Facts:

The case in question is between complainant Aurora Aguilar-Dyquiangco and respondent Atty. Diana Lynn M. Arellano. Their professional relationship began in 2004 when Atty. Arellano was a professor at the Don Mariano Marcos Memorial State University, College of Law. In 2006, the complainant hired the respondent to file a collection case against Delia Antigua, advancing PHP 10,000 for filing fees and PHP 2,000 as part of an agreed PHP 20,000 attorney's fee. After three years, Aguilar-Dyquiangco inquired with the Regional Trial Court (RTC) of San Fernando, La Union, only to find out that Atty. Arellano never filed the case. Subsequently, Aguilar-Dyquiangco sent a letter terminating Arellano’s services and demanding the return of the fees and documents, but the respondent refused, citing a retainer's lien.

During their lawyer-client relationship, Atty. Arellano repeatedly borrowed money from the complainant and her husband, Antonio Dyquiangco, allegedly for various personal

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Facts:

Initial Relationship and Engagement

• Complainant Aurora Aguilar-Dyquiangco and Respondent Atty. Diana Lynn M. Arellano first met in 2004 at the Don Mariano Marcos Memorial State University, College of Law when Arellano was Complainant’s professor.
• In 2006, Complainant engaged Respondent’s services to file a collection case against Delia Antigua, advancing P10,000.00 for filing fees and P2,000.00 as part of the agreed P20,000.00 attorney’s fee.

Non-filing of Case and Termination of Contract

• Three years later, Complainant discovered on inquiry at the Regional Trial Court of San Fernando, La Union, that Respondent failed to file the collection case.
• Consequently, Complainant sent a letter terminating the lawyer-client relationship and demanded the return of her documents and monies, which Respondent refused by alleging the enforcement of her retainer’s lien.

Loans and Borrowings from the Client

• During the existence of the relationship, Respondent frequently borrowed money from Complainant and her husband, Antonio Dyquiangco, issuing postdated checks in July 2008 as security.
• Complainant and her husband later discovered Respondent’s “kiting” practice—using funds from new loans to pay off previous borrowings—which led to the accumulation of loans totaling P360,818.20 (as of September 2008) covered by ten checks.
• Upon presentment, all checks were dishonored due to insufficient funds and account closures, prompting Complainant to file complaints under BP Blg. 22.

Transactions Involving Merchandise and the Magnetic Bracelet Business

• In June 2008, Respondent purchased magnetic bracelets valued at P282,110.00 from Complainant’s Good Faith Network Marketing business with the intention to resell them.
• Additionally, Respondent bought an “up-line” slot for P126,160.00 to maximize earnings, subsequently borrowing P360,000.00 from Complainant.
• A portion of these loan proceeds was used to pay for the bracelets by issuing postdated checks, but Respondent withdrew more than the number of bracelets purchased and failed to settle the corresponding accounts.
• Respondent similarly acquired other merchandise (soaps, slimming products, coffee, etc.) amounting to P5,770.00, which remains unpaid.

Joint Bank Account Transactions

• On June 24, 2008, Complainant and Respondent opened a joint checking account with East West Bank for their business transactions, starting with an initial balance of P130,000.00.
• Respondent issued a check from this account for the “up-line” slot and made further withdrawals (P136,000.00 and P75,000.00) from subsequent deposits.
• On June 17, 2009, Respondent obtained an additional loan of P30,000.00, part of which was used to settle obligations with Complainant’s husband.

Demands, Disputes, and Subsequent Libel Complaints

• Complainant and her husband sent a demand letter dated August 26, 2009, addressing the dishonored July 2008 checks, followed by exchanges of letters on September 28, 2009, and October 7, 2009.
• The October 7, 2009, letter, also sent to Respondent’s mother, prompted Respondent to file two baseless libel complaints (in Manila and San Fernando, La Union), which were later dismissed for lack of probable cause.

Filing of the Administrative Case

• On May 27, 2011, Complainant filed an administrative case for suspension and disbarment with the Integrated Bar of the Philippines (IBP).
• The complaint enumerated seven causes of action, which included:
• Failing to file the collection case (despite receiving filing fee and part of the acceptance fee).
• Obtaining loans from Complainant that remain unpaid.
• Withdrawing more merchandise than purchased.
• Acquiring additional merchandise without settling payments.
• Misusing the joint bank account for unauthorized withdrawals.
• Obtaining a subsequent loan (P30,000.00) that remains unpaid.
• Filing libel cases against Complainant regarding these transactions.

IBP Proceedings and Findings

• The case underwent a mandatory conference (initially set for March 23, 2012, then reset to June 29, 2012) and required filing of position papers from both parties.
• On September 28, 2012, Commissioner Oliver A. Cachapero rendered a Report and Recommendation finding Respondent guilty of violating Rules 16.04, 16.02, and 18.03 of the Code of Professional Responsibility, and recommended a suspension of one (1) year.
• The IBP Board of Governors, in its Resolution dated March 21, 2013, adopted the report with modifications, imposing a suspension of five (5) years.

Motion for Reconsideration and Court Referral

• Respondent’s Motion for Reconsideration (filed July 16, 2013) was denied on March 21, 2014.
• The case was then referred to the Court En Banc for review and final sanction determination.

Court’s Examination and Final Determination

• The Court En Banc adopted the factual findings of the IBP commission with no cogent reason to deviate from the established facts.
• The Court considered the totality of the circumstances and prior case precedents in reducing the penalty from five (5) years to three (3) years.
• Additionally, the Court ordered the return of P12,000.00 to the Complainant (covering the filing fee and part of the attorney’s fee) within 30 days from notice.

Issue:

• Whether Respondent violated her professional duty by failing to file the collection case after receiving the filing fee and part of the acceptance fee.
• Whether the frequent borrowing from Complainant (and her husband) and the subsequent issuance of postdated checks constituted a violation of the ethical obligations under the Code of Professional Responsibility, particularly regarding loan transactions from a client.
• Whether Respondent’s handling of the magnetic bracelet business—including excessive withdrawals, failure to pay for the purchased merchandise, and misuse of the joint bank account—transgressed professional financial management rules.
• Whether the issuance of dishonored checks, indicative of “kiting” and improper financial conduct, demonstrates a lack of requisite integrity and trustworthiness expected of lawyers.
• Whether Respondent’s filing of baseless libel complaints against Complainant (in multiple venues) was a violation of the Lawyer’s Oath and the ethical mandate to avoid groundless legal actions.
• What is the appropriate disciplinary sanction for the aggregate of these ethical and professional violations, taking into account prior judicial precedents and the fact that this is Respondent’s first administrative case.

Ruling:

• (Subscriber-Only)

Ratio:

• (Subscriber-Only)

Doctrine:

• (Subscriber-Only)