THIRD DIVISION

MA. GINA L. FRANCISCO, A.C. No. 6155

JOSEPHINE S. TAN and CARLOS
M. JOAQUIN,
Complainants,
Present:

- versus –

TINGA, JJ.
ATTY. JAIME JUANITO P.
PORTUGAL,
Respondent. Promulgated:

March 14, 2006

x---------------------------------------------------------------------------------x

DECISION

TINGA, J.:

Complainants filed before this Court an affidavit-complaint[1] on 15

August 2003 against Atty. Jaime Juanito P. Portugal (respondent) for violation of
the Lawyers Oath, gross misconduct, and gross negligence. Complainants are
related to petitioners in G.R. No. 152621-23 entitled SPO1 Ernest C. Francisco,
SPO1 Donato F. Tan and PO3 Rolando M. Joaquin v. People of the Philippines,
in whose behalf respondent filed the Petition for Review on Certiorari
(Ad Cautelam) in the case.

The complaint against respondent originated from his alleged mishandling

of the above-mentioned petition which eventually led to its denial with finality
by this Court to the prejudice of petitioners therein.

The facts are as follows:

1
 On 21 March 1994, SPO1 Ernesto C. Francisco, SPO1 Donato F. Tan and
PO3 Rolando M. Joaquin (eventually petitioners in G.R. No. 152621-23,
collectively referred to herein as the accused) were involved in a shooting incident
which resulted in the death of two individuals and the serious injury of
another. As a result, Informations were filed against them before the
Sandiganbayan for murder and frustrated murder. The accused pleaded not guilty
and trial ensued. After due trial, the Sandiganbayan[2] found the accused guilty of
two counts of homicide and one count of attempted homicide.

At that juncture, complainants engaged the services of herein respondent

for the accused. Respondent then filed a Motion for Reconsideration with the
Sandiganbayan but it was denied in a Resolution dated 21 August 2001. Unfazed
by the denial, respondent filed an Urgent Motion for Leave to File Second Motion
for Reconsideration, with the attached Second Motion for
Reconsideration.[3] Pending resolution by the Sandiganbayan, respondent also
filed with this Court a Petition for Review on Certiorari (Ad Cautelam) on 3 May
2002.

Thereafter, complainants never heard from respondent again despite the

frequent telephone calls they made to his office. When respondent did not return
their phone inquiries, complainants went to respondents last known address only
to find out that he had moved out without any forwarding address.

More than a year after the petition was filed, complainants were
constrained to personally verify the status of the ad cautelam petition as they had
neither news from respondent about the case nor knowledge of his whereabouts.
They were shocked to discover that the Court had already issued a
Resolution[4] dated 3 July 2002, denying the petition for late filing and non-
payment of docket fees.

Complainants also learned that the said Resolution had attained finality and
warrants of arrest[5] had already been issued against the accused because

2
respondent, whose whereabouts remained unknown, did nothing to prevent the
reglementary period for seeking reconsideration from lapsing.

In his Comment,[6] respondent states that it is of vital significance that the

Court notes that he was not the original counsel of the accused. He only met the
accused during the promulgation of the Sandiganbayan decision convicting the
accused of two counts of homicide and one count of attempted homicide. He was
merely requested by the original counsel to be on hand, assist the accused, and be
present at the promulgation of the Sandiganbayan decision.

Respondent claims that there was no formal engagement undertaken by the

parties. But only because of his sincere effort and in true spirit of the Lawyers
Oath did he file the Motion for Reconsideration. Though admitting its highly
irregular character, respondent also made informal but urgent and personal
representation with the members of the Division of the Sandiganbayan who
promulgated the decision of conviction. He asserts that because of all the efforts
he put into the case of the accused, his other professional obligations were
neglected and that all these were done without proper and adequate remuneration.

As to the ad cautelam petition, respondent maintains that it was filed on

time. He stresses that the last day of filing of the petition was on 3 April 2002 and
on that very day, he filed with this Court a Motion for Extension of Time to File
Petition for Review,[7] seeking an additional thirty (30) days to file the petition.
Subsequently, on 3 May 2002, he filed the petition by registered mail and paid
the corresponding docket fees. Hence, so he concludes, it was filed within the
reglementary period.

Soon thereafter, respondent recounted all the herculean efforts he made in

assisting the accused for almost a year after the promulgation of the
Sandiganbayan decision. He considered the fact that it was a case he had just
inherited from the original counsel; the effect of his handling the case on his other
equally important professional obligations; the lack of adequate financial
consideration for handling the case; and his plans to travel to the United States to

3
explore further professional opportunities. He then decided to formally withdraw
as counsel for the accused. He wrote a letter to PO3 Rolando Joaquin (PO3
Joaquin), who served as the contact person between respondent and
complainants, explaining his decision to withdraw as their counsel, and attaching
the Notice to Withdraw which respondent instructed the accused to sign and file
with the Court. He sent the letter through registered mail but unfortunately, he
could not locate the registry receipt issued for the letter.

Respondent states that he has asked the accused that he be discharged from
the case and endorsed the Notice of Withdrawal to PO3 Joaquin for the latter to
file with the Court. Unfortunately, PO3 Joaquin did not do so, as he was keenly
aware that it would be difficult to find a new counsel who would be as equally
accommodating as respondent. Respondent suggests this might have been the
reason for the several calls complainants made to his office.

On 9 February 2004, the Court resolved to refer the matter to the Integrated
Bar of the Philippines (IBP) for investigation, report and recommendation.

The case was assigned to Investigating Commissioner Leland

R. Villadolid, Jr. (Commissioner Villadolid) who sent notices of hearing to the
parties but of the three complainants, only complainant Carlos Joaquin
appeared. Thus, in the mandatory conference held, the other two complainants
were declared as having waived their rights to further participate in the IBP
proceedings.[8]

The parties were directed to file their respective position papers and on 27
May 2005, Commissioner Villadolid submitted his Report and Recommendation
finding respondent guilty of violation of the Code of Professional
Responsibility[9] and recommended the imposition of penalty ranging from
reprimand to suspension of six (6) months.[10] On 12 November 2005, the Board
of Directors of the IBP resolved to adopt and
approve Commissioner Villadolids recommendation to find respondent guilty
and specifically to recommend his suspension for six (6) months as penalty.

4
 The only issue to be resolved in the case at bar is, considering all the facts
presented, whether respondent committed gross negligence or misconduct in
handling G.R. No. 152621-23, which eventually led to the ad cautelam petitions
dismissal with finality.

After careful consideration of the records of the case, the Court finds the
suspension recommended by the IBP proper.

In a criminal case like that handled by respondent in behalf of the accused,

respondent has a higher duty to be circumspect in defending the accused for it is
not only the property of the accused which stands to be lost but more importantly,
their right to their life and liberty. As held in Regala v. Sandiganbayan:[11]

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 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 x x x .

It is also the strict sense of fidelity of a lawyer to his client that

distinguishes him from any other profession in society. x x x[12]

At the onset, the Court takes notice that the ad cautelam petition was
actually filed out of time. Though respondent filed with the Sandiganbayan an
Urgent Motion for Leave to File Second Motion for Reconsideration with the
attached Second Motion for Reconsideration, he should have known that a second
motion for reconsideration is a prohibited pleading[13] and it rests on the sound
discretion of the Sandiganbayan to admit it or not. Thus, in effect, the motion did
not toll the reglementary period to appeal. Having failed to do so, the accused had
already lost their right to appeal long before respondent filed his motion for
extension. Therefore, respondent cannot now say he filed
the ad cautelam petition on time. Also important to note is the allegation of
complainants that the Sandiganbayan denied the second motion for

5
reconsideration in its Resolution dated 7 February 2002. This respondent does not
dispute.

As to respondents conduct in dealing with the accused and complainants,

he definitely fell short of the high standard of assiduousness that a counsel must
perform to safeguard the rights of his clients. As aptly observed by
Commissioner Villadolid, respondent had not been quite candid in his dealings
with the accused or complainants. The Court notes that though respondent
represented to the accused that he had changed his office address, still, from the
examination of the pleadings[14]he filed, it can be gleaned that all of the pleadings
have the same mailing address as that known to complainants. Presumably, at
some point, respondents office would have received the Courts Resolution
dismissing the petition. Of course, the prudent step to take in that situation was
to at least inform the client of the adverse resolution since they had constantly
called respondents office to check the status of the case. Even when he knew that
complainants had been calling his office, he opted not to return their calls.

Respondent professed an inkling that the several phone calls of

complainants may have been about the letter he sent PO3 Joaquin regarding his
desire to be discharged as counsel of the case. However, though aware of such
likelihood, respondent still did not return their calls. Had he done so, he and
complainants could have threshed out all unresolved matters between them.

Had respondent truly intended to withdraw his appearance for the accused,
he as a lawyer who is presumably steeped in court procedures and practices,
should have filed the notice of withdrawal himself instead of the accused. At the
very least, he should have informed this Court through the appropriate
manifestation that he had already given instructions to his clients on the proper
way to go about the filing of the Notice of Withdrawal, as suggested by
Commissioner Villadolid. In not so doing, he was negligent in handling the case
of the accused.

Certainly, respondent ought to know that he was the one who should have
filed the Notice to Withdraw and not the accused. His tale that he sent a registered
6
letter to the accused and gave them instructions on how to go about respondents
withdrawal from the case defies credulity. It should have been respondent who
undertook the appropriate measures for the proper withdrawal of his
representation. He should not have relied on his client to do it for him if such was
truly the case. Without the presentation of the alleged registry receipt (or the
return card, which confirms the receipt of the mail by the recipient) of the letter
he allegedly sent to PO3 Joaquin, the Court cannot lend credence to respondents
naked claim, especially so that complainants have been resolute in their stand that
they did not hear from respondent after the latter had filed
the ad cautelam petition. He could relieve himself of his responsibility as counsel
only first by securing the written conformity of the accused and filing it with the
court pursuant to Rule 138, Section 26 of the Rules of Court.[15]

The rule in this jurisdiction is that a client has the absolute right to
terminate the attorney-client relation at anytime with or without cause. The right
of an attorney to withdraw or terminate the relation other than for sufficient cause
is, however, considerably restricted. Among the fundamental rules of ethics is the
principle that an attorney who undertakes to conduct an action impliedly
stipulates to carry it to its conclusion. He is not at liberty to abandon it without
reasonable cause. A lawyers right to withdraw from a case before its final
adjudication arises only from the clients written consent or from a good cause.[16]

We agree with Commissioner Villadolid that the dismissal of

the ad cautelam petition was primarily due to the gross negligence of respondent.
The Court has stressed in Aromin v. Boncavil[17] that:

Once he agrees to take up the cause of the client, the lawyer owes fidelity
to such cause and must always be mindful of the trust and confidence reposed
in him. He must serve the client with competence and diligence, and champion
the latters cause with wholehearted fidelity, care, and devotion. Elsewise stated,
he owes entire devotion to the interest of the client, warm zeal in the
maintenance and defense of his clients rights, and the exertion of the 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. 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

7
 or defense. 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.[18]

Respondent has time and again stated that he did all the endeavors he
enumerated without adequate or proper remuneration. However, complainants
have sufficiently disputed such claim when they attached in their position paper
filed before the IBP a machine validated deposit slip in the amount of P15,500.00
for the Metro Bank savings account of one Jaime Portugal with account number
7186509273.[19] Respondent has neither admitted nor denied having claimed the
deposited amount.

The Court also rejects respondents claim that there was no formal
engagement between the parties and that he made all his efforts for the case
without adequate and proper consideration. In the words of then
Justice Panganiban (presently Chief Justice) in Burbe v. Atty. Magulta:[20]
After agreeing to take up the cause of a client, a lawyer owes fidelity to
both cause and client, even if the client never paid any fee for the attorney-client
relationship. Lawyering is not a business; it is a profession in which duty of
public service, not money, is the primary consideration.[21]

Also to the point is another case where this Court ruled, thus:

A written contract is not an essential element in the employment of an attorney;

the contract may be express or implied. To establish the relation, it is sufficient
that the advice and assistance of an attorney is sought and received in any matter
pertinent to his profession. x x x [22]

Hence, even if respondent felt under-compensated in the case he undertook

to defend, his obligation embodied in the Lawyers Oath and the Code of
Professional Responsibility still remains unwavering. The zeal and the degree of

8
fervor in handling the case should neither diminish nor cease just because of his
perceived insufficiency of remuneration.

Lastly, the Court does not appreciate the offensive appellation respondent
called the shooting incident that the accused was engaged in. He described the
incident, thus: the accused police officers who had been convicted of
[h]omicide for the salvage of Froilan G. Cabiling and Jose M. Chua and
[a]ttempted [h]omicide of Mario C. Macato.[23] Rule 14.01[24] of the Code of
Professional Responsibility clearly directs lawyers not to discriminate clients as
to their belief of the guilt of the latter. It is ironic that it is the defense counsel that
actually branded his own clients as being the culprits that salvaged the victims.
Though he might think of his clients as that, still it is unprofessional to be labeling
an event as such when even the Sandiganbayan had not done so.

The IBP Board of Governors recommended the suspension of respondent

for six (6) months, the most severe penalty recommended by
Commissioner Villadolid, but did not explain why such penalty was justified. In
a fairly recent case where the lawyer failed to file an appeal brief which resulted
to the dismissal of the appeal of his client in the Court of Appeals, the Court
imposed upon the erring lawyer the penalty of three (3) months
suspension.[25] The Court finds it fit to impose the same in the case at bar.

WHEREFORE, premises considered, respondent is hereby SUSPENDED

from the practice of law for three (3) months. Let a copy of the Resolution be
furnished the Bar Confidant for appropriate annotation in the record
of respondent.

SO ORDERED.

9
ALEX ONG, complainant, vs. ATTY. ELPIDIO D. UNTO, respondent.

DECISION
PUNO, J.:

This is a disbarment case filed by Alex Ong, a businessman

[1]

from Dumaguete City, against Atty. Elpidio D. Unto, for malpractice of law
and conduct unbecoming of a lawyer.
The Commission on Bar Discipline of the Integrated Bar of the Philippines
(IBP-Pasig City) found Atty. Unto guilty of malpractice and recommended the
penalty of one-month suspension from the practice of law or, at the very
least, a severe reprimand against him. [2]

First, we look at the antecedent facts. The records show that the
complainant received a demand-letter from the respondent, in the latters
capacity as legal counsel of one Nemesia Garganian. The full text of
respondents letter reads:
[3]

Dear Mr. Ong:

This is in connection with the claim of support of Miss Nemesia Garganian (my
client) from you for your only child, Anson Garganian, with her (Miss Nemesia
Garganian) and other claims which Miss Garganian is demanding from you. It is
now about two months that you have abandoned your legal and moral obligations
to support your only child with her (Miss Nemesia Garganian) and up to this
moment you have not given said financial support.

I am doing this as a preliminary basis to a possible amicable settlement, if you

desire so, so that you will not be dragged unnecessarily to a court proceeding in
connection with your legal and moral obligations to your son with Miss Garganian.

May I advise you that within three (3) days from your receipt of this letter, you
should return to her house her television and betamax which you got from her
house during her absence and without her knowledge and consent. Your failure to
comply with this demand, this office will be constrained to file the proper action in
court against you.

I hope within three (3) days from your receipt of this letter you may come to my
Law Office at the above address or you may send your lawyer and/or

10
representative to discuss with me about the preliminary matters in connection with
all the claims of Miss Garganian against you.

I hope that you will not fail us, so that we can thresh out this matter smoothly,
otherwise your intentional failure or refusal to discuss these claims amicably with
our office might be construed as your absolute refusal really.

Expecting you then.

Very truly yours,

ATTY. ELPIDIO D. UNTO

Counsel for Miss Nemesia Garganian
Dumaguete City

WITH MY CONSENT:

NEMESIA GARGANIAN

A few days thereafter, the respondent wrote a letter addressed to Dr.

Jose Bueno (Agaw), an emissary of the complainant. In this letter, the
respondent listed down the alleged additional financial demands of Ms.
Garganian against the complainant and discussed the courses of action that
he would take against the complainant should the latter fail to comply with
his obligation to support Ms. Garganian and her son. The relevant portion of
the respondents second letter reads: [4]

These are the demands which my client would want to be complied (with):

1. P1,500.00 monthly For the sustenance of Mr. Ongs son. x x x (Note: That this
amount of P1,500.00 should be up to the completion of Mr. Ongs son in the
elementary course and this is subject to adjustment when the son is already in the
secondary course or up to his college course).

2. P50,000.00 - This amount should be given to Miss Garganian as her starting

capital for her planned business venture to give her a source of her living since she
cannot anymore be a teacher in any government position because of her status,
having a child without being lawfully wedded. x x x.

3. The TV and the Betamax should be returned and delivered to the house of Miss
Garganian, without the presence of Mr. Alex Ong x x x.

4. The amount of P5,000.00 as my attorneys fees should be given or paid to me

tomorrow before noon in my Law Office, through my cousin, Dr. Jose Bueno.

11
Criminal, civil and administrative actions that I am contemplating to file
against Mr. Alex Ong will be withheld pending the compliance by Mr. Ong of
these compromise agreements.

Gaw, if not of (sic) your representation I believe that one-week time as grace
period for Mr. Ong is too long a time.

Thank you very much.

Very truly yours,

ATTY. ELPIDIO D. UNTO

Counsel for Miss Nemesia Garganian

It was alleged that the real father of Ms. Garganians son was the
complainants brother and that the complainant merely assumed his brothers
obligation to appease Ms. Garganian who was threatening to sue them. The
complainant then did not comply with the demands against him.
Consequently, the respondent filed a complaint with the Office of the
[5]

City Fiscal (now Prosecutors Office) of Dumaguete City against the

complainant, his wife, Bella Lim, and one Albina Ong, for alleged violation of
the Retail Trade Nationalization Law and the Anti-Dummy Law.
The next day, the respondent filed another criminal complaint against the
complainant, Lim, Ong and Adela Peralta for their alleged violation of the
Anti-Dummy Law.
In addition, the respondent commenced administrative cases against the
complainant before the Bureau of Domestic Trade, the Commission on
Immigration and Deportation, and the Office of the Solicitor
General. According to the complainant, these cases were subsequently
[6]

denied due course and dismissed by the aforesaid government agencies.

The foregoing prompted the complainant to file the present case for
disbarment. Essentially, the complainant alleged that the respondent
manufactured the criminal and administrative cases against him to blackmail
him or extort money from him. He claimed that the respondent solicited for
any information that could be used against him in the aforementioned cases
by offering any informer or would-be witness a certain percentage of
whatever amounts they could get from him. The complainant branded the
respondents tactics as highly immoral, unprofessional and unethical,
constitutingmalpractice of law and conduct gravely unbecoming of a lawyer.
In support of his accusations, the complainant submitted the following
documents: (1) the afore-quoted letters of the respondent addressed to the
complainant and Dr. Bueno; (2) Nemesia Garganians affidavit where she
12
denied any knowledge regarding the demands listed in the letter addressed
to Dr. Bueno; (3) an unsigned affidavit allegedly prepared by the respondent
for the complainant, wherein the latter was acknowledging that he sired Ms.
Ganganians son illegitimate child; (4) the criminal complaints filed against
the complainant for alleged violation of the Retail Trade Nationalization Law
and the Anti-Dummy Law; and (5) an affidavit of Manuel Orbeta, a neighbor
of the complainant who claimed that a representative of the respondent had
asked him to sign an affidavit allegedly prepared by the respondent, with an
offer to give any informer 20% and witness, 10%, of any amount he can get
from Mr. Alex Ong. To further bolster the disbarment case against the
respondent, the complainant also included a Supplemental Affidavit, citing
[7]

several cases previously filed against the respondent by other parties. [8]

The records show that the respondent was directed to submit his
comment on the complaint lodged against him. He did not file
[9]

any. Subsequently, the case was endorsed to the Office of the Solicitor
General for investigation, report and recommendation. In turn, the OSG
forwarded the records of the case to the Office of the Provincial Fiscal of
Negros Oriental, authorizing said office to conduct the investigation.
It appears that the respondent did not appear before the investigating
officer, then Provincial Fiscal Jacinto Bautista, to answer the charges against
him. Instead, he moved for postponement. After denying the respondents
third request for postponement, Fiscal Bautista proceeded with the reception
of the complainants evidence. The respondent was duly notified of the
on-going investigation but he did not show up. When it was the
respondents turn to present evidence, notices of the preliminary investigation
were sent to his home address in Valenzuela, Negros Oriental, his law office
in Dumaguete City and his last known address in Quezon City. The return
cards showed that he could not be located, although his wife received some
of the notices sent to his home in Dumaguete.
Meanwhile, the case was transferred from one investigating officer to
another, with some of them inhibiting from the investigation. Finally, the case
was assigned to 2 Asst. Provincial Prosecutor Cristino Pinili. Atty. Pinili
nd

deemed the respondents absence as waiver of his right to present his

evidence. Finding merit in the complainants cause, the investigator
recommended that respondent be suspended from the practice of law for
one month, or, at the very least, be severely reprimanded.
The records of the case were endorsed to the Office of the Solicitor
General. Thereafter, the OSG transmitted the records to the Integrated Bar
[10]

of the Philippines in Manila, for proper disposition, conformably with adopted

policies and procedures. The IBPs Commission on Bar Discipline adopted
[11]

Atty. Pinilis report and recommendation in toto.[12]

We affirm with modification.

13
 The complainant seeks the disbarment of the respondent. Thus, it is
meet to revisit the importance of the legal profession and the purpose of the
disbarment as aptly discussed in Noriega vs. Sison. We then held:
[13]

In resolving this disbarment case, (w)e must initially emphasize the degree of
integrity and respectability attached to the law profession. There is no denying that
the profession of an attorney is required after a long and laborious study. By years
of patience, zeal and ability, the attorney acquires a fixed means of support for
himself and his family. This is not to say, however, that the emphasis is on the
pecuniary value of this profession but rather on the social prestige and intellectual
standing necessarily arising from and attached to the same by reason of the fact
that every attorney is deemed an officer of the court.

The importance of the dual aspects of the legal profession has been wisely put by
Chief Justice Marshall of the United States Court when he said:

On one hand, the profession of an Atty. is of great importance to an individual and

the prosperity of his life may depend on its exercise. The right to exercise it ought
not to be lightly or capriciously taken from him. On the other hand, it is extremely
desirable that the respectability of the Bar should be maintained and that its
harmony with the bench should be preserved. For these objects, some controlling
power, some discretion ought to be exercised with great moderation and judgment,
but it must be exercised.

The purpose of disbarment, therefore, is not meant as a punishment depriving him

of a source of livelihood but is rather intended to protect the administration of
justice by requiring that those who exercise this function should be competent,
honorable and reliable in order that the courts and clients may rightly repose
confidence in them.

The relevant rule to the case at bar is Canon 19 of the Code of

Professional Responsibility. It mandates lawyers to represent their clients
[14]

with zeal but within the bounds of the law. Rule 19.01 further commands that
a lawyer shall employ only fair and honest means to attain the lawful
objectives of his client and shall not present, participate or threaten to
present unfounded criminal charges to obtain an improper advantage
in any case or proceeding.
Considering the facts of this case, we find that respondent has not
exercised the good faith required of a lawyer in handling the legal affairs of
his client. It is evident from the records that he tried to coerce the
complainant to comply with his letter-demand by threatening to file various
charges against the latter. When the complainant did not heed his warning,
he made good his threat and filed a string of criminal and administrative
cases against the complainant. We find the respondents action to be

14
malicious as the cases he instituted against the complainant did not have
any bearing or connection to the cause of his client, Ms. Garganian. Clearly,
the respondent has violated the proscription in Canon 19, Rule 19.01. His
behavior is inexcusable.
The records show that the respondent offered monetary rewards to
anyone who could provide him any information against the complainant just
so he would have a leverage in his actions against the latter. His tactic is
unethical and runs counter to the rules that a lawyer shall not, for corrupt
motive or interest, encourage any suit or proceeding and he shall not do
[15]

any act designed primarily to solicit legal business. In the case of Choa vs.
[16]

Chiongson, we held:
[17]

While a lawyer owes absolute fidelity to the cause of his client, full devotion to his
genuine interest, and warm zeal in the maintenance and defense of his right, as well
as the exercise of his utmost learning and ability, he must do so only within the
bounds of the law. He must give a candid and honest opinion on the merits and
probable results of his clients case with the end view of promoting respect for the
law and legal processes, and counsel or maintain such actions or proceedings only
as appear to him to be just, and such defenses only as he believes to be honestly
debatable under the law. He must always remind himself of the oath he took
upon admission to the Bar that he will not wittingly or willingly promote or
sue any groundless, false or unlawful suit nor give aid nor consent to the
same; Needless to state, the lawyers fidelity to his client must not be pursued at the
expense of truth and the administration of justice, and it must be done within the
bounds of reason and common sense. A lawyers responsibility to protect and
advance the interests of his client does not warrant a course of action
propelled by ill motives and malicious intentions against the other party.

(emphases ours)

The ethics of the legal profession rightly enjoin lawyers to act with the
highest standards of truthfulness, fair play and nobility in the course of his
practice of law. A lawyer may be disciplined or suspended for any
misconduct, whether in his professional or private capacity. Public [18]

confidence in law and lawyers may be eroded by the irresponsible and

improper conduct of a member of the Bar. Thus, every lawyer should act and
comport himself in such a manner that would promote public confidence in
the integrity of the legal profession. [19]

Finally, we note that during the investigation of the case, despite being
duly notified thereof as evidenced by the motions for postponement he filed
on several occasions, the respondent chose not to participate in the
proceedings against him. His nonchalance does not speak well of him as it
reflects his utter lack of respect towards the public officers who were
assigned to investigate the case. He should be watchful of his conduct. The [20]

15
respondent should keep in mind the solemn oath he took before this Court
[21]

when he sought admission to the bar. The lawyers oath should not be
reduced to mere recital of empty words for each word aims to promote the
high standard of professional integrity befitting a true officer of the court.
The recommended penalty for the unprofessional conduct of the
respondent was one (1) month suspension or reprimand. We believe that the
same is too light vis--vis the misconduct of the respondent.
IN VIEW WHEREOF, respondent ATTY. ELPIDIO D. UNTO is hereby
declared guilty of conduct unbecoming of a lawyer. He is SUSPENDED from
the practice of law for a period of five (5) months and sternly warned that a
repetition of the same or similar act will be dealt with more severely.
Let a copy of this Decision be attached to Atty. Untos personal record in
the Office of the Bar Confidant and a copy thereof be furnished to the
Integrated Bar of the Philippines (IBP).
SO ORDERED.
Davide, Jr., C.J., (Chairman), Kapunan, Pardo, and Ynares-Santiago,
JJ., concur.

16
ROSITA TAN, petitioner, vs., ATTY. JOSE L. LAPAK, respondent.

DECISION
MENDOZA, J.:

This is a complaint filed by Rosita Tan against Atty. Jose L. Lapak for misconduct, based
on respondents failure to file with this Court a petition for review on certiorari of a resolution
of the Court of Appeals dismissing complainants appeal. Complainant alleged that despite the
fact that this Court had granted respondent an extension of the time to file the petition for
review on certiorari and she had paid respondent his fee, the latter nonetheless failed to file the
petition in this Court. Complainants letter, dated January 10, 1991, addressed to then Chief
Justice Marcelo B. Fernan, stated:

Ako po ay sumusulat sa iyo upang ihingi ng tulong ang aking suliranin na may
kaugnayan sa aking kaso, G.R. No. 93707 ROSITA TAN v. CA, et al. na dahilan
sa kapabayaan ng aking abogado na si Atty. Jose Lapak ay hindi nakapagfile ng
Certiorari nasa ngayon kanyang inihihinging palugit ay naibigay naman, at ako po
ay nagbigay naman ng halagang P4,000.00 upang gawain lamang ang petition sa
pagrerepaso ng Certiorari subalit inuulit pang hindi gawain.

Kgg. Na Chief Justice ako poy pinaasa lamang ng aking abogado na wala man
lamang nagawa kung ano ang nararapat. Ako naman ay isang walang karanasan sa
bagay na ito ay naniwala at naghintay. Nang makausap ko po siya ay aking tinapat
kung ano na at walang nadating na resulta sa ginawa niya ang sagot sa aking
maghintay na lamang daw ako. Ngunit ng ako po ay pumunta sa Maynila at
napadaan ako sa Korte Suprema saka ko pa lamang napag-alaman na ang aking
abogado ay hindi nakapaggawa ng brief ng Certiorari at kaya napawalaan ng bisa
ang aking apelasyon.

Akin pong naisip na idulog ang aking kaapihan sa Pangulo ng IBP ng Camarines
Norte ang mga bagay na ito ang sagot po sa aking ay maari akong maghain ng
demanda laban sa aking abogado na si Atty. Jose L. Lapak ngunit ako po ay
mahirap lamang at isa pa wala akong matutustos sa aking abogado. Isa pa po wala
akong pera at sapat na pinag-aralan kaya po hindi ko alam kung sino ang aking
dudulungan para tumulong sa mahihirap. Kaya naisip ko pong sumulat sa opisina
ninyo, para ihain ang aking karaingan. Kung inyo pong mamarapatin ako ay
humihingi ng tulong sa iyo bilang pinakamataas na hustisya ang aking kaapihan.

Respondent denied the allegations against him. In his manifestation and comment, dated
March 4, 1991, he contended:
a) Ms. Rosita Tan was formerly represented by Atty. Juanito Subia in Civil Case No. 5295,
Rosita Tan vs. Wilfredo Enriquez before the Regional Trial Court of Camarines Norte;
said case was dismissed due to failure of Rosita Tan and his (sic) counsel to appear during
the scheduled Pre-Trial of the case; . . .said Order of dismissal was however reconsidered;

17
b) On November 11, 1986, Atty. Marciano C. Dating, Jr. entered his appearance for the said
Rosita Tan as her original counsel, Atty. Juanito Subia, had withdrawn for reasons only
known to her; . . .Atty. Marciano C. Dating, Jr. filed an Amended Complaint;
c) That on September 20, 1988, the Court, through Hon. Luis Dictado, who heard the case,
rendered a decision dismissing Rosita Tans complaint;
d) That on October 13, 1988, Atty. Dating, Rosita Tans counsel, appealed from the adverse
decision against her to the Court of Appeals;
e) That Atty. Marciano Dating also withdrew later as Rosita Tans counsel and certain
Leopoldo P. San Buenaventura entered his appearance as new counsel for the said Rosita
Tan in the appealed case before the Court of Appeals which was docketed as C.A. G.R.
CV No. 20669;
f) On October 26, 1989, Atty. Leopoldo E. San Buenaventura filed a Motion for Extension of
Time to File Brief for Rosita Tan; however, for reasons only known to said lawyer, he
failed to file his Appellants Brief; hence, on February 20, 1990, the Court of Appeals
issued a Resolution dismissing the appeal for failure of Rosita Tans counsel to file
Appellants Brief despite extension of time granted to him;
g) That upon receipt by Ms. Rosita Tan of said Resolution dismissing her appeal due to the
failure of her Manila lawyer to file Appellants Brief, she came to the law office of
undersigned counsel in the company of her friend, Mrs. Gloria Gatan, to employ the latters
services to seek reconsideration of the Order of dismissal and file Appellants Brief to
enable her to pursue her appeal; Rosita employed the legal services of undersigned counsel
not to file a Petition for Review but to seek reconsideration of the order of dismissal of her
appeal; considering then that she does not have the papers to the case on appeal, Rosita
Tan agreed to pay counsel P5,000.00 to go to Manila, study the records of the case in the
Court of Appeals, file a Motion for Reconsideration and prepare Appellants Brief for her;
she was able to pay P3,000.00 only instead of P5,000.00 promising to pay the balance
later; consequently, the undersigned counsel filed an URGENT MOTION FOR
RECONSIDERATION with the Court of Appeals.;
h) Unfortunately, the Court of Appeals denied said Motion for Reconsideration in a
Resolution promulgated on May 2, 1990 .;
I) That upon receipt by the undersigned counsel of said Resolution of the Court of Appeals
denying the Motion for Reconsideration, the undersigned counsel summoned the appellant
Rosita Tan and requested her to bring the balance of P2,000.00 so that a Petition for
Review on Certiorari could be filed with the Supreme Court; however, the said appellant
Rosita Tan upon knowing of the adverse Resolution of the Court of Appeals became
apathetic and when she came to the law office of the undersigned she expressed her
misgivings of bringing the case to the Supreme Court and told counsel that she has no
more money; despite her indifference and lukewarm attitude, the undersigned counsel filed
a Motion for Extension of Time to file a Petition for Review with the Supreme Court
paying the docket fees therefore in behalf of said appellant; in the meantime the
undersigned counsel went to Manila to make researches preparatory to the filing of the
Petition for Review with the Supreme Court; The undersigned counsel then requested the
appellant Rosita Tan to pay him the balance of P2,000.00 as per agreement for him to be
able to prepare the Petition for review in Manila and file it with the Supreme Court; but
said appellant hesitantly paid only P1,000.00 which was her only money available
promising to pay the balance of P1,000.00 later; therafter, the undersigned counsel went
to the Court of Appeals to get certified true copies of the Resolution denying the Motion
for Reconsideration; he then learned that there was already an Entry of Judgment in the
case as the Resolution dismissing the appeal had already become final; the undersigned
then informed Rosita Tan of her misfortune and informed her that he would study the
propriety of filing an action for annulment of the decision because of his discovery of an

18
 anomaly which resulted in a mistrial; because of continuous setbacks she suffered from
beginning to end; Rosita Tan said she had lost all hope and was unwilling to go any further;
she then demanded the refund of P4,000.00 from the undersigned; when the undersigned
gave back the P1,000.00 he received from her, she refused to receive the amount insisting
that the whole amount of P4,000.00 be returned to her claiming that the undersigned
counsel had not done anything for her anyway; hence the misunderstanding which
culminated in her sending a letter complaint to the Honorable Chief Justice of the Supreme
Court.
The case was referred to the Integrated Bar of the Philippines for investigation, report, and
recommendation. On July 29, 2000, the IBP passed a resolution aadopting the report and
recommendation of its Investigating Commissioner Jaime M. Vibar that respondent be
reprimanded and ordered to restitute to complainant the amount of P1,000.00.
In finding respondent guilty of betrayal of his clients trust and confidence, the investigating
commissioner said in his report:

Regardless of the agreement on the total amount of fees, it is clear that respondent
committed to prepare and file a petition with the Supreme Court and for which he
received P1,000.00 from the complainant (annex B, Sagot, dated May 31,
1991). Despite such commitment, he failed to file the petition.

It is not explained why the payment of PHP1,000.00 was made by complainant for
the petition on August 8, 1990. At that time, the period to file the petition for
review as contemplated by respondent and which was the subject of an extension
motion, dated May 18, 1990, filed with and granted by the Hon. Supreme Court,
had already expired. It is to be noted that respondents motion sought an extension
of thirty (30) days from May 26, 1990 or up to June 25, 1990. It would appear that
respondent received P1,000.00 on August 8, 1990 from complainant at a time
when the remedy of a review of the dismissal order of the Court of Appeals was no
longer available. Yet, complainant was never informed or favored with an
explanation that a petition for review was no longer possible, or perhaps that
another remedy was still open to the complainant. To aggravate his situation,
respondent alleges in his comment to the complaint (at page 3) that after he
received P1,000.00 from the complainant he immediately went to the Court of
Appeals to get certified copies of the resolution denying his motion for
reconsideration and that thereat he discovered that an Entry of Judgment had
already been issued. Respondent should have known that when he went to the
Court of Appeals after reciept of P1,000.00, or after August 8, 1990. The period he
requested from the Hon. Supreme Court to institute the petition for review had
long expired.

But the silence of respondent at the time of receipt of the amount of P1,000.00 on
august 8, 1990 and the petition with the Supreme Court was no longer an available
remedy smacks of a betrayal of a clients cause and the trust and confidence reposed
in him. If indeed his clients cause was no longer worth fighting for, the lawyer
should not have demanded a feeand made representations that there is merit in her

19
case. He should have dealt with his client with all candor and honesty by informing
her that on August 8, 1990 the period to file the petition had already expired.

Complainant has been a victim of negligence on the part of the law firm of San
Buenaventura, et al., or particularly Atty. Leopoldo San Buenaventura, for their
failure to file the Appellants Brief in behalf of complainant within the period
allowed. The dismissal of the appeal gave complainant a slim chance, if not a futile
remedy, with the Hon. Supreme Court. Atty. Lapak would have been shackled in
any disquisition for complainants cause considering that she alredy lost in the trial
court and her appeal had been dismissed without any argument being advanced in
her behalf. Atty. Lapak should have been candid with complainant. He should not
have asked more at a time when nothing fruitful could be done anymore.

With respect to respondents offer to return the amount of P1,000.00 paid to him to file the
petition for review on certiorari, the investigating commissioner stated:

[T]his willingness to return P1,000.00 does not erase his breach of the Code of
Professional Responsibility for lacking in honesty, diligence and fairness in dealing
with his client as shown by the very fact that he received the amount at a time
when he could no longer file the petition with the Supreme Court. His client
deserved the information that on such date the decision of the Court of Appeals
was already final. Respondents actuation of filing an extension motion with the
Hon. Supreme Court and yet not filing an extension motion with the Hon. Supreme
Court and yet not filing the pleading within the period requested and granted
speaks well of respondents lack of candor, honesty and judicious conduct in
dealing with his client or in the handling of his case. This conduct violates Canon
17, & Rule 18.03, Rule 18.04 of Canon 18 of the Code of Professional
Responsibility.

The investigating commissioner recommends that respondent only be reprimanded

considering his old age and the negligent conduct of complainants previous counsel. The
commissioner reasoned that it was the negligent conduct of complainants previous counsel
which caused the dismissal of the appeal and rendered inutile any further legal action before
the Supreme Court.
The investigating commissioners findings are supported by the evidence. However, we
hold that the appropriate sanction should be reprimand and order respondent to return the
amount of P4,000.00 which he received from complainant.
Respondent advances two reasons why he did not file a petition for review on certiorari in
this Court, to wit: (1) because he found that the resolution of the Court of Appeals to be
appealed to the Supreme Court had become final on May 27, 1990 and (2) because complainant
failed to pay the balance of P1,000.00 of his fee.
First. With respect to the first reason, Rule 18.03 thereof which provides that A lawyer
shall not neglect a legal matter entrusted to him and his negligence in connection therewith
shall render him liable. Respondent alleges that upon receipt of the Court of Appeals resolution
denying the motion for reconsideration which he had filed, he summoned complainant and told
her that it was imperative that a petition for review on certiorari be filed with this Court.
20
 At this point, it is important to note the material dates on record to determine if respondents
justification for his failure to file a petition for review is tenable. The resolution of the Court of
Appeals dismissing complainants appeal for failure to file an appellants brief was promulgated
on February 20, 1990. Within the reglementary period for filing an appeal, respondent filed a
motion for reconsideration which the Court of Appeals denied on May 2, 1990. Respondent
received a copy of this resolution (denying the motion for reconsideration) on May 11, 1990
so that respondent had 15 days from May 11, 1990, or until May 26, within which to file a
petition for review on certiorari with the Supreme Court. Respondent therafter asked for, and
was granted by this Court, an extension of 30 days counted from the reglementary period, or
until June 25, 1990, within which to file the petition. As respondent failed to file the petition
within the extended period, the Supreme Court issued a resolution on August 20, 1990
declaring the judgment sought to be reviewed to have become final and executory.
It is not true, therefore, that respondent failed to file a petition for review on certiorari
because the judgment sought to be reviewed had become final on May 27, 1990.
When respondent summoned complainant and told her that in view of the denial of his
motion for reconsideration it was imperative that a petition for review be filed with this Court,
the resolution of the Court of Appeals was not yet final. In fact, this Court granted respondents
motion for extension of time to file the petition for review, because the resolution of the Court
of Appeals denying the motion for reconsideration had not yet attained finality. Despite having
been granted an extension, however, respondent failed to file the petition within the
reglementary period. This constitutes a serious breach. Rule 12.03 of the Code of Professional
Responsibility provides that A lawyer shall not, after obtaining extensions of time to file
pleadings, memoranda or briefs, let the period lapse without submitting the same or offering
an explanation for his failure to do so.
The filing of a petition for review is similar to the filing of an appellants or appellees
brief. In Mariveles v. Mallari,[1] it was held that the lawyers failure to file an appellants brief
despite numerous extensions of time to file the same constitutes a blatant violation of Rule
12.03 of the Code of Professional Responsibility. As already noted, this Rule provides that
after obtaining extensions of time to file pleadings, memoranda, or briefs, a lawyer should not
let the period lapse without submitting the same or offering an explanation for his failure to do
so.
In Re: Santiago F. Marcos,[2] the Court considered a lawyers failure to file a brief for his
client as amounting to inexcusable negligence. Said the Court:

An attorney is bound to protect his clients interest to the best of his ability and with
utmost diligence. (Del Rosario v. CA, 114 SCRA 159). A failure to file a brief for
his client certainly constitutes inexcusable negligence on his part. (People v. Villar,
46 SCRA 107) The respondent has indeed committed a serious lapse in the duty
owed by him to his client as well as to the Court not to delay litigation and to aid in
the speedy administration of justice. (People v. Daban, 43 SCRA 185; People v.
Estocada, 43 SCRA 515).

At any rate, even assuming that the resolution of the Court of Appeals expired on May 27,
1990, he should not have asked on August, 8, 1990 for the balance of P5,000.00 which
complainant had agreed to pay since the resolution had already become final at that time. As
the investigating commissioner pointed out in his report:

21
To aggravate his situation, respondent alleges in his comment to the complaint (at
page 3) that after he received P1,000.00 from the complainant he immediately went
to the Court of Appeals to get certified copies of the resolution denying his motion
for reconsideration and that thereat he discovered that an Entry of Judgment had
already been issued. Respondent should have known that when he went to the
Court of Appeals after receipt of P1,000.00, or after August 8, 1990, (t)he period
he requested from the Hon. Supreme Court to institute the petition for review had
long expired.[3]

It would, therefore, appear that if an entry of judgment had been made in the Court of
Appeals, it was precisely because respondent failed to file a petition for review with the
Supreme Court within the extended period granted him. He cannot, therefore, excuse his breach
of the duty to his client by his own negligent act.
Second. Respondent asserts that complainant only engaged his services to pursue her
appeal in the Court of Appeals which was dismissed due to the failure of complainants former
counsel, Atty. Leopoldo E. San Buenaventura, to file the appellants brief. Whether or not he
was engaged to represent complainant only in the Court of Appeals and not also in the Supreme
Court is immaterial. For the fact is that respondent already commenced the representation of
complainant in the Supreme Court by filing a motion for extension of the time to file a petition
for review. In fact, according to respondent, upon receipt of the Court of Appeals resolution
denying reconsideration of the dismissal of complainants appeal, respondent summoned
complainant to his office precisely to tell her that it was imperative that a petition for review
be filed with the Supreme Court. Once he took the cudgels of his clients case and assured her
that he would represent her in the Supreme Court, respondent owed it to his client to do his
utmost to ensure that every remedy allowed by law was availed of. As this Court has held:

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, 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. He must serve the client with competence and diligence, and
champion the latters cause with wholehearted fidelity, care and devotion. Elsewise
stated, he owes entire devotion to the interest of his client, warm zeal in the
maintenance and defense of his clients rights, and the exertion of his utmost
learning and ability to the end that nothing be taken or withheld from his client,
saved by the rules of law legally applied. This simply means that his cleint 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.[4]

Third. Nor can respondent excuse himself for his failure to file the petition for review on
certiorari on the ground that complainant failed to pay what she promised to pay. Complainant
agreed to pay P5,000.00. Of this amount, she paid respondent P3,000.00 and later P1,000.00,
leaving only a balance of P1,000.00. Even if this balance had not been paid, this fact was not
sufficient to justify the failure of respondent to comply with his professional obligation which
does not depend for compliance on the payment of a lawyers fees.

22
 As respondent utterly failed to comply with his professional commitment to complainant,
it is, therefore, not just for him to keep the legal fee of P4,000.00 which complainant paid
him. He has not rightfully earned that fee and should return it to complainant.
WHEREFORE, Atty. Jose L. Lapak is REPRIMANDED and ORDERED to refund to
complainant Rosita Tan the amount of P4,000.00. He is admonished henceforth to exercise
greater care and diligence in the performance of his duties towards his clients and the courts
and warned that repetition of the same or similar offense will be more severely dealt with.
SO ORDERED.
Bellosillo, (Chairman), Quisumbing, Buena, and De Leon, Jr., JJ., concur.

23
IMELDA A. NAKPIL, complainant, vs. ATTY. CARLOS J.
VALDES, respondent.

DECISION
PUNO, J.:

The friendship of JOSE NAKPIL and respondent CARLOS J. VALDES dates back
to the 50s during their schooldays in De La Salle and the Philippine Law School. Their
closeness extended to their families and respondent became the business consultant,
lawyer and accountant of the Nakpils.
In 1965, Jose Nakpil became interested in purchasing a summer residence in
Moran Street, Baguio City.[1] For lack of funds, he requested respondent to purchase
the Moran property for him. They agreed that respondent would keep the property in
thrust for the Nakpils until the latter could buy it back. Pursuant to their agreement,
respondent obtained two (2) loans from a bank (in the amounts of P65,000.00
and P75,000.00) which he used to purchase and renovate the property. Title was then
issued in respondents name.
It was the Nakpils who occupied the Moran summer house. When Jose Nakpil
died on July 8, 1973, respondent acted as the legal counsel and accountant of his
widow, complainant IMELDA NAKPIL. On March 9, 1976, respondents law firm, Carlos
J. Valdes & Associates, handled the proceeding for the settlement of Joses estate.
Complainant was appointed as administratix of the estate.
The ownership of the Moran property became an issue in the intestate
proceedings. It appears that respondent excluded the Moran property from the
inventory of Joses estate. On February 13, 1978, respondent transferred his title to
the Moran property to his company, the Caval Realty Corporation.
On March 29, 1979, complainant sought to recover the Moran property by filing
with the then Court of First Instance (CFI) of Baguio City an action for reconveyance
with damages against respondent and his corporation. In defense, respondent claimed
absolute ownership over the property and denied that a trust was created over it.
During the pendency of the action for reconveyance, complainant filed this
administrative case to disbar the respondent. She charged that respondent violated
professional ethics when he:
I. Assigned to his family corporation the Moran property (Pulong
Maulap) which belonged to the estate he was settling as its
lawyer and auditor.
II. Excluded the Moran property from the inventory of real estate
properties he prepared for a client-estate and, at the same
time, charged the loan secured to purchase the said
excluded property as a liability of the estate, all for the
purpose of transferring the title to the said property to his
family corporation.
III. Prepared and defended monetary claims against the estate
that retained him as its counsel and auditor.[2]
24
 On the first charge, complainant alleged that she accepted respondents offer to
serve as lawyer and auditor to settle her husbands estate. Respondents law firm then
filed a petition for settlement of the estate of the deceased Nakpil but did not include
the Moran property in the estates inventory. Instead, respondent transferred the
property to his corporation, Caval Realty Corporation, and title was issued in its name.
Complainant accused respondent of maliciously appropriating the property in trust
knowing that it did not belong to him. She claimed that respondent has expressly
acknowledged that the said property belonged to the late Nakpil in his
correspondences[3] with the Baguio City Treasurer and the complainant.
On the second charge, complainant alleged that respondents auditing firm (C. J.
Valdes and Co., CPAs) excluded the Moran property from the inventory of her
husbands estate, yet included in the claims against the estate the amounts
of P65,000.00 and P75,000.00, which respondent represented as her husbands loans
applied probably for the purchase of a house and lot in Moran Street, Baguio City.
As to the third charge, complainant alleged that respondents law firm (Carlos J.
Valdes and Associates) filed the petition for the settlement of her husbands estate in
court, while respondents auditing firm (C. J. Valdes & Co., CPAs) acted as accountant
of both the estate and two of its creditors. She claimed that respondent represented
conflicting interests when his accounting firm prepared the list of claims of creditors
Angel Nakpil and ENORN, Inc. against her husbands estate which was represented
by respondents law firm. Complainant averred that there is no distinction between
respondents law and auditing firms as respondent is the senior and controlling partner
of both firms which are housed in the same building.
We required respondent to answer the charges against him. In
hisANSWER,[4] respondent initially asserted that the resolution of the first and second
charges against him depended on the result of the pending action in the CFI for
reconveyance which involved the issue of ownership of the Moran property.
On the merit of the first charge, respondent reiterated his defense in the
reconveyance case that he did not hold the Moran property in trust for the Nakpils as
he is its absolute owner. Respondent explained that the Nakpils never bought back
the Moran property from him, hence, the property remained to be his and was rightly
excluded from the inventory of Nakpils estate.
As to the second charge, respondent denied preparing the list of claims against
the estate which included his loans of P65,000.00 and P75,000.00 for the purchase
and renovation of the Moran property. In charging his loans against the estate, he
stressed that the list drawn up by his accounting firm merely stated that the loans in
respondents name were applied probably for the purchase of the house and lot in
Moran Street, Baguio City. Respondent insisted that this was not an admission that
the Nakpils owned the property as the phrase probably for the purchase did not imply
a consummated transaction but a projected acquisition.
Respondent also disclaimed knowledge or privity in the preparation of a letter
(Exhibit H) of his accounting firm to the Baguio City treasurer remitting the real estate
taxes for the Moran property on behalf of the Nakpils. He contended that the letter
could be a mere error or oversight.
Respondent averred that it was complainant who acknowledged that they did not
own the Moran property for: (1) complainants February 1979 Statement of Assets and

25
Liabilities did not include the said property, and; (2) complainant, as administratrix,
signed the Balance Sheet of the Estate where the Moran property was not mentioned.
Respondent admitted that complainant retained the services of his law and
accounting firms in the settlement of her husbands estate. [5] However, he pointed out
that he has resigned from his law and accounting firms as early as 1974. He alleged
that it was Atty. Percival Cendaa (from the law firm Carlos Valdes & Associates) who
filed the inestate proceedings in court in 1976.
As to the third charge, respondent denied there was a conflict of interest when his
law firm represented the estate in the inestate proceedings while his accounting firm
(C. J. Valdes & Co., CPAs) served as accountant of the estate and prepared the claims
of creditors Angel Nakpil and ENORN, Inc. against the estate. He proffered the
following reasons for his thesis: First, the two claimants were closely related to the late
Nakpil. Claimant ENORN, Inc. is a family corporation of the Nakpils of which the late
Nakpil was the President. Claimant Angel Nakpil is a brother of the late Nakpil who,
upon the latters death, became the President of ENORN, Inc. These two claimants
had been clients of his law and accounting firms even during the lifetime of Jose
Nakpil. Second, his alleged representation of conflicting interests was with the
knowledge and consent of complainant as administratrix. Third, there was no conflict
of interests between the estate and the claimants for they had forged a modus vivendi,
i.e., that the subject claims would be satisfied only after full payment of the principal
bank creditors. Complainant, as administratrix, did not controvert the claims of Angel
Nakpil and ENORN, Inc. Complainant has started paying off the claims of Angel Nakpil
and ENORN, Inc. after satisfying the banks claims. Complainant did not assert that
their claims caused prejudice to the estate. Fourth, the work of Carlos J. Valdes and
Co. as common auditor redounded to the benefit of the estate for the firm prepared a
true and accurate amount of the claim. Fifth, respondent resigned from his law and
accounting firms as early as August 15, 1974.[6] He rejoined his accounting firm several
years later. He submitted as proof the SECs certification of the filing of his accounting
firm of an Amended Articles of Partnership. Thus, it was not he but Atty. Percival
Cendaa, from the firm Carlos J. Valdes and Associates, who filed the intestate
proceedings in court. On the other hand, the claimants were represented by their own
counsel Atty. Enrique O. Chan. Sixth, respondent alleged that in the remote possibility
that he committed a breach of professional ethics, he committed such misconduct not
as a lawyer but as an accountant who acted as common auditor of the estate and its
creditors. Hence, he should be held accountable in another forum.
On November 12, 1979, complainant submitted her REPLY.[7] She maintained that
the pendency of the reconveyance case is not prejudicial to the investigation of her
disbarment complaint against respondent for the issue in the latter is not the ownership
of the Moran property but the ethics and morality of respondents conduct as a CPA-
lawyer.
Complainant alleged that respondents Annexes to his Reply (such as the
Statement of Assets & Liability of the Nakpils and the Balance Sheet of the Estate)
which showed that complainant did not claim ownership of the Moran property were
all prepared by C. J. Valdes and Co. as accountant of the estate of Jose Nakpil and
filed with the intestate court by C. J. Valdes and Associates as counsel for the estate.
She averred that these Annexes were not proofs that respondent owned the Moran
property but were part of respondents scheme to remove the property from the estate
and transfer it to his family corporation. Complainant alleged that she signed the

26
documents because of the professional counsel of respondent and his firm that her
signature thereon was required. Complainant charged respondent with greed for
coveting the Moran property on the basis of defects in the documents he himself
prepared.
Complainant urged that respondent cannot disown unfavorable documents (the
list of claims against the estate and the letter regarding Nakpils payments of realty tax
on the Moran property) which were prepared by his law and accounting firms and
invoke other documents prepared by the same firms which are favorable to him. She
averred that respondent must accept responsibility not just for some, but for all the
representations and communications of his firms.
Complainant refuted respondents claim that he resigned from his firms from March
9, 1976 to several years later. She alleged that none of the documents submitted as
evidence referred to his resignation from his law firm. The documents merely
substantiated his resignation from his accounting firm.
In his REJOINDER,[8] respondent insisted that complainant cannot hold him liable
for representing the interests of both the estate and the claimants without showing that
his action prejudiced the estate. He urged that it is not per se anomalous for
respondents accounting firm to act as accountant for the estate and its creditors. He
reiterated that he is not subject to the jurisdiction of this Court for he acted not as
lawyer, but as accountant for both the estate and its claimants.
He alleged that his accounting firm merely prepared the list of claims of the
creditors Angel Nakpil and ENORN, Inc. Their claims were not defended by his
accounting or law firm but by Atty. Enrique Chan. He averred that his law firm did not
oppose these claims as they were legitimate and not because they were prepared by
his accounting firm. He emphasized that there was no allegation that the claims were
fraudulent or excessive and that the failure of respondents law firm to object to these
claims damaged the estate.
In our January 21, 1980 Resolution,[9] we deferred further action on the disbarment
case until after resolution of the action for reconveyance between the parties involving
the issue of ownership by the then CFI of Baguio. Complainant moved for
reconsideration on the ground that the issue of ownership pending with the CFI was
not prejudicial to her complaint which involved an entirely different issue, i.e., the
unethical acts of respondent as a CPA-lawyer. We granted her motion and referred
the administrative case to the Office of the Solicitor General (OSG) for investigation,
report and recommendation.[10]
In 1983, the CFI of Baguio dismissed the action for reconveyance. The trial court
ruled that respondent held the Moran property in trust for the Nakpils but found that
complainant waived her right over it.
On appeal, the Court of Appeals reversed the trial court. The appellate court held
that respondent was the absolute owner of the Moran property. The Decision was
elevated to this Court.
On February 18, 1986, during the pendency of complainants appeal to this Court,
the OSG submitted its Report[11] on the disbarment complaint. The OSG relied heavily
on the decision of the Court of Appeals then pending review by this Court. The OSG
found that respondent was not put on notice of complainants claim over the property.
It opined that there was no trust agreement created over the property and that

27
respondent was the absolute owner thereof. Thus, it upheld respondents right to
transfer title to his family corporation. It also found no conflict of interests as the
claimants were related to the late Jose Nakpil. The OSG recommended the dismissal
of the administrative case.
Prefatorily, we note that the case at bar presents a novel situation as it involves
the disbarment of a CPA-lawyer for his demeanor in his accounting profession and
law practice in connection with the property of his client.
As a rule, a lawyer is not barred from dealing with his client but the business
transaction must be characterized with utmost honesty and good faith. [12] The measure
of good faith which an attorney is required to exercise in his dealings with his client is
a much higher standard than is required in business dealings where the parties trade
at arms length.[13] Business transactions between an attorney and his client are
disfavored and discouraged by the policy of the law. Hence, courts carefully watch
these transactions to assure that no advantage is taken by a lawyer over his client.
This rule is founded on public policy for, by virtue of his office, an attorney is in an easy
position to take advantage of the credulity and ignorance of his client. Thus, no
presumption of innocence or improbability of wrongdoing is considered in an attorneys
favor. [14]
In the case at bar, we cannot subscribe to the findings of the OSG in its Report.
These findings were based mainly on the decision of the Court of Appeals in the action
for reconveyance which was reversed by this Court in 1993.[15]
As to the first two charges, we are bound by the factual findings of this Court in
the aforementioned reconveyance case.[16] It is well-established that respondent
offered to the complainant the services of his law and accounting firms by reason of
their close relationship dating as far back as the 50s. She reposed her complete trust
in respondent who was the lawyer, accountant and business consultant of her late
husband. Respondent and the late Nakpil agreed that the former would purchase the
Moran property and keep it in trust for the latter. In violation of the trust agreement,
respondent claimed absolute ownership over the property and refused to sell the
property to complainant after the death of Jose Nakpil. To place the property beyond
the reach of complainant and the intestate court, respondent later transferred it to his
corporation.
Contrary to the findings of the OSG, respondent initially acknowledged and
respected the trust nature of the Moran property. Respondents bad faith in transferring
the property to his family corporation is well discussed in this Courts Decision,[17] thus:
x x x Valdes (herein respondent) never repudiated the trust
during the lifetime of the late Jose Nakpil. On the contrary, he
expressly recognized it. x x x (H)e repudiated the trust when (he)
excluded Pulong Maulap from the list of properties of the late Jose
Nakpil submitted to the intestate court in 1973. x x x
xxx
The fact that there was no transfer of ownership intended by the
parties x x x can be bolstered by Exh. I-2, an annex to the claim filed
against the estate proceedings of the late Jose Nakpil by his
brother, Angel Nakpil, which was prepared by Carlos J. Valdes &
28
 Co., the accounting firm of herein respondent. Exhibit I-2, which is
a list of the application of the proceeds
of various FUB loans contracted as of 31 December 1973 by the
late Jose Nakpil, x x x contains the two (2) loans contracted in
the name of respondent. If ownership of Pulong Maulap was
already transferred or ceded to Valdes, these loans should not
have been included in the list.
Indeed, as we view it, what the parties merely agreed to under the
arrangement outlined in Exh. J was that respondent Valdes would
x x x take over the total loan of P140,000.00 and pay all of the
interests due on the notes while the heirs of the late Jose
Nakpil would continue to live in the disputed property for five
(5) years without remuneration save for regular maintenance
expenses. This does not mean, however, that if at the end of
the five-year period petitioner (Nakpil) failed to reimburse
Valdes for his advances, x x x Valdes could already
automatically assume ownership of Pulong Maulap. Instead,
the remedy of respondents Carlos J. Valdes and Caval Realty
Corporation was to proceed against the estate of the late Jose
M. Nakpil and/or the property itself. (emphasis supplied)
In the said reconveyance case, we further ruled that complainants documentary
evidence (Exhibits H, J and L), which she also adduced in this administrative case,
should estop respondent from claiming that he bought the Moran property for himself,
and not merely in trust for Jose Nakpil.[18]
It ought to follow that respondents act of excluding Moran property from the estate
which his law firm was representing evinces a lack of fidelity to the cause of his client.
If respondent truly believed that the said property belonged to him, he should have at
least informed complainant of his adverse claim. If they could not agree on its
ownership, respondent should have formally presented his claim in the intestate
proceedings instead of transferring the property to his own corporation and concealing
it from complainant and the judge in the estate proceedings. Respondents misuse of
his legal expertise to deprive his client of the Moran property is clearly unethical.
To make matters worse, respondent, through his accounting firm, charged the two
loans of P65,000.00 and P75,000.00 as liability of the estate, after said loans were
obtained by respondent for the purchase and renovation of the property which he
claimed for himself. Respondent seeks to exculpate himself from this charge by
disclaiming knowledge or privity in the preparation of the list of the estates liabilities.
He theorizes that the inclusion of the loans must have been a mere error or oversight
of his accounting firm. It is clear that the information as to how these two loans should
be treated could have only come from respondent himself as the said loans were in
his name. Hence, the supposed error of the accounting firm in charging respondents
loans against the estate could not have been committed without respondents
participation. Respondent wanted to have his cake and eat it too and subordinated the
interest of his client to his own pecuniary gain. Respondent violated Canon 17 of the
Code of Professional Responsibility which provides that a lawyer owes fidelity to his

29
clients cause and enjoins him to be mindful of the trust and confidence reposed on
him.
As regards the third charge, we hold that respondent is guilty of representing
conflicting interests. It is generally the rule, based on sound public policy, that an
attorney cannot represent adverse interests. It is highly improper to represent both
sides of an issue.[19]The proscription against representation of conflicting interests finds
application where the conflicting interests arise with respect to the same general
matter[20] and is applicable however slight such adverse interest may be. It applies
although the attorneys intentions and motives were honest and he acted in good
faith.[21] However, representation of conflicting interests may be allowed where the
parties consent to the representation, after full disclosure of facts. Disclosure alone is
not enough for the clients must give their informed consent to such representation.
The lawyer must explain to his clients the nature and extent of conflict and the possible
adverse effect must be thoroughly understood by his clients.[22]
In the case at bar, there is no question that the interests of the estate and that of
it creditors are adverse to each other. Respondents accounting firm prepared the list
of assets and liabilities of the estate and, at the same time, computed the claims of
two creditors of the estate. There is clearly a conflict between the interest of the estate
which stands as the debtor, and that of the two claimants who are creditors of the
estate. In fact, at one instance, respondents law firm questioned the claims of creditor
Angel Nakpil against the estate.
To exculpate himself, respondent denies that he represented complainant in the
intestate proceedings. He points out that it was one Atty. Percival Cendaa, from his
law firm Carlos J. Valdes & Associates, who filed the intestate case in court. However,
the fact that he did not personally file the case and appear in court is beside the point.
As established in the records of this case and in the reconveyance
case, [23] respondent acted as counsel and accountant of complainant after the death
of Jose Nakpil. Respondents defense that he resigned from his law and accounting
firms as early as 1974 (or two years before the filing of the intestate case) is unworthy
of merit. Respondents claim of resignation from his law firm is not supported by any
documentary proof. The documents on record [24]only show respondents resignation
from his accounting firm in 1972 and 1974. Even these documents reveal that
respondent returned to his accounting firm on July 1, 1976 and as of 1978, the
intestate proceedings for the settlement of Joses estate had not yet been terminated. It
does not escape us that when respondent transferred the Moran property to his
corporation on February 13, 1978, the intestate proceedings was still pending in
court. Thus, the succession of events shows that respondent could not have been
totally ignorant of the proceedings in the intestate case.
Respondent claims that complainant knew that his law firm Carlos J. Valdes &
Associates was the legal counsel of the estate[25] and his accounting firm, C.J. Valdes
& Co., CPAs, was the auditor of both the estate and the two claimants against it. [26] The
fact, however, that complainant, as administratrix, did not object to the set-up cannot
be taken against her as there is nothing in the records to show that respondent or his
law firm explained the legal situation and its consequences to complainant. Thus, her
silence regarding the arrangement does not amount to an acquiescence based on an
informed consent.

30
 We also hold that the relationship of the claimants to the late Nakpil does not
negate the conflict of interest. When a creditor files a claim against an estate, his
interest is per se adverse to the estate. As correctly pointed out by complainant, if she
had a claim against her husbands estate, her claim is still adverse and must be filed
in the intestate proceedings.
Prescinding from these premises, respondent undoubtedly placed his law firm in
a position where his loyalty to his client could be doubted. In the estate proceedings,
the duty of respondents law firm was to contest the claims of these two creditors but
which claims were prepared by respondents accounting firm. Even if the claims were
valid and did not prejudice the estate, the set-up is still undesirable. The test to
determine whether there is a conflict of interest in the representation is probability, not
certainty of conflict. It was respondents duty to inhibit either of his firms from said
proceedings to avoid the probability of conflict of interest.
Respondent advances the defense that assuming there was conflict of interest, he
could not be charged before this Court as his alleged misconduct pertains to his
accounting practice.
We do not agree. Respondent is a CPA-lawyer who is actively practicing both
professions. He is the senior partner of his law and accounting firms which carry his
name. In the case at bar, complainant is not charging respondent with breach of ethics
for being the common accountant of the estate and the two creditors. He is charged
for allowing his accounting firm to represent two creditors of the estate and, at the
same time, allowing his law firm to represent the estate in the proceedings where these
claims were presented. The act is a breach of professional ethics and undesirable as
it placed respondents and his law firms loyalty under a cloud of doubt. Even granting
that respondents misconduct refers to his accountancy practice, it would not prevent
this Court from disciplining him as a member of the Bar. The rule is settled that a
lawyer may be suspended or disbarred for ANY misconduct, even if it pertains to his
private activities, as long as it shows him to be wanting in moral character, honesty,
probity or good demeanor. [27] Possession of good moral character is not only a
prerequisite to admission to the bar but also a continuing requirement to the practice
of law.
Public confidence in law and lawyers may be eroded by the irresponsible and
improper conduct of a member of the bar. Thus, a lawyer should determine his conduct
by acting in a manner that would promote public confidence in the integrity of the legal
profession. Members of the bar are expected to always live up to the standards
embodied in the Code of Professional Responsibility as the relationship between an
attorney and his client is highly fiduciary in nature and demands utmost fidelity and
good faith. [28] In the case at bar, respondent exhibited less than full fidelity to his duty
to observe candor, fairness and loyalty in his dealings and transactions with his
clients. [29]
IN VIEW WHEREOF, the Court finds respondent ATTY. CARLOS J. VALDES
guilty of misconduct. He is suspended from the practice of law for a period of one (1)
year effective from receipt of this Decision, with a warning that a similar infraction shall
be dealt with more severely in the future.
Let copies of this Decision be furnished all courts, as well as the Integrated Bar of
the Philippines and the Office of the Bar Confidant.

31
SO ORDERED.
Regalado (Chairman), Mendoza and Martinez, JJ., concur.
Melo, J., no part. Previous associate with respondent.

32
 SECOND DIVISION

G.R. No. 173188, January 15, 2014

THE CONJUGAL PARTNERSHIP OF THE SPOUSES VICENTE

CADAVEDO AND BENITA ARCOY-CADAVEDO (BOTH DECEASED),
SUBSTITUTED BY THEIR HEIRS, NAMELY: HERMINIA, PASTORA,
HEIRS OF FRUCTUOSA, HEIRS OF RAQUEL, EVANGELINE, VICENTE,
JR., AND ARMANDO, ALL SURNAMED
CADAVEDO, Petitioners, v. VICTORINO (VIC) T. LACAYA, MARRIED
TO ROSA LEGADOS, Respondents.

DECISION

BRION, J.:

We resolve in this Rule 45 petition for review on certiorari1 the challenge

to the October 11, 2005 decision2 and the May 9, 2006 resolution3 of the
Court of Appeals (CA) in CA-G.R. CV No. 56948. The CA reversed and set
aside the September 17, 1996 decision4 of the Regional Trial Court (RTC),
Branch 10, of Dipolog City in Civil Case No. 4038, granting in part the
complaint for recovery of possession of property filed by the petitioners,
the Conjugal Partnership of the Spouses Vicente Cadavedo and Benita
Arcoy-Cadavedo against Atty. Victorino (Vic) T. Lacaya, married to Rosa
Legados (collectively, the respondents).

The Factual Antecedents

The Spouses Vicente Cadavedo and Benita Arcoy-Cadavedo

(collectively, the spouses Cadavedo) acquired a homestead grant over a
230,765-square meter parcel of land known as Lot 5415 (subject
lot) located in Gumay, Piñan, Zamboanga del Norte. They were issued
Homestead Patent No. V-15414 on March 13, 1953 and Original
Certificate of Title No. P-376 on July 2, 1953. On April 30, 1955, the
spouses Cadavedo sold the subject lot to the spouses Vicente Ames and
Martha Fernandez (the spouses Ames). Transfer Certificate of
Title (TCT) No. T-4792 was subsequently issued in the name of the
spouses Ames.

The present controversy arose when the spouses Cadavedo filed an

action5 before the RTC (then Court of First Instance) of Zamboanga City
against the spouses Ames for sum of money and/or voiding of
contract of sale of homestead after the latter failed to pay the balance

33
of the purchase price. The spouses Cadavedo initially engaged the
services of Atty. Rosendo Bandal who, for health reasons, later withdrew
from the case; he was substituted by Atty. Lacaya.

On February 24, 1969, Atty. Lacaya amended the complaint to assert the
nullity of the sale and the issuance of TCT No. T-4792 in the names of the
spouses Ames as gross violation of the public land law. The amended
complaint stated that the spouses Cadavedo hired Atty. Lacaya on a
contingency fee basis. The contingency fee stipulation specifically reads:

10. That due to the above circumstances, the plaintiffs were forced to
hire a lawyer on contingent basis and if they become the
prevailing parties in the case at bar, they will pay the sum of
P2,000.00 for attorney’s fees[.]6

In a decision dated February 1, 1972, the RTC upheld the sale of the
subject lot to the spouses Ames. The spouses Cadavedo, thru Atty.
Lacaya, appealed the case to the CA.

On September 18, 1975, and while the appeal before the CA in Civil Case
No. 1721 was pending, the spouses Ames sold the subject lot to their
children. The spouses Ames’ TCT No. T-4792 was subsequently cancelled
and TCT No. T-25984 was issued in their children’s names. On October
11, 1976, the spouses Ames mortgaged the subject lot with the
Development Bank of the Philippines (DBP) in the names of their children.

On August 13, 1980, the CA issued its decision in Civil Case No. 1721,
reversing the decision of the RTC and declaring the deed of sale, transfer
of rights, claims and interest to the spouses Ames null and void ab initio.
It directed the spouses Cadavedo to return the initial payment and
ordered the Register of Deeds to cancel the spouses Ames’ TCT No. T-
4792 and to reissue another title in the name of the spouses Cadavedo.
The case eventually reached this Court via the spouses Ames’ petition for
review on certiorariwhich this Court dismissed for lack of merit.

Meanwhile, the spouses Ames defaulted in their obligation with the DBP.
Thus, the DBP caused the publication of a notice of foreclosure sale of the
subject lot as covered by TCT No. T-25984 (under the name of the
spouses Ames’ children). Atty. Lacaya immediately informed the spouses
Cadavedo of the foreclosure sale and filed an Affidavit of Third Party
Claim with the Office of the Provincial Sheriff on September 14, 1981.

With the finality of the judgment in Civil Case No. 1721, Atty. Lacaya filed
on September 21, 1981 a motion for the issuance of a writ of execution.

On September 23, 1981, and pending the RTC’s resolution of the motion
for the issuance of a writ of execution, the spouses Ames filed a
complaint7 before the RTC against the spouses Cadavedo for Quieting of

34
Title or Enforcement of Civil Rights due Planters in Good Faith
with prayer for Preliminary Injunction. The spouses Cadavedo, thru
Atty. Lacaya, filed a motion to dismiss on the ground of res judicata and
to cancel TCT No. T-25984 (under the name of the spouses Ames’
children).

On October 16, 1981, the RTC granted the motion for the issuance of a
writ of execution in Civil Case No. 1721, and the spouses Cadavedo were
placed in possession of the subject lot on October 24, 1981. Atty. Lacaya
asked for one-half of the subject lot as attorney’s fees. He caused the
subdivision of the subject lot into two equal portions, based on area, and
selected the more valuable and productive half for himself; and assigned
the other half to the spouses Cadavedo.

Unsatisfied with the division, Vicente and his sons-in-law entered the
portion assigned to the respondents and ejected them. The latter
responded by filing a counter-suit for forcible entry before the Municipal
Trial Court (MTC); the ejectment case was docketed as Civil Case No.
215. This incident occurred while Civil Case No. 3352 was pending.

On May 13, 1982, Vicente and Atty. Lacaya entered into an amicable
settlement (compromise agreement)8 in Civil Case No. 215 (the ejectment
case), re-adjusting the area and portion obtained by each. Atty. Lacaya
acquired 10.5383 hectares pursuant to the agreement. The MTC approved
the compromise agreement in a decision dated June 10, 1982.

Meanwhile, on May 21, 1982, the spouses Cadavedo filed before the RTC
an action against the DBP for Injunction; it was docketed as Civil Case
No. 3443 (Cadavedo v. DBP). The RTC subsequently denied the petition,
prompting the spouses Cadavedo to elevate the case to the CA via a
petition for certiorari. The CA dismissed the petition in its decision of
January 31, 1984.

The records do not clearly disclose the proceedings subsequent to the CA

decision in Civil Case No. 3443. However, on August 18, 1988, TCT No.
41051 was issued in the name of the spouses Cadavedo concerning the
subject lot.

On August 9, 1988, the spouses Cadavedo filed before the RTC an

action9 against the respondents, assailing the MTC-approved compromise
agreement. The case was docketed as Civil Case No. 4038 and is the
root of the present case. The spouses Cadavedo prayed, among others,
that the respondents be ejected from their one-half portion of the subject
lot; that they be ordered to render an accounting of the produce of this
one-half portion from 1981; and that the RTC fix the attorney’s fees on
a quantum meruitbasis, with due consideration of the expenses that Atty.
Lacaya incurred while handling the civil cases.

35
During the pendency of Civil Case No. 4038, the spouses Cadavedo
executed a Deed of Partition of Estate in favor of their eight children.
Consequently, TCT No. 41051 was cancelled and TCT No. 41690 was
issued in the names of the latter. The records are not clear on the
proceedings and status of Civil Case No. 3352.

The Ruling of the RTC

In the September 17, 1996 decision10 in Civil Case No. 4038, the RTC
declared the contingent fee of 10.5383 hectares as excessive and
unconscionable. The RTC reduced the land area to 5.2691 hectares and
ordered the respondents to vacate and restore the remaining 5.2692
hectares to the spouses Cadavedo.

The RTC noted that, as stated in the amended complaint filed by Atty.
Lacaya, the agreed attorney’s fee on contingent basis was P2,000.00.
Nevertheless, the RTC also pointed out that the parties novated this
agreement when they executed the compromise agreement in Civil Case
No. 215 (ejectment case), thereby giving Atty. Lacaya one-half of the
subject lot. The RTC added that Vicente’s decision to give Atty. Lacaya
one-half of the subject lot, sans approval of Benita, was a valid act of
administration and binds the conjugal partnership. The RTC reasoned out
that the disposition redounded to the benefit of the conjugal partnership
as it was done precisely to remunerate Atty. Lacaya for his services to
recover the property itself.

These considerations notwithstanding, the RTC considered the one-half

portion of the subject lot, as Atty. Lacaya’s contingent fee, excessive,
unreasonable and unconscionable. The RTC was convinced that the issues
involved in Civil Case No. 1721 were not sufficiently difficult and
complicated to command such an excessive award; neither did it require
Atty. Lacaya to devote much of his time or skill, or to perform extensive
research.

Finally, the RTC deemed the respondents’ possession, prior to the

judgment, of the excess portion of their share in the subject lot to be in
good faith. The respondents were thus entitled to receive its fruits.

On the spouses Cadavedo’s motion for reconsideration, the RTC modified

the decision in its resolution11dated December 27, 1996. The RTC ordered
the respondents to account for and deliver the produce and income,
valued at P7,500.00 per annum, of the 5.2692 hectares that the RTC
ordered the spouses Ames to restore to the spouses Cadavedo, from
October 10, 1988 until final restoration of the premises.

The respondents appealed the case before the CA.

The Ruling of the CA

36
In its decision12 dated October 11, 2005, the CA reversed and set aside
the RTC’s September 17, 1996 decision and maintained the partition and
distribution of the subject lot under the compromise agreement. In so
ruling, the CA noted the following facts: (1) Atty. Lacaya served as the
spouses Cadavedo’s counsel from 1969 until 1988, when the latter filed
the present case against Atty. Lacaya; (2) during the nineteen (19) years
of their attorney-client relationship, Atty. Lacaya represented the spouses
Cadavedo in three civil cases - Civil Case No. 1721, Civil Case No. 3352,
and Civil Case No. 3443; (3) the first civil case lasted for twelve years and
even reached this Court, the second civil case lasted for seven years,
while the third civil case lasted for six years and went all the way to the
CA; (4) the spouses Cadavedo and Atty. Lacaya entered into a
compromise agreement concerning the division of the subject lot where
Atty. Lacaya ultimately agreed to acquire a smaller portion; (5) the MTC
approved the compromise agreement; (6) Atty. Lacaya defrayed all of the
litigation expenses in Civil Case No. 1721; and (7) the spouses Cadavedo
expressly recognized that Atty. Lacaya served them in several cases.

Considering these established facts and consistent with Canon 20.01 of

the Code of Professional Responsibility (enumerating the factors that
should guide the determination of the lawyer’s fees), the CA ruled that
the time spent and the extent of the services Atty. Lacaya rendered for
the spouses Cadavedo in the three cases, the probability of him losing
other employment resulting from his engagement, the benefits resulting
to the spouses Cadavedo, and the contingency of his fees justified the
compromise agreement and rendered the agreed fee under the
compromise agreement reasonable.

The Petition

In the present petition, the petitioners essentially argue that the CA erred
in: (1) granting the attorney’s fee consisting of one-half or 10.5383
hectares of the subject lot to Atty. Lacaya, instead of confirming the
agreed contingent attorney’s fees of P2,000.00; (2) not holding the
respondents accountable for the produce, harvests and income of the
10.5383-hectare portion (that they obtained from the spouses Cadavedo)
from 1988 up to the present; and (3) upholding the validity of the
purported oral contract between the spouses Cadavedo and Atty. Lacaya
when it was champertous and dealt with property then still subject of Civil
Case No. 1721.13

The petitioners argue that stipulations on a lawyer’s compensation for

professional services, especially those contained in the pleadings filed in
courts, control the amount of the attorney’s fees to which the lawyer shall
be entitled and should prevail over oral agreements. In this case, the
spouses Cadavedo and Atty. Lacaya agreed that the latter’s contingent
attorney’s fee was P2,000.00 in cash, not one-half of the subject lot. This
agreement was clearly stipulated in the amended complaint filed in Civil
37
Case No. 1721. Thus, Atty. Lacaya is bound by the expressly stipulated
fee and cannot insist on unilaterally changing its terms without violating
their contract.

The petitioners add that the one-half portion of the subject lot as Atty.
Lacaya’s contingent attorney’s fee is excessive and unreasonable. They
highlight the RTC’s observations and argue that the issues involved
in Civil Case No. 1721, pursuant to which the alleged contingent fee of
one-half of the subject lot was agreed by the parties, were not novel and
did not involve difficult questions of law; neither did the case require
much of Atty. Lacaya’s time, skill and effort in research. They point out
that the two subsequent civil cases should not be considered in
determining the reasonable contingent fee to which Atty. Lacaya should
be entitled for his services in Civil Case No. 1721, as those cases had not
yet been instituted at that time. Thus, these cases should not be
considered in fixing the attorney’s fees. The petitioners also claim that the
spouses Cadavedo concluded separate agreements on the expenses and
costs for each of these subsequent cases, and that Atty. Lacaya did not
even record any attorney’s lien in the spouses Cadavedo’s TCT covering
the subject lot.

The petitioners further direct the Court’s attention to the fact that Atty.
Lacaya, in taking over the case from Atty. Bandal, agreed to defray all of
the litigation expenses in exchange for one-half of the subject lot should
they win the case. They insist that this agreement is a champertous
contract that is contrary to public policy, prohibited by law for violation of
the fiduciary relationship between a lawyer and a client.

Finally, the petitioners maintain that the compromise agreement in Civil

Case No. 215 (ejectment case) did not novate their original stipulated
agreement on the attorney’s fees. They reason that Civil Case No. 215 did
not decide the issue of attorney’s fees between the spouses Cadavedo
and Atty. Lacaya for the latter’s services in Civil Case No. 1721.

The Case for the Respondents

In their defense,14 the respondents counter that the attorney’s fee

stipulated in the amended complaint was not the agreed fee of Atty.
Lacaya for his legal services. They argue that the questioned stipulation
for attorney’s fees was in the nature of a penalty that, if granted, would
inure to the spouses Cadavedo and not to Atty. Lacaya.

The respondents point out that: (1) both Vicente and Atty. Lacaya caused
the survey and subdivision of the subject lot immediately after the
spouses Cadavedo reacquired its possession with the RTC’s approval of
their motion for execution of judgment in Civil Case No. 1721; (2) Vicente
expressly ratified and confirmed the agreement on the contingent
attorney’s fee consisting of one-half of the subject lot; (3) the MTC in Civil
38
Case No. 215 (ejectment case) approved the compromise agreement; (4)
Vicente is the legally designated administrator of the conjugal
partnership, hence the compromise agreement ratifying the transfer
bound the partnership and could not have been invalidated by the
absence of Benita’s acquiescence; and (5) the compromise agreement
merely inscribed and ratified the earlier oral agreement between the
spouses Cadavedo and Atty. Lacaya which is not contrary to law, morals,
good customs, public order and public policy.

While the case is pending before this Court, Atty. Lacaya died.15 He was
substituted by his wife - Rosa - and their children - Victoriano D.L.
Lacaya, Jr., Rosevic Lacaya-Ocampo, Reymar L. Lacaya, Marcelito L.
Lacaya, Raymundito L. Lacaya, Laila Lacaya-Matabalan, Marivic Lacaya-
Barba, Rosalie L. Lacaya and Ma. Vic-Vic Lacaya-Camaongay.16

The Court’s Ruling

We resolve to GRANT the petition.

The subject lot was the core of four successive and overlapping cases
prior to the present controversy. In three of these cases, Atty. Lacaya
stood as the spouses Cadavedo’s counsel. For ease of discussion, we
summarize these cases (including the dates and proceedings pertinent to
each) as follows:

Civil Case No. 1721 - Cadavedo v. Ames (Sum of money and/or voiding
of contract of sale of homestead), filed on January 10, 1967. The writ of
execution was granted on October 16, 1981.

Civil Case No. 3352 - Ames v. Cadavedo (Quieting of Title and/or

Enforcement of Civil Rights due Planters in Good Faith with Application for
Preliminary injunction), filed on September 23, 1981.

Civil Case No. 3443 - Cadavedo v. DBP (Action for Injunction with
Preliminary Injunction), filed on May 21, 1982.

Civil Case No. 215 - Atty. Lacaya v. Vicente Cadavedo, et.

al. (Ejectment Case), filed between the latter part of 1981 and early part
of 1982. The parties executed the compromise agreement on May 13,
1982.

Civil Case No. 4038 - petitioners v. respondents (the present case).

The agreement on attorney’s fee consisting of one-half of the

subject lot is void; the petitioners are entitled to recover
possession

39
The core issue for our resolution is whether the attorney’s fee consisting
of one-half of the subject lot is valid and reasonable, and binds the
petitioners. We rule in the NEGATIVE for the reasons discussed below.

A. The written agreement providing for a contingent fee of P2,000.00

should prevail over the oral agreement providing for one-half of the
subject lot

The spouses Cadavedo and Atty. Lacaya agreed on a contingent fee of

P2,000.00 and not, as asserted by the latter, one-half of the subject lot.
The stipulation contained in the amended complaint filed by Atty. Lacaya
clearly stated that the spouses Cadavedo hired the former on a
contingency basis; the Spouses Cadavedo undertook to pay their lawyer
P2,000.00 as attorney’s fees should the case be decided in their favor.

Contrary to the respondents’ contention, this stipulation is not in the

nature of a penalty that the court would award the winning party, to be
paid by the losing party. The stipulation is a representation to the court
concerning the agreement between the spouses Cadavedo and Atty.
Lacaya, on the latter’s compensation for his services in the case; it is not
the attorney’s fees in the nature of damages which the former prays from
the court as an incident to the main action.

At this point, we highlight that as observed by both the RTC and the CA
and agreed as well by both parties, the alleged contingent fee agreement
consisting of one-half of the subject lot was not reduced to writing prior to
or, at most, at the start of Atty. Lacaya’s engagement as the spouses
Cadavedo’s counsel in Civil Case No. 1721. An agreement between the
lawyer and his client, providing for the former’s compensation, is subject
to the ordinary rules governing contracts in general. As the rules stand,
controversies involving written and oral agreements on attorney’s fees
shall be resolved in favor of the former.17 Hence, the contingency fee of
P2,000.00 stipulated in the amended complaint prevails over the alleged
oral contingency fee agreement of one-half of the subject lot.

B. The contingent fee agreement between the spouses Cadavedo and

Atty. Lacaya, awarding the latter one-half of the subject lot, is
champertous

Granting arguendo that the spouses Cadavedo and Atty. Lacaya indeed
entered into an oral contingent fee agreement securing to the latter one-
half of the subject lot, the agreement is nevertheless void.

In their account, the respondents insist that Atty. Lacaya agreed to

represent the spouses Cadavedo in Civil Case No. 1721 and assumed the
litigation expenses, without providing for reimbursement, in exchange for
a contingency fee consisting of one-half of the subject lot. This agreement
is champertous and is contrary to public policy.18

40
Champerty, along with maintenance (of which champerty is an
aggravated form), is a common law doctrine that traces its origin to the
medieval period.19 The doctrine of maintenance was directed “against
wanton and inofficious intermeddling in the disputes of others in which
the intermeddler has no interest whatever, and where the assistance
rendered is without justification or excuse.”20 Champerty, on the other
hand, is characterized by “the receipt of a share of the proceeds of the
litigation by the intermeddler.”21 Some common law court decisions,
however, add a second factor in determining champertous contracts,
namely, that the lawyer must also, “at his own expense maintain, and
take all the risks of, the litigation.”22

The doctrines of champerty and maintenance were created in response

“to medieval practice of assigning doubtful or fraudulent claims to persons
of wealth and influence in the expectation that such individuals would
enjoy greater success in prosecuting those claims in court, in exchange
for which they would receive an entitlement to the spoils of the
litigation.”23 “In order to safeguard the administration of justice, instances
of champerty and maintenance were made subject to criminal and
tortuous liability and a common law rule was developed, striking down
champertous agreements and contracts of maintenance as being
unenforceable on the grounds of public policy.”24

In this jurisdiction, we maintain the rules on champerty, as adopted from

American decisions, for public policy considerations.25 As matters
currently stand, any agreement by a lawyer to “conduct the litigation in
his own account, to pay the expenses thereof or to save his client
therefrom and to receive as his fee a portion of the proceeds of the
judgment is obnoxious to the law.”26 The rule of the profession that
forbids a lawyer from contracting with his client for part of the thing in
litigation in exchange for conducting the case at the lawyer’s expense
is designed to prevent the lawyer from acquiring an interest between him
and his client. To permit these arrangements is to enable the lawyer to
“acquire additional stake in the outcome of the action which might lead
him to consider his own recovery rather than that of his client or to accept
a settlement which might take care of his interest in the verdict to the
sacrifice of that of his client in violation of his duty of undivided fidelity to
his client’s cause.”27

In Bautista v. Atty. Gonzales,28 the Court struck down the contingent fee
agreement between therein respondent Atty. Ramon A. Gonzales and his
client for being contrary to public policy. There, the Court held that an
agreement between a lawyer and his client that does not provide for
reimbursement of litigation expenses paid by the former is against public
policy, especially if the lawyer has agreed to carry on the action at his
expense in consideration of some bargain to have a part of the thing in

41
dispute. It violates the fiduciary relationship between the lawyer and his
client.29

In addition to its champertous character, the contingent fee arrangement

in this case expressly transgresses the Canons of Professional Ethics and,
impliedly, the Code of Professional Responsibility.30Under Rule 42 of the
Canons of Professional Ethics, a lawyer may not properly agree with a
client that the lawyer shall pay or beat the expense of litigation.31 The
same reasons discussed above underlie this rule.

C. The attorney’s fee consisting of one-half of the subject lot is excessive

and unconscionable

We likewise strike down the questioned attorney’s fee and declare it void
for being excessive and unconscionable. The contingent fee of one-half of
the subject lot was allegedly agreed to secure the services of Atty. Lacaya
in Civil Case No. 1721. Plainly, it was intended for only one action as the
two other civil cases had not yet been instituted at that time. While Civil
Case No. 1721 took twelve years to be finally resolved, that period of
time, as matters then stood, was not a sufficient reason to justify a large
fee in the absence of any showing that special skills and additional work
had been involved. The issue involved in that case, as observed by the
RTC (and with which we agree), was simple and did not require of Atty.
Lacaya extensive skill, effort and research. The issue simply dealt with the
prohibition against the sale of a homestead lot within five years from its
acquisition.

That Atty. Lacaya also served as the spouses Cadavedo’s counsel in the
two subsequent cases did not and could not otherwise justify an
attorney’s fee of one-half of the subject lot. As asserted by the
petitioners, the spouses Cadavedo and Atty. Lacaya made separate
arrangements for the costs and expenses for each of these two cases.
Thus, the expenses for the two subsequent cases had been considered
and taken cared of.

Based on these considerations, we therefore find one-half of the subject

lot as attorney’s fee excessive and unreasonable.

D. Atty. Lacaya’s acquisition of the one-half portion contravenes Article

1491 (5) of the Civil Code

Article 1491 (5) of the Civil Code forbids lawyers from acquiring, by
purchase or assignment, the property that has been the subject of
litigation in which they have taken part by virtue of their profession.32 The
same proscription is provided under Rule 10 of the Canons of Professional
Ethics.33

42
A thing is in litigation if there is a contest or litigation over it in court or
when it is subject of the judicial action.34 Following this definition, we find
that the subject lot was still in litigation when Atty. Lacaya acquired the
disputed one-half portion. We note in this regard the following established
facts: (1) on September 21, 1981, Atty. Lacaya filed a motion for the
issuance of a writ of execution in Civil Case No. 1721; (2) on September
23, 1981, the spouses Ames filed Civil Case No. 3352 against the spouses
Cadavedo; (3) on October 16, 1981, the RTC granted the motion filed for
the issuance of a writ of execution in Civil Case No. 1721 and the spouses
Cadavedo took possession of the subject lot on October 24, 1981; (4)
soon after, the subject lot was surveyed and subdivided into two equal
portions, and Atty. Lacaya took possession of one of the subdivided
portions; and (5) on May 13, 1982, Vicente and Atty. Lacaya executed the
compromise agreement.

From these timelines, whether by virtue of the alleged oral contingent fee
agreement or an agreement subsequently entered into, Atty. Lacaya
acquired the disputed one-half portion (which was after October 24,
1981) while Civil Case No. 3352 and the motion for the issuance of a writ
of execution in Civil Case No. 1721 were already pending before the lower
courts. Similarly, the compromise agreement, including the subsequent
judicial approval, was effected during the pendency of Civil Case No.
3352. In all of these, the relationship of a lawyer and a client still existed
between Atty. Lacaya and the spouses Cadavedo.

Thus, whether we consider these transactions - the transfer of the

disputed one-half portion and the compromise agreement - independently
of each other or resulting from one another, we find them to be prohibited
and void35 by reason of public policy.36 Under Article 1409 of the Civil
Code, contracts which are contrary to public policy and those expressly
prohibited or declared void by law are considered inexistent and void from
the beginning.37

What did not escape this Court’s attention is the CA’s failure to note that
the transfer violated the provisions of Article 1491 (5) of the Civil Code,
although it recognized the concurrence of the transfer and the execution
of the compromise agreement with the pendency of the two civil cases
subsequent to Civil Case No. 1721.38 In reversing the RTC ruling, the CA
gave weight to the compromise agreement and in so doing, found
justification in the unproved oral contingent fee agreement.

While contingent fee agreements are indeed recognized in this jurisdiction

as a valid exception to the prohibitions under Article 1491 (5) of the Civil
Code,39 contrary to the CA’s position, however, this recognition does not
apply to the present case. A contingent fee contract is an agreement in
writing where the fee, often a fixed percentage of what may be recovered
in the action, is made to depend upon the success of the
litigation.40 The payment of the contingent fee is not made during the
43
pendency of the litigation involving the client’s property but only after the
judgment has been rendered in the case handled by the lawyer.41

In the present case, we reiterate that the transfer or assignment of the

disputed one-half portion to Atty. Lacaya took place while the subject lot
was still under litigation and the lawyer-client relationship still existed
between him and the spouses Cadavedo. Thus, the general prohibition
provided under Article 1491 of the Civil Code, rather than the exception
provided in jurisprudence, applies. The CA seriously erred in upholding
the compromise agreement on the basis of the unproved oral contingent
fee agreement.

Notably, Atty. Lacaya, in undertaking the spouses Cadavedo’s cause

pursuant to the terms of the alleged oral contingent fee agreement, in
effect, became a co-proprietor having an equal, if not more, stake as the
spouses Cadavedo. Again, this is void by reason of public policy; it
undermines the fiduciary relationship between him and his clients.42

E. The compromise agreement could not validate the void oral contingent
fee agreement; neither did it supersede the written contingent fee
agreement

The compromise agreement entered into between Vicente and Atty.

Lacaya in Civil Case No. 215 (ejectment case) was intended to ratify and
confirm Atty. Lacaya’s acquisition and possession of the disputed one-half
portion which were made in violation of Article 1491 (5) of the Civil Code.
As earlier discussed, such acquisition is void; the compromise agreement,
which had for its object a void transaction, should be void.

A contract whose cause, object or purpose is contrary to law, morals,

good customs, public order or public policy is inexistent and void from the
beginning.43 It can never be ratified44 nor the action or defense for the
declaration of the inexistence of the contract prescribe;45 and any
contract directly resulting from such illegal contract is likewise void and
inexistent.46

Consequently, the compromise agreement did not supersede the written

contingent fee agreement providing for attorney’s fee of P2,000.00;
neither did it preclude the petitioners from questioning its validity even
though Vicente might have knowingly and voluntarily acquiesced thereto
and although the MTC approved it in its June 10, 1982 decision in the
ejectment case. The MTC could not have acquired jurisdiction over the
subject matter of the void compromise agreement; its judgment in the
ejectment case could not have attained finality and can thus be attacked
at any time. Moreover, an ejectment case concerns itself only with the
issue of possession de facto; it will not preclude the filing of a separate
action for recovery of possession founded on ownership. Hence, contrary
to the CA’s position, the petitioners - in filing the present action and
44
praying for, among others, the recovery of possession of the disputed
one-half portion and for judicial determination of the reasonable fees due
Atty. Lacaya for his services - were not barred by the compromise
agreement.

Atty. Lacaya is entitled to receive attorney’s fees on a quantum

meruit basis

In view of their respective assertions and defenses, the parties, in effect,

impliedly set aside any express stipulation on the attorney’s fees, and the
petitioners, by express contention, submit the reasonableness of such
fees to the court’s discretion. We thus have to fix the attorney’s fees on
a quantum meruit basis.

“Quantum meruit — meaning ‘as much as he deserves’ — is used as basis

for determining a lawyer’s professional fees in the absence of a contract x
x x taking into account certain factors in fixing the amount of legal
fees.”47 “Its essential requisite is the acceptance of the benefits by one
sought to be charged for the services rendered under circumstances as
reasonably to notify him that the lawyer performing the task was
expecting to be paid compensation”48 for it. The doctrine of quantum
meruit is a device to prevent undue enrichment based on the equitable
postulate that it is unjust for a person to retain benefit without paying for
it.49

Under Section 24, Rule 138 of the Rules of Court50 and Canon 20 of the
Code of Professional Responsibility,51 factors such as the importance of
the subject matter of the controversy, the time spent and the extent of
the services rendered, the customary charges for similar services, the
amount involved in the controversy and the benefits resulting to the client
from the service, to name a few, are considered in determining the
reasonableness of the fees to which a lawyer is entitled.

In the present case, the following considerations guide this Court in

considering and setting Atty. Lacaya’s fees based on quantum meruit: (1)
the questions involved in these civil cases were not novel and did not
require of Atty. Lacaya considerable effort in terms of time, skill or the
performance of extensive research; (2) Atty. Lacaya rendered legal
services for the Spouses Cadavedo in three civil cases beginning in 1969
until 1988 when the petitioners filed the instant case; (3) the first of
these civil cases (Cadavedo v. Ames) lasted for twelve years and reaching
up to this Court; the second (Ames v. Cadavedo) lasted for seven years;
and the third (Cadavedo and Lacaya v. DBP) lasted for six years, reaching
up to the CA; and (4) the property subject of these civil cases is of a
considerable size of 230,765 square meters or 23.0765 hectares.

All things considered, we hold as fair and equitable the RTC’s

considerations in appreciating the character of the services that Atty.
45
Lacaya rendered in the three cases, subject to modification on valuation.
We believe and so hold that the respondents are entitled to two (2)
hectares (or approximately one-tenth [1/10] of the subject lot), with the
fruits previously received from the disputed one-half portion, as
attorney’s fees. They shall return to the petitioners the remainder of the
disputed one-half portion.

The allotted portion of the subject lot properly recognizes that litigation
should be for the benefit of the client, not the lawyer, particularly in a
legal situation when the law itself holds clear and express protection to
the rights of the client to the disputed property (a homestead lot).
Premium consideration, in other words, is on the rights of the owner, not
on the lawyer who only helped the owner protect his rights. Matters
cannot be the other way around; otherwise, the lawyer does indeed
effectively acquire a property right over the disputed property. If at all,
due recognition of parity between a lawyer and a client should be on the
fruits of the disputed property, which in this case, the Court properly
accords.

WHEREFORE, in view of these considerations, we hereby GRANT the

petition. We AFFIRM the decision dated September 17, 1996 and the
resolution dated December 27, 1996 of the Regional Trial Court of Dipolog
City, Branch 10, in Civil Case No. 4038, with the MODIFICATION that
the respondents, the spouses Victorino (Vic) T. Lacaya and Rosa Legados,
are entitled to two (2) hectares (or approximately one-tenth [1/10] of the
subject lot) as attorney’s fees. The fruits that the respondents previously
received from the disputed one-half portion shall also form part of the
attorney’s fees. We hereby ORDER the respondents to return to the
petitioners the remainder of the 10.5383-hectare portion of the subject
lot that Atty. Vicente Lacaya acquired pursuant to the compromise
agreement.

SO ORDERED.

Carpio, (Chairperson), Del Castillo, Perez, and Perlas-Bernabe,

JJ., concur.

46
 FIRST DIVISION
MA. LUISA HADJULA, A.C. No. 6711
Complainant, Present:

PUNO, C.J., Chairperson,

*
SANDOVAL-GUTIERREZ,
CORONA,
- versus - AZCUNA, and
GARCIA, JJ.

Promulgated:

ATTY. ROCELES F. MADIANDA, July 3, 2007

Respondent.

x------------------------------------------------------------------------------------x

DECISION

GARCIA, J.:

Under consideration is Resolution No. XVI-2004-472 of the Board of Governors,

Integrated Bar of the Philippines (IBP), relative to the complaint for disbarment
filed by herein complainant Ma. Luisa Hadjula against respondent Atty. Roceles
F. Madianda.

The case started when, in an AFFIDAVIT-COMPLAINT[1] bearing

date September 7, 2002 and filed with the IBP Commission on Bar Discipline,
complainant charged Atty. Roceles F. Madianda with violation of Article
209[2] of the Revised Penal Code and Canon Nos. 15.02 and 21.02 of the Code of
Professional Responsibility.

In said affidavit-complaint, complainant alleged that she and respondent used to

be friends as they both worked at the Bureau of Fire Protection (BFP) whereat

47
respondent was the Chief Legal Officer while she was the Chief Nurse of the
Medical, Dental and Nursing Services. Complainant claimed that, sometime in
1998, she approached respondent for some legal advice. Complainant further
alleged that, in the course of their conversation which was supposed to be kept
confidential, she disclosed personal secrets and produced copies of a marriage
contract, a birth certificate and a baptismal certificate, only to be informed later
by the respondent that she (respondent) would refer the matter to a lawyer
friend. It was malicious, so complainant states, of respondent to have refused
handling her case only after she had already heard her secrets.

Continuing, complainant averred that her friendship with respondent soured after
her filing, in the later part of 2000, of criminal and disciplinary actions against
the latter. What, per complainants account, precipitated the filing was when
respondent, then a member of the BFP promotion board, demanded a cellular
phone in exchange for the complainants promotion.

According to complainant, respondent, in retaliation to the filing of the aforesaid

actions, filed a COUNTER COMPLAINT[3] with the Ombudsman charging her
(complainant) with violation of Section 3(a) of Republic Act No.
3019,[4] falsification of public documents and immorality, the last two charges
being based on the disclosures complainant earlier made to respondent. And also
on the basis of the same disclosures, complainant further stated, a disciplinary
case was also instituted against her before the Professional Regulation
Commission.

Complainant seeks the suspension and/or disbarment of respondent for the latters
act of disclosing personal secrets and confidential information she revealed in the
course of seeking respondents legal advice.

In an order dated October 2, 2002, the IBP Commission on Bar Discipline

required respondent to file her answer to the complaint.

48
In her answer, styled as COUNTER-AFFIDAVIT,[5] respondent denied giving
legal advice to the complainant and dismissed any suggestion about the existence
of a lawyer-client relationship between them. Respondent also stated the
observation that the supposed confidential data and sensitive documents adverted
to are in fact matters of common knowledge in the BFP. The relevant portions of
the answer read:

5. I specifically deny the allegation of F/SUPT. MA. LUISA C.

HADJULA in paragraph 4 of her AFFIDAVIT-COMPLAINT for reason that
she never WAS MY CLIENT nor we ever had any LAWYER-CLIENT
RELATIONSHIP that ever existed ever since and that never obtained any legal
advice from me regarding her PERSONAL PROBLEMS or PERSONAL
SECRETS. She likewise never delivered to me legal documents much more told
me some confidential information or secrets. That is because I never entertain
LEGAL QUERIES or CONSULTATION regarding PERSONAL MATTERS
since I know as a LAWYER of the Bureau of Fire Protection that I am not
allowed to privately practice law and it might also result to CONFLICT OF
INTEREST. As a matter of fact, whenever there will be PERSONAL
MATTERS referred to me, I just referred them to private law practitioners and
never entertain the same, NOR listen to their stories or examine or accept any
document.

9. I specifically deny the allegation of F/SUPT. MA. LUISA C.

HADJULA in paragraph 8 of her AFFIDAVIT-COMPLAINT, the truth of the
matter is that her ILLICIT RELATIONSHIP and her illegal and unlawful
activities are known in the Bureau of Fire Protection since she also filed CHILD
SUPPORT case against her lover where she has a child .

Moreover, the alleged DOCUMENTS she purportedly have shown to

me sometime in 1998, are all part of public records .

Furthermore, F/SUPT. MA. LUISA C. HADJULA, is filing the instant

case just to get even with me or to force me to settle and withdraw the CASES
I FILED AGAINST HER since she knows that she will certainly be
DISMISSED FROM SERVICE, REMOVED FROM THE PRC ROLL and
CRIMINALLY CONVICTED of her ILLICIT, IMMORAL, ILLEGAL and
UNLAWFUL ACTS.

On October 7, 2004, the Investigating Commissioner of the IBP Commission on

Bar Discipline came out with a Report and Recommendation, stating that the
information related by complainant to the respondent is protected under the
attorney-client privilege communication. Prescinding from this postulate, the

49
Investigating Commissioner found the respondent to have violated legal ethics
when she [revealed] information given to her during a legal consultation, and
accordingly recommended that respondent be reprimanded therefor, thus:

WHEREFORE, premises considered, it is respectfully recommended that

respondent Atty. Roceles Madianda be reprimanded for revealing the secrets of
the complainant.

On November 4, 2004, the IBP Board of Governors issued Resolution No. XVI-
2004-472 reading as follows:
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 as
Annex A; and , finding the recommendation fully supported by the evidence on
record and the applicable laws and rules, and considering the actuation of
revealing information given to respondent during a legal consultation, Atty.
Roceles Madianda is hereby REPRIMANDED.

We AGREE with the recommendation and the premises holding it

together.

As it were, complainant went to respondent, a lawyer who incidentally was

also then a friend, to bare what she considered personal secrets and sensitive
documents for the purpose of obtaining legal advice and assistance. The moment
complainant approached the then receptive respondent to seek legal advice, a
veritable lawyer-client relationship evolved between the two. Such relationship
imposes upon the lawyer certain restrictions circumscribed by the ethics of the
profession. Among the burdens of the relationship is that which enjoins the
lawyer, respondent in this instance, to keep inviolate confidential information
acquired or revealed during legal consultations. The fact that one is, at the end of
the day, not inclined to handle the clients case is hardly of consequence. Of little
moment, too, is the fact that no formal professional engagement follows the
consultation. Nor will it make any difference that no contract whatsoever was
executed by the parties to memorialize the relationship. As we said in Burbe v.
Magulta,[6] -

50
 A lawyer-client relationship was established from the very first moment
complainant asked respondent for legal advise regarding the formers business.
To constitute professional employment, it is not essential that the client
employed the attorney professionally on any previous occasion.

It is not necessary that any retainer be paid, promised, or charged;

neither is it material that the attorney consulted did not afterward handle the
case for which his service had been sought.

It a person, in respect to business affairs or troubles of any kind, consults

a lawyer with a view to obtaining professional advice or assistance, and the
attorney voluntarily permits or acquiesces with the consultation, then the
professional employments is established.

Likewise, a lawyer-client relationship exists notwithstanding the close

personal relationship between the lawyer and the complainant or the non-
payment of the formers fees.

Dean Wigmore lists the essential factors to establish the existence of the attorney-
client privilege communication, viz:

(1) Where legal advice of any kind is sought (2) from a professional legal
adviser in his capacity as such, (3) the communications relating to that purpose,
(4) made in confidence (5) by the client, (6) are at his instance permanently
protected (7) from disclosure by himself or by the legal advisor, (8) except the
protection be waived.[7]

With the view we take of this case, respondent indeed breached his duty of
preserving the confidence of a client. As found by the IBP Investigating
Commissioner, the documents shown and the information revealed in confidence
to the respondent in the course of the legal consultation in question, were used as
bases in the criminal and administrative complaints lodged against the
complainant.

The purpose of the rule of confidentiality is actually to protect the client from
possible breach of confidence as a result of a consultation with a lawyer.
The seriousness of the respondents offense notwithstanding, the Court feels that
there is room for compassion, absent compelling evidence that the respondent
acted with ill-will. Without meaning to condone the error of respondents ways,

51
what at bottom is before the Court is two former friends becoming bitter enemies
and filing charges and counter-charges against each other using whatever
convenient tools and data were readily available. Unfortunately, the personal
information respondent gathered from her conversation with complainant became
handy in her quest to even the score. At the end of the day, it appears clear to us
that respondent was actuated by the urge to retaliate without perhaps realizing
that, in the process of giving vent to a negative sentiment, she was violating the
rule on confidentiality.

IN VIEW WHEREOF, respondent Atty. Roceles F. Madianda is

hereby REPRIMANDED and admonished to be circumspect in her handling of
information acquired as a result of a lawyer-client relationship. She is
also STERNLY WARNED against a repetition of the same or similar act
complained of.

SO ORDERED.

52
 FIRST DIVISION

R TRANSPORT CORPORATION, G.R. No. 155737

Petitioner,
Present:
Davide, Jr., C.J.,
(Chairman),
Quisumbing,
- versus - Ynares-Santiago,
Carpio, and
Azcuna, JJ.

PHILIPPINE HAWK Promulgated:

TRANSPORT CORPORATION,
Respondent. October 19, 2005
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION

QUISUMBING, J.:

This petition for review on certiorari seeks to reverse and set aside
the Decision[1] dated August 1, 2002 of the Court of Appeals in CA-G.R. SP No.
61717 denying due course to the Petition for Certiorari, as well as the appellate
courts Resolution[2] dated October 21, 2002, denying petitioners motion for
reconsideration.

The antecedent facts, from the Court of Appeals and borne by the records, are as
follows:

On April 7, 1997, the Regional Trial Court of Pasig City, Branch 162, rendered
a Decision[3] against the petitioner in Civil Case No. 61983. A copy of said
decision was sent to petitioners counsel, Atty. Jose O. Uy Jr., but was returned to
the trial court unserved, with notation, RTS-Moved.

53
On November 19, 1999, respondents filed a Motion for Execution of said
judgment. On March 3, 2000, the trial court issued an Order[4] directing that
petitioner be furnished with a copy of said motion. This was for the sole purpose
of notifying the party that an adverse decision had been rendered against it.
Petitioner received the copy on March 13, 2000 and filed a Notice of Appeal
on March 23, 2000. However, the trial court denied the appeal and granted
respondents motion for execution. The trial court also denied the subsequent
motion for reconsideration of the petitioner.

Thereafter, petitioner filed a special civil action for certiorari against the
presiding judge for granting the motion for execution despite the alleged timely
appeal. This was denied due course by the appellate court. Petitioner moved for
reconsideration but was likewise denied. Hence, this appeal by certiorari.

In its Memorandum, petitioner maintains that the sole issue is:

WHETHER OR NOT THE TRIAL COURT COMMITTED GRAVE
ABUSE OF DISCRETION IN GRANTING THE MOTION FOR
EXECUTION AND DENYING DUE COURSE . . . TO THE
APPEAL FILED BY THE PETITIONER AS DEFENDANT IN
CIVIL CASE NO. 61983 FOR NOT HAVING BEEN FILED
WITHIN THE REGLEMENTARY PERIOD.[5]

Petitioner argues that the proper service of the trial courts decision was done only
on March 13, 2000, contrary to the appellate courts finding that it was earlier
served on petitioners counsel. Therefore, it maintains that the counting of the
reglementary period to appeal should start only on March 13, 2000 and not
earlier.

Petitioner insists that insistence on the prior service before March 13, 2000, was
improper since it was neither received by counsel nor by petitioner, citing Section
2, Rule 13 of the 1997 Rules of Civil Procedure, which provides that if any party
has appeared by counsel, service upon him shall be made upon his counsel or one

54
of them, unless service upon the party himself is ordered by the court. Argues the
petitioner: since the trial court ordered that petitioner shall be furnished a copy of
the decision, then the reckoning point for the period to appeal becomes the actual
date of its receipt of the said decision. Therefore, petitioner submits, the trial court
committed grave abuse of discretion when it dismissed the appeal on the ground
that it was filed out of time.

Petitioner also contends that, since a timely appeal was made, the trial court had
no authority to grant the motion for execution. It cites Section 9, Rule 41 which
provides that in appeals by notice of appeal, the court loses jurisdiction over the
cases upon the perfection of the appeals filed in due time and the expiration of
the time to appeal of the other parties.

Respondent submits that petitioners argument is misleading because a copy of the

decision was earlier sent to the last known address appearing on record of
petitioners counsel, Atty. Uy. It is the fault of petitioners counsel, adds
respondent, that Atty. Uy was not able to receive the decision since he had not
filed any notice of change of address. Citing Bernardo v. Court of
Appeals,[6] respondent maintains that petitioner is bound by the mistakes of his
counsel.

Respondent also cites Section 8, Rule 13 of the Revised Rules of Court,[7] which
provides that substituted service of decisions may be made by delivering the copy
to the clerk of court, with proof of failure of both personal service and service by
mail. The service is complete at the time of such delivery. This being so,
respondent asserts, the notice of appeal was filed out of time since notice was
filed after more than two years from the date when substituted service was done.

We find the instant petition clearly without merit. No reversible error could be
attributed to the appellate court.

55
Under Section 2, Rule 13 of the Revised Rules of Court,[8] if a party has appeared
by counsel, service upon him shall be made upon his counsel. In the present case,
petitioner was actively represented by Atty. Uy in the trial of the case. Records
show that Atty. Uy filed an Answer to Counterclaim and an Answer to Cross-
claim. He also cross-examined witnesses of the respondent. Further, the decision
was properly sent to Atty. Uys last known address appearing on the record.
Though the copy of the decision was returned to court for the reason that the
petitioners counsel has moved, there was still proper service of the decision by
substituted service under Section 8, Rule 13 of the Revised Rules of Court. It is
also worthy to note that it was only the decision which was returned while all
other previous pleadings, including the notices to present evidence, were
received.

The general rule is that a client is bound by the acts, even mistakes of his
counsel.[9] Exceptions to the foregoing have been recognized by the Court in the
cases of Legarda v. Court of Appeals,[10] and Escudero v. Dulay,[11] such as when
the reckless or gross negligence of counsel deprives the client of due process of
law, or when the application results in the outright deprivation of one's property
through a technicality.[12]

We note that petitioner tried to show the gross negligence of its counsel. Petitioner
suggests that when its counsel just disappeared and failed to notify the court of
his change of address, where the courts decision could have been delivered, this
resulted in the deprivation of petitioners property without due process of law.

Regrettably, the Legarda and Escudero cases are inapplicable. The facts in
these cases are not on all fours with the facts in the present case.

In Legarda, the counsel was found grossly negligent because of the

complete absence of effort on his part to defend his clients cause. In contrast,

56
Atty. Uys failure to notify the court of his change of address is simply negligence
since it could be gleaned from the records that the counsel actively participated
in the proceedings of the case until respondent had rested its case and filed its
offer of evidence.

In like manner, the case at bar is different from the Escudero case where
there were outright deprivations of property without due process of law. In the
case before us, petitioner, through counsel filed its Answer with Counterclaim
and Answer to Cross-claim. Counsel also cross-examined the witnesses of the
respondent. Likewise, petitioner was given several opportunities to present
evidence in its defense.[13] The essence of due process is the reasonable
opportunity to be heard and submit evidence one may have in support of ones
defense.[14] Here, we find no deprivation of due process.

On the matter of appeal, we ruled on several occasions that the right to appeal is
neither a natural right nor a part of due process. It is merely a statutory privilege
and may be exercised only in the manner and strictly in accordance with the
provisions of the law.[15]The party who seeks to appeal must comply with the
requirements of the rules. Failure to do so results in the loss of that right.[16]

The perfection of an appeal in the manner and within the period permitted by law
is not only mandatory but also jurisdictional. The failure to seasonably perfect the
appeal to a higher court renders the judgment of the lower court final and
executory. Just as a losing party has the right to file an appeal within the
prescribed period, the winning party also has thereafter the correlative right to
enjoy the finality of the decision in the case.[17]

In sum, if petitioners counsel moved to another address without informing the

court of his change of address, the omission or neglect will not stay the finality
of the decision.[18]

57
WHEREFORE, the petition is hereby DENIED for lack of merit. The assailed
Decision dated August 1, 2002 and Resolution dated October 21, 2002 of the
Court of Appeals in CA-G.R. SP No. 61717 are AFFIRMED.

Costs against petitioner.

SO ORDERED.

LEONARDO A. QUISUMBING
Associate Justice

WE CONCUR:

HILARIO G. DAVIDE, JR.

Chief Justice
Chairman

CONSUELO YNARES-SANTIAGO ANTONIO T. CARPIO

Associate Justice Associate Justice

ADOLFO S. AZCUNA
Associate Justice

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, it is hereby certified that
the conclusions in the above Decision were reached in consultation before the
case was assigned to the writer of the opinion of the Courts Division.

HILARIO G. DAVIDE, JR.

Chief Justice

58
Republic of the Philippines
SUPREME COURT
Manila

EN BANC

A. M. No. 2104 August 24, 1989

NARCISO MELENDREZ and ERLINDA DALMAN, complainants,

vs.
ATTY. REYNERIO I. DECENA, respondent.

PER CURIAM:

In a sworn complaint1 dated 25 September 1979, the spouses

Erlinda Dalman and Narciso Melendrez charged Reynerio I.
Decena, a member of the Philippine Bar, with malpractice and
breach of trust. The complainant spouses alleged, among others,
that respondent had, by means of fraud and deceit, taken
advantage of their precarious financial situation and his
knowledge of the law to their prejudice, succeeded in divesting
them of their only residential lot in Pagadian City; that respondent,
who was their counsel in an estafa case against one Reynaldo
Pineda, had compromised that case without their authority.

In his answer dated 18 March 1980, respondent denied all the

charges levelled against him and prayed for the dismissal of the
complaint.

59
By resolution dated 14 April 1980, the administrative complaint
was referred to the Office of the Solicitor General for investigation,
report and recommendation.

Accordingly, the Solicitor General forthwith deputized the City

Fiscal of Pagadian City, Jorge T. Almonte, to conduct the necessary
investigation, with instructions to submit thereafter this report
and recommendation thereon. Fiscal Almonte held several
hearings on the administrative case until 15 July 1982, when he
requested the Solicitor General to release him from the duty of
investigating the case.

On 10 September 1982, the Solicitor General granted Fiscal

Almonte's request and in his stead appointed the Provincial Fiscal
of Zamboanga del Sur, Pedro S. Jamero, who resumed hearings on
15 June 1983.

Respondent filed with this Court on 9 June 1987, a motion seeking

to inhibit Fiscal Jamero from hearing the case followed by an
urgent motion for indefinite postponement of the investigation.
Both motions were denied by the Court in a Resolution dated 21
September 1987 with instructions to the Solicitor General to
complete the investigation of the administrative case and to render
his report and recommendation thereon within thirty (30) days
from notice.

On 19 July 1988, the Solicitor General submitted his Report and

Recommendation 2 dated 21 June 1988. In as Report, after setting
out the facts and proceedings held in the present case, the Solicitor
General presented the following:

FINDINGS

60
Complainants allege that on August 5, 1975, they obtained from
respondent a loan of P 4,000.00. This loan was secured by a real
estate mortgage (Annex C, Complainants' Complaint, p. 16,
records).lâwphî1.ñèt In the said Real Estate Mortgage document,
however, it was made to appear that the amount borrowed by
complainants was P5,000.00. Confronted by this discrepancy,
respondent assured complainants that said document was a mere
formality, and upon such assurance, complainants signed the
same. The document was brought by complainant Narciso
Melendres to a Notary Public for notarization. After the same was
notarized, he gave the document to respondent. Despite the
assurance, respondent exacted from complainants P500.00 a
month as payment for what is beyond dispute usurious interest on
the P5,000.00 loan. Complainants religiously paid the obviously
usurious interest for three months: September, October and
November, 1975. Then they stopped paying due to financial
reverses. In view of their failure to pay said amounts as interest,
respondent prepared a new document on May 7, 1976, a Real
Estate Mortgage (Annex D, Complaint, p. 18, records) over the
same lot 3125-C, replacing the former real estate mortgage dated
August 5, 1975, but this time the sum indicated in said new
contract of mortgage is P 10,000.00, purportedly with interest at
19% per annum. In this new Real Estate Mortgage, a special power
of attorney in favor of respondent was inserted, authorizing him to
sell the mortgaged property at public auction in the event
complainants fail to pay their obligation on or before May 30, 1976.
Without explaining the provisions of the new contract to
complainants, respondent insisted that complainants sign the
same, again upon the assurance that the document was a mere
formality. Unsuspecting of the motive of respondent, complainants
signed the document. Complainants Narciso Melendres again
brought the same document to a Notary Public for notarization.

61
After the document was notarized, he brought the same to
respondent without getting a copy of it.

Complainants, relying on the assurance of the respondent that the

second Real Estate Mortgage was but a formality, neither bothered
to ask from respondent the status of their lot nor tried to pay their
obligation. For their failure to pay the obligation, the respondent
on October 12, 1976, applied for the extrajudicial foreclosure of
the second real estate mortgage (Exhibit 16, Respondent's Position
Paper). All the requirements of Act No. 3135, as amended, re
extrajudicial sale of mortgage were ostensibly complied with by
respondent. Hence, finally, title was transferred to him, and on
June 20, 1979, respondent sold the involved property to Trinidad
Ylanan for P12,000.00.

When informed of the above by one Salud Australlado on the first

week of March 1979 (see Sworn Statement of complainant Narciso
Melendres, p. 6, Folder No. 2 of case), and not having known the
legal implications of the provisions of the second Real Estate
Mortgage which they had executed, complainants could not believe
that title to their lot had already been transferred to respondent
and that respondent had already sold the same to a third person.

Upon learning of the sale in March, 1979, complainants tried to

raise the amount of P10,000.00 and went to respondent's house
on May 30, 1979 to pay their obligation, hoping that they could
redeem their property, although three years had already lapsed
from the date of the mortgage.

Respondent did not accept the proffered P10,000.00, but instead

gave complainants a sheet of paper (Annex B, Complainants'
Position Paper), which indicated that the total indebtedness had
soared to P20,400.00. The computation was made in respondent's
62
own handwriting. Complainants went home with shattered hopes
and with grief in their hearts. Hence, the instant competent for
disbarment against respondent filed on October 5, 1979.

Respondent DENIES all the allegations of complainants. He

maintains that what appears on the two documents allegedly
executed by complainants, i.e., that they obtained a loan of
P5,000.00 on August 5, 1975 and another P10,000.00 on May
7,1976, is allegedly the truth, and claims that he in truth delivered
the alleged amount of P5,000.00 to complainants and not
P4,000.00. With respect to the second loan, respondent claims
that he delivered to complainants P8,000.00, plus the P2,000.00
loan previously extended [to] complainants [by] one Regino
Villanueva, which loan had been indorsed to respondent for
collection, thus making a total of P10,000.00, as appearing on said
document. Respondent denies that he exacted usurious interest of
10% a month or P500.00 from complainants. He asserts that the
fact that complainants were able to secure a loan from the Insular
Bank of Asia and America (IBAA) only proves the truth of his
allegation that the title of the property, at the time complainants
obtained a loan from IBAA on April 1976, was clear of any
encumbrance, since complainants had already paid the original
loan of P5,000.00 obtained from respondent; that complainants
knew fully well all the conditions of said mortgage; and that his
acquisition of the property in question was in accordance with
their contract and the law on the matter. Thus, he denies that he
has violated any right of the complainants.

After weighing the evidence of both complainants and respondent,

we find against respondent.

While complainants are correct in their claim that they actually

obtained an actual cash of P4,000.00, they are only partly correct
63
in the claim that out of the P10,000.00 appearing in the second
Real Estate Mortgage, P6,000.00 was applied to interest
considering that not all the P6,000.00 but only P4,000.00 was
applied to interest, computed as follows: the first loan of P5,000.00
was supposedly due on August 31, 1975. Complainants paid 10%
monthly interest or P500.00 on September 30, 1975, October 31,
1975 and November 30, 1975. Consequently, beginning December
31, 1975 up to May 31, 1976 (the date of the execution of the
second Real Estate Mortgage) a total of six (6) months lapsed. Six
(6) months at P500.00 equals P 3,000.00, which amount plus the
P2,000.00 complainants' loan to one Engr. Villanueva (indorsed to
respondent for collection) totals P5,000.00. Adding this amount to
the previous P5,000.00 indicated loan secured by the first
mortgage results in P10,000.00, the amount appearing in the
second Real Estate Mortgage. Section 7, Rule 130 of the Rules of
Court provides:

SEC. 7. Evidence of written agreements. — When the terms of an

agreement have been reduced to writing, it is to be considered as
complaining all such terms, and, therefore, there can be, as
between the parties and their successors in interest, no evidence
of the terms of the agreement other than the contents of the
writing, except in the following cases:

(a) Where a mistake or imperfection of the writing, or its failure to

express the true intent and agreement of the parties, or the validity
of the agreement is put in issue by the pleadings;

(b) Where there is an intrinsic ambiguity in the writing. The term

"agreement" includes wills.

There is no dispute that the two documents denominated Real

Estate Mortgages covering the supposed original loan of P5,000.00
64
and the inflated P10,000.00, respectively, were voluntarily signed
by the complainants. The general rule is that when the parties have
reduced their agreement to writing, it is presumed that they have
made the writing the only repository and memorial of the truth,
and whatever is not found in the writing must be understood to
have been waived and abandoned.

However, the rule is not absolute as it admits of some exceptions,

as aforequoted. One of the exceptions, that is, failure to express
the true intent and agreement of the parties, applies in this case.
From the facts obtaining in the case, it is clear that the
complainants were induced to sign the Real Estate Mortgage
documents by the false and fraudulent representations of
respondent that each of the successive documents was a are
formality.

While it may be true that complainants are not at all illiterate,

respondent, being a lawyer, should have at least explained to
complainants the legal implications of the provisions of the real
estate mortgage, particularly the provision appointing him as the
complainants' attorney-in-fact in the event of default in payments
on the part of complainants. While it may be conceded that it is
presumed that in practice the notary public apprises complainants
of the legal implications of the contract, it is of common knowledge
that most notaries public do not go through the desired practice.
Respondent at least could have informed the complainants by
sending a demand letter to them to pay their obligation as
otherwise he would proceed to sell the lot at public auction as per
their contract. This respondent failed to do, despite the fact that
he knew fully wen that complainants were trying their best to raise
money to be able to pay their obligation to him, as shown by the
loan obtained by complainants from the IBAA on April 8, 1976. In
this connection, it may be stated that complainants, per advice of
65
respondent himself, returned the proceeds of the IBAA loan to the
bank immediately on April 30, 1976, considering that the net
proceeds of the loan from said bank was only P4,300.00 and not
enough to pay the indicated loan from respondent of P5,000.00,
which per computation of respondent would already have earned
interest of P2,500.00 for five (5) months (December 1975 to April,
1976).

Respondent claims that complainants had paid him the original

loan of P5,000.00, and that this was the reason why complainants
were able to mortgage the lot to the bank free from any
encumbrance. This claim is incorrect. The reason why the title (T-
2684) was free from any encumbrance was simply because of the
fact that the first Real Estate Mortgage for the indicated loan of
P5,000.00 (the actual amount was only P 4,000.00) had not been
annotated at the back of the title (see Annex B, p. 14, rec.).

Respondent also denies that complainants offered to him the

amount of Pl0,000. 00 as payment of the loan, alleging that if the
offer were true, he could have readily accepted the same since he
sold the lot for almost the same amount, for only P12,000.00, a
difference of a few thousand pesos. Respondent's denial is
spacious.

Indeed, complainants made the offer, but respondent refused the

same for the simple reason that the offer was made on May
30,1979, three (3) years after the execution of the mortgage on May
31, 1976. With its lapse of time, respondent demanded obviously
the payment of the accumulated substantial interest for three
years, as shown by his own computation in as own handwriting on
a sheet of paper (Annex C, Complainants' Position Paper, Folder
No. 2).lâwphî1.ñèt

66
In view of all the foregoing, the observation made by the Hearing
Officer is worth quoting:

In the humble opinion of the undersigned the pivotal question with

respect to this particular charge is whose version is to be believed.
Is it the version of the complainants or the version of the
respondent.

In resolving this issue the possible motive on the part of the

complainants in filing the present complaint against the
respondent must be carefully examined and considered. At the
beginning there was a harmonious relationship between the
complainants and the respondent so much so that respondent was
even engaged as counsel of the complainants and it is but human
nature that when respondent extended a loan to the complainants
the latter would be grateful to the former. However, in the case at
bar, complainants filed a complaint against the respondent in spite
of the great disparity between the status of the complainants and
the respondent. Admittedly, respondent is in a better position
financially, socially and intellectually. To the mind of the
undersigned, complainants were only compelled to file the above
entitled complaint against the respondent because they felt that
they are so aggrieved of what the respondent has done to them. It
is for this reason therefore that the undersigned is inclined to
believe the version of the complainants rather than of the
respondent. In addition thereto, the respondent as a lawyer could
really see to it that the transaction between the complainants and
himself on papers appear legal and in order. Besides, there is
ample evidence in the records of its case that respondent is
actually engaged in lending money at least in a limited way and
that the interest at the rate of ten per cent a month is but common
among money lenders during the time of the transactions in
question'
67
Going now into the second charge, complainants alleged that
respondent, who was their counsel (private prosecutor) in Criminal
Case No. 734, for estafa, against accused Reynaldo Pineda,
compromised the case with the accused without their consent and
received the amount of P500.00 as advance payment for the
amicable settlement, without however, giving to the complainants
the Id amount nor informing them of said settlement and payment.

Again, respondent denies the allegation and claims that the

amicable settlement was with the consent of complainant wife
Erlinda Dalman Melendre[z].

We are inclined to believe the version of the complainants.

It is admitted that complainants were not interested in putting the

accused Reynaldo Pineda to jail but rather in merely recovering
their money of P2,000.00. At this stage, relationship between
complainants and respondent was not yet strained, and
respondent, as counsel of the complainants in this case, knew that
complainants were merely interested in said recovery. Knowing
this, respondent on his own volition talked to accused and tried to
settle the case amicably for P2,000.00. He accepted the amount of
P500.00 as advance payment, being then the only amount carried
by the accused Pineda. A receipt was signed by both respondent
and accused Pineda (Annex M, p. 34, record). However, respondent
did not inform complainants about this advance payment, perhaps
because he was still waiting for the completion of the payment of
P2,000.00 before turning over the whole amount to complainants.

At any rate, complainants saw accused Pineda give the

abovementioned P500.00 to respondent, but they were ashamed
then to ask directly of respondent what the money was all about.
68
On June 27, 1979, barely a month after May 30, 1979, when the
complainants had already lost their trust and respect and/or
confidence in respondent upon knowing what happened to their
lot and, more so, upon respondent's refusal to accept the
Pl0,000.00 offered by complainants to redeem the same, Narciso
Melendre[z] saw the accused Pineda on his way home and
confronted him on the P500.00 that had been given to respondent.
Accused then showed complainant Melendres the receipt (Annex
M, Id.) showing that the P500.00 was an advance payment for the
supposed settlement/dismissal of the case filed by complainants
against him.

Sensing or feeling that respondent was fooling them, complainants

then filed a motion before the court which was trying the criminal
case and relieved respondent as their counsel.

The Investigating Fiscal, who heard the case and saw the
demeanor of the witnesses in testifying, had this to say:

With respect to the second charge, the fact that respondent

received P500.00 from Reynaldo Pineda is duly established. Both
the complainants and the respondent agreed that the said amount
was given to the respondent in connection with a criminal case
wherein the complainants were the private offended parties: that
Reynaldo Pineda is the accused and that the respondent is the
private prosecutor of the said case. The pivotal issue in this
particular charge is whether the respondent received the amount
of P500.00 from Reynaldo Pineda as an advance payment of an
amicable settlement entered into by the complainants and the
accused or the respondent received said amount from the accused
without the knowledge and consent of the complainants. If it is
true as alleged by the respondent that he only received it for and
69
in behalf of the complainants as advance payment of an amicable
settlement why is it that the same was questioned by the
complainants? Why is it that it was not the complainants who
signed the receipt for the said amount? How come that as soon as
complainants knew that the said amount was given to the
respondent, the former filed a motion in court to relieve respondent
as their counsel on the ground that they have lost faith and
confidence on him? If it is really true that complainants have
knowledge and have consented to this amicable settlement they
should be grateful to the efforts of their private prosecutor yet the
fact is that they resented the same and went to the extent of
disqualifying the respondent as their private prosecutor. Reynaldo
Pineda himself executed an affidavit belying the claim of the
respondent.'

Clearly, the complained acts as described and levelled against

respondent Decena are contrary to justice, honesty, modesty, or
good morals for which he may be suspended. The moral turpitude
for which an attorney may be disbarred may consist of misconduct
in either his professional or non- professional attitude (Royong v.
Oblena, 7 SCRA 859). The complained acts of respondent imply
something immoral in themselves, regardless of the fact whether
they are punishable by law. The doing of the act itself, and not its
prohibition by statute, fixes the moral turpitude (Bartos vs. U.S.
Dist. Court for District of Nebraska C.C.C. Neb] 19 F [2d] 722).

A parting comment.

All the above is not to say that complainants themselves are

faultless.

Complainants should likewise be blamed for trusting the

respondent too much. They did not bother to keep a copy of the
70
documents they executed and considering that they admitted they
did not understand the contents of the documents, they did not
bother to have them explained by another lawyer or by any
knowledgeable person in their locality. Likewise, for a period of
three years, they did not bother to ask for respondent the status
of their lot and/or their obligation to him. Their complacency or
apathy amounting almost to negligence contributed to the
expedient loss of their property thru the legal manuevers employed
by respondent. Hence, respondent's liability merits mitigation.
(Emphasis supplied)

and made the following recommendation:

WHEREFORE, it is respectfully recommended that Atty. Reynerio

I. Decena be suspended from the practice of law for a period of five
(5) years. 3

The Office of the Solicitor General, through Fiscals Almonte and

Jamero, held several hearings during the investigation of the
present administrative case: City Fiscal Jorge T. Almonte was able
to hold six (6) actual hearings out of twenty-five (25) resettings 4
While only five (5) actual hearings, out of forty (40) resettings 5
were held under Provincial Fiscal Pedro S. Jamero. In those
hearings, the complainants presented a number of witnesses who,
after their direct testimony, were cross-examined by the counsel
for respondent; complainant Narciso Melendrez also testified and
was accordingly cross-examined. Considering the long delay
incurred in the investigation of the administrative case and having
been pressed by the Solicitor General immediately to complete the
investigation, Fiscal Jamero posed a change of procedure, from
trial type proceedings to requiring the parties to submit their
respective position papers. The complainants immediately filed
their position paper which consisted of their separate sworn
71
statements, (that of Narciso Melendrez was in a question and
answer form), their documentary exhibits and an affidavit of one
Jeorge G. Santos. Respondent also filed his counter-affidavit and
affidavits of his witnesses, with several annexes in support thereof
In the healing of 28 October 1987, which had been set for the cross
examination of the complainants and their witnesses by
respondent, the complainants refused to submit themselves to
cross-examination on the ground that the order of the hearing
officer dated 17 December 1986 declaring respondent's right of
cross examination as having been waived, had become final and
executory. Respondent questions now the evidentiary value of the
complainants' position paper, not having passed through any
cross-examination and argues that the non-submission of the
complainants and their witnesses to cross-examination
constitutes a denial of his right to due process.

We do not think respondent's right to confront the complainants

and their witnesses against him has been violated, Respondent in
fact cross-examined complainant Narciso Melendrez and some of
the witnesses which complainants had presented earlier. As
pointed out by the Solicitor General, the record of the proceedings
shows that respondent had all the opportunity to cross-examine
the other witnesses of the complainants (those whose affidavits
were attached to complainants' position paper) had he wanted to,
but had forfeited such opportunity by asking for numerous
continuances which indicated a clear attempt on his part to delay
the investigation proceedings. Respondent had in fact requested a
total of twenty three (23) resettings during the investigation
proceedings: he had eight (8) under Fiscal Almonte and fifteen (15)
under Fiscal Jamero. There were also instances where respondent
asked for postponement and at the same time reset the hearing to
a specific date of his choice on which neither he nor as counsel
would appear. That attitude of respondent eventually led the
72
hearing officer to declare his (respondent's) right to cross-examine
the complainants and their witnesses as having been waived in his
order of 17 December 1986. Respondent can not now claim that
he had been deprived below of the opportunity to confront the
complainants and their witnesses.

After carefully going through the record of the proceedings as well

as the evidence presented by both parties, we agree with the
findings and conclusions of the Solicitor General.

The following acts of respondent:

1. making it appear on the 5 August 1975 real estate mortgage

that the amount loaned to complainants was P5,000.00 instead of
P4,000.00;

2. exacting grossly unreasonable and usurious interest;

3. making it appear in the second real estate mortgage of 7 May

1976 that the loan extended to complainants had escalated to
P10,000.00;

4. failing to inform complainants of the import of the real

mortgage documents and inducing them to sign those documents
with assurances that they were merely for purposes of "formality";

5. failing to demand or refraining from demanding payment

from complainants before effecting extrajudicial foreclosure of the
mortgaged property; and

6. failing to inform or refraining from informing complainants

that the real estate mortgage had already been foreclosed and that

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complainants had a right to redeem the foreclosed property within
a certain period of time.

constitute deception and dishonesty and conduct unbecoming a

member of the Bar. We agree with the Solicitor General that the
acts of respondent "imply something immoral in themselves
regardless of whether they are punishable by law" and that these
acts constitute moral turpitude, being "contrary to justice,
honesty, modesty or good morals." The standard required from
members of the Bar is not, of course, satisfied by conduct which
merely avoids collision with our criminal law. Even so,
respondent's conduct, in fact, may be penalizable under at least
one penal statute — the anti-usury law.

The second charge against respondent relates to acts done in his

professional capacity, that is, done at a time when he was counsel
for the complainants in a criminal case for estafa against accused
Reynaldo Pineda. There are two (2) aspects to this charge: the first
is that respondent Decena effected a compromise agreement
concerning the civil liability of accused Reynaldo Pineda without
the consent and approval of the complainants; the second is that,
having received the amount of P500.00 as an advance payment on
this "settlement," he failed to inform complainants of that advance
payment and moreover, did not turn over the P500.00 to the
complainants. The facts show that respondent "settled" the estafa
case amicably for P2,000.00 without the knowledge and consent
of complainants. Respondent informed complainants of the
amicable "settlement" and of the P500.00 advance payment only
after petitioner Narciso Melendrez had confronted him about these
matters. And respondent never did turn over to complainants the
P500.00. Respondent is presumed to be aware of the rule that
lawyers cannot "without special authority, compromise their
clients' litigation or receive anything in discharge of a client's
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claim, but the full amount in cash.6 Respondent's failure to turn
over to complainants the amount given by accused Pineda as
partial "settlement" of the estafa case underscores his lack of
honesty and candor in dealing with his clients.

Generally, a lawyer should not be suspended or disbarred for

misconduct committed in his personal or non-professional
capacity. Where however, misconduct outside his professional
dealings becomes so patent and so gross as to demonstrate moral
unfitness to remain in the legal profession, the Court must
suspend or strike out the lawyer's name from the Rollo of
Attorneys. 7 The nature of the office of an attorney at law requires
that he shall be a person of good moral character. This
qualification is not only a condition precedent to admission to the
practice of law; its continued possession is also essential for
remaining in the practice of law, in the exercise of privileges of
members of the Bar. Gross misconduct on the part of a lawyer,
although not related to the discharge of professional duties as a
member of the Bar, which puts his moral character in serious
doubt, renders him unfit to continue in the practice of law. 8

In the instant case, the exploitative deception exercised by

respondent attorney upon the complainants in his private
transactions with them, and the exacting of unconscionable rates
of interest, considered together with the acts of professional
misconduct committed by respondent attorney, compel this Court
to the conviction that he has lost that good moral character which
is indispensable for continued membership in the Bar.

WHEREFORE, respondent Reynerio I. Decena is hereby

DISBARRED and his name shall be stricken from the Rollo of
Attorneys. Let a copy of this Resolution be FURNISHED each to the

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Bar Confidant and spread on the personal records of respondent
attorney, and to the Integrated Bar of the Philippines.

Fernan, (C.J.), Narvasa, Melencio-Herrera, Gutierrez, Jr., in Cruz,

Paras, Feliciano, Gancayco, Padilla, Bidin, Sarmiento, Cortes,
Grñ;no-Aquino, Medialdea and Regalado, JJ., concur.

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