aCanon 16 Hold in Trust Clients Moneys and Properties

A lawyer shall hold in trust all moneys and properties of his clients that may come into his possession

Art 1491, Civil Code: The following persons cannot acquire or purchase, even at a public or
judicial auction, either in person or through the mediation of another: (5) lawyers, with respect to the property and rights which may be the object of any litigation in which they take part by virtue of their profession. Prohibition applies: Purchase, acquisition by attorney (by himself or through a third person) of a property which is the subject of litigation, during the pendency of the case Includes mortgage of property in litigation t the lawyer.

Effect of sale: Void Belongs another Art 1409 par. 7 (contracts expressly prohibited or declared void by law) Cannot be ratified The right to set up defense of illegality cannot be waived Not considered illegal per se, but illegal because expressly declared by law (principle of in pare delicto does not apply)

Art 1491 not applicable when: 1) Attorney is not counsel in the case where the property is subject of litigation 2) Buyer/purchaser is a corporation, even if the attorney was an officer 3) Sale took place after the termination of litigationproperty no longer under litigation 4) Property in question is stipulated as part of attorneys fees, provided that, the same is contingent upon favorable outcome of litigation, provided, further, that the fee must be reasonable Hernandez v. Go (2005) The lawyer simulated transfer of lands without consideration as part of attorneys fees. The attorney-respondent here instilled in the deceased complainant a feeling of helplessness, fear, embarrassment, and social humiliation. He advised her to sell the land titles to enable her to pay her creditors, with the condition that he would sell the lots and from the proceeds pay the creditors. The act of acquiring for ones self the clients lots entrusted to him are, by any standard, acts constituting gross misconduct: a grievous wrong, a forbidden act, a dereliction in duty, willful in character, and implies a wrongful intent and not mere error in judgment. The lawyer was disbarred.

AccountRule 16.01: A lawyer shall account for all money or property collected or received for or from the client.
Obligated to report promptly the money of his clients that come into his possession

Daroy v. Legaspi (1975) Attorney Legaspi represented complainants in liquidation of coconut lands. When he received the share of complainants in the amount of P4,000, he misappropriated the same and said that it was spent by a Cousin Ramon. When cross examined by court, he said that he already wired it to a dead uncle, who can no longer testify. A lawyer, under his oath, pledges himself not to delay any man for money or malice and is bound to conduct himself with all good fidelity to his clients. He is obligated to report promptly the money of his clients that has come into his possession. He should not commingle it with his private property or use it for his personal purposes without his client's consent. He should maintain a reputation for honesty and fidelity to private trust Keep Clients FundsRule 16.02: A lawyer shall keep the funds of each client separate and apart from his own and those of others kept by him Velez v. De Vera (2006) Attorney De Vera was facing a charge as a member of the California bar for failing to return the insurance claim of his client. However, before the case was decided, he withdrew his license. He was now being charged for the same misdemeanor in the IBP. In the case, Atty. De Vera himself admitted the he used his clients money for personal use and therefore unwittingly sealed his own fate since this admission constitutes more than substantial evidence of malpractice. The defense that the elderly client testified that he expected de Vera might use the money for a few days is not consent. It is clear that depositing the check in his own account constitutes deceit, malpractice, gross misconduct and unethical behavior. Delivery of Funds; Lawyers LienRule 16.03: A lawyer shall deliver the funds and property to his client when due or upon demand. However, he Shall have a lien over the funds, and May apply apply so much thereof as necessary to satisfy his lawful fees and disbursements, Giving notice promptly thereafter to his client. He shall also have a lien to the same extent on all judgments and executions he has secured for his clients as provided for in the Rules of Court

Charging Lien successful money judgment awarded by the Court an equitable right to have the fees and lawful disbursements due a lawyer for his services, secured to him out of a money judgment Requisites for validity:

o o

Attorney-client relationship Lawful possession by lawyer of the clients funds, documents and papers in his professional capacity Unsatisfied claim for attorneys fees or disbursements (specified in the decision)

Retaining Lien Attorneys fees and disbursements, regardless of the decision A right merely to retain the funds, documents, and papers which have lawfully come into his possession and may retain the same until his lawful fees and disbursements have been paid Requisites for validity: o o o o o Attorney-client relationship Attorney has rendered services Money judgment favorable to the client has been secured in the action Attorney has a claim for attorneys fees or advances Statement of his claim has been duly recorded in the case with notice thereof served upon client and adverse party

Cannot be actively enforced; passive lien

Tanhueco v. De Dumo (1989) Tanhueco filed a case against Atty. De Dumo for failure to pay back the P12,000 of debt he collected from the Tanhuecos debtors. When respondent withheld and refused to deliver the money received by him for his client, the deceased complainant Hilaria Tanhueco, he breached the trust reposed upon him.The claim of the respondent that complainant had failed to pay his attorney's fees, is not an excuse for respondent's failure to deliver any amount to the complainants. The fact that a lawyer has a lien for fees on moneys in his hands collected for his client, does not relieve him from his duty promptly to account for the moneys received; his failure to do so constitutes professional misconduct. In the present case, what respondent could have properly done was to make an account with his client, the complainant, deduct his attorney's fees due in respect of the amount actually collected by him, and turn over the remaining balance to the complainant. Respondent was not entitled to hold on to the entire amount of P12,000.00 collected by him until all his fees for the other cases had also been paid and received by him. He was suspended. Navarro v. Meneses (1998) Attorney Meneses failed to return P50,000 which was supposed to be paid to the other party in amicable settlement of his client-company. He was sued by the new attorney of the company.

Attorney Meneses held in trust the money reposed to him by client. His failure to return the money upon termination of services proves beyond shadow of doubt that he is not fit for the bar. Disbarred. Overgaard v. Valdez (2009) Attorney Valdez received P900,000 under a contract for legal services. However, he failed to perform is obligation: he did not file counter-affidavit for light threats filed against complainant, and did not even enter appearance for civil case filed by complainant against another person. Atty Valdez did not merely neglect his client, he abandoned him. The lawyer must immediately return money upon demand. Disbarred. No Borrowing, LendingRule 16.04: A lawyer shall not borrow money from his client unless the clients interests are fully protected by the nature of the case or by independent advice. Neither shall a lawyer lend money to a client except when, in the interest of justice, he has to advance necessary expenses in a legal matter he is handling for the client. Rationale: The lawyer must not have any personal interest on the clients case. Cruz v. Jacinto (2000) Lawyer obtained loan from a client, supposedly to give out to a Concepcion Padilla, who did not pay him. It was later proven that there was no such person. The money came from a real estate mortgage contract that was fake and spurious. Attorney Jacintos claim that he is a victim will not exonerate him. Business transactions are discouraged and favored because of public policy. Suspended for six months. Laig v. Court of Appeals (1978) Galero sold land to Attorney Laig as attorneys fees on a contingent basis. The Court held that theres nothing with portion of the property in litigation being the basis of attorneys fees after the case has been decided.

Canon 17

Trust and Confidence

A lawyer owes fidelity to the cause of his client and he shall be mindful of the trust and confidence reposed in him.

Fidelity = devotion (recall: hopeless/always devoted to you) Must exert all efforts until for the protection of the case until its final conclusion

Cantiller vs. Potenciano (1968) Cantiller failed in the ejectment suit, where Attorney Potenciano was counsel. Atty Potenciano promised success in the case, pretending to be close to the judge. However, he was asked to withdraw as counsel, after being paid P10,000. He was also a sheriff. The counsel should have been more diligent and, in taking the cause of the client, should have exert all efforts until the case was decided. Suspended. (Maam says that the fact that he was a sheriff should have been a ground for absolute disqualification of private practice.) Overgaard vs. Velez, supra.

Canon 18

Competence and Diligence

A lawyer shall serve his client with competence and diligence. General Rule: negligence of the lawyer, negligence of the client Client Consent with Collaborating CounselRule 18.01: A lawyer shall not undertake a legal service which he knows or should know that he is not qualified to enter. However, he may render such service if, with the consent of his client, he can obtain as collaborating counsel a lawyer who is competent on the matter. When a lawyer accepts a case, whether for free or not, his acceptance is an implied representation: 1. That he possesses the requisite degree of academic learning 2. That he will exert his best judgment in the prosecution or defense of litigation entrusted to him 3. That he will exercise reasonable and ordinary care and diligence in the pursuit or defense of the case. And 4. The he will take steps as will adequately safeguard his clients interests Before a collaborating counsel can be allowed in a particular case, there must be consent of the client. A lawyer must not accept an undertaking a specific area of law which he knows or should know he is not qualified to enter.

Adequate PreparationRule 18.02: A lawyer shall not handle any legal matter without adequate preparation. Solatan vs. Inocentes (2003) Attorney Camano gave advice to adverse party of his client Solatan regarding ejectment case. Attorney Inocentes was the supervisor of Attorney Camano, although the latter basically had control of the cases he was asked to handle under the formers supervisory authority. As the lawyer with command responsibility and supervisor, Attorney Inocentes is legally responsible for exerting diligence in approving the cases handled by persons over which they exercise supervisory authority. He had the responsibility to make reasonable efforts to ensure lawyers should act in conformity with the Code of Professional Responsibility. Admonished. Not to Neglect Legal MattersRule 18.03: A lawyer shall not neglect a legal matter without adequate preparation, and his negligence therewith shall render him liable. Remember: the client is the principal of the lawyer If by reason of negligence actual loss has been caused to the client, the latter has a cause of action against him for damages. The negligence, however, must be the proximate cause of the actual loss. Client is entitled to every and any remedy and defense authorized by law. General Rule: Client is bound by attorneys conduct, negligence, and mistake in handling case or in management of litigation and in procedural technique, and cannot be heard to complain that result might have been different had his lawyer proceeded differently. Exceptions: 1. Where there is outright deprivation of clients liberty or property or where interest of justice so requires.

2. Where error by counsel is purely technical, which does not affect substantially clients cause 3. Ignorance, incompetence, or inexperience of lawyer is so great and error so serious that client, who has good cause, is prejudiced and denied a day in court. 4. Goss negligence of lawyer 5. Lack of acquaintance with technical part of procedure. Legarda vs. Court of Appeals (1992) Dean Coronel ignored the case of Legarda and put up as defense the many cases he is handling during the Marcos regime. Because of his negligence, complainant was declared in default (in the contract of lease involved in her case). The case is one of simple negligence. What Dean Coronel did was to file no appeal, motion to withdraw, or motion for reconsideration. He filed a motion to extend twice. Suspended for six months. Villaflores vs. Limos (2007) Attorney Limos hired by Villaflores as counsel in an appeal to the Court of Appeals. Having failed to file appellants brief within the 45-day reglementary period, complainant lost the case. The lawyer cannot shift the blame to the complainant, the client, when he fails to file a brief. In failing to do so, the lawyer displayed inexcusable negligence: ignorance of procedural rules and poor time management. Suspended for three months. Dalisay vs. Mauricio (2005), (2006) Attorney Mauricio, Jr. is a famous media personality who asked for P8,000 filing fee and P48,000 from defendant Dalisay. In spite of this, he never entered or rendered legal service. Nothing in the courts record shows that there was even an appearance as counsel. A member of the legal profession owes his client entire devotion to his genuine interest and warm zeal in the maintenance and defense of his rights. An attorney is expected to exert his best efforts and ability to protect his clients case, for his unwavering loyalty to his client likewise serves the ends of justice. Indeed, the entrusted privilege of every lawyer to practice law carries with it his corresponding duties, not only to his client, but also to the court, to the bar and to the public. His failure to do this warrants a suspension of 6 months. Inform Client on Status of CaseRule 18.04: A lawyer shall keep the client informed on the status of his case and shall respond within a reasonable time to the clients request for information Blanza vs. Arcangel (1967) Attorney Arcangel offered his services for pension claims of complainants. However, he never followed through after 6 long years. He didnt return the original documents specifying the claims as well. His defense is that the complainants never paid the payment for the Photostats (photocopying) and that he even shouldered the expenses to get back the original documents. Although the complainants didnt pay for the photostats, Attorney Arcangel should have terminated the relationship instead of letting it hang for as long as six years. Reprimanded.