In Besa-Edelmaier v. Arevalo, the Supreme Court addressed a complaint against Atty. Restituto M. Arevalo for violating the Code of Professional Responsibility. The Court found Arevalo guilty of failing to diligently pursue a client’s case after accepting a substantial attorney’s fee, not issuing receipts for payments, and initially denying receipt of funds. While the IBP recommended disbarment, the Supreme Court deemed suspension more appropriate given mitigating circumstances. This decision underscores the high standards of conduct expected of lawyers and the importance of maintaining client trust through diligence, transparency, and accountability.

Broken Promises: When a Lawyer’s Neglect Undermines Client Confidence

The case began when Marie Judy Besa-Edelmaier hired Atty. Restituto M. Arevalo in February 2003 to pursue a monetary claim against MR Knitwear Specialist Phil., Inc. (MR Knitwear). Edelmaier, an employee of BPI, had receivables of approximately P10,000,000.00 from MR Knitwear. Arevalo accepted the engagement for a fee of P1,000,000.00, covering legal services up to the appellate level, and demanded an advance payment of P900,000.00. Edelmaier paid the amount, but Arevalo did not issue receipts for either payment. Despite several follow-ups, Arevalo did not file a case against MR Knitwear, claiming it was more prudent to delay due to potential counterclaims. Edelmaier eventually terminated Arevalo’s services and demanded reimbursement, which he ignored, leading to the administrative complaint.

In refutation, Arevalo averred that (1) he assisted complainant in her separation from BPI without being dishonorably dismissed on the grounds of conflict of interest and breach of trust; (2) he cut short his stay in the USA and attended to a demand letter from MR Knitwear seeking return of overcharged interest payments and threatening complainant with the possible filing of estafa charges; and (3) upon arrival in the Philippines, he immediately coordinated with complainant about the status of MR Knitwear’s demand. Although he opined that it was untimely to file a collection case against MR Knitwear at the time, he nevertheless agreed to file such case and advised complainant to prepare the filing fees therefor. However, he never heard from complainant again until he received the demand letter for the reimbursement of the amounts paid to him.

The Integrated Bar of the Philippines (IBP) investigated the complaint. Commissioner Oliver A. Cachapero of the IBP­ CBD issued a Report and Recommendation, finding Arevalo guilty of breaching his duties and recommending disbarment. The IBP Board of Governors adopted this recommendation. Arevalo moved for reconsideration, arguing that he did not deliberately neglect his duty, the attorney’s fees were reasonable, and disbarment was too harsh. He later manifested that he had voluntarily returned the P900,000.00 to Edelmaier, who acknowledged receipt. The IBP denied his motion for reconsideration, leading Arevalo to file a petition with the Supreme Court.

The Supreme Court emphasized that the practice of law is a privilege granted by the State, requiring lawyers to maintain high standards of legal proficiency, morality, honesty, and integrity. Lawyers must fulfill their duties to society, the legal profession, the courts, and their clients, as embodied in the Code of Professional Responsibility. The Court noted that lawyers may be disciplined for conduct falling short of these standards, whether in their professional or private capacity. Moreover, the appropriate penalty for an errant lawyer depends on the sound discretion of the court based on the specific facts of the case. An attorney enjoys the legal presumption that he is innocent of the charges made against him until the contrary is proved, and that as an officer of the Court, he is presumed to have performed his duties in accordance with his oath.

The Court found that Arevalo’s actions fell short of the required standards. Despite receiving a substantial attorney’s fee, he failed to file the collection of money suit against MR Knitwear, which was the primary reason for his engagement. Arevalo’s justification for not filing the suit—that it was a prudent strategy due to potential counterclaims—was deemed insufficient. He did not adequately discuss this strategy with Edelmaier or undertake preparatory acts such as sending a demand letter to MR Knitwear. The Court rejected Arevalo’s claim that his inaction benefited Edelmaier by enabling her to retire from BPI without difficulties and preventing MR Knitwear from pursuing a case against her. The Court held that these benefits were speculative and did not excuse his failure to act.

The Supreme Court cited Canon 18 of the Code of Professional Responsibility, which requires lawyers to serve their clients with competence and diligence. Rules 18.03 and 18.04 further specify that a lawyer shall not neglect a legal matter entrusted to him and shall keep the client informed of the case’s status. Additionally, the Court found that Arevalo violated Rule 16.03 by failing to reimburse the amounts paid to him in a timely manner and Rule 16.01 by not issuing receipts for the amounts he received. The fact that Arevalo initially refused to acknowledge receipt of the P800,000.00 cash, only to later admit it, further underscored his misconduct.

The Court stated that Arevalo’s subsequent return of the P900,000.00 did not exonerate him from administrative liability. This return occurred after the IBP Board of Governors had already approved the recommendation to disbar him, suggesting it was motivated by the desire to avoid losing his license to practice law. While acknowledging the seriousness of Arevalo’s misconduct, the Court found that the penalty of disbarment was too severe under the circumstances. The Court considered that this was Arevalo’s first infraction, that he had reimbursed the entire amount, and that Edelmaier appeared to have abandoned the case after receiving the money.

Considering these factors, the Court determined that a suspension from the practice of law for two years was a more appropriate penalty. The Court has previously imposed similar suspensions in cases involving neglect of duty and failure to return client funds. In Rollon v. Naraval, the Court suspended a lawyer for two years for failing to render legal service and return money. Similar sanctions were imposed in Small v. Banares and Jinon v. Jiz for failure to file cases and perform required services, respectively. In Segovia-Ribaya v. Lawsin, a lawyer was suspended for one year for failing to fulfill obligations under a retainership agreement.

FAQs

What was the key issue in this case?	The key issue was whether Atty. Arevalo violated the Code of Professional Responsibility by neglecting his client’s case, failing to issue receipts for payments, and initially denying receipt of funds. The case examined the extent of a lawyer’s duty to a client and the appropriate disciplinary action for failing to meet those obligations.
What was the main reason for the administrative complaint?	The administrative complaint was filed because Atty. Arevalo failed to file a collection of money suit against MR Knitwear despite receiving P900,000.00 in attorney’s fees from Edelmaier. Additionally, he did not issue receipts for the payments and initially denied receiving the cash portion of the payment.
What did the IBP recommend as a penalty?	The IBP recommended that Atty. Arevalo be disbarred from the practice of law. The IBP found him guilty of breaching his duties to his client and to the legal profession, warranting the most severe disciplinary measure.
Why did the Supreme Court reduce the penalty to suspension?	The Supreme Court reduced the penalty to a two-year suspension, considering that it was Arevalo’s first infraction, he reimbursed the full amount to Edelmaier, and Edelmaier appeared to have abandoned the case after receiving the reimbursement. The Court deemed disbarment too harsh given these mitigating circumstances.
What ethical rules did Atty. Arevalo violate?	Atty. Arevalo violated Canons 16 and 18 of the Code of Professional Responsibility. Specifically, he violated Rule 16.01 (failure to account for money), Rule 16.03 (failure to deliver funds when due), Rule 18.03 (neglect of a legal matter), and Rule 18.04 (failure to keep the client informed).
Did Atty. Arevalo’s reimbursement of the money exonerate him?	No, Atty. Arevalo’s reimbursement did not exonerate him. The Supreme Court noted that the reimbursement occurred after the IBP had already recommended disbarment, suggesting it was motivated by a desire to avoid disciplinary action rather than genuine remorse.
What is the significance of this case for lawyers?	This case underscores the importance of diligence, transparency, and accountability in the attorney-client relationship. Lawyers must diligently pursue their clients’ cases, keep clients informed, properly account for funds, and avoid any conduct that undermines client trust.
What is the effect of the Supreme Court’s decision?	Atty. Arevalo is suspended from the practice of law for two years, effective immediately upon his receipt of the Court’s decision. He is also sternly warned that any repetition of similar acts will be dealt with more severely.

The Supreme Court’s decision in Besa-Edelmaier v. Arevalo serves as a reminder to all lawyers of the high ethical standards required in the legal profession. It emphasizes the importance of fulfilling duties to clients with competence, diligence, and transparency, and underscores that failure to do so can result in serious disciplinary action. This case reinforces the fiduciary nature of the attorney-client relationship and the need to uphold client trust at all times.

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Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: MARIE JUDY BESA­-EDELMAIER, COMPLAINANT, VS. ATTY. RESTITUTO M. AREVALO, RESPONDENT., A.C. No. 9161, July 12, 2022