Lantoria vs. Bunyi Facts:  Cesar Lantoria sought disciplinary action against Bunyi, counsel for Mrs.

Constancia Mascarinas in certain civil cases  Allegedly committed acts of "graft and corruption, dishonesty and conduct unbecoming of a member of the Integrated Bar of the Philippines, and corruption of the judge (Vicente Galicia of Esperanza, Agusan del Sur) and bribery  in cases for ejectment of squatters in Mascarinas land, Bunyi allegedly was the o one who prepared the decisions and judge simply signed them Issue: WON Bunyi is guilty of unethical conduct Held: YES Ratio:  letters show that he indeed prepared draft decisions for the judge to sign does not matter if it was clearly shown that the judge consented to such act or even asked for it  violated canon 3: attempts to exert personal influence on the court  violated: o CANON 13 A lawyer shall rely upon the merits of his cause and refrain from any impropriety which tends to influence, or gives the appearance of influencing the court.  Rule 13.01 A lawyer shall not extend extraordinary attention or hospitality to, nor seek opportunity for, cultivating familiarity with judges. SUSPENDED FOR A YEAR.

PRESIDENT JOSEPH EJERCITO ESTRADA, petitioner, vs. THE HONORABLE SANDIGANBAYAN Facts:  -Attorney Alan F. Paguia, as counsel for Estrada, averred that the respondent justices have violated Rule 5.10 of the Code of Judicial Conduct by attending the EDSA 2 Rally and by authorizing the assumption of Vice-President Gloria Macapagal Arroyo to the Presidency in violation of the 1987 Constitution. o Rule 5.10. A judge is entitled to entertain personal views on political questions. But to avoid suspicion of political partisanship, a judge shall not make political speeches, contribute to party funds, publicly endorse candidates for political office or participate in other partisan political activities.  Also, petitioner contended that the justices have prejudged a case that would assail the legality of the act taken by President Arroyo. The subsequent decision of the C ourt in Estrada v. Arroyo (353 SCRA 452 and 356 SCRA 108) is, petitioner states, a patent mockery of justice and due process.  According to Atty. Paguia, during the hearing of his Mosyong Pangrekonsiderasyon on 11 June 2003, the three justices of the Special Division of the Sandiganbayan made manifest their bias and partiality against his client.  Thus, he averred, Presiding Justice Minita V. Chico-Nazario supposedly employed foul and disrespectful language when she blurted out, Magmumukha naman kaming gago, (Rollo, p. 13.) and Justice Teresita Leonardo-De Castro characterized the motion as insignificant even before the prosecution could file its comments or opposition thereto, (Rollo, p. 12.) remarking in open court that to grant Estradas motion would result in chaos and disorder. (Ibid.) Prompted by the alleged bias and partial attitude of the Sandiganbayan justices, Attorney Paguia filed, on 14 July 2003, a motion for their disqualification.  The petitioner also asked the Court to include in its Joint Resolution the TRUTH of the acts of Chief Justice Davide, et al., last January 20, 2001 in: a. going to EDSA 2;

 

b. authorizing the proclamation of Vice-President Arroyo as President on the ground of permanent disability even without proof of compliance with the corresponding constitutional conditions, e.g., written declaration by either the President or majority of his cabinet; and c. actually proclaiming Vice-President Arroyo on that same ground of permanent disability. In a letter, dated 30 June 2003, addressed to Chief Justice Hilario G. Davide, Jr., and Associate Justice Artemio V. Panganiban, he has demanded, in a clearly disguised form of forum shopping, for several advisory opinions on matters pending before the Sandiganbayan. Subsequently, the court ruled that the instant petition assailing the foregoing orders must be DISMISSED for gross insufficiency in substance and for utter lack of merit. The Sandiganbayan committed no grave abuse of discretion, an indispensable requirement to warrant a recourse to the extraordinary relief of etition for certiorari under Rule 65 of the Revised Rules of Civil Procedure. In a resolution, dated 08 July 2003, the Court strongly warned Attorney Alan Paguia, on pain of disciplinary sanction, to desist from further making, directly or indirectly, similar submissions to this Court or to its Members. Unmindful of the well-meant admonition to him by the Court, Attorney Paguia appears to persist on end. o In fact, on the 7th September 2003 issue of the Daily Tribune, Atty. Paguia wrote to say - What is the legal effect of that violation of President Estradas right to due process of law? It renders the decision in Estrada vs. Arroyo unconstitutional and void. The rudiments of fair play were not observed. There was no fair play since it appears that when President Estrada filed his petition, Chief Justice Davide and his fellow justices had already committed to the other party - GMA - with a judgment already made and waiting to be formalized after the litigants shall have undergone the charade of a formal hearing. After the justices had authorized the proclamation of GMA as president, can they be expected to voluntarily admit the unconstitutionality of their own act?

Issue: WON Atty. Paguia committed a violation of the Code of Professional Responsibility. Held: 

Criticism or comment made in good faith on the correctness or wrongness, soundness or unsoundness, of a decision of the Court would be welcome for, if well-founded, such reaction can enlighten the court and contribute to the correction of an error if committed. (In Re Sotto, 82 Phil 595.) However, Attorney Paguia has not limited his discussions to the merits of his clients case within the judicial forum. Indeed, he has repeated his assault on the Court in both broadcast and print media. o Rule 13.02 of the Code of Professional Responsibility prohibits a member of the bar from making such public statements on any pending case tending to arouse public opinion for or against a party. By his acts, Attorney Paguia may have stoked the fires of public dissension and posed a potentially dangerous threat to the administration of justice. It should be clear that the phrase partisan political activities, in its statutory context, relates to acts designed to cause the success or the defeat of a particular candidate or candidates who have filed certificates of candidacy to a public office in an election. The taking of an oath of office by any incoming President of the Republic before the Chief Justice of the Philippines is a traditional official function of the Highest Magistrate. The assailed presence of other justices of the Court at such an event could be no different from their appearance in such other official functions as attending the Annual State of the Nation Address by the President of the Philippines before the Legislative Department. The Supreme Court does not claim infallibility; but it will not countenance any wrongdoing nor allow the erosion of our peoples faith in the judicial system, let alone, by those who have been privileged by it to practice law in the Philippines. Canon 11 of the Code of Professional Responsibility mandates that the lawyer should observe and maintain the respect due to the courts and judicial officers and, indeed, should insist on similar conduct by others. In liberally imputing sinister and devious motives and questioning the impartiality, integrity, and authority of the members of the Court, Atty. Paguia has only succeeded in seeking to impede, obstruct and pervert the dispensation of justice. The Court has already warned Atty. Paguia, on pain of disciplinary sanction, to become mindful of his grave responsibilities as a lawyer and as an officer of the Court. Apparently, he has chosen not to at all take heed.

WHEREFORE, Attorney Alan Paguia is hereby indefinitely suspended from the practice of law, effective upon his receipt hereof, for conduct unbecoming a lawyer and an officer of the Court.

VERONICA S. SANTIAGO, BENJAMIN Q. HONTIVEROS, MR. SOCORRO F. MANAS, and TRINIDAD NORDISTA, vs. ATTY. AMADO R. FOJAS DAVIDE JR., J.: In their letter of 8 September 1993, the complainants, former clients of the respondent, pray that the latter be disbarred for "malpractice, neglect and other offenses which may be discovered during the actual investigation of this complaint." They attached thereto an Affidavit of Merit wherein they specifically allege: 1. That we are Defendants-Appellates [sic] in the Court of Appeals Case No. CA-G.N. CV No. 38153 of which to our surprise lost unnecessarily the aforesaid Petition [sic]. A close perusal of the case reveals the serious misconduct of our attorney on record, Atty. Amado Fojas tantamount to malpractice and negligence in the performance of his duty obligation to us, to defend us in the aforesaid case. That the said attorney without informing us the reason why and riding high on the trust and confidence we repose on him either abandoned, failed to act accordingly, or seriously neglected to answer the civil complaint against us in the sala of Judge Teresita Capulong Case No. 3526-V-91 Val. Metro Manila so that we were deduced [sic] in default. 2. That under false pretenses Atty. Fojas assured us that everything was in order. That he had already answered the complaint so that in spite of the incessant demand for him to give us a copy he continued to deny same to us. Only to disclose later that he never answered it after all because according to him he was a very busy man. Please refer to Court of Appeals decision dated August 17, 1993. 3. That because of Atty. Amado Foja's neglect and malpractice of law we lost the Judge Capulong case and our appeal to the Court of Appeals. So that it is only proper that Atty. Fojas be disciplined and disbarred in the practice of his profession. In his Comment, the respondent admits his "mistake" in failing to file the complainants' answer in Civil Case No. 3526-V-91, but he alleges that it was cured by his filing of a motion for reconsideration, which was unfortunately denied by the court. He asserts that Civil Case No. 3526-V-91 was a "losing cause" for the complainants because it was based on the expulsion of the plaintiff therein from the Far Eastern University Faculty Association (FEUFA) which was declared unlawful in the final decision in NCR-OD-M-90-10-050. Thus, "[t]he unfavorable judgment in the Regional Trial Court is not imputable to [his] mistake but rather imputable to the merits of the case, i.e., the decision in the Expulsion case wherein defendants (complainants herein) illegally removed from the union (FEUFA) membership Mr. Paulino Salvador. . . ." He further claims that the complainants filed this case to harass him because he refused to share his attorney's fees in the main labor case he had handled for them. The respondent then prays for the dismissal of this complaint for utter lack of merit, since his failure to file the answer was cured and, even granting for the sake of argument that such failure amounted to negligence, it cannot warrant his disbarment or suspension from the practice of the law profession. The complainants filed a Reply to the respondent's Comment. Issues having been joined, we required the parties to inform us whether they were willing to submit this case for decision on the basis of the pleadings they have filed. In their separate compliance, both manifested in the affirmative. The facts in this case are not disputed. Complainants Veronica Santiago, Benjamin Hontiveros, Ma. Socorro Manas, and Trinidad Nordista were the President, VicePresident, Treasurer, and Auditor, respectively, of the FEUFA. They allegedly expelled from the union Paulino Salvador. The latter then commenced with the Department of Labor and Employment (DOLE) a complaint (NCR-OD-M-90-10-050) to declare illegal his expulsion from the union.

In his resolution of 22 November 1990, Med-Arbiter Tomas Falconitin declared illegal Salvador's expulsion and directed the union and all its officers to reinstate Salvador's name in the roll of union members with all the rights and privileges appurtenant thereto. This resolution was affirmed in toto by the Secretary of Labor and Employment. Subsequently, Paulino Salvador filed with the Regional Trial Court (RTC) of Valenzuela, Metro Manila, Branch 172, a complaint against the complainants herein for actual, moral, and exemplary damages and attorney's fees, under Articles 19, 20, and 21 of the Civil Code. The case was docketed as Civil Case No. 3526-V-91. As the complainants' counsel, the respondent filed a motion to dismiss the said case on grounds of (1) res judicataby virtue of the final decision of the Med-Arbiter in NCR-OD-M-90-10-050 and (2) lack of jurisdiction, since what was involved was an intra-union issue cognizable by the DOLE. Later, he filed a supplemental motion to dismiss. The trial court, per Judge Teresita Dizon-Capulong, granted the motion and ordered the dismissal of the case. Upon Salvador's motion for reconsideration, however, it reconsidered the order of dismissal, reinstated the case, and required the complainants herein to file their answer within a nonextendible period of fifteen days from notice. Instead of filing an answer, the respondent filed a motion for reconsideration and dismissal of the case. This motion having been denied, the respondent filed with this Court a petition for certiorari, which was later referred to the Court of Appeals and docketed therein as CA-G.R. SP No. 25834. Although that petition and his subsequent motion for reconsideration were both denied, the respondent still did not file the complainants' answer in Civil Case No. 3526-V-91. Hence, upon plaintiff Salvador's motion, the complainants were declared in default, and Salvador was authorized to present his evidence ex-parte. The respondent then filed a motion to set aside the order of default and to stop the ex-parte reception of evidence before the Clerk of Court, but to no avail. Thereafter, the trial court rendered a decision ordering the complainants herein to pay, jointly and severally, plaintiff Salvador the amounts of P200,000.00 as moral damages; P50,000.00 as exemplary damages or corrective damages; and P65,000.00 as attorney's fees; plus cost of suit. The complainants, still assisted by the respondent, elevated the case to the Court of Appeals, which, however, affirmed in toto the decision of the trial court. The respondent asserts that he was about to appeal the said decision to this Court, but his services as counsel for the complainants and for the union were illegally and unilaterally terminated by complainant Veronica Santiago. The core issue that presents itself is whether the respondent committed culpable negligence, as would warrant disciplinary action, in failing to file for the complainants an answer in Civil Case No. 3526-V-91 for which reason the latter were declared in default and judgment was rendered against them on the basis of the plaintiff's evidence, which was received ex-parte. 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 employment, 1 subject, however, to Canon 14 of the Code of Professional Responsibility. Once he agrees to take up the cause of a client, the lawyer owes fidelity to such cause and must always be mindful of the trust and confidence reposed in him. 2 He must serve the client with competence and diligence, 3 and champion the latter's cause with wholehearted fidelity, care, and devotion. 4Elsewise stated, he owes entire devotion to the interest of the client, warm zeal in the maintenance and defense of his client's rights, and the exertion of his utmost learning and ability to the end that nothing be taken or withheld from his client, save by the rules of law, legally applied. 5 This simply means that his client is entitled to the benefit of any and every remedy and defense that is authorized by the law of the land and he may expect his lawyer to assert every such remedy or defense. 6 If much is demanded from an attorney, it is because the entrusted privilege to practice law carries with it the correlative duties not only to the client but also to the court, to the bar, and to the public. A lawyer who performs his duty with diligence and candor not only protects the interest of his client; he also serves the ends of justice, does honor to the bar, and helps maintain the respect of the community to the legal profession. 7

The respondent admits that it was his duty to file an answer in Civil Case No. 3526-V-91. He justifies his failure to do so in this wise:
[I]n his overzealousness to question the Denial Order of the trial court, 8 [he] instead, thru honest mistake and excusable neglect, filed a PETITION FOR CERTIORARI with the Honorable Court, docketed as G.R. No. 100983. . . .

And, when the Court of Appeals, to which G.R. No. 100983 was referred, dismissed the petition, he again "inadvertently" failed to file an answer "[d]ue to honest mistake and because of his overzealousness as stated earlier. . . . " In their Reply, the complainants allege that his failure to file an answer was not an honest mistake but was "deliberate, malicious and calculated to place them on the legal disadvantage, to their damage and prejudice" for, as admitted by him in his motion to set aside the order of default, his failure to do so was "due to volume and pressure of legal work." 9 In short, the complainants want to impress upon this Court that the respondent has given inconsistent reasons to justify his failure to file an answer. We agree with the complainants. In his motion for reconsideration of the default order, the respondent explained his nonfiling of the required answer by impliedly invoking forgetfulness occasioned by a large volume and pressure of legal work, while in his Comment in this case he attributes it to honest mistake and excusable neglect due to his overzealousness to question the denial order of the trial court. Certainly, "overzealousness" on the one hand and "volume and pressure of legal work" on the other are two distinct and separate causes or grounds. The first presupposes the respondent's full and continuing awareness of his duty to file an answer which, nevertheless, he subordinated to his conviction that the trial court had committed a reversible error or grave abuse of discretion in issuing an order reconsidering its previous order of dismissal of Salvador's complaint and in denying the motion to reconsider the said order. The second ground is purely based on forgetfulness because of his other commitments. Whether it be the first or the second ground, the fact remains that the respondent did not comply with his duty to file an answer in Civil Case No. 3526-V-91. His lack of diligence was compounded by his erroneous belief that the trial court committed such error or grave abuse of discretion and by his continued refusal to file an answer even after he received the Court of Appeals' decision in the certiorari case. There is no showing whatsoever that he further assailed the said decision before this Court in a petition for review under Rule 45 of the Rules of Court to prove his claim of overzealousness to challenge the trial court's order. Neither was it shown that he alleged in his motion to lift the order of default that the complainants had a meritorious defense. 10 And, in his appeal from the judgment by default, he did not even raise as one of the errors of the trial court either the impropriety of the order of default or the court's grave abuse of discretion in denying his motion to lift that order. Pressure and large volume of legal work provide no excuse for the respondent's inability to exercise due diligence in the performance of his duty to file an answer. Every case a lawyer accepts deserves his full attention, diligence, skill, and competence, regardless of its importance and whether he accepts it for a fee or for free. All told, the respondent committed a breach of Canon 18 of the Code of Professional Responsibility which requires him to serve his clients, the complainants herein, with diligence and, more specifically, Rule 18.03 thereof which provides: "A lawyer shall not neglect a legal matter entrusted to him, and his negligence in connection therewith shall render him liable." The respondent's negligence is not excused by his claim that Civil Case No. 3526-V-91 was in fact a "losing cause" for the complainants since the claims therein for damages were based on the final decision of the Med-Arbiter declaring the complainants' act of expelling Salvador from the union to be illegal. This claim is a mere afterthought which hardly persuades us. If indeed the respondent was so convinced of the futility of any defense therein, he should have seasonably informed the complainants thereof. Rule 15.05, Canon 15 of the Code of Professional Responsibility expressly provides: A lawyer, when advising his client, shall give a candid and honest opinion on the merits and probable results of the client's case, neither overstating nor understanding the prospects of the case.

Then too, if he were unconvinced of any defense, we are unable to understand why he took all the trouble of filing a motion to dismiss on the grounds of res judicata and lack of jurisdiction and of questioning the adverse ruling thereon initially with this Court and then with the Court of Appeals, unless, of course, he meant all of these to simply delay the disposition of the civil case. Finally, the complainants were not entirely without any valid or justifiable defense. They could prove that the plaintiff was not entitled to all the damages sought by him or that if he were so, they could ask for a reduction of the amounts thereof. We do not therefore hesitate to rule that the respondent is not free from any blame for the sad fate of the complainants. He is liable for inexcusable negligence. WHEREFORE, ATTY. AMADO R. FOJAS is hereby REPRIMANDED and ADMONISHED to be, henceforth, more careful in the performance of his duty to his clients. SO ORDERED.

NORTHWESTERN UNIVERSITY, INC., and BEN A. NICOLAS vs. Atty. MACARIO D. ARQUILLO A.C. No. 6632. August 2, 2005 Facts: Atty. Macatrio D. Arquillo represented opposing parties in one a case before the before the National Labor Relations Commission, Regional Arbitration Branch in San Fernando, La Union. Herein, complainants accuse Atty. Arquillo of deceit, malpractice, gross misconduct and/or violation of his oath as attorney by representing conflicting interests. The case was filed with the IBP-Commission on Bar Discipline which found Atty. Arquillo guilty of the charge and recommended a penalty of suspension for 6 months. The governors of the IBP increased the penalty for 2 years. Issue: Whether or not the acts of Arquillo merits his suspension from the practice of law. Held: The Code of Professional Responsibility requires lawyers to observe candor, fairness and loyalty in all their dealings and transactions with their clients. Corollary to this duty, lawyers shall not represent conflicting interests, except with all the concerned clients written consent, given after a full disclosure of the facts. When a lawyer represents two or more opposing parties, there is a conflict of interests, the existence of which is determined by three separate tests: (1) when, in representation of one client, a lawyer is required to fight for an issue or claim, but is also duty-bound to oppose it for another client; (2) when the acceptance of the new retainer will require an attorney to perform an act that may injuriously affect the first client or, when called upon in a new relation, to use against the first one any knowledge acquired through their professional connection; or (3) when the acceptance of a new relation would prevent the full discharge of an attorneys duty to give undivided fidelity and loyalty to the client or would invite suspicion of unfaithfulness or double dealing in the performance of that duty. An attorney cannot represent adverse interests. It is a hornbook doctrine grounded on public policy that a lawyers representation of both sides of an issue is highly improper. The proscription applies when the conflicting interests arise with respect to the same general matter, however slight such conflict may be. It applies even when the attorney acts from honest intentions or in good faith. In accordance with previous rulings from this court Atty. Arquillo is suspended for 1 year from the practice of law.

LOLITA ARTEZUELA VS. ATTY. RICARTE B. MADERAZO A.C. NO. 4354. APRIL 22, 2002 Facts: Artezuela filed before the Supreme Court a verified complaint for disbarment against the respondent. She alleged that respondent grossly neglected his duties her lawyer in a damage suit and failed to represent her interests with zeal and enthusiasm. According to her, when her case was scheduled for pre-trial conference, respondent asked for its postponement although all the parties were present. Notwithstanding complainants persistent and repeated follow-up, respondent did not do anything to keep the case moving. He withdrew as counsel without obtaining complainants consent.

Complainant also claimed that respondent engaged in activities inimical to her interests. While acting as her counsel, respondent prepared Echavias Answer to the Amended Complaint. The said document was even printed in respondents 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. Issue: Whether or not the lawyer should be disbarred. Held: Yes. He is guilty of representing conflicting interests prohibited by Rule 15.03 of Canon 15 of the Code of Professional Responsibility. 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 partys 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.

PNB vs Cedo   Administrative Matter in the SC. Violation of Canon 6, Rule 6.03 of the Code of Professional Responsibility Complainant PNB charged respondent Atty. Telesforo S. Cedo, former Asst. VP of the Asset Mgt. Group, with violation of Canon 6, Rule 6.03 CPR by appearing as counsel for individuals who had transactions w/ complainant bank in w/c Cedo during his employment w/ aforesaid bank, had intervened. Particularly, Cedo: o Had participated in arranging the sale of steel sheets in favor of Milagros Ong Siy for P200K o Noted the gate passes issued by his subordinate, Emmanuel Elefan, in favor of Ong Siy authorizing pull-out of steel sheets o who had since left the employ of PNB, appeared as one of Ong Siys counsels in a civil action bet Ong Siy & PNB w/c arose from the pull-out transaction o while being the Asst. VP of PNBs Asset Mgt. Group, intervened in the handling of a loan account of the spouses Ponciano and Eufemia Almeda w/ complainant bank by writing demand letters to the couple. And when a civil action ensued bet. PNB and the spouses, the latter were represented by the law firm Cedo, Ferrer, Maynigo & Assocs of w/c Cedo is one of the Senior Partners Cedo admitted he appeared as counsel of Ong Siy but only w/ respect to the execution pending appeal. He denied ever appearing as counsel for the Almedas, contending that the case was only handled by Atty. Pedro Ferrer and that their law firm is not really a partnership since they handle their own cases independently. The case was referred to IBP for investigation, report and recommendation. IBP found: o that Cedo was previously fined for forum shopping Milagros Ong Siy v. Hon. Salvador Tensuan, et. al. o that charges made by PNB are fully substantiated o that his averment that their firm is not really a partnership cannot be entertained given that although he did not enter his appearance, he was practically dictating to Atty. Ferrer what to say and argue before the court in the Almeda case. He also impliedly admitted being the partner of Atty. Ferrer. o That assuming the alleged set-up of the firm were true, it is in itself a violation ofCPR (Rule 15.02) since the clients secrets and confidential records andinformation are exposed to the other lawyers and staff members at all times o In sum, that Cedo deliberately devised ways and means to attracts as clientformer borrowers of PNB since he was in the best position to see the legal weaknesses of his former employer. The IBP thus recommended a 3-yr suspension.

Issue: WON Cedo violated the aforesaid Canons and Rules of CPR&CPE  YES. While the SC agreed with the findings of the IBP, it also emphasized the importance of avoiding representation of conflicting interests.

It cited the case of Pasay Law and Conscience Union, Inc. v. Paz w/c cited Nombrado v. Hernandez: o Whatever may be said as to whether or not respondent utilized against his former client information given to him in a professional capacity, the mere fact of their previous relationship should have precluded him from appearing as counsel for the other side o This stern rule is designed not alone to prevent the dishonest practitioner from fraudulent conduct, but as well to protect the honest lawyer from unfounded suspicion of unprofessional practicethe question is not necessarily one of the rights of the parties, but as to whether the attorney has adhered to proper professional standard. He is also in violation of Canon 6, CPE on adverse influence and conflicting interests

Holding: Suspended for 3 years

REGALA vs. SANDIGANBAYAN [1996]  Special Civil Action in the SC. Certiorari  RP instituted a Complaint before the Sandiganbayan (SB), through the Presidential Commission on Good Govt (PCGG) against Eduardo M. Cojuangco, Jr., as one of the principal defendants, for the recovery of alleged illgotten wealth, which includes shares of stocks in the named corps. in PCGG Case No. 33 (CC No. 0033) entitled "RP vs. Eduardo Cojuangco, et al."  Among the defendants named in the case are herein petitioners and herein private respondent Raul S. Roco, who all were then partners of the law firm Angara, Abello, Concepcion, Regala and Cruz (ACCRA) Law Offices. ACCRA Law Firm performed legal services for its clients and in the performance of these services, the members of the law firm delivered to its client documents which substantiate the client's equity holdings.  In the course of their dealings with their clients, the members of the law firm acquire information relative to the assets of clients as well as their personal and business circumstances. As members of the ACCRA Law Firm, petitioners and private respondent Raul Roco admit that they assisted in the organization and acquisition of the companies included in CC No. 0033, and in keeping with the office practice, ACCRA lawyers acted as nomineesstockholders of the said corporations involved in sequestration proceedings.  PCGG filed a "Motion to Admit 3rd Amended Complaint" & "3rd Amended Complaint" w/c excluded Roco from the complaint in PCGG Case No. 33 as party defendant, Roco having promised hell reveal the identity of the principal/s for whom he acted as nominee/stockholder in the companies involved in PCGG Case # 33  Petitioners were included in 3rd Amended Complaint for having plotted, devised, schemed, conspired & confederated w/each other in setting up, through the use of coconut levy funds, the financial & corporate framework & structures that led to establishment of UCPB, UNICOM, COCOLIFE, COCOMARK, CIC, & more than 20 other coconut levy funded corps, including the acquisition of San Miguel Corp. shares & its institutionalization through presidential directives of the coconut monopoly. Through insidious means & machinations, ACCRA Investments Corp., became the holder of roughly 3.3% of the total outstanding capital stock of UCPB.  In their answer to the Expanded Amended Complaint, petitioners alleged that their participation in the acts w/ w/c their co-defendants are charged, was in furtherance of legitimate lawyering  Petitioner Paraja Hayudini, who had separated from ACCRA law firm, filed a separate answer denying the allegations in the complaint implicating him in the alleged ill-gotten wealth.  Petitioners then filed their "Comment &/or Opposition" w/ Counter-Motion that PCGG exclude them as partiesdefendants like Roco.  PCGG set the ff. precedent for the exclusion of petitioners: a. the disclosure of the identity of its clients; b. submission of documents substantiating the lawyer-client relationship; and c. the submission of the deeds of assignments petitioners executed in favor of its clients covering their respective shareholdings.  Consequently, PCGG presented supposed proof to substantiate compliance by Roco of the same conditions precedent. However, during said proceedings, Roco didnt refute petitioners' contention that he did actually not reveal the identity of the client involved in PCGG Case No. 33, nor had he undertaken to reveal the identity of the client for whom he acted as nominee-stockholder.

In a Resolution, SB denied the exclusion of petitioners, for their refusal to comply w/ the conditions required by PCGG. It held, ACCRA lawyers cannot excuse themselves from the consequences of their acts until they have begun to establish the basis for recognizing the privilege; the existence and identity of the client. ACCRA lawyers filed MFR w/c was denied. Hence, ACCRA lawyers filed the petition for certiorari. Petitioner Hayudini, likewise, filed his own MFR w/c was also denied thus, he filed a separate petition for certiorari, assailing SBs resolution on essentially same grounds averred by petitioners, namely: o SB gravely abused its discretion in subjecting petitioners to the strict application of the law of agency. o SB gravely abused its discretion in not considering petitioners & Roco similarly situated &, thus, deserving equal treatment o SB gravely abused its discretion in not holding that, under the facts of this case, the attorney-client privilege prohibits petitioners from revealing the identity of their client(s) and the other information requested by the PCGG. o SB gravely abused its discretion in not requiring that dropping of party defendants be based on reasonable & just grounds, w/ due consideration to constitutional rights of petitioners PCGG, through its counsel, refutes petitioners' contention, alleging that the revelation of the identity of the client is not w/in the ambit of the lawyer-client confidentiality privilege, nor are the documents it required (deeds of assignment) protected, because they are evidence of nominee status.

WON PCGG has a valid cause of action as against the petitioners  NO. It is quite apparent from the PCGG's willingness to cut a deal with petitioners that petitioners were impleaded by the PCGG as co-defendants to force them to disclose the identity of their clients.  It would seem that petitioners are merely standing in for their clients as defendants in the complaint. Petitioners are being prosecuted solely on the basis of activities and services performed in the course of their duties as lawyers. Quite obviously, petitioners' inclusion as co-defendants in the complaint is merely being used as leverage to compel them to name their clients and consequently to enable the PCGG to nail these clients. Such being the case, PCGG has no valid cause of action as against petitioners and should exclude them from the 3rd Amended Complaint. WON attorney-client privilege prohibits petitioners from revealing the identity of their client(s) & the other information requested by the PCGG  YES. Nature of lawyer-client relationship is premised on the Roman Law concepts of locatio conductio operarum (contract of lease of services) where one person lets his services and another hires them without reference to the object of which the services are to be performed, wherein lawyers' services may be compensated by honorarium or for hire, and mandato (contract of agency) wherein a friend on whom reliance could be placed makes a contract in his name, but gives up all that he gained by the contract to the person who requested him. But the lawyer-client relationship is more than that of the principal-agent and lessor-lessee.  An attorney is more than a mere agent or servant, because he possesses special powers of trust and confidence reposed on him by his client. An attorney occupies a "quasi-judicial office" since he is in fact an officer of the Court & exercises his judgment in the choice of courses of action to be taken favorable to his client.  Thus, in the creation of lawyer-client relationship, there are rules, ethical conduct and duties that breathe life into it, among those, the fiduciary duty to his client which is of a very delicate, exacting and confidential character, requiring a very high degree of fidelity and good faith, that is required by reason of necessity and public interest based on the hypothesis that abstinence from seeking legal advice in a good cause is an evil which is fatal to the administration of justice.  Attorney-client privilege, is worded in Rules of Court, Rule 130: Sec. 24. Disqualification by reason of privileged communication. The following persons cannot testify as to matters learned in confidence in the following cases: xxx An attorney cannot, without the consent of his client, be examined as to any communication made by the client to him, or his advice given thereon in the course of, or with a view to, professional employment, can an attorney's secretary, stenographer, or clerk be examined, without the consent of the client and his employer, concerning any fact the knowledge of which has been acquired in such capacity.  Further, Rule 138 of the Rules of Court states: Sec. 20. It is the duty of an attorney:

 

  

 

(e) to maintain inviolate the confidence, and at every peril to himself, to preserve the secrets of his client, and to accept no compensation in connection with his client's business except from him or with his knowledge and approval. This duty is explicitly mandated in Canon 17, CPR (A lawyer owes fidelity to the cause of his client and he shall be mindful of the trust and confidence reposed in him.) Canon 15, CPE also demands a lawyer's fidelity to client. An effective lawyer-client relationship is largely dependent upon the degree of confidence which exists between lawyer and client which in turn requires a situation which encourages a dynamic and fruitful exchange and flow of information. Thus, the Court held that this duty may be asserted in refusing to disclose the name of petitioners' client(s) in the case at bar. The general rule is that a lawyer may not invoke the privilege and refuse to divulge the name or identity of his client. Reasons advanced for the general rule: o Court has a right to know that the client whose privileged information is sought to be protected is flesh and blood. o Privilege begins to exist only after the attorney-client relationship has been established. o Privilege generally pertains to subject matter of relationship o Due process considerations require that the opposing party should, as a general rule, know his adversary. Exceptions to the gen. rule: o Client identity is privileged where a strong probability exists that revealing the client's name would implicate that client in the very activity for which he sought the lawyer's advice. - Ex-Parte Enzor and U.S. v. Hodge and Zweig: The subject matter of the relationship was so closely related to the issue of the client's identity that the privilege actually attached to both. o Where disclosure would open the client to civil liability, his identity is privileged. - Neugass v. Terminal Cab Corp.: couldnt reveal name of his client as this would expose the latter to civil litigation. - Matter of Shawmut Mining Company: We feel sure that under such conditions no case has ever gone to the length of compelling an attorney, at the instance of a hostile litigant, to disclose not only his retainer, but the nature of the transactions to w/c it related, when such information could be made the basis of a suit against his client. o Where the government's lawyers have no case against an attorney's client unless, by revealing the client's name, the said name would furnish the only link that would form the chain of testimony necessary to convict an individual of a crime, the client's name is privileged. - Baird vs. Korner: a lawyer could not be forced to reveal the names of clients who employed him to pay sums of money to govt voluntarily in settlement of undetermined income taxes, unsued on, & w/ no govt audit or investigation into that client's income tax liability pending Apart from these principal exceptions, there exist other situations which could qualify as exceptions to the general rule: o if the content of any client communication to a lawyer is relevant to the subject matter of the legal problem on which the client seeks legal assistance o where the nature of the attorney-client relationship has been previously disclosed & it is the identity w/c is intended to be confidential, the identity of the client has been held to be privileged, since such revelation would otherwise result in disclosure of the entire transaction. Summarizing these exceptions, information relating to the identity of a client may fall within the ambit of the privilege when the client's name itself has an independent significance, such that disclosure would then reveal client confidences. Instant case falls under at least 2 exceptions to the general rule. First, disclosure of the alleged client's name would lead to establish said client's connection with the very fact in issue of the case, which is privileged information, because the privilege, as stated earlier, protects the subject matter or the substance (without which there would be no attorney-client relationship).

 

The link between the alleged criminal offense and the legal advice or legal service sought was duly established in the case at bar, by no less than the PCGG itself as can be seen in the 3 specific conditions laid down by the PCGG which constitutes petitioners' ticket to non-prosecution should they accede thereto. From these conditions, particularly the third, we can readily deduce that the clients indeed consulted the petitioners, in their capacity as lawyers, regarding the financial and corporate structure, framework and set-up of the corporations in question. In turn, petitioners gave their professional advice in the form of, among others, the aforementioned deeds of assignment covering their client's shareholdings. Petitioners have a legitimate fear that identifying their clients would implicate them in the very activity for which legal advice had been sought, i.e., the alleged accumulation of ill-gotten wealth in the aforementioned corporations. Secondly, under the third main exception, revelation of the client's name would obviously provide the necessary link for the prosecution to build its case, where none otherwise exists. While the privilege may not be invoked for illegal purposes such as in a case where a client takes on the services of an attorney, for illicit purposes, it may be invoked in a case where a client thinks he might have previously committed something illegal and consults his attorney. Whether or not the act for which the client sought advice turns out to be illegal, his name cannot be used or disclosed if the disclosure leads to evidence, not yet in the hands of the prosecution, which might lead to possible action against him. The Baird exception, applicable to the instant case, is consonant with the principal policy behind the privilege, i.e., that for the purpose of promoting freedom of consultation of legal advisors by clients, apprehension of compelled disclosure from attorneys must be eliminated. What is sought to be avoided then is the exploitation of the general rule in what may amount to a fishing expedition by the prosecution. In fine, the crux of petitioner's objections ultimately hinges on their expectation that if the prosecution has a case against their clients, the latter's case should be built upon evidence painstakingly gathered by them from their own sources and not from compelled testimony requiring them to reveal the name of their clients, information which unavoidably reveals much about the nature of the transaction which may or may not be illegal. The utmost zeal given by Courts to the protection of the lawyer-client confidentiality privilege and lawyer's loyalty to his client is evident in the duration of the protection, which exists not only during the relationship, but extends even after the termination of the relationship. We have no choice but to uphold petitioners' right not to reveal the identity of their clients under pain of the breach of fiduciary duty owing to their clients, as the facts of the instant case clearly fall w/in recognized exceptions to the rule that the client's name is not privileged information. Otherwise, it would expose the lawyers themselves to possible litigation by their clients in view of the strict fiduciary responsibility imposed on them in exercise of their duties

WON PCGGs exclusion violates equal protection  YES. Respondents failed to show - and absolutely nothing exists in the records of the case at bar - that private respondent actually revealed the identity of his client(s) to the PCGG. Since the undertaking happens to be the leitmotif of the entire arrangement between Mr. Roco and the PCGG, an undertaking which is so material as to have justified PCGG's special treatment exempting the private respondent from prosecution, SB should have required proof of the undertaking more substantial than a "bare assertion" that private respondent did indeed comply with the undertaking.  Thus, the Court held that the condition precedent required by the respondent PCGG of the petitioners for their exclusion as parties-defendants in PCGG Case No. 33 violates the lawyer-client confidentiality privilege & constitutes a transgression by SB & PCGG of the equal protection clause of the Constitution.  The PCGG's demand not only touches upon the question of the identity of their clients but also on documents related to the suspected transactions, not only in violation of the attorney-client privilege but also of the constitutional right against self-incrimination. Whichever way one looks at it, this is a fishing expedition, a free ride at the expense of such rights.  Lastly, the invocation by petitioners of the privilege of attorney-client confidentiality at this stage of the proceedings is not premature and that they should not have to wait until they are called to testify and examine as witnesses as to matters learned in confidence before they can raise their objections. The petitioners are not mere witnesses but are co-principals in the case for recovery of alleged ill-gotten wealth. The case against

petitioners should never be allowed to take its full course in the SB. Petitioners should not be made to suffer the effects of further litigation when it is obvious that their inclusion in the complaint arose from a privileged attorney-client relationship and as a means of coercing them to disclose the identities of their clients. Holding: SB Resolutions ANNULLED and SET ASIDE, petitioners excluded as parties defendants in SB CC No.

CYNTHIA B. ROSACIA vs. ATTY. BENJAMIN B. BULALACAO

Complainant Cynthia B. Rosacia, president of Tacma, Phils., Inc., a duly registered corporation, filed a complaint for disbarment dated October 25, 1991, against herein respondent Atty. Benjamin B. Bulalacao. Acting on the complaint, the Court in a resolution dated February 24, 1992, resolved to refer the case to the Int egrated Bar of the Philippines (IBP) for investigation, report and recommendation. Commissioner Victor C. Fernandez, the IBP investigating commissioner, found that respondent breached his oath of office and accordingly recommended respondent's suspension from the practice of law for three (3) months. 1 In a resolution dated July 30, 1994, the IBP Board of Governors resolved to adopt and approve the commissioner's report and recommendation. 2 As found by the IBP, the undisputed facts are as follows: On June 1, 1990, by virtue of a written Agreement (Exh. "3-a"), respondent Atty. Benjamin B. Bulalacao was hired as retained counsel of a corporation by the name of Tacma Phils., Inc. On October 31, 1990, the lawyer-client relationship between the respondent and Tacma Phils., Inc. was severed as shown by another agreement of even date (Exh. "3-b").

On July, 1991, or after almost nine (9) months from the date respondent's retainer agreement with Tacma, Phils., Inc. was terminated, several employees of the corporation consulted the respondent for the purpose of filing an action for illegal dismissal. Thereafter, he agreed to handle the case for the said employees as against Tacma, Phils., Inc. by filing a complaint before the National Labor Relations Commission, and appearing in their behalf. 3
The sole issue to be addressed is whether or not respondent breached his oath of office for representing the employees of his former client, Tacma, Phils., Inc., after the t ermination of their attorney-client relationship. We agree with the findings of the IBP that respondent breached his oath of office. Respondent does not now dispute this. In fact, in his motion for reconsideration, respondent admitted that he "did commit an act bordering on grave misconduct, if not outright violation of his attorney's oath". 4 However, respondent is pleading for the Court's compassion and leni ency to reduce the IBP recommended three months suspension to either fine or admonition with the following proffered grounds: that he is relatively new in the profession having been admitted to the Philippine Bar on April 10, 1990 at the age of 46 when the complained conduct was committed on August 1991; that he is of humble beginnings and his suspension will deprive his family of its only source of livelihood he being the sole bread winner in the family; that he has fully realized his mistake and the gravity of his offense for which he is fully repentant; that he has severed his attorney-client relationship with the employees of Tacma, Phils., Inc. by inhibiting himself and withdrawing his appearance as counsel in the labor case against Tacma, Phils., Inc.; and that he pledges not to commit the same mistake and to henceforth strictly adhere to the professional standards set forth by the Code of Professional Responsibility. The Court reiterates that an attorney owes loyalty to his client not only in the case in which he has represented him but also after the relation of attorney and client has terminated as it is not good practice to permit him afterwards to defend in another case other person against his former client under the pret ext that the case is distinct from, and independent of the former case. 5 It behooves respondent not only to keep inviolate the client's confidence, but also to avoid the appearance of treachery and double dealing for only then can litigants be encouraged to entrust their secrets to their attorneys which is of paramount importance in the administration of justice. 6 The relation of attorney and client is one of confidence and trust in the highest degree. 7 A lawyer owes fidelity to the cause of his client and he ought to be mindful of the trust and confidence reposed in him. 8 An attorney not only becomes familiar with all the facts connected with his client's cause, but also learns from his client the weak and strong points of the case. No opportunity must be given attorneys to take advantage of the secrets of clients obtained while the confidential relation of attorney and client exists. Otherwise, the legal profession will suffer by the loss of the confidence of the people. 9 Respondent's plea for leniency cannot be granted. We note that respondent is new in the profession as he was just admitted to the Philippine Bar on April 10, 1990, when the breach of his oath of office occurred more than a year after. Having just hurdl ed the bar examinations which included an examination in legal ethics, surely the precepts of the Code of Professional Responsibility to keep inviolate the client's trust and confidence even after the attorney-client relation is terminated 10 must have been still fresh in his mind. A lawyer starting to establish his stature in the legal profession must start right and dutifully abide by the norms of conduct of the profession. This will ineluctably redound to his benefit and to the upliftment of the legal profession as well. ACCORDINGLY, respondent is hereby SUSPENDED from the practice of law for three months. Let this resolution be attached to respondent's record in the Office of the Bar Confidant and copies thereof furnished to all courts and to the Int egrated Bar of the Philippines.

LORENZANA FOOD CORPORATION vs. ATTY. FRANCISCO L. DARIA

The respondent lawyer, Atty. Francisco L. Daria, is administratively charged 1 on two counts, to wit: 1. Negligence and 2. Betrayal of his former client's confidences. A verified complaint dated February 22, 1985 was filed by Lorenzana Food Corporation LFC, hereinafter), and received by the Court on February 25, 1985. 2

The Court, on June 10, 1985, resolved to refer this case to the Office of the Solicitor General for investigation, report, and recommendation. After proper proceedings, the Office of the Solicitor General submitted its "Report and Recommendation," dated February 21, 1990 and received by the Court on February 26, 1990. From the findings made by the Solicitor General, the pertinent facts may be summarized as follows: Respondent Francisco L. Daria is charged with negligence and betrayal of his former client's confidences. The following facts are in connection with the charge of negligence: Respondent was hired by complainant Lorenzana Food Corporation (LFC) on January 8, 1981 as its legal counsel and was designated as its personnel manager six months later (tsn. pp. 6-7, Dec. 9, 1985). On May 23, 1983, LFC employee, Violeta Hanopol, filed a complaint for illegal dismissal and other monetary claims against complainant before the Ministry (now Department) of Labor and Employment (MOLE). On May 30, 1983, summons was served on the parties with the requirement that position papers be submitted (Exh. G). During the initial hearing on June 13, 1973 * (sic) Hanopol and respondent tried to explore the possibility of an amicable settlement. Since no agreement was reached the hearing was reset to June 17, 1983. On the pretext that Hanopol was supposed to go to his office on that date respondent failed to appear for the second setting (tsn. pp. 14-15, Dec. 9, 1985). So, the Labor Arbiter was constrained to further reset the hearing to June 28, 1983. Respondent received on June 23, 1983 the Order for the resetting to June 1983 (Exh. J). In the meantime, on June 20, 1983, respondent received an Order in another labor case, setting the hearing therein also on June 28, 1983 (Exh. H-6). Faced with a conflicting schedul e, respondent decided to move to postpone the hearing in the Hanopol case. However, inst ead of filing a written motion for postponement, he opted to call, through his secretary, the Office of the Labor Arbiter to move for postponement (Exh. H-5; tsn. p. 16, Dec. 9, 1985). Respondent's telephone message apparently failed to reach the Labor Arbiter, because at the hearing on June 28, 1983, he considered the case submitted for decision on the basis of Hanopol's complaint and affidavit (Exh. G-1). Respondent had not submitted a position paper. After a month, on July 29, 1983, the Labor Arbiter issued a Decision directing LFC to pay Hanopol the total sum of P6,469.60 in labor benefits, on the basis of Hanopol's evidence alone. Respondent Daria appealed the Decision to the National Labor Relations Commission (NLRC) on August 23, 1983 (Exh. 4). The case was remanded to the Labor Arbiter for further proceedings. The case was set for hearing on June 25, 1984 and July 12, 1984 wherein attempts for an amicable settlement still proved futile. The Labor Arbiter set two more dates for hearing: July 27, 1984 and August 8, 1984 (tsn. pp. 21-22, Dec. 9, 1985). In the meantime, the middle of June 1984, respondent signified to management his intention to resign. In the light of this development, management hired Atty. Rogelio Udarbe to take his place on July 16, 1984, the effective date of his resignation (Exh. 2). Respondent endorsed the cases of complainant to Atty. Udarbe (tsn. pp. 23-25, Dec. 9, 1985). During the hearings in the Hanopol case on July 27, 1984 and August 8, 1984, no one appeared for complainant. So, on August 15, 1984, Hanopol filed a "Manifestation and Motion" praying that the earlier Decision of the Labor Arbiter dated July 29, 1983 be revived. (Exh. 5). On September 1, 1984, Atty. Jose Loy, Jr. was hired by complainant LFC vice Atty. Udarbe and he immediately came across the abovementioned "Manifestation and Motion". On September 5, 1984, he filed an Opposition (Exh. 6) thereto, and on September 19, 1984, he followed this up with a position paper for LFC (Exh. 7). However, the Labor Arbiter had already revived his earlier Decision dated July 29, 1983 in another Decision dat ed September 4, 1984, thereby prompting Atty. Loy to appeal the latter Decision (Exh. 3). In a resolution dated May 9, 1985, the NLRC ordered anew the remand of the case for further proceedings (Exh. 8). In connection with the other charge of betrayal by respondent of his former client's confidences, the following facts appear on record: While respondent was still connected with complainant, its general manager, Sebastian Cortes, issued a memorandum dated February 28, 1984 (Exh. C) to its employee, Roberto San Juan, requiring him to submit a written explanation for his alleged double liquidation and unliquidated cash advances. Another memorandum dated March 15, 1984 (Exh. D) was issued this time by complainant's internal auditor, Rosario L. Bernardo, addressed to complainant's president, summing up San Juan's unliquidated advances amounting to P9,351.15. Respondent was furnished a copy of this memorandum (Exh. D-3). The executive committee, to which respondent belongs, investigated San Juan on his unliquidated advances. On account of the gravity of the charge, respondent placed San Juan under preventive suspension, per his letter to him dated April 25, 1984 (Exh. E).

On September 20, 1984, when respondent had already resigned, complainant sent a demand letter to San Juan requiring him to restitute the amount of P9,351.15 (Exh. N-2). Since he failed to pay the amount demanded, a complaint for estafa was lodged against him before the Office of the Provincial Fiscal. San Juan thereafter resigned and sought the assistance of respondent in the preparation of his counteraffidavit in January 1985 (tsn. p. 35, Nov. 5, 1985). Respondent prepared San Juan's counteraffidavit and signed it (Exh. F). San Juan then submitted his counteraffidavit to the Office of the Provincial Fiscal (tsn. p. 42, Nov. 5, 1985). 3
xxx xxx xxx For failure to appear in two consecutive hearings and to submit a position paper in the Hanopol case which resulted in complainant LFC's default and judgment against it by the Labor Arbiter, the respondent is faulted for negligence. The respondent avers that Hanopol should have seen him in his office to work out a compromise agreement, on the scheduled day of the second hearing, June 17, 1983, but did not. 4 It is the finding of the Solicitor General that this excuse by the respondent is not borne by the Constancia 5 setting the case for hearing. The Constancia clearly states: "By agreement of the parties, case reset to June 17, 1983 at 2:00 p.m. as previously scheduled." 6 Since it was signed by both Hanopol and the respondent, the Solicitor General argues that the respondent's explanation is manifestly unsatisfactory.

With regard to his second non-appearance for the hearing on June 2, 1983, the respondent justified his absence by claiming that he had another hearing on the same dat e and that he told his secretary to call up the Office of the Labor Arbiter to have the hearing of the Hanopol case postponed. 7 The Solicitor General avers:

. . . It is submitted that respondent's actuation was not warranted by the circumstances. As it turned out, the telephone request apparently did not reach the Labor Arbiter, thereby constraining him to declare complainant in default and render judgment against it. 8
In an effort to extricate himself from this charge, the respondent submits that since he was abl e to persuade the National Labor Relations Commission (NLRC) on appeal to set aside the Decision of the Labor Arbiter and to remand the case for further proceedings, then the charge of negligence should be considered moot and academic already. 9 We find this submission not meritorious. Instead, we agree ,with the position of the Solicitor General:

Respondent's plea is untenable. The setting aside of the adverse Decision of the Labor Arbiter cannot obliterate the effects of respondent's negligence. Indeed, had respondent attended the two scheduled hearings and filed the required position paper, then at least, there would have been no delay in the resolution of the case, which, perhaps, would have been in favor of complainant. The delay, by itself, was prejudicial to complainant because it deprived successor-counsel Atty. Loy of time which he should be devoting to other cases of complainant. In fact he had to prepare complainant's position paper which respondent should have done earlier (Exh. 7). 10
From the foregoing, it is manifest that the respondent is indeed guilty of negligence, a clear violation of the Code of Professional Responsibility: 11 CANON 18 A LAWYER SHALL SERVE HIS CLIENT WITH COMPETENCE AND DILIGENCE Rule 18.03 A lawyer shall not neglect a legal matter entrusted to him and his negligence in connection therewith shall render him liable. The other accusation against the respondent by the Solicitor General was that he had betrayed complainant LFC's confidences in violation of the then Canon 37 of the old Canons of Professional Ethics, to wit: It is the duty of a lawyer to preserve his client's confidences. This duty outlasts the lawyer's employment, and extends as well to his employee's and neither of them should accept employment which involves or may involve the disclosure or use of these confidences, either for the private advantages of the client, without his knowledge and consent, and even though there are other available sources of such information. A lawyer should not continue employment when he discovers that this obligation prevents the performance of his full duty to his former or to his new client. xxx xxx xxx Superseded by the Code of Professional Responsibility, the appropriate Canon now is: CANON 17 A LAWYER OWES FIDELITY TO THE CAUSE OF HIS CLIENT AND HE SHALL BE MINDFUL OF THE TRUST AND CONFIDENCE REPOSED IN HIM. The Solicitor General further found that the respondent assisted Roberto San Juan in the preparation of the counter-affidavit, 12 submitted in defense of the latter in the accusation of estafa filed against San Juan by LFC As a matter of fact, the respondent signed the jurat of the San Juan count er-affidavit he (respondent) helped prepare. It is also a fact that the respondent investigated this same charge of estafa while he was still the lawyer of the complainant and San Juan still likewise an employee of LFC Again, we concur with the findings and evaluation of the Office of the Solicitor General: . . . Respondent, however, tried to extricate himself from his predicament by testifying that the counteraffidavit was prepared by a lawyer-friend, Atty. Joselito R. Enriquez, who had his (respondent's) name typed on it; that after reading it, he called up Atty. Enriquez so that he will delete his name and signature thereon; that he instructed San Juan to bring the counteraffidavit to Atty. Enriquez so that he will delete his name and signature, but San Juan did not obey him; and that San Juan filed the count eraffidavit with the office of the Provincial Fiscal with his name and signature still on it (tsn. pp. 47-51, Dec. 9, 1985).

It is submitted that, apart from being a mere afterthought, respondent's explanation is incredible. His foregoing testimony is not reflected in his comment on the complaint . . . 13
We are convinced that the respondent had betrayed the confidences of the complainant, his former client.

. . . An attorney owes loyalty to his client not only in the case in which he has represented him but also after the relation of attorney and client has terminated, and it is not a good practice to permit him afterwards to defend in another case other persons against his former client under the pretext that the case is distinct from and independent of the former case. 14
WHEREFORE, premises considered, the respondent is found guilty of both the charge of negligence, a transgression of Rule 18.03, Canon 18, and the charge of betrayal of his former client's confidences, in violation of Canon 17 of the Code of Professional Responsibility. The respondent is hereby SUSPENDED from the practice of law for a period of six (6) months.

Let this Decision be entered in the personal records of the respondent and copies thereof furnished to all courts and IBP chapters. SO ORDERED.

UNITY FISHING DEVELOPMENT CORPORATION, complainant, vs. ATTY. DANILO G. MACALINO, Respondent.
Under consideration is this petition by way of a complaint for disbarment filed by Unity Fishing Development Corporation against Atty. Danilo Macalino for having violated Canon 16 of the Code of Professional Responsibility.

In its resolution of June 26, 1996, the Court required respondent to comment on th e complaint within ten (10) days from notice.[1]

On July 26, 1996, respondent filed a motion for extension of thirty (30) days within which to file comment,[2] which motion was granted by the Court in its resolution of August 21, 1996.[3]

On August 26, 1996, respondent filed another motion for extension, this time for an additional period of fifteen (15) days.[4] The motion was similarly granted by the Court in its resolution of October 7, 1996.[5]

Still, on September 19, 1996, respondent filed a third and last extension of time to file comment.[6] Again, this was granted by the Courtvia its resolution of November 27, 1996.[7]

Unfortunately, no comment was ever filed by respondent.

Hence, and taking note of complainants Motion to Conduct Further Proceedings, filed on March 23, 1998,[8] the Court, in its resolution of April 27, 1998,[9] referred the case to the Integrated Bar of the Philippines (IBP), for investigation, report and recommendation.

Acting on the referral, the IBP Commission on Bar Discipline designated Atty. Cesar R. Dulay as investigating commissioner.

It appears, however, that even while the case was already under formal investigation, respondent displayed the same attitude of lack of concern. As reported by Atty. Dulay:

The Commission issued a notice setting the case for hearing on October 8, 1998, at which hearing complainant represented by its legal counsel and respondent appeared. Again, respondent asked for fifteen days from October 8, 1998 to file his Answer. Complainant also asked the same period within which to file his reply.

On November 5, 1998, respondent filed an urgent motion for extension of time to file answer.

On November 9, 1998, respondent again filed an urgent motion for last extension of time or a period of fifteen (15) days from November 15, 1998 to file answer, which was granted by the Commission.

Since the respond ent has not filed his answer as required by the Honorable Supreme Court and th e Commission, the case was again set for hearing on November 9, 1999.

On said date, only the counsel for complainant appeared. Respond ent was absent. However, records show the notice sent to him was returned unserved with the annotation Mov ed. Records also show that respond ent has not filed his answer and again he was given a last chance to file his answer within ten (10) days from receipt of the Order dated Novemb er 9, 1999 and the hearing of the case was reset to Decemb er 9, 1999.

On December 9, 1999, only counsel for complainant appeared and moved that respond ents right to file answer be deemed waived and that complainant be allowed to file Memorandum after which, the case shall be deemed submitted for resolution.

On December 14, 1999, respondent again filed an Urgent Motion for Extension of fifteen (15) days from December 4, 1999 within which to file his answer.

On January 7, 2000, the complainant filed a Memorandum, a copy of which was furnished to respondent and which was not controverted by respond ent.

All told, respondent filed six (6) motions for extension of time to file Answer and up to this time, which is almost seven (7) years from the time the Honorable Supreme Court required respondent to file his answer to the complaint, respondent has not filed any answer,[10]

on account of which the investigating commissioner considered the case as now ready for resolution.[11]

Thereafter, th e investigating commissioner submitted his Report. Dated January 20, 2003,[12] the Report recites the factual background of the case and the commissioners discussion and findings thereon, thus:

Frabal Fishing and Ice Plant Corporation (hereinafter, Frabal) was the owner of a parcel of land located along Ramon Magsaysay Boulevard, Sta. Mesa, Manila which was leased to Wheels Distributors, Inc. (hereinafter, Wheels), an authorized dealer of cars and motor vehicles of various make;

A dispute arose betw een Frabal and Wh eels regarding the terms and conditions of th e lease contract. Th e dispute eventually led to a lawsuit. Frabal hired the s ervices of respondent Atty. Danilo G. Macalino as counsel for the purpose of representing its interest in the said lawsuit;

Frabal merged and was absorbed by Petitioner corporation on February 12, 1991, with the former conveying, assigning and transferring all its business assets and liabilities to the latter, including all judicial and extrajudicial claims. Hence, Petitioner was substituted in lieu of Frabal in the formers lawsuit with Wheels;

As Petitioners legal counsel, Respondent advised Petition er to sever e all contractual relationship with Wheels as a step towards eventually evicting the latter from the property they were occupying;

Hence, upon advice of Respondent, the contract of lease between Frabal and Wheels was terminated. Respondent likewise advised Petitioner to return the guarantee deposit equivalent to two (2) months rental or th e amount of P50,000.00 to Wheels;

On March 2, 1988, Petitioner prepared Metrobank Check No. MB350288 dated March 8, 1988 for the amount of P50,000.00. The check was crossed and made payable to the Wh eels Distributors, Inc. (Annex A).

Respondent volunteered to bring the check to the office of Wheels himself and to make them accept it. Hence, on March 3, 1988, Respondent sent his representative to Petitioners office to get the said check;

Respondents representative duly received th e said check from Petitioner, as proof of which he signed Check Voucher No. 3-012 (Annex B);

Thereafter, Respond ent repres ented to Petition er that he was able to deliver the check to Wh eels Distributors, Inc.;

The suit between Petition er and Wheels continued for several years. In the meantime, Petitioner changed counsels, replacing Respondent with someone else;

Finally, sometime in May 1994, the suit ended in amicable settlement. In the process of negotiating the terms and conditions of the settlement, Wheels informed Petitioner that it never received therefund (sic) guarantee deposit in the amount of P50,000.00;

Petitioner was shocked to learn this piece of information from Wheels Distributors as all along Respondent had repres ented to Petition er that Wh eels has already received the guarantee deposit of P50,000.00;

Petitioner searched its files for the subj ect check. After locating the check, P etition er noted that at the back of th e check was a rubber stamp marking indicating that it was deposited with the United Savings Bank Head Office on May 13, 1988 to Account No. CA-483-3. United Savings Bank has since been acquired by the United Coconut Planters Bank (UCPB) and is now known as UCPB Savings Bank;

Petitioner checked with Wh eels Distributors from whom it later learned that the latter never maintained an account with the United Savings Bank, now the UCPB Savings Bank;

Petitioner wrote to Respond ent on May 19, 1994 to explain why the check in issue never reached Wheels Distributors and how it was endorsed and encashed d espite the fact that it was a crossed check (Copy of said letter is Annex C);

Despite receipt of said letter, however, Respondent never responded nor attempted to explain his side to what strongly appears to be a gross misappropriation of the money for his own personal use;

Hence, Petition er was constrained to institute an action for damages against Respondent Danilo G. Macalino as well as UCPB Savings Bank with the Regional Trial Court of Malabon, Branch 72 where th e same is now docketed as Civil Case No. 2382-MN;

That Respondent misappropriated the amount of P50,000.00 for his own personal use cannot be denied. An employee of UCPB in the person of Eduardo Estremadura testified in the aforestated case for damages that Respondent Atty. Danilo G. Macalino was the one maintaining Account No. CA-483-37 at UCPB, to which the crossed check payable to Wheels was deposited (TSN, p. 8, Aug. 24, 1995, copy of the TSN is Annex D);

The Metrobank Ch eck No. MB350288 dated March 8, 1988 for the amount of P50,000.00 was deposited to Respondents account is further shown in United Savings Bank Current Account Deposit Slip accomplished by Respondent when he deposited said check with United Savings Bank on May 13, 1988 (Copy of said deposit slip is Annex E).

DISCUSSION AND FINDINGS:

Respondent Atty. Danilo G. Macalino was given all the opportunity to answer and present his defenses to the complaint. Regrettably, th e records show that despite th e orders of the Suprem e Court and this Commission respondent has not taken any step to verify and inquire as to the status of the complaint against him. Almost three years since the submission of the complainants memorandum, respondent has not reacted nor made any move to protect himself and answer the complaint. Due process consists in being given the opportunity to be heard and we believe that in this case respondent has been given all the opportunity to be heard.

On the basis of the above, th e investigating commissioner concluded his Report with the following -

RECOMMENDATION

WHEREFORE, it is respectfully recommended that respondent be suspended from the practice of law for two (2) years and be ordered to account to complainant the amount of P50,000.00. Respondent should be warned that a similar offense will merit a more severe penalty.[13]

On June 21, 2003, the IBP Board of Governors passed Resolution No. XV-2003-341,[14] adopting and approving the report and recommendation of the investigating commissioner with a modification as to the penalty, to wit:

RESOLVED to ADOPT and APPROVE, as it is hereby ADOPTED, th e Report and Recommendation of the Investigating Commissioner of the above-entitl ed case, herein made part of this Resolution/Decision as Annex A; and finding the recommendation fully supported by th e evidence on record and the applicable laws and rules, with modification as to th e penalty to conform to the evidence, and considering respondents failure to account for the funds received by him in trust from complainant in gross violation of Canon 16 of the Code of Professional Responsibility, as well as for respondents lax, remiss and untroubled attitude in this case, Atty. Danilo G. Macalino is hereby SUSPENDED from the practice of law for one (1) year and Ordered to account to complainant the amount of P50,000.00 with a Warning that a similar offense will merit a more severe penalty.

This resolution is now before us for confirmation.

The relationship b etween 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.[15] So it is that the Code of Professional Responsibility provides:

CANON 16 - A LAWYER SHALL HOLD IN TRUST ALL MONEYS AND PROPERTIES OF HIS CLIENT THAT MAY COME INTO HIS POSSESSION.

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

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

Rule 16.03 - A lawyer shall deliver the funds and prop erty of his client when due or upon d emand. However, h e shall have a lien over the funds and may apply so much thereof as may be n ecessary to satisfy his lawful fees and disbursements, giving notice promptly ther eafter 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.

The Canon of Professional Ethics is even more explicit when it states:

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

Money of th e client or 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. (par. 11)

Here, we are in full accord with the findings, conclusion and recommendation of the IBP Board of Governors that respond ent misappropriated th e money entrusted to him and which he failed to account for to his client despite demand therefor.

Respondents failure to rebut complainants evidence clearly reveals his failure to live up to his duties as a lawyer in consonance with th e lawyers oath and the Code of Professional Responsibility. His repeated failure without any valid reason to comply with the orders of the Court requiring him to comment on th e complaint lends credence to the allegations thereof and manifests his tacit admission of the same. As aptly found by Commissioner Dulay, the following uncontroverted facts as supported by the annexes of the complaint had been established:

1. that Metrobank Ch eck No. MB350288 in the amount of P50,000.00 payable to Wheels Distributors (Annex A of Petition) was prepared by Frabal Fishing & Ice Plant Corporation (Annex B Petition) and released to respondents repres entative;

2. that the said Metrobank Check No. [MB350288] was deposited to Account No. 0110004833 under Account Name Danilo G. Macalino at the United Savings Bank (Annex E of Petition);

3. that on 19 May 1994 complainant wrote a letter to respond ent (Ann ex C of Petition) advising the latter that the Metrobank Check intended for Wheel Distributors, Inc. was not received by them (Wh eels Distributors) yet it was endorsed and encashed. Respondent was therefore requ ested to explain how the particular check was encashed. Respondent received th e letter on May 23, 1994 (Annex C-3 of Petition) and the records do not show that respondent replied to th e latter requiring him to explain; and

4. that complainant filed a civil case against UCPB Savings Bank, and Danilo Macalino before th e Regional Trial Court of Malabon, Metro Manila docketed as Civil Case No. 2382-MN (Annex D of Petition) and at th e hearing of said case on August 24, 1995, witness Eduardo Estremadura, a bookeep er of UCPB Bank positively testified that Danilo G. Macalino was the maintainer of Account No. CA-483-3 of the UCPB Savings Bank, Legaspi Branch (page 8 & 9 Annex D, TSN of hearing of Civil Case No. 2382-MN) and that Check No. 350288 was deposited to the Account of Danilo G. Macalino under CA-483-3 on May 13, 1988 (page 9 of Annex D, TSN of hearing); and was credited to the account of Danilo G. Macalino (page 12 of Annex D, TSN of hearing of Civil Case No. 2382-MN)[16],

from which established facts, the investigating commissioner made the following conclusions:

1. that Metrobank Check No. 350288 in the amount of P50,000.00 which was intended for Wheels Distributors, Inc. was deposited and th e amount credited to Account No. 483-3 of respondent Danilo G. Macalino with the UCPB Savings Bank.

2. that respondent when required by the complainant to explain and account for the amount of P50,000.00 caused by Metrobank Check No. 350288 which was not intended for him failed to reply and give any accounting of such funds to complainant.[17]

Respondents wanton failure to make an accounting and to return to his client the amount entrusted to him upon demand give rise to th e presumption that he misappropriated it, in violation of th e trust and confidence reposed on him. His act of holding on to complainants money without its acquiescence is conduct indicative of lack of integrity and propriety.[18] A lawyer, under his oath, pledges himself not to delay any man for money and is bound to conduct himself with all good fidelity to his client.[19]

It is clear, therefore, that respond ent, by depositing the check in his own account and subsequently deceiving his client into believing that h e delivered the same to Wh eels is undoubtedly guilty of deceit, malpractice, gross misconduct and unethical behavior. He caused dishonor, not m erely to himself but to th e noble profession to which he belongs. For, it cannot b e deni ed that the resp ect of litigants to the profession is inexorably diminished whenever a member of the Bar betrays their trust and confidence.[20] Like judges, lawyers must not only be clean; they must also appear clean. This way, the peoples faith in the justice system remains undisturbed.[21]

What is more, respondents repeated failures to comply with the orders of the Court requiring him to comment on the complaint indicate a high degree of irresponsibility on his part.

We have no hesitance, th en, in confirming the resolution passed by the IBP Board of Governors suspending respondent from the practice of law for one (1) year. We could have taken a more drastic action against respondent, but considering that he has no prior administrative record, it is our sentiment that th e recommended p enalty serves the purpose of protecting the interest of the public and the legal profession. After all, in Espiritu vs. Cabredo,[22] we imposed the same penalty on an attorn ey who similarly failed to account the mon ey received from his client and to restitute it without any reason.

WHEREFORE, Atty. Danilo G. Macalino is hereby declared guilty of violation of Canon 16 of the Code of Professional Responsibility, for his failure to immediately return and deliver th e funds of his former client upon demand, and is hereby SUSPENDED from the practice of law for a period of one (1) year effective immediately, with a STERN WARNING that a repetition of the same or similar acts shall be dealt with more severely. He is likewise ordered to return the sum of P50,000 to complainant within ten (10) hereof.

Let copies of the Resolution be entered into respondents record as an attorney and be furnished the Integrated Bar of the Philippines (IBP) and all the courts in the country for their information and guidance.

SO ORDERED.

ROSARIO JUNIO, complainant, v. ATTY. SALVADOR M. GRUPO, Respondent.

This is a complaint for disbarment filed against Atty. Salvador M. Grupo for malpractice and gross misconduct.

Complainant Rosario N. Junio alleged that

3. Sometime in 1995, [she] engaged the services of [respondent], then a private practitioner, for the redemption of a parcel of land covered by Transfer Certificate of Title No. 20394 registered in the name of her parents, spouses Rogelio and Rufina Nietes, and located at Concepcion, Loay, Bohol.

4. On 21 August 1995, [complainant] entrusted to [respondent] th e amount of P25,000.00 in cash to be used in the redemption of the aforesaid property. Respond ent received the said amount as evidenced by an acknowledgment receipt, a copy of which is being hereto attached as Annex A.

5. Notwithstanding the foregoing and for no valid reason, respondent did not redeem the prop erty; as a result of which the right of redemption was lost and the property was eventually forfeited.

6. Because of respondents failure to redeem the prop erty, complainant had demand ed [the] return of the money which she entrusted to the former for the above-stated purpose.

7. Despite repeated demands made by the complainant and without justifiable cause, respondent has continuously refused to refund the money entrusted to him.[1 ]

In his Answer, petitioner admitted receiving the amount in question for the purpose for which it was given. However, he alleged that

6. The subject land for which the money of complainant was initially intended to b e applied could really not be redeem ed anymore . . ;

7. Complainant knew th e mortgage agreement between h er parents and th e mortgage-owner had already expired, and what respondent was trying to do was a sort of [a] desperate, last-ditch attempt to persuade th e said mortgagee to relent and give back the land to the mortgagors with the tender of redemption; but at this point, the mortgagee simply would not budge anymore. For one reason or another, he would no longer accept the sum offered;

8. By the time that complainant was to return to Manila, it was already a foregone matter that respondents efforts did not succeed. And so, when transaction failed, respondent requested the complainant that he be allowed, in the meantime, to avail of the money because h e had an urgent n eed for some mon ey himself to help defray his childrens educational expenses. It was really a personal request, a private matter betw een respondent and complainant, thus, respondent executed a promissory note for the amount, a copy of which is probably still in the possession of the complainant.

9. . . . [T]he family of the complainant and that of the respondent were very close and intimate with each other. Complainant, as well as two of her sisters, had served respondents family as household helpers for many years when they were still in Manila, and during all those times they were treated with respect, affection, and equality. They were considered practically part of respondents own family.

That is why, when complainant requested . . . assistance regarding the problem of the mortgaged property which complainant wanted to redeem, respondent had no second-thoughts in extending a lending hand . . . .

Respondent did not ask for any fee. His services were purely gratuitous; his acts [were] on his own and by his own. It was more than pro bono; it was not even for charity; it was simply an act of a friend for a friend. It was just lamentably unfortunate that his efforts failed.

....

Of course, respondent accepts his fault, because, indeed, there were occasions when complainants sisters came to respondent to ask for the payment in behalf of complainant, and he could not produce the money because the circumstances somehow, did not allow it. [I]t does not mean that respondent will not pay, or that he is that morally depraved as to wilfully and deliberately re[nege] in his obligation towards the complainant.[2]

Complainant filed a reply denying that respondent informed her of his failure to redeem the prop erty and that respondent requested her to instead lend the money to him. [3]

The case was thereafter referred to the Integrated Bar of the Philippines (IBP) for investigation, report, and recommendation. However, while two hearings were set for this purpose, both were postponed at the instance of respondent. For this reason, on August 28, 2000, complainant asked the Investigating Commissioner [4] to consider the case submitted for decision on the basis of the pleadings theretofore filed. Respondent was required to comment on complainants motion, but he failed to do so. Consequ ently, the case was considered submitted for resolution.

In his report, dated January 5, 2001, the Investigating Commissioner found respondent liable for violation of Rule 16.04 of the Code of Professional Responsibility which forbids lawyers from borrowing money from their clients unless the latters inter ests are protected by the nature of the case or by ind epend ent advice. The Investigating Commissioner found that respondent failed to pay his clients money. However, in view of respondents admission of liability and plea for magnanimity, the Investigating Commissioner recommended that respondent be simply reprimanded and ordered to pay th e amount of P25,000.00 loan plus interest at the legal rate.

In its Resolution No. XIV-2001-183, dated April 29, 2001, the IBP Board of Governors adopted and approved the Investigating Commissioners findings. However, it ordered

[R]espondent . . . suspend ed indefinitely from th e practice of law for the commission of an act which falls short of the standard of the norm of conduct required of every attorney and . . . ordered [him] to return to the complainant the amount of P25,000.00 plus interest at the legal rate from the time the said amount was misappropriated, until full payment; provided that the total suspension shall be at least one (1) year from the date of said full payment.

On July 4, 2001, respondent filed a motion for reconsideration alleging that

(a) there was no actual hearing of the case wherein respondent could have fully ventilated and defended his position;

(b) the subject Resolution gravely modified the Report and Recommendation of th e Trial Commissioner, Hon. Pedro Magpayo, Jr., . . . such that the resultant sanctions that are ordered impos ed are too leonine, unjust and cruel;

(c) that the factual circumstances attending the matter which gave rise to the complaint were not rightly or fairly appreciated.[5]

He argues that the Court should adopt th e report and recommendation of the IBP Investigating Commissioner.

In its resolution of August 15, 2001, the Court resolved to treat respondents motion for reconsideration as a petition for review of IBP Resolution No. XIV 2001-183 and required complainant to comment on the petition.

In her comment, complainant states that her primary interest is to recover the amount of P25,000.00 with interest and that she is leaving it to the Court to decide whether respondent deserves the penalty recommended by the IBP. [6]

The Court resolves to partially grant the petition. In his report and recommendation, Investigating Commissioner Magpayo, Jr. made the following findings:

In his Answer, the respondent ADMITS all the allegations in paragraph 4 of the complaint which avers:

4. On 21 August 1995, complainant entrusted to respond ent th e amount of P25,000.00 in cash to be used in the red emption of the aforesaid property (parcel of land covered by TCT No. 20394 registered in the name of complainants parents located at Concepcion, Loay, Bohol). Respondent received the said amount as evidenced by an acknowledgment receipt (Annex A).

By way of confession and avoidance, the respond ent, . . . however, contend ed that when th e mortgagee refused to accept th e sum tender ed as the period of redemption had already expired, h e requested th e complainant to allow him in the meantime to use the mon ey for his childrens educational expenses[,] to which request th e complainant allegedly acceded and respondent even executed a promissory note (please s ee 4th par. of Ann ex B of complaint).

Respondent takes further refuge in the intimate and close relationship existing between himself and the complainants family on the basis of which his legal services were purely gratuitous or simply an act of a friend for a friend with no consideration involved. Unfortunately, his efforts to redeem the foreclosed property, as already stated, did not produce the desired result because the mortgagee would not budge anymore and would not accept the sum offered.

Thus, the respond ent concluded that th ere was, strictly speaking, no attorney-client [relationship] existing between th em. Rather, right from the start[,] everything was sort of personal, he added.

Granting to the respond ent the b enefit of th e doubt, we shall assume that th ere was in reality a loan in the amount of P25,000.00. This is likewise confirmed by the execution of a promissory note on 12 December 1996 by the respond ent who undertook to pay Mrs. Junio on or b efore January 1997 (Annex B of complaint). Moreover, th e demand l etter of 12 March 1998 (Annex B) mentions of reimbursement of the sum r eceived and interest of 24% per annum until fully paid giving the impression that the funds previously intended to be used for the repurchase of a certain property (Annex A of complaint) was converted into a loan with the consent of the complainant who gave way to the request of the respond ent to h elp defray his childrens educational expenses (par. 8 of Answer).

Be that as it may, th e duty and obligation to repay the loan remains unshaken. Having utilized the sum to fulfill his urgent need for some money, it is but just and prop er that he return th e amount borrowed togeth er with interest.

Five (5) years had already passed since respondent retained the cash for his own personal use. But notwithstanding the same and his firm promise to pay Mrs. Junio on or before January 1997 he has not demonstrated any volition to settle his obligation to his creditor[,] although admittedly there w[ere] occasions when complainants sister came to respondent to ask for the payment in behalf of complainant, worse, the passage of time made respondent somehow forgot about the obligation.

A lawyer shall not borrow money from his client unless the clients interests are fully protected by the nature of the case or by independent advice (Rule 16.04, Code of Professional Responsibility). This rule is intended to prevent the lawyer from taking advantage of his influence over the client.

This rule is especially significant in the instant case where the respond ent enjoys an immense ascendancy over th e complainant who, as well as two of his sisters, had served respondents family as household helpers for many years.

Having gained dominance over the complainant by virtue of such long relation of master and servant, the respondent took advantage of his influence by not returning the money entrusted to him. Instead, he imposed his will on the complainant and borrowed her funds without giving adequate security therefor and mindless of the interest of the complainant.

In the light of the foregoing, . . . respondent has committed an act which falls short of the standard of the norm of conduct required of every attorney. If an ordinary borrower of money is required by the law to repay the loan failing which he may be subjected to court action, it is more so in the case of a lawyer whose conduct serves as an example.[7]

It would indeed app ear from the records of the case that respondent was allowed to borrow the money previously entrusted to him by complainant for the purpose of securing the redemption of th e property belonging to complainants parents. Respondent, however, did not give adequate security for the loan and subsequently failed to settle his obligation. Although complainant denied having loaned th e money to respondent, the fact is that complainant accepted the promissory note given her by respond ent on December 12, 1996. In effect, complainant consented to and ratified respondents use of the money. It is noteworthy that complainant did not attach this promissory note to her complaint nor explain the circumstances surrounding its execution. She only mention ed it in her demand letter of March 12, 1998 (Annex B), in which she referred to respondents undertaking to pay her the P25,000.00 on or before January 1997. Under the circumstances and in view of complainants failure to deny the promissory note, th e Court is constrained to give credence to respondents claims that the mon ey previously entrusted to him by complainant was later converted into a loan.

Respondents liability is thus not for misappropriation or embezzlement but for violation of Rule 16.04 of the Code of Professional Responsibility which forbids lawyers from borrowing money from their clients unless the latters interests are protected by the nature of the case or by independent advice. In this case, respondents liability is compounded by the fact that not only did he not give any security for the payment of the amount loaned to him but that h e has also refused to pay the said amount. His claim that he could not pay the loan because circumstances . . . did not allow it and that, because of the passage of time, he somehow forgot about his obligation only underscores his blatant disregard of his obligation which reflects on his honesty and candor. A lawyer is bound to observe candor, fairness, and loyalty in all his dealings and transactions with his client. [8]

Respondent claims that complainant is a close personal friend and that in helping redeem the property of complainants parents, he did not act as a lawyer but as a friend, hence there is no client-attorney relationship between them. This contention has no merit. As explained in Hilado v. David, [9]

To constitute professional employment it is not essential that th e client should have employed the attorney professionally on any previous occasion . . . It is not necessary that any retainer should have been paid, promised, or charged for; neither is it material that the attorney consulted did not afterward undertake th e case about which the consultation was had. If a person, in respect to his business affairs or troubles of any kind, consults with his attorney in his professional capacity with the view to obtaining professional advice or assistance, and the attorney voluntarily permits or acquiesces in such consultation, then th e professional employment must be regarded as established . . . .

Considering the foregoing, the Investigating Commissioners recommendation to impose on respondent the penalty of reprimand and restitution of the amount loaned by him is clearly inadequate. On the other hand, the penalty of indefinite suspension with restitution imposed by th e IBP Board of Governors is too harsh in view of respondents apparent lack of intent to defraud complainant and of the fact that this appears to be his first administrative transgression. It is the penalty imposed in Igual v. Javier [10] which applies to this case. In that case, this Court ordered the respondent suspended for one month from the practice of law and directed him to pay the amount given him by his clients within 30 days from notice for his failure to return th e money in qu estion notwithstanding his admission that h e did not use the money for the filing of the appellees brief, as agreed by them, b ecause of an alleged quarrel with his clients.

Anent petition ers allegation regarding the lack of hearing during the IBP investigation, suffice it to say that he waived such right when he failed to comment on petitioners motion to submit the case for resolution on the basis of the pleadings theretofore filed despite due notice to him, not to mention the fact that it was he who had requested th e postpon ement of the two hearings scheduled by the Investigating Commissioner.

WHEREFORE, th e Court finds petitioner guilty of violation of Rule 16.04 of the Code of Professional Responsibility and orders him suspended from the practice of law for a period of one (1) month and to pay to respond ent, within 30 days from notice, the amount of P25,000.00 with interest at the legal rate, computed from December 12, 1996.

SO ORDERED.

FLAVIANO A. PELMOKA vs. FELIX T. DIAZ, JR., ABAD SANTOS, J.: In a verified complaint dated December 4, 1981, Flaviano A. Pelmoka charged Judge Felix T. Diaz, Jr. of the Court of First Instance of Nueva Ecija and Attorneys Facundo T. Bautista and Inocencio B. Garampil, Sr. with serious misconduct in connection with Civil Case No. 279-G, entitled Eustacio Nepomuceno, et al. vs. Ester Garampil, et al. The charge against Judge Diaz is for gross ignorance of the law and judicial proceedings; failure to protect the complainant's charging lien as one of the lawyers who intervened in the aforementioned civil case; and partiality, bias prejudice or malicious motive. This decision concerns Judge Diaz only who was required to file an answer to the complaint. The answer denies the allegations of the complaint with a prayer that it be dismissed. The complainant filed a reply to the answer and issues having been joined, it was ascertained that the case could be decided on the basis of the documentary evidence submitted without resorting to a formal hearing. The Rollo of the case reveals, according to Deputy Court Administrator Romeo D. Mendoza, the following:

Civil Case No. 279-G was a case for partition and reconveyance filed with the CFI of Nueva Ecija, Branch IV, on March 4, 1972, long before respondent judge was appointed to the Bench. When the respondent judge inherited the case in 1976, there were many side issues and/or incidents pending to be resolved, among which were: (a) Motion to exclude defendant Ester Garampil as an heir of the late Leon Arguelles; and (b) Motion for appointment of commissioners to partition the properties, both filed by herein complainant. Respondent judge issued an order denying the motion of the plaintiffs for exclusion of defendant Ester Garampil as heir so as to avoid the piecemeal adjudication of the issues raised in the case. (p. 74.) The motion of the plaintiffs for the appointment of commissioners was likewise denied by respondent judge for the reason that there was then pending before the Court of Appeals, an appeal involving the same parties and the same properties whereby the legality of a Deed of Donation concerning the same properties being litigated, is the very issue to be resolved. (p. 75.) It was for this reason that respondent judge held in abeyance the trial of Civil Case No. 279-G pending termination of the appeal before the Court of Appeals. (p. 80.) On May 4, 1981, a Motion to set the case for conference among the parties, was filed by defendants Serranos, Rigors and Garcias who were represented by Atty. Facundo T. Bautista. After a hearing on the aforesaid motion was held, the defendants moved for the approval of the "Compromise Agreement" dated July 1, 1981, which was signed by all the parties to the case (except defendant Ester Garampil), as well as by all the lawyers of the said parties, namely, complainant himself, representing the plaintiffs, Atty. Facundo Bautista, representing the defendants, and Atty. Inocencio Garampil, representing defendant Ester Garampil. (pp. 89-94.) The parties agreed that they would partition the properties being litigated in the manner specified in the "Compromise Agreement" and that they would be separately responsible for the payment of the fees of their respective lawyers. On September 21, 1981, the respondent judge issued a decision approving the said compromise agreement on July 1, 1981. (pp. 97-100.) Defendant Ester Garampil thereafter filed a motion to deposit in court, the purchase price of a commercial property in the amount of P250,000.00 in order that the proceeds thereof may be disposed of in accordance with the approved compromise agreement. Complainant then filed a motion for the payment of his professional fee in the amount of P57,519.00, (pp. 104-105.) which was later raised to P79,186.00 in two subsequent motions of the complainant. (pp. 113-119.) On October 22, 1981, defendant Ester Garampil filed a motion for the withdrawal of the sum of P20,060.00 (p.109.) from the amount deposited with the court, representing partial payment of her share in the estate pursuant to the expressed agreement of the heirs of the deceased contained in the compromise agreement, which motion was granted by the respondent judge. (p.110.) The other parties thereafter moved to withdraw their respective shares in the cash deposit with the court, and on the basis of the said motions, respondent judge issued the Order dated October 30, 1981, allowing the defendants to withdraw their shares; (p.120.) and the Order dated November 20, 1981, granting the request of the other parties for the withdrawal of their respective shares. (pp. 135-137.) In his complaint, complainant charged respondent judge with gross ignorance of the law and judicial proceedings committed in the following manner: (a) unduly delaying the disposition of Civil Case No. 279-G when respondent judge denied plaintiffs' motion for the appointment of commissioners to partition the properties; (b) not resolving plaintiffs' motion to exclude defendant Ester Garampil as heir of deceased Leon Arguelles despite early pronouncement of Judge Placido Ramos, respondent judge's predecessor, that Ester Garampil is not an heir of the deceased; (c) approving the compromise agreement of partition entered into by all the parties; (d) allowing Ester Garampil to withdraw the amount of P20,000.00 from the cash deposit, with the court, considering that she is not an heir of the deceased; and (e) ignoring complainant's motion for payment of his fees out of the money deposited with the court. The complainant further alleged that the respondent judge failed to protect his charging lien for his attorney's fees when he allowed plaintiffs to withdraw their share from the said deposit. He likewise charged respondent judge with bias and partiality when he allowed all the parties to withdraw their respective shares while the complainant was not allowed to do the same in so far as his charging lien is concerned. Respondent judge, in his Answer dated January 13, 1982, (pp. 62-71.) denied all the charges in the complaint. The respondent judge alleged that Civil Case No. 279-G was a case for reconveyance and partition of the estate of deceased Leon Arguelles which had been heard and tried by no less than four (4) judges before him. When he inherited the case in 1976, there were several side issues and/or incidents pending to be resolved and while all these side issues were pending before the court a quo, an appeal involving the same parties and the same properties being litigated, was then pending before the Court of Appeals. It was for this reason that the respondent judge denied complainant's motion for appointment of a commissioner as well as his motion to exclude defendant Ester Garampil as an heir. Respondent judge also stated that he allowed the parties, including defendant Ester Garampil who is not a compulsory heir, to withdraw their respective shares from the cash portion of the estate in order to implement the compromise agreement entered into by all the parties and their respective lawyers. With respect to the charge of the complainant that the respondent judge failed to protect his charging lien or f& attorney's fees, the respondent judge explained that he did not grant complainant's motion for payment of his professional fees because he could not ascertain the exact amount of complainant's just, reasonable and fair fee, considering that his claim of P79,186.00 was contested by the plaintiffs as being exorbitant. Deputy Court Administrator Mendoza has assessed the charges against Judge Diaz in the light of the record as follows: The respondent judge cannot be faulted for dismissing complainant's motion for appointment of commissioners as well as his motion to exclude defendant Ester Garampil as an heir. The respondent judge had to dismiss the said motions to avoid piecemeal adjudication of the issues raised before him. In fact, respondent judge even suspended the trial of the case until after the Court of Appeals shall have resolved the issue pending before it which involved the same parties and the same properties being litigated. The respondent judge was likewise justified in granting the motion of the parties to withdraw their respective shares from the cash portion of the estate. The respondent judge only implemented the compromise agreement entered into by all the parties and signed by all their respective lawyers including complainant herein. With respect to complainant's professional fees, it was specified in the compromise agreement that the parties would be separately responsible for the payment of the fees of their respective lawyers. Since the plaintiffs (complainant's clients), refused to pay complainant's claim for attorney's fee in the amount of P79,186.00 on the ground that the same is exorbitant, the remedy of the complainant is to file a separate action for recovery of his fees where the parties win be afforded the chance to prove their respective claims and defenses. In the case of Bongco vs. Judge Serapio, (Adm. Matter No. 1804-CAR, Feb. 28, 1980.) this Court held that where it does not appear from the facts in an administrative complaint that the assailed judicial acts of respondent judge were corrupt or inspired by an intention to violate the law, or were done in persistent disregard of well known legal rules, the complaint should be dismissed for lack of merit. The assessment is well taken except in respect of the failure of the respondent to protect the complainant's right to collect his professional fees. The respondent should not have allowed the clients of the complainant to withdraw their shares from the cash deposit without extending ample protection to the latter's claim. This error was compounded by his order allowing even Ester Garampil to withdraw her share when she did not sign the compromise agreement of July 1, 1981.

It was grossly unfair for the respondent to leave the complainant holding an empty bag, so to speak, after he had rendered his professional services as counsel to the plaintiffs. True it is that the compromise agreement stipulates that the parties shall be separately responsible for the payment of the fees for their respective lawyers; nevertheless, the respondent should not have improvidently allowed the clients of the complainant to withdraw their shares without first determining his reasonable fees. A lawyer has the right to claim the fruits of his labor. He has the equitable right to be paid his fees out of the judgment which he has obtained from a court of justice. Any allegation of exorbitant or excessive fees should have been resolved by the respondent Judge on the basis of quantum meruit. Or the respondent could have inquired from the plaintiffs what they considered as reasonable attorney's fees for the services of complainant, direct the payment of such "reasonable amount" as partial payment of his attorney's fees, and set for hearing the disputed difference between the claim of the complainant and the amount considered reasonable by the plaintiffs. WHEREFORE, for his failure to protect the complainant's charging lien, the respondent is hereby reprimanded. SO ORDERED.

DANIEL LEMOINE, complainant, vs. ATTY. AMADEO E. BALON, JR., respondent.

On December 17, 1999, complainant Daniel Lemoine, a French national, filed a verified complaint[1] against respondent Atty. Amadeo E. Balon, Jr., for estafa and misconduct before the Integrated Bar of the Philippines. The case, docketed as CBD Case No. 99-679, was referred by the Commission on Bar Discipline to an Investigator for investigation, report and recommendation.

The facts that spawned the filing of the complaint are as follows:

In early 1998, complainant filed a car insurance claim with the Metropolitan Insurance Company (Metropolitan Insurance), the insurer of his vehicle which was lost. As complainant encountered problems in pursuing his claim which was initially rejected,[2] his friend, a certain Jesus Jess Garcia (Garcia), arranged for the engagement of respondents services.

By letter[3] of October 21, 1998 addressed to Elde Management, Inc., ATTN: Mr. Daniel Lemoine, under whose care complainant could be reached, respondent advised complainant, whom he had not before met, that for his legal services he was charging 25% of the actual amount being recovered. . . payable upon successful recovery; an advance payment of P50,000.00 to be charged [to complainant] to be deducted from whatever amount [would] be successfully collected; P1,000.00 as appearance and conference fee for each and every court hearings, conferences outside our law office and meetings before the Office of the Insurance Commission which will be also charged to our 25% recovery fee; and legal expenses such as but not limited to filing fee, messengerial and postage expenses . . . and other miscellaneous but related expenses, to be charged to complainants account which would be reimbursed upon presentation of statement of account.

The letter-proposal of respondent regarding attorneys fees does not bear complainants conformity, he not having agreed therewith.

It appears that Metropolitan Insurance finally offered to settle complainants claim, for by letter[4] of December 9, 1998 addressed to it, respondent confirmed his acceptance of its offer to settle the claim of complainant in an ex-gratia basis of 75% of his policy coverage which is therefore FIVE HUNDRED TWENTY FIVE THOUSAND (P525,000.00) PESOS.

A day or a few days before December 23, 1998 when complainant left for France,[5] he, on the advice of respondent, signed an already prepared undated Special Power of Attorney[6] authorizing respondent and/or Garcia to bring any action against Metropolitan Insurance for the satisfaction of complainants claim as well as to negotiate, sign, compromise[,] encash and receive payment from it. The Special Power of Attorney was later dated December 23, 1998 on which same date Metropolitan Insurance issued a Chinabank Check No. 841172 payable to complainant in the amount of P525,000.00 as full settlement of the claim.[7] The check was received by respondent.

In the meantime, complainant returned to the Philippines in early January 1999 but left again on the 24th of the same month.[8] On inquiry about the status of his claim, Garcia echoed to complainant what respondent had written him (Garcia) in respondents letter[9] ofMarch 26, 1999 that the claim was still pending with Metropolitan Insurance and that it was still subject of negotiations in which Metropolitan Insurance offered to settle it for P350,000.00 representing fifty percent thereof. In the same letter to Garcia, respondentsuggested the acceptance of the offer of settlement to avoid a protracted litigation.

On December 6, 1999, on complainants personal visit to the office of Metropolitan Insurance, he was informed that his claim had long been settled via a December 23, 1998 check given to respondent the year before.[10] Complainant lost no time in going to the law office of respondent who was not around, however, but whom he was able to talk by telephone during which he demanded that he turn over the proceeds of his claim.[11]

Respondent thereupon faxed to complainant a December 7, 1999 letter[12] wherein he acknowledged having in his possession the proceeds of the encashed check which he retained, however, as attorneys lien pending complainants payment of his attorneys fee, equivalent to fifty percent (50%) of entire amount collected. In the same letter, respondent protested what he branded as the uncivilized and unprofessional behavior complainant reportedly demonstrated at respondents office. Respondent winded up his letter as follows, quoted verbatim:

We would like to make it clear that we cannot give you the aforesaid amount until and unless our attorneys fees will be forthwith agreed and settled. In the same manner, should you be barbaric and uncivilized with your approached, we will not hesitate to make a proper representation with the Bureau of Immigration and Deportation for the authenticity of your visa, Department of Labor and Employment for your working status, Bureau of Internal Revenue for your taxation compliance and the National Bureau of Investigation [with] which we have a good network...

While it [is your] prerogative to file a legal action against us, it is also our prerogative to file a case against you. We will rather suggest if you could request your lawyer to just confer with us for the peaceful settlement of this matter. (Underscoring and emphasis supplied)

As despite written demands,[13] respondent refused to turn over the proceeds of the insurance claim and to acknowledge the unreasonableness of the attorneys fees he was demanding, complainant instituted the administrative action at bar on December 17, 1999.

In his Complaint-Affidavit, complainant alleged that [i]t appears that there was irregularity with the check, it having been issued payable to him, but and/or AMADEO BALON was therein intercalated after his (complainants) name.[14]

Maintaining that respondent was entitled to only P50,000.00 in attorneys fees,[15] complainant decried respondents continued possession of the proceeds of his claim[16]and his misrepresentations that the recovery thereof was fraught with difficulties.[17]

In his Counter-Affidavit[18] of February 18, 2000, respondent asserted that his continued retention of the proceeds of complainants claim is in lawful exercise of his lien for unpaid attorneys fees. He expressed readiness, however, to account for and turn them over once he got paid fifty percent (50%) thereof, he citing the so called contingent fee billing method of no cure, no pay adopted by practicing lawyers in the insurance industry as the basis of the amount of his attorneys fees,[19] which to him was justified in the absence of an attorney-client contract between him and complainant, the latter having rejected respondents letter-proposal of October 21, 1998.[20]

Respondent also highlighted the value of the time and efforts he extended in pursuing complainants claim and the expenses he incurred in connection therewith. He went on to assert that his inability to contact complainant whose whereabouts he did not know prompted him to encash the check and keep the proceeds thereof in conformity with the Special Power of Attorney executed in his favor.[21]

During the hearings conducted by the IBP Investigator, complainant echoed his allegations in his Complaint-Affidavit and stressed that he turned down as unreasonable respondents proposal in his October 21, 1998 letter that he be paid 25% of the actual amount collected for his legal services.[22] And he presented documentary evidence, including the March 26, 1999 letter of respondent informing his co-attorney-in-fact Garcia of the supposedly still unrecovered claim and suggesting acceptance of the purported offer of Metropolitan Insurance to settle complainants claim at P350,000.00.

Explaining how his above-mentioned March 26, 1999 letter to Garcia came about, respondent declared that it was made upon Garcias request, intended for a certain Joel Ramiscal (Ramiscal) who was said to be Garcias business partner.[23]

Respondent later submitted a June 13, 2001 Supplement[24] to his Counter-Affidavit reiterating his explanation that it was on Garcias express request that he wrote the March 26, 1999 letter, which was directed to the fax number of Ramiscal.

Additionally, respondent declared that in the first week of May 1999, on the representation of Garcia that he had talked to complainant about respondents retention of fifty percent (50%) of the insurance proceeds for professional fees less expenses,[25] he gave Garcia, on a staggered basis, the total amount of P233,000.00 which, so respondent averred, is the amount of insurance claim complainant is entitled to receive less attorneys fees and expenses.[26] Thus, respondent claimed that he gave Garcia the amount of P30,000.00 onMay 31, 1999 at Dulcinea Restaurant in Greenbelt, Makati; the amounts of P50,000.00, P20,000.00 and P30,000.00 on different occasions at his (respondents) former address through his executive secretary Sally I. Leonardo; the amount of P20,000.00 at the office of his (respondents) former employer Commonwealth Insurance Company through his subordinate Glen V. Roxas; and several other payments at Dulcinea, and at Manila Intercontinental Hotels coffee shop sometime in October 1999.[27] Respondent submitted the separate sworn statements of Leonardo and Roxas.[28]

Explaining why no written memorandum of the turn over of various payments to Garcia was made, respondent alleged that there was no need therefor since he very well knew Garcia who is a co-Rotarian and co-attorney-in-fact and whom he really dealt with regarding complainants claim.[29]

Respondent furthermore declared that he rejected complainants offer to pay him P50,000.00 for his services, insisting that since there had been no clear-cut agreement on his professional fees and it was through him that Metropolitan Insurance favorably reconsidered its initial rejection of complainants claim, he is entitled to a contingent fee of 50% of the net proceeds thereof.[30]

Finally, respondent declared that he, in connection with his follow-up of the insurance claim, incurred representation expenses of P35,000.00, entertainment and other representation expenses on various occasions of P10,000.00, and transportation and gasoline expenses and parking fees of P5,000.00;[31] and that his retention of complainants money was justified in light of his apprehension that complainant, being an alien without a valid working permit in the Philippines, might leave the country anytime without settling his professional fees.[32]

The Investigating Commissioner, by Report and Recommendation[33] of October 26, 2001, found respondent guilty of misconduct and recommended that he be disbarred and directed to immediately turn over to complainant the sum of P475,000.00 representing the amount of the P525,000.00 insurance claim less respondents professional fees of P50,000.00, as proposed by complainant.

The Board of Govenors of the Integrated Bar of the Philippines, acting on the Investigators Report, issued Resolution No. XV-2002-401[34] on August 3,2002, reading:

RESOLVED to ADOPT and APPROVE, as it is hereby ADOPTED and APPROVED, the Report and Recommendation of the Investigating Commissioner of the above-entitled case, herein made part of this Resolution/Decision as Annex A; and, finding the recommendation fully supported by the evidence on record and the applicable laws and rules, with modification, and considering respondents dishonesty which amounted to grave misconduct and grossly unethical behavior which caused dishonor, not merely to respondent but the noble profession to which he belongs, Respondent is hereby SUSPENDED from the practice of law for six (6) months with the directive to turn over the amount of Five Hundred Twenty Five Thousand (P525,000.00) Pesos to the complainant without prejudice to respondents right to claim attorneys fees which he may collect in the proper forum. (Underscoring supplied)

The records of the case are before this Court for final action.

Respondent, by a Motion for Reconsideration[35] filed with this Court, assails the Investigating Commissioners Report and Recommendation as not supported by clear, convincing and satisfactory proof. He prays for the reopening of the case and its remand to the Investigator so that Garcia can personally appear for his (respondents) confrontation.

There is no need for a reopening of the case. The facts material to its resolution are either admitted or documented.

This Court is in full accord with the findings of the IBP Investigator that respondent violated the following provisions of the Code of Professional Responsibility, to wit:

RULE 1.01 - A lawyer shall not engage in unlawful, dishonest, immoral or deceitful conduct.

xxx

CANON 15 - A lawyer shall observe candor, fairness and loyalty in all his dealings and transactions with his clients.

RULE 15.06 - A lawyer shall not state or imply that he is able to influence any public official, tribunal or legislative body.

xxx

CANON 16 - A lawyer shall hold in trust all moneys and properties of his client that may come into his possession.

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

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

RULE 16.03 - A lawyer shall deliver the funds and property 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.

xxx

CANON 17 - A lawyer owes fidelity to the cause of his client and he shall be mindful of the trust and confidence in him.

xxx

RULE 18.04 - A lawyer shall keep the client informed of the status of his case and shall respond within a reasonable time to the clients request for information.

xxx

RULE 21.02 - A lawyer shall not, to the disadvantage of his client, use information acquired in the course of employment, nor shall he use the same to his advantage or that of a third person, unless the client with full knowledge of the circumstances consents thereto.

Specifically with respect to above-quoted provision of Canon 16 of the Code of Professional Responsibility, the Filipino lawyers principal source of ethical rules, which Canon 16 bears on the principal complaint of complainant, a lawyer must hold in trust all moneys and properties of his client that he may come to possess. This commandment entails certain specific acts to be done by a lawyer such as rendering an accounting of all money or property received for or from the client[36] as well as delivery of the funds or property to the client when due or upon demand.[37] Respondent breached this Canon when after he received the proceeds of complainants insurance claim, he did not report it to complainant, who had a given address in Makati, or to his co-attorney-in-fact Garcia who was his contact with respect to complainant.

In fact, long after respondent received the December 23, 1998 check for P525,000.00 he, by his letter of March 26, 1999 to Garcia, had even the temerity to state that the claim was still pending and recommend acceptance of the 50% offer . . . which is P350,000.00 pesos.His explanation that he prepared and sent this letter on Garcias express request is nauseating. A lawyer, like respondent, would not and should not commit prevarication, documented at that, on the mere request of a friend.

By respondents failure to promptly account for the funds he received and held for the benefit of his client, he committed professional misconduct.[38] Such misconduct is reprehensible at a greater degree, for it was obviously done on purpose through the employment of deceit to the prejudice of complainant who was kept in the dark about the release of the check, until he himself discovered the same, and has to date been deprived of the use of the proceeds thereof.

A lawyer who practices or utilizes deceit in his dealings with his client not only violates his duty of fidelity, loyalty and devotion to the clients cause but also degrades himself and besmirches the fair name of an honorable profession.[39]

That respondent had a lien on complainants funds for his attorneys fees did not relieve him of his duty to account for it.[40] The lawyers continuing exercise of his retaining lien presupposes that the client agrees with the amount of attorneys fees to be charged. In case of disagreement or when the client contests that amount for being unconscionable, however, the lawyer must not arbitrarily apply the funds in his possession to the payment of his fees.[41] He can file, if he still deems it desirable, the necessary action or proper motion with the proper court to fix the amount of such fees.[42]

In respondents case, he never had the slightest attempt to bring the matter of his compensation for judicial determination so that his and complainants sharp disagreement thereon could have been put to an end. Instead, respondent stubbornly and in bad faith held on to complainants funds with the obvious aim of forcing complainant to agree to the amount of attorneys fees sought. This is an appalling abuse by respondent of the exercise of an attorneys retaining lien which by no means is an absolute right and cannot at all justify inordinate delay in the delivery of money and property to his client when due or upon demand.

Respondent was, before receiving the check, proposing a 25% attorneys fees. After he received the check and after complainant had discovered its release to him, he was already asking for 50%, objection to which complainant communicated to him. Why respondent had to doubly increase his fees after the lapse of about one year when all the while he has been in custody of the proceeds of the check defies comprehension. At any rate, it smacks of opportunism, to say the least.

As for respondents claim in his June 2001 Supplement to his Counter-Affidavit that he had on several occasions from May 1999 to October1999 already delivered a total of P233,000.00 out of the insurance proceeds to Garcia in trust for complainant, this does not persuade, for it is bereft of any written memorandum thereof. It is difficult to believe that a lawyer like respondent could have entrusted such total amount of money to Garcia without documenting it, especially at a time when, as respondent alleged, he and Garcia were not in good terms.[43] Not only that. As stated earlier, respondents Counter-Affidavit of February 18, 2000 and his December 7, 1999 letter to complainant unequivocally contained his express admission that the total amount of P525,000.00 was in his custody. Such illogical, futile attempt to exculpate himself only aggravates his misconduct. Respondents claim discredited, the affidavits of Leonardo and Roxas who, acting allegedly for him, purportedly gave Garcia some amounts forming part of the P233,000.00 are thus highly suspect and merit no consideration.

The proven ancillary charges against respondent reinforce the gravity of his professional misconduct.

The intercalation of respondents name to the Chinabank check that was issued payable solely in favor of complainant as twice certifiedby Metropolitan Insurance[44] is clearly a brazen act of falsification of a commercial document which respondent resorted to in order to encash the check.

Respondents threat in his December 7, 1999 letter to expose complainant to possible sanctions from certain government agencies with which he bragged to have a good network reflects lack of character, self-respect, and justness.

It bears noting that for close to five long years respondent has been in possession of complainants funds in the amount of over half a million pesos. The deceptions and lies that he peddled to conceal, until its discovery by complainant after about a year, his receipt of the funds and his tenacious custody thereof in a grossly oppressive manner point to his lack of good moral character. Worse, by respondents turnaround in his Supplement to his Counter-Affidavit that he already delivered to complainants friend Garcia the amount of

P233,000.00 which, so respondent claims, is all that complainant is entitled to, he in effect has declared that he has nothing more to turn over to complainant. Such incredible position is tantamount to a refusal to remit complainants funds, and gives rise to the conclusion that he has misappropriated them.[45]

In fine, by respondents questioned acts, he has shown that he is no longer fit to remain a member of the noble profession that is the law.

WHEREFORE, respondent Atty. Amadeo E. Balon, Jr., is found GUILTY of malpractice, deceit and gross misconduct in the practice of his profession as a lawyer and he is hereby DISBARRED. The Office of the Clerk of Court is directed to strike out his name from the Roll of Attorneys and to inform all courts and the Integrated Bar of the Philippines of this Decision.

Respondent is ordered to turn over to complainant, Daniel Lemoine, the amount of P525,000.00 within thirty (30) days from notice, without prejudice to whatever judicial action he may take to recover his attorneys fees and purported expenses incurred in securing the release thereof from Metropolitan Insurance.

SO ORDERED.