Case Summary (A.C. No. 4515)
Key Dates
• July 12, 1988 – DOLE cancels ISRC’s recruitment license.
• August 9, 1988 – POEA bans ISRC from overseas recruitment.
• September 19, 1988 – Respondent appeals cancellation with the Office of the President.
• March 30, 1993 – Office of the President rescinds cancellation, directs license renewal.
• August 9, 1992 – Memorandum of Agreement (MOA) executed between respondent and Khalifa.
• March 30, 1994 – Respondent issues a P500,000 check to Agno, later dishonored.
• December 26, 1995 – Disbarment complaint filed by Agno.
• October 22, 2005 – IBP Board adopts suspension and restitution recommendation.
• July 14, 2008 – Supreme Court decision.
Applicable Law
• 1987 Philippine Constitution (decision post-1990).
• Code of Professional Responsibility (Canons 1, 7; Rules 1.01, 7.03).
• Rule 139-B of the Rules of Court (disciplinary proceedings).
Procedural History
Agno filed a verified complaint for disbarment against Cagatan, alleging fraud, deceit and misrepresentation in inducing her husband to invest P500,000 in ISRC, and issuance of a dishonored check. The Supreme Court referred the matter to the IBP Commission on Bar Discipline (CBD). After hearings and written submissions, the CBD Commissioner recommended suspension and restitution. The IBP Board of Governors adopted the recommendation, suspending respondent for two years and ordering return of P500,000. The respondent’s motions for reconsideration and reinvestigation were denied, and the case was returned to the Supreme Court for final disposition.
Stand of the Parties
Agno alleged that under the MOA, P500,000 was to be used to reinstate ISRC’s license and start operations. Respondent countered that the funds were payment for his shares, evidenced by a Deed of Assignment, and that the check served only as a conditional guarantee. He denied misrepresentation, attributing Agno’s dissatisfaction to her own bad faith.
IBP Investigation and Findings
The CBD found that the MOA clearly stipulated the use of P500,000 for corporate purposes, not share purchase. The Deed of Assignment, absent in the MOA, bore signs of a dubious date and appeared executed only after Agno’s inquiries into ISRC’s status. The respondent failed to disclose key requirements for license reinstatement, including pending POEA cases. The dishonored check confirmed lack of intent to refund. The Commissioner concluded that respondent lacked candor and recommended maximum suspension and restitution.
Jurisdiction and Standing
The Court affirmed Agno’s standing under Rule 139-B, Section 1, which permits any person to initiate disciplinary proceedings. Disbarment actions serve public interest and do not require a personal injury or client status.
Fraud, Deceit, and Misrepresentation
The Court held that respondent violated professional duties by:
- Representing joint ownership and management rights in ISRC while lacking Board approval.
- Failing to use Agno’s P500,000 for license reinstatement and business startup as agreed.
- Concealing the full requirements and hurdles for license renewal.
His inconsistent explanations and belated defenses underscored intentional misrepresentation.
Gross Misconduct in Issuing a Worthless Check
By issuing a P500,000 check drawn on a closed account, respondent exhibited gross misconduct. The check, issued on
Case Syllabus (A.C. No. 4515)
Facts of the Case
- Atty. Marciano J. Cagatan was President of International Services Recruitment Corporation (ISRC), whose DOLE recruitment license was canceled on July 12, 1988 and permanently banned on August 9, 1988 for labor law violations.
- On September 19, 1988, Cagatan appealed to the Office of the President; by Resolution of March 30, 1993, the cancellation was set aside and both DOLE and POEA were directed to renew ISRC’s license upon posting a guarantee bond twice the statutory amount.
- ISRC’s license had expired on September 17, 1989; respondent filed for renewal on April 12, 1994 with the POEA pending compliance with the presidential Resolution.
- On August 9, 1992, while the appeal was pending, respondent and U.A.E. national Joma Humed Khalifa (complainant’s husband) signed a Memorandum of Agreement (MOA) for equal (50-50) ownership and profit-sharing of ISRC, appointing Khalifa Chairman, Cagatan President, and Agno Treasurer.
- The MOA stipulated that Khalifa would pay ₱250,000 for license reinstatement and ₱250,000 for startup operations; the parties agreed on monthly accounting and indemnification against prior claims.
- Despite the MOA, SEC records showed no change in ISRC’s officers or stockholders; POEA records confirmed the license was still not reinstated.
- On December 26, 1995, complainant filed a disbarment Complaint-Affidavit alleging respondent induced her husband’s ₱500,000 investment by fraud and later issued a worthless check (dated March 30, 1994) for that amount.
- Criminal charges for violation of Batas Pambansa Blg. 22 were filed against respondent; he failed to appear for arraignment and a warrant was issued.
- Respondent’s Comment denied fraud, claiming the ₱500,000 was payment for his shares evidenced by an April 26, 1993 Deed of Assignment, and that the check was a guarantee, not meant to be