MISAPPROPRIATION OF CLIENT’S FUNDS
But
CONCEPCION CABIGAO and LUIS YZQUIERDO, complainants, vs.
JOSE FERNANDO RODRIGO, respondent.
57 Phil 20, August 9, 1932
CANON 16 - A LAWYER SHALL HOLD IN TRUST ALL MONEYS AND PROPERTIES
OF HIS CLIENT THAT MAY COME INTO HIS PROFESSION.
Rule 16.03 - A lawyer shall deliver the funds and property of his client when due
or upon demand. However, he shall have a lien over the funds and may apply so
much thereof as may be necessary to satisfy his lawful fees and disbursements,
giving notice promptly thereafter to his client. He shall also have a lien to the
same extent on all judgments and executions he has secured for his client as
provided for in the Rules of Court.
(Note(s): “[In effect,] the Rule abandoned the ruling in Cabigao vs. Rodrigo, 57
Phil 20, where it was held that a lawyer cannot unilaterally appropriate his
client’s funds for payment of his unpaid attorney’s fees.” – Legal Ethics (2009),
Pineda p.277)
The Case:
Misappropriation by an attorney of funds entrusted to him by his clients
to be applied to the settlement of a civil case in which he acted as a lawyer.
The Facts:
Concepcion Cabigao and Luis Yzquierdo filed charges for malpractice
against Attorney Jose Fernando Rodrigo. By resolution, the court referred the
matter to the Attorney-General for investigation, report and recommendation.
After several hearings in which the parties submitted their evidence the
Attorney-General submitted his report. The respondent was then required to
answer the report and after various extensions of time which were granted him
upon his request he finally filed his answer. The matter was called for hearing
and the attorneys filed their respective memorandum. After careful
consideration of the whole evidence presented at the hearings the Attorney-
General found and satisfactorily proven that the respondent was one of their
counsel and the complainants were defendants in case No. 3590 of the Court of
First Instance of Bulacan. The respondent advised the complainants to settle the
case for P2,500. After securing the assent of said Eugenio Lim Pineda to a
settlement of the case for the amount of P2,500, the respondent obtained from
the complainants a check for the amount of P3,900, P2,500 of which, he
represented as the sum to be paid to Eugenio Lim Pineda in full settlement of
the case and the P1,400 to be paid to himself for his professional services.
after obtaining from the complainants the said check, the respondent kept the
funds and failed to settle the case. And by reason of the respondent's
representations and conduct, the complainants were forced to a settlement in
open court, by the terms of which, they were sentenced to pay the amount of
P3,500 to Eugenio Lim Pineda. And order to satisfy the judgment the
complainants demanded of the respondent, the return of the amount of P2,500.
The Issue(s):
Whether or not the acts of respondent Atty. Jose Fernando Rodrigo
constitute as malpractice.
The Ruling(s):
Yes. It clearly appears that the acts of the respondent constitute
malpractice for which he is accountable.
The facts above quoted are undeniable and do not leave room for any
doubt. It has been clearly proven, ….which is admitted by respondent, that he
received the check No. 1568738-D of the Philippine National bank in the amount
of P3,900 to be applied as follows: P2,500 to be paid to Eugenio Lim Pineda as
the agreed price of the amicable settlement between him and the complainants
in civil case No. 3590 of the Court of First Instance of Bulacan, and P1,400 to be
paid to the respondent as attorney's fees. The whole amount of P3,900 was
misappropriated by the respondent notwithstanding the fact that he never
carried out the alleged amicable settlement of the case and the repeated
demands made by the complainants for the return of the money.
The contention of the respondent that he had the right to retain the
money intended to be paid to Eugenio Lim Pineda for the protection of certain
bondsmen secured by him in favor of the complainants and that at any rate he
was entitled to use all the money because the complainants were indebted to
him in a larger amount as attorney's fees, is untenable and without merit.
He admitted having received the total sum of money for the specific
purpose recited in the receipt signed by him, and we fail to conceive any sound
reason by which he should be allowed to misapply said money entrusted to him.
To permit this would amount to sanctioning a flagrant violation of his obligations
as an attorney to his clients and to the public, aside from the criminal aspect
which the case might have.
(Full text link: www.lawphil.net/judjuris/juri1932/aug1932/cabigao-
rodrigo_1932.html)