Legal Ethics Finals Reviewer [Atty.

Bustamante] 1F 2018-‘19

I. payment of money and property in the lawful

A. Distinguish a charging lien from retaining lien executions issued in possession of the attorney
A charging lien is the right which the attorney has upon pursuance of such by reason of his
all judgments for the payment of money and executions judgments. professional employment
issued in pursuance thereof, secured in favor of the client. Notice Requirement
It covers only services rendered by an attorney in the Statement of his claim to Does not require notice
action in which the judgment was obtained and take effect be entered upon the record thereof upon the client
only after he shall have caused a statement of his claim to of the particular action and the adverse party to be
be entered upon the record of the particular action with with written notice thereof effective
written notice thereof to his client and to the adverse to his client and to the
party. On the other hand, a retaining lien is the right of adverse party
an attorney to retain the funds, documents and papers of Nature of Right
his client which have lawfully come into his possession Active right; enforceable Passive right; cannot be
until his lawful fees and disbursements have been paid by a writ of execution actively enforced
and to apply such funds to the satisfaction thereof. It is Possession of Client’s Property
dependent upon and takes effect from the time of lawful Possession of client’s Funds, documents and
possession; it does not require notice thereof upon the property is not required papers of the client must
client and the adverse party to be effective. have lawfully come into
lawyer’s possession
Charging Lien Retaining Lien Applicability
Right Involved Generally, it is May be exercised before
the right which the right of an attorney to exercisable only when the judgment or execution or
attorney has upon all retain the funds, attorney had already regardless thereof
judgments for the documents and papers of secured a favorable
payment of money and his client which have judgment for his client
executions issued in lawfully come into his *Some answers taken from Lawphil Reviewer
pursuance thereof possession
Basis of Right B. What are the requirements to invoke a charging
Securing of a favorable Lawful possession of lien and a retaining lien?
money judgment for the papers, documents, Charging lien
client. property belonging to a. There must be an attorney-client relationship
client. b. The attorney has rendered services
Time of Effectivity c. A money judgment favorable to the client has
only after he shall have from the time of lawful been secured in the action
caused a statement of his possession d. The attorney has a claim for attorney’s fees or
claim to be entered upon advances; and
the record of the particular e. A statement of his claim has been duly recorded
action with written notice in the case with notice thereof served upon the
thereof to his client and to client and the adverse party
the adverse party
Scope of Compensation Retaining Lien
Covers only services Account for services a. Attorney-client relationship
rendered by an attorney in rendered in all matters b. Lawful possession by the lawyer of the client’s
the action in which a which the lawyer may funds, documents, and papers in his professional
favorable money have handled for the capacity,
judgment was obtained; client, regardless of their c. Unsatisfied claim for attorney’s fees or
limited only to money outcome disbursements
judgments and not to any
other kinds of judgment C. Explain the Ordinary and Extra-Ordinary concept
Coverage of Lien of Attorney’s Fees
Special Lien; Covers only General Lien; Covers all
judgments for the papers, documents and
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Legal Ethics Finals Reviewer [Atty. Bustamante]
Ordinary Concept of Attorney’s Fees is the reasonable
compensation paid to the lawyer for the legal services he
had rendered in favor of his client. This is paid to the
lawyer and based on the fact of employment by the client.
Extra-ordinary Concept of Attorney’s Fees is an
indemnity for damages ordered by the court to be paid by
the losing party to the prevailing party in a litigation. The
general rule is it is paid to the client, the exception is when
it is paid to the lawyer when there is an agreement that the
award shall pertain to the lawyer as an additional
compensation or as part thereof. And the basis for this is
any of the cases authorized by law.
The two concepts require, as a prerequisite to their grant,
the intervention of or the rendition of professional
services by a lawyer. Both fees are subject to judicial
control and modification. And the rules governing the
determination of their reasonable amount are applicable
in one as in the other.
II.
A. Distinguish a champertous contract from a
contingency fee. Which is allowed?
Champertous contract is an agreement between a third
person and a party litigant or a lawyer and his client
wherein the third person with respect to the party litigant
or the lawyer with respect to his client, supports the party
litigant’s or the client’s litigation in exchange for a share
of the proceedings emanating from the litigation, if there
are any. Champerty is a bargain by a stranger with a party
to a suit, by which such third person undertakes to carry
on the litigation at his own cost and risk, in consideration
of receiving, if successful, a part of the proceeds or
subject sought to be recovered.
This is prohibited on the ground of public policy, it
violates the fiduciary relationship between the lawyer and
his client.
Contingent fee contract is an arrangement in writing in
which the fee, usually a fixed percentage of what may be
recovered in the action, is made to depend upon the
success in the effort to enforce or defend a supposed right.
Contingent Fee is a fee conditioned on securing a
favorable judgment and recovery of money or property
and the amount of which may be on percentage basis.
This is not prohibited by law and is impliedly sanctioned.
It is, however, closely supervised by the court to
safeguard the client from unjust charges or abuse on the
part of his counsel. Its validity depend, in large measure,
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1F 2018-‘19
upon the reasonableness of the amount fixed as a
contingent fee under the circumstances of the case.
Champertous contract is payable in kind only while
contingent fee is payable in cash.
In the former, the lawyers undertake to pay all expenses
of litigation while in the latter, lawyers do not undertake
to pay all expenses of litigation.
The former is Void while the latter is Valid.
B. Discuss the right of a lawyer to recover his/her fees
if there is a contract/there is no contract
Generally, the amount of attorney’s fees due is that
stipulated in the retainer agreement which is conclusive
as to the amount of lawyer’s compensation (Funa, 2009)
unless the stipulated amount in the written contract is
found by the court to be unconscionable or unreasonable
(Sec. 24, Rule 138, RRC). In the absence thereof, the
amount of attorney’s fees is fixed on the basis of quantum
meruit; i.e., the reasonable worth of the attorney's
services. (Sesbreno v. Court of Appeals, G.R. No.
117438, June 8,1995; Funa, 2009)
Sec. 24, Rule 138. "An attonery shall be entitled to have
and recover from his client no more than a reasonable
compensation for his services, with a view to the
importance of the subject matter of the controversy, the
extent of the services rendered, and the professional
standing of the attorney. X X X A written contract for
services shall control the amount to be paid therefor
unless found by the court to be unconscionable or
unreasonable."
The obligation of the client to pay attorney's fees is based
on the law of contracts / concept of facio des (I do and you
give) (Corpus vs CA 98 SCRA 424). Hence, unless
expressly stipulated, rendition of professional services by
a lawyer is for a fee or compensation and is not gratuitous.
(Research and Services Realty, Inc. v. CA GR. No.
124074)
C. What is quantum meruit; when is recovery under
quantum meruit allowed?
Quantum meruit means "as much as he deserves", and
is used as the basis for determining the lawyer's
professional fees in the absence of a contract, but
recoverable by him from his client.
Legal Ethics Finals Reviewer [Atty. Bustamante]
Quantum meruit is resorted to when:
1. There is no express contract for payment of attorney’s
fees agreed upon between the lawyer and the client;
2. Although there is a formal contract for attorney’s fees,
the stipulated fees are found unconscionable or
unreasonable by the court;
3. The contract for attorney’s fees is void due to purely
formal matters or defects of execution;
4. The counsel, for justifiable cause, was not able to finish
the case to its conclusion;
5. Lawyer and client disregard the contract for attorney’s
fees; and
6. The client dismissed his counsel before the termination
of the case.
D. In the absence of a contract, what are the factors to
consider in fixing an attorney’s fee?
In the absence of a fee arrangement, the lawyer is paid on
a quantum meruit basis. The factors to be taken into
consideration in determining the amount are:
1. Time spent and the services rendered or required – A
lawyer is justified in fixing higher fees when the case is
so complicated and requires more time and effort in fixing
it.
2. Importance of subject matter – The more important the
subject matter or the bigger the value of the interest of the
property in litigation, the higher is the attorney’s fees.
3. Novelty and difficulty of questions involved – When
the questions in a case are novel and difficult, greater
effort, deeper study and research are bound to burn the
lawyer’s time and stamina considering that there are no
local precedents to rely upon.
4. Skill demanded of a lawyer – The totality of the
lawyer’s experience provides him skill and competence
admired in lawyers.
General considerations:
Factors to be considered in fixing attorney’s
compensation:
- Importance of the subject matter of the controversy
- Extent of services rendered
- Professional standing of the lawyer
It is also enumerated in Canon 20, Rule 20.01:
Rule 20.01 - A lawyer shall be guided by the following
factors in determining his fees:
(a) the time spent and the extent of the service rendered
or required;
(b) the novelty and difficulty of the questions involved;
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1F 2018-‘19
(c) The importance of the subject matter;
(d) The skill demanded;
(e) The probability of losing other employment as a result
of acceptance of the proffered case;
(f) The customary charges for similar services and the
schedule of fees of the IBP chapter to which he belongs;
(g) The amount involved in the controversy and the
benefits resulting to the client from the service;
(h) The contingency or certainty of compensation;
(i) The character of the employment, whether occasional
or established; and
(j) The professional standing of the lawyer.
III.
A. When does an attorney-client relationship exist?
As a rule, an attorney-client relationship is said to exist
when a lawyer voluntarily permits or acquiesces with the
consultation of a person, who in respect to a business or
trouble of any kind, consults a lawyer with a view of
obtaining professional advice or assistance.
The lawyer-client relationship is formed through the
following:
1. Oral – When the counsel is employed without a
written agreement, but the conditions and amount of
attorney’s fees are agreed upon.
2. Express – When the terms and conditions
including the amount of fees are explicitly stated in a
written document, which may be a private or public
document. Written contract of attorney’s fees is the law
between the lawyer and the client.
3. Implied – When there is no agreement, whether
oral or written, but the client allowed the lawyer to render
legal services not intended to be gratuitous without
objection and client is benefited by reason thereof.
As discussed in the case of Hadjula v. Madianda [A.C.
No. 6711]:
“A lawyer-client relationship was established from the
very first moment complainant asked respondent for legal
advise regarding the former's business. To constitute
professional employment, it is not essential that the client
Legal Ethics Finals Reviewer [Atty. Bustamante]
employed the attorney professionally on any previous
occasion.
It is not necessary that any retainer be paid, promised, or
charged; neither is it material that the attorney consulted
did not afterward handle the case for which his service
had been sought.
If a person, in respect to business affairs or troubles of any
kind, consults a lawyer with a view to obtaining
professional advice or assistance, and the attorney
voluntarily permits or acquiesces with the consultation,
then the professional employments is established.
Likewise, a lawyer-client relationship exists
notwithstanding the close personal relationship between
the lawyer and the complainant or the non-payment of the
former's fees.”
B. What are the tests to determine if conflict of interest
exists? Briefly discuss each
Three tests to determine existence of conflict of interest:
1. CONFLICTING DUTIES - When, on behalf of
the client, it is the attorney’s duty to contest for that which
his duty to another client requires him to oppose or when
possibility of such situation will develop.
2. INVITATION OF SUSPICION - Whether the
acceptance of the new relation will prevent a lawyer from
the full discharge of his duty of undivided fidelity and
loyalty to his client or will invite suspicion of
unfaithfulness or double-dealing in the performance
thereof.
3. USE OF PRIOR KNOWLEDGE OBTAINED
- Whether a lawyer will be called upon his new relation to
use against the first client any knowledge acquired in the
previous employment.
General Test:
“Whether or not the acceptance of a new relation will
prevent an attorney from the full discharge of his duty of
individual fidelity and loyalty to his client or invite
suspicion of unfaithfulness or double-dealing in the
performance thereof.” (Tiana vs. Ocampo)
C. Exceptions to the rule on conflict of interest
The exception to the conflict of interest rule under Rule
15.03 is when the parties consent to the representation
after full disclosure of facts. The disclosure should
include an explanation of the effects of the dual
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representation, such as the possible revelation or the use
of confidential information.
Canon 15, Rule 15.03:
“Rule 15.03- A lawyer shall not represent conflicting
interests except by written consent of all concerned given
after a full disclosure of the facts.”
IV.
A. Requisites before Attorney-Client Privilege can
attach
As discussed in the case of Mercado v. Vitriolo:
1) There must be communication made by the client to the
attorney.
2) The client made the communication in confidence.
3) The legal advice must be sought from the attorney in
his professional capacity.
Dean Wigmore cites the factors essential to establish the
existence of the privilege, viz:
(1) Where legal advice of any kind is sought
(2) from a professional legal adviser in his capacity
as such,
(3) the communications relating to that purpose,
(4) made in confidence
(5) by the client,
(6) are at his instance permanently protected
(7) from disclosure by himself or by the legal
advisor,
(8) except the protection be waived.
B. When is a lawyer allowed to disclose information
that are covered by the privilege?
Rule 21.01 provides that “A lawyer shall not reveal the
confidences or secrets of his client except;
(a) When authorized by the client after acquainting him of
the consequences of the disclosure;
(b) When required by law;
(c) When necessary to collect his fees or to defend
himself, his employees or associates or by judicial
action.”
*additional exceptions refer to the commission of a
contemplated crime or the perpetuation of a fraud, the
relation of attorney and client being for lawful and honest
purpose only.
Legal Ethics Finals Reviewer [Atty. Bustamante]
C. Is the identity of the client confidential; are there
any exceptions?
No. As a general rule, the lawyer may not invoke
privilege and refuse to divulge the name or identity of his
client/s.
In the case of Regala v. Sandiganbayan [GR. No.
105938]:
As a matter of public policy, a client's identity should not
be shrouded in mystery. Under this premise, the general
rule in our jurisdiction as well as in the United States is
that a lawyer may not invoke the privilege and refuse to
divulge the name or identity of this client.
The reasons advanced for the general rule are well
established.
First, the court has a right to know that the client whose
privileged information is sought to be protected is flesh
and blood.
Second, the privilege begins to exist only after the
attorney-client relationship has been established. The
attorney-client privilege does not attach until there is a
client.
Third, the privilege generally pertains to the subject
matter of the relationship.
Finally, due process considerations require that the
opposing party should, as a general rule, know his
adversary. "A party suing or sued is entitled to know who
his opponent is." He cannot be obliged to grope in the dark
against unknown forces.
However this is subject to certain exceptions:
1. Where a strong possibility exists that revealing the
client's name would implicate the client in the very
activity for which he sought the client's advice;
2. Where the disclosure would open the client to civil
liability.
3. When the Government's lawyers have no case against
the attorney's client and revealing the client's name would
furnish the only link that would form the chain of
testimony necessary to convict him.
D. Can a lawyer testify against his client? Exceptions?
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As a general rule, a lawyer cannot testify against his client
in view of the attorney-client privilege. There are
however, exceptions to said rule:
1. Announcements of intention of a client to
commit a crime
2. Client jumped bail and lawyer knows his
whereabouts; or client is living somewhere under
an assumed name
3. Communication involves the commission of
future fraud or crime but crimes/frauds “already
committed” falls within the privilege.
V
A. Instances when a lawyer can withdraw his services
Rule 22.01 - A lawyer may withdraw his services in any
of the following case:
(a) When the client pursues an illegal or immoral course
of conduct in connection with the matter he is handling;
(b) When the client insists that the lawyer pursue conduct
violative of these canons and rules;
(c) When his inability to work with co-counsel will not
promote the best interest of the client;
(d) When the mental or physical condition of the lawyer
renders it difficult for him to carry out the employment
effectively;
(e) When the client deliberately fails to pay the fees for
the services or fails to comply with the retainer
agreement;
(f) When the lawyer is elected or appointed to public
office; and
(g) Other similar cases.
B. Discuss the procedure to be followed before a
lawyer may retire or withdraw from a case
Requirement of proper withdrawal:
1. The lawyer should have either the written
conformity of his client or an order from the court
relieving him of the duties of counsel
2. If the client refuses to give consent to the
retirement or withdrawal, the lawyer must file an
application or petition for withdrawal with the
court. He must serve a copy of his petition upon
his client and the adverse party at least 3 days
before the date set for hearing, otherwise the court
may treat the application as a “mere scrap of
paper.”
3. Withdrawal of record is required for an attorney
of record in litigation: a lawyer must still appear
Legal Ethics Finals Reviewer [Atty. Bustamante] 1F 2018-‘19

on the date of hearing for the attorney-client

relation does not terminate formally until there is As this Court held in People v. Florendo (177 Phil. 16),
a withdrawal of record. Until he is properly "the attorneys for the offended party ceased to be the
relieved as counsel of record, he will remain attorneys for the deceased upon the death of the letter, the
responsible for the conduct of the case. principal."
Lawas v. CA
- Retirement from the practice of law is not an excuse
from properly withdrawing from a case. Even if he has Underlying principle/explanation: Confidential
retired, he can’t still ignore court orders. He must go thru relationship characterized by highest degree fiduciary
proper withdrawal process. between attorney and client.
- A lawyer appointed to public office remains as counsel
of record where he did not file a motion to withdraw as
counsel

Procedure for the Substitution of Attorneys. There

must be filed:
- Written application for such substitution
- Written consent of the client
- If the written consent can’t be obtained, there must be
filed with the application proof of service of notice of
such motion upon the attorney to be substituted in the
manner prescribed by the rules
- If the foregoing is not complied with, substitution will
not be permitted.

C. What is the effect of the death of the lawyer or the

client to the Attorney-Client Relationship

Death of Lawyer:
Attorney-client relationship shall be extinguished except
when the contract is with a law firm. In which case, the
law firm shall continue to be responsible for the handling
of the case and there shall be assigned a new partner-
counsel to handle the case unless the client of the
deceased should engage the services of another counsel or
law firm.

Death of client:
Attorney client relationship shall be extinguished except
when the legal representatives, assigns or heirs of the
deceased should request and maintain the services of the
same counsel to continue handling the case.

The duty of counsel under [Section 16, Rule 3 of the 1997

Rules of Civil Procedure] is to inform the court within
thirty (30) days after the death of his client of the fact of
death, and to give the name and address of the deceased's
legal representative or representatives. Incidentally, this
is the only representation that counsel can undertake after
the death of a client as the fact of death terminated any
further lawyer-client relationship.
Sumaljag v. Diosdidit [G.R. No. 149787]

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