CANON 16: QUICK REFERENCE MEMORY AID FOR RULES UNDER CANON 16: o Account (Rule 16.

01) o Keep Clients Fund Separate (Rule 16.02) o Lawyers Lien (Rule 16.03) o No Borrowing, Lending (Rule 16.04)

KNOW MORE: Art. 1491(5) Civil Code. The following persons cannot acquire by purchase, even at a public auction, wither in person or through the mediation of another: (5) Justices, judges, prosecuting attorneys, clerks of superior and inferior courts, and other officers and employees connected with the administration of justice, the property and rights in litigation or levied upon an execution before the court within whose jurisdiction or territory they exercise their respective functions; this prohibition includes the act of acquiring by assignment and shall apply to lawyers, with respect to the property and tights which may be the object of any litigation in which they may take part by virtue of their profession.

Elements of Art. 1491 (Aguirre) o Property or interest is in litigation o Attorney takes part as counsel in the case involving said property o Purchase, acquisition by attorney, by himself or through another of the property in litigation, during the pendency of the case. (purchase includes mortgage of property in litigation to lawyer. In this case, acquisition is merely postponed until foreclosure but the effect is the same)

Application of the Rule When all the following four elements are present there is a violation of law and ethically improper conduct:

1. there must be attorney-client relationship 2. the property or interest of the client must be in litigation 3. the attorney takes part as counsel in the case 4. the attorney himself or through another purchases such property or interest during the pendency of the litigation

When the rule inapplicable The absence of one element renders prohibition inapplicable (e.g. an attorney may bid on behalf of his client at the auction sale of the clients property in litigation since it is not for his own benefit) contingent fee contract: allowed since it neither gives nor purports to give to the attorney an absolute right, personal or real, in the subject matter during the pendency of the litigation; the measure of compensation provided is a mere basis for the computation of fees and the payment made from the proceeds of the litigation is effected only after its successful termination. A distinction must be made between purchasing an interest in the litigation to enable a lawyer to litigate on his own account or to abuse the clients confidence (prohibited) and accepting compensation contingent upon the result of the litigation (allowed). Note, however, that a contingent fee contract which is unreasonable ceases to be a measure of due compensation for services rendered.

Effects of Prohibited Purchase O A prohibited purchase is null and void ab initio; public interest and public policy dictate that its nullity is definite and permanent and cannot be cured by ratification. The lawyer will be deemed to hold the property in trust for the client. o The client is therefore entitled to recover property and interest from his attorney with the fruits. The client should, however, return the purchase price and the legal interests.

I. Rule 16.01. A lawyer shall account for all money or property collected or received for or from the client.

 Notes from Agpalo: O A lawyer holds money or property, which he received from or for his client, in trust and should promptly make an accounting thereof. O If money or property entrusted was not used for its purpose, it should be returned immediately to the client. Failure to return would raise presumption that he misappropriated the money/property trust and he is under obligation to account for it.

O Money received by a lawyer from a person who is not his client is also held by him in

Canon 16. A Lawyer shall hold in trust all moneys and properties of his client that may come into his possession.

Rule 16.01. A lawyer shall account for all money or property collected or received for or from the client.

Rule 16.02. A lawyer shall keep the funds of each client separate and apart from his own and those of others kept by him. Rule 16.03. A lawyer shall deliver the funds and property to his client when due or upon demand. However, he shall have a lien over the funds and may apply so much thereof as may be necessary to satisfy his lawful fees and disbursements, giving notice promptly thereafter to his client. He shall also have a lien to the same extent on all judgments and executions he has secured for his client as provided for in the Rules of Court.

Rule 16.04. A lawyer shall not borrow money from his client unless the clients interests are fully protected by the nature of the case or by independent advice. Neither shall a lawyer lend money to a client except when, in the interest of justice, he has to advance necessary expenses in a legal matter he is handling for the client.

o The circumstance that a lawyer has a lien for his attorneys fees over the clients money in his possession does not relieve him from the obligation to make a prompt accounting and his failure to do so constitutes professional misconduct In the present case, respondent collected money from the complainant and the nephew of the detained person in the total amount of P64,000 for the immediate release of the detainee through his alleged connection with a Justice of the Supreme Court. Not only that, respondent even had the audacity to tell complainant that the Justices of the Supreme Court do not accept checks. As with other cases against him, respondent has demonstrated a penchant for misrepresenting to clients that he has the proper connections to secure the relief they seek, and thereafter, ask for money, which will allegedly be given to such connections. In so doing, respondent placed the Court in dishonor and public contempt. He deserves to be disbarred from the practice of law. (Berbano v. Barcelona, 410 SCRA 258 (2003))

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 (otherwise a violation of Sec. 25, Rule 138 of ROC). He should not commingle it without his clients consent. He should maintain a reputation for honesty and fidelity to private trust. The fact that a lawyer has a lien for fees on money in his hands would not relieve him from the duty of promptly accounting for the funds received. (Daroy v. Legaspi (1975))

II. Rule 16.02. A lawyer shall keep the funds of each client separate and apart from his own and those of others kept by him.

A lawyer should keep funds of each client separate and apart from his own. He should not use clients money for personal purposes without clients consent. He should report promptly the money of his client in his possession. (Agpalo)

III. Rule 16.03. A lawyer shall deliver the funds and property to his client when due or upon demand. However, he shall have a lien over the funds and may apply so much thereof as may be necessary to satisfy his lawful fees and disbursements, giving notice promptly thereafter to his client. He shall also have a lien to the same extent on all judgments and executions he has secured for his client as provided for in the Rules of Court.

FACTS: The SC disbarred Atty. Legaspi who, without his clients knowled ge, received from the deputy provincial sheriff P4, 000 as their share in the intestate proceeding of their maternal grandparents. He misled his clients by informing them that they could withdraw the money but later admitted that he had withdrawn the money and spent it. The SC disbarred Atty.

Rule 138, sec. 37. Attorneys liens. An attorney shall have a lien upon the funds, documents and papers of his client which have lawfully come into his possession and may retain the same until his lawful fees and disbursements have been paid, and may apply such funds to the satisfaction thereof. He shall also have a lien to the same extent upon all judgments for the payment of money, and executions issued in pursuance of such judgments, which he has secured in a litigation of his client, from and after the time when he shall have caused a statement of his claim of such lien to be entered upon the record of the court rendering such judgment, or issuing such execution, and shall have caused written notice thereof to be delivered to his client and power over such judgments and executions as his client would have to enforce his lien and secure the payment of his just fees and disbursements.

If client agrees with lawyer as to the amount of attorneys fees and a s to the application of the clients fund to pay his lawful fees and disbursement, a lawyer may deduct what is due him and remit the balance to his client. If no such agreement or consent or if there is dispute or disagreement as to the fees, he should return everything to client without prejudice to his filing a case to recover his unsatisfied fees. (Agpalo)

This rule grants the lawyer a lien over the clients funds in his possession as well as on all judgments and executions he has secured for his client, to satisfy his lawful fees and disbursements. (Agpalo)

 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. (Businos v. Ricafort, 283 SCRA 40(1997)) After a decision favorable to Atty. Robinols clients and he had received the latter's funds, suddenly, he had a change of mind and decided to convert the payment of his fees from a portion of land equivalent to that of each of the plaintiffs to P 50,000, which he alleges to be the monetary value of that area. Certainly, Atty. Robinol had no right to unilaterally appropriate his clients' money not only because he is bound by a written agreement but also because, under the circumstances, it was highly unjust for him to have done so. His clients were mere squatters who could barely eke out an existence Atty. Robinol has no basis to claim that since he was unjustly dismissed by his clients he had the legal right to retain the money in his possession. Firstly, there was justifiable ground

FACTS: Atty. Ricafort, as counsel of Busios in a case Busios won, received from the Clerk of Court of RTC Ligao, Albay, P25, 000 and from OAS Standard High School P5, 000. Busios waited for the amounts to be deposited in her account. Atty. Ricafort later informed her that he had spent the money but he promised to pay her. Only after an estafa case was filed did Atty. Ricafort pay P60,000 as settlement. Busios dropped the estafa case but not the disbarment case.