TL;DR

In Romo v. Ferrer, the Supreme Court of the Philippines suspended Atty. Orheim T. Ferrer for six months for failing to account for and return PHP 295,000.00 to his client, Salvacion Romo. These funds were settlement proceeds from a BP 22 case Atty. Ferrer handled on Romo’s behalf. Despite receiving PHP 375,000.00 from the opposing party, Atty. Ferrer only remitted PHP 80,000.00 and failed to provide a proper accounting, violating his fiduciary duty. The Court emphasized that lawyers are trustees of client funds and must maintain meticulous records and provide transparent accounting upon demand. This ruling reinforces the high ethical standards expected of legal professionals in managing client money and underscores that failure to uphold this duty can result in disciplinary action, including suspension from the practice of law.

Broken Trust: When a Lawyer Fails to Account for Client’s Settlement Funds

The case of Salvacion C. Romo v. Atty. Orheim T. Ferrer, A.C. No. 12833, decided on November 10, 2020, serves as a stark reminder of the fiduciary responsibilities lawyers owe to their clients, particularly concerning client funds. The core issue revolves around the ethical duty of a lawyer to account for money received on behalf of a client. Salvacion Romo engaged Atty. Orheim Ferrer to prosecute a case for violation of Batas Pambansa Bilang 22 (BP 22) against Amada Yu. During the course of representation, Amada Yu settled the case and paid a total of PHP 375,000.00 to Atty. Ferrer in various installments. However, Atty. Ferrer only remitted PHP 80,000.00 to Romo, leaving a significant balance of PHP 295,000.00 unaccounted for.

Despite repeated demands from Salvacion Romo for an accounting and the return of the remaining funds, Atty. Ferrer failed to comply. He initially claimed to have remitted PHP 120,000.00 and alleged that other payments were made directly to Romo’s daughter, without providing any concrete evidence. He even disputed the acknowledgment receipts presented by Romo, claiming they were fabricated. However, in a Memorandum of Agreement, Atty. Ferrer acknowledged his obligation to pay the PHP 295,000.00 balance, further undermining his defense. This case proceeded as an administrative complaint before the Integrated Bar of the Philippines (IBP), eventually reaching the Supreme Court for final resolution.

The legal framework governing this case is primarily found within the Code of Professional Responsibility, specifically Rule 16.01 of Canon 16, which mandates that “A lawyer shall account for all money or property collected or received for or from the client.” This rule is not merely a procedural guideline; it embodies the fundamental principle of trust inherent in the attorney-client relationship. The Supreme Court has consistently held that this duty to account is absolute and that failure to render an accounting upon demand constitutes a breach of professional ethics, potentially warranting disciplinary sanctions. The Court in this case reiterated this principle, emphasizing that:

A lawyer is a trustee of all client’s funds and properties, which may come into his possession. The failure to render an accounting upon demand deserves administrative sanctions.

The IBP Commission on Bar Discipline initially recommended a two-year suspension, finding Atty. Ferrer’s actions indicative of an intent to misappropriate client funds. The Commission highlighted Atty. Ferrer’s admission of receiving PHP 295,000.00 and his failure to substantiate his claims of remittance to Romo’s daughter. The IBP Board of Governors adopted these findings and recommendations. In its ruling, the Supreme Court affirmed the IBP’s factual findings but modified the penalty to a six-month suspension, considering it was Atty. Ferrer’s first offense and he had expressed willingness to return the funds. The Court referenced several precedents where lawyers were similarly sanctioned for failing to account for client funds, typically resulting in one-year suspensions. However, in Atty. Ferrer’s case, the mitigating circumstances led to a reduced suspension period.

The Supreme Court’s decision underscores the gravity with which it views breaches of fiduciary duty, particularly the mishandling of client funds. It serves as a potent reminder to all lawyers of their ethical obligations to maintain meticulous records of client money, to provide transparent and prompt accounting, and to avoid any commingling or misappropriation of such funds. The Court’s ruling in Romo v. Ferrer reinforces the principle that the legal profession is built on trust and that lawyers must act as honorable trustees of their clients’ resources. Failure to do so not only harms the client but also erodes public confidence in the legal system as a whole. The directive to return the misappropriated funds with interest further emphasizes the Court’s commitment to ensuring clients are made whole when lawyers fail in their fiduciary duties.

FAQs

For inquiries regarding the application of this ruling to specific circumstances, please contact Atty. Gabriel Ablola through gaboogle.com or via email at connect@gaboogle.com.

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: Romo v. Ferrer, A.C. No. 12833, November 10, 2020