FIRST DIVISION
[A.C. No. 9348. January 31, 2018.]
RONALD C. WAKLEY, complainant, vs. ATTY. ZOSIMO C. MENDOZA, JR., respondent.
NOTICE
Sirs/Mesdames :
Please take notice that the Court, First Division, issued a Resolution datedJanuary 31, 2018which reads as follows: HTcADC
"A.C. No. 9348 (Ronald C. Wakley, Complainant, v. Atty. Zosimo C. Mendoza, Jr., Respondent.)
This resolves the Complaint 1 for disbarment filed on January 20, 2012 by Ronald C. Wakley (complainant) against Atty. Zosimo C. Mendoza, Jr. (Atty. Mendoza) charging the latter with fraud, deceit, dishonesty and other acts in violation of the Lawyer's Oath and the Code of Professional Responsibility (CPR), specifically Canons 1 (Rule 1.01), 2 7 (Rule 7.03), 3 15, 16 and 17. 4
Antecedent Facts
Complainant averred that sometime in the second quarter of 2007, he was invited by Atty. Mendoza's wife, Editha, to jointly open and run a 7-Eleven convenience store in Olongapo City with her. 5 Editha had been offered a franchise to operate the said store by Philippine Seven Corporation, which Editha accepted. 6 Complainant was also interested because he wanted his wife, Rosanna Wakley, to have her own business.
The business proposal was allegedly discussed with complainant at the residence of Atty. Mendoza and Editha, where it was agreed that the capital contributions to the intended corporation, its ownership and distribution of profits between the parties shall be 51% (Editha's group) and 49% (Rosanna's group), respectively. The total estimated investment would be PhP4,510,000. Out of this amount, complainant agreed to advance 50% of his 49% participation in the venture or PhP1,104,950 to cover the franchise fee, incorporation and pre-operating expenses. 7
According to the complainant, Atty. Mendoza was present during the discussion and that, the latter drafted Memorandum of Agreement (MOA) 8 dated May 17, 2007 documenting the foregoing agreement, which was signed by Editha and the complainant as contracting parties and witnessed by Nigel Blake Wakley and Analiza Dapidran. On the same date, the memorandum was notarized, and pursuant to the undertaking, Rosanna caused the deposit of PhP1,104,950 to the bank account of the Spouses Mendoza with the Bank of the Philippine Islands. 9
The parties subsequently agreed that the corporation that would operate the 7-Eleven store should be known as EM & RW from the initials of Editha Mendoza and Rosanna Wakley. 10 The legal services of Atty. Mendoza was allegedly retained for the incorporation of EM & RW for which he was allegedly paid PhP125,000 from Rosanna's cash contribution. 11
Prior to the incorporation, Editha allegedly invited the complainant to their residence and submitted to him a Financial Report and Statement of Account prepared and certified as correct by Editha, to justify her request for additional investment to operate the store. Per the said report, the parties would now need to invest a total of PhP6,169,700 from the initial amount of PhP4,510,000. The spouses Mendoza would have to invest instead the amount of PhP3,146,547 equivalent to 51%, while Rosanna would have to put up the remaining 49% or PhP3,023,153. 12 In accord with the additional investment needed for their venture, Rosanna caused the issuance of another check in the amount of PhP1,918,203 to the spouses Mendoza. 13
On June 29, 2007, EM & RW was incorporated with the Securities and Exchange Commission (SEC). 14 As reflected in the 2011 General Information Sheet of EM & RW, Editha is the President and Chairman of the Board, while Atty. Mendoza is a member of the Board. 15
On October 17, 2007, Atty. Mendoza allegedly drafted a second MOA 16 stating in its whereas clause that the parties, who have now agreed to operate two (2) 7-Eleven stores, "have fully contributed their respective shares in the capital of the business." The second MOA was signed by Editha and Rosanna as contracting parties, as well as Atty. Mendoza and the complainant signifying their marital consent.
A computation of all the cash investments of Rosanna was thereafter made in the total amount of PhP9,055,435.80 for the opening and operation of two 7-Eleven convenience stores. 17
In 2009, the audit report 18 of OCM Accounting and Auditing Services revealed that Atty. Mendoza and Editha had no cash deposit representing their share in the capital investment of EM & RW. Also, Editha allegedly made unauthorized disbursements and incurred unliquidated expenses using the funds of EM & RW without the Board's approval.
Editha confirmed the findings of the audit report that they did not make any cash contribution to EM & RW, and that her actual contribution valued at PhP4,100,000 was in the form of structures and/or improvements in the leased property of the first store and her premium on goodwill. 19 aScITE
Unsatisfied with Editha's explanation, Rosanna sent a demand letter 20 on May 11, 2010 addressed to the spouses Mendoza, asking them to immediately contribute PhP9,425,045 corresponding to their 51% share in the capital of the stores owned and operated by EM & RW. Rosanna also filed a criminal complaint for estafa 21 with the Office of the City Prosecutor, Department of Justice (DOJ), Olongapo City, docketed as I.S. No. III-10-INV-11B-00179 against the spouses Mendoza and qualified theft 22 in NPS Docket No. III-10-INV-IIB-00180 to 00184 against Editha, which were subsequently dismissed, as well as an intra-corporate suit 23 with the Regional Trial Court (RTC), Branch 72, Olongapo City in I.C. Case No. 11-0-002.
On March 19, 2012, the Court issued a Resolution 24 directing Atty. Mendoza to file his Comment on the present disbarment case within ten days from notice.
In his June 11, 2012 Comment, 25 Atty. Mendoza averred: that he was not the lawyer of the complainant and Editha, nor was he privy to, the discussions and negotiations between them regarding the business venture to operate a 7-Eleven convenience store in Olongapo City; that the complainant and Rosanna were aware that Editha would be contributing both tangible and intangible assets to the capital of EM & RW; that he did not violate Section 62 of the Corporation Code because no shares of stock have yet been issued by EM & RW corresponding to the value of Editha's tangible and intangible contributions. He asserted that complainant failed to prove his accusations by clear, convincing, and satisfactory evidence and that complainant committed perjury and falsification just to make out a case against him and Editha.
On September 5, 2012, this Court issued a Resolution 26 referring the case to the Integrated Bar of the Philippines (IBP) for investigation, report and recommendation within 90 days from receipt of the records.
On January 29, 2013, the IBP Commission on Bar Discipline (CBD) issued a Notice of Mandatory Conference/Hearing 27 requiring both parties to appear.
Subsequently, on February 21, 2013, the IBP-CBD issued an Order 28 directing both parties to file their position papers within 15 days from notice and declared that after such period, the case shall be deemed submitted for report and recommendation with or without the said position papers having been filed.
Resolutions of the IBP Commissioner and
On June 24, 2013, Commissioner Honesto A. Villamor (Commissioner Villamor) issued his Report and Recommendation 29 finding Atty. Mendoza not guilty of the charges against him and consequently recommended that the present disbarment case be dismissed for lack of merit.
In a Notice of Resolution No. XXI-2014-568 30 dated September 27, 2014, the IBP Board of Governors adopted and approved the Report and Recommendation of Commissioner Villamor after finding his recommendation to be fully supported by the evidence on record and applicable laws.
Ruling of the Court
Upon careful review, this Court finds the Report and Recommendation of the IBP Commissioner, as adopted by the Board of Governors, proper under the circumstances.
In administrative proceedings, the complainant has the burden of proving with substantial evidence the allegations in the complaint. Mere allegation is not evidence and is not equivalent to proof. 31 Moreover, an administrative case against a lawyer must show the dubious character of the act done as well as of the motivation thereof. 32 In the present case, the complainant failed to substantiate his charge that Atty. Mendoza committed acts in contravention of the standards provided for by the CPR which would have warranted the imposition of administrative sanction against him.
As correctly observed by the IBP Commissioner, the complainant failed to establish that Atty. Mendoza participated in the discussions and negotiations between the complainant and Editha to form the business that was later incorporated as EM & RW. Indeed, Atty. Mendoza could not have acted as a lawyer for both his wife, Editha, and the complainant in the business negotiations, as they might have conflicting interests with each other. We note that there was no evidence that it was Atty. Mendoza who drafted the MOAs executed by the complainant and Editha on May 17, 2007 and October 17, 2007 respectively. Neither was there any evidence that Atty. Mendoza's services were retained to incorporate EM & RW. Furthermore, the evidence showing that Atty. Mendoza was the counsel for the complainant in a case entitled People vs. Ronald Wakley before the MTCC of Olongapo City is immaterial to the case at hand, as what is under consideration is the period that the complainant and Editha were discussing and setting up their business. HEITAD
A plain reading of the MOA dated May 17, 2007 shows that the complainant's initial contribution of PhP1,104,950 would be used for payment of the franchise fee, incorporation and pre-operation expenses. Complainant cannot now claim deception by denying full knowledge that the said expenses would be paid for out of the said cash contribution.
In coming to the conclusion that the complainant was in fact fully aware that Editha's contribution to the capital of the business would be in the form of tangible and intangible assets, Commissioner Villamor aptly observed that:
14. Complainant is a seasoned and well-connected Australian businessman who owns multimillion hotel businesses in Angeles City and Olongapo City, it would be incredulous to believe that he was fooled into entering the 17th May 2007 Agreement with Respondent's wife and in acceding to the 17th October 2007 Agreement. 33
That complainant intelligently negotiated and could not have misunderstood Editha's participation may be gleaned from Commissioner Villamor's Report and Recommendation citing the following:
8. x x x Complainant agreed in particular that Respondent's wife would contribute to the business the building structure built by the spouses Respondent and wife for Henlin Restaurant. Complainant even inspected the building structure, which is in fact the same structure where 7-Eleven Rotonda is established.
9. That there is no truth that the building shell is being subleased to the Philippine Seven corporation. The building shell was built and owned by spouses Respondent and Editha Food corporation and has been part of Respondent's wife['s] contributions to EM & RW Convenience Store Corporation in consonance with the agreement between the complainant and Respondent's wife. Only [the] 120 square meter parcel of land where the building is situated is being subleased by Zos and Edith Food corporation to Philippine Seven corporation. (citation omitted)
10. The amount of Respondent's wife['s] deposit indicated in the Statement of Account (citation omitted) clearly corresponds to the value of the "building shell" booked as item "D" of the Pre-Operating Expenses in the Financial Report.
11. The Financial Report and Statement of Account only prove that Respondent's wife never made assurances or representations that her contribution would only be in the form of money. 34
Anent the alleged violation of Section 62 of the Corporation Law, the Court agrees that there is none, considering that no shares of stock were issued by EM & RW corresponding to the value of the tangible and intangible contributions made by respondent's wife. 35
WHEREFORE, finding the recommendation of the IBP to be fully supported by the evidence on record and applicable laws, the Court RESOLVES to:
(i) NOTE the Notice of Resolution No. XXI-2014-568 dated September 27, 2014 of the IBP Board of Governors adopting and approving the Report and Recommendation of the Investigating Commissioner, and dismissing the complaint against respondent;
(ii) NOTE the Letter dated February 6, 2017 of the IBP transmitting the documents pertaining to this case; and
(iii) DISMISS the case against Atty. Zosimo C. Mendoza, Jr. and consider the same as CLOSED and TERMINATED.
SO ORDERED."
Very truly yours,
(SGD.) LIBRADA C. BUENADeputy Division Clerk of Court
Footnotes
1.Rollo, pp. 1-42.
2.Canon 1. A lawyer shall uphold the constitution, obey the laws of the land and promote respect for law and legal processes.
Rule 1.01. A lawyer shall not engage in unlawful, dishonest, immoral or deceitful conduct.
3.Canon 7. A lawyer shall at all times uphold the integrity and dignity of the legal profession and support the activities of the Integrated Bar.
xxx xxx xxx
Rule 7.03. A lawyer shall not engage in conduct that adversely reflects on his fitness to practice law, nor shall he, whether in public or private life, behave in a scandalous manner to the discredit of the legal profession.
4.Canon 15. A lawyer shall observe candor, fairness and loyalty in all his dealings and transactions with his client.
xxx xxx xxx
Canon 16. A lawyer shall hold in trust all moneys and properties of his client that may come into his possession.
Canon 17. A lawyer owes fidelity to the cause of his client and he shall be mindful of the trust and confidence reposed in him.
5.Rollo, Vol. I, p. 6.
6.Id. at 7.
7.Id. at 8.
8.Id. at 68-69.
9.Id. at 10.
10.Id. at 11.
11.Id.
12.Id. at 72-73.
13.Id. at 14.
14.Id. at 74.
15.Rollo, Vol. IV, p. 1887.
16.Rollo, Vol. I, pp. 75-77.
17.Id. at 15-16.
18.Id. at 78.
19.Id. at 83-97.
20.Id. at 98-99.
21.Id. at 258-304.
22. Id. at 498-505.
23. Rollo, Vol. IV, pp. 1573-1597.
24. Rollo, Vol. I, pp. 406-407.
25. Id. at 417-436.
26. Id. at 747.
27. Rollo, Vol. II, p. 833.
28. Id. at 835.
29. Rollo, Vol. VI, pp. 2008-2014.
30. Id. at 2007.
31. Cruz-Villanueva v. Atty. Rivera, 537 Phil. 409, 414-415 (2006).
32. Manubay v. Atty. Garcia, 386 Phil. 440, 444 (2000).
33. Rollo, Vol. VI, p. 2013.
34. Id. at 2012-2013.
35. Rollo, Vol. I, pp. 719-745.