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Canon 16

Distributor was eventually settled. But Unity Fishing

Unity Fishing vs. Atty. Macalino


Client (P) vs. Lawyer (D)
AC 4566

(P) was shocked to learn that Wheels Distributor


never got the P50,000 security deposit.

promptly thereafter to his client. He shall also have a


lien to the same extent on all judgments and
executions he has secured for his client as provided
for in the Rules of Court.
Junio v Grupo

After an investigation, Unity Fishing (P) discovered


Summary: A lawyer misappropriated money from his

that the check was deposited to Macalino's (D)

client.

account and he was actually the one who withdrew


the money.

Rule of Law: Canon 16 - A lawyer shall hold in trust


all moneys and properties of his client that may come

Issues: Which provision of the Code of Ethics did

into his possession.

Atty. Macalino violate?

Facts: Atty. Danilo Macalino (D) was hired to

Ruling: Atty. Macalion (D) violated Canon 16 of the

represent Frabal Fishing and Ice Plant Corporation

Code of Ethics.

against Wheels Distributor, Inc. Frabal was


eventually bought by Unity Fishing Development

Canon 16 - A lawyer shall hold in trust all moneys


and properties of his client that may come into his

Corporation (P) during the pendency of the case.

possession.

Unity Fishing (P) was evicting Wheels Distributor

Rule 16.1 - A lawyer shall account for all money or

from their property. Macalino (D), as counsel,

property collected or received for or from the client.

advised the Unity Fishing (P) to severe all contractual

Rule 16.2 - A lawyer shall keep the funds of each

relationship with Wheels Distributor and return their

client separate and apart from his own and those of

security deposit amounting to P50,000. Macalino (D)

others kept by him.

volunteered to take the check to Wheels Distributor


himself.

Facts:
Rosario Junio entrusted to Atty. Salvador Grupo,
P25,000 to be used in the redemption of a property in
Bohol. For no reason at all, Atty. Grupo did not
redeem the property so the property was forfeited.
Because of this, Junio wanted the money back but
Grupo refused to refund. Instead, Grupo requested
that he use the money to help defray his childrens
educational expenses. It was a personal request to
which Grupo executed a PN. He maintains that the
family of the Junio and Grupo were very close since
Junios sisters served as Grupos household helpers
for many years. Grupo also stated that the basis of his
rendering legal services was purely gratuitous or an
act of a friend for a friend with consideration
involved. He concluded that there was no atty-client
relationship existing between them.
The case was referred to the IBP and found Grupo
liable for violation of Rule 16.04 of the Code of
Profesisonal Responsibility which forbids lawyers
from borrowing money from their clients. The IBP
Board of Governors recommended that he be
suspended indefinitely from the practice of law.
Grupo filed a motion for reconsideration.
Issue:

Rule 16.3 - A lawyer shall deliver the funds and


property of his client when due or upon demand.
However, he shall have a lien over the funds and may

Later, another lawyer was hired to replace Macalino

apply so much thereof as may be necessary to satisfy

(D) and the case of Unity Fishing (P) against Wheels

his lawful fees and disbursements, giving notice

Whether or not there was an atty-client relationship.


Held:
Yes. If a person, in respect to his business affairs,
consults with an attorney in his professional capacity

and the attorney voluntarily permits in such


consultation, then the professional employment must
be regarded as established.
Having gained dominance over Junio by virtue of
such long relation of master and servant, Grupo took
advantage of his influence by not returning the
money. Grupo has committed an act which falls short
of the standard conduct of an attorney. If an ordinary
borrower of money is required by law to repay his
loan, it is more so in the case of a lawyer whose
conduct serves as an example.

charged [to complainant] to be deducted from


whatever amount [would] be successfully collected;
P1,000.00 as appearance and conference fee for each
and every court hearings, conferences outside our law
office and meetings before the Office of the
Insurance Commission which will be also charged to
our 25% recovery fee; and legal expenses such as but
not limited to filing fee, messengerial and postage
expenses . . . and other miscellaneous but related
expenses, to be charged to complainants account
which would be reimbursed upon presentation of
statement of account.

*SC orders Grupo suspended from the practice of law


for a month and to pay Junio within 30 days with
interest at the legal rate.

The letter-proposal of respondent regarding attorneys


fees does not bear complainants conformity, he not
having agreed therewith.

* Note: 5 yrs. has already passed since the loan.

It appears that Metropolitan Insurance finally offered


to settle complainants claim, for by letter[4] of
December 9, 1998 addressed to it, respondent
confirmed his acceptance of its offer to settle the
claim of complainant in an ex-gratia basis of 75% of
his policy coverage which is therefore FIVE
HUNDRED TWENTY FIVE THOUSAND
(P525,000.00) PESOS.

Lemoine v Balon
Facts: On December 17, 1999, complainant Daniel
Lemoine, a French national, filed a verified
complaint[1] against respondent Atty. Amadeo E.
Balon, Jr., for estafa and misconduct before the
Integrated Bar of the Philippines.
In early 1998, complainant filed a car insurance claim
with the Metropolitan Insurance Company
(Metropolitan Insurance), the insurer of his vehicle
which was lost. As complainant encountered
problems in pursuing his claim which was initially
rejected,[2] his friend, a certain Jesus Jess Garcia
(Garcia), arranged for the engagement of respondents
services.
ATTN: Mr. Daniel Lemoine, under whose care
complainant could be reached, respondent advised
complainant, whom he had not before met, that for
his legal services he was charging 25% of the actual
amount being recovered. . . payable upon successful
recovery; an advance payment of P50,000.00 to be

A day or a few days before December 23, 1998 when


complainant left for France,[5] he, on the advice of
respondent, signed an already prepared undated
Special Power of Attorney[6] authorizing respondent
and/or Garcia to bring any action against
Metropolitan Insurance for the satisfaction of
complainants claim as well as to negotiate, sign,
compromise[,] encash and receive payment from it.
The Special Power of Attorney was later dated
December 23, 1998 on which same date Metropolitan
Insurance issued a Chinabank Check No. 841172
payable to complainant in the amount of P525,000.00
as full settlement of the claim.[7] The check was
received by respondent.

On inquiry about the status of his claim, Garcia


echoed to complainant what respondent had written
him (Garcia) in respondents letter[9] of March 26,
1999 that the claim was still pending with
Metropolitan Insurance and that it was still subject of
negotiations in which Metropolitan Insurance offered
to settle it for P350,000.00 representing fifty percent
thereof. In the same letter to Garcia, respondent
suggested the acceptance of the offer of settlement to
avoid a protracted litigation.
On December 6, 1999, on complainants personal visit
to the office of Metropolitan Insurance, he was
informed that his claim had long been settled via a
December 23, 1998 check given to respondent the
year before.[10] Complainant lost no time in going to
the law office of respondent who was not around,
however, but whom he was able to talk by telephone
during which he demanded that he turn over the
proceeds of his claim.
Respondent thereupon faxed to complainant a
December 7, 1999 letter. In the same letter,
respondent protested what he branded as the
uncivilized and unprofessional behavior complainant
reportedly demonstrated at respondents office.
Respondent winded up his letter as follows,
quoted verbatim:
We would like to make it clear that we cannot give
you the aforesaid amount until and unless our
attorneys fees will be forthwith agreed and settled. In
the same manner, should you be barbaric and
uncivilized with your approached, we will not
hesitate to make a proper representation with the
Bureau of Immigration and Deportation for the
authenticity of your visa, Department of Labor and
Employment for your working status, Bureau of
Internal Revenue for your taxation compliance and
the National Bureau of Investigation [with] which we
have a good network...

While it [is your] prerogative to file a legal action


against us, it is also our prerogative to file a case
against you. We will rather suggest if you could
request your lawyer to just confer with us for the
peaceful settlement of this matter.
As despite written demands,[13] respondent refused
to turn over the proceeds of the insurance claim and
to acknowledge the unreasonableness of the attorneys
fees he was demanding, complainant instituted the
administrative action at bar on December 17, 1999.
In his Complaint-Affidavit, complainant alleged that
[i]t appears that there was irregularity with the check,
it having been issued payable to him, but and/or
AMADEO BALON was therein intercalated after his
(complainants) name.[14]
Maintaining that respondent was entitled to only
P50,000.00 in attorneys fees,[15] complainant
decried respondents continued possession of the
proceeds of his claim[16]and his misrepresentations
that the recovery thereof was fraught with difficulties.
[17]
During the hearings conducted by the IBP
Investigator, complainant echoed his allegations in
his Complaint-Affidavit and stressed that he turned
down as unreasonable respondents proposal in his
October 21, 1998 letter that he be paid 25% of the
actual amount collected for his legal services.[22]
And he presented documentary evidence, including
the March 26, 1999 letter of respondent informing his
co-attorney-in-fact Garcia of the supposedly still
unrecovered claim and suggesting acceptance of the
purported offer of Metropolitan Insurance to settle
complainants claim at P350,000.00.
Explaining why no written memorandum of the turnover of various payments to Garcia was made,
respondent alleged that there was no need therefor
since he very well knew Garcia who is a co-Rotarian

and co-attorney-in-fact and whom he really dealt with


regarding complainants claim.[29]
Respondent furthermore declared that he rejected
complainants offer to pay him P50,000.00 for his
services, insisting that since there had been no clearcut agreement on his professional fees and it was
through him that Metropolitan Insurance favorably
reconsidered its initial rejection of complainants
claim, he is entitled to a contingent fee of 50% of the
net proceeds thereof.[30]
Finally, respondent declared that he, in connection
with his follow-up of the insurance claim, incurred
representation expenses of P35,000.00, entertainment
and other representation expenses on various
occasions of P10,000.00, and transportation and
gasoline expenses and parking fees of P5,000.00;[31]
and that his retention of complainants money was
justified in light of his apprehension that
complainant, being an alien without a valid working
permit in the Philippines, might leave the country
anytime without settling his professional fees.[32]
The Investigating Commissioner, by Report and
Recommendation[33] of October 26, 2001, found
respondent guilty of misconduct and recommended
that he be disbarred and directed to immediately turn
over to complainant the sum of P475,000.00
representing the amount of the P525,000.00
insurance claim less respondents professional fees of
P50,000.00, as proposed by complainant
Issue: Whether or not the Atty. Balon violated the
Canon 16 of the CPR

principal complaint of complainant, 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[36] as well as
delivery of the funds or property to the client when
due or upon demand.[37] Respondent breached this
Canon when after he received the proceeds of
complainants insurance claim, he did not report it to
complainant, who had a given address in Makati, or
to his co-attorney-in-fact Garcia who was his contact
with respect to complainant.
In fact, long after respondent received the December
23, 1998 check for P525,000.00 he, by his letter of
March 26, 1999 to Garcia, had even the temerity to
state that the claim was still pending and recommend
acceptance of the 50% offer . . . which is
P350,000.00 pesos. His explanation that he prepared
and sent this letter on Garcias express request is
nauseating. A lawyer, like respondent, would not and
should not commit prevarication, documented at that,
on the mere request of a friend.
By respondents failure to promptly account for the
funds he received and held for the benefit of his
client, he committed professional misconduct.[38]
Such misconduct is reprehensible at a greater degree,
for it was obviously done on purpose through the
employment of deceit to the prejudice of complainant
who was kept in the dark about the release of the
check, until he himself discovered the same, and has
to date been deprived of the use of the proceeds
thereof.

Ruling: Yes.
Specifically with respect to above-quoted provision
of Canon 16 of the Code of Professional
Responsibility, the Filipino lawyers principal source
of ethical rules, which Canon 16 bears on the

A lawyer who practices or utilizes deceit in his


dealings with his client not only violates his duty of
fidelity, loyalty and devotion to the clients cause but

also degrades himself and besmirches the fair name


of an honorable profession.[39]
That respondent had a lien on complainants funds for
his attorneys fees did not relieve him of his duty to
account for it.[40] The lawyers continuing exercise of
his retaining lien presupposes that the client agrees
with the amount of attorneys fees to be charged. In
case of disagreement or when the client contests that
amount for being unconscionable, however, the
lawyer must not arbitrarily apply the funds in his
possession to the payment of his fees.[41] He can
file, if he still deems it desirable, the necessary action
or proper motion with the proper court to fix the
amount of such fees.[42]
In respondents case, he never had the slightest
attempt to bring the matter of his compensation for
judicial determination so that his and complainants
sharp disagreement thereon could have been put to an
end. Instead, respondent stubbornly and in bad faith
held on to complainants funds with the obvious aim
of forcing complainant to agree to the amount of
attorneys fees sought. This is an appalling abuse by
respondent of the exercise of an attorneys retaining
lien which by no means is an absolute right and
cannot at all justify inordinate delay in the delivery of
money and property to his client when due or upon
demand.
Respondent was, before receiving the check,
proposing a 25% attorneys fees. After he received the
check and after complainant had discovered its
release to him, he was already asking for 50%,
objection to which complainant communicated to
him. Why respondent had to doubly increase his fees
after the lapse of about one year when all the while
he has been in custody of the proceeds of the check
defies comprehension. At any rate, it smacks of
opportunism, to say the least

The intercalation of respondents name to the


Chinabank check that was issued payable solely in
favor of complainant as twice certified by
Metropolitan Insurance[44] is clearly a brazen act of
falsification of a commercial document which
respondent resorted to in order to encash the check.
Respondents threat in his December 7, 1999 letter to
expose complainant to possible sanctions from
certain government agencies with which he bragged
to have a good network reflects lack of character,
self-respect, and justness.
It bears noting that for close to five long years
respondent has been in possession of complainants
funds in the amount of over half a million pesos. The
deceptions and lies that he peddled to conceal, until
its discovery by complainant after about a year, his
receipt of the funds and his tenacious custody thereof
in a grossly oppressive manner point to his lack of
good moral character. Worse, by respondents
turnaround in his Supplement to his CounterAffidavit that he already delivered to complainants
friend Garcia the amount of P233,000.00 which, so
respondent claims, is all that complainant is entitled
to, he in effect has declared that he has nothing more
to turn over to complainant. Such incredible position
is tantamount to a refusal to remit complainants
funds, and gives rise to the conclusion that he has
misappropriated them.
WHEREFORE, respondent Atty. Amadeo E. Balon,
Jr., is found GUILTY of malpractice, deceit and gross
misconduct in the practice of his profession as a
lawyer and he is hereby DISBARRED. The Office of
the Clerk of Court is directed to strike out his name
from the Roll of Attorneys and to inform all courts
and the Integrated Bar of the Philippines of this
Decision.

Pelmoka v Judge Diaz


Facts: In a verified complaint dated December 4,
1981, Flaviano A. Pelmoka charged Judge Felix T.
Diaz, Jr. of the Court of First Instance of Nueva Ecija
and Attorneys Facundo T. Bautista and Inocencio B.
Garampil, Sr. with serious misconduct in connection
with Civil Case.
The charge against Judge Diaz is for gross ignorance
of the law and judicial proceedings; failure to protect
the complainant's charging lien as one of the lawyers
who intervened in the aforementioned civil case; and
partiality, bias prejudice or malicious motive.
Civil Case No. 279-G was a case for partition and
reconveyance filed with the CFI of Nueva Ecija,
Branch IV, on March 4, 1972, long before respondent
judge was appointed to the Bench. When the
respondent judge inherited the case in 1976, there
were many side issues and/or incidents pending to be
resolved,
The motion of the plaintiffs for the appointment of
commissioners was likewise denied by respondent
judge for the reason that there was then pending
before the Court of Appeals, an appeal involving the
same parties and the same properties whereby the
legality of a Deed of Donation concerning the same
properties being litigated, is the very issue to be
resolved. (p. 75.) It was for this reason that
respondent judge held in abeyance the trial of Civil
Case No. 279-G pending termination of the appeal
before the Court of Appeals.
On May 4, 1981, a Motion to set the case for
conference among the parties, was filed by
defendants as well as by all the lawyers of the said
parties, namely, complainant himself, representing
the plaintiffs, Atty. Facundo Bautista, representing
the defendants, and Atty. Inocencio Garampil,
representing defendant Ester Garampil. (pp. 89-94.)

The parties agreed that they would partition the


properties being litigated in the manner specified in
the "Compromise Agreement" and that they would be
separately responsible for the payment of the fees of
their respective lawyers. On September 21, 1981, the
respondent judge issued a decision approving the said
compromise agreement on July 1, 1981.
In his complaint, complainant charged respondent
judge with gross ignorance of the law and judicial
proceedings committed in the following manner: (a)
unduly delaying the disposition of Civil Case No.
279-G when respondent judge denied plaintiffs'
motion for the appointment of commissioners to
partition the properties; (b) not resolving plaintiffs'
motion to exclude defendant Ester Garampil as heir
of deceased Leon Arguelles despite early
pronouncement of Judge Placido Ramos, respondent
judge's predecessor, that Ester Garampil is not an heir
of the deceased; (c) approving the compromise
agreement of partition entered into by all the parties;
(d) allowing Ester Garampil to withdraw the amount
of P20,000.00 from the cash deposit, with the court,
considering that she is not an heir of the deceased;
and (e) ignoring complainant's motion for payment of
his fees out of the money deposited with the court.
Respondent judge, in his Answer dated January 13,
1982, (pp. 62-71.) denied all the charges in the
complaint. The respondent judge alleged that Civil
Case No. 279-G was a case for reconveyance and
partition of the estate of deceased Leon Arguelles
which had been heard and tried by no less than four
(4) judges before him. When he inherited the case in
1976, there were several side issues and/or incidents
pending to be resolved and while all these side issues
were pending before the court a quo, an appeal
involving the same parties and the same properties
being litigated, was then pending before the Court of
Appeals. It was for this reason that the respondent
judge denied complainant's motion for appointment

of a commissioner as well as his motion to exclude


defendant Ester Garampil as an heir.
Respondent judge also stated that he allowed the
parties, including defendant Ester Garampil who is
not a compulsory heir, to withdraw their respective
shares from the cash portion of the estate in order to
implement the compromise agreement entered into
by all the parties and their respective lawyers.
With respect to the charge of the complainant that the
respondent judge failed to protect his charging lien or
f& attorney's fees, the respondent judge explained
that he did not grant complainant's motion for
payment of his professional fees because he could not
ascertain the exact amount of complainant's just,
reasonable and fair fee, considering that his claim of
P79,186.00 was contested by the plaintiffs as being
exorbitant.
Deputy Court Administrator Mendoza has assessed
the charges against Judge Diaz which in favor of
Judge Diaz.
The assessment is well taken except in respect of the
failure of the respondent to protect the complainant's
right to collect his professional fees.
The respondent should not have allowed the clients
of the complainant to withdraw their shares from the
cash deposit without extending ample protection to
the latter's claim. This error was compounded by his
order allowing even Ester Garampil to withdraw her
share when she did not sign the compromise
agreement of July 1, 1981.
It was grossly unfair for the respondent to leave the
complainant holding an empty bag, so to speak, after
he had rendered his professional services as counsel
to the plaintiffs. True it is that the compromise
agreement stipulates that the parties shall be
separately responsible for the payment of the fees for

their respective lawyers; nevertheless, the respondent


should not have improvidently allowed the clients of
the complainant to withdraw their shares without first
determining his reasonable fees.
A lawyer has the right to claim the fruits of his labor.
He has the equitable right to be paid his fees out of
the judgment which he has obtained from a court of
justice. Any allegation of exorbitant or excessive fees
should have been resolved by the respondent Judge
on the basis of quantum meruit. Or the respondent
could have inquired from the plaintiffs what they
considered as reasonable attorney's fees for the
services of complainant, direct the payment of such
"reasonable amount" as partial payment of his
attorney's fees, and set for hearing the disputed
difference between the claim of the complainant and
the amount considered reasonable by the plaintiffs.
WHEREFORE, for his failure to protect the
complainant's charging lien, the respondent is hereby
reprimanded.
Canon 17
Rosacia v Atty. Bulalacao
Facts: Complainant Cynthia B. Rosacia, president of
Tacma, Phils., Inc., a duly registered corporation,
filed a complaint for disbarment dated October 25,
1991, against herein respondent Atty. Benjamin B.
Bulalacao. Acting on the complaint, the Court in a
resolution dated February 24, 1992, resolved to refer
the case to the Integrated Bar of the Philippines (IBP)
for investigation, report and recommendation.
Commissioner Victor C. Fernandez, the IBP
investigating commissioner, found that respondent
breached his oath of office and accordingly
recommended respondent's suspension from the
practice of law for three (3) months
On June 1, 1990, by virtue of a written Agreement
(Exh. "3-a"), respondent Atty. Benjamin B. Bulalacao
was hired as retained counsel of a corporation by the
name of Tacma Phils., Inc.

On October 31, 1990, the lawyer-client relationship


between the respondent and Tacma Phils., Inc. was
severed as shown by another agreement of even date
(Exh. "3-b").
On July, 1991, or after almost nine (9) months from
the date respondent's retainer agreement with Tacma,
Phils., Inc. was terminated, several employees of the
corporation consulted the respondent for the purpose
of filing an action for illegal dismissal. Thereafter, he
agreed to handle the case for the said employees as
against Tacma, Phils., Inc. by filing a complaint
before the National Labor Relations Commission,
and appearing in their behalf
Issue: Whether or not respondent breached his oath
of office for representing the employees of his former
client, Tacma, Phils., Inc., after the termination of
their attorney-client relationship
Ruling: Yes
The Court reiterates that an attorney owes loyalty to
his client not only in the case in which he has

represented him but also after the relation of attorney


and client has terminated as it is not good practice to
permit him afterwards to defend in another case other
person against his former client under the pretext that
the case is distinct from, and independent of the
former case. 5 It behooves respondent not only to
keep inviolate the client's confidence, but also to
avoid the appearance of treachery and double dealing
for only then can litigants be encouraged to entrust
their secrets to their attorneys which is of paramount
importance in the administration of justice. 6 The
relation of attorney and client is one of confidence
and trust in the highest degree. 7 A lawyer owes
fidelity to the cause of his client and he ought to be
mindful of the trust and confidence reposed in him. 8
An attorney not only becomes familiar with all the
facts connected with his client's cause, but also learns
from his client the weak and strong points of the case.
No opportunity must be given attorneys to take
advantage of the secrets of clients obtained while the
confidential relation of attorney and client exists.
Otherwise, the legal profession will suffer by the loss
of the confidence of the people. 9

Respondent's plea for leniency cannot be granted. We


note that respondent is new in the profession as he
was just admitted to the Philippine Bar on April 10,
1990, when the breach of his oath of office occurred
more than a year after. Having just hurdled the bar
examinations which included an examination in legal
ethics, surely the precepts of the Code of Professional
Responsibility to keep inviolate the client's trust and
confidence even after the attorney-client relation is
terminated 10 must have been still fresh in his mind.
A lawyer starting to establish his stature in the legal
profession must start right and dutifully abide by the
norms of conduct of the profession. This will
ineluctably redound to his benefit and to the
upliftment of the legal profession as well.
ACCORDINGLY, respondent is hereby
SUSPENDED from the practice of law for three
months