11.

12.

Petitioners cite Section 21, Rule 3 of the Rules of Court which provides:

SEC. 21. Indigent party. – A party may be authorized to litigate his action, claim or
defense as an indigent if the court, upon an ex parte application and hearing, is
satisfied that the party is one who has no money or property sufficient and
available for food, shelter and basic necessities for himself and his family.

Such authority shall include an exemption from payment of docket and other
lawful fees, and of transcripts of stenographic notes which the court may order to
be furnished him. The amount of the docket and other lawful fees which the
indigent was exempted from paying shall be a lien on any judgment rendered in
the case favorable to the indigent, unless the court otherwise provides. Any
adverse party may contest the grant of such authority at any time before
judgment is rendered by the trial court. If the court should determine after
hearing that the party declared as an indigent is in fact a person with sufficient
income or property, the proper docket and other lawful fees shall be assessed
and collected by the clerk of court. If payment is not made within the time fixed
by the court, execution shall issue or the payment thereof, without prejudice to
such other sanctions as the court may impose.

Respondents, on the other hand, cite Section 19, Rule 141 of the Rules of Court,
as amended by A.M. No. 00-2-01-SC and A.M. No. 04-2-04-SC, which reads:
SEC. 19. Indigent litigants exempt from payment of legal fees.– Indigent litigants
(a) whose gross income and that of their immediate family do not exceed an
amount double the monthly minimum wage of an employee and (b) who do not
own real property with A FAIR MARKET VALUE AS STATED IN THE CURRENT TAX
DECLARATION of more than THREE HUNDRED THOUSAND (₱300,000.00) PESOS
shall be exempt from the payment of legal fees.

The legal fees shall be a lien on any judgment rendered in the case favorable to
the indigent litigant unless the court otherwise provides.

To be entitled to the exemption herein provided, the litigant shall execute an

affidavit that he and his immediate family do not earn a gross income
abovementioned, and they do not own any real property with the fair value
aforementioned, supported by an affidavit of a disinterested person attesting to
the truth of the litigant’s affidavit. The current tax declaration, if any, shall be
attached to the litigant’s affidavit.

Any falsity in the affidavit of litigant or disinterested person shall be sufficient

cause to dismiss the complaint or action or to strike out the pleading of that
party, without prejudice to whatever criminal liability may have been incurred.

In the case of Spouses Algura v. Local Gov’t. Unit of the City of Naga,27 this Court
had the opportunity to explain how the two rules cited by the opposing parties
can stand together and are compatible with each other, to wit:

In the light of the foregoing considerations, therefore, the two (2) rules can stand
together and are compatible with each other.1âwphi1 When an application to
litigate as an indigent litigant is filed, the court shall scrutinize the affidavits and
supporting documents submitted by the applicant to determine if the applicant
complies with the income and property standards prescribed in the present
Section 19 of Rule 141—that is, the applicant’s gross income and that of the
applicant’s immediate family do not exceed an amount double the monthly
minimum wage of an employee; and the applicant does not own real property
with a fair market value of more than Three Hundred Thousand Pesos
(Php300,000.00). If the trial court finds that the applicant meets the income and
property requirements, the authority to litigate as indigent litigantis automatically
granted and the grant is a matter of right.

RELATED READINGS

Republic of the Philippines

SUPREME COURT

Manila

THIRD DIVISION

G.R. No. 94299 August 21, 1992

THE PEOPLE OF THE PHILIPPINES, plaintiff-appellee,

vs.

RICARDO MALLARI, accused-appellant.

The Solicitor General for plaintiff-appellee.

Edgardo Sorca Arias for accused-appellant.

NOCON, J.:

This is an appeal by accused-appellant Ricardo Mallari from the

decision 1 dated April 11, 1990 of the Regional Trial Court of Palawan and Puerto
Princesa City, 4th Judicial Region, Branch 47 in Criminal Case No. 6334, the
dispositive portion of which reads:

WHEREFORE, premises considered, the Court finds the two (2) herein accused
JOSINO RAMOS and RICARDO MALLARI guilty beyond reasonable doubt as co-
principals of the crime of MURDER charged against them by the Provincial
Prosecution Office in this case as defined and penalized under Article 248 of the
Revised Penal Code, and there being no modifying circumstance that attended the
commission of this offenses, hereby sentences each of them to suffer the penalty
of RECLUSION PERPETUA; each to pay the heirs or family of the victim, EDMUNDO
TUYAK, moral, exemplary and actual damages of FIFTY THOUSAND PESOS
(P50,000.00) and to pay the costs.

With this conviction, the bailbonds posted for the provisional liberty of the
accused are hereby ordered revoked, cancelled and terminated, and both accused
should immediately be placed behind bars and shipped to the national
penitentiary, Muntinlupa, Metro Manila, for imprisonment and to serve their
sentences there. 2

On June 5, 1986, an information was filed against Josino Ramos and Ricardo
Mallari for the crime of MURDER committed as follows:

That on or about the 7th day of May, 1986 at barangay Rio Tuba, Municipality of
Bataraza, Province of Palawan, Philippines and within the jurisdiction of this
Honorable Court, the above-named accused, conspiring, confederating together
and mutually helping one another with evident premeditation, treachery and with
intent to kill, did then and there wilfully [sic], unlawfully and feloniously attack,
assault and stab with a bladed weapon [,] to wit: a Batangas knife [sic], one
Edmundo Tuyak [,] hitting him in a vital part of his body and inflicting upon him
mortal injuries which was the direct and immediate caused [sic] of his death
shortly thereafter. 3

Upon arraignment accused Josino Ramos and accused-appellant Ricardo Mallari

pleaded "Not Guilty" to the offense charged.

The facts as found by the trial court are as follows:

At around 5:00 p.m. of May 7, 1986, the victim Edmundo Tuyac and his
companion Danilo Culaban left the store at Rio Tuba in Bataraza, Palawan where
they were celebrating their basketball championship with their teammates. As
they were walking towards the townsite, a Mazda minibus driven by accused-
appellant Ricardo Mallari suddenly stopped beside the victim and accused Josino
Ramos, who was the lone passenger in said bus, and who was seated at the back
of the driver stabbed the victim once with a Batangas knife on his clavicular area
while the latter was in a standing position and a foot away from the vehicle.

The stabbing incident was seen by Silvino dela Peña, who was about five (5) arms
length away from the victim, and heard one of the accused say "sibat na tayo."

Quirico Bañadera, a teammate of the victim, likewise saw Ramos stab the victim
Edmundo Tuyac as he was just coming out of a house which is about seven (7)
meters away from the scene of the stabbing incident. Thereafter, accused-
appellant Mallari speedily drove away from the scene of the crime. Bañadera
rushed to the victim, who fell to the ground after being stabbed by the accused
Ramos, and with the assistance of Edgar Galvero brought the latter to the hospital
on board a Gumba jeep which was parked nearby.

On their way to the hospital and upon reaching the military checkpoint, Bañadera
and dela Peña saw the minibus used by the accused and accordingly shouted at
the personnel manning said checkpoint to stop said minibus. Immediately, the
military officer stopped the bus and, after a search found a bloodied knife under
one of the seats of the bus.

At 11:30 a.m. of May 8, 1986, an autopsy of the victim was conducted by Medico
Legal Officer Joaquin B. Fabellon at Brooke's Point District Hospital, who stated in
his Partial Autopsy Report that the victim incurred a wound at the clavicular area
of his body hitting the thoracic cavity and perforating the left upper portion of his
lung and that the probable weapon used in inflicting said wound is a Batangas
knife . 4

Accused Ramos, however, disputes the forgoing facts and stated that what
actually happened on that fateful afternoon is as follows:

At around 6:20 p.m. of May 7, 1986, while he and accused-appellant Mallari were
on their way to the pier terminal at Rio Tuba, Bataraza, with the latter driving the
Mazda minibus with two (.2) passengers, a group of about 20 drunk men started
stoning their vehicle. The victim Edmundo Tuyac boxed his face several times, and
as Tuyac was pulling him out of the vehicle by his left hand, he got hold of a tool
from the opened tool box inside the minibus and hit the victim with it without any
intention of killing him since he never met the victim before nor had he any
motive to kill the latter. Thereafter, he and accused-appellant Mallari went to the
Marine Detachment to ask for assistance.

On the other hand, accused-appellant Mallari testified that at around 6:00 p.m. of
May 7, 1986, he and accused Ramos were at the lower portion of the pier to
unload cargoes. As. they were about to leave, the two (2) passengers inside the
minibus said "Takbo". Instinctively, he immediately drove the minibus and
proceeded to the Marine Detachment for assistance although he noticed no
unusual incident happening inside or outside the bus while driving from the pier
to the Marine Detachment since an iron backrest separates the driver's
compartment from the other passengers of the bus. Accused-appellant contends
that he has no reason to conceive of a plot to kill the victim whom he never knew
nor met before the incident in question much less to have any ill-feeling against
him.
For the failure of the accused and his counsel to appear in court on February 12,
1990 without justification or explanation despite notice that the defense has to
terminate its case that day, the trial court issued an Order submitting the case for
decision.

We find no merit in the appeal.

Accused-appellant contends that there was a mistrial since he was not

represented by a counsel of his own choice during the latter stage of the trial and
that he was denied due process of law for not being allowed to present further
evidence considering that it was the accused Ramos and his counsel who were
absent during the trial held on February 12, 1990.

The records belie accused-appellant's contention. He was duly represented by a

member of the Bar and was accorded all the opportunities to be heard and
present evidence to substantiate his defense during the entire trial proceedings.
As aptly pointed out by the Solicitor General:

Initially, appellant and his co-accused were represented in court by Atty. Demaala,
Sr. (p. 2, tsn March 28, 1988 a.m.). At said session, Atty. Demaala entered his
appearance as counsel for both accused for purposes of direct examination, to be
conducted by the prosecution. On cross-examination, Atty. Demaala appeared as
counsel for both accused (p. 2, March 28, 1988 P.M.). On the trial court's sessions
of June 1, 1988 and July 11, 1988 wherein Dr. Fabellon testified on his Autopsy
Report and the deceased's mother on the expenditures incurred relative to her
son's death, Atty. Demaala appeared for appellant Mallari while Atty. Rocamora
appeared for accused Ramos. In the trial court's session of November 12, 1989,
Atty. Rocamora entered his appearance as counsel "for the accused" (p. 2, tsn,
November 13, 1989) without any qualification. The same appearance was again
entered by Atty. Rocamora in the court's session of February 9, 1990.

Since afore-named counsels had, at one court session or another, interchangeably

appeared in court as counsel either for both accused or for a named accused, it is
safe and logical to assume that both are corroborating counsels for both accused.
Such that when one counsel enters his court appearance in the absence of the
other, such appearance was meant for both accused. This was evidently the
court's perception, in the absence of any qualification of counsels' court
appearances. In fine, there was an understanding between both counsels in this
regard, consented to by both accused as shown by their silence. Moreover, if
there is any truth that appellant Mallari was not represented or properly
represented by counsel of his choice, why did he fail to immediately inform the
court of it. Why did appellant wait until his conviction to raise this question? The
inevitable conclusion is that he knew that he was properly represented by a
counsel of his own choice. 5

As to the accused-appellant's contention that he was denied due process when

the trial court considered the case submitted for decision thereby depriving him
of presenting further evidence for his defense, We simply find the same to be
untrue. The trial court was merely following the continuous trial method
mandated by the Supreme Court on certain pilot courts. Accused appellant was
not, in any way, deprived of his substantive and constitutional right to due
process as he was duly accorded all the opportunities to be heard and to present
evidence to substantiate his defense but he forfeited this right, through his own
negligence for not appearing in court together with his counsel at the scheduled
hearings.

Both accused are deemed to have waived their right to present other evidences
considering that the trial court had repeatedly admonished them to resume the
presentation of their defense as can be gleaned from the trial court's Order of
November 13, 1989, to wit:

The parties are advised that this being a continuous trial, the ninety-day (90)
period to terminate this case starts today, November 13,

1989. . . . 6

And the trial court's Order of February 9, 1990, which reads:

AS PRAYED FOR, let this hearing be continued on February 12, 1990, at 8:30
o'clock in the morning. The defense is reminded that its time to terminate its case
is on the 12th of February, 1990, so it must be ready to close its case on that date.
7

but which both accused ignored. It cannot be said then that they were denied due
process as they were given ample opportunity to be heard during the trial of the
case but they chose not to appear in court on said dates.

With regards to accused-appellant's contention that the trial court erred in

finding that the killing of Edmundo Tuyac was attended by the qualifying
circumstances of conspiracy, evident premeditation and treachery, We find the
trial court's justification in accordance with the law and evidence. The trial court
found that the minibus driven by the accused-appellant stopped a foot away from
the victim who was standing on the road when accused Ramos, who was seated
inside the bus, suddenly stabbed the latter. Thereafter, accused-appellant
responding to the accused Ramos order "let's go" or "sibat na tayo" speedily
drove the minibus away from the scene of the crime.
These acts of the accused Ramos and accused-appellant Mallari positively indicate
the existence of a common unlawful purpose to kill and both were united in
seeing to its fulfillment by consciously and purposely adopting means and method
to ensure its commission. Thus, a person may be convicted for the criminal act of
another where, between them, there was conspiracy or unity of purpose and
intention in the commission of the crime charged. Once the assent is established,
each and everyone of the conspirators is made criminally liable for the crime
actually committed by anyone of them, 8 as in the case at bar. Furthermore, the
positive testimonies of the prosecution witnesses show clear indicia of conspiracy.
Indeed, the trial court was of the same opinion that conspiracy and treachery
attended the killing of the victim. Said the Court:

. . . The way the crime was executed gives a clear indication that this was the
result of a pre-arranged or pre-planned killing that was neatly and precisely
carried out. The Court takes into account that the two (2) accused had always
been together as driver and conductor of the passenger jeepney of Mrs. Magura.

xxx xxx xxx

The Court also believes and holds that the stabbing of the victim was attended by
treachery because while the victim was walking on the left side of the road, the
passenger jeepney driven by accused Ricardo Mallari suddenly stopped without
turning off its engine right in the place where he (victim) was and in that precise
moment, the other accused, Josino Ramos fatally stabbed the victim. The assault
was sudden and unexpected because nobody, let alone the victim knew or even
anticipated subject passenger jeepney [minibus] would stop right beside him and
he would be suddenly stabbed. 9
To constitute treachery, two conditions must be present, to wit: (1) the
employment of means of execution that gives the person attacked no opportunity
to defend himself or to retaliate; and (2) the means of execution were
deliberately or consciously adopted. 10 In the present case, the position of
accused Ramos, who was inside the minibus, from the victim, who was standing, a
foot away from the minibus, gave undue advantage to the former since the latter
was not in a position to defend himself or to retaliate. Moreover, the location of
the lone stab wound on the victim indicates that accused Ramos deliberately and
consciously aimed for the victim's vital organ to ensure the commission of the
offense without any risk himself which the victim might make.

As regards the qualifying circumstance of evident premeditation, We agree with

the accused-appellant that the same may not be appreciated against them absent
proof as to how and when the plan to kill was hatched or what time elapsed
before it was carried out. 11

WHEREFORE, finding no reversible error in the decision appealed from, the same
is hereby AFFIRMED in toto. Costs against accused-appellant.

SO ORDERED.

Narvasa, C.J., Padilla and Regalado, JJ., concur.

Melo, J., took no part.

Footnotes

1 Penned by Judge Eustaquio Z. Gacott, Jr.

2 Rollo, p. 63.

3 Original Record, p. 2.

4 T.S.N., June 1, 1988, pp. 3-7.

5 Rollo, p. 316.

6 Original Record, p. 231.

7 Id., at p. 272.

8 People vs. Talla, 181 SCRA 133 [1990].

9 Rollo, p. 85.

10 People vs. Mabubay, 185 SCRA 675 [1990].

11 People vs. Peñones, 200 SCRA 624 [1991].

Section 25. Unlawful retention of client's funds; contempt. — When an attorney

unjustly retains in his hands money of his client after it has been demanded, he
may be punished for contempt as an officer of the Court who has misbehaved in
his official transactions; but proceedings under this section shall not be a bar to a
criminal prosecution.

Section 26. Change of attorneys. — An attorney may retire at any time from any
action or special proceeding, by the written consent of his client filed in court. He
may also retire at any time from an action or special proceeding, without the
consent of his client, should the court, on notice to the client and attorney, and
on hearing, determine that he ought to be allowed to retire. In case of
substitution, the name of the attorney newly employed shall be entered on the
docket of the court in place of the former one, and written notice of the change
shall be given to the advance party.

A client may at any time dismiss his attorney or substitute another in his place,
but if the contract between client and attorney has been reduced to writing and
the dismissal of the attorney was without justifiable cause, he shall be entitled to
recover from the client the full compensation stipulated in the contract. However,
the attorney may, in the discretion of the court, intervene in the case to protect
his rights. For the payment of his compensation the attorney shall have a lien
upon all judgments for the payment of money, and executions issued in
pursuance of such judgment, rendered in the case wherein his services had been
retained by the client.
Section 27. Attorneys removed or suspended by Supreme Court on what
grounds. — A member of the bar may be removed or suspended from his office
as attorney by the Supreme Court for any deceit, malpractice, or other gross
misconduct in such office, grossly immoral conduct, or by reason of his conviction
of a crime involving moral turpitude, or for any violation of the oath which he is
required to take before the admission to practice, or for a wilfull disobedience of
any lawful order of a superior court, or for corruptly or willful appearing as an
attorney for a party to a case without authority so to do. The practice of soliciting
cases at law for the purpose of gain, either personally or through paid agents or
brokers, constitutes malpractice.

Section 28. Suspension of attorney by the Court of Appeals or a Court of First

Instance. — The Court of Appeals or a Court of First Instance may suspend an
attorney from practice for any of the causes named in the last preceding section,
and after such suspension such attorney shall not practice his profession until
further action of the Supreme Court in the premises.

Section 29. Upon suspension by the Court of Appeals or Court of First Instance,
further proceedings in Supreme Court. — Upon such suspension, the Court of
Appeals or the Court of First Instance shall forthwith transmit to the Supreme
Court a certified copy of the order of suspension and a full statement of the facts
upon which the same was based. Upon the receipt of such certified copy and
statement, the Supreme Court shall make a full investigation of the facts involved
and make such order revoking or extending the suspension, or removing the
attorney from his office as such, as the facts warrant.

RULE 116
Arraignment and Plea

Section 1. Arraignment and plea; how made. —

(a) The accused must be arraigned before the court where the complaint or
information was filed or assigned for trial. The arraignment shall be made in open
court by the judge or clerk by furnishing the accused with a copy of the complaint
or information, reading the same in the language or dialect known to him, and
asking him whether he pleads guilty or not guilty. The prosecution may call at the
trial witnesses other than those named in the complaint or information.

(b) The accused must be present at the arraignment and must personally enter
his plea. Both arraignment and plea shall be made of record, but failure to do so
shall not affect the validity of the proceedings.

(c) When the accused refuses to plead or makes a conditional plea, a plea of
not guilty shall be entered for him. (1a)

(d) When the accused pleads guilty but presents exculpatory evidence, his plea
shall be deemed withdrawn and a plea of not guilty shall be entered for him. (n)

(e) When the accused is under preventive detention, his case shall be raffled
and its records transmitted to the judge to whom the case was raffled within
three (3) days from the filing of the information or complaint. The accused shall
be arraigned within ten (10) days from the date of the raffle. The pre-trial
conference of his case shall be held within ten (10) days after arraignment. (n)
(f) The private offended party shall be required to appear at the arraignment
for purposes of plea bargaining, determination of civil liability, and other matters
requiring his presence. In case of failure of the offended party to appear despite
due notice, the court may allow the accused to enter a plea of guilty to a lesser
offense which is necessarily included in the offense charged with the conformity
of the trial prosecutor alone. (cir. 1-89)

(g) Unless a shorter period is provided by special law or Supreme Court

circular, the arraignment shall be held within thirty (30) days from the date the
court acquires jurisdiction over the person of the accused. The time of the
pendency of a motion to quash or for a bill of particulars or other causes justifying
suspension of the arraignment shall be excluded in computing the period. (sec. 2,
cir. 38-98)

Section 2. Plea of guilty to a lesser offense. — At arraignment, the accused,

with the consent of the offended party and the prosecutor, may be allowed by
the trial court to plead guilty to a lesser offense which is necessarily included in
the offense charged. After arraignment but before trial, the accused may still be
allowed to plead guilty to said lesser offense after withdrawing his plea of not
guilty. No amendment of the complaint or information is necessary. (sec. 4, circ.
38-98)

Section 3. Plea of guilty to capital offense; reception of evidence. — When the

accused pleads guilty to a capital offense, the court shall conduct a searching
inquiry into the voluntariness and full comprehension of the consequences of his
plea and require the prosecution to prove his guilt and the precise degree of
culpability. The accused may present evidence in his behalf. (3a)
Section 4. Plea of guilty to non-capital offense; reception of evidence,
discretionary. — When the accused pleads guilty to a non-capital offense, the
court may receive evidence from the parties to determine the penalty to be
imposed. (4)

Section 5. Withdrawal of improvident plea of guilty. — At any time before the

judgment of conviction becomes final, the court may permit an improvident plea
of guilty to be withdrawn and be substituted by a plea of not guilty. (5)

Section 6. Duty of court to inform accused of his right to counsel. — Before

arraignment, the court shall inform the accused of his right to counsel and ask
him if he desires to have one. Unless the accused is allowed to defend himself in
person or has employed a counsel of his choice, the court must assign a counsel
de oficio to defend him. (6a)

Section 7. Appointment of counsel de oficio. — The court, considering the

gravity of the offense and the difficulty of the questions that may arise, shall
appoint as counsel de oficio only such members of the bar in good standing who,
by reason of their experience and ability, can competently defend the accused.
But in localities where such members of the bar are not available, the court may
appoint any person, resident of the province and of good repute for probity and
ability, to defend the accused. (7a)

Section 8. Time for counsel de oficio to prepare for arraignment. — Whenever

a counsel de oficio is appointed by the court to defend the accused at the
arraignment, he shall be given a reasonable time to consult with the accused as to
his plea before proceeding with the arraignment. (8)
Section 9. Bill of particulars. — The accused may, before arraignment, move for
a bill of particulars to enable him properly to plead and to prepare for trial. The
motion shall specify the alleged defects of the complaint or information and the
details desired. (10a)

Section 10. Production or inspection of material evidence in possession of

prosecution. — Upon motion of the accused showing good cause and with notice
to the parties, the court, in order to prevent surprise, suppression, or alteration,
may order the prosecution to produce and permit the inspection and copying or
photographing of any written statement given by the complainant and other
witnesses in any investigation of the offense conducted by the prosecution or
other investigating officers, as well as any designated documents, papers, books,
accounts, letters, photographs, objects or tangible things not otherwise
privileged, which constitute or contain evidence material to any matter involved
in the case and which are in the possession or under the control of the
prosecution, police, or other law investigating agencies. (11a)

Section 11. Suspension of arraignment. — Upon motion by the proper party, the
arraignment shall be suspended in the following cases:

(a) The accused appears to be suffering from an unsound mental condition

which effective renders him unable to fully understand the charge against him
and to plead intelligently thereto. In such case, the court shall order his mental
examination and, if necessary, his confinement for such purpose;

(b) There exists a prejudicial question; and

(c) A petition for review of the resolution of the prosecutor is pending at either
the Department of Justice, or the Office of the President; provided, that the
period of suspension shall not exceed sixty (60) days counted from the filing of
the petition with the reviewing office. (12a)

A.C. No. 4354 April 22, 2002

LOLITA ARTEZUELA, complainant,

vs.

ATTY. RICARTE B. MADERAZO, respondent.

PUNO, J.:

For his failure to meet the exacting standards of professional ethics, the Board of
Governors of the Integrated Bar of the Philippines (IBP) in its Resolution of May 2,
2000 recommended the suspension from the practice of law of respondent Atty.
Ricarte B. Maderazo for the period of six (6) months, with a stern warning that
repetition of the same act will be dealt with more severely. Respondent allegedly
represented conflicting interests in violation of Canon 6 of the Code of
Professional Ethics, and Canon 15 and Rule 15.03 of the Code of Professional
Responsibility.1

By way of a Motion for Reconsideration,2 respondent now comes before this

Court to challenge the basis of the IBP's resolution, and prays for its reversal.

The factual antecedents of the case are as follows: On or about 3:00 in the early
morning of December 24, 1992, Allan Echavia had a vehicular accident at
Caduman St., corner H. Abellana St., Mandaue City. At the time of the accident,
Echavia was driving a Ford Telstar car owned by a Japanese national named
Hirometsi Kiyami, but was registered in the name of his brother-in-law, Jun
Anthony Villapez. The car rammed into a small carinderia owned by complainant
Lolita Artezuela.3

The destruction of the complainant's carinderia caused the cessation of the

operation of her small business, resulting to her financial dislocation. She incurred
debts from her relatives and due to financial constraints, stopped sending her two
children to college.4

Complainant engaged the services of the respondent in filing a damage suit

against Echavia, Villapez and one Bernardo Sia.5 Docketed as Civil Case No.
13666, the case was assigned to Branch 14 of the Regional Trial Court of Cebu. An
Amended Complaint was thereafter filed, impleading Echavia, Kiyami and Villapez,
and dropping Sia as a party-defendant.6 For his services, complainant paid the
respondent the amount of Ten Thousand Pesos (₱10,000.00) as attorney's fees
and Two Thousand Pesos (₱2,000.00) as filing fee.7 However, the case was
dismissed on March 22, 1994, allegedly upon the instance of the complainant and
her husband.8

Because of the dismissal of Civil Case No. 13666, complainant filed a civil case for
damages against the respondent. It was docketed as CEB-18552 and assigned to
Branch 57, Regional Trial Court of Cebu City. The case was dismissed on June 12,
2001.9

On November 24, 1994, Artezuela filed before this Court a verified complaint for
disbarment against the respondent. She alleged that respondent grossly
neglected his duties as a lawyer and failed to represent her interests with zeal and
enthusiasm. According to her, when Civil Case No. 13666 was scheduled for pre-
trial conference on August 20, 1993, respondent asked for its postponement
although all the parties were present. Notwithstanding complainant's persistent
and repeated follow-up, respondent did not do anything to keep the case moving.
He withdrew as counsel without obtaining complainant's consent.10

Complainant also claimed that respondent engaged in activities inimical to her

interests. While acting as her counsel, respondent prepared Echavia's Answer to
the Amended Complaint. The said document was even printed in respondent's
office. Complainant further averred that it was respondent who sought the
dismissal of the case, misleading the trial court into thinking that the dismissal
was with her consent.11

Respondent denied the complainant's allegations and averred that he

conscientiously did his part as the complainant's lawyer in Civil Case No. 13666.
He withdrew as counsel because the complainant was uncooperative and refused
to confer with him. He also gave several notices to the complainant and made
known his intention before he filed his Manifestation to withdraw as counsel.
Because of the severed relationship, the lower court, after holding a conference,
decided to grant respondent's manifestation and advised the complainant to
secure the services of a new lawyer. Complainant, however, refused and instead,
sought the dismissal of the case.12

Respondent alleged that he sought the postponement of the Pre-Trial Conference

scheduled on August 20, 1993 so that he could file the Amended Complaint. He
admitted that Echavia's Answer to the Amended Complaint was printed in his
office but denied having prepared the document and having acted as counsel of
Echavia. He claimed that complainant requested him to prepare Echavia's Answer
but he declined. Echavia, however, went back to his office and asked respondent's
secretary to print the document. Respondent intimated that the complainant and
Echavia have fabricated the accusations against him to compel him to pay the
amount of ₱500,000.00.13

This Court referred the complaint to the Integrated Bar of the Philippines (IBP).
The IBP-Visayas Regional Committee on Bar Discipline formed an Investigating
Committee to hear the disbarment complaint.

On October 6, 1999, Commissioner Gabriel T. Ingles issued a Report finding the

respondent guilty of representing conflicting interests, in violation of Canon 15
and Rule 15.03 of the Code of Professional Responsibility, as well as, of Canon 6 of
the Code of Professional Ethics. He recommended that the respondent be
suspended from the practice of law for a period of one (1) year.14 Commissioner
Ingles did not rule on the other issues.

As aforesaid, the Board of Governors of the Integrated Bar of the Philippines

upheld the findings of the Committee with modification only as to the penalty.
Seeking reconsideration of the IBP's resolution, respondent contends that the
Investigating Committee did not conduct trial; hence, he was not able to confront
and examine the witnesses against him. He argues that the Investigating
Committee's finding that he represented Echavia is contrary to court records and
the complainant's own testimony in CEB-18552. He also casts doubt on the
credibility of the Investigating Committee to render just and fair
recommendations considering that the Investigating Commissioner and the
respondent are counsel-adversaries in another case, Civil Case No. R-33277.
Finally, he questions the imposition of a six-month suspension, which he claims to
be harsh considering that his private practice is his only source of income.15

After carefully examining the records, as well as the applicable laws and
jurisprudence on the matter, this Court is inclined to uphold the IBP's
resolution.1âwphi1.nêt

In administrative cases, the requirement of notice and hearing does not connote
full adversarial proceedings, as "actual adversarial proceedings become necessary
only for clarification or when there is a need to propound searching questions to
witnesses who give vague testimonies."16 Due process is fulfilled when the
parties were given reasonable opportunity to be heard and to submit evidence in
support of their arguments.17

In the case at bar, records show that respondent repeatedly sought the
postponement of the hearings, prompting the Investigating Commissioner to
receive complainant's evidence ex parte and to set the case for resolution after
the parties have submitted their respective memorandum. Hence:
"The records show that this is already the third postponement filed by
respondent namely December 12, 1996 (sic), January 3, 1996 and April 1, 1996.

The Commission for the last time, will cancel today's hearing and can no longer
tolerate any further postponement. Notify respondent by telegram for the
hearing for (sic) April 22, 1996 at 2:00 P.M. Said hearing is intransferable in
character.

In the meantime, complainant affirmed her complaint and likewise her witness,
Allan Echavia, also affirmed the contents of his affidavit and further stated that he
had executed the same and understood the contents thereof."18

It is by his own negligence that the respondent was deemed to have waived his
right to cross-examine the complainant and her witness. He cannot belatedly ask
this Court to grant new trial after he has squandered his opportunity to exercise
his right.

Respondent's contention that the finding of the Investigating Committee was

contrary to the records and the complainant's own admission in CEB-18552 is
without merit. It is true that Atty. Aviola was Echavia's counsel-of-record in Civil
Case No. 13666 as evidenced by the certification from the clerk of court,19 and as
admitted by the complainant in CEB-18552, viz:

"ATTY. MADERAZO: (To witness- ON CROSS)

Q: Madam witness, you mentioned that the defendant in this case was the
counsel of Allan Echavia as early as August 20, 1993, wherein you learned for the
first time of this fact when you say he is counsel of Allan Echavia. (sic) You mean
he is the counsel of record of Allan Echavia in the Civil Case before Judge
Dacudao? Is that what you mean?

A: What I learned was that Atty. Alviola was the counsel of Allan Echavia in the
case before Judge Dacudao but I heard Atty. Maderazo telling Allan Echavia not to
admit that Atty. Maderazo is appearing for me because he will be the one to
coordinate with Allan's case.

Q: So it is clear that the defendant in this case is not the counsel of record of
Allan Echavia. It was Atty. Alviola stated by you now?

A: Atty. Maderazo was not Allan Echavia's counsel but it was Atty. Alviola who
was the counsel of record of Allan Echavia."20

Nevertheless, the issue in this case is not whether the respondent also acted as
the counsel-of-record of Echavia. Rather, it is whether or not he had a direct hand
in the preparation of Echavia's Answer to the Amended Complaint.

To be guilty of representing conflicting interests, a counsel-of-record of one party

need not also be counsel-of-record of the adverse party. He does not have to
publicly hold himself as the counsel of the adverse party, nor make his efforts to
advance the adverse party's conflicting interests of record--- although these
circumstances are the most obvious and satisfactory proof of the charge. It is
enough that the counsel of one party had a hand in the preparation of the
pleading of the other party, claiming adverse and conflicting interests with that of
his original client. To require that he also be counsel-of-record of the adverse
party would punish only the most obvious form of deceit and reward, with
impunity, the highest form of disloyalty.

Canon 6 of the Code of Professional Ethics states:

"It is the duty of a lawyer at the time of the retainer to disclose to the client the
circumstances of his relations to the parties and any interest in or in connection
with the controversy, which might influence the client in the selection of the
counsel.

"It is unprofessional to represent conflicting interests, except by express consent

of all concerned given after a full disclosure of the facts. Within the meaning of
this Canon, a lawyer represents conflicting interests when in behalf of one of the
clients, it is his duty to contend for that which duty to another client requires him
to oppose." (emphasis supplied)

An attorney owes his client undivided allegiance. Because of the highly fiduciary
nature of the attorney-client relationship, sound public policy dictates that a
lawyer be prohibited from representing conflicting interests or discharging
inconsistent duties. He may not, without being guilty of professional misconduct,
act as counsel for a person whose interest conflicts with that of his present or
former client. Indeed, good faith and honest intention on the part of the erring
lawyer does not make this rule inoperative.21 The lawyer is an officer of the court
and his actions are governed by the uncompromising rules of professional ethics.
Thus:

"The relations of attorney and client is founded on principles of public policy, on

good taste. The question is not necessarily one of the rights of the parties, but as
to whether the attorney has adhered to proper professional standard. With these
thoughts in mind, it behooves attorneys, like Ceasar's wife, not only to keep
inviolate the client's confidence, but also to avoid the appearance of treachery
and double-dealing. Only thus can litigants be encouraged to entrust their secrets
to their attorneys which is of paramount importance in the administration of
justice."22

The professional obligation of the lawyer to give his undivided attention and zeal
for his client's cause is likewise demanded in the Code of Professional
Responsibility. Inherently disadvantageous to his client's cause, representation by
the lawyer of conflicting interests requires disclosure of all facts and consent of all
the parties involved. Thus:

"CANON 15- All lawyers shall observe candor, fairness and loyalty in all his
dealings and transactions with his clients.

xxx

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."

While the Resolution of the IBP is purely recommendatory, we find no reason to

reverse the same. In disciplinary proceedings against members of the bar, only
clear preponderance of evidence is required to establish liability. As long as the
evidence presented by complainant or that taken judicial notice of by the Court is
more convincing and worthy of belief than that which is offered in opposition
thereto, the imposition of disciplinary sanction is justified.23
A perusal of Echavia's Answer to the Amended Complaint shows that it indeed
conflicts with the complainant's claims. It reads:

"1. The allegations (sic) in Paragraph One (1) of the Complaint is admitted in so far
as it pertains to the personal circumstance and residence of the answering
defendant. The rest of the allegations in Paragraph One (1), and all the allegations
in Paragraph Two (2) , THREE (3), FOUR (4), FIVE (5), SIX (6), ELEVEN (11), TWELVE
(12), and FOURTEEN (14), of the Complaint are DENIED for lack of knowledge
sufficient to form a belief as to the truth of such allegations."24

By way of prayer, Echavia states:

"WHEREFORE, it is respectfully prayed that after hearing, judgment be rendered

dismissing plaintiff's complaint."25

Anent the authorship by the respondent of the document quoted above, the
Investigating Committee found the testimonies of the complainant and Echavia
credible as opposed to respondent's bare denial. As pointed out by Echavia, he
was approached by Atty. Maderazo, introduced himself as his lawyer and after
some sessions in the latter's office, asked him to return and sign a document
which he later identified as the Answer to the Amended Complaint.

The Investigating Committee found respondent's defense weak. Respondent did

not bother to present his secretary as witness, nor obtain her affidavit to prove
his allegations. Instead, he offered a convenient excuse--- that he cannot anymore
locate his secretary.
Respondent argued that it was the complainant who asked him to prepare
Echavia's Answer to the Amended Complaint, after reaching an agreement
whereby Echavia would testify in favor of the complainant. After he declined the
request, he claimed that it was the complainant who prepared the document and
asked his secretary to print the same. But as shown, Echavia's Answer to the
Amended Complaint was in no way favorable to the complainant.

With the dismissal of Civil Case No. 13666, Echavia is practically off the hook. We
cannot find any reason why Echavia would commit perjury and entangle himself,
once again, with the law. He does not stand to profit at all by accusing the
respondent falsely.

Furthermore, considering complainant's stature and lack of legal education, we

can not see how she could have prepared Echavia's Answer to the Amended
Complaint and device a legal maneuver as complicated as the present case.

Respondent's attack on the credibility of Investigating Commissioner Ingles to

render an impartial decision, having been an adversary in Civil Case No. R-33277,
does not convince us to grant new trial. This is the first time that respondent
questions the membership of Commissioner Ingles in the Investigating
Committee. If respondent really believed in good faith that Commissioner Ingles
would be biased and prejudiced, he should have asked for the latter's inhibition at
the first instance. Moreover, we could not find any hint of irregularity, bias or
prejudice in the conduct of the investigation that would lead us to set it aside.

Finally, we remind the respondent that the practice of law is not a property right
but a mere privilege, and as such, must bow to the inherent regulatory power of
the Court to exact compliance with the lawyer's public responsibilities.26 The
suspension of the respondent's privilege to practice law may result to financial
woes. But as the guardian of the legal profession, we are constrained to balance
this concern with the injury he caused to the very same profession he vowed to
uphold with honesty and fairness.1âwphi1.nêt

IN VIEW WHEREOF, the Resolution of the IBP finding the respondent guilty of
violating Canon 6 of the Code of Professional Ethics, and Canon 15 and Rule 15.03
of the Code of Professional Responsibility is affirmed. Respondent is suspended
from the practice of law for six (6) months with a stern warning that a similar act
in the future shall be dealt with more severely.

SO ORDERED.

Austria-Martinez, J., concur.

Sandoval-Gutierrez, J., per special order no. 220, dated April 22, 2002, concur.

Davide, Jr., C.J., Kapunan, and Ynares-Santiago, JJ., on official leave.

Footnotes

1 Records, vol. I, p. 189.

2 Id., pp. 202-223.

3 Id., p. 2.

4 Id., p. 3.

5 Under the original complaint, Villapez was alleged to be the true owner of the
Ford Telstar car driven by Echvia while Sia was alleged to be the registered owner
thereof. See Original Complaint, Records, vol. I, pp. 146-153.

6 Records, vol. I, pp. 11-19.

7 Id., p. 3.

8 Id., p. 183.

9 Id., pp. 283-288.

10 Id., p. 3.

11 Id., p. 4.

12 Id., pp. 126-134.

13 Id., pp. 135-139.

14 Id., pp. 191-200.

15 Id., pp. 202-223.

16 Arboleda vs. NLRC, 303 SCRA 38 (1999).

17 Padilla vs. Sto. Tomas, 243 SCRA 155 (1995).

18 Records, vol. I, p. 195.

19 Id., p. 224.

20 TSN, CEB-18552, October 17, 1997, Records, vol. III, p. 213-214.

21 Maturan vs. Gonzales, 287 SCRA 443 (1998).

22 Hilado vs. David, 84 Phil. 569 (1949).

23 Pimentel vs. Llorente, 399 SCRA 154, 159-160 (2000).

24 Records, vol. I, p. 20.

25 Id., p. 22.

26 In re: Edillion, 84 SCRA 554 (1978).

EN BANC

A.C. No. 5948 January 22, 2003

(Formerly A.M. No. CBD-354)

GAMALIEL ABAQUETA, complainant,

vs.

ATTY. BERNARDITO A. FLORIDO, respondent.

RESOLUTION

YNARES-SANTIAGO, J.:
This is an administrative complaint 1 against Atty. Bernardito A. Florido filed with
the Integrated Bar of the Philippines (IBP) Commission on Bar Discipline, praying
that appropriate sanctions be imposed on respondent for representing conflicting
interests.

Complainant is a Filipino by birth who had acquired American citizenship. He

resides at 15856 N. 15th Way, Phoenix, Arizona 85022, U.S.A. Respondent is a
practicing lawyer based in Cebu City.

On November 28, 1983, complainant engaged the professional services of

respondent trough his attorney-in-fact, Mrs. Charito Y. Baclig, to represent him in
Special Proceedings No. 3971-R, entitled, "In the Matter of the Intestate Estate of
Deceased Bonifacia Abaqueta,2 Susana Uy Trazo, petitioner" before the Regional
Trial court of Cebu.3

Accordingly, respondent entered his appearance in Special Proceedings No. 3971-

R as counsel for herein complainant.4 Subsequently, he filed complainant's
"Objections and Comments to Inventory and Accounting," registering
complainant's objection —

. . . to the inclusion of the properties under Items 1 to 5 contained in the

inventory of the administratrix dated November 9, 1983. These properties are the
sole and exclusive properties of the oppositor per the latest tax declarations
already marked as Exhibits "2", "3", "4", "5" and "6" in the Formal Offer of Exhibits
by oppositor in writing dated August 17, 1983 x x x .5
Several years later, Milagros Yap Abaqueta filed an action for sum of money
against complainant, docketed as Civil Case No. CEB-11453 and entitled,
"Milagros Yap Abaqueta vs. Gamaliel Abaqueta and Casiano Gerona."6
Respondent signed the Complaint as counsel for plaintiff Milagros Yap Abaqueta,
averring, inter alia, that:

Plaintiff and defendant Gamaliel Abaqueta are the conjugal owners of those
certain parcels of land, more particularly as follows . . .

The "parcels of land" referred to as conjugal property of complainant and

Milagros Yap-Abaqueta are the very same parcels of land in Special Proceedings
No. 3971-R which respondent, as lawyer of complainant, alleged as the "sole and
exclusive properties" of complainant. In short, respondent lawyer made
allegations in Civil Case No. CEB-11453 which were contrary to and in direct
conflict with his averments as counsel for complainant in Special Proceedings No.
3971-R.

Complainant further averred that respondent admitted he was never authorized

by the former to appear as counsel for complainant's ex-wife in Civil Case No.
CEB-11453; that respondent failed to indicate in the Complaint the true and
correct address of herein complainant, which respondent knew as far back as
August 2, 1990, when he wrote a letter to the complainant at the said address.7
Consequently, complainant failed to receive summons and was declared in
default in Civil Case No. CEB-11453. While the order of default was eventually set
aside, complainant incurred expenses to travel to the Philippines, which were
conservatively estimated at $10,000.00. He argues that respondent's conduct
constitute professional misconduct and malpractice as well as trifling with court
processes.
In his defense, respondent claims in his Answer8 that he always acted in good
faith in his professional relationship with complainant in spite of the fact that they
have not personally met. He based the matters he wrote in the Complaint on
information and documents supplied by Mrs. Charito Y. Baclig, complainant's
sister-in-law and attorney-in-fact, indicating that he was sole and exclusive owner
of the properties. This was sometime in November 1983. No affidavit of
adjudication was ever furnished respondent by complainant and this was
apparently suppressed because it would show that the properties formed part of
the estate.

Eight years later, in November 1991, long after Special Proceedings No. 3971-R
was settled and the attorney-client relationship between complainant and
respondent was terminated, Mrs. Milagros Abaqueta through Mrs. Baclig,
engaged his services to file Civil Case No. CEB-11453. Mrs. Baclig presented to him
a deed of absolute sale dated July 7, 1975,9 showing that the properties subject
hereof were not complainant's exclusive property but his conjugal property with
his wife, the same having been acquired during the subsistence of their marriage.
Thus, in all good faith, respondent alleged in the complaint that said properties
were conjugal assets of the spouses.

Respondent further pointed out that his law firm handles on the average eighty
new court cases annually and personally interviews four or five clients,
prospective clients and/or witnesses daily except Saturdays and Sundays. It
regularly closes to the public at 7:00 p.m., but work continues sometimes until
8:30 p.m. This has been going on for the last twenty-five years out of
respondent's thirty-three years of private practice. The absence of personal
contact with complainant and the lapse of eight years resulted in the oversight of
the respondent's memory that complainant was a former client. Furthermore, the
caption of the Special Proceeding was not in the name of complainant but was
entitled, "In the Matter of the Intestate Estate of Bonifacia Payahay Abaqueta."
Respondent expressed regret over the oversight and averred that immediately
after discovering that the formerly represented complainant in Special Proceeding
No. 3971-R, he filed a motion to withdraw as counsel for plaintiff, which was
granted by the trial court.10 He denied any malice in his acts and alleged that it is
not in his character to do malice or falsehood particularly in the exercise of his
profession.

In his Comments/Observations on Respondent's Answer,11 complainant averred

that respondent's conduct was geared towards insuring a court victory for
Milagros Yap in Civil Case No. CEB-11453, wherein he deliberately stated that
complainant's address was 9203 Riverside Lodge Drive, Houston, Texas 77083,
U.S.A., when he knew fully well that complainant's true and correct address was
c/o V.A. Hospital, 7th Street & Italian School Road, Phoenix, Arizona, 85013, U.S.A.
By falsely stating and concealing his true and correct address, respondent
eventually succeeded in obtaining a default judgment in favor of his client.

During the pendency of these proceedings before the IBP, it appeared that
respondent's son got married to the daughter of IBP National President Arthur D.
Lim. Thus, Atty. Lim inhibited himself from participating in the resolution of the
case.12 Subsequently, a Resolution was issued requiring the IBP to elevate the
entire records of the case within thirty (30) days from notice.13

The main issue to be resolved in the case at bar is whether or not respondent
violated Rule 15.03 of the Code of Professional Responsibility. The investigating
Commissioner found that respondent clearly violated the prohibition against
representing conflicting interests and recommended that he be suspended from
the practice of law for a period of three (3) months.
We find the recommendation well-taken.

Rule 15.03 of the Code of Professional Responsibility explicitly provides that —

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.

There is a conflict of interest if there is an inconsistency in the interests 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.14 In short, if he argues for one client, this argument will be opposed
by him when he argues for the other client.15

There is a representation of conflicting interests if the acceptance of the new

retainer will require the attorney to do anything which will injuriously affect his
first client in any matter in which he represents him and also whether he will be
called upon in his new relation, to use against his first client any knowledge
acquired through their connection.16

As pointed out by the investigating commissioner, respondent does not deny that
he represented complainant in Special Proceedings No. 3971-R. He also does not
deny that he is the lawyer of Milagros Yap Abaqueta in Civil Case No. CEB-11453,
filed against complainant and involving the same properties which were litigated
in Special Proceedings No. 3971-R. Respondent also admitted that he did not
secure the consent of complainant before he agreed to act as Milagros Yap
Abaqueta's lawyer in Civil Case No. CEB-11453.
The reasons proffered by respondent are hardly persuasive to excuse his clear
representation of conflicting interests in this case. First, the investigating
commissioner observed that the name "Gamaliel Abaqueta" is not a common
name. Once heard, it will surely ring a bell in one's mind if he came across the
name again.

In this case, respondent actively prosecuted the cause of complainant in Special

Proceedings No. 3971-R, such that it would be impossible for respondent not to
have recalled his name.

Second, assuming arguendo that respondent's memory was indeed faulty, still it is
incredible that he could not recall that complainant was his client, considering
that Mrs. Charito Baclig, who was complainant's attorney-in-fact and the go-
between of complainant and respondent in Special Proceedings No. 3971-R, was
the same person who brought Milagros Yap Abaqueta to him. Even a person of
average intelligence would have made the connection between Mrs. Baclig and
complainant under such circumstances.

Lastly, the fact that the subject matter of Civil Case No. CEB-11453 and Special
Proceedings No. 3971-R are the same properties could not have escaped the
attention of respondent. With such an abundance of circumstances to aid
respondent's memory, it simply strains credulity for him to have conveniently
forgotten his past engagement as complainant's lawyer. What rather appears,
given the prevailing facts of this case, is that he chose to ignore them on the
assumption that the long period of time spanning his past and present
engagement would effectively blur the memories of the parties to such a
discrepancy.
It is axiomatic that no lawyer is obliged to act either as adviser or advocate for
every person who may wish to become his client. He has the right to decline such
employment,17 subject, however, to Canon 14 of the Code of Professional
Responsibility.18 Once he agrees to take up the cause of the client, the lawyer
owes fidelity to such cause and must always be mindful of the trust and
confidence reposed in him.19 He must serve the client with competence and
diligence20 and champion the latter's cause with wholehearted fidelity, care and
devotion.21

A lawyer May not, without being guilty of professional misconduct, act as counsel
for a person whose interest conflicts with that of his former client22 The reason
for the prohibition is found in the relation of attorney and client which is one of
trust and confidence of the highest degree.23 Indeed, as we stated in Sibulo v.
Cabrera,24 "The relation of attorney and client is based on trust, so that double
dealing, which could sometimes lead to treachery, should be avoided."25

Credence cannot, however, be given to the charge that respondent fraudulently

and maliciously falsified the true and correct address of the complainant
notwithstanding respondent's knowledge thereof. Lawyers normally do not have
knowledge of the personal circumstances of a party in a case and usually rely on
the information supplied by their clients. The fact that respondent sent a letter to
complainant at the latter's correct address26 sixteen months before the filing of
Civil Case No. CEB-11453 does not by itself prove malice on the part of
respondent. A new address was furnished by Milagros Yap Abaqueta days before
the complaint was filed. Respondent had no reason to doubt the correctness of
the address of the complainant given to him by Milagros Yap Abaqueta
considering that she was complainant's wife.

WHEREFORE, Atty. Bernardito A. Florido is SUSPENDED from the practice of law

for Three (3) months. He is further ADMONISHED to exercise greater care and
diligence in the performance of his duties towards his clients and the court. He is
warned that a repetition of the same or similar offense will be dealt with more
severely.

SO ORDERED.

Puno, Vitug, Mendoza, Panganiban, Quisumbing, Sandoval-Gutierrez, Carpio,

Austria-Martinez, Corona, Carpio-Morales, Callejo, Sr., and Azcuna, JJ ., concur.

Davide, Jr., C .J ., took no part due to closeness to a party.

Bellosillo, J ., on leave

Footnotes

1 Record, Vol. 1, p. 1.

2 Mother of complainant.

3 Record, Vol. 1, p. 8.

4 Ibid., p. 9.

5 Id., p. 10.
6 Id., p. 14.

7 Id., p. 68.

8 Id., pp. 18–25.

9 Id., p. 29.

10 Id., pp. 31–32.

11 Id., pp. 33–35.

12 Record, Vol. II, p. 2.

13 Ibid., p. 10.

14 Pineda, Legal and Judicial Ethics, 1999 ed. p. 199.

15 Ibid.

16 Id., citing Pierce v. Palmer, 31 R.I. 432.

17 Canon 31, Code of Professional Responsibility.

18 Canon 14. — A lawyer shall not refuse his services to the needy.

19 Canon 17, Code of Professional Responsibility.

20 Canon 18, Code of Professional Responsibility.

21 Santiago v. Fojas, 248 SCRA 68, 73 [1995], citing Vda. de Alisbo v. Jalandoon,
199 SCRA 321 [1991].

22 Cruz v. Jacinto, 328 SCRA 636, 642 [2000].

23 Maturan v. Gonzales, 287 SCRA 943 [1998].

24 336 SCRA 237, 240 [2000].

25 Citing Hilado v. David, 84 Phil. 569 [1941].

26 Exhibit 2.
Republic of the Philippines

SUPREME COURT

Manila

EN BANC

A.C. No. 76 July 23, 1952

SIMPLICIO NATAN, as administrator of the Intestate Estate of the deceased Maria

Sandoval de Petero, complainant,

vs.

ATTORNEY SIMEON CAPULE, respondent.

Simeon Capule in his own behalf.

Office of the Solicitor General Pompeyo Diaz and Solicitor Juan T. Alano for the
Government.

LABRADOR, J.:

These proceedings were instituted by the Solicitor General upon complaint of

Simplicio Natan against Simeon Capule, an attorney-at-law who is charged with
the following acts of misconduct in his office as lawyer: (1) for having failed to
appear, without any justifiable reason, in the hearing of a case for which he had
received his fees in full; (2) for having accepted professional employment in the
very case in which this former client is the adverse party, and utilizing against the
latter papers, knowledge, and information obtained in the course of his previous
employment; and (3) for falsely accusing tenants of his former clients and causing
their detention, in order to compel them to enter into a compromise by giving
him (respondent) one-half of their rice harvests.

Complainant Simplicio Natan is the judicial administrator of the estate of the

deceased Maria Sandoval de Patero, appointed by the Court of First Instance of
Palawan, and is in possession of all the properties of said deceased. During the
lifetime of the decedent's husband Santiago Patero, Natan had filed an action
against Patero to recover the wife's share in the conjugal properties. Santiago
Patero was condemned to deliver his wife's share in conjugal assets to Natan and
to render an accounting of the fruits thereof while he was in possession. As he
failed to make such accounting, his one-half share in the hacienda known as
Hacienda Minit was ordered delivered to Natan for Administration.

The above proceedings took place before the year 1922. Santiago Patero died in
August, 1925. Both he and his deceased wife left no descendants. In 1935 Natan
filed a project of partition of the properties left by Maria Sandoval de Patero and
said partition was approved on March 23, 1937. Natan has continued in
possession of the Hacienda Minit in his original capacity as administrator.

In the middle of the year 1949, Natan filed an action of forcible entry against
Francisco Edonga, Jose Cabungan, and Piloromo Raon (Civil Case No. 15, in the
Justice of the Peace Court of Coron, Palawan) for having illegally occupied and
detained portions of the Hacienda Minit under Natan's administration, and
contracted the services of the respondent herein, Simeon Capulan, for the
hearing of the case. The first professional act made by respondent in connection
with that case was the preparation of an amended complaint and an opposition
to dismiss the case. Capule received the amount of P50 as part of his fees at that
time, and fixed his fees for the whole case in the amount of P250. From time to
time he had been getting sums of money from the complainant as partial
payments of his fee. Up to October 7, 1949, he had received the sum of P180. On
this date the case was called for hearing and respondent appeared at the trial, but
it had to be postponed to November 17, 1949. As respondent maintained an
office in Manila and had to come to Manila before the hearing, he told his client
not to worry as he would take a boat from Manila in time to reach Coron for the
hearing on November 17, 1949. He assured his client that in case he would not be
able to arrive on time, he would ask the judge for postponement.

The respondent did not arrive on the date of the hearing, and as the judge
refused to grant postponement, complainant handled his case personally being a
lawyer himself, without the presence of respondent. All in all he was able to
collect the amount of P275 from complainant. On November 21, 1949,
respondent filed a petition, with the conformity of Natan to withdraw as attorney
for the latter in said Civil Case No. 15.

The above are the facts involved in the first charge. With respect to the other
charges, it appears that when Natan contracted respondent's professional
services in the month of August, 1949 he delivered to respondent various
documents, among which are a copy of the decision in Civil Case No. 96 of the
Court of First Instance of Palawan instituted by Natan against the deceased
Santiago Patero for the recovery of certain properties belonging to the latter's
wife, Exhibit A-2, a copy of the decision in Civila Case No. 104 of the same court
filed by Natan against Santiago Patero for the recovery of the wife's share in
conjugal properties in the possession of Patero, Exhibit A-3, the project of
partition, Exhibit A-5 the order of the court approving the project of partition,
Exhibit A-4, tax declarations of Hacienda Minit, Exhibits A-6, A-7, A-9, and A-10,
the new tax declaration of Hacienda Minit in the name of the deceased Estefania
Rodriguez, Exhibit A-8, various receipts for the payment of taxes, Exhibits A-11 to
A-15, and the plan of Hacienda Minit, Exhibit A-16. Towards the end of the month
of November, 1949, according to respondent's own witness Olimpio Patero, the
latter had talked to respondent in connection with his claim to the Hacienda
Minit, based on his pretension that he was a recognized child of the deceased
Santiago Patero (see certificate of baptism, Exhibit 12). After respondent was
employed by Olimpio Patero, the following incidents took place:

(1) On January 13, 1950, Olimpio Patero filed a motion that he be allowed to
intervene in Civil Case 188 of the Court of First Instance of Palawan, entitled
Simplicio Natan vs. Francisco Edonga, et al. (the same Civil Case No. 15 of the
Justice of the Peace Court of Coron, supra), in which the professional services of
respondent had been contracted and paid for by Natan (Exhibits L and N). The
intervention is improperly designated third party complaint. Both motion and
pleading are, however, signed by Olimpio Patero.

(2) On February 27, 1950, respondent herein filed on behalf of Olimpio Patero a
petition in the administration proceedings (Civil Case No. 71, Court of First
Instance of Palawan), alleging that Olimpio Patero is the sole heir of Santiago M.
Patero, and that he is in possession of Hacienda Minit; that the administrator of
the estate of the deceased Maria Sandoval de Patero, complainant herein
Simplicio Natan, had been encroaching upon the land constituting the Hacienda
Minit, interfering with its use and occupation and depriving Olimpio Patero of the
harvest of coconut and palay; and praying that Simplicio Natan be restrained from
interfering with the occupation and enjoyment of the Hacienda Minit by Olimpio
Patero, and that Natan should be ordered to return to Olimpio Patero 400
cavanes of palay representing his one-half share in the land, or the equivalent
value of P4,400, as well as the coconuts and copra which he may have gathered
amounting to not less than 37 tons valued at not less than P13,320 (Exhibit O).
This petition was opposed by Natan (Exhibit Q). In the Petition the lands
constituting the Hacienda Minit are set forth in accordance with the description
appearing in Tax Declarations Nos. 5785 and 7862, both in the name of Santiago
Patero (Exhibit A-9 and A-6). The petition also contains a statement of the area of
the land constituting the Hacienda Minit, together with the number of coconut
trees thereon, also based on Tax Declaration No. 2037 (Exhibit A-7), which was
furnished respondent by complainant herein.

(3) On May 5, 1950, Olimpio Patero signed an affidavit that he was the sole heir of
the deceased Santiago Patero stating that the number of cattle and carabaos left
by his deceased father and describing the land also left by him, and asserting that
he adjudicated to himself the entire estate of the deceased under Rule 74, section
1, of the Rules of Court (Exhibit P-1). Before the end of the year 1949, a complaint
had been filed by Natan against Olimpio Patero for trespass. In a motion for
postponement of the hearing of said case filed by Patero (Exhibit 7), he alleges
that his lawyer was to come from Manila, and this lawyer must have been
respondent herein. Again in the month of March, 1950, another complaint was
filed against Olimpio Patero, et al. charging him and others of frustrated murder
committed on the persons of Arsenio Santillan and Manuel Natan (Exhibit Y).

(4) Olimpio Patero had filed on January 10, 1950, an action for robbery with
attempted homicide against Ernesto Natan and cases for swindling against
Benigno Rios, Maximiano Pabia, Balbino Yapla, and Juan Bermudes (Exhibits C, D,
E, F). The above accusations were, however dismissed by the Justice of the peace
on the ground that there was no probate cause that the crimes had been
committed (Exhibits J and K). Upon the filing of the complaint for estafa the four
accused were arrested and detained in the municipal jail of Coron. Thereupon,
respondent herein went to see them and secured from three of them a written
statement that they would deliver to Olimpio Patero, the owner of Hacienda
Minit, his share in the harvest that the three obtained from the portions they
have cultivated (Exhibit 6). When the three accused signed the affidavit,
respondent asked the chief of police to release them, but when they went to get
the palay in the granary where their harvest were being kept, the granary was
closed. Thereupon, respondent ask them to break open the lock, but the three
refused, so the respondent told the chief of police to take them back into his
custody again, and so they were put back in jail.

In connection with the complaint filed against the four above-named persons,
including complainant's son, respondent denied having acted as lawyer for
Olimpio Patero, or for having asked them to compromise their criminal case upon
giving him the palay which is the share of the owner of the land. But we cannot
agree to his claim. Olimpio Patero was already his client when the estafa cases
were filed, and the same are evident attempts to get possession of the land and
get the tenants of the Hacienda Minit to recognize him as the owner, clearly for
the direct benefit of his client. He admits that he was present when the
compromise was being signed, but that it was not he who secured the signatures
thereto. For what purpose was he present, if not in the ultimate interest of his
client? As between his uncoroborated denial and the positive assertion of three
members of the poor working class, that he asked them to sign the compromise,
our choice is the latter, not only because respondent's own testimony must
necessarily be biased and that of his opponents more impartial, as they are
indifferent to the result of this proceedings, but also because the lowly and the
indigent are generally reputed to be timid, God-fearing and truthful.

We are convinced that the respondent had utilized the papers and the knowledge
and information that he had received from his former client Simplicio Natan, in
relation to the Hacienda Minit, against Natan and for the benefit of his new client
Patero. The data appearing in the petition that he had filed in Civil Case No. 71,
intestate proceedings of the deceased Maria Sandoval de Patero, could not have
been obtained by him only from the papers of said case(Exhibit A-2). We are also
convinced that the respondent must have been the one who induced Olimpio
Patero (his client) to accuse falsely the tenants of the complainant in Hacienda
Minit of the crime of estafa. More than that, as the respondent knew that his
client was not in possession of the hacienda, he also must have known that his
new client had no right to demand the harvests thereon from the tenants of the
complainant. He also must have `known that under no circumstances whatsoever
could the tenants be guilty of estafa for their failure or refusal to deliver the
harvests to his new client. From all of these it is apparent that the action for
estafa must have been maliciously concede to obtain unlawfully what he could
not lawfully get.

As to the first charge, however, we find that the respondent's failure to appear, as
he had agreed and promised, was in voluntary on his part, because it appears that
he had never expected that the judge before whom the case was pending would
refuse to grant his motion for postponement.

It is evident from the foregoing that respondent, because of his previous

relationship with the complainant herein, was disqualified to accept the case of
Olimpio Patero who claimed ownership of the Hacienda Minit. The immediate
objective of Patero was to wrest possession of the Hacienda Minit from the
respondents former client, Natan which possession it was the latter's duty to
protect and support. The fact that respondent herein retired from the forcible
entry case on November 21,1949, prior to retaining the case of Olimpio Patero,
did not relieve him from his obligation of fidelity and loyalty to his former client.(7
C.J.S. 827) The inconsistency between his position as attorney for Olimpio Patero
and that as attorney for complainant was so apparent that it could not have
escaped respondent's attention. Respondent may not excuse his conduct behind
the shield of the presumption of good faith, because the inconsistency was clear.
But what makes the violation of his obligation of fidelity more improper is the fact
that in forwarding Patero's interest, he did actually utilize the papers, knowledge
and information which he had received in the course of his employment as lawyer
for complainant herein.
An attorney is forbidden to do either of two thing after severing his relationship
with the former client. He may not do anything which will injuriously affect his
former client in any matter in which he formerly represented him, nor may heat
any time use against his former client knowledge or information acquired by
virtue of the previous relationship. Wutchumna Water Co. vs. Bailey, 15 P. (2d)
505, 509, 216 Cal. 564 (7 C.J.S. 828.)

But if the conduct of the respondent in accepting Pateros casein using papers and
documents to the prejudice of his former client is unexcusable, in prosecuting the
tenants of his former client for estafa without reasonable grounds, causing their
imprisonment in order to compel them to deliver portion of their palay harvests
to his second client, his conduct was reprehensible, constituting not merely
unethical practice but a clear and direct violation of the following portion of his
oath as lawyer:

. . . . I will do no falsehood, nor consent to the doing of any in court; I will not
wittingly or willingly promote or sue any groundless, false or unlawful suit, nor
give aid nor consent to the same; I will conduct myself as a lawyer according to
the best of my knowledge and discretion, with all good fidelity as well to the
courts as to my clients; . . . . (Emphasis ours.)

His conduct evinces a character wanting in truthfulness, and devoid of that sense
of fairness and justice so essential to the profession that he has embraced. But
this is the first occasion that respondent is charged in this Court with misconduct,
and we prefer to grant him the opportunity to reform. But we can not let his
misconduct pass unpunished; we must impose upon him a penalty which would,
at the same time, serve a purpose of a warning. The majority of this Court
believes that suspension from his office as lawyer for a period of two years would
serve both purposes.
Wherefore, this Court absolves respondent from the first charges, but finds him
guilty of all the other charges preferred against him by the Solicitor General and
suspends him from the exercise of his profession as attorney-at-law for a period
of two (2) years, the period to commence upon receipt by him of notice of final
resolution of this Court in this case.

Paras, C. J., Feria, Pablo, Bengzon, Padilla, Tuason, Montemayor, and Bautista
Angelo, JJ., concur.

EN BANC

A.C. No. 2591 September 8, 2006

LETICIA ADRIMISIN, complainant,

vs.

ATTY. ROLANDO S. JAVIER, respondent.

DECISION

CARPIO, J.:
The Case

On 12 September 1983, Leticia Adrimisin ("complainant") filed a complaint-

affidavit1 with the Ministry of Justice seeking the disbarment of Atty. Rolando S.
Javier ("respondent") for deceit and misrepresentation.

The Facts

Complainant alleges that on 12 July 1983, she was introduced by her cousin,
Pablo Adrimisin, to respondent. She needed the help of a lawyer in having her
son-in-law, Alfredo Monterde ("Monterde"), who was charged with the crime of
qualified theft, released from the Caloocan City Jail. Complainant claims that
respondent advised her to file a bail bond. Complainant informed respondent that
her only money was P500. Complainant contends that respondent received the
money, issued a receipt2 and promised that Monterde would be released from
jail the following day.

Complainant also alleges that respondent failed to keep his promise in having
Monterde released. Complainant went to respondent's office several times but it
seemed that respondent was avoiding her. Monterde was later released upon
settlement of the case with his employer. Complainant claims that she demanded
for the return of the P500 but respondent failed to return this amount.

Respondent did not file any comment or answer. He only appeared in the
investigative hearings conducted by the Office of the Solicitor General ("OSG").
Respondent, in his testimony, claims he was not hired by complainant as legal
counsel. Respondent alleges complainant only asked his help to secure a bail
bond.3 Respondent admits he received P500 for the bail bond and called up
Carlos Alberto ("Alberto"), an insurance agent.4 Respondent claims he gave the
P500 to Alberto. However, the amount was not sufficient to pay for the bond.5
Respondent denies that he promised to have Monterde released immediately.6
Respondent claims he advised complainant to get back her money directly from
Alberto.7

Alberto, the insurance agent, was presented during the hearing. He testified that
on 20 July 1983, respondent came to him to secure a bail bond for qualified
theft.8 Alberto showed a copy of the personal bail bond dated 20 July 1983,
issued by Philippine Phoenix Surety & Insurance, Inc. ("Philippine Phoenix Surety")
with a premium of P940 and costs of documentary stamps, notarial fees and
clearances at P279 for a total of P1,219.9 Alberto claimed he issued a genuine
bond but it was not filed in court because complainant failed to pay the
balance.10 He also testified that Pablo Adrimisin asked for the refund of the P500
but the amount could not be refunded due to expenses already incurred and
forfeiture of the remainder in favor of Alberto's office.11

The bail bond which was marked as Exhibit "1" contained a stamped "Limitation
of Liability" clause. The clause states "Authorized limit of the bond shall not
exceed P20,000 and it is not valid for theft and robbery cases."12 The portion
"Not valid for theft and robbery cases" was deleted with a marking pen but this
cancellation was not signed or initialed. Alberto was asked why the cancellation
was unsigned. Alberto replied that he had no knowledge on who made the stamp
or the cancellation.13 When asked if it is the policy of Philippine Phoenix Surety
not to post personal bail bond with respect to theft and robbery cases, Alberto
answered in the affirmative.14
Alberto also clarified that he is not connected with Philippine Phoenix Surety but
he is an employee of the House of Bonds, which is the general agent of the
former.15

Mr. Alfredo Brigoli ("Brigoli"), General Manager of the House of Bonds, was also
presented as one of respondent's witnesses. Brigoli explained that he gives
Alberto 5 sets of pre-signed bail bond forms.16 However, in theft, robbery and
drug cases, Alberto is required to seek his approval before the bond is issued.

Brigoli testified that it was Alberto's daughter who called him up for approval to
issue a bond for qualified theft.17 He informed Alberto's daughter to bring the
original bond and its duplicate copies to his office in Intramuros for his signature,
but the same was not done.18 Due to the lack of his signature, Brigoli claimed
that the bond has not been approved. 19 Brigoli also testified that since the bond
was not forwarded to his office, the same was not recorded and the payment was
not remitted.

The OSG's Report and Recommendation

The OSG's Investigating Solicitor Antonio G. Castro heard the case and submitted
a Report and Recommendation ("Report"). The OSG recommended that
respondent be suspended from the practice of law for not less than one year. The
Report reads:

The charge of deceit and misrepresentation against respondent has been

sufficiently established. Respondent himself admits that he received from
complainant the sum of P500.00 for the bail bond of complainant's son-in-law
Alfredo Monterde; that he failed to secure Monterde's release from jail; and that
he did not return the sum of P500.00 to complainant (pp. 9-20, tsn, March 14,
1985).

xxxx

Respondent's defense that he actually secured a bail bond for Monterde is a mere
afterthought. Firstly, complainant confided to him that she had no more money
except P500.00. He would not, therefore, secure a bail bond with higher premium
than P500.00.

Secondly, while he declared that the records of Monterde's case in the Regional
Trial Court in Caloocan City, Branch XXV, sala of Judge Oscar Herrera showed that
the recommended bail was P8,000.00 (pp. 8-9, tsn, March 14, 1985), the personal
bail bond, marked as Exhibit "1", which was allegedly prepared, was for P9,400.00
(Exh. "1", p. 7, Folder of Exhs.).

Thirdly, respondent's witness, Alfredo Brigoli, the general manager of the AAF
House of Bonds, admitted that Exhibit "1" was not finally approved. On cross-
examination, he declared:

"Q Have you signed that as finally approved?

A No, sir. When they called up asking for my signature on the deleted portion of
the bond, Mr. Alberto never came to my office.
Q In other words that bond has not been finally approved.

A Not finally approved because there is no signature yet."

(p. 20, tsn, Sept. 30, 1985).

As held by this Honorable Court in Royong v. Oblena, 7 SCRA 859, 868-869 (1963),
"The respondent's misconduct, although unrelated to his office, may constitute
sufficient grounds for disbarment." And in Quingwa v. Puno, 19 SCRA 439, 445
(1967), it also held that, "Indeed, it is important that members of this ancient and
learned profession of law must conform themselves in accordance with the
highest standards of morality."

Specifically, for deceit and misrepresentation, respondent may be suspended or

disbarred (In re Paraiso, 41 Phil. 24, 25 [1920]).20

The Court's Ruling

The Court finds respondent liable for violation of Canon 16 and Rule 18.03 of the
Code of Professional Responsibility ("Code"). The Code mandates every lawyer to
hold in trust all moneys and properties of his client that may come into his
possession.21 Consequently, a lawyer should account for the money received
from a client.22 The Code also enjoins a lawyer not to neglect a legal matter
entrusted to him,23 and his negligence in connection therewith shall render him
liable.
Respondent himself admitted the receipt of P500 from complainant as payment
for the bail bond as shown in his testimony and in Exhibit "A". By his receipt of the
amount, respondent agreed to take up complainant's cause and owed fidelity to
complainant and her cause, even if complainant never paid any fee. Lawyering is
not a business. It is a profession in which duty to public service, not money, is the
primary consideration.24

Respondent claims that on 12 July 1983, he called up Alberto for the issuance of
the bail bond but it took 8 days before the bail bond was prepared. In failing to
immediately secure the bail bond, respondent clearly neglected to exercise
ordinary diligence or that reasonable degree of care and skill required by the
circumstances.

There were also irregularities in the personal bail bond. Firstly, it was issued on 20
July 1983 but notarized sometime in 1984 as seen in the Notarial Certificate. The
Court therefore agrees with OSG's finding that respondent's defense that he
secured a bail bond was a mere afterthought. Furthermore, complainant filed her
complaint on 12 September 1983, which means that the bond was notarized only
after the complaint was filed. Secondly, the bail bond was not valid for theft and
robbery cases. Although there was a cancellation of such phrase through marking
pen, the same was not countersigned, and hence the cancellation was void.
Thirdly, the payment for the bond was not recorded and neither was it remitted
to the issuer of the bond. This means that the bond was a mere piece of paper
without any value for it failed to serve its purpose.

Complainant demanded for the return of the P500 but respondent kept on
insisting that complainant seek refund from Alberto. Respondent has the duty to
account for the money entrusted to him by complainant. In Pariñas v. Paguinto,25
we held that "a lawyer shall account for all money or property collected from the
client. Money entrusted to a lawyer for a specific purpose, such as for filing fee,
but not used for failure to file the case must immediately be returned to the client
on demand." In the present case, money for the payment of the bond's premium
was not used for the purpose intended. Hence, respondent must return the
amount to complainant upon demand.

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 of professional ethics. It impairs public
confidence in the legal profession and deserves punishment.26

This is not the first time respondent is found to have unlawfully withheld and
misappropriated money. In Igual v. Javier,27 the Court held that respondent had
unjustifiably refused to return Igual's money upon demand and his absence of
integrity was highlighted by his "half-baked excuses, hoary pretenses and blatant
lies in his testimony before the IBP Committee on Bar Discipline." The Court
suspended Javier from the practice of law for a period of one month and ordered
him to restitute the amount of P7,000 to Igual. In that case, we reminded
respondent that he was "expected to always live up to the standards embodied in
the Code of Professional Responsibility for the relationship between an attorney
and his client is highly fiduciary in nature and demands utmost fidelity and good
faith." 28

We reiterate this reminder. Lawyers who convert the funds entrusted to them are
in gross violation of professional ethics and are guilty of betrayal of public
confidence in the legal profession.29 Those who are guilty of such infraction may
be disbarred or suspended from the practice of law.30
WHEREFORE, we SUSPEND Atty. Rolando S. Javier from the practice of law for SIX
MONTHS effective upon finality of this Decision. We ORDER respondent to
restitute complainant Leticia Adrimisin the Five Hundred Pesos (P500) with legal
interest computed from 12 September 1983 until full payment. Respondent shall
submit to the Court proof of restitution within ten (10) days from payment.

Let copies of this resolution be furnished the Office of the Bar Confidant to be
appended to respondent's personal record, and the Integrated Bar of the
Philippines. The Court Administrator shall furnish copies to all courts of the land
for their information and guidance.

SO ORDERED.

Panganiban, C.J., Puno, Quisumbing, Ynares-Santiago, Sandoval-Gutierrez,

Austria-Martinez, Corona, Carpio-Morales, Callejo, Sr., Azcuna, Tinga, Chico-
Nazario, Garcia, Velasco, Jr., J.J., concur.

Footnotes

1 Rollo, pp. 3-4.

2 Rollo, p. 5 and Exhibit "A," exhibits for complainant and respondent, p. 1.

3 TSN, 8 April 1985, p. 11.

4 Id. at 12-13.

5 Id. at 25.

6 Id. at 28-29.

7 Id. at 34.

8 TSN, 15 August 1985, p. 25.

9 Id. at 10-13.

10 Id. at 16.

11 Id. at 29.

12 Exhibit "1," exhibits for complainant and respondent, p. 7.

13 TSN, supra note 8, at 46-47.

14 Id. at 48.
15 Id. at 41-43.

16 TSN, 30 September 1985, pp. 7-8.

17 Id. at 10.

18 Id.

19 Id. at 20.

20 Rollo, pp. 21-25.

21 Code of Professional Responsibility, Canon 16.

22 Code of Professional Responsibility, Rule 16.01.

23 Code of Professional Responsibility, Rule 18.03.

24 Burbe v. Magulta, 432 Phil. 840, 850 (2002).

25 A.C. No. 6297, 13 July 2004, 434 SCRA 179, 183.

26 R. Agpalo, Legal and Judicial Ethics 242 (2002 ed.)

27 324 Phil. 698, 709 (1996).

28 Id.

29 Sipin-Nabor v. Baterina, 412 Phil. 419, 424 (2001).

30 Espiritu v. Ulep, A.C. No. 5808, 4 May 2005, 458 SCRA 1, 9.

THIRD DIVISION

A.C. No. 5019 April 6, 2000

Judge ADORACION G. ANGELES, complainant,

vs.

Atty. THOMAS C. UY JR., respondent.

PANGANIBAN, J.:
Lawyers must promptly account for money or property they receive on behalf of
their clients. Failure to do so constitutes professional misconduct and justifies the
imposition of disciplinary sanctions.

The Case and the Facts

In a letter dated February 11, 1999 addressed to the Office of the Chief Justice,
Judge Adoracion G. Angeles of the Regional Trial Court of Caloocan City (Branch
121) charged Atty. Thomas C. Uy Jr. with violation of Canon 16 of the Code of
Professional Responsibility. Complainant states that respondent's acts, which had
earlier been held contemptible in her February 10, 1999 Order,1 also rendered
him administratively liable. In the said Order, she narrated the following facts:

When the case was called for the second time at 11:25 o'clock in the morning, the
private prosecutor Atty. Thomas C. Uy, Jr. appeared. In open court, accused
Norma Trajano manifested that she had already settled in full the civil aspect in
Crim. Case No. C-54177 (98) in the total amount of [t]hirty [s]ix [t]housand [f]ive
[h]undred (P36,500.00) [p]esos. She further alleged that she paid P20,000.00
directly to the private complainant and the balance of P16,500.00 was delivered
to Atty. Thomas C. Uy, Jr., the lawyer of the private complainant and accordingly
produced in open court the receipt for such payment signed by no less than the
aforesaid lawyer. Indeed, the civil liability of the accused had already been
satisfied in full.

However, the private complainant, Primitiva Malansing [Del Rosario] manifested

that she did not receive the amount of [s]ixteen [t]housand [f]ive [h]undred
(P16,500.00) [p]esos which was paid to his lawyer Atty. Thomas C. Uy, Jr., thereby
constraining this court to direct Atty. Thomas C. Uy to turn over the money to the
private complainant which he received in trust for his client. Atty. Uy however
argued that his client did not like to accept the money but the assertion of the
lawyer was belied by his own client, the herein private complainant, who
manifested in open court . . . her willingness to accept the money. The Court
again directed Atty. Uy to produce the money but the latter argued that he kept it
in his office. Consequently, the Court suspended the proceedings to enable Atty.
Uy to get the money from his law office which is located only at the second floor
of the same building where this court is located.

Unfortunately, it is already 12:15 o'clock past noon but Atty. Uy did not show up
anymore and not even his shadow appeared in Court.

It cannot be denied that the act of Atty. Thomas Uy in deliberately failing to

return to the Court [the] proceedings [of which] were suspended just because of
his representations, mirrors not only an undisguised disobedience of a court order
but also manifests his propensity to mock the dignity of the Court. Disgustingly,
he deliberately ignored his solemn oath to conduct himself as befitting the status
of an officer of the court.

Indeed, this gross misbehavior of Atty. Uy cannot simply be ignored for it is a raw
challenge to the authority of the Court.

It must also be pointedly emphasized that Atty. Thomas Uy committed a brazen

violation of the provisions of Canon 16 of the Code of Professional Responsibility,
to wit:

xxx xxx xxx

Obviously, Atty. Thomas Uy fell short of the duties expected from him as a
member of the bar.

In compliance with this Court's March 24, 1999 Resolution, Respondent Uy2 filed
his Comment on June 7, 1999. Denying that he violated Canon 16 of the Code of
Professional Responsibility, he explained:

1). In a criminal case, then pending before the Regional Trial Court, Branch 121 of
Kalookan City, Metro Manila, presided by the complainant Honorable Adoracion
G. Angeles, entitled "People of the Philippines vs. Norma Trajano, et., al", Criminal
Case No. C-54176-77 (98), Atty. Thomas C. Uy Jr., herein referred to as
[r]espondent, was engaged as [p]rivate [p]rosecutor of the complainant therein,
Mrs. Primitiva Malansing Del Rosario. At the outset Norma Trajano, accused in
said criminal case, expressed her desire and offered to settle the civil aspect of
the criminal case against her to which Primitiva Del Rosario acceded. On separate
hearings, Norma Trajano made installment payments to Primitiva Del Rosario
some of which payments were duly acknowledged by the latter in the presence of
[r]espondent;

2). On a previously cancelled date of hearing of the aforesaid criminal case . . . on

December 14, 1998, Norma Trajano went to the office of the [r]espondent at
about 8:45 o'clock in the morning, . . . and met Mr. Romeo C. Jamisola Jr., who is
acting as [r]espondent's personal secretary and at the same time the liason officer
of the law firm De Veyra, Uy and Associates . . . .Mr[.] Romeo Jamisola Jr., is the
lone staff of the law firm . . . . Respondent was at that time not in the office as he
was attending a hearing before the Regional Trial Court, Branch 122, Kalookan
City, Metro Manila. . . .
3). On the aforesaid date and time (December 14, 1998) at the office of the
[r]espondent, Norma Trajano told Mr. Romeo Jamisola Jr. that she will make
another partial payment to Primitiva M. Del Rosario because she cannot attend
the hearing the following day (8[:]30 o'clock a.m. of December 15, 1999) before
Judge Adoracion G. Angeles due to a conflict of schedule with her [other] case in
the Regional Trial Court, Branch 19, Malolos, Bulacan, where she is likewise the
accused for [e]stafa[.] Mr. Romeo Jamisola told Norma Trajano to wait for a while
as he will fetch [r]espondent at the ground floor in the sala of the Honorable
Remigio E. Zari. Respondent, upon being informed of the presence of Norma
Trajano in the office of the [r]espondent by Romeo Jamisola Jr. went to his office
and Norma Trajano immediately told [r]espondent that she knew that the setting
for that day (December 14, 1998) was previously cancelled and that she cannot
attend the hearing the following day (8[:]30 o'clock a.m. December 15, 1998) and
further told the [r]espondent that she (Norma Trajano) will make another partial
payment to Primitiva M. Del Rosario and that she will just leave her payment in
the sum of [s]ixteen [t]housand [five hundred] [p]esos (P16,500.00), Philippine
[c]urrency, in the office of the [r]espondent. Respondent then told Norma Trajano
to inform Primitiva M. Del Rosario first but Norma Trajano replied that she will
just call Primitiva [Del Rosario]. Nonetheless, [r]espondent told Romeo Jamisola
Jr. to call Primitiva Del Rosario, using the office phone, and let her talk with
Norma Trajano, and, if Primitiva Del Rosario agreed [r]espondent instructed
Romeo Jamisola Jr., to just prepare a receipt. Respondent, fearing that his case
(People vs. Rommel Senadrin, et al. above-stated) might have been called in the
calendar, immediately left the office and proceeded [at] the sala of the Honorable
Remigio E. Zari. Respondent, after the hearing . . ., returned to his office and upon
learning that his signature was affixed by Romeo Jamisola Jr. upon the insistence
of Norma Trajano scolded Romeo Jamisola Jr. and for his unsuccessful attempt to
contact first Primitiva Del Rosario before receiving the sum of money left by
Norma Trajano;

4). The following day [o]n the morning of December 15, 1998, [r]espondent
arrived at his office and met Primitiva Del Rosario and her daughter Aurora Del
Rosario and immediately the trio appeared before the sala of Judge Adoracion G.
Angeles in the hearing of the Norma Trajano case. Returning [to] the office of the
[r]espondent after the hearing, Primitiva Del Rosario and Aurora Del Rosario,
being earlier informed that on December 14, 1998 Norma Trajano went [to] his
office and made partial payment in the sum of P16,500 thru Mr. Romeo Jamisola
Jr., the [r]espondent told Mr. Romeo Jamisola to get the money from the filing
cabinet and while the money in the envelope [was] being handed over to
Primitiva Del Rosario, [the latter] and her daughter . . ., however, told
[r]espondent to just let the money in the sum of P16,500.00 be kept at the office
of the [r]espondent so that future payments of Norma Trajano will be save[d] in
whole and for them to avoid spending the same as what had happened to the
past installment payments of Norma Trajano. Respondent then acceded to the
request of Primitiva Del Rosario and her daughter and told them that they can get
the money anytime they want from the [r]espondent's office. Hence, the money
was kept locked [in] the filing cabinet of the [r]espondent where he used to keep
all his personal file[s].1âwphi1.nêt

5). On December 23, 1998, early before noon, Primitiva Del Rosario and her
daughter Aurora Del Rosario, on a prior invitation, attended the Christmas Party
of the office of [r]espondent and undersigned counsel. . . . Respondent, after
the . . . lunch, instructed Mr. Romeo Jamisola Jr., to give the sum of money
(P16,500.00) and for Primitiva Del Rosario to receive the same for fear of a
repetition of a burglary incident before, where some cash and minor office
appliances of undersigned were lost. Primitiva Del Rosario, however, insisted that
said sum of money be kept at the office of the [r]espondent to save in whole the
installment payments of Norma Trajano and that [was] the wish of her son
Fernando "Bong" Del Rosario, who is a long time friend and a compadre of the
[r]espondent. Respondent, respecting the trust reposed upon him by Primitiva Del
Rosario, her daughter Aurora Del Rosario, and son Fernando Del Rosario, acceded
to hold in trust the said sum of [s]ixteen [t]housand [f]ive [h]undred (P16,500.00)
[p]esos, Philippine [c]urrency, which [was] locked and safely kept [in] the filing
cabinet of the [r]espondent until February 12, 1999; . . .;
6). On February 10, 1999 [during] the hearing of the Norma Trajano case before
the Hon. Adoracion G. Angeles, [r]espondent appeared shortly before 10:30
o'clock in the morning, pursuant to a "Motion to Call Case at 10:30 o'clock in the
Morning". . .

7). When the said Norma Trajano [case] . . . was called on second call at 11[:]25
a.m., [i]n said February 10, 1999 hearing, respondent was first scolded by the
Honorable Court (Judge Adoracion G. Angeles) . . . [for] giving more preference to
the Metropolitan Trial Court than her Court. Resp[o]ndent, however, beg[ged the]
indulgence of the Honorable Court (Judge Adoracion G. Angeles) and explained
why [he] first attend[ed] the Mandaluyong hearing of Manny Chua's case, to wit; .
...

8). That it was during the course of [the] litany of sermon, [i]n that hour, made by
the Honorable Court addressed to the [r]espondent that Norma Trajano . . .
butted in and informed the Honorable Court (Judge Adoracion G. Angeles) that
she will be tendering another partial payment; it was at that moment that Judge
Adoracion G. Angeles asked Norma Trajano how much had she paid Primitiva Del
Rosario, and, Norma [T]rajano answered that she had already paid P36,500.00 as
full payment for one case, and that of the P36,500, P20,000.00 was paid to
Primitiva Del Rosario and HESITANTLY said that the P16,500 was paid to the
[r]espondent. Judge Angeles then took the receipt from Norma Trajano and had it
xeroxed by a personnel of the Court. The carbon duplicate original of the Receipt,
dated [D]ecember 14, 1998, showing the receipt by the office of the [r]espondent,
through Romeo Jamisola Jr., whose printed [name] was pre[ceded] by the word
"By", indicating that he received the sum of money on behalf of or in
representation of the [r]espondent, is hereto [attached] and marked as ANNEX
"5", to form part hereof;
9). That it was perhaps due to the belief [in] and the immediate impression of
Judge Adoracion G. Angeles [of the] answer of Norma Trajano that prompted
Judge Angeles to ask, instantaneously in a loud manner, Primitiva Del Rosario "IN
TAGALOG", the question, "NATANGGAP MO BA KAY ATTY. UY ANG PERA NA
P16,500.00?". Primitiva Del Rosario, a seventy-year-old, who was shocked by the
tone and the manner she was asked by Judge Angeles simply just answered
"HINDI PO, KASI GUSTO [KO] PO NA MABUO ANG PERA". Primitiva Del Rosario,
however, tried to explain her answer "HINDI PO" and why she did not yet
[receive] the money from the [r]espondent by raising her hand but was prevented
by Judge Adoracion G. Angeles from further answering by telling Primitiva Del
Rosario to stop. With that answer of Primitiva Del Rosario, [r]espondent butted in
to explain Primitiva Del Rosario's answer of "HINDI PO" and her having not yet
received the sum of money, subject of the inquisition of Judge Angeles by
manifesting to wit; . . . that Primitiva Del Rosario did not get the money when . . .
handed the same on December 15, 1998 because she wanted [it] to be save[d] in
whole together with the future installment payments of Norma Trajano and to be
kept in the office of the [r]espondent as wished by her son Bong Del Rosario; and,
that the said sum of money [was] kept in the filing cabinet in the office of the
[r]espondent. All explanation[s] of the [r]espondent went to . . . naught as the
[r]espondent was cut short by . . . Judge Angeles, [who] in a loud and angry voice
orally directed the [r]espondent to get the money from [r]espondent's office and
give the same to Primitiva Del Rosario. It was already 11:45 o'clock in the
morning, more or less, and the [r]espondent was given fifteen (15) minutes to
comply; [r]espondent requested Judge Angeles to be accompanied by Primitiva
Del Rosario and her daughter Aurora Del Rosario but both were ordered to stay in
court by Judge Angeles;

10). Respondent in compliance with the oral order of Judge Angeles immediately
proceeded [to] his office but only to find out that Romeo Jamisola Jr., who [held]
the only key [to r]espondent's filing cabinet, was on errand . . . that morning of
February 10, 1999 [for] Atty. Angel B. De Veyra (the Undersigned Counsel) [who
had sent him] to the offices of the solicitor general in Makati City, and, the City
Prosecutor's Office of Manila to [furnish copies to] both offices; . . .;

11). Respondent, expecting that Romeo Jamisola Jr. would [arrive] before 12[:]00
noon, . . . waited for Romeo Jamisola Jr. while at the same time called up [his]
wife to immediately [come] to his office to spare the sum of P16,500.00 as Romeo
Ja[mi]sola may not [arrive] [within] the time allotted by Judge Angeles. The wife
of respondent, however, arrived at about 12:25 P.M., more or less, ahead of
Romeo Jamisola Jr. and spared [r]espondent the sum of P16,500.00 and
[r]espondent immediately went [to] the fourth floor, where the sala of Judge
Angeles [was] located but unfortunately the session was already adjourned.
Respondent then talked to "Armand", one of the court personnel and is known as
the door keeper of the chamber of Judge Angeles, and [requested that he be
allowed to go inside the chamber to show [his] compliance, though late.
Respondent, however, was told by "Armand" that Judge Angeles was on her lunch
break and that it [was] better for [r]espondent to take his lunch too and return a
little later;

12). At about 1:30 o'clock in the afternoon of that day (February 10, 1999)
[r]espondent returned [to] the sale of Judge Angeles together with Primitiva Del
Rosario and her daughter Aurora Del Rosario, who likewise returned to the court,
to seek an audience in [the] chamber [of] Judge Angeles. Said audience with
Judge Angeles was desired by Primitiva Del Rosario to let Judge Angeles [witness]
the giving of the money to Primitiva Del Rosario. But request[s] for the same,
through "Armand", were twice denied by Judge Angeles because at that time
Judge Angeles was being interviewed by several media personnel of some TV
stations. The Del [Rosarios], however, left earlier upon knowing that Judge
Angeles denied their request for an audience. [T]hey told [r]espondent that they
will be back the following day. It was only when Romeo Jamisola arrived at about
3:00 o'clock, more or less, in the afternoon and went at the fourth floor at the
premises of the sala of Judge Angeles and informed the [r]espondent that he
carried with him the key to [r]espondent's cabinet and the presence of some
[squatter] families of Batasan Hills, Quezon City at the office of the [r]espondent,
who has an appointment with the [r]espondent, that the [r]espondent left the
premises of the sala of Judge Angeles. [sic] Respondent, at his office ordered
Romeo Jamisola Jr. to open the filing cabinet and returned to the premises of the
sala of Judge Angeles alone at about 4:00 o'clock P.M. after his meeting with the
squatter families. But again, his request to "Armand" to talk with Judge Angeles,
after the media interview, was denied. At about 5:30 o'clock in the afternoon,
"Armand", the court personnel, served the Order, of said date, February 10, 1999
at the office of the [r]espondent;

13). In the early afternoon of the following day, February 11, 1999, [r]espondent
together with Primitiva Del Rosario and her daughter Aurora Del Rosario went
again [to] the sala of Judge Angeles . . . to seek an audience with Judge Angeles.
Their request . . . w[as] likewise in vain. Primitiva Del Rosario, after the last
attempt to seek audience with Judge Angeles and already tired of going [to] and
[from] the sala of Judge Angeles, decided on February 12, 1999, to receive the
sum of money in the amount of P16,500.00 from the office of the [r]espondent,
through, Romeo Jamisola Jr. and executed a Sinumpaang Salaysay. . . .;

14). The Sinumpaang Salaysay of Primitiva Del Rosario, dated February 16, 1999
as well as the Acknowledgment Receipt, dated February 12, 199[9] was attached
to a Manifestation caused to be filed by the [r]espondent on March 3, 1999 when
the respondent was confined in Fatima Hospital in Valenzuela City, Metro Manila
on March 2, 1999;

15). Learning of the instant administrative case against the [r]espondent, Bong
Del Rosario, the son of Primitiva Del Rosario, upon whose wish the subject sum of
money was kept at the office of the [r]espondent to save the same in whole as
well as the future in[s]tallment payments of Norma Trajano executed a
Sinumpaang Salaysay, attesting [to] and confirming the statement of [his] mother
Primitiva Del Rosario. . . .3

Stripped of unnecessary verbiage, the Comment contends that the respondent

kept the money in his office because that was the alleged wish of both his client
and her son. He allegedly informed them of such money and tried to give it to
them, but they insisted that he retain it. He further maintained that it was only
after Judge Angeles issued the February 10, 1999 Order that his client relented
and accepted the money on February 12, 1999.

After the judge filed her Reply on June 30, 1999, this Court referred the case to
the Office of the Bar Confidant for report and recommendation. The Court
dispensed with the normal referral to the Integrated Bar of the Philippines
because the records were complete and the question raised was simple. No
further factual investigation was necessary in the premises.

Bar Confidant's Report and Recommendation

Recommending that Atty. Thomas C. Uy Jr. be suspended from the practice of law
for one month, the Office of the Bar Confidant in its Report and Recommendation
dated December 15, 1999 said:

. . . [I]t is clear that it is the sworn duty of a member of the bar to be accountable,
at all times, for anything which he receives for and in behalf of his client.

In the case at bar, this Office is more inclined to believe the story of the
complainant.
First, it cannot be disputed that the transcript of stenographic notes is the most
reliable record of what indeed transpired (and what words were uttered by the
parties involved) on February 10, 1999 at the hearing of Crim. Case No. C-54176-
77 (98). Records clearly show that the private complainant in the criminal case,
when asked by Judge Angeles as to the whereabouts of the P16,500.00,
spontaneously replied that she had no knowledge of the same; in effect saying
that Atty. Uy has not given her the subject P16,500.00. If, indeed, Primitiva Del
Rosario requested Atty. Uy to keep the money as far back as December 1998,
then she should have told the same to Judge Angeles.

Atty. Uy's allegation that Judge Angeles prevented Primitiva Del Rosario from
saying in open court the words "HINDI PO KASI GUSTO KO PO NA MABUO ANG
PERA" does not have any proof as nothing of that sort appears in the transcript of
stenographic notes. Atty. Uy has not even bothered to refute the truth of the
contents of the stenographic notes, all the more bolstering this Office's opinion
that the said notes are accurate and truthful.

Second, the affidavits executed by Primitiva Del Rosario and her son, Fernando
Del Rosario, dated February 16, 1999 and June 7, 1999, respectively, attesting to
Atty. Uy's averment that his act of personally keeping the subject P16,500.00 was
with and at their request cannot be given much credence to outweigh the
arguments of Judge Angeles. The said affidavits, both executed after February 10,
1999, are suspect. Caught by surprise when Judge Angeles inquired of the
whereabouts of his client's money, Atty. Uy . . . resorted to seeking the help of his
client to corroborate his defense. Being the clients of Atty. Uy, Primitiva Del
Rosario and her son could have been persuaded to help extricate their counsel
from the latter's predicament.
In the absence of any contradicting evidence to dispute the allegation that Atty.
Uy failed to immediately remit to his client the money due the latter, it is safe to
conclude that Atty. Uy has violated his sworn duty to uphold, at all times, the
trust and confidence reposed in him by his client(s).

xxx xxx xxx

In the instant case, Atty. Uy, upon receipt of the P16,500.00 from the accused in
the criminal case, should have promptly remitted the same to his client, Primitiva
Del Rosario. Had Judge Angeles not inquired of the whereabouts of the money,
the same would have remained with Atty. Uy, to the prejudice of the latter's
client. 4

This Court's Ruling

We agree with the findings and the recommendation of the Office of the Bar
Confidant.

Administrative Liability of Respondent

The relationship between a lawyer and a client is highly fiduciary; it requires a

high degree of fidelity and good faith. It is designed "to remove all such
temptation and to prevent everything of that kind from being done for the
protection of the client."5
Thus, Canon 16 of the Code of Professional Responsibility provides that "a lawyer
shall hold in trust all moneys and properties of his client that may come into his
possession." Furthermore, Rule 16.01 of the Code also states that "a lawyer shall
account for all money or property collected or received for or from the client."
The Canons of Professional Ethics is even more explicit:

The lawyer should refrain from any action whereby for his personal benefit or
gain he abuses or takes advantage of the confidence reposed in him by his client.

Money of the client collected for the client or other trust property coming into
the possession of the lawyer should be reported and accounted for promptly and
should not under any circumstances be commingled with his own or be used by
him.6

In the present case, it is clear that respondent failed to promptly report and
account for the P16,500 he had received from Norma Trajano on behalf of his
client, Primitiva Del Rosario. Although the amount had been entrusted to
respondent on December 14, 1998, his client revealed during the February 10,
1999 hearing that she had not yet received it. Worse, she did not even know
where it was.

Respondent maintains that on December 15, 1998 he informed Mrs. Del Rosario
about the payment.1âwphi1 He further avers that he kept the money upon her
instruction, as she had allegedly wanted "future payments . . . [to] be saved in
whole and for them to avoid spending the same as what had happened to the
past installment payments."7 This assertion allegedly finds support in her answer
to the question of Judge Angeles, who had asked her whether she had received
the disputed payment: "Hindi po, kasi gusto [ko] po na mabuo ang pera."
The Court is not persuaded. Respondent's assertions are contradicted by the
following transcript of stenographic notes:

Court: This P16,500, did you turn it over to the private complainant?

Atty. Uy: No your Honor, because she wanted the full amount of the settlement.

Court: Private complainant, is it true that you did not want to accept the money?

Mrs. Del Rosario: Hindi po, sila po ang nagbigayan.

Court: Hindi po ibinibigay sa inyo ni Atty. Uy?

Mrs. Del Rosario: Hindi po.

xxx xxx xxx

Court: Nasaan iyong P16,500?

Huwag kayong matakot.

Mrs. Del Rosario: Aywan ko po sa kanilang dalawa. 8

If it were true that Mrs. Del Rosario was informed about the payment and that
she entrusted it to respondent, she would have known its whereabouts. That she
did not know it showed the falsity of his claim.

It is noteworthy that respondent did not dispute the foregoing transcript although
it belied his allegation that Mrs. Del Rosario's express wish was to have the
payments in full.

Neither are we convinced by the affidavits of Mrs. Del Rosario and her son, both
of whom affirmed their intention to have their money in the safekeeping of
respondent. It should be stressed that he was her counsel and the compadre of
her son. Moreover, the affidavits were executed after the filing of this Complaint.
As the Office of the Bar Confidant observed, these considerations militate against
the credibility of the affiants. In any event, their affidavits fail to explain
adequately why Mrs. Del Rosario, during the hearing on February 10, 1999, did
not know where her money was.

The records do not clearly show whether Attorney Uy had in fact appropriated the
said amount; in fact, Mrs. Del Rosario acknowledged that she had received it on
February 12, 1999. They do show, however, that respondent failed to promptly
report that amount to her. This is clearly a violation of his professional
responsibility. Indeed, in Aya v. Bigornia, 9 the Court ruled that money collected
by a lawyer in favor of his clients must be immediately turned over to them. In
Daroy v. Legaspi, 10 the Court held that "lawyers are bound to promptly account
for money or property received by them on behalf of their clients and failure to
do so constitutes professional misconduct."
Verily, the question is not necessarily whether the rights of the clients have been
prejudiced, but whether the lawyer has adhered to the ethical standards of the
bar. 11 In this case, respondent has not done so. Indeed, we agree with the
following observation of the Office of the Bar Confidant:

Keeping the money in his possession without his client's knowledge only provided
Atty. Uy the tempting opportunity to appropriate for himself the money
belonging to his client. This situation should, at all times, be avoided by members
of the bar. Like judges, lawyers must not only be clean; they must also appear
clean. This way, the people's faith in the justice system would remain
undisturbed. 12

In this light, the Court must stress that it has the duty to look into dealings
between attorneys and their clients and to guard the latter from any undue
consequences resulting from a situation in which they may stand unequal. 13 The
present situation calls for the exercise of this duty.

For misappropriating and failing to promptly report and deliver money they
received on behalf of their clients, some lawyers have been disbarred 14 and
others have been suspended for six months. 15 In the present case, the records
merely show that respondent did not promptly report that he received money on
behalf of his client. There is no clear evidence of misappropriation. Under the
circumstances, we rule that he should be suspended for one month.

WHEREFORE, Atty. Thomas C. Uy Jr. is hereby SUSPENDED for one month. He is

warned that a repetition of the same or similar acts will be dealt with more
severely.
Let copies of this Decision be served on Atty. Thomas C. Uy Jr. at his given address
or any other known one. Copies of this Decision shall also be entered in his record
as attorney and served on the IBP, as well as the Court Administrator who shall
circulate them to all the courts in the country for their information and
guidance.1âwphi1.nêt

SO ORDERED.

Melo, Vitug, Purisima and Gonzaga-Reyes, JJ., concur.

Footnotes

1 Rollo, pp. 4-6.

2 Through his counsel Angel B. De Veyra.

3 Rollo, pp. 14-23.

4 Rollo, pp. 55-58.

5 Agpalo, Legal Ethics, 1992 ed., p. 188.

6 Paragraph 11, "Dealing with trust property"; emphasis supplied.

7 Comment, p. 4; rollo, p. 17.

8 See complainant's Reply, p. 2; rollo, 42. (Emphasis supplied)

9 57 Phil. 8, July 26, 1932.

10 65 SCRA 304, July 25, 1975, per Aquino, J., citing In Re Bamberger, 49 Phil. 962.
See also Obid v. Catimbang, 196 SCRA 23, April 19, 1991; Dumadag v. Legaspi, 197
SCRA 303, May 21, 1991.

11 See Hilado v. David, 84 Phil. 569, September 21, 1949.

12 Report and Recommendation, p. 9; rollo, p. 58.

13 Hilado v. David, supra.

14 Daroy v. Legaspi, supra.

15 Aya v. Bigonia, supra.

Republic of the Philippines

SUPREME COURT

Manila

SECOND DIVISION

A.C. No. 2040 March 4, 1998

IMELDA A. NAKPIL, complainant,

vs.

ATTY. CARLOS J. VALDES, respondent.

PUNO, J.:

The friendship of JOSE NAKPIL and respondent CARLOS J. VALDES dates back to
the '50s during their school days in De La Salle and the Philippine Law School.
Their closeness extended to their families and respondent became the business
consultant, lawyer and accountant of the Nakpils.
In 1965, Jose Nakpil became interested in purchasing a summer residence in
Moran Street, Baguio City.1 For lack of funds, he requested respondent to
purchase the Moran property for him. They agreed that respondent would keep
the property in trust for the Nakpils until the latter could buy it back. Pursuant to
their agreement, respondent obtained two (2) loans from a bank (in the amounts
of P65,000.00 and P75,000.00) which he used to purchase and renovate the
property. Title was then issued in respondent's name.

It was the Nakpils who occupied the Moran summer house. When Jose Nakpil
died on July 8, 1973, respondent acted as the legal counsel and accountant of his
widow, complainant IMELDA NAKPIL. On March 9, 1976, respondent's law firm,
Carlos J. Valdes & Associates, handled the proceeding for the settlement of Jose's
estate. Complainant was appointed as administratrix of the estate.

The ownership of the Moran property became an issue in the intestate

proceedings. It appears that respondent excluded the Moran property from the
inventory of Jose's estate. On February 13, 1978, respondent transferred his title
to the Moran property to his company, the Caval Realty Corporation.

On March 29, 1979, complainant sought to recover the Moran property by filing
with the then Court of First Instance (CFI) of Baguio City an action for
reconveyance with damages against respondent and his corporation. In defense,
respondent claimed absolute ownership over the property and denied that a trust
was created over it.
During the pendency of the action for reconveyance, complainant filed this
administrative case to disbar the respondent. She charged that respondent
violated professional ethics when he:

I. Assigned to his family corporation the Moran property (Pulong Maulap)

which belonged to the estate he was settling as its lawyer and auditor.

II. Excluded the Moran property from the "inventory of real estate properties"
he prepared for a client-estate and, at the same time, charged the loan secured to
purchase the said excluded property as a liability of the estate, all for the purpose
of transferring the title to the said property to his family corporation.

III. Prepared and defended monetary claims against the estate that retained
him as its counsel and auditor.2

On the first charge, complainant alleged that she accepted respondent's offer to
serve as lawyer and auditor to settle her husband's estate. Respondent's law firm
then filed a petition for settlement of the estate of the deceased Nakpil but did
not include the Moran property in the estate's inventory. Instead, respondent
transferred the property to his corporation, Caval Realty Corporation, and title
was issued in its name. Complainant accused respondent of maliciously
appropriating the property in trust knowing that it did not belong to him. She
claimed that respondent has expressly acknowledged that the said property
belonged to the late Nakpil in his correspondences3 with the Baguio City
Treasurer and the complainant.

On the second charge, complainant alleged that respondent's auditing firm (C. J.
Valdes & Co., CPAs) excluded the Moran property from the inventory of her
husband's estate, yet included in the claims against the estate the amounts of
P65,000.00 and P75,000.00, which respondent represented as her husband's
loans applied "probably for the purchase of a house and lot in Moran Street,
Baguio City."

As to the third charge, complainant alleged that respondent's law firm (Carlos J.
Valdes and Associates) filed the petition for the settlement of her husband's
estate in court, while respondent's auditing firm (C.J. Valdes & Co., CPAs) acted as
accountant of both the estate and two of its creditors. She claimed that
respondent represented conflicting interests when his accounting firm prepared
the list of claims of creditors Angel Nakpil and ENORN, Inc. against her husband's
estate which was represented by respondent's law firm. Complainant averred
that there is no distinction between respondent's law and auditing firms as
respondent is the senior and controlling partner of both firms which are housed in
the same building.

We required respondent to answer the charges against him. In his ANSWER, 4

respondent initially asserted that the resolution of the first and second charges
against him depended on the result of the pending action in the CFI for
reconveyance which involved the issue of ownership of the Moran property.

On the merit of the first charge, respondent reiterated his defense in the
reconveyance case that he did not hold the Moran property in trust for the
Nakpils as he is its absolute owner. Respondent explained that the Nakpils never
bought back the Moran property from him, hence, the property remained to be
his and was rightly excluded from the inventory of Nakpil's estate.

As to the second charge, respondent denied preparing the list of claims against
the estate which included his loans of P65,000.00 and P75,000.00 for the
purchase and renovation of the Moran property. In charging his loans against the
estate, he stressed that the list drawn up by his accounting firm merely stated
that the loans in respondent's name were applied "probably for the purchase of
the house and lot in Moran Street, Baguio City." Respondent insisted that this was
not an admission that the Nakpils owned the property as the phrase "probably for
the purchase" did not imply a consummated transaction but a projected
acquisition.

Respondent also disclaimed knowledge or privity in the preparation of a letter

(Exhibit "H") of his accounting firm to the Baguio City treasurer remitting the real
estate taxes for the Moran property on behalf of the Nakpils. He contended that
the letter could be a mere error or oversight.

Respondent averred that it was complainant who acknowledged that they did not
own the Moran property for: (1) complainant's February 1979 Statement of
Assets and Liabilities did not include the said property, and; (2) complainant, as
administratrix, signed the Balance Sheet of the Estate where the Moran property
was not mentioned.

Respondent admitted that complainant retained the services of his law and
accounting firms in the settlement of her husband's estate.5 However, he pointed
out that he has resigned from his law and accounting firms as early as 1974. He
alleged that it was Atty. Percival Cendaña (from the law firm Carlos Valdes &
Associates) who filed the intestate proceedings in court in 1976.

As to the third charge, respondent denied there was a conflict of interest when
his law firm represented the estate in the intestate proceedings while his
accounting firm (C.J. Valdes & Co., CPAs) served as accountant of the estate and
prepared the claims of creditors Angel Nakpil and ENORN, Inc. against the estate.
He proffered the following reasons for his thesis: First, the two claimants were
closely related to the late Nakpil. Claimant ENORN, Inc. is a family corporation of
the Nakpils of which the late Nakpil was the President. Claimant Angel Nakpil is a
brother of the late Nakpil who, upon the latter's death, became the President of
ENORN, Inc. These two claimants had been clients of his law and accounting firms
even during the lifetime of Jose Nakpil. Second, his alleged representation of
conflicting interests was with the knowledge and consent of complainant as
administratrix. Third, there was no conflict of interests between the estate and
the claimants for they had forged a modus vivendi, i.e., that the subject claims
would be satisfied only after full payment of the principal bank creditors.
Complainant, as administratrix, did not controvert the claims of Angel Nakpil and
ENORN, Inc. Complainant has started paying off the claims of Angel Nakpil and
ENORN, Inc. after satisfying the banks' claims. Complainant did not assert that
their claims caused prejudice to the estate. Fourth, the work of Carlos J. Valdes &
Co. as common auditor redounded to the benefit of the estate for the firm
prepared a true and accurate amount of the claim. Fifth, respondent resigned
from his law and accounting firms as early as August 15, 1974.6 He rejoined his
accounting firm several years later. He submitted as proof the SEC's certification
of the filing of his accounting firm of an Amended Articles of Partnership. Thus, it
was not he but Atty. Percival Cendaña, from the firm Carlos J. Valdes & Associates,
who filed the intestate proceedings in court. On the other hand, the claimants
were represented by their own counsel Atty. Enrique O. Chan. Sixth, respondent
alleged that in the remote possibility that he committed a breach of professional
ethics, he committed such "misconduct" not as a lawyer but as an accountant
who acted as common auditor of the estate and its creditors. Hence, he should be
held accountable in another forum.

On November 12, 1979, complainant submitted her REPLY.7 She maintained that
the pendency of the reconveyance case is not prejudicial to the investigation of
her disbarment complaint against respondent for the issue in the latter is not the
ownership of the Moran property but the ethics and morality of respondent's
conduct as a CPA-lawyer.
Complainant alleged that respondent's Annexes to his Reply (such as the
Statement of Assets & Liability of the Nakpils and the Balance Sheet of the Estate)
which showed that complainant did not claim ownership of the Moran property
were all prepared by C.J. Valdes & Co. as accountant of the estate of Jose Nakpil
and filed with the intestate court by C.J. Valdes & Associates as counsel for the
estate. She averred that these Annexes were not proofs that respondent owned
the Moran property but were part of respondent's scheme to remove the
property from the estate and transfer it to his family corporation. Complainant
alleged that she signed the documents because of the professional counsel of
respondent and his firm that her signature thereon was required. Complainant
charged respondent with greed for coveting the Moran property on the basis of
defects in the documents he himself prepared..

Complainant urged that respondent cannot disown unfavorable documents (the

list of claims against the estate and the letter regarding Nakpil's payment of realty
tax on the Moran property) which were prepared by his law and accounting firms
and invoke other documents prepared by the same firms which are favorable to
him. She averred that respondent must accept responsibility not just for some,
but for all the representations and communications of his firms.

Complainant refuted respondent's claim that he resigned from his firms from
March 9, 1976 to "several years later." She alleged that none of the documents
submitted as evidence referred to his resignation from his law firm. The
documents merely substantiated his resignation from his accounting firm.

In his REJOINDER,8 respondent insisted that complainant cannot hold him liable
for representing the interests of both the estate and the claimants without
showing that his action prejudiced the estate. He urged that it is not per se
anomalous for respondent's accounting firm to act as accountant for the estate
and its creditors. He reiterated that he is not subject to the jurisdiction of this
Court for he acted not as lawyer, but as accountant for both the estate and its
claimants.

He alleged that his accounting firm merely prepared the list of claims of the
creditors Angel Nakpil and ENORN, Inc. Their claims were not defended by his
accounting or law firm but by Atty. Enrique Chan. He averred that his law firm did
not oppose these claims as they were legitimate and not because they were
prepared by his accounting firm. He emphasized that there was no allegation that
the claims were fraudulent or excessive and that the failure of respondent's law
firm to object to these claims damaged the estate.

In our January 21, 1980 Resolution,9 we deferred further action on the

disbarment case until after resolution of the action for reconveyance between the
parties involving the issue of ownership by the then CFI of Baguio. Complainant
moved for reconsideration on the ground that the issue of ownership pending
with the CFI was not prejudicial to her complaint which involved an entirely
different issue, i.e., the unethical acts of respondent as a CPA-lawyer. We granted
her motion and referred the administrative case to the Office of the Solicitor
General (OSG) for investigation, report and recommendation. 10

In 1983, the CFI of Baguio dismissed the action for reconveyance. The trial court
ruled that respondent held the Moran property in trust for the Nakpils but found
that complainant waived her right over it.

On appeal, the Court of Appeals reversed the trial court. The appellate court held
that respondent was the absolute owner of the Moran property. The Decision
was elevated to this Court.
On February 18, 1986, during the pendency of complainant's appeal to this Court,
the OSG submitted its Report 11 on the disbarment complaint. The OSG relied
heavily on the decision of the Court of Appeals then pending review by this Court.
The OSG found that respondent was not put on notice of complainant's claim
over the property. It opined that there was no trust agreement created over the
property and that respondent was the absolute owner thereof. Thus, it upheld
respondent's right to transfer title to his family corporation. It also found no
conflict of interests as the claimants were related to the late Jose Nakpil. The OSG
recommended the dismissal of the administrative case.

Prefatorily, we note that the case at bar presents a novel situation as it involves
the disbarment of a CPA-lawyer for his demeanor in his accounting profession and
law practice in connection with the property of his client.

As a rule, a lawyer is not barred from dealing with his client but the business
transaction must be characterized with utmost honesty and good faith. 12 The
measure of good faith which an attorney is required to exercise in his dealings
with his client is a much higher standard than is required in business dealings
where the parties trade at "arms length." 13 Business transactions between an
attorney and his client are disfavored and discouraged by the policy of the law.
Hence, courts carefully watch these transactions to assure that no advantage is
taken by a lawyer over his client. This rule is founded on public policy for, by
virtue of his office, an attorney is in an easy position to take advantage of the
credulity and ignorance of his client. Thus, no presumption of innocence or
improbability of wrongdoing is considered in an attorney's favor. 14

In the case at bar, we cannot subscribe to the findings of the OSG in its Report.
These findings were based mainly on the decision of the Court
of Appeals in the action for reconveyance which was reversed by this Court in
1993. 15

As to the first two charges, we are bound by the factual findings of this Court in
the aforementioned reconveyance case. 16 It is well-established that respondent
offered to the complainant the services of his law and accounting firms by reason
of their close relationship dating as far back as the '50s. She reposed her complete
trust in respondent who was the lawyer, accountant and business consultant of
her late husband. Respondent and the late Nakpil agreed that the former would
purchase the Moran property and keep it in trust for the latter. In violation of the
trust agreement, respondent claimed absolute ownership over the property and
refused to sell the property to complainant after the death of Jose Nakpil. To
place the property beyond the reach of complainant and the intestate court,
respondent later transferred it to his corporation.

Contrary to the findings of the OSG, respondent initially acknowledged and

respected the trust nature of the Moran property. Respondent's bad faith in
transferring the property to his family corporation is well discussed in this Court's
Decision,17 thus:

. . . Valdes (herein respondent) never repudiated the trust during the lifetime of
the late Jose Nakpil. On the contrary, he expressly recognized it. . . . (H)e
repudiated the trust when (he) excluded Pulong Maulap from the list of
properties of the late Jose Nakpil submitted to the intestate court in 1973. . . .

xxx xxx xxx

The fact that there was no transfer of ownership intended by the parties . . . can
be bolstered by Exh. "I-2," an annex to the claim filed against the estate
proceedings of the late Jose Nakpil by his brother, Angel Nakpil, which was
prepared by Carlos J. Valdes & Co., the accounting firm of herein respondent.
Exhibit "I-2," which is a list of the application of the proceeds of various FUB loans
contracted as of 31 December 1973 by the late Jose Nakpil, . . . contains the two
(2) loans contracted in the name of respondent. If ownership of Pulong Maulap
was already transferred or ceded to Valdes, these loans should not have been
included in the list.

Indeed, as we view it, what the parties merely agreed to under the arrangement
outlined in Exh. "J" was that respondent Valdes would . . . "take over the total
loan of P140,000.00 and pay all of the interests due on the notes" while the heirs
of the late Jose Nakpil would continue to live in the disputed property for five (5)
years without remuneration save for regular maintenance expenses. This does
not mean, however, that if at the end of the five-year period petitioner (Nakpil)
failed to reimburse Valdes for his advances, . . . Valdes could already
automatically assume ownership of Pulong Maulap. Instead, the remedy of
respondents Carlos J. Valdes and Caval Realty Corporation was to proceed against
the estate of the late Jose M. Nakpil and/or the property itself." (emphasis
supplied)

In the said reconveyance case, we further ruled that complainant's documentary

evidence (Exhibits "H", "J" and "L"), which she also adduced in this administrative
case, should estop respondent from claiming that he bought the Moran property
for himself, and not merely in trust for Jose Nakpil. 18

It ought to follow that respondent's act of excluding the Moran property from the
estate which his law firm was representing evinces a lack of fidelity to the cause
of his client. If respondent truly believed that the said property belonged to him,
he should have at least informed complainant of his adverse claim. If they could
not agree on its ownership, respondent should have formally presented his claim
in the intestate proceedings instead of transferring the property to his own
corporation and concealing it from complainant and the judge in the estate
proceedings. Respondent's misuse of his legal expertise to deprive his client of the
Moran property is clearly unethical.

To make matters worse, respondent, through his accounting firm, charged the
two loans of P65,000.00 and P75,000.00 as liability of the estate, after said loans
were obtained by respondent for the purchase and renovation of the property
which he claimed for himself. Respondent seeks to exculpate himself from this
charge by disclaiming knowledge or privity in the preparation of the list of the
estate's liabilities. He theorizes that the inclusion of the loans must have been a
mere error or oversight of his accounting firm. It is clear that the information as to
how these two loans should be treated could have only come from respondent
himself as the said loans were in his name. Hence, the supposed error of the
accounting firm in charging respondent's loans against the estate could not have
been committed without respondent's participation. Respondent wanted to "have
his cake and eat it too" and subordinated the interest of his client to his own
pecuniary gain. Respondent violated Canon 17 of the Code of Professional
Responsibility which provides that a lawyer owes fidelity to his client's cause and
enjoins him to be mindful of the trust and confidence reposed on him.

As regards the third charge, we hold that respondent is guilty of representing

conflicting interests. It is generally the rule, based on sound public policy, that an
attorney cannot represent adverse interests. It is highly improper to represent
both sides of an issue. 19 The proscription against representation of conflicting
interests finds application where the conflicting interests arise with respect to the
same general matter 20 and is applicable however slight such adverse interest
may be. It applies although the attorney's intentions and motives were honest
and he acted in good faith. 21 However, representation of conflicting interests
may be allowed where the parties consent to the representation, after full
disclosure of facts. Disclosure alone is not enough for the clients must give their
informed consent to such representation. The lawyer must explain to his clients
the nature and extent of the conflict and the possible adverse effect must be
thoroughly understood by his clients. 22

In the case at bar, there is no question that the interests of the estate and that of
its creditors are adverse to each other. Respondent's accounting firm prepared
the list of assets and liabilities of the estate and, at the same time, computed the
claims of two creditors of the estate. There is clearly a conflict between the
interest of the estate which stands as the debtor, and that of the two claimants
who are creditors of the estate. In fact, at one instance, respondent's law firm
questioned the claims of creditor Angel Nakpil against the estate.

To exculpate himself, respondent denies that he represented complainant in the

intestate proceedings. He points out that it was one Atty. Percival Cendaña, from
his law firm Carlos J. Valdes & Associates, who filed the intestate case in court.
However, the fact that he did not personally file the case and appear in court is
beside the point. As established in the records of this case and in the
reconveyance case, 23 respondent acted as counsel and accountant of
complainant after the death of Jose Nakpil. Respondent's defense that he
resigned from his law and accounting firms as early as 1974 (or two years before
the filing of the intestate case) is unworthy of merit. Respondent's claim of
resignation from his law firm is not supported by any documentary proof. The
documents on record 24 only show respondent's resignation from his accounting
firm in 1972 and 1974. Even these documents reveal that respondent returned to
his accounting firm on July 1, 1976 and as of 1978, the intestate proceedings for
the settlement of Jose's estate had not yet been terminated. It does not escape us
that when respondent transferred the Moran property to his corporation on
February 13, 1978, the intestate proceedings was still pending in court. Thus, the
succession of events shows that respondent could not have been totally ignorant
of the proceedings in the intestate case.

Respondent claims that complainant knew that his law firm Carlos J. Valdes &
Associates was the legal counsel of the estate 25 and his accounting firm, C.J.
Valdes & Co., CPAs, was the auditor of both the estate and the two claimants
against it. 26 The fact, however, that complainant, as administratrix, did not
object to the set-up cannot be taken against her as there is nothing in the records
to show that respondent or his law firm explained the legal situation and its
consequences to complainant. Thus, her silence regarding the arrangement does
not amount to an acquiescence based on an informed consent.

We also hold that the relationship of the claimants to the late Nakpil does not
negate the conflict of interest. When a creditor files a claim against an estate, his
interest is per se adverse to the estate. As correctly pointed out by complainant, if
she had a claim against her husband's estate, her claim is still adverse and must
be filed in the intestate proceedings.

Prescinding from these premises, respondent undoubtedly placed his law firm in a
position where his loyalty to his client could be doubted. In the estate
proceedings, the duty of respondent's law firm was to contest the claims of these
two creditors but which claims were prepared by respondent's accounting firm.
Even if the claims were valid and did not prejudice the estate, the set-up is still
undesirable. The test to determine whether there is a conflict of interest in the
representation is probability, not certainty of conflict. It was respondent's duty to
inhibit either of his firms from said proceedings to avoid the probability of conflict
of interest.
Respondent advances the defense that assuming there was pro, he could not be
charged before this Court as his alleged "misconduct" pertains to his accounting
practice.

We do not agree. Respondent is a CPA-lawyer who is actively practicing both

professions. He is the senior partner of his law and accounting firms which carry
his name. In the case at bar, complainant is not charging respondent with breach
of ethics for being the common accountant of the estate and the two creditors.
He is charged for allowing his accounting firm to represent two creditors of the
estate and, at the same time, allowing his law firm to represent the estate in the
proceedings where these claims were presented. The act is a breach of
professional ethics and undesirable as it placed respondent's and his law firm's
loyalty under a cloud of doubt. Even granting that respondent's misconduct refers
to his accountancy practice, it would not prevent this Court from disciplining him
as a member of the Bar. The rule is settled that a lawyer may be suspended or
disbarred for ANY misconduct, even if it pertains to his private activities, as long
as it shows him to be wanting in moral character, honesty, probity or good
demeanor. 27 Possession of good moral character is not only a prerequisite to
admission to the bar but also a continuing requirement to the practice of law.

Public confidence in law and lawyers may be eroded by the irresponsible and
improper conduct of a member of the bar. Thus, a lawyer should determine his
conduct by acting in a manner that would promote public confidence in the
integrity of the legal profession. Members of the Bar are expected to always live
up to the standards embodied in the Code of Professional Responsibility as the
relationship between an attorney and his client is highly fiduciary in nature and
demands utmost fidelity and good faith.28 In the case at bar, respondent
exhibited less than full fidelity to his duty to observe candor, fairness and loyalty
in his dealings and transactions with his clients. 29
IN VIEW WHEREOF, the Court finds respondent ATTY. CARLOS J. VALDES guilty of
misconduct. He is suspended from the practice of law for a period of one (1) year
effective from receipt of this Decision, with a warning that a similar infraction
shall be dealt with more severely in the future.

Let copies of this Decision be furnished all courts, as well as the Integrated Bar of
the Philippines and the Office of the Bar Confidant.

SO ORDERED.

Regalado, Mendoza and Martinez, JJ., concur.

Melo, J., took no part.

Footnotes

1 The Moran property consists of a four-bedroom bungalow on a 2,490

square meter lot.

2 Letter-complaint, dated June 16, 1979; Rollo, pp. 1-9.

3 Exhibits "H", "J" and "L", adduced also in the reconveyance case.
4 Rollo, pp. 44-63.

5 Attached to his Answer is the retainership agreement, dated February 20,

1976, between complainant and his firms; Rollo, pp. 73-75.

6 He attached to his Answer his letter of resignation addressed to the

managing partner of his accounting firm (Rollo, at p. 76) and the SEC certification
that the letter of resignation was duly presented to said body (Rollo, at p. 77).

7 Rollo, pp. 137-155.

8 Rollo, pp. 182-197.

9 Ibid., p. 200.

10 See Resolution, dated July 18, 1984; Rollo, at p. 305.

11 Rollo, pp. 306-342.

12 7 C.J.S. 966.

13 Gould v. State, 69 ALR 709.

14 5 Am. Jur. 338.

15 Nakpil v. IAC, 225 SCRA 456.

16 Ibid.

17 Nakpil v. IAC, supra.

18 Ibid., at p. 465.

19 7A C.J.S. 206-209, citing U.S. — Brown & Williamson Tobacco Corporation

vs. Daniel Intern Corporation, C.A. Ga., 563.

20 Md. — Rippon vs. Mercantile Safe Deposit & T. Co. of Baltimore, 131 A. 2d
695, 699, 213 Md. 215.

21 U.S. — Cinema 5 Ltd. vs. Cinerama, Inc., C.A.N.Y., 528 F. 2d 1384.

22 7A C.J.S. 215-216; Pa. — Jedwabny vs. Philadelphia Transport Co., 135 A.2d
252, 390 Pa. 231; 78 S. Ct. 557, 355 U.S. 966, 2 L. Ed. 2d 541.

23 Nakpil vs. IAC, supra, at p. 458.

24 Amendment to Amended Articles of Partnership of respondent's
accounting firm which contains the following information: (a) on July 17, 1973, a
week after Jose Nakpil died, the SEC approved the recall of respondent's
withdrawal from his accounting firm in 1972; see Rollo, at pp. 80-81; (b) on
August 31, 1974, respondent resigned again from his accounting firm; see
Respondent's letter of resignation from his accounting firm, dated August 15,
1974; Rollo, at p. 76; (c) On July 1, 1976, barely three months after the filing of the
intestate case in court, respondent rejoined the accounting firm; Rollo, at p. 89.
All the foregoing documents refer to respondent's resignation from his accounting
firm. Moreover, it appears from the records that as of 1978, the intestate case
was still pending in court.

25 Rollo, at p. 60.

26 Ibid., at p. 59.

27 Nadayag vs. Grageda, 237 SCRA 202 [1994].

28 Igual vs. Javier, 254 SCRA 416 [1996].

29 Canon 15, Code of Professional Responsibility.

EN BANC
A.C. No. 6705 March 31, 2006

RUTHIE LIM-SANTIAGO, Complainant,

vs.

ATTY. CARLOS B. SAGUCIO, Respondent.

DECISION

CARPIO, J.:

The Case

This is a disbarment complaint against Atty. Carlos B. Sagucio for violating Rule
15.03 of the Code of Professional Responsibility and for defying the prohibition
against private practice of law while working as government prosecutor.

The Facts

Ruthie Lim-Santiago ("complainant") is the daughter of Alfonso Lim and Special

Administratrix of his estate. 1 Alfonso Lim is a stockholder and the former
President of Taggat Industries, Inc. 2
Atty. Carlos B. Sagucio ("respondent") was the former Personnel Manager and
Retained Counsel of Taggat Industries, Inc. 3 until his appointment as Assistant
Provincial Prosecutor of Tuguegarao, Cagayan in 1992. 4

Taggat Industries, Inc. ("Taggat") is a domestic corporation engaged in the

operation of timber concessions from the government. The Presidential
Commission on Good Government sequestered it sometime in 1986, 5 and its
operations ceased in 1997. 6

Sometime in July 1997, 21 employees of Taggat ("Taggat employees") filed a

criminal complaint entitled "Jesus Tagorda, Jr. et al. v. Ruthie Lim-Santiago,"
docketed as I.S. No. 97-240 ("criminal complaint"). 7 Taggat employees alleged
that complainant, who took over the management and control of Taggat after the
death of her father, withheld payment of their salaries and wages without valid
cause from 1 April 1996 to 15 July 1997. 8

Respondent, as Assistant Provincial Prosecutor, was assigned to conduct the

preliminary investigation. 9 He resolved the criminal complaint by recommending
the filing of 651 Informations 10 for violation of Article 288 11 in relation to
Article 116 12 of the Labor Code of the Philippines. 13

Complainant now charges respondent with the following violations:

1. Rule 15.03 of the Code of Professional Responsibility

Complainant contends that respondent is guilty of representing conflicting

interests. Respondent, being the former Personnel Manager and Retained
Counsel of Taggat, knew the operations of Taggat very well. Respondent should
have inhibited himself from hearing, investigating and deciding the case filed by
Taggat employees. 14 Furthermore, complainant claims that respondent
instigated the filing of the cases and even harassed and threatened Taggat
employees to accede and sign an affidavit to support the complaint. 15

2. Engaging in the private practice of law while working as a government

prosecutor

Complainant also contends that respondent is guilty of engaging in the private

practice of law while working as a government prosecutor. Complainant
presented evidence to prove that respondent received P10,000 as retainer’s fee
for the months of January and February 1995, 16 another P10,000 for the months
of April and May 1995, 17 and P5,000 for the month of April 1996. 18

Complainant seeks the disbarment of respondent for violating Rule 15.03 of the
Code of Professional Responsibility and for defying the prohibition against private
practice of law while working as government prosecutor.

Respondent refutes complainant’s allegations and counters that complainant

was merely aggrieved by the resolution of the criminal complaint which was
adverse and contrary to her expectation. 19

Respondent claims that when the criminal complaint was filed, respondent had
resigned from Taggat for more than five years. 20 Respondent asserts that he no
longer owed his undivided loyalty to Taggat. 21 Respondent argues that it was his
sworn duty to conduct the necessary preliminary investigation. 22 Respondent
contends that complainant failed to establish lack of impartiality when he
performed his duty. 23 Respondent points out that complainant did not file a
motion to inhibit respondent from hearing the criminal complaint 24 but instead
complainant voluntarily executed and filed her counter-affidavit without mental
reservation. 25

Respondent states that complainant’s reason in not filing a motion to inhibit

was her impression that respondent would exonerate her from the charges filed
as gleaned from complainant’s statement during the hearing conducted on 12
February 1999:

xxx

Q. (Atty. Dabu). What do you mean you didn’t think he would do it, Madam
Witness?

A. Because he is supposed to be my father’s friend and he was working with my

Dad and he was supposed to be trusted by my father. And he came to me and
told me he gonna help me. x x x. 26

Respondent also asserts that no conflicting interests exist because he was not
representing Taggat employees or complainant. Respondent claims he was
merely performing his official duty as Assistant Provincial Prosecutor. 27
Respondent argues that complainant failed to establish that respondent’s act
was tainted with personal interest, malice and bad faith. 28
Respondent denies complainant’s allegations that he instigated the filing of the
cases, threatened and harassed Taggat employees. Respondent claims that this
accusation is bereft of proof because complainant failed to mention the names of
the employees or present them for cross-examination. 29

Respondent does not dispute his receipt, after his appointment as government
prosecutor, of retainer fees from complainant but claims that it

was only on a case-to-case basis and it ceased in 1996. 30 Respondent contends

that the fees were paid for his consultancy services and not for representation.
Respondent submits that consultation is not the same as representation and that
rendering consultancy services is not prohibited. 31 Respondent, in his Reply-
Memorandum, states:

x x x [I]f ever Taggat paid him certain amounts, these were paid voluntarily by
Taggat without the respondent’s asking, intended as token consultancy fees on
a case-to-case basis and not as or for retainer fees. These payments do not at all
show or translate as a specie of ‘conflict of interest’. Moreover, these
consultations had no relation to, or connection with, the above-mentioned labor
complaints filed by former Taggat employees. 32

Respondent insists that complainant’s evidence failed to prove that when the
criminal complaint was filed with the Office of the Provincial Prosecutor of
Cagayan, respondent was still the retained counsel or legal consultant. 33

While this disbarment case was pending, the Resolution and Order issued by
respondent to file 651 Informations against complainant was reversed and set
aside by Regional State Prosecutor of Cagayan Rodolfo B. Cadelina last 4 January
1999. 34 Hence, the criminal complaint was dismissed. 35

The IBP’s Report and Recommendation

The Integrated Bar of the Philippines’ Investigating Commissioner Ma. Carmina

M. Alejandro-Abbas ("IBP Commissioner Abbas") heard the case 36 and allowed
the parties to submit their respective memoranda. 37 Due to IBP Commissioner
Abbas’ resignation, the case was reassigned to Commissioner Dennis A.B. Funa
("IBP Commissioner Funa"). 38

After the parties filed their memoranda and motion to resolve the case, the IBP
Board of Governors issued Resolution No. XVI-2004-479 ("IBP Resolution") dated
4 November 2004 adopting with modification 39 IBP Commissioner Funa’s
Report and Recommendation ("Report") finding respondent guilty of conflict of
interests, failure to safeguard a former client’s interest, and violating the
prohibition against the private practice of law while being a government
prosecutor. The IBP Board of Governors recommended the imposition of a
penalty of three years suspension from the practice of law. The Report reads:

Now the issue here is whether being a former lawyer of Taggat conflicts with his
role as Assistant Provincial Prosecutor in deciding I.S. No. 97-240. A determination
of this issue will require the test of whether the matter in I.S. No. 97-240 will
conflict with his former position of Personnel Manager and Legal Counsel of
Taggat.
I.S. No. 97-240 was filed for "Violation of Labor Code" (see Resolution of the
Provincial Prosecutors Office, Annex "B" of Complaint). Herein Complainant,
Ruthie Lim-Santiago, was being accused as having the "management and control"
of Taggat (p. 2, Resolution of the Prov. Pros. Office, supra).

Clearly, as a former Personnel Manager and Legal Counsel of Taggat, herein

Respondent undoubtedly handled the personnel and labor concerns of Taggat.
Respondent, undoubtedly dealt with and related with the employees of Taggat.
Therefore, Respondent undoubtedly dealt with and related with complainants in
I.S. No. 97-240. The issues, therefore, in I.S. No. 97-240, are very much familiar
with Respondent. While the issues of unpaid salaries pertain to the periods 1996-
1997, the mechanics and personalities in that case are very much familiar with
Respondent.

A lawyer owes something to a former client. Herein Respondent owes to Taggat, a

former client, the duty to "maintain inviolate the client’s confidence or to
refrain from doing anything which will injuriously affect him in any matter in
which he previously represented him" (Natam v. Capule, 91 Phil. 640; p. 231,
Agpalo, Legal Ethics, 4th ed.)

Respondent argues that as Assistant Provincial Prosecutor, he does not represent

any client or any interest except justice. It should not be forgotten, however, that
a lawyer has an immutable duty to a former client with respect to matters that he
previously handled for that former client. In this case, matters relating to
personnel, labor policies, and labor relations that he previously handled as
Personnel Manager and Legal Counsel of Taggat. I.S. No. 97-240 was for "Violation
of the Labor Code." Here lies the conflict. Perhaps it would have been different
had I.S. No. 97-240 not been labor-related, or if Respondent had not been a
Personnel Manager concurrently as Legal Counsel. But as it is, I.S. No. 97-240 is
labor-related and Respondent was a former Personnel Manager of Taggat.
xxxx

While Respondent ceased his relations with Taggat in 1992 and the unpaid
salaries being sought in I.S. No. 97-240 were of the years 1996 and 1997, the
employees and management involved are the very personalities he dealt with as
Personnel Manager and Legal Counsel of Taggat. Respondent dealt with these
persons in his fiduciary relations with Taggat. Moreover, he was an employee of
the corporation and part of its management.

xxxx

As to the propriety of receiving "Retainer Fees" or "consultancy fees" from herein

Complainant while being an Assistant Provincial Prosecutor, and for rendering
legal consultancy work while being an Assistant Provincial Prosecutor, this matter
had long been settled. Government prosecutors are prohibited to engage in the
private practice of law (see Legal and Judicial Ethics, Ernesto Pineda, 1994 ed., p.
20; People v. Villanueva, 14 SCRA 109; Aquino v. Blanco 70 Phil. 647). The act of
being a legal consultant is a practice of law. To engage in the practice of law is to
do any of those acts that are characteristic of the legal profession (In re: David, 93
Phil. 461). It covers any activity, in or out of court, which required the application
of law, legal principles, practice or procedures and calls for legal knowledge,
training and experience (PLA v. Agrava, 105 Phil. 173; People v. Villanueva, 14
SCRA 111; Cayetano v. Monsod, 201 SCRA 210).

Respondent clearly violated this prohibition.

As for the secondary accusations of harassing certain employees of Taggat and
instigating the filing of criminal complaints, we find the evidence insufficient.

Accordingly, Respondent should be found guilty of conflict of interest, failure to

safeguard a former client’s interest, and violating the prohibition against the
private practice of law while being a government prosecutor. 40

The IBP Board of Governors forwarded the Report to the Court as provided under
Section 12(b), Rule 139-B 41 of the Rules of Court.

The Ruling of the Court

The Court exonerates respondent from the charge of violation of Rule 15.03 of
the Code of Professional Responsibility ("Code"). However, the Court finds
respondent liable for violation of Rule 1.01, Canon 1 of the Code of Professional
Responsibility against unlawful conduct. 42 Respondent committed unlawful
conduct when he violated Section 7(b)(2) of the Code of Conduct and Ethical
Standards for Public Officials and Employees or Republic Act No. 6713 ("RA
6713").

Canon 6 provides that the Code "shall apply to lawyers in government service in
the discharge of their official duties." 43 A government lawyer is thus bound by
the prohibition "not [to] represent conflicting interests." 44 However, this rule is
subject to certain limitations. The prohibition to represent conflicting interests
does not apply when no conflict of interest exists, when a written consent of all
concerned is given after a full disclosure of the facts or when no true attorney-
client relationship exists. 45 Moreover, considering the serious consequence of
the disbarment or suspension of a member of the Bar, clear preponderant
evidence is necessary to justify the imposition of the administrative penalty. 46

Respondent is also mandated under Rule 1.01 of Canon 1 not to engage in

"unlawful x x x conduct." Unlawful conduct includes violation of the statutory
prohibition on a government employee to "engage in the private practice of [his]
profession unless authorized by the Constitution or law, provided, that such
practice will not conflict or tend to conflict with [his] official functions." 47

Complainant’s evidence failed to substantiate the claim that respondent

represented conflicting interests

In Quiambao v. Bamba, 48 the Court enumerated various tests to determine

conflict of interests. One test of inconsistency of interests is whether the lawyer
will be asked to use against his former client any confidential information
acquired through their connection or previous employment. 49 In essence, what a
lawyer owes his former client is to maintain inviolate the client’s confidence or
to refrain from doing anything which will injuriously affect him in any matter in
which he previously represented him. 50

In the present case, we find no conflict of interests when respondent handled the
preliminary investigation of the criminal complaint filed by Taggat employees in
1997. The issue in the criminal complaint pertains to non-payment of wages that
occurred from 1 April 1996 to 15 July 1997. Clearly, respondent was no longer
connected with Taggat during that period since he resigned sometime in 1992.
In order to charge respondent for representing conflicting interests, evidence
must be presented to prove that respondent used against Taggat, his former
client, any confidential information acquired through his previous employment.
The only established participation respondent had with respect to the criminal
complaint is that he was the one who conducted the preliminary investigation. On
that basis alone, it does not necessarily follow that respondent used any
confidential information from his previous employment with complainant or
Taggat in resolving the criminal complaint.

The fact alone that respondent was the former Personnel Manager and Retained
Counsel of Taggat and the case he resolved as government prosecutor was labor-
related is not a sufficient basis to charge respondent for representing conflicting
interests. A lawyer’s immutable duty to a former client does not cover
transactions that occurred beyond the lawyer’s employment with the client. The
intent of the law is to impose upon the lawyer the duty to protect the client’s
interests only on matters that he previously handled for the former client and not
for matters that arose after the lawyer-client relationship has terminated.

Further, complainant failed to present a single iota of evidence to prove her

allegations. Thus, respondent is not guilty of violating Rule 15.03 of the Code.

Respondent engaged in the private practice of law while working as a government

prosecutor

The Court has defined the practice of law broadly as –

x x x any activity, in or out of court, which requires the application of law, legal
procedure, knowledge, training and experience. "To engage in the practice of law
is to perform those acts which are characteristics of the profession. Generally, to
practice law is to give notice or render any kind of service, which device or service
requires the use in any degree of legal knowledge or skill." 51

"Private practice of law" contemplates a succession of acts of the same nature

habitually or customarily holding one’s self to the public as a lawyer. 52

Respondent argues that he only rendered consultancy services to Taggat

intermittently and he was not a retained counsel of Taggat from 1995 to 1996 as
alleged. This argument is without merit because the law does not distinguish
between consultancy services and retainer agreement. For as long as respondent
performed acts that are usually rendered by lawyers with the use of their legal
knowledge, the same falls within the ambit of the term "practice of law."

Nonetheless, respondent admitted that he rendered his legal services to

complainant while working as a government prosecutor. Even the receipts he
signed stated that the payments by Taggat were for "Retainer’s fee." 53 Thus, as
correctly pointed out by complainant, respondent clearly violated the prohibition
in RA 6713.

However, violations of RA 6713 are not subject to disciplinary action under the
Code of Professional Responsibility unless the violations also constitute
infractions of specific provisions of the Code of Professional Responsibility.
Certainly, the IBP has no jurisdiction to investigate violations of RA 6713 – the
Code of Conduct and Ethical Standards for Public Officials and Employees –
unless the acts involved also transgress provisions of the Code of Professional
Responsibility.

Here, respondent’s violation of RA 6713 also constitutes a violation of Rule 1.01

of Canon 1, which mandates that "[a] lawyer shall not engage in unlawful,
dishonest, immoral or deceitful conduct." Respondent’s admission that he
received from Taggat fees for legal services while serving as a government
prosecutor is an unlawful conduct, which constitutes a violation of Rule 1.01.

Respondent admitted that complainant also charged him with unlawful conduct
when respondent stated in his Demurrer to Evidence:

In this instant case, the complainant prays that the respondent be permanently
and indefinitely suspended or disbarred from the practice of the law profession
and his name removed from the Roll of Attorneys on the following grounds:

xxxx

d) that respondent manifested gross misconduct and gross violation of his oath of
office and in his dealings with the public. 54

On the Appropriate Penalty on Respondent

The appropriate penalty on an errant lawyer depends on the exercise of sound

judicial discretion based on the surrounding facts. 55
Under Civil Service Law and rules, the penalty for government employees
engaging in unauthorized private practice of profession is suspension for six
months and one day to one year. 56 We find this penalty appropriate for
respondent’s violation in this case of Rule 1.01, Canon 1 of the Code of
Professional Responsibility.

WHEREFORE, we find respondent Atty. Carlos B. Sagucio GUILTY of violation of

Rule 1.01, Canon 1 of the Code of Professional Responsibility. Accordingly, we
SUSPEND respondent Atty. Carlos B. Sagucio from the practice of law for SIX
MONTHS effective upon finality of this Decision.

Let copies of this Decision be furnished the Office of the Bar Confidant to be
appended to respondent’s personal record as an attorney, the Integrated Bar of
the Philippines, the Department of Justice, and all courts in the country for their
information and guidance.

SO ORDERED.

ANTONIO T. CARPIO

Associate Justice

WE CONCUR:

ARTEMIO V. PANGANIBAN
Chief Justice

REYNATO S. PUNO

Associate Justice LEONARDO A. QUISUMBING

Asscociate Justice

CONSUELO YNARES-SANTIAGO

Associate Justice ANGELINA SANDOVAL-GUTIERREZ

Asscociate Justice

MA. ALICIA AUSTRIA-MARTINEZ

Associate Justice RENATO C. CORONA

Asscociate Justice

CONCHITA CARPIO MORALES

Associate Justice ROMEO J. CALLEJO, SR.

Asscociate Justice

ADOLFO S. AZCUNA

Associate Justice DANTE O. TINGA

Asscociate Justice

MINITA V. CHICO-NAZARIO

Associate Justice CANCIO C. GARCIA

Asscociate Justice

Footnotes
1 Rollo, p. 153.

2 Id. at 128-129.

3 Id. at 10.

4 Id. at 1, 240.

5 Id. at 240.

6 Id.

7 Id. at 21.

8 Id. at 22.

9 Id. at 75.

10 21 Taggat employees filed their Affidavits alleging that complainant failed to

pay them 31 quincenas of their salaries and wages, thus 651 Informations were
recommended for filing.
11 Article 288 of the Labor Code of the Philippines provides: "Penalties. – Except
as otherwise provided in this Code, or unless the acts complained of hinges on a
question of interpretation or implementation of ambiguous provisions of an
existing collective bargaining agreement, any violation of the provisions of this
Code declared to be unlawful or penal in nature shall be punished with a fine of
not less than One Thousand Pesos (P1,000.00) nor more than Ten Thousand Pesos
(P10,000.00), or imprisonment of not less than three months nor more than three
years, or both such fine and imprisonment at the discretion of the court. x x x."

12 Article 116 of the Labor Code of the Philippines provides: "Withholding of

wages and kickbacks prohibited. – It shall be unlawful for any person directly or
indirectly, to withhold any amount from the wages of a worker or induce him to
give up any part of his wages by force, stealth, intimidation, threat or by any other
means whatsoever without the worker’s consent."

13 Rollo, p. 82.

14 Id. at 2.

15 Id. at 3.

16 Id. at 110-111.

17 Id. at 112-113.
18 Id. at 114.

19 Id. at 243.

20 Id. at 242.

21 Id. at 244.

22 Id.

23 Id. at 243.

24 Id. at 245.

25 Id. at 244.

26 Id. at 246, 483.

27 Id. at 247.

28 Id.
29 Id. at 249.

30 Id. at 247-248.

31 Id. at 350.

32 Id.

33 Id. at 248.

34 Id. at 155-157.

35 Id.

36 Id. at 84-89, 99-103, 232, 237-239, 268, 273, 276-279, 282-284, 294-296, 299-
300.

37 Id. at 330-331.

38 Id. at 362.
39 The IBP Commissioner imposed a penalty of three months suspension from the
practice of law.

40 Rollo, pp. 549-554.

41 Section 12(b), Rule 139-B of the Rules of Court provides:

SEC. 12. Review and decision by the Board of Governors. —

xxxx

(b) If the Board, by the vote of a majority of its total membership, determines that
the respondent should be suspended from the practice of law or disbarred, it shall
issue a resolution setting forth its findings and recommendations which, together
with the whole record of the case, shall forthwith be transmitted to the Supreme
Court for final action.

42 Rule 1.01, Canon 1 of the Code of Professional Responsibility provides:

Rule 1.01. – A lawyer shall not engage in unlawful, dishonest, immoral or

deceitful conduct.

43 Code of Professional Responsibility, Canon 6.

44 Code of Professional Responsibility, Rule 15.03.

45 R. Agpalo, Comments On The Code Of Professional Responsibility And The

Code Of Judicial Conduct 165 (2001 ed.)

46 Berbano v. Barcelona, A.C. No. 6084, 3 September 2003, 410 SCRA 258.

47 RA 6713, Section 7(b)(2).

48 A.C. No. 6708, 25 August 2005, 468 SCRA 1.

49 Id. at 10-11.

50 Pormento, Sr. v. Pontevedra, A.C. No. 5128, 31 March 2005, 454 SCRA 167,
178.

51 Cayetano v. Monsod, G.R. No. 100113, 3 September 1991, 201 SCRA 210, 214.

52 Borja, Sr. v. Sulyap, Inc., 447 Phil. 750, 759 (2003).

53 Exhs. "B," "B-2," "B-3," rollo, pp. 110-114.

54 Id. at 241-242.

55 Endaya v. Oca, A.C. No. 3967, 3 September 2003, 410 SCRA 244, 255.

56 Omnibus Rules Implementing Book V of Executive Order No. 292 and Other
Pertinent Civil Service Laws as mandated by Section 12 of RA 6713.

Republic of the Philippines

SUPREME COURT

Manila

THIRD DIVISION

G.R. No. 169079 February 12, 2007

FRANCISCO RAYOS, Petitioner,

vs.

ATTY. PONCIANO G. HERNANDEZ, Respondent.

DECISION
CHICO-NAZARIO, J.:

This is a Petition for Review 1 of the Resolution dated 12 March 2005 of the
Integrated Bar of the Philippines (IBP), dismissing petitioner Francisco Rayos’s
complaint for disbarment against respondent Atty. Ponciano Hernandez.

Respondent was the counsel of petitioner in Civil Case No. SM-951 entitled,
"Francisco Rayos v. NAPOCOR," filed before the Regional Trial Court (RTC),
Malolos, Bulacan. The complaint alleged, among other things, that the National
Power Corporation (NAPOCOR) recklessly, imprudently and negligently opened
the three floodgates of the spillway of Angat Dam at midnight of 26 October 1978
until the early morning hours of 27 October 1978, during the occurrence of
typhoon "Kading" causing the release of a great volume of stored water, the
resultant swelling and flooding of Angat River, and the consequent loss of lives of
some of petitioner’s relatives and destruction of his family’s properties, for
which he sought damages. Of the 10 members of petitioner’s family who
perished, only four bodies were recovered and only petitioner and one of his
sons, German Rayos, survived.

On 21 December 1979, the complaint was dismissed 2 on the ground that the
State cannot be sued without its consent as the operation and management of
Angat Dam, Norzagaray, were governmental functions. Said dismissal was
questioned directly to this Court which set aside the RTC decision and ordered the
reinstatement of the complaint. 3

On 30 April 1990, however, the complaint was dismissed again by the RTC for lack
of sufficient and credible evidence. 4
The case was subsequently appealed to the Court of Appeals, which reversed the
RTC decision and awarded damages in favor of petitioner, the dispositive portion
of which reads:

CONFORMABLY TO THE FOREGOING, the joint decision appealed from is hereby

REVERSED and SET ASIDE, and a new one is hereby rendered:

xxxx

2. In Civil Case No. SM-951, ordering defendants-appellees to pay jointly and

severally, plaintiff-appellant, with legal interest from the date when this decision
shall have become final and executory, the following:

A. Actual damages of Five Hundred Twenty Thousand Pesos (₱520,000.00);

B. Moral Damages of Five Hundred Thousand Pesos (₱500,000.00); and

C. Litigation Expenses of Ten Thousand Pesos (₱10,000.00).

xxxx

In addition, in all the four (4) instant cases, ordering defendants-appellees to pay,
jointly and severally, plaintiffs-appellants, attorney’s fees in an amount
equivalent to 15% of the total amount awarded. 5
The case was appealed to this Court, which affirmed the Court of Appeals
Decision. 6 The Decision of the Supreme Court became final and executory on 4
August 1993.

Thus, a Writ of Execution 7 was issued by the RTC on 10 December 1993, upon
motion filed by respondent. As a consequence, NAPOCOR issued Check No.
014710 dated 5 January 1994, in the amount of ₱1,060,800.00 payable to
petitioner. Thereafter, the check was turned over to respondent as counsel of
petitioner. Petitioner demanded the turn over of the check from respondent, but
the latter refused.

On 24 January 1994 , petitioner filed with the RTC a motion 8 to direct respondent
to deliver to him the check issued by NAPOCOR, corresponding to the damages
awarded by the Court of Appeals. Petitioner sought to recover the check in the
amount of ₱1,060,800.00 from respondent, claiming that respondent had no
authority to receive the same as he was already dismissed by petitioner as his
counsel on 21 November 1993. 9 Respondent, on the other hand, justifies his
retention as a means to ensure payment of his attorney’s fees.

On 7 April 1994, the RTC issued an Order directing respondent to deliver the
check to the Sheriff of the court who will subsequently deliver it to petitioner. A
Writ of Execution was subsequently issued. Despite the Court Order, respondent
refused to surrender the check.

However, on 4 July 1994, respondent deposited the amount of ₱502,838.79 with

Farmers Savings and Loan Bank, Inc., Norzagaray, Bulacan, in the name of
petitioner which was eventually received by the latter.
Thus, petitioner initiated this complaint for disbarment for the failure of
respondent to return the rest of the award in the amount of ₱557,961.21.

In his comment, 10 respondent alleged that he handled petitioner’s case, in Civil

Case No. SM-951, for 15 years, from the trial court up to the Supreme Court. On
21 November 1993, he received a letter from petitioner dismissing him as
counsel. Simultaneous thereto, respondent received a letter dated 15 November
1993 from Atty. Jose G. Bruno asking him to comment on the therein attached
letter dated 19 November 1993 of petitioner addressed to NAPOCOR, requesting
that the award of damages granted by the Court of Appeals and affirmed by the
Supreme Court be paid to him.

Respondent also averred that petitioner had a verbal contract for attorney’s
fees on a contingent basis and that the said contract was only reduced in writing
on 6 October 1991, duly signed by both of them. By virtue of the contract,
petitioner and respondent supposedly agreed on a 40%-60% sharing, respectively,
of the court award. Respondent was entitled to receive 60% of the award because
petitioner agreed to pay him 40% of the award as attorney’s fees and 20% of
the award as litigation expenses.

Respondent further asseverated that because petitioner dismissed the

respondent and refused to settle his obligation, he deposited the amount of
₱424,320.00 in a bank in petitioner’s name under Account No. 381
(representing petitioner’s share of 40% of the total award) on 10 May 1994 11 ;
and the amount of ₱63,648.00 in petitioner’s name under Account No. 389
(representing petitioner’s share of 40% of the ₱159,120.00 awarded as
attorney’s fees by the Court of Appeals) on 19 May 1994. 12 Petitioner already
received the amount of ₱502,838.79 in accordance with the RTC Order dated 7
April 1994.

Respondent contended that the petitioner’s complaint was without basis and
was meant only to harass and put him to shame before the residents of
Norzagaray, Bulacan.

In a Resolution dated 9 August 1995, 13 the Court referred the case to the
Commission on Bar Discipline of the IBP for investigation, report and
recommendation.

A series of hearings were conducted by the Commission on Bar Discipline of the

IBP at the IBP Building, Ortigas Center, Pasig City, from March to September 2001.

On 1 February 2005, Investigating Commissioner Lydia A. Navarro B. Funa

submitted her Report and Recommendation, 14 recommending the dismissal of
the case.

Thereafter, the IBP issued its Resolution dated 12 March 2005, approving and
adopting the recommendation of the Investigating Commissioner, thus:

RESOLVED to ADOPT and APPROVE, as it hereby ADOPTED and APPROVED, the

Report and Recommendation of the Investigating Commissioner of the above-
entitled case, herein made part of this Resolution as Annex "A"; and, finding the
recommendation fully supported by the evidence on record and the applicable
laws and rules, and considering that the case lacks merit, the same is hereby
DISMISSED. 15

We do not agree in the recommendation of the IBP.

The threshold issue in this petition is: whether respondent is justified in retaining
the amount awarded to petitioner in Civil Case No. SM-951 to assure payment of
his attorney’s fees.

Moneys collected by an attorney on a judgment rendered in favor of his client

constitute trust funds and must be immediately paid over to the client. 16 Canon
16 of the Code of Professional Responsibility provides as follows:

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.

In the case at bar, when respondent withheld and refused to deliver the
NAPOCOR check representing the amount awarded by the court in Civil Case No.
SM-951, which he received on behalf of his client (petitioner herein), he breached
the trust reposed on him. It is only after an Order was issued by the RTC ordering
the delivery of the check to petitioner that the respondent partially delivered the
amount of ₱502,838.79 to the former, but still retaining for himself the amount of
₱557,961.21 as payment for his attorney’s fees. The claim of the respondent
that petitioner failed to pay his attorney’s fees is not an excuse for
respondent’s failure to deliver the amount to the petitioner. A lawyer is not
entitled to unilaterally appropriate his client’s money for himself by the mere
fact alone that the client owes him attorney’s fees. 17 The failure of an attorney
to return the client’s money upon demand gives rise to the presumption that he
has misappropriated it for his own use to the prejudice and violation of the
general morality, as well as of professional ethics; it also impairs public
confidence in the legal profession and deserves punishment. In short, a lawyer’s
unjustified withholding of money belonging to his client, as in this case, warrants
the imposition of disciplinary action. 18

It is true that under Canon 16.03 of the Code of Professional Responsibility, an

attorney has the following rights;

Rule 16.03- A lawyer shall deliver the funds and property of 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. (Emphases supplied.)

But the fact alone that a lawyer has a lien for fees on moneys in his hands
collected for his client, as above-stated, does not relieve him of his duty to
promptly account for the moneys received; his failure to do so constitutes
professional misconduct. 19 Thus, what respondent should have properly done in
the case at bar was to provide the petitioner with an accounting before deducting
his attorney’s fees and then to turn over the remaining balance of the award
collected to petitioner. The Court notes that respondent represented petitioner
from the time of filing of the complaint in Civil Case No. SM-951 before what is
now the RTC and of the appeal of the same case to the Court of Appeals and
Supreme Court. But respondent was not justified to hold on the entire amount of
award collected by him until his fees had been paid and received by him.

The relationship of attorney and client has always been rightly regarded as one of
special trust and confidence. An attorney must exercise the utmost good faith and
fairness in all his relationship vis-à-vis his client. Respondent fell far short of this
standard when he failed to render an accounting for the amount actually received
by him on behalf of his client and when he refused to turn over any portion of
said amount to his client upon the pretext that his attorney’s fees had not at all
been paid. Respondent had, in fact, placed his private and personal interest above
that of his client.

We have held that lawyering is not a moneymaking venture and lawyers are not
merchants. 20 Law advocacy, it has been stressed, is not capital that yields profits.
The returns it births are simple rewards for a job done or service rendered. It is a
calling that, unlike mercantile pursuits which enjoy a greater deal of freedom
from governmental interference, is impressed with a public interest, for which it
is subject to State regulation. 21

A lawyer is not merely the defender of his client’s cause and a trustee of his
client’s cause of action and assets; he is also, and first and foremost, an officer
of the court and participates in the fundamental function of administering justice
in society. 22 It follows that a lawyer’s compensation for professional services
rendered is subject to the supervision of the court, not just to guarantee that the
fees he charges and receives remain reasonable and commensurate with the
services rendered, but also to maintain the dignity and integrity of the legal
profession to which he belongs. Upon taking his attorney’s oath as an officer of
the court, a lawyer submits himself to the authority of the courts to regulate his
right to charge professional fees. 23

There is another aspect to this case which the Court cannot just gloss over.
Respondent claimed that he charged petitioner, his client, a contingent fee
comprising of forty percent (40%) as attorney’s fees and twenty percent (20%)
as litigation expenses. The agreement provides:

UNAWAIN NG LAHAT SA PAMAMAGITAN NITO:

Ako, si Francisco Rayos, Sr., Pilipino, may sapat na gulang at ngayon ay

naninirahan sa Pinagbarilan, Baliwag, Bulacan, sa pamamagitan ng kasulatang ito,
ay nagpapatunay sa mga sumusunod:

Na, kaugnay sa aking usapin laban sa NPC at Benjamin Chavez (Rayos vs. NPC, et
al.) na ngayon ay nakabinbin sa Court of Appeals, ako ay nakipagkasundo sa aking
abogado, Atty. Ponciano G. Hernandez, gaya ng sumusunod:

1 Sakaling ipanalo ang aking usapin, ang ano mang aking makukuha ay hahatiin
gaya ng sumusunod: 40% ang para sa akin; 40% ang para kay Atty. Ponciano G.
Hernandez; 20% ay ilalabas bilang gastos sa kaso.

2. Kung matalo ako sa kaso ay wala akong sagutin sa aking abogado.

Sa katunayan ng lahat, ako ay lumagda sa kasunduang ito dito sa Norzagaray,
Bulacan ngayong ika-6 ng Oktubre 1991.

(SGD)PONCIANO G. HERNANDEZ (SGD)FRANCISCO RAYOS

Abogado May Usapin 24

A contingent fee arrangement is valid in this jurisdiction 25 and is generally

recognized as valid and binding but must be laid down in an express contract. 26
The amount of contingent fee agreed upon by the parties is subject to the
stipulation that counsel will be paid for his legal services only if the suit or
litigation prospers. A much higher compensation is allowed as contingent fee in
consideration of the risk that the lawyer may get nothing if the suit fails. 27
Contracts of this nature are permitted because they redound to the benefit of the
poor client and the lawyer "especially in cases where the client has meritorious
cause of action, but no means with which to pay for legal services unless he can,
with the sanction of law, make a contract for a contingent fee to be paid out of
the proceeds of the litigation. Oftentimes, the contingent fee arrangement is the
only means by which the poor and helpless can seek redress for injuries sustained
and have their rights vindicated." 28

Contingent fee contracts are subject to the supervision and close scrutiny of the
court in order that clients may be protected from unjust charges. 29 Section 13 of
the Canons of Professional Ethics states that "a contract for a contingent fee,
where sanctioned by law, should be reasonable under all the circumstances of the
case including the risk and uncertainty of the compensation, but should always be
subject to the supervision of a court, as to its reasonableness." Likewise, Rule 138,
Section 24, of the Rules of Court provides:
SEC. 24. Compensation of attorney’s; agreement as to fees. - An attorney 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. No court shall be bound by the opinion of
attorneys as expert witnesses as to the proper compensation, but may disregard
such testimony and base its conclusion on its own professional knowledge. A
written contract for services shall control the amount to be paid therefor unless
found by the court to be unconscionable or unreasonable. (Underscoring
supplied.)

The reduction of unreasonable attorney’s fees is within the regulatory powers

of the courts. 30 When the courts find that the stipulated amount is excessive or
the contract is unreasonable, or found to have been marred by fraud, mistake,
undue influence or suppression of facts on the part of the attorney, public policy
demands that said contract be disregarded to protect the client from
unreasonable exaction. 31

There is, therefore, now a corollary issue of whether the stipulated attorney’s
fees are unreasonable and unconscionable under the circumstances of the case as
to warrant a reduction thereof.

Stipulated attorney’s fees are unconscionable whenever the amount is by far so

disproportionate compared to the value of the services rendered as to amount to
fraud perpetrated upon the client. This means to say that the amount of the fee
contracted for, standing alone and unexplained would be sufficient to show that
an unfair advantage had been taken of the client, or that a legal fraud had been
perpetrated on him. 32
The decree of unconscionability or unreasonableness of a stipulated amount in a
contingent fee contract, will not, however, preclude recovery. It merely justifies
the fixing by the court of a reasonable compensation for the lawyer’s services.

Generally, the amount of attorney’s fees due is that stipulated in the retainer
agreement which is conclusive as to the amount of the lawyer’s compensation.
A stipulation on a lawyer’s compensation in a written contract for professional
services ordinarily controls the amount of fees that the contracting lawyer may be
allowed, unless the court finds such stipulated amount unreasonable or
unconscionable. 33 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. Courts may ascertain also if the attorney’s fees are found
to be excessive, what is reasonable under the circumstances. 34 In no case,
however, must a lawyer be allowed to recover more than what is reasonable,
pursuant to Section 24, Rule 138 of the Rules of Court.

We have identified the circumstances to be considered in determining the

reasonableness of a claim for attorney’s fees as follows: (1) the amount and
character of the service rendered; (2) labor, time, and trouble involved; (3) the
nature and importance of the litigation or business in which the services were
rendered; (4) the responsibility imposed; (5) the amount of money or the value of
the property affected by the controversy or involved in the employment; (6) the
skill and experience called for in the performance of the services; (7) the
professional character and social standing of the attorney; (8) the results secured;
(9) whether the fee is absolute or contingent, it being recognized that an attorney
may properly charge a much larger fee when it is contingent than when it is not;
35 and (10) the financial capacity and economic status of the client have to be
taken into account in fixing the reasonableness of the fee. 36
Rule 20.1, Canon 20 of the Code of Professional Responsibility enumerates the
following factors which should guide a lawyer in determining his fees:

(a) The time spent and the extent of the services rendered or required;

(b) The novelty and difficulty of the questions involved;

(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.

In the case at bar, respondent retained the amount of ₱557,961.21 out of the
₱1,060,800.00 award for damages paid by NAPOCOR to petitioner. Under the said
scheme, respondent actually collected fifty-three percent (53%) or more than half
of the total amount due the petitioner; indeed, he appropriated for himself more
than the amount which he had already turned over to and actually received by his
client.

As adverted to above, we note that petitioner was unschooled and frustrated and
hopeless with the tragic loss of his loved ones caused by the inundation of the
town of Norzagaray, Bulacan, on 26-27 October 1978 because of the negligent
release by NAPOCOR of the water through the spillways of the Angat Dam.
Petitioner also had to face the loss and destruction of his family’s properties.
Under such circumstances and given his understandable desire to recover the
damages for the loss of his loved ones and properties, petitioner would easily
succumb and readily agree to the demands of respondent lawyer regarding his
attorney’s fees.

We believe and so hold that the contingent fee here claimed was, under the facts
obtaining in this case, grossly excessive and unconscionable. Such a fee structure,
when considered in conjunction with the circumstances of this case, also shows
that an unfair advantage was taken of the client and legal fraud and imposition
perpetrated upon him. Lawyers should not be permitted to get a lion’s share of
the benefits due the poor and the helpless. Contracts for legal services between
the helpless and attorney should be zealously scrutinized to the end that a fair
share of the benefits be not denied to the former. This Court has the power to
guard a client, 37 especially an aged and necessitous client, 38 against such a
contract.

A survey of existing jurisprudence regarding attorney’s fees would reveal the

following: in the case of Amalgamated Laborers’ Association v. Court of
Industrial Relations, 39 the rate of attorney’s fees allowed was 25%; in Law Firm
of Raymundo A. Armovit v. Court of Appeals, 40 the rate allowed was 20%; in
Polytrade Corporation v. Blanco, 41 25%; in Santiago v. Dimayuga, 42 20%; in
Cosmopolitan Insurance Co., Inc. v. Reyes, 43 15%; in Reyes v. Court of Appeals,
44 15%; and in Social Security Commission v. Almeda, 45 15%.

In the present case, respondent Atty. Hernandez, after all, succeeded in obtaining
a favorable decision for his client, the petitioner. At first, respondent failed to
obtain a favorable judgment in the RTC as the case was dismissed. But on appeal
to the Court of Appeals, the RTC Decision was reversed and petitioner was
awarded the amount of ₱1,060,800.00 as damages and ₱159,120.00 as
attorney’s fees. Said award was sustained by the Supreme Court. We also take
note respondent’s efforts in litigating petitioner’s case for a long period of 15
years. Lastly, the respondent took risk in representing petitioner on a contingent
fee basis.

In consideration of the foregoing, a fee of 35% of the amount awarded to

petitioner would be a fair compensation for respondent’s legal services.

The misconduct of a lawyer, whether in his professional or private capacity, which

shows him to be wanting in moral character, honesty, probity and good
demeanor, renders him unworthy to the privileges which his license and the law
confer upon him, may be sanctioned with disbarment or suspension. 46

The court should also exercise a sound discretion in determining whether a

lawyer should be disbarred or merely suspended. It should bear in mind that
admission to the Bar is obtained only after years of labor and study and the office
acquired often becomes the source of great honor and emolument to its
possessor. To most members of the legal profession, it is a means of support for
themselves and their families. To deprive one of such an office is often to decree
poverty to the lawyer and destitution to his family. 47 Disbarment, therefore,
should never be decreed where any lesser penalty, such as temporary suspension,
would accomplish the end desired. 48

In the case of Schulz v. Atty. Flores, 49 a lawyer was suspended for six months for
not returning his client’s money despite demands, for unjustifiably refusing to
return his client’s papers, and for collecting excessive and unreasonable fees.
Also in the case of Tanhueco v. Atty. De Dumo, 50 a lawyer was suspended for a
period of six months for failure to return the money received by him on behalf of
his client and for collecting excessive and unconscionable fees.

Guided by our rulings in the abovestated cases, suspension of respondent for six
months is justified in the case at bar.1awphi1.net

WHEREFORE the Court Resolves that:

1. Respondent is guilty of violation of the attorney’s oath and of serious

professional misconduct and shall be SUSPENDED from the practice of law for six
(6) months and WARNED that repetition of the same or similar offense will be
dealt with more severely;

2. Respondent is entitled to attorney’s fees in the amount equivalent to thirty-

five percent (35%) of the total amount awarded 51 to petitioner in Civil Case No.
SM-951; and

3. Respondent is to return the amount of Two Hundred Ninety Thousand One

Hundred Nine Pesos and Twenty-One Centavos (₱290,109.21), 52 which he
retained in excess of what we herein declared as fair and reasonable attorney’s
fees, plus legal interest from date of finality of this judgment until full payment
thereof.

Let copies of this Decision be entered in the personal record of respondent as

member of the Bar and furnished the Office of the Bar Confidant, the IBP, and the
Court Administrator for circulation to all courts of the country.

SO ORDERED.

MINITA V. CHICO-NAZARIO

Associate Justice

WE CONCUR:

CONSUELO YNARES-SANTIAGO
Associate Justice

Chairperson

MA. ALICIA AUSTRIA-MARTINEZ

Associate Justice ROMEO J. CALLEJO, SR.

Asscociate Justice

On Leave

ANTONIO EDUARDO B. NACHURA

Associate Justice

ATTESTATION

I attest that the conclusions in the above Decision were reached in consultation
before the case was assigned to the writer of the opinion of the Court’s Division.

CONSUELO YNARES-SANTIAGO

Associate Justice

Chairperson, Third Division

CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution, and the Division
Chairperson’s Attestation, it is hereby certified that the conclusions in the above
Decision were reached in consultation before the case was assigned to the writer
of the opinion of the Court’s Division.

REYNATO S. PUNO

Chief Justice

Footnotes

1 Rollo, pp. 9-24.

2 Records, Vol. III, p. 66.

3 Id. at 89.

4 Id. at 125.

5 Id. at 198-201.

6 Promulgated 21 May 1993.

7 Records, Vol. III, pp. 224-226.

8 Id. at 243-245.

9 Id. at 239.

10 Records, Vol. I, pp. 45-49.

11 Records, Vol. III, p. 233.

12 Id. at 234.

13 Records, Vol. I, p. 75.

14 Rollo, pp. 28-34.

15 Id. at 27.

16 Aya v. Bigornia, 57 Phil. 8, 11 (1932).

17 Cabigao v. Rodrigo, 57 Phil. 20, 23 (1932).

18 Sencio v. Atty. Calvadores, 443 Phil. 490, 494 (2003); Reyes v. Maglaya, 313
Phil. 1, 7 (1995).

19 Tanhueco v. De Dumo, A.C. No. 1437, 25 April 1989, 172 SCRA 760, 767.

20 Canon 1, Canons of Professional Ethics.

21 Metropolitan Bank & Trust Company v. Court of Appeals, G.R. Nos. 86100-03,
23 January 1990, 181 SCRA 367, 377, citing Canlas v. Court of Appeals, G.R. No. L-
77691, 8 August 1988, 164 SCRA 160, 173-174.

22 Pineda v. Atty. De Jesus, G.R. No. 155224, 23 August 2006.

23 Sumaoang v. Judge, RTC, Br. XXXI, Guimba, Nueva Ecija, G.R. No. 78173, 26
October 1992, 215 SCRA 136, 143.

24 Records, Vol. I, p. 53.

25 Law Firm of Raymundo A. Armovit v. Court of Appeals, G.R. No. 90983, 27

September 1991, 202 SCRA 16, 24.

26 Corpus v. Court of Appeals, G.R. No. L-40424, 30 June 1980, 98 SCRA 424, 441.
27 Sesbreño v. Court of Appeals, 314 Phil. 884, 893 (1995).

28 Director of Lands v. Ababa, G.R. No. L-26096, 27 February 1979, 88 SCRA 513,
524.

29 Licudan v. Court of Appeals, G.R. No. 91958, 24 January 1991, 193 SCRA 293,
300; Director of Lands v. Ababa, id. at 525.

30 Radiowealth Finance Co., Inc. v. International Corporate Bank, G.R. Nos.

77042-43, 28 February 1990, 182 SCRA 862, 868.

31 Felices v. Madrilejos, 51 Phil. 24, 33 (1927); Jayme v. Bualan, 58 Phil. 422, 424
(1933).

32 Sesbreño v. Court of Appeals, supra note 27 at 894.

33 Rule 138, Section 24, Revised Rules of Court; Francisco v. Matias, 119 Phil. 351,
358 (1964); Lopez v. Pan American World Airways, 123 Phil. 256, 271 (1966).

34 Sesbreño v. Court of Appeals, supra note 27 at 894.

35 Research and Services Realty, Inc. v. Court of Appeals, 334 Phil. 652, 668
(1997).
36 Taganas v. National Labor Relations Commission, G.R. No. 118746, 7
September 1995, 248 SCRA 133, 137.

37 Tanhueco v. De Dumo, supra note 19 at 772.

38 Article 24, Civil Code of the Philippines.

39 131 Phil. 374, 386 (1968).

40 Supra note 25 at 25.

41 G.R. No. L-27033, 31 October 1969, 30 SCRA 187, 193.

42 113 Phil. 902, 905 (1961).

43 122 Phil. 648, 651 (1965).

44 202 Phil. 172, 173 (1982).

45 G.R. No. L-75428, 14 December 1988, 168 SCRA 474, 481.

46 Po Cham v. Pizarro, A.C. No. 5499, 16 August 2005, 467 SCRA 1, 13.
47 Pineda, Ernesto, Legal and Judicial Ethics (1994 Edition), p. 280.

48 Lim v. Montano, A.C. No. 5653, 27 February 2006, 483 SCRA 192, 202.

49 462 Phil. 601 (2003).

50 Supra note 19.

51 ₱1060,800.00 as damages and ₱159,120.00 (15% of ₱1,060,800.00) as

attorney’s fees or a total of ₱1,219,920.00.

52 35% of ₱1,219,920.00 is ₱426,972.00. Since respondent retained ₱557,961.21

and ₱159,120.00 and 35% of ₱1,219,920.00 is ₱ 426,972.00, respondent will
return the difference of ₱290,109.21 to petitioner. The amount of ₱557,961.21
and ₱159,120.00 retained by respondent is actually 59% of the amount due to
petitioner in Civil Case No. 951.

Republic of the Philippines

SUPREME COURT

Manila
SECOND DIVISION

G. R. No. 195002 January 25, 2012

HECTOR TREÑAS, Petitioner,

vs.

PEOPLE OF THE PHILIPPINES, Respondent.

DECISION

SERENO, J.:

Where life or liberty is affected by its proceedings, courts must keep strictly
within the limits of the law authorizing them to take jurisdiction and to try the
case and render judgment thereon.1

This is a Petition for Review on Certiorari under Rule 45 of the 1997 Revised Rules
of Civil Procedure, seeking to annul and set aside the Court of Appeals (CA)
Decision dated 9 July 20102 and Resolution dated 4 January 2011.

Statement of the Facts and of the Case

The pertinent facts, as found by the CA, are as follows:

Sometime in December 1999, Margarita Alocilja (Margarita) wanted to buy a
house-and-lot in Iloilo City covered by TCT No. 109266. It was then mortgaged
with Maybank. The bank manager Joselito Palma recommended the appellant
Hector Treñas (Hector) to private complainant Elizabeth, who was an employee
and niece of Margarita, for advice regarding the transfer of the title in the
latter’s name. Hector informed Elizabeth that for the titling of the property in
the name of her aunt Margarita, the following expenses would be incurred:

P20,000.00- Attorney’s fees,

P90,000.00- Capital Gains Tax,

P24,000.00- Documentary Stamp,

P10,000.00- Miscellaneous Expenses.

Thereafter, Elizabeth gave P150,000.00 to Hector who issued a corresponding

receipt dated December 22, 1999 and prepared [a] Deed of Sale with Assumption
of Mortgage. Subsequently, Hector gave Elizabeth Revenue Official Receipt Nos.
00084370 for P96,000.00 and 00084369 for P24,000.00. However, when she
consulted with the BIR, she was informed that the receipts were fake. When
confronted, Hector admitted to her that the receipts were fake and that he used
the P120,000.00 for his other transactions. Elizabeth demanded the return of the
money.
To settle his accounts, appellant Hector issued in favor of Elizabeth a Bank of
Commerce check No. 0042856 dated November 10, 2000 in the amount of
P120,000.00, deducting from P150,000.00 the P30,000.00 as attorney’s fees.
When the check was deposited with the PCIBank, Makati Branch, the same was
dishonored for the reason that the account was closed. Notwithstanding repeated
formal and verbal demands, appellant failed to pay. Thus, the instant case of
Estafa was filed against him.3

On 29 October 2001, an Information was filed by the Office of the City Prosecutor
before the Regional Trial Court (RTC), both of Makati City. The Information reads
as follows:

That on or about the 23rd day of December, 1999, in the City of Makati, Metro
Manila, Philippines and within the jurisdiction of this Honorable Court, the above-
named accused, received in trust from ELIZABETH LUCIAJA the amount of
P150,000.00 which money was given to her by her aunt Margarita Alocilja, with
the express obligation on the part of the accused to use the said amount for
expenses and fees in connection with the purchase of a parcel of land covered by
TCT No. T-109266, but the said accused, once in possession of the said amount,
with the intent to gain and abuse of confidence, did then and there willfully,
unlawfully and feloniously misappropriate, misapply and convert to his own
personal use and benefit the amount of P130,000.00 less attorney’s fees and
the said accused failed and refused and still fails and refuses to do so, to the
damage and prejudice of complainant Elizabeth Luciaja and Margarita Alocilja in
the aforementioned amount of P130,000.00.

CONTRARY TO LAW.4
During arraignment on 26 April 2002, petitioner, acting as his own counsel,
entered a plea of "Not Guilty." Allegedly due to old age and poor health, and the
fact that he lives in Iloilo City, petitioner was unable to attend the pre-trial and
trial of the case.

On 8 January 2007, the RTC rendered a Decision5 finding petitioner guilty of the
crime of Estafa under section 1, paragraph (b), of Article 315 of the Revised Penal
Code (RPC), with the dispositive portion as follows:

WHEREFORE, in view of the foregoing, judgment is rendered finding accused

Hector Trenas guilty of the crime of Estafa with abuse of confidence as penalized
under Article 315 of the Revised Penal Code, and which offense was committed in
the manner described in the aforementioned information. As a consequence of
this judgment, accused Hector Trenas is sentenced to suffer a penalty of Ten (10)
Years and One (1) Day of Prision Mayor to Seventeen (17) Years and Four (4)
Months of Reclusion Temporal. Moreover, he is ordered to indemnify private
complainant Elizabeth Luciaja the amount of P130,000.00 with interest at the
legal rate of 12% per annum, reckoned from the date this case was filed until the
amount is fully paid.

SO ORDERED.6

We note at this point that petitioner has been variably called Treñas and Trenas in
the pleadings and court issuances, but for consistency, we use the name "Treñas",
under which he was accused in the Information.

On 24 August 2007, petitioner filed a Motion for Reconsideration,7 which was

denied by the RTC in a Resolution dated 2 July 2008.8
On 25 September 2008, petitioner filed a Notice of Appeal before the RTC.9 The
appeal was docketed as CA-G.R. CR No. 32177. On 9 July 2010, the CA rendered a
Decision10 affirming that of the RTC. On 4 August 2010, petitioner filed a Motion
for Reconsideration, which was denied by the CA in a Resolution dated 4 January
2011.11

On 25 January 2011, petitioner filed a Motion for Extension of Time to File

Petition for Review on Certiorari12 before this Court. He asked for a period of 15
days within which to file a petition for review, and the Court granted his motion in
a Resolution dated 9 February 2011.

On 3 February 2011, petitioner filed his Petition for Review on Certiorari before
this Court, with the following assignment of errors:

1. THE COURT OF APPEALS ERRED IN RULING THAT AN ACCUSED HAS TO PRESENT

EVIDENCE IN SUPPORT OF THE DEFENSE OF LACK OF JURISDICTION EVEN IF SUCH
LACK OF JURISDICTION APPEARS IN THE EVIDENCE OF THE PROSECUTION;

2. THE COURT OF APPEALS ERRED IN RULING THAT DEMAND MADE BY A PERSON

OTHER THAN THE AGGRIEVED PARTY SATISFIES THE REQUIREMENT OF DEMAND
TO CONSTITUTE THE OFFENSE OF ESTAFA;13

On the first issue, petitioner asserts that nowhere in the evidence presented by
the prosecution does it show that ₱ 150,000 was given to and received by
petitioner in Makati City. Instead, the evidence shows that the Receipt issued by
petitioner for the money was dated 22 December 1999, without any indication of
the place where it was issued. Meanwhile, the Deed of Sale with Assumption of
Mortgage prepared by petitioner was signed and notarized in Iloilo City, also on
22 December 1999. Petitioner claims that the only logical conclusion is that the
money was actually delivered to him in Iloilo City, especially since his residence
and office were situated there as well. Absent any direct proof as to the place of
delivery, one must rely on the disputable presumption that things happened
according to the ordinary course of nature and the ordinary habits of life. The
only time Makati City was mentioned was with respect to the time when the
check provided by petitioner was dishonored by Equitable-PCI Bank in its De la
Rosa-Rada Branch in Makati. Petitioner asserts that the prosecution witness failed
to allege that any of the acts material to the crime of estafa had occurred in
Makati City. Thus, the trial court failed to acquire jurisdiction over the case.

Petitioner thus argues that an accused is not required to present evidence to

prove lack of jurisdiction, when such lack is already indicated in the prosecution
evidence.

As to the second issue, petitioner claims that the amount of P150,000 actually
belongs to Margarita. Assuming there was misappropriation, it was actually she
– not Elizabeth – who was the offended party. Thus, the latter’s demand does
not satisfy the requirement of prior demand by the offended party in the offense
of estafa. Even assuming that the demand could have been properly made by
Elizabeth, the demand referred to the amount of P120,000, instead of P150,000.
Finally, there is no showing that the demand was actually received by petitioner.
The signature on the Registry Return Receipt was not proven to be that of
petitioner’s.

On 30 May 2011, this Court issued a Resolution directing the Office of the Solicitor
General (OSG) to file the latter’s Comment on the Petition. On 27 July 2011, the
OSG filed a Motion for Extension, praying for an additional period of 60 days
within which to submit its Comment. This motion was granted in a Resolution
dated 12 September 2011. On 23 September 2011, the OSG filed a Motion for
Special Extension, requesting an additional period of five days. On 29 September
2011, it filed its Comment on the Petition.

In its Comment, the OSG asserts that the RTC did not err in convicting petitioner
as charged. The OSG notes that petitioner does not dispute the factual findings of
the trial court with respect to the delivery of ₱150,000 to him, and that there was
a relationship of trust and confidence between him and Elizabeth. With respect to
his claim that the Complaint should have been filed in Iloilo City, his claim was not
supported by any piece of evidence, as he did not present any. Further, petitioner
is, in effect, asking the Court to weigh the credibility of the prosecution witness,
Elizabeth. However, the trial court’s assessment of the credibility of a witness is
entitled to great weight, unless tainted with arbitrariness or oversight of some
fact or circumstance, which is not the case here.

With respect to the second issue, the OSG stresses that the defense of "no valid
demand" was not raised in the lower court. Nevertheless, the demand letter sent
to Elizabeth suffices, as she is also one of the complainants alleged in the
Information, as an agent of Margarita. Moreover, no proof was adduced as to the
genuineness of petitioner’s signature in the Registry Return Receipt of the
demand letter.

The OSG, however, submits that the Court may recommend petitioner for
executive clemency, in view of his advanced age and failing health.

The Court’s Ruling

The Petition is impressed with merit.

Review of Factual Findings

While the Petition raises questions of law, the resolution of the Petition requires a
review of the factual findings of the lower courts and the evidence upon which
they are based.

As a rule, only questions of law may be raised in a petition for review under Rule
45 of the Rules of Court. In many instances, however, this Court has laid down
exceptions to this general rule, as follows:

(1) When the factual findings of the Court of Appeals and the trial court are
contradictory;

(2) When the conclusion is a finding grounded entirely on speculation, surmises or

conjectures;

(3) When the inference made by the Court of Appeals from its findings of fact is
manifestly mistaken, absurd or impossible;

(4) When there is grave abuse of discretion in the appreciation of facts;

(5) When the appellate court, in making its findings, went beyond the issues of
the case, and such findings are contrary to the admissions of both appellant and
appellee;

(6) When the judgment of the Court of Appeals is premised on misapprehension

of facts;

(7) When the Court of Appeals failed to notice certain relevant facts which, if
properly considered, would justify a different conclusion;

(8) When the findings of fact are themselves conflicting;

(9) When the findings of fact are conclusions without citation of the specific
evidence on which they are based; and

(10) When the findings of fact of the Court of Appeals are premised on the
absence of evidence but such findings are contradicted by the evidence on
record.14

In this case, the findings of fact of the trial court and the CA on the issue of the
place of commission of the offense are conclusions without any citation of the
specific evidence on which they are based; they are grounded on conclusions and
conjectures.
The trial court, in its Decision, ruled on the commission of the offense without any
finding as to where it was committed:

Based on the evidence presented by the prosecution through private complainant

Elizabeth Luciaja, the Court is convinced that accused Trenas had committed the
offense of Estafa by taking advantage of her trust so that he could misappropriate
for his own personal benefit the amount entrusted to him for payment of the
capital gains tax and documentary stamp tax.

As clearly narrated by private complainant Luciaja, after accused Trenas had

obtained the amount of P150,000.00 from her, he gave her two receipts
purportedly issued by the Bureau of Internal Revenue, for the fraudulent purpose
of fooling her and making her believe that he had complied with his duty to pay
the aforementioned taxes. Eventually, private complainant Luciaja discovered
that said receipts were fabricated documents.15

In his Motion for Reconsideration before the RTC, petitioner raised the argument
that it had no jurisdiction over the offense charged. The trial court denied the
motion, without citing any specific evidence upon which its findings were based,
and by relying on conjecture, thus:

That the said amount was given to [Treñas] in Makati City was incontrovertibly
established by the prosecution. Accused Treñas, on the other hand, never
appeared in Court to present countervailing evidence. It is only now that he is
suggesting another possible scenario, not based on the evidence, but on mere
"what ifs". x x x
Besides, if this Court were to seriously assay his assertions, the same would still
not warrant a reversal of the assailed judgment. Even if the Deed of Sale with
Assumption of Mortgage was executed on 22 December 999 in Iloilo City, it
cannot preclude the fact that the P150,000.00 was delivered to him by private
complainant Luciaja in Makati City the following day. His reasoning the money
must have been delivered to him in Iloilo City because it was to be used for paying
the taxes with the BIR office in that city does not inspire concurrence. The records
show that he did not even pay the taxes because the BIR receipts he gave to
private complainant were fake documents. Thus, his argumentation in this regard
is too specious to consider favorably.16

For its part, the CA ruled on the issue of the trial court’s jurisdiction in this wise:

It is a settled jurisprudence that the court will not entertain evidence unless it is
offered in evidence. It bears emphasis that Hector did not comment on the formal
offer of prosecution’s evidence nor present any evidence on his behalf. He failed
to substantiate his allegations that he had received the amount of P150,000.00 in
Iloilo City. Hence, Hector’s allegations cannot be given evidentiary weight.

Absent any showing of a fact or circumstance of weight and influence which

would appear to have been overlooked and, if considered, could affect the
outcome of the case, the factual findings and assessment on the credibility of a
witness made by the trial court remain binding on appellate tribunal. They are
entitled to great weight and respect and will not be disturbed on review.17

The instant case is thus an exception allowing a review of the factual findings of
the lower courts.
Jurisdiction of the Trial Court

The overarching consideration in this case is the principle that, in criminal cases,
venue is jurisdictional. A court cannot exercise jurisdiction over a person charged
with an offense committed outside its limited territory. In Isip v. People,18 this
Court explained:

The place where the crime was committed determines not only the venue of the
action but is an essential element of jurisdiction. It is a fundamental rule that for
jurisdiction to be acquired by courts in criminal cases, the offense should have
been committed or any one of its essential ingredients should have taken place
within the territorial jurisdiction of the court. Territorial jurisdiction in criminal
cases is the territory where the court has jurisdiction to take cognizance or to try
the offense allegedly committed therein by the accused. Thus, it cannot take
jurisdiction over a person charged with an offense allegedly committed outside of
that limited territory. Furthermore, the jurisdiction of a court over the criminal
case is determined by the allegations in the complaint or information. And once it
is so shown, the court may validly take cognizance of the case. However, if the
evidence adduced during the trial shows that the offense was committed
somewhere else, the court should dismiss the action for want of jurisdiction.
(Emphasis supplied.)

In a criminal case, the prosecution must not only prove that the offense was
committed, it must also prove the identity of the accused and the fact that the
offense was committed within the jurisdiction of the court.

In Fukuzume v. People,19 this Court dismissed a Complaint for estafa, wherein

the prosecution failed to prove that the essential elements of the offense took
place within the trial court’s jurisdiction. The Court ruled:
More importantly, we find nothing in the direct or cross-examination of Yu to
establish that he gave any money to Fukuzume or transacted business with him
with respect to the subject aluminum scrap wires inside or within the premises of
the Intercontinental Hotel in Makati, or anywhere in Makati for that matter.
Venue in criminal cases is an essential element of jurisdiction. x x x

In the present case, the criminal information against Fukuzume was filed with and
tried by the RTC of Makati. He was charged with estafa as defined under Article
315, paragraph 2(a) of the Revised Penal Code, the elements of which are as
follows: x x x

The crime was alleged in the Information as having been committed in Makati.
However, aside from the sworn statement executed by Yu on April 19, 1994, the
prosecution presented no other evidence, testimonial or documentary, to
corroborate Yu's sworn statement or to prove that any of the above-enumerated
elements of the offense charged was committed in Makati. Indeed, the
prosecution failed to establish that any of the subsequent payments made by Yu
in the amounts of P50,000.00 on July 12, 1991, P20,000.00 on July 22, 1991,
P50,000.00 on October 14, 1991 and P170,000.00 on October 18, 1991 was given
in Makati. Neither was there proof to show that the certifications purporting to
prove that NAPOCOR has in its custody the subject aluminum scrap wires and that
Fukuzume is authorized by Furukawa to sell the same were given by Fukuzume to
Yu in Makati. On the contrary, the testimony of Yu established that all the
elements of the offense charged had been committed in Parañaque, to wit: that
on July 12, 1991, Yu went to the house of Fukuzume in Parañaque; that with the
intention of selling the subject aluminum scrap wires, the latter pretended that he
is a representative of Furukawa who is authorized to sell the said scrap wires; that
based on the false pretense of Fukuzume, Yu agreed to buy the subject aluminum
scrap wires; that Yu paid Fukuzume the initial amount of P50,000.00; that as a
result, Yu suffered damage. Stated differently, the crime of estafa, as defined and
penalized under Article 315, paragraph 2(a) of the Revised Penal Code, was
consummated when Yu and Fukuzume met at the latter's house in Parañaque
and, by falsely pretending to sell aluminum scrap wires, Fukuzume was able to
induce Yu to part with his money.

xxx

From the foregoing, it is evident that the prosecution failed to prove that
Fukuzume committed the crime of estafa in Makati or that any of the essential
ingredients of the offense took place in the said city. Hence, the judgment of the
trial court convicting Fukuzume of the crime of estafa should be set aside for want
of jurisdiction, without prejudice, however, to the filing of appropriate charges
with the court of competent jurisdiction. (Emphasis supplied)

In this case, the prosecution failed to show that the offense of estafa under
Section 1, paragraph (b) of Article 315 of the RPC was committed within the
jurisdiction of the RTC of Makati City.

That the offense was committed in Makati City was alleged in the information as
follows:

That on or about the 23rd day of December, 1999, in the City of Makati, Metro
Manila, Philippines and within the jurisdiction of this Honorable Court, the above-
named accused, received in trust from ELIZABETH LUCIAJA the amount of
P150,000.00 x x x. (Emphasis supplied.)20
Ordinarily, this statement would have been sufficient to vest jurisdiction in the
RTC of Makati. However, the Affidavit of Complaint executed by Elizabeth does
not contain any allegation as to where the offense was committed. It provides in
part:

4. THAT on 23 December 1999, [Elizabeth] personally entrusted to ATTY. HECTOR

TREÑAS the sum of P150,000.00 to be expended as agreed and ATTY. HECTOR
TREÑAS issued to me a receipt, a photo copy of which is hereto attached as Annex
"B",

5. THAT despite my several follow-ups with ATTY. HECTOR TREÑAS, the latter
failed to transfer the title of aforesaid property to MRS. MARGARITA ALOCILJA. He
also failed to pay the capital gains tax, documentary stamps and BIR-related
expenses. What ATTY. HECTOR TREÑAS accomplished was only the preparation of
the Deed of Sale covering aforesaid property. A copy of said Deed of Sale is hereto
attached as Annex "C",

6. THAT in view of my persistent follow-ups, ATTY. HECTOR TREÑAS issued to me

a check for refund of the sum given to him less the attorney’s fee of P20,000.00
and the sum of P10,000.00 allegedly paid to BIR or in the net sum of P120,000.00.
xxx

7. THAT when said check was deposited at EQUITABLE PCI BANK dela Rosa-Rada
Branch at Makati City, the same was dishonored by the drawee bank for the
reason: ACCOUNT CLOSED. x x x21
Aside from the lone allegation in the Information, no other evidence was
presented by the prosecution to prove that the offense or any of its elements was
committed in Makati City.

Under Article 315, par. 1 (b) of the RPC, the elements of estafa are as follows: (1)
that money, goods or other personal property is received by the offender in trust
or on commission, or for administration, or under any other obligation involving
the duty to make delivery of or to return the same; (2) that there be
misappropriation or conversion of such money or property by the offender, or
denial on his part of such receipt; (3) that such misappropriation or conversion or
denial is to the prejudice of another; and (4) there is demand by the offended
party to the offender.22

There is nothing in the documentary evidence offered by the prosecution23 that

points to where the offense, or any of its elements, was committed. A review of
the testimony of Elizabeth also shows that there was no mention of the place
where the offense was allegedly committed:

Q After the manager of Maybank referred Atty. Treñas to you, what happened
next?

A We have met and he explained to the expenses and what we will have to… and
she will work for the Deed of Sale.

Q And did he quote any amount when you got to the expenses?
A Yes. I gave him ONE HUNDRED FIFTY THOUSAND.

Q What was the amount quoted to you?

A ONE HUNDRED FIFTY THOUSAND.

Q Did he give a breakdown of this ONE HUNDRED FIFTY THOUSAND?

A Yes, sir.

Q And what is the breakdown of this ONE HUNDRED FIFTY THOUSAND?

A TWENTY THOUSAND is for his Attorney’s fee, NINETY THOUSAND is for the
capital gain tax TWENTY FOUR THOUSAND is intended for documentary sum (sic)
and TEN THOUSAND PESOS is for other expenses for BIR.

Q And did you give him this ONE HUNDRED FIFTY THOUSAND?

A Yes, sir.

Q Did he issue a receipt?

A Yes, sir.

Q If shown to you a receipt issued by Atty. Treñas for this ONE HUNDRED FIFTY
THOUSAND, will you be able to identify it?

A Yes, sir.

Q I am showing to you a document, madam witness, already identified during the

pre-trial as exhibit "B". This appears to be a receipt dated December 22, 1999.
Will you please go over this document and inform this court what relation has this
to the receipt which you said Atty. Treñas issued to you?

A This is the receipt issued by Atty. Hector Treñas.

Q Now, after the amount of ONE HUNDRED FIFTY THOUSAND was given to Atty.
Treñas by you, what happened next?

A We made several follow-ups but he failed to do his job.24

Although the prosecution alleged that the check issued by petitioner was
dishonored in a bank in Makati, such dishonor is not an element of the offense of
estafa under Article 315, par. 1 (b) of the RPC.
Indeed, other than the lone allegation in the information, there is nothing in the
prosecution evidence which even mentions that any of the elements of the
offense were committed in Makati. The rule is settled that an objection may be
raised based on the ground that the court lacks jurisdiction over the offense
charged, or it may be considered motu proprio by the court at any stage of the
proceedings or on appeal.25 Moreover, jurisdiction over the subject matter in a
criminal case cannot be conferred upon the court by the accused, by express
waiver or otherwise. That jurisdiction is conferred

by the sovereign authority that organized the court and is given only by law in the
manner and form prescribed by law.26

It has been consistently held by this Court that it is unfair to require a defendant
or accused to undergo the ordeal and expense of a trial if the court has no
jurisdiction over the subject matter or offense or it is not the court of proper
venue.27 Section 15 (a) of Rule 110 of the Revised Rules on Criminal Procedure of
2000 provides that "[s]ubject to existing laws, the criminal action shall be
instituted and tried in the court of the municipality or territory where the offense
was committed or where any of its essential ingredients occurred." This
fundamental principle is to ensure that the defendant is not compelled to move
to, and appear in, a different court from that of the province where the crime was
committed as it would cause him great inconvenience in looking for his witnesses
and other evidence in another place.28 This principle echoes more strongly in this
case, where, due to distance constraints, coupled with his advanced age and
failing health, petitioner was unable to present his defense in the charges against
him.

There being no showing that the offense was committed within Makati, the RTC
of that city has no jurisdiction over the case.29
As such, there is no more need to discuss the other issue raised by petitioner.

At this juncture, this Court sees it fit to note that the Code of Professional
Responsibility strongly militates against the petitioner’s conduct in handling the
funds of his client. Rules 16.01 and 16.02 of the Code provides:

Rule 16.01 — A lawyer shall account for all money or property collected or
received for or from the client.1âwphi1

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

When a lawyer collects or receives money from his client for a particular purpose
(such as for filing fees, registration fees, transportation and office expenses), he
should promptly account to the client how the money was spent.30 If he does not
use the money for its intended purpose, he must immediately return it to the
client. His failure either to render an accounting or to return the money (if the
intended purpose of the money does not materialize) constitutes a blatant
disregard of Rule 16.01 of the Code of Professional Responsibility.31

Moreover, a lawyer has the duty to deliver his client's funds or properties as they
fall due or upon demand.32 His failure to return the client's money upon demand
gives rise to the presumption that he has misappropriated it for his own use to
the prejudice of and in violation of the trust reposed in him by the client.33 It is a
gross violation of general morality as well as of professional ethics; it impairs
public confidence in the legal profession and deserves punishment.34
In Cuizon v. Macalino,35 this Court ruled that the issuance of checks which were
later dishonored for having been drawn against a closed account indicates a
lawyer's unfitness for the trust and confidence reposed on him, shows lack of
personal honesty and good moral character as to render him unworthy of public
confidence, and constitutes a ground for disciplinary action.

This case is thus referred to the Integrated Bar of the Philippines (IBP) for the
initiation of disciplinary proceedings against petitioner. In any case, should there
be a finding that petitioner has failed to account for the funds received by him in
trust, the recommendation should include an order to immediately return the
amount of ₱ 130,000 to his client, with the appropriate rate of interest from the
time of demand until full payment.

WHEREFORE, the Petition is GRANTED. The Decision dated 9 July 2010 and the
Resolution dated 4 January 2011 issued by the Court of Appeals in CA-G.R. CR No.
32177 are SET ASIDE on the ground of lack of jurisdiction on the part of the
Regional Trial Court, Branch 137, Makati City. Criminal Case No. 01-2409 is
DISMISSED without prejudice. This case is REFERRED to the IBP Board of
Governors for investigation and recommendation pursuant to Section 1 of Rule
139-B of the Rules of Court.

SO ORDERED.

MARIA LOURDES P. A. SERENO

Associate Justice
WE CONCUR:

ANTONIO T. CARPIO

Associate Justice

Chairperson

JOSE PORTUGAL PEREZ

Associate Justice BIENVENIDO L. REYES

Associate Justice

ESTELA M. PERLAS-BERNABE*

Associate Justice

ATTESTATION

I attest that the conclusions in the above Decision had been reached in
consultation before the case was assigned to the writer of the Opinion of the
Court’s Division.

ANTONIO T. CARPIO

Associate Justice

Chairperson, Second Division

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, and the Division
Chairperson’s Attestation, I certify that the conclusions in the above decision
had been reached in consultation before the case was assigned to the writer of
the opinion of the Court’s Division.

RENATO C. CORONA

Chief Justice

Footnotes

* Designated as Acting Member of the Second Division vice Associate Justice

Arturo D. Brion per Special Order No. 1174 dated January 9, 2012.

1 Fukuzume v. People, G.R. No. 143647, 11 November 2005, 474 SCRA 570, citing
Pangilinan v. Court of Appeals, 321 SCRA 51 (1999).

2 Penned by Associate Justice Samuel H. Gaerlan and concurred in by Associate

Justices Hakim S. Abdulwahid and Ricardo R. Rosario.

3 Rollo, p. 33; original citations omitted.

4 Id. at 40.

5 Id. at 52-58.

6 Id. at 58.

7 Id. at 59-66.

8 Id. at 67-72.

9 Id. at 73-74.

10 Id. at 31-38.

11 Id. at 39-40.

12 Id. at 3-6.

13 Id. at 14.

14 Salcedo v. People, G.R. No. 137143, 8 December 2000, 347 SCRA 499.
15 Rollo, pp. 55-56.

16 Id. at 71.

17 Id. at 36-37.

18 G.R. No. 170298, 26 June 2007, 525 SCRA 735.

19 Supre note 1.

20 Rollo, p. 40.

21 Id. at 41-42.

22 Salazar v. People of the Philippines, 480 Phil. 444 (2004).

23 Records, pp. 260-262.

24 Records, pp. 352-353.

25 Supra; see also Rules of Court, Rule 118, Sec. 9 in relation to Sec. 3(b).
26 Id.

27 Buaya v. Polo, 251 Phil. 422 (1989); Javier v. Sandiganbayan, G.R. Nos. 147026-
27, 11 September 2009, 599 SCRA 324.

28 Campanano v. Datuin, G.R. No. 172142, 17 October 2007, 536 SCRA 471.

29 See Uy v. Court of Appeals, G.R. No. 119000, 28 July 1997, 276 SCRA 367.

30 Belleza v. Macasa, A.C. No. 7815, 23 July 2009, 593 SCRA 549.

31 Id.

32 Code of Professional Responsibility, Rule 16.03; Barnachea v. Quiocho, A.C. No.

5925, 11March 2003, 399 SCRA 1.

33 Pentecostes v. Ibañez, 363 Phil. 624 (1999).

34 Supra note 30.

35 A.C. No. 4334, 7 July 2004, 433 SCRA 484.