A.C. No. 4763 March 20, 2003 DR. GIL Y. GAMILLA, NORMA S. CALAGUAS, IRMA E.

POTENCIANO, EDITHA OCAMPO, LUZ DE GUZMAN, GLICERIA BALDRES, FERDINAND LIMOS, MA. LOURDES C. MEDINA, HIDELITA GABO, CORAZON CUI, REMEDIOS T. GARCIA, RENE ARNEJO, RENE LUIS TADLE, LAURA ABARA, PHILIP AGUINALDO, BENEDICTA ALAVA, LEONCIO CASAL, CARMELITA ESPINA, ZENAIDA FAMORCA, CELSO NIERA, CESAR REYES, NATIVIDAD SANTOS and MAFEL YSRAEL, complainants, vs. ATTY. EDUARDO J. MARIO JR., respondent. BELLOSILLO, J.: THIS DISBARMENT CASE EMANATED from an intra-union leadership dispute some seventeen (17) years ago that spilled over to the instant complaint alleging impropriety and double-dealing in the disbursement of sums of money entrusted by the University of Sto. Tomas to respondent Atty. Eduardo J. Mario Jr. as president of the UST Faculty Union and his core of officers and directors 1 for distribution among faculty members of the university. For a sense of history, sometime in 1986 respondent Atty. Mario Jr. as president of the UST Faculty Union and other union officers entered into a collective bargaining agreement with the management of UST for the provision of economic benefits amounting to P35 million. Instead of creating a harmonious relationship between the contracting parties, the collective bargaining agreement regrettably engendered disputes arising from the interpretation and implementation thereof one of which even reached 2 this Court. The 1986 collective bargaining agreement expired in 1988 but efforts to forge a new one unfortunately failed. In 1989 the faculty members of UST went on strike and as a counter-measure UST terminated the employment of sixteen (16) officers and directors of the UST Faculty Union including respondent. The dismissal precipitated anew bitter legal battles which were resolved by this Court 3 in favor of the dismissed employees by ordering their reinstatement with back wages. In 1990 Secretary of Labor Ruben D. Torres prescribed the terms and conditions of a five (5)-year collective bargaining agreement between UST and the UST Faculty Union retroactive to 1988 when the 1986 collective bargaining agreement expired. In the same year, the administration of UST and the UST Faculty Union also entered into a compromise agreement for the payment of P7,000,000.00 from which P5,000,000.00 was intended to settle the back wages and other claims of the sixteen (16) union officers and directors of the UST Faculty Union, including herein respondent, who were earlier ordered reinstated by this Court, and the sum of P2,000,000.00 to satisfy the remaining obligations of UST under the 1986 collective bargaining agreement. It appears from the record that only P5,000,000.00 for the back wages and other claims of respondent Atty. Mario and other concerned union officers and directors was paid immediately by UST while the satisfaction of the balance of P2,000,000.00 was apparently deferred to some unspecified time. In 1992 UST and the UST Faculty Union executed a memorandum of agreement to settle the salary increases and other benefits under the collective bargaining agreement effective 1988 for the period 1 June 1991 to 31 May 1993 for a total of P42,000,000.00. It was agreed that the benefits accruing from 1 June 1991 to 31 October 1992 were to be taken from the sum of P42,000,000.00 which UST would release directly to the faculty members, while the remainder of the P42,000,000.00 package would be ceded by UST to the UST Faculty Union which would then disburse the balance to cover the benefits from 1 November 1992 to 31 May 1993. The memorandum of agreement also charged the amount of P2,000,000.00 agreed upon in the 1990 compromise agreement as well as the attorney's fees of Atty. Mario worth P4,200,000.00 against the P42,000,000.00 outlay. In accordance with the memorandum of agreement, UST took care of the disbursement of P20,226,221.60 from the total commitment of P42,000,000.00 to pay for the following expenses: (a) P2,000,000.00 as payment for unpaid obligations to faculty members under the 1986 collective bargaining agreement; (b) P13,833,597.96 for the salary increases of faculty members from 1 June 1991 to 31 October 1992; (c) P192,623.64 for telephone, electricity and water billings; and, (d) P4,200,000.00 paid to the UST Faculty Union as attorney's fees. The expenses left a collectible sum of P21,773,778.40 from the obligation of P42,000,000.00. The university however relinquished only P18,038,939.37 to the UST Faculty Union which was P3,734,839.03 short of the balance of P21,773,778.40. In the meantime, the UST Faculty Union placed P9,766,570.01 of the amount received from UST in the money market to earn as it did make P1,146,381.27 in interest. For benefits corresponding to 1 November 1992 to 31 May 1993, the UST Faculty Union charged against the short-changed amount of P18,038,939.37 a total of P16,723,638.27 consisting of the following expenses: (a) P10,521,800.64 as the amount paid for salary increases beginning 1 November 1992 to 31 May 1993; (b) P578,296.31 which was refunded to the faculty members whose salaries were reduced as a result of their participation in the 1989 strike; (c) P2,045,192.97 as amount paid to the faculty members representing their December 1992 bonus; and, (d) P3,578,348.35 for reimbursements to the University of Santo Tomas. The expenses left a balance of P5,050,140.13, i.e., the remainder of P1,315,301.10 out of the P18,038,939.37 earlier turned over by UST to the UST Faculty Union, plus the deficit amount of P3,734,839.03 which UST later turned over to the UST Faculty Union after previously failing to deliver the amount. To the sum of P5,050,140.13, the UST Faculty Union added the interest earnings of P1,146,381.27 from money market investments as well as the amount of P192,632.64 representing the disallowed amount of expenses earlier deducted by UST from the P42,000,000.00 package. All in all, the money left in the possession of the UST Faculty Union was P6,389,154.04 which it distributed among the faculty members in 1994.

Complainants as members of the UST Faculty Union questioned the alleged lack of transparency among the officers and directors of the union in the management and disbursement of the monetary benefits for the faculty members. They initiated two (2) complaints with the Office of the Regional Director, National Capital Region, Department of Labor and Employment, one on 18 October 1995, docketed as Case No. NCR-OD-M-9412-022, and another, on 16 November 1996, docketed as Case No. NCR-OD-M-9510-028. In both pleadings, they prayed for the expulsion of the officers and directors of the union led by respondent Atty. Mario because of their alleged failure to account for the balance of the P42,000,000.00 ceded to them by UST and the 4 attorney's fees amounting to P4,200,000.00 which they deducted from the benefits allotted to faculty members. On 2 July 1997 complainants filed the instant complaint for disbarment against Atty. Mario accusing him of (a) compromising their entitlements under the 1986 collective bargaining agreement without the knowledge, consent or ratification of the union members, and worse, for only P2,000,000.00 when they could have received more than P9,000,000.00; (b) failing to account for the P7,000,000.00 received by him and other officers and directors in the UST Faculty Union under the 1990 compromise agreement; (c) lack of transparency in the administration and distribution of the remaining balance of the P42,000,000.00 package under the 1992 memorandum of agreement; (d) refusal to remit and account for the P4,200,000.00 in favor of the faculty members although 5 6 the amount was denominated as attorney's fees. Complainants asserted that respondent violated Rules 1.01 and 1.02 of Canon 7 8 9 10 11 1; Rule 15.08 of Canon 15; Rules 16.01, 16.02 and 16.03 of Canon 16; and Rule 20.04 of Canon 20, of the Code of Professional Responsibility. On 4 November 1997, after several extensions Atty. Mario filed his comment on the complaint. He alleged that the issues raised therein were the same issues involved in the two (2) complaints before the Bureau of Labor Relations and therefore constituted forum-shopping, and further explained that he had adequately accounted for the disbursement of the money demanded by complainants. On 18 March 1998 we referred the disbarment complaint and the comment thereon to the Integrated Bar of the Philippines for investigation, report and recommendation within ninety (90) days from notice thereof. On 18 May 1999 we received the Report of IBP Commissioner Lydia A. Navarro as well as the Resolution of 30 March 1999 of the IBP Board of Governors adopting and approving the Report which found the complaint meritorious and suspended respondent Atty. Mario from the practice of law "until such time that the required detailed accounting of the questioned remittances made by UST to the UST [Faculty Union] during his incumbency as President and Legal Counsel has been officially submitted and reported to the UST [Faculty Union] and to the IBP." On 7 September 1999 respondent filed his comment on the IBP Report and Resolution and alleged the same contentions he previously asserted. On 27 October 1999 we referred the case back to the IBP for a more detailed investigation and submission of report and recommendation within sixty (60) days from notice. In the meantime, or on 27 May 1999, the Regional Director found merit in the two (2) complaints docketed as Case No. NCR-OD-M-9412-022 and Case No. NCR-OD-M-9510-028 and ordered the expulsion of respondent and the other officers and directors of the union led by respondent Atty. Mario because of their failure to account for the balance of the P42,000,000.00 that had been delivered to them by the management of UST, and their collection of exorbitant and illegal attorney's fees amounting to 12 P4,200,000.00. On 9 March 2000 the Bureau of Labor Relations in the appeal docketed as BLR-A-TR-52-25-10-99 set aside the Order of the Regional Director. It found that the balance of the P42,000,000.00 which UST delivered to the UST Faculty Union had been full y 13 and adequately accounted for by respondent and the other officers and directors of the union. Nonetheless, the Bureau of Labor Relations ordered respondent and the other officers and directors of the union to distribute the attorney's fees of P4,200,000.00 among the faculty members and to immediately hold the elections for union officers and directors in view of the expiration of their respective terms of office. On 16 March 2001 the Decision of the Bureau of Labor Relations was affirmed in toto by the Court of Appeals in CA-G.R. SP No. 14 60657. The Decision of the Court of Appeals was elevated to this Court, docketed G.R. No. 149763, where the case is allegedly still pending resolution. On 25 September 2002 we received the detailed Report and Recommendation of IBP Commissioner Lydia A. Navarro and the IBP Resolution of 3 August 2002 of the Board of Governors adopting and approving the Reportwhich recommended the lifting of Atty. Mario's suspension from law practice since he had sufficiently accounted for the funds in question. For a start, it appears that complainants did not file a petition with this Court to review the IBP Resolutionexonerating respondent from the accusations against him and lifting his suspension from the practice of law, an action otherwise required under Sec. 12, Rule 139-B of the Rules of Court if the case against respondent could still proceed in this Court. Nevertheless since the IBP Resolution is merely recommendatory, and considering further the instructional value of this case to members of the Bench,

many of whom are engaged simultaneously in other businesses or professions, we find it prudent and judicious to decide the instant case once and for all. In fine, there are ethical lapses on the part of respondent Atty. Eduardo J. Mario Jr. in the manner by which he secured the P7,000,000.00 by virtue of the compromise agreement and the P4,200,000.00 attorney's fees under the memorandum of agreement. Although the record shows that the Bureau of Labor Relations found respondent as having adequately accounted for the disbursement of the funds which the UST Faculty Union received through the series of agreements with the management of UST, this Court believes that Atty. Mario failed to avoid conflict of interests, first, when he negotiated for the compromise agreement wherein he played the diverse roles of union president, union attorney and interested party being one of the dismissed employees seeking his own restitution, and thereafter, when he obtained the attorney's fees of P4,200,000.00 without full prior disclosure of the circumstances justifying such claim to the members of the UST Faculty Union. As one of the sixteen (16) union officers and directors seeking compensation from the University of Santo Tomas for their illegal dismissal, respondent was involved in obvious conflict of interests when in addition he chose to act as concurrent lawyer and president of the UST Faculty Union in forging the compromise agreement. The test of conflict of interest among lawyers is "whether the acceptance of a new relation will prevent an attorney from the full discharge of his duty of undivided fidelity and loyalty to his 15 client or invite suspicion of unfaithfulness or double-dealing in the performance thereof." In the same manner, it is undoubtedly a conflict of interests for an attorney to put himself in a position where self-interest tempts, or worse, actually impels him to do less than his best for his client. Thus it has been held that an attorney or any other person occupying fiduciary relations respecting property or persons is utterly 16 disabled from acquiring for his own benefit the property committed to his custody for management. This rule is entirely independent of whether fraud has intervened as in fact no fraud need be shown; no excuse will be heard from an attorney because the rule stands on the moral obligation to refrain from placing oneself in positions that ordinarily excite conflict between self-interest and integrity. Necessarily, a lawyer cannot continue representing a client in an action or any proceeding against a party even with the clie nt's consent after the lawyer brings suit in his own behalf against the same defendant if it is uncertain whether the defendant will be 17 able to satisfy both judgments. No doubt, a lawyer is not authorized to have financial stakes in the subject matter of the suit 18 brought in behalf of his client. In the instant case, quite apart from the issue of validity of the 1990 compromise agreement, this Court finds fault in respondent's omission of that basic sense of fidelity to steer clear of situations that put his loyalty and devotion to his client, the faculty members of UST, open to question. Atty. Mario both as lawyer and president of the union was duty bound to protect and advance the interest of union members and the bargaining unit above his own. This obligation was jeopardized when his personal interest as one of the dismissed employees of UST complicated the negotiation process and eventually resulted in the lopsided compromise agreement that rightly or wrongly brought money to him and the other dismissed union officers and directors, seemingly or otherwise at the expense of the faculty members. The facts would affirm this observation. In brokering the compromise agreement, respondent received P5,000,000.00 as compensation for the dismissed union officials while only P2,000,000.00 apparently settled UST's obligations in favor of the faculty members under the 1986 collective bargaining agreement when their original claim amounted to at least P9,000,000.00. Worse, the P2,000,000.00 concession for accountabilities demandable long ago in 1986 was paid only in 1992 under the memorandum of agreement, or a period of more than two (2) years after the execution of the compromise agreement, in contrast to the immediate payment of the P5,000,000.00 to Atty. Mario and the other union officers and directors. Respondent Atty. Mario ought to have disclosed to the members of the UST Faculty Union, if not the entire bargaining unit of faculty members, his interest in the compromise agreement as one of the dismissed union officers seeking compensation for the claim of back wages and other forms of damages, and also the reasons for reducing the claim of the faculty members from more than P9,000,000.00 to only P2,000,000.00. As the record shows, the explanations for respondent's actions were disclosed only years after the consummation of the compromise agreement, particularly only after the instant complaint for disbarment was filed against him, when the accounting should have been forthcoming either before or during the settlement of the labor case against the management of UST. Equally important, since respondent and the other union officers and directors were to get for themselves a lion's share of the compromise as they ultimately did, Atty. Mario should have unambiguously divulged and made clear to his client the compelling probability of conflict of interests. He should have voluntarily turned over the reins of legal representation to another lawyer who could have acted on the matter with a deep sense of impartiality over the several claims against UST and an unfettered commitment to the cause of the faculty members. Furthermore, there was lack of notice and transparency in respondent's dual role as lawyer and president of the UST Faculty Union when he obtained P4,200,000.00 as attorney's fees. Without ruling on the validity of the collection of attorney's fees so as not to pre-empt the decision in G.R. No. 149763 on this issue, the record does not show any justification for such huge amount of

compensation nor any clear differentiation between his legal services and his tasks as union president comprising in all probability the same duties for which he had collected a hefty compensation as attorney for the union. The situation of Atty. Mario is not any different from that of an executor or administrator of an estate who may not charge against the estate any professional fee for legal services rendered by him because his efforts as such are already paid for in his capacity as 19 executor or administrator. Indeed, he could have avoided complaints and perceptions of self-enrichment arising from the levy of attorney's fees by spelling out the terms and bases for the claim of P4,200,000.00 since the compensation for his services as president of the union should have otherwise covered his legal services as well. Regardless of the motivations of respondent in perfecting the compromise agreement or demanding the inexplicable attorney's fees, his actions were not transparent enough to allow the bargaining unit ample information to decide freely and intelligently. Clearly, he violated Canon 15 of the Code of Professional Responsibility requiring every lawyer to "observe candor, fairness and loyalty in all his dealings and transactions with his clients." Lawyers are vanguards in the bastion of justice so they are without doubt expected to have a bigger dose of service-oriented conscience and a little less of self-interest. As indispensable part of the system of administering justice, attorneys must comply strictly with the oath of office and the canons of professional ethics - a duty more than imperative during these critical times when strong and disturbing criticisms are hurled at the practice of law. The process of imbibing ethical standards can begin with the simple act of openness and candor in dealing with clients, which would progress thereafter towards the ideal that a lawyer's vocation is not synonymous with an ordinary business proposition but a serious matter of public interest. The evidence on record proves that Atty. Mario failed to disclose at crucial moments significant information about the manner by which he secured the P7,000,000.00 by virtue of the compromise agreement and the P4,200,000.00 attorney's fees under the memorandum of agreement. A simple accounting of the money that he and others concerned received from UST, as well as an explanation on the details of the agreements, would have enlightened the faculty members about the probability of conflict of interests on respondent's part and guided them to look for alternative actions to protect their own interests. In light of the irrefragable fact of respondent's misdemeanor, a possible mitigation of his actionable conduct was that the attorney's fees and the compromise agreement were negotiated and finalized under the most strenuous circumstances where his leadership and that of his core officers and directors were incessantly challenged by complainants allegedly aided by factions within UST itself. He might also have believed that the settlement achieved immense benefits for his constituents which would not have been otherwise obtained if he had chosen to relinquish the rein of legal representation to some other lawyer. Finally, it was not improbable for him to suppose though wrongly that he could represent and in some manner serve the interests of all of them, 20 including his own, by pushing for and seeking the approval of the agreements himself. We reiterate that the objective of a disciplinary case is not so much to punish the individual attorney as to protect the dispensation of justice by sheltering the judiciary and the public from the misconduct or inefficiency of officers of the court. Restorative justice not retribution is our goal in this type of proceedings. In view of this, instead of taking a more stern measure against respondent, a 21 reprimand and a warning would be sufficient disciplinary action in accordance with our ruling in Sumangil v. Sta. Romana. Hence, Atty. Mario is admonished to refrain from all appearances and acts of impropriety including circumstances indicating conflict of interests, and to behave at all times with circumspection and dedication befitting a member of the Bar, especially observing candor, 22 fairness and loyalty in all transactions with his client. WHEREFORE, respondent Atty. Eduardo J. Mario Jr. is REPRIMANDED for his misconduct with a warning that a more drastic punishment will be imposed on him upon a repetition of the same act. SO ORDERED. A.C. No. 6711 July 3, 2007 MA. LUISA HADJULA, complainant, vs. ATTY. ROCELES F. MADIANDA, respondent. GARCIA, J.: Under consideration is Resolution No. XVI-2004-472 of the Board of Governors, Integrated Bar of the Philippines (IBP), relative to the complaint for disbarment filed by herein complainant Ma. Luisa Hadjula against respondent Atty. Roceles F. Madianda. The case started when, in an AFFIDAVIT-COMPLAINT bearing date September 7, 2002 and filed with the IBP Commission on 2 Bar Discipline, complainant charged Atty. Roceles F. Madianda with violation of Article 209 of the Revised Penal Code and Canon Nos. 15.02 and 21.02 of the Code of Professional Responsibility. In said affidavit-complaint, complainant alleged that she and respondent used to be friends as they both worked at the Bureau of Fire Protection (BFP) whereat respondent was the Chief Legal Officer while she was the Chief Nurse of the Medical, Dental and Nursing Services. Complainant claimed that, sometime in 1998, she approached respondent for some legal advice. Complainant further alleged that, in the course of their conversation which was supposed to be kept confidential, she disclosed personal secrets and produced copies of a marriage contract, a birth certificate and a baptismal certificate, only to be informed later by the
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respondent that she (respondent) would refer the matter to a lawyer friend. It was malicious, so complainant states, of respondent to have refused handling her case only after she had already heard her secrets. Continuing, complainant averred that her friendship with respondent soured after her filing, in the later part of 2000, of criminal and disciplinary actions against the latter. What, per complainant's account, precipitated the filing was when respondent, then a member of the BFP promotion board, demanded a cellular phone in exchange for the complainant's promotion. According to complainant, respondent, in retaliation to the filing of the aforesaid actions, filed a COUNTER COMPLAINT with the 4 Ombudsman charging her (complainant) with violation of Section 3(a) of Republic Act No. 3019, falsification of public documents and immorality, the last two charges being based on the disclosures complainant earlier made to respondent. And also on the basis of the same disclosures, complainant further stated, a disciplinary case was also instituted against her before the Professional Regulation Commission. Complainant seeks the suspension and/or disbarment of respondent for the latter's act of disclosing personal secrets and confidential information she revealed in the course of seeking respondent's legal advice. In an order dated October 2, 2002, the IBP Commission on Bar Discipline required respondent to file her answer to the complaint. In her answer, styled as COUNTER-AFFIDAVIT, respondent denied giving legal advice to the complainant and dismissed any suggestion about the existence of a lawyer-client relationship between them. Respondent also stated the observation that the supposed confidential data and sensitive documents adverted to are in fact matters of common knowledge in the BFP. The relevant portions of the answer read: 5. I specifically deny the allegation of F/SUPT. MA. LUISA C. HADJULA in paragraph 4 of her AFFIDAVIT-COMPLAINT for reason that she never WAS MY CLIENT nor we ever had any LAWYER-CLIENT RELATIONSHIP that ever existed ever since and that never obtained any legal advice from me regarding her PERSONAL PROBLEMS or PERSONAL SECRETS. She likewise never delivered to me legal documents much more told me some confidential information or secrets. That is because I never entertain LEGAL QUERIES or CONSULTATION regarding PERSONAL MATTERS since I know as a LAWYER of the Bureau of Fire Protection that I am not allowed to privately practice law and it might also result to CONFLICT OF INTEREST. As a matter of fact, whenever there will be PERSONAL MATTERS referred to me, I just referred them to private law practitioners and never entertain the same, NOR listen to their stories or examine or accept any document. 9. I specifically deny the allegation of F/SUPT. MA. LUISA C. HADJULA in paragraph 8 of her AFFIDAVIT-COMPLAINT, the truth of the matter is that her ILLICIT RELATIONSHIP and her illegal and unlawful activities are known in the Bureau of Fire Protection since she also filed CHILD SUPPORT case against her lover where she has a child . Moreover, the alleged DOCUMENTS she purportedly have shown to me sometime in 1998, are all part of public records . Furthermore, F/SUPT. MA. LUISA C. HADJULA, is filing the instant case just to get even with me or to force me to settle and withdraw the CASES I FILED AGAINST HER since she knows that she will certainly be DISMISSED FROM SERVICE, REMOVED FROM THE PRC ROLL and CRIMINALLY CONVICTED of her ILLICIT, IMMORAL, ILLEGAL and UNLAWFUL ACTS. On October 7, 2004, the Investigating Commissioner of the IBP Commission on Bar Discipline came out with aReport and Recommendation, stating that the information related by complainant to the respondent is "protected under the attorney-client privilege communication." Prescinding from this postulate, the Investigating Commissioner found the respondent to have violated legal ethics when she "[revealed] information given to her during a legal consultation," and accordingly recommended that respondent be reprimanded therefor, thus: WHEREFORE, premises considered, it is respectfully recommended that respondent Atty. Roceles Madianda be reprimanded for revealing the secrets of the complainant. On November 4, 2004, the IBP Board of Governors issued Resolution No. XVI-2004-472 reading as follows: RESOLVED to ADOPT and APPROVE, as it is hereby ADOPTED and APPROVED, the Report and Recommendation of the Investigating Commissioner of the above-entitled case, herein made part of this Resolution as Annex "A"; and , finding the recommendation fully supported by the evidence on record and the applicable laws and rules, and considering the actuation of revealing information given to respondent during a legal consultation, Atty. Roceles Madianda is hereby REPRIMANDED. We AGREE with the recommendation and the premises holding it together.
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As it were, complainant went to respondent, a lawyer who incidentally was also then a friend, to bare what she considered personal secrets and sensitive documents for the purpose of obtaining legal advice and assistance. The moment complainant approached the then receptive respondent to seek legal advice, a veritable lawyer-client relationship evolved between the two. Such relationship imposes upon the lawyer certain restrictions circumscribed by the ethics of the profession. Among the burdens of the relationship is that which enjoins the lawyer, respondent in this instance, to keep inviolate confidential information acquired or revealed during legal consultations. The fact that one is, at the end of the day, not inclined to handle the client's case is hardly of consequence. Of little moment, too, is the fact that no formal professional engagement follows the consultation. Nor will it make any difference that no contract whatsoever was executed by the parties to memorialize the relationship. As we said inBurbe v. 6 Magulta, A lawyer-client relationship was established from the very first moment complainant asked respondent for legal advise 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. It a person, in respect to business affairs or troubles of any kind, consults a lawyer with a view to obtaining professional advice or assistance, and the attorney voluntarily permits or acquiesces with the consultation, then the professional employments is established. Likewise, a lawyer-client relationship exists notwithstanding the close personal relationship between the lawyer and the complainant or the non-payment of the former's fees. Dean Wigmore lists the essential factors to establish the existence of the attorney-client privilege communication, viz: (1) Where legal advice of any kind is sought (2) from a professional legal adviser in his capacity as such, (3) the communications relating to that purpose, (4) made in confidence (5) by the client, (6) are at his instance permanently protected 7 (7) from disclosure by himself or by the legal advisor, (8) except the protection be waived. With the view we take of this case, respondent indeed breached his duty of preserving the confidence of a client. As found by the IBP Investigating Commissioner, the documents shown and the information revealed in confidence to the respondent in the course of the legal consultation in question, were used as bases in the criminal and administrative complaints lodged against the complainant. The purpose of the rule of confidentiality is actually to protect the client from possible breach of confidence as a result of a consultation with a lawyer. The seriousness of the respondent's offense notwithstanding, the Court feels that there is room for compassion, absent compelling evidence that the respondent acted with ill-will. Without meaning to condone the error of respondent's ways, what at bottom is before the Court is two former friends becoming bitter enemies and filing charges and counter-charges against each other using whatever convenient tools and data were readily available. Unfortunately, the personal information respondent gathered from her conversation with complainant became handy in her quest to even the score. At the end of the day, it appears clear to us that respondent was actuated by the urge to retaliate without perhaps realizing that, in the process of giving vent to a negative sentiment, she was violating the rule on confidentiality. IN VIEW WHEREOF, respondent Atty. Roceles F. Madianda is hereby REPRIMANDED and admonished to be circumspect in her handling of information acquired as a result of a lawyer-client relationship. She is alsoSTERNLY WARNED against a repetition of the same or similar act complained of. SO ORDERED. [A.M. No. RTJ-05-1900. January 28, 2005] SHIRLEY LORIA TOLEDO and ROSIE LORIA DAJAC, complainants, vs. JUDGE ALFREDO E. KALLOS,respondent. DAVIDE, JR., C.J.: For our resolution is the verified complaint, written in the vernacular and dated 21 August 2002, of siblings Shirley Loria Toledo and Rosie Loria Dajac against respondent Judge Alfredo E. Kallos, Presiding Judge of the Regional Trial Court (RTC) of Legazpi City, Branch 10, for violation of the Code of Judicial Conduct, the Code of Professional Responsibility, and Article 1491 (5) of the Civil Code. Prior to his appointment as a judge in March 1995, Judge Kallos was complainants counsel of record in Civil Case No. 4879 filed with the RTC of Legazpi City, Branch 4, involving the recovery of hereditary shares with damages. On 25 March 1979, a judgment was rendered ordering the defendants to, among other things, turn over to herein complainants, the plaintiffs therein, the possession and ownership of the total area of 4,514 square meters of lot 2082 Albay Cadastre. On appeal, the decision was [2] affirmed by the Court of Appeals and became final and executory on 16 December 1985.
[1]

Several years thereafter, or in February 2002, the respondent filed in the same action, Civil Case No. 4879, before the RTC of [3] Legazpi, Branch 4, an Omnibus Motion praying, inter alia, for the issuance an order constituting in his favor an attorneys lien to the extent of one-third over the lot awarded in favor of the complainants representing his attorneys fee. He based his motion on a written contingency agreement on attorneys fees for professional services rendered whereby he is entitled to one-third share of what would be awarded to the complainants. He claimed that this agreement had already been implemented when one of the three (3) lots levied upon by the sheriff to answer for the award of damages was given to (him) as his one-third share while the other two lots went to the plaintiffs as their two-third share [as] evidenced by the Definite Deed of Sale and Transfer Certificate of Titles Nos. T-77728, T-77458 and T-77459. However, he misplaced a copy of said written agreement. In the meantime, or on 5 September 2002, the complainants filed before this Court, through the Office of the Court Administrator, the subject verified complaint. Here, complainants pray for three things. First, they pray for an order directing the respondent to stop demanding his 1/3 share attorneys fees. They assert that the respondent has no basis for his claim because he failed to show in court proof of the alleged written contingency fee agreement. They also belie respondents insistence in his Omnibus Motion that the said agreement had already been implemented when, on execution, one of three lots levied upon by the sheriff was given to him as his 1/3 share. They emphasize that all the lots levied by the sheriff were given to them. However, the respondent forced them to sign a Deed of Absolute Sale on 16 January 1990 involving a parcel of land valued in the document at P10,000, but actually worth more than P500,000, in payment of his attorneys fees. While they did not want to sign the document because respondent appeared in their case only during execution, they were constrained to do so for fear that something adverse might happen to their case, as the respondent so warned them. The latter told them that they would not have won the case were it not for his services. The complainants thus seek, as their second prayer, the recovery of the property involved in said Deed of Absolute Sale. They argue that pursuant to Article 1491(5) of the Civil Code, lawyers are prohibited from buying their clients properties when the same are still the object of litigation. To prove that the respondent was still their counsel when the sale took place, the complainants attached to their complaint the Motion to Terminate Services dated 23 June 1994, which was based on respondents being remiss in his duties and responsibilities as their lawyer, and the Order of the court dated 29 June 1994, approving the termination. Third, the complainants pray for the removal of the respondent from his position as RTC judge for his alleged abusive conduct unbecoming a judge. In his Comment dated 25 November 2002, the respondent denies the allegations against him and asserts that he is only claiming what is due him. He vehemently denies that he appeared in the case only during the execution stage, pointing to the Minutes of Hearing and the Order, both dated 05 October 1973, which show that he entered his appearance as counsel for the complainants as early as 5 October 1973, or two months after the complaint was filed. He continuously handled the case from then on, as shown by copies of the minutes of the hearings and orders issued by the RTC, until a favorable judgment was rendered on 25 March 1979 and the subject properties were levied upon on execution to satisfy the judgment. He insists that he was never remiss in the performance of his duties and responsibilities as complainants counsel. The respondent further alleges that the existence of the agreement on attorneys fees was admitted by complainant Shirley Loria Toledo as evidenced by the order issued by the court on 01 March 2002, which states that Ms. Toledo came to the court [4] informally informing it that she had a copy of the contract on attorneys fees. As regards the Deed of Absolute Sale, respondent admits that he was still complainants lawyer when the lot was transferred in his name. The lot was given to him by the complainants and their mother, pursuant to their written contingency agreement, as his 1/3 share in the three parcels of land levied upon by the sheriff to settle the accrued rentals awarded in the second paragraph of the dispositive portion of the decision. He did not pay for it. The figure appearing on the document was written only to facilitate the transaction. He never compelled the complainants and their mother to sell to him the parcel of land. Neither did he tell them that nothing would happen to their case without him. Finally, the respondent asserts that his claim for attorneys fees is still being litigated in Civil Case No. 4879. Thus, the instant complaint is premature. In their Rejoinder dated 7 January 2003, the complainants insist that there is no basis for respondents claim for attorneys fees for the following reasons: (1) the respondent failed to present the agreement on attorneys fees; (2) attorneys fees were not awarded by the RTC or the Court of Appeals; and (3) Civil Case No. 4879 is in its execution stage. After evaluating the pleadings submitted by the parties, the Court Administrator found that respondent was, indeed, complainants counsel in Civil Case No. 4879, and he should therefore be compensated for his services. The act of demanding payment for his attorneys fees is not a ground for administrative liability. However, he can be allowed only fair and reasonable attorneys fees under Canon 20 of the Code of Professional Responsibility. As to this, the Court Administrator stated: On the question of whether respondent violated Article 1491(5) of the Civil Code, the Court Administrator found that this may be fairly resolved in an investigation, there being a factual dispute, and recommended that the complaint be referred to an Associate Justice of the Court of Appeals pursuant to Section 3, Rule 140 of the Rules of Court. On the basis of this recommendation, we referred the matter to Associate Justice Jose Mendoza of the Court of Appeals for investigation, report, and recommendation.
[5]

In his Report, Justice Mendoza found that the respondent indeed represented the complainants in Civil Case No. 4879. Like the Court Administrator, he expresses the view that the act of demanding attorneys fees for services rendered is not a ground for administrative sanction. He finds that when the respondent made the demand, he did so as a lawyer who obtained a favorable judgment for his client, and not as a judge. As a lawyer, it is but just that he be fairly compensated for his services. And his filing of a claim for attorneys fees in Civil Case No. 4879 was an appropriate legal remedy. Considering the pendency of such claim, Justice Mendoza recommends the suspension of the determination of the instant administrative complaint until the rendition of a final judicial ruling on the matter of respondents attorneys fees; thus: As the said issue is still being litigated in the Regional Trial Court in Civil Case No. 4879, it is the view of the undersigned that the complaint is still premature . In other words, the complaint is not yet ripe for administrative evaluation. The hearing on the matter being conducted by the court below should be allowed to run its course as that court is the appropriate forum for a ruling on the dispute. To make a determination at this time on whether the respondent violated Article 1491 (A) would be to preempt the lower court in its resolution of the issue. Any recommendation by the undersigned in this administrative case and subsequent resolution by the Honorable Supreme Court on the matter would certainly affect or influence the thinking of the trial court before which the matter is pending. In such a case, it will be unfair to either party. At any rate, the party who would feel aggrieved might still elevate the decision to the higher courts. This recommendation is not without precedent. In the case of Spouses De Leon v. Hon. Bonifacio, Adm. Case No. 4467, October 10, 1997, the then Deputy Court Administrator, Hon. Reynaldo Suarez, recommended the dismissal of the case for being judicial in nature or, at least, premature. In this case, the respondent is not being charged for his acts or decisions as a judge. Rather, he has been charged for dealing with the property of his client which is prohibited by law. Nevertheless, the principle is the same, in that, the matter is still judicial in nature. We agree with Justice Mendoza. It is fundamental that a claim for attorneys fees may be asserted either in the very action in which the services of a lawyer had [7] been rendered or in a separate action. The respondent chose to file his claim for attorneys fees in the same case in which he served as counsel for the complainants. As mentioned, this is a proper remedy under our jurisdiction and is preferred to an independent action as it avoids multiplicity of suits. Besides, the right to recover attorneys fees is but an incident of the case in which the services of counsel have been rendered. Moreover, the court trying the case is to a certain degree already familiar with [8] the nature and extent of the lawyers services and is in a better position to decide the question of fees. Undisputably, respondents claim for attorneys fees is under litigation. We find in the records an Order dated 7 January 2004 issued in Civil Case No. 4879 which granted respondents prayer for 1/3 share of attorneys fees in the proceeds of litigation as claimed in his Omnibus Motion dated 14 February 2002. This Order is the subject of a motion for reconsideration by the [9] complainants, as stated in respondents Manifestation dated 24 January 2004 filed in the investigation proceedings conducted by Justice Mendoza. Also part of the records is respondents Affidavit dated 1 December 2003, filed in the same investigation proceedings, alluding to the complainants filing of a Petition for Certiorari and Mandamus in the Court of Appeals, docketed as CA-G.R. SP No. 80090, seeking to reverse the Order of the trial court denying complainants Motion to Dismiss respondents Omnibus Motion. We, therefore, find no cogent reason for us to resolve complainants first two issues raised in the verified complaint, for they are inextricably inherent in the claim of the respondent in his Omnibus Motion, which is pending judicial determination. Since respondents claim for attorneys fees in the main case has not yet become final, the objection of prematurity obtains, as a contrary [10] holding may be preemptive of a final judicial determination of factual and evidentiary matters inherent in the claim. Clearly, the [11] reliefs asked by the complainants are judicial in nature. And, if only for an orderly administration of justice, the proceedings in Civil Case No. 4879 should be allowed to continue and take its course, and the claim of the respondent judicially settled first. But while we give deference to the wisdom of the trial court to initially decide respondents claim for attorneys fees, we deem it appropriate to reiterate certain principles governing the payment of attorneys fees and impart our observations on the instant claim. Foremost of these principles is that the act of demanding attorneys fees for services rendered is not a ground for an administrative sanction. On the contrary, Canon 20 of the Code of Professional Responsibility allows lawyers to charge fair and reasonable fees. As long as a lawyer honestly and in good faith serves and represents the interest of the client, he should have a [12] reasonable compensation for his service. Lawyers are thus as much entitled to judicial protection against injustice on the part of their clients as the clients are against abuses on the part of counsel. The duty of the court is not only to see that lawyers act in a proper and lawful manner, but also to [13] see that lawyers are paid their just and lawful fees. Thus, in J.K. Mercado and Sons Agricultural Enterprises, Inc. v. De [14] [15] Vera, citing Albano v. Coloma, we stressed:

[6]

While, indeed, the practice of law is not a business venture, a lawyer, nevertheless, is entitled to be duly compensated for professional services rendered. So, also, he must be protected against clients who wrongly refuse to give him his just due. In Albano vs. Coloma, this Court has said: Counsel, any counsel, who is worthy of his hire, is entitled to be fully recompensed for his services. With his capital consisting solely of his brains and with his skill, acquired at tremendous cost not only in money but in the expenditure of time and energy, he is entitled to the protection of any judicial tribunal against any attempt on the part of a client to escape payment of his fees. It is indeed ironic if after putting forth the best that is in him to secure justice for the party he represents, he himself would not get his due. Such an eventuality this Court is determined to avoid. It views with disapproval any and every effort of those benefited by counsels services to deprive him of his hard-earned honorarium. Such an attitude deserves condemnation. It should be stressed in this connection that the absence of a written contract will not preclude the finding that there was a professional relationship that justifies the collection of attorneys fees for professional services rendered. Documentary formalism is not an essential element in the employment of an attorney; the contract may be express or implied. To establish the relation, it is sufficient that the advice and assistance of an attorney is sought and received in any matter pertinent to his [16] profession. Hence, with or without a contingency agreement between the complainants and the respondent, the trial court must determine the propriety of respondents claim for attorneys fees and the reasonable amount thereof. The third issue raised in the verified complaint deserves a short shrift. No evidence was presented to prove respondents alleged abusive conduct unbecoming a judge. The complainants do not dispute the fact that the respondent was not yet a judge when the assailed action or conduct was allegedly committed by him. As such, and to that extent, there is no reason to bind him by the strict standards of the Code of Judicial Conduct for acts committed as counsel to a case prior to his appointment as a judge. WHEREFORE, the instant administrative complaint is DISMISSED for being premature and for lack of merit. SO ORDERED. [AC No. 99-634. June 10, 2002] DOMINADOR P. BURBE, complainant, vs. ATTY. ALBERTO C. MAGULTA, respondent. PANGANIBAN, J.: After agreeing to take up the cause of a client, a lawyer owes fidelity to both cause and client, even if the client never paid any fee for the attorney-client relationship. Lawyering is not a business; it is a profession in which duty to public service, not money, is the primary consideration. The Case Before us is a Complaint for the disbarment or suspension or any other disciplinary action against Atty. Alberto C. Magulta. Filed by Dominador P. Burbe with the Commission on Bar Discipline of the Integrated Bar of the Philippines (IBP) on June 14, 1999, the Complaint is accompanied by a Sworn Statement alleging the following: x x x xxx xxx

That in connection with my business, I was introduced to Atty. Alberto C. Magulta, sometime in September, 1998, in his office at the Respicio, Magulta and Adan Law Offices at 21-B Otero Building, Juan de la Cruz St., Davao City, who agreed to legally represent me in a money claim and possible civil case against certain parties for breach of contract; That consequent to such agreement, Atty. Alberto C. Magulta prepared for me the demand letter and some other legal papers, for which services I have accordingly paid; inasmuch, however, that I failed to secure a settlement of the dispute, Atty. Magulta suggested that I file the necessary complaint, which he subsequently drafted, copy of which is attached as Annex A, the filing fee whereof will require the amount of Twenty Five Thousand Pesos (P25,000.00); That having the need to legally recover from the parties to be sued I, on January 4, 1999, deposited the amount of P25,000.00 to Atty. Alberto C. Magulta, copy of the Receipt attached as Annex B, upon the instruction that I needed the case filed immediately; That a week later, I was informed by Atty. Alberto C. Magulta that the complaint had already been filed in court, and that I should receive notice of its progress; That in the months that followed, I waited for such notice from the court or from Atty. Magulta but there seemed to be no progress in my case, such that I frequented his office to inquire, and he would repeatedly tell me just to wait; That I had grown impatient on the case, considering that I am told to wait [every time] I asked; and in my last visit to Atty. Magulta last May 25, 1999, he said that the court personnel had not yet acted on my case and, for my satisfaction, he even brought me to the Hall of Justice Building at Ecoland, Davao City, at about 4:00 p.m., where he left me at the Office of the City Prosecutor at the ground floor of the building and told to wait while he personally follows up the processes with the Clerk of Court; whereupon, within the hour, he came back and told me that the Clerk of Court was absent on that day;

That sensing I was being given the run-around by Atty. Magulta, I decided to go to the Office of the Clerk of Court with my draft of Atty. Magultas complaint to personally verify the progress of my case, and there told that there was no record at all of a case filed by Atty. Alberto C. Magulta on my behalf, copy of the Certification dated May 27, 1999, attached as Annex C; That feeling disgusted by the way I was lied to and treated, I confronted Atty. Alberto C. Magulta at his office the following day, May 28, 1999, where he continued to lie to with the excuse that the delay was being caused by the court personnel, and only when shown the certification did he admit that he has not at all filed the complaint because he had spent the money for the filing fee for his own purpose; and to appease my feelings, he offered to reimburse me by issuing two (2) checks, postdated June 1 and June 5, 1999, in the amounts of P12,000.00 and P8,000.00, respectively, copies of which are attached as Annexes D and E; That for the inconvenience, treatment and deception I was made to suffer, I wish to complain Atty. Alberto C. Magulta for misrepresentation, dishonesty and oppressive conduct; xxx xxx x x x.
[1] [2]

On August 6, 1999, pursuant to the July 22, 1999 Order of the IBP Commission on Bar Discipline, respondent filed his [3] Answer vehemently denying the allegations of complainant for being totally outrageous and baseless. The latter had allegedly been introduced as a kumpadre of one of the formers law partners. After their meeting, complainant requested him to draft a demand letter against Regwill Industries, Inc. -- a service for which the former never paid. After Mr. Said Sayre, one of the business partners of complainant, replied to this letter, the latter requested that another demand letter -- this time addressed to the former -be drafted by respondent, who reluctantly agreed to do so. Without informing the lawyer, complainant asked the process server of the formers law office to deliver the letter to the addressee. Aside from attending to the Regwill case which had required a three-hour meeting, respondent drafted a complaint (which was only for the purpose of compelling the owner to settle the case) and prepared a compromise agreement. He was also requested by complainant to do the following: 1. Write a demand letter addressed to Mr. Nelson Tan 2. Write a demand letter addressed to ALC Corporation 3. Draft a complaint against ALC Corporation 4. Research on the Mandaue City property claimed by complainants wife All of these respondent did, but he was never paid for his services by complainant. Respondent likewise said that without telling him why, complainant later on withdrew all the files pertinent to the Regwill case. However, when no settlement was reached, the latter instructed him to draft a complaint for breach of contract. Respondent, whose services had never been paid by complainant until this time, told the latter about his acceptance and legal fees. When told that these fees amounted to P187,742 because the Regwill claim was almost P4 million, complainant promised to pay on installment basis. On January 4, 1999, complainant gave the amount of P25,000 to respondents secretary and told her that it was for the filing fee of the Regwill case. When informed of the payment, the lawyer immediately called the attention of complainant, informing the latter of the need to pay the acceptance and filing fees before the complaint could be filed. Complainant was told that the amount he had paid was a deposit for the acceptance fee, and that he should give the filing fee later. Sometime in February 1999, complainant told respondent to suspend for the meantime the filing of the complaint because the former might be paid by another company, the First Oriental Property Ventures, Inc., which had offered to buy a parcel of land owned by Regwill Industries. The negotiations went on for two months, but the parties never arrived at any agreement. Sometime in May 1999, complainant again relayed to respondent his interest in filing the complaint. Respondent reminded him once more of the acceptance fee. In response, complainant proposed that the complaint be filed first before payment of respondents acceptance and legal fees. When respondent refused, complainant demanded the return of the P25,000. The lawyer returned the amount using his own personal checks because their law office was undergoing extensive renovation at the time, and their office personnel were not reporting regularly. Respondents checks were accepted and encashed by complainant. Respondent averred that he never inconvenienced, mistreated or deceived complainant, and if anyone had been shortchanged by the undesirable events, it was he. The IBPs Recommendation In its Report and Recommendation dated March 8, 2000, the Commission on Bar Discipline of the Integrated Bar of the Philippines (IBP) opined as follows: x x x [I]t is evident that the P25,000 deposited by complainant with the Respicio Law Office was for the filing fees of the Regwill complaint. With complainants deposit of the filing fees for the Regwill complaint, a corresponding obligation on the part of respondent was created and that was to file the Regwill complaint within the time frame contemplated by his client, the

complainant. 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. Thus, to impress upon the respondent the gravity of his offense, it is recommended that respondent [4] be suspended from the practice of law for a period of one (1) year. The Courts Ruling We agree with the Commissions recommendation. Main Issue: Misappropriation of Clients Funds Central to this case are the following alleged acts of respondent lawyer: (a) his non-filing of the Complaint on behalf of his client and (b) his appropriation for himself of the money given for the filing fee. Respondent claims that complainant did not give him the filing fee for the Regwill complaint; hence, the formers failure to file the complaint in court. Also, respondent alleges that the amount delivered by complainant to his office on January 4, 1999 was for attorneys fees and not for the filing fee. We are not persuaded. Lawyers must exert their best efforts and ability in the prosecution or the defense of the clients 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. [5] They do honor to the bar and help maintain the respect of the community for the legal profession. Members of the bar must do nothing that may tend to lessen in any degree the confidence of the public in the fidelity, the honesty, and integrity of the [6] profession. 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. We disagree. A lawyer-client relationship was established from the very first moment complainant asked respondent for legal advice regarding the formers 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. If a person, in respect to business affairs or troubles of any kind, consults a lawyer with a view to obtaining professional advice or assistance, and the attorney voluntarily permits or acquiesces with the consultation, then the professional employment is [7] established. Likewise, a lawyer-client relationship exists notwithstanding the close personal relationship between the lawyer and the [8] complainant or the nonpayment of the formers fees. Hence, despite the fact that complainant was kumpadre of a law partner of respondent, and that respondent dispensed legal advice to complainant as a personal favor to the kumpadre, the lawyer was duty-bound to file the complaint he had agreed to prepare -- and had actually prepared -- at the soonest possible time, in order to protect the clients interest. Rule 18.03 of the Code of Professional Responsibility provides that lawyers should not neglect legal matters entrusted to them. This Court has likewise constantly held that once lawyers agree to take up the cause of a client, they owe fidelity to such [9] cause and must always be mindful of the trust and confidence reposed in them. They owe entire devotion to the interest of the client, warm zeal in the maintenance and the defense of the clients rights, and the exertion of their utmost learning and abilities to [10] the end that nothing be taken or withheld from the client, save by the rules of law legally applied. Similarly unconvincing is the explanation of respondent that the receipt issued by his office to complainant on January 4, 1999 was erroneous. The IBP Report correctly noted that it was quite incredible for the office personnel of a law firm to be prevailed upon by a client to issue a receipt erroneously indicating payment for something else. Moreover, upon discovering the mistake -- if indeed it was one -- respondent should have immediately taken steps to correct the error. He should have lost no time in calling complainants attention to the matter and should have issued another receipt indicating the correct purpose of the payment. The Practice of Law -- a Profession, Not a Business In this day and age, members of the bar often forget that the practice of law is a profession and not a business. Lawyering [12] is not primarily meant to be a money-making venture, and law advocacy is not a capital that necessarily yields profits. The [13] gaining of a livelihood is not a professional but a secondary consideration. Duty to public service and to the administration of justice should be the primary consideration of lawyers, who must subordinate their personal interests or what they owe to
[11]

themselves. The practice of law is a noble calling in which emolument is a byproduct, and the highest eminence may be attained [14] without making much money. 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 [15] 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 [16] public confidence in the legal profession. It may be true that they have a lien upon the clients 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 [17] misconduct. In any event, they must still exert all effort to protect their clients interest within the bounds of law. If much is demanded from an attorney, it is because the entrusted privilege to practice law carries with it correlative duties not [18] only to the client but also to the court, to the bar, and to the public. Respondent fell short of this standard when he converted into his legal fees the filing fee entrusted to him by his client and thus failed to file the complaint promptly. The fact that the former returned the amount does not exculpate him from his breach of duty. On the other hand, we do not agree with complainants plea to disbar respondent from the practice of law. The power to disbar must be exercised with great caution. Only in a clear case of misconduct that seriously affects the standing and the character of the [19] bar will disbarment be imposed as a penalty. WHEREFORE, Atty. Alberto C. Magulta is found guilty of violating Rules 16.01 and 18.03 of the Code of Professional Responsibility and is herebySUSPENDED from the practice of law for a period of one (1) year, effective upon his receipt of this Decision. Let copies be furnished all courts as well as the Office of the Bar Confidant, which is instructed to include a copy in respondents file. SO ORDERED. A.C. No. 3701 March 28, 1995 PHILIPPINE NATIONAL BANK, complainant, vs. ATTY. TELESFORO S. CEDO, respondent. BIDIN, J.: In a verified letter-complaint dated August 15, 1991, complainant Philippine National Bank charged respondent Atty. Telesforo S. Cedo, former Asst. Vice-President of the Asset Management Group of complainant bank with violation of Canon 6, Rule 6.03 of the Code of Professional Responsibility, thus: A lawyer shall not, after leaving government service, accept engagement or employment in connection with any matter in which he had intervened while in said service. by appearing as counsel for individuals who had transactions with complainant bank in which respondent during his employment with aforesaid bank, had intervened. Complainant averred that while respondent was still in its employ, he participated in arranging the sale of steel sheets (denominated as Lots 54-M and 55-M) in favor of Milagros Ong Siy for P200,000. He even "noted" the gate passes issued by his subordinate, Mr. Emmanuel Elefan, in favor of Mrs. Ong Siy authorizing the pull-out of the steel sheets from the DMC Man Division Compound. When a civil action arose out of this transaction between Mrs. Ong Siy and complainant bank before the Regional Trial Court of Makati, Branch 146, respondent who had since left the employ of complainant bank, appeared as one of the counsels of Mrs. Ong Siy. Similarly, when the same transaction became the subject of an administrative case filed by complainant bank against his former subordinate Emmanuel Elefan, for grave misconduct and dishonesty, respondent appeared as counsel for Elefan only to be later disqualified by the Civil Service Commission. Moreover, while respondent was still the Asst. Vice President of complainants Asset Management Group, he intervened in the handling of the loan account of the spouses Ponciano and Eufemia Almeda with complainant bank by writing demand letters to the couple. When a civil action ensued between complainant bank and the Almeda spouses as a result of this loan account, the latter were represented by the law firm "Cedo, Ferrer, Maynigo & Associates" of which respondent is one of the Senior Partners. In his Comment on the complaint, respondent admitted that he appeared as counsel for Mrs. Ong Siy but only with respect to the execution pending appeal of the RTC decision. He alleged that he did not participate in the litigation of the case before the trial court. With respect to the case of the Almeda spouses, respondent alleged that he never appeared as counsel for them. He contended that while the law firm "Cedo Ferrer, Maynigo & Associates" is designated as counsel of record, the case is actually handled only by Atty. Pedro Ferrer. Respondent averred that he did not enter into a general partnership with Atty. Pedro Ferrer nor with the other lawyers named therein. They are only using the aforesaid name to designate a law firm maintained by lawyers, who

although not partners, maintain one office as well as one clerical and supporting staff. Each one of them handles their own cases independently and individually receives the revenues therefrom which are not shared among them. In the resolution of this Court dated January 27, 1992, this case was referred to the Integrated Bar of the Philippines (IBP), for investigation, report and recommendation. During the investigation conducted by the IBP, it was discovered that respondent was previously fined by this Court in the amount of P1,000.00 in connection with G.R. No. 94456 entitled "Milagros Ong Siy vs. Hon. Salvador Tensuan, et al." for forum shopping, where respondent appeared as counsel for petitioner Milagros Ong Siy "through the law firm of Cedo Ferrer Maynigo and Associates." The IBP further found that the charges herein against respondent were fully substantiated. Respondent's averment that the law firm handling the case of the Almeda spouses is not a partnership deserves scant consideration in the light of the attestation of complainant's counsel, Atty. Pedro Singson, that in one of the hearings of the Almeda spouses' case, respondent attended the same with his partner Atty. Ferrer, and although he did not enter his appearance, he was practically dictating to Atty. Ferrer what to say and argue before the court. Furthermore, during the hearing of the application for a writ of injunction in the same case, respondent impliedly admitted being the partner of Atty. Ferrer, when it was made of record that respondent was working in the same office as Atty. Ferrer. Moreover, the IBP noted that assuming the alleged set-up of the firm is true, it is in itself a violation of the Code of Professional Responsibility (Rule 15.02) since the clients secrets and confidential records and information are exposed to the other lawyers and staff members at all times. From the foregoing, the IBP found a deliberate intent on the part of respondent to devise ways and means to attract as clients former borrowers of complainant bank since he was in the best position to see the legal weaknesses of his former employer, a convincing factor for the said clients to seek his professional service. In sum, the IBP saw a deliberate sacrifice by respondent of his ethics in consideration of the money he expected to earn. The IBP thus recommended the suspension of respondent from the practice of law for 3 years. The records show that after the Board of Governors of the IBP had, on October 4, 1994, submitted to this Court its Report and recommendation in this case, respondent filed a Motion for Reconsideration dated October 25, 1994 of the recommendation contained in the said Report with the IBP Board of Governors. On December 12, 1994, respondent also filed another "Motion to Set Hearing" before this Court, the aforesaid Motion for Reconsideration. In resolving this case, the Court took into consideration the aforesaid pleadings. In addition to the findings of the IBP, this Court finds this occasion appropriate to emphasize the paramount importance of avoiding the representation of conflicting interests. In the similar case of Pasay Law and Conscience Union, Inc. vs. Paz, (95 SCRA 24 [1980]) where a former Legal Officer and Legal Prosecutor of PARGO who participated in the investigation of the Anti-Graft case against Mayor Pablo Cuneta later on acted as counsel for the said Mayor in the same anti-graft case, this Court, citing Nombrado vs. Hernandez (26 SCRA 13 119681) ruled: The Solicitor General is of the opinion, and we find no reason to disagree with him, that even if respondent did not use against his client any information or evidence acquired by him as counsel it cannot be denied that he did become privy to information regarding the ownership of the parcel of land which was later litigated in the forcible entry case, for it was the dispute over the land that triggered the mauling incident which gave rise to the criminal action for physical injuries. This Court's remarks in Hilado vs. David, 84 Phil. 571, are apropos: "Communications between attorney and client are, in a great number of litigations, a complicated affair, consisting of entangled relevant and irrelevant, secret and well-known facts. In the complexity of what is said in the course of dealings between an attorney and client, inquiry of the nature suggested would lead to the revelation, in advance of the trial, of other matters that might only further prejudice the complainant's cause." Whatever may be said as to whether or not respondent utilized against his former client information given to him in a professional capacity, the mere fact of their previous relationship should have precluded him from appearing as counsel for the other side in the forcible entry case. In the case ofHilado vs. David, supra, this Tribunal further said: Hence the necessity of setting the existence of the bare relationship of attorney and client as the yardstick for testing incompatibility of interests. This stern rule is designed not alone to prevent the dishonest practitioner from fraudulent conduct, but as well to protect the honest lawyer from unfounded suspicion of unprofessional practice. . . . It is founded on principles of public policy, of good taste. As has been said in another case, the question is not necessarily one of the rights of the parties, but as to whether the attorney has adhered to proper professional standard. With these thoughts in mind, it behooves attorney,

like Caesar's wife, not only to keep inviolate the client's confidence, but also to avoid the appearance of treachery and double dealing. Only thus can litigants. be encouraged to entrust their secrets to their attorneys which is of paramount importance in the administration of justice. The foregoing disquisition on conflicting interest applies with equal force and effect to respondent in the case at bar. Having been an executive of complainant bank, respondent now seeks to litigate as counsel for the opposite side, a case against his former employer involving a transaction which he formerly handled while still an employee of complainant, in violation of Canon 6 of the Canons of Professional Ethics on adverse influence and conflicting interests, to wit: It is unprofessional to represent conflicting interests, except by express conflicting consent of all concerned given after a full disclosure of the facts. Within the meaning of this canon, a lawyer represents conflicting interest when, in behalf on one client, it is his duty to contend for that which duty to another client requires him to oppose. ACCORDINGLY, this Court resolves to SUSPEND respondent ATTY. TELESFORO S. CEDO from the practice of law for THREE (3) YEARS, effective immediately. Let copies of this resolution be furnished the Integrated Bar of the Philippines and all courts in Metro Manila. SO ORDERED. [A.C. No. 2597. March 12, 1998] GLORITO V. MATURAN, petitioner, vs. ATTY. CONRADO S. GONZALES, respondent. ROMERO, J.: A complaint for disbarment was filed with this Court on October 25, 1983, by Glorito V. Maturan against his counsel, Atty. Conrado S. Gonzales, charging him with immoral, unethical, and anomalous acts. The respondent filed his comment thereto on February 6, 1984. On November 11, 1997, or after thirteen (13) years, the Board of Governors of the Integrated Bar of the Philippines submitted their report and recommendation on the instant case. The facts, as culled from the records, are as follows: Spouses Antonio and Gloria Casquejo instituted their son-in-law, Glorito V. Maturan (herein petitioner), as their attorney-in-fact, through a Special Power of Attorney (SPA) dated November 6, 1981. Said SPA authorized Maturan to file ejectment cases against squatters occupying Lot 1350-A, Psd-50375, located in General Santos City, as well as criminal cases against the latter for violation of P.D. 772, again in connection with said lot. Respondent, Atty. Conrado Gonzales, prepared and notarized said Special Power of Attorney. Subsequently, Glorito Maturan engaged the services of respondent in ejecting several squatters occupying Lot 1350-A, Psd-50735. While said lot was registered in the name of Celestino Yokingco, Antonio Casquejo had, however, instituted a case for reconveyance of property and declaration of nullity against the former, docketed as Civil Case No. 2067. As a consequence of his engagement by petitioner, respondent Gonzales filed Civil Case No. 1783-11 for Forcible Entry and Damages against several individuals. On February 18, 1983, a judgment was rendered in favor of petitioner. Petitioner, through respondent, filed a motion for issuance of a writ of execution on March 10, 1983. In the interim, the parties to Civil Case No. 2067 entered into a compromise agreement, which was judicially approved in a judgment dated March 28, 1983. On June 22, 1983, while the motion for issuance of a writ of execution was pending, and without withdrawing as counsel for petitioner, respondent filed, on behalf of Celestino Yokingco, et al., Civil Case No. 2746, an action to annul the judgment rendered in Civil Case No. 2067. The action was predicated on the lack of authority on the part of petitioner to represent Antonio and Gloria Casquejo, as no such authorization was shown to be on record in Civil Case No. 2067. On August 24, 1983, respondent, on behalf of Celestino Yokingco, et al., also filed Special Civil Case No. 161 for injunction with a prayer for preliminary injunction, with damages, against petitioner. Aggrieved by respondents acceptance of professional employment from their adversary in Civil Case No. 2067, and alleging that privileged matters relating to the land in question had been transmitted by petitioner to respondent in Civil Case 1783-11, petitioner filed an administrative complaint against the former for immoral, unethical, and anomalous acts and asked for his disbarment. Respondent, in a comment dated January 25, 1984, denied having committed any malicious, unethical, unbecoming, immoral, or anomalous act against his client. Respondent declared that he was of the belief that filing a motion for issuance of a writ of execution was the last and final act in the lawyer-client relationship between himself and petitioner, and that his formal withdrawal as counsel for the Casquejos was unnecessary in order to sever the lawyer-client relationship between them. Furthermore, he alleged that his acceptance of employment from Yokingco was for him, an opportunity to honestly earn a little more for his childrens sustenance. The investigating commissioner of the Integrated Bar of the Philippines, in his report dated August 21, 1997, found respondent guilty of representing conflicting interests and recommended that he be suspended for three (3) years. The Board of

Governors of the IBP adopted and approved the report and recommendation of the investigating commissioner but recommended that the suspension be reduced from three (3) years to one (1) year. This Court adopts the findings of the investigating commissioner finding respondent guilty of representing conflicting interests. It is improper for a lawyer to appear as counsel for one party against the adverse party who is his client in a related suit, as a lawyer is prohibited from representing conflicting interests or discharging inconsistent duties. He may not, without being guilty [1] of professional misconduct, act as counsel for a person whose interest conflicts with that of his present or former client. That the representation of conflicting interest is in good faith and with honest intention on the part of the lawyer does not make the prohibition inoperative. The reason for the prohibition is found in the relation of attorney and client, which is one of trust and confidence of the highest degree. A lawyer becomes familiar with all the facts connected with his clients case. He learns from his client the weak points of the action as well as the strong ones. Such knowledge must be considered sacred and guarded with care. No opportunity must be given him to take advantage of the clients secrets. A lawyer must have the fullest confidence of his client. For if the confidence [2] is abused, the profession will suffer by the loss thereof. This Court finds respondents actuations violative of Canon 6 of the Canons of Professional Ethics which provide in part: It is unprofessional to represent conflicting interests, except by express consent of all concerned given after a full disclosure of the facts. Within the meaning of this canon, a lawyer represents conflicting interests when, in behalf of one client, it is his duty to contend for that which duty to another client requires him to oppose. Moreover, respondents justification for his actions reveal a patent ignorance of the fiduciary obligations which a lawyer owes to his client. A lawyer-client relationship is not terminated by the filing of a motion for a writ of execution. His acceptance of a case implies that he will prosecute the case to its conclusion. He may not be permitted to unilaterally terminate the same to the prejudice of his client. As to the recommendation that the term of suspension be reduced from three years to one year, we find the same to be unwarranted. In similar cases decided by the Supreme Court, the penalty of two or three years suspension has been imposed [3] where respondent was found guilty of representing conflicting interests. In Vda. De Alisbo vs. Jalandoon, Sr., the respondent, who appeared for complainant in a case for revival of judgment, even though he had been the counsel of the adverse party in the [4] case sought to be revived, was suspended for a period of two years. InBautista vs. Barrios, a suspension of two years was imposed on respondent Barrios, who had drafted a deed of partition for petitioner, but who appeared for the other party therein, [5] when the same was sought to be enforced by petitioner. In PNB vs. Cedo, the Court even suspended the respondent therein for three years, but only because respondent not only represented conflicting interests, but also deliberately intended to attract clients [6] with interests adverse to his former employer. Finally, in Natan vs. Capule, respondent was suspended for two years after he accepted professional employment in the very case in which his former client was the adverse party. ACCORDINGLY, this Court resolves to MODIFY the IBP recommendation to suspend respondent for one year and modifies it to SUSPENSION from the practice of law for TWO (2) YEARS, effective immediately. SO ORDERED. [A.C. No. 4346. April 3, 2002] ERLINDA ABRAGAN, MILA GINA JAVIER, REYNALDO MERCADO, PATERNO TORRES, BENIGNA ANTIBO, ELEISER SALVADOR, EDNA SAPON, JULIANA CUENCA, ESPERANZA BUENAFE, VICENTE BARNAGA, MARTHA SAPON, JOSEFINA OPEA, PUREZA WABE, RONULFO LOPEZ, DOMINADOR HERNANDEZ, FELIPA EMBATE, ROQUE CATIIL, JERRY SAPON, CONCEPCION MATANOG, and PABLO SALOMON,complainants, vs. Atty. MAXIMO G. RODRIGUEZ, respondent. PANGANIBAN, J.: Lawyers violate their oath of office when they represent conflicting interests. They taint not only their own professional practice, but the entire legal profession itself. The Case and the Facts [1] Before us is a verified Petition praying for the disbarment of Atty. Maximo G. Rodriguez because of alleged illegal and unethical acts. The Petition relevantly reads as follows: 2. That sometime in 1986, the petitioners hired the services of the respondent and the latter, represented the former in the case entitled PABLO SALOMON et al vs. RICARDO DACALUZ et al., before the Municipal Trial Court in Cities, Cagayan de Oro City, Branch 3 docketed as Civil Case No. 11204, for Forcible Entry with Petition for a Writ of Preliminary Injunction and Damages, [and] a Certified True and Correct Copy of the COMPLAINT by Clerk of Court III Gerardo B. Ucat of the said Court, is herewith attached to the original of this PETITION, while photocopies of the same are also attached to the duplicate copies of this same Petition and marked as Annex A hereof; 3. That after the Case No. 11204 was finally won, and a Writ of Execution was issued by the Honorable Municipal Trial Court in Cities of Cagayan de Oro City, Branch 3, the same respondent lawyer represented the petitioners herein; 4. That when respondent counsel disturbed the association (Cagayan de Oro Landless Residents Association, Inc.), to which all the complainants belong, by surreptitiously selling some rights to other persons without the consent of the petitioners herein, they decided to sever their client-lawyer relationship;

5. That in fact, the National Bureau of Investigation of Cagayan de Oro City, is presently undertaking an investigation on the illegal activities of Atty. Maximo Rodriguez pertaining to his express involvement in the illegal and unauthorized apportionment, assignment and sale of parcels of land subject to the Case No. 11204, where he represented the poor landless claimants of Cagayan de Oro City, which include your petitioners in this case; 6. That petitioners herein later filed an indirect contempt charge under Civil Case No. 11204 against Sheriff Fernando Loncion et al., on August 2, 1991 engaging the services of Atty. LORETO O. SALVA, SR., an alleged former student of law of Atty. Maximo Rodriguez, [and a] certified true and correct copy of the complaint thereat consisting of four (4) pages is herewith attached and photocopies of which are also attached to the duplicates hereof, and correspondingly marked as their Annex B; 7. That respondent lawyer, Atty. Maximo Rodriguez, (in the Indirect Contempt Case under the same Civil Case No. 11204,) REPRESENTED and actively took up the defense of FERNANDO LONCION et al. much to the dismay, damage and prejudice of the herein petitioners, [and] a copy of Atty. Rodriguezs Answer, which is also certified true and correct by Clerk of Court III Gerardo Ucat of Branch 3 of MTCC Cagayan de Oro City, consisting of three (3) pages, is attached to the original of this Petition, while photocopies of the same are attached to the other copies hereof and accordingly marked as Annex C; 8. That the records will bear the petitioners out that their counsel, Atty. SALVA SR. later on withdrew the case of Indirect Contempt upon the suggestion of Atty. Maximo Rodriguez; and instead, filed the Motion for the Issuance of an Alias Writ of Execution; 9. That on January 12, 1993, the herein respondent, without consulting the herein Petitioners who are all poor and ignorant of court procedures and the law, filed in behalf of the plaintiffs (which include the herein Petitioners) in Civil Case No. 11204, a Motion to Withdraw Plaintiffs Exhibits, [and] a certified true and correct copy of said Motion by Mr. Gerardo Ucat of MTCC Branch 3, Cagayan de Oro City is herewith attached to the original of this Petition, while photocopies of the same are also attached to the rest of the copies of this same Petition, and are correspondingly marked as their Annex D. 10. That the illegal and unethical actions of Atty. Maximo Rodriguez are most obnoxious, condemnable, and highly immoral, to say the least, more so if we consider his social standing and ascendancy in the community of Cagayan de Oro City; 11. That the records of Civil Case No. 11204 which are voluminous will bear the petitioners allegations against the herein respondent, who, after representing them initially, then transferring allegiance and services to the adverse parties (Lonchion, Palacio and NHA Manager), came back to represent the herein petitioners without any regard [for] the rules of law and the Canons of Professional Ethics, which is highly contemptible and a clear violation of his oath as a lawyer and an officer of the courts of law; 12. That these acts are only those that records will bear, because outside of the court records, respondent, without regard [for] delicadeza, fair play and the rule of law, has assigned, apportioned and sold parcels of land[,] subject matter in Civil Case No. 11204 which legally have been pronounced and decided to be in the possession of the plaintiffs in Civil Case No. 11204, who are partly the petitioners herein. Thus, they cannot yet enjoy the fruits of the tedious and protracted legal battle because of respondents illegal acts, which have instilled fear among the plaintiffs and the petitioners herein; 13. That respondent lawyer even represented ERLINDA ABRAGAN, one of the herein petitioners, in a later proceedings in Civil Case No. 11204 wherein the apportionment of parcels of land was erroneously, unprocedurally and illegally submitted to a commissioner, and that ERLINDA ABRAGAN, after winning in the said Civil Case was later on dispossessed of her rights by respondent counsels maneuver, after the decision (in Civil Case No. 11208) became final executory; 14. That to make matters worse, respondent Atty. Rodriguez eventually fenced an area consisting of about 10, 200 square meters within Lot No. 1982[,] the subject matter in Civil Case No. 11204 without the consent of the herein petitioners. He even openly and publicly proclaimed his possession and ownership thereof, which fact is again and also under NBI investigation; 15. That all the foregoing acts of respondent lawyer plus his continuing and ongoing illegal and unethical maneuvers have deprived the herein petitioners of their vested rights to possess and eventually own the land they have for decades possessed, and declared as such by final judgment in Civil Case No. 11204. In his Comment, respondent flatly denied the accusations of petitioners. He explained that the withdrawal of the exhibits, having been approved by the trial court, was not illegal, obnoxious, undesirable and highly immoral. He added that he took over the 8,000 square meters of land only after it had been given to him as attorneys fees. In his words: 14. Respondent ADMITS that he fenced an area of about 8,000 sq. [m]. after the association had awarded the same as attorneys fees in Civil Case Number 11204, the dismissal of the appeal by the NHA, the successful handling of three (3) cases in the SUPREME COURT, the pending case of QUIETING OF TITLE filed by the NHA, and for the pending reconveyance case, Civil Case No. 93-573, supra. These area of 8,000 sq. [m]., was awarded as attorneys fees, which [were] supposed to be ten percent of the 22 hectares, Lot No. 1982, the subject matter of Civil Case No. 11204, but the association and its members were able to take
[2]

actual possession by judgment of the courts only o[f] the twelve (12) hectares. [This] area consisting of 8,000 sq. [m]., and consisting of two (2) lots [was] fenced by the respondent to prevent squatters from entering the area. The rights of possession and ownership o[f] this area by the respondent depends upon the outcome of Civil Case No. 93-573, supra, for reconveyance of title by the association and its members versus the NHA, et. al. If it is true that this is under investigation by the NBI, then why, not wait and submit the investigation of the NHA, instead of filing this unwarranted, false and fabricated charge based on preposterous and [3] ridiculous charges without any proof whatsoever, except the vile [language] of an irresponsible lawyer. Thereafter, petitioners filed a Reply in which they reiterated their allegations against respondent and added that the latter likewise violated Rule 15.03 of the Code of Professional Responsibility. The Court referred the case to the Integrated Bar of the [5] Philippines (IBP) for investigation, report and/or decision. Report of the Investigating Commissioner In her Report and Recommendation dated January 23, 2001, Investigating IBP Commissioner Lydia A. Navarro recommended that respondent be suspended from the practice of law for six (6) months for violation of Rule 15.03 of Canon 15 of the Code of Professional Responsibility. Her report reads in part as follows: From the facts obtaining, it is apparent that respondent represented conflicting interest considering that the complainants were the same plaintiffs in both cases and were duly specified in the pleadings particularly in the caption of the cases. Under the said predicament even if complainants were excluded as members of the Association represented by the respondent; the latter should have first secured complainants written consent before representing defendants in the Indirect Contempt case particularly Macario Palacio, president of the Association, or inhibited himself. It is very unfortunate that in his desire to render service to his client, respondent overlooked the fact that he already violated Rule 15.03 of [C]anon 15 of the Code of Professional Responsibility, to wit: Rule 15.03 - A lawyer shall not represent conflicting interests except by written consent of all concerned given after a full disclosure of the facts. We have no alternative but to abide by the rules. IBP Board of Governors Resolution Upholding the above-quoted Report, the Board of Governors of the Integrated Bar of the Philippines recommended via its May 26, 2001 Resolution that respondent be suspended from the practice of law for two (2) months for violation of Rule 15.03 of Canon 15 of the Code of Professional Responsibility. This Courts Ruling We agree with the findings and the recommendation of the IBP Board of Governors, but hold that the penalty should be six-month suspension as recommended by the investigating commissioner. Administrative Liability of Respondent At the outset, we agree with Commissioner Navarros conclusion that apart from their allegations in their various pleadings, petitioners did not proffer any proof tending to show that respondent had sold to other persons several rights over the land in question; and that he had induced the former counsel for petitioners, Atty. Salva Jr., to withdraw the indirect contempt case that they had filed. Neither did the IBP find anything wrong as regards the 8,000 square meters awarded to respondent as payment for his legal services. Petitioners bare assertions, without any proof to back them up, would not justify the imposition of a penalty on respondent. Having said that, we find, however, that respondent falls short of the integrity and good moral character required from all lawyers. They are expected to uphold the dignity of the legal profession at all times. The trust and confidence clients repose in them require a high standard and appreciation of the latters duty to the former, the legal profession, the courts and the public. Indeed, the bar must maintain a high standard of legal proficiency as well as of honesty and fair dealings. To this end, lawyers should refrain from doing anything that might tend to lessen the confidence of the public in the fidelity, honesty and integrity [7] of their profession. In the present case, respondent clearly violated Rule 15.03 of Canon 15 of the Code of Professional Responsibility, which provides that a lawyer shall not represent conflicting interests except by written consent of all concerned given after full disclosure of the facts. The Court explained in Buted v. Hernando:
[8] [6] [4]

[A] lawyer represents conflicting interests when, in behalf of one client, it is his duty to contend for that which duty to another client requires him to oppose.

The obligation to represent the client with undivided fidelity and not to divulge his secrets or confidence forbids also the subsequent acceptance of retainers or employment from others in matters adversely affecting any interest of the client with respect [9] to which confidence has been reposed. (Italics in the original) In the case at bar, petitioners were the same complainants in the indirect contempt case and in the Complaint for forcible entry [10] in Civil Case No. 11204. Respondent should have evaluated the situation first before agreeing to be counsel for the defendants in the indirect contempt proceedings. Attorneys owe undivided allegiance to their clients, and should at all times weigh their actions, especially in their dealings with the latter and the public at large. They must conduct themselves beyond reproach at all times. The Court will not tolerate any departure from the straight and narrow path demanded by the ethics of the legal profession. In Hilado v. David, be so.
[11]

which we quote below, the Court advised lawyers to be like Caesars wife to be pure and to appear to

This stern rule is designed not alone to prevent the dishonest practitioner from fraudulent conduct, but as well as to protect the honest lawyer from unfounded suspicion of unprofessional practice. It is founded on principles of public policy, on good taste. As has been said in another case, the question is not necessarily one of the rights of the parties, but as to whether the attorney has adhered to proper professional standard. With these thoughts in mind, it behooves attorneys, like Caesars wife, not only to keep inviolate the clients confidence, but also to avoid the appearance of treachery and double-dealing. Only thus can litigants be encouraged to entrust their secrets to their attorneys which is of paramount importance in the administration of justice. Because of his divided allegiance, respondent has eroded, rather than enhanced, the public perception of the legal profession. His divided loyalty constitutes malpractice for which he may be suspended, following Section 27, Rule 138 of the Rules of Court, which provides: SEC. 27. Disbarment or suspension of Attorneys by Supreme Court, grounds therefor. Any 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 appearing as an attorney for a party to a case without authority so to do. x x x. Complainants ask that respondent be disbarred. We find however that suspension of six (6) months from the practice of law, as recommended by Commissioner Navarro, is sufficient to discipline respondent. A survey of cases involving conflicting interests on the part of counsel reveals that the Court has imposed on erring [12] [13] [14] attorneys either a reprimand, or a suspension from the practice of law from five (5) months to as high as two (2) years. WHEREFORE, Maximo G. Rodriguez is found guilty of violating Rule 15.03 of Canon 15 of the Code of Professional Responsibility and is herebySUSPENDED for six (6) months from the practice of law, effective upon his receipt of this Decision. He is warned that a repetition of the same or similar acts will be dealt with more severely. Let copies of this Decision be entered in the record of respondent as attorney and served on the IBP, as well as on the Court Administrator who shall circulate it to all courts for their information and guidance. SO ORDERED. [A.C. No. 2040. March 4, 1998] IMELDA A. NAKPIL, complainant, vs. ATTY. CARLOS J. VALDES, respondent. PUNO, J.: The friendship of JOSE NAKPIL and respondent CARLOS J. VALDES dates back to the 50s during their schooldays in De La Salle and the Philippine Law School. Their closeness extended to their families and respondent became the business consultant, lawyer and accountant of the Nakpils. [1] In 1965, Jose Nakpil became interested in purchasing a summer residence in Moran Street, Baguio City. For lack of funds, he requested respondent to purchase the Moran property for him. They agreed that respondent would keep the property in thrust 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 respondents 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, respondents law firm, Carlos J. Valdes & Associates, handled the proceeding for the settlement of Joses estate. Complainant was appointed as administratix of the estate. The ownership of the Moran property became an issue in the intestate proceedings. It appears that respondent excluded the Moran property from the inventory of Joses estate. On February 13, 1978, respondent transferred his title to the Moran property to his company, the Caval Realty Corporation.

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. 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 he: I. II. Assigned to his family corporation the Moran property (Pulong Maulap) which belonged to the estate he was settling as its lawyer and auditor. Excluded the Moran property from the inventory of real estate properties he prepared for a client-estate and, at the same time, charged the loan secured to purchase the said excluded property as a liability of the estate, all for the purpose of transferring the title to the said property to his family corporation. Prepared and defended monetary claims against the estate that retained him as its counsel and auditor.
[2]

III.

On the first charge, complainant alleged that she accepted respondents offer to serve as lawyer and auditor to settle her husbands estate. Respondents law firm then filed a petition for settlement of the estate of the deceased Nakpil but did not include the Moran property in the estates inventory. Instead, respondent transferred the property to his corporation, Caval Realty Corporation, and title was issued in its name. Complainant accused respondent of maliciously appropriating the property in trust knowing that it did not belong to him. She claimed that respondent has expressly acknowledged that the said property belonged to [3] the late Nakpil in his correspondences with the Baguio City Treasurer and the complainant. On the second charge, complainant alleged that respondents auditing firm (C. J. Valdes and Co., CPAs) excluded the Moran property from the inventory of her husbands estate, yet included in the claims against the estate the amounts of P65,000.00 and P75,000.00, which respondent represented as her husbands loans applied probably for the purchase of a house and lot in Moran Street, Baguio City. As to the third charge, complainant alleged that respondents law firm (Carlos J. Valdes and Associates) filed the petition for the settlement of her husbands estate in court, while respondents 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 husbands estate which was represented by respondents law firm. Complainant averred that there is no distinction between respondents law and auditing firms as respondent is the senior and controlling partner of both firms which are housed in the same building. We required respondent to answer the charges against him. In hisANSWER, respondent initially asserted that the resolution of the first and second charges against him depended on the result of the pending action in the CFI for reconveyance which involved the issue of ownership of the Moran property. On the merit of the first charge, respondent reiterated his defense in the reconveyance case that he did not hold the Moran property in trust for the Nakpils as he is its absolute owner. Respondent explained that the Nakpils never bought back the Moran property from him, hence, the property remained to be his and was rightly excluded from the inventory of Nakpils estate. As to the second charge, respondent denied preparing the list of claims against the estate which included his loans of P65,000.00 andP75,000.00 for the purchase and renovation of the Moran property. In charging his loans against the estate, he stressed that the list drawn up by his accounting firm merely stated that the loans in respondents name were applied probably for the purchase of the house and lot in Moran Street, Baguio City. Respondent insisted that this was not an admission that the Nakpils owned the property as the phrase probably for the purchase did not imply a consummated transaction but a projected acquisition. Respondent also disclaimed knowledge or privity in the preparation of a letter (Exhibit H) of his accounting firm to the Baguio City treasurer remitting the real estate taxes for the Moran property on behalf of the Nakpils. He contended that the letter could be a mere error or oversight. Respondent averred that it was complainant who acknowledged that they did not own the Moran property for: (1) complainants February 1979 Statement of Assets and Liabilities did not include the said property, and; (2) complainant, as administratrix, signed the Balance Sheet of the Estate where the Moran property was not mentioned. Respondent admitted that complainant retained the services of his law and accounting firms in the settlement of her [5] husbands estate. However, he pointed out that he has resigned from his law and accounting firms as early as 1974. He alleged that it was Atty. Percival Cendaa (from the law firm Carlos Valdes & Associates) who filed the inestate proceedings in court in 1976. As to the third charge, respondent denied there was a conflict of interest when his law firm represented the estate in the inestate 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 latters 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.
[4]

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 and Co. as common auditor redounded to the benefit of the estate for the firm prepared a true and accurate [6] amount of the claim. Fifth, respondent resigned from his law and accounting firms as early as August 15, 1974. He rejoined his accounting firm several years later. He submitted as proof the SECs certification of the filing of his accounting firm of an Amended Articles of Partnership. Thus, it was not he but Atty. Percival Cendaa, from the firm Carlos J. Valdes and 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. On November 12, 1979, complainant submitted her REPLY. She maintained that the pendency of the reconveyance case is not prejudicial to the investigation of her disbarment complaint against respondent for the issue in the latter is not the ownership of the Moran property but the ethics and morality of respondents conduct as a CPA-lawyer. Complainant alleged that respondents Annexes to his Reply (such as the Statement of Assets & Liability of the Nakpils and the Balance Sheet of the Estate) which showed that complainant did not claim ownership of the Moran property were all prepared by C. J. Valdes and Co. as accountant of the estate of Jose Nakpil and filed with the intestate court by C. J. Valdes and Associates as counsel for the estate. She averred that these Annexes were not proofs that respondent owned the Moran property but were part of respondents scheme to remove the property from the estate and transfer it to his family corporation. Complainant alleged that she signed the documents because of the professional counsel of respondent and his firm that her signature thereon was required. Complainant charged respondent with greed for coveting the Moran property on the basis of defects in the documents he himself prepared. Complainant urged that respondent cannot disown unfavorable documents (the list of claims against the estate and the letter regarding Nakpils payments of realty tax on the Moran property) which were prepared by his law and accounting firms and invoke other documents prepared by the same firms which are favorable to him. She averred that respondent must accept responsibility not just for some, but for all the representations and communications of his firms. Complainant refuted respondents claim that he resigned from his firms from March 9, 1976 to several years later. She alleged that none of the documents submitted as evidence referred to his resignation from his law firm. The documents merely substantiated his resignation from his accounting firm. In his REJOINDER, respondent insisted that complainant cannot hold him liable for representing the interests of both the estate and the claimants without showing that his action prejudiced the estate. He urged that it is not per se anomalous for respondents accounting firm to act as accountant for the estate and its creditors. He reiterated that he is not subject to the jurisdiction of this Court for he acted not as lawyer, but as accountant for both the estate and its claimants. He alleged that his accounting firm merely prepared the list of claims of the creditors Angel Nakpil and ENORN, Inc. Their claims were not defended by his accounting or law firm but by Atty. Enrique Chan. He averred that his law firm did not oppose these claims as they were legitimate and not because they were prepared by his accounting firm. He emphasized that there was no allegation that the claims were fraudulent or excessive and that the failure of respondents law firm to object to these claims damaged the estate. In our January 21, 1980 Resolution, we deferred further action on the disbarment case until after resolution of the action for reconveyance between the parties involving the issue of ownership by the then CFI of Baguio. Complainant moved for reconsideration on the ground that the issue of ownership pending with the CFI was not prejudicial to her complaint which involved an entirely different issue, i.e., the unethical acts of respondent as a CPA-lawyer. We granted her motion and referred the [10] administrative case to the Office of the Solicitor General (OSG) for investigation, report and recommendation. In 1983, the CFI of Baguio dismissed the action for reconveyance. The trial court ruled that respondent held the Moran property in trust for the Nakpils but found that complainant waived her right over it. On appeal, the Court of Appeals reversed the trial court. The appellate court held that respondent was the absolute owner of the Moran property. The Decision was elevated to this Court. On February 18, 1986, during the pendency of complainants appeal to this Court, the OSG submitted its Report on the disbarment complaint. The OSG relied heavily on the decision of the Court of Appeals then pending review by this Court. The OSG found that respondent was not put on notice of complainants claim over the property. It opined that there was no trust agreement created over the property and that respondent was the absolute owner thereof. Thus, it upheld respondents right to transfer title to his family corporation. It also found no conflict of interests as the claimants were related to the late Jose Nakpil. The OSG recommended the dismissal of the administrative case. Prefatorily, we note that the case at bar presents a novel situation as it involves the disbarment of a CPA-lawyer for his demeanor in his accounting profession and law practice in connection with the property of his client.
[11] [9] [8] [7]

As a rule, a lawyer is not barred from dealing with his client but the business transaction must be characterized with utmost [12] honesty and good faith. The measure of good faith which an attorney is required to exercise in his dealings with his client is a [13] much higher standard than is required in business dealings where the parties trade at arms length. Business transactions between an attorney and his client are disfavored and discouraged by the policy of the law. Hence, courts carefully watch these transactions to assure that no advantage is taken by a lawyer over his client. This rule is founded on public policy for, by virtue of his office, an attorney is in an easy position to take advantage of the credulity and ignorance of his client. Thus, no presumption of [14] innocence or improbability of wrongdoing is considered in an attorneys favor. In the case at bar, we cannot subscribe to the findings of the OSG in its Report. These findings were based mainly on the [15] decision of the Court of Appeals in the action for reconveyance which was reversed by this Court in 1993. As to the first two charges, we are bound by the factual findings of this Court in the aforementioned reconveyance case. It is well-established that respondent offered to the complainant the services of his law and accounting firms by reason of their close relationship dating as far back as the 50s. She reposed her complete trust in respondent who was the lawyer, accountant and business consultant of her late husband. Respondent and the late Nakpil agreed that the former would purchase the Moran property and keep it in trust for the latter. In violation of the trust agreement, respondent claimed absolute ownership over the property and refused to sell the property to complainant after the death of Jose Nakpil. To place the property beyond the reach of complainant and the intestate court, respondent later transferred it to his corporation. Contrary to the findings of the OSG, respondent initially acknowledged and respected the trust nature of the Moran property. [17] Respondents bad faith in transferring the property to his family corporation is well discussed in this Courts Decision, thus: x x x Valdes (herein respondent) never repudiated the trust during the lifetime of the late Jose Nakpil. On the contrary, he expressly recognized it. x x x (H)e repudiated the trust when (he) excluded Pulong Maulap from the list of properties of the late Jose Nakpil submitted to the intestate court in 1973. x x x xxx The fact that there was no transfer of ownership intended by the parties x x x can be bolstered by Exh. I-2, an annex to the claim filed against the estate proceedings of the late Jose Nakpil by his brother, Angel Nakpil, which was prepared by Carlos J. Valdes & Co., the accounting firm of herein respondent. Exhibit I-2, which is a list of the application of the proceeds of various FUB loans contracted as of 31 December 1973 by the late Jose Nakpil, x x x contains the two (2) loans contracted in the name of respondent. If ownership of Pulong Maulap was already transferred or ceded to Valdes, these loans should not have been included in the list. Indeed, as we view it, what the parties merely agreed to under the arrangement outlined in Exh. J was that respondent Valdes would x x x take over the total loan of P140,000.00 and pay all of the interests due on the notes while the heirs of the late Jose Nakpil would continue to live in the disputed property for five (5) years without remuneration save for regular maintenance expenses. This does not mean, however, that if at the end of the five-year period petitioner (Nakpil) failed to reimburse Valdes for his advances, x x x Valdes could already automatically assume ownership of Pulong Maulap. Instead, the remedy of respondents Carlos J. Valdes and Caval Realty Corporation was to proceed against the estate of the late Jose M. Nakpil and/or the property itself. (emphasis supplied) In the said reconveyance case, we further ruled that complainants documentary evidence (Exhibits H, J and L), which she also adduced in this administrative case, should estop respondent from claiming that he bought the Moran property for himself, [18] and not merely in trust for Jose Nakpil. It ought to follow that respondents act of excluding Moran property from the estate which his law firm was representing evinces a lack of fidelity to the cause of his client. If respondent truly believed that the said property belonged to him, he should have at least informed complainant of his adverse claim. If they could not agree on its ownership, respondent should have formally presented his claim in the intestate proceedings instead of transferring the property to his own corporation and concealing it from complainant and the judge in the estate proceedings. Respondents misuse of his legal expertise to deprive his client of the Moran property is clearly unethical. To make matters worse, respondent, through his accounting firm, charged the two loans of P65,000.00 and P75,000.00 as liability of the estate, after said loans were obtained by respondent for the purchase and renovation of the property which he claimed for himself. Respondent seeks to exculpate himself from this charge by disclaiming knowledge or privity in the preparation of the list of the estates liabilities. He theorizes that the inclusion of the loans must have been a mere error or oversight of his accounting firm. It is clear that the information as to how these two loans should be treated could have only come from respondent himself as the said loans were in his name. Hence, the supposed error of the accounting firm in charging respondents loans against the estate could not have been committed without respondents participation. Respondent wanted to have his cake and eat it too and subordinated the interest of his client to his own pecuniary gain. Respondent violated Canon 17 of the Code of Professional Responsibility which provides that a lawyer owes fidelity to his clients cause and enjoins him to be mindful of the trust and confidence reposed on him. As regards the third charge, we hold that respondent is guilty of representing conflicting interests. It is generally the rule, based on sound public policy, that an attorney cannot represent adverse interests. It is highly improper to represent both sides of [19] an issue. The proscription against representation of conflicting interests finds application where the conflicting interests arise [20] with respect to the same general matter and is applicable however slight such adverse interest may be. It applies although the
[16]

attorneys intentions and motives were honest and he acted in good faith. 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 [22] conflict and the possible adverse effect must be thoroughly understood by his clients. In the case at bar, there is no question that the interests of the estate and that of it creditors are adverse to each other. Respondents 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, respondents law firm questioned the claims of creditor Angel Nakpil against the estate. To exculpate himself, respondent denies that he represented complainant in the intestate proceedings. He points out that it was one Atty. Percival Cendaa, from his law firm Carlos J. Valdes & Associates, who filed the intestate case in court. However, the fact that he did not personally file the case and appear in court is beside the point. As established in the records of this case and [23] in the reconveyance case, respondent acted as counsel and accountant of complainant after the death of Jose Nakpil. Respondents defense that he resigned from his law and accounting firms as early as 1974 (or two years before the filing of the intestate case) is unworthy of merit. Respondents claim of resignation from his law firm is not supported by any documentary [24] proof. The documents on record only show respondents resignation from his accounting firm in 1972 and 1974. Even these documents reveal that respondent returned to his accounting firm on July 1, 1976 and as of 1978, the intestate proceedings for the settlement of Joses estate had not yet been terminated. It does not escape us that when respondent transferred the Moran property to his corporation on February 13, 1978, the intestate proceedings was still pending in court. Thus, the succession of events shows that respondent could not have been totally ignorant of the proceedings in the intestate case. Respondent claims that complainant knew that his law firm Carlos J. Valdes & Associates was the legal counsel of the [25] estate and his accounting firm, C.J. Valdes & Co., CPAs, was the auditor of both the estate and the two claimants against [26] it. 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 husbands 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 respondents law firm was to contest the claims of these two creditors but which claims were prepared by respondents 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 respondents duty to inhibit either of his firms from said proceedings to avoid the probability of conflict of interest. Respondent advances the defense that assuming there was conflict of interest, he could not be charged before this Court as his alleged misconduct pertains to his accounting practice. 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 c laims were presented. The act is a breach of professional ethics and undesirable as it placed respondents and his law firms loyalty under a cloud of doubt. Even granting that respondents 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 [27] good demeanor. Possession of good moral character is not only a prerequisite to admission to the bar but also a continuing requirement to the practice of law. Public confidence in law and lawyers may be eroded by the irresponsible and improper conduct of a member of the bar. Thus, a lawyer should determine his conduct by acting in a manner that would promote public confidence in the integrity of the legal profession. Members of the bar are expected to always live up to the standards embodied in the Code of Professional Responsibility as the relationship between an attorney and his client is highly fiduciary in nature and demands utmost fidelity and [28] good faith. In the case at bar, respondent exhibited less than full fidelity to his duty to observe candor, fairness and loyalty in his [29] dealings and transactions with his clients. IN VIEW WHEREOF, the Court finds respondent ATTY. CARLOS J. VALDES guilty of misconduct. He is suspended from the practice of law for a period of one (1) year effective from receipt of this Decision, with a warning that a similar infraction shall be dealt with more severely in the future. Let copies of this Decision be furnished all courts, as well as the Integrated Bar of the Philippines and the Office of the Bar Confidant.SO ORDERED.

[21]

[A.C. No. 4354. April 22, 2002] LOLITA ARTEZUELA, complainant, vs. ATTY. RICARTE B. MADERAZO, respondent. PUNO, J.: For his failure to meet the exacting standards of professional ethics, the Board of Governors of the Integrated Bar of the Philippines (IBP) in its Resolution of May 2, 2000 recommended the suspension from the practice of law of respondent Atty. Ricarte B. Maderazo for the period of six (6) months, with a stern warning that repetition of the same act will be dealt with more severely. Respondent allegedly represented conflicting interests in violation of Canon 6 of the Code of Professional Ethics, and [1] Canon 15 and Rule 15.03 of the Code of Professional Responsibility. By way of a Motion for Reconsideration, resolution, and prays for its reversal.
[2]

respondent now comes before this Court to challenge the basis of the IBPs

The factual antecedents of the case are as follows: On or about 3:00 in the early morning of December 24, 1992, Allan Echavia had a vehicular accident at Caduman St., corner H. Abellana St., Mandaue City. At the time of the accident, Echavia was driving a Ford Telstar car owned by a Japanese national named Hirometsi Kiyami, but was registered in the name of his [3] brother-in-law, Jun Anthony Villapez. The car rammed into a small carinderia owned by complainant Lolita Artezuela. The destruction of the complainants carinderia caused the cessation of the operation of her small business, resulting to her financial dislocation. She incurred debts from her relatives and due to financial constraints, stopped sending her two children to [4] college. Complainant engaged the services of the respondent in filing a damage suit against Echavia, Villapez and one Bernardo [5] Sia. Docketed as Civil Case No. 13666, the case was assigned to Branch 14 of the Regional Trial Court of Cebu. An Amended [6] Complaint was thereafter filed, impleading Echavia, Kiyami and Villapez, and dropping Sia as a party-defendant. For his services, complainant paid the respondent the amount of Ten Thousand Pesos (P10, 000.00) as attorneys fees and Two [7] Thousand Pesos (P2,000.00) as filing fee. However, the case was dismissed on March 22, 1994, allegedly upon the instance of [8] the complainant and her husband. Because of the dismissal of Civil Case No. 13666, complainant filed a civil case for damages against the respondent. It was docketed as CEB-18552 and assigned to Branch 57, Regional Trial Court of Cebu City. The case was dismissed on June 12, [9] 2001. On November 24, 1994, Artezuela filed before this Court a verified complaint for disbarment against the respondent. She alleged that respondent grossly neglected his duties as a lawyer and failed to represent her interests with zeal and enthusiasm. According to her, when Civil Case No. 13666 was scheduled for pre-trial conference on August 20, 1993, respondent asked for its postponement although all the parties were present. Notwithstanding complainants persistent and repeated follow-up, respondent [10] did not do anything to keep the case moving. He withdrew as counsel without obtaining complainants consent. Complainant also claimed that respondent engaged in activities inimical to her interests. While acting as her counsel, respondent prepared Echavias Answer to the Amended Complaint. The said document was even printed in respondents office. Complainant further averred that it was respondent who sought the dismissal of the case, misleading the trial court into thinking [11] that the dismissal was with her consent. Respondent denied the complainants allegations and averred that he conscientiously did his part as the complainants lawyer in Civil Case No. 13666. He withdrew as counsel because the complainant was uncooperative and refused to confer with him. He also gave several notices to the complainant and made known his intention before he filed his Manifestation to withdraw as counsel. Because of the severed relationship, the lower court, after holding a conference, decided to grant respondents manifestation and advised the complainant to secure the services of a new lawyer. Complainant, however, refused and instead, [12] sought the dismissal of the case. Respondent alleged that he sought the postponement of the Pre-Trial Conference scheduled on August 20, 1993 so that he could file the Amended Complaint. He admitted that Echavias Answer to the Amended Complaint was printed in his office but denied having prepared the document and having acted as counsel of Echavia. He claimed that complainant requested him to prepare Echavias Answer but he declined. Echavia, however, went back to his office and asked respondents secretary to print the document. Respondent intimated that the complainant and Echavia have fabricated the accusations against him to compel him to [13] pay the amount ofP500,000.00. This Court referred the complaint to the Integrated Bar of the Philippines (IBP). The IBP-Visayas Regional Committee on Bar Discipline formed an Investigating Committee to hear the disbarment complaint. On October 6, 1999, Commissioner Gabriel T. Ingles issued a Report finding the respondent guilty of representing conflicting interests, in violation of Canon 15 and Rule 15.03 of the Code of Professional Responsibility, as well as, of Canon 6 of the Code of Professional Ethics. He recommended that the respondent be suspended from the practice of law for a period of one (1) [14] year. Commissioner Ingles did not rule on the other issues. As aforesaid, the Board of Governors of the Integrated Bar of the Philippines upheld the findings of the Committee with modification only as to the penalty.

Seeking reconsideration of the IBPs resolution, respondent contends that the Investigating Committee did not conduct trial; hence, he was not able to confront and examine the witnesses against him. He argues that the Investigating Committees finding that he represented Echavia is contrary to court records and the complainants own testimony in CEB-18552. He also casts doubt on the credibility of the Investigating Committee to render just and fair recommendations considering that the Investigating Commissioner and the respondent are counsel-adversaries in another case, Civil Case No. R-33277. Finally, he questions the imposition of a six-month suspension, which he claims to be harsh considering that his private practice is his only source of [15] income. After carefully examining the records, as well as the applicable laws and jurisprudence on the matter, this Court is inclined to uphold the IBPs resolution. In administrative cases, the requirement of notice and hearing does not connote full adversarial proceedings, as actual adversarial proceedings become necessary only for clarification or when there is a need to propound searching questions to [16] witnesses who give vague testimonies. Due process is fulfilled when the parties were given reasonable opportunity to be heard [17] and to submit evidence in support of their arguments. In the case at bar, records show that respondent repeatedly sought the postponement of the hearings, prompting the Investigating Commissioner to receive complainants evidence ex parte and to set the case for resolution after the parties have submitted their respective memorandum. Hence: The records show that this is already the third postponement filed by respondent namely December 12, 1996 (sic), January 3, 1996 and April 1, 1996. The Commission for the last time, will cancel todays hearing and can no longer tolerate any further postponement. Notify respondent by telegram for the hearing for (sic) April 22, 1996 at 2:00 P.M. Said hearing is intransferable in character. In the meantime, complainant affirmed her complaint and likewise her witness, Allan Echavia, also affirmed the contents of his [18] affidavit and further stated that he had executed the same and understood the contents thereof. It is by his own negligence that the respondent was deemed to have waived his right to cross-examine the complainant and her witness. He cannot belatedly ask this Court to grant new trial after he has squandered his opportunity to exercise his right. Respondents contention that the finding of the Investigating Committee was contrary to the records and the complainants own admission in CEB-18552 is without merit. It is true that Atty. Aviola was Echavias counsel-of-record in Civil Case No. 13666 [19] as evidenced by the certification from the clerk of court, and as admitted by the complainant in CEB-18552, viz: ATTY. MADERAZO: (To witness- ON CROSS) Q: Madam witness, you mentioned that the defendant in this case was the counsel of Allan Echavia as early as August 20, 1993, wherein you learned for the first time of this fact when you say he is counsel of Allan Echavia. (sic) You mean he is the counsel of record of Allan Echavia in the Civil Case before Judge Dacudao? Is that what you mean? What I learned was that Atty. Alviola was the counsel of Allan Echavia in the case before Judge Dacudao but I heard Atty. Maderazo telling Allan Echavia not to admit that Atty. Maderazo is appearing for me because he will be the one to coordinate with Allans case. So it is clear that the defendant in this case is not the counsel of record of Allan Echavia. It was Atty. Alviola stated by you now? Atty. Maderazo was not Allan Echavias counsel but it was Atty. Alviola who was the counsel of record of Allan Echavia.
[20]

A:

Q: A:

Nevertheless, the issue in this case is not whether the respondent also acted as the counsel-of-record of Echavia. Rather, it is whether or not he had a direct hand in the preparation of Echavias Answer to the Amended Complaint. To be guilty of representing conflicting interests, a counsel-of-record of one party need not also be counsel-of-record of the adverse party. He does not have to publicly hold himself as the counsel of the adverse party, nor make his efforts to advance the adverse partys conflicting interests of record--- although these circumstances are the most obvious and satisfactory proof of the charge. It is enough that the counsel of one party had a hand in the preparation of the pleading of the other party, claiming adverse and conflicting interests with that of his original client. To require that he also be counsel-of-record of the adverse party would punish only the most obvious form of deceit and reward, with impunity, the highest form of disloyalty. Canon 6 of the Code of Professional Ethics states: It is the duty of a lawyer at the time of the retainer to disclose to the client the circumstances of his relations to the parties and any interest in or in connection with the controversy, which might influence the client in the selection of the counsel.

It is unprofessional to represent conflicting interests, except by express consent of all concerned given after a full disclosure of the facts. Within the meaning of this Canon, a lawyer represents conflicting interests when in behalf of one of the clients, it is his duty to contend for that which duty to another client requires him to oppose. (emphasis supplied) An attorney owes his client undivided allegiance. Because of the highly fiduciary nature of the attorney-client relationship, sound public policy dictates that a lawyer be prohibited from representing conflicting interests or discharging inconsistent duties. He may not, without being guilty of professional misconduct, act as counsel for a person whose interest conflicts with that of his present or former client. Indeed, good faith and honest intention on the part of the erring lawyer does not make this rule [21] inoperative. The lawyer is an officer of the court and his actions are governed by the uncompromising rules of professional ethics. Thus: The relations of attorney and client is founded on principles of public policy, on good taste. The question is not necessarily one of the rights of the parties, but as to whether the attorney has adhered to proper professional standard. With these thoughts in mind, it behooves attorneys, like Ceasars wife, not only to keep inviolate the clients confidence, but also to avoid the appearance of treachery and double-dealing. Only thus can litigants be encouraged to entrust their secrets to their attorneys which is of [22] paramount importance in the administration of justice. The professional obligation of the lawyer to give his undivided attention and zeal for his clients cause is likewise demanded in the Code of Professional Responsibility. Inherently disadvantageous to his clients cause, representation by the lawyer of conflicting interests requires disclosure of all facts and consent of all the parties involved. Thus: CANON 15- All lawyers shall observe candor, fairness and loyalty in all his dealings and transactions with his clients. xxx Rule 15.03- A lawyer shall not represent conflicting interests except by written consent of all concerned given after a full disclosure of the facts. While the Resolution of the IBP is purely recommendatory, we find no reason to reverse the same. In disciplinary proceedings against members of the bar, only clear preponderance of evidence is required to establish liability. As long as the evidence presented by complainant or that taken judicial notice of by the Court is more convincing and worthy of belief than that which is [23] offered in opposition thereto, the imposition of disciplinary sanction is justified. A perusal of Echavias Answer to the Amended Complaint shows that it indeed conflicts with the complainants claims. It reads: 1. The allegations (sic) in Paragraph One (1) of the Complaint is admitted in so far as it pertains to the personal circumstance and residence of the answering defendant. The rest of the allegations in Paragraph One (1), and all the allegations in Paragraph Two (2) , THREE (3), FOUR (4), FIVE (5), SIX (6), ELEVEN (11), TWELVE (12), and FOURTEEN (14), of the Complaint are DENIED [24] for lack of knowledge sufficient to form a belief as to the truth of such allegations. By way of prayer, Echavia states: WHEREFORE, it is respectfully prayed that after hearing, judgment be rendered dismissing plaintiffs complaint.
[25]

Anent the authorship by the respondent of the document quoted above, the Investigating Committee found the testimonies of the complainant and Echavia credible as opposed to respondents bare denial. As pointed out by Echavia, he was approached by Atty. Maderazo, introduced himself as his lawyer and after some sessions in the latters office, asked him to return and sign a document which he later identified as the Answer to the Amended Complaint. The Investigating Committee found respondents defense weak. Respondent did not bother to present his secretary as witness, nor obtain her affidavit to prove his allegations. Instead, he offered a convenient excuse--- that he cannot anymore locate his secretary. Respondent argued that it was the complainant who asked him to prepare Echavias Answer to the Amended Complaint, after reaching an agreement whereby Echavia would testify in favor of the complainant. After he declined the request, he claimed that it was the complainant who prepared the document and asked his secretary to print the same. But as shown, Echavias Answer to the Amended Complaint was in no way favorable to the complainant. With the dismissal of Civil Case No. 13666, Echavia is practically off the hook. We cannot find any reason why Echavia would commit perjury and entangle himself, once again, with the law. He does not stand to profit at all by accusing the respondent falsely. Furthermore, considering complainants stature and lack of legal education, we can not see how she could have prepared Echavias Answer to the Amended Complaint and device a legal maneuver as complicated as the present case.

Respondents attack on the credibility of Investigating Commissioner Ingles to render an impartial decision, having been an adversary in Civil Case No. R-33277, does not convince us to grant new trial. This is the first time that respondent questions the membership of Commissioner Ingles in the Investigating Committee. If respondent really believed in good faith that Commissioner Ingles would be biased and prejudiced, he should have asked for the latters inhibition at the first instance. Moreover, we could not find any hint of irregularity, bias or prejudice in the conduct of the investigation that would lead us to set it aside. Finally, we remind the respondent that the practice of law is not a property right but a mere privilege, and as such, must bow [26] to the inherent regulatory power of the Court to exact compliance with the lawyers public responsibilities. The suspension of the respondents privilege to practice law may result to financial woes. But as the guardian of the legal profession, we are constrained to balance this concern with the injury he caused to the very same profession he vowed to uphold with honesty and fairness. IN VIEW WHEREOF, the Resolution of the IBP finding the respondent guilty of violating Canon 6 of the Code of Professional Ethics, and Canon 15 and Rule 15.03 of the Code of Professional Responsibility is affirmed. Respondent is suspended from the practice of law for six (6) months with a stern warning that a similar act in the future shall be dealt with more severely. SO ORDERED. A.C. No. 3745 October 2, 1995 CYNTHIA B. ROSACIA, complainant, vs. ATTY. BENJAMIN B. BULALACAO, respondent. FRANCISCO, J.: 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 1 oath of office and accordingly recommended respondent's suspension from the practice of law for three (3) months. In a resolution dated July 30, 1994, the IBP Board of Governors resolved to adopt and approve the commissioner's report and 2 recommendation. As found by the IBP, the undisputed facts are as follows: 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 3 before the National Labor Relations Commission, and appearing in their behalf. The sole issue to be addressed is 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. We agree with the findings of the IBP that respondent breached his oath of office. Respondent does not now dispute this. In fact, in his motion for reconsideration, respondent admitted that he "did commit an act bordering on grave misconduct, if not outright violation of his attorney's 4 oath". However, respondent is pleading for the Court's compassion and leniency to reduce the IBP recommended three months suspension to either fine or admonition with the following proffered grounds: that he is relatively new in the profession having been admitted to the Philippine Bar on April 10, 1990 at the age of 46 when the complained conduct was committed on August 1991; that he is of humble beginnings and his suspension will deprive his family of its only source of livelihood he being the sole bread winner in the family; that he has fully realized his mistake and the gravity of his offense for which he is fully repentant; that he has severed his attorney-client relationship with the employees of Tacma, Phils., Inc. by inhibiting himself and withdrawing his appearance as counsel in the labor case against Tacma, Phils., Inc.; and that he pledges not to commit the same mistake and to henceforth strictly adhere to the professional standards set forth by the Code of Professional Responsibility. 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 5 person against his former client under the pretext that the case is distinct from, and independent of the former case. 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 6 7 administration of justice. The relation of attorney and client is one of confidence and trust in the highest degree. A lawyer owes 8 fidelity to the cause of his client and he ought to be mindful of the trust and confidence reposed in him. 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 9 of attorney and client exists. Otherwise, the legal profession will suffer by the loss of the confidence of the people.

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 10 inviolate the client's trust and confidence even after the attorney-client relation is terminated 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. Let this resolution be attached to respondent's record in the Office of the Bar Confidant and copies thereof furnished to all courts and to the Integrated Bar of the Philippines. G.R. No. L-27428 May 29, 1971 LEODIGARIO GILLEGO, petitioner-appellant, vs. SALVACION DIAZ and MANUEL GATA, and HON. MAYORICO GALLANOSA, as Municipal Judge of Matnog,respondents-appellees. TEEHANKEE, J.: Direct appeal on a question of law from the order of the Court of First Instance of Sorsogon dismissing appellant's petition for certiorari seeking to restrain the execution of a judgment of ejectment rendered by the municipal court of Matnog, Sorsogon, on the ground of the latter court's alleged loss of jurisdiction over the ejectment case after the lapse of one year from the filing of the complaint. On January 15, 1964, respondents Salvacion Diaz and Manuel Gata filed a complaint for ejectment and illegal detainer of a certain residential property against petitioner before the municipal court of Matnog, Sorsogon, presided by respondent judge Mayorico Gallanosa. After numerous postponements attributed by respondents to the efforts of respondent judge to effect an amicable settlement of the case (petitioner's wife being the sister of respondent Salvacion Diaz) and to postponements secured by the parties, judgment of ejectment was rendered on November 1, 1965 by respondent judge, sentencing "the defendant Leodigario Gillego and other occupants therein to vacate the premises as soon as possible, to pay the amount of P315.00 as rentals in arrears at the rate of P15.00 a month which is considered a reasonable compensation for the use and occupation of the premises from the final filing of the complaint to date, and finally to pay P100.00 as attorney's fee and the cost of this action." The judgment having become final and executory, respondents filed on February 16, 1966 the corresponding motion for execution of judgment, but petitioner filed with the lower court on March 22, 1966 the present petition for certiorari with injunction, praying for a declaration of nullity of the judgment of ejectment on the sole ground that "the said decision of the respondent Municipal Judge of Matnog, rendered on November 1, 1965 is null and void ab initio for the reason that the same was rendered by him after he has lost jurisdiction over the case due to the lapse of one year from the date of filing of the complaint. The lower court made short shrift of the petition, and issued its order of May 3, 1966, dismissing the petition without costs, upon the 1 2 3 authority of Alejandro vs. Court of First Instance of Bulacan, Barrueco vs. Abeto, Gallano vs. Rivera and Casilan vs. 4 Tomassi, and ruling that "(T)he Municipal Judge of Matnog, Sorsogon, did not lose jurisdiction over the case just for the reason that the decision was rendered more than one year after the filing of the complaint." Hence, this appeal which the Court finds bereft of merit. Sections 9 and 11 of Rule 4 of the old Rules of Court (now Rule 5, sections 8 and 10) providing that "Adjournment. Inferior courts may adjourn the hearing of an action from day to day as the interest of justice requires, but shall not have power to adjourn hearings for a longer period than five (5) days for each adjournment, nor for more than fifteen (15) in all," and that at the conclusion of trial, the municipal judge shall render judgment, "But he may adjourn the disposition of the case to a stated day, not exceeding one week from the time of conclusion of the trial, for the consideration of the judgment, if he requires time for consideration" have long been uniformly held by the Court in the above-entitled cases of Alejandro, Gallano and Casilanto be merely directory in character, a violation or non-observance of which would not nullify the judicial proceeding, although a willful disregard or reckless violation thereof by a judge would constitute a breach or neglect of duty which may subject him to appropriate administrative action. In Casilan, where the Court reaffirmed anew the above-cited cases, including Barrueco involving the counterpart provision of Rule 31, section 4 of the old Rules of Court (now Rule 22, section 3) for courts of first instance, the Court stressed that the requirement in the cited Rule "for the judge of an inferior court to decide a case within one week after trial is not jurisdictional and that a violation thereof does not render the decision void but subjects the judge to disciplinary action." The Court has but last month reaffirmed the doctrine in People vs. Catolico 5 emphasizing that (I)ndeed, the Rule could not but be directory rather than mandatory in character, for it could not have been possibly intended to divest without sanction of law the trial courts of their jurisdiction and authority to try and decide cases within their competent jurisdiction, as conferred by statute."

The earlier case of Monteblanco vs. Hinigaran Sugar Plantations cited by petitioner-appellant clearly has no application to the present case. In that case, the action for detainer first instituted in 1924 was not sought to be reactivated until after more than eight years later in 1933, and the ratio decidendi was that "(F)or purposes of the law, the case had died in the justice of the peace court one year after it had been remanded thereto by the Court of First Instance, with no step having been taken towards its termination in one way or another." Plaintiffs there had been deemed to have abandoned their detainer suit after the lapse of over eight years, with the consequent loss of jurisdiction of the inferior court over the case, since, as stated by the Court. "(I)t is known that under the law (Acts Nos. 3881 and 4115), justice of the peace courts alone have jurisdiction in cases of forcible entry and detainer, when the action arising therefrom is commenced within one year from the time said acts took place." Petitioner, in his brief on appeal, would belatedly assail the municipal court's ejectment judgment against him on the alleged ground that the said suit should have been considered as one between members of the same family under Article 222 of the Civil Code (since he is a brother-in-law of respondent Salvacion Diaz) and it had not been shown that earnest efforts towards a compromise have been made but failed, as enjoined by said codal provision. Assuming arguendo the applicability of the cited article, it is much too late now for petitioner to raise this question for the first time here on appeal. Not having raised it in the ejectment suit, which has long become final and executory he is barred now by laches and waiver from invoking the cited provision. Not having raised it either in his petition for certiorari below, where the sole issue raised by him was the alleged nullity of the municipal court's ejectment judgment "for loss of jurisdiction over the case due to the lapse of one year from the date of filing of the complaint," he is doubly barred from raising it for the first time in this appeal, under the well-settled principle that issues of fact or of law not properly brought to the attention of the trial court cannot be raised for the first time on appeal and will not be considered by 7 the reviewing court. The case at bar recalls to mind the Court admonition, through Mr. Justice J. B. L. Reyes, in a similarly unmeritorious case that "(T)he circumstances surrounding this litigation definitely prove that appeal is frivolous and a plain trick to delay payment and prolong litigation unnecessarily. Such attitude deserves severe condemnation, wasting as it does, the time that the courts could 9 well devote to meritorious cases." In Lopez vs. Aquino promulgated last month, the Court exhorted counsel that "the cooperation of litigants and their attorneys is needed so that needless clogging of the court dockets with umneritorious cases may be avoided. There must be more faithful adherence to Rule 7, section 5 of the Rules of Court which provides that 'the signature of an attorney constitutes a certificate by him that he has read the pleading and that to the best of his knowledge, information and belief, there is good ground to support it; and that it is interposed for delay' and expressly admonishes that 'for a willful violation of this rule an attorney may be subjected to disciplinary action'." WHEREFORE, the order appealed from is hereby affirmed and petitioner's counsel shall pay treble costs in both instances. Let this decision be noted in the personal record of petitioner's counsel. So ordered. G.R. No. 77439 August 24, 1989 DONALD DEE petitioner, vs. COURT OF APPEALS and AMELITO MUTUC, respondents. REGALADO, J.: Petitioner assails the resolution of respondent court, dated February 12,1987, reinstating its decision promulgated on May 9, 1986 in AC-G.R. CV No. 04242 wherein it affirmed the decision of the that court holding that the services rendered by private respondent was on a professional, and not on a gratis et amore basis and ordering petitioner to pay private respondent the sum of P50,000.00 as the balance of the latter's legal fee therefor. The records show that sometime in January, 1981, petitioner and his father went to the residence of private respondent, accompanied by the latter's cousin, to seek his advice regarding the problem of the alleged indebtedness of petitioner's brother, Dewey Dee, to Caesar's Palace, a well-known gambling casino at Las Vegas, Nevada, U.S.A. Petitioner's father was apprehensive over the safety of his son, Dewey, having heard of a link between the mafia and Caesar's Palace and the possibility 1 that his son may be harmed at the instance of the latter. Private respondent assured petitioner and his father that he would inquire into the matter, after which his services were reportedlyp contracted for P100,000. 00. From his residence, private respondent called up Caesar's Palace and, thereafter, several long distance telephone calls and two trips to Las Vegas by him elicited the information that Dewey Dee's outstanding account was around $1,000,000.00. Further investigations, however, revealed that said account had actually been incurred by Ramon Sy, with Dewey Dee merely signing for the chits. Private respondent communicated said information to petitioner's a father and also 2 assured him that Caesar's Palace was not in any way linked to the mafia. In June, 1981, private respondent personally talked with the president of Caesar's Palace at Las Vegas, Nevada. He advised the president that for the sake and in the interest of the casino it would be better to make Ramon Sy answer for the indebtedness. The president told him that if he could convince Ramon Sy to acknowledge the obligation, Dewey Dee would be exculpated from liability for the account. Upon private respondent's return to Manila, he conferred with Ramon Sy and the latter was convinced to acknowledge the indebtedness. In August, 1981, private respondent brought to Caesar's Palace the letter of Ramon Sy owning the 3 debt and asking for a discount. Thereafter, the account of Dewey Dee was cleared and the casino never bothered him.
8

Having thus settled the account of petitioner's brother, private respondent sent several demand letters to petitioner demanding the balance of P50,000.00 as attorney's fees. Petitioner, however, ignored said letters. On October 4, 1982, private respondent filed a complaint against petitioner in the Regional Trial Court of Makati, Branch CXXXVI, for the collection of attorney's fees and refund of 4 transport fare and other expenses. Private respondent claimed that petitioner formally engaged his services for a fee of P100,000.00 and that the services he rendered were professional services which a lawyer renders to a client. Petitioner, however, denied the existence of any professional relationship of attorney and client between him and private respondent. He admits that he and his father visited private respondent for advice on the matter of Dewey Dee's gambling account. However, he insists that such visit was merely an informal one and that private respondent had not been specifically contracted to handle the problem. On the contrary, respondent Mutuc had allegedly volunteered his services "as a friend of defendant's family" to see what he could do about the situation. As for the P50,000.00 inceptively given to private respondent, petitioner claims that it was not in the nature of attomey's fees but merely "pocket money" solicited by the former for his trips to Las Vegas and the said amount of P50,000.00 was already sufficient remuneration for his strictly voluntary services. After trial, the court a quo rendered judgment ordering herein petitioner to pay private respondent the sum of P50,000.00 with interest thereon at the legal rate from the filing of the complaint on October 4, 1982 and to pay the costs. All other claims therein of 5 private respondent and the counterclaim of petitioner were dismissed. On appeal, said judgment was affirmed by the then 6 Intermediate Appellate Court on May 9, 1986. Petitioner, in due time, filed a motion for reconsideration contending that the Appellate Court overlooked two important and decisive factors, to wit: (1) At the time private respondent was ostensibly rendering services to petitioner and his father, he was actually working "in the interest" and "to the advantage" of Caesar's Palace of which he was an agent and a consultant, hence the interests of the casino and private respondent were united in their objective to collect from the debtor; and (2) Private respondent is not justified in claiming that he rendered legal services to petitioner and his father in view of the conflicting interests involved. In its resolution of July 31, 1986, respondent court reconsidered its decision and held that the sum of P50,000.00 already paid by petitioner to private respondent was commensurate to the services he rendered, considering that at the time he was acting as counsel for petitioner he was also acting as the collecting agent and consultant of, and receiving compensation from, Caesar's 7 Palace. However, upon a motion for reconsideration thereafter filed by private respondent, the present respondent Court of 8 Appeals issued another resolution, dated February 12, 1987, reinstating the aforesaid decision of May 9, 1986. Petitioner is now before us seeking a writ of certiorari to overturn the latter resolution. It is necessary, however, to first clear the air of the questions arising from the change of stand of the First Civil Cases Division of the former Intermediate Appellate Court when, acting on the representations in petitioner's undated motion for reconsideration supposedly filed on May 28,1986, it promulgated its July 31, 1986 resolution reconsidering the decision it had rendered in AC-G.R. CV No. 04242. Said resolution was, as earlier noted, set aside by the Twelfth Division of the reorganized Court of Appeals which, at the same time, reinstated the aforesaid decision. Because of its clarificatory relevance to some issues belatedly raised by petitioner, which issues should have been 9 disregarded but were nevertheless auspiciously discussed therein, at the risk of seeming prolixity we quote hereunder the salient portions of the assailed resolution which demonstrate that it was not conceived in error. The reason for then IAC's action is that it deemed the P50,000.00 plaintiff-appellee had previously received from defendant-appellant as adequate compensation for the services rendered by am for defendant-appellant, considering that at the time plaintiff-appellee was acting as counsel for defendant-appellant, he was also acting as the collecting agent and consultant of, and receiving compensation from Caesar's Palace in Las Vegas, Nevada, the entity with whom defendant-appellant was having a problem and for which he had engaged the services of plaintiff-appellee. The crux of the matter, therefore, is whether or not the evidence on record justifies this finding of the IAC. Plaintiff-appellee maintains that his professional services to defendant-appellant were rendered between the months of July and September of 1981, while his employment as collection agent and consultant of Caesar's Palace covered the period from December 1981 to October 1982. This positive testimony of plaintiff-appellee, however, was disregarded by the IAC for the following reasons: 1. In August l983, plaintiff-appellee testified that he was a representative of Caesar's Palace in the Philippines 'about two or three years ago.' From this the IAC concluded that the period covers the time plaintiff-appellee rendered professional services to defendant-appellant.

We do not think that IAC's conclusion is necessarily correct. When plaintiff-appellee gave the period 'about two or three years ago,' he was merely stating an approximation. Considering that plaintiff-appellee was testifying in August 1983, and his employment with Caesar's Palace began in December 1981, the stated difference of two years is relatively correct. . . . 2. The plaintiff appellee had testified that he was working for the sake,' 'in the interest,' and 'to the advantage' of Caesar's Palace. x x x "We detect nothing from the above which would support IAC's conclusion that plaintiff-appellee was then in the employ of Caesar's Palace. What is gathered is that plaintiff-appellee was simply fulfilling a condition which plaintiff-appellee had proposed to, and was accepted by, Caesar's Palace, for the release of Dewey Dee from his obligation to Caesar's Palace. 3. Caesar's Palace would not have listened to, and acted upon, the advice of plaintiff-appellee if he were no longer its consultant and alter ego. Why not? We are witnesses to many successful negotiations between contending parties whose representing lawyers were not and were never in the employ of the opposite party. The art of negotiation is precisely one of the essential tools of a good practitioner, and mastery of the art takes into account the circumstance that one may be negotiating, among others, with a person who may not only be a complete stranger but antagonistic as well. The fact that plaintiff-appellee was able to secure a favorable concession from Caesar's Palace for defendant-appellant does not justify the conclusion that it could have been secured only because of plaintiff-appellee's professional relationship with Caesar's Palace. It could have been attributable more to plaintiff-appellee's stature as a former ambassador of the Philippines to the United States, his personality, and his negotiating technique. Assuming, however, that plaiSntiff-appellee was employed by Caesar's Palace during the time that he was rendering professional services for defendant-appellant, this would not automatically mean the denial of additional attorney's fees to plaintiff appellee. The main reason why the IAC denied plaintiff-appellee additional compensation was because the latter was allegedly receiving compensation from Caesar's Palace, and, therefore, the amount of P50,000.00 plaintiff-appellee had previously received from defendant-appellant is 'reasonable and commensurate. This conclusion, however, can only be justified if the fact and amount of remuneration had been established. These were not proven at all. No proof was presented as 10 to the nature of plaintiff-appellee's remuneration, and the mode or manner in which it was paid.. . . Both the lower court and the appellate court concur in their findings that there was a lawyer-client relationship between petitioner and private respondent Mutuc. We find no reason to interfere with this factual finding. There may be instances when there is doubt as to whether an attorney-client relationship has been created. The issue may be raised in the trial court, but once the trial court and the Court of Appeals have found that there was such a relationship the Supreme Court cannot disturb such finding of 11 fact, absent cogent reasons therefor. The puerile claim is advanced that there was no attorney-client relationship between petitioner and private respondent for lack of a written contract to that effect. The absence of a written contract will not preclude the finding that there was a professional relationship which merits attorney's fees for professional services rendered. Documentary formalism is not an essential element in the employment of an attorney; the contract may be express or implied. To establish the relation, it is sufficient that the advice and assistance of an attorney is sought and received in any matter pertinent to his profession. An acceptance of the relation is implied 12 on the part of the attorney from his acting on behalf of his client in pursuance of a request from the latter. There is no question that professional services were actually rendered by private respondent to petitioner and his family. Through his efforts, the account of petitioner's brother, Dewey Dee, with Caesar's Palace was assumed by Ramon Sy and petitioner and his family were further freed from the apprehension that Dewey might be harmed or even killed by the so-called mafia. For such services, respondent Mutuc is indubitably entitled to receive a reasonable compensation and this right cannot be concluded by petitioner's pretension that at the time private respondent rendered such services to petitioner and his family, the former was also the Philippine consultant of Caesar's Palace. On the first aspect, the evidence of record shows that the services of respondent Mutuc were engaged by the petitioner for the purposes hereinbefore discussed. The previous partial payments totalling P50,000.00 made by petitioner to respondent Mutuc and the tenor of the demand letters sent by said private respondent to petitioner, the receipt thereof being acknowledged by petitioner, ineluctably prove three facts, viz: that petitioner hired the services of private respondent Mutuc; that there was a prior agreement as to the amount of attorney's fees to be given to the latter; and there was still a balance due and payable on said fees. The duplicate original copy of the initial receipt issued and signed in this connection by private respondent reads: RECEIVED from Mr. Donald Dee, for professional services rendered, the sum of THIRTY THOUSAND PESOS (P30,000.00) as partial payment, leaving a balance of SEVENTY THOUSAND PESOS (P70,000.00), payable on demand. Makati, Metro Manila, July 25,1981.
13

Thereafter, several demand letters for payment of his fees, dated August 6, 1981, December 2, 1981, January 29, 1982, March 7, 14 1982, and September 7, 1982 were sent by private respondent to petitioner, all to no avail. On the second objection, aside from the facts stated in the aforequoted resolution of respondent Court of Appeals, it is also not completely accurate to judge private respondent's position by petitioner's assumption that the interests of Caesar's Palace were adverse to those of Dewey Dee. True, the casino was a creditor but that fact was not contested or opposed by Dewey Dee, since the latter, as verifications revealed, was not the debtor. Hence, private respondent's representations in behalf of petitioner were not in resistance to the casino's claim but were actually geared toward proving that fact by establishing the liability of the true debtor, 15 Ramon Sy, from whom payment was ultimately and correctly exacted. Even assuming that the imputed conflict of interests obtained, private respondent's role therein was not ethically or legally indefensible. Generally, an attorney is prohibited from representing parties with contending positions. However, at a certain stage 16 of the controversy before it reaches the court, a lawyer may represent conflicting interests with the consent of the parties. A common representation may work to the advantage of said parties since a mutual lawyer, with honest motivations and impartially cognizant of the parties' disparate positions, may well be better situated to work out an acceptable settlement of their differences, being free of partisan inclinations and acting with the cooperation and confidence of said parties. Here, even indulging petitioner in his theory that private respondent was during the period in question an agent of Caesar's Palace, petitioner was not unaware thereof, hence he actually consented to and cannot now decry the dual representation that he postulates. This knowledge he admits, thus: It is a fair question to ask why, of all the lawyers in the land, it was the private respondent who was singled out by the petitioner's father for consultation in regard to an apparent problem, then pending in Caesar's Palace. The testimony of Arthur Alejandrino, cousin to private respondent, and the admission of the private respondent himself supply the answer. Alejandrino testified that private respondent was the representative of Caesar's Palace in the Philippines (p. 23, t.s.n., Nov. 29, 1983).lwph1.t Private respondent testified that he was such representative tasked by the casino to collect the gambling 17 losses incurred by Filipinos in Las Vegas. (p. 5, t.s.n., Sept. 21, 1983). A lawyer is entitled to have and receive the just and reasonable compensation for services rendered at the special instance and request of his client and as long as he is honestly and in good faith trying to serve and represent the interests of his client, the latter 18 is bound to pay his just fees. WHEREFORE, the resolution of respondent Court of Appeals, dated February 12,1987, reinstating its original decision of May 9, 1986 is hereby AFFIRMED, with costs against l petitioner. SO ORDERED.