G.R. No. L-29130 - Development Bank of the Philippines vs. Mirang

Respondent Atty. Marciano J. Cagatan was President of International Services Recruitment Corporation (ISRC), a recruiter of Filipino workers abroad.
On July 12, 1988, the Department of Labor and Employment (DOLE) cancelled ISRC’s license for labor-law violations; on August 9, 1988, ISRC was permanently barred from overseas recruitment.

On September 19, 1988, respondent appealed to the Office of the President; by Resolution dated March 30, 1993, the cancellation was set aside, directing DOLE and POEA to renew ISRC’s license upon posting a guarantee bond double the statutory amount.
ISRC’s license had expired September 17, 1989; on April 12, 1994, respondent applied for renewal with the POEA under the reinstatement resolution’s conditions.

On August 9, 1992, respondent and U.A.E. national Joma Humed Khalifa (complainant Cecilia Agno’s husband) executed an MOA:

50–50 joint ownership of ISRC; profit sharing after expenses; management by Khalifa’s group; legal liaison by respondent; officers to be registered with SEC (Chairman – Khalifa; President/GM – respondent; Treasurer – Cecilia Agno).
Khalifa undertook to pay P250,000 “initially on or before August 25, 1992” to reinstate ISRC’s license and another P250,000 upon release for operations and liquidation of obligations.

The MOA stipulated monthly accounting with a qualified accountant; advances and profit releases by agreement; preexisting claims were respondent’s sole responsibility.

On December 26, 1995, Cecilia Agno filed a verified complaint for disbarment, alleging respondent induced her husband to invest P500,000 under false pretenses, failed to comply with MOA terms (no license reinstatement, no SEC filings), and issued a dishonored check of P500,000 dated March 30, 1994.
Respondent’s Comment claimed the P500,000 was payment for his personal shares via a Deed of Assignment (April 26, 1993) and that the check was a non‐encashment guarantee pending appeal outcome. He submitted POEA correspondence and a letter requesting renewal.
The Integrated Bar of the Philippines (IBP) Commission on Bar Discipline (CBD) held hearings (last on November 13, 2003); Commissioner San Juan recommended suspension and restitution. The IBP Board approved suspension for two years and restitution of P500,000 (Res. XVII-2005-102). Respondent’s motions for reconsideration and reinvestigation were denied. The IBP transmitted the case to the Supreme Court.

Whether complainant, not being a direct party to the stock‐purchase agreement, has personality under Rule 139-B to file a disbarment complaint.

Whether respondent committed fraud, deceit, or misrepresentation by inducing the investment under the MOA without intent or capacity to comply.
Whether issuing a dishonored check of P500,000 constitutes gross misconduct.