order.

IssueWhether or not Respondent is guilty of representing conflicting interest.

HeldGuilty || Reprimand

The termination of attorney-client relation provides no justification for a lawyer to represent an interest adverse to orin conflict with that of the former client. The client's confidence once reposed should not be divested by mereexpiration of professional employment. Even after the severance of the relation, a lawyer should not do anything thatwill injuriously affect his former client in any matter in which he previously represented him nor should he disclose oruse any of the client's confidences acquired in the previous relation.

In the case at bar, respondent admitted having jointly represented Lydio and Raleigh as defendants in the first civilcase. Evidently, the attorney-client relation between Lydio and respondent was established despite the fact that it wasonly Raleigh who paid him.

As defense counsel in the first civil case, respondent advocated the stance that Lydio solely owned the property subjectof the case. In the second civil case involving the same property, respondent, as counsel for Raleigh and his spouse,has pursued the inconsistent position that Raleigh owned the same property in common with Lydio, withcomplainants, who inherited the property, committing acts that debase respondent's rights as a co-owner.

The fact that the attorney-client relation had ceased by reason of Lydio's death or through the completion of thespecific task for which respondent was employed is not reason for respondent to advocate a position opposed to that ofLydio. Precedents tell us that even after the termination of his employment, an attorney may not act as counsel againsthis client in the same general matter, even though, while acting for his former client, he acquired no knowledge thatcould operate to his client's disadvantage in the subsequent adverse employment. And while complainants have never

been respondent's clients, they derive their rights to the property from Lydio's ownership of it which respondentmaintained in the first civil case.


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Gamilla vs. Mario, Jr (2003)(union officer, lawyer)

Doctrines:

A lawyer is not authorized to have financial stakes in the subject matter of the suit brought in behalf of his client.

Facts:

In 1986 respondent Atty. Mario Jr., as president of the UST Faculty Union, together with other union officersentered into a collective bargaining agreement with the management of UST for the provision of economic benefits. When

the CBA expired, the parties could not reach an agreement which prompted the faculty members of UST go on strike.

As a counter-measure UST terminated the employment of 16 officers and directors of the UST Faculty

Union including Atty. Mario. The dismissal resulted into bitter legal battles which were resolved by the Court in favor

of the dismissed employees by ordering their reinstatement with back wages.

After the conflict, UST, through a memorandum of agreement was made to pay P40M minus several deductions.

About P9M was left but the officers deducted P5M as compensation for back wages(it seems that the members of the

union did not initially know about this).

A disbarment case was filed against Atty. Mario, accusing him of failing to account the money awarded to

them.His suspension was lifted when the bureau of labor relations held that Atty. Mario properly accountedfor the

P40M award.

Issues:

1. Whether Atty. Mario committed unethical acts despite the fact that he properly accounted for the funds

Held/Ratio:

1. YES. Atty. Mario failed to avoid conflict of interests, first, when he negotiated for the compromise

agreement wherein he played the diverse roles of union president, union attorney and interested party

being one of the dismissed employees seeking his own restitution, and thereafter, when he obtained the

attorneys fees of P4.2M without full prior disclosure of the circumstances justifying such claim to the

members of the UST Faculty Union. He was involved in obvious conflict of interests when in addition he chose to

act as concurrent lawyer and president of the UST Faculty Union in forging the compromise agreement. No

doubt, a lawyer is not authorized to have financial stakes in the subject matter of the suit brought in behalfof his client.

He jeopardized his obligation to protect the interest of the union by also being one of the dismissed officers. Atty.

Mario ought to have disclosed to the members of the UST Faculty Union, if not the entire bargaining unit of

faculty members, his interest in the compromise agreement as one of the dismissed union officers seeking

compensationfor the claim of back wages and other forms of damages, and also the reasons for reducing the

claim of the facultymembers from more than P9M to only P2M.

The situation of Atty. Mario is not any different from that of an executor or administrator of an estate who may

not charge against the estate any professional fee for legal services rendered by him because his efforts as such are

already paid for in his capacity as executor or administrator.

He was reprimanded.


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QuiambaovsBamba

FactsIn this administrative case for disbarment, complainant Felicitas S. Quiambao charges respondent Atty. Nestor A.Bamba with violation of the Code of Professional Responsibility for representing conflicting interests when the latterfiled a case against her while he was at that time representing her in another case, and for committing other acts ofdisloyalty and double-dealing.

Complainant was the president and managing director of Allied Investigation Bureau, Inc. (AIB). She avers that sheprocured the legal services of the respondent not only for the corporate affairs of AIB but also for her personal case.Particularly, the respondent acted as her counsel of record in an ejectment case. Later, she resigned as AIB president,the respondent filed on behalf of AIB a complaint for replevin and damages against her to recover from her the car ofAIB assigned to her as a service vehicle. This he did without withdrawing as counsel of record in the ejectment case,which was then still pending.

Further, Complaint accused Respondent of inducing her to resign from AIB and form her own security company,SESSI. Respondent was even made an officer in the new security company while still retained as counsel for AIB.

IssueWhether or not the respondent is guilty of misconduct for representing conflicting interests in contravention of the

basic tenets of the legal profession.

HeldGuilty || 1-year Suspension.

We do not sustain respondents theory that since the ejectment case and the replevin case are unrelated cases fraughtwith different issues, parties, and subject matters, the prohibition is inapplicable. His representation of opposing clientsin both cases, though unrelated, obviously constitutes conflict of interest or, at the least, invites suspicion ofdouble-dealing. While the respondent may assert that the complainant expressly consented to his continuedrepresentation in the ejectment case, the respondent failed to show that he fully disclosed the facts to both his clientsand he failed to present any written consent of the complainant and AIB.

It must be noted that the proscription against representation of conflicting interests finds application where the

conflicting interests arise with respect to the same general matter however slight the adverse interest may be. It applieseven if the conflict pertains to the lawyers private activity or in the performance of a function in non-professionalcapacity. In the process of determining whether there is a conflict of interest, an important criterion is probability, notcertainty, of conflict.

Since the respondent has financial or pecuniary interest in SESSI, which is engaged in a business competing with hisclients, and, more importantly, he occupies the highest position in SESSI, one cannot help entertaining a doubt on hisloyalty to his client AIB. This kind of situation passes the second test of conflict of interest, which is whether theacceptance of a new relationship would prevent the full discharge of the lawyers duty of undivided fidelity andloyalty to the client or invite suspicion of unfaithfulness or double- dealing in the performance of that duty. The closerelationship of the majority stockholders of both companies does not negate the conflict of interest. Neither does his

protestation that his shareholding in SESSI is a mere pebble among the sands.


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74 - Pacana v. Pascual-Lopez (2009)

Doctrine:

There is conflict of interest when a lawyer represents inconsistent interests of two or more opposing parties. The

test is whether or not in behalf of one client, it is the lawyers duty to fight for an issue or claim, but it is his duty

to oppose it for the other client. In brief, 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 beenconfided, 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. 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 thereof

Facts:

Pacana was the Operations Director for Multitel Communications Corporation (MCC). MCC changed its name to

Precedent Communications Corporation (Precedent).

According to Pacana, in mid-2002, Multitel was besieged by demand letters from its members and investorsbecause of the failure of its investment schemes. He alleges that he earned the ire of Multitel investors after becoming the

assignee of majority of the shares of stock of Precedent and after being appointed as trustee of a fund amounting to Thirty

Million Pesos (P30,000,000.00) deposited at Real Bank. Distraught, complainant sought the advice of Pascual-Lopez who

also happened to be a member of the Couples for Christ, a religious organization where complainant and his wife were

also active members. Atty. Pascual-Lopez gave legal advice to complainant and even helped him prepare standard

quitclaims for creditors. A Retainer Agreement was made between the parties but not signed by Pacana because

the proposed fees were not within his means.

After a few weeks, Pacana was surprised to receive a demand letter from Pascual-Lopez asking for the return and

immediate settlement of the funds invested by Pascual-Lopezs clients in Multitel. When complainant confronted Atty.

Pascual-Lopez about the demand letter, the latter explained that she had to send it so that her clients defrauded

investors of Multitel would know that she was doing something for them and assured complainant that there wasnothing to worry about. She also asked money from complainant allegedly for safekeeping to be used only for his case

whenever necessary.

When complainant went to the United States (US), he received several messages from Pascual-Lopez sent

through electronic mail (e-mail) and short messaging system (SMS, or text messages) warning him not to return to the

Philippines because Rosario Baladjay, president of Multitel, was arrested and that complainant may later on be implicated

in Multitels failed investment system. . Pacana, thereafter, received several e-mail messages from Pascual-Lopez

updating him of the status of the case against Multitel and promised that she will settle the matter discreetly with

government officialsshe can closely work with in order to clear complainants name

When Pacanas family advised him to get a new lawyer, Atty. Pascual-Lopez wrote him an email referring to

herself as his friend and lawyer, and that if Coco Pimentel will be hired to replace her, that she will be hands off with the

case because she works differently.

About a month thereafter, Atty. Pascual-Lopez personally met with complainant and his wife and told

them that she has already accumulated P12,500,000.00 as attorneys fees and was willing to give P2,000,000.00 to

Pacana in appreciation for his help but later on she changed her mind and told him that she would instead invest

theP2,000,000.00 on his behalf in a business venture. Pacana declined and explained to her that he and his family

needed the money instead to cover their daily expenses as he was no longer employed. she allegedly agreed, but she

failed to fulfill her promise.

Later on, Pacana noticed that Pascual-Lopez was evading him, always saying that she is busy. He thenwrote

Pascual-Lopez a letter formally asking for a full accounting of all the money, documents and properties given to


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the latter. Atty. Pascual-Lopez wrote explaining that all the properties and cash turned over to her by complainant

had been returned to her clients who had money claims against Multitel. In exchange for this, she said that she was

able to secure quitclaim documents clearing complainant from any liability.Still unsatisfied, Pacana decided to file

an affidavit-complaint against Pascual-Lopez before the Commission on Bar Discipline of the Integrated Bar of the

Philippines (IBP) seeking the disbarment of Pascual-Lopez. In sum, Pacana avers that a lawyer-client relationship was

established between him and Atty. Pascual Lopez although no formal document was executed by them at that time.

Issue:

1. W/N Atty. Pascual-Lopez represented conflicting interests

Held/Ratio:

1. YES. Pascual-Lopezs act of constantly and actively communicating with Pacana and assisting him by giving

legal advice eventually led to the establishment of a lawyer-client relationship.

Rule 15.03, Canon 15 of the Code of Professional responsibility provides:

Rule 15.03 A lawyer shall not represent conflicting interests except by written consent of all

concerned given after full disclosure of the facts.

Pascual-Lopez cannot shield herself from the inevitable consequences of her actions by simply saying that

the assistance she rendered to complainant was only in the form of friendly accommodations, preciselybecause at the time she was giving assistance to complainant, she was already privy to the cause of the

opposing parties who had been referred to her by the SEC.

The absence of a written contract will not preclude the finding that there was a professional relationship between

the parties. Documentary formalism is not an essential element in the employment of an attorney; the

contract may be express or implied. To establish the relation, it is sufficient that the advice and assistance of an

attorney is sought and received in any matter pertinent to his profession

Given the situation, the most decent and ethical thing which Pascual-Lopez should have done was either to advise

complainant to engage the services of another lawyer since she was already representing the opposing parties, or

to desist from acting as representative of Multitel investors and stand as counsel for complainant. She cannot be

permitted to do both because that would amount to double-dealing and violate our ethical rules on conflict of

interest


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LAWYERS FIDUCIARY OBLIGATIONS

76 - Licuanan v. Melo (1989)(Lawyer did not tell client about receiving any money)

Doctrines:

Money collected by a lawyer in pursuance of a judgment in favor of his clients is held in trust and must be

immediately turned over to them

Money of the client or collected for the client of other trust property coming into the possession of the lawyer

should be reported and accounted for promptly, and should not under any circumstance be commingled with his

own or be used by him.

Facts:

Leonila Licuanan, through her counsel Atty. Melo, filed an ejectment case against Aida Pineda who was one of

her tenants. The City Court of Manila ruled for Licuanan and ordered Pineda to pay her rentals. In the months following

the favorable judgement, Pineda proceeded to pay rentals to Atty. Melo. However, Atty. Melo did not remit the money

to Licuanan. In fact, he did not even tell Licuanan about receiving themeven when Licuanan called him regularly to

ask for updates regarding the ejectment case.

(This paragraph tells a not so important side story. If youre in a hurry, skip this paragraph.) Because Licuananwas not receiving any of the rental payments, she filed an administrative complaint against Pineda before the Chief of the

Tuberculosis Society accusing her of moral turpitude for not paying the rentals which the court had ordered her to pay. Of

course, the complaint was found to be groundless because Pineda was actually paying the rentals to Atty. Melo who was

not remitting to Licuanan. In turn, Pineda filed a case for damages against Licuanan because the accusation that she was

not paying her rentals had caused her humiliation.

Licuanan later found out, through another counsel, about the money paid by Pineda to Atty. Melo. Licuanans

new counsel demandad the same from Atty. Melo who only then remitted the rentals. (This was about a year after he

actually received them.) However, he explains by saying that he did not tell Licuanan about the money and only kept it to

himself for a while because he wanted to surprise her by his success. (Hehe. Sweet.) Atty. Melo collected a total amount

of P5220over a period of one year. Licuanan filed a complaint against Atty. Melo for breach of professional ethics.

Issues:

1. W/N Atty. Melo was guilty of breach of professional ethics

Held/Ratio:

1. YES, Atty. Melo was guilty of breach of professional ethics.

The acts of Atty. Melo of keeping the money for his personal benefit, depriving Licuanan of use of money that

was rightfully hers, and withholding information regarding their receipt despite inquiries made by her, is

obviously in breach of professional ethics. Particularly:

The lawyer should refrain from any action whereby for his personal benefit or gain he abuses or takes advantage

of the confidence reposed in him by his client. Money of the client or collected for the client of other trust

property coming into the possession of the lawyer should be reported and accounted for promptly , and

should not under any circumstance be commingled with his own or be used by him.

Atty. Melo breached the trust reposed in him by his client. His actions went against the very nature of an attorney-

client relationship which is characterized by confidence and trust. Atty. Melo was disbarred and his name

stricken from the Roll of Attorneys.


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77 - Daniel Lemoine v. Amadeo Balon, Jr. (2003)(Insurance Claim + Attorneys lien)

Doctrine:

A lawyer must hold in trust all moneys and properties of his client that he may come to possess. This

commandment entails certain specific acts to be done by a lawyer such as rendering an accountingof all money

or property received for or from the client, as well as delivery of the funds or property to the client when due

or upon demand.

A lawyer who practices or utilizes deceit in his dealings with his client not only violates his duty of fidelity,

loyalty and devotion to the clients cause but also degrades himself and besmirches the fair name of an honorable

profession.

Facts:

Daniel Lemoine, a French national, filed a complaint before the IBP against Atty. Balon for estafa and

misconduct. Balon Jr. acted as Lemoines attorney in an insurance claim against Metropolitan Insurance regarding his lost

vehicle. A certain Jess Garcia arranged for the meeting of Balon and Lemoine. Balon insisted that for his fees, he shall be

paid 25% of whatever amount is to be collected from the insurance company. Lemoine objected to this arrangement,

but still hired the services of Balon.

A few days before Dec. 23, 1998, Lemoine signed an undated, prepared Special Power of Attorney authorizingGarcia or Balon to institute actions, negotiate and encash checks received from Metropolitan. On Dec. 23, the SPA was

dated and Metropolitan issued a check payable to Lemoine for P525,000. The check was received by Balon. Fast

forward, Lemoine inquired with Garcia about the status of the claim, Garcia echoed to him that Balon wrote him a letter

on March 1999 stating that the claim was still pending, that it is still subject to negotiations and that Metropolitan offered

350K. He suggested to Garcia that they accept the 350K to avoid litigation.

On Dec 1999, Lemoine went to Metropolitan Insurance to personally inquire about the claim and he learned that it

had long been settled in Dec 1998. He immediately went to Balons law office. The next day Balon sent Lemoine a letter

stating that he is in fact in possession of the money but he will not turn it overto Lemoine and will continue to retain it

until Lemoine pays him an amount of 50% of the claim. In his letter he also stated that he will not hesitate to institute

cases in the Bureau of Immigration, NLRC, NBI against Lemoine, warning that he has good network relations with

them.

Lemoine thus instituted this action. Lemoine contends that Balon is entitled only to 50K and not 50% of the claim

as attorneys fees and that respondent acted fraudulentlywith regard to the claim. Balon in his counter-affidavit stated

that he is entitled to 50% because that was the practice in the insurance industry and that the absence of a contract

between him and Lemoine justifies the claim. He also contends that Garcia, as Lemoines attorney in fact already

approved of the 50% arrangement and that the balance of the claim minus the costs and attorneys fees were already

delivered to Garcia. No written memorandum to prove this claim was submitted. Balon also stated that the March letter

offering the 350K was made only at the request of Garcia for show to another business partner. The IBP ruled that he is

guilty of misconduct and recommended that he be suspended.

Issue:

1. W/N Balon should be disbarred.

Held/Ratio:

1. YES. Balon acted in violation of Canon 16 of the CPR. A lawyer must hold in trust all moneys and properties

of his client that he may come to possess. This commandment entails certain specific acts to be done by a lawyer

such as rendering an accounting of all money or property received for or from the client, as well as delivery of the

funds or property to the client when due or upon demand. Respondent breached this Canon when after hereceived the proceeds of complainants insurance claim, he did not report it to complainant , who had a

given address in Makati, or to his co-attorney-in-fact Garcia who was his contact with respect to complainant.


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Balon could not justify his misconduct based on his right to attorneys lien. The fact that he kept the money from

Lemoine and only informed him that he has it when Lemoine himself discovered it cannot be tolerated. The fact

that he also altered the check to add his name as payee is grossly unacceptable. He abused his right to attorneys

lien.

It is evident from the facts that Balon misappropriated the money. The SC found it somewhat fishy that at first

he wanted only 25% of the claim but after he received the money, he wanted 50 % of it. Moreover, the fact that he

said he paid Garcia the balance of the claim minus the fees during several occasions from May-October 1999,contrary to his earlier affidavit admitting that he had the whole 525,000 in his possession evinces that he has

already misappropriated the money. Balon was disbarred.


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LemoinevsBalon

FactsComplainant filed a car insurance claim with the Metropolitan Insurance, the insurer of his vehicle that was lost.Complainant engaged respondents services. Respondent advised complainant of his attorneys fees and expenses,which includes 25 of whatever is to be awarded to Complainant. Complainant didnt agree with Respondent regardingthe attorneys fees.

Later, Metropolitan Insurance finally offered to settle complainants claim and Respondent accepted the offer.Respondent, using an SPA signed by Complainant, received a check from Metropolitan Insurance payable toComplainant as full settlement of the claim. On inquiry about the status of his claim, Respondent told Complainant thatthe claim was still pending with Metropolitan Insurance and that it was still subject of negotiations.

Afterwards, Complainant discovered that Metropolitan Insurance had already long settled the case via a check given toRespondent. Complainant then demanded from Respondent the checks proceeds. Respondent acknowledged

possessing the proceeds of the encashed check that he retained, however, as attorneys lien pending complainantspayment of his attorneys fee, equivalent to fifty percent (50%) of entire amount collected. Respondent even counteredby threatening to file charges against Complainant if the formers fees arent paid.

Issue

Whether or not Respondents actions of concealing the progress of the settlement and retaining the proceeds of theencashed check for himself by virtue of an alleged attorneys lien a ground for disciplinary action.

HeldGround for disciplinary action || Disbarred

Respondent breached Canon 16 of the CPR when after he received the proceeds of complainants insurance claim; hedid not report it to complainant. In fact, long after respondent received the check he even had the temerity to state thatthe claim was still pending. Such misconduct is reprehensible at a greater degree, for it was obviously done on purposethrough the employment of deceit to the prejudice of complainant who was kept in the dark about the release of thecheck, until he himself discovered the same, and has to date been deprived of the use of the proceeds thereof.

That respondent had a lien on complainants funds for his attorneys fees did not relieve him of his duty to account for

it. The lawyers continuing exercise of his retaining lien presupposes that the client agrees with the amount ofattorneys fees to be charged. In case of disagreement or when the client contests that amount for beingunconscionable, however, the lawyer must not arbitrarily apply the funds in his possession to the payment of his fees.He can file the necessary action or proper motion with the proper court to fix the amount of such fees. In respondentscase, he never had the slightest attempt to bring the matter of his compensation for judicial determination. Instead,respondent stubbornly and in bad faith held on to complainants funds with the obvious aim of forcing complainant toagree to the amount of attorneys fees sought.

Respondent was, before receiving the check, proposing a 25% attorneys fees. After he received the check and aftercomplainant had discovered its release to him, he was already asking for 50%, objection to which complainantcommunicated to him. This smacks of opportunism, to say the least.

Respondent also falsified the check in order to encash the same. His threat to expose complainant to possible sanctionsfrom certain government agencies with which he bragged to have a good network reflects lack of character,self-respect, and justness.


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DeChavez-BlancovsLumasag

FactsComplainant alleged that she owned two (2) adjacent parcels of land in Quezon City registered in her name. Sheauthorised Respondent, who was her husbands first cousin, to sell said lots. Respondent reported that he had sold onlyone lot for the price of P320,000.00 and therefrom he deducted P38,130.0 for taxes and commissions. Respondentinformed complainant that the other lot remained unsold due to the presence of squatters on the property.

Afterwards, Complainant discovered that in truth, the two (2) lots had been sold to the spouses Martinez for the priceof P1,120,000.00. Complainant confronted respondent with these facts and demanded respondent to remit the entire

proceeds of the sale of the properties. Respondent admitted the sale of the properties and his receipt of its proceeds,but he never tendered the same to complainant. Despite repeated demands, respondent has since not remitted theamount.

Complainant also averred that the Special Power of Attorney which respondent had used to sell the lots is a forgeryand a falsified document, as the signature therein were not the real signatures of complainant.

IssueWhether or not Respondents concealment of the sale of the 2nd lot and retaining the proceeds for himself is a groundfor disciplinary action.

HeldGround for disciplinary action || 6-month Suspension

Records show that respondent as evidenced by the Deed of Absolute Sale had sold two lots. Respondent, however,taking advantage of the absence of complainant from the Philippines and their complete trust in him, deceitfullyinformed them that he had sold only one. It can be reasonably deduced from the exchanges between the parties that the

proceeds of the first lot had been transmitted to complainant. Respondents contention, though, that he had beenauthorized to retain the proceeds of the second is specious, as complainant could not have given the same, having beenleft in the dark as regards its sale. And despite repeated demands, to date, there is no showing that the outstandingamount has been paid.


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ArellanoUniversityvsMijares

FactsComplainant Arellano University, Inc. (the University) engaged the services of respondent Mijares for securing acertificate of title covering a parcel of land. The property was the subject of a Deed of Exchange between the City ofManila and the University.

The University alleged that it gave him all the documents he needed to accomplish his work. Later, Mijares asked the

University for and was given P500,000.00 on top of his attorneys fees, supposedly to cover the expenses for"facilitation and processing." He in turn promised to give the money back in case he was unable to get the work done.

Later, Mijares informed the University that he already completed Phase I of the titling of the property, meaning that hesucceeded in getting the MMDA to approve it and that the documents had already been sent to the DENR. TheUniversity requested Mijares for copies of the MMDA approval but he unjustifiably failed to comply despite hisclients repeated demands. Then he made himself scarce, prompting the University to withdraw all the cases it hadentrusted to him and demand the return of the P500,000.00 it gave him. Mijares did not return the money asked ofhim.

IssueWhether or not respondent Mijares is guilty of misappropriating the P500,000.00 that his client, the University,

entrusted to him for use in facilitating and processing the titling of a property that it claimed.

HeldGuilty || Disbarment

Here, respondent Mijares chose not to be heard on his evidence. Technically, the only evidence on record that theCourt can consider is the Universitys evidence that he got P500,000.00 from complainant for expenses in facilitatingand processing its title application; that he undertook to return the money if he did not succeed in his purpose; that hefalsely claimed having obtained the MMDA approval of the application; and that he nonetheless refused to return themoney despite repeated demands.

Besides, even if the Court were to consider the defense that Mijares laid out in his answer, the same does not rousesympathy. He claims that he gave the P500,000.00 to Undersecretary Lacuna, with the Universitys conformity, for a

favorable MMDA endorsement to the Mayor of Manila. He also claims that, in a complete turnaround, Lacuna latersaid that he could not provide the endorsement because, as it turned out, the MMDA had previously given suchendorsement of the Universitys earlier application and the Mayor of Manila did not act on that endorsement.

But, if this were so, there was no reason for Mijares not to face the University and make it see that it had no cause forcomplaint, having given him clearance to pass on the P500,000.00 to Lacuna. Instead, Mijares kept silent. He did notdeny that the University went all over town looking for him after he could not return the money. Nor did he take anyaction to compel Lacuna to hand back the money that the University gave him.

Even more unfortunate for Mijares, he admitted under oath having bribed a government official to act favorably on hisclients application to acquire title to a dried-up creek. That is quite dishonest. The Court is also not inclined to goalong with the IBPs recommendation that the Court include in its decision an order directing Mijares to return the

P500,000.00 that the University entrusted to him. The University knowingly gave him that money to spend for"facilitation" and processing. It is not nave. There is no legitimate expense called "facilitation" fee. This term is adeodorized word for bribe money. The Court will not permit the conversion of a disbarment proceeding into a remedyfor recovering bribe money lost in a bad deal.


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ErlindaTarogvsAtty.Ricafort

FactsThe Tarogs engaged Atty. Ricafort as their attorney regarding their bank-foreclosed property. Atty. Ricafort requiredthe Tarogs to pay P7,000.00 as filing fee and to deposit P65,000.00 in court to counter the P60,000.00 deposited byAntonio Tee, the buyer of the foreclosed property. Later, the Tarogs went to the office of Atty. Ricafort to deliver theP65,000.00. When Arnulfo said that he had first to encash the check at the bank, Atty. Ricafort persuaded him toentrust the check to him instead so that he (Atty. Ricafort) would be the one to encash it and then deposit the amount

in court. On that representation, the Tarogs handed the check to Atty. Ricafort.

After some time, the Tarogs visited Atty. Ricafort to verify the status of the consignation. Atty. Ricafort informedthem that he had not deposited the amount in court, but in his own account. He promised to return the money, plusinterest. Despite several inquiries about when the amount would be returned, however, the Tarogs received mereassurances from Atty. Ricafort that the money was in good hands.

The Tarogs further claimed that the RTC had required the parties to file their memoranda. Accordingly, they deliveredP15,000.00 to Atty. Ricafort for that purpose, but he did not file the memorandum. When it became apparent to theTarogs that Atty. Ricafort would not make good his promise of returning the P65,000.00, plus interest, the Tarogsdemanded that Atty. Ricafort return the P65,000.00, plus interest, and the P15,000.00 paid for the filing of thememorandum. Yet, they did not receive any reply from Atty. Ricafort.

IssueWhether or not Atty. Ricaforts failure to use the clients money for the particular purpose it was intended and insteaddepositing the same in his personal account is a ground for disciplinary action.

HeldA ground for disciplinary action || Disbarred

Atty. Ricaforts act of obtaining P65,000.00 and P15,000.00 from the Tarogs under the respective pretexts that theamount would be deposited in court and that he would prepare and file the memorandum for the Tarogs erected aresponsibility to account for and to use the amounts in accordance with the particular purposes intended. For him todeposit the amount of P65,000.00 in his personal account without the consent of the Tarogs and not return it upondemand, and for him to fail to file the memorandum and yet not return the amount of P15,000.00 upon demand

constituted a serious breach of his fiduciary duties as their attorney. He reneged on his duty to render an accounting tohis clients showing that he had spent the amounts for the particular purposes intended. He was thereby presumed tohave misappropriated the moneys for his own use to the prejudice of his clients and in violation of the clients trustreposed in him. He could not escape liability, for upon failing to use the moneys for the purposes intended, he shouldhave immediately returned the moneys to his clients.

That this offense was not the first charged and decided against Atty. Ricafort aggravated his liability. In Nuez v.Ricafort, the Court found him liable for failing to turn over the proceeds of the sale of realty to the complainant (whohad authorized him to sell the realty in her behalf). His failure to turn over the proceeds compelled the complainant tocommence in the RTC a civil action to recover the proceeds against him and his wife.


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BengcovsAtty.Bernardo

FactsRespondent with the help and in connivance and collusion with a certain Andres Magat (Magat), by using false

pretenses and deceitful words, [wilfully] and illegally committed fraudulent acts to the effect that respondent wouldexpedite the titling of the land belonging to the Miranda family of Tagaytay City, who were the acquaintance ofcomplainants.

Respondent and a certain Magat convinced complainants that if they finance and deliver to them the amount ofP495,000.00 as advance money, they would expedite the titling of the subject land. Respondent represented himself to

be the lawyer of William Gatchalian, the owner of Plastic City who was allegedly the buyer of the subject land once ithas been titled. Respondent and Magat also represented that they have contacts at NAMREA, DENR, CENRO and theRegister of Deeds which representation they knew to be false, fraudulent and were only made to induce complainantsto give and deliver to the the amount of P495,000.00. Once in possession of the said amount, far from complying withtheir obligation to expedite and cause the titling of the subject land, respondent and Magat illegally misappropriatedthe said amount to their personal use and benefit and despite demand upon them to return the said amount, they failedand refused to do so.

In view of the deceit committed by respondent and Magat, complainants filed a complaint for Estafa against theformer.

IssueWhether or not Respondents false misrepresentations to induce Complainants to hand over their money is a groundfor disciplinary action.

HeldGround for disciplinary action || 1-year Suspension and Return the money

Further, consistent with his failure to file his answer after he himself pleaded for several extensions of time to file thesame, the respondent failed to appear during the mandatory conference, as ordered by the IBP. As a lawyer, therespondent is considered as an officer of the court who is called upon to obey and respect court processes. Such acts ofthe respondent are a deliberate and contemptuous affront on the courts authority that cannot be countenanced.

There is no question that the respondent committed the acts complained of. He himself admitted in his answer that thecomplainants through Magat regarding the purported titling of land supposedly purchased hired his legal services.While he begs for the Courts indulgence, his contrition is shallow considering the fact that he used his position as alawyer in order to deceive the complainants into believing that he can expedite the titling of the subject properties. Henever denied that he did not benefit from the money given by the complainants in the amount of P495,000.00.

As the records reveal, the RTC eventually convicted the respondent for the crime of Estafa. Such criminal convictionclearly undermines the respondents moral fitness to be a member of the Bar.

chopsuey iii

Documents