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   A.C. No. 10548. December 10, 2014. *  CAROLINE CASTAÑEDA JIMENEZ, complainant, vs.  ATTY. EDGAR B. FRANCISCO, respondent.  Attorneys; Legal Ethics; A lawyer’s personal deference to the law not only speaks of his character but it also inspires respect and obedience to the law, on the  part of the public.  —  Canon 1 clearly mandates the obedience of every lawyer to laws and legal processes. To the best of his ability, a lawyer is expected to respect and abide by the law and, thus, avoid any act or omission that is contrary thereto. A lawyer’s personal deference to the law not only speaks of his character but it also inspires respect and obedience to the law, on the part of the public. Rule 1.0, on the other hand, states the norm of conduct to be observed by all lawyers. Same; Same; Membership in the legal profession is bestowed upon individuals who are not only learned in law, but also known to possess good moral character.  —  Membership in the legal profession is bestowed upon individuals who are not only learned in law, but also known to possess good moral character. Lawyers should act and comport themselves with honesty and integrity in a manner beyond reproach, in order to promote the public’s faith in the legal profession. “To say that lawyers must at all times uphold and respect the law is to state the obvious, but such statement can never be overemphasized. Considering that, of all classes and professions, [lawyers are] most sacredly bound to uphold the law, it is imperative that they live by the law.”   Same; Same; It needs to be emphasized that the lawyer’s fidelity to his client must not be pursued at the expense of truth and justice, and must be held within the bounds of reason and common sense.  —  Time and again, the Court has reminded lawyers that their support for the cause of their clients should never be attained at the expense of truth and justice. While a lawyer owes absolute fidelity to the cause of his client, full devotion to his genuine interest, and warm zeal in the maintenance and defense of his rights, as well as the exertion of his utmost learning and ability, he must do so only within the bounds of the law. It needs to be emphasized that the lawyer’s fidelity to his client must not be pursued at the expense of truth and justice, and must be held within the bounds of reason and common sense. His responsibility to protect and advance the interests of his client does not warrant a course of action propelled by ill motives and malicious intentions. Same; Same; Lawyers are expected to act with honesty in all their dealings, especially with the court.  —Canon 10 of the CPR provides that, “[a] lawyer owes candor, fairness and g ood faith to the court.” Corollary thereto, Rule 10.0 of the CPR provides that “a lawyer shall do no falsehood, nor consent to the doing of any in Court, nor shall he mislead or allow the Court to be misled by an artifice.” Lawyers are officers of the court, called upon to assist in the administration of  justice. They act as vanguards of our legal system, protecting and upholding truth and the rule of law. They are expected to act with honesty in all their dealings, especially with the court. From the foregoing, Atty. Francisco clearly violated his duties as a lawyer embodied in the CPR, namely, to avoid dishonest and deceitful conduct, (Rule 1.01, Canon 1) and to act with candor, fairness and good faith (Rule 10.01, Canon 10). Also, Atty. Franciso desecrated his solemn oath not to do any falsehood nor consent to the doing of the same. Same; Same; Conflict of Interests; A client can only entrust confidential information to his / her lawyer based on an expectation from the lawyer of utmost secrecy and discretion; the lawyer, for his part, is duty-bound to observe candor,  fairness and loyalty in all his dealings and transactions with the client. Part of the lawyer’s duty in this regard is to avoid representing conflicting interests.  —  Rule 15.03, Canon 15 of the CP R provides that, “[a] lawyer shall not represent conflicting interests except by written consent of all concerned given after a full disclosure of the facts.” “The relationship between a lawyer and his/her client should ideally be imbued with the highest level of trust and confidence. This is the standard of confidentiality that must prevail to promote a full disclosure of the client’s most confidential information to his/her lawyer for an unhampered exchange of information between them. Needless to state, a client can only entrust confidential information to his/her lawyer based on an expectation from the lawyer of utmost secrecy and discretion; the lawyer, for his part, is duty-bound to observe candor, fairness and loyalty in all his dealings and transactions with the client. Part of the lawyer’s duty in this regard is to avoid representing conflicting interests…” Thus, even if lucrative fees offered by prospective clients are at stake, a lawyer must decline professional employment if the same would trigger a violation of the prohibition against conflict of interest. Same; Suspension; Disbarment; In suspension or disbarment proceedings, lawyers enjoy the presumption of innocence, and the burden of proof rests upon the complainant to clearly prove the allegations in the complaint by preponderant evidence.  —  In suspension or disbarment proceedings, lawyers enjoy the presumption of innocence, and the burden of proof rests upon the complainant to clearly prove the allegations in the complaint by preponderant evidence. Preponderance of evidence means that the evidence adduced by one side is, as a whole, superior to or has greater weight than that of the other. It means evidence which is more convincing to the court as worthy of belief than that which is offered in opposition thereto. Under Section 1 of Rule 133, in determining whether or not there is preponderance of evidence, the court may consider the following: (a) all the facts and circumstances of the case; (b) the witnesses’ manner of testifying, their intelligence, their means and opportunity of knowing the facts to which they are testifying, the nature of the facts to which they testify, the probability or improbability of their testimony; (c) the witnesses’ interest or want of interest, and also their personal credibility so far as the same may ultimately appear in the trial; and (d) the number of witnesses, although it does not mean that preponderance is necessarily with the greater number. Same; Same; Same; Grounds by which a Lawyer may be Suspended or  Disbarred.  —   A member of the Bar may be penalized, even disbarred or suspended from his office as an attorney, for violating of the lawyer’s oath and/or for breaching the ethics of the legal profession as embodied in the CPR, for the practice of law is a profession, a form of public trust, the performance of which is entrusted to those who are qualified and who possess good moral character. The appropriate penalty  on an errant lawyer depends on the exercise of sound judicial discretion based on the surrounding facts. Under Section 27, Rule 138 of the Revised Rules of Court, a member of the Bar may be disbarred or suspended on any of the following grounds: (1) deceit; (2) malpractice or other gross misconduct in office; (3) grossly immoral conduct; (4) conviction of a crime involving moral turpitude; (5) violation of the lawyer’s oath; (6) willful disobedience of any lawful order of a superior court; and (7) willful appearance as an attorney for a party without authority. A lawyer may be disbarred or suspended for misconduct, whether in his professional or private capacity, which shows him to be wanting in moral character, honesty, probity and good demeanor, or unworthy to continue as an officer of the court.  ADMINISTRATIVE CASE in the Supreme Court. Multiple Violations of the Code of Professional Responsibility. The facts are stated in the opinion of the Court. Reyes, Francisco and Associates  for respondent. MENDOZA, J. : This refers to the Resolutions of the Integrated Bar of the Philippines, Board of Governors ( IBP-BOG ), dated January 3, 2013 1 and March 22, 2014, 2  adopting and approving the findings of the Commission on Bar Discipline ( CBD ) which found Atty. Edgar B. Francisco (  Atty. Francisco ) administratively liable for multiple violations of the Code of Professional Responsibility ( CPR ) and recommended the penalty of suspension of one (1) year from the practice of law. On September 6, 2007, the CBD received a complaint, dated July 14, 2007, 3  filed by Caroline Castañeda Jimenez ( complainant ) against Atty. Francisco for multiple violations of the CPR. On October 24, 2007, Atty. Francisco filed his  Answer. 4  On June 26, 2009, the mandatory conference was held and terminated. Only the counsel for Atty. Francisco appeared. The notice of the said conference addressed to complainant was returned with the notation “unknown at the given address.” No new address was provided by the complainant. Both parties were required to submit their respective position papers. For this purpose, Atty. Francisco adopted his Answer. The Antecedents  Mario Crespo, otherwise known as Mark Jimenez ( Jimenez ), filed a complaint for estafa  against complainant, her sister Rosemarie Flaminiano, Marcel Crespo, Geraldine Antonio, Brenda Heffron, Magdalena Cunanan, and Isabel Gonzalez. 5  The said complaint was docketed as IS No. 074314 with the Office of the City Prosecutor of Makati City. Jimenez alleged that he was the true and beneficial owner of the shares of stock in Clarion Realty and Development Corporation ( Clarion ), which was incorporated specifically for the purpose of purchasing a residential house located in Forbes Park, Makati City ( Forbes  property ). The incorporators and srcinal stockholders of Clarion were as follows: Thomas K. Chua  –   P500,000.00 Teresita C. Alsua  –   P500,000.00 Myla Villanueva  –   P249,998.00 Edgar B. Francisco  –   P1.00 Soledad Gamat  –   P1.00 Simultaneous with the drafting of Clarion’s Articles of Incorporation, the above named stockholders, except for Myla Villanueva ( Myla ), executed a deed of assignment of their respective shares in favor of complainant, who was then Jimenez’s common - law partner. Clarion’s total capitalization was only P5,000,000.00. Thus, in order to achieve its purpose of purchasing the Forbes property, Clarion simulated a loan from the complainant in the amount of P80,750,000.00. Thereafter, Clarion purchased the Forbes property in the amount of P117,000,000.00 from Gerardo Contreras. To effect the sale, Myla handed a check in the said amount which was funded entirely by Jimenez. The sale, however, was undervalued. In the deed of sale, it was made to appear that the Forbes property was purchased for P78,000,000.00 only. Further, the money used as the purchase price was not reflected in the books of Clarion. On July 19, 2001, Thomas Chua and Teresita Alsua assigned their shares in Clarion to Jimenez by virtue of a deed of trust. On the other hand, Myla’s 249,997 shares were transferred to complainant based on a deed of assignment. The remaining one (1) share was transferred to Ma. Carolina C. Crespo. These transactions appeared in Clarion’s General Information Sheet ( GIS  ) filed with the Securities and Exchange Commission ( SEC  ). Resultantly, the subscribed shares of Clarion were as follows: Mark Jimenez  –   P500,000.00 Caroline Jimenez  –   P749,997.00 Ma. Carolina C. Crespo  –   P1.00 Edgar B. Francisco  –   P1.00 Soledad Gamat  –   P1.00 On November 5, 2002, Jimenez transferred all his shares to complainant by another deed of assignment, making her the holder of Clarion shares amounting to P1,249,997.00.  According to Jimenez’s complaint, while he was in prison in the United States in 2004, he learned from Atty. Francisco that his son, Marcel Crespo ( Marcel ), approached the complainant and threatened her, claiming that the United States Internal Revenue Service ( IRS  ) was about to go after their properties. Marcel succeeded in persuading complainant to transfer her nominal shares in Clarion to Geraldine Antonio, through another deed of assignment. Again, this was reflected in Clarion’s GIS for the year 2004.  Thereafter, Jimenez was informed by Atty. Francisco that, through fraudulent means, complainant and her corespondents in the estafa  case, put the Forbes property for sale sometime in August 2004. The said property was eventually sold to Philmetro Southwest Enterprise, Inc. (  Philmetro ) for the amount of P118,000,000.00 without Jimenez’s knowledge. This sale was again undervalued at P78,000.000.00 per the deed of sale. Atty. Francisco relayed to Jimenez that he was the one who received the payment for the sale of the Forbes property and that he handed all the proceeds thereof to Rosemarie Flaminiano in the presence of complainant.  Jimenez’s complaint for   estafa   was based on complainant’s alleged participation in the fraudulent means in selling the Forbes property which was acquired by Clarion with Jimenez’s money. Complainant was duty -bound to remit all the proceeds of the sale to Jimenez as the true and beneficial owner. Complainant and her corespondents, however, misappropriated and converted the funds for their personal use and benefit. In support of Jimenez’s complaint for   estafa , Atty. Francisco executed an affidavit reiterating its factual averments. 6  A perusal of this affidavit likewise would show the following claims and admissions, among other things, of Atty. Francisco: 1. Sometime in August 2004, complainant called him, asking for assistance in the documentation of the sale of the Forbes property owned by Clarion. Atty. Francisco asked her if she had secured permission from Mark Jimenez and complainant answered in the affirmative. 2. The Board of Directors of Clarion issued a resolution authorizing him to negotiate the sale of the property. 3. For purposes of the sale, he opened an account with Security Bank, San Francisco Del Monte branch. When the cash payment was deposited, he withdrew the amount and handed the same to Rosemarie Flaminiano in the presence of complainant. 4. All transfers of shares were caused without any consideration. The transfer taxes, however, were paid. 5. When Mark Jimenez returned to the Philippines, he was able to confirm that the sale of the Forbes property was without his knowledge and approval. The proceeds of the sale had already been farmed out to different corporations established by complainant and her sister. 6. The frequent changes in stockholdings were premeditated in order to steal the money of Mark Jimenez. The Complaint  Complainant was shocked upon reading the allegations in the complaint for estafa  filed by Jimenez against her. She felt even more betrayed when she read the affidavit of Atty. Francisco, on whom she relied as her personal lawyer and Clarion’s corporate counsel and secretary of Clarion. This prompted her to file a disciplinary case against Atty. Francisco for representing conflicting interests.  According to her, she usually conferred with Atty. Francisco regarding the legal implications of Clarion’s transactions. More significantly, the principal documents relative to the sale and transfer of Clarion’s property were all prepared and drafted by Atty. Francisco or the members of his law office. 7  Atty. Francisco was the one who actively participated in the transactions involving the sale of the Forbes property. Without admitting the truth of the allegations in his affidavit, complainant argued that its execution clearly betrayed the trust and confidence she reposed on him as a lawyer. For this reason, complainant prayed for the disbarment of Atty. Francisco. The Respondent’s Position  In his Answer, 8  Atty. Francisco replied that Jimenez initially engaged his services in 1998 for the incorporation of Clarion for the purpose of purchasing a residential house in Forbes Park, where he intended to live with his long-time partner, the complainant; that the srcinal incorporators and stockholders of Clarion held their respective shares in trust for Jimenez; that the subsequent changes in the ownership of Clarion shareholdings were also pursuant to Jimenez’s orders; and that as the corporate secretary and legal counsel of Clarion, he prepared all the legal documentation to give effect to the said transfers and, ultimately, to the purchase of the Forbes property.  Atty. Francisco further stated that sometime in 2004, Jimenez was imprisoned in the United States for excessive contributions to the Democratic Party; that during this time, Jimenez’s son, Marcel, and the complainant, asked him again to change the ownership of Clarion shares in order to avoid the attachment of Jimenez’s properties in a tax evasion case; that he acceded to the request on the belief that this was in accordance with Jimenez’s wishes; and that as a result, almost 100% of Clarion’s ownership was transferred in the name of Geraldine  Antonio.  Atty. Francisco also claimed that, thereafter, complainant tasked him to talk to prospective buyers and to negotiate the sale of the Forbes property until it was sold for P118,000,000.00; that Marcel and complainant led him to believe that Jimenez had knowledge of the sale as they were in constant communication with him; that all these representations, however, turned out to be false when Jimenez returned to the Philippines and discovered that the proceeds of the sale were coursed through other corporations set up by complainant and her sister; that Jimenez likewise learned of the successive sale of his other properties, including Meridian Telekoms, Inc., by the members of his family; and that this led to the filing of the estafa case against the complainant and the others. As a witness to the fraud committed against Jimenez, Atty. Francisco executed the affidavit narrating the facts and circumstances surrounding the said transactions.  Atty. Francisco mainly argued that he violated neither the rule on disclosures of privileged communication nor the proscription against representing conflicting interests, on the ground that complainant was not his client. He was the lawyer of Jimenez and the legal counsel of Clarion, but never of the complainant. He might have assisted her in some matters, but these were all under the notion that Jimenez had given him authority to do so. Further, though he acted as legal counsel for Clarion, no attorney-client relationship between him and complainant was formed, as a corporation has a separate and distinct personality from its shareholders. While he admitted that the legal documentation for the transfer of shares and the sale of the Forbes property were prepared by him and notarized by the members of his law firm, he averred that these acts were performed in his capacity as the corporate secretary and legal counsel of Clarion, and not as a lawyer of complainant. Therefore, he served no conflicting interests because it was not a “former client” and a “subsequent client” who were the opposing parties in litigation. He opined that assuming that complainant was indeed his client, the rule on privileged communication does not apply to his case. Here, complainant failed to allege, much less prove, the requisites for the application of the privilege. When  Atty. Francisco denied being her lawyer, the complainant should have established,  by clear and convincing evidence, that a lawyer-client relationship indeed existed between them. Complainant failed to do this.  Arguing that the execution of his affidavit in the estafa  case was but a truthful narration of facts by a witness, Atty. Francisco cited Gonzaga v. Cañete , 9  where the Court ruled that “the fact that one of the witnesses for the defendant had been formerly the lawyer for the defendant in this suit was no ground for rejecting his testimony.” In this case, he merely attested to the fraud ulent acts of complainant, in the course of which, he defended and served Jimenez as a client. This was likewise pursuant to the rule that unlawful and illegal motives and purposes were not covered by the privilege. It was just unfortunate that he fell for the ploy of complainant. The Findings of the Investigating Commissioner    In the Commissioner’s Report, 10  dated November 7, 2011, the Investigating Commissioner, Atty. Jose I. Dela Rama, Jr. ( Investigating Commissioner ), found  Atty. Francisco guilty of violations of the CPR and recommended that he be suspended for one (1) year from the practice of law. Initially, the Investigating Commissioner noted that the subsequent affidavit of desistance executed by Jimenez in the estafa case did not affect the investigation conducted by the CBD as it was not an ordinary court which accepted compromises or withdrawals of cases. After weighing on the claims of the parties, the Investigating Commissioner concluded that nothing in the records would show that a lawyer-client relationship existed between Atty. Francisco and Jimenez. 11  The circumstances would show that Atty. Francisco was an srcinal incorporator and shareholder of Clarion. He was also the legal counsel and corporate secretary of the said corporation, the articles of incorporation of which did not include Jimenez as an srcinal incorporator. He became a stockholder only in 2001, when Jimenez acquired shares from Thomas Chua and Teresita Alsua. Jimenez’s participation in Clarion affairs again stopped when he a ssigned the entirety of his shares in favor of complainant. Granting that Jimenez really owned 100% of Clarion as alluded to by Atty. Francisco, the report stated that it would appear that the latter permitted misrepresentations as to Clarion’s ownership t o be reported to the SEC through its GIS. The Investigating Commissioner also pointed out Atty. Francisco’s clear admission that the transfer of shares within Clarion were “without any consideration,” ran counter to the deeds of assignment that he again ad mittedly executed as corporate counsel. Worse, Atty. Francisco admitted to have simulated the loan and undervalued the consideration of the effected sale of the Forbes property, which displayed his unlawful, dishonest, immoral, and deceitful conduct in violation of Canon 1 of the CPR. Further, when he executed the affidavit containing allegations against the interest of Clarion and complainant, the Investigating Commissioner held that Atty. Francisco violated the rule on privileged communication and engaged in an act that constituted representation of conflicting interests in violation of Canons 15 and 21 of the CPR. In its January 3, 2013 Resolution, 12  the IBP-BOG adopted and approved, in toto , the findings and recommendation of the CBD against Atty. Francisco. The respondent received a copy of the said resolution on March 26, 2013 and moved for its reconsideration. 13   Atty. Francisco appealed to the compassion of the IBP-BOG, reasoning out that the penalty of suspension of one (1) year is too severe considering that in his more than three decades of practice, he had never been involved in any act that would warrant the imposition of disciplinary action upon him. It was only in 2007, when his client, Jimenez, experi-  _______________ 11 Jimenez was represented by the Law Office of Chavez Miranda Aseoche in the estafa  case he filed against the complainant. 12 Rollo , p. 278. 13 Id. , at pp. 289-304. 228   228 SUPREME COURT REPORTS ANNOTATED  Jimenez vs. Francisco   enced a difficult crisis involving his children and common-law partner that he experienced a major upheaval in his professional life. He apologized for his not being too circumspect in dealing with the relatives of Jimenez.  As to the charges against him, Atty. Francisco reiterated that his participation in the execution of the documents pertaining to the sale of the Forbes property were all connected to his capacity as Clarion’s corporate secretary and legal counsel, not to mention his ties with his client and friend, Jimenez. He admitted that he owed fidelity to Clarion and Jimenez, but denied that this duty extended to the incorporators and shareholders of Clarion. Thus, when complainant sought advice in her capacity as a shareholder in Clarion, no fiduciary duty arose on his part. In his own words, Atty. Francisco insisted that “Carol is not Clarion and   vice versa .” 14    Attached to Atty. Francisco’s motion for reconsideration was an affidavit executed by Jimenez, stating that he had retained the legal services of Atty. Francisco since 1999. Espousing Atty. Francisco’s defenses, Jimenez asserted that  Atty. Francisco’s law firm was in -charge of all the companies he owned in the Philippines. He directed Atty. Francisco to execute all the documentation to show his ownership of these companies, including Clarion. These documents were in the possession of complainant for safekeeping. When Jimenez ran for Congress in 2001, Atty. Francisco personally assisted him in the filing of his certificate of candidacy and the proceedings before the electoral tribunals. While he was in prison in the United States, it was Atty. Francisco who visited and told him that his children, Myla and Marcel, were then facilitating the sale of one of his companies, Meridian Telekoms, Inc., without his knowledge. He asked Atty. Francisco to keep quiet about his children’s betrayal and to wait until he could go home. When he filed the criminal cases against his children and complainant, the latter even filed a frivolous kidnapping case against Atty. Francisco. According to Jimenez, the people who committed crimes against him were now exhausting all possible means to keep Atty. Francisco silent and to prevent the latter from performing his duties as a lawyer. In its March 22, 2014 Resolution, 15  the IBP- BOG denied the respondent’s motion for reconsideration.
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