EN BANC
July 12, 2016
A.C. No. 10541
(Formerly CBD Case No. 11-3046)
AURORA AGUILAR-DYQUIANGCO, Complainant
vs.
ATTY. DIANA LYNN M. ARELLANO, Respondent
DECISION
CAGUIOA, J.:
A lawyer, once he takes up the cause of his client, has the duty to serve such client with competence,
and to attend to his client's cause with diligence, care and devotion, whether he accepts the engagement
for free or for a fee.1 Moreover, lawyers should refrain from obtaining loans from their clients, in order
to avoid the perils of abusing the trust and confidence reposed upon him by such client.2
The facts established in the proceedings before the Integrated Bar of the Philippines ("IBP"), which we
adopt in tum, are as follows:
Complainant Aurora Aguilar-Dyquiangco ("Complainant") and Respondent Atty. Diana Lynn M. Arellano
("Respondent") first met in 2004 at the Don Mariano Marcos Memorial State University, College of Law
when the latter became Complainant's professor.3
Sometime in 2006, Complainant engaged Respondent's services for the purpose of filing a case for
collection of sum of money against a certain Delia Antigua ("Antigua"), advancing ₱l0,000.00 for filing
fees and ₱2,000.00 as part of the attorney's fees out of the agreed amount of ₱20,000.00.4 Three years
later, Complainant, upon inquiry with the Regional Trial Court ("RTC") of San Fernando, La Union,
discovered that Respondent failed to file her case against Antigua.5 Consequently, Complainant sent a
letter to Respondent terminating Respondent's services and demanding the return of the said money
and documents she entrusted to Respondent,6 who, in turn, refused to return Complainant's documents
alleging that she was enforcing her retainer's lien.7
During the existence of a lawyer-client relationship between them, Respondent frequently borrowed
money from Complainant and her husband, Antonio Dyquiangco ("Antonio"),8 for which Respondent
issued postdated checks in July 2008 ("checks issued in July 2008") as security.9 Complainant and
Antonio later stopped lending money to Respondent when they discovered that she was engaged in
"kiting", that is, using the newer loans to pay off the previous loans she had obtained.10
These accumulated loans totaled ₱360,8l8.20 as of September 2008, covered by ten (10) checks.11 Upon
presentment by Complainant, all of the said checks were dishonored due to insufficiency of funds and
closure of accounts. Hence, Complainant filed complaints for violation of Batas Pambansa Blg. 22 ("BP
Blg. 22") against Respondent.12 These cases are currently pending with the Municipal Trial Court in
Cities of San F emando, La Union, Branch 2.13
Sometime in June 2008, in a separate transaction from the previous loans, Respondent purchased
magnetic bracelets in the amount of ₱282,110.00 from Complainant's Good Faith Network Marketing
business in order to resell the same.14 In addition, since Complainant's business uses "networking" as a
marketing scheme, Respondent also bought an "up-line"15 slot in the amount of ₱126,160.00 to
maximize her earnings.16
Respondent then borrowed ₱360,000.00 from Complainant.17 A part of the loan proceeds were used by
Respondent to pay for the magnetic bracelets by issuing postdated checks for the purpose. Respondent
purchased seventy five (75) bracelets, which were kept at Complainant's business center, and withdrawn
by Respondent whenever she had buyers.18 However, Respondent's total withdrawals exceeded the
number of bracelets actually purchased from Complainant.19 Moreover, Respondent failed to pay the
price for the magnetic bracelets.20
Respondent similarly acquired from Complainant other products (i.e., soaps, slimming products, coffee,
etc.) for reselling in the amount of ₱15,770.00 which Respondent failed to pay up to this day.21
On June 24, 2008, Complainant and Respondent opened a joint checking account with East West Bank in
connection with their Good Faith Magnetic Bracelets business transactions, with an initial balance of
₱130,000.00.22 Respondent issued a check from this joint account in the amount of ₱126,160.00 to pay
for the "up-line" slot she purchased from Complainant.23 Subsequent deposits by Complainant were
used by Respondent when the latter issued checks in the amounts of ₱136,000.00 and ₱75,000.00.24
On June 17, 2009, Respondent obtained another loan from Complainant in the amount of ₱30,000.00,
which the Respondent used to pay off her obligation to Complainant's husband.25
Complainant and her husband sent a demand letter dated August 26, 200926 to Respondent for the
payment of the dishonored checks issued in July 2008. The Respondent's failure to pay despite demand
resulted in letter exchanges between the parties dated September 28, 200927 and October 7, 2009.28
The October 7, 2009 demand letter by Complainant was also sent to Respondent's mother, Florescita M.
ArellaNo. 29 This exchange of letters, which the Respondent believed to be libelous, led to the filing of
two (2) complaints for Libel against Complainant with the Office of the City Prosecutor of Manila and the
Office of the Provincial Prosecutor of La Union, both of which were eventually dismissed for lack of
probable cause.30
On May 27, 2011, based on the foregoing transactions and incidents between the parties, the
Complainant filed against the Respondent the instant administrative case for suspension and disbarment
with the Integrated Bar of the Philippines ("IBP"),31 listing seven causes of action based on the
Respondent's acts of:
1. Failing to file a collection case on behalf of the Complainant, for which the Respondent received
₱10,000.00 for filing fees ("First Cause of Action");
2. Obtaining several loans from the Complainant, which remain unpaid ("Second Cause of Action");
3. Taking out merchandise (i.e. magnetic bracelets) in excess of what she purchased from the
Complainant ("Third Cause of Action");
4. Acquiring other merchandise from the Complainant without paying for the same ("Fourth Cause of
Action");
5. Inducing the Complainant to open joint bank accounts, out of which the Respondent made several
withdrawals ("Fifth Cause of Action");
6. Obtaining a ₱30,000.00 loan that remains unpaid ("Sixth Cause of Action");
7. Filing libel cases against the Complainant based on incidents related the transactions that gave rise to
the second, third, fourth, fifth and sixth causes of action ("Seventh Cause of Action").1âwphi1
Proceedings with the IBP
The instant case was initially set for mandatory conference on March 23, 2012,32 but the same was reset
to June 29, 2012 upon motion of Respondent.33 After due proceedings, the mandatory conference was
terminated and both parties were required by the investigating commissioner, Commissioner Oliver A.
Cachapero, to file their respective position papers.34 Both parties filed their respective position papers
on July 26, 201235 and September 7, 2012.36
The Findings of the IBP
On September 28, 2012, Commissioner Cachapero rendered a Report and Recommendation37 finding
Respondent guilty of violation of Rules 16.04, 16.02, and 18.03 of the Code of Professional Responsibility
("CPR''). The dispositive portion reads:
Foregoing premises considered, the undersigned believes and so hold that the instant complaint is with
merit. Accordingly, he recommends that the Respondent be meted with the penalty of SUSPENSION for a
period of one (1) year.38
In a Resolution dated March 21, 2013, the IBP Board of Governors resolved to adopt and approve with
modification the Report and Recommendation of the Investigating Commissioner dated September 28,
2012 which states:
RESOLVED to ADOPT and APPROVE, as it is hereby unanimously ADOPTED and APPROVED, with
modification, the Report and Recommendation of the Investigating Commissioner in the above-entitled
case, herein made part of this Resolution as Annex "A", and finding the recommendation fully supported
by the evidence on record and the applicable laws and rules, and considering that Respondent violated
Canon 16, Rule 16.02 and Canon 18, Rule 18.03 of the Code of Professional Responsibility, Atty. Diana
Lynn M. Arellano is hereby SUSPENDED from the practice of law for five (5) years.39
Respondent filed a Motion for Reconsideration dated July 16, 2013,40 which was subsequently denied
through a Resolution dated March 21, 2014.41 In view of the penalty recommended by the IBP Board of
Governors, the case was referred to this Court En Banc.
The Court's Ruling
After a judicious examination of the records and submission of the parties, we find no cogent reason not
to adopt the factual findings of the Investigating Commissioner as approved by the IBP Board of
Governors. However, we reduce the penalty for the reasons to be discussed below.
First Cause of Action
Respondent violated Canon 18 when she failed to file the collection case in court. In this regard, Canon
18 of the CPR mandates, thus:
A lawyer shall serve his client with competence and diligence.
Rule 18.03 thereof emphasizes that:
A lawyer shall not neglect a legal matter entrusted to him, and his negligence in connection therewith
shall render him liable.
In Reyes v. Vi tan,42 this Court held that the failure of a lawyer to file a complaint with the court in behalf
of his client, despite receiving the necessary fees from the latter, is a violation of the said canon and rule:
The act of receiving money as acceptance fee for legal services in handling complainant's case and
subsequently failing to render such services is a clear violation of Canon 18 of the Code of Professional
Responsibility which provides that a lawyer shall serve his client with competence and diligence. More
specifically, Rule 18.03 states:
"Rule 18.03. A lawyer shall not neglect a legal matter entrusted to him, and his negligence in connection
therewith shall render him liable."
A member of the legal profession owes his client entire devotion to his genuine interest, warm zeal in
the maintenance and defense of his rights. An attorney is expected to exert his best efforts and ability to
preserve his client's cause, for the unwavering loyalty displayed to his client likewise serves the ends of
justice. Verily, the entrusted privilege to practice law carries with it the corresponding duties, not only to
the client, but also to the court, to the bar and to the public.43
Further, as this Court ruled in Parinas v. Paguinto,44it is of no moment that there is only partial payment
of the acceptance fee, to wit:
Rule 16.01 of the Code of Professional Responsibility ("the Code") provides that a lawyer shall account
for all money or property collected for or from the client. Acceptance of money from a client establishes
an attorney-client relationship and gives rise to the duty of fidelity to the client's cause. Money entrusted
to a lawyer for a specific purpose, such as for filing fee, but not used for failure to file the case must
immediately be returned to the client on demand. Paguinto returned the money only after Parinas filed
this administrative case for disbarment.45
In the case before us, it is undisputed that after Complainant paid the filing fees and also part of the
acceptance fees, Respondent did not bother to file any complaint before the court. Worse, Respondent
knew for a long time that she required additional documents from Complainant before filing the
complaint, yet Respondent did not appear to exert any effort to contact Complainant in order to obtain
the said documents and finally file the said case.46 In fact, in the occasions Respondent met with
Complainant in order to obtain a loan or discuss the magnetic bracelet business, Respondent never
brought up the needed documents for the case to Complainant. As correctly held by Commissioner
Cachapero, Respondent displayed a lack of zeal in handling the case of Complainant in neglecting to
remind the latter of the needed documents in order to file the complaint in court.47
Second, Third, Fourth, Fifth and Sixth Causes of Action
Respondent violated Canon 16 when she obtained loans from a client. Pertinently, Canon 16 of the CPR
states:
A lawyer shall hold in trust all moneys and properties of his client that may come into his possession.
Moreover, Rule 16.02 provides that:
A lawyer shall keep the funds of each client separate and apart from his own and those of others kept by
him.
Finally, Rule 16.04 thereof commands that:
A lawyer shall not borrow money from his client unless the client's interests are fully protected by the
nature of the case or by independent advice. Neither shall a lawyer lend money to a client except, when
in the interest of justice, he has to advance necessary expenses in a legal matter he is handling for the
client.
In the instant case, there is no dispute that Respondent obtained several loans from Complainant
beginning in 2008 or two (2) years after they established a lawyer-client relationship in 2006, and before
they terminated the same in 2009, in violation of Rule 16.04 of the CPR.48
We have previously emphasized that it is unethical for a lawyer to obtain loans from Complainant during
the existence of a lawyer-client relationship between them as we held in Paulina T Yu v. Atty. Berlin R.
Dela Cruz49:
This act alone shows respondent lawyer's blatant disregard of Rule 16.04. Complainant's acquiescence to
the "pawning" of her jewelry becomes immaterial considering that the CPR is clear in that lawyers are
proscribed from borrowing money or property from clients, unless the latter's interests are fully
protected by the nature of the case or by independent advice. Here, respondent lawyer's act of
borrowing does not constitute an exception. Respondent lawyer used his client's jewelry in order to
obtain, and then appropriate for himself, the proceeds from the pledge. In so doing, he had abused the
trust and confidence reposed upon him by his client. That he might have intended to subsequently pay
his client the value of the jewelry is inconsequential. What deserves detestation was the very act of his
exercising influence and persuasion over his client in order to gain undue benefits from the latter's
property. The Court has repeatedly emphasized that the relationship between a lawyer and his client is
one imbued with trust and confidence. And as true as any natural tendency goes, this "trust and
confidence" is prone to abuse. The rule against borrowing of money by a lawyer from his client is
intended to prevent the lawyer from taking advantage of his influence over his client. The rule presumes
that the client is disadvantaged by the lawyer's ability to use all the legal maneuverings to renege on his
obligation. Suffice it to say, the borrowing of money or property from a client outside the limits laid
down in the CPR is an unethical act that warrants sanction.
xxxx
Given the circumstances, the Court does not harbor any doubt in favor of respondent lawyer. Obviously,
his unfulfilled promise to facilitate the redemption of the jewelry and his act of issuing a worthless check
constitute grave violations of the CPR and the lawyer's oath. These shortcomings on his part have
seriously breached the highly fiduciary relationship between lawyers and clients. Specifically, his act of
issuing worthless checks patently violated Rule 1.01 of Canon 1 of the CPR which requires that "[a]
lawyer shall not engage in unlawful, dishonest, immoral or deceitful conduct." This indicates a lawyer's
unfitness for the trust and confidence reposed on him, shows such lack of personal honesty and good
moral character as to render him unworthy of public confidence, and constitutes a ground for
disciplinary action, and thus seriously and irreparably tarnishes the image of the profession. Such
conduct, while already off-putting when attributed to an ordinary person, is much more abhorrent when
exhibited by a member of the Bar. In this case, respondent lawyer turned his back from the promise that
he once made upon admission to the Bar. As "vanguards of the law and the legal system, lawyers must at
all times conduct themselves, especially in their dealings with their clients and the public at large, with
honesty and integrity in a manner beyond reproach."50
Respondent even exacerbated her infractions when she issued worthless checks to pay for her debts,51
the existence of which was admitted by Respondent. Both the Yu case quoted above and the case of
Wong v. Moya II52citing Lao v. Medel53are in point:
Canon 1 of the Code of Professional Responsibility mandates all members of the Bar to obey the laws of
the land and promote respect for law. Rule 1.01 of the Code specifically provides that "[a] lawyer shall
not engage in unlawful, dishonest, immoral or deceitful conduct." In Co v. Bernardino, [A.C. No. 3919,
January 28, 1998, 285 SCRA 102] the Court considered the issuance of worthless checks as violation of
this Rule and an act constituting gross misconduct.
Moreover, in Cuizon v. Macalino, we also ruled that the issuance of checks which were later dishonored
for having been drawn against a closed account indicates a lawyer's unfitness for the trust and
confidence reposed on him, shows such lack of personal honesty and good moral character as to render
him unworthy of public confidence, and constitutes a ground for disciplinary action. Similarly, Sanchez v.
Somoso held that the persistent refusal to settle due obligations despite demand manifests a lawyer's
low regard to his commitment to the oath he has taken when he joined his peers, seriously and
irreparably tarnishing the image of the profession he should, instead, hold in high esteem. This conduct
deserves nothing less than a severe disciplinary action.
Clearly, therefore, the act of a lawyer in issuing a check without sufficient funds to cover the same
constitutes such willful dishonesty and immoral conduct as to undermine the public confidence in the
legal profession. He cannot justify his act of issuing worthless checks by his dire financial condition.
Respondent should not have contracted debts which are beyond his financial capacity to pay. If he
suffered a reversal of fortune, he should have explained with particularity the circumstances which
caused his failure to meet his obligations. His generalized and unsubstantiated allegations as to why he
reneged in the payment of his debts promptly despite repeated demands and sufficient time afforded
him cannot withstand scrutiny.54
Regarding the issue of commingling of funds, the Court ruled in the case of Velez v. De Vera,55 citing
Espiritu v. Ulep,56that using a client's funds for the lawyer's personal use and depositing the same in his
personal account is prohibited, to wit:
[A] lawyer's failure to return upon demand the funds or property held by him on behalf of his client gives
rise to the presumption that he has appropriated the same for his own use to the prejudice of, and in
violation of the trust reposed in him by, his client. It is a gross violation of general morality as well as of
professional ethics; it impairs the public confidence in the legal profession and deserves punishment.
Lawyers who misappropriate the funds entrusted to them are in gross violation of professional ethics
and are guilty of betrayal of public confidence in the legal profession. Those who are guilty of such
infraction may be disbarred or suspended indefinitely from the practice of law. (Emphases supplied.)
xxxx
In the instant case, the act of Atty. de Vera in holding on to his client's money without the latter's
acquiescence is conduct indicative of lack of integrity and propriety.1âwphi1 It is clear that Atty. de Vera,
by depositing the check in his own account and using the same for his own benefit is guilty of deceit,
malpractice, gross misconduct and unethical behavior. He caused dishonor, not only to himself but to the
noble profession to which he belongs. For, it cannot be denied that the respect of litigants to the
profession is inexorably diminished whenever a member of the profession betrays their trust and
confidence. Respondent violated his oath to conduct himself with all good fidelity to his client.58
Further, in Barcenas v. Alvero,59 the Court held that the failure of a lawyer to render an account of any
money received from a client and deliver the same to such client when due or upon demand, is a breach
of the said rule; and, that a lawyer is liable for gross misconduct for his failure to return or repay money
due to another person upon demand, even in the absence of an attorney-client relationship between
them.
In this case, Respondent admitted that she commingled her money and those of the Complainant for the
bracelet business by opening an East West Bank joint account for the said purpose.60 To be sure,
Commissioner Cachapero noted that Respondent has not shown that she had made any effort to
separate her funds from Complainant's money and properly account for the same, including any
withdrawals Respondent made therefrom.61
Seventh Cause of Action
The Court notes, in addition, that the Investigating Commissioner failed to consider Respondent's act of
filing two (2) baseless complaints for libel against Complainant in two (2) different venues (Manila62 and
San Fernando City, La Union63) for the same alleged act. The fact that the handling prosecutors in both
cases are in agreement that there was nothing in the demand letter subject of the said cases that could
be considered libelous,64 and that the City Prosecutor of Manila made mention of the aforementioned
criminal complaint filed with, and previously dismissed by, the Provincial Prosecutor of La Union,65 make
the aforementioned filing of criminal complaints by Respondent a clear violation of the Lawyer's Oath -
which states that a lawyer shall "not wittingly or willingly promote or sue any groundless, false or
unlawful suit, nor give aid or consent to the same."67 This is enunciated by this Court in Vaflor-Fabroa v.
Paguinto:68
When respondent caused the filing of baseless criminal complaints against complainant, he violated the
Lawyer's Oath that a lawyer shall "not wittingly or willingly promote or sue any groundless, false or
unlawful suit, nor give aid or consent to the same."
The filing of baseless criminal complaints, even merely threatening to do so, also violates Canon 19 and
Rule 19.01 of the CPR, as explained in Pena v. Aparicio,69 thus:
Canon 19 of the Code of Professional Responsibility states that "a lawyer shall represent his client with
zeal within the bounds of the law," reminding legal practitioners that a lawyer's duty is not to his client
but to the administration of justice; to that end, his client's success is wholly subordinate; and his
conduct ought to and must always be scrupulously observant of law and ethics. In particular, Rule 19.01
commands that a "lawyer shall employ only fair and honest means to attain the lawful objectives of his
client and shall not present, participate in presenting or threaten to present unfounded criminal charges
to obtain an improper advantage in any case or proceeding." Under this Rule, a lawyer should not file or
threaten to file any unfounded or baseless criminal case or cases against the adversaries of his client
designed to secure a leverage to compel the adversaries to yield or withdraw their own cases against the
lawyer's client.70
As to the imposable penalty, and after due consideration of the totality of the circumstances attendant
to this case, the nature of the offenses committed, we find the recommended penalty of the IBP to be
too harsh, especially in light of the fact that this is Respondent's first administrative case.71
In Parinas v. Paguinto,72 cited above, this Court suspended Atty. Paguinto from the practice of law for six
(6) months for failing to file the complaint on behalf of his client despite having been paid a part of his
acceptance fee.
In Orbe v. Adaza,71this Court suspended Atty. Adaza for one (1) year for issuing two (2) worthless checks,
in spite of the pendency of the BP Blg. 22 cases filed against him.
In Velez v. De Vera,72 a two (2)-year suspension was given to Atty. de Vera for using his client's funds for
his personal use and depositing the same in his personal account.
Finally, in Olivares v. Villalon, Jr.,73the Court would have imposed a penalty of six (6) months suspension
against the late Atty. Villalon had he not died prior to the resolution of the said case for violating the rule
on forum-shopping by filing a second complaint for the same cause of action, despite the finality of the
decision in the first case.
In view of the foregoing jurisprudence, and taking into consideration that this is Respondent's first
administrative case, and that she fully participated in the proceedings before the IBP, we deem it more
appropriate to reduce the period of suspension from five (5) years, as recommended, to only three (3)
years.
One final note: It also bears mentioning that there is nothing in the records to show that the ₱l0,000.00
filing fee advanced by the Complainant has been returned to her by Respondent after failing to file the
said complaint against Antigua. This Court has, in numerous administrative cases, ordered lawyers to
return any acceptance, filing, or other legal fees advanced to them by their clients.74 Hence, the return
of the said amount to Complainant is proper. Furthermore, the ₱2,000.00 Respondent received as
attorney's fees should likewise be returned.
As we conclude, we remind lawyers that it is not only important to serve their clients with utmost zeal
and competence. It is also an equally important responsibility for them to properly separate and account
for any money given to them by their clients, and to resist the temptation to borrow money from their
clients, in order to preserve the trust and confidence reposed upon lawyers by every person requiring
their legal advice and services.
WHEREFORE, we find Respondent Atty. Diana Lynn M. Arellano GUILTY of Violation of Rules 16.02, 16.04,
and 18.03 of the Code of Professional Responsibility, and the Lawyer's Oath. We SUSPEND Respondent
from the practice of law for a period of THREE (3) YEARS. We also ORDER Respondent to return to Aurora
Aguilar-Dyquiangco the full amount of TWELVE THOUSAND PESOS (₱12,000.00) within 30 days from
notice hereof and DIRECT her to submit to this Court proof of such payment. We STERNLY WARN
Respondent that a repetition of the same or similar act will be dealt with more severely.
We also DIRECT Respondent to inform this Court of the date of her receipt of this Decision to determine
the reckoning point of the effectivity of her suspension.
Let a copy of this Decision be made part of Respondent's records in the Office of the Bar Confidant, and
copies be furnished the Integrated Bar of the Philippines and the Office of the Court Administrator for
circulation to all courts.
SO ORDERED.
