PALE Case Digests 5

Canon 14

People v. Mallari

Presence of two counsels as appeared in the court record belittles claim of accused that he was not represented

FACTS: At around 5:00 p.m. of May 7, 1986, the victim Edmundo Tuyac and his companion Danilo
Culaban left the store at Rio Tuba in Bataraza, Palawan where they were celebrating their basketball
championship with their teammates. As they were walking towards the townsite, a Mazda minibus driven by
accused-appellant Ricardo Mallari suddenly stopped beside the victim and accused Josino Ramos, who was
the lone passenger in said bus, and who was seated at the back of the driver stabbed the victim once with a
Batangas knife on his clavicular area while the latter was in a standing position and a foot away from the
vehicle.

2 people witnessed the incident and was used by the prosecution to establish guilt of the two accused.

Defense’s version: At around 6:20 p.m. of May 7, 1986, while he and accused-appellant Mallari were on their way
to the pier terminal at Rio Tuba, Bataraza, with the latter driving the Mazda minibus with two (.2) passengers,
a group of about 20 drunk men started stoning their vehicle. The victim Edmundo Tuyac boxed his face
several times, and as Tuyac was pulling him out of the vehicle by his left hand, he got hold of a tool from the
opened tool box inside the minibus and hit the victim with it without any intention of killing him since he
never met the victim before nor had he any motive to kill the latter. Thereafter, he and accused-appellant
Mallari went to the Marine Detachment to ask for assistance.

On the other hand, accused-appellant Mallari testified that at around 6:00 p.m. of May 7, 1986, he and
accused Ramos were at the lower portion of the pier to unload cargoes. As. they were about to leave, the two
(2) passengers inside the minibus said "Takbo". Instinctively, he immediately drove the minibus and
proceeded to the Marine Detachment for assistance although he noticed no unusual incident happening
inside or outside the bus while driving from the pier to the Marine Detachment since an iron backrest
separates the driver's compartment from the other passengers of the bus. Accused-appellant contends that he
has no reason to conceive of a plot to kill the victim whom he never knew nor met before the incident in
question much less to have any ill-feeling against him.

Accused-appellant contends that there was a mistrial since he was not represented by a counsel of his own
choice during the latter stage of the trial.

ISSUE: Whether there was a mistrial that took place due to the absence of counsel in behalf of
accused

RULING: NO, there was no mistrial because based on records, there appear two counsels for the
accused

The records belie accused-appellant's contention. He was duly represented by a member of the Bar and was
accorded all the opportunities to be heard and present evidence to substantiate his defense during the entire
trial proceedings. As aptly pointed out by the Solicitor General:
 Initially, appellant and his co-accused were represented in court by Atty. Demaala, Sr. (p. 2, tsn
March 28, 1988 a.m.). At said session, Atty. Demaala entered his appearance as counsel for both
accused for purposes of direct examination, to be conducted by the prosecution. On cross-
examination, Atty. Demaala appeared as counsel for both accused (p. 2, March 28, 1988 P.M.). On
the trial court's sessions of June 1, 1988 and July 11, 1988 wherein Dr. Fabellon testified on his
Autopsy Report and the deceased's mother on the expenditures incurred relative to her son's death,
Atty. Demaala appeared for appellant Mallari while Atty. Rocamora appeared for accused Ramos. In
the trial court's session of November 12, 1989, Atty. Rocamora entered his appearance as counsel
"for the accused" (p. 2, tsn, November 13, 1989) without any qualification. The same appearance was
again entered by Atty. Rocamora in the court's session of February 9, 1990.

Since afore-named counsels had, at one court session or another, interchangeably appeared in court
as counsel either for both accused or for a named accused, it is safe and logical to assume that both
are corroborating counsels for both accused. Such that when one counsel enters his court appearance
in the absence of the other, such appearance was meant for both accused. This was evidently the
court's perception, in the absence of any qualification of counsels' court appearances. In fine, there
was an understanding between both counsels in this regard, consented to by both accused as shown
by their silence. Moreover, if there is any truth that appellant Mallari was not represented or properly
represented by counsel of his choice, why did he fail to immediately inform the court of it. Why did
appellant wait until his conviction to raise this question? The inevitable conclusion is that he knew
that he was properly represented by a counsel of his own choice. 5

As to the accused-appellant's contention that he was denied due process when the trial court considered the
case submitted for decision thereby depriving him of presenting further evidence for his defense, We simply
find the same to be untrue. The trial court was merely following the continuous trial method mandated by the
Supreme Court on certain pilot courts. Accused appellant was not, in any way, deprived of his substantive
and constitutional right to due process as he was duly accorded all the opportunities to be heard and to
present evidence to substantiate his defense but he forfeited this right, through his own negligence for not
appearing in court together with his counsel at the scheduled hearings.

Ledesma v. Climaco

Denial of being counsel of accused due to being appointed as election registrar is not an excuse

FACTS: According to the undisputed facts, petitioner, on October 13, 1964, was appointed Election
Registrar for the Municipality of Cadiz, Province of Negros Occidental. Then and there, he commenced to
discharge its duties. As he was counsel de parte for one of the accused in a case pending in the sala of
respondent Judge, he filed a motion to withdraw as such. Not only did respondent Judge deny such motion,
but he also appointed him counsel de oficio for the two defendants. Subsequently, on November 3, 1964,
petitioner filed an urgent motion to be allowed to withdraw as counsel de oficio, premised on the policy of
the Commission on Elections to require full time service as well as on the volume or pressure of work of
petitioner, which could prevent him from handling adequately the defense. Respondent Judge, in the
challenged order of November 6, 1964, denied said motion. A motion for reconsideration having proved
futile, he instituted this certiorari proceeding.

ISSUE: Whether Ledesma should not be appointed as counsel de officio of the accused as ordered
by Climaco
RULING: NO, he should still be appointed

It was noted in such order that there was no incompatibility between the duty of petitioner to the accused and
to the court and the performance of his task as an election registrar of the Commission on Elections and that
the ends of justice "would be served by allowing and requiring Mr. Ledesma to continue as counsel de oficio,
since the prosecution has already rested its case."

"There is need anew in this disciplinary proceeding to lay stress on the fundamental postulate that
membership in the bar carries with it a responsibility to live up to its exacting standard. Those enrolled in its
ranks are called upon to aid in the performance of one of the basic purposes of the State, the administration
of justice. To avoid any frustration thereof, especially in the case of an indigent defendant, a lawyer may be
required to act as counsel de oficio.

Its importance was rightfully stressed by Chief Justice Moran in People v. Holgado in these words: "In
criminal cases there can be no fair hearing unless the accused be given an opportunity to be heard by counsel.
The right to be heard would be of little avail if it does not include the right to be heard by counsel. Even the
most intelligent or educated man may have no skill in the science of law, particularly in the rules of procedure,
and; without counsel, he may be convicted not because he is guilty but because he does not know how to
establish his innocence. And this can happen more easily to persons who are ignorant or uneducated. It is for
this reason that the right to be assisted by counsel is deemed so important that it has become a constitutional
right and it is so implemented that under rules of procedure it is not enough for the Court to apprise an
accused of his right to have an attorney, it is not enough to ask him whether he desires the aid of an attorney,
but it is essential that the court should assign one de oficio for him if he so desires and he is poor or grant
him a reasonable time to procure an attorney of his own

Thus is made manifest the indispensable role of a member of the Bar in the defense of an accused. Such a
consideration could have sufficed for petitioner not being allowed to withdraw as counsel de oficio. For he
did betray by his moves his lack of enthusiasm for the task entrusted to him, to put matters mildly. He did
point though to his responsibility as an election registrar. Assuming his good faith, no such excuse could be
availed now. There is not likely at present, and in the immediate future, an exorbitant demand on his time. It
may likewise be assumed, considering what has been set forth above, that petitioner would exert himself
sufficiently to perform his task as defense counsel with competence, if not with zeal, if only to erase doubts as
to his fitness to remain a member of the profession in good standing. The admonition is ever timely for those
enrolled in the ranks of legal practitioners that there are times, and this is one of them, when duty to court
and to client takes precedence over the promptings of self-interest.

Canon 15

Quiambao v. Atty. Bamba

Illustrative case of conflict of interest: both in private and professional capacity

FACTS: From June 2000 to January 2001, the complainant was the president and managing director of Allied
Investigation Bureau, Inc. (AIB), a family-owned corporation engaged in providing security and investigation
services. She avers that she procured 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 against Spouses Santiago and Florita Torroba filed by her on 29 December 2000 before the Metropolitan
Trial Court (MeTC) of Parañaque City.
About six months after she resigned as AIB president, or on 14 June 2001, the respondent filed on behalf of
AIB a complaint for replevin and damages against her before the MeTC of Quezon City for the purpose of
recovering from her the car of AIB 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.

Apart from the foregoing litigation matter, the complainant, in her Position Paper, charges the respondent
with acts of disloyalty and double-dealing. She avers that the respondent proposed to her that she organize
her own security agency and that he would assist her in its organization, causing her to resign as president of
AIB. The respondent indeed assisted her in December 2000 in the formation of another security agency,
Quiambao Risk Management Specialists, Inc., (QRMSI), which was later registered under complainant’s
name, with the respondent as a "silent partner" represented by his associate Atty. Gerardo P. Hernandez. The
respondent was paid attorney’s fees for his legal services in organizing and incorporating QRMSI. He also
planned to "steal" or "pirate" some of the more important clients of AIB. While serving as legal counsel for
AIB and a "silent partner" of QRMSI, he convinced complainant’s brother Leodegario Quiambao to organize
another security agency, San Esteban Security Services, Inc. (SESSI) where he (the respondent) served as its
incorporator, director, and president. The respondent and Leodegario then illegally diverted the funds of AIB
to fund the incorporation of SESSI, and likewise planned to eventually close down the operations of AIB and
transfer the business to SESSI.

Defense: For his part, the respondent admits that he represented the complainant in the aforementioned
ejectment case and later represented AIB in the replevin case against her. He, however, denies that he was the
"personal lawyer" of the complainant, and avers that he was made to believe that it was part of his function as
counsel for AIB to handle even the "personal cases" of its officers. Even assuming that the complainant
confided to him privileged information about her legal interests, the ejectment case and the replevin case are
unrelated cases involving different issues and parties and, therefore, the privileged information which might
have been gathered from one case would have no use in the other.

He justified his act by claiming that that while both AIB and SESSI are engaged in security agency business,
he is serving in different capacities. As the in-house legal counsel of AIB, he "serves its legal interest the
parameter of which evolves around legal matters" such as protecting the legal rights and interest of the
corporation; conducting an investigation or a hearing on violations of company rules and regulations of their
office employees and security guards; sending demand letters in collection cases; and representing the
corporation in any litigation for or against it. And as president of SESSI, he serves the operational aspects of
the business such as "how does it operate[], how much do they price their services, what kind or how do they
train[] their security guards, how they solicit clients." Thus, conflict of interest is far-fetched.

Investigating Committee (suspension from practice of law for 1yr): found the respondent guilty of representing
conflicting interests based on the following undisputed facts: first, the respondent was still complainant’s
counsel of record in the ejectment case when he filed, as legal counsel of AIB, the replevin case against her;
and second, the respondent was still the legal counsel of AIB when he advised the complainant on the
incorporation of another security agency, QRMSI, and recommended his former law partner, Atty. Gerardo
Hernandez, to be its corporate secretary and legal counsel and also when he conferred with Leodegario to
organize another security agency, SESSI, where the respondent became an incorporator, stockholder, and
president. The IBP Board of Governors adopted and approved the investigating commissioner’s report and
recommendation, but reduced the penalty from one year to a stern reprimand.

ISSUE: Whether there exist a conflict of interest

RULING: YES, there is conflict of interest

In broad terms, lawyers are deemed to represent conflicting interests when, in behalf of one client, it is their
duty to contend for that which duty to another client requires them to oppose.11 Developments in
jurisprudence have particularized various tests to determine whether a lawyer’s conduct lies within this
proscription. One test is whether a lawyer is duty-bound to fight for an issue or claim in behalf of one client
and, at the same time, to oppose that claim for the other client.12 Thus, if a lawyer’s argument for one client
has to be opposed by that same lawyer in arguing for the other client, there is a violation of the rule.

Another test of inconsistency of interests is whether the acceptance of a new relation would prevent the full
discharge of the lawyer’s duty of undivided fidelity and loyalty to the client or invite suspicion of
unfaithfulness or double-dealing in the performance of that duty.13 Still another test is whether the lawyer
would be called upon in the new relation to use against a former client any confidential information acquired
through their connection or previous employment.

The proscription against representation of conflicting interests applies to a situation where the opposing
parties are present clients in the same action or in an unrelated action. It is of no moment that the lawyer
would not be called upon to contend for one client that which the lawyer has to oppose for the other client,
or that there would be no occasion to use the confidential information acquired from one to the disadvantage
of the other as the two actions are wholly unrelated. It is enough that the opposing parties in one case, one of
whom would lose the suit, are present clients and the nature or conditions of the lawyer’s respective retainers
with each of them would affect the performance of the duty of undivided fidelity to both clients.

In this case, it is undisputed that at the time the respondent filed the replevin case on behalf of AIB he was
still the counsel of record of the complainant in the pending ejectment case. We do not sustain respondent’s
theory that since the ejectment case and the replevin case are unrelated cases fraught with different issues,
parties, and subject matters, the prohibition is inapplicable. His representation of opposing clients in both
cases, though unrelated, obviously constitutes conflict of interest or, at the least, invites suspicion of double-
dealing. While the respondent may assert that the complainant expressly consented to his continued
representation in the ejectment case, the respondent failed to show that he fully disclosed the facts to both his
clients and he failed to present any written consent of the complainant and AIB as required under Rule 15.03,
Canon 15 of the Code of Professional Responsibility.

Conflict of interest in his private capacity: While the complainant lacks personality to question the alleged conflict of
interests on the part of the respondent in serving both security agencies, we cannot just turn a blind eye to
respondent’s act. 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 applies even if the conflict pertains to the lawyer’s private activity or in the
performance of a function in a non-professional capacity.23 In the process of determining whether there is a
conflict of interest, an important criterion is probability, not certainty, of conflict.

Since the respondent has financial or pecuniary interest in SESSI, which is engaged in a business competing
with his client’s, and, more importantly, he occupies the highest position in SESSI, one cannot help
entertaining a doubt on his loyalty to his client AIB. This kind of situation passes the second test of conflict
of interest, which is whether the acceptance of a new relationship would prevent the full discharge of the
lawyer’s duty of undivided fidelity and loyalty to the client or invite suspicion of unfaithfulness or double-
dealing in the performance of that duty. The close relationship 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."

Hilado v. Davide

What constitute Attorney-Client relationship. In Re: Conflict of Interest

FACTS: In April 1945, Blandina Hilado filed a complaint to have some deeds of sale annulled against Selim
Assad.

Attorney Delgado Dizon represented Hilado. Assad was represented by a certain Atty. Ohnick. In January
1946, Atty. Vicente Francisco replaced Atty. Ohnick as counsel for Assad and he thereafter entered his
appearance in court.

In May 1946 or four months later, Atty. Dizon filed a motion to have Atty. Francisco be disqualified because
Atty. Dizon found out that in June 1945, Hilado approached Atty. Francisco to ask for additional legal
opinion regarding her case and for which Atty. Francisco sent Hilado a legal opinion letter. Atty. Francisco
opposed the motion for his disqualification.

In his opposition, he said that no material information was relayed to him by Hilado; that in fact, upon
hearing Hilado’s story, Atty. Francisco advised her that her case will not win in court; but that later, Hilado
returned with a copy of the Complaint prepared by Atty. Dizon; that however, when Hilado returned, Atty.
Francisco was not around but an associate in his firm was there (a certain Atty. Federico Agrava); that Atty.
Agrava attended to Hilado; that after Hilado left, leaving behind the legal documents, Atty. Agrava then
prepared a legal opinion letter where it was stated that Hilado has no cause of action to file suit; that Atty.
Agrava had Atty. Francisco sign the letter; that Atty. Francisco did not read the letter as Atty. Agrava said that
it was merely a letter explaining why the firm cannot take on Hilado’s case.

Atty. Francisco also pointed out that he was not paid for his advice; that no confidential information was
relayed because all Hilado brought was a copy of the Complaint which was already filed in court; and that, if
any, Hilado already waived her right to disqualify Atty. Francisco because he was already representing Assad
in court for four months in the said case.

Judge ruled in favour of Atty. Francisco

ISSUE: Whether there exists a conflict of interest despite the non-acceptance of the Atty. Francisco

RULING: YES, there is conflict of interest

There already existed an attorney-client relationship between Hilado and Atty. Francisco. Hence, Atty.
Francisco cannot act as counsel against Hilado without the latter’s consent.

As ruled by the Supreme Court, to constitute an attorney-client relationship, 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.
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

It does not matter if the information relayed is confidential or not. So long as the attorney-client relationship
is established, the lawyer is proscribed from taking other representations against the client.

It still binds him because Atty. Agrava, assuming that he was the real author, was part of the same law firm.
An information obtained from a client by a member or assistant of a law firm is information imparted to the
firm, his associates or his employers.

The length of time is not a waiver of her right. The right of a client to have a lawyer be disqualified, based on
previous atty-client relationship, as counsel against her does not prescribe. Professional confidence once
reposed can never be divested by expiration of professional employment.

Nakpil v. Valdes

Conflict of interest in a person professional capacity as lawyer and accountant

FACTS: In 1965, Jose Nakpil became interested in purchasing a summer residence in Moran Street, Baguio
City.1 For lack of funds, he requested respondent to purchase the Moran property for him. They agreed that
respondent would keep the property in trust for the Nakpils until the latter could buy it back. Pursuant to
their agreement, respondent obtained two (2) loans from a bank (in the amounts of P65,000.00 and
P75,000.00) which he used to purchase and renovate the property. Title was then issued in respondent's
name.

It was the Nakpils who occupied the Moran summer house. When Jose Nakpil died on July 8, 1973,
respondent acted as the legal counsel and accountant of his widow, complainant IMELDA NAKPIL. On
March 9, 1976, respondent's law firm, Carlos J. Valdes & Associates, handled the proceeding for the
settlement of Jose's estate. Complainant was appointed as administratrix of the estate.

On March 29, 1979, complainant sought to recover the Moran property by filing with the then Court of First
Instance (CFI) of Baguio City an action for reconveyance with damages against respondent and his
corporation. In defense, respondent claimed absolute ownership over the property and denied that a trust was
created over it. It was however established by the courts that no trust agreement existed, hence it was owned by Valdes

During the pendency of the action for reconveyance, complainant filed this administrative case to disbar the
respondent. She charged that respondent violated professional ethics when the respondent's law firm (Carlos
J. Valdes and Associates) filed the petition for the settlement of her husband's estate in court, while
respondent's auditing firm (C.J. Valdes & Co., CPAs) acted as accountant of both the estate and two of its
creditors. She claimed that respondent represented conflicting interests when his accounting firm prepared
the list of claims of creditors Angel Nakpil and ENORN, Inc. against her husband's estate which was
represented by respondent's law firm. Complainant averred that there is no distinction between respondent's
law and auditing firms as respondent is the senior and controlling partner of both firms which are housed in
the same building.

Defense: As to the third charge, respondent denied there was a conflict of interest when his law firm
represented the estate in the intestate proceedings while his accounting firm (C.J. Valdes & Co., CPAs) served
as accountant of the estate and prepared the claims of creditors Angel Nakpil and ENORN, Inc. against the
estate. He proffered the following reasons for his thesis: First, the two claimants were closely related to the
late Nakpil. Claimant ENORN, Inc. is a family corporation of the Nakpils of which the late Nakpil was the
President. Claimant Angel Nakpil is a brother of the late Nakpil who, upon the latter's death, became the
President of ENORN, Inc. These two claimants had been clients of his law and accounting firms even during
the lifetime of Jose Nakpil. Second, his alleged representation of conflicting interests was with the knowledge
and consent of complainant as administratrix. Third, there was no conflict of interests between the estate and
the claimants for they had forged a modus vivendi, i.e., that the subject claims would be satisfied only after
full payment of the principal bank creditors. Complainant, as administratrix, did not controvert the claims of
Angel Nakpil and ENORN, Inc. Complainant has started paying off the claims of Angel Nakpil and
ENORN, Inc. after satisfying the banks' claims. Complainant did not assert that their claims caused prejudice
to the estate. Fourth, the work of Carlos J. Valdes & Co. as common auditor redounded to the benefit of the
estate for the firm prepared a true and accurate amount of the claim. Fifth, respondent resigned from his law
and accounting firms as early as August 15, 1974.6 He rejoined his accounting firm several years later. He
submitted as proof the SEC's certification of the filing of his accounting firm of an Amended Articles of
Partnership. Thus, it was not he but Atty. Percival Cendaña, from the firm Carlos J. Valdes & Associates,
who filed the intestate proceedings in court. On the other hand, the claimants were represented by their own
counsel Atty. Enrique O. Chan. Sixth, respondent alleged that in the remote possibility that he committed a
breach of professional ethics, he committed such "misconduct" not as a lawyer but as an accountant who
acted as common auditor of the estate and its creditors. Hence, he should be held accountable in another
forum.

ISSUE: Whether there exists conflict of interest in the case of Valdes as a lawyer and as an
accountant

RULING: YES, there is conflict of interest

The proscription against representation of conflicting interests finds application where the conflicting
interests arise with respect to the same general matter 20 and is applicable however slight such adverse
interest may be. It applies although the attorney's intentions and motives were honest and he acted in good
faith. 21 However, representation of conflicting interests may be allowed where the parties consent to the
representation, after full disclosure of facts. Disclosure alone is not enough for the clients must give their
informed consent to such representation. The lawyer must explain to his clients the nature and extent of the
conflict and the possible adverse effect must be thoroughly understood by his clients. 22

In the case at bar, there is no question that the interests of the estate and that of its creditors are adverse to
each other. Respondent's accounting firm prepared the list of assets and liabilities of the estate and, at the
same time, computed the claims of two creditors of the estate. There is clearly a conflict between the interest
of the estate which stands as the debtor, and that of the two claimants who are creditors of the estate. In fact,
at one instance, respondent's law firm questioned the claims of creditor Angel Nakpil against the estate.

Respondent claims that complainant knew that his law firm Carlos J. Valdes & Associates was the legal
counsel of the estate 25 and his accounting firm, C.J. Valdes & Co., CPAs, was the auditor of both the estate
and the two claimants against it. 26 The fact, however, that complainant, as administratrix, did not object to
the set-up cannot be taken against her as there is nothing in the records to show that respondent or his law
firm explained the legal situation and its consequences to complainant. Thus, her silence regarding the
arrangement does not amount to an acquiescence based on an informed consent.
We also hold that the relationship of the claimants to the late Nakpil does not negate the conflict of interest.
When a creditor files a claim against an estate, his interest is per se adverse to the estate. As correctly pointed
out by complainant, if she had a claim against her husband's estate, her claim is still adverse and must be filed
in the intestate proceedings.

Prescinding from these premises, respondent undoubtedly placed his law firm in a position where his loyalty
to his client could be doubted. In the estate proceedings, the duty of respondent's law firm was to contest the
claims of these two creditors but which claims were prepared by respondent's accounting firm. Even if the
claims were valid and did not prejudice the estate, the set-up is still undesirable. The test to determine
whether there is a conflict of interest in the representation is probability, not certainty of conflict. It was
respondent's duty to inhibit either of his firms from said proceedings to avoid the probability of conflict of
interest.

We do not agree. Respondent is a CPA-lawyer who is actively practicing both professions. He is the senior
partner of his law and accounting firms which carry his name. In the case at bar, complainant is not charging
respondent with breach of ethics for being the common accountant of the estate and the two creditors. He is
charged for allowing his accounting firm to represent two creditors of the estate and, at the same time,
allowing his law firm to represent the estate in the proceedings where these claims were presented. The act is
a breach of professional ethics and undesirable as it placed respondent's and his law firm's loyalty under a
cloud of doubt. Even granting that respondent's misconduct refers to his accountancy practice, it would not
prevent this Court from disciplining him as a member of the Bar. The rule is settled that a lawyer may be
suspended or disbarred for ANY misconduct, even if it pertains to his private activities, as long as it shows
him to be wanting in moral character, honesty, probity or good demeanor.

Hence, guilty of misconduct warranting the suspension from practice of law for 1 yr.

Lim v. Sagucio

Conflict of interest must be substantiated: previous relation is not enough to warrant conflict

FACTS: Atty. Carlos B. Sagucio ("respondent") was the former Personnel Manager and Retained Counsel of
Taggat Industries, Inc. 3 until his appointment as Assistant Provincial Prosecutor of Tuguegarao, Cagayan in
1992.

Taggat Industries, Inc. ("Taggat") is a domestic corporation engaged in the operation of timber concessions
from the government. The Presidential Commission on Good Government sequestered it sometime in 1986,
5 and its operations ceased in 1997.

Sometime in July 1997, 21 employees of Taggat ("Taggat employees") filed a criminal complaint entitled
"Jesus Tagorda, Jr. et al. v. Ruthie Lim-Santiago," docketed as I.S. No. 97-240 ("criminal complaint"). 7
Taggat employees alleged that complainant, who took over the management and control of Taggat after the
death of her father, withheld payment of their salaries and wages without valid cause from 1 April 1996 to 15
July 1997.
Respondent, as Assistant Provincial Prosecutor, was assigned to conduct the preliminary investigation. 9 He
resolved the criminal complaint by recommending the filing of 651 Informations 10 for violation of Article
288 11 in relation to Article 116 12 of the Labor Code of the Philippines.

Complainant contends that respondent is guilty of representing conflicting interests. Respondent, being the
former Personnel Manager and Retained Counsel of Taggat, knew the operations of Taggat very well.
Respondent should have inhibited himself from hearing, investigating and deciding the case filed by Taggat
employees.

IBP finding: I.S. No. 97-240 was filed for "Violation of Labor Code" (see Resolution of the Provincial
Prosecutors Office, Annex "B" of Complaint). Herein Complainant, Ruthie Lim-Santiago, was being accused
as having the "management and control" of Taggat (p. 2, Resolution of the Prov. Pros. Office, supra).

Clearly, as a former Personnel Manager and Legal Counsel of Taggat, herein Respondent undoubtedly
handled the personnel and labor concerns of Taggat. Respondent, undoubtedly dealt with and related with
the employees of Taggat. Therefore, Respondent undoubtedly dealt with and related with complainants in I.S.
No. 97-240. The issues, therefore, in I.S. No. 97-240, are very much familiar with Respondent. While the
issues of unpaid salaries pertain to the periods 1996-1997, the mechanics and personalities in that case are
very much familiar with Respondent.

A lawyer owes something to a former client. Herein Respondent owes to Taggat, a former client, the duty to
"maintain inviolate the client’s confidence or to refrain from doing anything which will injuriously affect him
in any matter in which he previously represented him"

ISSUE: Whether conflict of interest exists in the case

RULING: NO, previous relationship is not enough to warrant conflict of interest

In Quiambao v. Bamba, 48 the Court enumerated various tests to determine conflict of interests. One test of
inconsistency of interests is whether the lawyer will be asked to use against his former client any confidential
information acquired through their connection or previous employment. 49 In essence, what a lawyer owes
his former client is to maintain inviolate the client’s confidence or to refrain from doing anything which will
injuriously affect him in any matter in which he previously represented him. 50

In the present case, we find no conflict of interests when respondent handled the preliminary investigation of
the criminal complaint filed by Taggat employees in 1997. The issue in the criminal complaint pertains to
non-payment of wages that occurred from 1 April 1996 to 15 July 1997. Clearly, respondent was no longer
connected with Taggat during that period since he resigned sometime in 1992.

In order to charge respondent for representing conflicting interests, evidence must be presented to prove that
respondent used against Taggat, his former client, any confidential information acquired through his previous
employment. The only established participation respondent had with respect to the criminal complaint is that
he was the one who conducted the preliminary investigation. On that basis alone, it does not necessarily
follow that respondent used any confidential information from his previous employment with complainant or
Taggat in resolving the criminal complaint.

The fact alone that respondent was the former Personnel Manager and Retained Counsel of Taggat and the
case he resolved as government prosecutor was labor-related is not a sufficient basis to charge respondent for
representing conflicting interests. 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.

Further, complainant failed to present a single iota of evidence to prove her allegations. Thus, respondent is
not guilty of violating Rule 15.03 of the Code.

Canon 16

Aro v. Nanawa

Compromise agreement to the detriment of the compensation of the lawyer which was agreed upon prior

FACTS: That the services of herein petitioner, as practising attorney, was engaged by respondents Luis
Magtibay and Pablo Magtibay for the prosecution of their claim, as heirs, in the estate of their deceased uncle
Lucio Magtibay, consisting of properties which were in the possession of the respondents Aurelia
Martinez,1spouses Gregorio Lontok and Maria Mendoza and spouses Maximo Porto and Rosario Andaya.

That by virtue of said agreement, herein petitioner took the necessary steps to gather the needed papers and
documents for the filing of a petition to litigate as pauper and a complaint in the Court of First Instance of
Laguna, in which respondents Luis Magtibay and Pablo Magtibay were the plaintiffs and the other
respondents, excepting the respondent Judge, were the defendants

That on the very day of and after the hearing of the motion to dismiss, or on October 24, 1964, before
receipt of a copy of the said order (Annex 'G'), there was a conversation which took place between herein
petitioner and the attorney of the defendants, Atty. Rustico de los Reyes, Jr., in the civil case and one who
was then acting as a sort of spokesman for the defendants (Ex-Mayor Cordova of Sta. Maria, Laguna) for the
amicable settlement of the case between the plaintiffs and the defendants to the effect that a certain property
of the spouses Lucio Magtibay (deceased) and respondent Aurelia Martinez, worth P3,000.00, would be given
to the plaintiffs in full settlement of their claim, as share in the properties left by their deceased uncle Lucio
Magtibay, it having been agreed by herein petitioner and Atty. de los Reyes and the spokesman of the
defendants that for the purpose of said amicable settlement, the plaintiffs or one of them and herein
petitioner would go to Sta. Maria, Laguna, on October 23, 1964.

That it was only on October 28, 1964, when herein petitioner received a copy of the order dated October 24,
1964 (Annex "G") and to his surprise he also received on the said day a second motion to dismiss dated
October 26, 1964; together with Annex "A" of said motion, which is entitled KASULATAN NG
PAGHAHATIAN NA LABAS SA HUKUMAN AT PAGPAPALABI, dated October 23, 1964 at Sta. Cruz,
Laguna and signed by the plaintiffs and defendant Aurelia Martinez (the three being now respondents in this
case), it having been made to appear in said Annex "A" of the second motion to dismiss, among others, that
the plaintiffs and defendant Aurelia Martinez had made an extrajudicial partition of the properties of the
deceased Lucio Magtibay and the said Aurelia Martinez adjudicating to the plaintiffs one-fourth (¼) share in
the properties of the spouses and three-fourth

That by the express terms of the agreement, Annex "A" of this petition, plaintiffs in Civil Case No. SC-525
had expressly ceded to herein petitioner one-half (½) [later verbally reduced to one-third (1/3) or P1,000.00]
or whatever share they would get from the estate of their deceased uncle Lucio Magtibay, and the defendants
in said Civil Case had full knowledge of said right of herein petitioner in the properties in controversy from
and after the time they were served with summons and copies of the complaint in said civil case

petitioner tries to make out before this Court a case of certiorari for grave abuse of discretion on the part of
respondent Judge in dismissing the case on the basis of the compromise agreement of the parties, entered
into at the back of petitioner notwithstanding the reservation made in his favor to file an action against both
parties "with respect to his alleged attorney's fees"

ISSUE: Whether the lower court erred in their decision in denying his rightful claim of his salary as
embodied in the agreement

RULING: YES, the lower court erred in their decision

On the same considerations of equity, and for the better protection of lawyers, who, trusting in the good faith
of their clients, render professional services on contingent basis, and so that it may not be said that this Court,
sanctions in any way the questionable practice of clients of compromising their cases at the back of their
counsel with the consequence that the stipulated contingent fees of the lawyer are either unreasonably
reduced or even completely rendered without basis, as in this case — wherein the clients waived the whole of
their rights in favor of their opponent after the latter had acknowledged, in effect, the correctness of said
clients' contention — We have decided to grant the herein petition, in so far as the rights of petitioner have
been prejudiced by the questioned compromise agreement. While We here reaffirm the rule that "the client
has an undoubted right to compromise a suit without the intervention of his lawyer", 8 We hold that when
such compromise is entered into in fraud of the lawyer, with intent to deprive him of the fees justly due him,
the compromise must be subject to the said fees, and that when it is evident that the said fraud is committed
in confabulation with the adverse party who had knowledge of the lawyer's contingent interest or such
interest appears of record and who would benefit under such compromise, the better practice is to settle the
matter of the attorney's fees in the same proceeding, after hearing all the affected parties and without
prejudice to the finality of the compromise in so far as it does not adversely affect the rights of the lawyer.
Surely, "the client cannot, by setting, compromising or dismissing his suit during its pendency, deprive the
attorney of his compensation for the agreed amount, unless the lawyer consents to such settlement,
compromise or dismissal", (Legal and Judicial Ethics by Martin, 1967 Rev. Ed p. 121) for the, attorney is or
"Shall be entitled to have and recover from his client - a reasonable compensation (not more) 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", (Sec. 24, Rule 138, on Attorney and Admission to Bar) albeit,
under Canon 12 of the Canons of Professional Ethics, "in fixing fees, it should not be forgotten that the
profession is a branch of the administration of justice and not a mere money-getting trade."

True it is also that "a client may, at anytime, dismiss his attorney or substitute another in his place", (Sec. 26,
Rule 138) but it must be emphasized that the same provision, which is an incorporation of Republic Act 636
into the Rules of Court, also provides that "if the contract between client and attorney had been reduced to
writing and the dismissal of the attorney was without justifiable cause, he shall be entitled to recover from the
client full compensation ..." In the case at bar, by entering into the compromise agreement in question and
even inserting therein a prayer to the court to dismiss their case filed by petitioner, (see footnote 6, ante)
petitioner's clients impliedly dismissed him. (Rustia vs. the Court, etc., supra.) Such implied dismissal appears
to Us to have been made without justifiable cause, none is urged anywhere in the record, and so, the above-
quoted provision of Section 26, Rule 138 applies here. The terms of the compromise in question, as spelled
out in Annex A of Annex I of the petition, indicate clearly that Aurelia Martinez, the defendant aunt in-law of
petitioner's clients, acknowledged that the rights of said clients were practically as alleged by petitioner in the
complaint he filed for them. In other words, through the services of petitioner, his clients secured, in effect, a
recognition, which had been previously denied by their aunt-in-law, that they were entitled to a ¼ share in the
estate left by their uncle. We hold that under these circumstances, and since it appears that said clients have
no other means to pay petitioner, since they instituted their case as paupers, and that their aunt-in-law was
aware of the terms of their contract of professional services with petitioner', said clients had no right to waive
the portion of their such acknowledged rights in favor of their opponent to the extent that such waiver would
prejudice the stipulated contingent interest of their lawyer and their aunt-in-law had no right to accept such
waiver unqualified

Junio v. Grupo

Loan of money to client

FACTS: Sometime in 1995, [she] engaged the services of [respondent], then a private practitioner, for the
redemption of a parcel of land covered by Transfer Certificate of Title No. 20394 registered in the name of
her parents, spouses Rogelio and Rufina Nietes, and located at Concepcion, Loay, Bohol

On 21 August 1995, [complainant] entrusted to [respondent] the amount of P25,000.00 in cash to be used in
the redemption of the aforesaid property. Respondent received the said amount as evidenced by an
acknowledgment receipt, a copy of which is being hereto attached as Annex "A".

Notwithstanding the foregoing and for no valid reason, respondent did not redeem the property; as a result
of which the right of redemption was lost and the property was eventually forfeited.

Because of respondent's failure to redeem the property, complainant had demanded [the] return of the money
which she entrusted to the former for the above-stated purpose.

Despite repeated demands made by the complainant and without justifiable cause, respondent has
continuously refused to refund the money entrusted to him.

Defense: Complainant knew the mortgage agreement between her parents and the mortgage-owner had already
expired, and what respondent was trying to do was a sort of [a] desperate, last-ditch attempt to persuade the
said mortgagee to relent and give back the land to the mortgagors with the tender of redemption; but at this
point, the mortgagee simply would not budge anymore. For one reason or another, he would no longer
accept the sum offered;

By the time that complainant was to return to Manila, it was already a foregone matter that respondent's
efforts did not succeed. And so, when transaction failed, respondent requested the complainant that he be
allowed, in the meantime, to avail of the money because he had an urgent need for some money himself to
help defray his children's educational expenses. It was really a personal request, a private matter between
respondent and complainant, thus, respondent executed a promissory note for the amount, a copy of which is
probably still in the possession of the complainant.

Investigating Commissioner found respondent liable for violation of Rule 16.04 of the Code of Professional
Responsibility which forbids lawyers from borrowing money from their clients unless the latter's interests are
"protected by the nature of the case or by independent advice." The Investigating Commissioner found that
respondent failed to pay his client's money. However, in view of respondent's admission of liability and "plea
for magnanimity," the Investigating Commissioner recommended that respondent be simply reprimanded
and ordered to pay the amount of P25,000.00 loan plus interest at the legal rate.

However, IBP board of governors ordered for the suspension of respondent herein ruling: Five (5) years had
already passed since respondent retained the cash for his own personal use. But notwithstanding the same
and his firm promise "to pay Mrs. Junio on or before January 1997" he has not demonstrated any volition to
settle his obligation to his creditor[,] although admittedly "there w[ere] occasions when complainant's sister
came to respondent to ask for the payment in behalf of complainant," worse, "the passage of time made
respondent somehow forgot about the obligation."

A lawyer shall not borrow money from his client unless the client's interests are fully protected by the nature
of the case or by independent advice (Rule 16.04, Code of Professional Responsibility). This rule is intended
to prevent the lawyer from taking advantage of his influence over the client.

This rule is especially significant in the instant case where the respondent enjoys an immense ascendancy over
the complainant who, "as well as two of his sisters, had served respondent's family as household helpers for
many years."

Having gained dominance over the complainant by virtue of such long relation of master and servant, the
respondent took advantage of his influence by not returning the money entrusted to him. Instead, he
imposed his will on the complainant and borrowed her funds without giving adequate security therefor and
mindless of the interest of the complainant

In the light of the foregoing, respondent has committed an act which falls short of the standard of the norm
of conduct required of every attorney. If an ordinary borrower of money is required by the law to repay the
loan failing which he may be subjected to court action, it is more so in the case of a lawyer whose conduct
serves as an example.

ISSUE: Whether respondent should be disciplined

RULING: YES, he should be disciplined

It would indeed appear from the records of the case that respondent was allowed to borrow the money
previously entrusted to him by complainant for the purpose of securing the redemption of the property
belonging to complainant's parents. Respondent, however, did not give adequate security for the loan and
subsequently failed to settle his obligation. Although complainant denied having loaned the money to
respondent, the fact is that complainant accepted the promissory note given her by respondent on December
12,1996. In effect, complainant consented to and ratified respondent's use of the money. It is noteworthy that
complainant did not attach this promissory note to her complaint nor explain the circumstances surrounding
its execution. She only mentioned it in her demand letter of March 12, 1998 (Annex B), in which she referred
to respondent's undertaking to pay her the P25,000.00 on or before January 1997. Under the circumstances
and in view of complainant's failure to deny the promissory note, the Court is constrained to give credence to
respondent's claims that the money previously entrusted to him by complainant was later converted into a
loan.

Respondent's liability is thus not for misappropriation or embezzlement but for violation of Rule 16.04 of the
Code of Professional Responsibility which forbids lawyers from borrowing money from their clients unless
the latter's interests are protected by the nature of the case or by independent advice. In this case,
respondent's liability is compounded by the fact that not only did he not give any security for the payment of
the amount loaned to him but that he has also refused to pay the said amount. His claim that he could not
pay the loan "because circumstances . . . did not allow it" and that, because of the passage of time, "he
somehow forgot about his obligation" only underscores his blatant disregard of his obligation which reflects
on his honesty and candor. A lawyer is bound to observe candor, fairness, and loyalty in all his dealings and
transactions with his client.