A.C. No. 5041 November 23, 2004
Salvador G. Villanueva, complainant, vs. Atty. Ramon F. Ishiwata, respondent.

FACTS

Complainant Salvador G. Villanueva hired respondent Atty. Ramon F. Ishiwata to handle his labor case for unpaid wages and benefits against J.T. Transport, Inc. The parties entered into a compromise agreement wherein the company agreed to pay complainant P225,000.00. J.T. Transport delivered the full settlement amount via checks to respondent between June and August 1998. However, respondent remitted only P45,000.00 to complainant, misleading him that it was merely a “first installment” without disclosing the full payment. Upon learning the truth, complainant made repeated demands for the balance, but respondent refused to deliver the remaining funds.
In his defense, respondent claimed he had paid additional sums to complainant’s alleged wife, totaling P90,000.00, but could not produce receipts. He also asserted he deducted a 25% attorney’s fee (P56,250.00) and paid P33,000.00 to a research aide, leaving only a minimal balance due. The case was referred to the Integrated Bar of the Philippines (IBP) for investigation.

ISSUE

Whether respondent Atty. Ramon F. Ishiwata is administratively liable for violating the Code of Professional Responsibility in his handling of client funds.

RULING

Yes, respondent is administratively liable. The Supreme Court sustained the IBP’s findings, holding that respondent violated Canon 16 and its related rules of the Code of Professional Responsibility, which mandate that a lawyer must hold client funds in trust, account for them faithfully, and deliver them upon demand. Respondent’s failure to promptly account for and remit the full settlement amount to complainant, coupled with his inability to substantiate his alleged additional payments with receipts, gave rise to the presumption that he misappropriated the funds. This act constitutes a gross violation of professional ethics and a betrayal of the fiduciary nature of the attorney-client relationship.
The Court also found respondent’s claimed 25% attorney’s fee excessive. Applying Article 111 of the Labor Code, the allowable fee in a labor case for recovery of wages is only 10% of the amount recovered. Consequently, his fee was reduced to P22,500.00. After deducting this and the P45,000.00 already paid, respondent was ordered to restitute the balance of P154,500.00 to complainant. For his professional misconduct, respondent Atty. Ramon F. Ishiwata is SUSPENDED from the practice of law for one (1) year, with a stern warning against repetition.