ANTONIO T. AGUINALDO, COMPLAINANT, VS. ATTY. ISAIAH C. ASUNCION, JR., RESPONDENT.

Aguinaldo versus Asuncion

The Case

This is an administrative complaint for disbarment filed by Antonio T. Aguinaldo against Attorney Isaiah C. Asuncion, Junior, before the Integrated Bar of the Philippines Commission on Bar Discipline, for alleged violation of the Lawyer's Oath and the Code of Professional Responsibility. The complainant accuses the respondent of fraud and of using his profession to take advantage of the complainant's limited knowledge after the respondent failed to return earnest money paid for a parcel of land that was never delivered. The case matters because it shows how a purely private contractual dealing can become a disciplinary matter when a lawyer's conduct reveals dishonesty and deceit, and it fixes the meaning of dishonest and deceitful conduct under Canon 1, Rule 1.01 of the Code of Professional Responsibility.

Procedural History

The complainant filed his complaint for disbarment before the Integrated Bar of the Philippines Commission on Bar Discipline. A mandatory conference was held in June 2012, and the parties were ordered to submit their verified position papers. The parties later filed a joint manifestation and motion to dismiss saying they had settled, but the complainant then filed his position paper stating that the settlement did not materialize because the respondent failed to comply with its terms. After evaluating the evidence, the Investigating Commissioner submitted a Report and Recommendation dated December 2014 finding the respondent to have violated Canon 1, specifically Rule 1.01, for engaging in deceitful conduct, and recommending suspension from the practice of law for six months. The Integrated Bar of the Philippines Board of Governors adopted that Report and Recommendation in a Resolution dated February 2016. The respondent moved for reconsideration, which the Board denied in April 2017. The Commission then transmitted the notices of resolution and the records of the case to the Supreme Court for appropriate action, and the Court resolved the matter in this Decision.

Facts

Sometime in October 2010, the complainant, the respondent, the respondent's mother, and their agent talked about the sale of the respondent's property in Moncada, Tarlac, consisting of four point four hectares. The respondent agreed to sell the property to the complainant, and as part of the agreement the complainant handed the respondent one hundred thousand pesos as earnest money. The respondent later returned to ask for four hundred thousand pesos more, which the complainant refused to give because the respondent had failed to present documents pertaining to the property.

Because the respondent continued to fail to give the particulars of the property, the complainant sought the return of his money. Despite repeated demand, the respondent did not return the earnest money. The complainant then accused him of fraud and of using his profession to take advantage of the complainant's limited knowledge.

The respondent claimed he was wrongly accused. He asserted that the earnest money was a guaranty that the complainant would not back out and that his mother would not sell the land to other buyers until the date the complainant was bound to pay the down payment of four hundred thousand pesos. He insisted he was not obliged to return the money because the complainant failed to pay the down payment on time and imposed conditions not previously agreed upon, such as the segregation of the portion being bought and the issuance of a separate title. He cited a prior decision of the Court on earnest money and denied using his profession against the complainant.

Issues

• Whether or not the respondent should be held administratively liable for violating the Code of Professional Responsibility.
• Whether or not the respondent's failure to disclose material facts about the status of the subject property and his refusal to return the earnest money constitute dishonest and deceitful conduct under Canon 1, Rule 1.01.

Applicable Provisions

Canon 1 of the Code of Professional Responsibility provides:

Canon 1. A lawyer shall uphold the Constitution, obey the laws of the land and promote respect for law and legal processes.

This Canon anchors the respondent's duty to respect the law and to avoid any act or omission contrary to it.

Rule 1.01 of the Code of Professional Responsibility provides:

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

This Rule is the specific standard the Court applies to the respondent's misrepresentation and his refusal to return the money.

Article 1482 of the Civil Code provides:

Whenever earnest money is given in a contract of sale, it shall be considered as part of the purchase price and as proof of the perfection of the contract.

This Article defeats the respondent's claim that the earnest money was a forfeitable guaranty, because absent an express agreement the money forms part of the price and must be returned when the sale does not materialize.

Ruling

On the first issue, the Court held that although the dispute between the parties is contractual and can be raised before the proper courts, a disbarment case is not meant to grant relief to a complainant as in a civil case. It is a proceeding of a class of its own, intended to cleanse the ranks of the legal profession of undesirable members in order to protect the public and the courts. The real question is whether the attorney is still a fit person to be allowed the privileges of membership in the Bar, and the Court limited itself to whether the respondent committed transgressions warranting administrative liability.

On the second issue, the Court adopted the findings of fact of the Integrated Bar of the Philippines and held the respondent liable. The Court found that he employed trickery by luring the complainant into agreeing to buy the property, leading him to believe the land was still owned by his mother when in truth it had already been sold to another buyer, the Posadas family. The respondent failed to disclose this fact, as shown by his failure to produce documents of title when required. As a lawyer, he was duty-bound to observe fairness and candor in dealing with the complainant. The Court also found that he willfully refused to return the earnest money even though the transaction did not materialize, and that he blamed the complainant for the failed transaction and insisted the money was forfeited.

The Court rejected the claim of forfeiture, quoting the recommendation that no document existed to show the earnest money was merely a guaranty, and that other than a mere photocopy of a supposed written proposal, the respondent presented no clear and convincing proof. Applying Article 1482 of the Civil Code, the Court held that the earnest money was an advance payment forming part of the purchase price, which must be deducted from the total price, and that the parties could not have intended it to be forfeited absent a clear and express agreement. No such express agreement existed, so the respondent should have returned the money when the transaction did not materialize.

The Court defined the terms of the Rule. To be dishonest means the disposition to lie, cheat, deceive, defraud or betray, to be untrustworthy, lacking in integrity, honesty, probity, fairness and straightforwardness. To be deceitful means the proclivity for fraudulent and deceptive misrepresentation, artifice or device used upon another who is ignorant of the true facts, to the prejudice and damage of the party imposed upon. In order to be deceitful, the person must either have knowledge of the falsity or acted in reckless and conscious ignorance thereof, especially if the parties are not on equal terms, and it must be done with the intent that the aggrieved party act thereon, and the latter must indeed act in reliance on the false statement or deed to his injury. The Court found the respondent's lack of good faith evident from his stubborn refusal to return the money despite persistent demand, his ignoring of the complainant, and his failure to honor the negotiated settlement by again blaming the complainant.

Doctrine

A disbarment case is not an investigation into the acts of the respondent as such, but into his conduct as an officer of the court and his fitness to continue as a member of the Bar. Its primary objective is public interest, and it is not meant to grant relief to a complainant as in a civil case.

Under Canon 1, Rule 1.01 of the Code of Professional Responsibility, a lawyer shall not engage in unlawful, dishonest, immoral or deceitful conduct. Dishonesty is the disposition to lie, cheat, deceive, defraud or betray, lacking in integrity, honesty, probity, fairness and straightforwardness. Deceitful conduct is the proclivity for fraudulent and deceptive misrepresentation, artifice or device used upon another who is ignorant of the true facts, to his prejudice and damage, done with knowledge of the falsity or in reckless and conscious ignorance thereof, with intent that the aggrieved party act thereon, and the latter acting in reliance to his injury.

Under Article 1482 of the Civil Code, earnest money given in a contract of sale is part of the purchase price and proof of the perfection of the contract. It may not be forfeited when the buyer fails to pay the balance absent a clear and express agreement thereon.

A lawyer is duty-bound to observe fairness and candor in all his dealings, whether in his professional or private capacity, and membership in the legal profession is a high personal privilege burdened with continuing fidelity to the law and constant possession of moral fitness.

Disposition

The Court found Attorney Isaiah C. Asuncion, Junior guilty of dishonest, deceitful, and fraudulent acts prejudicial to the legal profession in violation of Canon 1, Rule 1.01, suspended him from the practice of law for six months reckoned from receipt of the Decision, warned that similar misconduct in the future shall be dealt with more severely, and directed that copies be furnished the Office of the Bar Confidant and the Integrated Bar of the Philippines and that the Decision be circulated to all courts.

Remember This

Memorize this line: a lawyer shall not engage in unlawful, dishonest, immoral or deceitful conduct, and earnest money is part of the purchase price, not a forfeitable guaranty absent express agreement. Examiners use this case to test the definition of dishonest and deceitful conduct under Rule 1.01 and the principle that a private contractual dispute can still ground disciplinary liability when the lawyer's own conduct shows bad faith.