Facts:

Cecilia A. Agno filed a disbarment complaint against Atty. Marciano J. Cagatan on July 14, 2008, claiming violations of the Code of Professional Responsibility. Cagatan was the President of International Services Recruitment Corporation (ISRC), a company engaged in recruiting Filipino workers for overseas employment. On July 12, 1988, the Department of Labor and Employment (DOLE) cancelled ISRC's recruitment license due to violations of labor laws. Cagatan appealed this cancellation, and on March 30, 1993, the Office of the President issued a resolution favoring ISRC's license renewal, which required the payment of a guarantee bond.

While the appeal was pending, on August 9, 1992, Cagatan entered into a Memorandum of Agreement with Mr. Khalifa H. Juma, Agno's husband. The agreement outlined joint ownership of ISRC, with contributions from Khalifa intended to reinstate the company's license. However, Agno later discovered Cagatan had not complied with the agreeme

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Facts:

Background of the Parties and ISRC

• Cecilia A. Agno, a party-in-interest, filed the disbarment complaint against Atty. Marciano J. Cagatan.
• Respondent Atty. Marciano J. Cagatan served as President of International Servicing and Recruitment Corporation (ISRC), a firm engaged in the recruitment of Filipino workers for overseas employment.

Regulatory and Licensing Developments

• On July 12, 1988, the Department of Labor and Employment (DOLE) cancelled ISRC’s recruitment license for violations of labor law provisions.
• ISRC was subsequently banned from overseas recruitment on August 9, 1988.
• On September 19, 1988, respondent appealed DOLE’s cancellation decision with the Office of the President.
• The Office of the President resolved the appeal in respondent’s favor on March 30, 1993, setting aside the cancellation order and directing the renewal of the recruitment license, subject to the payment of a guarantee bond at double the legally required amount.
• ISRC’s original recruitment license had already expired on September 17, 1989, prompting an application for renewal on April 12, 1994, with the Philippine Overseas Employment Agency (POEA).

Execution of the Memorandum of Agreement (MOA)

• On August 9, 1992, during the pendency of the appeal, respondent entered into a Memorandum of Agreement with Mr. Khalifa H. Juma—a United Arab Emirates national and the husband of the complainant.
• The MOA provided for:
• Joint 50-50 ownership of ISRC between respondent and Mr. Khalifa.
• The sharing of profits on an equal basis after deduction of expenses.
• The appointment of officers and the inclusion of the complainant as treasurer.
• The contribution of an initial sum of P250,000.00 for the reinstatement of ISRC’s license and an additional P250,000.00 as working capital and for liquidating pending obligations, totaling P500,000.00.
• Notably, the MOA did not mention any assignment of shares to the complainant or her husband.

Developments Leading to the Disbarment Complaint

• On December 26, 1995—more than three years after the execution of the MOA—the complainant filed a Complaint-Affidavit for disbarment against respondent.
• The allegations included:
• The use of fraud, deceit, and misrepresentation by respondent in persuading Mr. Khalifa to invest P500,000.00 in ISRC.
• Misappropriation of the funds meant for reinstating the license and starting business operations.
• Unauthorized issuance of a bank check dated March 30, 1994 for P500,000.00, which was later dishonored for being drawn on a closed account.
• Failure to update the Securities and Exchange Commission (SEC) and POEA with the correct composition of ISRC’s Board of Directors, officers, and stockholders.

Administrative and Disciplinary Proceedings

• The case was referred by the Supreme Court to the Integrated Bar of the Philippines (IBP) and its Commission on Bar Discipline (CBD) for investigation.
• Multiple hearings were held, with the last before the CBD occurring on November 13, 2003.
• On October 12, 2004, Commissioner San Juan issued a Report and Recommendation calling for the suspension of respondent and restitution of the invested amount.
• The IBP Board of Governors, on October 22, 2005, adopted a modified version of the recommended sanctions.
• Subsequent motions for reconsideration and reinvestigation were filed by respondent, but the case ultimately proceeded based on the pleadings and evidence presented.

Issue of Complainant’s Standing

• Respondent argued that the complainant lacked legal standing to file the complaint, as she was not a party to the original MOA.
• The Court, relying on Section 1, Rule 139-B of the Rules of Court and precedent from Navarro v. Meneses III and Ilusorio-Bildner v. Lokin, rejected this argument by noting that disbarment proceedings are a matter of public interest and not limited to private grievances.

Issue:

Did the respondent employ fraud, deceit, or misrepresentation by failing to disclose the true condition of ISRC and misusing the funds meant for reinstatement of its recruitment license?

• Whether the funds, which were to be used for reinstatement and operational purposes, were misappropriated.
• Is the issuance of a dishonored check—drawn on a closed account—demonstrative of gross misconduct by the respondent?
• Does the unauthorized execution of the Deed of Assignment, which was not stipulated in the MOA, indicate an act of deceit?
• Does the complainant have legal standing to institute disciplinary proceedings against the respondent under Section 1, Rule 139-B of the Rules of Court?
• What is the appropriate penalty to impose on the respondent considering his misconduct and the corresponding evidence?

Ruling:

• (Subscriber-Only)

Ratio:

• (Subscriber-Only)

Doctrine:

• (Subscriber-Only)