PHILIPPINE SUPREME COURT JURISPRUDENCE

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Republic of the Philippines
SUPREME COURT
Manila

EN BANC

NARCISO MELENDREZ and ERLINDA DALMAN, complainants, vs. ATTY. REYNERIO I. DECENA, respondent.

In a sworn complaint ¹ dated 25 September 1979, the spouses Erlinda Dalman and Narciso Melendrez charged Reynerio I. Decena, a member of the Philippine Bar, with malpractice and breach of trust. The complainant spouses alleged, among others, that respondent had, by means of fraud and deceit, taken advantage of their precarious financial situation and his knowledge of the law to their prejudice, succeeded in divesting them of their only residential lot in Pagadian City; that respondent, who was their counsel in an estafa case against one Reynaldo Pineda, had compromised that case without their authority.chanrobles virtual law library

In his answer dated 18 March 1980, respondent denied all the charges levelled against him and prayed for the dismissal of the complaint.chanrobles virtual law library

By resolution dated 14 April 1980, the administrative complaint was referred to the Office of the Solicitor General for investigation, report and recommendation.chanrobles virtual law library

Accordingly, the Solicitor General forthwith deputized the City Fiscal of Pagadian City, Jorge T. Almonte, to conduct the necessary investigation, with instructions to submit thereafter this report and recommendation thereon. Fiscal Almonte held several hearings on the administrative case until 15 July 1982, when he requested the Solicitor General to release him from the duty of investigating the case.chanrobles virtual law library

On 10 September 1982, the Solicitor General granted Fiscal Almonte's request and in his stead appointed the Provincial Fiscal of Zamboanga del Sur, Pedro S. Jamero, who resumed hearings on 15 June 1983.chanrobles virtual law library

Respondent filed with this Court on 9 June 1987, a motion seeking to inhibit Fiscal Jamero from hearing the case followed by an urgent motion for indefinite postponement of the investigation. Both motions were denied by the Court in a Resolution dated 21 September 1987 with instructions to the Solicitor General to complete the investigation of the administrative case and to render his report and recommendation thereon within thirty (30) days from notice.chanrobles virtual law library

On 19 July 1988, the Solicitor General submitted his Report and Recommendation ² dated 21 June 1988. In as Report, after setting out the facts and proceedings held in the present case, the Solicitor General presented the following:

FINDINGS

Complainants allege that on August 5, 1975, they obtained from respondent a loan of P 4,000.00. This loan was secured by a real estate mortgage (Annex C, Complainants' Complaint, p. 16, records). In the said Real Estate Mortgage document, however, it was made to appear that the amount borrowed by complainants was P5,000.00. Confronted by this discrepancy, respondent assured complainants that said document was a mere formality, and upon such assurance, complainants signed the same. The document was brought by complainant Narciso Melendres to a Notary Public for notarization. After the same was notarized, he gave the document to respondent. Despite the assurance, respondent exacted from complainants P500.00 a month as payment for what is beyond dispute usurious interest on the P5,000.00 loan. Complainants religiously paid the obviously usurious interest for three months: September, October and November, 1975. Then they stopped paying due to financial reverses. In view of their failure to pay said amounts as interest, respondent prepared a new document on May 7, 1976, a Real Estate Mortgage (Annex D, Complaint, p. 18, records) over the same lot 3125-C, replacing the former real estate mortgage dated August 5, 1975, but this time the sum indicated in said new contract of mortgage is P 10,000.00, purportedly with interest at 19% per annum. In this new Real Estate Mortgage, a special power of attorney in favor of respondent was inserted, authorizing him to sell the mortgaged property at public auction in the event complainants fail to pay their obligation on or before May 30, 1976. Without explaining the provisions of the new contract to complainants, respondent insisted that complainants sign the same, again upon the assurance that the document was a mere formality. Unsuspecting of the motive of respondent, complainants signed the document. Complainants Narciso Melendres again brought the same document to a Notary Public for notarization. After the document was notarized, he brought the same to respondent without getting a copy of it.chanrobles virtual law library

Complainants, relying on the assurance of the respondent that the second Real Estate Mortgage was but a formality, neither bothered to ask from respondent the status of their lot nor tried to pay their obligation. For their failure to pay the obligation, the respondent on October 12, 1976, applied for the extrajudicial foreclosure of the second real estate mortgage (Exhibit 16, Respondent's Position Paper). All the requirements of Act No. 3135, as amended, re extrajudicial sale of mortgage were ostensibly complied with by respondent. Hence, finally, title was transferred to him, and on June 20, 1979, respondent sold the involved property to Trinidad Ylanan for P12,000.00.chanrobles virtual law library

When informed of the above by one Salud Australlado on the first week of March 1979 (see Sworn Statement of complainant Narciso Melendres, p. 6, Folder No. 2 of case), and not having known the legal implications of the provisions of the second Real Estate Mortgage which they had executed, complainants could not believe that title to their lot had already been transferred to respondent and that respondent had already sold the same to a third person.chanrobles virtual law library

Upon learning of the sale in March, 1979, complainants tried to raise the amount of P10,000.00 and went to respondent's house on May 30, 1979 to pay their obligation, hoping that they could redeem their property, although three years had already lapsed from the date of the mortgage.chanrobles virtual law library

Respondent did not accept the proffered P10,000.00, but instead gave complainants a sheet of paper (Annex B, Complainants' Position Paper), which indicated that the total indebtedness had soared to P20,400.00. The computation was made in respondent's own handwriting. Complainants went home with shattered hopes and with grief in their hearts. Hence, the instant competent for disbarment against respondent filed on October 5, 1979.chanrobles virtual law library

Respondent DENIES all the allegations of complainants. He maintains that what appears on the two documents allegedly executed by complainants, i.e., that they obtained a loan of P5,000.00 on August 5, 1975 and another P10,000.00 on May 7,1976, is allegedly the truth, and claims that he in truth delivered the alleged amount of P5,000.00 to complainants and not P4,000.00. With respect to the second loan, respondent claims that he delivered to complainants P8,000.00, plus the P2,000.00 loan previously extended [to] complainants [by] one Regino Villanueva, which loan had been indorsed to respondent for collection, thus making a total of P10,000.00, as appearing on said document. Respondent denies that he exacted usurious interest of 10% a month or P500.00 from complainants. He asserts that the fact that complainants were able to secure a loan from the Insular Bank of Asia and America (IBAA) only proves the truth of his allegation that the title of the property, at the time complainants obtained a loan from IBAA on April 1976, was clear of any encumbrance, since complainants had already paid the original loan of P5,000.00 obtained from respondent; that complainants knew fully well all the conditions of said mortgage; and that his acquisition of the property in question was in accordance with their contract and the law on the matter. Thus, he denies that he has violated any right of the complainants.