G.R. No. A.C. No. 2614; May 21, 1991
MAXIMO DUMADAG, complainant, vs. ERNESTO L. LUMAYA, respondent.

FACTS

Complainant Maximo Dumadag engaged respondent Atty. Ernesto L. Lumaya as counsel in Civil Case No. 148 against the Avellanosa spouses, involving a sale of land. The case concluded via a court-approved compromise agreement, prepared by respondent, requiring the Avellanosas to pay Dumadag P4,644.00 by October 1, 1979, with a default clause entitling Dumadag to possession. Upon the Avellanosas’ default, Dumadag requested respondent to file a motion for execution, but respondent failed to do so. Dumadag filed it himself with court assistance, securing a writ.
Subsequently, Deputy Sheriff Rogelio Dongiapon, instead of serving the writ, facilitated the sale of a one-hectare portion of the subject land by the Avellanosas to Eleonora Astudillo to satisfy Dumadag’s claim. The deed of sale, notarized by respondent, acknowledged its purpose was to satisfy Dumadag’s claim. A Sheriff’s Return later confirmed the Avellanosas paid P4,344.00 to “Atty. Ernesto L. Lumaya, plaintiff’s counsel.” Dumadag alleged respondent never delivered this amount to him despite demand.

ISSUE

Whether respondent Atty. Ernesto L. Lumaya violated the Code of Professional Responsibility by failing to account for and deliver funds received for his client.

RULING

Yes, respondent is administratively liable. The Supreme Court found the records, including the Sheriff’s Return, conclusively established that respondent received P4,344.00 intended for his client, Dumadag. Respondent’s defenses—that Dumadag had previously received partial payments without receipts and that the notarized deed was a private sale he processed without full scrutiny—were unavailing. The Court noted the trial court in a subsequent civil case (No. 283) had ordered respondent to pay Dumadag the same sum, corroborating his liability.
The legal logic centers on the fiduciary duty of a lawyer under Canon 16 of the Code of Professional Responsibility. Rules 16.01 and 16.03 mandate a lawyer to account for and deliver client funds upon demand. By retaining the P4,344.00 received from the sheriff, respondent breached this fundamental duty. His actions demonstrated gross negligence and a conflict of interest, particularly in notarizing a deed that disposed of property central to his client’s case without ensuring the client received the proceeds. The indefinite suspension imposed serves to protect the public and uphold the integrity of the legal profession, emphasizing that misappropriation or failure to account for client funds warrants severe disciplinary action.