A.C. No. 8380 - Arellano University, Inc. vs. Mijares III

Case Summary (A.C. No. 8380)

Factual Background

The University engaged the services of the respondent sometime in January 2004 for securing a certificate of title covering a dried up portion of the Estero de San Miguel which the University had been occupying. The property involved was the subject of a Deed of Exchange dated October 1, 1958 between the City of Manila and the University.

In its complaint, the University alleged that it provided the respondent with all documents needed for his work. The respondent later requested, and the University gave, PHP 500,000.00 in addition to attorney’s fees, purportedly as expenses for “facilitation and processing.” The respondent promised to refund the amount if he failed to accomplish the intended work.

On July 5, 2004, the respondent informed the University that he completed Phase I by obtaining approval from the Metro Manila Development Authority (MMDA) and that the documents had been sent to the Department of Environment and Natural Resources (DENR). The University requested copies of the MMDA approval, but the respondent failed to comply without justification despite repeated demands. As time passed, the respondent became unavailable, leading the University to withdraw the cases entrusted to him and demand the return of the PHP 500,000.00.

On November 23, 2005, the University sent a registered letter formally terminating the respondent’s services and demanding the return of the PHP 500,000.00. The letter could not be served because the respondent had changed his office address without informing the University. The University later found his new address and served the letter on January 2, 2006. The respondent personally received it but still did not return the money.

IBP Investigation and Respondent’s Nonappearance

In his answer, the respondent did not deny that he received the PHP 500,000.00; instead, he offered an alternative narrative. He alleged that he and the University agreed on steps for the titling process and on paying “facilitation costs,” including a survey plan approval from the DENR-NCR with a facilitation cost of PHP 500,000.00, a favorable MMDA endorsement with another PHP 500,000.00, and titling by the Land Registration Authority with yet another PHP 500,000.00. He further alleged that he was told to secure MMDA endorsement and that the appropriate person to deal with was Undersecretary Cesar Lacuna.

According to the respondent, he met Lacuna through a common friend. He claimed that Lacuna requested or would receive something for recommending approval, and that the respondent gave the PHP 500,000.00 to Lacuna on Lacuna’s instruction. The respondent later asserted that Lacuna told him about a prior identical application filed by the University on March 15, 2002, which had been denied. The respondent claimed the University had deliberately withheld that fact from him. He stated that Lacuna endorsed the earlier application to the Mayor of Manila on July 23, 2003, but the Mayor did not act. The respondent claimed that he and Lacuna attempted to bypass the Mayor’s intervention but could not arrive at a concrete plan.

Notably, the IBP designated Atty. Dennis B. Funa as Commissioner to conduct a formal investigation. Despite numerous settings, the respondent failed to appear and failed to adduce evidence in his defense. As a result, the investigation proceeded without testimonial or documentary substantiation from the respondent during the formal hearing.

The Commissioner’s Report and Recommendation, and the IBP Board Resolution

On October 17, 2008, Commissioner Funa submitted his Report and Recommendation. The report concluded that the University did not authorize the respondent to give PHP 500,000.00 to then MMDA Deputy Chairman Cesar Lacuna, that the respondent failed to account for and failed to return the money despite repeated demands, and that the respondent admitted under oath having bribed a government official.

Commissioner Funa recommended that the respondent be found guilty of violating Rules 1.01 and 1.02, Canon 15, Rule 15.05, Canon 16, Rules 16.01 and 16.03, and Canon 18, Rule 18.04 of the Code of Professional Responsibility, with the penalty of disbarment. He further recommended that the respondent be ordered to return the PHP 500,000.00 and all pertinent documents to the University. Finally, he recommended that the respondent’s sworn statement used in his answer be endorsed to the Office of the Ombudsman for whatever action it deemed proper with respect to his alleged shady dealing with Deputy Chairman Lacuna.

The IBP Board of Governors passed Resolution XVIII-2008-631 on December 11, 2008, adopting and approving the Commissioner’s recommendations but modifying the penalty from disbarment to indefinite suspension from the practice of law. It also ordered the respondent to return the PHP 500,000.00 and all pertinent documents within six months from receipt of the Court’s decision.

Issue Presented

The Court framed the only question for determination as whether the respondent was guilty of misappropriating the PHP 500,000.00 entrusted to him by his client, the University, for use in facilitating and processing the property titling that the University claimed.

The Parties’ Positions

The University maintained that it entrusted the respondent with PHP 500,000.00 for “facilitation and processing,” that the respondent undertook to return the money if he failed to obtain the intended result, and that he did not return the money despite repeated demands. It asserted that the respondent falsely claimed to have obtained MMDA approval and then became unresponsive, leaving the University to withdraw the matter and pursue recovery.

In his answer, the respondent did not offer a credible defense tied to documentary proof or live testimony. He asserted a narrative that the University authorized or consented to the payment for endorsements and approvals, and that the later difficulties were attributable to facts allegedly withheld by the University about a prior application. Yet the respondent did not appear before the Commissioner and did not present evidence to substantiate these defenses during the investigation.

Legal Basis and Reasoning

The Court anchored its analysis on Section 27, Rule 138 of the Revised Rules of Court, which authorizes disbarment or suspension for specific misconduct, including deceit, malpractice, gross misconduct, grossly immoral conduct, conviction of a crime involving moral turpitude, violation of the lawyer’s oath, willful disobedience of a lawful court order, and unauthorized practice. It emphasized that every lawyer bears the responsibility to protect and advance the interests of a client, which includes promptly accounting for money or property entrusted by the client. As a trustee, the lawyer must keep such funds separate from personal interests and ensure they are used for their intended purpose. Where the funds are not used, the lawyer must return them immediately upon demand. The Court held that failure to return entrusted client money upon demand permits a presumption of misappropriation in violation of the trust reposed in the lawyer.

The Court further reiterated that a lawyer’s conversion of client funds entrusted to him constitutes a gross violation of professional ethics.

On the evidentiary posture, the Court stressed that the respondent chose not to be heard on his evidence. Consequently, the Court could consider only the University’s evidence, which established that the respondent received PHP 500,000.00 for facilitation and processing; promised to return the money if he failed; falsely claimed to have obtained MMDA approval; and refused to return the money despite repeated demands. The Court held that, unopposed and unrebutted during the investigation, this evidence supported the findings of guilt by the Investigating Commissioner and adopted by the IBP Board.

Even if the Court considered the respondent’s assertions in his answer, the Court found the defense lacking in merit. The respondent claimed that he gave the PHP 500,000.00 to Undersecretary Lacuna with the University’s conformity for a favorable MMDA endorsement to the Mayor of Manila. The Court noted that, on the respondent’s own account, Lacuna later allegedly stated that he could not provide the endorsement because MMDA had already provided such endorsement for the University’s earlier application and the Mayor of Manila had not acted. The Court held that the respondent’s narrative offered no sufficient explanation for why he did not confront the University to show that the client’s basis for complaint had no factual moorings. Instead, the respondent kept silent. The Court emphasized that the respondent did not deny that the University searched for him after he failed to return the money, and he took no action to compel Lacuna to return the money entrusted to him. The Court also treated the respondent’s failure to appear and testify at the investigation as a “dead giveaway” of the weakness of his defense.

The Court also relied on the respondent’s admission under oath that he bribed a government official to obtain favorable action on the client’s titling matter relating to acquiring title to a dried-up creek. The Court characterized this admission as dishonest and treated it as an aggravating circumstance that supported a penalty more severe than indefinite suspension.

Disposition and Final Orders

The Court rejected the IBP’s position that indefinite suspension would suffice, reasoning that the IBP’s penalty would effectively allow the respondent to resume practice after a time if he returned the money and made a promise to

Case Syllabus (A.C. No. 8380)

Parties and Procedural Posture

Arellano University, Inc. (the University) filed a disbarment complaint against Atty. Leovigildo H. Mijares III (the respondent), a member of the Bar.
The Integrated Bar of the Philippines (IBP) designated Atty. Dennis B. Funa as Commissioner to conduct the formal investigation.
The Commissioner reported that the respondent failed to appear despite numerous settings and failed to adduce evidence in his defense.
The IBP Board of Governors adopted the Commissioner’s findings but modified the proposed penalty from disbarment to indefinite suspension, and ordered the return of the money and documents within six months from the Court’s decision.
The case reached the Supreme Court for final disposition.

Key Factual Allegations

In January 2004, the University engaged the respondent to secure a certificate of title covering a dried up portion of the Estero de San Miguel that the University claimed to be occupying.
The property was the subject of a Deed of Exchange dated October 1, 1958 between the City of Manila and the University.
The University alleged that it gave the respondent all required documents to accomplish his task.
The respondent requested and was granted P500,000.00 on top of attorney’s fees for supposed expenses related to “facilitation and processing.”
The respondent allegedly promised to return the P500,000.00 if he failed to get the work done.
On July 5, 2004, the respondent informed the University he had completed Phase I by obtaining MMDA approval and that the documents had already been sent to the DENR.
The University requested copies of the MMDA approval, but the respondent allegedly failed to comply despite repeated demands.
The respondent then allegedly became unavailable, which prompted the University to withdraw other matters entrusted to him and demand the return of the P500,000.00.
On November 23, 2005, the University wrote a registered letter terminating the respondent’s services and demanding the return of the P500,000.00, but service failed due to the respondent’s changed office address without notice.
On January 2, 2006, the letter was served at the respondent’s new address, and the respondent personally received it but did not return the money.
In his answer, the respondent alleged an agreement on multiple “facilitation cost” courses of action totaling P1,500,000.00, including claims that DENR-NCR approval required an MMDA endorsement and that the person to talk to was Undersecretary Cesar Lacuna.
The respondent alleged that he met Lacuna through a common friend, that they agreed on what Lacuna would get for recommending approval, and that he gave P500,000.00 to Lacuna on Lacuna’s instruction.
The respondent alleged that Lacuna later explained difficulty in recommending approval because the University allegedly filed an identical earlier application on March 15, 2002.
The respondent alleged that Lacuna had endorsed the prior application to the Mayor of Manila on July 23, 2003, but the Mayor did not act.
The respondent claimed that he and Lacuna intended to bypass the Mayor of Manila in the paperwork but could not arrive at a concrete plan.
The respondent asserted that the University gave only P45,000.00 as fees and that the P500,000.00 was delivered to Lacuna with the University’s conformity.

IBP Commissioner Findings

The Commissioner found that the University did not authorize the respondent to give the P500,000.00 to then MMDA Deputy Chairman Cesar Lacuna.
The Commissioner found that the respondent failed to account for and failed to return the money despite repeated demands.
The Commissioner reported that the respondent admitted under oath that he bribed a government official to act favorably on the client’s application.
The Commissioner recommended disbarment, ordered the respondent to return the P500,000.00 and all pertinent documents, and recommended forwarding the respondent’s sworn statement to the Office of the Ombudsman for appropriate action and possible prosecution.

IBP Board of Governors Modification

The IBP Board of Governors adopted the Commissioner’s findings of unethical conduct but modified the penalty from disbarment to indefinite suspension.
The IBP Board of Governors maintained an order for the respondent to return the P500,000.00 and all pertinent documents to the University within six months from receipt of the Court’s decision.

Core Legal Issue

The Supreme Court framed the only issue as whether the respondent was guilty of misappropriating th