Rule 16.01.

A lawyer shall account for client’s funds

1. A lawyer holds money or property in trust and he is under obligation to make an accounting
thereof.

2. The money collected by a lawyer in pursuance of a judgment in favor of his client is held in trust.

3. Where a client gives money to his lawyer for a specific purpose, the lawyer should account for the
money. If he fails to accomplish the purpose for which the money is intended, he should immediately
return the money to his client.

4. Failure to account or return the money if the purpose has failed is a violation of Rule 16.01.

5. Money received by a lawyer from a person who is not his client is also held by him in trust and he is
under obligation to account for it.

6. The circumstance that an attorney has a lien for his attorney’s fees on the money in his hands
collected for his client does not relieve him from the obligation to make a prompt accounting.

Berbano vs Barcelona
1. Summary:

a. Felicitas Berbano, one of the heirs of Rufino Esteban Hilapo, appointed Porfirio Daen as
attorney-in-fact in a pending case before the Commission on the Settlement of Land Problems against
Filinvest Development Corporation.

b. January 26, 1999 -- Daen was imprisoned on the ground of an expired warrant of arrest.
Berbano sought the assistance of Atty. Wenceslao Barcelona in releasing Daen. Berbano and the
nephew of Daen gave Atty. Barcelona a sum of money aggregating to P64,000.00 after Atty.
Barcelona represented that he knew a justice in the Supreme Court who could help the immediate
release of Daen. However, Daen was not released from jail as promised and Berbano, in her several
attempts to recover the money, was evaded by Barcelona.

c. March 11, 1999 -- Berbano filed a complaint before the IBP against Barcelona for Malpractice
and Gross Misconduct Unbecoming a Lawyer, Dereliction of Duty and Unjust Enrichment.

d. December 23, 2001 -- The Commission on Bar Discipline recommended that the respondent
be disbarred and return the amount of P64,000.00. The IBP Board of Governors adopted the
Commission’s findings but reduced the penalty to suspension from the practice of law for six years.

2. ISSUE: WON Atty. Barcelona’s misrepresentation to Berbano that he has proper connections to
secure the relief the latter seeks, and thereafter ask for money, constitutes violation of Rule 16.01 of
Canon 16.

3. Supreme Court:

a) Yes. Barcelona callously demeaned the legal profession by taking money from a client
under the pretext of having connections with a justice of the Supreme Court.

b) The Code exacts from lawyers not only a firm respect for law, legal processes and the
courts but also mandates utmost degree of fidelity and good faith in dealing with clients
and the moneys entrusted to them pursuant to their fiduciary relationship.

c) Barcelona was disbarred from the practice of law and ordered the return of the amount of
P64,000.00.
Licuanan vs Melo

1. Facts:

a) August 8, 1979 -- Leonila Licuanan’s lawyer, Atty. Manuel Melo, obtained judgment in
Licuanan’s favor against Aida Pineda whereby the latter was directed by the City Court of
Manila to pay Licuanan all her monthly rentals from October 1978 and succeeding months
thereafter.

b) Pineda complied and she started paying the rents to Licuanan’s lawyer, Atty. Melo.
However, during the entire 12 months that respondent had been receiving rental payments
of Pineda, Atty. Melo did not bother to inform or report to complainant about the said
payments and instead unnecessarily retained the money.

c) As a consequence, Licuanan filed a case against Pineda. Pineda in turn filed a damage suit
against Licuanan as she claims that the case filed by Licuanan against her is groundless – as
she was in fact paying her rents.

d) Eventually, Licuanan found out that Melo failed to deliver to her the rents. Licuanan then
filed an affidavit complaint against Melo. Melo in his defense said that he withheld
information about the rent payments for a year because he merely wanted to surprise
Licuanan about the success of the collections.

e) The Office of the Solicitor General recommended that Atty. Melos be suspended from the
practice of law for a period of not less than one year.

2. ISSUE: WON Atty. Melo’s failure to account for the rental payments he received on behalf of his
client constitutes a violation of Canon 16.

3. Supreme Court:

a) Yes. Respondent has breached the trust reposed in him by his client. He has shown himself
unfit for the confidence and trust which should characterize an attorney-client relationship
and the practice of law.

b) By force of circumstances, complainant was further compelled to engage the services of

another counsel in order to recover the amount rightfully due her but which respondent
had unjustifiedly withheld from her.

c) Respondent is guilty of deceit, malpractice and gross misconduct in office.

d) Respondent is disbarred from the practice of law.

Sison vs Camacho

1. Facts:

a) Antero Sison, complainant, was the president of Marsman-Drysdale Agribusiness Holdings

(MDAHI). Atty. Manuel Camacho was the counsel of MDAHI in an insurance claim action
against Paramount Life and General Insurance Corp before the RTC.

b) Atty. Camacho proposed to increase their claim to P64,000,000 by taking into account the
interests imposed and that it would require additional docket fees in the amount of P1.2 M.
MDAHI agreed and granted the said amount.

c) May 26, 2011 -- RTC rendered a decision in favor of MDAHI granting its insurance claim plus
interests in the amount of P65M.
 d) May 27, 2011 -- MDAHI gave the money for docket fees to Atty Camacho who promised to
issue a receipt for said amount, but never did.

e) August 11, 2011 -- Atty. Camacho recommended to MDAHI a settlement with Paramount in
the amount of P15M to prevent a protracted appeal with the appellate court. MDAH
refused the offer of compromise.

f) August 15, 2011 -- Even without the written conformity of MDAHI, Camacho filed a
Satisfaction of Judgment dated August 15, 2011, before the RTC stating that the parties had
entered into a compromise agreement.

g) August 18, 2011 -- Sison met with Camacho to clarify events that transpired. He asked
Camacho whether he paid the amount of P1.2M as additional docket fees, and the latter
replied that he simply gave it to the clerk of court as the payment period had lapsed.

h) September 13, 2011 -- Atty. Camacho that he filed a Motion to Compel Plaintiff to Pay
Attorney’s Fee before the RTC.

i) April 12, 2012 -- The Court granted the motion stating that the amount of P1.2M was
considered as part of his attorney’s fees.

j) Hence Atty. Camacho argued that the RTC order operated as res judicata in the present
admin case. And that MDAHI disregarded the RTC order as it filed an estafa case against
him concerning the amount of P1.2M.

k) Findings and Recommendations -- IBP CBD recommended one-year suspension from

practice of law. IBP Board of Governors partially upheld IBP CBD because of the pending
criminal case against Atty. Camacho. The penalty was lowered to 6-month suspension from
the practice of law.

2. ISSSUE: WON Atty. Camacho’s failure to apply for its intended purpose the amount of P1.2 M as
payment for additional docket fees constitutes violation of Canon 16.

3. Supreme Court:

a) Yes. The lame excuse of Camacho is bereft of merit because it constitutes a mere
afterthought and a manifest disrespect to the legal profession.

b) Camacho is treading a prelious path where the payment of his attorney’s fees is more
important than his fiduciary and faithful duty of accounting the money of his client.

c) Well-settled is the rule that lawyers are not entitled to unilaterally misappropriate their
client’s money for themselves by the mere fact that the clients owe them attorney’s fees.

d) Atty. Camacho was disbarred and ordered the return of P1.2 M.