Legal and judicial ethics by Agpalo

Chapter VIII LAWYERS FIDUCIARY OBLIGATION A. Effects of fiduciary obligation 1. Generally a. The well established rule that the relation of attorney and client is highly fiduciary and strictly confidential requiring utmost good faith, loyalty, fidelity and disinterestedness on the part of the attorney REASON: To remove all such temptation and to prevent everything of that kind from being done for the protection of the client. 2. Dealings with client closely scrutinized a. Attorney-client relation is subject to the closest judicial scrutiny REASON: It is the courts duty to look into dealings between attorneys and their clients and to guard and protect the latter from any undue consequences resulting from a situation in which they may stand unequal. b. Attorney-relationship is highly favorable to the client REASON: No presumption of innocence or improbability of wrong doing is considered in favor of the lawyer. Burden of proof rests upon the attorney to show that the transaction is fair, that it was equitable and just, that it did not proceed from undue influence and that the property so acquired does not belong constructively to the client. 3. Abuse of clients confidence a. Any advantage derived by a lawyer as a result of abuse of the clients confidence generally INURES to the benefit of the client. 4. Rebates and commissions a. A lawyer shall not, without the full knowledge and consent of the client, accept any fee, reward, cost omission interest, rebate or forwarding allowance or other compensation whatsoever related to his professional employment form anyone other than his client. REASON: This rule is designed to secure the attorneys whole hearted fidelity to the clients cause and to prevent that situation in which the receipt by him rebate or commission from another on connection with the clients business may interfere with the full discharge of his duty to his clients. 5. A lawyer shall not borrow from, nor lend money to, client a. Rule 16.04 of the code

i. “A lawyer shall not borrow money from his client unless the client interest are fully protected by the nature of the case or by independent advice. Neither shall a lawyer lend money to a client except ,when in the interest of justice, he has to advance necessary expenses in a legal matter he is handling for the client.” Rule consist of two parts: 1. Prohibits a lawyer from borrowing money from his client. a. REASON: i. Prevent the lawyer from taking advantage of his influence over the client EXCEPT where the clients interest are fully protected by the nature of the case he is handling for the client or by independent advice from another lawyer, he should not abuse the clients confidence by delaying payment 2. Prohibits a lawyer from lending money to the client, EXCEPT when, in the interest of justice, he has to advance necessary expenses in a legal matter he is handling a. REASON: i. Intended to assure the lawyers independent professional judgment, for if the lawyer acquires a financial interest in the outcome of the case the free exercise of his judgment may be adversely affected. Further, the lawyer in effect acquires an interest in the subject matter of the case or an additional stake in its outcome, either of which ,may lead the lawyer consider his own recovery rather than of his client or accept a settlement which might take care of his interest in the verdict to the sacrifice of that of the client in violation of his duty of undivided fidelity to the clients cause. B. Accounting of Clients funds a. A lawyer shall account for clients funds i. Canon 16 requires that a “lawyer shall hold in trust all moneys and properties of his client that may come into his possession” ii. Canon 16.1 states that “lawyer shall account for all money or property collected or received for or from the client” 1. REASONS/JUSTIFICATIONS

a. A lawyer may receive money or property for or from his client in the course of his professional relationship with his client. The lawyer holds such money or property in trust and he is under obligation to make an accounting thereof. So is money of a client not used for the purpose for which it was entrusted to his counsel. Example for filing fees and other legal fees for the counterclaims . b. A lawyer also holds for the benefit of his client nay property redeemed with the clients money and registered in the lawyers name or any fund received by him from a judgment creditor as consideration for his desisting from participating in the public sale of the clients property. c. If the lawyer fails to accomplish the purpose for which the money is intended, he should immediately return the money to his client. His failure to make an accounting or to return the money if the purpose for which the money is intended has failed , constitute blatant disregard of rule 16.01 of the code. d. In Celaje v Sorianno, the court held that a lawyer entrusted by his client of amounts for specific purpose but did not spend the money for such purpose and instead misappropriated the same for his personal use is guilty of violation of Canon 16, for which he may be suspended or disbarred, and ordered to restitute the same within a specific period e. In Small v Banares, the responded was suspended for two years for violating Canon 16 of the CPR, particularly for failing to file a case for which the amount of P80,000.00 was given him by his client, and for failing to return the said amount upon demand. f. He may not, in the absence of authority from his client, disburse the money collected for his client in favor of persons who may be entitled thereto, he owing fidelity to the former and not to the latter. b. A lawyer shall not commingle clients funds i. A lawyer shall keep the funds of each client separate and apart from his own and those of others kept by him. c. A lawyer shall deliver funds to client, subject to his lien

i. Rule 16.03 of the CPR provides that “a lawyer shall deliver the funds and property of his client when due or upon demand. TO BE CONTINUED C. Restriction against buying clients property a. Purchas of clients property in litigation i. The law makes the incapacity of the attorney to acquire his client property in litigation and ABSOLUTE and PERMANENT. Prohibiting from purchasing, even at a public or judicial auction, either in person or through the mediation of another, any property or interest involve in any litigation in which he may take part by virtue of his profession. 1. REASON a. It is intended to curtail any undue influence of the lawyer upon his client on account of his fiduciary and confidential relation with him. b. Application of rule i. The rule forbidding an attorney from purchasing his clients property or interest in litigation involves four elements: 1. There must be an attorney-client relationship 2. The property or interest of the client must be in litigation 3. The attorney takes part as counsel in the case 4. The attorney by himself or through another purchase such property or interest during the pendency of the litigation Note: The presence of all the foregoing elements makes the acquisition by a lawyer of his clients property in litigation violative of the law and renders his conduct ethically improper. c. Where rule inapplicable i. The absence of any of the elements constitutive of the rule forbidding a lawyer from purchasing his clients property in litigation renders the prohibition in applicable. 1. Thus, it had been held that the prohibition apply where the property purchased by a lawyer was not involved in litigation, where the sale took place before it became involve in the suit, where the purchaser of the property in litigation was a corporation even though the attorney was an officer thereof, or where the sale took place after the termination of the ligation. 2. If at the time of the purchase the attorney-client relationship has terminated, the prohibition does not apply in the absence of fraud or the use of confidential information acquired during the previous employment. D. Effects of prohibited purchase

a. The purchase by an attorney of his clients property or interest in litigation is a breach of professional ethics. The attorney, in an appropriate case, may be disciplined for such misconduct. b. The transaction will be NULL and VOID ab initio