Jinon v Jiz (A.C. No.

9615)

Facts: The complaint alleged that Gloria Jinon (Gloria), after the death of her brother Charlie in July
2001, entrusted two (2) land titles covering properties owned by their deceased parents to her sister-in-
law, Viola J. Jinon (Viola): one located in Mangasina, Sta. Barbara, Iloilo (Sta. Barbara Property) and the
other at No. 12 Valencia St., Poblacion, Leganes, Iloilo (Leganes Property).

Eventually, Gloria sold the Sta. Barbara Property, which resulted in disagreements between her and
Viola regarding their respective shares in the proceeds. Consequently, Viola refused to return to Gloria
TCT No. T-119598, prompting Gloria to engage the services of Atty. Jizon April 29, 2003 to recover the
said title, for which she immediately paid an acceptance fee of ₱17,000.00.

In their subsequent meeting, Atty. Jiz assured the transfer of the title in Gloria's name. On August 13,
2003, Gloria, upon Atty. Jiz's instructions, remitted the amount of ₱45,000.004 to answer for the
expenses of the transfer. However, when she later inquired about the status of her case, she was
surprised to learn from Atty. Jiz that a certain Atty. Caras was handling the same. Moreover, when she
visited the Leganes Property, which has been leased out to one Rose Morado (Rose), she discovered that
Atty. Jiz has been collecting the rentals for the period June 2003 up to October 2004. When she
demanded for the rentals, Atty. Jiz gave her only ₱7,000.00, explaining that the balance of ₱5,000.00
would be added to the expenses needed for the transfer of the title of the Leganes Property to her
name.

The foregoing incidents prompted Gloria to terminate the legal services of Atty. Jiz and demand the
return of the amounts of ₱45,000.00 and ₱5,000.00 through a letter dated September 22, 2004, which
has remained unheeded. To date, Atty. Jiz has not complied with his undertaking to recover TCT No. T-
119598 from Viola and effect its transfer in Gloria’s name, and has failed to return her money despite
due demands.

Gloria then filed an administrative complaint with the IBP praying that Atty. Jiz will be ordered to
reimburse her of all the fees she paid and that Atty. Jiz will be punished accordingly by the IBP.

In his Answer and Position Paper, Atty. Jiz admitted accepting Gloria’s case but claimed that it was only
for the purpose of protecting her rights against her sister-in-law, Viola. According to him, the extent of
his legal services covered the negotiation and consummation of the sale of the Sta. Barbara Property
and the possible filing of an ejectment case against the tenant of the Leganes Property. Atty. Jiz also
alleged that Gloria approached him to secure another owner’s copy of a title she purportedly lost, but
which would turn out to be in Viola’s possession. Despite her offer to pay legal fees amounting to
₱100,000.00, heclaimed to have refused to file a "fraudulent cadastral case." He likewise denied having
committed to file one or to refer the case to another lawyer. Thus, Atty. Jiz asseverated that he was not
remiss in his legal duties to Gloria. Denying liability to reimburse Gloria for any amount, much less for
₱45,000.00,he claimed that he had rendered the corresponding legal services to her with fidelity and
candor.
The IBP found that Atty. Jiz was remis in his duty to update his client regarding her case which is a
violation of Canon 18, Rule 18.4. The IBP suspended Atty. Jiz from the practice of law for 2 years.

Issue: Whether or not Atty. Jiz is administratively liable for having been remiss in his duties as a
lawyer.

Held: He is liable. The Code of Professional Responsibility provides:

CANON 16 – A LAWYER SHALL HOLD IN TRUST ALL MONEYS AND PROPERTIES OF HIS CLIENT THAT
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 16.03 – A lawyer shall deliver the funds and property of his client when due or upon demand.

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.

Undeniably, "when a lawyer takes a client’s cause, he covenants that he will exercise due diligence in
protecting the latter’s rights. Failure to exercise that degree of vigilance and attention expected of a
good father of a family makes the lawyer unworthy of the trust reposed on him by his client and makes
him answerable not just to client but also to the legal profession, the court and society."

Moreover, money entrusted to a lawyer for a specific purpose, such as for the processing of transfer of
land title, but not used for the purpose, should be immediately returned.15 "A lawyer’s failure to return
upon demand the funds held by him on behalf of his client gives rise to the presumption that he has
appropriated the same for his own use in violation of the trust reposed to him by his client. Such act is a
gross violation of general morality as well as of professional ethics. It impairs public confidence in the
legal profession and deserves punishment."

In this case, Atty. Jiz committed acts in violation of his sworn duty as a member of the bar.1âwphi1 Aside
from the demand letter17 dated April 29, 2003 which he sent to Viola, he failed to perform any other
positive act in order to recover TCT No. T-119598 from Viola for more than a year. He also failed to
return, despite due demand, the funds allocated for the transfer of the title that he received from her.

The claim that the total amount of ₱62,000.00 that Gloria paid him was for the services he rendered in
facilitating the sale of the Sta. Barbara Property is belied by the receipt18 dated April 29, 2003, which
states that the amount of ₱17,000.00 paid by Gloria was for "consultation and other legal services" he
would render "up to and including April 30, 2003." His handwritten notation at the bottom portion
made it clear that he received the said amount "as full payment." He likewise failed to substantiate his
averment that he actually facilitated the sale of the Sta. Barbara Property.
Spouses San Pedro v Mendoza (A.C. No. 5440)

Facts: On or about November 21, 1996, complainants engaged the services of respondent to facilitate
the transfer of title to property, in the name of Isabel Azcarraga Marcaida, to complainants.
Complainants then gave respondent a check for ₱68,250.00 for the payment of transfer taxes. They also
gave respondent a check for ₱13,800.00 for respondent’s professional fee.

Respondent failed to produce the title despite complainants’ repeated follow-ups. Several
letters were sent by respondent explaining the delay in the transfer of title. However, respondent still
failed to produce the title. Complainants subsequently referred the case to the barangay. Respondent
refused to return the amount complainants gave for the transfer taxes. Complainants were then issued
a certificate to file action. They also sent a letter demanding the refund of the money intended for the
transfer taxes. Respondent still did not return the money.

Spouses San Pedro then file a complaint for disbarment with the IBP against respondent.

Respondent contested the allegations of complainants. According to him, it was complainants

who caused the three-year delay in the transfer of title to complainants’ names as they were not able to
furnish important documents to the respondent. In addition, respondent argued that complainants paid
him the measly sum of ₱13,800.00 despite all the work he did for them, including facilitating the sale of
the property. Respondent also claimed that retention of the money is justified owing to his receivables
from complainants for the services he rendered in various cases for the complainants.

The IBP found respondent in violation of Canon 16, Rule 16.01 and 16.03 of the Code of
Professional Responsibility. The Investigating Commissioner found that both checks issued to
respondent were encashed despite respondent’s failure to facilitate the release of the title in the name
of complainants. Complainants had to obtain a loan to facilitate the transfer of title in their names.

Issue: Whether or not Atty. Mendoza violated Canon 16 of the CPR for failing to hold in trust the
money of his clients.

Held: He violated the Code of Professional Responsibility. A lawyer’s duty under Canon 16 of the Code
of Professional Responsibility is clear:

The fiduciary nature of the relationship between counsel and client imposes on a lawyer the duty to
account for the money or property collected or received for or from the client[,] [thus] . . . [w]hen a
lawyer collects or receives money from his client for a particular purpose (such as for filing fees,
registration fees, transportation and office expenses), he should promptly account to the client how the
money was spent. If he does not use the money for its intended purpose, he must immediately return it
to the client. His failure either to render an accounting or to return the money (if the intended purpose
of the money does not materialize) constitutes a blatant disregard of Rule 16.01 of the Code of
Professional Responsibility. [The lawyer’s] failure to return the client’s money upon demand gives rise to
the presumption that he has misappropriated it for his own use to the prejudice of and in violation of
the trust reposed in him by the client. Respondent admitted that there were delays in the transfer of
title of property to complainants’ name. He continuously assured complainants that he would still fulfill
his duty. However, after three (3) years and several demands from complainants, respondent failed to
accomplish the task given to him and even refused to return the money. Complainants’ alleged failure to
provide the necessary documents to effect the transfer does not justify his violation of his duty under
the Code of Professional Responsibility.

Respondent’s assertion of a valid lawyer’s lien is also untenable. A valid retaining lien has the following
elements:

An attorney’s retaining lien is fully recognized if the presence of the following elements concur: (1)
lawyer-client relationship; (2) lawful possession of the client’s funds, documents and papers; and (3)
unsatisfied claim for attorney’s fees.

Further, the attorney’s retaining lien is a general lien for the balance of the account between the
attorney and his client, and applies to the documents and funds of the client which may come into the
attorney’s possession in the course of his employment. Respondent did not satisfy all the elements of a
valid retaining lien. He did not present evidence as to an unsatisfied claim for attorney’s fees. The
enumeration of cases he worked on for complainants remains unsubstantiated. When there is no
unsatisfied claim for attorney’s fees, lawyers cannot validly retain their client’s funds or properties.
Furthermore, assuming that respondent had proven all the requisites for a valid retaining lien, he cannot
appropriate for himself his client's funds without the proper accounting and notice to the client. The rule
is that when there is "a disagreement, or when the client disputes the amount claimed by the lawyer . . .
the lawyer should not arbitrarily apply the funds in his possession to the payment of his fees.

Luna v Galarrita (A.C. No. 10662)

Facts: Luna alleged that he retained Atty. Galarrita’s legal services in filing a foreclosure Complaint on
October 14, 2002 before the Regional Trial Court of Gumaca, Quezon. The Complaint against one Jose
Calvario (Calvario) alleged that Calvario borrowed P100,000.00 from Luna. This loan was secured by a
Deed of Real Estate Mortgage over a parcel of land in Quezon Province. Due to non-payment of the
loan, Luna filed the Complaint praying for payment of the obligation with interest, and issuance of a
foreclosure decree upon Calvario’s failure to fully pay within the period. The parties tried to amicably
settle the case during pre-trial, followed by Luna’s presentation and offer of evidence. Atty. Galarrita
opted to enter into a settlement with the other party after his formal offer of evidence. They submitted
the Kasunduan (Compromise Agreement) before the trial court on February 14, 2006. It provided that
Calvario would pay Luna P105,000.00 as payment for his mortgaged land and, in turn, Luna would cause
the removal of the encumbrance annotation on the land title. The trial court approved the Compromise
Agreement in its February 20, 2006 Decision. Luna alleged that Atty. Galarrita never informed him of this
Compromise Agreement, and did not deliver to him the P100,000.00 settlement proceeds Atty. Galarrita
had received. In August 2009, Luna received a letter from one of the heirs of Jose Calvario, Emma C.
Tayag, seeking delivery of the land title since they paid the P100,000.00 settlement amount.28 Another
heir, Lutchiare Calvario, wrote Luna in September 2009 again demanding delivery of title.
Luna then filed a complaint for disbarment against the respondent with the IBP for failure of remitting
to him the payment made in the amicable settlement.

In his Verified Answer, Atty. Galarrita prays for the dismissal of the disbarment Complaint. He argues
that he entered the Compromise Agreement by virtue of a Special Power of Attorney that includes this
purpose. He regularly submitted reports to Luna on developments and possible settlement before he
entered the Compromise Agreement.36 He submits that Luna "‘slept’ on his rights." Atty. Galarrita adds
that under their General Retainership Agreement, Luna shall pay him 4,000.00 monthly. Luna should
have paid P48,000.00 as of November 17, 2006, and after four years with no revocation, termination, or
nullification, Luna’s unpaid obligation amounted to P208,000.00. He listed other unpaid amounts for his
legal services. Atty. Galarrita, thus, argues for an application of the rule on retaining lien. Atty. Galarrita
also raises the two-year prescription under Rule VIII, Section 1 of the Rules of Procedure of the
Integrated Bar of the Philippines Commission on Bar Discipline.43 More than four years elapsed since
their last communication in 2006 when the Compromise Agreement became final.

The IBP found that respondent violated Rule 16.03 of the Code of Professional Responsibility and
ordered that respondent be suspended from the practice of law.

Issue: Whether or not Atty. Galarrita violated the Code of Professional Responsibility.

Held: He violated the Code. Lawyers should maintain, at all times, "a high standard of legal proficiency,
morality, honesty, integrity and fair dealing, and must perform their four-fold duty to society, the legal
profession, the courts and their clients, in accordance with the values and norms embodied in the Code.
Members of the bar took their oath to conduct themselves "according to the best of [their] knowledge
and discretion with all good fidelity as well to the courts as to [their] clients[,]" and to "delay no man for
money or malice[.]These mandates apply especially to dealings of lawyers with their clients considering
the highly fiduciary nature of their relationship.57 Clients entrust their causes—life, liberty, and
property—to their lawyers, certain that this confidence would not be abused.

Complainant Luna entrusted respondent Atty. Galarrita with handling the civil case involving a
mortgaged land in Quezon Province. However, without complainant Luna’s consent, respondent Atty.
Galarrita settled this case with the other party.

Respondent Atty. Galarrita not only failed to promptly inform complainant Luna of the former’s receipt
of the P100,000.00 settlement proceeds but also refused to turn over the amount to complainant Luna.
This court has held that "any money collected for the client or other trust property coming into the
lawyer’s possession should promptly be reported by him [or her]. Rule 16.03 under Canon 6 of the Code
of Professional Responsibility provides that:
CANON 16 – A lawyer shall hold in trust all moneys and properties of his client that may come into his
possession.

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.

In this case, respondent Atty. Galarrita entered into the Compromise Agreement involving complainant
Luna’s property without informing him. Even though complainant Luna forewent the lack of authority
issue, respondent Atty. Galarrita still continued to act in bad faith by refusing to turn over the
P100,000.00 settlement amount received.

Foronda v Alvarez (A.C. No. 9976)

Facts: The complainant is an overseas Filipino worker in Dubai. In May 2008, she returned to the
Philippines to institute a case for the nullification of her marriage. The respondent was referred to her
and the complainant agreed to engage his services for a fee of ₱195,000.00 to be paid as follows: 50% or
₱100,000.00 upon the signing of the contract; 25% or ₱50,000.00 on or before June 10, 2008; and 25%
or ₱45,000.00 before the filing of the case. The complainant paid the amounts as agreed. The amount of
₱45,000.00 was even paid on June 10, 2008, after being informed by the respondent that the petition
for the annulment of marriage was ready for filing. The complainant averred that the respondent
promised to file the petition after he received the full payment of his attorney’s fee, or on June 11,
2008. In September 2008, the complainant inquired about the status of her case and was allegedly told
by the respondent that her petition was pending in court; and in another time, she was told that a
decision by the court was already forthcoming. However, when she came back to the country in May
2009, the respondent told her that her petition was still pending in court and apologized for the delay.
Eventually, the complainant was able to get a copy of her petition and found out that it was filed only on
July 16, 2009. The complainant further alleged in her complaint that the week after she signed the
contract of service with the respondent, the latter requested for a meeting. Thinking that they were
going to discuss her case, she agreed. But during the meeting, the respondent invited her to be an
investor in the lending business allegedly ran by the respondent’s sister-in-law. The respondent
encouraged her to invest ₱200,000.00 which he said can earn five percent (5%) interest per month. The
complainant finally agreed on the condition that the respondent shall issue personal and post-dated
checks in her favor dated the 10th of each month starting July 2008 until June 10,2009, representing the
five percent (5%) interest that the complainant’s money shall earn. The complainant then gave the Php
200,000.00 to the respondent upon security of 13 checks. Upon presentment of these checks, the
drawee-bank honored the first two (2) checks, but the rest were dishonored for being drawn against a
closed account. When she brought the matter to the respondent, he promised to pay her in cash. The
respondent failed to pay the entire obligation as promised.

Complainant then filed a case for disbarment against respondent with the IBP.

In his Answer,9 the respondent admitted that he filed the petition for annulment only in July 2009 but
this was not due to his own fault. The delay was caused by the complainant herself who allegedly
instructed him to hold the filing of the said petition as she and her husband were discussing a possible
reconciliation.10 He further claimed that he filed the petition on July 16, 2009 after negotiations with
the complainant’s husband apparently failed. The respondent also admitted that he invited the
complainant to be a partner in a lending business and clarified that the said business was being
managed by a friend. He further stated that he was also involved in the said business as a partner. By
way of special and affirmative defense, the respondent asserted the following: that it was the
complainant who owed him notarial fee amounting to 80,000.00 as he notarized a deed of conditional
sale executed between her and a certain Rosalina A. Ruiz over a real property worth 4,000,000.00;15
and that the contract he executed with the complainant was a mere contract of loan. Being a contract of
loan, he cannot be held guilty of violation of Batas Pambansa Bilang 22 (B.P. Blg. 22) since the checks he
issued were to serve only as security for it.

The IBP found that respondent is guilty of violating Canons 17 and 18 of the Code of Professional
Responsibility and ordered for his suspension from the practice of law for 1 year.

Issue: Whether or not respondent violated the Code of Professional Responsibility.

Held: He violated the Code. At the outset, it must be stressed that "[a] lawyer, by taking the lawyer’s
oath, becomes a guardian of the law and an indispensable instrument for the orderly administration of
justice."23 He can be disciplined for any conduct, in his professional or private capacity, which renders
him unfit to continue to be an officer of the court. For of all classes and professions, it is the lawyer who
is most sacredly bound to uphold the laws, for he is their sworn servant.

It was established that the complainant engaged the professional services of the respondent. She
expected the immediate filing of the petition for the nullity of her marriage after the full payment of
attorney’s fees on June 10, 2008. However, the respondent filed the said petition only on July 16, 2009.
The respondent gave out different reasons for the delay in an attempt to exculpate himself. At the end,
the respondent admitted the delay and apologized for it. It cannot be gainsaid that the complainant
through her agent was diligent in following up the petition. The different excuses proffered by the
respondent also show his lack of candor in his dealings with the complainant. "Once a lawyer 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."27 "[H]e is required by the Canons of Professional Responsibility to
undertake the task with zeal, care and utmost devotion."28 "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."
The respondent’s act of issuing worthless checks is a violation of Rule 1.01 of the Code of Professional
Responsibility which requires that "a lawyer shall not engage in unlawful, dishonest, immoral or
deceitful conduct."30 "[T]he issuance of checks which were later dishonored for having been drawn
against a closed account indicates a lawyer’s unfitness for the trust and confidence reposed on him,
shows such lack of personal honesty and good moral character as to render him unworthy of public
confidence, and constitutes a ground for disciplinary action." It cannot be denied that the respondent’s
unfulfilled promise to settle his obligation and the issuance of worthless checks have seriously breached
the complainant’s trust. She went so far as to file multiple criminal cases for violation of B.P. Blg. 22
against him. "The relationship of an attorney to his client is highly fiduciary. Canon 15 of the Code of
Professional Responsibility provides that ‘a lawyer shall observe candor, fairness and loyalty in all his
dealings and transactions with his client.’ Necessity and public interest enjoin lawyers to be honest and
truthful when dealing with his client."

Navarro v Solidum (A.C. No. 9872)

Facts: This case originated from a complaint for disbarment, dated 26 May 2008, filed by Natividad P.
Navarro (Navarro) and Hilda S. Presbitero (Presbitero) against Atty. Ivan M. Solidum, Jr. (respondent)
before the Integrated Bar of the Philippines Commission on Bar Discipline (IBP-CBD).

On 4 April 2006, respondent signed a retainer agreement with Presbitero to follow up the release of the
payment for the latter’s 2.7-hectare property located in Bacolod which was the subject of a Voluntary
Offer to Sell (VOS) to the Department of Agrarian Reform (DAR). The agreement also included the
payment of the debts of Presbitero’s late husband to the Philippine National Bank (PNB), the sale of the
retained areas of the property, and the collection of the rentals due for the retained areas from their
occupants. It appeared that the DAR was supposed to pay ₱700,000 for the property but it was
mortgaged by Presbitero and her late husband to PNB for ₱1,200,000. Presbitero alleged that PNB’s
claim had already prescribed, and she engaged the services of respondent to represent her in the
matter. Respondent proposed the filing of a case for quieting of title against PNB. Respondent and
Presbitero agreed to an attorney’s fee of 10% of the proceeds from the VOS or the sale of the property,
with the expenses to be advanced by Presbitero but deductible from respondent’s fees. Respondent
received ₱50,000 from Presbitero, supposedly for the expenses of the case, but nothing came out of it.

In May 2006, Presbitero’s daughter, Ma. Theresa P. Yulo (Yulo), also engaged respondent’s services to
handle the registration of her 18.85-hectare lot located in Nasud-ong, Caradio-an, Himamaylan, Negros.
Yulo convinced her sister, Navarro, to finance the expenses for the registration of the property.
Respondent undertook to register the property in consideration of 30% of the value of the property
once it is registered. Respondent obtained ₱200,000 from Navarro for the registration expenses.
Navarro later learned that the registration decree over the property was already issued in the name of
one Teodoro Yulo. Navarro alleged that she would not have spent for the registration of the property if
respondent only apprised her of the real situation of the property.

On 25 May 2006, respondent obtained a loan of ₱1,000,000 from Navarro to finance his sugar trading
business. It was agreed that said loan will be secured by a real estate mortgage. They also agreed that
respondent shall issue postdated checks to cover the principal amount of the loan as well as the interest
thereon. Respondent delivered the checks to Navarro, drawn against an account in Metrobank, Bacolod
City Branch, and signed them in the presence of Navarro. In June 2006, respondent obtained an
additional loan of ₱1,000,000 from Navarro, covered by a second MOA with the same terms and
conditions as the first MOA. Respondent sent Navarro, through a messenger, postdated checks drawn
against an account in Bank of Commerce, Bacolod City Branch. Respondent likewise discussed with
Navarro about securing a "Tolling Agreement" with Victorias Milling Company, Inc. but no agreement
was signed. Respondent also obtained a loan from Presbitero which is secured also by a real estate
mortgage covering a property in Brgy. Tacuring, Bacolod City. Respondent paid the loan interest for the
first few months. He was able to pay complainants a total of ₱900,000. Thereafter, he failed to pay
either the principal amount or the interest thereon. In September 2006, the checks issued by
respondent to complainants could no longer be negotiated because the accounts against which they
were drawn were already closed. When complainants called respondent’s attention, he promised to pay
the agreed interest for September and October 2006 but asked for a reduction of the interest to 7% for
the succeeding months.

In November 2006, respondent withdrew as counsel for Yulo. On the other hand, Presbitero terminated
the services of respondent as counsel. Complainants then filed petitions for the judicial foreclosure of
the mortgages executed by respondent in their favor. Respondent countered that the 10% monthly
interest on the loan was usurious and illegal. Complainants also filed cases for estafa and violation of
Batas Pambansa Blg. 22 against respondent.

Complainants then filed a case for disbarment against respondent with the IBP. Complainants alleged
that respondent induced them to grant him loans by offering very high interest rates. He also prepared
and signed the checks which turned out to be drawn against his son’s accounts. Complainants further
alleged that respondent deceived them regarding the identity and value of the property he mortgaged
because he showed them a different property from that which he owned. Presbitero further alleged that
respondent mortgaged his 263-square-meter property to her for ₱1,000,000 but he later sold it for only
₱150,000.

Respondent, for his defense, alleged that he was engaged in sugar and realty business and that it was
Yulo who convinced Presbitero and Navarro to extend him loans. Yulo also assured him that Presbitero
would help him with the refining of raw sugar through Victorias Milling Company, Inc. Respondent
alleged that Navarro fixed the interest rate and he agreed because he needed the money. He alleged
that their business transactions were secured by real estate mortgages and covered by postdated
checks. Respondent denied that the property he mortgaged to Presbitero was less than the value of the
loan. He also denied that he sold the property because the sale was actually rescinded. Respondent
claimed that the property he mortgaged to Navarro was valuable and it was actually worth more than
₱8,000,000. Respondent alleged that he was able to pay complainants when business was good but he
was unable to continue paying when the price of sugar went down and when the business with Victorias
Milling Company, Inc. did not push through because Presbitero did not help him. Respondent also
denied that he was hiding from complainants.

The IBP found respondent in violation of Rule 1.01 and Rule 16.01 of the Code of Professional
Responsibility and ordered that he be suspended from the practice of law for 2 years.

Issue: Whether or not respondent violated the Code of Professional Responsibility.

Held: He violated the Code. Rule 1.01 of the Code of Professional Responsibility provides:

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

With respect to his client, Presbitero, it was established that respondent agreed to pay a high interest
rate on the loan he obtained from her. He drafted the MOA. Yet, when he could no longer pay his loan,
he sought to nullify the same MOA he drafted on the ground that the interest rate was unconscionable.
It was also established that respondent mortgaged a 263-square-meter property to Presbitero for
₱1,000,000 but he later sold the property for only ₱150,000, showing that he deceived his client as to
the real value of the mortgaged property. Respondent’s allegation that the sale was eventually
rescinded did not distract from the fact that he did not apprise Presbitero as to the real value of the
property.

It is clear that respondent violated Rule 1.01 of the Code of Professional Responsibility. The Supreme
Court ruled that conduct, as used in the Rule, is not confined to the performance of a lawyer’s
professional duties.1 A lawyer may be disciplined for misconduct committed either in his professional or
private capacity.2 The test is whether his conduct shows him to be wanting in moral character, honesty,
probity, and good demeanor, or whether it renders him unworthy to continue as an officer of the court.

In this case, the loan agreements with Navarro were done in respondent’s private capacity. Although
Navarro financed the registration of Yulo’s lot, respondent and Navarro had no lawyer-client
relationship. However, respondent was Presbitero’s counsel at the time she granted him a loan. It was
established that respondent misled Presbitero on the value of the property he mortgaged as a collateral
for his loan from her. To appease Presbitero, respondent even made a Deed of Undertaking that he
would give her another 1,000-square-meter lot as additional collateral but he failed to do so.

Canon 16 and Rule 16.01 of the Code of Professional Responsibility provide:

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.
The fiduciary nature of the relationship between the counsel and his client imposes on the lawyer the
duty to account for the money or property collected or received for or from his client.

Navarro, who financed the registration of Yulo’s 18.85-hectare lot, claimed that respondent received
₱265,000 from her. Respondent countered that ₱105,000 was paid for real estate taxes but he could not
present any receipt to prove his claim. Respondent also claimed that he paid ₱70,000 to the surveyor
but the receipt was only for ₱15,000. Respondent claimed that he paid ₱50,000 for filing fee, publication
fee, and other expenses but again, he could not substantiate his claims with any receipt. As pointed out
by the IBP-CBD, respondent had been less than diligent in accounting for the funds he received from
Navarro for the registration of Yulo’s property.

As regards Presbitero, it was established during the clarificatory hearing that respondent received
₱50,000 from Presbitero. As the IBP-CBD pointed out, the records do not show how respondent spent
the funds because he was not transparent in liquidating the money he received from Presbitero.

Clearly, respondent had been negligent in properly accounting for the money he received from his
client, Presbitero. Indeed, his failure to return the excess money in his possession gives rise to the
presumption that he has misappropriated it for his own use to the prejudice of, and in violation of the
trust reposed in him by, the client.

Rule 16.04 of the Code of Professional Responsibility provides:

Rule 16.04. - A lawyer shall not borrow money from his client unless the client’s interests are fully
protected by the nature of the case or by independent advice. Neither shall a lawyer lend money to a
client except, when in the interest of justice, he has to advance necessary expenses in a legal matter he
is handling for the client.

While respondent’s loan from Presbitero was secured by a MOA, postdated checks and real estate
mortgage, it turned out that respondent misrepresented the value of the property he mortgaged and
that the checks he issued were not drawn from his account but from that of his son. Respondent
eventually questioned the terms of the MOA that he himself prepared on the ground that the interest
rate imposed on his loan was unconscionable. Finally, the checks issued by respondent to Presbitero
were dishonored because the accounts were already closed. The interest of his client, Presbitero, as
lender in this case, was not fully protected. Respondent violated Rule 16.04 of the Code of Professional
Responsibility, which presumes that the client is disadvantaged by the lawyer’s ability to use all the legal
maneuverings to renege on his obligation.6 In his dealings with his client Presbitero, respondent took
advantage of his knowledge of the law as well as the trust and confidence reposed in him by his client.