PACE vs. Alibutdan-Diaz

A lawyer may be suspended from the practice of law for engaging in dishonest or deceitful conduct in a non-legal capacity, such as serving as officer of a professional association, where such conduct demonstrates a lack of candor and integrity requisite for continued membership in the Bar.

Atty. Edna M. Alibutdan-Diaz served as National Treasurer of the Philippine Association of Court Employees (PACE), an umbrella organization of first and second level court employees. During her tenure, PACE held its 11th National Convention in Davao City in October 2005 and its 12th National Convention in Iloilo City in March 2007. As treasurer, Atty. Diaz was entrusted with the custody and management of all financial matters for these events. Following the 12th convention, questions arose regarding her handling of association funds, her eligibility to run for re-election, and her receipt of a term-end bonus approved by the outgoing board of directors.

• The Conventions and Financial Custody: PACE held its 11th National Convention in Davao City from October 6 to 8, 2005, followed by its 12th National Convention in Iloilo City on March 29 to 31, 2007. As National Treasurer, Atty. Diaz was entrusted with all money matters of the association.
• Delayed Liquidation: The liquidation report for the 11th convention was submitted by Atty. Diaz only on March 29, 2007, during the 12th convention—approximately seventeen months after the event. She failed to submit any liquidation report for the 12th convention despite a letter of demand dated June 20, 2007, and no turnover of monies occurred as a matter of procedure.
• The Term-End Bonus: On March 31, 2007, the last day of the 12th convention, the outgoing Board of Directors, including Atty. Diaz, passed Resolution No. 1-2007 appropriating ₱30,000.00 as term-end bonus for each qualified PACE official. At the time, Atty. Diaz was no longer working in the Judiciary, having filed her certificate of candidacy for Board Member of the First District of Ipil, Zamboanga Sibugay.
• The Re-election Bid: During the 12th convention, Atty. Diaz ran for the position of National Treasurer but was not elected. Her candidacy was questioned as she was allegedly no longer connected with the Judiciary, rendering her ineligible for the position reserved for court employees.
• Demand for Accountability: The new set of PACE officers issued Board Resolution No. 00-07 directing the past president and Atty. Diaz to explain their failure to liquidate the finances for both conventions.

• Timeliness of Liquidation: PACE maintained that Atty. Diaz's submission of the liquidation report for the 11th convention seventeen months after the event, and her failure to liquidate the 12th convention funds despite demand, constituted dishonest conduct violating Rule 1.01 of the Code of Professional Responsibility.
• Disqualification from Office: Petitioner argued that Atty. Diaz's candidacy for re-election as National Treasurer while no longer employed in the Judiciary demonstrated deceitful conduct, as the position was reserved for court employees.
• Improper Appropriation of Bonus: PACE contended that Atty. Diaz's participation in approving the ₱30,000 term-end bonus for herself, despite no longer being in judicial service, constituted unlawful and dishonest conduct.

• Adequate Liquidation: Atty. Diaz countered that she filed the Statement of Liquidation for the 11th convention less than a week after the event, which was duly audited and showed that net proceeds were fully accounted for and deposited to PACE accounts. She claimed to have filed the liquidation for the 12th convention on May 22, 2007, with the documents received by the former president and witnessed by other officers.
• Non-Candidacy: She denied running for re-election as National Treasurer, asserting that she had already filed her certificate of candidacy for a local legislative position, making a bid for PACE office a useless exercise.
• Collegial Approval of Bonus: Atty. Diaz argued that the term-end bonus was approved by the entire Board of Directors as a collegial body, not by her solely, and was initiated by other board members.
• Lack of Connection to Legal Practice: She maintained that her actions as PACE treasurer were unrelated to her practice of law and should be governed by the association's by-laws rather than the Code of Professional Responsibility.

• Liquidation of Funds: Whether Atty. Diaz violated Rule 1.01 of the Code of Professional Responsibility through her delay in liquidating PACE funds for the 11th and 12th national conventions.
• Eligibility for Re-election: Whether Atty. Diaz engaged in deceitful conduct by running for re-election as PACE National Treasurer when she was allegedly no longer connected with the Judiciary.
• Approval of Term-End Bonus: Whether Atty. Diaz's participation in approving a term-end bonus for herself, despite no longer being employed in the Judiciary, constituted unlawful and dishonest conduct violating Rule 1.01 of the CPR.

• Liquidation of Funds: The delay in submitting the liquidation report for the 11th convention (seventeen months after the event) and the failure to timely liquidate the 12th convention funds demonstrated a lack of candor required of lawyers. These actions, constituting part of a pattern of questionable conduct, violated the lawyer's duty to act with honesty and transparency.
• Eligibility for Re-election: Atty. Diaz's candidacy for re-election, evidenced by affidavits of former PACE officers notwithstanding her denial, constituted deceitful conduct given her ineligibility as she was no longer a judicial employee. The Court rejected her defense that she did not run, noting that evidence other than the certificate of candidacy established her candidacy.
• Approval of Term-End Bonus: Her participation in the approval of Resolution No. 1-2007 granting herself a ₱30,000 bonus, while no longer in the Judiciary, demonstrated a lack of candor and integrity. The cumulative effect of these actions—delayed liquidation, improper candidacy, and self-approving bonus participation—reflected adversely on her moral character as a member of the Bar.

• Practice of Law as a Privilege Conditioned on Good Moral Character — Membership in the legal profession is not a right but a privilege that requires continuous possession of good moral character. Lawyers must demonstrate the highest standards of honesty, integrity, and fair dealing in all their affairs, whether professional or personal, and must conduct themselves beyond reproach at all times. The Court applied this doctrine to emphasize that Atty. Diaz's actions, even in a non-legal capacity as PACE treasurer, reflected on her fitness to remain a member of the Bar.
• Candor as the Essence of Professional Membership — Candor in all dealings constitutes the essence of honorable membership in the legal profession. Lawyers are bound by their oath to speak the truth and to conduct themselves according to the best of their knowledge and discretion, with fidelity to courts and clients. The Court held that Atty. Diaz's delay in liquidating funds, her denial of candidacy contradicted by evidence, and her participation in self-approving a bonus demonstrated a lack of the candor required of all practitioners.
• Applicability of Professional Responsibility Rules to Non-Legal Activities — The Code of Professional Responsibility applies to a lawyer's conduct even in capacities unrelated to the practice of law where such conduct reflects adversely on the lawyer's moral character and fitness to remain a member of the Bar. The Court rejected the argument that Atty. Diaz's actions as PACE treasurer were governed solely by the association's by-laws, holding instead that her conduct was subject to disciplinary action under Rule 1.01 of the CPR.

• "Everyone should keep in mind that the practice of law is only a privilege. It is definitely not a right. In order to enjoy this privilege, one must show that he possesses, and continues to possess, the qualifications required by law for the conferment of such privilege." — Emphasizing the conditional nature of membership in the Bar.
• "Candor in all their dealings is the very essence of a practitioner's honorable membership in the legal profession. Lawyers are required to act with the highest standard of truthfulness, fair play and nobility in the conduct of litigation and in their relations with their clients, the opposing parties, the other counsels and the courts." — Defining the standard of conduct expected of lawyers.
• "Atty. Diaz' delay in the liquidation of the finances of PACE; her running for re-election... and her involvement in the approval or passage of the questioned term-end bonus of PACE officers, including herself even though she was no longer working in the Judiciary, were definitely not the candor the Court speaks of." — Applying the standard to the specific facts.

• Sonic Steel Industries, Inc. v. Chua, AC No. 6942, July 17, 2013, 701 SCRA 340, 353 — Cited for the principle that lawyers must act with the highest standard of truthfulness, fair play and nobility.
• Ronquillo v. Cezar, 524 Phil. 311, 317 (2006) — Cited for the standard that the Bar maintains a high standard of honesty and fair dealing, and that violation of these standards justifies suspension or disbarment.
• Malhabour v. Sarmiento, 520 Phil. 529, 536 (2006) — Cited for the principle that lawyers must uphold the integrity and dignity of the legal profession and refrain from acts that lessen public trust in the profession.

• Chapter I, Canon 1, Rule 1.01, Code of Professional Responsibility — "A lawyer should not engage in an unlawful, dishonest, immoral or deceitful conduct." The Court applied this provision to sanction Atty. Diaz for her cumulative acts demonstrating lack of candor.

Antonio T. Carpio (Chairperson), Mariano C. Del Castillo, Bienvenido L. Reyes (Designated Acting Member per Special Order No. 1881 dated November 25, 2014), and Marvic M.V.F. Leonen.