LEGAL ETHICS
Falame vs Atty. Baguio
PP. 246-300
CANON 15
Rule 15.03
No representation of conflicting interests except by
written consent of all concerned given a full
disclosure of the facts
Conflicting Interests
- inconsistency in the interests of two or more opposing
parties
- TEST: Whether or not in behalf of one client, it is the
lawyer’s duty to fight for an issue or claim, but is it his
duty to oppose it for the other client
- ANOTHER TEST: Whether the acceptance of a new
relation would:
a. prevent the full discharge of the lawyer’s duty of
undivided fidelity and loyalty; or
b. invite suspicion of unfaithfulness or double
dealing in the performance of that duty
- Probability, not certainty of conflict, is an important
criterion in determining conflict of interest
- Par. 2, Art. 209, Revised Penal Code
“xxx
The same penalty shall be imposed upon an attorney-
at-law xxx who, having undertaken the defense of a
client or having received confidential information from
said client in a case, shall undertake the defense of the
opposing party in the same case, without the consent of
his first client.”
Honrilla vs Salunat
RULING:
- “A lawyer engaged as counsel for a corporation cannot
represent members of the same corporation’s board of
directors in a derivative suit brought against them.”
should have observed the requirements laid down by
FACTS:
1) A lawyer represents a client involving a certain
property in a civil case. The judge ruled in favor of their
cause.
2) In a subsequent civil case involving the same
property, the lawyer acted as counsel for the adverse
party of his former client
RULING:
- “The rule concerning conflict of interest prohibits
a lawyer from representing a client if that representation
will be directly adverse to any of his present of former
client.”
- “xxx a lawyer may only be allowed xxx [to do so]
if the former client consents to it after consultation.”
- “The client’s confidence once reposed
should not be divested by mere expiration of
professional employment.”
- “The rule is grounded on the fiduciary obligation
of loyalty.”
Gonzales vs Cabucana Jr.
FACTS:
1) Respondent’s law firm, his brother as counsel,
represented Gonzales in a former civil case.
2) Respondent argues that he acted in good faith and
with honest intention, the case being that the adverse
party of Gonzales in the subsequent civil case cannot
find a lawyer willing to engage in their cause.
RULING:
- “his [Respondent’s] claim that he could not turn
down the spouses as no other lawyer is willing to take
their case cannot prosper as it is settled xxx they
[lawyers] cannot be made to labor under conflict of
interest between a present client and a prospective
one.”
- “Granting also that there really was no other
lawyer who could handle the spouse’s case xxx he
the rules xxx [:] the written consent of all concerned
after a full disclosure of the facts.”
Quiambao vs Bamba
FACTS:
1) Counsel represents a client in an ejectment case.
2) During the pendency of the ejectment case, the
counsel took on the adverse party’s cause for a different
case, a replevin case.
RULING:
- “We [the Court] 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 [on conflict of
interest] is inapplicable.”
- “His representation of opposing clients in both cases,
though unrelated, obviously constitutes conflict of
interest or at least, invites the suspicion of double-
dealing.”
Hilado vs David
FACTS:
1) Atty. Francisco was consulted by a party for certain
case. Upon review, he gave his written opinion stating
that such case will not prosper based on the facts.
2) Atty. Francisco was hired by the opposing party.
RULING:
- “If a person, in respect to his business affairs or
troubles of any kind, consults with his attorney:
a) in his professional capacity
b) with the view to obtaining professional
advice xxx and
c) the attorney voluntarily permits xxx in such
consultation,
the professional employment must be regarded as
established.”

Nakpil vs Valdez
FACTS:
1) Atty. Valdez is both a lawyer and a CPA, and
practices both professions in his law firm and
accounting firm.
2) In a case involving the estate of the late Jose Nakpil:
a) he appeared as counsel for the estate,
b) and at the same time, his accounting firm prepared
the list of assets and liabilities of the estate, and
computed the claims of two creditors of the estate.
ISSUE:
Whether or not Atty. Valdez represented conflicting
interests in said case.
RULING:
Yes.
- “In the estate proceedings, the duty of
respondent’s law firm was to contest the claims of the
two creditors, but whose claims were prepared by the
respondent’s accounting firm.”
- “The test to determine whether there is a conflict
of interest in the representation is probability, not
certainty.”
- “The proscription against representation of
conflicting interests:
a) find application where the conflicting interests
arise in respect to the same general matter, and
b) is applicable however slight such adverse
interests may be.
ISSUE:
Whether or not the misdemeanor pertains only to
respondent’s accounting practices.
RULING:
No.
- “In the case at bar xxx 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 xxx. The act is a breach of
professional ethics xxx 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 practices, 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 xxx.”
Lim-Santiago vs Sagucio
FACTS:
1) Atty. Sagucio was the former Personnel Manager and
retained counsel of Taggat Industries Inc. until he was
appointed as Assistant Provincial Prosecutor of
Tuguegarao in 1992.
2) Taggat Industries Inc., Lim-Santiago’s corporation,
ceased operation in 1997 after it was sequestered by
the PCGG.
3) 21 employees of the corporation filed a criminal
complaint against Lim-Santiago for withholding their
salaries without valid cause from April 1, 1996 to July
15, 1997.
4) Atty. Sagucio, as prosecutor, filed 651 Informations
against complainant
ISSUE:
Whether or not the respondent is guilty of representing
conflicting interests.
RULING:
No.
- “The issue in the criinal complaint pertains to
non-payment of wages that occurred from April 1 1996
to July 15 1997. Clearly, respondent was no longer
connected with Taggat during that period xxx.”
- “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 xxx in resolving the criminal
complaint.”
- “xxx 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.”
- “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.”
Rule 15.04
A lawyer may, with the written consent of all
concerned, act as mediator, conciliator or arbitrator in
settling disputes.
PP. 82, Report of the IBP
“x x x A lawyer who acts as mediator, conciliator or
arbitrator in settling a dispute, cannot represent any of
the parties to it.”
Rule 15.05
When advising a client:
a) give a candid and honest opinion on the merits and
probable results of the client’s case
b) neither overstating not understating the prospects
of the case
- a careful investigation and examination of the facts
must first be had before any legal opinion be ventured
by the lawyer to the client
- clients are ordinarily unfamiliar with the intricacies of
law and are therefore entitled to a candid and honest
opinion of a lawyer as to the merit or lack thereof of their
case
Overestimation of Prospects of the Case
- a lawyer who exaggerates the prospect of winning a
case:
a) will be placed under heavy pressure to employ
any means possible to win the case at all cost and will
be blind to ethical rules
b) if he loses, a cloud of suspicion will hang over
his head that he betrayed his client
Underestimation of Prospects of the Case
- a lawyer who understates the prospect of winning a
case places the client in grave anxiety and this may
affect the latter’s trust to the former’s ability to handle
the case
Rollon vs Naraval
RULING:
- “If they [lawyers] find that their client’s cause is
defenseless, then it is their bounded duty to advise
the latter to acquiesce and submit, rather than to
traverse the incontrovertible.”
Mercado vs Security Bank Corporation
RULING:
- “A lawyer who guarantees the successful
outcome of a litigation will exert heavy pressure and
employ any means to win the case at all costs. xxx when
the case is lost, he will blame the courts, placing them
under a cloud of suspicion.”
- “xxx in this case, Atty. Villanueva’s statements
led Mercado, not only to suspect but also believe,
that the entire Court, together with Chief justice Davide
and the ponente could be pressured or influenced.”
Rule 15.06
A lawyer shall not state or imply that he is able to
influence any public official, tribunal or legislative body.
- such a display of influence, whether factual or
imaginary:
a) undermines the judicial and legal systems
b) degrades our court or tribunals
as a dangerous impression is created that cases are
won not on the merits but on the magnetic pull of
influential connections
Rule 15.07
Impress upon clients compliance with the laws and
principles of fairness.
- impress that everybody, including lawyers must
respect the law and observe the principle of fairness in
their dealings
- Art. 19, New Civil Code
“Every person in the exercise of their rights or the
fulfillment of their duties, act with justice, give everyone
his due and observe honesty and good faith.”
Millare vs Montero
RULING:
- “xxx a lawyer is required:
a) to represent his client within the bounds of
the law xxx
b) employ only fair and honest means to attain
the lawful objectives of his client, and
c) warns him not to allow his client to dictate
the procedure in handling the case
Rule 15.08
If engaged in another profession, a lawyer shall make
clear whether he is acting as a lawyer or in another
capacity
- keep any business, in which he is engaged in
concurrently with the practice of law, entirely separate
and apart from the latter.
- he must keep paramount in the protection of the legal
profession even when he is engaged in any other
legitimate profession.
- P. 84, Report of the IBP Committee
“The lawyer should inform the client when he is acting
as a lawyer and when he is not, because certain ethical
considerations governing the client-lawyer
relationship may be operative in one case and not
in the other.”
CANON 16
A lawyer shall hold in trust all moneys and properties
of his client that may come into his possession.
Rule 16.01
Account for all money or property collected or received
for or from the client
- a lawyer must not comingle his client’s money with
other money in his possession not only to prevent
confusion but as well, to avoid the appearance of
impropriety
In re: Abad
- “In the absence of authority from his client,
he is not allowed to disburse the money collected for his
client in favor of persons who may be entitled thereto
considering that he owes fidelity to the client and
not the creditor.”
Rule 16.02
Keep the funds of each client separate and apart from
his own and those others kept by him
Rule 16.03
a) Shall deliver the funds and property of his client when
due or upon demand.
b) He shall have a lien over the funds and may apply so
much thereof as may be necessary to satisfy his
lawful fees, disbursements, giving notice promptly
thereafter to his client.
c) He shall also have a lien to the same extent on all
judgments and executions he has secured for his client.
Presumption of Misappropriation
- arises upon a lawyer’s failure to deliver upon demand
Sec. 37, Rule 138, Revised Rules of Court
“An attorney shall have a lien upon the:
a) funds
b) documents and papers of his client
which have lawfully come into his possession and may
retain the same until his lawful fees and disbursements
have been paid, and may apply such funds to the
satisfaction thereof xxx.”
Matute vs Matute
RULING:
- “xxx an attorney may not be compelled to
surrender the documents in his possession without prior
proof that his fees have been duly satisfied. But if it be
entirely indispensable for the court to gain possession
of the documents that have come to the attorney and
are held by him in the course of his employment as
counsel, it can require surrender thereof by
requiring the client to first file proper and adequate
security for the lawyer’s compensation.”
Retaining lien
- a right merely to retain the funds, documents and
papers of his client which have lawfully come into his
possession and may retain the same until his lawful fees
and disbursements have been paid.
Charging lien
- 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 of Retaining lien
1) Attorney-client relationship
2) Lawful possession by lawyer of client’s funds,
documents and papers in his professional capacity
3) Unsatisfied claim for attorney’s fees or disbursements
Requisites for validity of Charging lien
1) Attorney-client relationship
2) Attorney has rendered services
3) Money judgment favorable to the client
4) Attorney has a claim for attorney’s fees
Rule 16.04
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
Shall 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 a client
…Unless the client’s interests are fully protected by
the nature of the case or by independent advice
- e.g. a lawyer may borrow money from a client bank
since the latter’s interests are protected by the bank’s
rules and regulations which have to be complied with.
…Except, when, in the interest of justice, he has to
advance necessary expenses in a legal matter he is
handling for a client
- the advances made must be subject to reimbursement,
otherwise the lawyer’s employment may become
champertous.
CANON 17
A lawyer owes fidelity to the cause of his client and he
shall be mindful of the trust and confidence reposed in
him.
Lorenzana Food Corporation vs Daria
RULING:
- “An attorney owes loyalty to his client not only
in the case in which he has represented him but also
after the relation of the attorney and the client has
terminated.”
CANON 18
Serve the client with competence and diligence
Diligence
- attention and care required of a person in a given
situation and is the opposite of negligence
- the legal profession demands of a lawyer that degree
of vigilance and attention expected of a good father of a
family
Presumption of Diligence
- in the absence of any contrary evidence, a lawyer is
presumed to be prompt and diligent in the performance
of his duties
How a Laywer Attains and Maintains Competence
1) keeping abreast with current legal literature
2) participating in legal education programs
3) concentrating in particular areas of the law
4) availing himself of these means
Rule 18.01
Shall not undertake a legal service which he knows
or should know that he is not qualified to render.
He may render such service if, with the consent of his
client, he obtains as a collaborating counsel a
lawyer who is competent on the matter.
- the handling lawyer cannot just take another lawyer to
collaborate with without the consent of the client, and
the new lawyer cannot just enter his appearance as
collaborating counsel without the conformity of the first
counsel
Rule 18.02 to represent them while counsel was in the hospital
Shall not handle any legal matter without adequate 6) Failure to appear simply because the client did not
preparation go to counsel’s office on the date of the trial as was
agreed upon
Adequate Preparation 7) Failure to pay the appellate docket fee after receiving
- includes among other virtues, the amount for the purpose

a) sufficient knowledge if the law and jurisprudence
b) ability in trial technique
c) high-proficiency in the formulation of pleadings

Rule 18.03
Shall not neglect a legal matter entrusted to him and his
negligence in connection therewith shall render him
liable

- If by reason of the lawyer’s negligence, actual loss has

been caused to his client, the latter has a cause of action
against him for damages. However, for the lawyer to be
held liable, his failure to exercise reasonable care, skill
and diligence must be proximate cause of the loss.

1) Failure of counsel to ask for additional time to answer

a complaint resulting in a default judgment against his
client
2) Failure to bring suit immediately. When the belated
suit was filed, the defendant had already become
insolvent and recovery could no longer be had. The
lawyer was declared liable to the client
3) Failure to ascertain date of receipt from post office of
notice of decision resulting in the non-perfection of the
appellant’s appeal]. 

4) Failure to file briefs within the reglementary period 5)
Failure to attend to trial without filing a motion for
postponement or without requesting either of his two
partners in the law office to take his place and appear
for the defendants
6) Failure to appear at pre-trial
5) Failure of counsel to notify clients of the scheduled
trial which prevented the latter to look to another lawyer