Ethics

B.R. Sebastian Enterprises Inc. vs. CA Facts: Eulogio B. Reyes, now deceased, filed an action for damages against the Director of Public Works and BR Sebastian Enterprises. The trial court rendered a decision finding petitioner liable for damages but absolving the other defendants. Petitioner, thru its counsel, the law firm of Baizas, Alberto and Associates, timely appealed the adverse decision to the respondent Court of Appeals. During the pendency of the appeal, Eulogio B. Reyes died and was substituted by his heirs. On 19 February 1974, petitioner, thru its then counsel of record, received notice to file Appellant's Brief within 45 days from receipt thereof. It had, therefore, until 5 April 1974 within which to comply. Counsel for petitioner failed to file the Brief; thus, on 9 July 1974, respondent Court issued a Resolution requiring said counsel to show cause why the appeal should not be dismissed for failure to file the Appellant's Brief within the reglementary period. However, CA dismissed the appeal. On September 1974, petitioner, this time thru the BAIZAS LAW OFFICE, filed a motion for reconsideration of the resolution dismissing its appeal alleging that as a result of the death of Atty. Crispin Baizas, senior partner in the law firm. Atty. Rodolfo Espiritu, the lawyer who handled this case in the trial court and who is believed to have also attended to the preparation of the Appellant’s Brief but failed to submit it through oversight and inadvertence, had also left the firm. Court denied the motion for reconsideration. No action was taken by petitioner from within the period to file a petition for review, the same became final and executory, and the records of the case were remanded. Trial court issued a writ of execution. However, on 6 November 1975, petitioner filed with respondent Court a Motion to Reinstate Appeal with Prayer for Issuance of a Writ of Preliminary Injunction but was subsequently denied. Petitioner filed prohibition and mandamus, with prayer for preliminary injunction with the Supreme Court to Court of Appeals denial of petitioner’s motion. . SC required them to comment and soon after, some amendments were made. Ultimately, the petition was denied. But on May 1976, petitioner filed a motion for its reconsideration claiming that since it was deprived of the right to appeal without fault on its part, the petition should be given due course. Supreme Court reconsidered and required both parties to submit simultaneously their respective Memoranda.

Issue:

Whether or not the respondent Court of Appeals gravely abused its discretion in denying petitioner's motion to reinstate its appeal, previously dismissed for failure to file the Appellant's Brief. Held:

No. The "confusion" in the office of the law firm following the death of Atty. Crispin Baizas is not a valid justification for its failure to file the Brief. With Baizas' death, the responsibility of Atty. Alberto and his Associates to the petitioner as counsel remained until withdrawal by the former of their appearance in the manner provided by the Rules of Court. This is so because it was the law firm which handled the case for petitioner before both the trial and appellate courts. That Atty. Espiritu, an associate who was designated to handle the case, later left the office after the death of Atty. Baizas is of no moment since others in the firm could have replaced him.. Upon receipt of the notice to file Brief, the law firm should have re-assigned the case to another associate or, it could have withdrawn as counsel in the manner provided by the Rules of Court so that the petitioner could contract the services of a new lawyer. The rule is settled that negligence of counsel binds the client. Moreover, petitioner itself was guilty of negligence when it failed to make inquiries from counsel regarding its case. As pointed out by respondents, the president of petitioner corporation claims to be the intimate friend of Atty. Crispin Baizas; hence, the death of the latter must have been known to the former. This fact should have made petitioner more vigilant with respect to the case at bar. Petitioner failed to act with prudence and diligence, thus, its plea that they were not accorded the right to procedural due process cannot elicit either approval or sympathy. Based on the foregoing, it is clear that there was failure to show a good and sufficient cause which would justify the reinstatement of petitioner's appeal. Respondent Court of Appeals did not them commit any grave abuse of discretion when it denied petitioner's motion to reinstate its appeal. Gonzales vs. Sabacajan Facts: An administrative complaints filed by Gonzales and Pantanosas against Atty. Miguel Sabacajan. In their complaint, it was alleged that the complainants were informed by the Register of Deeds of CDO that complainants’ owners duplicate of title covering their lands, Transfer Certificate of Title (TCT) were entrusted to the office of secretary of the respondent who in turn entrusted the same to respondent. However, the latter admitted and confirmed to the complainants that their titles are in his custody and has even shown that the ssame complainant Pantanosas but when demanded to deliver the said titles to the complainant in a formal demand letter, the respondent refused without any justification to give their titles and when confronted, respondent

challenged the complainants to file any case in any court even in the Honorable Supreme Court. That respondent’s challenge is a manifestation of his arrogance taking undue advantage of his legal profession over innocence and ignorance of the complainants, one of whom is his blood relative, his aunt, for which complainants shudder with mental anguish. In spite of repeated demands, request(s) and pleas towards (sic) respondent, respondent still fail(ed) and stubbornly refused without justification to surrender the said titles to the rightful owners, the complainants here(in), which act is tantamount to willful and malicious defiance of legal and moral obligations emanating from his professional capacity as a lawyer who had sworn to uphold law and justice, to the prejudice and damage of the complainants. In an answer, the respondent admitted having met Pantanosas but claims that, to his recollection, Nicasio Gonzales/Serdan has never been into my office. Respondent likewise denied that he challenged anyone to file a case in any court, much less the Supreme Court. He also claims that he referred complainant Pantanosas to his client, Mr. Samto M. Uy of Iponan, Cagayan de Oro City, for whom he worked out the segregation of the titles, two of which are the subject of the instant case. Respondent likewise denies complainants' allegation that he is arrogant, in contrast to the innocence, simplicity and ignorance of said complainants. He contends that the truth of the matter is that complainants have been charged with a number of criminal and civil complaints before different courts. He also asserts that he was holding the certificates of title in behalf of his client, Samto M. Uy. Atty. Sabacajan stresses, by way of defense, that "the instant action was chosen precisely to browbeat him into delivering the Certificates of Title to them without said certificates passing the hands of Mr. Samto Uy with whom the complainants have some monetary obligations." Issue: WON Atty Sabacajan has violated the Code of Professional Responsibility for his refulsa without just cause to return to complainants their certificates of titles. Held: Yes. The Court accordingly finds that respondent has not exercised the good faith and diligence required of lawyers in handling the legal affairs of their clients. If complainants did have the alleged monetary obligations to his client, that does not warrant his summarily confiscating their certificates of title since there is no showing in the records that the same were given as collaterals to

secure the payment of a debt. Neither is there any intimation that there is a court order authorizing him to take and retain custody of said certificates of title. Apparently, respondent has disregarded Canon 15, Rule 15.07 of the Code of Professional Responsibility which provides that a lawyer shall impress upon his client the need for compliance with the laws and principles of fairness. Instead, he unjustly refused to give to complainants their certificates of titles supposedly to enforce payment of their alleged financial obligations to his client and presumably to impress the latter of his power to do so. Canon 19, Rule 19.01 ordains that a lawyer shall employ only fair and honest means to attain the lawful objectives of his client and shall not present, participate in presenting, or threaten to present unfounded charges to obtain an improper advantage in any case or proceeding. Respondent has closely skirted this proscription, if he has not in fact transgressed the same. On the foregoing considerations, the Court desires and directs that respondent should forthwith return the certificates of title of complainants. To ensure the same, he should be placed under suspension until he presents to the Court proof of receipt by complainants of their respective copies of Certificates of Title Nos. T-91735 and T-91736 or a judicial order or document authorizing or justifying the retention of possession thereof by respondent or his aforenamed client. WHEREFORE, Atty. Miguel Sabacajan is hereby SUSPENDED from the practice of law until he can duly show to this Court that the disputed certificates of title have been returned to and the receipt thereof duly acknowledged by complainants, or can present a judicial order or appropriate legal authority justifying the possession by him or his client of said certificates. He is further WARNED that a repetition of the same or similar or any other administrative misconduct will be punished more severely. Inton v. Matute Facts: On January 3, 1963, Julian Villanueva Matute, as newlyappointed coadministrator of the Testate Estate of Amadeo Matute Olave, filed a motion with the probate court, praying that Atty. Antonio Enrile Inton be ordered to surrender and deliver to him (movant) all certificates of title, plans, documents, and papers belonging to the Estate and which were in the possession of said lawyer, in order that they may be kept in the office of the Estate in Davao City and be ready for inspection should the management of the properties require It. This motion was opposed by Atty. Antonio Enrile Inton, who alleged that he was the counsel for the Estate and the former

administrator, Celestino Alonzo; that for said legal services, he filed with the probate court on October 10, 1962, a claim for payment of his lawful fees from November 26, 1958 to October 26, 1962, at the rate of P1,200.00 a month or a total of P72,500.00, excluding the compensation for handling the defense against various claims filed in the testate proceed-ing, which should be on quantum meruit basis; that he came into possession of 20 certificates of title2 in the course of his work as counsel for the Estate and the former administrator. Oppositor, therefore, contended that until his claim for attorneys’ f ees is settled, he will be exercising a retaining lien over the aforesaid documents belonging to the Estate. After the issues were joined, the court a quo by order of January 7, 1963, granted the motion of the coadministrator and ordered Atty. Enrile Inton to deliver the 19 documents listed in the Opposition and admitted by the latter to belong to the Estate. Atty. Enrile Inton filed the present appeal, which calls only for the determination of whether or not he has the right to retain the titles and documents in question, until his claim or attorney’s fees is finally settled. Issue: WON respondent has the right to retain the titles and documents in question, until his claim or attorney’s fees is finally settled. Held: Section 37 of Rule 138 of the Revised Rules of Court provides: “SEC. 37. Attorney’s liens.—An attorney shall have a lien upon the funds, documents and papers of his client which have lawfully come into his possession and may retain the same until his lawful fees and disbursements have been paid, x x x.” Thereunder, there is no question that a lawyer has a retaining lien upon the funds, documents and papers of his client that may have come lawfully into his possession, until his lawful fees are duly paid. In the present case, it is not disputed that appellant was commissioned to render, as in fact he did render, legal services to the former administrator of the Estate, Celestino Alonzo. It is clear therefrom that appellant was appointed by Alonzo as his lawyer, to represent him in all suits affecting the Estate under his trust. This appointment, however, was not in pursuance to any court order, nor was it approved by the probate court. It was an act personal to the administrator. The creation of the professional relationship between appellant and the administrator did not, therefore, make the Estate also a client of the said lawyer.

And, it may be stated in this connection that for legal services rendered to the administrator the estate under administration cannot be directly held liable for payment of the corresponding attorneys’ fees. It follows as a necessary consequence that the lawyer for the administrator or executor cannot claim to have a retaining lien over any funds, papers, or documents belonging to the Estate, even if these properties may have come into his possession in the course of his work as such counsel for the administrator. Seng v. Magat Facts: On March 27, 1979, Uy Chung Guan Seng and Ching Uy Seng filed a verified Complaint for Disbarment against respondent Atty. Jose C. Magat alleging that the following circumstances warranted his exclusion from the Roll of Attorneys. Complainant CHING UY SENG a ROBERT CHING received a letter from Respondent Atty. JOSE C. MAGAT, threatening to report him to the government athorities if he would not get in touch with him (MAGAT) and his clients with respect to a bunch of documents and papers pertaining to Complainants’ business. Such documents turned out to be a part of the articles which were stolen from the office/residence of Complainants. Seng together with her lawyer Atty. Eliseo Legaspi and NBI Agent Rodolfo Dahiroc went to the Office of Atty. MAGAT at Room 512 Madrigal Bldg., Escolta, Manila. in response to the above-mentioned letter. Atty. MAGAT initially demanded the sum of P500,000.00 in exchange for the robbed documents. CHING, LEGASPI and Agent DAHIROC insisted on seeing the documents first and to talk with Atty. MAGAT’s clients before they negotiate the terms of the return of the documents. The meeting was reset on 15 August 1977 at 3:00 p.m., during which Atty. MAGAT informed them that their demand was reduced to P300,000.00 on a ’take it or leave it’ basis. Atty. MAGAT’s ’clients’ who brought in the robbed documents turned out to be the suspects in the robbery of the office/residence of Complainants on 2 June 1977. Atty. MAGAT insisted that HENRY CHING produce P30,000.00 to show his good faith in pushing through with the negotiation. It was at this juncture that the NBI Agents confronted the group and brought them to the NBI office together with the robbed documents for investigation. Atty. Magat alleged that there was absolutely no truth to the charge imputed to him; that the incident became the subject of a criminal charge for Light Threats filed by the NBI Agents with the Office of the Fiscal of Manila, which, after preliminary investigation, was dropped for “utter insufficiency of evidence”; and that after the lapse of more than one year from the date of said criminal complaint, complainants through Atty. Eliseo Legaspi, reopened

the case before this Tribunal merely to harass him and assail his character and conduct. Respondent prayed that the complaint be dismissed for utter lack of merit. On June 5, 1979, upon consideration of the Complaint and the Comment, this Court resolved to suspend respondent from the practice of law effective immediately upon notice, and until further orders. The Court further resolved to refer the case to the Solicitor General for investigation. After review, Solicitor General recommends that Atty. Magat be disbarred. Issue: WON Atty Magat should be disbarred for malpractice and gross misconduct. Held: Yes. Upon the oral and documentary evidence, the court find the charges substantiated and the Report and Recommendation of the Solicitor General thorough and well founded. Although respondent’s confidential letter to the BIR is dated August 12, 1977, or ostensibly a day after respondent’s letter to Robert Ching, and prior to the raid on respondent’s office on August 15, 1977, the BIR letter of October 25, 1979, supra, specifically stated “the Post mark of the Manila Central Post Office of the envelope which contained said letter, bears the date August 16, 1977 p.m.”. Evidently, respondent’s letter was mailed the day after the raid on August 15, 1977 as an afterthought designed to stave off impending liability. His defense at the hearing that the Post Office was delayed in stamping the letter is puerile. The presumption of regularity in the performance of official functions has not been overcome. Besides, if respondent were really motivated by the desire to expose tax anomalies, he could have written the BIR directly. There was no need to have written his letter to Robert Ching. The dismissal of the criminal complaint for Light Threats against respondent by the City Fiscal’s Office will not preclude the fact that respondent has not exhibited honesty nor show trustworthiness in the discharge of his duties as a member of the Bar. The dismissal of the criminal complaint does not exonerate him of professional misconduct. The proper disciplinary action against respondent is disbarment for malpractice and gross misconduct. He has shown himself unfit for the office and unworthy of the privileges which the law confers upon him.6 “The assisting of a client in a scheme which the attorney knows to be dishonest, or the conniving at a violation of law, are acts which justify disbarment. (In Re Terrel, 2 Phil. 266, 267-268).”

WHEREFORE, respondent Atty. Jose C. Magat is hereby disbarred; his name is ordered stricken off the Roll of attorneys; and his Certificate of Admission to the Bar is hereby recalled. Reparations Commission vs. Visayan Packing Corporation Facts: Plaintiff Reparations Commission (Repacom, for short) is a government entity created by virtue of Republic Act No. 1789, with offices at the 5th Floor, Development Bank of the Philippines Building No. 2, Port Area, Manila while the defendants, Visayan Packing Corporation (Vispac, for short) and the Fieldmen’s Insurance Co., Inc. (FICI, for short) are corporations duly organized and registered under the laws of the Philippines, with offices in Bacolod City, Philippines and Singson Bldg., Plaza Moraga, Manila, respectively. On May 19, 1960, plaintiff Repacom adopted Resolution No. 262 awarding to the defendant Vispac by way of a contract of conditional purchase and sale subsequently execute: one (1) Cannery Plant, divested from M/S “Estancia”; two (2) Fishing Boats M/S “SONIA” and M/S “ANA LARES”, 75 G.T. and one (1) Fishing Boat M/S “SALVADOR ‘B’ ”, 100 G.T.; including all its corresponding accessories and appurtenances. These reparations goods were delivered to the defendant Vispac. Defendant-appellant FICI is impleaded as bondsman for the principal defendant Vispac, under Surety Bond No. 4122 (Exhibit “B”) issued by the former on May 30, 1960, to guarantee “faithful observance and compliance by the principal of all its obligations” recited in the Contract of Conditional Purchase and Sale of Reparations Goods (Exhibit “A”) and in the annexed Schedule of Payments (Exhibit “A-1”). On September 27, 1962, Repacom filed a complaint for specific performance with the court a quo against Vispac seeking collection of the amount of P124,242.47 allegedly due on May 30, 1962 as payment of the 1st installment of the reparations goods and impleaded the FICI as defendant. In its answer, Vispac claimed that the Schedule of Payments is vague and ambiguous with respect to the date when the first installment falls due and that by reason thereof, the ambiguity should be construed against Repacom, the party which drafted the contract. Repacom and Vispac submitted a “Stipulation of Facts” and both prayed that this case be submitted for decision after their respective memoranda have been filed. FICI joined with this move and request of the principal parties.

On the basis of the said Stipulations of Facts and the pleadings submitted by the parties, the court a quo rendered judgment, ordering the defendant to pay, jointly and severally, to the plaintiff the sum of P124,242.47 with interest at the legal rate from the date of filing of the complaint until fully paid. The plaintiff’s prayer for attorney’s fees is denied, inasmuch as there is no showing that the defendants were motivated with bad faith in failing to pay plaintiff’s claim. “With respect to the cross-claim of defendant Fieldmen’s Insurance Co., Inc., the Court hereby orders defendant Visayan Packing Corporation to pay defendant Fieldmen’s Insurance Co., Inc., such amount which the latter may pay to the plaintiff by reason of this judgment, with interest at 12% per annum until fully paid, and attorney’s fees equivalent to 10% of the amount paid by Fieldmen’s Insurance Co., Inc., to the plaintiff. With costs against the defendants. Thereafter, Vispac and FICI filed a motion for reconsideration but it was denied. Feeling aggrieved, Vispac and FICI appealed the case to the Court of Appeals. After the parties have submitted their respective briefs, Repacom on April 28, 1965; Vispac on January 2, 1965; and FICI on January 15, 1965, the case was submitted for decision on September 6, 1965. In a resolution promulgated June 14, 1969, the Court of Appeals*** certified the instant case to this Court for proper disposition for being pure question of law. Issue: WON the trial court erred in ordering Vispac to pay to FICI attorney’s fees equivalent to only 10% of the amount due despite the fact that Vispac bound itself to pay to FICI attorney’s fees equivalent to 20% of the total amount due but in no case less than P200.00 as per their Indemnity Agreement. Held: No. It has been held that a stipulation regarding the payment of attorney’s fees is neither illegal nor immoral and is enforceable as the law between the parties, as long as such stipulation does not contravene law, good morals, good customs, public order or public policy. Considering, therefore, that the 20% attorney’s fees provided under the parties’ Indemnity Agreement is not contrary to the existing jurisprudence on the matter, and is not considered excessive nor unconscionable, the same should be awarded to FICI.