PALE.7.8 Burbe v. Magulta, A.C. No.

99-634, June 10, 2002

FACTS: Magulta decided to represent Burbe in a money claim and a possible civil case for breach of contract against
certain parties. Atty Magulta drafted the demand letter and other legal documents needed which Burbe accordingly paid.
They failed to secure a settlement but Atty Magulta still suggested to Burbe that they file a complaint and the amount of
the filing fee needed was 25,000. Burbe deposited the amount to Atty Magulta and was informed by the attorney that the
complaint was already filed in court. Months passed and still there was no notice from the court about the progress of the
complaint. Burbe was advised by Atty Magulta to just wait. Burbe, feeling restless, went personally to the court to ask
about the complaint’s progress and he found out that there was no record at all of a case filed by Atty Magulta in Burbe’s
behalf. Thus, this proceeding against the attorney.

Atty Magulta’s defense: All the legal documents including the demand letter were services that Burbe never paid. When
Burbe deposited the 25,000, he said that it was for the filing fee but Atty Magulta said that he needed to pay for the
acceptance fee first before the filing fee.Burbe agreed, then that the 25,000 were for lawyer’s fees, not for the filing of the
complaint.

IBP: Atty Magulta is to be suspended for one year. It is clear that the 25,000 was for the filing of the complaint and with
the deposit, an obligation was created on the part of the attorney to file the complaint within the time frame. The failure
of respondent to fulfill this obligation due to his misuse of the filing fees deposited by complainant, and his attempts to
cover up this misuse of funds of the client, which caused complainant additional damage and prejudice, constitutes highly
dishonest conduct on his part, unbecoming a member of the law profession. The subsequent reimbursement by the
respondent of part of the money deposited by complainant for filing fees, does not exculpate the respondent for his
misappropriation of said funds.

ISSUE: Whether or not respondent Atty. Magulta is liable for misrepresentation of funds given to him for the filing fee

RULING: AGREE WITH THE IBP. Atty. Magulta violated CANONS 16.1 AND 18.3 of the CPR.
Atty Magulta violated canon 16.01 because lawyering is not a business-it is a profession. In failing to apply to the filing
fee the amount given by complainant -- as evidenced by the receipt issued by the law office of respondent -- the latter also
violated the rule that lawyers must be scrupulously careful in handling money entrusted to them in their professional
capacity. Rule 16.01 of the Code of Professional Responsibility states that lawyers shall hold in trust all moneys of their
clients and properties that may come into their possession.Lawyers who convert the funds entrusted to them are in gross
violation of professional ethics and are guilty of betrayal of public confidence in the legal profession.It may be true that
they have a lien upon the client’s funds, documents and other papers that have lawfully come into their possession; that
they may retain them until their lawful fees and disbursements have been paid; and that they may apply such funds to the
satisfaction of such fees and disbursements. However, these considerations do not relieve them of their duty to promptly
account for the moneys they received. Their failure to do so constitutes professional misconduct.In any event, they must
still exert all effort to protect their client’s interest within the bounds of law.

Rule 18.03 of the Code of Professional Responsibility provides that lawyers should not neglect legal matters entrusted to
them. Lawyers must exert their best efforts and ability in the prosecution or the defense of the client’s cause. They who
perform that duty with diligence and candor not only protect the interests of the client, but also serve the ends of justice.
Respondent wants this Court to believe that no lawyer-client relationship existed between him and complainant, because
the latter never paid him for services rendered. The former adds that he only drafted the said documents as a personal favor
for the kumpadre of one of his partners. A lawyer-client relationship was established from the very first moment
complainant asked respondent for legal advice regarding the former’s business. To constitute professional employment, it
is not essential that the client employed the attorney professionally on any previous occasion. It is not necessary that any
retainer be paid, promised, or charged; neither is it material that the attorney consulted did not afterward handle the case
for which his service had been sought.

PALE.7.9 Castaneda vs. Ago, 65 SCRA 505 (1975)

FACTS: On 1955, Castaneda and Henson filed a replevin suit against Ago in the CFI of Manila to recover certain
machineries. On 1957 judgment was rendered in favor of Castaneda and Henson. On 1961, SC affirmed the judgment; trial
court issued writ of execution; Ago’s motion denied, levy was made on Ago’s house and lots; sheriff advertised the sale
and Ago moved to stop the auction but CA dismissed the petition and SC affirmed dismissal. Ago thrice attempted to
obtain writ of preliminary injunction to restrain sheriff from enforcing the writ of execution; his motions were denied. On
1963, sheriff sold the house and lots to Castaneda and Henson in which Ago failed to redeem. On 1964, sheriff executed
final deed of sale; CFI issued writ of possession to the properties. Ago filed a complaint upon the judgment rendered
against him in the replevin suit saying it was his personal obligation and that his wife ½ share in their conjugal house could
not legally be reached by the levy made; CFI of QC issued writ of preliminary injunction restraining Castaneda the Registed
of Deeds and the sheriff from registering the final deed of sale; the battle on the matter of lifting and restoring the restraining
order continued. On 1966, Agos filed a petition for certiorari and prohibition to enjoin sheriff from enforcing writ of
possession; SC dismissed it; Agos filed a similar petition with the CA which also dismissed the petition; Agos appealed to
SC which dismissed the petition. Agos filed another petition for certiorari and prohibition with the CA which gave due
course to the petition and granted preliminary injunction.

ISSUE: Whether or not the Agos’ lawyer, encourage his clients to avoid controversy
RULING: No. Despite the pendency in the trial court of the complaint for the annulment of the sheriff’s sale, justice
demands that the petitioners, long denied the fruits of their victory in the replevin suit, must now enjoy them, for, the
respondents Agos abetted by their lawyer Atty. Luison, have misused legal remedies and prostituted the judicial process
to thwart the satisfaction of the judgment, to the extended prejudice of the petitioners.
Forgetting his sacred mission as a sworn public servant and his exalted position as an officer of the court, Atty. Luison has
allowed himself to become an instigator of controversy and a predator of conflict instead of a mediator for concord and a
conciliator for compromise, a virtuoso of technicality in the conduct of litigation instead of a true exponent of the primacy
of truth and moral justice.
A counsel’s assertiveness in espousing with candor and honesty his client’s cause must be encouraged and is to be
commended; what the SC does not and cannot countenance is a lawyer’s insistence despite the patent futility of his client’s
position.
It is the duty of the counsel to advice his client on the merit or lack of his case. If he finds his client’s cause as defenseless,
then he is his duty to advice the latter to acquiesce and submit rather than traverse the incontrovertible. A lawyer must
resist the whims and caprices of his client, and temper his client’s propensity to litigate.

PALE.7.10 In re De Vera, 385 SCRA 285 (2002)

FACTS: Complainant Zoilo Antonio Velez moved for the suspension and/or disbarment of respondent Atty. Leonard de
Vera based on the following grounds:

1) Atty. De Veras alleged misrepresentation in concealing the suspension order rendered against him by the State Bar of
California.

2) That the respondent, in appropriating for his own benefit funds due his client, was found to have performed an act
constituting moral turpitude by the Hearing Referee Bill Dozier, Hearing Department – San Francisco, State Bar of
California.

Complainant alleged that the respondent was then forced to resign or surrender his license to practice law in the said state
in order to evade the recommended 3 year suspension. Atty. De Vera stated in his reply that the issues raised in above-
mentioned Complaint were the very issues raised in an earlier administrative case filed by the same complainant against
him. In fact, according to him, the said issues were already extensively discussed and categorically ruled upon by the SC
in its Decision in Dec. 11, 2005 (In Re: Petition to Disqualify Atty. Leonard De Vera). He prayed that the instant
administrative complaint be dismissed following the principle of res judicata.

Complainant maintained that there is substantial evidence showing respondent's moral baseness, vileness and depravity,
which could be used as a basis for his disbarment. Complainant stressed that the respondent never denied that he used his
client's money. Complainant argued that the respondent failed to present evidence that the SC of California accepted the
latter's resignation and even if such was accepted, complainant posited that this should not absolve the respondent from
liability. Moreover, complainant added that the principle of res judicata would not apply in the case at bar. He asserted that
the first administrative case filed against the respondent was one for his disqualification.
ISSUE: Whether Atty. Leonard S. De Vera committed malpractice which amounted to moral turpitude in the State Bar of
California and should such be an applicable basis for a disbarment in the Philippines

RULING: Yes, there is substantial evidence of malpractice by Atty. De Vera. SC suspended him for 2 years.

Section 27 of Rule 138 of our Rules of Court states:

Disbarment or suspension of attorneys by Supreme Court; grounds therefor. – A member of the bar may be disbarred or
suspended from his office as attorney by the Supreme Court for any deceit, malpractice, or other gross misconduct in such
office, grossly immoral conduct, or by reason of his conviction of a crime involving moral turpitude, or for any violation
of the oath which he is required to take before admission to practice, or for a wilful disobedience of any lawful order of a
superior court, or for corruptly or wilfully appearing as an attorney for a party to a case without authority so to do. The
practice of soliciting cases at law for the purpose of gain, either personally or through paid agents or brokers, constitutes
malpractice.

Atty. de Vera did not deny complainant's (Julius Willis) allegation in the latter's memorandum that he (de Vera) received
US$12,000.00 intended for his client and that he deposited said amount in his personal account and not in a separate trust
account and that, finally, he spent the amount for personal purposes. Atty. De Vera insists that Julius’ father authorized
him to use the money, and has repayed the full amount even before the administrative case was filed against him. However,
aside from these self-serving statements, the SC cannot find anywhere in the records of this case proof that indeed Atty.
de Vera was duly authorized to use the funds of his client.

Atty. de Vera cannot rely on the statement made by the hearing officer that the elder Willis had indeed testified that he
"expected de Vera might use the money for a few days" was not so much an acknowledgment of consent to the use by
Atty. de Vera of his client's funds as it was an acceptance of the probability that Atty. de Vera might, indeed, use his client's
funds, which by itself did not speak well of the character of Atty. de Vera or the way such character was perceived.

Canon 16. A lawyer shall hold in trust all moneys and properties of his client that may come to his possession.
Rule 16.01. A lawyer shall account for all money or property collected or received for or from the client.
Rule 16.02. A lawyer shall keep the funds of each client separate and apart from his own and those of others kept by him.

Atty. De Vera’s actions caused dishonor, not only to himself but to the noble profession to which he belongs. For, it cannot
be denied that the respect of litigants to the profession is inexorably diminished whenever a member of the profession
betrays their

PALE.7.11 Quiambao vs. Bamba, 468 SCRA 1 (2005)

FACTS: Complainant averred that she procured the legal services of respondent not only for the corporate affairs of AIB
(Allied Investigation Bureau Inc.) but also for her personal case. That respondent acted as her counsel of record in an
ejectment case which she paid attorney’s fees in that case. Six months after her resignation as AIB President, respondent
filed on behalf of AIB a complaint for replevin and damages against her without withdrawing as counsel in the ejectment
case which was then still pending. Furthermore, respondent proposed to organize a new security agency under
complainant’s name (QRMSI) where he was a silent partner represented by his former law partner. Further stated that,
respondent convinced her brother to organize another security agency (SESSI) and divert the funds of AIB to SESSI.

On the other hand, respondent admitted that he was the counsel of the aforementioned ejectment case and later represented
AIB in the replevin case against her. However, contend that ejectment case and the replevin case are unrelated cases
involving different issues and parties. Respondent also denies that he agreed to be a silent partner of QRMSI instead
suggests that his former law partner assume his place. Moreover, he denies diverting funds from AIB to SESSI and
organizing another security agency under her brother management. It was to complement the business of AIB which was
then in ruin, that SESSI was established. IBP Commissioner suspend respondent for one year but IBP Board of Governors
reduced it to reprimand.

ISSUE: Whether or not respondent guilty of serious misconduct for representing conflicting interests?
RULING: Yes, Rule 15.03, Canon 5 of the Code of CPR provides: a lawyer shall not represent conflicting interests except
by written consent of all concerned given after a full disclosure of the facts. This prohibition is founded on principles of
public policy and good taste. In the course of a lawyer-client relationship, the lawyer learns all the facts connected with
the client’s case, including the weak and strong points of the case. The nature of that relationship is, therefore, one of trust
and confidence of the highest degree. It behooves lawyers not only to keep inviolate the client’s confidence, but also to
avoid the appearance of treachery and double-dealing for only then can litigants be encouraged to entrust their secrets to
their lawyers, which is of paramount importance in the administration of justice. Furthermore, Atty. Bamba failed to show
that he disclosed or procured the approval of Quiambao before pursuing the replevin case against her. Atty. Bamba was
found guilty of violating the Code of Professional Responsibility and was suspended from practicing for one (1) year.

PALE.7.12 Zalamea v. De Guzman, A.C. No. 7387, November 3, 2016

FACTS: Complinant seeks the legal advised of the property of their ill mother. And sometimes respondent help them to
pay their loan in the bank, however, complinant failed to pay the bank, so the wife of the lawyer paid for it. And they
became the owner. Comes now, complinant filed an disbarment case against respondent lawyer, for the reason that he
cannot aquire said property because of prohibition of lawyers- client relationship, and a violation under Article 1491 of the
Civil Code, lawyers are prohibited to acquire by purchase, even at a public or judicial auction, either in person or through
the mediation of another, their client's property and rights in litigation, hence:
ART. 1491. The following persons cannot acquire by purchase, even at a public or judicial auction, either in person or
through the mediation of another:
5. Justices, judges, prosecuting attorneys, clerks of superior and inferior courts, and other officers and employees connected
with the administration of justice, the property and rights in litigation or levied upon an execution before the court within
whose jurisdiction or territory they exercise their respective functions; this prohibition includes the act of acquiring by
assignment and shall apply to lawyers, with respect to the property and rights which may be the object of any litigation in
which they may take part by virtue of their profession.
6. Any others specially disqualified by law.

ISSUE: Whether or not respondent lawyer violates such prohibition?

RULING : The prohibition which rests on considerations of public policy and interests is intended to curtail any undue
influence of the lawyer upon his client on account of his fiduciary and confidential relationship with him. De Guzman
could not have possibly exerted such undue influence, as a lawyer, upon the Zalameas, as his clients. In fact, it was Manuel
Enrique who approached the Spouses De Guzman and asked them if they would be willing to become business partners in
a lechon business. It was also Manuel Enrique who turned to De Guzman for help in order to reacquire the already
foreclosed Speaker Perez property. They had agreed that De Guzman would simply pay the required downpayment to
BDO and EMZEE would pay the remaining balance in installment. And when EMZEE continued suffering losses, Angel
took care of the monthly amortizations so as not to lose the property.
Clearly, the re!ationship between the Spouses De Guzman and the Zalamea brothers is actually one of business partners
rather than that of a lawyer and client. Atty. De Guzman's acquisition of the Speaker Perez property was a valid
consequence of a business deal, not by reason of a lawyer-client relationship, for which he could not be penalized by the
Court. De Guzman and his wife are very well allowed by law to enter into such a transaction and their conduct in this
regard was not borne out to have been attended by any undue influence, deceit, or misrepresentation.

Doctrine: An attorney may be disbarred or suspended for any violation of his oath or of his duties as an attorney and
counselor, which include statutory grounds enumerated in Section 27,3 Rule 138 of the Rules of Court.

Indeed, the purchase by a lawyer of his client's property or interest in litigation is a breach of professional ethics and
constitutes malpractice. The persons mentioned in Article 1491 are prohibited from purchasing said property because of
an existing trust relationship. A lawyer is disqualified from acquiring by purchase the property and rights in litigation
because of his fiduciary relationship with such property and rights, as well as with the client. The very first Canon of the
Code of Professional Responsibility5 provides that "a lawyer shall uphold the Constitution, obey the laws of the land and
promote respect for law and legal process." Canon 17 states that "a lawyer owes fidelity to the cause of his client and he
shall be mindful of the trust and confidence reposed in him, while Canon 16 provides that "a lawyer shall hold in trust all
moneys and properties of his client that may come into his possession." Further, Section 3, Rule 13 8 of the Revised Rules
of Court requires every lawyer to take an oath to obey the laws as well as the legal orders of the duly constituted authorities.
And for any violation of this oath, a lawyer may be suspended or disbarred by the Court. All of these underscore the role
of the lawyer as the vanguard of our legal system. The transgression of any provision of law by a lawyer is a repulsive and
reprehensible act which the Court will never countenance.

PALE.7.13 Roxas vs. de Zuzuarregui, 481 SCRA 250 (2006)

FACTS: The Zuzuarreguis engaged the legal services of Attys. Romeo G. Roxas and Santiago N. Pastor, to represent
them in the case. This was sealed by a Letter-Agreement, wherein it was contained that the attorneys would endeavor to
secure just compensation with the NHA and other government agencies at a price of 11pesos or more per square meter,
and that any lower amount shall not entitle them to any atty’s fees. They also stipulated that in the event they get it for
11pesos per square meter, their contingent fee shall be 30% of the just compensation. They also stipulated that their
lawyer’s fees shall be in proportion to the cash/bonds ratio of the just compensation.

A Compromise Agreement was executed between the Zuzuarreguis and the NHA. The Compromise Agreement,
stipulated among other things, that the just compensation of the Zuzuarregui properties would be at P19.50 per square
meter payable in NHA Bonds. In a Decision dated 20 December 1985, the RTC, approved the Compromise Agreement
submitted by the parties.
The total amount in NHA bonds released to Atty. Romeo G. Roxas in behalf of the Zuzuarreguis amounted to
P54,500,000.00. Out of this amount, the records show that the amount turned over to the Zuzuarreguis by Atty. Roxas
amounted to P30,520,000.00 (representing the actual just compensation, although this amount is bigger) in NHA bonds.
Computed at P19.50 per square meter, the 1,790,570.36 square meters property of the Zuzuarreguis was
expropriated at a total price of P34,916,122.00. The total amount released by the NHA was P54,500,000.00. The difference
of P19,583,878.00 is, undoubtedly, the yield on the bonds.
On 25 August 1987, a letter was sent by the Zuzuarreguis’ new counsel, Jose F. Gonzalez, to Attys. Roxas and
Pastor, demanding that the latter deliver to the Zuzuarreguis the yield corresponding to bonds paid by the NHA within a
period of 10 days from receipt, under pain of administrative, civil and/or criminal action.

ISSUE: The honorable court of appeals gravely erred on a question of law in holding that the letter-agreement re:
contingent fees cannot be allowed to stand as the law between the parties

RULING: A contract is a meeting of the minds between two persons whereby one binds himself, with respect to the other,
to give something or to render some service. Contracts shall be obligatory, in whatever form they may have been entered
into, provided all the essential requisites for their validity are present. The Zuzuarreguis, in entering into the Letter-
Agreement, fully gave their consent thereto. In fact, it was them (the Zuzuarreguis) who sent the said letter to Attys. Roxas
and Pastor, for the purpose of confirming all the matters which they had agreed upon previously. There is absolutely no
evidence to show that anybody was forced into entering into the Letter-Agreement. Verily, its existence, due execution
and contents were admitted by the Zuzuarreguis themselves.
In the presence of a contract for professional services duly executed by the parties thereto, the same becomes the
law between the said parties is not absolute but admits an exception – that the stipulations therein are not contrary to law,
good morals, good customs, public policy or public order.
Under the contract in question, Attys. Roxas and Pastor are to receive contingent fees for their professional services.
It is a deeply-rooted rule that contingent fees are not per se prohibited by law. They are sanctioned by Canon 13 of the
Canons of Professional Ethics.
A contract for contingent fee, where sanctioned by law, should be reasonable under all the circumstances of the
case including the risk and uncertainty of the compensation, but should always be subject to the supervision of a court, as
to its reasonableness.
Indubitably entwined with the lawyer’s duty to charge only reasonable fees is the power of this Court to reduce the
amount of attorney’s fees if the same is excessive and unconscionable.
Attorney’s fees are unconscionable if they affront one’s sense of justice, decency or reasonableness. It becomes
axiomatic therefore, that power to determine the reasonableness or the, unconscionable character of attorney's fees
stipulated by the parties is a matter falling within the regulatory prerogative of the courts.
In the instant case, Attys. Roxas and Pastor received an amount which was equal to forty-four percent (44%) of the
just compensation paid (including the yield on the bonds) by the NHA to the Zuzuarreguis, or an amount equivalent to
P23,980,000.00 of the P54,500,000.00. Considering that there was no full blown hearing in the expropriation case, ending
as it did in a Compromise Agreement, the 44% is, undeniably, unconscionable and excessive under the circumstances. Its
reduction is, therefore, in order.
It is imperative that the contingent fees received by Attys. Roxas and Pastor must be equitably reduced. In the
opinion of this Court, the yield that corresponds to the percentage share of the Zuzuarreguis in the P19.50 per square meter
just compensation paid by the NHA must be returned by Attys. Roxas and Pastor.
The yield on the NHA bonds amounted to P19,583,878.00. This amount must therefore be divided between the
Zuzuarreguis, on the one hand, and Attys. Roxas and Pastor, on the other. The division must be pro rata. Attys. Roxas and
Pastor, in the opinion of this Court, were not shortchanged for their efforts for they would still be earning or actually earned
attorney’s fees in the amount of P6,987,078.75
On the issue of moral and exemplary damages, we cannot award the same for there was no direct showing of bad faith on
the part of Attys. Roxas and Pastor, for as we said earlier, contingency fees are not per se prohibited by law. It is only
necessary that it be reduced when excessive and unconscionable, which we have already done.