Mercullo vs. Ramon

A lawyer who engages in dishonest and deceitful conduct by misrepresenting her capacity to perform a legal service, accepting client funds under false pretenses, and failing to initiate the promised undertaking commits a violation of Rule 1.01, Canon 1 of the Code of Professional Responsibility and the Lawyer's Oath, warranting suspension from the practice of law and restitution of the misappropriated funds with legal interest. The mitigating circumstance of first offense is unavailable where the lawyer disregarded notices from the IBP during the investigation of the complaint.

Carmelita T. Vedaño had an unpaid mortgage obligation to the National Home Mortgage Finance Corporation (NHMFC) secured by her residential property in Novaliches, Caloocan City. From 2002 to 2011, NHMFC sent her several demand letters, and the matter eventually progressed toward foreclosure and auction sale. Carmelita's children, Verlita Mercullo and Raymond Vedaño, were authorized to inquire into the status of the obligation and to pursue redemption of the property. Respondent Atty. Marie Frances E. Ramon was a lawyer formerly connected with the NHMFC who had charge over the mortgage account at the time the complainants first inquired.

From 2002 to 2011, the National Home Mortgage Finance Corporation (NHMFC) sent several demand letters to Carmelita T. Vedaño regarding her unpaid obligations secured by the mortgage over her residential property in Novaliches, Caloocan City. To avoid foreclosure, Carmelita authorized her children, Verlita Mercullo and Raymond Vedaño, to inquire from the NHMFC about the status of the obligations. They learned that the arrears had reached P350,000.00 and that the mortgage matter was under the charge of respondent Atty. Marie Frances E. Ramon, who was then unavailable.

On June 20, 2012, Carmelita received a sheriff's letter from the RTC in Caloocan City stating that her property would be put up for auction in July 2013. Verlita and Raymond went to the NHMFC and met with respondent, who advised them of their right to redeem the property within one year from foreclosure. In August 2013, they called respondent to express their intention to redeem by paying the redemption price; respondent agreed and scheduled a meeting for August 30, 2013.

On August 30, 2013, respondent arrived carrying the folder that the complainants had previously seen at the NHMFC. After orienting them on the redemption procedure, the complainants handed P350,000.00 to respondent, who signed two acknowledgment receipts — one for the redemption price and one for litigation expenses — and presented her NHMFC identification card. She promised to inform them once the redemption documents were ready for their mother's signature. On September 4, 2013, respondent met with Verlita and handed her a signed letter addressed to the Clerk of Court and Ex Officio Sheriff of the RTC in Caloocan City, requesting assistance in redeeming the property covered by EJF No. 7484-2013, along with a special power of attorney for Carmelita's signature.

On September 9, 2013, the complainants went to the NHMFC to follow up, only to discover that respondent had already ceased to be connected with the agency. On September 20, 2013, they met her at Branch 145 of the RTC in Makati City, where she informed them that the redemption was under process and the certificate of redemption would be issued in two to three weeks. After further communication through text messages, the complainants went to the Clerk of Court of the RTC in Caloocan City on November 27, 2013, where they discovered that respondent had neither deposited the redemption price nor filed any letter of intent to redeem the property. On December 5, 2013, they handed respondent a demand letter requiring her to return the P350,000.00; she acknowledged it and promised to deposit the amount in Verlita's bank account by December 16, 2013. She failed to fulfill this promise and did not appear at her subsequent scheduled hearings in Branch 145. With all attempts to reach her proving futile, the complainants filed their disbarment complaint with the IBP.

• Violation of the Code of Professional Responsibility: Whether respondent's conduct in accepting P350,000.00 from the complainants under the pretext of processing a property redemption, without actually initiating the redemption proceedings, constituted dishonest and deceitful conduct in violation of Rule 1.01, Canon 1 of the Code of Professional Responsibility and the Lawyer's Oath.
• Appropriate Penalty: Whether the IBP-recommended penalty of two years' suspension was commensurate with the gravity of respondent's misconduct, and whether the mitigating circumstance of first offense should apply.

• Violation of the Code of Professional Responsibility: Yes. Respondent's actuations — misrepresenting her capacity to process the redemption, concealing her severance from the NHMFC, falsely claiming to have initiated the redemption process, and failing to deposit the redemption price or file any letter of intent — constituted dishonest and deceitful conduct proscribed by Rule 1.01, Canon 1 of the Code of Professional Responsibility and the Lawyer's Oath.
• Appropriate Penalty: No, the two-year suspension was insufficient. A heavier sanction of five years' suspension was warranted due to the material prejudice caused to the clients' interest, and the mitigating circumstance of first offense was unavailable because respondent had disregarded the several notices sent by the IBP during the investigation.

• Violation of the Code of Professional Responsibility: The Lawyer's Oath is a source of the obligations and duties of every lawyer, and any violation thereof may be punished with disbarment, suspension, or other commensurate disciplinary action. Every lawyer must at no time be wanting in probity and moral fiber, which are conditions precedent to admission to the Bar and essential for continued membership in the legal profession. Respondent transgressed the Lawyer's Oath by receiving money from the complainants after making them believe she could assist in redeeming their mother's property. She was convincing because she had worked at the NHMFC, yet she did not inform them that she had ceased to be connected with the agency — a duty she was obliged to discharge. She further misled them by falsely claiming to have started the redemption process, concealing the fact that she had not even initiated the proceedings. Her conduct breached Rule 1.01, Canon 1 of the Code of Professional Responsibility, which proscribes unlawful, dishonest, immoral, or deceitful conduct. Evil intent was not essential to bring her conduct within the coverage of Rule 1.01; the Code exacted from her the utmost degree of fidelity and good faith in dealing with clients and the moneys entrusted to them pursuant to their fiduciary relationship. Her unfulfilled promise to return the money and her refusal to communicate with the complainants further aggravated the neglect and dishonesty attending her dealings.

• Appropriate Penalty: The IBP Board of Governors recommended suspension for two years and return of P350,000.00. The Court found this penalty not commensurate with the gravity of the misconduct, as respondent had caused material prejudice to the clients' interest, warranting a longer suspension of five years. The usual mitigation of the recommended penalty by virtue of the misconduct being her first offense could not be applied in her favor because she had disregarded the several notices sent by the IBP, reflecting undisguised contempt for the proceedings of a body the Court had invested with authority to investigate attorney misconduct. Such disregard exhibited irresponsibility and utter disrespect for the Court and the Judiciary. Requiring restitution with legal interest was fair and just because she did not comply in the least with her ethical undertaking to work on the redemption.

• Dishonesty and Deceit as Grounds for Disciplinary Action — A lawyer is proscribed from engaging in unlawful, dishonest, immoral, or deceitful conduct in dealings with others, especially clients. Evil intent is not essential to bring an unlawful act or omission within the coverage of Rule 1.01, Canon 1 of the Code of Professional Responsibility. The Code exacts from lawyers not only a firm respect for the law and legal processes but also the utmost degree of fidelity and good faith in dealing with clients and the moneys entrusted to them pursuant to their fiduciary relationship. In this case, respondent's misrepresentation of her capacity to process a redemption, concealment of her severance from the NHMFC, and false assurances about the redemption process constituted dishonest and deceitful conduct warranting suspension.

• Disregard of IBP Notices as Aggravating Circumstance — A lawyer's wanton disregard of notices sent by the IBP during disbarment proceedings reflects undisguised contempt for the IBP, a body invested by the Court with authority to investigate attorney misconduct, and exhibits irresponsibility and utter disrespect for the Court and the Judiciary. Such disregard disentitles the lawyer from the mitigating circumstance of first offense. In this case, respondent's failure to submit an answer, attend the mandatory conference, or otherwise participate in the IBP investigation negated the application of first-offense mitigation.

• Material Prejudice to Client's Interest as Basis for Heavier Sanction — Where a lawyer's professional misconduct causes material prejudice to the client's interest, a longer suspension from the practice of law is warranted beyond the penalty recommended by the IBP. The Court may increase the recommended penalty when the gravity of the misconduct so demands, as it did here in raising the suspension from two to five years.

• "Evil intent was not essential in order to bring the unlawful act or omission of the respondent within the coverage of Rule 1.01 of the Code of Professional Responsibility." — This passage articulates the principle that good faith or absence of malicious intent is not a defense to a charge of dishonest or deceitful conduct under Rule 1.01; the objective conduct itself is the measure of the violation.

• "The usual mitigation of the recommended penalty by virtue of the misconduct being her first offense cannot be carried out in her favor considering that she had disregarded the several notices sent to her by the IBP in this case." — This establishes that disregard of IBP proceedings forfeits the mitigating circumstance of first offense, reinforcing the duty of lawyers to participate in and respect disciplinary investigations.

• "The recommended penalty is not commensurate to the gravity of the misconduct committed. She merited a heavier sanction of suspension from the practice of law for five years. Her professional misconduct warranted a longer suspension from the practice of law because she had caused material prejudice to the clients' interest." — This passage justifies the Court's exercise of its power to increase the penalty beyond the IBP's recommendation, anchoring the heavier sanction on the gravity of the misconduct and the prejudice caused.

• Vitriolo vs. Dasig, A.C. No. 4984, April 1, 2003, 400 SCRA 172 — Cited for the proposition that the Lawyer's Oath is a source of obligations and duties of every lawyer, and that any violation may be punished with disbarment, suspension, or other disciplinary action.
• Penilla vs. Alcid, Jr., A.C. No. 9149, September 4, 2013, 705 SCRA 1 — Cited for the principle that probity and moral fiber are conditions precedent to admission to the Bar and essential for continued membership in the legal profession.
• Arroyo-Posidio vs. Vitan, A.C. No. 6051, April 2, 2007, 520 SCRA 1 — Cited for the rule that a lawyer is proscribed from engaging in unlawful, dishonest, immoral, or deceitful conduct in dealings with others, especially clients.
• Re: Report on the Financial Audit Conducted on the Books of Accounts of Atty. Raquel G. Kho, A.M. No. P-06-2177, April 19, 2007, 521 SCRA 25 — Cited for the proposition that evil intent is not essential to bring an unlawful act or omission within the coverage of Rule 1.01 of the Code of Professional Responsibility.
• Anacta vs. Resurreccion, A.C. No. 9074, August 14, 2012, 678 SCRA 352 — Cited for the principle that the Code exacts from lawyers the utmost degree of fidelity and good faith in dealing with clients and moneys entrusted pursuant to their fiduciary relationship.
• Pesto vs. Millo, A.C. No. 9612, March 13, 2013, 693 SCRA 281 — Cited for the principle that a lawyer should comply with orders of the Court and its duly constituted authorities, like the IBP, and that disregard of IBP notices exhibits irresponsibility and disrespect for the Judiciary.

• Canon 1, Rule 1.01, Code of Professional Responsibility — Provides that "[a] lawyer shall not engage in unlawful, dishonest, immoral, or deceitful conduct." Applied as the primary basis for finding respondent guilty, as her misrepresentation, concealment, and failure to initiate the redemption proceedings constituted dishonest and deceitful conduct.
• Rule 18.03, Code of Professional Responsibility — Provides that a lawyer shall not neglect a legal matter entrusted to him, and his neglect in connection therewith shall render him liable. Applied to hold respondent liable for neglecting the redemption matter entrusted to her by the complainants.
• The Lawyer's Oath — Serves as a source of the obligations and duties of every lawyer; any violation may be punished with disbarment, suspension, or other disciplinary action. Respondent's conduct was found to have transgressed the Lawyer's Oath.

Sereno, C.J.; Carpio, J.; Velasco, Jr., J.; Leonardo-De Castro, J. (On Leave); Brion, J. (On Leave); Peralta, J.; Del Castillo, J.; Perez, J. (On Official Leave); Mendoza, J. (On Official Leave); Reyes, J.; Perlas-Bernabe, J.; Leonen, J.; Jardeleza, J.; Caguioa, J.