CANON 14

CANON 15

Conflict of interest Rule 15.01 and Rule 15.03

Hornilla V. Salunat 405 SCRA FACTS:

220 (2003) ● On November 21, 1997, Benedicto Hornilla and Federico Ricafort filed an
AC. NO. 5804 July 1, 2003 administrative complaint against Atty. Ernesto Salunat for illegal and unethical
practice and conflict of interest.
Ynares -Santiago, J.
● They alleged that Atty. Salunat is a member of ASSA Law and Associates
which was retained counsel of Philippine Public School Teachers Association
CRUZ, MA. ALYSSA (PPSTA)
BIANCA KALALANG ● Hornilla and Rocafort who are members of PPSTA filed an intracorporate case
against its members of Board of Directors for the terms 1992-1995 and 1995-
1997 before SEC and a complaint before the Office of the Ombudsman, for
unlawful spending and undervalued sale of real property of the PPSTA.
● They contended that Atty. Salunat was guilty of conflict of interest because he
was engaged by PPSTA of which complainant were members and was being
paid out of its corporate funds where complainants have contributed.
● Despite being told about the conflict of interest, Atty. Salunat refused to
withdraw his appearance in the said cases.
● Also, complainants allege that Atty. Salunat violated Rule 15.06 of the Code of
Professional Responsibility when he appeared at the meeting of PPSTA Board
and assured its members that he will win the PPSTA cases.
● Atty. Salunat in an answer stressed that he enters his appearance as counsel
for the PPSTA Board embers for and in behalf of ASSA Law and Associates.
As a partner of the said firm, he only filed a “Manifestation of Extreme Urgency”
in OMB.
● As for the SE case, it was handled by another partner of the firm, Atty. Agustin.
● According to Atty. Salunat, Atty. Ricafort who instigated and indiscriminately
filed the said a cases against members of PPSTA and its Board.
● He also pointed out that his Relationship to Aurelio Salunat (Brother and
member of the PSSTA Board) was immaterial, he entered into the retainer
contract with PPSTA Board not in his individual capacity bus in representation
of the ASSA Law firm.
● Atty. Salunat denied that he ensured the victory of PPSTA Board in the case
he was handling. He merely assured the Board that truth will come out and
case before the ombudsman will be dismissed for lack of jurisdiction,
considering that respondents were not public officials but private employees.
● As for the SEC case, he alleged that the law firm of Atty. Eduardo de Mesa and
not ASSA was handling the case.
● By way of Special and Affirmative Defenses, Atty. Salunat averred that Atty.
Ricafort was himself guilty of gross violation of hos oath of office amounting to
gross misconduct, malpractice and unethical conduct for filing charges against
him and Atty. De Mesa.
● With this, Atty. Salunat prayed that the complaint against him be dismissed and
instead, Ricafort be disciplined or disbarred.
● The pertinent rule of the Code of Professional Responsibility provides:
Rule 15.3 A lawyer shall not represent conflicting interests except by written consent of
all concerned given after a full disclosure of the facts.
○ There is conflict of interest when a lawyer represents inconsistent
interest of two or more opposing parties. The test is “whether or not
in behalf of one client, it is the lawyer’s duty to fight for an issue or
claim, but it is his duty to oppose it for the other client. In brief, if he
argues for one client, the argument will be opposed by him when he
argues for the other client. This rule covers not only cases in which
confidential communications have been confided but also those in
which no confidence has been bestowed or will be used.
○ Another test of inconsistency of interest is whether the acceptance of
a new relation will prevent an attorney from the full discharge of his
duty of undivided fidelity and loyalty to his client or invite suspicion of
unfaithfulness or double dealing.
● The corporation board of directors is understood to be which:
 1. Exercises all powers provided for under the Corporation Code
2. Conducts business of the corporation
3. Controls and holds all property of the corporation
● Where corporate directors have committed a breach of trust either by their
frauds, ultra vires acts or negligence, and the corporation is unable or unwilling
to institute a suit to remedy the wrong, a stockholder may sue on behalf of
himself and other stockholders for the benefit of the corporation.
● A redress of the wrong done directly to the corporation and indirectly to the
stockholders (this is known as a derivative suit)
● Doctrine of derivative suit- the corporation is the real party in interest while the
stockholder filing suit for the corporation’s behalf is only nominal party. The
corporation should be included as a party in the suit.

ISSUE:
Whether or not a lawyer engaged by a corporation defend members of the board of
the same corporation in a derivative suit?

HELD/ RATIO:
● The prevailing rule is that a situation wherein a lawyer represents both the
corporation and its assailed directors unavoidably gives rise to a conflict of
interest.
● The interest of the corporate client is paramount and should not be influenced
by any interest of the individual corporate officials.
● A lawyer engaged as counsel for a corporation cannot represent members of
the same corporation’s board of directors in a derivative suit brought against
them. T
● his would tantamount to representing conflicting interest which is prohibited by
the Code of Professional Responsibility
● in the case, the records show that the SEC case 9 Philippine Public School
Teacher Association, Inc. vs. Board of Directors of PPSTA was filed by PPSTA
against its own board of directors.
● Atty. Salunat admits that the ASSA Law firm were he is a managing partner
was retained as counsel of PPTSA yet he appeared as counsel of record for
the respondent Board of Directors.
● Clearly Atty. Salunat was guilty of conflict of interest when he represented the
parties against whom his other client, the PPSTA filed a suit.
● Despite Atty. Salunat’s argument that he only represented the Board of
Directors in the OMB case and he merely filed a Manifestation of Extreme
Urgency wherein he prayed for the dismissal of the complaint against his
clients, the individual Board Members.
● Through filing a pleading, he necessarily entered his appearance in the case
which constituted conflict of interest considering that the complaint in the
Office of the Ombudsman, even though in the name of the individual members
of PPTS, was brought in benhalf of and to protect the interest of the
corporation.

SC DECISION: Guilty of representing conflicting interests and is admonished to observe

a higher degree of fidelity in the practice of his profession. He is further warned that a
repetition of the same or similar acts will be dealt with more severely.

Illusorio V. Lokin Jr. 477

SCRA 634 (2005)

LIMJOCO, JUSTINELLI
MARIE TAMAYO

Gonzales V. Cabucana 479 FACTS

Gonzales being counseled by the law firm Cabucana, Cabucana, De Guzman and Cabucana Law
SCRA 320 (2006) Office, filed a civil case that was awarded to them in a judicial ruling and asked Gatcheco to execute
such however Gatcheco failed to do so and Gonzales filed a complaint. Gatcheco harassed Gonzales
and subsequently Gonzales filed a criminal case. Atty. Marcelino Cabucana, Jr., represented
DE LEON, JONATHAN Gatcheco. Gonzales filed an administrative case saying that Cabucana violated the lawyer-client
DURON relationship due to conflict of interest.

ISSUE
Whether or Not there is a violation of the Code of Professional Responsibility for conflict of interest
 HELD
Yes, the rule is that the lawyer is barred from representing conflicting interests except by written
consent of all concerned given after a full disclosure of the facts. Even the fact of appearing to be
treacherous and double-dealing is discouraged because people are expected to entrust their secrets
to their lawyers. Acceptance of a new relation would prevent the full discharge of the lawyer’s duty of
undivided fidelity and loyalty to the client or invite suspicion of unfaithfulness or double-dealing in the
performance of that duty.
Although the firm was the one who represented the civil case the person is still in representation of the
firm. It at the least invite suspicion of double-dealing.
It is however mitigated by the fact that the case was done in good faith and with no malice as
supported by the findings of IBP Commissioner Reyes and Gonzales move of withdrawing the case.

Disposition Respondent fined and given a stern warning

De Guzman V. de Dios 350

SCRA (2001)

VERSOZA, REG

Privileged Communication Rule 15.02

Regala V. Sandiganbayan FACTS:

262 SCRA 122(1996)
Ponente: KAPUNAN, J.
BACANI, CZARINA YSABEL
VIERNES
● This is an offshoot of the complaint before the Sandiganbayan through the
PCGG against Eduardo Cojuangco Jr. for recovery of alleged ill-gotten wealth
including shares of stocks in certain corporations.
● ACCRA Law Firm performs legal services including the organization and
acquisition of business associations/organizations. Sometimes, members of
the firm act as incorporators or stockholders. They acquire info relative to
assets of clients and their personal/business circumstances. In this case,
ACCRA lawyers acted as nominees-stockholders of said corps involved in
sequestration proceedings.
● PCGG filed Third Amended Complaint w/c excluded private respondent Raul
Roco because he promised to reveal identity of principal/s for whom he acted
as nominee-stockholder.
● ACCRA lawyers said it was in furtherance of legitimate lawyering and they
became holders of shares of stock only as incorporating or acquiring
stockholders, and as such, they do not claim any proprietary interest in said
shares.
● Petitioner Paraja Hayudini, who separated from ACCRA, filed a separate
answer.
● ACCRA lawyers filed a counter-motion that PCGG also exclude them as
parties-defendant as it did to Roco. PCGG set conditions for exclusion of the
petitioners:
○ (1) disclosure of identity of clients, (2) submission of documents
substantiating lawyer-client relationship, (3) submission of deeds of
assignments petitioners executed in favor of its clients covering their
respective shareholdings.
● PCGG presented supposed proof to substantiate compliance by Roco of the
said conditions.
● Sandiganbayan denied exclusion of petitioners from the PCGG case. That
denial is now being questioned.

ISSUE:
● Whether or not lawyer-client confidentiality applies in this case

HELD/RATIO
● Yes
● Lawyer-client relationship is based on contract of lease services & contract of
agency; but it is more than relationship of principal-agent and lessor-lessee. A
lawyer possesses special powers of trust given by the client. He also occupies
quasi-judicial office since he is an officer of the court.
● Canon 17 of CPR says that a lawyer owes fidelity to cause of his client.
Canon 15 of the Canons of Professional Ethics also speaks of the devotion of
a lawyer to the interest of his client.
● The rights to counsel of an accused is also involved in this issue. If client were
made to choose between legal representation w/o effective communication and
 disclosure and legal representation w/ all his secrets revealed then he might be
compelled to stay away from judicial system or lose right to counsel.
● GENERAL RULE:
○ Court has right to know that client whose privileged info is sought to
be protected is flesh and blood.
○ Privilege exists only after attorney-client relationship has been
established. It does not attach until there is a client.
○ Privilege generally pertains to subject matter of the relationship.
○ Due process requires that the opposing party should, as a general
rule, know his adversary.
● EXCEPTIONS
○ Client identity is privileged where a strong probability exists that
revealing client’s name would implicate that client in the very activity
for w/c he sought the lawyer’s advice.
○ It is also privileged where disclosure would open the client to civil
liability.
○ It is also privileged when government’s lawyers have no case against
an attorney’s client unless, by revealing the client’s name, the said
name would furnish the only link that would be necessary to convict
an individual of a crime.
● The instant case FALLS UNDER AT LEAST 2 EXCEPTIONS.
● First, disclosure would lead to establish the client’s connection w/ the very fact
in issue. Also, the link between the offense and the legal advice/service was
duly established by no less than the PCGG itself. The petitioners have a
legitimate fear that identifying their clients would implicate them. The revelation
of the name would provide the link for prosecution to build its case, where none
otherwise exists.
● It is different when the client consults attorney for illicit purposes, seeking
advice on how to around the law. In this case, a client thinks he might have
previously committed something illegal and consults his attorney about it.
● The Court is trying to avoid fishing expedition by the prosecution. After all,
there are alternative sources of information available to prosecutor w/c does
not depend on utilizing a defendant’s counsel as convenient and readily
available sources.
● The Lawyer-client confidentiality and loyalty exists not only during
relationship but even after termination of the relationship.

People V. Sandiganbayan FACTS:

275 SCRA 505 (1996) - The annulment of a resolution of the Sandiganbayan is being sought,
with the Sandiganbayan denying the motion to utilize Atty. Sansaet as
GOMEZ, HANS HENLY
state witness.
SEVILLA
- Honrada was a clerk of court in a municipality in Agusan del Sur.
Paredes was the provincial attorney of Agusan del Sur who later
became governor and congressman.
- Sansaet was a lawyer who served as counsel for Parades in several
instances petinent to the criminal charges involved in the present
recourse.
- 1976 – Paredes applied for a free patent over a piece of land. His
application was approved and a title was issued to him.
- 1985 – Director of Lands cancelled the patent of Paredes, saying that
the land had already been designated and reserved as a school site.
- It was also discovered that Paredes got the lot through fraudulent
means.
- An information for perjury was filed against Paredes. Another
allegation was that he had used his position to get what he wanted.
Sansaet was still Paredes’ counsel.
- Gelacio, a taxpayer, wrote the Ombudsman and asked for the
investigation of Sansaet, Honrada and Paredes. According to him, he
conspired with the other two.
ISSUES:
1. WON projected testimony of Sansaet is barred by the atty-client
relationship
2. WON Sansaet qualified as particeps criminis (accomplice to the
crime) for discharge from the criminal prosecution in order to testify for
the State

HELD
1. NO
Ratio If a client seeks his lawyers’ advice with respect to a crime he
committed, it is given the virtual confessional seal. This does not apply
to a crime which a client intends to commit.
Reasoning A distinction must be made between confidential
communications relating to past crimes already crimes and future
crimes intended to be committed.
- The period is the date when the privileged communication was made
by the client to the attorney.
- Paredes was planning to commit the crime of falsification.
- But for the application of the attorney-client privilege, however, the
period to be considered is the date when the privileged communication
was made by the client to the attorney in relation to either a crime
committed in the past or with respect to a crime intended to be
committed in the future.
- The testimony sought to be elicited from Sansaet as state witness are
the communications made to him by physical acts and/or
accompanying words of Parades at the time he and Honrada, either
with the active or passive participation of Sansaet, were about to falsify,
or in the process of falsifying, the documents which were later filed in
the Tanodbayan by Sansaet and culminated in the criminal charges
now pending in respondent Sandiganbayan
- Sansaet himself was a conspirator and it is settled that for the atty-
client privilege to apply in communication, it must be for a lawful
purpose. The existence of an unlawful purpose prevents the
attachment of the privilege.
2. YES
Ratio Despite his involvement in the crime, Sansaet fulfills all the
requirements needed for his discharge as state witness.
Reasoning Sansaet was a conspirator in the crime of falsification and
in a conspiracy the act of one is the act of all. One of the requirements
for state witness is that he does not appear to be the most guilty (not
that he is the least guilty as to what has been erroneously interpreted in
some instances).
- It is the identity of the mens rea which is considered the predominant
consideration and warrants an imposition of the same penalty.
- In the case of People v Ocemar: “And by ‘most guilty’ we mean the
highest degree of culpability in terms of participation in the commission
of the offense and not necessarily the severity of the penalty imposed.
 While all the accused may be given the same penalty by reason of
conspiracy, yet one may be considered least guilty if We take into
account his degree of participation in the perpetration of the offense.
- The other requisites for the discharge of Sansaet as state witness are
present.
- Sansaet is the only cooperative witness to the actual commission
of the crime of falsification.
- There is absolute necessity for Sansaet’s testimony because the
prosecution has no direct evidence available.
- He does not appear to be the most guilty.
- His testimony can be corroborated by reputable witnesses.
- Sansaet has not been convicted of any crime involving moral
turpitude.

Castillo V. Sandigan 377 CASTILLO vs. SANDIGANBAYAN

SCRA 509 (2002) G.R. No. 138231. February 21, 2002 BUENA, J.:
Facts :
EULOGIO, MELISSA
FATIMA RODRIGUEZ
● On July 23, 1987, the Republic of the Philippines filed with the
Sandiganbayan a complaint for reconveyance, reversion,
accounting, restitution and damages against several persons
one of which is petitioner, GREGORIO R. CASTILLO as he acted
as a dummy, nominee and/or agent of Defendants Ferdinand
E. Marcos, Imelda R. Marcos, and several other beneficiaries in
establishing Hotel properties Inc. in order to acquire interest
and control, and conceal ownership, of Silahis International
Hotel.
● Petitioner filed his Answer including a counterclaim against
the Republic that as attorney-in-fact of the defendants
Enriquezes and Panlilios who as such signed all pertinent
documents for the latter, without any allegations of
knowledge of or participation in the wrongful acts within
which the other defendants are charged hence he is not a real-
party-interest.
● On October 24, 1992, petitioner died. Subsequently, a motion
to dismiss was filed by his counsel however on February 19,
1993, the Sandiganbayan promulgated a Resolution denying
petitioners motion to dismiss. It ruled that respondents’ cause
of action as against petitioner is not extinguished by the
latter’s death since it is not only one for recovery of money,
debt or interest thereon, but also for recovery of real and
personal property.
● On October 15, 1996, petitioner, represented by his heirs, filed
another Motion to Dismiss on the ground that the Complaint
against him is violative of the lawyer-client confidentiality
privilege and must be dismissed citing Regala vs.
 Sandiganbayan
Issue: Whether Sandiganbayan committed grave abuse of discretion
in disregarding the ruling in Regala v. Sandiganbayan on lawyer-
client confidentiality privilege?
Held/Ruling:
● It is true that unlike in Regala, petitioner in the present case is
not being required to name his clients. However, the case of
Regala is still applicable to the present case because as
lawyer-client relationship between petitioner and defendants
Enriquezes and Panlilios was immediately raised by petitioner
as one of his affirmative defenses. In Regala, the professional
relationship was raised merely as a defense by defendant
lawyers and was not yet proved during the trial. This
notwithstanding, the Court struck out the complaint against
the lawyers.
● In the case of Regala, in overruling the Republics position, the
Court ruled that an argument is advanced that the invocation
by petitioners of the privilege of attorney-client confidentiality
at this stage of the proceedings is premature and that they
should wait until they are called to testify and examine as
witnesses as to matters learned in confidence before they can
raise their objection. But petitioners are not mere witnesses.
They are co-principals in the case for recovery of alleged ill-
gotten wealth. They have made their position clear from the
very beginning that they are not willing to testify and they
cannot be compelled to testify in view of their constitutional
right against self-incrimination and of their fundamental legal
right to maintain inviolate the privilege of attorney-client
confidentiality (exact quote)
● The doctrine of adherence to judicial precedents or stare
decisis is provided in Art. 8 of the Civil Code. The doctrine is
enunciated, hence the doctrine of stare decisis enjoins
adherence to judicial precedents. It requires courts in a
country to follow the rule established in a decision of the
Supreme Court thereof. That decision becomes a judicial
precedent to be followed in subsequent cases by all courts in
the land. The doctrine of stare decisis is based on the principle
that once a question of law has been examined and decided, it
should be deemed settled and closed to further argument.
The Resolutions of the Sandiganbayan dated November 24, 1998 and
February 18, 1999 are hereby ANNULLED and SET ASIDE

Dalisay V. Mauricio 479

SCRA 307 (2006)

BORDADO JR, ADELUIS

ANTOVIC ARELLANO
Mediator, Conciliator or Arbritator Rule 15.04

Dee V. CA 176 SCRA 651 FACTS:

(1989)
Petitioner and his father went to the residence of private respondent,
CRUZ, KARL MICHAEL accompanied by the latter’s cousin, to seek his advice regarding the
ANTHONY LAMPA problem of the alleged indebtedness of petitioner’s brother, Dewey
Dee, to Caesar’s Palace, a well-known gambling casino at Las Vegas,
Nevada, U.S.A. Private respondent personally talked with the president
of Caesar’s Palace at Las Vegas, Nevada. He advised the president
that for the sake and in the interest of the casino it would be better to
make Ramon Sy answer for the indebtedness. The president told him
that if he could convince Ramon Sy to acknowledge the obligation,
Dewey Dee would be exculpated from liability for the account. Upon
private respondent’s return to Manila, he conferred with Ramon Sy and
the latter was convinced to acknowledge the indebtedness. In August,
1981, private respondent brought to Caesar’s Palace the letter of
Ramon Sy owning the debt and asking for a discount. Thereafter, the
account of Dewey Dee was cleared and the casino never bothered him.

Having thus settled the account of petitioner’s brother, private

respondent sent several demand letters to petitioner demanding the
balance of P50,000.00 as attorney’s fees. Petitioner, however, ignored
said letters.

ISSUE:

Whether or not there is an attorney-client relationship between parties.

HELD:

YES. Court affirmed the decision of the defendant Court of Appeals.

Costs against the petitioner.

RATIO:

There is no question that professional services were actually rendered

by private respondent to petitioner and his family. Through his efforts,
the account of petitioner’s brother, Dewey Dee, with Caesar’s Palace
was assumed by Ramon Sy and petitioner and his family were further
freed from the apprehension that Dewey might be harmed or even
killed by the so-called mafia. For such services, respondent Mutuc is
indubitably entitled to receive a reasonable compensation and this right
cannot be concluded by petitioner’s pretension that at the time private
respondent rendered such services to petitioner and his family, the
former was also the Philippine consultant of Caesar’s Palace.

A lawyer is entitled to have and receive the just and reasonable

compensation for services rendered at the special instance and request
of his client and as long as he is honestly and in good faith trying to
serve and represent the interests of his client, the latter is bound to pay
his just fees.
Dual Profession Rule 15.08

Nakpil V. Valdez 286 SCRA

758 (1998)

OREIRO, ZAFARIAH

Quiambao V. Bamba 468

SCRA 1 (2005)

PASOMANERO, RAY
PAOLO LAZARO