OCA CIRCULAR NO. 36-2004, March 09, 2004

For the information and guidance of all concerned, quoted
hereunder is the resolution of the First Division dated December 8, 2003
in Administrative Case No, 4219, to wit:

“Only recently, we stressed that membership in the bar is a
privilege burdened with conditions. A high sense of morality, honesty
and fair dealing is expected and required of a member of the bar. Rule
1.01 of the Code of Professional Responsibility provides that ‘a lawyer
shall not engage in unlawful, dishonest, immoral or deceitful conduct.’
The nature of the office of a lawyer requires that he shall be of good
moral character. This qualification is not only a condition precedent to
the admission to the legal profession, but its continued possession is
essential to maintain one’s good standing in the profession. ^[1] Furthermore, implicit in a vocation characterized by professionalism is a certain level of competence and dedication.^[2]
Far from measuring up to the norms of conduct set in the Code, the
respondent charged in this case, in fact, breached his avowed duty as a
lawyer and the ethical standards he was strictly bound to observe.

On March 22, 1994, Lothar Schulz, a German national filed a
verified complaint for disbarment against Atty. Marcelo G. Flores of
Dumaguete City, Negros Oriental.^[3]
He alleged that sometime in December 1992, he engaged the services of
respondent for the purposes of filing a complaint against Wilson Ong for
revocation of contract and damages for the latter’s failure to deliver
the jeep he sold to complaint within the stipulated period., Respondent
advised him that there was no need to refer the complaint for barangay
conciliation. There months later, respondent instructed him to file his
complaint with the Lupon Tagcipoyapa of Tabuc- tubig, Dumaguete City . Wilson Ong refused to appear at the conciliation hearings, arguing that the Lupon of
Tabuc-tubig had no jurisdiction over his person because he was a
resident of Barangay Banilad. Complainant thus brought the complaint
before the Barangay Captain of Banilad. By that time, however,
complainant learned that Wilson Ong had already filed a case for
Specific Performance against him before the Regional Trial Court of
Negros Oriental, Branch 31, entitled “Rachel Lisa B. Ong, et al v. Lothar Sehuh? docketed
as Civil Case No. 10527. Complainant, argued that respondent’s
inordinate delay in acting on Ms case resulted in his being defendant
rather than a complainant against Wilson Ong.

Complainant also charged respondent with collecting excessive
and unreasonable fees and of unjustifiably refusing to return his files.
He undertook to pay respondent attorney’s fees of P5 7000.00 if the
case does not reach the court, and PI0,000.00 attorney’s fees and
P500.00 appearance fees if it reaches the court. This notwithstanding,
respondent alleged in the Answer with Counterclaim which he prepared on
behalf of complainant in Civil Case No. 10527 that his attorney’s fees
was P50,000.00 and appearance fee was Pl,000.00 per hearing. When
complainant questioned him about this, respondent explained that it was
Wilson Ong who will be made to pay for the said fees. This, complainant
claimed, showed respondent’s deceit and lack of candor in his dealings
with the parties in court.

Further, complainant alleged that since he suspected respondent
of not protecting his interest in Civil Case No. 10527, he instructed
respondent to withdraw his appearance as his counsel after the filing of
the answer. Thereafter, he asked respondent to return the amount of
P12,000.00 out of the total of P17,000.00 that he has paid to the
latter, inasmuch as the amount of P5,000.00 should be sufficient
compensation for the minimal services rendered by him. Respondent,
however, refused to return the amount to complainant and, instead,
demanded additional fees. Complainant’s new counsel wrote a formal
demand letter to respondent which, however, was ignored. This prompted
complainant to file a complaint with the Lupon Tagapayap a of
Barangay Bantayan where respondent resided. After the parties failed to
reach a settlement, complainant instituted an action for sum of money
against respondent, docketed as Civil Case No. 10645.

Complainant alleged that respondent offered to return his files
provided that he signs a statement acknowledging that respondent does
not owe him anything. Complainant refused, for fear that it would
prejudice the collection suit he filed against respondent. Thus,
respondent continued to unreasonably retain his files.

In support of the charges against the respondent, complaint
pointed out that respondent was formerly a Municipal Judge of Siaton,
Negros Oriental who was dismissed from the service after the end of the
Marcos regime. He submitted a copy of an Order^[4]
of the Regional Trial Court of Negros Oriental, Branch 34, in Civil
Case No. 9412 entitled “Bishop ofDumaguete v. Pajunar, et al” In that
case, respondent sought the inhibition of the Presiding Judge, Rosendo
Bandal, Jr. The latter inhibited himself but cited in the said Order
nine instances of anomalous, illegal and unethical practices committed
by respondent.

In his Comment,^[5]
respondent alleged that upon accepting the case of complainant, he
immediately sent a letter to Wilson Ong demanding that he deliver the
jeep to complainant, for road test^[6]
Ong complied with the demand and allowed complainant to road-test the
vehicle, during which he discovered that the jeep was defective.^[7]
Respondent thereafter requested Ong to cause the repairs on the jeep.
It was only after the negotiations with Ong failed that he advised
complainant to proceed with the filing of his complaint before the
Barangay Captain of Tabuc-tubig. At the time, he believed Tabuc- tubig
was the proper venue considering that the South Pacific Metal Works
owned by Wilson Ong was located there.

Respondent claims that complainant was to blame for the fact
that Wilson Ong filed his complaint in court first. He alleged that
complainant failed to follow up his case because he was involved in a
traffic accident. Complainant’s inability to attend to his complaint
with the Barangay Lupon in Tabuc-tubig caused the delay thereof.

Anent the attorney’s fees, respondent alleges that complainant
agreed to pay him P50,000 as attorney’s fees, one-half of which is
payable upon the filing of the Answer with Counterclaim^[8]
in Civil Case No. 10527 less the amount of P17,000.00 given as payment
for past services. Complainant also agreed to pay him P 1,000.00 per
appearance. Hence, respondent avers that complainant still owed him
P8,000.00 to complete the required one-half of the P50,000.00 attorney’s
fees, and P1,000.00 appearance fee for the hearing on April 15, 1993 .
Respondent further explained that he was willing to return complainant’s
files provided that he sign a receipt acknowledging the turn-over, but
complainant refused to sign.

Respondent admitted that he was once a Municipal Judge of
Siaton, Negros Oriental but he decided to go on optional retirement.
During his 17-year stint in the judiciary, he was held in high esteem by
his colleagues and was elected President of the Municipal Judges League
of Negros Oriental for 14 consecutive terms. Out of the 15 RTC Judges
in Negros Oriental, it is only Judge Bandal who had shown animosity,
hostility and hatred towards him. However, he added that he and Judge
Bandal have recorded and are now good terms.

On August 29, 1994 , the Court referred the case to the
Integrated Bar of the Philippines (IBP) for investigation, report and
recommendation.^[9]

On August 9, 2002 , respondent filed a Manifestation and Motion
alleging that complainant had long left the country, for which reason
the case may be resolved on the basis of the pleadings.^[10]

The IBP Commission on Bar Discipline submitted a Report dated
June 28, 2003 recommending that: (1) respondent be suspended from the
practice of law for six months with a warning that a repetition of tlie
same or similar acts will merit a more severe penalty; (2) he be ordered
to return to complainant the amount of Twelve Thousand Pesos
(P12,000.00) with legal interest; and (3) he return the papers of
complainant which came under his custody during the period of his
engagement as counsel.

In justifying the recommended penalty, the IBP-CBD made the following observations:

[Respondent] was presumed to be knowledgeable on the laws, but
in this case, it turned out that Atty. Flores knew too little of the
provisions and application of PD No. 1508 which mandates that all
disputes, except those specifically cited (the dispute between Lothar
Schulz and Wilson Ong not included), between and among residents of the
same city or municipality should be brought first under the system of
barangay conciliation before recourse to the court can be allowed.

He was not all certain if the complaint of Lothar Schulz falls
under PD No. 1508 or not. As Lothar Schulz narrated, Atty, Flores told
him at first that there was no need for his complaint to be coursed
through the barangay authorities.

Not realizing the need and urgency to avail of PD No. 1508,
Atty. Flores found it more important to spend more than two months to
dialogue and confer with Wilson and hope that he could get the parties
to come to an amicable settlement of their differences, an undertaking
that only involves a waste of time and effort as he later realized it
because it turned out that Wilson Ong did not ‘appear to have any
genuine intent to make good his obligation to put the jeep in good
running condition and fee from defects because Lothar Schulz and his
mechanics found out from the result of the last road test on the jeep
that aside from several defects discovered during previous road tests
and which had remained uncorrected/unrepaired, there are twenty-six more
new defects.

It was already March 8, 1992 , more than two months after
becoming Lothar Schuiz’s lawyer that Atty. Flores reversed position and
suddenly prepared a written complaint for the client which he asked the
latter to file with the Barangay Captain of Tabuc-tubig. However, that
belated move did not benefit the cause of his client at all. On the
contrary, Atty. Flores even made the problem of delay worse. Upon the
misconception that the proper venue was Tabuc-tubig which was the place
where the assembly/motor shop of Wilson Ong is located, he directed
Lothar Schulz to file his complaint there. That was a wrong advice.
Section 3 of PD No. 1508 states that the dispute shoufd be lodged for
conciliation with the barangay where the respondent actually resides.
Because PD No. 1508 applies only to parties who are natural persons, the
location of the assembly should of Wilson Ong is of no consequence to
the law. The respondent who could be made a party under PD No, 1508 in
this case is Wilson Ong and the complaint against him must be filed
where he resides which is Barangay Banilad in Dumaguete City. Thus, the
complaint of Lothar Schulz was not able to move at all for the entire
duration that ft was in Barangay Tabuc- tubig which had no authority
over it. Such was the situation until that barangay was impelled to
dismiss the complaint for lack of jurisdiction. It is true that the
complaint was eventually brought to the proper barangay (Banilad), but
the Lupon in that place was no longer in a position to assert
rts jurisdiction because at that time there was already a case that
Wilson Ong had succeeded to file against Lothar Schulz on the subject of
their failed contract.

xxx

xxx

xxx

Between the conflicting versions given by the parties as to
the reason why the papers of Lothar Schulz had continued to be possessed
by Atty. Flores, the version of the complainant appears more deserving
of credence. If the paper which was presented for the signature of
Lothar Schulz is really an acknowledgment to evidence the return of the
papers of the case to Lothar Schulz, as the respondent would have it
appear, there is no reason why Lothar Schul2 [should] hesitate or refuse
to sign the papers] as there is nothing prejudicial to his interest.
But certainly if the contents of the paper presented by Atty. Flores to
Lothar Schulz for the purpose of signature involve[s] an admission on
the part of Lothar Schulz that the lawyer is clear on the matter of
money accountability, it is understandable that Lothar Schulz will not
sign that paper because his signature will have the effect of a
desistance in his pending civil case for the recovery of the P12,000.00
which he alleged to be an overcharge on attorney’s fee[s] by Atty.
Flores. The continuing possession by Atty. Flores of the papers of
Lothar Schuiz can only be compatible with the version that Lothar Schulz
presented. Atty. Flores would not release the papers for they serve as
means to harass and/or pressure Lothar Schulz until the latter is
impelled to agree to give up his effors to pursue Civil Case No. 10645
which will provide Atty. Flores the assurance that a day may come when
he will be made to reimburse the amount of P12,000.00 previously
collected from the former client.^[11]

The findings and recommendation of the IBP-CBD were thereafter
approved and adopted by the IBP Board of Governors in Resolution No.
XVI-2003-109 dated August 30, 2003 .

We agree with the findings and conclusions of the Committee on
Bar Discipline, as approved by the IBP Board of Governors. The breach of
respondent’s sworn duty as a lawyer and of the ethical standards he was
strictly to honor and observe has been sufficiently established.

Respondent has fallen short of the competence and diligence
required of every member of the Bar. The pertinent Canons of the Code of
Professional Responsibility state:

CANON 17. – A LAWYER OWES FIDELITY TO THE CAUSE OF HIS CLIENT
AND HE SHALL BE MINDFUL OF THE TRUST AND CONFIDENCE REPOSED IN HIM.

CANON 18. – A LAWYER SHALL SERVE HIS CLIENT WITH COMPETENCE AND DILIGENCE

xxx

xxx

xxx

Rule 18.03 – A lawyer shall not neglect a legal matter
entrusted to him and his negligence in connection therewith shall render
him liable.

It is dismaying to note that respondent patently violated his
duty as a lawyer in this case. He committed a serious transgression when
he failed to exert his utmost learning and ability to give entire
devotion to his client’s cause. His client had relied upon him to file
the complaint with dispatch so that he would not be preempted by the
adverse party. But he failed him. As a consequence of respondent’s
indolence, his client was haled to court as a party-defendant. It
therefore behooves this Court to wield its corrective hand on this
inexcusable infraction which caused undeserved and needless prejudice to
his client’s interest, adversely affected the confidence of the
community in the legal profession and eroded the public’s trust in the
judicial system. As an attorney, respondent is sworn to do his level
best and to observe full fidelity to the court and his clients.^[12]

The Court has time and agian emphatically stated that the trust
and confidence necessarily reposed by clients requires in the lawyer a
high standard and an appreciation of his duty to his clients, his
profession, thecourts and the public.^[13]
Every case an attorney accepts deserves his full attention, deligence,
skill and competence, regardless of its importance and whether he
accepts it for a fee or for free.^[14]
To be sure, any member of the legal fraternity worth his title cannot
afford to practice the profession in a lackadaisical manner.

Likewise, respondent erred in not returning complainant’s money
despite demands after his failure to file the case and his devious act
of compelling complainant, to sign a document stating that he has no
financial obligation to complainant in exchange of the return of
complainant’s papers. This conduct violated the following Canon:

CANON 15. – A LAWYER SHALL OBSERVE CANDOR, FAIRNESS, AND LOYALTY IN ALL HIS DEALINGS AND TRANSACTIONS WITH HIS CLIENT.

Rule 16.03 – A lawyer shall deliver the funds and property of client when due or upon demand, xxx.

Where a client gives money to his lawyer for a specific purpose,
such as to file an action, appeal an adverse judgment, consummate a
settlement, or pay the purchase price of a parcel of land, the lawyer
should, upon failure to take such step and spend the money for it,
immediately return the money to his client.^[15]
The fact that a lawyer has a lien for his attorney’s fees on the money
in his hands collected for his client does not relieve him from the
obligation to make a prompt accounting.^[16]
Neither is a lawyer entitled to unilaterally appropriate his client’s
money for himself by the mere fact alone that the client owes him
attorney’s fees.^[17]

The failure of an attorney to return the client’s money upon demand gives rise to the presumption that he has misappropriated it for his own use to the prejudice and violation of the trust reposed in him by the client. ^[18]
It is not only a gross violation of the general morality as well as of
professional ethics; it also impairs confidence in the legal profession
and deserves punishment.^[19]
In short, it is settled that the unjustified withholding of money
belonging to his client, as in this case, warrants the imposition of
disciplinary action.^[20]

A lawyer must conduct himself, especially in his dealings with
his clients, with integrity in a manner that is beyond reproach. His
relationship with his clients should be characterized by the highest
degree of good faith and fairness.

Therefore, we agree with the evaluation of the IBP-CBD and find
that respondent’s acts warrant the imposition of disciplinary sanctions
against him. The recommended penalty of six months suspension from the
practice of law is well-taken.

WHEREFORE, in view of all the foregoing, respondent Atty. MARCELO G. FLORES is found guilty of negligence and incompetence, and is SUSPENDED from the practice of law for a period of six (6) months effective immediately. He is ordered to RETURN
to complainant Lothar Schulz the amount of Twelve Thousand Pesos
(P12,000.00) with legal interest from the date of promulgation of this
Resolution, and all papers which came into his custody as a result of
having served as counsel for said complainant. Respondent is further STERNLY WARNED that a commission of the same or similar act in the future will be dealt with more severely.

Let copies of this Resolution be entered in the record of
respondent and served on the IBP, as well as on the Court Administrator
who shall circulate it to all courts for their information and guidance.

SO ORDERED.”

Copy of the resolution was received by respondent on January 3, 2004, as shown by Registry Receipt No. 274.

__9__ March 2004.

 ^[2] Jardin v. Villar, A.C. No. 5474, 28 August 2003.

 ^[3] Rollo, Vol. I, p. 1.

 ^[4] Id. , pp. 26-31.

 ^[5] Id. , pp. 38-45.

 ^[6] Annex 1-T, Comment

 ^[7] Rollo, Vol. L p. 62; Annex 1-U, Comment.

 ^[8] Id., pp. 55.

 ^[9] Id., p. 70.

 ^[10] Rollo,Vol. III, p.3.

 ^[11] Report of Investigation and Recommendation, pp. 10-12, 15-16.

 ^[12] Jardin v. Vtilar, supra.

 ^[13] Sipin-Nabor v. Baterira, 412 Phil. 419 [2001].

 ^[14] In re: Atty. Davide Briones, 415 Phil. 203 [2001].

 ^[15] Agpalo, R.E. Legal Ethics, 1997 ed., p. 189.

 ^[16] In re: Bainberger,
49 Phil. 962 [19421; Daroy v. Legaspi, 65 SCRA 304 [1975]; Domingo v.
Domingo, 42 SCRA 131 [1971];Tambueko v. DeDumo, 172 SCRA 760 [1989].

 ^[17]Cabigao v. Rodrigo, 567 Phil. 20 [1932]; Manaloto v. Reyes, 113 Phil. 915 [1965].

 ^[18] In re; David, 84 Phil. 627 [1949]; Manaloto v. Reyes, supra.

 ^[19] Daroy v. Legaspi, supra.

 ^[20] Sencio v. Atty. Robert Calvadores, A.C. No. 5841, 20 January 2003 , citing Reyes v. Magkya, 243 SCRA 214,219 [1995].

 ^[21] Genato v. Atty. Essex L. Silapan, A.C. No. 4078, 14 July 2003.