DOMINGO R. MARCELO, PETITIONER, VS. ATTY. ADRIANO S. JAVIER, SR., RESPONDENT.

Marcelo versus Javier

The Case

This is an administrative case for disbarment or suspension filed by Domingo R. Marcelo against Atty. Adriano S. Javier, Sr., charging the latter with conduct unbecoming of a lawyer in connection with a transaction over the complainant's residential lot, which the complainant had given as security for a loan. The case matters because it shows how a lawyer's duty of candor and fair dealing toward a layman who reposes confidence in him is enforced through the Court's disciplinary power over members of the bar, and because it illustrates that a lawyer who prepares and notarizes documents while concealing their true nature from an unschooled party may be held guilty of deceit.

Procedural History

The complainant filed a verified letter-complaint dated May 19, 1988 with the Supreme Court. Pursuant to Rule 139-B of the Rules of Court and the resolution of the Court en banc of April 12, 1988, the administrative case was referred to the Integrated Bar of the Philippines Commission on Bar Discipline for investigation, report and recommendation. The commission, through Commissioner Pineda, received the parties' affidavits, exhibits, testimonies and memoranda, and thereafter submitted its findings and recommendation. The case then came before the Supreme Court as an administrative matter, and the Court rendered its decision through Justice Regalado.

Facts

On November 13, 1984, the complainant mortgaged his unregistered land consisting of 1,045 square meters located at Cambaog, Bustos, Bulacan, to mortgagee Sy Hun Tek as security for a loan, with the deed of mortgage having been prepared and notarized by the respondent as the family lawyer of the mortgagee. The complainant alleged that of the stated loan of 80,000 pesos he actually received only 50,000 pesos, from which 2,500 pesos were deducted as the first installment for December 1984 and a further 5,000 pesos were taken for the titling of the property, leaving him a net amount of 42,500 pesos. The respondent, for his part, denied having prepared the deed and claimed that he merely acknowledged it before the parties, and that the complainant received the full amount in cash through the mortgagee's brother, Sy Hun Kiong.

As of the filing of the case, the respondent had not yet caused the property to be titled. The complainant was not given a copy of the mortgage deed and learned of its contents only when he secured a certified copy from the Records Management and Archives Office in Manila. Upon his default on two months' installments, the respondent went to his house at a time when he was sick and asked him to sign some papers which the respondent said merely confirmed his obligation to Sy Hun Tek. Relying on this and on his confidence in the respondent, the complainant signed the papers without being given copies.

A few weeks thereafter, the complainant learned that the property had been foreclosed and sold to one Enrico Perez, without public auction or the posting of the notices prescribed by law, and that the sale took place within the redemption period. When the complainant sought the respondent's help to redeem the property, the respondent refused and told him not to worry because his obligation had already been settled. It turned out that the papers he had signed were a dacion en pago, a dation in payment, which the respondent had prepared and notarized. The complainant learned of the dacion en pago only in September 1988, when he received a copy of the respondent's answer to which it was attached.

Issues

• Whether or not the amount of the loan was 50,000 pesos or 80,000 pesos, with the complainant receiving either the net amount of 42,500 pesos or 77,500 pesos.
• Whether or not the complainant was informed of the contents of the mortgage contract and furnished a copy thereof.
• Whether or not the complainant was fully apprised that what the respondent made him sign was a dacion en pago, and given a copy thereof after its notarization.
• Whether or not the respondent is guilty of conduct unbecoming of a lawyer warranting disciplinary action.

Applicable Provisions

The mortgage contract itself, as quoted in the decision, provided for the manner of payment and the mode of foreclosure:

That MORTGAGOR shall caused to be paid the loan of P80,000.00 by way of installments in accordance with the following schedule, to wit: 1st December 15, 1984 P2,500.00; 2nd January 15, 1985 2,500.00; 3rd February 15, 1985 2,500.00; 12,500.00; 4th March 15, 1985 2,500.00; 5th April 15, 1985 2,500.00; 6th May 15, 1985 2,500.00; 12,500.00; 7th June 15, 1985 2,500.00; 8th July 15, 1985 2,500.00; 9th August 15, 1985 2,500.00; 12,500.00; 10th September 15, 1985 2,500.00; 11th October 15, 1985 2,500.00; 12th November 15, 1985 2,500.00; 12,500.00; P80,000.00; Plus the expenses for the issuance of title 5,000.00; TOTAL P85,000.00.

This schedule is the basis for the commission's finding that the true loan was only 50,000 pesos, with the balance representing interest.

The same contract provided for extrajudicial foreclosure:

That provided, however, that if I, DOMINGO R. MARCELO, MORTGAGOR, shall pay or cause to be paid to the said SY HUN TEK, MORTGAGEE, his heirs or assigns, the said sum of EIGHTY THOUSAND PESOS (P80,000.00), within the period of ONE (1) year from and after the execution of this mortgage, together with the legal rate of interest, then this MORTGAGE shall be discharged and of no effect; otherwise, I hereby agree that the said MORTGAGEE, may enforce his rights herein without judicial proceedings by causing the above-described property to be sold at Provincial Capitol after giving notice of sale for 20 days posted in at least three public places of the Municipality of Bustos, Bulacan, said sale to take place on a business day between 9:00 a.m. and 4:00 p.m. at the municipal building at said municipality, under the direction of a notary public of said municipality, the justice or auxiliary justice of the peace of the municipality, or the provincial sheriff, in accordance with Act No. 3135, as amended by Act No. 4118.

This provision shows that foreclosure could take place only after November 15, 1985, which bears on the complainant's claim that he was made to sign the dacion en pago while the mortgage could not yet be foreclosed.

The dacion en pago, as quoted in the decision, provided in part:

That upon the signing of this agreement the VENDOR-MORTGAGOR shall be free and release(d) of all his existing obligation to the VENDEE-MORTGAGEE in the amount of P80,000.00 including interest and other such charges.

This document is the very instrument whose true nature the respondent concealed from the complainant.

Ruling

On the first issue, the Court upheld the commission's finding that the complainant actually received only 50,000 pesos as loan, with a net of 42,500 pesos after deductions, and that the 30,000 pesos in the mortgage represented interest for one year. On the second and third issues, the Court approved and adopted the commission's findings that the complainant was not apprised in full of the total obligation and the terms of the mortgage, that he was not given copies of the mortgage deed or the dacion en pago, and that the respondent maneuvered the signing of a blank long bond paper which turned out to be the dacion en pago. The commission concluded, and the Court agreed, that the respondent was guilty of deceit.

The Court then laid down the governing ethical principles. A lawyer shall at all times uphold the integrity and dignity of the legal profession. The trust and confidence reposed by clients require a high standard of duty to clients, profession, courts and public. Membership in the bar is a privilege burdened with conditions, and a lawyer may be deprived of the privilege only for misconduct ascertained and declared by judgment of the court after opportunity to be heard. The purpose of suspension or disbarment is to remove from the profession a person whose misconduct has proved him unfit to be entrusted with the duties and responsibilities of an attorney.

Doctrine

A lawyer owes his client and the public the highest degree of honesty and fair dealing. He may not prepare or notarize a document and conceal its true nature and legal effect from a party who reposes confidence in him, for to do so is deceit. The trust and confidence necessarily reposed by clients require in the attorney a high standard and appreciation of his duty to his clients, his profession, the courts and the public. Membership in the bar is a privilege burdened with conditions, and the Court may suspend or disbar a lawyer for misconduct that proves him unfit to be entrusted with the duties of an attorney, after notice and hearing.

Disposition

The Court found the respondent guilty of conduct unbecoming of a lawyer and imposed upon him the penalty of suspension from the practice of law, with the corresponding order for his discipline as recommended and adopted by the Court.

Remember This

The single line worth memorizing is that a lawyer who conceals the true nature of a document from a client who trusts him is guilty of deceit, for membership in the bar is a privilege burdened with conditions. Examiners use this case to test the ethical duty of candor and fair dealing, and the standard for suspension or disbarment for conduct unbecoming a lawyer.