CASES UNDER CHAPTER 8 LAWYERS

FIDUCIARY OBLIGATIONS
1.

Judge
ADORACION
G.
ANGELES,
complainant, vs. Atty. THOMAS C. UY, JR.,
respondent. Jr.
A.C. No. 5019. April 6, 2000

Key phrase: spendthrift client

Doctrines:
1.

2.

3.

4.

The relationship between a lawyer and a client

is highly fiduciary; it requires a high degree of
fidelity and good faith. It is designed to remove
all such temptation and to prevent everything of
that kind from being done for the protection of
the client. Thus, Canon 16 of the Code of
Professional Responsibility provides that a
lawyer shall hold in trust all moneys and
properties of his client that may come into his
possession. Furthermore, Rule 16.01 of the
Code also states that a lawyer shall account
for all money or property collected or received
for or from the client.
Same; Same; Professional Misconduct;
Lawyers are bound to promptly account for
money or property received by them on
behalf of their clients and failure to do so
constitutes professional misconduct.The
records do not clearly show whether Attorney
Uy had in fact appropriated the said amount; in
fact, Mrs. Del Rosario acknowledged that she
had received it on February 12, 1999. They do
show, however, that respondent failed to
promptly report that amount to her. This is
clearly a violation of his professional
responsibility. Indeed, in Aya v. Bigornia, the
Court ruled that money collected by a lawyer in
favor of his clients must be immediately turned
over to them. In Daroy v. Legaspi, the Court
held that lawyers are bound to promptly
account for money or property received by
them on behalf of their clients and failure to do
so constitutes professional misconduct.
Same; Same; The Supreme Court has the
duty to look into dealings between
attorneys and their clients and to guard the
latter from any undue consequences
resulting from a situation in which they may
stand unequal.In this light, the Court must
stress that it has the duty to look into dealings
between attorneys and their clients and to
guard the latter from any undue consequences
resulting from a situation in which they may
stand unequal. The present situation calls for
the exercise of this duty.
Same; Same; In the absence of clear
evidence of misappropriation, the failure of
a lawyer to promptly report that he received
money on behalf of his client will warrant
suspension
for
one
month.For
misappropriating and failing to promptly report
and deliver money they received on behalf of
their clients, some lawyers have been
disbarred and others have been suspended for
six months. In the present case, the records

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merely show that respondent did not promptly
report that he received money on behalf of his
client. There is no clear evidence of
misappropriation. Under the circumstances, we
rule that he should be suspended for one
month.
NATURE OF CASE: ADMINISTRATIVE MATTER in
the Supreme Court. Violation of Canon 16, Code of
Professional Responsibility.
FACTS: In a letter dated February 11, 1999 addressed
to the Office of the Chief Justice, Judge Adoracion G.
Angeles of the Regional Trial Court of Caloocan City
(Branch 121) charged Atty. Thomas C. Uy, Jr. with
violation of Canon 16 of the Code of Professional
Responsibility.
In open court, accused Norma Trajano manifested that
she had alreadv settled in full the civil aspect in Crim.
Case No. C-54177 (98) in the total amount P36,500.00.
She further alleged that she paid P20,000.00 directly to
the private complainant and the balance of P16,500.00
was delivered to Atty. Thomas C. Uy, Jr., the lawyer of
the private complainant and accordingly produced in
open court the receipt for such payment signed by no
less than the aforesaid lawyer. Indeed, the civil liability
of the accused had already been satisfied in full.
However, the private complainant, Primitiva Malansing
[Del Rosario] manifested that she did not receive the
amount thereby constraining this court to direct Atty.
Thomas C. Uy to turn over the money to the private
complainant which he received in trust for his client.
Atty. Uy however argued that his client did not like to
accept the money but the assertion of the lawyer was
belied by his own client, the herein private complainant,
who manifested in open court her willingness to accept
the money.
Consequently, the Court suspended the proceedings to
enable Atty. Uy to get the money from his law office.
Unfortunately, it is already 12:15 oclock past noon but
Atty. Uy did not show up anymore and not even his
shadow appeared in Court.
Stripped of unnecessary verbiage, the Comment
contends that the respondent kept the money in his
office because that was the alleged wish of both his
client and her son. He allegedly informed them of such
money and tried to give it to them, but they insisted that
he retain it. He further maintained that it was only after
Judge Angeles issued the February 10, 1999 Order that
his client relented and accepted the money on February
12, 1999.
Bar Confidant s Report and Recommendation: That
Atty. Thomas C. Uy, Jr. be suspended from the practice
of law for one month.
Atty. Uys allegation that Judge Angeles prevented
Primitiva Del Rosario from saying in open court the
words HINDI PO KASI GUSTO KO PO NA MABUO
ANG PERA does not have any proof as nothing of that
sort appears in the transcript of stenographic notes. Atty.

Uy has not even bothered to refute the truth of the

contents of the stenographic notes, all the more
bolstering this Offices opinion that the said notes are
accurate and truthful.
The affidavits executed by Primitiva Del Rosario and
her son, Fernando Del Rosario, dated February 16,
1999 and June 7, 1999, respectively, attesting to Atty.
Uys averment that his act of personally keeping the
subject P16,500.00 was with and at their request cannot
be given much credence to outweigh the arguments of
Judge Angeles.
ISSUE: Whether or not Atty. Uy should be suspended?
HELD: YES. The relationship between a lawyer and a
client is highly fiduciary; it requires a high degree of
fidelity and good faith. It is designed to remove all such
temptation and to prevent everything of that kind from
being done for the protection of the client.
Thus, Canon 16 of the Code of Professional
Responsibility provides that a lawyer shall hold in trust
all moneys and properties of his client that may come
into his possession. Furthermore, Rule 16.01 of the
Code also states that a lawyer shall account for all
money or property collected or received for or from the
client.
In the present case, it is clear that respondent failed to
promptly report and account for the P16,500 he had
received from Norma Trajano on behalf of his client,
Primitiva Del Rosario. Although the amount had been
entrusted to respondent on December 14, 1998, his
client revealed during the February 10, 1999 hearing
that she had not yet received it. Worse, she did not even
know where it was. If it were true that Mrs. Del Rosario
was informed about the payment and that she entrusted
it to respondent, she would have known its
whereabouts. That she did not know it showed the falsity
of his claim.
It is noteworthy that respondent did not dispute the
foregoing transcript although it belied his allegation that
Mrs. Del Rosarios express wish was to have the
payments in full. Neither are we convinced by the
affidavits of Mrs. Del Rosario and her son, both of whom
affirmed their intention to have their money in the
safekeeping of respondent. It should be stressed that he
was her counsel and the compadre of her son.
Verily, the question is not necessarily whether the rights
of the clients have been prejudiced, but whether the
lawyer has
adhered to the ethical standards of the bar. In this case,
respondent has not done so. Indeed, we agree with the
following observation of the Office of the Bar Confidant:
Keeping the money in his possession without his
clients knowledge only provided Atty. Uy the tempting
opportunity to appropriate for himself the money
belonging to his client. This situation should, at all times,
be avoided by members of the bar. Like judges, lawyers
must not only be clean; they must also appear clean.

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This way, the peoples faith in the justice system would
remain undisturbed.
In this light, the Court must stress that it has the duty to
look into dealings between attorneys and their clients
and to guard
the latter from any undue consequences resulting from a
situation in which they may stand unequal. The present
situation calls for the exercise of this duty.
For misappropriating and failing to promptly report and
deliver money they received on behalf of their clients,
some lawyers have been disbarred and others have
been suspended for six months. In the present case, the
records merely show that respondent did not promptly
report that he received money on behalf of his client.
There is no clear evidence of misappropriation. Under
the circumstances, we rule that he should be suspended
for one month.
WHEREFORE, Atty. Thomas C. Uy, Jr. is hereby
SUSPENDED for one month. He is warned that a
repetition of the same or similar acts will be dealt with
more severely. Let copies of this Decision be served on
Atty. Thomas C. Uy, Jr. at his given address or any
other known one. Copies of this Decision shall also be
entered in his record as attorney and served on the IBP,
as well as the Court Administrator who shall circulate
them to all the courts in the country for their information
and guidance.
2.

IMELDA A. NAKPIL, complainant, vs. ATTY.

CARLOS J. VALDES, respondent. (A.C. No.
2040 March 4, 1998)

Key phrase: CPA lawyer bought Baguio property

FACTS: The friendship of JOSE NAKPIL and
respondent CARLOS J. VALDES dates back to the '50s
during their school days in De La Salle and the
Philippine Law School.
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 trust for the Nakpils until the
latter could buy it back.
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, respondent's law firm, Carlos J. Valdes &
Associates, handled the proceeding for the settlement of
Jose's estate. The ownership of the Moran property
became an issue in the intestate proceedings.
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. During the
pendency of the action for reconveyance, complainant
filed this administrative case to disbar the respondent.
On the first charge, complainant alleged that she
accepted respondent's offer to serve as lawyer and

auditor to settle her husband's estate. Respondent's law

firm then filed a petition for settlement of the estate of
the deceased Nakpil but did not include the Moran
property in the estate's inventory. Instead, respondent
transferred the property to his corporation, Caval Realty
Corporation, and title was issued in its name.
On the second charge, complainant alleged that
respondent's auditing firm (C. J. Valdes & Co., CPAs)
excluded the Moran property from the inventory of her
husband's estate, yet included in the claims against the
estate the amounts of P65,000.00 and P75,000.00,
which respondent represented as her husband's loans
applied "probably for the purchase of a house and lot in
Moran Street, Baguio City."
As to the third charge, complainant alleged that
respondent's law firm (Carlos J. Valdes and Associates)
filed the petition for the settlement of her husband's
estate in court, while respondent's auditing firm (C.J.
Valdes & Co., CPAs) acted as accountant of both the
estate and two of its creditors.

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The OSG recommended the dismissal of the
administrative case.
ISSUE: Whether or not respondent lawyer violated his
clients trust, therefore should be held administratively
liable?
HELD: NO. As a rule, a lawyer is not barred from
dealing with his client but the business transaction must
be characterized with utmost honesty and good faith.
The measure of good faith which an attorney is required
to exercise in his dealings with his client is a 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 innocence or improbability of
wrongdoing is considered in an attorney's favor.

Defense
On 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.
As to the second charge, respondent denied preparing
the list of claims against the estate which included his
loans of P65,000.00 and P75,000.00 for the purchase
and renovation of the Moran property.
As to the third charge, respondent denied there was a
conflict of interest when his law firm represented the
estate in the intestate 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. 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
latter's 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. Third, there was no
conflict of interests between the estate and the
claimants for they had forged a modus vivendi.
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
complainant's 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 respondent's 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.

As to the first two charges, 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.
To place the property beyond the reach of complainant
and the intestate court, respondent later transferred it to
his corporation. In the said reconveyance case, we
further ruled that complainant's documentary evidence,
which she also adduced in this administrative case,
should estop respondent from claiming that he bought
the Moran property for himself, and not merely in trust
for Jose Nakpil.
It ought to follow that respondent's act of excluding the
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. Respondent's misuse of his legal
expertise to deprive his client of the Moran property is
clearly unethical.
In the second complaint, 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 violated Canon 17 of
the Code of Professional Responsibility which provides
that a lawyer owes fidelity to his client's 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 an issue. The proscription
against representation of conflicting interests finds
application where the conflicting interests arise with
respect to the same general matter and is applicable
however slight such adverse interest may be. It applies
although the attorney's 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 the 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 its creditors are adverse to each
other. Respondent's 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.
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 husband's
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 respondent's law firm was to
contest the claims of these two creditors but which
claims were prepared by respondent's 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 respondent's duty to inhibit either of his firms from
said proceedings to avoid the probability of conflict of
interest.
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 good faith. In the case at bar, respondent exhibited
less than full fidelity to his duty to observe candor,
fairness and loyalty in his dealings and transactions with
his clients.
IN VIEW WHEREOF, the Court finds respondent

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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.
3.

GERVACIO L. LIWAG, complainant, vs. ATTY.

GILBERTO NERI, respondent.
Adm. Case No. 275. April 29, 1960

Doctrine:
ATTORNEY-AT-LAW;
BREACH
OF
PROFESSIONAL ETHICS; REPRIMAND.Respondent
attorney received from the complainant the sum of
P30.00 for the purpose of filing a collection complaint.
The respondent did not actually file the complaint for the
alleged reason that the debtors had given assurances to
pay, and did not return the filing fee, although he
informed the complainant that he had already done so.
Held: The respondent was guilty of a breach of
professional ethics. Considering, however, that the
respondent had not yet received anything for his
services and the complainant had subsequently been
paid, the court merely reprimanded him.
FACTS: The complainant, Gervacio L. Liwag, seeks to
disbar the respondent, Atty. Gilberto Neri.
spouses Enrique and Ursula Pineda requested the
complainant to act as counter-indemnitor with the Manila
Surety & Fidelity Company in a bond posted for said
spouses in favor of the National Rice and Corn
Corporation (NARIC). When the Pinedas had failed to
liquidate their obligation, the NARIC enforced the bond
against the Manila Surety and Fidelity Company and the
latter in turn collected from the complainant.
Having failed to recover extra-judicially said amount
from the Pinedas, the complainant engaged the services
of the respondent who agreed to handle the matter on a
contingent fee of forty per cent. As they were his
neighbors, the respondent, acting slowly, tried to talk to
the Pinedas, who admitted their indebtedness and
pleaded for time to pay the same.
When no payment had been made, the respondent
wrote a letter of demand, threatening to take judicial
action if the Pinedas would still not meet their obligation.
On the same date, the complainant delivered to the
respondent the amount of P30.00 as the filing fee for the
necessary complaint. The respondent did not actually
file any complaint, for the alleged reason that debtor
spouses had given assurances to pay.
CONTENTION: It is an established fact that the
respondent had received from the complainant P30.00
as filing fee. The respondent argues that his services
were not engaged solely "for the purpose of filing the
corresponding collection complaint", but to collect from
the Pinedas the amount owed; or, in other words, that
the respondent was given full discretion as to the means
for accomplishing the assignment.
ISSUE: WON respondent
professional ethics?

committed

breach

of

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HELD: YES. Respondent has committed a breach of
professional ethics when, contrary to the fact, he made
the complainant believe that the Pineda spouses had
already been sued in court and did not return the
amount intended for the filing fee.
Considering however, that the respondent has not yet
received anything for his services and that the
complainant has subsequently been paid, disbarment or
even suspension of the respondent from the practice of
his profession would be too harsh and unkind. We only
hereby reprimand him for the offense, with the warning
that a repetition of similar misconduct or, for that matter,
any violation of his oath will be dealt with more
drastically.
So ordered.
4.

VICENTE DIAZ, complainant, vs. RUPERTO

KAPUNAN, respondent. December 8, 1923

FACTS: This action for malpractice brought by Vicente

Diaz against Attorney Ruperto Kapunan, has to do with
the conduct of Attorney Kapunan during the legal
proceedings which followed the business troubles of
Vicente Diaz and Secundino de Mendezona, and
particularly relates to the conduct of Attorney Kapunan
in civil case No. 2098.
Vicente Diaz and Secundino de Mendezona formed a
partnership and entered into extensive business
transactions in the Province of Leyte. however, the
business failed to prosper, with the result that on
liquidation, it was found to have suffered a loss of
P67,000. When Diaz and Mendezona came to settle up
their affairs, they eventually formulated a document of
sale and mortgage in which Mendezona recognized a
debt in favor of Diaz in the sum of P80,000 and an
additional sum of P10,000 owing to Diaz, laid upon the
hacienda "Mapuyo," and to be paid within the term of
one year. When the year had expired Mendezona was
not to be found and his family was unable to meet the
payment.
Vicente Diaz, accompanied by his lawyer Emilio Benitez,
and Attorney Ruperto Kapunan. The bidding was
opened by Kapunan offering P12,000 for the property
and with Diaz and Kapunan raising the bids until finally
Diaz offered P12,500.
Diaz gave Kapunan P500 of the P1,000 mentioned in
the above quoted document. Diaz further f ollowed the
usual procedure to take over the property of Mendezona
pursuant to his bid of P12,500, which covered the
amount of the mortgage with its accumulated interest
and with the judicial expenses. There the bids stopped
on account of Diaz and Kapunan entering into the
agreement.
Although it was on December 23, 1922, that Diaz and
Kapunan entered into the agreement, Diaz could only
wait until January 4, 1923, following, to lay before this
court charges against Attorney Kapunan for alleged

unprofessional conduct.
Undoubtedly, before Kapunan had knowledge of the
disbarment proceedings, he presented a motion in the
Court of First Instance of Leyte asking that he be
permitted to retain the P500 in question, in part payment
of his professional fees.
When Kapunan must have had knowledge of the
disbarment proceedings, he filed another motion,
withdrawing his f ormer motion and asking the court to
permit him to turn over the P500 to Diaz.
Nevertheless, on July 10, 1923, the clerk of the Court of
First Instance of Leyte handed the P500 to Diaz who, in
turn, receipted for that amount.
Three charges seem to have been considered. The first
two, relating to Kapunan's attempt to represent both
parties in the case, and to molest and disturb Diaz by
frivolous motions, the law officer of the Government
finds not substantiated; and with this conclusion we fully
agree. The third charge is more serious and has to do
with Kapunan having intervened in the manner in which
he did in the sale of the property of his client
Mendezona.
ISSUE: WON Atty. Kapunan is guilty of misconduct?
HELD: YES. It provides that the following persons,
naming them, "cannot take by purchase, even at a
public or judicial auction, either in person or through the
mediation of another." The provision contained in the
last paragraph of said article is made to include lawyers,
with respect to any property or rights involved in any
litigation in which they may take part by virtue of their
profession and office. We do not believe this article has
been infringed by the respondent because he has not
purchased property at a public or judicial auction and
because his participation in the auction was in
representation of his client. It has been held that an
execution sale to the attorney of the defendant is not
unlawful if made in good faith, with the consent of the
client, and without any purpose of defrauding the latter's
creditors.
The more puzzling question relates to the alleged
violation by Attorney Kapunan of article 542 of the Penal
Code. This article punishes "any person who shall solicit
any gift or promise as a consideration for agreeing to
refrain from taking part in any public auction." The crime
is consummated by the mere act of soliciting a gift or
promise for the purpose of abstaining from taking part in
the auction.
Public policy discountenances combinations or
agreements on the part of bidders at execution sales,
the objects and effects of which are to stifle competition.
The courts will consider an agreement between a
judgment creditor and one claiming an interest in the
thing about to be sold under an execution, that neither
shall bid against the other, as void, unless all parties
concerned know of the arrangement and consent

thereto. Execution sales should be open to free and f ull

competition, in order to secure the maximum benefit for
the debtor. Article 542 of the Penal Code is, therefore, a
wise provision even though rarely invoked, and should
be used to discourage the stifling of bids at judicial
sales. Execution sales should be open to free and full
competition, in order to secure the maximum benefit for
the debtor.

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Held: 1) No. A lawyer should not exploit his mastery of
procedural law to score a technical knock-out over his
own client. Procedural rules, after all, have for their
object assistance unto parties in obtaining just, speedy,
and inexpensive determination of every action and
proceeding.
2)

We conclude that Attorney Kapunan has been guilty of a

technical violation of article 542 of the Penal Code.
5. PATERNO R. CANLAS, petitioner, vs. HON. COURT
OF APPEALS, and FRANCISCO HERRERA,
respondents.
G.R. No. L-77691; August 8, 1988; Sarmiento, J.
Facts: Respondent Herrera was the registered owner of
8 parcels of land in QC. He obtained several loans from
the L&R Corp. (financing institution) equal to P420,000.
As security, he executed deeds of mortgage in favor of
the corp. over the parcels of land. Upon failure to pay,
L&R extrajudicially foreclosed the mortgage, causing the
parcels of land to be sold at public auction, with L&R as
highest bidder.
Pending redemption, the respondent through petitioner
counsel filed a complaint for injunction against L & R, to
enjoin consolidation of title in its name, in which he
succeeded in obtaining preliminary injunctive relief. 2
years later, parties entered into a compromise
agreement whereby respondent was allowed another
year to redeem the property and that Atty. Canlas shall
be entitled to P100,000 as attorneys fees. The court
approved the compromise.
Respondent remained in financial straits, failing to
acquire the funds to repay the loans and the attorneys
fees. Petitioner moved for execution as to his fees,
which was granted but not collected.
Petitioner and respondent came to an agreement that
Atty. Canlas would redeem the property in favor of the
latter, executing a Deed of Sale and Transfer of Rights
of Redemption and /or to redeem, which enabled
petitioner to redeem and register the same in his name.
Respondent alleged that the deed was falsified and filed
an action for reconveyance and reformation of
document, disbarment proceedings, and various criminal
complaints, but the court ruled otherwise, stating that it
did not change the meaning of the contract. He then
filed a suit for Annulment of Judgment in the CA.
Petitioner argues that the petition for annulment was
actually a petition for certiorari and should be
dismissed.
Issue: 1) W/N respondents action is a petition for
certiorari.
2) W/N petitioner validly imposed and executed the
amount of his attorneys fees.
3) W/N redemption and sale of respondents
properties by petitioner was valid.

No. The attorneys fees should be

commensurate to the extent of services
rendered. In the case at bar, petitioners claim
for attorneys fees in the sum of P100,000 is
unreasonable. The case itself moreover did not
involve complex questions of fact or law that
would have required substantial effort as to
research or leg work for the petitioner to
warrant his demands. The fact that the
properties subject thereof commanded quite
handsome prices in the market should not be a
measure of the importance or non-importance
of the case.
Lawyering is not a moneymaking venture and
lawyers are not merchants. Respondents
bankruptcy should have tempered petitioners
demand for his fees. He placed his interests
over and above those of his client, in opposition
to his oath to conduct himself as a lawyer with
all good fidelity to his clients.

3.

Yes. The Court observed that the Deed of

Sale and Transfer of Rights of Equity of
Redemption and/or to Redeem was executed
following the finality of the decision approving
the compromise agreement. It is actually a new
contractnot one in pursuance of what had
been agreed upon on compromisein which,
as we said, the petitioner purportedly assumed
redemption rights over the disputed properties
(but in reality, acquired absolute ownership
thereof). By virtue of such a subsequent
agreement, the lands had ceased to be
properties, which are the object of any
litigation.
It is futile to invoke the rule granting attorneys a
lien upon the things won in litigation similar to
that vested upon redemptioners. To begin with,
the rule refers to realty sold as a result of
execution in satisfaction of judgment. In this
case, however, redemption was decreed by
agreement (on compromise) between the
mortgagor and mortgagee. It did not give the
petitioner any right to the properties
themselves, much less the right of redemption,
although provisions for his compensation were
purportedly provided.
At any rate, the transfer, so we hold, is not
subject to the injunction of Article 1491 of the
Civil Code. But like all voidable contracts, it is
open to annulment on the ground of mistake,
fraud, or undue influence, which is in turn
subject to the right of innocent purchasers for
value .For this reason we invalidate the transfer
in question specifically for undue influence as
earlier detailed. While the respondent Herrera
has not specifically prayed for invalidation, this
is the clear tenor of his petition for annulment in
the Appellate Court. It appearing, however, that

the properties have been conveyed to third

persons whom we presume to be innocent
purchasers for value, the petitioner, Atty.
Paterno Canlas, must be held liable, by way of
actual damages, for such a loss of properties.
To hold Atty. Canlas alone liable for damages
is to enrich said respondent at the expense of
his lawyer. The parties must then set off their
obligations against the other. To obviate debate
as the actual amounts owing by one to the
other, we hold Francisco Herrera, the private
respondent, liable to Atty. Paterno Canlas, the
petitioner, in the sum of P654,000.00
representing the redemption price of the
properties, in addition to the sum of P20,000.00
as and for attorneys fees. We order Atty.
Canlas, in turn, to pay the respondent Herrera
the amount of P1,000,000.00, the sum he
earned from the resale thereof, such that he
shall, after proper adjustments, be indebted to
his client in the sum of P326,000.00 as and for
damages.
6. Emilio and Cirila CAPULONG vs. Atty. Manuel
ALIO
A.M. No. 381; February 10, 1968; Concepcion, C.J.
Facts: Atty. Alino was charged by his former clients with
gross negligence tantamount to malpractice and
betrayal of his clients trust and confidence.
Respondent received from complainants the sum of
P298, for the specific purpose of applying the same to
the payment of the "appellate" docket fees (P24), appeal
bond (P15), (printing of) the record on appeal (P150)
and appellants' brief (P100). However, due to
respondents failure to pay the docket fees and deposit
the costs of printing, the appeal was dismissed.
Respondent claims that he was authorized to exercise
his judgment in determining whether he should
prosecute the appeal, and to regard the sum as
compensation for his services in connection with the
case, should he consider it advisable to desist from
appeal. Prior to the commencement of this
administrative proceedings, complainants' counsel
contacted respondent and advised him to settle the
matter with them, respondent said he would do so, but
actually did nothing about it. Hence, the complaint
herein was filed.
The Provincial Fiscal of Nueva Ecija, as deputized by
the SolGen, recommended the disciplinary action
against respondent after reception of evidence. He
stated that he intended to introduce additional evidence.
However, after securing 4 postponements of the date,
he did not introduce any. When the case was also set
for oral argument, he moved for the postponement, but
did not file a memorandum in his favor.
Issue: W/N respondents act of appropriating the
money for himself without notifying or giving an
account to his clients was valid.

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HELD: NO. Had complainants authorized him to decide
whether or not to prosecute their appeal or desist
therefrom, and, in the latter alternative, to keep the
P298.00 in question as his fees, respondent would have
retrieved the receipt issued by him for said sum, stating
specifically that it would be used for docket fees, the
record on appeal, the appeal bond and the (printing) of
their brief. Moreover, if his failure to pay said docket fees
and to deposit the estimated cost of printing of the
record on appeal was due to his decision pursuant to
the aforementioned authority he had allegedly been
given to desist from prosecuting the appeal and to
apply the money to the payment of his professional fees,
why is it that he filed a motion for reconsideration of the
resolution of the Court of Appeals dismissing the appeal
in consequence of said failure, thereby securing, in
effect, an extension of over five (5) months, to make
said payment and deposit, which, eventually, he did not
make?
Apart from suggesting a misappropriation of funds held
by him in trust for his clients and a breach of such trust,
the foregoing acts and omissions indicate the high
degree of irresponsibility of respondent herein and his
unworthiness to continue as a member of the legal
profession. Atty. Alino is DISBARRED.
7. ANDREA BALCE CELAJE, complainant, vs. ATTY.
SANTIAGO C. SORIANO, respondent (A.C. No. 7418.
October 9, 2007)
Facts: Complainant alleged that respondent asked for
money to be put up as an injunction bond, which
complainant found out later to be unnecessary as the
application for the writ was denied by the trial court.
Respondent also asked for money on several occasions
allegedly to spend for or to be given to the judge
handling their case. Said judge denied the allegation
and advised her to file an administrative complaint.
Respondent denied the charges and averred that they
were merely to destroy his character, and that it was the
complainant herself that boasted that she was a
professional fixer in administrative agencies as well as in
the judiciary. IBP Commissioner Funa found respondent
guilty for Gross Misconduct and recommended his
suspension for 3 years for misappropriating his clients
funds and for deceiving and abusing his clients
confidence. Complainant alleged that an amount of
more or less P270,000 was given to respondent, but
they were all undocumented. However, the amount of
P14,000 intended for an injunction bod was supported
by documents. Only P5,800 of such amount remained
unaccounted for. No motion for reconsideration was filed
by either party.
ISSUE:W/N Atty. Soriano violated the Code of
Professional Responsibility when he misappropriated
the funds given by his client.
HELD: YES. Canon 16 of the CPR mandates that a
lawyer shall hold in trust all moneys and properties of his
client that may come into his possession. He shall
account for all money or property collected or received
from his client and shall deliver the funds and property of
his client when due or upon demand.
Respondents failure to return the money to complainant
upon demand gave rise to the presumption that he

misappropriated it for his own use to the prejudice of,

and in violation of the trust reposed in him by his client.
It is a gross violation of general morality and of
professional ethics and impairs public confidence in the
legal profession, which deserves punishment. When a
lawyer receives money from the client for a particular
purpose, the lawyer is bound to render an accounting to
the client showing that the money was spent for a
particular purpose. And if he does not use the money for
the intended purpose, the lawyer must immediately
return the money to his client.
The Court has been exacting in its demand for integrity
and good moral character of members of the Bar who
are expected at all times to uphold the integrity and
dignity of the legal profession and refrain from any act or
omission which might lessen the trust and confidence
reposed by the public in the fidelity, honesty, and
integrity of the legal profession. Indeed, membership in
the legal profession is a privilege. The attorney-client
relationship is highly fiduciary in nature. As such, it
requires utmost good faith, loyalty, fidelity and
disinterestedness on the part of the lawyer. Atty. Soriano
is SUSPENDED for 2 years with a STERN WARNING
that a repetition of the same shall be dealt with more
severely. He is also ordered to restitute to his client the
amount of P5,800.
8. ATTY. PRUDENCIO S. PENTICOSTES, complainant,
vs.
PROSECUTOR
DIOSDADO
S.
IBAEZ,
respondent. A.C. CBD No. 167; March 9, 1999;
Romero, J.
Doctrine: The relation between an attorney and his
client is highly fiduciary in nature . . . (thus) lawyers are
bound to promptly account for money or property
received by them on behalf of their clients and failure to
do so constitutes professional misconduct.It is
glaringly clear that respondents non-remittance for over
one year of the funds coming from Encarnacion Pascual
constitutes conduct in gross violation of the above
canon. The belated payment of the same to the SSS
does not excuse his misconduct. While Pascual may not
strictly be considered a client of respondent, the rules
relating to a lawyers handling of funds of a client is
applicable. In Daroy v. Legaspi, this court held that (t)he
relation between an attorney and his client is highly
fiduciary in nature . . . [thus] lawyers are bound to
promptly account for money or property received by
them on behalf of their clients and failure to do so
constitutes professional misconduct. The failure of
respondent to immediately remit the misappropriated it
for his own use. This is a gross violation of general
morality as well as professional ethics; it impairs public
confidence in the legal profession and deserves
punishment.
FACTS:Encarnacion Pascual, sister-in-law of Atty.
Penticostes, was sued for non-remittance of SSS
payments. The case was assigned for preliminary
Investigation to Prosecutor Ibanez, wherein Pascual
gave P1,804 to respondent as payment of her SSS
contributions in arrears. Respondent did not remit the
amount, as certified by the SSS. Over a year later,
complainant filed with the RTC a complaint for
professional misconduct against respondent for the
failure to remit the amount, stating that it was a violation
of his oath as a lawyer. 7 days later, respondent paid the
amount to the SSS. Upon referral to the IBP, respondent

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alleged in his defense tdhat his act of accommodating
the request for payment was merely and act of Christian
charity, that the action was moot and academic as the
amount was paid, and that he was not liable as the acts
done by him was not in the capacity as a practicing
lawyer but as a prosecutor. The commission
recommended that he should be reprimanded with a
warning.
ISSUE: Whether the prosecutor should be reprimanded
by reason of his non-payment of the SSS fees.
HELD: YES. The duties of a provincial prosecutor do
not include receiving money from persons with official
transactions with his office.
This court has repeatedly admonished lawyers that a
high sense of morality, honesty and fair dealing is
expected and required of a member of the bar. Rule
1.01 of the Code of Professional Responsibility provides
that [a] lawyer shall not engage in unlawful, dishonest,
immoral or deceitful conduct. Respondents nonremittance for over one year of the funds coming from
Pascual constitutes conduct in gross violation of the
above canon. The belated payment of the same to the
SSS does not excuse his misconduct. While Pascual
may not strictly be considered a client of respondent, the
rules relating to a lawyers handling of funds of a client is
applicable.
In Daroy v. Legaspi, this court held that (t)he relation
between an attorney and his client is highly fiduciary in
nature . . . [thus] lawyers are bound to promptly account
for money or property received by them on behalf of
their clients and failure to do so constitutes professional
misconduct. The failure of respondent to immediately
remit the amount to the SSS gives rise to the
presumption that he has misappropriated it for his own
use. This is a gross violation of general morality as well
as professional ethics; it impairs public confidence in the
legal profession and deserves punishment.
Respondents claim that he may not be held liable
because he committed such acts, not in his capacity as
a private lawyer, but as a prosecutor is unavailing.
Canon 6 of the Code of Professional Responsibility
provides:
These canons shall apply to lawyers in government
service in the discharge of their official tasks.
A lawyer does not shed his professional obligations
upon assuming public office. In fact, his public office
should make him more sensitive to his professional
obligations because a lawyers disreputable conduct is
more likely to be magnified in the publics eye. Want of
moral integrity is to be more severely condemned in a
lawyer who holds a responsible public office.
Prosecutor Ibanez is REPRIMANDED and given a
STERN WARNING that the commission of the same will
be dealt more severely in the future.
9. FERMINA LEGASPI DAROY, LYDIA LEGASPI and
AGRIPINO LEGASPI, complainants, vs. ATTORNEY
RAMON CHAVES LEGASPI, respondent. (ALREADY
DISCUSSED UNDER CHAP VI NATURE AND

CREATION OF ATTORNEY-CLIENT RELATIONSHIP,

SAME DIGEST)
Doctrines applicable:
1.

2.

Same; Attorney is bound to turn over funds

belonging to his client Money collected by
a lawyer in pursuance of a judgment in favor of
his clients is held in trust and must be
immediately turned over to them (Aya vs.
Bigornia, 57 Phil. 8, 11). Section 25, Rule 138
of the Rules of Court provides that when an
attorney unjustly retains in his hands money of
his client after it has been demanded, he may
be punished for contempt as an officer of the
court who has misbehaved in his official
transactions and he is liable to a criminal
prosecution.
Same; Attorneys conversion of his clients
money constitutes deceit, malpractice and
gross misconduct.A member of the bar
who converts the money of his client to his own
benefit through false pretenses is guilty of
deceit, malpractice and gross misconduct in his
office of lawyer. The attorney, who violates his
oath of office, betrays the confidence reposed
in him by a client and practises deceit cannot
be permitted to continue as a law practitioner.
Not alone has he degraded himself but as an
unfaithful lawyer he has besmirched the fair
name of an honorable profession (In re
Paraiso, 41 Phil. 24, 25; In re David, 84 Phil.
627; Manaloto vs. Reyes, Adm. Case No. 503,
October 29, 1965, 15 SCRA 131; See Cabigao
and Yzquierdo vs. Fernando Rodrigo, 57 Phil.
20).

FACTS: Fermina Daroy, Lydia Legaspi and Agripino

Legaspi hired the Ramon Legaspi in May, 1962 to
represent them in the intestate proceeding for the
settlement
of
the
estate
of the spouses Aquilino Gonzaga and
Paz
VelezGonzaga. The complainants, together with their brother,
Vivencio, who was abroad, were adjudged as one of the
six groups of heirs of the late Gonzaga spouses,
their deceased
mother, Consuelo Gonzaga-Legaspi,
being a daughter of the spouses.
April 11, 1969 in a joint petition dated which Atty.
Legaspi signed as counsel for the complainants, agreed
that the coconut land left by the decedents would be
divided into six equal parts, that the administrator be
authorized to sell the land, and that, after payment of the
obligations of the estate, the net proceeds would
be distributed among the six groups of heirs.
The land was sold. Fermina Daroy came to know of
the sale only when Atty. Legaspi wrote a note dated
November 28, 1969 to her father, Teofilo Legaspi,
wherein
he
stated
"that
the money
we
have deposited may be withdrawn on December 8, 1969
at 9:00 o'clock". Atty. Legaspi advised Teofilo Legaspi to
see him on that date so that the money could be
withdrawn. Complainants were not able to withdraw the
money.
December 9, 1969 Mrs. Daroy received a note
wherein Atty. Legaspi Informed them that he used their

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money to solve his problems and that he would pay the,
as soon as he receives the proceeds of his jeep.
Complainants
made
several
demands
for payment buy Atty. Legaspi repeatedly broke his
promise and as such a complaint for his disbarment was
filed.
Version of Legaspi: Teofilo Legaspi supposedly went
to see him on October 21, 1969 and at
their conference they supposedly agreed that the sum of
P700 would be deducted from the P4,000 to cover
the expenses which he described as "expenses involved
from the parties litigants, expenses seeking evidence
and other expenses relevant to the case"
and "major expenses" in the case and that his attorney's
fees would be equivalent "to a share of the petitioners",
and that the balance of P3,300 would be divided into six
equal parts (six because of the four Legaspi children,
the father Teofilo Legaspi and the lawyer Ramon C.
Legaspi); that under such division each participant
would receive P412 each (P3,300 divided by six gives a
quotient of P550 not P412), and that he gave Teofilo the
sum of P412. No receipt was presented.
First week of November 1969 Teofilo got from him the
share of Vivencio. Money left with him amounted to
P2,476.
According to Atty. Legaspi the complainants "refused
consistently to receive" the said balance from him
because they wanted the full amount of P4,000. He said
that he had already paid to them the sum of P2,000 and
that only the sum of P476 was left in his custody. He did
not present any receipt to prove the alleged payment of
P2,000. He said that he could deliver that amount of
P476 to the complainants.
Mrs. Daroy stated that there was no agreement that
Atty. Legaspi would participate like an heir in the
partition. WON Atty. Legaspi paid the money to Teofilo
Legaspi? NO note of Atty. Legaspi to Mrs. Daroy dated
December 9, 1969, overwhelmingly belie his fabricated
theory that he conferred with Teofilo Legaspi at the end
of October or in the first week of November, 1969. He
was tempted to concoct a story as to his alleged
payments to Teofilo Legaspi because the latter is dead
and could not refute him. However, complainants'
documentary evidence refutes his prevarications,
distortions and fabrications.
ISSUE: WON Atty. Legaspi is guilty of malpractice?
HELD: YES. Carbon copy of a supposed extrajudicial
partition executed in 1968 by the four children of
Consuelo Gonzaga, by her surviving husband, Teofilo
Legaspi and by the respondent, Atty. Legaspi, all the six
being described in the document as "the legitimate
children and sole heirs of Consuelo Gonzaga, who died
on March 12. 1941". Atty. Legaspi is not a legitimate heir
and he did not explain why he is referred to as one. The
document casts a reflection on his competency and
integrity as a lawyer and on the competency and
integrity of the notary before whom it was
acknowledged. It was made to appear herein that
respondent Legaspi was an heir of Consuelo Gonzaga
when, obviously, he did not possess that status.
A lawyer, under his oath, pledges himself not to delay
any man for money or malice and is bound to conduct

himself with all good fidelity to his clients. He is obligated

to report promptly the money of his clients that has
come into his possession. He should not commingle it
with his private property or use it for his personal
purposes without his client's consent. He should
maintain a reputation for honesty and fidelity to private
trust. Money collected by a lawyer in pursuance of a
judgment in favor of his clients is held in trust and must
be immediately turned over to them
Section 25, Rule 138 of the Rules of Court provides that
when an attorney unjustly retains in his hands money of
his client after it has been demanded, he may be
punished for contempt as an officer of the court who has
misbehaved in his official transactions and he is liable to
a criminal prosecution.
A member of the bar who converts the money of his
client to his own benefit through false pretenses is guilty
of deceit, malpractice and gross misconduct in his office
of lawyer. The attorney, who violates his oath of office,
betrays the confidence reposed in him by a client
and practices deceit cannot be permitted to continue as
a law practitioner. Not alone has he degraded himself
but as an unfaithful lawyer he has besmirched the
fair name of an honorable profession
Sturr vs. State Bar of California: The conversion of funds
entrusted to an attorney is a gross violation of general
morality as well as professional ethics. It impairs public
confidence in the legal profession, "It deserves severe
punishment".
Holding: Atty. Legaspi is disbarred.
10. PLARIDEL SOTTO, Administrator of the Testate
Estate of Vicente Sotto, petitioner-appellant, vs.
QUINTILLANA SAMSON (SANSON), respondentappellee.
Doctrine: Attorney and Client; Prohibition against
counsel to buy client's property.The conveyance of
the property in litigation by the litigant to his counsel
during the existence of attorney-and-client relationship is
void. The statute prohibiting such sale is designed to
curtail any undue influence of the lawyer upon his client
on account of their confidential association.
Nature of case: REVIEW of a judgment of the Court of
Appeals.
FACTS: Since 1924, Atty. Vicente Sotto was appellee
Samsons counsel in several cases in which the adverse
party was her husband, Manuel Carratala, from whom
she was estranged. Sometime in March 1926, Atty.
Sotto filed a petition with the CFI of Cebu requesting for
judicial authority for Samson to sell her paraphernal
property without the need of her husbands consent.
In turn, Manuel Carratala filed a petition, asking the CFI
of Cebu to annul or prevent any conveyance of said
paraphernal property, and obtained a writ of injunction
forbidding both appellee Samson and Atty. Sotto from
carrying out the sale and registering any conveyance of
property with the Register of Deeds.
This notwithstanding, appellee Samson executed a
Deed of Sale whereby she sold and conveyed to her
counsel, Atty. Sotto, her paraphernal property known as
lot No. 872 of the Cadastral Survey of Cebu with the

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improvements existing therein. Also, Atty. Sotto gave
appellee an option to repurchase the property within two
years, which was extended to another two years.
However, the RD of Cebu refused to register the deeds
for registration.
In the CFI of Manila, appellee was able to obtain a
judicial authority to dispose of her paraphernal property.
Subsequently, she executed a confirmation deed of the
original sale to Atty. Sotto; and the latter succeeded in
the cancellation of the previous OCT and its transfer to
his name.
Another confirmation deed of the sale was executed in
view of a previous reversal of the Supreme Court by the
CFI of Manila presided by Judge Diaz.
On the other hand, the Cebu Court decided in favor of
appellee's husband, thereby declaring null and void the
sale of her paraphernal property in favor of her counsel;
that Atty. Sotto appealed to the Supreme Court but later
withdrew the appeal after the Philippine Legislature
enacted Act No. 3922 authorizing a married woman to
dispose of her paraphernal property without her
husband's consent; and that six days after the passage
of said law, Atty. Sotto had the third ratification deed
executed by appellee in his favor.
ISSUES: whether or not the sale in favor of Sotto is null
and void
HELD: YES. The Court declared that on May 11, 1926
when this sale was first agreed upon, Sotto was
Samson's lawyer in a litigation involving the subject of
the contract. Therefore, Sotto was disqualified to buy
under article 1459 of the Civil Code, which according to
Fisher's translationwhich we deem correctreads as
follows:
"ART.1459. The following persons cannot take by
purchase, even at a public or judicial auction, either in
person or through the mediation of another:
xxx
5. Justices, judges, members of the department of public
prosecution, clerks of superior and inferior courts and
other officers of such courts, the property and rights in
litigation before the court within whose jurisdiction or
territory they perform their respective duties. This
prohibition shall include the acquisition of such property
by assignment. x x x
The prohibition contained in this fifth paragraph shall
include lawyers and solicitors with respect to any
property rights involved in any litigation in which they
may take part by virtue of their profession and office."
Certainly, on said date there was pending in the Court of
First Instance of Cebu Civil Case No. 6448 which was a
litigation2 handled by Sotto as the lawyer, concerning
the same lot. Indeed, because of their client-attorney
relationship Sotto probably unduly influences Samson,
not only to sell the lot to him but also to accept terms
less favorable to her.
Judgment: Wherefore, it is our judgment that the
decision of the Court of Appeals should be, and is
hereby affirmed, with these additional directives: (a) In
case Sotto cannot return the lot to Samson he shall pay
for it (786 sq. m.) at the price of P70 pesos per square
meter; (b) Sotto shall also pay rents at the rate of P100

pesos a month from Sept. 17, 1932; (c) Samson shall in

turn pay Sotto the amount of P21,595.00 plus legal
interest from Sept. 17, 1932.
11. ROSARIO VDA. DE LAIG, ROMEO, JOSE,
NESTOR and BENITO, JR., all surnamed LAIG, minors,
assisted by Rosario Vda. de Laig, Their Guardian Ad
Litem, petitioners, vs. COURT OF APPEALS, CARMEN
VERZO, PETRE GALERO, THE REGISTER OF
DEEDS OF CAMARINES NORTE, THE DIRECTOR OF
LANDS, AND THE SECRETARY OF AGRICULTURE
AND NATURAL RESOURCES, respondents.
NATURE OF CASE: APPEAL by certiorari from the
decision of the Court of Appeals.
FACTS: On June 1, 1948, a deed of sale was executed
by and between Petre Galero as vendor and Atty. Benito
K. Laig as vendee, whereby the former sold to the latter
the land in question with its improvements, for
P1,500.00 plus attorneys fees due Atty. Laig for his
legal services as counsel for Galero in the successful
reconveyance case.

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through the Director of Lands, seeking the formers
required approval. Enclosed in the letter was a copy of
the deed of sale in Verzos favor, and an affidavit that
the land in point was sold to Verzo by homestead
grantee Petre Galero.
On August 30, 1952, Assistant Director of Lands Zoilo
Castrillo forwarded Verzos papers to the Secretary of
Agriculture and Natural Resources and recommended
that the sale, not being violative of the pertinent
provisions of the Public Land Act nor the rules and
regulations promulgated thereunder, be approved.
On September 12, 1952, Acting Secretary of Agriculture
Jose S. Camus approved the sale in favor of Carmen
Verzo. On September 27, 1952, the office of the Director
of Lands notified Carmen Verzo of such approval.
Whereupon, on October 13, 1952, Verzo declared the
land in her name for taxation purposes, and since then,
had been paying the realty taxes thereon.
On October 14, 1952, the deed of sale in Verzos favor
was registered, and a new TCT was issued in her name.

The OCT was delivered by Galero to Atty. Laig.

Unfortunately, vendee Atty. Benito K. Laig failed to
solicit the approval of the Secretary of Agriculture and
Natural Resources (then Secretary of Agriculture and
Commerce), as required by Section 118 of the Public
Land Act, as amended

On January 26, 1953, petitioner Vda. de Laig inquired

from the Register of Deeds of Camarines Norte if it was
true that OCT No. 1097 in favor of Galero had already
been cancelled and a transfer certificate of title had
been issued in favor of another person. Respondent
Register of Deeds Lapak replied in the affirmative.

Therefore, after Atty. Laigs death, on November 5,

1951, Vda. De Laig wrote the then Register of Deeds of
Camarines Norte, respondent Baldomero M. Lapak,
stating that the disputed parcel of land covered by
original Certificate of Title No. 1097 in the same of Petre
Galero, had been sold to her late husband, requesting
that she be informed of any claim of ownership by other
parties so that she could take the necessary steps, and
serving notice of her claim over the said property as
surviving spouse of the late Atty. Laig and as natural
guardian of their children.
On November 12, 1951, Register of Deeds Lapak
replied that Original Certificate of Title No. 1097 was still
intact and took note of her letter.

In no time at all, petitioners called the attention of the

Director of Lands to the existence of two deeds of sale,
one in favor of Atty. Benito Laig, and another in favor of
Carmen Verzo.

On August 14, 1952, the Office of the Secretary of

Agriculture and Natural Resources, thru then
Undersecretary Jose S. Camus, approved the deed of
sale submitted by Vda. De Laig to the Bureau of Lands.
On the same day, the Office of the Director of Lands,
addressed a letter to Atty. Benito Laig informing him of
the approval of the deed of sale executed by and
between him and Petre Galero.

On April 13, 1954, petitioner Vda. de Laig, together with

her minor children, filed the present action, docketed as
Civil Case No. 577 in the Court of First Instance of
Camarines Norte against respondents Carmen Verzo,
Petre Galero, the Director of Lands, the Register of
Deeds of Camarines Norte and the Secretary of
Agriculture and Natural Resources praying for the
annulment of the sale in favor of Carmen Verzo and the
cancellation of the second owners duplicate of OCT and
TCT by declaring the first OCT valid and effective or in
the alternative, by ordering Carmen Verzo to reconvey
the land in question to petitioners, plus P5,000.00 by
way of damages.

However, on July 15, 1952, Petre Galero, with the

assistance of Atty. Jose L. Lapak, son of respondent
Register of Deeds Baldomero M. Lapak, sought in court
the issuance of a second owners duplicate copy of OCT
No. 1097, claiming that his first duplicate of said OCT
was lost during World War II. On July 19, 1952or in a
span of only four daysa second owners duplicate
copy of OCT No. 1097 was issued by respondent
Register of Deeds Baldomero M. Lapak in favor of Petre
Galero. And right on that same day, Galero executed in
favor of respondent Carmen Verzo a deed of sale of the
land in issue for the sum of P600.00.
On July 30, 1952, Carmen Verzo addressed a letter to
the Secretary of Agrirulture and Natural Resources,

On March 15, 1953, the Bureau of Lands in Camarines

Norte reported to the Director of Lands that second
vendee Carmen Verzo had already successfully
obtained a transfer certificate of title over the land in
question, with the recommendation that the heirs of the
first vendee, Benito K. Laig, seek their remedy in court
as the status of the property at that stage does not
anymore fall within the jurisdiction of the Bureau of
Lands

On November 21, 1961, the trial court, in a decision,

dismissed the complaint and declared that the land
described is rightfully owned by Carmen Verzo,
declaring, among others, that plaintiffs-appellants slept
on their rights in not having the first deed of sale in favor
of Atty. Laig registered in the Registry of Property, and
therefore, have only themselves to blame for losing the
land; and exempted Galero from liability.
On April 12, 1962, petitioners appealed the decision of
the lower court to the Court of Appeals, which affirmed

the decision of the Court of First Instance of Camarines

Norte.
ISSUE: Who between petitioner Vda. De Laig and
respondent Carmen Verzo should be considered as the
rightful owner of the land in question?
HELD: The Court held petitioner Vda. De Laig as the
rightful owner of the land. The records reveal that
respondent Carmen Verso was not in good faith when
she facilitated the registration of her deed of sale, since
Atty. Laig was a boarder of Carmen Verzo in her house,
and the latter must have known such sale; because
transactions in the rural areas do not escape the
knowledge of persons living under one roof with a party
to the document, more especially when there exists
between such persons and party the peculiarly intimate
relationship of landlady and boarder in a small town.
Also, Petre Galero was able to procure another copy of
the duplicate of Original Certificate of Title No. 1097
covering the disputed land through the aid of Atty. Jose
Lapak who is the son of respondent register of deeds,
Baldomero Lapak, under clearly dubious circumstances.
As Carmen Verzo was not a purchaser in good faith, she
could never have been a registrant in good faith of the
deed of sale of said land in her favor.
For his malicious involvement, Baldomero Lapak is
liable under Sec. 117 of the Land Registration Act which
states as follows:
Whoever fraudulently procures, or assists in
fraudulently procuring or is privy to the fraudulent
procurement of any certificate of title or owners
duplicate certificate, shall be fined not exceeding five
thousand dollars (ten thousand pesos) or imprisoned not
exceeding five years, or both, in the discretion of the
court (Sec. 117, Act No. 496).
Baldomero Lapak likewise stands liable under Article 27
of the New Civil Code, which states: Any person
suffering material or moral loss because a public servant
or employee refuses or neglects, without just cause, to
perform his official duty may file an action for damages
and other relief against the latter, without prejudice to
any disciplinary administrative action that may be taken.
For in essence, his refusal to follow the directive of law
(Act No. 496) was a conduct injurious to the petitioner.
WE also find Atty. Jose L. Lapak liable under the
abovequoted Section 117 of Act No. 496 (Land
Registration Act), for which he should be, not only
prosecuted but also, disciplined as a member of the Bar.
Moreover, both Baldomero Lapak and his son Atty. Jose
Lapak are likewise civilly liable for failure to observe
honesty and good faith in the performance of their duties
as public officer and as a member of the Bar (Art. 19,
New Civil Code) or for wilfully or negligently causing
damage to another (Art. 20, New Civil Code), or for
wilfully causing loss or injury to another in a manner that
is contrary to morals, good customs and/or public policy
(Art. 21, New Civil Code).
WHEREFORE, THE DECISION APPEALED FROM IS
HEREBY REVERSED AND THE REGISTER OF
DEEDS OF CAMARINES NORTE IS HEREBY
DIRECTED (A) TO CANCEL TCT NO. T- 1055; AND (B)
TO ISSUE IN LIEU THEREOF A NEW TRANSFER
CERTIFICATE OF TITLE IN FAVOR OF THE HEIRS

Encarnacion / Recinto / San Diego

3B PALE 2015-2016
OF THE LATE BENITO K. LAIG; AND ALL THE
RESPONDENTS HEREIN, EXCEPT THE DIRECTOR
OF
LANDS
AND
THE
SECRETARY
OF
AGRICULTURE AND NATURAL RESOURCES, ARE
HEREBY ORDERED TO PAY JOINTLY AND
SEVERALLY PETITIONERS IN THE AMOUNT OF TEN
THOUSAND (P10,000.00) PESOS AS MORAL
DAMAGES; THE SUM OF FIVE THOUSAND
(P5,000.00) PESOS AS ATTORNEYS FEES; AND THE
COSTS. SO ORDERED.
12. Gerardo GO BELTRAN, complainant, vs. Inocentes
FERNANDEZ, respondent
FACTS: The evidence discloses that on or about June
13, 1928, one Honorio Pajaron, with his spouse
Natividad Ypan, conveyed to the complainant Gerardo
Go Beltran two parcels of land situated in Talisayan,
Oriental Misamis and described in the deed of sale,
Exhibit 3. A misunderstanding thereafter developed
between the parties with respect to the identity of the
parcels of land so conveyed regarding lot C.
Consequently, a series of suits, civil and criminal were
instituted by and between the parties to the deed, and,
in all these suits, respondent Inocentes Fernandez
appeared as counsel for the opponents of the
complainant herein.
On November 16, 1935, while criminal case No. 6586
aforementioned was pending appeal in the Court of First
Instance of Oriental Misamis, respondent purchased
from his client, Natividad Ypan, lot C in question.
Respondent claimed that the property purchased by him
was not the one which constitutes the object of the
series of litigations between the parties aforementioned.
In the investigation, however, conducted by the
provincial fiscal of Oriental Misamis, respondent
admitted that the land which he bought from his client is
the same land involved in the civil and criminal cases
filed by his client.
Thus, Gerardo Go Beltran, filed with this court a
complaint for malpractice against respondent Inocentes
Fernandez, a member of the Philippine Bar engaged in
the practice of law in Talisayan, Oriental Misamis. The
Solicitor-General, filed, after due investigation, the
corresponding complaint, charging respondent with
having purchased a property of his client involved in a
pending litigation in which he appeared as counsel, and
prayed that appropriate disciplinary action be taken
against him. On November 30, 1939, the Court of First
Instance of Oriental Misamis, to which the case was
committed for investigation, submitted a report
confirming in substance the charge and reiterating the
recommendation of the Solicitor-General.
ISSUE: whether or not respondent is guilty of
misconduct in purchasing the property of his client
involved in a pending litigation in which he appeared as
counsel?
HELD: YES. The Court held that respondent has
accordingly violated article 1459 of the Civil Code, in
breach of professional conduct. In accordance with the
exemplary punishment we have set forth in Hernandez
vs. Villanueva (40 Phil, 775), which involved a like
breach of professional ethics, respondent herein is
hereby ordered suspended from the practice of law for a
period of six months effective as of the date this
judgment becomes final.