I.

Ethics in Corporate Law

A. How to Avoid Conflict of Interest (Part II)

B. Client fraud in the corporate set-up

II. Ethics in Remedial Law

Read the attached case file. After reading the same do the following:

A. Research the Issues Confronting Lawyers in Accepting Cases.

B. Assume that you are the lawyer of the Defendant. Prepare to Discuss How to Handle the
Trial of the Case Against Client. Prepare a memorandum of the facts and law in your evaluation
of the merits of the case. Note: this is not the same as the memorandum submitted in court.

It is more of an outline of the facts and the law constituting your defense and the merits of the
complaint with an evaluation of the merits of the case. To be submitted on April 22, 2017
Representing Repugnant Clients
Every Lawyers Choice?

By Scott D. Laufenberg

Are a sense of justice and professional responsibility all that a lawyer considers in deciding
whether to take on a case or to choose between Case A and Case B? In the glow of law school
ethics or professionalism courses, this noble sense of fulfilling the right to representation appears
admirable, even sometimes seductive. But it is often unrealistic.

This is not to say that seasoned attorneys are not idealistic. Many of us take cases when no one
else will help or when the client cannot pay. But it is one thing to accept such a case by choice
and entirely another for a lawyer to be required to represent a specific client but have no say in
the decision. Practicing law is challenging enough without having mandatory representation
thrust upon us. Attorneys should be free to decide whether or not to represent a client or cause.

Satisfying and maintaining professional relationships with existing clients are extremely
important to the success of a practice. One of the core problems with compulsory representation
is the effect that the lawyers association with an unpopular client or a scandalous issue might
have on an attorneys existing clients. Intense media attention would likely accompany a high-
profile case; that might raise awareness of the lawyers or firms practice, but it would focus only
on that case and might even give the public a false impression about the types of matters the
lawyer handles. Even if the case does not receive media attention, news about the representation
may spread by word of mouth. Such concerns may not be a problem in New York or Los
Angeles, but in a small community they could be the bane of a budding professional career.

In theory, attorneys are advocates for others. Many people understand that representing the
person or issue does not equate with accepting or endorsing what a particular client does. In
practice, however, even the most sophisticated client may have difficulty accepting your
representation of a known pedophile or racist hate group.

Being concerned about how existing clients will react is a valid concern. I can recall several
political campaigns in which an attorney was characterized as implicitly unfit to hold public
office because of having represented criminal defendants. Here, opponents were attempting to
capitalize on the publics navet.

Attorneys also may face pressure from personal relationshipsfriends and family who may
disapprove of the representation of an unpopular client. Some might go so far as to question the
lawyers loyalty to friends and family and lose confidence in the lawyers overall judgment as a
result. Personal relationships represent an important source of client referralsand some people
may no longer recommend a lawyer who represented a serial rapist.

The fact is that lawyers may often be called upon to be an advocate for a client who engaged in
reprehensible behaviors or to advocate positions that the lawyer personally finds unacceptable.
Part of advocacy involves bringing clarity to complex issues or neutralizing the emotional
content of a case in seeking resolution. Effective advocates are able to put their personal views
aside to represent clients with whom they may personally disagree. This is not always possible,
however.

If a lawyer is repulsed by a client, can the lawyer really be an effective advocate? In such a case,
it may be a greater disservice to the client to accept the case. Being forced to accept the case
exacerbates this dilemma by preventing the attorneys option to decline the case.

As attorneys, we do not give up our personal moral standards when we become members of the
bar. Attorneys who are personally repulsed by the beliefs and actions of white supremacists
should not be forced to represent them. Further, although the lawyer does not implicitly or
explicitly endorse the clients actions or beliefs by establishing a defense, that representation can
unfortunately become a conduit for promoting those very beliefs. Ideally, attorneys would not let
the moral or ethical status of a clients actions or position impair their ability to be effective
advocates; unfortunately, this is not always possible in the real world.

Taking on an unpopular case might even lead to a malpractice claim if the lawyer is unable to
provide zealous representation. Although the competence of the lawyers defense may be
intellectually intact, conflicting personal values may render the lawyers performance subpar.

Asa P. Pete Gullett, CEO of Lawyers Mutual Insurance Co. of Kentucky, frequently speaks at
seminars on the ethical problems caused by procrastination, and how it can lead to a legal
malpractice claim. Although he speaks in general of dog cases, his advice is equally applicable
to attorneys representations of unpopular clients. Dog cases are those that are always bumped to
the end of the lawyers to-do list or sit in the corner of the desk taking up space and collecting
dust. A week turns into a month, and then six. Eventually, the lawyers lack of diligence in the
case can become a malpractice claim. If the lawyer dreads taking the case in the first place, how
strong will that defense be after six months or two years? A malpractice claimand the effect
even one claim may have on a careeris a serious consequence for something in which the
lawyer had no choice.

Attorneys should know how to deal with unacceptable clients in nonconfrontational ways. Often,
it is easier to sugarcoat the reason for not taking a case: I have a conflict and cannot represent
you or I am simply too busy to take your case right now. Why should attorneys feel
compelled to give such answers? After all, one of a lawyers ethical obligations to clients is a
duty of candor. We are not being candid, with ourselves or our clients, if we perpetuate these
responses. Comment 1 to Rule 6.2 of the ABA Model Rules of Professional Conduct does not
mandate the representation of a client who is regarded as repugnant.

We need to be honest with our clients and ourselves. Clients are better served if we can be
candid about why we will not represent them, without fear of ethical violation or the burden of
professional obligation.

Scott D. Laufenberg is an associate with Kerrick, Stivers & Coyle, P.L.C., in Bowling Green,
Kentucky. He can be reached at slaufenberg@kgslaw.com.

Every Lawyers Duty?

By Elizabeth A. Wolford

Upon entering law practice, few attorneys, I suspect, aspire to represent clients whose conduct or
actions are repulsive or violate the lawyers beliefs. Criminal defendants may be charged with
morally revolting crimes, from serial murder to terrorism to sexual abuse. Certainly no
respectable attorney would endorse this type of behavior.

Yet the Sixth Amendment dictates that all criminal defendantseven those charged with the
most heinous crimesare entitled to the right to assistance of counsel. Attorneys are the
guardians of the legal system. When admitted to practice, lawyers take an oath to uphold the
Constitution and to discharge their duties faithfully. That oath is not qualified by only if I really
want to or unless the client or case is unpopular or only if it wont impact my ability to make
my law school loan payments.

Attorneys are morally and ethically obligated to take on difficult cases and clients exactly
because the willingness to do so is fundamental to the integrity of our judicial system. Our
democratic society depends upon the rule of law, which is itself based upon an effective and fair
judicial system. Lawyers play a vital role in ensuring that the rule of law is followed and the
system of justice, fair. If lawyers refuse to participate actively in that judicial system, or to
participate only with those cases or clients they personally support, the entire system falls at risk.

The assumption that somebody else will take the case is no excuse for a lawyers unwillingness
to get involved. Each attorney has an individual responsibility to live up to the expectations and
duties of the profession.

Some may suggest that no attorney carries an obligation to take on personally upsetting cases.
Surely, however, those attorneys who represent controversial clients or issues do not necessarily
embrace the alleged conduct or endorse the alleged behavior. But they do embrace the
fundamental principles underlying our justice system and Constitution.

It is the rule of law and our judicial system that sets the United States apart from much of the rest
of the world. As Supreme Court Justice Sandra Day OConnor warned in the recent Supreme
Court decision in Hamdi v. Rumsfeld, 124 S. Ct. 2633 (2004), involving an American citizen
who was detained as an enemy combatant, It is during our most challenging and uncertain
moments that our Nations commitment to due process is most severely tested; and it is in those
times that we must preserve our commitment at home to the principles for which we fight
abroad.

Naturally, a lawyer must be concerned about the financial impact of or public reaction to
publicly sensitive representation. Yet if law school loans prevent an attorney from protecting the
Constitution and the efficient administration of justice, then thatattorney is in the wrong
profession and should never have incurred those loans in the first place.

It also seems too easy a way out for an attorney to decline representation under the theory that he
or she cannot zealously advocate on behalf of the client. The ethics rules do provide this easy
way out. The ABA Model Rules of Professional Conduct do not require attorneys to take on
clients or causes that they find repugnant. Rule 6.2 provides that good cause will exist to avoid
appointment by a tribunal to represent a person where the client or the cause is so repugnant to
the lawyer as to be likely to impair the client-lawyer relationship or the lawyers ability to
represent the client. However, the comment to the rule goes on to state:

A lawyer ordinarily is not obliged to accept a client whose character or cause the lawyer regards
as repugnant. The lawyers freedom to select clients is, however, qualified. All lawyers have a
responsibility to assist in providing pro bono publico service. See Rule 6.1. An individual lawyer
fulfills this responsibility by accepting a fair share of unpopular matters or indigent or
unpopular clients. A lawyer may also be subject to appointment by a court to serve unpopular
clients or persons unable to afford legal services.

Moreover, Rule 1.2 provides that a lawyers representation of a client does not constitute an
endorsement of the clients political, economic, social or moral views or activities.

As attorneys, we are obligated not to let our opinion of a client or cause impair the lawyer-client
relationship or our ability to represent the client effectively. The escape clause provided by
Rule 6.2 should never come into play; our personal feelings should not influence our ability to
effectively advocate on behalf of a client.

Is this simply idealistic rhetoric? It is by no means easy to prevent personal standards or

experiences from influencing ones view of a particular case or client. But the question can arise
whether it is the repugnant nature of the client or case that is influencing the attorney not to take
the caseor, more practically, the negative impact such representation would have on the
lawyers practice. No professional likes being criticized within a communitybut an attorney
would be an extremely ineffective advocate indeed to choose cases based upon the perceptions of
others. A lawyer with an acceptable reputation in the community likely would not have to worry
about clients being turned off by the choice to represent a controversial cause or individual.
Indeed, lawyers seem to be obligated to take on difficult casesand, as importantly, to defend
our peers who have done so and explain why only the bravest and most admirable lawyers do. If
negative public reaction to the simple fact of representation arises, then we as attorneys have not
done an effective job of educating the public and our clients (and, perhaps, other lawyers) about
the constitutional right to representation guaranteed to all. Not to include this in our role as
lawyers simply pays lip service to the concept of justice.

Many people easily recall one of the best-loved characters in fiction, Atticus Finch in Harper
Lees To Kill a Mockingbird, who decides to represent Tom Robinson, a black man accused of
raping a very poor white girl named Mayella Ewell. Facing harsh criticism, which ultimately
threatens the life of his children, Finch nonetheless defends Robinson against the racist societys
presumptions of guilt. Finch takes the case because his conscience would not let him do
otherwise.

Or consider the real-life hero John Adams, second president of the United States. Long before he
rose to such stature in our country, Adams agreed to represent British soldiers accused of
intentionally killing Boston residents during the Revolutionary Wars Boston Massacre.
Agreeing to represent the despised redcoats could hardly have been considered good practice
development. But attorneys who refuse to become embroiled in the difficult case, who do not act
because of fear of retribution, will not leave their mark on society.

Although the need for adequate defense counsel is self-evident in a criminal case where
implications of the Sixth Amendments right to counsel come into play, the underlying principles
of right to counsel are no less applicable to the civil arena. Whether a case is civil or criminal,
our country has but one justice system; as attorneys, we are its servants.

In fact, at least one court has determined that the failure to represent a client can, under certain
circumstances, constitute unlawful discrimination. In Nathanson v. Commonwealth of
Massachusetts, 2003 WL 22480688 ( Mass. Super. Ct. 2003), the Massachusetts Superior Court
upheld a decision by the state Commission Against Discrimination in an unlawful gender
discrimination case. The court found that a female attorney had discriminated by declining to
represent a male client in a divorce action. The attorney argued that her commitment to
representing women in divorce proceedings precluded her from advocating zealously on behalf
of men, but the court rejected her attempt to cloak discrimination in the canons of legal ethics:

While an attorneys ability to advocate zealously for a client is a relevant consideration in

determining whether an attorney is legally required to provide representation, it is not
permissible for an attorney to assert a discriminatory agenda as grounds that she is unable to
advocate zealously for a client. This is because an attorney is required to adhere to and follow the
law.

Our profession is filled, at times, with difficult decisions. But lawyers are trained to take two
sides. It is the brilliant lawyer who can take any side of an issue and advocate effectively on
behalf of any client. In the words of the British novelist Charles Dickens, If there were no bad
people, there would be no good lawyers.

Why might a personal injury lawyer decline my case?

Find out what makes an attorney likely to turn down your accident or injury case

Written by: Enjuris Editors

How can I contribute?

You will want to interview a few different personal injury lawyers before you decide which
attorney to hire. Don't be discouraged if the first lawyer turns down or refuses your case.
Just as you are evaluating the attorney, he or she is also evaluating your personal injury
case's potential, as well as their costs and ability to represent you well. There may be other
factors unrelated to your injury or accident, also.

Even years after an accident, some people whose cases were turned down by an attorney
may never have fully understood why. It may be any number of these factors at play.

If you're facing a potential personal injury lawsuit, find out ahead of time the factors that are
important to lawyers and evaluate your case potential through the eyes of those who may
accept or decline to represent you.
Difficulty establishing liability

The first issue that the prospective lawyer will look at in any given case is the issue of
liability.

Just because someone was injured does not mean that someone else is legally required to
pay for these injuries. If the victim is responsible for his or her own injuries, there will be
no recovery. A lawyer evaluates a case and determines which parties may bear
responsibility for the accident.

If another party is not legally responsible for the accident, the case will be denied.

Inadequate amount of damages

The amount of money that a personal injury case can be awarded is based on the damages
that the plaintiff (the person injured) suffers.

Damages may include property damage, medical expenses, lost time from work, lost earning
capacity, mental anguish and pain and suffering.
An attorney must be able to justify taking the time and expending the necessary resources to
handle the claim.

This is especially important in personal injury cases because these are usually handled on a
contingency fee basis. This means that the lawyer receives a certain percentage of the total
settlement or verdict.

If this number is expected to be low, it may not justify a large amount of time expended on
the case.

Enjuris tip: See potential hidden costs of hiring an attorney and other factors to consider
when discussing fees with a lawyer: Negotiating fees with a personal injury lawyer

Limited resources of the defendant

A personal injury lawyer may also reject a case if he or she believes that the defendant (the
person to be sued) does not have the proper resources to pay the claim.

In most personal injury cases, insurance coverage is available to help pay for the damages
that the victim sustains.

However, in some situations, insurance coverage may be denied or a private party may not
have insurance coverage that applies.

One reason a case may be rejected: sometimes theres simply no money, even if you deserve
compensation. Tweet this
In that case, the defendant's resources will need to be tapped into in order to collect on the
eventual settlement or judgment.

If a defendant is financially unable to pay for the damages that he or she is responsible for,
the lawyer may not receive his or her agreed upon fees.
Likewise, if the lawyer believes that there will be difficulty collecting on the judgment for a
reason such as most of the defendant's resources are tied up in legally separate entities or
corporations, he or she may be unwilling to take the risk of pursuing the case.

Expense of the case

Because most personal injury cases are taken on a contingency fee basis, this means that the
lawyer may invest a significant amount of time in a case with no guarantee that he or she
will be paid for his or her time.

The attorney will be paid for his or her time only when he or she collects on the judgment.

A lawyer handling a case with a contingency fee may also pay for some of the expenses
associated with the case. If the case goes to trial, this can mean that the lawyer pays to take
depositions, to copy documents for discovery, copy documents that will be used as
evidence, prepare exhibits, pay medical experts and pay other experts to provide valuable
information about the case.

If these expenses are too much, the lawyer may not be able to afford to handle the case and
may decide to reject it.

In contrast, a lawyer may accept those cases that he or she feels confident will compensate
for the risk and expenses that the lawyer faces.

Too much time required

A personal injury attorney must analyze how long a case may take.
If the case is expected to take a long time, the lawyer may not receive the money that he or
she invests in the case for a long time. He or she may not be able to carry this risk.

Additionally, if the case takes too long, this may not allow the lawyer to be available to take
advantage of other cases.

Your case involves a novel Issue

If there is a complex and novel issue involved in a case, the lawyer may not feel that he or
she has the necessary experience to properly handle the case.

While research may help make the lawyer competent to handle the legal issue, this may
involve another investment of time.

Enjuris tip: The attorney must balance risk and reward. If they take on your case, they will
be foregoing another opportunity, as every firm has caseload and resources to consider.
They must expect a case to bring great enough reward to make the effort worthwhile.

Likewise, if the attorney does not handle the particular type of personal injury case, he or
she may decline to handle the case.

Similarly, if the case involves governmental immunity, federal court jurisdiction or other
jurisdictional matters, the lawyer may want to avoid the complications that these factors
may entail.
Conflict of interest

Attorneys must adhere to a strict set of ethical guidelines. If they violate these guidelines,
they can risk losing their professional license. An attorney may reject a client if he or she
previously represented the defendant.

If he or she is morally or intellectually at odds, he or she may also perceive a conflict and
choose to reject the case.

Poor rapport with client

In some instances, a personal injury attorney may not feel that he or she has good rapport
with a particular client. If the attorney feels like the client does not trust him or her, the
attorney may simply not take the case rather than face client difficulties down the line.

Other attorneys rejected the client

Sometimes a client who has been rejected by previous attorneys may raise red flags that a
new attorney may want to avoid.

If the client has fired several attorneys, the new lawyer may perceive that the client has
difficulty with lawyers. If other attorneys have rejected the client, they may have perceived
some problem with the case and may avoid accepting the client.

Statute of limitations has expired

An important reason why a personal injury attorney may reject a client is when the
relevant statute of limitations has expired.
Even if the client had a good case, the expiration of the statute of limitations bars the client
from proceeding with the case.
 RETAINER AGREEMENT
6 February 2006

______________________
______________________
______________________
______________________

Attention: _______________

Gentlemen:

We have the honor to propose this retainer agreement for our engagement as legal
counsel for ______________________, (the Corporation). Upon your acceptance of this
proposal, the services of (name of law firm) through its different Service Departments, namely,
the Retainer, Intellectual Property (Patents, Trademarks and Copyrights), Corporate and Special
Projects, Labor, Immigration, Litigation (including Administrative Litigation, Arbitration and
Admiralty) and Tax Departments, as well as the services of our Cebu and Davao Branches, shall
be available to the
Corporation, subject to the following terms:

Effectivity Date1: _______________

Retainer Fee:2 P=________, or P=_________ per quarter, plus12% value added tax, payable
quarterly in advance within the first five (5) days of the first month of each calendar
quarter.

This amount is tentatively fixed at this time since it is difficult for you and us at this stage to
determine the volume of work, the nature of services to be rendered and the complexities of the
problems that you may be encountering. Such retainer amount will be subject to adjustment upon
mutual agreement of the parties if our periodic review of the engagement indicates that economic
conditions or the volume of retainer work necessitate such adjustment.

Services Covered by the Retainer Fee: The retainer fee will cover the legal services required in
the ordinary course of the Corporations business, such as consultations, advice and preparation
of simple contracts and opinions, but shall not cover legal services (including the drafting and/or
review of contracts and/or the rendering of opinions) which will require extensive studies or time
involvement by our lawyers, or assistance at negotiations with, or representation before, any
governmental instrumentality. In the event our periodic review of the engagement indicates that
the services rendered under this paragraph substantially exceed the amount of retainer fees paid,
we reserve the right to send you additional retainer fee billing(s).

Other Services Subject to Separate Billings: All services required of us other than those included
above, such as litigation in court or appearance before legislative, quasi-judicial or administrative
bodies or officials, other extraordinary legal services, as well as the services of our _____ and/or
_____ Branches, shall be subject to separate special billings at a rate based upon, among others,
the time spent and the extent of the services rendered or required, the novelty and difficulty of
the questions involved, the importance of the subject matter, the skills demanded and the amount

1
The effectivity of this agreement shall be subject to our receipt of (a) your written conformity to this
retainer agreement, and (b) the initial retainer fee within fifteen (10) days from date hereof. (You may
immediately fax to us an advance copy of the duly conformed to retainer agreement and send the original
thereof to us by courier.)

2
Subject to an additional amount corresponding to the applicable VAT in accordance with Republic Act
No. 9337 and its implementing regulations.
involved in the project or controversy, and the benefits resulting to the client from the service.
We shall inform you whenever a particular case, project or matter you refer will be deemed by us
as not covered by the retainer fee and, therefore, subject to separate special billings. However,
we will take the retainer relationship into account and whenever we feel that the services covered
by the retainer agreement are not being fully availed of, we will make appropriate adjustments to
billings described in this paragraph. We reserve the right to make our own assessment of cases
and/or other matters referred to us for purposes of determining the proper disposition of the
referral. We shall send you on a regular basis a statement of account for our services which are
subject to separate special billings.

Delivery of Legal Services: Generally, a team of at least three (3) lawyers - composed of a
Supervising Partner, a Partner or Senior Associate in-charge, and one or more assisting
Associates - is assigned to every retainer client and to every case or project referred to the Firm.
Our policy of creating a team of lawyers for every retainer client and for every referral, we
believe, promotes superior work and also ensures, among others, that more than one lawyer will
be responsible for any matter referred to us, whether covered by the scope of our retainer
services or otherwise, and that any member of the assigned team of lawyers can take over the
role of another who may not be available at any particular point in time. The members of the
assigned team of lawyers do not work in isolation within our Firm. From time to time, they may
have to consult with members of the other service groups in our Firm, i.e., the Corporate and
Special Projects Department, Tax Department, Labor Department, Litigation Department,
Immigration Department, and Intellectual Property Department.

Out-of-pocket Expenses: Ordinary out-of-pocket expenses such as internet services, word

processing, machine reproduction and transportation expenses, as well as per diems and
accommodation expenses (which are at least business class for our lawyers) incurred in
undertaking work for you outside the Metro Manila area, and other special out-of-pocket
expenses you may authorize us to incur (which shall always be cleared with you in advance),
shall be for your account. In this connection, we would request you to deposit with us the amount of
P=__________ to cover such out-of-pocket expenses. Our Accounting Department will regularly render a
report on these expenses and, if necessary, request a replenishment of the deposit.

Interest Charges: Unpaid legal fees shall be charged two percent (2%) interest per month starting
thirty (30) days after your receipt of the first billing. Further, any amount advanced by the Firm
for your account shall be charged two percent (2%) interest per month from the date the amount
was disbursed.

Conflict of Interest: In case any matter should arise between you and another client of this office,
by virtue of which we might have a conflict of interest under the code of professional
responsibility which binds all lawyers, we reserve the right to inhibit ourselves from representing
you and/or our other client(s) insofar as that particular matter is concerned.

Termination: This retainer contract is subject to termination by either party on sixty (60) days
notice in writing.

If the foregoing meets with your approval, please indicate your conformity in the space provided
herein below and return to us a signed duplicate original of this letter for our files. We look
forward to being able to work with you closely and to servicing your legal requirements.

Very truly yours,

___________________________________

By:
C O N F O R M E:

____________________
By:
 DESCRIPTION

Vic Traders Corporation (VTC) is a corporation engaged in the merchandising and

trading business whose principal office prior to August 17, 2005 was at No. 353 Aurora
Boulevard, Quezon City.

Mighty Glue Corporation (MGC) is a corporation engaged in the manufacture of

industrial glues, vulcanizing cement, rubber cement, leather dressings, leather varnishes and
cutting dies, most of which need highly inflammable and flammable solvents for their
manufacture into finished products, such as Tuluol, Pegasol and Barsol, among others.
Specifically, the manufacture of leather dressings and leather varnishes required as an element
the chemical substance known as nitrocellulose. Before August 17, 2005, the principal office
of MGC was No. 355 Aurora Boulevard, Quezon City, adjoining that of VTC.

On August 17, 2005. at about 11:30 a.m., a fire, preceded by explosions, broke out from the
Adhesives Department of MGC. The fire gutted not only the principal office of MGC but
likewise the adjoining building of VTC.

On January 1, 2006, VTC filed a complaint for damages against MGC with the Regional Trial
Court of Quezon City alleging that the fire was caused by the fault or negligence of defendant
and/or its employees in not taking the necessary precautions to avoid damage to others and in
failing to comply with the requirements of the authorities relative to the use and storage of highly
inflammable goods and materials like nitrocellulose which is needed in the manufacture of its
products. The complaint seeks from MGC the payment of compensatory damages in the amount
of P25 million, with legal interest from the filing of the complaint, plus exemplary damages,
counsel fees, expenses of litigation and the costs of suit.

Upon receipt of the summons and the complaint, MGC referred it to the Magdangal and Matatag
Law Firm (the M & M Law Firm), its retained counsel. MGC pays the M & M Law Firm a
monthly retainer of P20,000 under a retainer agreement, a copy of which is attached.

It is the policy of the M & M Law Firm that for non-retainer clients a case referral must be
carefully evaluated and must be rejected if the Litigation Department is of the view that the
clients position is not meritorious. But for retainer clients like MGC this policy is relaxed and
the M & M Law Firm feels obligated to accept the referral even if the Litigation Department has
misgivings about the merits of the case.

The referral of MGC was referred to a team of three lawyers who immediately proceeded to
interview the principal operating officers of the client and the prospective witnesses. The team,
as is the practice of the firm, prepared an analysis of the facts and the law. The team expressed
serious doubts on the merits of the case, especially on the issue of the presence of nitrocellulose
in MGCs premises and whether it was the cause of the fire. It is MGCs position that the
cause of the fire was of undetermined origin or accidental in origin of undetermined source,
probably due to an electrical short circuit.

The members of the legal team felt that the clients prospective witnesses were not fully
disclosing the truth and that VTCs complaint is meritorious.

Assume that at the trial VTC will present the following two principal witnesses:

1. Manuel de los Santos, a former employee of MGC, who will testify as follows:
(a) Before August 17, 2005 he recommended to, and caused the importation by MGC, of four
(4) drums of nitrocellulose which was stored in MGCs Adhesive Manufacturing Department
and that he was the one who supervised the use of the same.
(b) He had been advising MGC that the drums of nitrocellulose be stored in a separate building
outside the main building of the company.
(c) When his employment was terminated by MGC sometime in June 2005, there were still two
(2) drums of unused nitrocellulose stored in the premises of MGC.

2. Reynaldo Reyes, also a former employee of MGC, who will testify as follows:

(a) On August 17, 2005, while working in the Adhesive Department of MGC, he saw that
something was smoking inside one of the drums stored in the premises.

(b) He hurriedly ran to the office of Mr. Oscar Cervantes, his boss, the one in charge of the
Adhesive Department, to tell him about the smoking drum.

(c) Mr. Cervantes and he immediately went to where the smoking drum was. Mr. Cervantes
told him and the other employees who by then had also rushed to the scene not to tinker with
the drum because it contained nitrocellulose and that it might explode and for them to remove
anything located around the drum that might catch fire.

(d) Shortly after Mr. Cervantes had warned them so, the drum exploded.

When the team handling the case interviewed Mr. Oscar Cervantes who had resigned
from MGC after the fire he refused to testify for MGC for the purpose of contradicting the
story of Mr. Reynaldo Reyes about the incident.

On the part of MGC, the team handling the case was asked to present witnesses who
would testify that the probable cause of the fire was an electrical short circuit.

1. Mr. Nicolas Salas He will testify that long before the fire MGC had stopped the manufacture
of leather dressings one of the ingredients of which is nitrocellulose and that at the time of the
fire the nitrocellulose supply of MGC had already been consumed.

2. Mr. Pedro Garcia He will testify that on August 17, 2005, at about 11:00 a.m., he was
conferring with his boss at the conference room when they heard the ringing of the alarm bell.
They then hurriedly went out and he saw the three electrical wires in MGCs premises parallel to
the two meter wide alley at the height of about 8 to 10 meters burning and their insulations were
peeling off and were burning rapidly towards their opposite ends.

3. Gil Salas, As an expert witness, he will testify that the excessive heating of electrical wire
caused by such electrical wires carrying electrical current beyond its rated capacity may cause
fire. Example: When a motor connected to an electrical wire becomes overloaded and the motor
is damaged, short circuit may occur inside the motor causing the same to draw a larger amount of
electric current causing the electrical wires to carry current beyond their rated capacity and the
insulation thereof will burn and this starts the fire.

The team of lawyers assigned to handle the case in the M & M Law Firm were skeptical about
the credibility of MGCs witnesses because the evidence was overwhelming that a drum in
MGCs premises exploded and that this started the fire.

Complaint of VTC
 REPUBLIC OF THE PHILIPPINES
NATIONAL CAPITAL REGION
REGIONAL TRIAL COURT
QUEZON CITY, BRANCH______

VIC TRADERS CORPORATION,

Plaintiff,

- versus - CIVIL CASE NO. ________

MIGHTY GLUE CORPORATION

Defendant.
x-----------------------------------------x

COMPLAINT

PLAINTIFF, through counsel, respectfully alleges that:

1. Plaintiff is a corporation duly organized and existing under the laws of the Philippines, with
principal place of business and offices in Quezon City as borne by its Articles of incorporation.

Defendant is a corporation duly organized and existing under Philippine laws, with
principal offices at No. 150 Pioneer Street, Mandaluyong, Rizal, where it may be served with
summons and other processes of this Honorable Court.

2. At all times material to this case, plaintiff was essentially a trading firm while defendant was
essentially a manufacturing firm and both firms had their offices and trading/manufacturing
spaces at Vic Traders Compound at 353 - 355 Aurora Boulevard, Quezon City.

3. On or about August 17, 2005, a fire exploded from the Adhesives Department of the defendant
at 355 Aurora Boulevard, Quezon City, where it stored highly inflammable materials such as but
not limited to toluol, pegasol, nitro-cellulose that it used in the manufacture of rubber cement,
adhesives, sodium silicate, glue, varnish, and the like, as a result of which the adjacent offices
and building of the plaintiff, together with the contents thereof consisting of various
merchandise, finished goods, raw materials, machinery and equipment in use and other
equipment belonging to plaintiff were totally lost or destroyed.

4. The said fire was caused by the fault or negligence of defendant and/or its employees in not
taking the necessary precautions to avoid damage to others and in failing to comply with the
requirements of the authorities relative to use and storage of highly inflammable goods of
materials.

5. As a result of the said fire that was caused by the fault or negligence of the defendant and/or
its employees, the plaintiff suffered damages in the amount of at least P2,142,599.50, itemized as
follows:

Estimated Merchandise Inventory Loss

P1,507,503.24

FIXED ASSETS:
Cost Depreciation Net
Building P335,000.00 P163,798.89
P171,201.11
Cement Machinery 9,000.00 5,127.03 3,872.97
Furniture &Fixtures 61,000.00 41,987.09
19,012.91
Medical Equipment 1,500.00 987.39
512.61
Office Mach & Equipment 74,000.00 40,536.68
33,463.32
PVC Machinery 227,000.00 109, 395.46
117,604.54
Shop Mach. & Equipment 123,000.00 73,125.95
49,874.05
Tools & Equipment 32,000.00 27,646.23
4,353.77
Construction Equipment 10,000.00 4,198.79
5,801.21
P 872,500.00 P 466,803.51
P405,696.49
Less: Salvage Value of Building 6,000.00
399,696.49

OTHERS:
PVC Materials & Products Stock P173,000.00
Cement Materials & Products Stock 313,000.00
Shop & IRS Materials & Products Stock 130,000.00
Unused Office Supplies, Stamps &
Medical Supplies 15,032.06
631,032.06
Total Estimate Fire Loss
2,538,231.79
Deduct: Insurance Proceeds
395,632.29
Net : Fire Loss
2,142,599.50
vvvvvvvvvvvv

6. By reason of the fault of negligence of the defendant and/or its employees that caused the
mentioned fire, defendant is liable to the plaintiff in the aforesaid amount of at least
2,142,599.50.

7. To serve as an example for the public good and as a deterrent against similar actuations,
defendant should be made liable for exemplary damages in the amount of P500,000.00.

8. In bringing this suit, plaintiff was constrained to retain the services of counsel for a fee and to
incur expenses of litigation in the amount of P300,000.00.

WHEREFORE, it is most respectfully prayed that judgment be rendered ordering the

defendant to pay the plaintiff the following amounts:

1. P2,142,599.50 with legal interest from the date of filing of this Complaint until fully
paid;

2. P500,000.00 as exemplary damages;

3. P300,000.00 as attorneys fees and expenses of litigation.

4. The costs of suit.

Plaintiff also prays for such other reliefs just and equitable in the premises.

Manila for Quezon City, April 18, 2017.