ASG Law

Tag: misappropriation

  • Unraveling Estafa: The Supreme Court’s Stance on Misappropriation and Probable Cause

    In Burgundy Realty Corporation v. Josefa “Jing” C. Reyes, the Supreme Court clarified the application of estafa under Article 315, par. 1(b) of the Revised Penal Code (RPC), particularly concerning the element of misappropriation and the determination of probable cause during preliminary investigations. The Court emphasized that a finding of probable cause does not require absolute certainty or an inquiry into whether there is sufficient evidence to procure a conviction, but rather a reasonable ground to believe that the act complained of constitutes the offense charged. This decision underscores the importance of a thorough preliminary investigation in establishing whether there is sufficient ground to proceed with a criminal case, especially when dealing with allegations of misappropriation of funds.

    Real Estate Deals Gone Wrong: When Does a Breach of Trust Become Criminal Estafa?

    The case originated from a business deal gone sour between Burgundy Realty Corporation and Josefa “Jing” C. Reyes, a real estate agent. Burgundy Realty entrusted Reyes with P23,423,327.50 to purchase parcels of land. Instead, Reyes allegedly misappropriated the funds. The legal battle reached the Supreme Court after the Secretary of Justice ordered the withdrawal of estafa charges against Reyes, a decision affirmed by the Court of Appeals. At the heart of the legal issue was whether there was probable cause to indict Reyes for estafa, specifically if the element of misappropriation was sufficiently established during the preliminary investigation.

    The Supreme Court addressed the errors assigned by Burgundy Realty Corporation, primarily focusing on whether the Secretary of Justice capriciously disregarded evidence showing probable cause for estafa under Article 315 1(b) of the Revised Penal Code. It was also questioned if the Court of Appeals erred in concurring with the Secretary of Justice’s holding that the element of misappropriation was not sufficiently established. Finally, the Court looked at whether the Secretary of Justice acted with grave abuse of discretion in accepting matters of defense by Reyes in her counter-affidavit, which should have been proven during the trial.

    The Court’s analysis began by acknowledging the Secretary of Justice’s power of direct control and supervision over prosecutors, as outlined in the Revised Administrative Code. This power allows the Secretary to affirm, nullify, reverse, or modify the rulings of prosecutors, a concept rooted in the doctrine of exhaustion of administrative remedies. However, this authority must be exercised judiciously, especially when overturning a prosecutor’s finding of probable cause after a preliminary investigation. The Secretary of Justice reversed the investigating prosecutor’s finding of probable cause, stating that the theory of conversion or misappropriation was difficult to sustain.

    To properly address the errors, it is essential to revisit the elements of Estafa under Article 315 (1) (b) of the Revised Penal Code. The elements are: (1) that money, goods, or other personal property is received by the offender in trust, on commission, for administration, or under any obligation involving the duty to deliver or return the same; (2) that there is misappropriation or conversion of such money or property by the offender, or denial of such receipt; (3) that such misappropriation, conversion, or denial is to the prejudice of another; and (4) that there is demand made by the offended party on the offender. The heart of estafa under this provision lies in the appropriation or conversion of money or property received, to the detriment of the owner.

    The Supreme Court emphasized that a preliminary investigation is a realistic judicial appraisal of the merits of a case. Its purpose is twofold: to determine if a crime has been committed and whether there is probable cause to believe the accused is guilty. This process does not require the stringent application of rules and standards of proof necessary for a judgment of conviction after a full trial. It is sufficient that the prosecutor believes that the act or omission constitutes the offense charged. The Court noted that Reyes received P23,423,327.50 from Burgundy Realty Corporation, evidenced by checks and vouchers, for purchasing parcels of land.

    The demand letter from Burgundy Realty Corporation for Reyes to return the funds was not heeded. Thus, the failure to deliver the titles or return the entrusted money, despite demand and the duty to do so, constituted prima facie evidence of misappropriation. In proving the element of conversion or misappropriation, a legal presumption of misappropriation arises when the accused fails to deliver the proceeds of the sale or to return the items to be sold and fails to give an account of their whereabouts. The Court cited U.S. v. Rosario de Guzman, where it was established that the mere presumption of misappropriation or conversion is enough to conclude that a probable cause exists for the indictment of Reyes for Estafa.

    The Supreme Court articulated the standard for determining probable cause, stating that it requires the existence of such facts and circumstances as would excite the belief in a reasonable mind, acting on the facts within the knowledge of the prosecutor, that the person charged was guilty of the crime for which they were prosecuted. The term does not mean “actual or positive cause” nor does it import absolute certainty. It is merely based on opinion and reasonable belief. The Court found that the investigating prosecutor was correct in finding the existence of all the elements of estafa, and thus, the Secretary of Justice erred in reversing this finding.

    The appellate court, in sustaining the questioned resolutions of the Secretary of Justice, ruled that the element of misappropriation or conversion is wanting. It further ratiocinated that the demand for the return of the thing delivered in trust and the failure of the accused to account for it, are circumstantial evidence of misappropriation, however, the said presumption is rebuttable and if the accused is able to satisfactorily explain his failure to produce the thing delivered in trust, he may not be held liable for estafa.

    The Supreme Court held that the Court of Appeals gravely erred in sustaining the decision of the Secretary of Justice. The Court also emphasized that whether Reyes could rebut the presumption of misappropriation was a matter of defense to be presented during a full-blown trial. It is enough that it is believed that the act or omission complained of constitutes the offense charged. Consequently, the Supreme Court reversed the Court of Appeals’ decision, directing the Regional Trial Court to proceed with Reyes’ arraignment.

    FAQs

    What was the key issue in this case? The key issue was whether there was probable cause to indict Josefa “Jing” C. Reyes for estafa under Article 315, par. 1(b) of the Revised Penal Code, specifically concerning the element of misappropriation. The Supreme Court reviewed whether the Secretary of Justice properly reversed the investigating prosecutor’s finding of probable cause.
    What is estafa under Article 315, par. 1(b) of the Revised Penal Code? Estafa under this provision involves defrauding another with unfaithfulness or abuse of confidence, specifically by misappropriating or converting money, goods, or other personal property received in trust or on commission, to the prejudice of another. It also includes denying having received such money, goods, or other property.
    What are the elements of estafa under Article 315, par. 1(b)? The elements are: (1) receipt of money or property in trust; (2) misappropriation or conversion of the money or property; (3) prejudice to another as a result of the misappropriation; and (4) demand by the offended party on the offender for the return of the property.
    What is probable cause, and how is it determined in a preliminary investigation? Probable cause exists when there are facts and circumstances that would lead a reasonable person to believe that the accused committed the crime. In a preliminary investigation, it’s determined by assessing whether there is sufficient ground to engender a well-founded belief that a crime has been committed and that the respondent is probably guilty.
    What happens if the accused fails to return the money or property received in trust? Failure to return the money or property received in trust, despite demand, constitutes prima facie evidence of misappropriation. This creates a legal presumption of misappropriation, which is enough to establish probable cause for indictment, although the accused can present a defense during the trial to rebut this presumption.
    What is the role of the Secretary of Justice in preliminary investigations? The Secretary of Justice has the power of direct control and supervision over prosecutors and can affirm, nullify, reverse, or modify their rulings. This power is rooted in the doctrine of exhaustion of administrative remedies, but it must be exercised judiciously, especially when overturning a prosecutor’s finding of probable cause.
    What did the Court rule regarding the element of misappropriation in this case? The Supreme Court ruled that the failure of Reyes to deliver the titles or return the entrusted money, despite demand and the duty to do so, constituted prima facie evidence of misappropriation. This presumption was sufficient to establish probable cause for estafa.
    What was the final decision of the Supreme Court in this case? The Supreme Court granted the petition, reversed the Court of Appeals’ decision, and directed the Regional Trial Court to proceed with the arraignment of Josefa “Jing” C. Reyes. This ruling affirmed the investigating prosecutor’s finding of probable cause for estafa.

    In conclusion, the Burgundy Realty Corporation v. Josefa “Jing” C. Reyes case serves as a crucial reminder of the elements of estafa, the significance of probable cause in preliminary investigations, and the balance of power between prosecutors and the Secretary of Justice. It underscores that a finding of probable cause does not require absolute certainty but a reasonable belief based on the available facts. It also highlights the importance of presenting defenses during the trial, rather than at the preliminary investigation stage.

    For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

    Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
    Source: BURGUNDY REALTY CORPORATION VS. JOSEFA “JING” C. REYES AND SECRETARY RAUL GONZALEZ OF THE DEPARTMENT OF JUSTICE, G.R. No. 181021, December 10, 2012

  • Breach of Public Trust: Dismissal for Dishonesty and Misconduct in Judiciary Funds Handling

    The Supreme Court affirmed the dismissal of a cash clerk who defrauded the Judiciary by misappropriating funds. The Court emphasized that public office is a public trust, requiring public officers and employees to be accountable, responsible, and honest. This decision underscores the judiciary’s zero-tolerance policy towards dishonesty and grave misconduct, especially when it involves the mishandling of public funds. The ruling serves as a reminder to all public servants that they must uphold the highest standards of integrity and accountability in the performance of their duties.

    When Trust is Broken: A Cash Clerk’s Betrayal of Judicial Integrity

    This case revolves around the complaint filed by Atty. Dennis A. Velasco, then the Clerk of Court VI of Branch 38 of the Regional Trial Court (RTC) in Alabel, Sarangani Province, against Myra L. Baterbonia, an RTC Cash Clerk. Velasco discovered that Baterbonia was systematically defrauding the government by underreporting judicial fees paid by litigants. Her method involved recording smaller amounts in the duplicate and triplicate copies of official receipts (ORs) compared to what was actually paid. This discrepancy led to a thorough audit, revealing significant misappropriations.

    The audit team’s findings revealed substantial discrepancies between the legal fees received and the amounts recorded in the official receipts. For instance, in the Judicial Development Fund (JDF), the audit showed an unrecorded amount of P98,544.40 from civil cases alone. Similarly, for the General Fund, discrepancies were noted across various categories, including civil cases and miscellaneous cases. Overall, the grand total of unrecorded amounts reached P254,632.09. The audit also uncovered that Baterbonia failed to deposit P36,000.00 representing withdrawn confiscated bonds.

    Following the audit, the Office of the Court Administrator (OCA) recommended that Baterbonia be found guilty of dishonesty and gross misconduct, facing dismissal from service and forfeiture of retirement benefits. The OCA also suggested that Atty. Anthony A. Barluado, the Branch Clerk of Court, be admonished for his failure to supervise Baterbonia adequately, which allowed the mishandling of funds to occur. The Supreme Court adopted these recommendations, emphasizing the importance of integrity in public service.

    The Supreme Court, in its decision, emphasized that a public office is a public trust, citing Section 1, Article XI of the 1987 Constitution of the Philippines. This provision mandates that public officers and employees must be accountable to the people, serving with responsibility, integrity, loyalty, and efficiency. The Court reiterated that any act of impropriety erodes public confidence in the Judiciary, necessitating that every worker in the Judiciary maintains the good name of the courts.

    The Court determined that Baterbonia’s actions constituted grave misconduct. Grave misconduct involves a transgression of an established rule, with elements of corruption, clear intent to violate the law, or flagrant disregard of established rules. The Supreme Court quoted the case of Imperial v. Santiago, Jr., A.M. No. P-01-1449, February 24, 2003, 398 SCRA 75, 85, to define misconduct:

    Misconduct is a transgression of some established and definite rule of action, more particularly, unlawful behavior or gross negligence by the public officer. To warrant dismissal from the service, the misconduct must be grave, serious, important, weighty, momentous and not trifling. The misconduct must imply wrongful intention and not a mere error of judgment. The misconduct must also have a direct relation to and be connected with the performance of his official duties amounting either to maladministration or willful, intentional neglect or failure to discharge the duties of the office. There must also be reliable evidence showing that the judicial acts complained of were corrupt or inspired by an intention to violate the law.

    Baterbonia’s repeated acts of misappropriation demonstrated a clear intent to cheat the Judiciary, qualifying as grave misconduct and justifying her dismissal. Moreover, the Court highlighted that Baterbonia’s actions might have incurred criminal liability for the complex felony of estafa through falsification. As such, the Court instructed the OCA to initiate criminal charges against her with the Department of Justice.

    The Court also addressed the supervisory responsibilities of Atty. Barluado. While there was no evidence of conspiracy, his failure to adequately supervise Baterbonia contributed to the prolonged misappropriation. The Court admonished Barluado, reminding him that clerks of court perform critical functions regarding judicial funds and must be vigilant against any misfeasance by subordinates. This highlights the principle that supervisors can be held responsible for the actions of their subordinates, especially concerning the handling of public funds. The Court stated:

    He ought to be reminded that his being the clerk of court requires him to perform delicate functions regarding the custody of judicial funds, revenues, records, properties and premises, and that he should then unceasingly be alert to any misfeasance and malfeasance on the part of his subordinates.  He should always bear in mind that he may be held as responsible to an extent for any loss, shortage, destruction or impairment of the funds or property entrusted to the court he serves as any of his guilty subordinates.

    The Court’s ruling in this case underscores the importance of accountability and integrity within the judiciary. The dismissal of Baterbonia serves as a stern warning to all public servants that dishonesty and misconduct will not be tolerated. Furthermore, the admonishment of Atty. Barluado highlights the supervisory responsibilities of court officials in ensuring the proper handling of public funds. The practical implication of this case is that it reinforces the judiciary’s commitment to maintaining the public trust and upholding the highest standards of ethical conduct. The ruling also reminds supervisors of their duty to exercise diligence in overseeing their subordinates, as negligence can lead to severe consequences.

    FAQs

    What was the key issue in this case? The key issue was whether the cash clerk’s act of misappropriating judiciary funds constituted dishonesty and grave misconduct, warranting her dismissal from service. It also addressed the responsibility of the clerk of court in supervising subordinates.
    What did the audit reveal about the cash clerk’s actions? The audit revealed that the cash clerk, Myra L. Baterbonia, had been systematically underreporting the amounts of judicial fees paid by litigants, misappropriating a significant sum of money over time. The audit found discrepancies between the legal fees received and the amounts recorded in the official receipts.
    What specific violations did the cash clerk commit? Baterbonia committed falsification of official receipts, misappropriation of funds, and a breach of the trust reposed in her as the cash clerk of the court. Her actions constituted grave misconduct, justifying her dismissal.
    What was the Supreme Court’s ruling in this case? The Supreme Court found Myra L. Baterbonia guilty of dishonesty and gross misconduct, ordering her dismissal from service with forfeiture of retirement benefits. The Court also directed the Office of the Court Administrator to initiate criminal charges against her.
    What was the responsibility of Atty. Anthony A. Barluado in this case? Atty. Anthony A. Barluado, as the Branch Clerk of Court, was responsible for supervising Baterbonia. His failure to exercise adequate supervision led to the mishandling of funds, for which he was admonished by the Supreme Court.
    What is the significance of this ruling for public trust? This ruling emphasizes that public office is a public trust, and public servants must be accountable, responsible, and honest. It reinforces the judiciary’s commitment to maintaining public confidence and upholding ethical standards.
    What is the penalty for grave misconduct in the civil service? Under the Uniform Rules on Administrative Cases in the Civil Service, grave misconduct is a grave offense that warrants dismissal from the service for the first offense. This includes forfeiture of retirement benefits and disqualification from reemployment in government service.
    What action did the Supreme Court order regarding criminal charges? The Supreme Court directed the Office of the Court Administrator to bring the necessary criminal complaints to the Department of Justice for the prompt criminal prosecution of Myra L. Baterbonia, if warranted. This ensures that she faces legal consequences for her actions.

    This case underscores the judiciary’s commitment to maintaining the highest standards of integrity and accountability. The decision serves as a reminder to all public servants that they must uphold the public trust and perform their duties with utmost honesty and diligence. The ruling also highlights the responsibilities of supervisory personnel in preventing and detecting misconduct within their offices.

    For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

    Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
    Source: ATTY. DENNIS A. VELASCO vs. MYRA L. BATERBONIA, A.M. No. P-06-2161, September 25, 2012

  • Breach of Public Trust: Consequences for Misappropriation of Court Funds in the Philippines

    In Administrator v. Acedo, the Supreme Court of the Philippines addressed the severe consequences for a clerk of court’s misappropriation of public funds. The Court emphasized that public office is a public trust, and those who fail to uphold this trust by misusing funds will face significant penalties, including forfeiture of retirement benefits and perpetual disqualification from government service. This decision underscores the judiciary’s commitment to maintaining integrity and accountability within its ranks, ensuring that those entrusted with public funds are held to the highest standards of ethical conduct.

    When Duty Dissolves: Examining a Clerk’s Accountability for Court Funds

    This case involves Leonila R. Acedo, a former Clerk of Court II of the Municipal Circuit Trial Court (MCTC) in Abuyog-Javier, Leyte, who faced administrative charges for failing to submit required monthly reports and, more critically, for shortages in judiciary funds. The Supreme Court consolidated two administrative matters to address Acedo’s infractions, which included shortages in the Judiciary Development Fund (JDF), Clerk of Court General Fund (COCGF), and Fiduciary Fund (FF). The audit revealed significant under-remittance of collections and undocumented withdrawals, leading to a total accountability of over one million pesos. This prompted a deeper examination of the responsibilities of court personnel and the repercussions of failing to uphold public trust.

    The core of this case revolves around the principle that public office is a public trust, as enshrined in Section 1, Article XI of the Constitution, which states, “Public officers and employees must, at all times, be accountable to the people, serve them with utmost responsibility, integrity, loyalty, and efficiency, act with patriotism and justice, and lead modest lives.” This fundamental principle forms the bedrock upon which the Court assessed Acedo’s conduct. Clerks of court, as essential judicial officers, are entrusted with the delicate function of collecting legal fees and administering court funds. Their role demands the highest standards of competence, honesty, and probity, safeguarding the integrity of the court and its proceedings. The Court has consistently emphasized that the failure to remit funds promptly constitutes dishonesty and grave misconduct, eroding public faith in the Judiciary.

    Acedo’s defense rested on her admission of failure to comply with her obligations due to illness and her subsequent use of entrusted funds for medical and household expenses. She pleaded for leniency, offering to settle her accountabilities through deductions from her terminal leave benefits and monthly pension. While acknowledging Acedo’s admission of responsibility, the Court weighed this against the aggravating circumstances of her actions. The Court referenced OCA v. Santos, A.M. No. P-06-2287, October 12, 2010, 632 SCRA 678, 689-690, stating that “The failure to remit the funds in due time amounts to dishonesty and grave misconduct, which the Court cannot tolerate for they diminish the people’s faith in the Judiciary. The act of misappropriating judiciary funds constitutes dishonesty and grave misconduct which are punishable by dismissal from the service even if committed for the first time.”

    The Supreme Court carefully considered the recommendations of the Office of the Court Administrator (OCA), which initially suggested allowing Acedo to retire and settle her remaining cash accountabilities. However, the Court diverged from this recommendation, emphasizing that mitigating circumstances are not loosely applied, especially in cases of serious offenses. While Acedo’s nearly forty years of service in the Judiciary were noted, the Court deemed this length of service an aggravating factor. Having been accorded full trust and confidence for such a significant period, Acedo was expected to discharge her duties with utmost responsibility, integrity, loyalty, and efficiency, which she failed to do.

    The Court also found that Acedo took advantage of her official position to misappropriate court funds, making the misappropriation habitual. These circumstances, pursuant to Sec. 53 of the Uniform Rules on Administrative Cases in the Civil Service, further aggravated her infractions. The Uniform Rules on Administrative Cases in the Civil Service provides guidance on penalties:

    Section 54. Manner of Imposition. When applicable, the imposition of the penalty may be made in accordance with the manner provided herein below:

    1. The minimum of the penalty shall be imposed where only mitigating and no aggravating circumstances are present.
    2. The medium of the penalty shall be imposed where no mitigating and aggravating circumstances are present.
    3. The maximum of the penalty shall be imposed where only aggravating and no mitigating circumstances are present.
    4. Where aggravating and mitigating circumstances are present, paragraph [a] shall be applied where there are more mitigating circumstances present; paragraph [b] shall be applied when the circumstances equally offset each other; and paragraph [c] shall be applied when there are more aggravating circumstances.

    Applying these rules, the Court concluded that the aggravating circumstances outweighed the mitigating ones, leading to the forfeiture of Acedo’s retirement benefits, except for her accrued/terminal leave benefits, which would be applied towards settling her shortages. The Court made sure to correct errors in the original computation of Acedo’s accountabilities. The audit team earlier revealed a total shortage in the amount of P964,577.20, inclusive of the undocumented withdrawals. A careful scrutiny of the computation bared a miscalculation in the balance of unwithdrawn FF. Deducting the total refunded cash bond from the total collections should have resulted in the amount of P581,025.00 instead of P551,025.00. There was clearly a difference of P30,000.00. The correct amount of total shortage should be P994,577.20.

    The Court ultimately ordered the forfeiture of Acedo’s retirement benefits, except for her accrued/terminal leave benefits, which were to be applied in payment of her shortages. This decision aligned with the principle that public office is a public trust, and those who violate this trust must face severe consequences. In addition to Acedo’s case, the Court addressed the failure of other clerks of court to submit required monthly reports. Ernesto A. Luzod, Jr. and Gerardo K. Baroy were also implicated in failing to submit required monthly reports. The Court directed the Court Management Office (CMO) of the OCA to report on the audit results of their cash accounts. Pending the submission of these audit results, Luzod and Baroy were immediately relieved of their duties and responsibilities as clerks of court, and their bonds were ordered canceled.

    FAQs

    What was the key issue in this case? The key issue was whether a clerk of court should face penalties, including forfeiture of retirement benefits, for misappropriating public funds and failing to submit required monthly reports. The Supreme Court emphasized that public office is a public trust, and those who violate this trust must face severe consequences.
    What funds were involved in the misappropriation? The misappropriation involved the Judiciary Development Fund (JDF), Clerk of Court General Fund (COCGF), and Fiduciary Fund (FF). These funds are crucial for the proper functioning of the judiciary, and their misuse undermines public trust.
    What was the total amount of Acedo’s accountability? The total accountability of Acedo was P471,633.91, representing the net shortage after deducting her terminal pay. This amount included shortages in the JDF, COCGF, and FF.
    What were the aggravating circumstances in Acedo’s case? The aggravating circumstances included Acedo’s length of service, her taking advantage of her position, and the habitual nature of the misappropriation. These factors weighed heavily against her plea for leniency.
    What was the role of the Office of the Court Administrator (OCA)? The OCA conducted the financial audit, recommended actions, and monitored compliance. Their findings and recommendations were crucial in the Court’s decision-making process.
    What happened to Acedo’s retirement benefits? Acedo’s retirement benefits were forfeited, except for her accrued/terminal leave benefits, which were applied towards settling her shortages. This penalty underscored the severity of her offenses.
    What happened to the other clerks of court involved? Ernesto A. Luzod, Jr. and Gerardo K. Baroy were immediately relieved of their duties, and their bonds were canceled pending further investigation. This action demonstrated the Court’s commitment to accountability across the board.
    What is the significance of public office being a public trust? This principle means that public officers must be accountable to the people, serve with utmost responsibility, integrity, loyalty, and efficiency, and act with patriotism and justice. It is the foundation of ethical conduct in public service.

    The Supreme Court’s decision in Administrator v. Acedo serves as a stern warning to all public officials, particularly those in the judiciary, about the consequences of misappropriating public funds. The ruling reinforces the principle that public office is a public trust and that those who violate this trust will face severe penalties. This case highlights the importance of maintaining integrity and accountability within the judiciary to preserve public confidence in the administration of justice.

    For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

    Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
    Source: ADMINISTRATOR, VS. LEONILA R. ACEDO, [A.M. NO. 01-10-593-RTC, September 11, 2012]

  • Breach of Trust: Attorney Suspended for Misappropriating Client Funds

    In a significant ruling, the Supreme Court held that an attorney’s failure to return funds entrusted by a client constitutes a violation of the Code of Professional Responsibility. The court emphasized that lawyers must hold client funds in trust and account for them properly. This decision reinforces the high ethical standards expected of legal professionals and protects clients from potential financial harm due to misappropriation or negligence on the part of their attorneys.

    When Trust Erodes: The Case of Dhaliwal vs. Dumaguing

    The case of Emilia O. Dhaliwal against Atty. Abelardo B. Dumaguing revolves around a clear breach of Canon 16 of the Code of Professional Responsibility. Dhaliwal entrusted Dumaguing with funds to purchase land, but he failed to properly account for or return the money. The central legal question is whether Dumaguing violated his ethical obligations as a lawyer by not safeguarding his client’s funds and by potentially using dishonest tactics to evade his responsibilities.

    Dhaliwal hired Dumaguing to assist with purchasing a parcel of land. Following Dumaguing’s instructions, Dhaliwal’s family withdrew P342,000 and gave it to the attorney. Dumaguing then acquired two manager’s checks totaling P311,819.94, which were later consigned with the Housing and Land Use Regulatory Board (HLURB) after Dhaliwal requested a suspension of payments. Subsequently, Dumaguing filed a complaint against Fil-Estate on Dhaliwal’s behalf but later withdrew the consigned checks. After Dhaliwal terminated Dumaguing’s services and lost the HLURB case, she demanded the return of her funds. Dumaguing failed to comply, leading to the filing of this disbarment case.

    Dumaguing admitted to the core allegations but argued that he consigned the funds to HLURB to cover the balance for the land purchase. He claimed Fil-Estate rejected the payment due to additional interests and surcharges. He further stated that he filed a motion to verify the judgment’s satisfaction but had not yet returned the money because the motion was pending. However, the Integrated Bar of the Philippines (IBP) found that Dumaguing’s motion lacked proof of service and filing, deeming it fabricated. The IBP determined Dumaguing violated Canon 16 and recommended suspension, which the Supreme Court ultimately adopted.

    The Code of Professional Responsibility is clear on how lawyers should handle client money. Canon 16 mandates that lawyers must hold all client funds and properties in trust. Rule 16.01 states that lawyers must account for all money received for or from the client. Rule 16.02 requires that client funds be kept separate from the lawyer’s own funds. Lastly, Rule 16.03 emphasizes the lawyer’s duty to deliver the funds and property of the client when due or upon demand.

    The Supreme Court has consistently held that money entrusted to a lawyer for a specific purpose must be returned immediately if not used for that purpose. The court cited the case of Rhodora B. Yutuc v. Atty. Daniel Rafael B. Penuela, stating that “[a] lawyer’s failure to return upon demand the funds held by him on behalf of his client gives rise to the presumption that he has appropriated the same for his own use in violation of the trust reposed in him by his client. Such act is a gross violation of general morality as well as of professional ethics. It impairs public confidence in the legal profession and deserves punishment.”

    In this case, Dumaguing’s actions directly contravened these ethical standards. He withdrew the consigned funds but did not use them for their intended purpose. His failure to return the money upon demand and his fabricated motion further demonstrated a breach of trust. The Supreme Court recognized that the misappropriation of client funds undermines the integrity of the legal profession.

    The court highlighted the importance of maintaining high moral standards in the legal profession. Dumaguing’s attempt to justify his actions by awaiting HLURB action on his alleged motion was deemed a dishonest tactic to evade his obligations. This demonstrated a failure to meet the ethical requirements expected of all lawyers. The Court referenced Eastern Shipping Lines, Inc. v. Court of Appeals to justify the imposition of legal interest on the amount to be returned.

    The Supreme Court’s decision serves as a stern warning to lawyers who might be tempted to mishandle client funds. It underscores the fiduciary duty that lawyers owe to their clients and reinforces the principle that trust is the cornerstone of the attorney-client relationship. By suspending Dumaguing and ordering the return of the funds with interest, the Court reaffirmed its commitment to upholding the ethical standards of the legal profession and protecting the interests of clients.

    The ruling has significant implications for both lawyers and clients. Lawyers must exercise utmost care and diligence in managing client funds, ensuring proper accounting and prompt return when required. Clients, on the other hand, can take comfort in knowing that the legal system provides recourse against lawyers who breach their fiduciary duties. This decision should encourage greater transparency and accountability in the handling of client funds, thereby strengthening public confidence in the legal profession.

    FAQs

    What was the central issue in this case? The main issue was whether Atty. Dumaguing violated the Code of Professional Responsibility by failing to return funds entrusted to him by his client, Ms. Dhaliwal, for a specific purpose. The Court examined if he breached the trust reposed in him by misappropriating or improperly withholding those funds.
    What is Canon 16 of the Code of Professional Responsibility? Canon 16 mandates that a lawyer shall hold in trust all moneys and properties of the client that may come into their possession. This means the lawyer has a fiduciary duty to manage client funds with utmost care and integrity.
    What were the specific violations committed by Atty. Dumaguing? Atty. Dumaguing failed to return the client’s money upon demand, which creates a presumption that he used the funds for his benefit. He also allegedly fabricated a motion to justify his delay, further indicating a breach of ethical conduct.
    What was the punishment imposed on Atty. Dumaguing? The Supreme Court suspended Atty. Dumaguing from the practice of law for six (6) months. He was also ordered to return the amount of P311,819.94 to Ms. Dhaliwal, with legal interest.
    Why was the fabrication of a document considered an aggravating factor? Fabricating a document demonstrates dishonesty and an attempt to mislead the court and the client. This behavior goes against the high moral standards expected of members of the legal profession.
    What is the significance of this ruling for clients? This ruling assures clients that the legal system protects them from lawyers who mishandle their funds. It also provides a clear avenue for redress if a lawyer breaches their fiduciary duty.
    How does this case impact the legal profession? This case serves as a reminder to all lawyers about their ethical obligations regarding client funds. It emphasizes the importance of transparency, accountability, and maintaining the trust placed in them by their clients.
    What is the legal interest rate applied in this case? The legal interest rate is six percent (6%) per annum from the time of receipt of the money until the finality of the Resolution. After the finality, it increases to twelve percent (12%) per annum until the amount is fully paid.
    What should a client do if they suspect their lawyer is mishandling their funds? A client should immediately seek legal advice, demand an accounting of the funds, and, if necessary, file a complaint with the Integrated Bar of the Philippines (IBP) or the Supreme Court.

    This case reinforces the critical importance of ethical conduct and accountability within the legal profession. It underscores the judiciary’s commitment to protecting clients and maintaining the integrity of the legal system.

    For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

    Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
    Source: EMILIA O. DHALIWAL VS. ATTY. ABELARDO B. DUMAGUING, A.C. No. 9390, August 01, 2012

  • Breach of Public Trust: Misappropriation of Evidence and the Consequences for Court Employees

    The Supreme Court’s decision in Office of the Court Administrator v. Musngi underscores the stringent standards of honesty and integrity expected of court employees. The Court emphatically ruled that misappropriating funds, even if intended for court-related purposes, constitutes grave misconduct and dishonesty, leading to dismissal from service. This ruling serves as a stern warning that no excuse, including alleged directives from superiors, can justify the misuse of court funds or evidence.

    When Good Intentions Pave a Dishonest Path: Can ‘Repairs’ Excuse Misappropriation?

    This case arose when Judge Cielitolindo A. Luyun, upon assuming office, discovered that Php 45,000, part of the evidence in several criminal cases, was missing. The money had been entrusted to Ma. Irissa G. Musngi, a Court Legal Researcher II, who claimed that she used the funds for repairs to the court facilities, allegedly under the instruction of a former judge. However, she failed to provide receipts or any concrete evidence to support her claim. This prompted an investigation by the Office of the Court Administrator (OCA), which ultimately led to the Supreme Court’s decision.

    The core issue before the Supreme Court was whether Musngi’s actions constituted grave misconduct and dishonesty, warranting disciplinary action. The Court meticulously examined the evidence presented, including Musngi’s explanations and the findings of the OCA. The Court emphasized that public office is a public trust, and any act that undermines this trust, such as misappropriation of funds, cannot be tolerated. Building on this principle, the Court referenced the case of Alenio v. Cunting, where it defined dishonesty as the disposition to lie, cheat, deceive, defraud, or betray; untrustworthiness; lack of integrity; lack of honesty, probity, or integrity in principle; and lack of fairness and straightforwardness. On the other hand, misconduct is a transgression of some established and definite rule of action, more particularly, unlawful behavior or gross negligence by the public officer.

    The Supreme Court highlighted that Musngi’s actions fell squarely within these definitions. Her unauthorized use of the Php 45,000, irrespective of her purported intent, constituted a clear breach of trust and a violation of established rules. Even if Musngi genuinely believed she was acting in the best interest of the court, her actions were not excused, as she circumvented established procedures for handling court funds and failed to provide any documentation to support her claims. The court underscored the principle laid out in Office of the Court Administrator v. Pacheco, where it had previously rejected unsubstantiated explanations regarding the use of funds for alleged court renovations, emphasizing the necessity of proper documentation and adherence to established protocols.

    The Court firmly stated that taking monetary evidence without proper authority constitutes theft, citing Judge San Jose, Jr. v. Camurongan, where it held that “The act of taking monetary exhibits without authority from their custodian constitutes theft. Thievery, no matter how petty, has no place in the judiciary. This unlawful act of taking cannot be justified by an alleged intention to safeguard the money from damage that might be caused by the flood.” This principle reinforces the idea that even with good intentions, unlawful acts cannot be justified, especially within the judicial system.

    The Supreme Court also considered the fact that Musngi eventually restituted the Php 45,000. However, the Court clarified that restitution does not absolve her from administrative liability. The Court’s decision was grounded in the principle that public office is a public trust, and any act of dishonesty or misconduct, regardless of subsequent rectification, erodes public confidence in the judiciary. The integrity of the judicial system demands that those who violate this trust be held accountable for their actions.

    The penalties for grave misconduct and dishonesty are explicitly outlined in Section 52(A)(1) and (3) of the Revised Uniform Rules on Administrative Cases in the Civil Service, classifying these offenses as grave and punishable by dismissal for the first offense. Section 58(a) further specifies that dismissal carries with it cancellation of eligibility, forfeiture of retirement benefits, and perpetual disqualification from re-employment in the government service. Consequently, the Supreme Court found Musngi guilty of dishonesty and grave misconduct and ordered her dismissal from service, with all the corresponding penalties. This ruling is consistent with the Court’s stance on maintaining the highest standards of integrity within the judiciary and ensuring public trust in the administration of justice.

    FAQs

    What was the key issue in this case? The key issue was whether Ma. Irissa G. Musngi’s misappropriation of Php 45,000 from court evidence, claiming it was used for court repairs, constituted grave misconduct and dishonesty warranting dismissal.
    What was Musngi’s defense? Musngi claimed that she used the money for repairs to the court’s ceiling and toilet, allegedly under the instruction of a former judge, but failed to provide supporting receipts or affidavits.
    Did the Court accept Musngi’s explanation? No, the Court found her explanation unconvincing, as she did not provide any receipts or affidavits to support her claim, and unauthorized use of court funds is prohibited.
    Did Musngi’s restitution of the money affect the outcome? No, the Court clarified that restitution did not absolve her from administrative liability, as the act of misappropriation itself constituted a breach of public trust.
    What is the penalty for grave misconduct and dishonesty in this case? The penalty is dismissal from service with forfeiture of all retirement benefits except accrued leave credits, and with prejudice to re-employment in any branch or instrumentality of the government.
    What legal principle did the Court emphasize in its decision? The Court emphasized that public office is a public trust, and any act of dishonesty or misconduct erodes public confidence in the judiciary and cannot be tolerated.
    What constitutes dishonesty according to the Court? Dishonesty involves the disposition to lie, cheat, deceive, defraud, or betray; untrustworthiness; lack of integrity; lack of honesty, probity, or integrity in principle; and lack of fairness and straightforwardness.
    What constitutes misconduct according to the Court? Misconduct is a transgression of some established and definite rule of action, more particularly, unlawful behavior or gross negligence by a public officer.

    The Office of the Court Administrator v. Musngi case serves as a stark reminder to all public servants, particularly those in the judiciary, of the high ethical standards they must uphold. The decision reinforces the principle that any act of dishonesty or misconduct, no matter the perceived justification, will be met with severe consequences to maintain the integrity and credibility of the judicial system.

    For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

    Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
    Source: OFFICE OF THE COURT ADMINISTRATOR v. MA. IRISSA G. MUSNGI, G.R. No. 54983, July 17, 2012

  • Breach of Public Trust: Dismissal for Misappropriation of Court Funds in the Philippines

    In the Philippines, public office is a public trust, demanding the highest standards of integrity and accountability. The Supreme Court decision in Office of the Court Administrator v. Lunalinda M. Peradilla underscores this principle, holding that a Clerk of Court who misappropriates public funds is guilty of dishonesty, gross neglect of duty, and grave misconduct. The Court ordered the dismissal of Lunalinda M. Peradilla, a Clerk of Court II, for failing to properly remit and account for judiciary funds, emphasizing that court personnel must be above suspicion and adhere to the strictest standards of honesty.

    Entrusted Funds, Betrayed Duty: When Court Clerks Fail the Public Trust

    The case began with a financial audit of the Municipal Circuit Trial Court (MCTC) of El Nido-Linapacan, Palawan, prompted by concerns raised by Presiding Judge Ma. Theresa P. Mangcucang-Navarro regarding Clerk of Court Lunalinda M. Peradilla’s handling of Judiciary Development Funds and Fiduciary Funds. The audit, conducted by the Office of the Court Administrator (OCA), revealed significant discrepancies in Peradilla’s accounts. These discrepancies included non-remittance of collections, failure to issue official receipts, and intentional misreporting of collection amounts. The findings exposed a total accountability of P603,628.85 across various judiciary funds, largely attributed to Peradilla’s actions. This case highlights the critical role of court personnel in managing public funds and the severe consequences of failing to uphold their fiduciary duties.

    The audit team’s investigation unveiled several alarming practices. Peradilla was found to have not remitted collections for various judiciary funds, including the Judiciary Development Fund, Special Allowance for the Judiciary Fund, General Fund, Mediation Fund, and Fiduciary Fund. Furthermore, she failed to issue official receipts for collections amounting to P235,000.00 and did not report these collections in the required monthly reports. The audit team also discovered that Peradilla had intentionally misrepresented the amounts collected, reporting lesser sums than what was actually received, thereby enriching herself by P20,187.50. This pattern of dishonesty and mismanagement prompted the OCA to initiate administrative proceedings against her.

    In response to the audit findings, Peradilla admitted to misappropriating court funds, claiming that she had intended to “borrow” the money to cover her family’s expenses but was unable to repay it. She requested that the monetary equivalent of her earned vacation and sick leave be used to restitute the shortages. However, her admissions did not mitigate the severity of her actions. The OCA recommended her dismissal from service, forfeiture of retirement benefits (excluding accrued leave credits), and a bar against re-employment in any government office. The Supreme Court, agreeing with the OCA’s assessment, emphasized the constitutional mandate that public office is a public trust, requiring all public officers to be accountable and serve with utmost integrity.

    The Supreme Court’s decision underscored the importance of upholding the integrity of the judiciary. Section 1, Article XI of the Constitution explicitly states:

    Public office is a public trust. Public officers and employees must at all times be accountable to the people, serve them with utmost responsibility, integrity, loyalty, and efficiency, act with patriotism and justice, and lead modest lives.

    The Court emphasized that this demand for moral uprightness is particularly critical for members and personnel of the judiciary, whose conduct must be above suspicion. Any act of impropriety, no matter how small, can erode public confidence in the judiciary. The Court cited previous rulings to reinforce this point, emphasizing that court personnel should adhere to the strictest standards of honesty and integrity.

    Clerks of Court, as custodians of court funds, have a significant responsibility to manage these funds with diligence and transparency. They are liable for any loss, shortage, destruction, or impairment of such funds. The Supreme Court has issued clear directives on how court funds should be handled. Supreme Court Circular No. 50-95 mandates that:

    All collections from bail bonds, rental deposits, and other fiduciary collections shall be deposited within twenty-four (24) hours by the Clerk of Court concerned, upon receipt thereof, with the Land Bank of the Philippines.

    In areas without a Land Bank branch, the funds should be deposited with the Provincial, City, or Municipal Treasurer. Similarly, Administrative Circular No. 5-93 outlines the duties of Clerks of Court in managing the Judiciary Development Fund, requiring them to issue proper receipts, maintain separate cash books, and deposit collections in authorized government depository banks. These regulations are designed to ensure that court funds are properly managed and protected from misappropriation.

    In Peradilla’s case, her failure to remit court funds, issue official receipts, and accurately report collections constituted a clear violation of these regulations. Her actions were deemed to be a grave breach of her duties as a Clerk of Court and a violation of the public trust. The Court also noted that Peradilla’s accountability for the Fiduciary Fund shortage should be increased by P46,000.00 due to her failure to submit the required documentation and secure confirmation regarding certain transactions. This additional amount increased her total Fiduciary Fund accountability to P355,000.00, further underscoring the extent of her mismanagement.

    The Supreme Court referenced the case of Re: Report on the Judicial and Financial Audit of RTC-Br. 4, Panabo, Davao Del Norte, in which it held that a Clerk of Court’s failure to remit court funds constitutes gross neglect of duty, dishonesty, and grave misconduct. Under Section 52, Rule IV of the Uniform Rules on Administrative Cases in the Civil Service, these offenses are classified as grave offenses, warranting the penalty of dismissal for the first offense. The Court found Peradilla guilty of all three offenses, citing her non-remittance of collections, failure to issue official receipts, and erroneous reporting of collections. Consequently, the Court ordered her dismissal from service, forfeiture of retirement benefits, and disqualification from re-employment in any government office.

    FAQs

    What was the key issue in this case? The key issue was whether a Clerk of Court could be held administratively liable for failing to properly remit and account for judiciary funds, and if so, what the appropriate penalty should be. The Supreme Court determined that the Clerk of Court was indeed liable for dishonesty, gross neglect of duty, and grave misconduct.
    What specific actions did the Clerk of Court commit that led to her dismissal? The Clerk of Court was found to have failed to remit collections of judiciary funds, failed to issue official receipts for some collections, and made erroneous reports of collections by reporting lesser amounts than what was actually collected. These actions resulted in a total accountability of P603,628.85.
    What funds were involved in the misappropriation? The funds involved included the Judiciary Development Fund, Special Allowance for the Judiciary Fund, General Fund, Mediation Fund, and Fiduciary Fund. The largest portion of the misappropriated funds came from the Fiduciary Fund.
    What does the Constitution say about public office? Section 1, Article XI of the Constitution states that public office is a public trust. Public officers and employees must at all times be accountable to the people, serve them with utmost responsibility, integrity, loyalty, and efficiency.
    What is the role of a Clerk of Court in handling court funds? Clerks of Court act as custodians of the court’s funds, revenues, records, property, and premises. They are liable for any loss, shortage, destruction, or impairment of such funds and property.
    What are the prescribed procedures for handling judiciary funds? Supreme Court Circular No. 50-95 requires that all collections from bail bonds, rental deposits, and other fiduciary collections be deposited within 24 hours with the Land Bank of the Philippines. Administrative Circular No. 5-93 provides similar guidelines for the Judiciary Development Fund.
    What penalties are prescribed for dishonesty, gross neglect of duty, and grave misconduct? Under Section 52, Rule IV of the Uniform Rules on Administrative Cases in the Civil Service, dishonesty, gross neglect of duty, and grave misconduct are classified as grave offenses. The penalty for the first offense is dismissal from service.
    Was the Clerk of Court entitled to any retirement benefits? The Clerk of Court was entitled to accrued leave credits, but all other retirement benefits were forfeited as a result of her dismissal. She was also barred from re-employment in any branch or instrumentality of the government.

    The Supreme Court’s decision in Office of the Court Administrator v. Lunalinda M. Peradilla serves as a stern reminder to all public officers, particularly those in the judiciary, about the importance of upholding the public trust. The Court’s resolute stance underscores its commitment to maintaining the integrity of the judicial system and ensuring that those who betray the trust placed in them are held accountable.

    For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

    Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
    Source: OFFICE OF THE COURT ADMINISTRATOR VS. LUNALINDA M. PERADILLA, A.M. No. P-09-2647, July 17, 2012

  • Probable Cause and Estafa: Balancing Corporate Investments and Criminal Liability

    The Supreme Court, in Manila Electric Company v. Vicente Atilano, et al., affirmed that the determination of probable cause for filing a criminal case rests primarily with the public prosecutor and the Secretary of Justice. The Court emphasized that absent grave abuse of discretion, courts should not interfere with the executive branch’s judgment on whether sufficient evidence exists to warrant criminal charges. This ruling underscores the separation of powers and clarifies the scope of judicial review in preliminary investigations.

    When Investment Deals Go Sour: Can a Bad Business Deal Lead to Criminal Charges?

    Manila Electric Company (MERALCO) filed a complaint for estafa against officers of Corporate Investments Philippines, Inc. (CIPI), alleging that CIPI misappropriated funds intended for investment in government securities (GS) and commercial papers (CPs) of the Lopez Group. MERALCO claimed that despite specific instructions, CIPI invested in its own promissory notes and CPs of non-Lopez Group companies. The prosecutor dismissed the complaint, finding insufficient evidence of misappropriation or deceit, a decision affirmed by the Department of Justice (DOJ) and later by the Court of Appeals (CA). MERALCO then elevated the case to the Supreme Court, questioning the DOJ’s resolution and seeking to overturn the lower courts’ decisions.

    The Supreme Court addressed two primary issues: whether the DOJ’s resolution complied with constitutional and administrative requirements, and whether the Court could disturb the public prosecutor’s determination of probable cause. Regarding the DOJ’s resolution, MERALCO argued that it lacked a sufficient statement of facts and law, violating Section 14, Article VIII of the Constitution and Section 14, Chapter III, Book VII of the Administrative Code of 1987. However, the Court clarified that these provisions apply to courts, not to the DOJ Secretary or prosecutors. The DOJ’s role in reviewing a prosecutor’s order is not a quasi-judicial proceeding, and therefore, a different standard applies.

    The Court cited Odchigue-Bondoc v. Tan Tiong Bio, clarifying that Section 4, Article VIII of the Constitution does not extend to resolutions issued by the DOJ Secretary. This distinction is crucial because the DOJ, when reviewing a prosecutor’s order, exercises investigative or inquisitorial powers rather than judicial adjudication. Investigative powers, as the Court explained, involve inspecting records, investigating activities, and securing information, differing significantly from the power to adjudicate rights and obligations. Thus, it suffices for a DOJ resolution to state the legal basis for its decision, such as Section 7 of Department Circular No. 70, which allows the dismissal of a petition if it lacks merit or is intended for delay.

    Addressing MERALCO’s claim that the DOJ applied technicalities unfairly by dismissing the petition for failing to attach a legible copy of a document, the Court noted that this omission was not the sole reason for the denial. The primary basis was the prosecutor’s resolution being in accordance with the evidence and the law. The Supreme Court emphasized the principle that it will not rule on a constitutional question if the case can be resolved on other grounds. Furthermore, the Court recognized the presumption of constitutionality afforded to enactments of the executive branch, respecting the separation of powers.

    Building on this principle, the Court reiterated that the determination of probable cause is an executive function. As stated in Cruzvale, Inc. v. Eduque, courts are not empowered to substitute their judgment for that of the executive branch absent grave abuse of discretion. The public prosecutor alone determines the sufficiency of evidence for filing a criminal information, and courts will not interfere unless there is a clear showing of such abuse. In this case, the Court found no error in the prosecutor’s determination that no probable cause existed to justify filing a criminal complaint against the respondents for estafa under Article 315, paragraphs 1(a), 1(b), and 2(a) of the Revised Penal Code.

    To establish estafa under Article 315, paragraph 1(b), the prosecution must prove that the offender received money or property in trust, misappropriated or converted it to the prejudice of another, and failed to return it upon demand. The critical element missing in MERALCO’s case was proof of misappropriation. The Court agreed with the prosecutor’s finding that MERALCO failed to provide evidence, aside from the minutes of a meeting, that specific instructions were given to CIPI to invest only in GS or CPs of the Lopez Group. The Court further noted that the minutes of the meeting lacked probative value due to being hearsay evidence, as the testimony of Manuel Lopez, who allegedly gave the instructions, was not presented.

    Without proof of specific instructions, CIPI could not be deemed to have misappropriated MERALCO’s investments. The Court recognized that in money market transactions, dealers have discretion over investment placements unless there is a specific agreement or instruction from the investor. The absence of such specific instructions meant that CIPI’s actions, at worst, could only give rise to a civil action for recovery, not a criminal prosecution for estafa. This approach contrasts with situations where dealers deviate from explicit investment instructions, potentially exposing them to both civil and criminal liabilities.

    Regarding the charge of estafa under Article 315, paragraph 2(a), the prosecution must prove that the offender made false pretenses or fraudulent representations to induce the offended party to part with their money or property. MERALCO argued that CIPI falsely represented its ability to buy GS and CPs of the Lopez Group. However, the Court found no evidence of such false representations. In fact, the records showed that respondent Atilano disclosed CIPI’s liquidity problems to MERALCO before the investment was made, negating any claim of deceit. The court emphasized that MERALCO failed to present evidence showing that any of the respondents made fraudulent misrepresentations before or during the investment.

    Building on this, the Court also pointed out that MERALCO failed to establish the specific roles or participation of each respondent in the alleged criminal act. It is a fundamental principle that only corporate officers directly involved in anomalous acts can be held criminally liable. The absence of evidence linking each respondent to the alleged misappropriation further weakened MERALCO’s case. Therefore, the Supreme Court denied MERALCO’s petition, affirming the decisions of the Court of Appeals and underscoring the importance of proving all elements of estafa beyond reasonable doubt.

    FAQs

    What was the key issue in this case? The key issue was whether the public prosecutor and DOJ committed grave abuse of discretion in dismissing MERALCO’s estafa complaint against CIPI officers for alleged misappropriation of investment funds.
    Why did the Supreme Court side with the DOJ and prosecutor? The Court found no grave abuse of discretion, noting that MERALCO failed to provide sufficient evidence of specific investment instructions or fraudulent misrepresentations by the CIPI officers.
    What is the difference between investigative and judicial powers? Investigative powers involve inspecting records and gathering information, while judicial powers involve adjudicating rights and obligations. The DOJ exercises investigative powers when reviewing a prosecutor’s decision.
    What must be proven to establish estafa by misappropriation? To establish estafa by misappropriation, it must be proven that the offender received money in trust, misappropriated it, caused prejudice to another, and failed to return it upon demand.
    What is the role of the public prosecutor in determining probable cause? The public prosecutor determines the sufficiency of evidence for filing a criminal information. Courts generally defer to this determination unless there is grave abuse of discretion.
    Can a simple failure to repay investments lead to a criminal estafa case? No, a simple failure to repay investments typically gives rise to a civil action for recovery, not a criminal prosecution for estafa, unless there is clear evidence of fraud or misappropriation.
    What evidence did MERALCO lack in this case? MERALCO lacked concrete evidence proving specific instructions given to CIPI to invest only in GS or CPs of the Lopez Group, as well as evidence of fraudulent misrepresentations by the respondents.
    What is the significance of disclosing liquidity problems before an investment? Disclosing liquidity problems before an investment negates claims of deceit or false pretenses, which are essential elements of estafa under Article 315, paragraph 2(a) of the Revised Penal Code.
    Are corporate officers automatically liable for corporate actions? No, only corporate officers who are shown to have directly participated in the alleged anomalous acts can be held criminally liable.

    In summary, the Supreme Court’s decision underscores the importance of clear evidence and specific instructions in investment agreements, particularly when seeking criminal prosecution for alleged misappropriation. The ruling reinforces the separation of powers between the executive and judicial branches in the determination of probable cause. This case serves as a reminder that not every failed investment warrants criminal charges; clear evidence of fraud or specific violations of trust must be demonstrated.

    For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

    Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
    Source: MERALCO vs. ATILANO, G.R. No. 166758, June 27, 2012

  • Breach of Trust: Failure to Account for Property as Evidence of Estafa

    The Supreme Court has affirmed that failure to account for property held in trust upon demand constitutes circumstantial evidence of misappropriation, leading to a conviction for estafa (swindling). This ruling clarifies that individuals entrusted with company property must properly account for it; otherwise, their failure to do so can be used against them in court as proof of conversion to personal use, resulting in criminal liability. It reinforces the fiduciary duties of managing directors and others holding positions of trust within a corporation.

    When ‘Lien’ Becomes Liability: Did Holding Company Property Justify a Conviction for Estafa?

    This case revolves around Andre L. D’Aigle, who was convicted of estafa for failing to return company properties to Samfit Philippines, Inc. (SPI) after his dismissal as managing director. The central legal question is whether D’Aigle’s failure to account for and deliver SPI’s properties, which he claimed he held as a lien for unpaid debts, constituted sufficient evidence of misappropriation to warrant a conviction for estafa.

    The facts reveal that D’Aigle, as managing director of SPI, was entrusted with company properties, including an electric transformer, electronic boxes, computer boxes, machine spare parts, and raw materials. Following his dismissal due to a conflict of interest, an audit revealed that these properties were missing. SPI demanded the return of these items, but D’Aigle failed to comply, claiming that SPI owed him money for repairs and unpaid salary, thus justifying his retention of the properties as a lien. This claim of a right of lien became the focal point of his defense, arguing that he did not misappropriate the items but merely held them as security for SPI’s debts.

    The Regional Trial Court (RTC) convicted D’Aigle, finding that his failure to account for the properties constituted evidence of conversion. The Court of Appeals (CA) affirmed this decision, albeit with a modification of the penalty. D’Aigle then appealed to the Supreme Court, arguing that he never had juridical possession of the properties, as they were under his care solely by virtue of his official capacity. He also claimed that the dispute was an intra-corporate controversy, which should absolve him from criminal liability.

    The Supreme Court, however, upheld the conviction, emphasizing that all the elements of estafa under Article 315, paragraph 1(b) of the Revised Penal Code (RPC) were sufficiently established:

    1. That money, goods or other personal properties are received by the offender in trust or on commission, or for administration, or under any other obligation involving the duty to make delivery of or to return, the same;
    2. That there is a misappropriation or conversion of such money or property by the offender or denial on his part of such receipt;
    3. That such misappropriation or conversion or denial is to the prejudice of another; and
    4. That there is a demand made by the offended party on the offender.

    The Court found that D’Aigle received the properties in trust for a specific purpose – the fabrication of bending machines and spare parts. When SPI demanded their return, he deliberately ignored the demand. The Supreme Court explicitly rejected D’Aigle’s argument that he did not have juridical possession, stating that he had absolute control over the use of the equipment without SPI’s oversight. This established not just physical possession but also juridical possession.

    Building on this principle, the Court then addressed the critical element of misappropriation or conversion. While direct evidence of misappropriation might be elusive, the Court highlighted that it can be proven through circumstantial evidence. Quoting Lee v. People, the decision emphasizes that “the failure to account upon demand, for funds or property held in trust, is circumstantial evidence of misappropriation.”

    The “failure to account upon demand, for funds or property held in trust, is circumstantial evidence of misappropriation.”

    The Court underscored that D’Aigle’s failure to return the properties upon demand constituted circumstantial evidence of their misappropriation. Even if he retained the properties to preserve his right of lien, this did not negate the act of misappropriation. The fact that D’Aigle no longer served as managing director at the time of the demand further weakened his claim to retain the properties, raising a presumption of misappropriation and conversion.

    The Court dismissed D’Aigle’s claim that the dispute was an intra-corporate controversy, aligning with the CA’s finding that his retention of the properties did not qualify as a corporate act. He had not shown that he acted on behalf of TAC Manufacturing Corporation or SPI. Consequently, he could not evade personal liability for his actions. The Supreme Court deferred to the lower courts’ assessment of the credibility of the prosecution witnesses, affirming their testimonies and the finding of D’Aigle’s guilt.

    Regarding the penalty, the Court noted that the CA correctly determined the maximum term of imprisonment as twenty (20) years of reclusion temporal, but it erred in setting the minimum term. The Supreme Court adjusted the penalty to an indeterminate sentence of four (4) years and two (2) months of prision correccional as minimum to twenty (20) years of reclusion temporal as maximum. The conviction was therefore affirmed with a modification to the penalty.

    This case sets a clear precedent that managing directors and other individuals holding positions of trust within a corporation are responsible for the company’s properties under their care. Failure to account for these properties upon demand can lead to a presumption of misappropriation, which can be difficult to rebut. It underscores the importance of maintaining transparent and accurate records of company assets and fulfilling the fiduciary duties associated with positions of trust. It also clarifies that claiming a right of lien does not automatically absolve one from the responsibility of accounting for and returning company property, especially after termination from a position of trust.

    FAQs

    What was the key issue in this case? The key issue was whether Andre L. D’Aigle’s failure to account for and return company properties to Samfit Philippines, Inc. constituted sufficient evidence of misappropriation, warranting a conviction for estafa. He claimed he held the properties as a lien for unpaid debts.
    What is estafa under Article 315, paragraph 1(b) of the RPC? Estafa, under this provision, involves misappropriating or converting money, goods, or other personal property received in trust, on commission, or for administration, to the prejudice of another, after a demand for its return has been made.
    What constitutes circumstantial evidence of misappropriation? The Supreme Court has stated that “failure to account upon demand, for funds or property held in trust, is circumstantial evidence of misappropriation.” This means the lack of proper accounting can imply conversion for personal use.
    What is juridical possession, and why was it important in this case? Juridical possession is the right to possess something that can be asserted even against the owner. In this case, the Court found D’Aigle had juridical possession because he had control over the use of the equipment.
    Did D’Aigle’s claim of a right of lien excuse his failure to return the properties? No, the Court ruled that even if D’Aigle retained the properties to preserve his right of lien, it did not negate the act of misappropriation, especially after he was no longer managing director and a demand for return was made.
    What was the Supreme Court’s ruling on the penalty imposed? The Supreme Court modified the penalty, setting it to an indeterminate sentence of four (4) years and two (2) months of prision correccional as minimum to twenty (20) years of reclusion temporal as maximum, finding the CA’s original minimum term to be erroneous.
    Why was the dispute not considered an intra-corporate controversy? The Court agreed with the CA that D’Aigle’s retention of the properties did not qualify as a corporate act since he did not act on behalf of TAC Manufacturing Corporation or SPI. Thus, it was deemed a personal liability issue.
    What practical lesson can managing directors learn from this case? Managing directors must maintain transparent and accurate records of company assets under their care and fulfill their fiduciary duties diligently. Failure to account for company properties upon demand can lead to a presumption of misappropriation and criminal charges.

    This case underscores the importance of transparency and accountability when handling company assets, especially for individuals in positions of trust. The ruling serves as a cautionary tale that failure to properly account for entrusted property can have significant legal consequences.

    For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

    Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
    Source: ANDRE L. D’ AIGLE vs. PEOPLE OF THE PHILIPPINES, G.R. No. 174181, June 26, 2012

  • Trust Receipts vs. Loans: Distinguishing Obligations in Philippine Law

    The Supreme Court has clarified that a transaction is not a trust receipt if the parties know the entrustee cannot return the goods. In Land Bank of the Philippines v. Lamberto C. Perez, the Court ruled that when a bank is aware that materials are used in construction projects and cannot be recovered, the agreement is a loan, not a trust receipt. This distinction is critical because it affects whether a borrower can be charged with estafa (fraud) for failing to pay.

    Construction Materials and Trust: When Does a Loan Masquerade as Something Else?

    This case revolves around Land Bank of the Philippines (LBP) and Asian Construction and Development Corporation (ACDC). LBP extended credit to ACDC, and the latter used letters of credit and trust receipts to acquire construction materials. When ACDC failed to pay, LBP filed an estafa complaint against ACDC’s officers, alleging a violation of the Trust Receipts Law. The respondents countered that the transactions were merely loans because the materials were used for construction projects and could not be returned. The central legal question is whether the transactions constituted valid trust receipts or simply loans, impacting the potential criminal liability of ACDC’s officers.

    The court’s analysis hinged on the nature of a **trust receipt transaction**, defined in Section 4 of Presidential Decree No. 115 (P.D. 115):

    Section 4. What constitutes a trust receipt transaction. A trust receipt transaction, within the meaning of this Decree, is any transaction by and between a person referred to in this Decree as the entruster, and another person referred to in this Decree as entrustee, whereby the entruster, who owns or holds absolute title or security interests over certain specified goods, documents or instruments, releases the same to the possession of the entrustee upon the latter’s execution and delivery to the entruster of a signed document called a “trust receipt” wherein the entrustee binds himself to hold the designated goods, documents or instruments in trust for the entruster and to sell or otherwise dispose of the goods, documents or instruments with the obligation to turn over to the entruster the proceeds thereof to the extent of the amount owing to the entruster or as appears in the trust receipt or the goods, documents or instruments themselves if they are unsold or not otherwise disposed of, in accordance with the terms and conditions specified in the trust receipt, or for other purposes substantially equivalent to any of the following:

    In essence, a trust receipt involves the entruster (usually a bank) holding title over goods released to the entrustee (the borrower) who must either sell the goods and remit the proceeds or return the goods if unsold. The failure to do so can lead to estafa charges under Section 13 of P.D. 115, which states:

    Section 13. Penalty clause. The failure of an entrustee to turn over the proceeds of the sale of the goods, documents or instruments covered by a trust receipt to the extent of the amount owing to the entruster or as appears in the trust receipt or to return said goods, documents or instruments if they were not sold or disposed of in accordance with the terms of the trust receipt shall constitute the crime of estafa, punishable under the provisions of Article Three hundred and fifteen, paragraph one (b) of Act Numbered Three thousand eight hundred and fifteen, as amended, otherwise known as the Revised Penal Code.

    The Supreme Court emphasized that the intent of the parties is crucial in determining the true nature of the transaction. Article 1371 of the Civil Code supports this:

    Article 1371. In order to judge the intention of the contracting parties, their contemporaneous and subsequent acts shall be principally considered.

    The Court considered the contemporaneous actions of LBP and ACDC. LBP knew ACDC was a construction company and that the materials would be used for projects like the Metro Rail Transit and Clark Centennial Exposition. This knowledge negated the possibility of LBP expecting the return of the construction materials. This aligns with the ruling in Colinares v. Court of Appeals, which held that transactions involving construction materials delivered before the trust receipt are generally considered loans, not trust receipt agreements.

    The Court also pointed out that the construction materials, once used, became part of immovable or public domain properties, further eliminating any possibility of LBP reclaiming them. Article 445 of the Civil Code states:

    Article 445. Whatever is built, planted or sown on the land of another and the improvements or repairs made thereon, belong to the owner of the land, subject to the provisions of the following articles.

    Moreover, Article 420 of the Civil Code defines properties of public dominion:

    Article 420. The following things are property of public dominion:
    (1) Those intended for public use, such as roads, canals, rivers, torrents, ports and bridges constructed by the State, banks, shores, roadsteads, and others of similar character;
    (2) Those which belong to the State, without being for public use, and are intended for some public service or for the development of the national wealth.

    The Court distinguished genuine trust receipts from secured loans, highlighting that in true trust receipts, the entruster retains ownership until full payment or sale proceeds are remitted. Since LBP could not realistically expect the return of the materials, the transaction was deemed a loan.

    Even if the transactions were considered trust receipts, the Court found no evidence of misappropriation or abuse of confidence by ACDC. The failure to remit proceeds was due to non-payment by ACDC’s clients, a fact LBP did not dispute. The Court also addressed the requirement for the Office of the Solicitor General (OSG) to represent the government in criminal proceedings.

    The Court acknowledged two exceptions where a private party can file a petition without OSG intervention: denial of due process and questioning the civil aspect of a decision. However, LBP did not allege any OSG inaction or denial of due process. Additionally, LBP had already assigned ACDC’s debts and the civil liabilities appeared settled, further weakening their claim.

    FAQs

    What was the key issue in this case? The key issue was whether the transactions between LBP and ACDC were genuine trust receipts or merely loans, impacting the potential criminal liability for estafa.
    What is a trust receipt transaction? A trust receipt transaction involves an entruster (usually a bank) releasing goods to an entrustee (borrower) who must sell the goods and remit the proceeds or return the goods if unsold. The entruster retains ownership of the goods.
    What happens if an entrustee fails to comply with the trust receipt agreement? Failure to turn over proceeds or return the goods can lead to estafa charges under Section 13 of Presidential Decree No. 115.
    Why were the transactions in this case considered loans and not trust receipts? The transactions were considered loans because LBP knew the construction materials would be used in projects and could not be returned. The intent of the parties and the nature of the goods were considered.
    What is the significance of the Colinares case? Colinares v. Court of Appeals established the principle that transactions involving construction materials delivered before the trust receipt agreement are generally considered loans.
    What role does the intent of the parties play in determining the nature of the transaction? The intent of the parties, as evidenced by their actions, is crucial in determining whether a transaction is a trust receipt or a loan. Article 1371 of the Civil Code supports this principle.
    What is the role of the Office of the Solicitor General (OSG) in criminal proceedings? The OSG is responsible for representing the government in criminal proceedings before the Supreme Court and the Court of Appeals.
    When can a private party file a petition in a criminal case without the OSG? A private party can file a petition without the OSG when there is a denial of due process or when questioning the civil aspect of a decision.
    What constitutes misappropriation in a trust receipt transaction? Misappropriation occurs when the entrustee fails to turn over the proceeds of the sale of the goods or fails to return the goods themselves, without proper authorization.

    This ruling underscores the importance of carefully evaluating the nature of transactions and the intent of the parties involved. Banks must be aware of the specific circumstances of the borrower’s business and the feasibility of recovering the goods subject to the trust receipt. This ensures fairness and prevents the misuse of estafa charges in situations that are essentially secured loans.

    For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

    Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
    Source: Land Bank of the Philippines, vs. Lamberto C. Perez, G.R. No. 166884, June 13, 2012

  • Breach of Trust: Lawyer Disbarred for Misappropriating Client Funds and Offering Bribes

    The Supreme Court held that a lawyer who misappropriates client funds and engages in bribery is guilty of violating the Code of Professional Responsibility and warrants disbarment. This ruling underscores the high ethical standards expected of legal professionals, reinforcing the principle that lawyers must act with utmost honesty and integrity in handling client funds and dealing with public officials. The decision serves as a stern warning against conduct that undermines the integrity of the legal profession and the administration of justice, protecting clients and the public from dishonest and unethical practices.

    The Case of the Missing Money: Did a Lawyer Betray His Client’s Trust?

    In 2004, Arellano University, Inc. (the University) hired Atty. Leovigildo H. Mijares III to secure a title for a dried-up portion of Estero de San Miguel. The University provided Mijares with necessary documents and P500,000 for “facilitation and processing,” with the understanding that the money would be returned if the task wasn’t completed. Mijares claimed to have completed Phase I of the titling, securing approval from the Metro Manila Development Authority (MMDA), but failed to provide proof despite repeated requests. Subsequently, the University terminated his services and demanded the return of the P500,000.

    Mijares claimed that the University had agreed to a series of “facilitation costs,” including P500,000 for a survey plan approval from the Department of Environment and Natural Resources (DENR), another P500,000 for a favorable MMDA endorsement, and a final P500,000 for titling by the Land Registration Authority. He alleged that he gave the initial P500,000 to Undersecretary Cesar Lacuna of the MMDA through a mutual acquaintance. Lacuna then allegedly revealed that the University had previously filed an identical application, casting doubt on the current one’s success.

    The Integrated Bar of the Philippines (IBP) investigated the complaint. Despite several scheduled hearings, Mijares failed to appear and present evidence in his defense. The investigating commissioner found that the University had not authorized Mijares to bribe Lacuna, and Mijares failed to account for the funds, admitting under oath that he bribed a government official.

    “Every lawyer has the responsibility to protect and advance the interests of his client such that he must promptly account for whatever money or property his client may have entrusted to him. As a mere trustee of said money or property, he must hold them separate from that of his own and make sure that they are used for their intended purpose. If not used, he must return the money or property immediately to his client upon demand, otherwise the lawyer shall be presumed to have misappropriated the same in violation of the trust reposed on him.”

    The Supreme Court cited Section 27, Rule 138 of the Revised Rules of Court, outlining grounds for disbarment or suspension. These include deceit, malpractice, gross misconduct, and violation of the lawyer’s oath. The Court emphasized a lawyer’s duty to protect a client’s interests, promptly account for entrusted funds, and keep such funds separate. Failure to return unused funds upon demand results in a presumption of misappropriation and breach of trust.

    Because Mijares did not present any defense, the Court primarily considered the University’s evidence: Mijares received P500,000 for facilitating the title application, promised to return the money if unsuccessful, falsely claimed MMDA approval, and refused to return the funds despite repeated demands. The Court found Mijares’s defense unconvincing, stating that if he had permission to give Lacuna the P500,000, there was no reason to avoid the University or not compel Lacuna to return the money.

    Mijares admitted to bribing a government official to act favorably on his client’s application. Such conduct violated Rules 1.01 and 1.02, Canon 15, Rule 15.05, Canon 16, Rules 16.01 and 16.03, and Canon 18, Rule 18.04 of the Code of Professional Responsibility, which prohibit lawyers from engaging in unlawful, dishonest, or deceitful conduct, and require them to hold property of others with care. The Court rejected the IBP’s recommendation of indefinite suspension, instead ordering disbarment.

    The Court declined to order Mijares to return the P500,000 because the University willingly provided the money for “facilitation,” a euphemism for bribery. The Court would not transform the disbarment proceeding into a means of recovering bribe money. Mijares was, however, ordered to return all documents related to the titling matter to Arellano University, Inc.

    FAQs

    What was the main reason for Atty. Mijares’ disbarment? Atty. Mijares was disbarred for misappropriating client funds intended for facilitating a title application and for admitting to bribing a government official. This violated the Code of Professional Responsibility, which demands honesty and integrity from lawyers.
    What specific violations did Atty. Mijares commit? He violated Rules 1.01 and 1.02 (unlawful, dishonest conduct), Canon 15 and Rule 15.05 (conflict of interest), Canon 16 and Rules 16.01 and 16.03 (accountability for client funds), and Canon 18 and Rule 18.04 (neglect of legal matters) of the Code of Professional Responsibility.
    Why did the Court not order Atty. Mijares to return the P500,000? The Court did not order the return of the money because the University knowingly provided it for “facilitation,” which is considered a bribe. The Court refused to facilitate the recovery of bribe money through disbarment proceedings.
    What is the significance of Section 27, Rule 138 of the Revised Rules of Court? This section lists the grounds for disbarment or suspension of a lawyer, including deceit, malpractice, gross misconduct, and violation of the lawyer’s oath, all of which Atty. Mijares was found guilty of committing.
    What does it mean to misappropriate client funds? It means that the lawyer used the money given by client for uses or reason that weren’t approved. More specifically here, Mijares kept the money after having breached the understanding that if he does not fulfil the request then he needs to return the money.
    How does this case protect clients of legal services? It reinforces the importance of honesty, integrity, and accountability among lawyers. It also emphasizes how they are entrusted a position to deliver upon an objective of clients. This case sends a clear signal that the Court takes violations of the Code of Professional Responsibility seriously and protect clients.
    Why it is serious to attempt bribery within court contexts? Offering or engaging in the crime of bribery or corruption in courts, by extension within the Philippine context is severe as this degrades trust in institutions of trust which are considered important to preserve society by the laws, code of conduct. Such instances compromise the objective decisions or opinions formed under due process which causes lack of objectivity and trust.
    What ethical principle related to Lawyer’s Code was highlighted by this case? Integrity. The core of this legal battle is founded around the fact on whether the lawyer practiced this virtue that ought to be innately present given he is bound to take responsibility given his position as counsel of the University

    This case serves as a stark reminder to all members of the Bar of the ethical responsibilities they must uphold. It illustrates the serious consequences that can arise from failing to maintain the highest standards of integrity and fidelity to the legal profession.

    For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

    Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
    Source: ARELLANO UNIVERSITY, INC. vs. ATTY. LEOVIGILDO H. MIJARES III, A.C. No. 8380, November 20, 2009