G.R. No. A.C. No. 4219; December 8, 2003
Lothar Schulz, complainant, vs. Atty. Marcelo G. Flores, respondent.

FACTS

Complainant Lothar Schulz, a German national, engaged the services of respondent Atty. Marcelo G. Flores to file a complaint against Wilson Ong for revocation of contract and damages due to Ong’s failure to deliver a purchased jeep. Respondent initially advised that barangay conciliation was unnecessary, but three months later instructed filing with the Lupon Tagapayapa of Tabuc-tubig. Ong refused to appear, arguing improper venue as he resided in Barangay Banilad. During this delay, Ong preemptively filed a suit for Specific Performance against Schulz. Complainant alleged respondent’s inaction caused him to become a defendant instead of a complainant.
Complainant further charged respondent with collecting excessive fees, refusing to return excess payments and case files, and demonstrating deceit. The agreed fees were P5,000 if the case did not reach court and P10,000 plus appearance fees if it did. However, in the Answer prepared for Schulz in Ong’s suit, respondent alleged his fees were P50,000 with a P1,000 appearance fee, claiming Ong would pay. After Schulz discharged him, respondent refused to return P12,000 of the P17,000 paid and retained the files unless Schulz signed a waiver. This led to a collection suit by Schulz.

ISSUE

Whether respondent Atty. Marcelo G. Flores violated the Code of Professional Responsibility warranting disciplinary action.

RULING

Yes, respondent is guilty of negligence, incompetence, and violation of ethical rules, warranting suspension. The Court emphasized that a lawyer’s continued possession of good moral character is essential to the profession, as mandated by Rule 1.01 of the Code of Professional Responsibility prohibiting dishonest or deceitful conduct. Respondent’s failure to promptly and correctly advise on the proper venue for barangay conciliation constituted negligence and incompetence, directly resulting in his client being preemptively sued. This demonstrated a lack of the required dedication and competence.
Furthermore, respondent’s conduct regarding attorney’s fees and client funds was unethical. His act of stipulating a P50,000 fee in a pleading contrary to his original agreement with the client, and his unjustified refusal to return the unearned portion of the advance payment after being discharged, constituted deceit and a gross violation of trust. A lawyer is a fiduciary and must account for and return any unearned fees. The unjust retention of both money and client files betrayed the high degree of good faith required in lawyer-client relations. The Integrated Bar of the Philippines’ recommendation was adopted. Respondent Atty. Marcelo G. Flores is SUSPENDED from the practice of law for six months, ORDERED to return P12,000 with legal interest and all client papers, and STERNLY WARNED.