Client’s Trust Account

Cusi, Ronald Arvin C.

delos Reyes, Mervyn Jef F.

Landicho, Laurie Carr L.

Ramos, Samuel G.
 What is a Client’s Trust Account?

A Client’s trust account is a special

bank account where client funds are kept
safe until it is time to withdraw those funds.
 Historical Overview

The original 32 Canons of Professional Ethics were adopted by the

American Bar Association in 1908.

One of the earliest ethics codes described a virtuous lawyer in

these words:

“Tell me a man is dishonest and I will answer that he is no lawyer.

He cannot be because he is careless and reckless of justice; the
law is not in his heart, is not the standard and rule of his
conduct.”
 Historical Overview

The first publication to set out rules for the legal profession may
have been David Hoffman

“I will retain no client’s funds beyond the period in which I can,

with safety and ease, put him in possession of them”
 Historical Overview

Pennsylvania Judge George Sharswood, whose ethical

prescriptions greatly influenced the first American Bar
Association’s (ABA) ethical code, wrote that “mutual trust,
confidence and goodwill” are the essence of the lawyer-client
relationship.

Alabama adopted most of Sharswood’s prescriptions into the

nation’s first official code of ethics for lawyers. The ABA code, ABA
CANONS OF PROFESSIONAL ETHICS, was approved in 1908.
Canon 11 which deals with client funds is almost identical to
Sharswood’s statement as cited.
 1908 Code of Professional Ethics (American
Bar Association) *These canons of the
American Bar Association were adopted by the
Philippine Bar Association as its own in 1917
and in 1946.

PROVISIONS OF ABA Model Code of Professional

LAW REGARDING Responsibility which was adopted by the
TRUST ACCOUNT House Delegates in 1969 and became effective
IN RELATION TO in January 1, 1970.
LEGAL ETHICS
Canons of Professional Ethics (CPE)

Code of Professional Responsibility (CPR)

June 21, 1988
 Spouses Lopez vs. Atty. Limos
(A.C. No. 7618, 16 February 2016)

Respondent violated Rule 16.01 and 16.03, Canon 16 of the CPR

when she failed to return the amount of P75, 000.00 representing
legal fees that complainants paid her. Thus, a lawyer’s failure to
return upon demand the funds held by him on behalf of his client
gives rise to the presumption that he has appropriated the same
for his own use in violation of the trust reposed in him by his
client. Such act is a gross violation of general morality, as well as
professional ethics.
 Spouses Concepcion vs. Atty. Dela Rosa
(A.C. No. 10681, 03 February 2015)

The rule against borrowing of money by a lawyer from his client is

intended to prevent the lawyer from taking advantage of his
influence over the client. The rule presumes that the client is
disadvantaged by the lawyer’s ability to use all the maneuverings
to renege on his obligation. Respondent’s act of borrowing money
from a client amounting to P2.5 M and blatantly refusing to pay
the same was a violation of Rule 16.04 of the CPR.
 Yu vs. Atty. Dela Cruz
(A.C. No. 10912, 19 January 2016)

The conversion by a lawyer of funds entrusted to him by his client

is a gross violation of professional ethics and a betrayal of public
confidence in the legal profession. After the decision was rendered
in favor of the complainant, and a writ of execution issued.
Respondent issued a check purportedly to settle the case only to
have the check bounce for insufficiency of funds. The conversion of
the client’s
 Cooperman’s Case

First judicial decision to invalidate a non-refundable retainer on

the ground that it was unethical. Cooperman was a lawyer charge
with fifteen violations centering around his use of nonrefundable
retainer agreements.

Arens vs. Committee on Professional

Conduct.
The Supreme Court sanctioned two lawyers who did not refund
the unearned portion of a refundable fee.
 Misappropriation of funds.
A lawyer entrusted by his client of
PROBLEM AREAS amounts for specific purpose but did not
WITH REGARD TO spend the money for such purpose and
CLIENT’S TRUST instead misappropriated the same for his
ACCOUNT personal use may be suspended or
disbarred.
Atty. Augusto G. Navarro vs. Atty. Rosendo Meneses III
[CBD A.C. No. 313. January 30, 1998]

Atty. Rosendo Meneses received the sum of P50,000.00 from

Arthur Bretaa for an out-of-court settlement.

Regional Trial Court of Makati revealed that the supposed

amicable settlement was not finalized and concluded.

Several postponement and resetting of hearings were later

requested and granted by the Commission.
 Atty. Augusto G. Navarro vs. Atty.
Supreme Court Decision
Rosendo Meneses III
[CBD A.C. No. 313. January 30, 1998] Code of Professional
Responsibility
Board of Governors of the IBP: Respondent
Canon 16
Refusal and/or failurerecommended
of respondent that to is disbarred.
Rule 16.01
The Commission
account for the
respondent sum ofbe
Meneses P50,000.00
suspended he from
received
the “a lawyer shall
proves
practicebeyond
of the any
legalshadow of a for
profession doubt that heof
a period account for all money
misappropriated
three (3) years the andsame.
directed to return the or property collected
P50,000.00 he received from the petitioner or received for or
within fifteen (15) days from notice of the from his client”
resolution. It further provided that failure on
his part to comply with such requirement
would result in his disbarment.
The Florida Bar v. Michael Eugene Wynn, No. SC-1323
No. SC-1323, February 16, 2017

On October 10, 2013, Sylvia Rhodes paid $500 to Atty. Wynn to be

used towards the cost in a landlord-tenant matter.

Respondent deposited the $500 into his business operating

account rather than to his trust account.

In a meeting, respondent repaid the $500 and requested that the

Bar complaint be dismissed.
 The Florida Bar v. Michael
Eugene Wynn, No. SC-1323 Florida CPR
SC decision
No. SC-1323, February 16, 2017
Canon 16
Respondent16.02 is
Rule 16.03
Rules
RulesRegulating TrustConduct
of Professional Accounts
suspended for 1
Rule 4-1.15RULE 5-1.1 Property
Safekeeping Ayear.
lawyer shall
A lawyer keep
shall
TRUST
Compliance ACCOUNTS
With Trust Accounting Rules.
(d) Trust Accounting. the funds
deliver of each
the funds and
client separate
property and
of his client
Compliance With Trust Accounting Rules. A apart
when from
due orhisupon
own
Minimum trust
lawyer shall accounting
comply records
with The shallBar
Florida be
maintained and minimum trust accounting and those of others
demand.
Rules Regulating Trust Accounts. kept by him.
procedures must be followed by all attorneys
practicing in Florida who receive or disburse
trust money or property.
 Ways Lawyers Misappropriate
Clients’ Funds
Pocketing payments

Misapplication

Charging for service never provided

Fraud

Overcharging

Misuse of Trust

Breach of law society orders

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an
 Commingling Of Client’s Fund
• Lawyer shall keep the funds of
each client separate and apart from his
own and those of others kept by him.
PROBLEM AREAS
• Failure to return gives rise to the
WITH REGARD TO
presumption that the lawyer has
CLIENT’S TRUST
appropriated the fund for his own use
ACCOUNT
(Sison v. Valdez, July 31 2017)

• This obligations flows from the

highly fiduciary character of attorney-
client relationship.
 Commingling Of Client’s Fund
• An attorney should keep a record and report promptly the
money of the client that has come to his possession and

• At all times reputation for honesty and fidelity to private

trust should be maintained.

• Failure to do so is violation of Canon 16 of CPR and

failure to return funds may constitute a prima facie evidence of
swindling or estafa (Belleza v. Atty Macasa, July 23, 2009).

• Any violation to the said obligation may result to

disbarment depending on circumstances of the case. (Licuanan v.
Atty. Melo, February 9 1989)
Thank you.