SUPREME COURT REPORTS ANNOTATED VOLUME 395 Page 1 of 10

VOL. 395, JANUARY 13, 2003 19

Espiritu vs. Cabredo IV

Adm. Case No. 5831. January *13, 2003.<a

href="#p395scra8960019001"> a
>

CESAR A. ESPIRITU, complainant, vs. ATTY. JUAN

CABREDO IV, respondent.

Administrative Law; Attorneys; Relationship between a lawyer

and a client is highly fiduciary, it requires a high degree of fidelity
and good faith.—The relationship between a lawyer and a client
is highly fiduciary; it requires a high degree of fidelity and good
faith. Hence, in dealing with trust property, a lawyer should be
very scrupulous. Money or other trust property of the client
coming into the possession of the lawyer should be reported by the
latter and accounted for promptly and should not, under any
circumstances, be commingled with his own or be used by him.
Same; Same; Like judges, lawyers must not only be proper but
they must also appear to be so.—Indeed, it is improbable that
respondent’s secretary failed to inform complainant about the
receipt of such a substantial sum of money. In failing to account
for the money of his client, respondent violated not only the Code
of Professional Responsibility but also his oath to conduct himself
with all good fidelity to his clients. Like judges, lawyers must not
only be proper but they must also appear to be so. This way, the
people’s faith in the justice system would remain unshaken.
Same; Same; The breach of trust committed by respondent
amounted to deceit as well as a violation of his oath for which he
should be penalized with either disbarment or suspension.—From
the evidence presented by complainant, which respondent failed
to rebut, it is clear that the breach of trust committed by
respondent amounted to deceit, as well as a violation of his oath,
for which he should be penalized with either disbarment or
suspension. While we agree with the findings of the investigating
commissioner, we find the recommended penalty of suspension for
three months to be too light. In Reyes P. Maglaya a lawyer was

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suspended for one year for failing to return P1,500.00 belonging to

his client despite numerous demands. In Castillo v. Taguines, a
lawyer failed to deliver to his client P500.00, representing the
monetary settlement of a civil suit despite demands. To make
matters worse, he fooled the client by issuing a bouncing check.
He was suspended for one year.

ADMINISTRATIVE MATTER in the Supreme Court.

Failure to Fulfill Fiduciary Obligation.

The facts are stated in the opinion of the Court.

_____________

* SECOND DIVISION.

20

20 SUPREME COURT REPORTS ANNOTATED

Espiritu vs. Cabredo IV

MENDOZA, J.:

This is an administrative complaint filed with the

Integrated Bar of the Philippines (IBP) on May 8, 2001 by
complainant Cesar A. Espiritu against Atty. Juan
Cabredo IV for failure to fulfill a fiduciary obligation to a
client.
The complaint alleges the following facts:
On November 5, 1999, the BPI Family Savings Bank
Inc. (BPI-FSB) filed two complaints for replevin and
damages against Esphar Medical Center, (Esphar) Inc. and
its president Cesar Espiritu and a certain John Doe. In
the first complaint, the BPI-FSB alleged that, on July 14,
1997, Esphar, Cesar Espiritu, and a certain John Doe
executed in favor of Gencars, Inc. (Gencars) a promissory
note in which they obligated themselves jointly and
severally to pay the latter P511,956.00 in monthly
installments pursuant to a schedule they had agreed upon.
It was provided that failure on the part of the makers to
pay any installment when due shall make subsequent
installments and the balance of the obligation immediately
due and demandable. The promissory note was secured by
a chattel mortgage on an Isuzu “Close Van” (1997 model)
and registered with the Register of Deeds and the Land

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Transportation Commission. On July 14, 1997, Gencars

executed a deed of assignment in favor of the BPI-FSB,
assigning to the latter all of its rights, title and interest in
the promissory note secured by the chattel mortgage. In
1999, Esphar, Espiritu and John Doe failed to pay
installments for three consecutive months, for which
reason demands were made on the three to pay the entire
balance of P186,806.28, with accrued interest at the rate of
36% per annum or to give to BPI-FSB the possession of the
Isuzu van in order to foreclose the mortgage. As the three
failed to comply with the demands, the BPI-FSB brought
suit for replevin 1 and damages against them.<a
href="#p395scra8960020001"> a
>
The second complaint alleged similar facts involving
Citimotors, Inc. as the payee of another promissory note in
which Esphar, Espiritu and John Doe, as makers,
obligated themselves solidarily to pay the former
P674,640.00 in monthly installments. The promissory note
was secured by a chattel mortgage on a Mitsubishi L-300
“Exceed Montone Van” (1997 model), which BPI-FSB, as

_____________

1 Annex “A” of the Complaint, Rollo, pp. 4-12.

21

VOL. 395, JANUARY 13, 2003 21

Espiritu vs. Cabredo IV

holder of the said promissory note, sought to foreclose due

to the makers’ failure to comply 2
with its terms and
<a href="#p395scra8960021001"> a
conditions. >
On December 10, 1999, Espiritu engaged the services of
Atty. Juan Cabredo IV, herein respondent, to represent
him in the two civil cases. On same day, Cabredo’s
secretary, Rose Tria, picked up copies of the complaints
from Espiritu’s office and, on December 14, 1999, his
representative Reynaldo Nuñez received from Esphar
P16,000.00 for use as filing and acceptance fees. While the
cases were pending in court, Atty. Cabredo advised
Esphar to remit money and update payments to BPI-FSB
through the trial court. Accordingly, on December 28, 1999
and again January 28, 2000, Esphar’s representative,

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SUPREME COURT REPORTS ANNOTATED VOLUME 395 Page 4 of 10

Maritess Alejandrino, delivered a total of P51,161.00 to

Atty. Cabredo’s office. Later on, when Atty. Cabredo
failed to appear at a hearing of the civil cases, the
management of Esphar found out that he did not deliver
the sum of P51,161.00 to the court or BPI-FSB. The
management of Esphar then agreed to settle the cases
amicably. For this reason, a joint motion to dismiss was
filed by the parties, and the cases were dismissed on May
15, 2000. Thereafter, on May 8, 2001, Espiritu filed a
complaint against 3 Atty. Cabredo for fraud.<a
href="#p395scra8960021002"> a
>
In his answer dated June 6, 2001, respondent
Cabredo admitted that his secretary, Rose Tria, had
indeed received P51,161.00 from Esphar, but claimed that
Tria failed to inform him about it. It was only when he read
Esphar’s first demand letter dated March 21, 2000 that he
learned for the first time about the receipt of the money.
Respondent claimed that he failed to get complainant’s
demand letters of March 24, 2000 and January 5, 2001
because of lapses on the part of his staff. He thus shifted
the blame on his staff.

7. It is quite unfortunate that this incident happened

all thru the fault of the law firm personnel. In spite
of respondent’s candid, honest and sincere desire
to faithfully and religiously serve good clients, [his
efforts have been] rendered inutile by lapses of his
staff;
8. Respondent believes that complainant Cesar A.
Espiritu would not have resorted to this present
action had the firm personnel been vigilant enough
to inform respondent of this matter.

_____________

2 Annex “B” of the Complaint; id., pp. 13-21.

3 Complaint; Rollo, pp. 1-2.

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22 SUPREME COURT REPORTS ANNOTATED

Espiritu vs. Cabredo IV

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Respondent said he was willing to reimburse

complainant to show his good faith and “to erase the
suspicion that respondent intentionally spent the amount 4

for his own use and benefit.”<a href="#p395scra8960022001"> a>

Acting on the complaint, the Integrated Bar of the
Philippines (IBP) Commission on Bar Discipline scheduled
a hearing on September 24, 2001. However, the hearing
had to be rescheduled three times—on November 14, 2001,
December 14, 2001, and January 18, 2002—because of
respondent’s failure to appear despite due notice to him.
In orders dated
5
November 14, 2001<a
href="#p395scra8960022002"> a
6
> and December 14, 2001,<a
href="#p395scra8960022003"> a
> respondent was warned that the
investigator would proceed with the case if he failed to
appear again in subsequent hearings. Finally, in the order
dated January 18, 2002, Investigating Commissioner
Wilfredo Reyes ordered:

Considering that this is the fifth (5th) time that the respondent
has failed to appear despite notice, the undersigned
Commissioner has no option but to decide the case on the basis of
the pleadings submitted. It must be noted that despite receipt of
the Orders of the Commission, the respondent Atty. Juan
Cabredo IV has failed to appear before the Commission on Bar
Discipline.
This case is deemed submitted for resolution based 7on the
pleadings submitted by the parties.<a href="#p395scra8960022004"> a>

On February 13, 2002, Commissioner Reyes submitted his

report and recommendation. He found respondent guilty
of violation of the Code of Professional Responsibility and
recommended that the latter be suspended from the
practice of law for three months and ordered to return the 8

amount of P51,161.00 to Esphar.<a href="#p395scra8960022005"> a>

In a resolution dated August 3, 2002, the IBP Board of
Governors adopted and approved the recommendation 9
of
<a href="#p395scra8960022006"> a
the investigating commissioner. >

_____________

4 Answer, Rollo, pp. 36-37.

5 Id., p. 56.
6 Id., p. 58
7 Id., p. 61.
8 Report and Recommendation of Cmr. Wilfredo Reyes, pp. 4-5; Rollo,
pp. 67-68.

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SUPREME COURT REPORTS ANNOTATED VOLUME 395 Page 6 of 10

9 Resolution No. XV-2002-411, CBD Case No. 01-833, Cesar A. Espiritu

v. Atty. Juan Cabredo, IV; Rollo, p. 63.

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VOL. 395, JANUARY 13, 2003 23

Espiritu vs. Cabredo IV

Except for the penalty, we find the recommendation is well

taken.
The Code of Professional Responsibility provides:

CANON 16—A LAWYER SHALL HOLD IN TRUST ALL

MONEYS AND PROPERTIES OF HIS CLIENT THAT MAY
COME INTO HIS POSSESSION.
Rule 16.01—A lawyer shall account for all money or property
collected or received for or from the client.
Rule 16.02—A lawyer shall keep the funds of each client
separate and apart from his own and those of others kept by him.
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.

The relationship between a lawyer and a client is highly

fiduciary; it requires a high10 degree of fidelity and good
faith.<a href="#p395scra8960023001"> a> Hence, in dealing with
trust property, a lawyer should be very scrupulous. Money
or other trust property of the client coming into the
possession of the lawyer should be reported by the latter
and accounted for promptly and should not, under any
circumstances, be commingled 11
with his own or be used by
him.<a href="#p395scra8960023002"> a>
In this case, respondent claims that he did not know
about the receipt by his secretary on the amount of
P51,161.00 received from Esphar until he read the first
demand letter of the company, which stated:

March 21, 2000

JUDGE JUAN CABREDO
Cubao, Quezon City

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_____________

<a id="p395scra8960023001"> a>

10 Angeles v. Uy, 330 SCRA 6 (2000).
<a id="p395scra8960023002"> a>
11 Marquez v. Meneses, 321 SCRA 1 (1999), citing Canon 11 of the
Canons of Professional Ethics.

24

24 SUPREME COURT REPORTS ANNOTATED

Espiritu vs. Cabredo IV

Dear Judge Cabredo:

Due to your failure to make an interbank deposit as
what we have agreed upon yesterday, March 20, 2000,
we are sending bearer, MRS. MARITESS
ALEJANDRINO, to collect the amount of P51,161.00
representing payment intended for BPI FAMILY
BANK which was coursed through your office per your
instruction.
We are hoping that you will not fail to return the
money through bearer hereof. Her specimen signature
is shown below for identification purposes. Thank you.
Very truly yours,
ESPHAR MEDICAL CENTER, INC.
(signed)
AUTHORIZED SIGNATURE
Specimen Signature of:
(signed)
MARITESS ALEJANDRINO

However; even after receiving this notice and two other

demand letters, respondent never returned the money of
complainant nor paid it to the bank. Indeed, it is
improbable that respondent’s secretary failed to inform
complainant about the receipt of such a substantial sum
of money. In failing to account for the money of his client,
respondent violated not only the Code of Professional
Responsibility but also his oath to conduct himself12with all
good fidelity to his clients.<a href="#p395scra8960024001"> a> Like
judges, lawyers must not only be proper but they must also
appear to be so. This way, the people’s faith in the justice 13

system would remain unshaken.<a href="#p395scra8960024002"> a>

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It appears that respondent, while now a practicing 14

lawyer, was a former judge.<a href="#p395scra8960024003"> a>

Thus, he should have known the ethical precepts guiding
lawyers who handle money given to them in trust by their
clients and the necessary consequences for violation
thereof. Rule 138 of the Rules of Court provides,

_____________

12 Rule 138, RULES OF COURT.

13 See Angeles v. Uy, 330 SCRA 6 (2000).
14 Annex “H” of Complaint; Rollo, pp. 27, 32-33. Complainant refers to
respondent as “Judge Juan Cabredo IV” in a letter to the IBP Commission
on Bar Discipline and in two demand letters.

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VOL. 395, JANUARY 13, 2003 25

Espiritu vs. Cabredo IV

Sec. 27. Disbarment or suspension of attorneys by Supreme Court;

grounds therefore.—A member of the bar may be disbarred or
suspended from his office as attorney by the Supreme Court for
any deceit, malpractice, or other gross misconduct in such office,
grossly immoral conduct, or by reason of his conviction of a crime
involving moral turpitude, or for any violation of the oath which
he is required to take before admission to practice, or for a wilful
disobedience of any lawful order of a superior court, or for
corruptly or wilfully appearing as an attorney for a party to a case
without authority so to do. The practice of soliciting cases at law
for the purpose of gain, either personally or through paid agents
or brokers, constitutes malpractice. [emphasis supplied]

From the evidence presented by complainant, which

respondent failed to rebut, it is clear that the breach of
trust committed by respondent amounted to deceit, as
well as a violation of his oath, for which he should be
penalized with either disbarment or suspension. While we
agree with the findings of the investigating commissioner,
we find the recommended penalty of suspension for three
months to be too15 light. In Reyes v. Maglaya<a
href="#p395scra8960025001"> a
> a lawyer was suspended for one
year for failing to return P1,500.00 belonging to his client
despite numerous demands. In Castillo v. Taguines,<a

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SUPREME COURT REPORTS ANNOTATED VOLUME 395 Page 9 of 10

16
href="#p395scra8960025002"> a
> a lawyer failed to deliver to his
client P500.00, representing the monetary settlement of a
civil suit despite demands. To make matters worse, he
fooled the client by issuing a bouncing check. He was
suspended for one year.
For his failure to account for P51,161.00 received from
his client and to restitute it without any reason,
respondent should be suspended for one year.
WHEREFORE, Atty. Juan Cabredo IV is hereby
SUSPENDED for one (1) year and ORDERED to
immediately return to Esphar Medical Center, Inc. the sum
of P51,161.00, with WARNING that a repetition of the
same or similar acts will be dealt with more severely. Let
copies of the Decision be entered in his record as an
attorney and be furnished the Integrated Bar of the
Philippines (IBP) and all the courts in the country for their
information and guidance.

_____________

15 243 SCRA 214 (1995).

16 254 SCRA 554 (1996).

26

26 SUPREME COURT REPORTS ANNOTATED

Guyud vs. Pine

SO ORDERED.

Bellosillo (Chairman), Quisumbing, Austria-

Martinez and Callejo, Sr., JJ., concur.

Respondent suspended for one (1) year and ordered to

return to Esphar Medical Center, Inc. the sum of P51,161,
with warning against repetition of similar act.

Note.—A lawyer can be deprived of his license for

misconduct ascertained and declared by judgment of the
court after giving him the opportunity to be heard.
(Sebastian vs. Calis, 314 SCRA 1 [1999])

——o0o——

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