A.C. No. 10533 - Medina vs. Lizardo

Case Summary (A.C. No. 10533)

Factual Background

Complainant Silvestra Medina entrusted to Atty. Rufino C. Lizardo the owner’s duplicates of Transfer Certificates of Title Nos. 13866 and 3900 for safekeeping. The titles covered interests in Lots 456, 457 and 458. Complainants asserted that they did not intend to sell all parcels and that other heirs demanded the original duplicate copies, prompting complainants to seek the return of the TCTs on March 5, 2011, which Atty. Lizardo refused to deliver. Atty. Lizardo submitted documentary evidence, including a Malayang Salaysay of Silvestra dated April 10, 1981, a Sinumpaang Salaysay of the late Alicia Medina dated May 24, 1982, a CFI Decision dated May 16, 1962 awarding one-fourth shares in the subject lots to Silvestra and Alicia, and an Extrajudicial Settlement With Sale dated July 16, 1992 by Alicia’s heirs purporting to convey their shares to Renato Martinez and spouse for P150,000.

Partition Proceedings and Competing Claims

A partition complaint, Civil Case No. 18400, was filed on September 4, 1987 in the Regional Trial Court of Makati, Branch 143, with Atty. Lizardo acting as counsel of record for Silvestra and the late Alicia. Atty. Lizardo alleged that Renato Martinez shouldered legal expenses for the partition, supported by Martinez’s affidavit dated May 10, 2011, and that Martinez later engaged him concerning transfer of the shares to Martinez’s name. Complainants denied that Lot 456 (TCT No. 3900) was sold and maintained that they had only sold the parcels covered by TCT No. 13866. The parties disputed whether the Extrajudicial Settlement with Sale encompassed Lot 456 and whether its execution involved improper conduct.

Proceedings before the Commission on Bar Discipline

Complainants filed a complaint with the IBP Commission on Bar Discipline seeking return of the titles and, ultimately, disbarment of Atty. Lizardo for alleged misconduct. The Commission conducted mandatory conferences on July 21, 2011 and November 4, 2011; Atty. Lizardo failed to appear personally at the second conference and was represented by a paralegal with a medical certificate. The Investigating Commissioner received testimony and documentary submissions, and the parties were directed to file verified position papers.

Investigating Commissioner's Findings and Recommendation

The Investigating Commissioner issued a Report dated August 3, 2012 recommending suspension of Atty. Lizardo for two years rather than disbarment. The Commissioner found that Atty. Lizardo had represented conflicting interests because evidence indicated that Martinez’s interests were adverse to those of Silvestra and Santos, and that Atty. Lizardo had failed to include Martinez in the partition litigation or otherwise protect Martinez’s asserted interests while representing Silvestra and Alicia. The Commissioner also found that Atty. Lizardo participated in conduct that amounted to deceiving his clients by facilitating an Extrajudicial Settlement with Sale executed at a questionable time and under circumstances suggesting haste, though the Commissioner’s factual characterization rested on testimonial and documentary inferences.

IBP Board Action and Respondent's Pleadings

The IBP Board of Governors adopted the Investigating Commissioner’s Report and recommended suspension for two years in its March 21, 2013 Resolution. Atty. Lizardo filed a Motion for Reconsideration asserting that he did not represent conflicting interests because Martinez had been engaged contemporaneously with Silvestra and Alicia, that all had the same interest in the partition, and that Martinez should have been impleaded if necessary; he also denied that the Extrajudicial Settlement was executed during the wake of Alicia and asserted that parties, including heirs, had acknowledged the sale of Lot 456 at a July 16, 1992 meeting. Complainants countered that these assertions were fabricated and were raised only as afterthoughts.

IBP Final Administrative Determination

On March 21, 2014, the IBP Board denied Atty. Lizardo’s Motion for Reconsideration but modified the relief by directing Atty. Lizardo to return TCT Nos. 3900 and 13866 to Silvestra. The Board thus affirmed the finding of ethical breach warranting discipline and ordered restitution of the physical titles to the former client.

Issues Presented to the Supreme Court

The Court reviewed whether Atty. Lizardo violated Rule 15.03, Canon 15 by representing conflicting interests without written consent after full disclosure; whether he breached Canon 16 and Rule 16.03 by withholding client property and failing to deliver it upon demand; whether allegations of deceit implicated Canon 1, Rule 1.01 and Canon 7, Rule 7.03; and what sanction was appropriate.

Legal Standard on Conflict of Interest

The Court reiterated controlling authority that a conflict of interest exists when a lawyer represents inconsistent interests of two or more opposing parties such that zeal for one client would require opposing the other, citing the test that an argument for one client would be adverse when made for the other. The Court restated that the prohibition extends to matters not limited to confidential communications and that subsequent representation adverse to a former client in the same or substantially related matter is permitted only with the former client's informed consent in writing after consultation.

Court's Findings on Conflict and Duty to Return Property

Applying the foregoing tests to the record, the Court found it undeniable that Silvestra and Santos, on one hand, and Martinez, on the other, held conflicting interests regarding Lot 456 (TCT No. 3900). The Court concluded that Atty. Lizardo argued against the ownership position of his own clients in the partition case by later aligning with Martinez’s claimed interests and that there was no credible proof that he had been retained from the outset to represent Silvestra, Alicia and Martinez as a common counsel. The Court held that Atty. Lizardo’s subsequent engagement by Martinez to act against Silvestra and Santos amounted to a conflict of interest that required written consent of all concerned after full disclosure, which he did not obtain. The Court further held that as counsel for Silvestra and Alicia, Atty. Lizardo had a duty under Canon 16 and Rule 16.03 to deliver client funds and property when due or upon demand, subject only to a proper lien for fees, and that withholding the entrusted TCTs to protect another purported client violated those duties.

Decision on Allegations of Deceit and Scope of Adjudication

Although the Investigating Commissioner found that Atty. Lizardo allowed himself to be used by Martinez to defraud Silvestra and Alicia’s heirs, the Supreme Court declined to resolve the factual issue of fraud in the execution of the Extrajudicial Settlement with Sale. The Court explained that questions of fraud affecting the validity and legal effect of the settlement document must be litigated and resolved in the proper civil proceeding before the courts and were not appropriately decided in the disciplinary context at that juncture.

Sanction and Comparative Considerations

The IBP had recommended suspension for two years, citing precedents such as Villanueva v. Atty. Gonzales where a two-year suspension followed more aggravated conduct including prolonged avoidance of a client and repeated failures to appear. The Court assessed that Atty. Lizardo’s conduct was reprehensible and constituted a violation of Canons 16 and 17 and Rules 15.03 and 16.03, but was less egregious than the misconduct in Villanue

Case Syllabus (A.C. No. 10533)

Parties and Posture

Silvestra Medina and Santos Medina Loraya filed a complaint with the Integrated Bar of the Philippines Commission on Bar Discipline against Atty. Rufino C. Lizardo for refusing to return entrusted title documents.
The complainants prayed for the turnover of the original duplicate copies of Transfer Certificates of Title Nos. 13866 and 3900 and for other just and equitable reliefs.
Atty. Lizardo answered, principally asserting that the Commission on Bar Discipline lacked jurisdiction because the controversy involved specific performance.
The Commission on Bar Discipline, through its Investigating Commissioner, recommended disciplinary sanctions and the IBP Board of Governors adopted the recommendation and imposed discipline subject to further review.
The Supreme Court resolved to adopt the Resolutions of the IBP Board of Governors with modification and to impose disciplinary sanctions on Atty. Lizardo.

Key Facts

Silvestra entrusted the original duplicates of TCT Nos. 13866 and 3900 to Atty. Lizardo for safekeeping because of her advanced age.
The titles covered interests in Lots 456, 457 and 458, and Atty. Lizardo prepared and notarized a Malayang Salaysay of Silvestra dated April 10, 1981.
A compromise Decision of the Court of First Instance awarded Silvestra and the late Alicia Medina a one-fourth share in Lots 456, 457 and 458 as recorded in the CFI Decision dated May 16, 1962.
The parties filed a partition case docketed as Civil Case No. 18400 on September 4, 1987 with Atty. Lizardo as counsel of record for Silvestra and Alicia.
Renato Martinez alleged that he purchased the one-fourth shares from Silvestra and Alicia, that he shouldered partition expenses, and that the heirs executed an Extrajudicial Settlement With Sale dated July 16, 1992 conveying those shares to him for P150,000.00.
Complainants alleged that they did not intend to sell Lot 456 covered by TCT No. 3900 and that they trusted Atty. Lizardo to sell only the parcel or parcels covered by TCT No. 13866.
Complainants terminated Atty. Lizardo and sought his disbarment after he refused to return the titles upon demand.

Procedural History

The Investigating Commissioner conducted mandatory conferences on July 21, 2011 and November 4, 2011 and issued a Report dated August 3, 2012 recommending a two-year suspension.
The IBP Board of Governors issued a Resolution on March 21, 2013 adopting the Investigating Commissioner’s recommendation and suspending Atty. Lizardo for two years.
Atty. Lizardo filed a Motion for Reconsideration which the IBP Board of Governors denied on March 21, 2014 and which further directed the return of the subject titles to Silvestra.
The Supreme Court reviewed the IBP Resolutions and resolved the matter by a Decision imposing a modified sanction and additional orders.

Issues Presented

Whether the Commission on Bar Discipline had jurisdiction to entertain the complaint against Atty. Lizardo.
Whether Atty. Lizardo represented conflicting interests in violation of Rule 15.03, Canon 15 of the Code of Professional Responsibility.
Whether Atty. Lizardo unlawfully withheld his clients’ property in violation of Canon 16 and Rule 16.03 of the Code of Professional Responsibility.
Whether the Investigating Commissioner’s finding that Atty. Lizardo engaged in deceit invoked liability under Canon 1, Rule 1.01 and Canon 7, Rule 7.03 of the Code of Professional Responsibility.

Contentions of the Parties

Atty. Lizardo contended that the Commission on Bar Discipline lacked jurisdiction because the controversy involved specific performance and that he concurrently represented Silvestra, Alicia, and Martinez with aligned interests.
Atty. Lizardo asserted that the sale included Lot 456 and that the Extrajudicial Settlement With Sale was validly prepared and executed on July 16, 1992 in his office.
Complainants maintained that Martinez was