Espiritu vs Cabredo IV

AC # 5831, January 13, 2003

PALE Principle: A lawyer must never comingle his funds with his clients.
RULES:
 Canon 16 – A lawyer shall hold in trust all moneys and properties of his client that may come
into his profession
o 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.
FACTS: Cesar Espiritu (complainant) filed and administrative complaint with the IBP against Atty.
Juan Cabredo IV (respondent) for failure to fulfill a fiduciary obligation to a client.
Complainant was the president of Esphar Medical Center, and he executed a promissory note
that obliges him to pay P511,956 in monthly installments to Gencars, Inc. Gencars assigned to BPI-
FSB all of its rights regarding the promissory note. Complainant failed to pay for 3 consecutive
months, and demands were made to pay their obligation.
Complainant engaged the services of respondent to represent him in the civil case for
payment. Esphar’s representative, Maritess Alejandrino, delivered P51,160 to respondent’s office. It
was later found out that respondent did not deliver the money to the court or to BPI-FSB, even failing
to appear at the hearing of the complainant’s civil case. Complainant then filed a case for fraud
against respondent after amicably settling his civil case with the other party.
Respondent’s defense was that his secretary (Rose Tria) did indeed receive the money from
Esphar, but Tria failed to inform him about the money. Respondent shifted the blame of negligence
towards his staff. He is also willing to reimburse complainant to show his good faith and to remove
any suspicion that he used the amount for his own use and benefit.
IBP acted on the complaint and set hearings, but respondent failed to attend even after being
rescheduled for 3 times. Eventually, the investigating commissioner proceeded with the case and
decided that respondent be suspended from the practice of law for 3 months and ordered to return
the amount to Esphar.

ISSUE: Whether or not Atty. Cabredo should be suspended by the court for his actions.

HELD: YES. The SC suspended him for one year from the practice of law and ordered him to return
the money to Esphar.
The relationship between a lawyer and a client is highly fiduciary; it requires a high degree of
fidelity and good faith. Hence, in dealing with trust property, a lawyer should be very scrupulous. Money
or other trust property of the client coming into the possession of the lawyer should be reported by the
latter and accounted for promptly and should not, under any circumstances, be commingled with his
own or be used by him.
Even after receiving notice and two other demand letters, respondent never returned the money
of complainant nor paid it to the bank. Indeed, it is improbable that respondents secretary failed to
inform complainant about the receipt of such a substantial sum of money. In failing to account for the
money of his client, respondent violated not only the Code of Professional Responsibility but also his
oath to conduct himself with all good fidelity to his clients. Like judges, lawyers must not only be proper
but they must also appear to be so. This way, the people’s faith in the justice system would remain
unshaken.