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Republic of the PhilippinesSUPREME COURT

Manila

EN BANC

A.C. No. 5580 June 15, 2005

SAN JOSE HOMEOWNERS ASSOCIATION INC., as represented by REBECCA V. LABRADOR, complainant, vs.ATTY. ROBERTO B. ROMANILLOS, respondent.

D E C I S I O N

PER CURIAM:

This is a Petition1 for disbarment against Atty. Roberto B. Romanillos for allegedly representing conflicting interests and for using the title "Judge" despite having been found guilty of grave and serious misconduct inZarate v. Judge Romanillos.2

The facts are as follows:

In 1985, respondent represented San Jose Homeowners Association, Inc. (SJHAI) before the Human Settlements Regulation Commission (HSRC) in a case3 against Durano and Corp., Inc. (DCI) for violation of the Subdivision and Condominium Buyer’s Protection Act (P.D. No. 957). SJHAI alleged that Lot No. 224 was designated as a school site in the subdivision plan that DCI submitted to the Bureau of Lands in 1961 but was sold by DCI to spouses Ramon and Beatriz Durano without disclosing it as a school site.

While still the counsel for SJHAI, respondent represented Myrna and Antonio Montealegre in requesting for SJHAI’s conformity to construct a school building on Lot No. 224 to be purchased from Durano.

When the request was denied, respondent applied for clearance before the Housing and Land Use Regulatory Board (HLURB) in behalf of Montealegre. Petitioner’s Board of Directors terminated respondent’s services as counsel and engaged another lawyer to represent the association.

Respondent also acted as counsel for Lydia Durano-Rodriguez who substituted for DCI in Civil Case No. 18014 entitled "San Jose Homeowners, Inc. v. Durano and Corp., Inc." filed before the Regional Trial Court of Makati City, Branch 134. Thus, SJHAI filed a disbarment case against respondent for representing conflicting interests, docketed as Administrative Case No. 4783.

In her Report4 dated August 3, 1998, Investigating Commissioner Lydia A. Navarro of the Commission on Bar Discipline of the Integrated Bar of the Philippines (IBP) made the following findings:

… Respondent failed to observe candor and fairness in dealing with his clients, knowing fully well that the Montealegre case was adverse to the Complainant wherein he had previously been not only an active board member but its corporate secretary having access to all its documents confidential or otherwise and its counsel in handling the implementation of the writ of execution against its developer and owner, Durano and Co. Inc.Moreso, when Respondent acted as counsel for the substituted defendant Durano and Co. Inc., Lydia Durano-Rodriguez; the conflict of

interest between the latter and the Complainant became so revealing and yet Respondent proceeded to represent the former.

…

For his defense of good faith in doing so; inasmuch as the same wasn’t controverted by the Complainant which was his first offense; Respondent must be given the benefit of the doubt to rectify his error subject to the condition that should he commit the same in the future; severe penalty will be imposed upon him.5

The Investigating Commissioner recommended dismissal of the complaint with the admonition that respondent should observe extra care and diligence in the practice of his profession to uphold its dignity and integrity beyond reproach.

The IBP Board of Governors adopted and approved the report and recommendation of the Investigating Commissioner, which we noted in a resolution dated March 8, 1999.

Notwithstanding the admonition, respondent continued representing Lydia Durano-Rodriguez before the Court of Appeals6 and this Court7 and even moved for the execution of the decision.

Thus, a second disbarment case was filed against respondent for violation of the March 8, 1999 Resolution in A.C. No. 4783 and for his alleged deceitful conduct in using the title "Judge" although he was found guilty of grave and serious misconduct.

Respondent used the title "Judge" in his office letterhead, correspondences and billboards which was erected in several areas within the San Jose Subdivision sometime in October 2001.

In his Comment and Explanation,8 respondent claimed that he continued to represent Lydia Durano-Rodriguez against petitioner despite the March 8, 1999 Resolution because it was still pending when the second disbarment case was filed. He maintained that the instant petition is a rehash of the first disbarment case from which he was exonerated. Concerning the title "Judge", respondent stated that since the filing of the instant petition he had ceased to attach the title to his name.

On July 7, 2003, the matter was referred to the IBP for investigation, report and recommendation.9

Investigating Commissioner Leland R. Villadolid, Jr. reported that respondent did not violate the admonition because it referred to future cases only and not to cases subject of A.C. No. 4783. Besides, petitioner never questioned the propriety of respondent’s continued representation of Lydia Durano-Rodriguez on appeal until the case was terminated.

The Investigating Commissioner, however, believed that respondent was deceitful when he used the title "Judge", thus creating a false impression that he was an incumbent.

The Investigating Commissioner recommended thus:

In view of the foregoing considerations, this Commissioner respectfully recommends the following penalty range to be deliberated upon by the Board for imposition on Respondent: minimum penalty of reprimand to a maximum penalty of four (4) months suspension. It is further recommended that in addition to the penalty to be imposed, a stern

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warning be given to Respondent in that should he violate his undertaking/promise not to handle any case in the future where the Complainant would be the adverse party and/or should he again use the title of "Judge" which would create an impression that he is still connected to the judiciary, a more severe penalty shall be imposed on him by the Commission.

RESPECTFULLY SUBMITTED.

The IBP Board of Governors approved with modification the report and recommendation of the Investigating Commissioner, thus:

RESOLVED to ADOPT and APPROVE, as it is hereby ADOPTED and APPROVED, with modification, the Report and Recommendation of the Investigating Commissioner of the above-entitled case, herein made part of this Resolution as Annex "A", and, finding the recommendation fully supported by the evidence on record and the applicable laws and rules, and considering Respondent’s violation of Rule 1.01 and Rule 3.01 of the Code of Professional Responsibility, Atty. Roberto Romanillos is hereby SUSPENDED from the practice of law for six (6) months with a WARNING that should he violate his undertaking/promise a more severe penalty shall be imposed against him.

Undoubtedly, respondent represented the inconsistent interests of SJHAI, DCI as substituted by Lydia Durano-Rodriguez and the Montealegres. Respondent was admonished yet he continued to represent Durano-Rodriguez against SJHAI.

It is inconsequential that petitioner never questioned the propriety of respondent’s continued representation of Lydia Durano-Rodriguez. The lack of opposition does not mean tacit consent. As long as the lawyer represents inconsistent interests of two (2) or more opposing clients, he is guilty of violating his oath. Rule 15.03 of the Code of Professional Responsibility specifically mandates that a lawyer shall not represent conflicting interests except by written consent of all concerned given after a full disclosure. Incidentally, it is also misleading for respondent to insist that he was exonerated in A.C. No. 4783.

We agree with the IBP that respondent’s continued use of the title "Judge" violated Rules 1.01 and 3.01 of the Code of Professional Responsibility prohibiting a lawyer from engaging in deceitful conduct and from using any misleading statement or claim regarding qualifications or legal services. The quasi-judicial notice he posted in the billboards referring to himself as a judge is deceiving. It was a clear attempt to mislead the public into believing that the order was issued in his capacity as a judge when he was dishonorably stripped of the privilege.

Respondent did not honorably retire from the judiciary. He resigned from being a judge during the pendency ofZarate v. Judge Romanillos, where he was eventually found guilty of grave and serious misconduct and would have been dismissed from the service had he not resigned.

In that case, respondent was found guilty of illegal solicitation and receipt of P10,000.00 from a party litigant. We ruled thus:

Considering the foregoing, respondent Judge Roberto B. Romanillos is hereby found guilty of grave and serious misconduct affecting his integrity and honesty. He deserves the supreme penalty of dismissal. However, respondent, in an obvious attempt to escape punishment for his misdeeds, tendered his resignation during the pendency of this case. … Consequently, we are now precluded from dismissing respondent from the service. Nevertheless, the ruling in People v.

Valenzuela (135 SCRA 712 [1985]), wherein the respondent judge likewise resigned before the case could be resolved, finds application in this case. Therein it was held that the rule that the resignation or retirement of a respondent judge in an administrative case renders the case moot and academic, is not a hard and fast rule. …

…

ACCORDINGLY, in view of our aforestated finding that respondent Judge Romanillos is guilty of grave and serious misconduct which would have warranted his dismissal from the service had he not resigned during the pendency of this case, and it appearing that respondent has yet to apply for his retirement benefits and other privileges if any; the Court, consistent with the penalties imposed in Valenzuela (supra.), hereby orders the FORFEITURE of all leave and retirement benefits and privileges to which herein respondent Judge Romanillos may be entitled WITH PREJUDICE to reinstatement and/or reemployment in any branch or instrumentality of government, including government-owned or controlled agencies or corporations.

SO ORDERED.10

The penalty imposed upon him in said case included forfeiture of all leave and retirement benefits and privileges to which he may be entitled with prejudice to reinstatement and/or reemployment in any branch or instrumentality of government, including government-owned or controlled agencies or corporations. Certainly, the use of the title ‘Judge’ is one of such privileges.

We have previously declared that the use of titles such as "Justice" is reserved to incumbent and retired members of the Supreme Court, the Court of Appeals and the Sandiganbayan and may not be used by any other official of the Republic, including those given the rank of "Justice".11 By analogy, the title "Judge" should be reserved only to judges, incumbent and retired, and not to those who were dishonorably discharged from the service. As correctly pointed out by the Investigating Commissioner, the right to retain and use said title applies only to the aforementioned members of the bench and no other, and certainly not to those who were removed or dismissed from the judiciary, such as respondent.

Membership in the legal profession is a special privilege burdened with conditions.12 It is bestowed upon individuals who are not only learned in law, but also known to possess good moral character.13 Lawyers should act and comport themselves with honesty and integrity in a manner beyond reproach, in order to promote the public’s faith in the legal profession.14

To say that lawyers must at all times uphold and respect the law is to state the obvious, but such statement can never be overemphasized. Considering that, "of all classes and professions, [lawyers are] most sacredly bound to uphold the law," it is imperative that they live by the law. Accordingly, lawyers who violate their oath and engage in deceitful conduct have no place in the legal profession.15

Disbarment is the most severe form of disciplinary sanction. We are mindful that the power to disbar must always be exercised with great caution, for only the most imperative reasons,16 and in clear cases of misconduct affecting the standing and moral character of the lawyer as an officer of the court and as a member of the bar.17

This is not respondent’s first infraction as an officer of the court and a member of the legal profession. He was stripped of his retirement benefits and other privileges in Zarate v. Judge Romanillos.18 In A.C.

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No. 4783, he got off lightly with just an admonition. Considering his previous infractions, respondent should have adhered to the tenets of his profession with extra fervor and vigilance. He did not. On the contrary, he manifested undue disrespect to our mandate and exhibited a propensity to violate the laws. He is thus unfit to discharge the duties of his office and unworthy of the trust and confidence reposed on him as an officer of the court. His disbarment is consequently warranted.

Section 27, Rule 138 of the Revised Rules of Court provides:

SEC. 27. Disbarment or suspension of attorneys by Supreme Court; grounds therefor. – A member of the bar may be disbarred or suspended from his office as attorney by the Supreme Court for any deceit, malpractice, or other gross misconduct in such office, grossly immoral conduct, or by reason of his conviction of a crime involving moral turpitude, or for any violation of the oath which he is required to take before admission to practice, or for a wilful disobedience of any lawful order of a superior court, or for corruptly or wilfully appearing as an attorney for a party to a case without authority so to do. The practice of soliciting cases at law for the purpose of gain, either personally or through paid agents or brokers, constitutes malpractice.

WHEREFORE, respondent Atty. Roberto B. Romanillos is DISBARRED and his name is ORDERED STRICKEN from the Roll of Attorneys. Let a copy of this Decision be entered in respondent’s record as a member of the Bar, and notice of the same be served on the Integrated Bar of the Philippines, and on the Office of the Court Administrator for circulation to all courts in the country.

SO ORDERED.

Davide, Jr., C.J., Puno, Panganiban, Quisumbing, Ynares-Santiago, Sandoval-Gutierrez, Carpio, Austria-Martinez, Corona, Carpio-Morales, Callejo, Sr., Azcuna, Tinga, Chico-Nazario, and Garcia, JJ., concur.

Republic of the PhilippinesSUPREME COURTManila

FIRST DIVISION

A.C. No. 5804 July 1, 2003

BENEDICTO HORNILLA and ATTY. FEDERICO D. RICAFORT, complainants, vs.ATTY. ERNESTO S. SALUNAT, respondent.

R E S O L U T I O N

YNARES-SANTIAGO, J.:

On November 21, 1997, Benedicto Hornilla and Federico D. Ricafort filed an administrative complaint1 with the Integrated Bar of the

Philippines (IBP) Commission on Bar Discipline, against respondent Atty. Ernesto S. Salunat for illegal and unethical practice and conflict of interest. They alleged that respondent is a member of the ASSA Law and Associates, which was the retained counsel of the Philippine Public School Teachers Association (PPSTA). Respondent’s brother, Aurelio S. Salunat, was a member of the PPSTA Board which approved respondent’s engagement as retained counsel of PPSTA.

Complainants, who are members of the PPSTA, filed an intra-corporate case against its members of the Board of Directors for the terms 1992-1995 and 1995-1997 before the Securities and Exchange Commission, which was docketed as SEC Case No. 05-97-5657, and a complaint before the Office of the Ombudsman, docketed as OMB Case No. 0-97-0695, for unlawful spending and the undervalued sale of real property of the PPSTA. Respondent entered his appearance as counsel for the PPSTA Board members in the said cases. Complainants contend that respondent was guilty of conflict of interest because he was engaged by the PPSTA, of which complainants were members, and was being paid out of its corporate funds where complainants have contributed. Despite being told by PPSTA members of the said conflict of interest, respondent refused to withdraw his appearance in the said cases.

Moreover, complainants aver that respondent violated Rule 15.062 of the Code of Professional Responsibility when he appeared at the meeting of the PPSTA Board and assured its members that he will win the PPSTA cases.

In his Answer,3 respondent stressed that he entered his appearance as counsel for the PPSTA Board Members for and in behalf of the ASSA Law and Associates. As a partner in the said law firm, he only filed a "Manifestation of Extreme Urgency" in OMB Case No. 0-97-0695.4 On the other hand, SEC Case No. 05-97-5657 was handled by another partner of the firm, Atty. Agustin V. Agustin. Respondent claims that it was complainant Atty. Ricafort who instigated, orchestrated and indiscriminately filed the said cases against members of the PPSTA and its Board.

Respondent pointed out that his relationship to Aurelio S. Salunat was immaterial; and that when he entered into the retainer contract with the PPSTA Board, he did so, not in his individual capacity, but in representation of the ASSA Law Firm. He denied that he ensured the victory of the PPSTA Board in the case he was handling. He merely assured the Board that the truth will come out and that the case before the Ombudsman will be dismissed for lack of jurisdiction, considering that respondents therein are not public officials, but private employees. Anent the SEC case, respondent alleged that the same was being handled by the law firm of Atty. Eduardo de Mesa, and not ASSA.

By way of Special and Affirmative Defenses, respondent averred that complainant Atty. Ricafort was himself guilty of gross violation of his oath of office amounting to gross misconduct, malpractice and unethical conduct for filing trumped-up charges against him and Atty. De Mesa. Thus, he prayed that the complaint against him be dismissed and, instead, complainant Ricafort be disciplined or disbarred.

The complainant was docketed as CBD Case No. 97-531 and referred to the IBP Commission on Bar Discipline. After investigation, Commissioner Lydia A. Navarro recommended that respondent be suspended from the practice of law for six (6) months. The Board of Governors thereafter adopted Resolution No. XV-3003-230 dated June 29, 2002, approving the report and recommendation of the Investigating Commissioner.

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Respondent filed with this Court a Motion for Reconsideration of the above Resolution of the IBP Board of Governors.

The pertinent rule of the Code of Professional Responsibility provides:

RULE 15.03. – A lawyer shall not represent conflicting interests except by written consent of all concerned given after a full disclosure of the facts.

There is conflict of interest when a lawyer represents inconsistent interests of two or more opposing parties. The test is "whether or not in behalf of one client, it is the lawyer’s duty to fight for an issue or claim, but it is his duty to oppose it for the other client. In brief, if he argues for one client, this argument will be opposed by him when he argues for the other client."5 This rule covers not only cases in which confidential communications have been confided, but also those in which no confidence has been bestowed or will be used.6 Also, there is conflict of interests if the acceptance of the new retainer will require the attorney to perform an act which will injuriously affect his first client in any matter in which he represents him and also whether he will be called upon in his new relation to use against his first client any knowledge acquired through their connection.7 Another test of the inconsistency of interests is whether the acceptance of a new relation will prevent an attorney from the full discharge of his duty of undivided fidelity and loyalty to his client or invite suspicion of unfaithfulness or double dealing in the performance thereof.8

In this jurisdiction, a corporation’s board of directors is understood to be that body which (1) exercises all powers provided for under the Corporation Code; (2) conducts all business of the corporation; and (3) controls and holds all property of the corporation.9 Its members have been characterized as trustees or directors clothed with a fiduciary character.10 It is clearly separate and distinct from the corporate entity itself.

Where corporate directors have committed a breach of trust either by their frauds, ultra vires acts, or negligence, and the corporation is unable or unwilling to institute suit to remedy the wrong, a stockholder may sue on behalf of himself and other stockholders and for the benefit of the corporation, to bring about a redress of the wrong done directly to the corporation and indirectly to the stockholders.11 This is what is known as a derivative suit, and settled is the doctrine that in a derivative suit, the corporation is the real party in interest while the stockholder filing suit for the corporation’s behalf is only nominal party. The corporation should be included as a party in the suit.12

Having thus laid a suitable foundation of the basic legal principles pertaining to derivative suits, we come now to the threshold question: can a lawyer engaged by a corporation defend members of the board of the same corporation in a derivative suit? On this issue, the following disquisition is enlightening:

The possibility for conflict of interest here is universally recognized. Although early cases found joint representation permissible where no conflict of interest was obvious, the emerging rule is against dual representation in all derivative actions. Outside counsel must thus be retained to represent one of the defendants. The cases and ethics opinions differ on whether there must be separate representation from the outset or merely from the time the corporation seeks to take an active role. Furthermore, this restriction on dual representationshould not be waivable by consent in the usual way; the corporation should be presumptively incapable of giving valid consent.13 (underscoring ours)

In other jurisdictions, the prevailing rule is that a situation wherein a lawyer represents both the corporation and its assailed directors unavoidably gives rise to a conflict of interest. The interest of the corporate client is paramount and should not be influenced by any interest of the individual corporate officials.14 The rulings in these cases have persuasive effect upon us. After due deliberation on the wisdom of this doctrine, we are sufficiently convinced that a lawyer engaged as counsel for a corporation cannot represent members of the same corporation’s board of directors in a derivative suit brought against them. To do so would be tantamount to representing conflicting interests, which is prohibited by the Code of Professional Responsibility.

In the case at bar, the records show that SEC Case No. 05-97-5657, entitled "Philippine Public School Teacher’s Assn., Inc., et al. v. 1992-1995 Board of Directors of the Philippine Public School Teacher’s Assn. (PPSTA), et al.," was filed by the PPSTA against its own Board of Directors. Respondent admits that the ASSA Law Firm, of which he is the Managing Partner, was the retained counsel of PPSTA. Yet, he appeared as counsel of record for the respondent Board of Directors in the said case. Clearly, respondent was guilty of conflict of interest when he represented the parties against whom his other client, the PPSTA, filed suit.

In his Answer, respondent argues that he only represented the Board of Directors in OMB Case No. 0-97-0695. In the said case, he filed a Manifestation of Extreme Urgency wherein he prayed for the dismissal of the complaint against his clients, the individual Board Members. By filing the said pleading, he necessarily entered his appearance therein.15 Again, this constituted conflict of interests, considering that the complaint in the Ombudsman, albeit in the name of the individual members of the PPSTA, was brought in behalf of and to protect the interest of the corporation.

Therefore, respondent is guilty of representing conflicting interests. Considering however, that this is his first offense, we find the penalty of suspension, recommended in IBP Resolution No. XV-2002-230 dated June 29, 2002, to be too harsh. Instead, we resolve to admonish respondent to observe a higher degree of fidelity in the practice of his profession.

ACCORDINGLY, respondent Atty. Ernesto Salunat is found GUILTY of representing conflicting interests and is ADMONISHED to observe a higher degree of fidelity in the practice of his profession. He is further WARNED that a repetition of the same or similar acts will be dealt with more severely.

SO ORDERED.

Davide, Jr., C.J., Vitug, Carpio, and Azcuna, JJ., concur.

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Republic of the PhilippinesSUPREME COURT

Manila

SECOND DIVISION

G.R. No. 77439 August 24, 1989

DONALD DEE petitioner, vs.COURT OF APPEALS and AMELITO MUTUC, respondents.

Tanjuatco, Oreta & Tanjuatco for petitioner.

Amelito R. Mutuc for and in his own behalf

REGALADO, J.:

Petitioner assails the resolution of respondent court, dated February 12,1987, reinstating its decision promulgated on May 9, 1986 in AC-G.R. CV No. 04242 wherein it affirmed the decision of the that court holding that the services rendered by private respondent was on a professional, and not on a gratis et amore basis and ordering petitioner to pay private respondent the sum of P50,000.00 as the balance of the latter's legal fee therefor.

The records show that sometime in January, 1981, petitioner and his father went to the residence of private respondent, accompanied by the latter's cousin, to seek his advice regarding the problem of the alleged indebtedness of petitioner's brother, Dewey Dee, to Caesar's Palace, a well-known gambling casino at Las Vegas, Nevada, U.S.A. Petitioner's father was apprehensive over the safety of his son, Dewey, having

heard of a link between the mafia and Caesar's Palace and the possibility that his son may be harmed at the instance of the latter. 1

Private respondent assured petitioner and his father that he would inquire into the matter, after which his services were reportedly contracted for P100,000. 00. From his residence, private respondent called up Caesar's Palace and, thereafter, several long distance telephone calls and two trips to Las Vegas by him elicited the information that Dewey Dee's outstanding account was around $1,000,000.00. Further investigations, however, revealed that said account had actually been incurred by Ramon Sy, with Dewey Dee merely signing for the chits. Private respondent communicated said information to petitioner's a father and also assured him that Caesar's Palace was not in any way linked to the mafia. 2

In June, 1981, private respondent personally talked with the president of Caesar's Palace at Las Vegas, Nevada. He advised the president that for the sake and in the interest of the casino it would be better to make Ramon Sy answer for the indebtedness. The president told him that if he could convince Ramon Sy to acknowledge the obligation, Dewey Dee would be exculpated from liability for the account. Upon private respondent's return to Manila, he conferred with Ramon Sy and the latter was convinced to acknowledge the indebtedness. In August, 1981, private respondent brought to Caesar's Palace the letter of Ramon Sy owning the debt and asking for a discount. Thereafter, the account of Dewey Dee was cleared and the casino never bothered him. 3

Having thus settled the account of petitioner's brother, private respondent sent several demand letters to petitioner demanding the balance of P50,000.00 as attorney's fees. Petitioner, however, ignored said letters. On October 4, 1982, private respondent filed a complaint against petitioner in the Regional Trial Court of Makati, Branch CXXXVI, for the collection of attorney's fees and refund of transport fare and other expenses. 4

Private respondent claimed that petitioner formally engaged his services for a fee of P100,000.00 and that the services he rendered were professional services which a lawyer renders to a client. Petitioner, however, denied the existence of any professional relationship of attorney and client between him and private respondent. He admits that he and his father visited private respondent for advice on the matter of Dewey Dee's gambling account. However, he insists that such visit was merely an informal one and that private respondent had not been specifically contracted to handle the problem. On the contrary, respondent Mutuc had allegedly volunteered his services "as a friend of defendant's family" to see what he could do about the situation. As for the P50,000.00 inceptively given to private respondent, petitioner claims that it was not in the nature of attomey's fees but merely "pocket money" solicited by the former for his trips to Las Vegas and the said amount of P50,000.00 was already sufficient remuneration for his strictly voluntary services.

After trial, the court a quo rendered judgment ordering herein petitioner to pay private respondent the sum of P50,000.00 with interest thereon at the legal rate from the filing of the complaint on October 4, 1982 and to pay the costs. All other claims therein of private respondent and the counterclaim of petitioner were dismissed. 5 On appeal, said judgment was affirmed by the then Intermediate Appellate Court on May 9, 1986. 6

Petitioner, in due time, filed a motion for reconsideration contending that the Appellate Court overlooked two important and decisive factors, to wit: (1) At the time private respondent was ostensibly rendering services to petitioner and his father, he was actually working "in the

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interest" and "to the advantage" of Caesar's Palace of which he was an agent and a consultant, hence the interests of the casino and private respondent were united in their objective to collect from the debtor; and (2) Private respondent is not justified in claiming that he rendered legal services to petitioner and his father in view of the conflicting interests involved.

In its resolution of July 31, 1986, respondent court reconsidered its decision and held that the sum of P50,000.00 already paid by petitioner to private respondent was commensurate to the services he rendered, considering that at the time he was acting as counsel for petitioner he was also acting as the collecting agent and consultant of, and receiving compensation from, Caesar's Palace. 7 However, upon a motion for reconsideration thereafter filed by private respondent, the present respondent Court of Appeals issued another resolution, dated February 12, 1987, reinstating the aforesaid decision of May 9, 1986. 8

Petitioner is now before us seeking a writ of certiorari to overturn the latter resolution.

It is necessary, however, to first clear the air of the questions arising from the change of stand of the First Civil Cases Division of the former Intermediate Appellate Court when, acting on the representations in petitioner's undated motion for reconsideration supposedly filed on May 28,1986, it promulgated its July 31, 1986 resolution reconsidering the decision it had rendered in AC-G.R. CV No. 04242. Said resolution was, as earlier noted, set aside by the Twelfth Division of the reorganized Court of Appeals which, at the same time, reinstated the aforesaid decision.

Because of its clarificatory relevance to some issues belatedly raised by petitioner, which issues should have been disregarded 9 but were nevertheless auspiciously discussed therein, at the risk of seeming prolixity we quote hereunder the salient portions of the assailed resolution which demonstrate that it was not conceived in error.

The reason for then IAC's action is that it deemed the P50,000.00 plaintiff-appellee had previously received from defendant-appellant as adequate compensation for the services rendered by am for defendant-appellant, considering that at the time plaintiff-appellee was acting as counsel for defendant-appellant, he was also acting as the collecting agent and consultant of, and receiving compensation from Caesar's Palace in Las Vegas, Nevada, the entity with whom defendant-appellant was having a problem and for which he had engaged the services of plaintiff-appellee. The crux of the matter, therefore, is whether or not the evidence on record justifies this finding of the IAC.

Plaintiff-appellee maintains that his professional services to defendant-appellant were rendered between the months of July and September of 1981, while his employment as collection agent and consultant of Caesar's Palace covered the period from December 1981 to October 1982. This positive testimony of plaintiff-appellee, however, was disregarded by the IAC for the following reasons:

1. In August l983, plaintiff-appellee testified that he was a representative of Caesar's Palace in the Philippines 'about two or three years ago.' From this the IAC concluded that the period covers the

time plaintiff-appellee rendered professional services to defendant-appellant.

We do not think that IAC's conclusion is necessarily correct. When plaintiff-appellee gave the period 'about two or three years ago,' he was merely stating an approximation. Considering that plaintiff-appellee was testifying in August 1983, and his employment with Caesar's Palace began in December 1981, the stated difference of two years is relatively correct. . . .

2. The plaintiff appellee had testified that he was working for the sake,' 'in the interest,' and 'to the advantage' of Caesar's Palace. x x x "We detect nothing from the above which would support IAC's conclusion that plaintiff-appellee was then in the employ of Caesar's Palace. What is gathered is that plaintiff-appellee was simply fulfilling a condition which plaintiff-appellee had proposed to, and was accepted by, Caesar's Palace, for the release of Dewey Dee from his obligation to Caesar's Palace.

3. Caesar's Palace would not have listened to, and acted upon, the advice of plaintiff-appellee if he were no longer its consultant and alter ego.

Why not? We are witnesses to many successful negotiations between contending parties whose representing lawyers were not and were never in the employ of the opposite party. The art of negotiation is precisely one of the essential tools of a good practitioner, and mastery of the art takes into account the circumstance that one may be negotiating, among others, with a person who may not only be a complete stranger but antagonistic as well. The fact that plaintiff-appellee was able to secure a favorable concession from Caesar's Palace for defendant-appellant does not justify the conclusion that it could have been secured only because of plaintiff-appellee's professional relationship with Caesar's Palace. It could have been attributable more to plaintiff-appellee's stature as a former ambassador of the Philippines to the United States, his personality, and his negotiating technique.

Assuming, however, that plaintiff-appellee was employed by Caesar's Palace during the time that he was rendering professional services for defendant-appellant, this would not automatically mean the denial of additional attorney's fees to plaintiff appellee. The main reason why the IAC denied plaintiff-appellee additional compensation was because the latter was allegedly receiving compensation from Caesar's Palace, and, therefore, the amount of P50,000.00 plaintiff-appellee had previously received from defendant-appellant is 'reasonable and commensurate. This conclusion, however, can only be justified if the fact and amount of remuneration had been established. These were not proven at all. No proof was presented as to the nature of plaintiff-appellee's

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remuneration, and the mode or manner in which it was paid.. . . 10

Both the lower court and the appellate court concur in their findings that there was a lawyer-client relationship between petitioner and private respondent Mutuc. We find no reason to interfere with this factual finding. There may be instances when there is doubt as to whether an attorney-client relationship has been created. The issue may be raised in the trial court, but once the trial court and the Court of Appeals have found that there was such a relationship the Supreme Court cannot disturb such finding of fact, 11 absent cogent reasons therefor.

The puerile claim is advanced that there was no attorney-client relationship between petitioner and private respondent for lack of a written contract to that effect. The absence of a written contract will not preclude the finding that there was a professional relationship which merits attorney's fees for professional services rendered. Documentary formalism is not an essential element in the employment of an attorney; the contract may be express or implied. To establish the relation, it is sufficient that the advice and assistance of an attorney is sought and received in any matter pertinent to his profession. An acceptance of the relation is implied on the part of the attorney from his acting on behalf of his client in pursuance of a request from the latter. 12

There is no question that professional services were actually rendered by private respondent to petitioner and his family. Through his efforts, the account of petitioner's brother, Dewey Dee, with Caesar's Palace was assumed by Ramon Sy and petitioner and his family were further freed from the apprehension that Dewey might be harmed or even killed by the so-called mafia. For such services, respondent Mutuc is indubitably entitled to receive a reasonable compensation and this right cannot be concluded by petitioner's pretension that at the time private respondent rendered such services to petitioner and his family, the former was also the Philippine consultant of Caesar's Palace.

On the first aspect, the evidence of record shows that the services of respondent Mutuc were engaged by the petitioner for the purposes hereinbefore discussed. The previous partial payments totalling P50,000.00 made by petitioner to respondent Mutuc and the tenor of the demand letters sent by said private respondent to petitioner, the receipt thereof being acknowledged by petitioner, ineluctably prove three facts, viz: that petitioner hired the services of private respondent Mutuc; that there was a prior agreement as to the amount of attorney's fees to be given to the latter; and there was still a balance due and payable on said fees. The duplicate original copy of the initial receipt issued and signed in this connection by private respondent reads:

RECEIVED from Mr. Donald Dee, for professional services rendered, the sum of THIRTY THOUSAND PESOS (P30,000.00) as partial payment, leaving a balance of SEVENTY THOUSAND PESOS (P70,000.00), payable on demand.

Makati, Metro Manila, July 25,1981. 13

Thereafter, several demand letters for payment of his fees, dated August 6, 1981, December 2, 1981, January 29, 1982, March 7, 1982, and September 7, 1982 were sent by private respondent to petitioner, 14 all to no avail.

On the second objection, aside from the facts stated in the aforequoted resolution of respondent Court of Appeals, it is also not completely accurate to judge private respondent's position by petitioner's

assumption that the interests of Caesar's Palace were adverse to those of Dewey Dee. True, the casino was a creditor but that fact was not contested or opposed by Dewey Dee, since the latter, as verifications revealed, was not the debtor. Hence, private respondent's representations in behalf of petitioner were not in resistance to the casino's claim but were actually geared toward proving that fact by establishing the liability of the true debtor, Ramon Sy, from whom payment was ultimately and correctly exacted. 15

Even assuming that the imputed conflict of interests obtained, private respondent's role therein was not ethically or legally indefensible. Generally, an attorney is prohibited from representing parties with contending positions. However, at a certain stage of the controversy before it reaches the court, a lawyer may represent conflicting interests with the consent of the parties. 16 A common representation may work to the advantage of said parties since a mutual lawyer, with honest motivations and impartially cognizant of the parties' disparate positions, may well be better situated to work out an acceptable settlement of their differences, being free of partisan inclinations and acting with the cooperation and confidence of said parties.

Here, even indulging petitioner in his theory that private respondent was during the period in question an agent of Caesar's Palace, petitioner was not unaware thereof, hence he actually consented to and cannot now decry the dual representation that he postulates. This knowledge he admits, thus:

It is a fair question to ask why, of all the lawyers in the land, it was the private respondent who was singled out by the petitioner's father for consultation in regard to an apparent problem, then pending in Caesar's Palace. The testimony of Arthur Alejandrino, cousin to private respondent, and the admission of the private respondent himself supply the answer. Alejandrino testified that private respondent was the representative of Caesar's Palace in the Philippines (p. 23, t.s.n., Nov. 29, 1983).lâwphî1.ñèt Private respondent testified that he was such representative tasked by the casino to collect the gambling losses incurred by Filipinos in Las Vegas. (p. 5, t.s.n., Sept. 21, 1983). 17

A lawyer is entitled to have and receive the just and reasonable compensation for services rendered at the special instance and request of his client and as long as he is honestly and in good faith trying to serve and represent the interests of his client, the latter is bound to pay his just fees. 18

WHEREFORE, the resolution of respondent Court of Appeals, dated February 12,1987, reinstating its original decision of May 9, 1986 is hereby AFFIRMED, with costs against l petitioner.

SO ORDERED.

Melencio-Herrera, (Chairperson), Paras, Padilla and Sarmiento, JJ., concur.

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G.R. No. 106244 January 22, 1997

REPUBLIC OF THE PHILIPPINES, petitioner, vs.HONORABLE SANDIGANBAYAN, VICTOR AFRICA, LOURDES AFRICA, NATHALIE AFRICA, JOSE ENRIQUE, AFRICA, PAUL DELFIN AFRICA, ROSARIO ARELLANO RACQUEL DINGLASAN, VICTORIA N. LEGARDA, ANGELA N LOBREGAT, MANUEL V. NIETO, BENITO NIETO, MA. RITA N. DE LOS REYES, EVELYN ROMERO, ROSARIO SONGCO, CARMEN N. TUAZON and RAFAEL V. VALDEZ, respondents.

BELLOSILLO, J.:

GOVERNMENT calls upon us to issue a writ of certiorari declaring null and void the 26 November 1991 and 20 May 1992 Resolutions of respondent ,Sandiganbayan which granted the Motion for Declaration of Non-Sequestration or Invalidity of Sequestration over the shares of stock of private respondents Messrs. Victor Africa, et al., in Eastern Telecommunications Philippines, Inc. (ETPI), and which Subsequently denied reconsideration thereof thereby lifting the writ of Sequestration over the subject shares.

These facts are not disputed: On 22 July 1987 the Republic of the Philippines through the Presidential Commission on Good Government (PCGG) and the Office of the Solicitor General filed before respondent Sandiganbayan a complaint for reconveyance, reversion, accounting, restitution and damages against Messrs. Jose L. Africa, Manuel H. Nieto, Jr., Ferdinand E. Marcos, Imelda R. Marcos, Ferdinand R. Marcos, Jr., Roberto S. Benedicto, Juan Ponce Enrile and Potenciano Ilusorio before the Sandiganbayan. The complaint, docketed as Civil Case No. 0009, alleged that defendants illegally manipulated, under the guise of expanding the operations of Philippine Communications Satellite Corporation (PHILCOMSAT), the purchase of major shareholdings of Cable and Wireless Limited, a London-based telecommunications company, in ETPI which shareholdings defendants Roberto S. Benedicto, Jose L. Africa and Manuel H. Nieto Jr., by themselves and through corporations organized by them, namely, Polygon Investors and Managers, Inc., Aerocom Investors and Managers, Inc., and Universal Molasses Corporation, beneficially held for themselves and for defendants Ferdinand E. Marcos and Imelda R. Marcos. 2

Private respondents Victor Africa, Lourdes Africa, Nathalie Africa. Jose Enrique Africa, Paul Delfin Africa, Rosario Arellano, Racquel Dinglasan, Victoria N. Legarda, Angela N. Lobregat, Manuel V. Nieto, Ramon Nieto, Benito Nieto, Carlos Nieto, Ma. Rita N. Delos Reyes, Evelyn Romero. Rosario Sangco, Carmen N. Tuazon and Rafael V. Valdez, who are registered stockholders of ETPI, were not impleaded in Civil Case No. 0009. Nonetheless, they were denied the dividends appertaining to their shares. Thus on at least two (2) different occasions, i.e., on 8 November 1988 and 31 January 1991, they had to file motions for leave of court to intervene in Civil Case No. 0009 to be able to receive their cash dividends, which motions were both

granted. 3 On 4 October 1991 they filed aMotion for Declaration of Non- Sequestration or Invalidity of Sequestration.

Private respondents anchor their Motion for Declaration of Non-Sequestration or Invalidity of Sequestration on the absence of a valid sequestration over their shares of stock, and on the automatic lifting of the writ of sequestration, granting that their shares were validly sequestered, pursuant to the second and third paragraphs of Sec. 26, Art. XVIII, 1987 Constitution, which provide —

A sequestration or freeze order shall be issued only upon showing of a prima facie case. The order and the list of the sequestered or frozen properties shall forthwith be registered with the proper court. For orders issued before the ratification of this Constitution, the corresponding judicial action or proceeding shall be filed within six months from the issuance thereof.

The sequestration or freeze order is deemed automatically lifted if no judicial action or proceeding is commenced as herein provided.

In a Resolution dated 26 November 1991, the Sandiganbayan granted the Motion for Declaration of Non-Sequestration or Invalidity of Sequestration filed by private respondents on the ground that since no judicial proceeding was ever commenced against them within the constitutionally-mandated six-month period, the writ of sequestration issued over their shares of stock is deemed to have been automatically lifted. In a Resolution dated 20 May 1992, which was promulgated 8 June 1992, the motion for reconsideration was denied for lack of merit.

The Government through the PCGG is now before us on certiorari claiming grave abuse of discretion amounting to lack or in excess of jurisdiction on the part of respondent Sandiganbayan in granting private respondents'Motion for Declaration of Non- Sequestration or Invalidity of Sequestration. In the main, the Government submits that "although private respondents have neither been formally impleaded as parties nor have duly been served with summons in Civil Case No. 0009, there being a finding that the subject shares were being held merely on behalf of the already impleaded defendants in Civil Case No. 0009, there is no doubt that there is a judicial action involving private respondents." 4 We are not persuaded.

It is elementary that before a person can be deprived of his right or property he should first be informed of the claim against him and the theory on which such claim is premised. He should be given an opportunity to defend himself and protect his interest. Impleading him as a defendant in a complaint is just too basic to be disregarded. For, how can he be expected to be informed of such claim, defend himself against it, protect his interest and prepare for trial if he is not even impleaded as a defendant in a case involving his right or property?

In the instant case, private respondents have in the past years been deprived of their dividends which have now accrued and accumulated, without affording them an opportunity to protect and defend their interests. Their shares of stock in ETPI have been challenged by the Government without the latter instituting an action to recover the same, and only on the mere allegation in a collateral proceeding, belatedly made, that they are also part of ill-gotten wealth. The Government is thus seeking to recover the shares of stock of private respondents through an action where the named defendants are different from private respondents herein.

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The procedure is highly irregular and seriously flawed. If the Government is really interested in claiming the shares of stock of private respondents the proper procedure is to implead them in a complaint for the recovery of those shares. Unfortunately, it has allowed the period to lapse without impleading them. If the defendants in Civil Case No. 0009, who have been particularly identified as having manipulated the transfer of shares of stock in ETPI to their names allegedly under unconscionable terms and conditions, were impleaded to be able to defend themselves and their interests, with more reason should private respondents herein, who have not even been shown to have participated in the illicit transactions, be impleaded and given a chance to be heard. For, the sanctified principle that no person shall be deprived of life, liberty or property without due process of law requires that at the outset a person should first be named and included in a suit before his very existence is disregarded and his freedom and property taken away from him. Actions must be brought against the persons who are to be bound by the judgment obtained therein. 5

We are not unaware of the various PCGG sequestration cases decided by this Court on 23 January 1995 where it was held that "corporations or business enterprises alleged to be repositories of 'ill-gotten' wealth (need not) be actually and formally impleaded in the actions for the recovery thereof, in order to maintain in effect existing sequestration thereof." 6 But those cases should be distinguished from the instant case. In those 21 cases the companies as well as properties which former President and Mrs. Ferdinand Marcos, their relatives, friends and business associates allegedly used as depositories or as instruments to illegally amass wealth, or which supposedly constituted fruits of ill-gotten wealth, were sequestered. Complaints were thereafter filed by the PCGG against individual persons believed to be the owners or holders of the shares of stock of the aforesaid companies. The companies were not themselves impleaded as defendants but merely enumerated in lists annexed to the complaints against the named individuals.

The defendants therein banked on the omissions and sought the lifting of the orders of sequestration on the ground that no proper judicial action had been filed within the time and in the manner required by the Constitution against the corporations with which they were associated. They argued that upon the expiration of the reglementary period the sequestration of the corporations should be deemed automatically lifted. Under the facts especially attendant in those cases we said it should not be so. There we held that the Constitution did not describe nor specify the kind and character of the judicial action or proceeding to be instituted but only required that the action or proceeding involved the matter of sequestration, freezing or provisional takeover of specific properties, having for its object the demonstration by competent evidence that the property sequestered, frozen or taken over was indeed "ill-gotten wealth" over which the government had a legitimate claim for recovery and other reliefs. The supposed omission was rationalized thus -

A. Error Immaterial to Requirement to File Actions or Proceedings within Constitutional Time Limits —

Such a procedural defect, however, conceding its existence for the nonce, does not contradict or adversely affect the actuality that judicial actions or proceedings had been brought within the time limits laid down by the Constitution "for" them, i.e., with regard or in relation to, in connection with, or involving or concerning the sequestration or seizure by the PCGG of the assets or properties in question.

Other considerations bearing upon the matter should also be taken into account.

B. Impleading Unnecessary in Cases for Recovery of Shares of Stock or Bank Deposits —

As regards actions in which the complaints seek recovery of defendants' shares of stock in existing corporations (e.g., San Miguel Corporation, Benguet Corporation, Meralco, etc.) because (they were) allegedly purchased with misappropriated public funds, in breach of fiduciary duty, or otherwise illicit or anomalous conditions, the impleading of said firms would clearly appear to be unnecessary. If warranted by the evidence, judgments may be handed down against the corresponding defendants divesting them of ownership of their stock, the acquisition thereof being illegal and consequently burdened with a constructive trust, and imposing on them the obligation of surrendering them to the Government.

Quite the same thing may be said of illegally obtained funds deposited in banks. The impleading of the banks would also appear unnecessary. Indeed, there would exist no cause of action against them. Judgment may properly be rendered on the basis of competent evidence, that said funds are ill-gotten wealth over which the defendants have no right, and should consequently be surrendered to their rightful owner, the Government. The judgment would constitute sufficient warrant for the bank to make the corresponding transfer of the funds.

C. Impleading Unnecessary Re Firms Which Are the Res of the Actions —

And as to corporations organized with ill-gotten wealth, but are not guilty of misappropriation, fraud or other illicit conduct — in other words, the companies themselves are the object or thing involved in the action, the res thereof — there is no need to implead them either. Indeed, their impleading is not proper on the strength alone of having been formed with ill-gotten funds, absent any other particular wrongdoing on their part. The judgment may simply be directed against the shares of stock shown to have been issued in consideration of ill-gotten wealth.

Such showing of having been formed with, or having received ill-gotten funds, however strong or convincing, does not, without more, warrant identifying the corporations in question with the persons who formed or made use of them to give the color or appearance of lawful, innocent acquisition to illegally amassed wealth — at the least, not so as (to) place on the Government the onus of impleading the former together with the latter in actions to recover such wealth. Distinguished, in terms of juridical personality and legal culpability from their erring members or stockholders, said corporations are not themselves guilty of the sins of the latter, of the embezzlement,

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asportation, etc., that gave rise to the Government's cause of action for recovery; their creation or organization was merely the result of their members' (or stockholders') manipulations and manuevers to conceal the illegal origins of the assets or monies invested therein. In this light, they are simply the res in the actions for the recovery of illegally acquired wealth, and there is, in principle, no cause of action against them and no ground to implead them as defendants in said actions.

The Government is, thus, not to be faulted for not making such corporations defendants in the actions referred to. It is even conceivable that had this been attempted, motions to dismiss would have lain to frustrate such attempts. 7

Private respondents in the instant case, as already stated, are not even sued nor impleaded as defendants in Civil Case No, 0009 before public respondent Sandiganbayan. Neither are they mentioned in the complaint of the Government. Their names only surfaced when they were forced to intervene in the case since all the cash dividends declared by the Board of Directors of ETPI were being turned over to the PCGG including the cash dividends due them. Thus, each time a cash dividend was declared they had to file a motion to intervene in Civil Case No. 0009 to be able to petition respondent court to order the PCGG to release to them their respective dividends. Accordingly, private respondents had to file in Civil Case No. 0009 a Motion for Declaration of Non-Sequestration or Invalidity of Sequestration, which respondent court granted.

Clearly, there is a material variance between the factual circumstances in the 21 sequestration cases on one hand, and those in the instant case on the other. In the former, court actions were instituted against natural persons suspected to be "dummies" whose shares of stock in different corporations the Government has been trying to recover. In the case before us, no court action has ever been instituted against private respondents. In the former, the corporations which were supposedly used as depositaries or as intruments to illegally amass wealth, or which allegedly constituted fruits of ill-gotten wealth, were named in lists annexed to the complaints filed against the natural persons who were suspected of being dummies. In the latter case, there was not even a mention of private respondents' names in the complaints filed by the Government. In the former, the Government was actually after the shares of stock of the defendant-stockholders of the corporations who supposedly misappropriated public funds or who entered into illicit or anomalous transactions prejudicial to the government, not the corporations themselves. Thus it was held that the omission to implead the corporations was not fatal. In the latter, it appears that the Government is after the shares of stock in the name of private respondents. Consequently, the failure to implead them is a serious procedural flaw. Indeed, the firms in the various PCGG sequestration cases and private respondents in the present case stand on different grounds.

Thus, since only Jose L. Africa, Manuel H. Nieto F., Ferdinand E. Marcos, Imelda R. Marcos, Ferdinand R. Marcos Jr., Roberto S. Benedicto, Juan Ponce Enrile, and Potenciano Ilusorio were impleaded as defendants in Civil Case No. 0009 While private respondents were not, only the shares of stock registered in the names of defendants should be in issue. Those registered in the names of others, e.g., those of private respondents, should be spared unless it can be shown in a proper proceeding that they are likewise ill-gotten-wealth or fruits of ill-gotten wealth. In this regard, if only to uphold the rule of law, the minimum requirement is to implead the registered owners of those shares in a formal complaint to recover them.

In the same sequestration cases, we also ruled that for lack of proof, even of the specie prima facie, the writ of sequestration should be lifted —

This Court is not unmindful of the fact that its Resolution of July 26, 1991, on the petitioner's motion for reconsideration in G.R. No. 92755 (PCGG v. Interco) appears to sustain the proposition that actual impleading in the recovery action of a corporation under sequestration for being a repository of illegally-acquired wealth, is necessary and requisite for such proposed or pending seizure to come under the protective umbrella of the Constitution. But Interco is to be differentiated from the cases now under review in that the former, as already elsewhere herein made clear, there was a lack of proof, even of the prima facie kind, that Eduardo Cojuangco, Jr., owned any stock in Interco, the evidence on record being in fact that said corporation had been organized as a family corporation of the Luys.

So too, this Court's judgment in the so-called "PJI Case" (Republic of the Philippines [PCGG] v. Sandiganbayan and Rosario Olivares) may not be ragarded as on all fours with the cases under consideration. The PJI Case involved the shares of stock in the name of eight (8) natural persons which had never been sequestered at all.

What happened was that the PCGG simply arrogated unto itself the right to vote those unsequestered shares on the bare claim that the eight (8) registered owners thereof were "dummies" of Benjamin Romualdez, the real owner of the shares; and all that the PCGG had done as predicate for that act of appropriation of the stock, was to include all the shares of PJI in a list (Annex A) appended to its complaint in Sandiganbayan Case No. 0035, describing them as among the properties illegally acquired by Romualdez. Unfortunately, as in Interco, the PCGG failed to substantiate by competent evidence its theory of clandestine ownership of Romualdez; and since moreover, there had been no sequestration of the alleged dummies' shares of stock, it was undoubtedly correct for the Sandiganbayan to grant the latter's motion for them to be recognized and declared as the true owners of the stock in question, which judgment this Court absolutely pronounced to be free from grave abuse of discretion. 8

The Solicitor General explained the Interco ruling in the instant petition, 9 as well as in eight (8) 10 out of the twenty-one (21) petitions this Court resolved on 23 January 1995 thuswise —

The reason for the correctness of the (Interco) exception is obviously the doctrine of "piercing the veil of corporate fiction." Stated simply, this doctrine states that in an action against a person, whether natural or a corporation, that wholly owns or controls another corporation and uses this wholly owned or controlled corporation to evade his or its obligation or liability . . . to hide the ill-gotten

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wealth of any or all of the persons impleaded therein, a judgment against any or all of the impleaded defendants may be enforced against any or all of the said corporations even if these corporations have not been formally impleaded as defendants in the case.

But even if we disregard the corporate fiction of ETPI, still private respondents cannot be divested of their shares of stock unless in a proper forum they have been shown to have committed some wrongdoing in acquiring them. A corporation is a collection of individuals and the idea of its being a legal entity apart from its members is a mere fiction of law introduced for convenience in conducting business. When this fiction is used to justify wrong, protect fraud, or defend crime, the law will disregard the existence of the corporation as a distinct legal entity and view the latter merely as an association of persons. Accordingly, the equitable owners of the corporation shall be personally liable and the acts of the real parties will be dealt with as though no corporation had been formed. In the instant case, only the named defendants in Civil Case No. 0009 are being accused of wrongdoing in acquiring their shares of stock in ETPI. Thus only their identified shares of stock in ETPI should be subject to the laims of the Government.

On the other hand, private respondents who were not charged nor impleaded as defendants are innocent until found guilty by a court of competent jurisdiction. They should be spared until found liable. Consequently, even if the corporate veil of ETPI is pierced, they can never be divested of their shares of stock until shown to have engaged in illicit activities in acquiring those shares. At the very least, they have to be impleaded in a complaint for recovery thereof. For, how can their shares of stock be considered ill-gotten and consequently the writ of sequestration of the said shares upheld when not a single case has been filed against private respondents for the purpose? How can the supposed prima facie case determined by the PCGG to be existing be substantiated? To deny them their right to such shares on the much belated allegation — and merely on the basis thereof — that they fronted for former President and Mrs. Ferdinand Marcos and their cronies would simply be to unduly perpetuate the assault on the rudimentary rules of fair play.

In Republic v. Sandiganbayan 11 we said that "[w]e need only to recall at this juncture that, as in 'INTERCO,' evidence of the PCGG is nil to even come up with a prima facie case against SIPALAY (and ALLIED). This similitude is the decisive factor that draws the instant case away from the "Final Dispositions" made by this Court in the 1995 Republic v. Sandiganbayan case, thus making INTERCO, as supported by the Aetna and Seno cases, the controllingprecedent." 12 In the case at hand, how can the PCGG establish its supposed prima facie finding against private respondents when it has not even filed a case against them?

The Concurring Opinion with Qualifications of Mme. Justice Melencio-Herrera in Bataan Shipyard & Engineering Co., Inc. v. Presidential Commission on Good Government 13 cannot escape our thoughts —

I consider it imperative that sequestration measures be buttressed by judicial proceedings the soonest possible in order to settle the matter of ownership of sequestered shares and to determine whether or not they are legally owned by the stockholders of record or are "ill-gotten wealth" subject to forfeiture in favor of the State. Sequestration alone, being actually an ancillary remedy to a principal action, should not be made

the basis for the exercise of acts of dominion for an indefinite period of time.

Sequestration is an extraordinary, harsh, and even severe remedy. It should be confined to its lawful parameters and exercised, with due regard, in the words of its enabling laws, to the requirements of fairness, due process, and Justice.

Also worth mentioning is the Dissent in those oft-repeated PCGG sequestration cases where in strong and eloquent language it was said —

While government efforts to recover illegally amassed wealth should have the support from all its branches, eagerness and zeal should not be allowed to run berserk, overriding in the process the very principles that it is sworn to uphold. In our legal system, the ends do not justify the means. Wrongs are never corrected by committing other wrongs, and as above-discussed, the recovery of ill-gotten wealth does not and should never justify unreasonable intrusions into constitutionally forbidden grounds. 14

As we held in Republic v. Sandiganbayan, 15 sequestration, etc., in order to be valid must have factual basis and must accord due process to the parties thereby affected — that said remedies are not meant to create a permanent situation as regards the property subject thereof, or divest ownership or rights, that they are in fact merely provisional and temporary and subsist only until ownership is finally judicially determined.

Thus, we add, sequestration — if it is to adhere to constitutional due process — cannot be allowed to hang interminably and forever!

WHEREFORE, premises considered, the instant petition for certiorari is DISMISSED.

SO ORDERED.

Separate Opinions

PADILLA, J., concurring:

I concur, for the reasons stated in my dissenting opinion in Republic of the Philippines v. Sandiganbayan, et al.. G.R. No. 96073, 23 January 1995, 240 SCRA 476.

It is my view that in all actions for recovery of so-called illegally acquired wealth during the Marcos era, all persons, whether natural or juridical, who stand to lose in favor of the government under a judgment in such actions should be impleaded as defendants to afford them an opportunity to be heard and defend themselves in the action . Consequently, where shares of stock in a corporation, registered in the name of a particular stockholder or stockholders have been sequestered by the PCGG but no judicial action or proceeding has been initiated by the government against the stockholder or stockholders of record, within the period prescribed by Sec. 26, Article XVIII of the Constitution, then the sequestration of the subject shares of stock is deemed automatically lifted by operation of the Constitution.

VITUG, J., dissenting:

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The real point of controversy is whether or not respondent Sandiganbayan gravely abused its discretion in declaring the orders/writ of sequestration issued by the PCGG over the ETPI shares of private respondents to have been AUTOMATICALLY LIFTED due to PCGG's failure to file the corresponding judicial action against them within the period prescribed by Section 26, Article. XVIII, of the Constitution.

In the various PCGG sequestration cases, promulgated on 23 January 1995, 1 this Court has responded in the affirmative to the crucial question of whether or not the inclusion in the complaints filed by the PCGG before the Sandiganbayan of specific allegations of corporations being "dummies" or under the control of the defendants named therein and used as instruments for acquisition, or as being depositaries, of ill-gotten wealth, or the annexing to said complaints of a list of said firms, but without actually so impleading them as defendants, would satisfy the constitutional requirement. This Court has said that there is no particular description or specification of the kind and character of the judicial action or proceeding contemplated, let alone an explicit requirement of the impleading of the corporations sequestered, or of the ostensible owners of property suspected to be ill-gotten. The only modifying or qualifying requirement in the constitution is held to be that the action or proceeding should be filed with regard or in relation to, in respect of, or in connection with, or concerning orders of sequestration.

The majority view would stress that there is a material difference between the factual circumstances, on the one hand, in the 21 sequestration cased 2 and, on the other hand, in the case at bench. The majority points out that in the PCGG sequestration cases, judicial actions have been initiated against individuals suspected to be "dummies" whose shares of stock in various corporations the Goverment has sought to recover, while in the instant case, no such judicial action is claimed to have been instituted against private respondents.

I, most regretfully, find myself unable to join my respected colleagues in giving too much significance to the supposed factual variance. I fail to see why there should be one rule for corporate entities and a contrary rule for the individual stockholder. There is here, in any case, Civil Case No. 0009 of the Sandiganbayan in which herein private respondents have intervened 3 and whose interventions have been allowed. Civil Case No. 0009, instituted by the Republic, is for the reversion, reconveyance and accounting of all ill-gotten ETPI shares. ETPI is included in the list (of firms owning ill-gotten shares) appended to the complaint in the civil case in which corporation private respondents are said to be holding ETPI shares on behalf of the named defendants in Civil Case No. 0009, namely Jose Africa, Manuel Nieto, Jr., Roberto Benedicto, Ferdinand Marcos, et al. The intervention has resulted in bringing private respondents into the court action and having thus submitted themselves to the jurisdiction of the court, they must now lay their claims before that court for adjudication and determination. 4 Most importantly, the omission to initially implead private respondents in the complaint should be treated as a technical, not a fatal, defect that is correctable under applicable adjective rules. Thus, in its 23rd January 1995 decision in the PCGG sequestration cases, the Court has ruled.

Even in those cases where it might reasonably be argued that the failure of the Goverment to implead the sequestered corporations as defendants is indeed a procedural aberration, as where said firms were allegedly used, and actively cooperated with the defendants, as instruments or conduits for conversion of public funds or property or illicit or fraudulent obtention of favored Government.

contracts, etc., slight reflection would nevertheless lead to the conclusion that the defect is not fatal, but one correctible under applicable adjective rules — e.g., Section 10, Rule 5 of the Rules of Court [specifying the remedy of amendment during trial to authorize or to conform to the evidence]; Section 1, Rule 20 [governing amendments before trial], in relation to the rule respecting the omission of so-called necessary or indispensable parties, set out in Section 11, Rule 3 of the Rules of Court. it is relevant in this context to advert to the old. familiar doctrines that the omission to implead such parties "is a mere technical defect which can be cured at any stage of the proceedings even after judgment"; and that, particularly in the case of indispensable parties, since their presence and participation is essential to the very life of the action, for without them no judgment may be rendered, amendments of the complaint in order to implead them should be freely allowed, even on appeal, in fact even after rendition of judgment by this Court, where it appears that the complaint otherwise indicates their identity and character as such indispensable parties. 5

Verily, the PCGG should be given an opportunity to adduce its evidence to show, among other things, that it has aprima facie determination for its sequestration order and that it can provide sufficient factual basis for the continued sequestration of ETPI shares held by private respondents. The Sandiganbayan may, in time, be called upon to adjudicate the claims of all contending parties. While the above matters and, eventually, the issue of ownership over the sequestered shares remain unresolved, the lifting of sequestration over the ETPI shares in the names of private respondents would appear to be precipitate.

In PCGG vs. International Copra Export Corporation 6 it might be pointed out, this Court had first remanded the case (G.R. No. 86989) to the Sandiganbayan for the reception of evidence but the PCGG, despite the opportunity, failed to present any proof to justify a further sequestration of therein respondent corporations. On the contrary, the respondents were there able to show that International Copra Export Corporation was organized as early as 1961, that Interco Manufacturing Corporation was established in 1976, and that the two corporations were and remained to be family corporationsof the Luy family. 7

Given all the foregoing I am constrained to vote for setting aside the resolutions, dated 26 November 1991 and 08 June 1992, of respondent Sandiganbayan and directing the latter in Civil Case No. 0009 to have the issue of whether or not private respondents are the legitimate and bona fide owners of the sequestered shares of stocks, as well as all other incidental and related questions such as whether or not there is prima facie factual basis for the sequestration of private respondents' ETPI shares, properly adjudicated.

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G.R. No. 105938 September 20, 1996

TEODORO R. REGALA, EDGARDO J. ANGARA, AVELINO V. CRUZ, JOSE C. CONCEPCION, ROGELIO A. VINLUAN, VICTOR P. LAZATIN and EDUARDO U. ESCUETA, petitioners, vs.THE HONORABLE SANDIGANBAYAN, First Division, REPUBLIC OF THE PHILIPPINES, ACTING THROUGH THE PRESIDENTIAL COMMISSION ON GOOD GOVERNMENT, and RAUL S. ROCO, respondents.

G.R. No. 108113 September 20, 1996

PARAJA G. HAYUDINI, petitioner, vs.THE SANDIGANBAYAN and THE REPUBLIC OF THE PHILIPPINES, respondents.

KAPUNAN, J.:

These case touch the very cornerstone of every State's judicial system, upon which the workings of the contentious and adversarial system in the Philippine legal process are based — the sanctity of fiduciary duty in the client-lawyer relationship. The fiduciary duty of a counsel and advocate is also what makes the law profession a unique position of trust and confidence, which distinguishes it from any other calling. In this instance, we have no recourse but to uphold and strengthen the mantle of protection accorded to the confidentiality that proceeds from the performance of the lawyer's duty to his client.

The facts of the case are undisputed.

The matters raised herein are an offshoot of the institution of the Complaint on July 31, 1987 before the Sandiganbayan by the Republic of the Philippines, through the Presidential Commission on Good

Government against Eduardo M. Cojuangco, Jr., as one of the principal defendants, for the recovery of alleged ill-gotten wealth, which includes shares of stocks in the named corporations in PCGG Case No. 33 (Civil Case No. 0033), entitled "Republic of the Philippines versus Eduardo Cojuangco, et al." 1

Among the dependants named in the case are herein petitioners Teodoro Regala, Edgardo J. Angara, Avelino V. Cruz, Jose C. Concepcion, Rogelio A. Vinluan, Victor P. Lazatin, Eduardo U. Escueta and Paraja G. Hayudini, and herein private respondent Raul S. Roco, who all were then partners of the law firm Angara, Abello, Concepcion, Regala and Cruz Law Offices (hereinafter referred to as the ACCRA Law Firm). ACCRA Law Firm performed legal services for its clients, which included, among others, the organization and acquisition of business associations and/or organizations, with the correlative and incidental services where its members acted as incorporators, or simply, as stockholders. More specifically, in the performance of these services, the members of the law firm delivered to its client documents which substantiate the client's equity holdings, i.e., stock certificates endorsed in blank representing the shares registered in the client's name, and a blank deed of trust or assignment covering said shares. In the course of their dealings with their clients, the members of the law firm acquire information relative to the assets of clients as well as their personal and business circumstances. As members of the ACCRA Law Firm, petitioners and private respondent Raul Roco admit that they assisted in the organization and acquisition of the companies included in Civil Case No. 0033, and in keeping with the office practice, ACCRA lawyers acted as nominees-stockholders of the said corporations involved in sequestration proceedings. 2

On August 20, 1991, respondent Presidential Commission on Good Government (hereinafter referred to as respondent PCGG) filed a "Motion to Admit Third Amended Complaint" and "Third Amended Complaint" which excluded private respondent Raul S. Roco from the complaint in PCGG Case No. 33 as party-defendant. 3Respondent PCGG based its exclusion of private respondent Roco as party-defendant on his undertaking that he will reveal the identity of the principal/s for whom he acted as nominee/stockholder in the companies involved in PCGG Case No. 33. 4

Petitioners were included in the Third Amended Complaint on the strength of the following allegations:

14. Defendants Eduardo Cojuangco, Jr., Edgardo J. Angara, Jose C. Concepcion, Teodoro Regala, Avelino V. Cruz, Rogelio A. Vinluan, Eduardo U. Escueta, Paraja G. Hayudini and Raul Roco of the Angara Concepcion Cruz Regala and Abello law offices (ACCRA) plotted, devised, schemed conspired and confederated with each other in setting up, through the use of the coconut levy funds, the financial and corporate framework and structures that led to the establishment of UCPB, UNICOM, COCOLIFE, COCOMARK, CIC, and more than twenty other coconut levy funded corporations, including the acquisition of San Miguel Corporation shares and its institutionalization through presidential directives of the coconut monopoly. Through insidious means and machinations, ACCRA, being the wholly-owned investment arm, ACCRA Investments Corporation, became the holder of approximately fifteen million shares representing roughly 3.3% of the total outstanding capital stock of UCPB as of 31 March 1987. This ranks ACCRA Investments Corporation number 44 among the top 100 biggest

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stockholders of UCPB which has approximately 1,400,000 shareholders. On the other hand, corporate books show the name Edgardo J. Angara as holding approximately 3,744 shares as of February, 1984. 5

In their answer to the Expanded Amended Complaint, petitioners ACCRA lawyers alleged that:

4.4 Defendants-ACCRA lawyers' participation in the acts with which their codefendants are charged, was in furtherance of legitimate lawyering.

4.4.1 In the course of rendering professional and legal services to clients, defendants-ACCRA lawyers, Jose C. Concepcion, Teodoro D. Regala, Rogelio A. Vinluan and Eduardo U. Escueta, became holders of shares of stock in the corporations listed under their respective names in Annex "A" of the expanded Amended Complaint as incorporating or acquiring stockholders only and, as such, they do not claim any proprietary interest in the said shares of stock.

4.5 Defendant ACCRA-lawyer Avelino V. Cruz was one of the incorporators in 1976 of Mermaid Marketing Corporation, which was organized for legitimate business purposes not related to the allegations of the expanded Amended Complaint. However, he has long ago transferred any material interest therein and therefore denies that the "shares" appearing in his name in Annex "A" of the expanded Amended Complaint are his assets. 6

Petitioner Paraja Hayudini, who had separated from ACCRA law firm, filed a separate answer denying the allegations in the complaint implicating him in the alleged ill-gotten wealth. 7

Petitioners ACCRA lawyers subsequently filed their "COMMENT AND/OR OPPOSITION" dated October 8, 1991 with Counter-Motion that respondent PCGG similarly grant the same treatment to them (exclusion as parties-defendants) as accorded private respondent Roco. 8 The Counter-Motion for dropping petitioners from the complaint was duly set for hearing on October 18, 1991 in accordance with the requirements of Rule 15 of the Rules of Court.

In its "Comment," respondent PCGG set the following conditions precedent for the exclusion of petitioners, namely: (a) the disclosure of the identity of its clients; (b) submission of documents substantiating the lawyer-client relationship; and (c) the submission of the deeds of assignments petitioners executed in favor of its client covering their respective shareholdings. 9

Consequently, respondent PCGG presented supposed proof to substantiate compliance by private respondent Roco of the conditions precedent to warrant the latter's exclusion as party-defendant in PCGG Case No. 33, to wit: (a) Letter to respondent PCGG of the counsel of

respondent Roco dated May 24, 1989 reiterating a previous request for reinvestigation by the PCGG in PCGG Case No. 33; (b) Affidavit dated March 8, 1989 executed by private respondent Roco as Attachment to the letter aforestated in (a); and (c) Letter of the Roco, Bunag, and Kapunan Law Offices dated September 21, 1988 to the respondent PCGG in behalf of private respondent Roco originally requesting the reinvestigation and/or re-examination of the evidence of the PCGG against Roco in its Complaint in PCGG Case No. 33. 10

It is noteworthy that during said proceedings, private respondent Roco did not refute petitioners' contention that he did actually not reveal the identity of the client involved in PCGG Case No. 33, nor had he undertaken to reveal the identity of the client for whom he acted as nominee-stockholder. 11

On March 18, 1992, respondent Sandiganbayan promulgated the Resolution, herein questioned, denying the exclusion of petitioners in PCGG Case No. 33, for their refusal to comply with the conditions required by respondent PCGG. It held:

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ACCRA lawyers may take the heroic stance of not revealing the identity of the client for whom they have acted, i.e. their principal, and that will be their choice. But until they do identify their clients, considerations of whether or not the privilege claimed by the ACCRA lawyers exists cannot even begin to be debated. The ACCRA lawyers cannot excuse themselves from the consequences of their acts until they have begun to establish the basis for recognizing the privilege; the existence andidentity of the client.

This is what appears to be the cause for which they have been impleaded by the PCGG as defendants herein.

5. The PCGG is satisfied that defendant Roco has demonstrated his agency and that Roco has apparently identified his principal, which revelation could show the lack of cause against him. This in turn has allowed the PCGG to exercise its power both under the rules of Agency and under Section 5 of E.O. No. 14-A in relation to the Supreme Court's ruling in Republic v. Sandiganbayan (173 SCRA 72).

The PCGG has apparently offered to the ACCRA lawyers the same conditions availed of by Roco; full disclosure in exchange for exclusion from these proceedings (par. 7, PCGG's COMMENT dated November 4, 1991). The ACCRA lawyers have preferred not to make the disclosures required by the PCGG.

The ACCRA lawyers cannot, therefore, begrudge the PCGG for keeping them as party defendants. In the same vein, they cannot compel the PCGG to be accorded the same treatment accorded to Roco.

Neither can this Court.

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WHEREFORE, the Counter Motion dated October 8, 1991 filed by the ACCRA lawyers and joined in by Atty. Paraja G. Hayudini for the same treatment by the PCGG as accorded to Raul S. Roco is DENIED for lack of merit. 12

ACCRA lawyers moved for a reconsideration of the above resolution but the same was denied by the respondent Sandiganbayan. Hence, the ACCRA lawyers filed the petition for certiorari, docketed as G.R. No. 105938, invoking the following grounds:

I

The Honorable Sandiganbayan gravely abused its discretion in subjecting petitioners ACCRA lawyers who undisputably acted as lawyers in serving as nominee-stockholders, to the strict application of the law of agency.

II

The Honorable Sandiganbayan committed grave abuse of discretion in not considering petitioners ACCRA lawyers and Mr. Roco as similarly situated and, therefore, deserving of equal treatment.

1. There is absolutely no evidence that Mr. Roco had revealed, or had undertaken to reveal, the identities of the client(s) for whom he acted as nominee-stockholder.

2. Even assuming that Mr. Roco had revealed, or had undertaken to reveal, the identities of the client(s), the disclosure does not constitute a substantial distinction as would make the classification reasonable under the equal protection clause.

3. Respondent Sandiganbayan sanctioned favoritism and undue preference in favor of Mr. Roco in violation of the equal protection clause.

III

The Honorable Sandiganbayan committed grave abuse of discretion in not holding that, under the facts of this case, the attorney-client privilege prohibits petitioners ACCRA lawyers from revealing the identity of their client(s) and the other information requested by the PCGG.

1. Under the peculiar facts of this case, the attorney-client privilege includes the identity of the client(s).

2. The factual disclosures required by the PCGG are not limited to the identity of petitioners ACCRA lawyers' alleged client(s) but extend to other privileged matters.

IV

The Honorable Sandiganbayan committed grave abuse of discretion in not requiring that the dropping of party-defendants by the PCGG must be based on reasonable and just grounds and with due consideration to the constitutional right of petitioners ACCRA lawyers to the equal protection of the law.

Petitioner Paraja G. Hayudini, likewise, filed his own motion for reconsideration of the March 18, 1991 resolution which was denied by respondent Sandiganbayan. Thus, he filed a separate petition for certiorari, docketed as G.R. No. 108113, assailing respondent Sandiganbayan's resolution on essentially the same grounds averred by petitioners in G.R. No. 105938.

Petitioners contend that the exclusion of respondent Roco as party-defendant in PCGG Case No. 33 grants him a favorable treatment, on the pretext of his alleged undertaking to divulge the identity of his client, giving him an advantage over them who are in the same footing as partners in the ACCRA law firm. Petitioners further argue that even granting that such an undertaking has been assumed by private respondent Roco, they are prohibited from revealing the identity of their principal under their sworn mandate and fiduciary duty as lawyers to uphold at all times the confidentiality of information obtained during such lawyer-client relationship.

Respondent PCGG, through its counsel, refutes petitioners' contention, alleging that the revelation of the identity of the client is not within the ambit of the lawyer-client confidentiality privilege, nor are the documents it required (deeds of assignment) protected, because they are evidence of nominee status. 13

In his comment, respondent Roco asseverates that respondent PCGG acted correctly in excluding him as party-defendant because he "(Roco) has not filed an Answer. PCGG had therefore the right to dismiss Civil Case No.0033 as to Roco 'without an order of court by filing a notice of dismissal'," 14 and he has undertaken to identify his principal. 15

Petitioners' contentions are impressed with merit.

I

It is quite apparent that petitioners were impleaded by the PCGG as co-defendants to force them to disclose the identity of their clients. Clearly, respondent PCGG is not after petitioners but the "bigger fish" as they say in street parlance. This ploy is quite clear from the PCGG's

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willingness to cut a deal with petitioners — the names of their clients in exchange for exclusion from the complaint. The statement of the Sandiganbayan in its questioned resolution dated March 18, 1992 is explicit:

ACCRA lawyers may take the heroic stance of not revealing the identity of the client for whom they have acted, i.e, their principal, and that will be their choice. But until they do identify their clients, considerations of whether or not the privilege claimed by the ACCRA lawyers exists cannot even begin to be debated. The ACCRA lawyers cannot excuse themselves from the consequences of their acts until they have begun to establish the basis for recognizing the privilege; the existence and identity of the client.

This is what appears to be the cause for which they have been impleaded by the PCGG as defendants herein. (Emphasis ours)

In a closely related case, Civil Case No. 0110 of the Sandiganbayan, Third Division, entitled "Primavera Farms, Inc., et al. vs. Presidential Commission on Good Government" respondent PCGG, through counsel Mario Ongkiko, manifested at the hearing on December 5, 1991 that the PCGG wanted to establish through the ACCRA that their "so called client is Mr. Eduardo Cojuangco;" that "it was Mr. Eduardo Cojuangco who furnished all the monies to those subscription payments in corporations included in Annex "A" of the Third Amended Complaint; that the ACCRA lawyers executed deeds of trust and deeds of assignment, some in the name of particular persons; some in blank.

We quote Atty. Ongkiko:

ATTY. ONGKIKO:

With the permission of this Hon. Court. I propose to establish through these ACCRA lawyers that, one, their so-called client is Mr. Eduardo Cojuangco. Second, it was Mr. Eduardo Cojuangco who furnished all the monies to these subscription payments of these corporations who are now the petitioners in this case. Third, that these lawyers executed deeds of trust, some in the name of a particular person, some in blank. Now, these blank deeds are important to our claim that some of the shares are actually being held by the nominees for the late President Marcos. Fourth, they also executed deeds of assignment and some of these assignments have also blank assignees. Again, this is important to our claim that some of the shares are for Mr. Conjuangco and some are for Mr. Marcos. Fifth, that most of thes e corporations are really just paper corporations. Why do we say that? One: There are no really fixed sets of officers, no fixed sets of directors at the time of incorporation and even up to 1986, which is the crucial year. And not only that, they have no permits from the municipal authorities in Makati. Next, actually all their addresses now are care of Villareal Law Office. They really have no address on records. These are some of the principal things that we would ask of these nominees stockholders, as they called themselves. 16

It would seem that petitioners are merely standing in for their clients as defendants in the complaint. Petitioners are being prosecuted solely on the basis of activities and services performed in the course of their duties as lawyers. Quite obviously, petitioners' inclusion as co-defendants in the complaint is merely being used as leverage to compel them to name their clients and consequently to enable the PCGG to nail these clients. Such being the case, respondent PCGG has no valid cause of action as against petitioners and should exclude them from the Third Amended Complaint.

II

The nature of lawyer-client relationship is premised on the Roman Law concepts of locatio conductio operarum(contract of lease of services) where one person lets his services and another hires them without reference to the object of which the services are to be performed, wherein lawyers' services may be compensated by honorariumor for hire, 17 and mandato (contract of agency) wherein a friend on whom reliance could be placed makes a contract in his name, but gives up all that he gained by the contract to the person who requested him. 18 But the lawyer-client relationship is more than that of the principal-agent and lessor-lessee.

In modern day perception of the lawyer-client relationship, an attorney is more than a mere agent or servant, because he possesses special powers of trust and confidence reposed on him by his client. 19 A lawyer is also as independent as the judge of the court, thus his powers are entirely different from and superior to those of an ordinary agent.20 Moreover, an attorney also occupies what may be considered as a "quasi-judicial office" since he is in fact an officer of the Court 21 and exercises his judgment in the choice of courses of action to be taken favorable to his client.

Thus, in the creation of lawyer-client relationship, there are rules, ethical conduct and duties that breathe life into it, among those, the fiduciary duty to his client which is of a very delicate, exacting and confidential character, requiring a very high degree of fidelity and good faith, 22 that is required by reason of necessity and public interest 23based on the hypothesis that abstinence from seeking legal advice in a good cause is an evil which is fatal to the administration of justice. 24

It is also the strict sense of fidelity of a lawyer to his client that distinguishes him from any other professional in society. This conception is entrenched and embodies centuries of established and stable tradition. 25 In Stockton v. Ford, 26 the U. S. Supreme Court held:

There are few of the business relations of life involving a higher trust and confidence than that of attorney and client, or generally speaking, one more honorably and faithfully discharged; few more anxiously guarded by the law, or governed by the sterner principles of morality and justice; and it is the duty of the court to administer them in a corresponding spirit, and to be watchful and industrious, to see that confidence thus reposed shall not be used to the detriment or prejudice of the rights of the party bestowing it. 27

In our jurisdiction, this privilege takes off from the old Code of Civil Procedure enacted by the Philippine Commission on August 7, 1901. Section 383 of the Code specifically "forbids counsel, without authority of his client to reveal any communication made by the client to him or

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his advice given thereon in the course of professional employment." 28 Passed on into various provisions of the Rules of Court, the attorney-client privilege, as currently worded provides:

Sec. 24. Disqualification by reason of privileged communication. — The following persons cannot testify as to matters learned in confidence in the following cases:

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An attorney cannot, without the consent of his client, be examined as to any communication made by the client to him, or his advice given thereon in the course of, or with a view to, professional employment, can an attorney's secretary, stenographer, or clerk be examined, without the consent of the client and his employer, concerning any fact the knowledge of which has been acquired in such capacity. 29

Further, Rule 138 of the Rules of Court states:

Sec. 20. It is the duty of an attorney: (e) to maintain inviolate the confidence, and at every peril to himself, to preserve the secrets of his client, and to accept no compensation in connection with his client's business except from him or with his knowledge and approval.

This duty is explicitly mandated in Canon 17 of the Code of Professional Responsibility which provides that:

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.

Canon 15 of the Canons of Professional Ethics also demands a lawyer's fidelity to client:

The lawyers owes "entire devotion to the interest of the client, warm zeal in the maintenance and defense of his rights and the exertion of his utmost learning and ability," to the end that nothing be taken or be withheld from him, save by the rules of law, legally applied. No fear of judicial disfavor or public popularity should restrain him from the full discharge of his duty. In the judicial forum the client is entitled to the benefit of any and every remedy and defense that is authorized by the law of the land, and he may expect his lawyer to assert every such remedy or defense. But it is steadfastly to be borne in mind that the great trust of the lawyer is to be performed within and not without the bounds of the law. The office of attorney does not permit, much less does it demand of him for any client, violation of law or any manner of fraud or chicanery. He must obey his own conscience and not that of his client.

Considerations favoring confidentially in lawyer-client relationships are many and serve several constitutional and policy concerns. In the constitutional sphere, the privilege gives flesh to one of the most sacrosanct rights available to the accused, the right to counsel. If a

client were made to choose between legal representation without effective communication and disclosure and legal representation with all his secrets revealed then he might be compelled, in some instances, to either opt to stay away from the judicial system or to lose the right to counsel. If the price of disclosure is too high, or if it amounts to self incrimination, then the flow of information would be curtailed thereby rendering the right practically nugatory. The threat this represents against another sacrosanct individual right, the right to be presumed innocent is at once self-evident.

Encouraging full disclosure to a lawyer by one seeking legal services opens the door to a whole spectrum of legal options which would otherwise be circumscribed by limited information engendered by a fear of disclosure. An effective lawyer-client relationship is largely dependent upon the degree of confidence which exists between lawyer and client which in turn requires a situation which encourages a dynamic and fruitful exchange and flow of information. It necessarily follows that in order to attain effective representation, the lawyer must invoke the privilege not as a matter of option but as a matter of duty and professional responsibility.

The question now arises whether or not this duty may be asserted in refusing to disclose the name of petitioners' client(s) in the case at bar. Under the facts and circumstances obtaining in the instant case, the answer must be in the affirmative.

As a matter of public policy, a client's identity should not be shrouded in mystery 30 Under this premise, the general rule in our jurisdiction as well as in the United States is that a lawyer may not invoke the privilege and refuse to divulge the name or identity of this client. 31

The reasons advanced for the general rule are well established.

First, the court has a right to know that the client whose privileged information is sought to be protected is flesh and blood.

Second, the privilege begins to exist only after the attorney-client relationship has been established. The attorney-client privilege does not attach until there is a client.

Third, the privilege generally pertains to the subject matter of the relationship.

Finally, due process considerations require that the opposing party should, as a general rule, know his adversary. "A party suing or sued is entitled to know who his opponent is." 32 He cannot be obliged to grope in the dark against unknown forces. 33

Notwithstanding these considerations, the general rule is however qualified by some important exceptions.

1) Client identity is privileged where a strong probability exists that revealing the client's name would implicate that client in the very activity for which he sought the lawyer's advice.

In Ex-Parte Enzor, 34 a state supreme court reversed a lower court order requiring a lawyer to divulge the name of her client on the ground that the subject matter of the relationship was so closely related to the issue of the client's identity that the privilege actually attached to both. In Enzor, the unidentified client, an election official, informed his attorney in confidence that he had been offered a bribe to violate election laws or that he had accepted a bribe to that end. In her testimony, the attorney revealed that she had advised her client to

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count the votes correctly, but averred that she could not remember whether her client had been, in fact, bribed. The lawyer was cited for contempt for her refusal to reveal his client's identity before a grand jury. Reversing the lower court's contempt orders, the state supreme court held that under the circumstances of the case, and under the exceptions described above, even the name of the client was privileged.

U .S. v. Hodge and Zweig, 35 involved the same exception, i.e. that client identity is privileged in those instances where a strong probability exists that the disclosure of the client's identity would implicate the client in the very criminal activity for which the lawyer's legal advice was obtained.

The Hodge case involved federal grand jury proceedings inquiring into the activities of the "Sandino Gang," a gang involved in the illegal importation of drugs in the United States. The respondents, law partners, represented key witnesses and suspects including the leader of the gang, Joe Sandino.

In connection with a tax investigation in November of 1973, the IRS issued summons to Hodge and Zweig, requiring them to produce documents and information regarding payment received by Sandino on behalf of any other person, and vice versa. The lawyers refused to divulge the names. The Ninth Circuit of the United States Court of Appeals, upholding non-disclosure under the facts and circumstances of the case, held:

A client's identity and the nature of that client's fee arrangements may be privileged where the person invoking the privilege can show that a strong probability exists that disclosure of such information would implicate that client in the very criminal activity for which legal advice was sought Baird v.Koerner, 279 F. 2d at 680. While in Baird Owe enunciated this rule as a matter of California law, the rule also reflects federal law. Appellants contend that the Baird exception applies to this case.

The Baird exception is entirely consonant with the principal policy behind the attorney-client privilege. "In order to promote freedom of consultation of legal advisors by clients, the apprehension of compelled disclosure from the legal advisors must be removed; hence, the law must prohibit such disclosure except on the client's consent." 8 J. Wigmore, supra sec. 2291, at 545. In furtherance of this policy, the client's identity and the nature of his fee arrangements are, in exceptional cases, protected as confidential communications. 36

2) Where disclosure would open the client to civil liability; his identity is privileged. For instance, the peculiar facts and circumstances of Neugass v. Terminal Cab Corporation, 37 prompted the New York Supreme Court to allow a lawyer's claim to the effect that he could not reveal the name of his client because this would expose the latter to civil litigation.

In the said case, Neugass, the plaintiff, suffered injury when the taxicab she was riding, owned by respondent corporation, collided with a second taxicab, whose owner was unknown. Plaintiff brought action both against defendant corporation and the owner of the second cab, identified in the information only as John Doe. It turned out that when the attorney of defendant corporation appeared on preliminary

examination, the fact was somehow revealed that the lawyer came to know the name of the owner of the second cab when a man, a client of the insurance company, prior to the institution of legal action, came to him and reported that he was involved in a car accident. It was apparent under the circumstances that the man was the owner of the second cab. The state supreme court held that the reports were clearly made to the lawyer in his professional capacity. The court said:

That his employment came about through the fact that the insurance company had hired him to defend its policyholders seems immaterial. The attorney is such cases is clearly the attorney for the policyholder when the policyholder goes to him to report an occurrence contemplating that it would be used in an action or claim against him. 38

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All communications made by a client to his counsel, for the purpose of professional advice or assistance, are privileged, whether they relate to a suit pending or contemplated, or to any other matter proper for such advice or aid; . . . And whenever the communication made, relates to a matter so connected with the employment as attorney or counsel as to afford presumption that it was the ground of the address by the client, then it is privileged from disclosure. . .

It appears . . . that the name and address of the owner of the second cab came to the attorney in this case as a confidential communication. His client is not seeking to use the courts, and his address cannot be disclosed on that theory, nor is the present action pending against him as service of the summons on him has not been effected. The objections on which the court reserved decision are sustained. 39

In the case of Matter of Shawmut Mining Company, 40 the lawyer involved was required by a lower court to disclose whether he represented certain clients in a certain transaction. The purpose of the court's request was to determine whether the unnamed persons as interested parties were connected with the purchase of properties involved in the action. The lawyer refused and brought the question to the State Supreme Court. Upholding the lawyer's refusal to divulge the names of his clients the court held:

If it can compel the witness to state, as directed by the order appealed from, that he represented certain persons in the purchase or sale of these mines, it has made progress in establishing by such evidence their version of the litigation. As already suggested, such testimony by the witness would compel him to disclose not only that he was attorney for certain people, but that, as the result of communications made to him in the course of such employment as such attorney, he knew that they were interested in certain transactions. We feel sure that under such conditions no case has ever gone to the length of compelling an attorney, at the instance of a hostile litigant, to disclose not only his retainer, but the nature of the transactions to which it related, when such information could be made the basis of a suit against his client. 41

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3) Where the government's lawyers have no case against an attorney's client unless, by revealing the client's name, the said name would furnish the only link that would form the chain of testimony necessary to convict an individual of a crime, the client's name is privileged.

In Baird vs. Korner, 42 a lawyer was consulted by the accountants and the lawyer of certain undisclosed taxpayers regarding steps to be taken to place the undisclosed taxpayers in a favorable position in case criminal charges were brought against them by the U.S. Internal Revenue Service (IRS).

It appeared that the taxpayers' returns of previous years were probably incorrect and the taxes understated. The clients themselves were unsure about whether or not they violated tax laws and sought advice from Baird on the hypothetical possibility that they had. No investigation was then being undertaken by the IRS of the taxpayers. Subsequently, the attorney of the taxpayers delivered to Baird the sum of $12, 706.85, which had been previously assessed as the tax due, and another amount of money representing his fee for the advice given. Baird then sent a check for $12,706.85 to the IRS in Baltimore, Maryland, with a note explaining the payment, but without naming his clients. The IRS demanded that Baird identify the lawyers, accountants, and other clients involved. Baird refused on the ground that he did not know their names, and declined to name the attorney and accountants because this constituted privileged communication. A petition was filed for the enforcement of the IRS summons. For Baird's repeated refusal to name his clients he was found guilty of civil contempt. The Ninth Circuit Court of Appeals held that, a lawyer could not be forced to reveal the names of clients who employed him to pay sums of money to the government voluntarily in settlement of undetermined income taxes, unsued on, and with no government audit or investigation into that client's income tax liability pending. The court emphasized the exception that a client's name is privileged when so much has been revealed concerning the legal services rendered that the disclosure of the client's identity exposes him to possible investigation and sanction by government agencies. The Court held:

The facts of the instant case bring it squarely within that exception to the general rule. Here money was received by the government, paid by persons who thereby admitted they had not paid a sufficient amount in income taxes some one or more years in the past. The names of the clients are useful to the government for but one purpose — to ascertain which taxpayers think they were delinquent, so that it may check the records for that one year or several years. The voluntary nature of the payment indicates a belief by the taxpayers that more taxes or interest or penalties are due than the sum previously paid, if any. It indicates a feeling of guilt for nonpayment of taxes, though whether it is criminal guilt is undisclosed. But it may well be the link that could form the chain of testimony necessary to convict an individual of a federal crime. Certainly the payment and the feeling of guilt are the reasons the attorney here involved was employed — to advise his clients what, under the circumstances, should be done. 43

Apart from these principal exceptions, there exist other situations which could qualify as exceptions to the general rule.

For example, the content of any client communication to a lawyer lies within the privilege if it is relevant to the subject matter of the legal problem on which the client seeks legal assistance. 44 Moreover, where

the nature of the attorney-client relationship has been previously disclosed and it is the identity which is intended to be confidential, the identity of the client has been held to be privileged, since such revelation would otherwise result in disclosure of the entire transaction. 45

Summarizing these exceptions, information relating to the identity of a client may fall within the ambit of the privilege when the client's name itself has an independent significance, such that disclosure would then reveal client confidences. 46

The circumstances involving the engagement of lawyers in the case at bench, therefore, clearly reveal that the instant case falls under at least two exceptions to the general rule. First, disclosure of the alleged client's name would lead to establish said client's connection with the very fact in issue of the case, which is privileged information, because the privilege, as stated earlier, protects the subject matter or the substance (without which there would be not attorney-client relationship).

The link between the alleged criminal offense and the legal advice or legal service sought was duly establishes in the case at bar, by no less than the PCGG itself. The key lies in the three specific conditions laid down by the PCGG which constitutes petitioners' ticket to non-prosecution should they accede thereto:

(a) the disclosure of the identity of its clients;

(b) submission of documents substantiating the lawyer-client relationship; and

(c) the submission of the deeds of assignment petitioners executed in favor of their clients covering their respective shareholdings.

From these conditions, particularly the third, we can readily deduce that the clients indeed consulted the petitioners, in their capacity as lawyers, regarding the financial and corporate structure, framework and set-up of the corporations in question. In turn, petitioners gave their professional advice in the form of, among others, the aforementioned deeds of assignment covering their client's shareholdings.

There is no question that the preparation of the aforestated documents was part and parcel of petitioners' legal service to their clients. More important, it constituted an integral part of their duties as lawyers. Petitioners, therefore, have a legitimate fear that identifying their clients would implicate them in the very activity for which legal advice had been sought, i.e., the alleged accumulation of ill-gotten wealth in the aforementioned corporations.

Furthermore, under the third main exception, revelation of the client's name would obviously provide the necessary link for the prosecution to build its case, where none otherwise exists. It is the link, in the words of Baird, "that would inevitably form the chain of testimony necessary to convict the (client) of a . . . crime." 47

An important distinction must be made between a case where a client takes on the services of an attorney for illicit purposes, seeking advice about how to go around the law for the purpose of committing illegal activities and a case where a client thinks he might have previously committed something illegal and consults his attorney about it. The first case clearly does not fall within the privilege because the same cannot be invoked for purposes illegal. The second case falls within the exception because whether or not the act for which the client sought

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advice turns out to be illegal, his name cannot be used or disclosed if the disclosure leads to evidence, not yet in the hands of the prosecution, which might lead to possible action against him.

These cases may be readily distinguished, because the privilege cannot be invoked or used as a shield for an illegal act, as in the first example; while the prosecution may not have a case against the client in the second example and cannot use the attorney client relationship to build up a case against the latter. The reason for the first rule is that it is not within the professional character of a lawyer to give advice on the commission of a crime.48 The reason for the second has been stated in the cases above discussed and are founded on the same policy grounds for which the attorney-client privilege, in general, exists.

In Matter of Shawmut Mining Co., supra, the appellate court therein stated that "under such conditions no case has ever yet gone to the length of compelling an attorney, at the instance of a hostile litigant, to disclose not only his retainer, but the nature of the transactions to which it related, when such information could be made the basis of a suit against his client." 49 "Communications made to an attorney in the course of any personal employment, relating to the subject thereof, and which may be supposed to be drawn out in consequence of the relation in which the parties stand to each other, are under the seal of confidence and entitled to protection as privileged communications." 50 Where the communicated information, which clearly falls within the privilege, would suggest possible criminal activity but there would be not much in the information known to the prosecution which would sustain a charge except that revealing the name of the client would open up other privileged information which would substantiate the prosecution's suspicions, then the client's identity is so inextricably linked to the subject matter itself that it falls within the protection. The Baird exception, applicable to the instant case, is consonant with the principal policy behind the privilege, i.e., that for the purpose of promoting freedom of consultation of legal advisors by clients, apprehension of compelled disclosure from attorneys must be eliminated. This exception has likewise been sustained in In re Grand Jury Proceedings 51 and Tillotson v. Boughner. 52 What these cases unanimously seek to avoid is the exploitation of the general rule in what may amount to a fishing expedition by the prosecution.

There are, after all, alternative source of information available to the prosecutor which do not depend on utilizing a defendant's counsel as a convenient and readily available source of information in the building of a case against the latter. Compelling disclosure of the client's name in circumstances such as the one which exists in the case at bench amounts to sanctioning fishing expeditions by lazy prosecutors and litigants which we cannot and will not countenance. When the nature of the transaction would be revealed by disclosure of an attorney's retainer, such retainer is obviously protected by the privilege. 53 It follows that petitioner attorneys in the instant case owe their client(s) a duty and an obligation not to disclose the latter's identity which in turn requires them to invoke the privilege.

In fine, the crux of petitioners' objections ultimately hinges on their expectation that if the prosecution has a case against their clients, the latter's case should be built upon evidence painstakingly gathered by them from their own sources and not from compelled testimony requiring them to reveal the name of their clients, information which unavoidably reveals much about the nature of the transaction which may or may not be illegal. The logical nexus between name and nature of transaction is so intimate in this case the it would be difficult to simply dissociate one from the other. In this sense, the name is as much "communication" as information revealed directly about the transaction in question itself, a communication which is clearly and distinctly privileged. A lawyer cannot reveal such communication

without exposing himself to charges of violating a principle which forms the bulwark of the entire attorney-client relationship.

The uberrimei fidei relationship between a lawyer and his client therefore imposes a strict liability for negligence on the former. The ethical duties owing to the client, including confidentiality, loyalty, competence, diligence as well as the responsibility to keep clients informed and protect their rights to make decisions have been zealously sustained. In Milbank, Tweed, Hadley and McCloy v. Boon, 54 the US Second District Court rejected the plea of the petitioner law firm that it breached its fiduciary duty to its client by helping the latter's former agent in closing a deal for the agent's benefit only after its client hesitated in proceeding with the transaction, thus causing no harm to its client. The Court instead ruled that breaches of a fiduciary relationship in any context comprise a special breed of cases that often loosen normally stringent requirements of causation and damages, and found in favor of the client.

To the same effect is the ruling in Searcy, Denney, Scarola, Barnhart, and Shipley P.A. v. Scheller 55 requiring strict obligation of lawyers vis-a-vis clients. In this case, a contingent fee lawyer was fired shortly before the end of completion of his work, and sought payment quantum meruit of work done. The court, however, found that the lawyer was fired for cause after he sought to pressure his client into signing a new fee agreement while settlement negotiations were at a critical stage. While the client found a new lawyer during the interregnum, events forced the client to settle for less than what was originally offered. Reiterating the principle of fiduciary duty of lawyers to clients in Meinhard v. Salmon 56 famously attributed to Justice Benjamin Cardozo that "Not honesty alone, but the punctilio of an honor the most sensitive, is then the standard of behavior," the US Court found that the lawyer involved was fired for cause, thus deserved no attorney's fees at all.

The utmost zeal given by Courts to the protection of the lawyer-client confidentiality privilege and lawyer's loyalty to his client is evident in the duration of the protection, which exists not only during the relationship, but extends even after the termination of the relationship. 57

Such are the unrelenting duties required by lawyers vis-a-vis their clients because the law, which the lawyers are sworn to uphold, in the words of Oliver Wendell Holmes, 58 ". . . is an exacting goddess, demanding of her votaries in intellectual and moral discipline." The Court, no less, is not prepared to accept respondents' position without denigrating the noble profession that is lawyering, so extolled by Justice Holmes in this wise:

Every calling is great when greatly pursued. But what other gives such scope to realize the spontaneous energy of one's soul? In what other does one plunge so deep in the stream of life — so share its passions its battles, its despair, its triumphs, both as witness and actor? . . . But that is not all. What a subject is this in which we are united — this abstraction called the Law, wherein as in a magic mirror, we see reflected, not only in our lives, but the lives of all men that have been. When I think on this majestic theme my eyes dazzle. If we are to speak of the law as our mistress, we who are here know that she is a mistress only to be won with sustained and lonely passion — only to be won by straining all the faculties by which man is likened to God.

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We have no choice but to uphold petitioners' right not to reveal the identity of their clients under pain of the breach of fiduciary duty owing to their clients, because the facts of the instant case clearly fall within recognized exceptions to the rule that the client's name is not privileged information.

If we were to sustain respondent PCGG that the lawyer-client confidential privilege under the circumstances obtaining here does not cover the identity of the client, then it would expose the lawyers themselves to possible litigation by their clients in view of the strict fiduciary responsibility imposed on them in the exercise of their duties.

The complaint in Civil Case No. 0033 alleged that the defendants therein, including herein petitioners and Eduardo Cojuangco, Jr. conspired with each other in setting up through the use of coconut levy funds the financial and corporate framework and structures that led to the establishment of UCPB, UNICOM and others and that through insidious means and machinations, ACCRA, using its wholly-owned investment arm, ACCRA Investment Corporation, became the holder of approximately fifteen million shares representing roughly 3.3% of the total capital stock of UCPB as of 31 March 1987. The PCGG wanted to establish through the ACCRA lawyers that Mr. Cojuangco is their client and it was Cojuangco who furnished all the monies to the subscription payment; hence, petitioners acted as dummies, nominees and/or agents by allowing themselves, among others, to be used as instrument in accumulating ill-gotten wealth through government concessions, etc., which acts constitute gross abuse of official position and authority, flagrant breach of public trust, unjust enrichment, violation of the Constitution and laws of the Republic of the Philippines.

By compelling petitioners, not only to reveal the identity of their clients, but worse, to submit to the PCGG documents substantiating the client-lawyer relationship, as well as deeds of assignment petitioners executed in favor of its clients covering their respective shareholdings, the PCGG would exact from petitioners a link "that would inevitably form the chain of testimony necessary to convict the (client) of a crime."

III

In response to petitioners' last assignment of error, respondents alleged that the private respondent was dropped as party defendant not only because of his admission that he acted merely as a nominee but also because of his undertaking to testify to such facts and circumstances "as the interest of truth may require, which includes . . . the identity of the principal." 59

First, as to the bare statement that private respondent merely acted as a lawyer and nominee, a statement made in his out-of-court settlement with the PCGG, it is sufficient to state that petitioners have likewise made the same claim not merely out-of-court but also in the Answer to plaintiff's Expanded Amended Complaint, signed by counsel, claiming that their acts were made in furtherance of "legitimate lawyering." 60 Being "similarly situated" in this regard, public respondents must show that there exist other conditions and circumstances which would warrant their treating the private respondent differently from petitioners in the case at bench in

order to evade a violation of the equal protection clause of the Constitution.

To this end, public respondents contend that the primary consideration behind their decision to sustain the PCGG's dropping of private respondent as a defendant was his promise to disclose the identities of the clients in question. However, respondents failed to show — and absolute nothing exists in the records of the case at bar — that private respondent actually revealed the identity of his client(s) to the PCGG. Since the undertaking happens to be the leitmotif of the entire arrangement between Mr. Roco and the PCGG, an undertaking which is so material as to have justified PCGG's special treatment exempting the private respondent from prosecution, respondent Sandiganbayan should have required proof of the undertaking more substantial than a "bare assertion" that private respondent did indeed comply with the undertaking. Instead, as manifested by the PCGG, only three documents were submitted for the purpose, two of which were mere requests for re-investigation and one simply disclosed certain clients which petitioners (ACCRA lawyers) were themselves willing to reveal. These were clients to whom both petitioners and private respondent rendered legal services while all of them were partners at ACCRA, and were not the clients which the PCGG wanted disclosed for the alleged questioned transactions. 61

To justify the dropping of the private respondent from the case or the filing of the suit in the respondent court without him, therefore, the PCGG should conclusively show that Mr. Roco was treated as species apart from the rest of the ACCRA lawyers on the basis of a classification which made substantial distinctions based on real differences. No such substantial distinctions exist from the records of the case at bench, in violation of the equal protection clause.

The equal protection clause is a guarantee which provides a wall of protection against uneven application of status and regulations. In the broader sense, the guarantee operates against uneven application of legal norms sothat all persons under similar circumstances would be accorded the same treatment. 62 Those who fall within a particular class ought to be treated alike not only as to privileges granted but also as to the liabilities imposed.

. . . What is required under this constitutional guarantee is the uniform operation of legal norms so that all persons under similar circumstances would be accorded the same treatment both in the privileges conferred and the liabilities imposed. As was noted in a recent decision: "Favoritism and undue preference cannot be allowed. For the principle is that equal protection and security shall be given to every person under circumstances, which if not identical are analogous. If law be looked upon in terms of burden or charges, those that fall within a class should be treated in the same fashion, whatever restrictions cast on some in the group equally binding the rest. 63

We find that the condition precedent required by the respondent PCGG of the petitioners for their exclusion as parties-defendants in PCGG Case No. 33 violates the lawyer-client confidentiality privilege. The condition also constitutes a transgression by respondents Sandiganbayan

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and PCGG of the equal protection clause of the Constitution. 64 It is grossly unfair to exempt one similarly situated litigant from prosecution without allowing the same exemption to the others. Moreover, the PCGG's demand not only touches upon the question of the identity of their clients but also on documents related to the suspected transactions, not only in violation of the attorney-client privilege but also of the constitutional right against self-incrimination. Whichever way one looks at it, this is a fishing expedition, a free ride at the expense of such rights.

An argument is advanced that the invocation by petitioners of the privilege of attorney-client confidentiality at this stage of the proceedings is premature and that they should wait until they are called to testify and examine as witnesses as to matters learned in confidence before they can raise their objections. But petitioners are not mere witnesses. They are co-principals in the case for recovery of alleged ill-gotten wealth. They have made their position clear from the very beginning that they are not willing to testify and they cannot be compelled to testify in view of their constitutional right against self-incrimination and of their fundamental legal right to maintain inviolate the privilege of attorney-client confidentiality.

It is clear then that the case against petitioners should never be allowed to take its full course in the Sandiganbayan. Petitioners should not be made to suffer the effects of further litigation when it is obvious that their inclusion in the complaint arose from a privileged attorney-client relationship and as a means of coercing them to disclose the identities of their clients. To allow the case to continue with respect to them when this Court could nip the problem in the bud at this early opportunity would be to sanction an unjust situation which we should not here countenance. The case hangs as a real and palpable threat, a proverbial Sword of Damocles over petitioners' heads. It should not be allowed to continue a day longer.

While we are aware of respondent PCGG's legal mandate to recover ill-gotten wealth, we will not sanction acts which violate the equal protection guarantee and the right against self-incrimination and subvert the lawyer-client confidentiality privilege.

WHEREFORE, IN VIEW OF THE FOREGOING, the Resolutions of respondent Sandiganbayan (First Division) promulgated on March 18, 1992 and May 21, 1992 are hereby ANNULLED and SET ASIDE. Respondent Sandiganbayan is further ordered to exclude petitioners Teodoro D. Regala, Edgardo J. Angara, Avelino V. Cruz, Jose C. Concepcion, Victor P. Lazatin, Eduardo U. Escueta and Paraja G. Hayuduni as parties-defendants in SB Civil Case No. 0033 entitled "Republic of the Philippines v. Eduardo Cojuangco, Jr., et al."

SO ORDERED.

Separate Opinions

VITUG, J., concurring:

The legal profession, despite all the unrestrained calumny hurled against it, is still the noblest of professions. It exists

upon the thesis that, in an orderly society that is opposed to all forms of anarchy, it so occupies, as it should, an exalted position in the proper dispensation of justice. In time, principles have evolved that would help ensure its effective ministration. The protection of confidentiality of the lawyer-client relationship is one, and it has since been an accepted firmament in the profession. It allows the lawyer and the client to institutionalize a unique relationship based on full trust and confidence essential in a justice system that works on the basis of substantive and procedural due process. To be sure, the rule is not without its pitfalls, and demands against it may be strong, but these problems are, in the ultimate analysis, no more than mere tests of vigor that have made and will make that rule endure.

I see in the case before us, given the attendant circumstances already detailed in the ponencia, a situation of the Republic attempting to establish a case not on what it perceives to be the strength of its own evidence but on what it could elicit from a counsel against his client. I find it unreasonable for the Sandiganbayan to compel petitioners to breach the trust reposed on them and succumb to a thinly disguised threat of incrimination.

Accordingly, I join my other colleague who vote for the GRANT of the petition.

DAVIDE, JR., J.: dissenting

The impressive presentation of the case in the ponencia of Mr. Justice Kapunan makes difficult the espousal of a dissenting view. Nevertheless, I do not hesitate to express that view because I strongly feel that this Court must confine itself to the key issue in this special civil action for certiorari, viz., whether or not the Sandiganbayan acted with grave abuse of discretion in not excluding the defendants, the petitioners herein, from the Third Amended Complaint in Civil Case No. 0033. That issue, unfortunately, has been simply buried under the avalanche of authorities upholding the sanctity of lawyer-client relationship which appears to me to be prematurely invoked.

From the undisputed facts disclosed by the pleadings and summarized in the ponencia, I cannot find my way clear to a conclusion that the Sandiganbayan committed grave abuse of discretion in not acting favorably on the petitioners' prayer in their Comment to the PCGG's Motion to Admit Third Amended Complaint.

The prerogative to determine who shall be made defendants in a civil case is initially vested in the plaintiff, or the PCGG in this case. The control of the Court comes in only when the issue of "interest" (§ 2, Rule 3, Rules of Court) as, e.g., whether an indispensable party has not been joined, or whether there is a misjoinder of parties (§ 7, 8, and 9, Id.), is raised.

In the case below, the PCGG decided to drop or exclude from the complaint original co-defendant Raul Roco because he had allegedly complied with the condition prescribed by the PCGG, viz., undertake that he will reveal the identity of the principals for whom he acted as nominee/stockholder in the companies involved in PCGG Case No. 0033. In short, there was an agreement or compromise settlement between the PCGG and Roco. Accordingly, the PCGG submitted a

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Third Amended Complaint without Roco as a defendant. No obstacle to such an agreement has been insinuated. If Roco's revelation violated the confidentiality of a lawyer-client relationship, he would be solely answerable therefor to his principals/clients and, probably, to this Court in an appropriate disciplinary action if warranted. There is at all no showing that Civil Case No. 0033 cannot further be proceeded upon or that any judgment therein cannot be binding without Roco remaining as a defendant. Accordingly, the admission of the Third Amended Complaint cannot be validly withheld by the Sandiganbayan.

Are the petitioners, who did not file a formal motion to be excluded but only made the request to that effect as a rider to their Comment to the Motion to Admit Third Amended Complaint, entitled to be excluded from the Third Amended Complaint such that denial thereof would constitute grave abuse of discretion on the Sandiganbayan's part? To me, the answer is clearly in the negative.

The petitioners seek to be accorded the same benefit granted to or to be similarly treated as Roco. Reason and logic dictate that they cannot, unless they too would make themselves like Roco. Otherwise stated, they must first voluntarily adopt for themselves the factual milieu created by Roco and must bind themselves to perform certain obligations as Roco. It is precisely for this that in response to the petitioners' comment on the aforementioned Motion to Admit Third Amended Complaint the PCGG manifested that it is willing to accord the petitioners the treatment it gave Roco provided they would do what Roco had done, that is, disclose the identity of their principals/clients and submit documents substantiating their claimed lawyer-client relationship with the said principals/clients, as well as copies of deeds of assignments the petitioners executed in favor of their principals/clients. The petitioners did not do so because they believed that compliance thereof would breach the sanctity of their fiduciary duty in a lawyer-client relationship.

It, indeed, appears that Roco has complied with his obligation as a consideration for his exclusion from the Third Amended Complaint. The Sandiganbayan found that

5. The PCGG is satisfied that defendant Roco has demonstrated his agency and that Roco has apparently identified his principal, which revelation could show the lack of action against him. This in turn has allowed the PCGG to exercise its power both under the rules of agency and under Section 5 of E.O. No. 14-1 in relation to the Supreme Court's ruling in Republic v. Sandiganbayan (173 SCRA 72).

As a matter of fact, the PCGG presented evidence to substantiate Roco's compliance. The ponencia itself so stated, thus:

. . . respondent PCGG presented evidence to substantiate compliance by private respondent Roco of the conditions precedent to warrant the latter's exclusion as party-defendant in PCGG Case No. 33, to wit: (a) Letter to respondent PCGG of the counsel of respondent Roco dated May 24, 1989 reiterating a previous request for reinvestigation by the PCGG in PCGG Case No.

33; (b) Affidavit dated March 8, 1989 executed by private respondent Roco as Attachment to the letter aforestated in (a); and (c) Letter of Roco, Bunag, and Kapunan Law Offices dated September 21, 1988 to the respondent in behalf of private respondent Roco originally requesting the reinvestigation and/or re-examination of evidence by the PCGG it Complaint in PCGG Case No. 33. (Id., 5-6).

These are the pieces of evidence upon which the Sandiganbayan founded its conclusion that the PCGG was satisfied with Roco's compliance. The petitioners have not assailed such finding as arbitrary.

The ponencia's observation then that Roco did not refute the petitioners' contention that he did not comply with his obligation to disclose the identity of his principals is entirely irrelevant.

In view of their adamantine position, the petitioners did not, therefore, allow themselves to be like Roco. They cannot claim the same treatment, much less compel the PCGG to drop them as defendants, for nothing whatsoever. They have no right to make such a demand for until they shall have complied with the conditions imposed for their exclusion, they cannot be excluded except by way of a motion to dismiss based on the grounds allowed by law (e.g., those enumerated in § 1, Rule 16, Rules of Court). The rule of confidentiality under the lawyer-client relationship is not a cause to exclude a party. It is merely aground for disqualification of a witness (§ 24, Rule 130, Rules of Court) and may only be invoked at the appropriate time, i.e., when a lawyer is under compulsion to answer as witness, as when, having taken the witness stand, he is questioned as to such confidential communicator or advice, or is being otherwise judicially coerced to produce, through subpoena duces tecum or otherwise, letters or other documents containing the same privileged matter. But none of the lawyers in this case is being required to testify about or otherwise reveal"any [confidential] communication made by the client to him, or his advice given thereon in the course of, or with a view to, professional employment." What they are being asked to do, in line with their claim that they had done the acts ascribed to them in pursuance of their professional relation to their clients, is to identify the latter to the PCGG and the Court; but this, only if they so choose in order to be dropped from the complaint, such identification being the condition under which the PCGG has expressed willingness to exclude them from the action. The revelation is entirely optional, discretionary, on their part. The attorney-client privilege is not therefor applicable.

Thus, the Sandiganbayan did not commit any abuse of discretion when it denied the petitioners' prayer for their exclusion as party-defendants because they did not want to abide with any of the conditions set by the PCGG. There would have been abuse if the Sandiganbayan granted the prayer because then it would have capriciously, whimsically, arbitrarily, and oppressively imposed its will on the PCGG.

Again, what the petitioners want is their exclusion from the Third Amended Complaint or the dismissal of the case insofar as they are concerned because either they are invested with immunity under the principle of confidentiality in

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a lawyer-client relationship, or the claims against them in Civil Case No. 0033 are barred by such principle.

Even if we have to accommodate this issue, I still submit that the lawyer-client privilege provides the petitioners no refuge. They are sued as principal defendants in Civil Case No. 0033, a case of the recovery of alleged ill-gotten wealth. Conspiracy is imputed to the petitioners therein. In short, they are, allegedly, conspirators in the commission of the acts complained of for being nominees of certain parties.

Their inclusion as defendants in justified under § 15, Article XI of the Constitution — which provides that the right of the State to recover properties unlawfully acquired by public officials or employees, from them or from their nominees or transferees, shall not be barred by prescription, laches or estoppel — and E.O. No. 1 of 28 February 1986, E.O. No. 2 of 12 March 1986, E.O. No. 14 of 7 May 1986, and the Rules and Regulations of the PCGG. Furthermore, § 2, Rule 110 of the Rules of Court requires that the complaint or information should be "against all persons who appear to be responsible for the offense involved."

Hypothetically admitting the allegations in the complaint in Civil Case No. 0033, I find myself unable to agree with the majority opinion that the petitioners are immune from suit or that they have to be excluded as defendants, or that they cannot be compelled to reveal or disclose the identity of their principals, all because of the sacred lawyer-client privilege.

This privilege is well put in Rule 130 of the Rules of Court, to wit:

§ 24. Disqualification by reason of privileged communication. — The following persons cannot testify as to matters learned in confidence in the following cases:

xxx xxx xxx

(b) An attorney cannot, without the consent of his client, be examined as to any communication made by the client to him, or his advice given thereon in the course of, or with a view to, professional employment, nor can an attorney's secretary, stenographer, or clerk be examined, without the consent of the client and his employer, concerning any fact the knowledge of which has been acquired in such capacity.

The majority seeks to expand the scope of the Philippine rule on the lawyer-client privilege by copious citations of American jurisprudence which includes in the privilege the identity of the client under the exceptional situations narrated therein. From the plethora of cases cited, two facts stand out in bold relief. Firstly, the issue of privilege contested therein arose in grand jury proceedings on different States, which are preliminary proceedings before the filing of the case in court, and we are not even told what evidentiary rules apply in the said hearings. In the present case, the privilege is invoked in the court where it was already filed and presently pends, and we have the foregoing specific rules above-quoted. Secondly, and more important, in the cases cited by the majority, the lawyers concerned were merely advocating

the cause of their clients but were not indicted for the charges against their said clients. Here, the counsel themselves are co-defendants duly charged in court as co-conspirators in the offenses charged. The cases cited by the majority evidently do not apply to them.

Hence, I wish to repeat and underscore the fact that the lawyer-client privilege is not a shield for the commission of a crime or against the prosecution of the lawyer therefor. I quote, with emphases supplied, from 81 AM JUR 2d, Witnesses, § 393 to 395, pages 356-357:

§ 393. Effect of unlawful purpose.

The existence of an unlawful purpose prevents the attorney-client privilege from attaching. The attorney-client privilege does not generally exist where the representation is sought to further criminal or fraudulent conduct either past, present, or future. Thus, a confidence received by an attorney in order to advance a criminal or fraudulent purpose is beyond the scope of the privilege.

Observation: The common-law rule that the privilege protecting confidential communications between attorney and client is lost if the relation is abused by a client who seeks legal assistance to perpetrate a crime or fraud has been codified.

§ 394. Attorney participation.

The attorney-client privilege cannot be used to protect a client in the perpetration of a crime in concert with the attorney, even where the attorney is not aware of his client's purpose. The reason for the rule is that it is not within the professional character of a lawyer to give advised on the commission of crime. Professional responsibility does not countenance the use of the attorney-client privilege as a subterfuge, and all conspiracies, either active or passive, which are calculated to hinder the administration of justice will vitiate the privilege. In some jurisdictions, however, this exception to the rule of privilege in confined to such intended acts in violation of the law as are mala in se, as distinguished from those which are merely mala prohibita.

§ 395. Communication in contemplation of crime.

Communications between attorney and client having to do with the client's contemplated criminal acts, or in aid or furtherance thereof, are not covered by the cloak of privilege ordinarily existing in reference to communications between attorney and client. But, the mere charge of illegality, not supported by evidence, will not defeat the privilege; there must be at least prima facie evidence that the illegality has some foundation in fact.

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Underhill also states:

There are many other cases to the same effect, for the rule is prostitution of the honorable relation of attorney and client will not be permitted under the guise of privilege, and every communication made to an attorney by a client for a criminal purpose is a conspiracy or attempt at a conspiracy which is not only lawful to divulge, but which the attorney under certain circumstances may be bound to disclose at once in the interest of justice. In accordance with this rule, where a forged will or other false instrument has come into possession of an attorney through the instrumentality of the accused, with the hope and expectation that the attorney would take some action in reference thereto, and the attorney does act, in ignorance of the true character of the instrument, there is no privilege, inasmuch as full confidence has been withheld. The attorney is then compelled to produce a forged writing against the client. The fact that the attorney is not cognizant of the criminal or wrongful purpose, or, knowing it, attempts to dissuade his client, is immaterial. The attorney's ignorance of his client's intentions deprives the information of a professional character as full confidence has been withheld. (H.C. Underhill, A Treatise on the Law of Criminal Case Evidence, vol. 2, Fifth ed. (1956), Sec. 332, pp. 836-837; emphasis mine).

125 AMERICAN LAW REPORTS ANNOTATED, 516-519, summarizes the rationale of the rule excepting communications with respect to contemplated criminal or fraudulent acts, thus:

c. Rationale of rule excepting communications with respect to contemplated criminal or fraudulent act.

Various reasons have been announced as being the foundation for the holdings that communications with respect to contemplated criminal or fraudulent acts are not privileged.

The reason perhaps most frequently advanced is that in such cases there is no professional employment, properly speaking. Standard F. Ins. Co v. Smithhart (1919) 183 Ky 679, 211 SW. 441, 5 ALR 972; Cummings v. Com. (1927) 221 Ky 301, 298 SW 943; Strong v. Abner (1937) 268 Ky 502, 105 SW(2d) 599; People v. Van Alstine (1885) 57 Mich 69, 23 NW 594; Hamil & Co. v. England (1892) 50 Mo App 338; Carney v. United R. Co. (1920) 205 Mo App 495, 226 SW 308; Matthews v. Hoagland(1891) 48 NJ Eq 455, 21 A 1054; Covency v. Tannahill (1841) 1 Hill (NY) 33, 37 AM Dec 287; People ex rel. Vogelstein v. Warden (1934) 150 Misc 714, 270 NYS 362 (affirmed without opinion in (1934) 242 App Div 611, 271 NYS 1059); Russell v. Jackson (1851) 9 Hare 387, 68 Eng Reprint 558;Charlton v. Coombes (1863) 4 Giff 372, 66 Eng Reprint 751; Reg. v. Cox (1884) LR 14 QB Div (Eng) 153 — CCR; Re Postlethwaite (1887) LR 35 Ch Div (Eng) 722.

In Reg. v. Cox (1884) LR 14 QB Div (Eng) 153 — CCR, the court said: "In order that the rule may apply, there must be both professional confidence and professional employment, but if the client has a criminal object in view in his communications with his solicitor one of these elements must necessarily be absent. The client must either conspire with his solicitor or deceive him. If his criminal object is avowed, the client does not consult his adviser professionally, because it cannot be the solicitor's business to further any criminal object. If the client does not avow his object, he reposes no confidence, for the state of facts which is the foundation of the supposed confidence does not exist. The solicitor's advice is obtained by a fraud."

So, in Standard F. Ins. Co. v. Smithhart (1919) 183 Ky 679, 211 SW 441, 5 ALR 972, the court said: "The reason of the principle which holds such communications not to be privileged is that it is not within the professional character of a lawyer to give advice upon such subjects, and that it is no part of the profession of an attorney or counselor at law to be advising persons as to how they may commit crimes or frauds, or how they may escape the consequences of contemplated crimes and frauds. If the crime or fraud has already been committed and finished, a client may advise with an attorney in regard to it, and communicate with him freely, and the communications cannot be divulged as evidence without the consent of the client, because it is a part of the business and duty of those engaged in the practice of the profession of law, when employed and relied upon for that purpose, to give advice to those who have made infractions of the laws; and, to enable the attorney to properly advise and to properly represent the client in court or when prosecutions are threatened, it is conducive to the administration of justice that the client shall be free to communicate to his attorney all the facts within his knowledge, and that he may be assured that a communication made by him shall not be used to his prejudice."

The protection which the law affords to communications between attorney and client has reference to those which are legitimately and properly within the scope of a lawful employment, and does not extend to communications made in contemplation of a crime, or perpetration of a fraud. Strong v.Abner (1937) 368 Ky 502, 105 SW (2d) 599.

The court in People v. Van Alstine (1885) 57 Mich 69, 23 NW 594, in holding not privileged communications to an attorney having for their object the communication of a crime, said: "They then partake of the nature of a conspiracy, or attempted conspiracy, and it is not only lawful to divulge such communications, but under certain circumstances it might become the duty of the attorney to do so. The interests of public justice require that no such shield from merited exposure shall be interposed to protect a person who takes counsel how he can safely commit a crime. The

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relation of attorney and client cannot exist for the purpose of counsel in concocting crimes."

And in Coveney v. Tannahill (1841) 1 Hill (NY) 33, 37 Am Dec 287, the court was of the opinion that there could be no such relation as that of attorney and client, either in the commission of a crime, or in the doing of a wrong by force or fraud to an individual, the privileged relation of attorney and client existing only for lawful and honest purposes.

If the client consults the attorney at law with reference to the perpetration of a crime, and they co-operate in effecting it, there is no privilege, inasmuch as it is no part of the lawyer's duty to aid in crime — he ceases to be counsel and becomes a criminal. Matthews v. Hoagland (1891) 48 NJ Eq 455, 21 A 1054.

The court cannot permit it to be said that the contriving of a fraud forms part of the professional business of an attorney or solicitor. Charlton v. Coombes (1863) 4 Giff 372, 66 Eng Reprint 751.

If the client does not frankly and freely reveal his object and intention as well as facts, there is not professional confidence, and therefore no privilege. Matthews v. Hoagland (NJ) supra. See to the same effect Carney v. United R. Co. (1920) 205 Mo App 495, 226 SW 308.

There is no valid claim of privilege in regard to the production of documents passing between solicitor and client, when the transaction impeached is charged to be based upon fraud, that is the matter to be investigated, and it is thought better that the alleged privilege should suffer than that honestly and fair dealing should appear to be violated with impunity. Smith v. Hunt (1901) 1 Ont L Rep 334.

In Tichborne v. Lushington, shorthand Notes (Eng) p. 5211 (cited in Reg. v. Cox (1884) LR 14 QB Div (Eng) 172 — CCR), the chief justice said "I believe the law is, and properly is, that if a party consults an attorney, and obtains advice for what afterwards turns out to be the commission of a crime or a fraud, that party so consulting the attorney has no privilege whatever to close the lips of the attorney from stating the truth. Indeed, if any such privilege should be contended for, or existing, it would work most grievous hardship on an attorney, who, after he had been consulted upon what subsequently appeared to be a manifest crime and fraud, would have his lips closed, and might place him in a very serious position of being suspected to be a party to the fraud, and without his having an opportunity of exculpating himself . . . There is no privilege in the case which I have suggested of a party consulting another, a professional man, as to what may afterwards turn out to be a crime or fraud, and the best mode of accomplishing it."

In Garside v. Outram (1856) 3 Jur NS (Eng) 39, although the question of privilege as to communications between attorney and client was

not involved, the question directly involved being the competency of a clerk in a business establishment to testify as to certain information which he acquired while working in the establishment, the court strongly approved of a view as stated arguendo for plaintiff, in Annesley v. Anglesea (1743) 17 How St Tr (Eng) 1229, as follows: "I shall claim leave to consider whether an attorney may be examined as to any matter which came to his knowledge as an attorney. If he is employed as an attorney in any unlawful or wicked act, his duty to the public obliges him to disclose it; no private obligations can dispense with that universal one which lies on every member of society to discover every design which may be formed, contrary to the laws of society, to destroy the public welfare. For this reason, I apprehend that if a secret which is contrary to the public good, such as a design to commit treason, murder, or perjury, comes to the knowledge of an attorney, even in a cause where he is concerned, the obligation to the public must dispense with the private obligation to the client."

The court in McMannus v. State (1858) 2 Head (Tenn) 213, said; "It would be monstrous to hold that if counsel was asked and obtained in reference to a contemplated crime that the lips of the attorney would be sealed, when the facts might become important to the ends of justice in the prosecution of crime. In such a case the relation cannot be taken to exist. Public policy would forbid it."

And the court in Lanum v. Patterson (1909) 151 Ill App 36, observed that this rule was not in contravention of sound public policy, but on the contrary, tended to the maintenance of a higher standard of professional ethics by preventing the relation of attorney and client from operating as a cloak for fraud.

Communications of a client to an attorney are not privileged if they were a request for advice as to how to commit a fraud, it being in such a case not only the attorney's privilege, but his duty, to disclose the facts to the court. Will v. Tornabells & Co. (1907) 3 Porto Rico Fed Rep 125. The court said: "We say this notwithstanding the comments of opposing counsel as to the indelicacy of his position because of his being now on the opposite side of the issue that arose as a consequence of the communication he testifies about, and is interested in the cause to the extent of a large contingent fee, as he confesses."

The object of prohibiting the disclosure of confidential communications is to protect the client, and not to make the attorney an accomplice or permit him to aid in the commission of a crime. People vs.Petersen (1901) 60 App Div 118, NYS 941.

The seal of personal confidence can never be used to cover a transaction which is in itself a

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crime.People v. Farmer (1909) 194 NY 251, 87 NE 457.

As to disclosing the identity of a client, 81 AM JUR 2d, Witnesses, § 410 and 411, pages 366-368, states:

§ 410. Name or identity of client.

Disclosure of a client's identity is necessary proof of the existence of the attorney-client relationship and is not privileged information. Thus, the attorney-client privilege is inapplicable even though the information was communicated confidentially to the attorney in his professional capacity and, in some cases, in spite of the fact that the attorney may have been sworn to secrecy, where an inquiry is directed to an attorney as to the name or identity of his client. This general rule applies in criminal cases, as well as in civil actions. Where an undisclosed client is a party to an action, the opposing party has a right to know with whom he is contending or who the real party in interest is, if not the nominal adversary.

§ 411. Disclosure of identity of client as breach of confidentiality.

The revelation of the identification of a client is not usually considered privileged, except where so much has been divulged with regard to to legal services rendered or the advice sought, that to reveal the client's name would be to disclose the whole relationship and confidential communications. However, even where the subject matter of the attorney-client relationship has already been revealed, the client's name has been deemed privileged.

Where disclosure of the identity of a client might harm the client by being used against him under circumstances where there are no countervailing factors, then the identity is protected by the attorney-client privilege.

In criminal proceedings, a client's name may be privileged if information already obtained by the tribunal, combined with the client's identity, might expose him to criminal prosecution for acts subsequent to, and because of, which he had sought the advice of his attorney.

Although as a general rule, the identity of a defendant in a criminal prosecution is a matter of public record and, thus, not covered by the attorney-client privilege, where the attorney has surrendered to the authorities physical evidence in his possession by way of the attorney-client relationship, the state must prove the connection between the piece of physical evidence and the defendant without in any way relying on the testimony of the client's attorney who initially received the evidence and, thus, the attorney may not be called to the stand and asked to disclose the identity of the client. However, an attorney cannot

refuse to reveal the identity of a person who asked him to deliver stolen property to the police department, whether a bona fide attorney-client relationship exists between them, inasmuch as the transaction was not a legal service or done in the attorney's professional capacity.

Distinction: Where an attorney was informed by a male client that his female acquaintance was possibly involved in [a] his-and-run accident, the identity of the female did not come within scope of attorney-client privilege although the identity of the male client was protected. (emphases supplied)

WIGMORE explains why the identity of a client is not within the lawyer-client privilege in this manner:

§ 2313. Identity of client or purpose of suit. — The identity of the attorney's client or the name of the real party in interest will seldom be a matter communicated in confidence because the procedure of litigation ordinarily presupposes a disclosure of these facts. Furthermore, so far as a client may in fact desire secrecy and may be able to secure action without appearing as a party to the proceedings, it would be improper to sanction such a wish. Every litigant is in justice entitled to know the identity of his opponents. He cannot be obliged to struggle in the dark against unknown forces. He has by anticipation the right, in later proceedings, if desired, to enforce the legal responsibility of those who may have maliciously sued or prosecuted him or fraudulently evaded his claim. He has as much right to ask the attorney "Who fees your fee?" as to ask the witness (966 supra). "Who maintains you during this trial?" upon the analogy of the principle already examined (2298 supra), the privilege cannot be used to evade a client's responsibility for the use of legal process. And if it is necessary for the purpose to make a plain exception to the rule of confidence, then it must be made. (Wigmore on Evidence, vol. 8, (1961), p. 609; emphases supplied).

In 114 ALR, 1322, we also find the following statement:

1. Name or identity.

As is indicated in 28 R.C.L. p. 563, it appears that the rule making communications between attorney and client privileged from disclosure ordinarily does not apply where the inquiry is confined to the fact of the attorney's employment and the name of the person employing him, since the privilege presupposes the relationship of client and attorney, and therefore does not attach to its creation.

At the present stage of the proceedings below, the petitioners have not shown that they are so situated with respect to their principals as to bring them within any of the exceptions established by American jurisprudence. There will be full

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opportunity for them to establish that fact at the trial where the broader perspectives of the case shall have been presented and can be better appreciated by the court. The insistence for their exclusion from the case is understandable, but the reasons for the hasty resolution desired is naturally suspect.

We do not even have to go beyond our shores for an authority that the lawyer-client privilege cannot be invoked to prevent the disclosure of a client's identity where the lawyer and the client are conspirators in the commission of a crime or a fraud. Under our jurisdiction, lawyers are mandated not to counsel or abet activities aimed at defiance of the law or at lessening confidence in the legal system (Rule 1.02, Canon 1, Code of Professional Responsibility) and to employ only fair and honest means to attain the lawful objectives of his client (Rule 19.01, Canon 19, Id.). And under the Canons of Professional Ethics, a lawyer must steadfastly bear in mind that his great trust is to be performed within and not without the bounds of the law (Canon 15, Id.), that he advances the honor of his profession and the best interest of his client when he renders service or gives advice tending to impress upon the client and his undertaking exact compliance with the strictest principles of moral law (Canon 32, Id.). These canons strip a lawyer of the lawyer-client privilege whenever he conspires with the client in the commission of a crime or a fraud.

I then vote to DENY, for want of merit, the instant petition.

Narvasa, C.J. and Regalado, J., concur.

PUNO, J., dissenting:

This is an important petition for certiorari to annul the resolutions of the respondent Sandiganbayan denying petitioners' motion to be excluded from the Complaint for recovery of alleged ill-gotten wealth on the principal ground that as lawyers they cannot be ordered to reveal the identity of their client.

First, we fast forward the facts. The Presidential Commission on Good Government (PCGG) filed Civil Case No. 33 before the Sandiganbayan against Eduardo M. Cojuangco, Jr., for the recovery of alleged ill-gotten wealth. Sued as co-defendants are the petitioners in the cases at bar — lawyers Teodoro Regala, Edgardo J. Angara, Avelino V. Cruz, Jose Concepcion, Rogelio A. Vinluan, Victor P. Lazatin, Eduardo Escueta and Paraja Hayudini. Also included as a co-defendant is lawyer Raul Roco, now a duly elected senator of the Republic. All co-defendants were then partners of the law firm, Angara, Abello, Concepcion, Regala and Cruz Law Offices, better known as the ACCRA Law Firm. The Complaint against Cojuangco, Jr., and the petitioners alleged, inter alia, viz:

xxx xxx xxx

The wrongs committed by defendants acting singly or collectively and in unlawful concert with one another, include the misappropriation and theft of public funds, plunder of the nation's wealth, extortion, blackmail, bribery, embezzlement and other acts of corruption, betrayal of public trust and

brazen abuse of power as more fully described (in the subsequent paragraphs of the complaint), all at the expense and to the grave and irreparable damage of Plaintiff and the Filipino people.

Defendants Eduardo Cojuangco, Jr., Edgardo J. Angara, Jose C. Concepcion, Teodoro D. Regala, Avelino V. Cruz, Regalio A. Vinluan, Eduardo U. Escueta, Paraja G. Hayudini and Raul S. Roco of Angara, Concepcion, Cruz, Regala, and Abello law offices (ACCRA) plotted, devised, schemed, conspired and confederated with each other in setting up, through the use of the coconut levy funds, the financial and corporate framework and structures that led to the establishment of UCPB, UNICOM, COCOLIFE, COCOMARK, CIC and more than twenty other coconut levy funded corporations, including the acquisition of the San Miguel Corporation shares and the institutionalization through presidential directives of the coconut monopoly. through insidious means and machinations, ACCRA, using its wholly-owned investment arm, ACCRA Investments Corporation, became the holder of approximately fifteen million shares representing roughly 3.3% of the total outstanding capital stock of UCPB as of 31 March 1987. This ranks ACCRA Investments Corporation number 44 among the top 100 biggest stockholders of UCPB which has approximately 1,400,000 shareholders. On the other hand, corporate books show the name Edgardo J. Angara as holding approximately 3,744 shares as of 7 June 1984.

In their Answer, petitioners alleged that the legal services offered and made available by their firm to its clients include: (a) organizing and acquiring business organizations, (b) acting as incorporators or stockholders thereof, and (c) delivering to clients the corresponding documents of their equity holdings (i.e., certificates of stock endorsed in blank or blank deeds of trust or assignment). They claimed that their activities were "in furtherance of legitimate lawyering."

In the course of the proceedings in the Sandiganbayan, the PCGG filed a Motion to Admit Third Amended Complaint and the Third Amended Complaint excluding lawyer Roco as party defendant. Lawyer Roco was excluded on the basis of his promise to reveal the identity of the principals for whom he acted as nominee/stockholder in the companies involved in the case.

The Sandiganbayan ordered petitioners to comment on the motion. In their Comment, petitioners demanded that they be extended the same privilege as their co-defendant Roco. They prayed for their exclusion from the complaint. PCGG agreed but set the following conditions: (1) disclosure of the identity of their client; (2) submission of documents substantiating their lawyer-client relationship; and (3) submission of the deeds of assignment petitioners executed in favor of their client covering their respective shareholdings. The same conditions were imposed on lawyer Roco.

Petitioners refused to comply with the PCGG conditions contending that the attorney-client privilege gives them the right not to reveal the identity of their client. They also alleged that lawyer Roco was excluded though he did not in fact

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reveal the identity of his clients. On March 18, 1992, the Sandiganbayan denied the exclusion of petitioners in Case No. 33. It held:

xxx xxx xxx

ACCRA lawyers may take the heroic stance of not revealing the identity of the client for whom they have acted, i.e., their principal, and that will be their choice. But until they do identify their clients, considerations of whether or not the privilege claimed by the ACCRA lawyers exists cannot even begin to the debated. The ACCRA lawyers cannot excuse themselves from the consequences of their acts until they have begun to establish the basis for recognizing the privilege; the existence and identity of the client.

This is what appears to be the cause for which they have been impleaded by the PCGG as defendants herein.

5. The PCGG is satisfied that defendant Roco has demonstrated his agency and that Roco has apparently identified his principal, which revelation could show the lack of course against him. This in turn has allowed the PCGG to exercise its power both under the rules of Agency and under Section 5 of E.O. No. 14-A in relation to the Supreme Court's ruling in Republic v. Sandiganbayan (173 SCRA 72).

The PCGG has apparently offered to the ACCRA lawyers the same conditions availed of by Roco; full disclosure in exchange for exclusion from these proceedings (par. 7, PCGG's COMMENT dated November 4, 1991). The ACCRA lawyers have preferred not to make the disclosures required by the PCGG.

The ACCRA lawyers cannot, therefore, begrudge the PCGG for keeping them as a party defendants. In the same vein, they cannot compel the PCGG to be accorded the same treatment accorded to Roco.

Neither can this Court.

WHEREFORE, the Counter Motion dated October 8, 1991 filed by the ACCRA lawyers and joined in by Atty. Paraja G. Hayudini for the same treatment by the PCGG as accorded to Raul S. Roco is DENIED for lack of merit.

Sandiganbayan later denied petitioners' motions for reconsideration in its resolutions dated May 21, 1988 and September 3, 1992.

In this petition for certiorari, petitioners contend:

I

The Honorable Sandiganbayan gravely abused its discretion in subjecting petitioners ACCRA lawyers

who indisputably acted as lawyers in serving as nominee-stockholders, to the strict application of the law agency.

II

The Honorable Sandiganbayan committed grave abuse of discretion in not considering petitioners ACCRA lawyers and Mr. Roco as similarly situated and, therefore, deserving of equal treatment.

1. There is absolutely no evidence that Mr. Roco had revealed, or had undertaken to reveal, the identities of the client(s) for whom he acted as nominee-stockholder.

2. Even assuming that Mr. Roco had revealed, or had undertaken to reveal, the identities of the client(s), the disclosure does not constitute a substantial distinction as would make the classification reasonable under the equal protection clause.

3. Respondent Sandiganbayan sanctioned favoritism and undue preference in favor of Mr. Roco and violation of the equal protection clause.

III

The Honorable Sandiganbayan committed grave abuse of discretion in not holding that, under the facts of this case, the attorney-client privilege prohibits petitioners ACCRA lawyers from revealing the identity of their client(s) and the other information requested by the PCGG.

1. Under the peculiar facts of this case, the attorney-client privilege includes the identity of the client(s).

2. The factual disclosures required by the PCGG are not limited to the identity of petitioners ACCRA lawyers' alleged client(s) but extend to other privileged matters.

IV

The Honorable Sandiganbayan committed grave abuse of discretion in not requiring that the dropping of party-defendants by the PCGG must be based on reasonable and just grounds and with due consideration to the constitutional right of

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petitioners ACCRA lawyers to the equal protection of the law.

The petition at bar is atypical of the usual case where the hinge issue involves the applicability of attorney-client privilege. It ought to be noted that petitioners were included as defendants in Civil Case No. 33 as conspirators. Together with Mr. Cojuangco, Jr., they are charged with having ". . . conspired and confederated with each other in setting up, through the use of the coconut levy funds, the financial and corporate framework and structures that led to the establishment of UCPB, UNICOM, COCOLIFE, COCOMARK, CICI and more than twenty other coconut levy funded corporations, including the acquisition of San Miguel Corporation shares and the institutionalization through presidential directives of the coconut monopoly." To stress, petitioners are charged with having conspired in the commission of crimes. The issue of attorney-client privilege arose when PCGG agreed to exclude petitioners from the complaint on condition they reveal the identity of their client. Petitioners refused to comply and assailed the condition on the ground that to reveal the identity of their client will violate the attorney-client privilege.

It is thus necessary to resolve whether the Sandiganbayan committed grave abuse of discretion when it rejected petitioners' thesis that to reveal the identity of their client would violate the attorney-client privilege. The attorney-client privilege is the oldest of the privileges for confidential communications known to the common law. 1 For the first time in this jurisdiction, we are asked to rule whether the attorney-client privilege includes the right not to disclose the identity of client. The issue poses a trilemma for its resolution requires the delicate balancing of three opposing policy considerations. One overriding policy consideration is the need for courts to discover the truth for truth alone is the true touchstone of justice. 2 Equally compelling is the need to protect the adversary system of justice where truth is best extracted by giving a client broad privilege to confide facts to his counsel. 3 Similarly deserving of sedulous concern is the need to keep inviolate the constitutional right against self-incrimination and the right to effective counsel in criminal litigations. To bridle at center the centrifugal forces of these policy considerations, courts have followed to prudential principle that the attorney-client privilege must not be expansively construed as it is in derogation of the search for truth. 4 Accordingly, a narrow construction has been given to the privilege and it has been consistently held that "these competing societal interests demand that application of the privilege not exceed that which is necessary to effect the policy considerations underlying the privilege, i.e., the privilege must be upheld only in those circumstances for which it was created.'" 5

Prescinding from these premises, our initial task is to define in clear strokes the substantive content of the attorney-client privilege within the context of the distinct issues posed by the petition at bar. With due respect, I like to start by stressing the irreducible principle that the attorney-client privilege can never be used as a shield to commit a crime or a fraud. Communications to an attorney having for their object the commission of a crime ". . . partake the nature of a conspiracy, and it is not only lawful to divulge such communications, but under certain circumstances it might become the duty of the attorney to do so. The interests of public justice require that no such shield from merited

exposure shall be interposed to protect a person who takes counsel how he can safely commit a crime. The relation of attorney and client cannot exist for the purpose of counsel in concocting crimes." 6 In the well chosen words of retired Justice Quiason, a lawyer is not a gun for hire. 7 I hasten to add, however, that a mere allegation that a lawyer conspired with his client to commit a crime or a fraud will not defeat the privilege. 8 As early as 1933, no less than the Mr. Justice Cardozo held in Clark v. United States 9 that: "there are early cases apparently to the effect that a mere charge of illegality, not supported by any evidence, will set the confidences free . . . But this conception of the privilege is without support . . . To drive the privilege away, there must be 'something to give colour to the charge;' there must be prima facie evidence that it has foundation in fact." In the petition at bar, however, the PCGG appears to have relented on its original stance as spelled out in its Complaint that petitioners are co-conspirators in crimes and cannot invoke the attorney-client privilege. The PCGG has agreed to exclude petitioners from the Complaint provided they reveal the identity of their client. In fine, PCGG has conceded that petitioner are entitled to invoke the attorney-client privilege if they reveal their client's identity.

Assuming then that petitioners can invoke the attorney-client privilege since the PCGG is no longer proceeding against them as co-conspirators in crimes, we should focus on the more specific issue of whether the attorney-client privilege includes the right not to divulge the identity of a client as contended by the petitioners. As a general rule, the attorney-client privilege does not include the right of non-disclosure of client identity. The general rule, however, admits of well-etched exceptions which the Sandiganbayan failed to recognize. The general rule and its exceptions are accurately summarized in In re Grand Jury Investigation, 10 viz:

The federal forum is unanimously in accord with the general rule that the identity of a client is, with limited exceptions, not within the protective ambit of the attorney-client privilege. See: In re Grand Jury Proceedings (Pavlick), 680 F.2d 1026, 1027 (5th Cir. 1982) (en banc); In re Grand Jury Proceedings (Jones), 517 F. 2d 666, 670-71 (5th Cir. 1975); In re Grand Jury Proceedings (Fine), 651 F. 2d 199, 204 (5th Cir. 1981); Frank v. Tomlinson, 351 F.2d 384 (5th Cir. 1965), cert. denied, 382 U.S. 1082, 86 S.Ct. 648, 15 L.Ed.2d 540 (1966); In re Grand Jury Witness (Salas), 695 F.2d 359, 361 (9th Cir. 1982); In re Grand Jury Subpoenas Duces Tecum (Marger/Merenbach), 695 F.2d 363, 365 (9th Cir. 1982); In re Grand Jury Proceedings (Lawson), 600 F.2d 215, 218 (9th Cir. 1979).

The Circuits have embraced various "exceptions" to the general rule that the identity of a client is not within the protective ambit of the attorney-client privilege. All such exceptions appear to be firmly grounded in the Ninth Circuit's seminal decision in Baird v. Koerner, 279 F.2d 633 (9th Cir. 1960). In Baird the IRS received a letter from an attorney stating that an enclosed check in the amount of $12,706 was being tendered for additional amounts due from undisclosed taxpayers. When the IRS summoned the attorney to ascertain the identity of the delinquent taxpayers the attorney refused

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identification assertion the attorney-client privilege. The Ninth Circuit, applying California law, adjudged that the "exception" to the general rule as pronounced in Ex parte McDonough, 170 Cal. 230, 149 P. 566 (1915) controlled:

The name of the client will be considered privileged matter where the circumstances of the case are such that the name of the client is material only for the purpose of showing an acknowledgment of guilt on the part of such client of the very offenses on account of which the attorney was employed.

Baird, supra, 279 F.2d at 633. The identity of the Baird taxpayer was adjudged within this exception to the general rule. The Ninth Circuit has continued to acknowledge this exception.

A significant exception to this principle of non-confidentiality holds that such information may be privileged when the person invoking the privilege is able to show that a strong possibility exists that disclosure of the information would implicate the client in the very matter for which legal advice was sought in the first case.

In re Grand Jury Subpoenas Duces Tecum (Marger/Merenbach), 695 F.2d 363, 365 (9th Cir. 1982). Accord: United States v. Hodge and Zweig, 548 F.2d 1347, 1353 (9th Cir. 1977); In re Grand Jury Proceedings (Lawson), 600 F.2d 215, 218 (9th Cir. 1979); United States v. Sherman, 627 F.2d 189, 190-91 (9th Cir. 1980); In re Grand Jury Witness (Salas), 695 F.2d 359, 361 (9th Cir. 1982). This exception, which can perhaps be most succinctly characterized as the "legal advice" exception, has also been recognized by other circuits. See: In re Walsh, 623 F.2d 489, 495 (7th Cir.), cert. denied, 449 U.S. 994, 101 S. Ct. 531, 66 L.Ed.2d 291 (1980); In re Grand Jury Investigation (Tinari), 631 F.2d 17, 19 (3d Cir 1980), cert. denied, 449 U.S.1083, 101 S.Ct. 869-70, 66 L.Ed.2d 808 (1981). Since the legal advice exception is firmly grounded in the policy of protecting confidential communications, this Court adopts and applies its principles herein. See: In re Grand Jury Subpoenas Duces Tecum (Marger/Merenbach), supra.

It should be observed, however that the legal advice exception may be defeated through a prima facieshowing that the legal representation was secured in furtherance of present or intended continuing illegality, as where the legal representation itself is part of a larger conspiracy. See: In re Grand Jury Subpoenas Decus Tecum (Marger/Merenbach), supra, 695 F.2d at 365 n. 1;

In re Walsh, 623 F.2d 489, 495 (7th Cir.), cert. denied, 449, U.S. 994, 101 S.Ct. 531, 66 L.Ed. 2d 291 (1980); In re Grand Jury Investigation (Tinari), 631 F.2d 17, 19 (3d Cir 1980); cert. denied, 449 U.S. 1083, 101 S.Ct. 869, 66 L.Ed. 2d 808 (1981); In re Grand Jury Proceedings (Lawson), 600 F.2d 215, 218 (9th Cir. 1979); United States v. Friedman, 445 F.2d 1076, 1086 (9th Cir. 1971). See also: Clark v. United States, 289 U.S. 1, 15, 53, S.Ct. 465, 469, 77, L.Ed. 993 (1933); In re Grand Jury Proceedings (Pavlick), 680 F.2d 1026, 1028-29 (5th Cir. 1982 (en banc).

Another exception to the general rule that the identity of a client is not privileged arises where disclosure of the identity would be tantamount to disclosing an otherwise protected confidential communication. In Baird, supra, the Ninth Circuit observed:

If the identification of the client conveys information which ordinarily would be conceded to be part of the usual privileged communication between attorney and client, then the privilege should extend to such identification in the absence of another factors.

Id., 279 F.2d at 632. Citing Baird, the Fourth Circuit promulgated the following exception:

To the general rule is an exception, firmly embedded as the rule itself. The privilege may be recognized where so much of the actual communication has already been disclosed that identification of the client amounts to disclosure of a confidential communication.

NLRB v. Harvey, 349 F.2d 900, 905 (4th Cir. 1965). Accord: United States v. Tratner, 511 F.2d 248, 252 (7th Cir. 1975); Colton v. United States, 306 F.2d 633, 637 (2d Cir. 1962), cert. denied, 371 U.S. 951, 83 S.Ct. 505, 9 L.Ed.2d 499 1963); Tillotson v. Boughner, 350 F.2d 663, 666 (7th Cir. 1965);United States v. Pape, 144 F.2d 778, 783 (2d Cir. 1944). See also: Chirac v. Reinecker, 24 U.S. (11 Wheat) 280, 6 L.Ed. 474 (1826). The Seventh Circuit has added to the Harvey exception the following emphasized caveat:

The privilege may be recognized where so much of the actual communication has already been disclosed [not necessarily by the attorney, but by independent sources as well] that identification of the client [or of fees paid] amounts

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to disclosure of a confidential communication.

United States vs. Jeffers, 532 F.2d 1101, 1115 (7th Cir. 1976 (emphasis added). The Third Circuit, applying this exception, has emphasized that it is the link between the client and the communication, rather than the link between the client and the possibility of potential criminal prosecution, which serves to bring the client's identity within the protective ambit of the attorney-client privilege. See: In re Grand Jury Empanelled February 14, 1978 (Markowitz), 603 F.2d 469, 473 n. 4 (3d Cir. 1979). Like the "legal advice" exception, this exception is also firmly rooted in principles of confidentiality.

Another exception, articulated in the Fifth Circuit's en banc decision of In re Grand Jury Proceedings (Pavlick), 680 F.2d 1026 (5th Cir. 1982 (en banc), is recognized when disclosure of the identity of the client would provide the "last link" of evidence:

We have long recognized the general rule that matters involving the payment of fees and the identity of clients are not generally privileged. In re Grand Jury Proceedings, (United States v. Jones), 517 F.2d 666 (5th Cir. 1975); see cases collected id. at 670 n. 2. There we also recognized, however, a limited and narrow exception to the general rule, one that obtains when the disclosure of the client's identity by his attorney would have supplied the last link in an existing chain of incriminating evidence likely to lead to the client's indictment.

I join the majority in holding that the Sandiganbayan committed grave abuse of discretion when it misdelineated the metes and bounds of the attorney-client privilege by failing to recognize the exceptions discussed above.

Be that as it may, I part ways with the majority when it ruled that petitioners need not prove they fall within the exceptions to the general rule. I respectfully submit that the attorney-client privilege is not a magic mantra whose invocation will ipso facto and ipso jure drape he who invokes it with its protection. Plainly put, it is not enough to assert the privilege. 11 The person claiming the privilege or its exceptions has the obligation to present the underlying facts demonstrating the existence of the privilege. 12 When these facts can be presented only by revealing the very information sought to be protected by the privilege, the procedure is for the lawyer to move for an inspection of the evidence in an in camera hearing. 13 The hearing can even be in camera and ex-parte. Thus, it has been held that "a well-recognized means for an attorney to demonstrate the existence of an exception to the general rule, while simultaneously

preserving confidentiality of the identity of his client, is to move the court for an in cameraex-parte hearing. 14 Without the proofs adduced in these in camera hearings, the Court has no factual basis to determine whether petitioners fall within any of the exceptions to the general rule.

In the case at bar, it cannot be gainsaid that petitioners have not adduced evidence that they fall within any of the above mentioned exceptions for as aforestated, the Sandiganbayan did not recognize the exceptions, hence, the order compelling them to reveal the identity of their client. In ruling that petitioners need not further establish the factual basis of their claim that they fall within the exceptions to the general rule, the majority held:

The circumstances involving the engagement of lawyers in the case at bench therefore clearly reveal that the instant case falls under at least two exceptions to the general rule. First, disclosure of the alleged client's name would lead to establish said client's connection with the very fact in issue of the case, which is privileged information, because the privilege, as stated earlier, protects the subject matter or the substance (without which there would be no attorney-client relationship). Furthermore, under the third main exception, revelation of the client's name would obviously provide the necessary link for the prosecution to build its case, where none otherwise exists. It is the link, in the word of Baird, "that would inevitably form the chain of testimony necessary to convict the (client) of a . . . crime.

I respectfully submit that the first and third exceptions relied upon by the majority are not self-executory but need factual basis for their successful invocation. The first exception as cited by the majority is ". . . where a strong probability exists that revealing the clients' name would implicate that client in the very activity for which he sought the lawyer's advice." It seems to me evident that "the very activity for which he sought the lawyer's advice" is a question of fact which must first be established before there can be any ruling that the exception can be invoked. The majority cites Ex Parte Enzor, 15 andU S v. Hodge and Zweig, 16 but these cases leave no doubt that the "very activity" for which the client sought the advice of counsel was properly proved. In both cases, the "very activity" of the clients reveal they sought advice on their criminal activities. Thus, in Enzor, the majority opinion states that the "unidentified client, an election official, informed his attorney in confidence that he had been offered a bribe to violate election laws or that he had accepted a bribe to that end." 17 In Hodge, the "very activity" of the clients deals with illegal importation of drugs. In the case at bar, there is no inkling whatsoever about the "very activity" for which the clients of petitioners sought their professional advice as lawyers. There is nothing in the records that petitioners were consulted on the "criminal activities" of their client. The complaint did allege that petitioners and their client conspired to commit crimes but allegations are not evidence.

So it is with the third exception which as related by the majority is "where the government's lawyers have no case against an attorney's client unless, by revealing the client's name, the said name would furnish the only link that would form the chain of testimony necessary to convict an individual

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of a crime." 18 Again, the rhetorical questions that answer themselves are: (1) how can we determine that PCGG has "no case" against petitioners without presentation of evidence? and (2) how can we determine that the name of the client is the only link without presentation of evidence as to the other links? The case of Baird vs. Koerner 19 does not support the "no need for evidence" ruling of the majority. In Baird, as related by the majority itself, "a lawyer was consulted by the accountants and the lawyer of certain undisclosed taxpayers regarding steps to be taken to place the undisclosed taxpayers in a favorable position in case criminal charges were brought against them by the US Internal Revenue Service (IRS). It appeared that the taxpayers' returns of previous years were probably incorrect and the taxes understated. 20 Once more, it is clear that the Baird court was informed of the activity of the client for which the lawyer was consulted and the activity involved probable violation of the tax laws. Thus, the Court held:

The facts of the instant case bring it squarely within that exception to the general rule. Here money was received by the government, paid by persons who thereby admitted they had not paid a sufficient amount in income taxes some one or more years in the past. The names of the clients are useful to the government for but one purpose — to ascertain which taxpayers think they were delinquent, so that it may check the records for that one year or several years. The voluntary nature of the payment indicates a belief by the taxpayers that more tax or interest or penalties are due than the sum previously paid, if any. It indicates a feeling of guilt for nonpayment of taxes, though whether it is criminal guilt is undisclosed. But it may well be the link that could form the chain of testimony necessary to convict an individual of a federal crime. Certainly the payment and the feeling of guilt are the reasons the attorney here involved was employed — to advise his clients what, under the circumstances, should be done.

In fine, the factual basis for the ruling in Baird was properly established by the parties. In the case at bar, there is no evidence about the subject matter of the consultation made by petitioners' client. Again, the records do not show that the subject matter is criminal in character except for the raw allegations in the Complaint. Yet, this is the unstated predicate of the majority ruling that revealing the identity of the client ". . . would furnish the only link that would form the chain of testimony necessary to convict an individual of a crime." The silent implication is unflattering and unfair to petitioners who are marquee names in the legal profession and unjust to their undisclosed client.

Finally, it ought to be obvious that petitioners' right to claim the attorney-client privilege is resolutory of the Complaint against them, and hence should be decided ahead and independently of their claim to equal protection of the law. Pursuant to the rule in legal hermeneutics that courts should not decide constitutional issues unless unavoidable, I also respectfully submit that there is no immediate necessity to resolve petitioners' claim to equal protection of the law at this stage of the proceedings.

Republic of the PhilippinesSUPREME COURT

Manila

SECOND DIVISION

A.C. No. 2040 March 4, 1998

IMELDA A. NAKPIL, complainant, vs.ATTY. CARLOS J. VALDES, respondent.

PUNO, J.:

The friendship of JOSE NAKPIL and respondent CARLOS J. VALDES dates back to the '50s during their school days in De La Salle and the Philippine Law School. Their closeness extended to their families and respondent became the business consultant, lawyer and accountant of the Nakpils.

In 1965, Jose Nakpil became interested in purchasing a summer residence in Moran Street, Baguio City.1 For lack of funds, he requested respondent to purchase the Moran property for him. They agreed that respondent would keep the property in trust for the Nakpils until the latter could buy it back. Pursuant to their agreement, respondent obtained two (2) loans from a bank (in the amounts of P65,000.00 and P75,000.00) which he used to purchase and renovate the property. Title was then issued in respondent's name.

It was the Nakpils who occupied the Moran summer house. When Jose Nakpil died on July 8, 1973, respondent acted as the legal counsel and accountant of his widow, complainant IMELDA NAKPIL. On March 9, 1976, respondent's law firm, Carlos J. Valdes & Associates, handled the proceeding for the settlement of Jose's estate. Complainant was appointed as administratrix of the estate.

The ownership of the Moran property became an issue in the intestate proceedings. It appears that respondent excluded the Moran property from the inventory of Jose's estate. On February 13, 1978, respondent transferred his title to the Moran property to his company, the Caval Realty Corporation.

On March 29, 1979, complainant sought to recover the Moran property by filing with the then Court of First Instance (CFI) of Baguio City an action for reconveyance with damages against respondent and his corporation. In defense, respondent claimed absolute ownership over the property and denied that a trust was created over it.

During the pendency of the action for reconveyance, complainant filed this administrative case to disbar the respondent. She charged that respondent violated professional ethics when he:

I. Assigned to his family corporation the Moran property (Pulong Maulap) which belonged to the estate he was settling as its lawyer and auditor.

II. Excluded the Moran property from the "inventory of real estate properties" he prepared for a client-estate and, at the same time, charged the loan secured to purchase the said excluded property as a liability of the estate, all for the purpose of

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transferring the title to the said property to his family corporation.

III. Prepared and defended monetary claims against the estate that retained him as its counsel and auditor.2

On the first charge, complainant alleged that she accepted respondent's offer to serve as lawyer and auditor to settle her husband's estate. Respondent's law firm then filed a petition for settlement of the estate of the deceased Nakpil but did not include the Moran property in the estate's inventory. Instead, respondent transferred the property to his corporation, Caval Realty Corporation, and title was issued in its name. Complainant accused respondent of maliciously appropriating the property in trust knowing that it did not belong to him. She claimed that respondent has expressly acknowledged that the said property belonged to the late Nakpil in his correspondences3 with the Baguio City Treasurer and the complainant.

On the second charge, complainant alleged that respondent's auditing firm (C. J. Valdes & Co., CPAs) excluded the Moran property from the inventory of her husband's estate, yet included in the claims against the estate the amounts of P65,000.00 and P75,000.00, which respondent represented as her husband's loans applied "probably for the purchase of a house and lot in Moran Street, Baguio City."

As to the third charge, complainant alleged that respondent's law firm (Carlos J. Valdes and Associates) filed the petition for the settlement of her husband's estate in court, while respondent's auditing firm (C.J. Valdes & Co., CPAs) acted as accountant of both the estate and two of its creditors. She claimed that respondent represented conflicting interests when his accounting firm prepared the list of claims of creditors Angel Nakpil and ENORN, Inc. against her husband's estate which was represented by respondent's law firm. Complainant averred that there is no distinction between respondent's law and auditing firms as respondent is the senior and controlling partner of both firms which are housed in the same building.

We required respondent to answer the charges against him. In his ANSWER, 4 respondent initially asserted that the resolution of the first and second charges against him depended on the result of the pending action in the CFI for reconveyance which involved the issue of ownership of the Moran property.

On the merit of the first charge, respondent reiterated his defense in the reconveyance case that he did not hold the Moran property in trust for the Nakpils as he is its absolute owner. Respondent explained that the Nakpils never bought back the Moran property from him, hence, the property remained to be his and was rightly excluded from the inventory of Nakpil's estate.

As to the second charge, respondent denied preparing the list of claims against the estate which included his loans of P65,000.00 and P75,000.00 for the purchase and renovation of the Moran property. In charging his loans against the estate, he stressed that the list drawn up by his accounting firm merely stated that the loans in respondent's name were applied "probably for the purchase of the house and lot in Moran Street, Baguio City." Respondent insisted that this was not an admission that the Nakpils owned the property as the phrase "probably for the purchase" did not imply a consummated transaction but a projected acquisition.

Respondent also disclaimed knowledge or privity in the preparation of a letter (Exhibit "H") of his accounting firm to the Baguio City treasurer

remitting the real estate taxes for the Moran property on behalf of the Nakpils. He contended that the letter could be a mere error or oversight.

Respondent averred that it was complainant who acknowledged that they did not own the Moran property for: (1) complainant's February 1979 Statement of Assets and Liabilities did not include the said property, and; (2) complainant, as administratrix, signed the Balance Sheet of the Estate where the Moran property was not mentioned.

Respondent admitted that complainant retained the services of his law and accounting firms in the settlement of her husband's estate.5 However, he pointed out that he has resigned from his law and accounting firms as early as 1974. He alleged that it was Atty. Percival Cendaña (from the law firm Carlos Valdes & Associates) who filed the intestate proceedings in court in 1976.

As to the third charge, respondent denied there was a conflict of interest when his law firm represented the estate in the intestate proceedings while his accounting firm (C.J. Valdes & Co., CPAs) served as accountant of the estate and prepared the claims of creditors Angel Nakpil and ENORN, Inc. against the estate. He proffered the following reasons for his thesis: First, the two claimants were closely related to the late Nakpil. Claimant ENORN, Inc. is a family corporation of the Nakpils of which the late Nakpil was the President. Claimant Angel Nakpil is a brother of the late Nakpil who, upon the latter's death, became the President of ENORN, Inc. These two claimants had been clients of his law and accounting firms even during the lifetime of Jose Nakpil. Second, his alleged representation of conflicting interests was with the knowledge and consent of complainant as administratrix. Third, there was no conflict of interests between the estate and the claimants for they had forged a modus vivendi, i.e., that the subject claims would be satisfied only after full payment of the principal bank creditors. Complainant, as administratrix, did not controvert the claims of Angel Nakpil and ENORN, Inc. Complainant has started paying off the claims of Angel Nakpil and ENORN, Inc. after satisfying the banks' claims. Complainant did not assert that their claims caused prejudice to the estate. Fourth, the work of Carlos J. Valdes & Co. as common auditor redounded to the benefit of the estate for the firm prepared a true and accurate amount of the claim. Fifth, respondent resigned from his law and accounting firms as early as August 15, 1974.6 He rejoined his accounting firm several years later. He submitted as proof the SEC's certification of the filing of his accounting firm of an Amended Articles of Partnership. Thus, it was not he but Atty. Percival Cendaña, from the firm Carlos J. Valdes & Associates, who filed the intestate proceedings in court. On the other hand, the claimants were represented by their own counsel Atty. Enrique O. Chan. Sixth, respondent alleged that in the remote possibility that he committed a breach of professional ethics, he committed such "misconduct" not as a lawyer but as an accountant who acted as common auditor of the estate and its creditors. Hence, he should be held accountable in another forum.

On November 12, 1979, complainant submitted her REPLY.7 She maintained that the pendency of the reconveyance case is not prejudicial to the investigation of her disbarment complaint against respondent for the issue in the latter is not the ownership of the Moran property but the ethics and morality of respondent's conduct as a CPA-lawyer.

Complainant alleged that respondent's Annexes to his Reply (such as the Statement of Assets & Liability of the Nakpils and the Balance Sheet of the Estate) which showed that complainant did not claim ownership of the Moran property were all prepared by C.J. Valdes & Co. as accountant of the estate of Jose Nakpil and filed with the

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intestate court by C.J. Valdes & Associates as counsel for the estate. She averred that these Annexes were not proofs that respondent owned the Moran property but were part of respondent's scheme to remove the property from the estate and transfer it to his family corporation. Complainant alleged that she signed the documents because of the professional counsel of respondent and his firm that her signature thereon was required. Complainant charged respondent with greed for coveting the Moran property on the basis of defects in the documents he himself prepared..

Complainant urged that respondent cannot disown unfavorable documents (the list of claims against the estate and the letter regarding Nakpil's payment of realty tax on the Moran property) which were prepared by his law and accounting firms and invoke other documents prepared by the same firms which are favorable to him. She averred that respondent must accept responsibility not just for some, but for all the representations and communications of his firms.

Complainant refuted respondent's claim that he resigned from his firms from March 9, 1976 to "several years later." She alleged that none of the documents submitted as evidence referred to his resignation from his law firm.The documents merely substantiated his resignation from his accounting firm.

In his REJOINDER,8 respondent insisted that complainant cannot hold him liable for representing the interests of both the estate and the claimants without showing that his action prejudiced the estate. He urged that it is not per se anomalous for respondent's accounting firm to act as accountant for the estate and its creditors. He reiterated that he is not subject to the jurisdiction of this Court for he acted not as lawyer, but as accountant for both the estate and its claimants.

He alleged that his accounting firm merely prepared the list of claims of the creditors Angel Nakpil and ENORN, Inc. Their claims were not defended by his accounting or law firm but by Atty. Enrique Chan. He averred that his law firm did not oppose these claims as they were legitimate and not because they were prepared by his accounting firm. He emphasized that there was no allegation that the claims were fraudulent or excessive and that the failure of respondent's law firm to object to these claims damaged the estate.

In our January 21, 1980 Resolution,9 we deferred further action on the disbarment case until after resolution of the action for reconveyance between the parties involving the issue of ownership by the then CFI of Baguio. Complainant moved for reconsideration on the ground that the issue of ownership pending with the CFI was not prejudicial to her complaint which involved an entirely different issue, i.e., the unethical acts of respondent as a CPA-lawyer. We granted her motion and referred the administrative case to the Office of the Solicitor General (OSG) for investigation, report and recommendation. 10

In 1983, the CFI of Baguio dismissed the action for reconveyance. The trial court ruled that respondent held the Moran property in trust for the Nakpils but found that complainant waived her right over it.

On appeal, the Court of Appeals reversed the trial court. The appellate court held that respondent was the absolute owner of the Moran property. The Decision was elevated to this Court.

On February 18, 1986, during the pendency of complainant's appeal to this Court, the OSG submitted its Report 11on the disbarment complaint. The OSG relied heavily on the decision of the Court of Appeals then pending review by this Court. The OSG found that respondent was not put on notice of complainant's claim over the

property. It opined that there was no trust agreement created over the property and that respondent was the absolute owner thereof. Thus, it upheld respondent's right to transfer title to his family corporation. It also found no conflict of interests as the claimants were related to the late Jose Nakpil. The OSG recommended the dismissal of the administrative case.

Prefatorily, we note that the case at bar presents a novel situation as it involves the disbarment of a CPA-lawyer for his demeanor in his accounting profession and law practice in connection with the property of his client.

As a rule, a lawyer is not barred from dealing with his client but the business transaction must be characterized with utmost honesty and good faith. 12 The measure of good faith which an attorney is required to exercise in his dealings with his client is a much higher standard than is required in business dealings where the parties trade at "arms length." 13 Business transactions between an attorney and his client are disfavored and discouraged by the policy of the law. Hence, courts carefully watch these transactions to assure that no advantage is taken by a lawyer over his client. This rule is founded on public policy for, by virtue of his office, an attorney is in an easy position to take advantage of the credulity and ignorance of his client. Thus, no presumption of innocence or improbability of wrongdoing is considered in an attorney's favor. 14

In the case at bar, we cannot subscribe to the findings of the OSG in its Report. These findings were based mainly on the decision of the Courtof Appeals in the action for reconveyance which was reversed by this Court in 1993. 15

As to the first two charges, we are bound by the factual findings of this Court in the aforementioned reconveyance case. 16 It is well-established that respondent offered to the complainant the services of his law and accounting firms by reason of their close relationship dating as far back as the '50s. She reposed her complete trust in respondent who was the lawyer, accountant and business consultant of her late husband. Respondent and the late Nakpil agreed that the former would purchase the Moran property and keep it in trust for the latter. In violation of the trust agreement, respondent claimed absolute ownership over the property and refused to sell the property to complainant after the death of Jose Nakpil. To place the property beyond the reach of complainant and the intestate court, respondent later transferred it to his corporation.

Contrary to the findings of the OSG, respondent initially acknowledged and respected the trust nature of the Moran property. Respondent's bad faith in transferring the property to his family corporation is well discussed in this Court's Decision,17 thus:

. . . Valdes (herein respondent) never repudiated the trust during the lifetime of the late Jose Nakpil. On the contrary, he expressly recognized it. . . . (H)e repudiated the trust when (he) excluded Pulong Maulap from the list of properties of the late Jose Nakpil submitted to the intestate court in 1973. . . .

x x x x x x x x x

The fact that there was no transfer of ownership intended by the parties . . . can be bolstered by Exh. "I-2," an annex to the claim filed against the estate proceedings of the late Jose Nakpil by his

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brother, Angel Nakpil, which was prepared by Carlos J. Valdes & Co., the accounting firm of herein respondent. Exhibit "I-2," which is a list of the application of the proceeds of various FUB loans contracted as of 31 December 1973 by the late Jose Nakpil, . . . contains the two (2) loans contracted in the name of respondent. If ownership of Pulong Maulap was already transferred or ceded to Valdes, these loans should not have been included in the list.

Indeed, as we view it, what the parties merely agreed to under the arrangement outlined in Exh. "J" was that respondent Valdes would . . . "take over the total loan of P140,000.00 and pay all of the interests due on the notes" while the heirs of the late Jose Nakpil would continue to live in the disputed property for five (5) years without remuneration save for regular maintenance expenses. This does not mean, however, that if at the end of the five-year period petitioner (Nakpil) failed to reimburse Valdes for his advances, . . . Valdes could already automatically assume ownership ofPulong Maulap. Instead, the remedy of respondents Carlos J. Valdes and Caval Realty Corporation was to proceed against the estate of the late Jose M. Nakpil and/or the property itself." (emphasis supplied)

In the said reconveyance case, we further ruled that complainant's documentary evidence (Exhibits "H", "J" and "L"), which she also adduced in this administrative case, should estop respondent from claiming that he bought the Moran property for himself, and not merely in trust for Jose Nakpil. 18

It ought to follow that respondent's act of excluding the Moran property from the estate which his law firm was representing evinces a lack of fidelity to the cause of his client. If respondent truly believed that the said property belonged to him, he should have at least informed complainant of his adverse claim. If they could not agree on its ownership, respondent should have formally presented his claim in the intestate proceedings instead of transferring the property to his own corporation and concealing it from complainant and the judge in the estate proceedings. Respondent's misuse of his legal expertise to deprive his client of the Moran property is clearly unethical.

To make matters worse, respondent, through his accounting firm, charged the two loans of P65,000.00 and P75,000.00 as liability of the estate, after said loans were obtained by respondent for the purchase and renovation of the property which he claimed for himself. Respondent seeks to exculpate himself from this charge by disclaiming knowledge or privity in the preparation of the list of the estate's liabilities. He theorizes that the inclusion of the loans must have been a mere error or oversight of his accounting firm. It is clear that the information as to how these two loans should be treated could have only come from respondent himself as the said loans were in his name. Hence, the supposed error of the accounting firm in charging respondent's loans against the estate could not have been committed without respondent's participation. Respondent wanted to "have his cake and eat it too" and subordinated the interest of his client to his own pecuniary gain. Respondent violated Canon 17 of the Code of Professional Responsibility which provides that a lawyer owes fidelity to his client's cause and enjoins him to be mindful of the trust and confidence reposed on him.

As regards the third charge, we hold that respondent is guilty of representing conflicting interests. It is generally the rule, based on sound public policy, that an attorney cannot represent adverse interests. It is highly improper to represent both sides of an issue. 19 The proscription against representation of conflicting interests finds application where the conflicting interests arise with respect to the same general matter 20 and is applicable however slight such adverse interest may be. It applies although the attorney's intentions and motives were honest and he acted in good faith. 21 However, representation of conflicting interests may be allowed where the parties consent to the representation, after full disclosure of facts. Disclosure alone is not enough for the clients must give their informed consent to such representation. The lawyer must explain to his clients the nature and extent of the conflict and the possible adverse effect must be thoroughly understood by his clients. 22

In the case at bar, there is no question that the interests of the estate and that of its creditors are adverse to each other. Respondent's accounting firm prepared the list of assets and liabilities of the estate and, at the same time, computed the claims of two creditors of the estate. There is clearly a conflict between the interest of the estate which stands as the debtor, and that of the two claimants who are creditors of the estate. In fact, at one instance, respondent's law firm questioned the claims of creditor Angel Nakpil against the estate.

To exculpate himself, respondent denies that he represented complainant in the intestate proceedings. He points out that it was one Atty. Percival Cendaña, from his law firm Carlos J. Valdes & Associates, who filed the intestate case in court. However, the fact that he did not personally file the case and appear in court is beside the point. As established in the records of this case and in the reconveyance case, 23 respondent acted as counsel and accountant of complainant after the death of Jose Nakpil. Respondent's defense that he resigned from his law and accounting firms as early as 1974 (or two years before the filing of the intestate case) is unworthy of merit. Respondent's claim of resignation from his law firm is not supported by any documentary proof. The documents on record 24 only show respondent's resignation from his accounting firm in 1972 and 1974. Even these documents reveal that respondent returned to his accounting firm on July 1, 1976 and as of 1978, the intestate proceedings for the settlement of Jose's estate had not yet been terminated. It does not escape us that when respondent transferred the Moran property to his corporation on February 13, 1978, the intestate proceedings was still pending in court. Thus, the succession of events shows that respondent could not have been totally ignorant of the proceedings in the intestate case.

Respondent claims that complainant knew that his law firm Carlos J. Valdes & Associates was the legal counsel of the estate 25 and his accounting firm, C.J. Valdes & Co., CPAs, was the auditor of both the estate and the two claimants against it. 26 The fact, however, that complainant, as administratrix, did not object to the set-up cannot be taken against her as there is nothing in the records to show that respondent or his law firm explained the legal situation and its consequences to complainant. Thus, her silence regarding the arrangement does not amount to an acquiescence based on an informed consent.

We also hold that the relationship of the claimants to the late Nakpil does not negate the conflict of interest. When a creditor files a claim against an estate, his interest is per se adverse to the estate. As correctly pointed out by complainant, if she had a claim against her husband's estate, her claim is still adverse and must be filed in the intestate proceedings.

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Prescinding from these premises, respondent undoubtedly placed his law firm in a position where his loyalty to his client could be doubted. In the estate proceedings, the duty of respondent's law firm was to contest the claims of these two creditors but which claims were prepared by respondent's accounting firm. Even if the claims were valid and did not prejudice the estate, the set-up is still undesirable. The test to determine whether there is a conflict of interest in the representation is probability, not certainty of conflict. It was respondent's duty to inhibit either of his firms from said proceedings to avoid the probability of conflict of interest.

Respondent advances the defense that assuming there was conflict of interest, he could not be charged before this Court as his alleged "misconduct" pertains to his accounting practice.

We do not agree. Respondent is a CPA-lawyer who is actively practicing both professions. He is the senior partner of his law and accounting firms which carry his name. In the case at bar, complainant is not charging respondent with breach of ethics for being the common accountant of the estate and the two creditors. He is charged for allowing his accounting firm to represent two creditors of the estate and, at the same time, allowing his law firm to represent the estate in the proceedings where these claims were presented. The act is a breach of professional ethics and undesirable as it placed respondent's and his law firm's loyalty under a cloud of doubt. Even granting that respondent's misconduct refers to his accountancy practice, it would not prevent this Court from disciplining him as a member of the Bar. The rule is settled that a lawyer may be suspended or disbarred for ANY misconduct, even if it pertains to his private activities, as long as it shows him to be wanting in moral character, honesty, probity or good demeanor. 27 Possession of good moral character is not only a prerequisite to admission to the bar but also a continuing requirement to the practice of law.

Public confidence in law and lawyers may be eroded by the irresponsible and improper conduct of a member of the bar. Thus, a lawyer should determine his conduct by acting in a manner that would promote public confidence in the integrity of the legal profession. Members of the Bar are expected to always live up to the standards embodied in the Code of Professional Responsibility as the relationship between an attorney and his client is highly fiduciary in nature and demands utmost fidelity and good faith.28 In the case at bar, respondent exhibited less than full fidelity to his duty to observe candor, fairness and loyalty in his dealings and transactions with his clients. 29

IN VIEW WHEREOF, the Court finds respondent ATTY. CARLOS J. VALDES guilty of misconduct. He is suspended from the practice of law for a period of one (1) year effective from receipt of this Decision, with a warning that a similar infraction shall be dealt with more severely in the future.

Let copies of this Decision be furnished all courts, as well as the Integrated Bar of the Philippines and the Office of the Bar Confidant.

SO ORDERED.

Regalado, Mendoza and Martinez, JJ., concur.

Melo, J., took no part.

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EN BANC[A.C. No. 6084. September 3, 2003]

FELICITAS BERBANO, complainant, vs. ATTY. WENCESLAO BARCELONA, respondent.D E C I S I O N

PER CURIAM:

A lawyer shall at all times uphold the integrity and dignity of the legal profession. The trust and confidence necessarily reposed by clients require in the attorney a high standard and appreciation of his duty to his clients, his profession, the courts and the public. The bar should maintain a high standard of legal proficiency as well as of honesty and fair dealing. Generally speaking, a lawyer can do honor to the legal profession by faithfully performing his duties to society, to the bar, to the courts and to his clients. To this end, nothing should be done by any member of the legal fraternity which might tend to lessen in any degree the confidence of the public in the fidelity, honesty and integrity of the profession.[1]

In a sworn Affidavit-Complaint dated March 11, 1999 filed before the Integrated Bar of the Philippines (IBP), complainant Felicitas Berbano seeks the disbarment of Atty. Wenceslao Barcelona for Malpractice and Gross Misconduct Unbecoming a Lawyer, Dereliction of Duty and Unjust Enrichment.[2] Complainant alleges:

1. I am one of the heirs of Rufino Esteban Hilapo, owner of a 244-hectare lot situated at Alabang, Muntinlupa, which property is being claimed by Filinvest Dev. Corp. in a case pending with the Commission on the Settlement of Land Problems (COSLAP), Quezon City. The heirs of REH has appointed Mr. PORFIRIO DAEN as their attorney-in-fact giving him authority to prosecute the case for and in their behalf.

2. On January 26, 1999, Mr. Porfirio Daen was arrested by a Muntinlupa police on the strength of an expired warrant of arrest-it was issued on February 1990-and subsequently detained at the Muntinlupa City Jail, Tunasan, Muntinlupa City, until his release on February 18, 1999.

3. Since Mr. Daen needed the assistance of a lawyer for his release from incarceration, we tried to look for one. We told our friend Naty Sibuya, about the predicament of Mr. Daen, who recommended Atty. Wenceslao Barcelona to us, his wife being Naty’s cousin/relative.

4. So on January 26, 1999, at about 10:30 in the evening, Atty. Wenceslao Barcelona arrived at the Muntinlupa City Jail and conferred with Mr. Daen. We learned later that Mr. Daen has engaged the services of Atty. Barcelona for the latter to secure the release of the former from prison. After their conversation, Atty. Barcelona told us that if you could produce the amount of FIFTY THOUSAND (P50,000.00) Pesos he will cause the release of Mr. Daen from prison the following day. I told him that it was already late in the evening and I cannot any more produce the amount. But he insisted that I must produce even just a small amount. So, what I did was ask my relatives who were with me at the time to contribute and we were able to raise FIFTEEN THOUSAND SEVEN-HUNDRED (P15,700.00) Pesos. In the meantime, Atty. Barcelona proceeded to Chowking Restaurant which is just located across the city jail where he waited for us there.

5. At the aforesaid restaurant, I handed to Atty. Barcelona the amount who accepted the same. He reiterated his promise to secure the release of Mr. Daen the following day. Before he left, he asked us to meet him at Max’ Restaurant at around 12:00 noon at EDSA Crossing. He thereafter left because according to him, he would go and see somebody, (a justice) from the Supreme Court who could help the release of Mr. Daen. It was already about 12:30 in the early morning of January 27, 1999.

6. As agreed upon, I, together with Romana Soriano, proceeded to Max’ Restaurant. We arrived at around 12:00 noon. Atty. Barcelona came at around 1:00 P.M. He even told us that he just came from the Supreme Court where he “fixed” the case of Mr. Daen. It surprised me though, that he did not have with him any single document at the time. Then, I handed him a “pay-to-cash” check for TWENTY-FOUR THOUSAND (P24,000.00) Pesos, dated January 29, 1999. We told him that the check may be encashed on the said date. Although, he said that the Justices of the Supreme Court do not accept check he nonetheless, accepted it saying that he will have the same rediscounted. We thereafter left.

7. The following morning, January 28, 1999, at around 7:00 o’clock Atty. Barcelona called me up by phone to say that since he was unable to have the check rediscounted, I must produce the amount of P5,000.00 and give the amount to him at Max’ Restaurant at EDSA Crossing at around 12:00 noon. We were unable to meet him because we arrived at about 1:00 o’clock already. Nonetheless, we waited for him until 3:00 in the afternoon. Thereafter, I called him through his pager saying that we were waiting for him at Max’. I also called up our house and inquire (sic) if a lawyer has called up. I was able to talk to my husband who informed me that a certain Atty. Barcelona called up. That Atty. Barcelona wanted to meet us at McDonald’s at Barangka Drive, Mandaluyong. So we rushed to the place but he was not there. I again paged him informing him that we were already at McDonald’s and to return my call through my cell phone. After a while, his wife called up to inform us to proceed to their house which was just five houses away from McDonald’s. When we reached their house, we were met by his daughter who called her mother. We were ushered inside the house and after introducing ourselves, we gave not only P5,000.00, but TEN THOUSAND (P10,000.00) Pesos in cash to his wife in the presence of his daughter. Then we went to Putatan, Muntinlupa, hoping that he might be there.

8. We arrived at Putatan, Muntinlupa at around 4:30 in the afternoon and there we saw Atty. Barcelona. We informed him that we left the P10,000.00 with his wife at their house. Since Atty. Barcelona informed us that he could not secure the release of Mr. Daen because the check had not been encashed, Mr. Gil Daen, a nephew of Porfirio Daen, gave him FIFTEEN THOUSAND (P15,000.00) Pesos in cash. I also gave him an additional P1,000.00 for his gasoline expenses.

9. The next time that we saw Atty. Barcelona was on February 3, 1999, Wednesday at around 6:00 in the evening at Putatan, Muntinlupa. He informed us that he just came from the city jail where he had a

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conversation with Mr. Daen. He told us that he is going to release Mr. Daen from prison tomorrow, February 4, 1999. However, in the morning of February 4, we learned from the wife of Atty. Barcelona when she returned my call that her husband had left for Mindanao early that morning on board a private plane owned by Chiongbian allegedly to attend a peace talk with the Muslims.

10. After more than a week, I went to Putatan, Muntinlupa, because I was informed by the son of Mr. Daen that he saw Atty. Barcelona there. When I saw him, I confronted him about his undertaking to release Mr. Daen from prison, but he only advised us not to worry and promised (again) that he will return the entire amount of P64,000.00 more or less, on Thursday, February 18, 1999. But I never saw him again since then. I have repeatedly paged him to return my call but he never returned any of my calls.[3]

In an Order dated April 15, 1999, Investigating Commissioner J. Virgilio A. Bautista of the Commission on Bar Discipline of the IBP, required respondent to submit his answer to the complaint, with a warning that he will be considered in default and the case will be heard ex parte, if he fails to do so.[4] Despite due notice,[5] respondent failed to file his answer. Thus, complainant filed a motion to declare respondent in default,[6] resolution of which was held in abeyance by the Investigating Commissioner who required the parties to appear for hearing before the Commission on August 13, 1999.[7] On said date, respondent again failed to appear despite due receipt of notice.[8] Commissioner Bautista was thus constrained to consider respondent in default and complainant was allowed to present her evidence ex parte. Complainant testified and affirmed under oath the truthfulness and veracity of her Affidavit-Complaint.[9] Complainant also manifested that she will present the check in the amount of P24,000.00[10] at the next date of hearing.

Further hearings were set by the Commissioner, on October 1, 1999, November 19, 1999, October 12, 2001, December 14, 2001 and June 28, 2002, but both parties failed to appear on said dates despite due notice.[11]

Commissioner Bautista submitted his Final Report and Recommendation on December 23, 2002 finding respondent guilty of malpractice and serious breach of the Code of Professional Responsibility and recommending that respondent be disbarred and ordered to return to complainant the amount of P64,000.00. The IBP Board of Governors adopted Commissioner Bautista’s findings but reduced the penalty to suspension from the practice of law for six years.

The Court disagrees with the IBP Board of Governors in reducing the penalty and upholds the findings and recommendation of Commissioner Bautista. Under the facts established by complainant, respondent should not only be suspended, but disbarred from practice.

The object of a disbarment proceeding is not so much to punish the individual attorney himself, as to safeguard the administration of justice by protecting the court and the public from the misconduct of officers of the court, and to remove from the profession of law persons whose disregard for their oath of office have proved them unfit to continue discharging the trust reposed in them as members of the bar.[12]

In In re Almacen, the Court expounded on the nature of disbarment proceedings, viz.:

. . . Disciplinary proceedings against lawyers are sui generis . Neither purely civil nor purely criminal, they do not involve a trial of an action

or a suit, but rather investigations by the Court into the conduct of one of its officers. Not being intended to inflict punishment, [they are] in no sense a criminal prosecution. Accordingly, there is neither a plaintiff nor a prosecutor therein. [They] may be initiated by the Court motu propio. Public interest is [their] primary objective, and the real question for determination is whether or not the attorney is still a fit person to be allowed the privileges as such. Hence, in the exercise of its disciplinary powers, the Court merely calls upon a member of the Bar to account for his actuations as an officer of the Court with the end in view of preserving the purity of the legal profession and the proper and honest administration of justice by purging the profession of members who by their misconduct have prove[n] themselves no longer worthy to be entrusted with the duties and responsibilities pertaining to the office of an attorney. . . .[13]

As in the Ricafort case,[14] herein respondent chose to forget that by swearing the lawyer’s oath, he became a guardian of truth and the rule of law, and an indispensable instrument in the fair and impartial administration of justice – a vital function of democracy a failure of which is disastrous to society.[15] In disbarment proceedings, the burden of proof rests upon the complainant, and for the court to exercise its disciplinary powers, the case against the respondent must be established by clear, convincing and satisfactory proof.[16] Considering the serious consequence of the disbarment or suspension of a member of the Bar, this Court has consistently held that clear preponderant evidence is necessary to justify the imposition of the administrative penalty.[17]

Complainant’s evidence consists solely of her Affidavit-Complaint and testimony before the Commission attesting to the truth of the allegations laid down in her affidavit. Commissioner Bautista and the IBP Board of Governors found her testimony together with her affidavit sufficient to support the finding that respondent committed the acts complained of . The matter of assigning values to the testimony of witnesses is best done by the investigating body (which in this case is the Investigating Commissioner) because unlike appellate courts, it can weigh such testimony in light of the demeanor, conduct and attitude of the witnesses at the trial.[18] Witnesses are weighed not numbered, and the testimony of a single witness may suffice if trustworthy and reliable.[19]

The non-presentation of the check given to respondent does not affect complainant’s case as it will merely serve to corroborate her testimony and there is no law which requires that the testimony of a single witness needs corroboration except where the law expressly mandates such corroboration[20] which is not so required in administrative cases.

The act of respondent in not filing his answer and ignoring the hearings set by the Investigating Commission, despite due notice, emphasized his contempt for legal proceedings. Thus, the Court finds no compelling reason to overturn the Investigating Commissioner’s judgment.

Respondent is guilty of culpable violations of several Canons of the Code of Professional Responsibility, to wit:

CANON 1 – A lawyer shall uphold the constitution, obey the laws of the land and promote respect for law and for legal processes.

CANON 7 – A lawyer shall at all times upholds the integrity and dignity of the legal profession, and support the activities of the integrated bar.

CANON 11 – A lawyer shall observe and maintain the respect due to the courts and to judicial officers and should insist on similar conduct by others.

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CANON 16 – A lawyer shall hold in trust all moneys and properties of his client that may come into his possession.

Rule 16.01 – A lawyer shall account for all money or property collected or received for or from the client.

The Code exacts from lawyers not only a firm respect for law, legal processes and the courts but also mandates the utmost degree of fidelity and good faith in dealing with clients and the moneys entrusted to them pursuant to their fiduciary relationship. Instead of promoting respect for law and the legal processes, respondent callously demeaned the legal profession by taking money from a client under the pretext of having connections with a Member of this Court.

The Court has taken into consideration the penalties imposed in other administrative cases involving similar offenses, e. g.:

In Judge Angeles vs. Atty. Uy, Jr.,[21] the respondent was suspended from the practice of law for one month for failing to promptly report and remit the amount of P16,500.00 he received on behalf of his client.

In Gonato vs. Atty. Adaza,[22] the respondent was suspended from the practice of law for six months for charging his clients the amount of P15,980.00 as filing fees when in fact no such fees were due.

In Dumadag vs. Lumaya,[23] the Court ordered the indefinite suspension of a lawyer for not remitting to his client the amount of P4,344.00 that he had received pursuant to an execution.

In Gatchalian Promotions Talents Pool, Inc., vs. Atty. Naldoza,[24] the respondent was disbarred for obtaining from his client the amount of US$2,555.00 allegedly as cash bond in an appealed case before this Court, when in fact no such amount has been paid or that the Court required such payment.

In the present case, respondent collected money from the complainant and the nephew of the detained person in the total amount of P64,000.00 for the immediate release of the detainee through his alleged connection with a Justice of the Supreme Court. He deserves to be disbarred from the practice of law.

This is not the first time that respondent has been charged with and found guilty of conduct unbecoming a lawyer. In Gil T. Aquino vs. Atty. Wenceslao C. Barcelona,[25] respondent misrepresented to the complainant that he could secure the restructuring of the complainant’s loan with the PNB through his connection with a certain Gonzalo Mericullo, legal assistant in the PNB. Based on such misrepresentation, respondent asked and received the amount of P60,000.00 from the complainant allegedly to be paid to the PNB. It turned out that there was no such employee in the PNB by the name Gonzalo Mericullo and the complainant’s property was eventually foreclosed. As in the present case, respondent did not appear before the IBP Commission on Bar Discipline despite receipt of the notices sent and duly received by him. After due proceedings, the IBP Board of Governors found respondent guilty of professional misconduct, and recommended that he be suspended from the practice of law for six months and ordered to render the accounting and restitute whatever remained of the P60,000.00 to the complainant. The Court adopted such finding and recommendation and respondent was ordered suspended from the practice of law for six months, effective immediately.

Respondent has demonstrated a penchant for misrepresenting to clients that he has the proper connections to secure the relief they seek, and thereafter, ask for money, which will allegedly be given to such connections. In this case, respondent misrepresented to complainant that he could get the release of Mr. Porfirio Daen through

his connection with a Supreme Court Justice. Not only that, respondent even had the audacity to tell complainant that the Justices of the Supreme Court do not accept checks.

In so doing, respondent placed the Court in dishonor and public contempt. In Surigao Mineral Reservation Board vs. Cloribel,[26] the Court expounded on a lawyer’s duty to the courts, viz.:

A lawyer is an officer of the courts; he is, “like the court itself, and instrument or agency to advance the ends of justice.’ [People ex rel. Karlin vs. Culkin, 60 A.L.R. 851, 855]. His duty is to uphold the dignity and authority of the courts to which he owes fidelity, ‘not to promote distrust in the administration of justice.” [In re Sotto, 82 Phil. 595, 602]. Faith in the courts a lawyer should seek to preserve. For, to undermine the judicial edifice “is a disastrous to the continuity of the government and to the attainment of the liberties of the people.” [Malcolm Legal and Judicial Ethics, 1949 ed., p. 160]. Thus has it been said a lawyer that “[a]s an officer of the court, it is his sworn and moral duty to help build and not destroy unnecessarily that high esteem and regard towards the courts so essential to the proper administration of justice.”

The Judiciary has been besieged enough with accusations of corruption and malpractice. For a member of the legal profession to further stoke the embers of mistrust on the judicial system with such irresponsible representations is reprehensible and cannot be tolerated. Respondent made a mockery of the Judiciary and further eroded public confidence in courts and lawyers when he ignored the proceedings in the Aquino case and in the present case. More so, when he misrepresented to complainant that he has connections with a Member of the Court to accommodate his client and that Justices of the Court accept money. Indubitably, he does not deserve to remain a member of the Bar any minute longer.

The practice of law is a privilege burdened with conditions. Adherence to the rigid standards of mental fitness, maintenance of the highest degree of morality and faithful compliance with the rules of the legal profession are the conditions required for remaining a member of good standing of the bar and for enjoying the privilege to practice law. The Supreme Court, as guardian of the legal profession, has ultimate disciplinary power over attorneys. This authority to discipline its members is not only a right but a bounden duty as well . . . That is why respect and fidelity to the Court is demanded of its members.[27]

WHEREFORE, for gross misconduct, respondent Wenceslao C. Barcelona is DISBARRED from the practice of law. His name is ordered STRICKEN from the Roll of Attorneys. He is further directed to return to complainant Felicitas Berbano the amount of Sixty Four Thousand Pesos (P64,000.00) within thirty (30) days from notice of this Decision.

This Decision shall take effect immediately.

Let copies hereof be furnished the Office of the Bar Confidant, to be appended to respondent’s personal record; the Integrated Bar of the Philippines; the Office of the President; the Department of Justice; the Philippines Judges Association; and all courts of the land for their information and guidance.

SO ORDERED.

Bellosillo, Puno, Panganiban, Quisumbing, Sandoval-Gutierrez, Austria-Martinez, Corona, Carpio-Morales, Callejo, Sr., Azcuna, and Tinga, JJ., concur.

Davide, Jr., C.J., Ynares-Santiago, and Carpio, JJ., on official leave.

Vitug, J., I concur except for the civil award which, in my view, should be taken apart from this administrative case.

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Republic of the PhilippinesSUPREME COURT

Manila

EN BANC

A.M. No. 936 July 25, 1975

FERMINA LEGASPI DAROY, LYDIA LEGASPI and AGRIPINO LEGASPI, complainants, vs.ATTORNEY RAMON CHAVES LEGASPI, respondent.

AQUINO, J.:

Fermina Legazpi-Daroy, Lydia Legaspi-Acha and Agripino Legaspi of Iligan City, in a verified complaint dated March 10, 1970, charged Attorney Ramon Chaves Legaspi of Cagayan de Oro City with malpractice for having misappropriated the sum of four thousand pesos which he had collected for them. They prayed that the respondent be disbarred. 1 (He was 59 years old in 1974. He passed the 1954 bar examinations with a rating of 75.75%).

The evidence shows that the complainants hired the respondent in May, 1962 to represent them in the intestate proceeding for the settlement of the estate of the spouses Aquilino Gonzaga and Paz Velez-Gonzaga. The complainants, together with their brother, Vivencio, who was abroad, were adjudged as one of the six groups of heirs of the late Gonzaga spouses, their deceased mother, Consuelo

Gonzaga-Legaspi, being a daughter of the spouses. The heirs in a joint petition dated April 11, 1969, which the respondent signed as counsel for the complainants, agreed that the coconut land left by the decedents would be divided into six equal parts, that the administrator be authorized to sell the land, and that, after payment of the obligations of the estate, the net proceeds would be distributed among the six groups of heirs. The probate court approved that agreement in its order of April 29, 1969 (Spec. Proc. Nop. 640 of the Misamis Oriental CFI, Exh. A).

The land was sold. Fermina Legaspi-Daroy came to know of the sale only when the respondent wrote a note dated November 28, 1969 to her father, Teofilo Legaspi, wherein he stated "that the money we have deposited may be withdrawn on December 8, 1969 at 9:00 o'clock". The respondent advised Teofilo Legaspito see him on that date so that the money could be withdrawn (Exh. B).

The complainants were not able to get the money on December 8 because the respondent on December 7 sent to Mrs. Daroy a telegram countermanding his prior advice and directing here to go to Cagayan de Oro City on December 10, a Wednesday, to receive the money (Exh. C). On December 9, a certain Atty. Sugamo sent a handwritten note to Mrs. Daroy advising her not to go to Cagayan de Oro City on December 10 because according to the respondent "his postdated checks can be paid and/or collected either Thursday or Friday yet" (Exh. D).

In the afternoon of that same day, December 9, Mrs. Daroy received another note, this time from the respondent himself, "Cousin Ramon". The note contained the disturbing intelligence that Mrs. Daroy's "Cousin Ramon" had withdrawn the money amounting to P4,000 and had spent it. The letter, a sort of extrajudicial confession or mea culpa on respondent's part, reads as follows (Exh. E):

Dear Fermina,

I wrote this letter with the hope that you will understand me. I have received P4,000.00 our share in the case filed and is now in my custody.

Previous (sic) I have a case wherein I was forced to use our money to solve my problem.

Now to pay the amount I have used, I sold my jeep to Mr. Ricarte Gorospe, an Employee of the BIR here in Cag. But I am not paid as yet. So, I am waiting as he will pay at 3:00 p.m. today and it's close as I have promised to give it on the 10th, I mean our money.

Kindly help me, defer the giving you of the sum or at least until Thursday or Friday, I bring it to you.

I know, my responsibility on this matter.

Thanks

CousinRaon

It turned out that on October 20, 1969 the respondent, as to "counsel for Fermina Daroy et al.", received from Deputy Provincial Sheriff Jose V. Yasay the said sum of P4,000 as "one (1) share in participation of

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my clients Fermina Daroy et al. in connection with (the) order of Judge B. K. Gorospe" in the aforementioned intestate proceeding. The respondent signed a receipt for that amount (Exh. L-1). The sheriff paid to Attorneys Angel Quimpo, Leovigildo Tandog, Jr. and Teogenes Velez, Jr. the respective shares of the other groups of heirs also in the sum of P4,000 for each group. Those lawyers turned over the amounts withdrawn to their respective clients (Exh. L).

It is evident that the respondent, in writing on November 28, 1969 to Teofilo Legaspi that the money deposited could be withdrawn on December 8, 1969, acted in bad faith. He had already withdrawn the money before that date. He concealed that fact from the complainants.

Before the disbarment complaint was filed several demands were made upon the respondent to pay to the complainants the amount which he had misappropriated. He repeatedly broke his promises to make payment. As complainants' patience was already exhausted, they filed their complaint for disbarment on March 13, 1970. 2

Atty. Alfredo R. Busico, the lawyer for the complainants, in a letter to this Court's Clerk of Court dated May 26, 1970, expressed the hope that preferential attention would be given to the case. He said that he had "reliable information from Cagayan de Oro City" that the respondent "has been bragging that nothing will happen to this case" (p. 20, Rollo).1äwphï1.ñët

The case was referred to the Solicitor General for investigation, report and recommendation. In 1973 he requested the City Fiscal of Iligan City to conduct the investigation. 3 After the investigation was finished, the case was set for hearing. The respondent did not appear at the hearing.

Respondent Legaspi in his testimony admitted that he received the said sum of P4,000 as shown in the receipt, Exhibit D dated October 20, 1969. He said that after receiving it he immediately wired Teofilo Legaspi at Iligan City to see him (the respondent) in his office at Cagayan de Oro City so that Teofilo Legaspi could tell him "the proper disposal" of that amount.

Teofilo Legaspi supposedly went to see him on October 21, 1969 and at their conference they supposedly agreed that the sum of P700 would be deducted from the P4,000 to cover the expenses which he (Legaspi) described as "expenses involved from the parties litigants, expenses seeking evidence and other expenses relevant to the case" and "major expenses" in the case (sic); that his attorney's fees would be equivalent "to a share of the petitioners", an agreement which was later placed in formal form (referring to 1968 extrajudicial settlement attached to his answer); that the balance of P3,300 would be divided into six equal parts (six because of the four Legaspi children, the father Teofilo Legaspi and the lawyer Ramon C. Legaspi); that under such division each participant would receive P412 each (P3,300 divided by six gives a quotient of P550 not P412), and that he gave Teofilo the sum of P412. The respondent did not present any receipt to prove that alleged payment.

He said that at first Teofilo Legaspi told him to keep the share of Vivencio Legaspi, who was abroad, but at the end of October or the first week of November, 1969 Teofilo got from him (the respondent) Vivencio's share. Again, the respondent did not ask Teofilo to sign a receipt for Vivencio's share. After paying the shares of Teofilo and Vivencio, the balance of the amount left in respondent's possession amounted to P2,476.

According to respondent's version, the complainants "refused consistently to receive" the said balance from him because they wanted the full amount of P4,000. He said that he had already paid to them the sum of P2,000 and that only the sum of P476 was left in his custody. He did not present any receipt to prove the alleged payment of P2,000. He said that he could deliver that amount of P476 to the complainants.

Mrs. Daroy, in rebuttal, denied that her father, Teofilo Legaspi, received the sum of P412 from the respondent. She said that her father never went to Cagayan de Oro City to confer with the respondent. She said that there was no agreement that the respondent would participate like an heir in the partition of the sum of P4,000. She denied that the respondent offered to pay her and her brother and sister the sum of P2,746. She denied that the respondent paid to the complainants P2,000.

After a careful examination of the evidence, we find that respondent's testimony cannot be given any credence. In his memorandum he stated that after he received from the sheriff "on October 29, 1969" the sum of P4,000, he "immediately wired" his kinsman, Teofilo Legaspi, to come to Cagayan de Oro City and that Teofilo "came onOctober 21, 1969". Respondent meant October 20, 1969, the date of the receipt, Exhibit L-1.

The truth is that he did not send any such wire. The statement of the sheriff and respondent's office clerk in their affidavits of March 18, 1975 that such a wire was sent is false. What he sent to Teofilo Legaspi was a handwritten note dated November 28, 1969 (Exh. B) wherein the respondent made it appear that the said sum of P4,000 was going to be withdrawn on "December 8, 1969 at nine o'clock". That the respondent in his testimony and memorandum forgot that note, which is Annex C of the complaint for disbarment and which he admitted in paragraph 4 of his answer, is an indication that he does not know the facts of his own case and that he had no scruples in trying to mislead and deceive this Court.

That note of respondent to Teofilo Legaspi, his telegram and his letter (already quoted) to Mrs. Daroy dated December 7 and 9, 1969, respectively (Exh. B, C and E) overwhelmingly belie his fabricated theory that he conferred with Teofilo Legaspi at the end of October or in the first week of November, 1969. He was tempted to concoct a story as to his alleged payments to Teofilo Legaspi because the latter is dead and could not refute him. However, complainants' documentary evidence refutes his prevarications, distortions and fabrications.

He attached to his memorandum (of which he did not furnish complainants a copy) his Exhibit 2, a supposed typewritten claim against him which totalled P10,406.05. Exhibit 2 does not bear any signature. The respondent wants to imply that the complainants were trying to blackmail him. No probative value can be given to Exhibit 2.

The flimsiness and incredible character of respondent's defense are discernible in his Exhibit 1, which he attached to his answer to the original complaint.

Exhibit 1 as a carbon copy of a supposed extrajudicial partition executed in 1968 by the four children of Consuelo Gonzaga, by her surviving husband, Teofilo Legaspi and by the respondent, Atty. Legaspi, all the six being described in the document as "the legitimate children and sole heirs of Consuelo Gonzaga, who died on March 12. 1941". Why the respondent was an heir of Consuelo Gonzaga was not explained.

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In that curious instrument, the spaces for the day and month when it was signed and acknowledged before a notary, the spaces for the description of the fourth parcel of land, the spaces for the shares adjudicated to the heirs, the spaces for the instrumental witnesses and the spaces for the numbers of the residence certificates and the dates and places of issue were left blank. Yet the instrument was signed by the above six persons and duly notarized by a notary whose signature is illegible.

In that extrajudicial partition Consuelo Gonzaga was alleged to have left four parcels of land located at Barrio Maputi, Initao, Misamis Oriental which she inherited from her father Aquilino Gonzaga. However, in the order of the Court of First Instance of Misamis Oriental dated April 29, 1969 Consuelo Gonzaga inherited only a one-sixth share in a parcel of land located at Maputi, Initao, Misamis Oriental.

How Vivencio Legaspi, who, according to the instrument, was a resident of Alameda, California, was able to sign it and to appear before a notary was not explained.

The incomplete document, far from being of any help to respondent Legaspi, casts a reflection on his competency and integrity as a lawyer and on the competency and integrity of the notary before whom it was acknowledged. As already noted, it was made to appear herein that respondent Legaspi was an heir of Consuelo Gonzaga when, obviously, he did not possess that status. The document does not even mention whether the deceased died intestate.

That document has no connection with the P4,000 and does not justify the misappropriation or breach of trust committed by the respondent.

A lawyer, under his oath, pledges himself not to delay any man for money or malice and is bound to conduct himself with all good fidelity to his clients. He is obligated to report promptly the money of his clients that has come into his possession. He should not commingle it with his private property or use it for his personal purposes without his client's consent. He should maintain a reputation for honesty and fidelity to private trust (Pars. 11 and 32, Canons of Legal Ethics).

Money collected by a lawyer in pursuance of a judgment in favor of his clients is held in trust and must be immediately turned over to them (Aya vs. Bigornia, 57 Phil. 8, 11).1äwphï1.ñët

Section 25, Rule 138 of the Rules of Court provides that when an attorney unjustly retains in his hands money of his client after it has been demanded, he may be punished for contempt as an officer of the court who has misbehaved in his official transactions and he is liable to a criminal prosecution.

A lawyer may be disbarred for any deceit, malpractice or other gross misconduct in his office as attorney or for any violation of the lawyer's oath (Ibid, sec. 27).

"The relation between an attorney and his client is highly fiduciary in its nature and of a very delicate, exacting and confidential character, requiring a high degree of fidelity and good faith" (7 Am. Jur. 2d 105). In view of that special relationship, "lawyers are bound to promptly account for money or property received by them on behalf of their clients and failure to do so constitutes professional misconduct. The fact that a lawyer has a lien for fees on money in his hands collected for his clients does not relieve him from the duty of promptly accounting for the funds received." (Syllabus, In re Bamberger, 49 Phil. 962).

The conversion of funds entrusted to an attorney is a gross violation of general morality as well as professional ethics. It impairs public confidence in the legal profession, "It deserves severe punishment" (Sturr vs. State Bar of California, 52 Cal. 2d 125, 338 Pac. 2d 897).1äwphï1.ñët

A member of the bar who converts the money of his client to his own benefit through false pretenses is guilty of deceit, malpractice and gross misconduct in his office of lawyer. The attorney, who violates his oath of office, betrays the confidence reposed in him by a client and practices deceit cannot be permitted to continue as a law practitioner. Not alone has he degraded himself but as an unfaithful lawyer he has besmirched the fair name of an honorable profession (In re Paraiso, 41 Phil. 24, 25; In re David, 84 Phil. 627; Manaloto vs. Reyes, Adm. Case No. 503, October 29, 1965, 15 SCRA 131; See Cabigao and Yzquierdo vs. Fernando Rodrigo, 57 Phil. 20).

We find respondent Legaspi guilty of deceit, malpractice and professional misconduct for having misappropriated the funds of his clients. His manufactured defenses, his lack of candor and his repeated failure to appear at the investigation conducted by the City Fiscal of Iligan and at the hearings scheduled by this Court, thus causing this proceeding to drag on for a long time, demonstrate his unworthiness to remain as a member of the noble profession of law. (See Capulong vs. Aliño, Adm. Case No. 381, February 10, 1968, 22 SCRA 491).

Taking into account the environmental circumstances of the case, we hold that the proper disciplinary action against the respondent is disbarment. Its salutary purpose is to protect the court and the public from the misconduct of an officer of the court. It is premised on the assumption that a member of the bar should be competent, honorable and reliable, a person in whom courts and clients may repose confidence (In reMacDougall, 3 Phil. 70, 78).

Its objectives are to compel the lawyer to deal fairly and honestly with his client and to remove from the profession a person whose misconduct has proven him unfit for the duties and responsibilities belonging to the office of an attorney (6 Moran's Comments on the Rules of Court, 1970 Ed., p. 242).1äwphï1.ñët

The prayer of the complainants that the respondent be ordered to pay them the said amount of P4,000 plus attorney's fees and miscellaneous expenses incurred in the prosecution of this case amounting to more than P1,000 cannot be granted in this disbarment proceeding. That amount should be recovered in an ordinary action.

WHEREFORE, the respondent is disbarred. The Clerk of Court is directed to strike out his name from the Roll of Attorneys.

SO ORDERED.

Makalintal, C.J., Castro, Fernando, Barredo, Makasiar, Antonio, Esguerra, Muñoz Palma, Concepcion Jr., and Martin, JJ., concur.

Teehankee, J., is on leave.

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Republic of the PhilippinesSUPREME COURT

Manila

EN BANC

A.C. No. 1526 January 31, 2005

NAZARIA S. HERNANDEZ (DECEASED), SUBSTITUTED BY LUCIANO S. HERNANDEZ, JR., complainant, vs.ATTY. JOSE C. GO, respondent.

D E C I S I O N

PER CURIAM:

For our resolution is the verified letter-complaint1 for disbarment against Atty. Jose C. Go dated June 23, 1975 filed by Nazaria S. Hernandez (now deceased). Both parties are from Zamboanga City.

The allegations in the letter-complaint are:

Sometime in 1961, complainant’s husband abandoned her and her son, Luciano S. Hernandez, Jr. Shortly thereafter, her husband’s numerous creditors demanded payments of his loans. Fearful that the various mortgage contracts involving her properties will be foreclosed and aware of impending suits for sums of money against her, complainant engaged the legal services of Atty. Jose C. Go, herein respondent.

Respondent instilled in complainant a feeling of helplessness, fear, embarrassment, and social humiliation. He advised her to give him her land titles covering Lots 848-A, 849-Q, and 849-P at Zamboanga City so he could sell them to enable her to pay her creditors. He then persuaded her to execute deeds of sale in his favor without any monetary or valuable consideration. Complainant agreed on condition that he would sell the lots and from the proceeds pay her creditors.

Complainant also owned Lots 2118, 2139, and 1141-A, likewise located in Zamboanga City, which were mortgaged to her creditors. When the mortgages fell due, respondent redeemed the lots. Again, he convinced her to execute deeds of sale involving those lots in his favor. As a result, respondent became the registered owner of all the lots belonging to complainant.

Sometime in 1974, complainant came to know that respondent did not sell her lots as agreed upon. Instead, he paid her creditors with his own funds and had her land titles registered in his name, depriving her of her real properties worth millions.1a\^/phi1.net

In our Resolution dated September 24, 1975, respondent was required to file his comment on the complaint.

Instead of filing his comment, respondent submitted a motion to dismiss on the ground that the complaint is premature since there is pending before the then Court of First Instance of Zamboanga City Civil Case No. 17812for recovery of ownership and declaration of nullity of deeds of sale filed by complainant against him involving the subject lots.

On November 14, 1975, we issued a Resolution denying respondent’s motion and requiring him to submit his answer.

In his answer dated December 19, 1975, respondent denied the allegations in the instant complaint. He averred that he sold, in good faith, complainant’s lots to various buyers, including himself, for valuable consideration. On several occasions, he extended financial assistance to complainant and even invited her to live with his family. His children used to call her "Lola" due to her frequent visits to his residence. He prayed that the complaint be dismissed for failure to state a cause of action.

On January 17, 1977, we referred the case to the Office of the Solicitor General (OSG) for investigation, report, and recommendation.

It was only on March 13, 1990 or after 13 years, 1 month and 26 days that the OSG filed a motion to refer the instant case to the IBP for the retaking of the testimonies of complainant’s witnesses and the submission of its report and recommendation.

On April 4, 1990, we issued a Resolution referring the case to the IBP for investigation, report, and recommendation.

The Report and Recommendation dated June 15, 2004 of Atty. Lydia A. Navarro, Commissioner of the IBP Commission on Bar Discipline, is quoted as follows:

"A careful examination and evaluation of the evidence submitted by the parties showed that all the properties of the complainant are presently owned by the respondent by virtue of several deeds of sale executed by the complainant in favor of the respondent without monetary consideration except Lot 849-D situated in Tomas Claudio which was returned by the respondent to the complainant on September 5, 1974.

It is evident from the records that respondent was the one who notarized the documents involving the said properties redeemed or repurchased by the complainant from her creditors which ended up in respondent’s name like in the deed of sale executed by Victoriano Dejerano in favor of Nazaria Hernandez over Lots 1141-A-3-A and 1141-A-3-B; deed of sale executed by Antonio Masrahon on September 3, 1961regarding Lot No. 1141-A; deed of absolute sale executed by Francisco Esperat over the Curuan properties on November 9, 1971 and the cancellation of the mortgage executed by Alfonso Enriquez on July 18, 1964 over the Tomas Claudio properties.

The foregoing legal activities and operations of the respondent in addition to his having discussed, advised and gave solutions to complainant’s legal problems and liabilities to her creditors and even requested her creditors for extension of time to pay complainant’s accounts constitute practice of law as legal counsel for consultation aside from representing complainant in other cases; a mute proof of a lawyer-client relations between them, a fact also admitted by the respondent.

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It is incumbent upon the respondent to have rendered a detailed report to the complainant on how he paid complainant’s creditors without selling her properties. Instead of selling to buyers at higher price, he paid them out of his own funds; then later on admitted that he was one of the purchasers of complainant’s properties in utter disregard of their agreement and no evidence was submitted by the respondent concerning the value of the said sale of complainant’s properties.

As such, respondent did not adhere faithfully and honestly in his obligation and duty as complainant’s legal adviser and counsel when he took advantage of the trust and confidence reposed in him by the complainant in ultimately putting complainant’s properties in his name and possession in violation of Canon 17 of the Code of Professional Responsibility.

WHEREFORE, in view of the foregoing, the undersigned respectfully recommends that respondent Atty. Jose C. Go be suspended from the practice of law for a period of six (6) months from receipt hereof and the IBP Chapter where he is a registered member be furnished a copy of the same for implementation hereof, subject to the approval of the Honorable Members of the Board of Governors."

On July 30, 2004, the IBP Board of Governors passed Resolution No. XVI-2004-39 adopting and approving the Report of Commissioner Navarro with modification in the sense that the recommended penalty of suspension from the practice of law was increased from six (6) months to three (3) years.

We sustain the Resolution of the IBP Board of Governors finding that respondent violated the Code of Professional Responsibility.l^vvphi1.net However, we have to modify its recommended penalty.1a\^/phi1.net

Canon 16 of the Code of Professional Responsibility, the principal source of ethical rules for lawyers in this jurisdiction, provides:

"A lawyer shall hold in trust all moneys and properties of his client that may come into his possession."

Respondent breached this Canon. His acts of acquiring for himself complainant’s lots entrusted to him are, by any standard, acts constituting gross misconduct, a grievous wrong, a forbidden act, a dereliction in duty, willful in character, and implies a wrongful intent and not mere error in judgment.3 Such conduct on the part of respondent degrades not only himself but also the name and honor of the legal profession. He violated this Court’s mandate that lawyers must at all times conduct themselves, especially in their dealing with their clients and the public at large, with honesty and integrity in a manner beyond reproach.4

Canon 17 of the same Code states:

"A lawyer owes fidelity to the cause of his client and he shall be mindful of the trust and confidence reposed in him."

The records show that complainant reposed such high degree of trust and confidence in herein respondent, that when she engaged his services, she entrusted to him her land titles and allowed him to sell her lots, believing that the proceeds thereof would be used to pay her creditors. Respondent, however, abused her trust and confidence when he did not sell her properties to others but to himself and spent his own money to pay her obligations. As correctly observed by Investigating IBP Commissioner Lydia Navarro, respondent is duty-bound to render a detailed report to the complainant on how much he

sold the latter’s lots and the amounts paid to her creditors. Obviously, had he sold the lots to other buyers, complainant could have earned more. Records show that she did not receive any amount from respondent. Clearly, respondent did not adhere faithfully and honestly in his duty as complainant’s counsel.

Undoubtedly, respondent’s conduct has made him unfit to remain in the legal profession. He has definitely fallen below the moral bar when he engaged in deceitful, dishonest, unlawful and grossly immoral acts. We have been exacting in our demand for integrity and good moral character of members of the Bar. They are expected at all times to uphold the integrity and dignity of the legal profession5 and refrain from any act or omission which might lessen the trust and confidence reposed by the public in the fidelity, honesty, and integrity of the legal profession.6Membership in the legal profession is a privilege.7 And whenever it is made to appear that an attorney is no longer worthy of the trust and confidence of his clients and the public, it becomes not only the right but also the duty of this Court, which made him one of its officers and gave him the privilege of ministering within its Bar, to withdraw the privilege.8 Respondent, by his conduct, blemished not only his integrity as a member of the Bar, but also the legal profession.

Public interest requires that an attorney should exert his best efforts and ability to protect the interests of his clients. A lawyer who performs that duty with diligence and candor not only protects his client’s cause; he also serves the ends of justice and does honor to the bar and helps maintain the respect of the community to the legal profession.

It is a time-honored rule that good moral character is not only a condition precedent to admission to the practice of law. Its continued possession is also essential for remaining in the legal profession.9

Section 27, Rule 138 of the Revised Rules of Court mandates that a lawyer may be disbarred or suspended by this Court for any of the following acts: (1) deceit; (2) malpractice; (3) gross misconduct in office; (4) grossly immoral conduct; (5) conviction of a crime involving moral turpitude; (6) violation of the lawyer’s oath; (7) willful disobedience of any lawful order of a superior court; and (8) willfully appearing as an attorney for a party without authority to do so.10

In Rayos-Ombac vs. Rayos ,11 we ordered the disbarment of lawyer when he deceived his 85-year old aunt into entrusting him with all her money and later refused to return the same despite demand. In Navarro vs. Meneses III,12 we disbarred a member of the Bar for his refusal or failure to account for the P50,000.00 he received from a client to settle a case. In Docena vs. Limson ,13 we expelled from the brotherhood of lawyers, an attorney who extorted money from his client through deceit and misrepresentation. In Busiños vs. Ricafort ,14 an attorney was stripped of his license to practice law for misappropriating his client’s money.

Considering the depravity of respondent’s offense, we find the penalty recommended by the IBP too light. It bears reiterating that a lawyer who takes advantage of his client’s financial plight to acquire the latter’s properties for his own benefit is destructive of the confidence of the public in the fidelity, honesty, and integrity of the legal profession. Thus, for violation of Canon 16 and Canon 17 of the Code of Professional Responsibility, which constitutes gross misconduct, and consistent with the need to maintain the high standards of the Bar and thus preserve the faith of the public in the legal profession, respondent deserves the ultimate penalty, that of expulsion from the esteemed brotherhood of lawyers.

WHEREFORE, respondent JOSE S. GO is found guilty of gross misconduct and is DISBARRED from the practice of law. His name is

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ordered STRICKEN from the Roll of Attorneys EFFECTIVE IMMEDIATELY.

Let copies of this Decision be furnished the Bar Confidant, the Integrated Bar of the Philippines and all courts throughout the country.

SO ORDERED.

Davide, Jr., C.J., Puno, Panganiban, Quisumbing, Ynares-Santiago, Sandoval-Gutierrez, Carpio, Austria-Martinez, Corona, Carpio-Morales, Azcuna, Tinga, Chico-Nazario and Garcia, JJ., concur.

Callejo, Sr., J., on official leave.

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Republic of the PhilippinesSUPREME COURT

Manila

EN BANC

A.C. No. 4349 December 22, 1997

LOURDES R. BUSIÑOS, complainant, vs.ATTY. FRANCISCO RICAFORT, respondent.

R E S O L U T I O N

PER CURIAM:

In a sworn complaint for disbarment dated 31 October 1994 but received by us on 21 November 1994, complainant Lourdes R. Busiños charged respondent Atty. Francisco Ricafort, a practicing lawyer in Oas, Albay with having committed the crime of estafa under Article 315(1) (b) of the Revised Penal Code by misappropriating the sum of P32,000.00. Of this amount, P30,000.00 was entrusted to respondent for deposit in the bank account of complainant's husband, while P2,000.00 represented the amount respondent demanded from complainant supposedly for a bond in Civil Case No. 5814, when no such bond was required.

In the resolution of 18 January 1995, we required respondent to comment on the complaint. Despite his receipt of a copy of the resolution, respondent did not comply, compelling us in the resolution of 17 July 1995 to require him to show cause why he should not be disciplinarily dealt with or held in contempt for such failure.

Again respondent failed to comply. Hence in the resolution of 25 September 1996, we ordered him once more to file his comment within ten (10) days from notice, and within the same period, to pay a fine of P1,000.00 or suffer imprisonment of ten (10) days should he fail to so pay. In a Compliance and Motion dated 24 October 1996, respondent transmitted the fine of P1,000.00 by way of postal money order, but asked for five (5) days from date to file his comment. As respondent still failed to so file, we then declared, in the resolution of 2 December 1996, that respondent was deemed to have waived his right to file his comment, and referred the complaint to the Office of the Bar Confidant for reception of complainant's evidence and submission of a report and recommendation thereon.

On 16 October 1997, the Bar Confidant, Atty. Erlinda C. Verzosa, submitted her Report and Recommendation, material portions of which read as follows:

Respondent Atty. Francisco Ricafort stands charged with having misappropriated the sum of P30,000.00 intended for his clients as well as having deceived his clients into giving him the sum of P2,000.00 purportedly to be deposited as a bond in the case he was handling.

Complainant Lourdes R. Businos is one of the heirs of Pedro Rodrigo who are the defendants in Civil Case No. 1584, apparently a case involving the properties of the late Pedro Rodrigo, father of herein complainant. Respondent was the counsel of record for the defendants in the said case. On July 10, 1994, complainant, representing her co-heirs, executed a special power of attorney, appointing and constituting

respondent and/or Pedro Rodrigo, Jr. to be her true and lawful attorney-in-fact with the following powers:

1. To attend to and represent me, testify, or otherwise enter into compromise during the pre-trial stage or other proceedings in Civil Case No. 1584, entitled "Heirs of Rosario Rodrigo-Reantaso, vs. Heirs of Pedro Rodrigo Sr., et. al." now pending before the Regional Trial Court, Branch 12, Ligao, Albay;

2. To demand, collect and receipt for any and all sums of money that may now be deposited in said court by the defendant Oas Standard High School or hereafter be deposited by said defendant, due and owing to me or said Heirs of Pedro Rodrigo, Sr., representing the rentals of said defendant for the lease of the property involved in said case; and

3. To sign, authenticate, issue and deliver any and all deeds, instruments, papers and other records necessary and pertinent to the above stated transactions.

On August 10, 1994, the Regional Trial Court of Ligao, Albay, Br. 12 issued an order, directing the Clerk of Court "to release any and all deposits of rentals made in connection with this case (Civil Case No. 1584) to the defendants Heirs of Pedro Rodrigo through Lourdes Rodrigo Businos who were receiving the rentals from Oas Standard High School prior to the institution of this case."

In a letter dated August 10, 1994, the Clerk of Court of RTC, Ligao informed herein complainant that respondent had already received the rental deposit of P25,000.00 on even date (see Annex "C" to the complaint). Respondent also received from Oas Standard High School on August 17, 1994 the sum of P5,000.00 as payment for rental of school site for the month of July 1994 (See Annex "D" to the complaint). The said sum was entrusted to respondent with an obligation on his part to deposit the same in the account of complainant's husband at PNB, Ligao Branch. Instead, however, of depositing the money, respondent converted the money to his own personal use, and despite several demands, he failed to return the same to complainant. She was thus constrained to file a criminal case for estafa and an administrative case for disbarment against him. Thus, on November 21, 1994, complainant filed the instant administrative case against respondent.

Complainant further accuses respondent for demanding and receiving P2,000.00 from her which he said will be used for the bond in Civil Case No. 1584, but said amount was never used as intended since no bond was required in the said case. Thus, respondent merely pocketed the said amount.

xxx xxx xxx

Complainant, upon questioning by the undersigned, testified that: She authorized respondent to withdraw the money

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amounting P35,000.00 representing the rental fee paid of Oas Standard High School from the Clerk of Court, with the instruction to deposit the same in her savings account at the PNB. After she was informed by the court that respondent had already withdrawn the money, she expected in vain to receive the money a week later in Tarlac as respondent failed to effect the deposit of the said sum in her account. She demanded from him to give her the money, but he informed her that he had already spent the same. He promised, though, to pay her the said amount. (pp. 7-8, TSN, Reception of Evidence, April 18, 1997). She clarified that respondent withdrew only the sum of P30,000.00 from the Clerk of Court, while the P5,000.00 was withdrawn by respondent from Oas Standard High School (TSN, p. 8). Despite several demands, both from her and her lawyer, respondent failed to make good his promise to give her the money he withdrew from the Clerk of Court and Oas Standard High School (TSN, pp. 11-13). She was then constrained to file a criminal case for estafa and an administrative case against respondent sometime in November of 1994 to recover the money in question (TSN, pp. 14-16). On their third hearing of the estafa case sometime in 1995, respondent came with the money and paid complainant inside the courtroom (TSN, pp. 15, 19-20). Because of this development, she did not anymore pursue the estafa case against respondent (TSN, p. 17). She has no intention, however, of withdrawing the instant complaint (TSN, p. 18).

She further testified that respondent demanded from her the sum of P2,000.00 for the bond required in the civil case. (TSN, p. 18). Respondent did not give her a receipt for the said amount. (TSN, p. 19). Respondent gave back the P2,000.00 to complainant. He paid complainant a total of P60,000.00 representing the money he withdrew from the Clerk of Court and Oas Standard High School, the P2,000.00 he got from complainant and attorney's fees, which he undertook to foot as a way of settlement. (TSN, p. 19).

Although complainant failed to submit the original or certified true copies of the documents in support of her complaint against respondent, respondent's repeated failure to comply with several resolutions of the Court requiring him to comment on the complaint lends credence to the allegations of the complainant. It manifests his tacit admission thereto. We have no other alternative, therefore, but to accept the said documents at their [sic] face value.

There is no doubt that respondent is guilty of having used the money of his clients without their consent. As the evidentiary value of the documents should be given more weight than the oral testimony of complainant, we place the amount illegally used by respondent at P30,000.00 and not P35,000.00 as claimed by complainant. Respondent's illegal use of his client's money is made more manifest [by] his letters to complainant, all promising the latter to make good his promise to pay the money he withdrew from the Clerk of Court and Oas Standard High School (See Annex "E" to the complaint).

It bears emphasis that a lawyer, under his oath, pledges himself not to delay any man for money or malice and is bound to conduct himself with all good fidelity to his clients. He is obligated to report promptly the money of his clients that has come into his possession. He should not commingle it with his private property or use it for his personal purposes

without his client's [sic] consent. He should maintain a reputation for honesty and fidelity to private trust (Daroy vs. Legaspi, 65 SCRA 304).

Money collected by a lawyer in pursuance of a judgment in favor of his clients is held in trust and must be immediately turned over to them (Aya vs. Bigornia, 57 Phil. 8).

Respondent, by converting the money of his clients to his own personal use without their consent, and by deceiving the complainant into giving him the amount of P2,000.00 purportedly to be used as a bond which was not required is, undoubtedly, guilty of deceit, malpractice and gross misconduct. By so doing, he betrays the confidence reposed in him by his clients. Not only has he degraded himself but as an unfaithful lawyer he has besmirched the fair name of an honorable profession.

His belated payment of the amount he illegally used and fraudulently obtained do not relieve him from any liability if only to impress upon him that the relation between an attorney and his client is highly fiduciary in its nature and of a very delicate, exacting and confidential character, requiring high degree of fidelity and good faith. In view of that special relationship, lawyers are bound to promptly account for money or property received by them on behalf of their clients and failure to do so constitutes professional misconduct (Daroy vs. Legaspi, supra).

Moreover, his repeated failure to comply with the resolutions of the Court, requiring him to comment on the complaint indicate the high degree of irresponsibility of respondent.

PREMISES CONSIDERED, it is respectfully recommended that respondent Atty. Francisco Ricafort be SUSPENDED from the practice of law for a period of ONE (1) YEAR.

While the findings are in order, the penalty recommended is not commensurate to respondent's infractions.

Plainly, respondent breached Section 25 of Rule 138 of the Rules of Court, Rule 1.01 of Canon 1 and Rules 16.01, 16.02 and 16.03 of Canon 16 of the Code of Professional Responsibility, which read:

Sec. 25. Unlawful retention of client's funds; contempt. — When an attorney unjustly retains in his hands money of his client after it has been demanded he may be punished for contempt as an officer of the Court who has misbehaved in his official transactions; but proceedings under this section shall not be a bar to a criminal prosecution.

CANON 1 — A LAWYER SHALL UPHOLD THE CONSTITUTION, OBEY THE LAWS OF THE LAND AND PROMOTE RESPECT FOR LAW AND LEGAL PROCESS.

Rule 1.01. — A lawyer shall not engage in unlawful, dishonest, immoral or deceitful conduct.

CANON 16 — A LAWYER SHALL HOLD IN TRUST ALL MONEYS AND PROPERTIES OF HIS CLIENT THAT MAY COME INTO HIS POSSESSION.

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Rule 16.01. — A lawyer shall account for all money or property collected or received for or from the client.

Rule 16.02. — A lawyer shall keep the funds of each client separate and apart from his own and those of others kept by him.

Rule 16.03. — A lawyer shall deliver the funds and property of his client when due or upon demand. However, he shall have a lien over the funds and may apply so much thereof as may be necessary to satisfy his unlawful fees and disbursements, giving notice promptly thereafter to his client. He shall also have a lien to the same extent on all judgments and executions he has secured for his client as provided for in the Rules of Court.

Respondent's transgressions manifested dishonesty and amounted to grave misconduct and grossly unethical behavior which caused dishonor, not merely to respondent, but to the noble profession to which he belongs, for it cannot be denied that the respect of litigants for the profession is inexorably diminished whenever a member of the Bar betrays their trust and confidence.

This Court has been nothing short of exacting in its demand for integrity and good moral character from members of the Bar. In Marcelo v. Javier (A.C. No. 3248, 18 September 1992, 214 SCRA 1, 12-13), reiterated in Fernandez v. Grecia, (A.C. No. 3694, 17 June 1993, 223 SCRA 425, 434), this Court declared:

A lawyer shall at all times uphold the integrity and dignity of the legal profession. The trust and confidence necessarily reposed by clients require in the attorney a high standard and appreciation of his duty to his client, his profession, the courts and the public. The bar should maintain a high standard of legal proficiency as well as of honesty and fair dealing. Generally speaking, a lawyer can do honor to the legal profession by faithfully performing his duties to society, to the bar, to the courts and to his clients. To this end, nothing should be done by any member of the legal fraternity which might tend to lessen in any degree the confidence of the public in the fidelity, honesty and integrity of the profession.

Here, respondent chose to forget that by swearing the lawyer's oath, he became a guardian of truth and the rule of law, and an indispensable instrument in the fair an impartial administration of justice — a vital function of democracy a failure of which is disastrous to society.

Any departure from the path which a lawyer must follow as demanded by the virtues of his profession shall not be tolerated by this Court as the disciplining authority. This is specially so, as here, where respondent even deliberately defied the lawful orders of the Court for him to file his comment on the complaint, thereby transgressing Canon 11 of the Code of Professional Responsibility which requires a lawyer to observe and maintain the respect due the courts.

WHEREFORE, for dishonesty, grave misconduct, grossly unethical behavior in palpable disregard of Section 25 of Rule 138 of the Rules of Court, Rule 1.01 of Canon 1 and Rules 16.01, 16.02 and 16.03 of Canon 16 of the Code of Professional Responsibility, aggravated by a violation of Canon 11 thereof, and consistent with the urgent need to maintain the esteemed traditions and high standards of the legal profession and to preserve undiminished public faith in the members of the Philippine Bar, the Court Resolves to DISBAR respondent ATTY.

FRANCISCO RICAFORT from the practice of law. His name is hereby stricken from the Roll of Attorneys.

This resolution shall take effect immediately and copies thereof furnished the Office of the Bar Confidant, to be appended to respondent's personal record; the National Office and the Albay Chapter of the Integrated Bar of the Philippines; the Philippine Judges Association; and all courts of the land for their information and guidance.

SO ORDERED.

Narvasa, C.J., Regalado, Davide Jr., Romero, Bellosillo, Melo, Puno, Vitug, Kapunan, Mendoza, Francisco, Panganiban and Martinez, JJ., concur.

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Republic of the PhilippinesSUPREME COURT

Manila

EN BANC

A.M. No. 2144 April 10, 1989

CELEDONIO QUILBAN, ROMUALDO DALAGAN, FORTUNATO RAMIREZ AMADOR ALARCON and LUIS AGAWAN, complainant, vs.ATTY. SANTIAGO R. ROBINOL, respondent.

A.M. No. 2180 April 10, 1989

ATTY. SANTIAGO R. ROBINOL, complainant, vs.ATTY. A. R. MONTEMAYOR, respondent.

R E S O L U T I O N

PER CURIAM:

Subjected to frustrations were the dreams of thirty-two (32) squatter families to own the land of approximately 50 square meters each on which their respective homes were built. To vindicate their rights they have aired their plight before this Court. Thwarted, too, was the benevolence shown by the original owner of the land which parted with its property at a giveaway price thinking that it was accommodating the landless squatters.

The antecedent facts follow:

The Colegio de San Jose, a Jesuit corporation, (Colegio, for short) used to own a parcel of land at the Seminary Road, Barrio Bathala, Quezon City. Through its administrator, Father Federico Escaler, it sold said land to the Quezon City Government as the site for the Quezon City General Hospital but reserved an area of 2,743 square meters as a possible development site. Squatters, however, settled in the area since 1965 or 1966.

Sometime in 1970, the Colegio, through Father Escaler gave permission to Congressman Luis R. Taruc to build on the reserved site a house for his residence and a training center for the Christian Social Movement. Seeing the crowded shanties of squatters, Congressman Taruc broached to Father Escaler the Idea of donating or selling the land cheap to the squatters. Congressman Taruc then advised the squatters to form an organization and choose a leader authorized to negotiate with Father Escaler. Following that advice, the squatters formed the "Samahang Pagkakaisa ng Barrio Bathala" (Samahan, for brevity), with Bernabe Martin as President (Exhibit "24", Robinol), who was entrusted with the task of negotiating on their behalf for the sale of the land to them.

But instead of working for the welfare of the Samahan, Martin went to one Maximo Rivera, a realtor, with whom he connived to obtain the sale to the exclusion of the other Samahan members. On 28 March 1971, the land was ultimately sold to Rivera at P 15 per square meter or a total consideration of P 41,961.65. The prevailing price of the land in the vicinity then was P 100 to P 120 per square meter. It was evident that Father Escaler had been made to believe that Rivera represented the squatters on the property. On the same date, 28 March 1971, Rivera obtained TCT No. 175662 to the property in his name alone.

In 1972, thirty-two heads of families of the Samahan filed Civil Case No. Q-16433, Branch IV, Quezon City, entitled "Celedonio Quilban, et al., Plaintiffs, vs. Maximo Rivera, et al., Defendants." with the principal prayer that said defendants be ordered to execute a deed of conveyance in favor of said plaintiffs after reimbursement by the latter of the corresponding amount paid by Rivera to the Colegio. The Court of First Instance of Quezon City, however, dismissed the case.

To prosecute the appeal before the Court of Appeals, the Samahan members hired as their counsel Atty. Santiago R. Robinol for which the latter was paid P 2,000.00 as attorney's fees on 8 October 1975 (Exhibit "I"). Atty. Robinol was also to be given by the members a part of the land, subject matter of the case, equal to the portion that would pertain to each of them. What was initially a verbal commitment on the land sharing was confirmed in writing on 10 March 1979 (Exhibit "2").

On 14 November 1978, the Court of Appeals reversed the CFI Decision by:

(1) ordering defendant Maximo Rivera and all his co-defendants to execute a deed of conveyance of the land in question in favor of herein plaintiffs after the payment of the corresponding amount paid by the defendants to the Colegio de San Jose, Inc., and in case of refusal or failure on their part to do so, ordering the Clerk of Court to execute the same in favor of plaintiffs and declaring TCT No. 175662 (Annex E) null and void and ordering the Register of Deeds of Quezon City to cancel said certificate and issue a new one in lieu thereof in the name of plaintiffs-appellants, upon presentation of the deed of conveyance to be executed in favor of appellants and (2) ordering appellees jointly and severally to pay appellants the sum of P 2,000.00 as attomey's fees, plus costs." (p. 30, Report and Recommendation)

To raise the amount of P 41,961.65 ordered paid by the Court of Appeals, plus expenses for ejectment of the non-plaintiffs occupying the property, conveyance, documentation, transfer of title etc., the five officers of the Samahan collected, little by little, P 2,500.00 from each head of family. The Treasurer, Luis Agawan, issued the proper receipts prepared by Atty. Robinol. On 18 May 1979, the sum of P 68,970.00 was turned over to Atty. Robinol by the officers; on 31 May 1979 the amounts of P l,030.00 and P 2,500.00 respectively; and on 2 June 1979, the sum of P 2,500.00, or a total of P 75,000.00.

After almost a year, the five officers discovered that no payment had been made to Rivera. When queried, Atty. Robinol replied that there was an intervention filed in the civil case and that a Writ of Execution had not yet been issued by the Court of First Instance of Quezon City. However, it turned out that the motion for intervention had already been dismissed. After confronting Atty. Robinol with that fact, the latter gave other excuses, which the officers discovered to have no basis at all.

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On 6 March 1980, 21 out of 32 plaintiffs arrived at a "first consensus" to change their counsel, Atty. Robinol (Exhibit "3"). The officers of the Samahan thereafter approached Atty. Anacleto R. Montemayor, who agreed to be their counsel, after he was shown the document of 6 March 1980 containing the consensus of the Samahan members to change Atty. Robinol as their lawyer. Upon Atty. Montemayor's advice, the officers sent Atty. Robinol a letter dated 17 March 1980 informing the latter of their decision to terminate his services and demanding the return of the P 75,000.00 deposited with him (Exhibit "5"). Atty. Robinol turned deaf ears to the demand. A subsequent letter of the same tenor, dated 31 March 1980 (Exhibit "6"), was similarly disregarded by Atty. Robinol.

On 20 March 1980, Atty. Montemayor formally entered his appearance in Civil Case No. Q-16433 as counsel for the plaintiffs (Exhibit "8"), vice Atty. Robinol, on the strength of the authority dated 18 March 1980 given him by plaintiffs in said civil case through the five officers (Exhibit "9"). Atty. Montemayor then filed on 20 March 1980 a Motion for Execution praying that the defendants and/or the Clerk of Court be directed to execute a deed of conveyance in favor of the plaintiffs (Exhibit "10"). At the hearing of the Motion for Execution on 5 June 1980, Atty. Robinol manifested that he had no objection to the appearance of and his substitution by Atty. Montemayor (Exhibits "11" & "11-A").

Because Atty. Robinol, however, still questioned the first consensus dated 6 March 1980, another document labelled the "second consensus" (Exhibit "E") was signed by 21 plaintiffs during a meeting held for the purpose on 24 November 1980 to the effect that they had decided to change Atty. Robinol as their counsel because he had delayed paying for their land notwithstanding the Decision of the Court of Appeals in their favor.

Administrative Case No. 2144

On 15 April 1980 the Samahan officers filed this Administrative Complaint before this Court requesting the invention of Atty. Robinol for refusal to return the P 75,000.00 and praying that the Court exercise its power of discipline over members of the Bar unworthy to practice law. The details of their Complaint were embodied in their Joint Affidavit executed on 14 April 1980 describing what had transpired between them and Atty. Robinol.

In his defense, Atty. Robinol maintains that he was hired by Complainants to appeal their case to the Court of appeals after they had lost in the lower Court; that their agreement as to attomey's fees was on a contingent basis if he obtains a reversal of the lower Court Decision, they wig give him a portion of the property subject matter of the litigation equal to the portion that will pertain to each of the 32 plaintiffs in Civil Case No. Q-16433; that he did not receive P 70,000.00 from Complainants on 18 May 1979 but only P 56,470.00; that he prepared and signed the receipt dated 18 May 1979 showing that he received P 70,000.00 only to save complainants from embarrassment and shame should their co-plaintiff ask for proof that they (Complainants) have paid their shares, which they have not; that the correct amount in his possession is only P 62,470.00-it would really be P 75,000.00 had the five Complainants paid their shares in the amount of P 12,500.00 at P 2,500.00 each and one Fortunate Ramirez paid his balance of P 30.00; that he had the right to hold the money in his possession as guarantee for the payment of his attomey's fees of get a portion of the property that win pertain to each of the plaintiffs, he wants his portion converted to cash, and the cash equivalent of his portion is P 50,000.00 (2,743 square meters divided by 32 plaintiffs equals 85 square meters for each plaintiff, multiplied by P 500.00 up per square meter); that considering that P 50,000.00 is even less than

one-half (1/ 2) per cent of the total value of the property, which is more than a million pesos, such amount is not unreasonable; that he is ready to give back the amount of P 12,470.00, representing the difference between P 50,000.00 and the amount of P 62,470.00 in his possession; that complainants cannot make this Court a collection agency and that while this Court has the exclusive disciplinary power over members of the Bar, it is equally true that the Court cannot pass judgment on Complainants' plea that the amount deposited by respondent be returned to them as this prayer should be ventilated in an ordinary action; that he does not have the slightest intention to appropriate the money in his possession (P 62,470.00) for himself, but he is holding it until his attomey's fees are satisfied there being no guarantee for its satisfaction because of Complainants' adamant refusal to pay him; that there was no previous notice to him of his discharge; and that Atty. Montemayor accepted the case without his Robinols formal withdrawal and conformity.

Administrative Case No. 2180

Pursuing that tack on 29 July 1980, Atty. Robinol filed a complaint for Disbarment against Atty. Anacleto R. Montemayor for alleged gross unethical conduct unbecoming of a lawyer in that Atty. Montemayor readily accepted the case without his Robinols formal withdrawal and conformity and knowing fully well that there was no consensus of all the plaintiffs to discharge him as their counsel.

For his part, Atty. Montemayor denied that the attomey's fees agreed upon by plaintiffs and Atty. Robinol were purely on a contingent basis, the truth being that the attomey's fees were payable on a cash basis of P 2,000.00 retainer fee, as evidenced by the receipt signed by Atty. Robinol (Annex "I"), plus whatever amount is adjudicated as attomey's fees by the Court of Appeals; that the contingent fee referred to by Atty. Robinol was the result of his insistent demand after the Court of Appeals Decision in Civil Case No. Q-16433 was already final, as shown by the date of the agreement (Annex "2"); that twenty [20] out of thirty-two [32] members of the Samahan signed the agreement to discharge Atty. Robinol and hire a substitute counsel as shown by Annex "3", which is a majority of the membership and, therefore, a valid consensus; that he agreed to act as counsel if only to arrest the growing belief of the Samahan that most members of the Philippine Bar are unprincipled; that although there was no formal Motion for substitution, there was substantial compliance with Sec. 26, Rule 138 of the Rules of Court, as shown by the formal entry of appearance in Civil Case No. Q-1 6433 (Annex "8"), the written consent of the clients (Annex "9"), notice to Atty. Robinol of his discharge and substitution (Annexes "10' and "11"), non-objection by Robinol of his appearance as counsel (Annex "l 2"), and implied consent of the Court to the substitution as shown by its Order of 29 May 1980 (Annex "l 3"); that his professional and personal actuations as counsel for the plaintiffs in Civil Case No. Q-16433, CFI-Quezon City, do not cause dishonor either to himself or to the Philippine Bar; and that the Complaint against him should be dismissed.

On 1 September 1980 and on 17 December 1980, the Court referred Adm. Case No. 2144 and Adm. Case No. 2180, respectively, to the Office of the Solicitor General for investigation, report and recommendation. On 15 December 1988, the Solicitor General submitted his compliance and recommended:

1. That Atty. Santiago R. Robinol be suspended for three months for refusing to deliver the funds of the plaintiffs in his possession, with the warning that a more severe penalty will

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be imposed for a repetition of the same or similar act, and that he be ordered to return to the plaintiffs, through the complainants in Adm. Case No. 2134, the sum of P 75,000.00.

2. That the case against Atty. Anacleto R. Montemayor, Adm. Case No. 2180, be dismissed, since he has not committed any misconduct imputed to him by Atty. Robinol. (pp. 59-60, Rollo)

Except for the disciplinary sanction suggested for Atty. Robinol, we concur with the recommendations.

Re: Atty. Santiago R. Robinol

Atty. Robinol has, in fact, been guilty of ethical infractions and grave misconduct that make him unworthy to continue in the practice of the profession. After the Court of Appeals had rendered a Decision favorable to his clients and he had received the latter's funds, suddenly, he had a change of mind and decided to convert the payment of his fees from a portion of land equivalent to that of each of the plaintiffs to P 50,000.00, which he alleges to be the monetary value of that area. Certainly, Atty. Robinol had no right to unilaterally appropriate his clients' money not only because he is bound by a written agreement but also because, under the circumstances, it was highly unjust for him to have done so. His clients were mere squatters who could barely eke out an existence They had painstakingly raised their respective quotas of P 2,500.00 per family with which to pay for the land only to be deprived of the same by one who, after having seen the color of money, heart lessly took advantage of them.

Atty. Robinol has no basis to claim that since he was unjustly dismissed by his clients he had the legal right to retain the money in his possession. Firstly, there was justifiable ground for his discharge as counsel. His clients had lost confidence in him for he had obviously engaged in dilatory tactics to the detriment of their interests, which he was duty-bound to protect. Secondly, even if there were no valid ground, he is bereft of any legal right to retain his clients' funds intended for a specific purpose the purchase of land. He stands obliged to return the money immediately to their rightful owners.

The principle of quantum meruit applies if a lawyer is employed without a price agreed upon for his services in which case he would be entitled to receive what he merits for his services, as much as he has earned. In this case, however, there was an express contract and a stipulated mode of compensation. The implied assumpsit onquantum meruit therefore, is inapplicable.

But Atty. Robinol seeks to impress upon the Court that he had received only the sum of P 62,470.00 and not P 75,000.00 claiming that five (5) officers of the Samahan had not yet paid their shares to P 12,500.00.

We agree with the Solicitor General that complainants' evidence on this score is the more credible and that he had, in fact, received the total sum of P 75,000.00 inclusive of the share of P 12,500.00 of the five (5) officers of the Somalian For, in the pleadings filed by Atty. Robinol himself in the civil case below, namely, the Motion for Execution on 5 June 1979; the Motion for Postponement on 31 August 1979; and the Motion to Set Hearing of Motion for Execution on 10 March 1980, he

made mention of seven (7) persons, who, as of that time, had not yet submitted their corresponding shares which list, however, did not include any of the five (5) officers of the Samahan.

Inevitable, therefore, is the conclusion that Atty. Robinol has rendered himself unfit to continue in the practice of law. He has not only violated his oath not to delay any man for money and to conduct himself with all good fidelity to his clients. He has also brought the profession into disrepute with people who had reposed in it full faith and reliance for the fulfillment of a life-time ambition to acquire a homelot they could call their own.

Re: Atty. Anacleto R. Montemayor

In so far as Atty. Montemayor is concerned, we agree with the findings of the Solicitor General that he has not exposed himself to any plausible charge of unethical conduct in the exercise of his profession when he agreed to serve as counsel for the plaintiffs in Civil Case No. Q-16433.

Of the thirty-two (32) plaintiffs in said civil case, twenty-one (21) had signed the first consensus of 6 March 1980 expressing their resolve to change their lawyer. In as much as Atty. Robinol sought to exclude seven (7) of the plaintiffs (out of 32) for non-payment of their shares, only twenty five (25) of them should be considered in determining the majority. Consequently, twenty-one (21) out of twenty-five (25) is sufficient to make the said consensus binding. It is more than a simple majority.

Moreover, the following developments estop Atty. Robinol from questioning his discharge as counsel: On 17 March 1980 he was informed in writing by plaintiffs of the termination of his services (Exhibit "5"). That was followed by another letter of 31 March 1980 of the same tenor (Exhibit "6"). In his Memorandum of 12 December 1985 and during the proceedings before the lower Court on 5 June 1980 he had stated that he had no objection to Atty. Montemayor's appearance in Civil Case Q-16433. When the latter did enter his appearance, therefore, on 20 March 1980 it was only after assuring himself that Atty. Robinol's services had been formally terminated. He had in no way encroached upon the professional employment of a colleague.

There is no gainsaying that clients are free to change their counsel in a pending case at any time (Section 26, Rule 138, Rules of Court) and thereafter employ another lawyer who may then enter his appearance. In this case, the plaintiffs in the civil suit below decided to change their lawyer, Atty. Robinol, for loss of trust and confidence. That act was well within their prerogative.

In so far as the complaint for disbarment filed by Atty. Robinol against Atty. Montemayor is concerned, therefore, we find the same absolutely without merit.

ACCORDINGLY, 1) In Administrative Case No. 2144, Atty. Santiago R. Robinol is hereby DISBARRED for having violated his lawyer's oath to delay no man for money, broken the fiduciary relation between lawyer and client, and proven himself unworthy to continue in the practice of law. By reason of his unethical actuations, he is hereby declared to have forfeited his rights to attomey's fees and is ordered to return the amount of P 75,000.00 to the plaintiffs in Civil Case No. Q-16433 through the complainant in the aforementioned Administrative Case.

2) Administrative Case No. 2180 against Atty. Anacleto R. Montemayor for disbarment is hereby DISMISSED for lack of merit.

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Let copies of this Resolution be entered in the respective personal records of Attys. Santiago R. Robinol and Anacleto R. Montemayor.

This Resolution is immediately executory.

SO ORDERED.

Fernan, C.J., Narvasa, Melencio-Herrera, Gutierrez, Jr., Cruz, Paras, Feliciano, Gancayco, Padilla, Bidin, Sarmiento, Cortes, Griño-Aquino, Medialdea and Regalado, JJ., concur.

Republic of the PhilippinesSUPREME COURT

Manila

SECOND DIVISION

A.C. No. 5925 March 11, 2003(Formerly CBD No. 01-912)

RUBY MAE BARNACHEA, complainant, vs.ATTY. EDWIN T. QUIOCHO, respondent.

R E S O L U T I O N

CALLEJO, SR., J.:

On January 3, 2002, Ruby Mae Barnachea filed a verified complaint for breach of lawyer-client relations against respondent Atty. Edwin T. Quiocho.

It appears that respondent had not been in the private practice of the law for quite some time. However, in September 2001, he decided to revive his legal practice with some associates. Complainant engaged the legal services of respondent for the latter to cause the transfer

under her name of the title over a property covered by Transfer Certificate of Title No. 334411 previously owned by her sister, Lutgarda Amor D. Barnachea. The latter sold said property to complainant under an unnotarized deed of absolute sale. Complainant drew and issued BPI Family Bank Check No. 0052304 in the amount of P11,280.00 and BPI Family Bank Check No. 0052305 in the amount of P30,000.00, both dated September 5, 2001, or the total amount of P41,280.00 for the expenses for said transfer and in payment for respondent’s legal services. Respondent enchased the checks.

However, despite the lapse of almost two months, respondent failed to secure title over the property in favor of complainant. The latter demanded that respondent refund to her the amount of P41,280.00 and return the documents which she earlier entrusted to him. However, respondent failed to comply with said demands. On November 1, 2001, complainant received a letter from respondent informing her that he had failed to cause the transfer of the property under her name and that he was returning the documents and title she had entrusted to him and refunding to her the amount of P41,280.00 through his personal check No. DIL 0317787. Said check was drawn against his account with the Bank of Commerce (Diliman Branch) in the amount of P41,280.00 and was postdated December 1, 2001. Respondent told complainant that he needed more time to fund the check. However, respondent failed to fund the check despite the demands of complainant.

In his Answer to the complaint, respondent denied that complainant contracted his legal services. Although respondent admitted having received the two checks from complainant, he claimed that said checks were intended to cover actual and incidental expenses for transportation, communication, representation, necessary services, taxes and fees for the cancellation and transfer of TCT No. 334411 under the name of complainant and not for legal services. He asserted that he acted in good faith as shown by the fact of his return of complainant’s documents with an explanatory letter and his issuance of a personal check for P41,280.00 dated December 1, 2001. He insisted that he would not compromise for such meager amount his personal standing as well as his membership in the legal profession. His failure to transfer the title of the property under the name of the complainant was caused by his difficulty in making good the claimed amount, compounded by his affliction with diabetes and the consequent loss of sight of his right eye.

Respondent further alleged that he was a licensed real estate and insurance broker and had been a freelance business management consultant. At the same time he engaged in real estate brokering, pre-need products marketing for Prudential Life, and life insurance underwriting for Insular Life. In 1999, he gave up the practice of his profession as a lawyer and subsequently managed to put up a business center with fellow insurance underwriters for their common insurance underwriting practice. He further claimed that sometime in August, 2001, an insurance client introduced complainant as an insurance prospect to him. In the course of their dealing, complainant intimated to respondent her willingness to consider respondent’s insurance proposal provided the latter would help her facilitate the cancellation and eventual transfer to her name the property covered by TCT No. 334411 in the name of complainant’s sister, Lutgarda Amor D. Barnachea. Respondent agreed to help complainant in the transfer of the title to her name, with the condition that no diligent study or verification of complainant’s documents, nor preparation of any additional document or any application or petition whatsoever, will be made by respondent. He explained to complainant that his task was merely to go through the regular process of presenting the available documents, paying the taxes and fees, and following up the processing for the cancellation and issuance of the certificate of title. In other words, respondent offered to complainant services which a non-lawyer

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familiar with the procedure and the related offices can perform and provide to the complainant with respect to the transfer of the title of the property in her name.

Respondent asserted that in the latter part of September 2001, he discovered and became aware for the first time that the original copy of TCT No. 334411 with the Register of Deeds of Quezon City was destroyed in a fire in Quezon City Hall several years earlier and that complainant’s copy of the title needed to be reconstituted before it can be cancelled and transferred. At about the same time, the working relations of respondent in the business center with his non-lawyer associates had become difficult and strained, impelling him to sever his business relations with them and cease from to going to the business center. Consequently, telephone communications between respondent and complainant at the business center was cut. Communications became much more limited when, apart from the fact that respondent did not have a landline at his residence, respondent’s mobile phone was stolen sometime in October 2001.

The Integrated Bar of the Philippines (IBP) designated Atty. Dennis B. Funa as Commissioner to conduct a formal investigation of the complaint. Despite several settings, respondent failed to appear and adduce evidence.

On April 26, 2002, Investigating Commissioner Dennis B. Funa submitted his report and recommendation stating in part that:

1. Respondent is not able to meet his financial obligations due to financial difficulties, and that respondent is in good faith in his failure to meet this obligation.

2. It is recommended that respondent be ORDERED TO REPAY HIS CLIENT within ninety (90) days from receipt of this Decision. The principal amount being P41,280.00. Failure to comply with the Order shall be considered as proof of evident bad faith, and shall be considered in the continuing evaluation of the case in view of the continued failure to repay his client.

3. Respondent should also be given a WARNING that a repetition shall be dealt with more severely.1

The Investigating Commissioner gave credence to the claim of complainant that she engaged the legal services of respondent and paid him for his services and that respondent failed in his undertaking and refund the amount of P41,280.00 to complainant despite her demands and that respondent appeared to be evading the complainant.

On October 19, 2002, the IBP Board of Governors passed Resolution No. XV-2002-550 adopting and approving the Investigating Commissioner’s recommendation with the additional sanction of reprimand for respondent:

RESOLVED to ADOPT and APPROVE, as it is hereby ADOPTED and APPROVED, the Report and Recommendation of the Investigating Commissioner of the above-entitled case, herein made part of this Resolution/Decision as Annex "A"; and, finding the recommendation fully supported by the evidence on record and the applicable laws and rules, with modification. Respondent is hereby reprimanded and ordered to return the Forty One Thousand Two Hundred Eighty (P41,280.00)

Pesos to complainant within ninety (90) days from receipt of notice.2

While the Court agrees with the Board of Governors that respondent should be meted a disciplinary sanction, it finds that the penalty of reprimand recommended by the Board of Governors is not commensurate to the gravity of the wrong committed by respondent. As found by the Investigating Commissioner, the complainant engaged the legal services of the respondent. As admitted in his letter to the complainant, respondent had just resumed his private practice of law two months before complainant contracted his services for the notarization of the Deed of Absolute Sale, the registration thereof with the Register of Deeds and the transfer of the title over the property to the complainant:

NOVEMBER 1, 2002

DEAR RUBY,

I AM SORRY I AM RETURNING YOUR DOCUMENTS WITHOUT CHANGES.

I HAD A SERIES OF MONEY PROBLEMS RIGHT AFTER YOU GAVE ME THE TWO CHECKS AND COMING WITH THE AMOUNTS WITH PERSONAL FUNDS.

I WAS REVIVING MY LEGAL PRACTICE ONLY FOR TWO MONTHS WHICH WE MET AND HAD JUST SET UP THE OFFICE WITH TWO ASSOCIATES WHICH A FEW WEEKS LATER WE HAD DISAGREEMENTS AND DECIDED TO DISBAND. I WILL HAVE TO REFURBISH MY OFFICE. I AM ISSUING MY PERSONAL CHECK TO GUARANTEE THE AMOUNT I TOOK. I NEED A LITTLE TIME TO COVER THE AMOUNT. THANKS FOR YOUR UNDERSTANDING.

(Sgd.) EDWIN.3

Respondent’s claim that complainant did not retain his legal services flies in the face of his letter to complainant. Even if it were true that no attorney-client relationship existed between them, case law has it that an attorney may be removed or otherwise disciplined not only for malpractice and dishonesty in the profession but also for gross misconduct not connected with his professional duties, making him unfit for the office and unworthy of the privileges which his license and the law confer upon him.4

In this case, respondent failed to comply with his undertaking for almost two months. Worse, despite demands of complainant, he failed to refund the amount of P41,280.00 and to return to complainant the deed of absolute sale and title over the property. Respondent’s claim that complainant could not contact him because he did not have any landline at his residence and that his mobile phone was stolen in October 2001, is hard to believe. He failed to adduce a morsel of evidence to prove that his telephone at the business center was cut or that his mobile phone had been stolen. Even then, respondent could have easily contacted the complainant at her residence or could have written her a letter informing her that the original copy of TCT No. 324411 in the custody of the Register of Deeds was burned when the Quezon City Hall was gutted by fire and that there was a need for the reconstitution of said title. Neither did respondent adduce evidence that he was a life insurance underwriter for Insular Life or that he had been sick with diabetes and had lost his sight in his right eye. Respondent simply refused to adduce evidence to prove his allegations in his Answer to the complaint.

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The Court is led to believe that respondent’s failure to cause the transfer of the title of the property under the name of complainant was due to a financial problem that beset him shortly after he received the checks from complainant. It can easily be inferred from respondent’s letter that he used complainant’s money to alleviate if not solve his financial woes. What compounded respondent’s unethical conduct was his drawing of a personal check and delivering the same to complainant without sufficient funds in his bank account to cover the check. Even as he promised to fund his account with the drawee bank, respondent failed to do so when the check became due.

A lawyer is obliged to hold in trust money or property of his client that may come to his possession. He is a trustee to said funds and property.5 He is to keep the funds of his client separate and apart from his own and those of others kept by him. Money entrusted to a lawyer for a specific purpose such as for the registration of a deed with the Register of Deeds and for expenses and fees for the transfer of title over real property under the name of his client if not utilized, must be returned immediately to his client upon demand therefor. The lawyer’s failure to return the money of his client upon demand gave rise to a presumption that he has misappropriated said money in violation of the trust reposed on him.6 The conversion by a lawyer funds entrusted to him by his client is a gross violation of professional ethics and a betrayal of public confidence in the legal profession.7

In this case, respondent intransigeantly refused to return to the complainant the amount of P41,280.00 which he received for the expenses for the transfer to her of the title of the property and for his professional fees. His dishonest conduct was compounded by his interjection of flimsy excuses for his obstinate refusal to refund the amount to complainant.

The relation of attorney and client is highly fiduciary in nature and is of a very delicate, exacting and confidential character.8 A lawyer is duty-bound to observe candor, fairness and loyalty in all his dealings and transactions with his clients.9 The profession, therefore, demands of an attorney an absolute abdication of every personal advantage conflicting in any way, directly or indirectly, with the interest of his client. In this case, respondent miserably failed to measure up to the exacting standard expected of him.

IN LIGHT OF ALL THE FOREGOING, Respondent Atty. Edwin T. Quiocho is found guilty of violation of Canons 15 and 16 of the Code of Professional Responsibility. He is SUSPENDED from the practice of law for One (1) Year with a stern warning that a repetition of the same or similar acts shall be dealt with more severely. He is DIRECTED to restitute to the complainant the full amount of P41,280.00 within ten (10) days from notice hereof. Respondent is further DIRECTED to submit to the Court proof of payment of said amount within ten (10) days from said payment. If Respondent fails to restitute the said amount within the aforesaid period, he shall be meted an additional suspension of three (3) months for every month or fraction thereof of delay until he shall have paid the said amount in full. In case a subsidiary penalty of suspension for his failure to restitute the said amount shall be necessary, respondent shall serve successively the penalty of his one year suspension and the subsidiary penalty. This is without prejudice to the right of the complainant to institute the appropriate action for the collection of said amount.

SO ORDERED.

Bellosillo, (Chairman), Mendoza, Quisumbing and Austria-Martinez, JJ., concur.

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Republic of the PhilippinesSUPREME COURT

Manila

EN BANC

G.R. No. L-35702 May 29, 1973

DOMINGO D. RUBIAS, plaintiff-appellant, vs.ISAIAS BATILLER, defendant-appellee.

Gregorio M. Rubias for plaintiff-appellant.

Vicente R. Acsay for defendant-appellee.

TEEHANKEE, J.:

In this appeal certified by the Court of Appeals to this Court as involving purely legal questions, we affirm the dismissal order rendered by the Iloilo court of first instance after pre-trial and submittal of the pertinent documentary exhibits.

Such dismissal was proper, plaintiff having no cause of action, since it was duly established in the record that the application for registration of the land in question filed by Francisco Militante, plaintiff's vendor and predecessor interest, had been dismissed by decision of 1952 of the land registration court as affirmed by final judgment in 1958 of the Court of Appeals and hence, there was no title or right to the land that could be transmitted by the purported sale to plaintiff.

As late as 1964, the Iloilo court of first instance had in another case of ejectment likewise upheld by final judgment defendant's "better right to possess the land in question . having been in the actual possession thereof under a claim of title many years before Francisco Militante sold the land to the plaintiff."

Furthermore, even assuming that Militante had anything to sell, the deed of sale executed in 1956 by him in favor of plaintiff at a time when plaintiff was concededly his counsel of record in the land registration case involving the very land in dispute (ultimately decided adversely against Militante by the Court of Appeals' 1958 judgment affirming the lower court's dismissal of Militante's application for registration) was properly declared inexistent and void by the lower court, as decreed by Article 1409 in relation to Article 1491 of the Civil Code.

The appellate court, in its resolution of certification of 25 July 1972, gave the following backgrounder of the appeal at bar:

On August 31, 1964, plaintiff Domingo D. Rubias, a lawyer, filed a suit to recover the ownership and possession of certain portions of lot under Psu-99791 located in Barrio General Luna, Barotac Viejo, Iloilo which he bought from his father-in-law, Francisco Militante in 1956 against its present occupant defendant, Isaias Batiller, who illegally entered said portions of the lot on two occasions — in 1945 and in 1959. Plaintiff prayed also for damages and attorneys fees. (pp. 1-7, Record on Appeal). In his answer with counter-claim defendant claims the complaint of the plaintiff does not state a cause of action, the truth of the matter being that he and his predecessors-in-interest have

always been in actual, open and continuous possession since time immemorial under claim of ownership of the portions of the lot in question and for the alleged malicious institution of the complaint he claims he has suffered moral damages in the amount of P 2,000.00, as well as the sum of P500.00 for attorney's fees. ...

On December 9, 1964, the trial court issued a pre-trial order, after a pre-trial conference between the parties and their counsel which order reads as follows..

'When this case was called for a pre-trial conference today, the plaintiff appeared assisted by himself and Atty. Gregorio M. Rubias. The defendant also appeared, assisted by his counsel Atty. Vicente R. Acsay.

A. During the pre-trial conference, the parties have agreed that the following facts are attendant in this case and that they will no longer introduced any evidence, testimonial or documentary to prove them:

1. That Francisco Militante claimed ownership of a parcel of land located in the Barrio of General Luna, municipality of Barotac Viejo province of Iloilo, which he caused to be surveyed on July 18-31, 1934, whereby he was issued a plan Psu-99791 (Exhibit "B"). (The land claimed contained an area of 171:3561 hectares.)

2. Before the war with Japan, Francisco Militante filed with the Court of First Instance of Iloilo an application for the registration of the title of the land technically described in psu-99791 (Exh. "B")opposed by the Director of Lands, the Director of Forestry and other oppositors. However, during the war with Japan, the record of the case was lost before it was heard, so after the war Francisco Militante petitioned this court to reconstitute the record of the case. The record was reconstituted on the Court of the First Instance of Iloilo and docketed as Land Case No. R-695, GLRO Rec. No. 54852. The Court of First Instance heard the land registration case on November 14, 1952, and after the trial this court dismissed the application for registration. The appellant, Francisco Militante, appealed from the decision of this Court to the Court of Appeals where the case was docketed as CA-GR No. 13497-R..

3. Pending the disposal of the appeal in CA-GR No. 13497-R and more particularly on June 18, 1956, Francisco Militante sold to the plaintiff, Domingo Rubias the land technically described in psu-99791 (Exh. "A"). The sale was duly recorded in the Office of the Register of Deeds for the

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province of Iloilo as Entry No. 13609 on July 11, 1960 (Exh. "A-1").

(NOTE: As per deed of sale, Exh. A, what Militante purportedly sold to plaintiff-appellant, his son-in-law, for the sum of P2,000.00 was "a parcel of untitled land having an area Of 144.9072 hectares ... surveyed under Psu 99791 ... (and) subject to the exclusions made by me, under (case) CA-i3497, Land Registration Case No. R-695, G.L.R.O. No. 54852, Court of First Instance of the province of Iloilo. These exclusions referred to portions of the original area of over 171 hectares originally claimed by Militante as applicant, but which he expressly recognized during the trial to pertain to some oppositors, such as the Bureau of Public Works and Bureau of Forestry and several other individual occupants and accordingly withdrew his application over the same. This is expressly made of record in Exh. A, which is the Court of Appeals' decision of 22 September 1958 confirming the land registration court's dismissal of Militante's application for registration.)

4. On September 22,1958 the Court of appeals in CA-G.R. No. 13497-R promulgated its judgment confirming the decision of this Court in Land Case No. R-695, GLRO Rec. No. 54852 which dismissed the application for Registration filed by Francisco Militante (Exh. "I").

5. Domingo Rubias declared the land described in Exh. 'B' for taxation purposes under Tax Dec. No. 8585 (Exh. "C") for 1957; Tax Dec. Nos. 9533 (Exh. "C-1") and 10019 (Exh. "C-3")for the year 1961; Tax Dec. No. 9868 (Exh. "C-2") for the year 1964, paying the land taxes under Tax Dec. No. 8585 and 9533 (Exh. "D", "D-1", "G-6").

6. Francisco Militante immediate predecessor-in-interest of the plaintiff, has also declared the land for taxation purposes under Tax Dec. No. 5172 in 1940 (Exh. "E") for 1945; under Tax Dec. No. T-86 (Exh. "E-1") for 1948; under Tax Dec. No. 7122 (Exh. "2"), and paid the land taxes for 1940 (Exhs. "G" and "G-7"), for 1945 46 (Exh. "G-1") for 1947 (Exh. "G-2"), for 1947 & 1948 (Exh. "G-3"), for 1948 (Exh. "G-4"), and for 1948 and 1949 (Exh. "G-5").

7. Tax Declaration No. 2434 in the name of Liberato Demontaño for the land described therein (Exh. "F") was cancelled by Tax. Dec. No. 5172 of Francisco Militante (Exh. "E"). Liberato Demontaño paid the land tax under Tax Dec. No. 2434 on Dec. 20, 1939 for the years 1938 (50%) and 1959 (Exh. "H").

8. The defendant had declared for taxation purposes Lot No. 2 of the Psu-155241 under Tax Dec. Not. 8583 for 1957 and a portion of Lot No. 2, Psu-155241, for 1945 under Tax Dec. No. 8584 (Exh. "2-A" Tax No. 8583 (Exh. "2") was revised by Tax Dec. No. 9498 in the name of the defendant (Exh. "2-B") and Tax Dec. No. 8584 (Exh. "2-A")

was cancelled by Tax Dec. No. 9584 also in the name of the defendant (Exh. "2-C"). The defendant paid the land taxes for Lot 2, Psu-155241, on Nov. 9, 1960 for the years 1945 and 1946, for the year 1950, and for the year 1960 as shown by the certificate of the treasurer (Exh. "3"). The defendant may present to the Court other land taxes receipts for the payment of taxes for this lot.

9. The land claimed by the defendant as his own was surveyed on June 6 and 7,1956, and a planapproved by Director of Land on November 15, 1956 was issued, identified as Psu 155241 (Exh. "5").

10. On April 22, 1960, the plaintiff filed forcible Entry and Detainer case against Isaias Batiller in the Justice of the Peace Court of Barotac Viejo Province of Iloilo (Exh. "4") to which the defendant Isaias Batiller riled his answer on August 29, 1960 (Exh. "4-A"). The Municipal Court of Barotac Viejo after trial, decided the case on May 10, 1961 in favor of the defendant and against the plaintiff (Exh. "4-B"). The plaintiff appealed from the decision of the Municipal Court of Barotac Viejo which was docketed in this Court as Civil Case No. 5750 on June 3, 1961, to which the defendant, Isaias Batiller, on June 13, 1961 filed his answer (Exh. "4-C"). And this Court after the trial. decided the case on November 26, 1964, in favor of the defendant, Isaias Batiller and against the plaintiff (Exh. "4-D").

(NOTE: As per Exh. 4-B, which is the Iloilo court of first instance decision of 26 November 1964dismissing plaintiff's therein complaint for ejectment against defendant, the iloilo court expressly found "that plaintiff's complaint is unjustified, intended to harass the defendant" and "that the defendant, Isaias Batiller, has a better right to possess the land in question described in Psu 155241 (Exh. "3"), Isaias Batiller having been in the actual physical possession thereof under a claim of title many years before Francisco Militante sold the land to the plaintiff-hereby dismissing plaintiff's complaint and ordering the plaintiff to pay the defendant attorney's fees ....")

B. During the trial of this case on the merit, the plaintiff will prove by competent evidence the following:

1. That the land he purchased from Francisco Militante under Exh. "A" was formerly owned and possessed by Liberato Demontaño but that on September 6, 1919 the land was sold at public auction by virtue of a judgment in a Civil Case entitled "Edw J. Pflieder plaintiff vs. Liberato Demontaño Francisco Balladeros and Gregorio Yulo, defendants", of which Yap Pongco was the purchaser (Exh. "1-3"). The sale was registered in the Office of the Register of Deeds of Iloilo on August 4, 1920, under Primary Entry No. 69 (Exh. "1"), and a definite Deed of Sale was executed by Constantino A. Canto, provincial Sheriff of Iloilo, on Jan. 19, 1934 in favor of Yap Pongco (Exh. "I"), the

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sale having been registered in the Office of the Register of Deeds of Iloilo on February 10, 1934 (Exh. "1-1").

2. On September 22, 1934, Yap Pongco sold this land to Francisco Militante as evidenced by a notarial deed (Exh. "J") which was registered in the Registry of Deeds on May 13, 1940 (Exh. "J-1").

3. That plaintiff suffered damages alleged in his complaint.

C. Defendants, on the other hand will prove by competent evidence during the trial of this case the following facts:

1. That lot No. 2 of the Psu-1552 it (Exh. '5') was originally owned and possessed by Felipe Batiller, grandfather of the defendant Basilio Batiller, on the death of the former in 1920, as his sole heir. Isaias Batiller succeeded his father , Basilio Batiller, in the ownership and possession of the land in the year 1930, and since then up to the present, the land remains in the possession of the defendant, his possession being actual, open, public, peaceful and continuous in the concept of an owner, exclusive of any other rights and adverse to all other claimants.

2. That the alleged predecessors in interest of the plaintiff have never been in the actual possession of the land and that they never had any title thereto.

3. That Lot No. 2, Psu 155241, the subject of Free Patent application of the defendant has beenapproved.

4. The damages suffered by the defendant, as alleged in his counterclaim."' 1

The appellate court further related the developments of the case, as follows:

On August 17, 1965, defendant's counsel manifested in open court that before any trial on the merit of the case could proceed he would file a motion to dismiss plaintiff's complaint which he did, alleging that plaintiff does not have cause of action against him because the property in dispute which he (plaintiff) allegedly bought from his father-in-law, Francisco Militante was the subject matter of LRC No. 695 filed in the CFI of Iloilo, which case was brought on appeal to this Court and docketed as CA-G.R. No. 13497-R in which aforesaid case plaintiff was the counsel on record of his father-in-law, Francisco Militante. Invoking Arts. 1409 and 1491 of the Civil Code which reads:

'Art. 1409. The following contracts are inexistent and void from the beginning:

xxx xxx xxx

(7) Those expressly prohibited by law.

'ART. 1491. The following persons cannot acquire any purchase, even at a public auction, either in person of through the mediation of another: .

xxx xxx xxx

(5) Justices, judges, prosecuting attorneys, clerks of superior and inferior courts, and other officers and employees connected with the administration of justice, the property and rights of in litigation or levied upon an execution before the court within whose jurisdiction or territory they exercise their respective functions; this prohibition includes the act of acquiring an assignment and shall apply tolawyers, with respect to the property and rights which may be the object of any litigation in which they may take part by virtue of their profession.'

defendant claims that plaintiff could not have acquired any interest in the property in dispute as the contract he (plaintiff) had with Francisco Militante was inexistent and void. (See pp. 22-31, Record on Appeal). Plaintiff strongly opposed defendant's motion to dismiss claiming that defendant can not invoke Articles 1409 and 1491 of the Civil Code as Article 1422 of the same Code provides that 'The defense of illegality of contracts is not available to third persons whose interests are not directly affected' (See pp. 32-35 Record on Appeal).

On October 18, 1965, the lower court issued an order disclaiming plaintiffs complaint (pp. 42-49, Record on Appeal.) In the aforesaid order of dismissal the lower court practically agreed with defendant's contention that the contract (Exh. A) between plaintiff and Francism Militante was null and void. In due season plaintiff filed a motion for reconsideration (pp. 50-56 Record on Appeal) which was denied by the lower court on January 14, 1966 (p. 57, Record on Appeal).

Hence, this appeal by plaintiff from the orders of October 18, 1965 and January 14, 1966.

Plaintiff-appellant imputes to the lower court the following errors:

'1. The lower court erred in holding that the contract of sale between the plaintiff-appellant and his father-in-law, Francisco Militante, Sr., now deceased, of the property covered by Plan Psu-99791, (Exh. "A") was void, not voidable because it was made when plaintiff-appellant was the counsel of

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the latter in the Land Registration case.

'2. The lower court erred in holding that the defendant-appellee is an interested person to question the validity of the contract of sale between plaintiff-appellant and the deceased, Francisco Militante, Sr.

'3. The lower court erred in entertaining the motion to dismiss of the defendant-appellee after he had already filed his answer, and after the termination of the pre-trial, when the said motion to dismiss raised a collateral question.

'4. The lower court erred in dismissing the complaint of the plaintiff-appellant.'

The appellate court concluded that plaintiffs "assignment of errors gives rise to two (2) legal posers — (1) whether or not the contract of sale between appellant and his father-in-law, the late Francisco Militante over the property subject of Plan Psu-99791 was void because it was made when plaintiff was counsel of his father-in-law in a land registration case involving the property in dispute; and (2) whether or not the lower court was correct in entertaining defendant-appellee's motion to dismiss after the latter had already filed his answer and after he (defendant) and plaintiff-appellant had agreed on some matters in a pre-trial conference. Hence, its elevation of the appeal to this Court as involving pure questions of law.

It is at once evident from the foregoing narration that the pre-trial conference held by the trial court at which the parties with their counsel agreed and stipulated on the material and relevant facts and submitted their respective documentary exhibits as referred to in the pre-trial order, supra, 2 practically amounted to a fulldress trial which placed on record all the facts and exhibits necessary for adjudication of the case.

The three points on which plaintiff reserved the presentation of evidence at the-trial dealing with the source of the alleged right and title of Francisco Militante's predecessors, supra, 3 actually are already made of record in thestipulated facts and admitted exhibits. The chain of Militante's alleged title and right to the land as supposedly traced back to Liberato Demontaño was actually asserted by Militante (and his vendee, lawyer and son-in-law, herein plaintiff) in the land registration case and rejected by the Iloilo land registration court which dismissed Militante's application for registration of the land. Such dismissal, as already stated, was affirmed by the final judgment in 1958 of the Court of Appeals. 4

The four points on which defendant on his part reserved the presentation of evidence at the trial dealing with his and his ancestors' continuous, open, public and peaceful possession in the concept of owner of the land and the Director of Lands' approval of his survey plan thereof, supra, 5 are likewise already duly established facts of record, in the land registration case as well as in the ejectment case wherein the Iloilo court of first instance recognized the superiority of defendant's right to the land as against plaintiff.

No error was therefore committed by the lower court in dismissing plaintiff's complaint upon defendant's motion after the pre-trial.

1. The stipulated facts and exhibits of record indisputably established plaintiff's lack of cause of action and justified the outright dismissal of the complaint. Plaintiff's claim of ownership to the land in question was predicated on the sale thereof for P2,000.00 made in 1956 by his father-in- law, Francisco Militante, in his favor, at a time when Militante's application for registration thereof had already been dismissed by the Iloilo land registration court and was pending appeal in the Court of Appeals.

With the Court of Appeals' 1958 final judgment affirming the dismissal of Militante's application for registration, the lack of any rightful claim or title of Militante to the land was conclusively and decisively judicially determined. Hence, there was no right or title to the land that could be transferred or sold by Militante's purported sale in 1956 in favor of plaintiff.

Manifestly, then plaintiff's complaint against defendant, to be declared absolute owner of the land and to be restored to possession thereof with damages was bereft of any factual or legal basis.

2. No error could be attributed either to the lower court's holding that the purchase by a lawyer of the property in litigation from his client is categorically prohibited by Article 1491, paragraph (5) of the Philippine Civil Code, reproduced supra; 6 and that consequently, plaintiff's purchase of the property in litigation from his client (assuming that his client could sell the same since as already shown above, his client's claim to the property was defeated and rejected) was void and could produce no legal effect, by virtue of Article 1409, paragraph (7) of our Civil Code which provides that contracts "expressly prohibited or declared void by law' are "inexistent and that "(T)hese contracts cannot be ratified. Neither can the right to set up the defense of illegality be waived."

The 1911 case of Wolfson vs. Estate of Martinez 7 relied upon by plaintiff as holding that a sale of property in litigation to the party litigant's lawyer "is not void but voidable at the election of the vendor" was correctly held by the lower court to have been superseded by the later 1929 case of Director of Lands vs. Abagat. 8 In this later case of Abagat, the Court expressly cited two antecedent cases involving the same transaction of purchase of property in litigation by the lawyer which was expressly declared invalid under Article 1459 of the Civil Code of Spain (of which Article 1491 of our Civil Code of the Philippines is the counterpart) upon challenge thereof not by the vendor-client but by the adverse parties against whom the lawyer was to enforce his rights as vendee thus acquired.

These two antecedent cases thus cited in Abagat clearly superseded (without so expressly stating the previous ruling in Wolfson:

The spouses, Juan Soriano and Vicente Macaraeg, were the owners of twelve parcels of land. Vicenta Macaraeg died in November, 1909, leaving a large number of collateral heirs but no descendants. Litigation between the surviving husband, Juan Soriano, and the heirs of Vicenta immediately arose, and the herein appellant Sisenando Palarca acted as Soriano's lawyer. On May 2, 1918, Soriano executed a deed for the aforesaid twelve parcels of land in favor of Sisenando Palarca and on the following day, May 3, 1918, Palarca filed an application for the registration of the land in the deed. After hearing, the Court of First Instance

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declared that the deed was invalid by virtue of the provisions of article 1459 of the Civil Code, which prohibits lawyers and solicitors from purchasing property rights involved in any litigation in which they take part by virtue of their profession. The application for registration was consequently denied, and upon appeal by Palarca to the Supreme Court, the judgement of the lower court was affirmed by a decision promulgated November 16,1925. (G.R. No. 24329, Palarca vs. Director of Lands, not reported.)

In the meantime cadastral case No. 30 of the Province of Tarlac was instituted, and on August 21, 1923, Eleuteria Macaraeg, as administratrix of the estate of Vicente Macaraeg, filed claims for the parcels in question. Buenaventura Lavitoria administrator of the estate of Juan Soriano, did likewise and so did Sisenando Palarca. In a decision dated June 21, 1927, the Court of First Instance, Judge Carballo presiding, rendered judgment in favor of Palarea and ordered the registration of the land in his name. Upon appeal to this court by the administration of the estates of Juan Soriano and Vicente Macaraeg, the judgment of the court below was reversed and the land adjudicated to the two estates as conjugal property of the deceased spouses. (G.R. No. 28226, Director of Lands vs. Abagat, promulgated May 21, 1928, not reported.) 9

In the very case of Abagat itself, the Court, again affirming the invalidity and nullity of the lawyer's purchase of the land in litigation from his client, ordered the issuance of a writ of possession for the return of the land by the lawyer to the adverse parties without reimbursement of the price paid by him and other expenses, and ruled that "the appellant Palarca is a lawyer and is presumed to know the law. He must, therefore, from the beginning, have been well aware of the defect in his title and is, consequently, a possessor in bad faith."

As already stated, Wolfson and Abagat were decided with relation to Article 1459 of the Civil Code of Spain then adopted here, until it was superseded on August 30, 1950 by the Civil Code of the Philippines whose counterpart provision is Article 1491.

Article 1491 of our Civil Code (like Article 1459 of the Spanish Civil Code) prohibits in its six paragraphs certain persons, by reason of the relation of trust or their peculiar control over the property, from acquiring such property in their trust or control either directly or indirectly and "even at a public or judicial auction," as follows: (1) guardians; (2) agents; (3) administrators; (4) public officers and employees; judicial officers and employees, prosecuting attorneys, and lawyers; and (6) others especially disqualified by law.

In Wolfson which involved the sale and assignment of a money judgment by the client to the lawyer, Wolfson, whose right to so purchase the judgment was being challenged by the judgment debtor, the Court, through Justice Moreland, then expressly reserved decision on "whether or not the judgment in question actually falls within the prohibition of the article" and held only that the sale's "voidability can not be asserted by one not a party to the transaction or his representative," citing from Manresa 10 that "(C)onsidering the question from the point of view of the civil law, the view taken by the code, we must limit ourselves to classifying as void all acts done contrary to the express prohibition of the statute. Now then: As the code does not

recognize such nullity by the mere operation of law, the nullity of the acts hereinbefore referred to must be asserted by the person having the necessary legal capacity to do so and decreed by a competent court." 11

The reason thus given by Manresa in considering such prohibited acquisitions under Article 1459 of the Spanish Civil Code as merely voidable at the instance and option of the vendor and not void — "that the Code does not recognize such nullity de pleno derecho" — is no longer true and applicable to our own Philippine Civil Code whichdoes recognize the absolute nullity of contracts "whose cause, object, or purpose is contrary to law, morals, good customs, public order or public policy" or which are "expressly prohibited or declared void by law" and declares such contracts "inexistent and void from the beginning." 12

The Supreme Court of Spain and modern authors have likewise veered from Manresa's view of the Spanish codal provision itself. In its sentencia of 11 June 1966, the Supreme Court of Spain ruled that the prohibition of Article 1459 of the Spanish Civil Code is based on public policy, that violation of the prohibition contract cannot be validated by confirmation or ratification, holding that:

... la prohibicion que el articulo 1459 del C.C. establece respecto a los administradores y apoderados, la cual tiene conforme a la doctrina de esta Sala, contendia entre otras, en S. de 27-5-1959, un fundamento de orden moral lugar la violacion de esta a la nulidad de pleno derecho del acto o negocio celebrado, ... y prohibicion legal, afectante orden publico, no cabe con efecto alguno la aludida retification ... 13

The criterion of nullity of such prohibited contracts under Article 1459 of the Spanish Civil Code (Article 1491 of our Civil Code) as a matter of public order and policy as applied by the Supreme Court of Spain to administrators and agents in its above cited decision should certainly apply with greater reason to judges, judicial officers, fiscals and lawyers under paragraph 5 of the codal article.

Citing the same decisions of the Supreme Court of Spain, Gullon Ballesteros, his "Curso de Derecho Civil, (Contratos Especiales)" (Madrid, 1968) p. 18, affirms that, with respect to Article 1459, Spanish Civil Code:.

Que caracter tendra la compra que se realice por estas personas? Porsupuesto no cabe duda de que el caso (art.) 1459, 40 y 50, la nulidad esabsoluta porque el motivo de la prohibicion es de orden publico. 14

Perez Gonzales in such view, stating that "Dado el caracter prohibitivo delprecepto, la consequencia de la infraccion es la nulidad radical y ex lege." 15

Castan, quoting Manresa's own observation that.

"El fundamento do esta prohibicion es clarisimo. No sa trata con este precepto tan solo de guitar la ocasion al fraude; persiguese, ademasel proposito de rodear a las personas que intervienen en la administrcionde justicia de todos los retigios que necesitan pora ejercer su ministerio librandolos de toda suspecha, que aunque fuere in fundada, redundura endescredito de la institucion." 16 arrives at the contrary and now accepted view that "Puede considerace en nuestro

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derecho inexistente 'o radicalmente nulo el contrato en los siguentes cases: a) ...; b) cuando el contrato se ha celebrado en violacion de una prescripcion 'o prohibicion legal, fundada sobre motivos de orden publico(hipotesis del art. 4 del codigo) ..." 17

It is noteworthy that Caltan's rationale for his conclusion that fundamental consideration of public policy render void and inexistent such expressly prohibited purchase (e.g. by public officers and employees of government property intrusted to them and by justices, judges, fiscals and lawyers of property and rights in litigation and submitted to or handled by them, under Article 1491, paragraphs (4) and (5) of our Civil Code) has been adopted in a new article of our Civil Code, viz, Article 1409 declaring such prohibited contracts as "inexistent and void from the beginning." 18

Indeed, the nullity of such prohibited contracts is definite and permanent and cannot be cured by ratification. The public interest and public policy remain paramount and do not permit of compromise or ratification. In his aspect, the permanent disqualification of public and judicial officers and lawyers grounded on public policy differs from the first three cases of guardians, agents and administrators (Article 1491, Civil Code), as to whose transactions it had been opined that they may be "ratified" by means of and in "the form of a new contact, in which cases its validity shall be determined only by the circumstances at the time the execution of such new contract. The causes of nullity which have ceased to exist cannot impair the validity of the new contract. Thus, the object which was illegal at the time of the first contract, may have already become lawful at the time of the ratification or second contract; or the service which was impossible may have become possible; or the intention which could not be ascertained may have been clarified by the parties. The ratification or second contract would then be valid from its execution; however, it does not retroact to the date of the first contract." 19

As applied to the case at bar, the lower court therefore properly acted upon defendant-appellant's motion to dismiss on the ground of nullity of plaintiff's alleged purchase of the land, since its juridical effects and plaintiff's alleged cause of action founded thereon were being asserted against defendant-appellant. The principles governing the nullity of such prohibited contracts and judicial declaration of their nullity have been well restated by Tolentino in his treatise on our Civil Code, as follows:

Parties Affected. — Any person may invoke the in existence of the contract whenever juridical effects founded thereon are asserted against him. Thus, if there has been a void transfer of property, the transferor can recover it by the accion reinvindicatoria; and any prossessor may refuse to deliver it to the transferee, who cannot enforce the contract. Creditors may attach property of the debtor which has been alienated by the latter under a void contract; a mortgagee can allege the inexistence of a prior encumbrance; a debtor can assert the nullity of an assignment of credit as a defense to an action by the assignee.

Action On Contract. — Even when the contract is void or inexistent, an action is necessary to declare its inexistence, when it has already been fulfilled. Nobody can take the law into his own hands; hence, the intervention of the competent court is necessary to declare the absolute nullity of the contract and to decree the restitution of what has been given under it. The judgment, however, will

retroact to the very day when the contract was entered into.

If the void contract is still fully executory, no party need bring an action to declare its nullity; but if any party should bring an action to enforce it, the other party can simply set up the nullity as a defense.20

ACCORDINGLY, the order of dismissal appealed from is hereby affirmed, with costs in all instances against plaintiff-appellant. So ordered.

Makalintal, Zaldivar, Castro,. Fernando, Barredo, Makasiar, Antonio and Esguerra, JJ., concur.

Republic of the PhilippinesSUPREME COURT

Manila

EN BANC

B.M. No. 793 July 30, 2004

IN RE: SUSPENSION FROM THE PRACTICE OF LAW IN THE TERRITORY OF GUAM OF ATTY. LEON G. MAQUERA.

R E S O L U T I O N

TINGA, J.:

May a member of the Philippine Bar who was disbarred or suspended from the practice of law in a foreign jurisdiction where he has also been admitted as an attorney be meted the same sanction as a member of the Philippine Bar for the same infraction committed in the foreign jurisdiction? There is a Rule of Court provision covering this case's central issue. Up to this juncture, its reach and breadth have not undergone the test of an unsettled case.

In a Letter dated August 20, 1996,1 the District Court of Guam informed this Court of the suspension of Atty. Leon G. Maquera (Maquera) from the practice of law in Guam for two (2) years pursuant to the Decision rendered by the Superior Court of Guam on May 7, 1996 in Special Proceedings Case No. SP0075-94,2 a disciplinary case filed by the Guam Bar Ethics Committee against Maquera.

The Court referred the matter of Maquera's suspension in Guam to the Bar Confidant for comment in itsResolution dated November 19, 1996.3 Under Section 27, Rule 138 of the Revised Rules of Court, the disbarment or suspension of a member of the Philippine Bar in a foreign jurisdiction, where he has also been admitted as an attorney, is also a ground for his disbarment or suspension in this realm, provided the foreign court's action is by reason of an act or omission constituting deceit, malpractice or other gross misconduct, grossly immoral conduct, or a violation of the lawyer's oath.

In a Memorandum dated February 20, 1997, then Bar Confidant Atty. Erlinda C. Verzosa recommended that the Court obtain copies of the record of Maquera's case since the documents transmitted by the Guam District Court do not contain the factual and legal bases for Maquera's suspension and are thus insufficient to enable her to determine whether Maquera's acts or omissions which resulted in his suspension in Guam are likewise violative of his oath as a member of the Philippine Bar.4

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Pursuant to this Court's directive in its Resolution dated March 18, 1997,5 the Bar Confidant sent a letter dated November 13, 1997 to the District Court of Guam requesting for certified copies of the record of the disciplinary case against Maquera and of the rules violated by him.6

The Court received certified copies of the record of Maquera's case from the District Court of Guam on December 8, 1997.7

Thereafter, Maquera's case was referred by the Court to the Integrated Bar of the Philippines (IBP) for investigation report and recommendation within sixty (60) days from the IBP's receipt of the case records.8

The IBP sent Maquera a Notice of Hearing requiring him to appear before the IBP's Commission on Bar Discipline on July 28, 1998.9 However, the notice was returned unserved because Maquera had already moved from his last known address in Agana, Guam and did not leave any forwarding address.10

On October 9, 2003, the IBP submitted to the Court its Report and Recommendation and its Resolution No. XVI-2003-110, indefinitely suspending Maquera from the practice of law within the Philippines until and unless he updates and pays his IBP membership dues in full.11

The IBP found that Maquera was admitted to the Philippine Bar on February 28, 1958. On October 18, 1974, he was admitted to the practice of law in the territory of Guam. He was suspended from the practice of law in Guam for misconduct, as he acquired his client's property as payment for his legal services, then sold it and as a consequence obtained an unreasonably high fee for handling his client's case.12

In its Decision, the Superior Court of Guam stated that on August 6, 1987, Edward Benavente, the creditor of a certain Castro, obtained a judgment against Castro in a civil case. Maquera served as Castro's counsel in said case. Castro's property subject of the case, a parcel of land, was to be sold at a public auction in satisfaction of his obligation to Benavente. Castro, however, retained the right of redemption over the property for one year. The right of redemption could be exercised by paying the amount of the judgment debt within the aforesaid period.13

At the auction sale, Benavente purchased Castro's property for Five Hundred U.S. Dollars (US$500.00), the amount which Castro was adjudged to pay him.14

On December 21, 1987, Castro, in consideration of Maquera's legal services in the civil case involving Benavente, entered into an oral agreement with Maquera and assigned his right of redemption in favor of the latter.15

On January 8, 1988, Maquera exercised Castro's right of redemption by paying Benavente US$525.00 in satisfaction of the judgment debt. Thereafter, Maquera had the title to the property transferred in his name.16

On December 31, 1988, Maquera sold the property to C.S. Chang and C.C. Chang for Three Hundred Twenty Thousand U.S. Dollars (US$320,000.00).17

On January 15, 1994, the Guam Bar Ethics Committee (Committee) conducted hearings regarding Maquera's alleged misconduct.18

Subsequently, the Committee filed a Petition in the Superior Court of Guam praying that Maquera be sanctioned for violations of Rules 1.519 and 1.8(a)20 of the Model Rules of Professional Conduct (Model Rules) in force in Guam. In its Petition, the Committee claimed that Maquera obtained an unreasonably high fee for his services. The Committee further alleged that Maquera himself admitted his failure to comply with the requirement in Rule 1.8 (a) of the Model Rules that a lawyer shall not enter into a business transaction with a client or knowingly acquire a pecuniary interest adverse to a client unless the transaction and the terms governing the lawyer's acquisition of such interest are fair and reasonable to the client, and are fully disclosed to, and understood by the client and reduced in writing.21

The Committee recommended that Maquera be: (1) suspended from the practice of law in Guam for a period of two 2 years, however, with all but thirty (30) days of the period of suspension deferred; (2) ordered to return to Castro the difference between the sale price of the property to the Changs and the amount due him for legal services rendered to Castro; (3) required to pay the costs of the disciplinary proceedings; and (4) publicly reprimanded. It also recommended that other jurisdictions be informed that Maquera has been subject to disciplinary action by the Superior Court of Guam.22

Maquera did not deny that Castro executed a quitclaim deed to the property in his favor as compensation for past legal services and that the transaction, except for the deed itself, was oral and was not made pursuant to a prior written agreement. However, he contended that the transaction was made three days following the alleged termination of the attorney-client relationship between them, and that the property did not constitute an exorbitant fee for his legal services to Castro.23

On May 7, 1996, the Superior Court of Guam rendered its Decision24 suspending Maquera from the practice of law in Guam for a period of two (2) years and ordering him to take the Multi-State Professional Responsibility Examination (MPRE) within that period. The court found that the attorney-client relationship between Maquera and Castro was not yet completely terminated when they entered into the oral agreement to transfer Castro's right of redemption to Maquera on December 21, 1987. It also held that Maquera profited too much from the eventual transfer of Castro's property to him since he was able to sell the same to the Changs with more than US$200,000.00 in profit, whereas his legal fees for services rendered to Castro amounted only to US$45,000.00. The court also ordered him to take the MPRE upon his admission during the hearings of his case that he was aware of the requirements of the Model Rules regarding business transactions between an attorney and his client "in a very general sort of way."25

On the basis of the Decision of the Superior Court of Guam, the IBP concluded that although the said court found Maquera liable for misconduct, "there is no evidence to establish that [Maquera] committed a breach of ethics in the Philippines."26 However, the IBP still resolved to suspend him indefinitely for his failure to pay his annual dues as a member of the IBP since 1977, which failure is, in turn, a ground for removal of the name of the delinquent member from the Roll of Attorneys under Section 10, Rule 139-A of the Revised Rules of Court.27

The power of the Court to disbar or suspend a lawyer for acts or omissions committed in a foreign jurisdiction is found in Section 27, Rule 138 of the Revised Rules of Court, as amended by Supreme Court Resolution dated February 13, 1992, which states:

Section 27. Disbarment or suspension of attorneys by Supreme Court, grounds therefor.—A member of the bar may be disbarred or suspended from his office as attorney by the Supreme Court for any

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deceit, malpractice, or other gross misconduct in such office, grossly immoral conduct, or by reason of his conviction of a crime involving moral turpitude, or for any violation of the oath which he is required to take before admission to practice, or for a willful disobedience appearing as attorney for a party to a case without authority to do so. The practice of soliciting cases at law for the purpose of gain, either personally or through paid agents or brokers, constitutes malpractice.

The disbarment or suspension of a member of the Philippine Bar by a competent court or other disciplinatory agency in a foreign jurisdiction where he has also been admitted as an attorney is a ground for his disbarment or suspension if the basis of such action includes any of the acts hereinabove enumerated.

The judgment, resolution or order of the foreign court or disciplinary agency shall be prima facie evidence of the ground for disbarment or suspension (Emphasis supplied).

The Court must therefore determine whether Maquera's acts, namely: acquiring by assignment Castro's right of redemption over the property subject of the civil case where Maquera appeared as counsel for him; exercising the right of redemption; and, subsequently selling the property for a huge profit, violate Philippine law or the standards of ethical behavior for members of the Philippine Bar and thus constitute grounds for his suspension or disbarment in this jurisdiction.

The Superior Court of Guam found that Maquera acquired his client's property by exercising the right of redemption previously assigned to him by the client in payment of his legal services. Such transaction falls squarely under Article 1492 in relation to Article 1491, paragraph 5 of the Civil Code of the Philippines. Paragraph 5 of Article 149128 prohibits the lawyer's acquisition by assignment of the client's property which is the subject of the litigation handled by the lawyer. Under Article 1492,29 the prohibition extends to sales in legal redemption.

The prohibition ordained in paragraph 5 of Article 1491 and Article 1492 is founded on public policy because, by virtue of his office, an attorney may easily take advantage of the credulity and ignorance of his client30 and unduly enrich himself at the expense of his client.

The case of In re: Ruste31 illustrates the significance of the aforementioned prohibition. In that case, the attorney acquired his clients' property subject of a case where he was acting as counsel pursuant to a deed of sale executed by his clients in his favor. He contended that the sale was made at the instance of his clients because they had no money to pay him for his services. The Court ruled that the lawyer's acquisition of the property of his clients under the circumstances obtaining therein rendered him liable for malpractice. The Court held:

…Whether the deed of sale in question was executed at the instance of the spouses driven by financial necessity, as contended by the respondent, or at the latter's behest, as contended by the complainant, is of no moment. In either case an attorney occupies a vantage position to press upon or dictate his terms to a harassed client, in breach of the "rule so amply protective of the confidential relations, which must necessarily exist between attorney and client, and of the rights of both".32

The Superior Court of Guam also hinted that Maquera's acquisition of Castro's right of redemption, his subsequent exercise of said right, and his act of selling the redeemed property for huge profits were tainted with deceit and bad faith when it concluded that Maquera charged Castro an exorbitant fee for his legal services. The court held that since the assignment of the right of redemption to Maquera was in payment for his legal services, and since the property redeemed by him had a market value of US$248,220.00 as of December 21, 1987 (the date when the right of redemption was assigned to him), he is liable for misconduct for accepting payment for his legal services way beyond his actual fees which amounted only to US$45,000.00.

Maquera's acts in Guam which resulted in his two (2)-year suspension from the practice of law in that jurisdiction are also valid grounds for his suspension from the practice of law in the Philippines. Such acts are violative of a lawyer's sworn duty to act with fidelity toward his clients. They are also violative of the Code of Professional Responsibility, specifically, Canon 17 which states that "[a] lawyer owes fidelity to the cause of his client and shall be mindful the trust and confidence reposed in him;" and Rule 1.01 which prohibits lawyers from engaging in unlawful, dishonest, immoral or deceitful conduct. The requirement of good moral character is not only a condition precedent to admission to the Philippine Bar but is also a continuing requirement to maintain one's good's standing in the legal profession.33

It bears stressing that the Guam Superior Court's judgment ordering Maquera's suspension from the practice of law in Guam does not automatically result in his suspension or disbarment in the Philippines. Under Section 27,34Rule 138 of the Revised Rules of Court, the acts which led to his suspension in Guam are mere grounds for disbarment or suspension in this jurisdiction, at that only if the basis of the foreign court's action includes any of the grounds for disbarment or suspension in this jurisdiction.35 Likewise, the judgment of the Superior Court of Guam only constitutes prima facie evidence of Maquera's unethical acts as a lawyer.36 More fundamentally, due process demands that he be given the opportunity to defend himself and to present testimonial and documentary evidence on the matter in an investigation to be conducted in accordance with Rule 139-B of the Revised Rules of Court. Said rule mandates that a respondent lawyer must in all cases be notified of the charges against him. It is only after reasonable notice and failure on the part of the respondent lawyer to appear during the scheduled investigation that an investigation may be conducted ex parte.37

The Court notes that Maquera has not yet been able to adduce evidence on his behalf regarding the charges of unethical behavior in Guam against him, as it is not certain that he did receive the Notice of Hearing earlier sent by the IBP's Commission on Bar Discipline. Thus, there is a need to ascertain Maquera's current and correct address in Guam in order that another notice, this time specifically informing him of the charges against him and requiring him to explain why he should not be suspended or disbarred on those grounds (through this Resolution), may be sent to him.

Nevertheless, the Court agrees with the IBP that Maquera should be suspended from the practice of law for non-payment of his IBP membership dues from 1977 up to the present.38 Under Section 10, Rule 139-A of the Revised Rules of Court, non-payment of membership dues for six (6) months shall warrant suspension of membership in the IBP, and default in such payment for one year shall be ground for removal of the name of the delinquent member from the Roll of Attorneys.39

WHEREFORE, Atty. Leon G. Maquera is required to SHOW CAUSE, within fifteen (15) days from receipt of thisResolution, why he should

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not be suspended or disbarred for his acts which gave rise to the disciplinary proceedings against him in the Superior Court of Guam and his subsequent suspension in said jurisdiction.

The Bar Confidant is directed to locate the current and correct address of Atty. Maquera in Guam and to serve upon him a copy of this Resolution.

In the meantime, Atty. Maquera is SUSPENDED from the practice of law for ONE (1) YEAR or until he shall have paid his membership dues, whichever comes later.

Let a copy of this Resolution be attached to Atty. Maquera's personal record in the Office of the Bar Confidant and copies be furnished to all chapters of the Integrated Bar of the Philippines and to all courts in the land.

SO ORDERED.

Davide, Jr., C.J., Puno, Panganiban, Quisumbing, Ynares-Santiago, Sandoval-Gutierrez, Carpio, Austria-Martinez, Carpio-Morales, Callejo, Sr., Azcuna, and Chico-Nazario, JJ., concur.Corona, J., on leave.

Republic of the PhilippinesSUPREME COURT

Manila

EN BANC

A.M. No. 2490 February 7, 1991

FULGENCIO A. NGAYAN, TOMASA K. NGAYAN and BELLA AURORA NGAYAN, complainants,

vs.ATTY. FAUSTINO F. TUGADE, respondent.

R E S O L U T I O N

PER CURIAM:p

This case refers to disciplinary proceedings initiated by the herein complainants Fulgencio A. Ngayan, Tomasa K. Ngayan and Bella Aurora Ngayan in a letter-complaint dated November 16, 1982 against respondent lawyer for violation of sub-paragraphs (e) and (f) of Section 20, Rule 138 of the Rules of Court of the Philippines.

It appears that respondent lawyer was formerly a counsel for complainants either as defense counsel or private prosecutor in the following cases:

(a) People v. Fulgencio A. Ngayan, City Court of Manila, Branch Criminal Case No. 053773-CR for light threat;

(b) People v. Tomasa Ngayan and Bella Aurora Ngayan, City Court of Manila, Branch VIII, Criminal Case No. 053594-CR, for unjust vexation;

(c) People v. Bella Aurora Ngayan, City Court of Manila, Branch II, Criminal Case No. 053599-CR, for grave threats;

(d) People v. Roberto Leonido, City Court of Manila, Branch XIV, Criminal Case No. 053649-CR, for trespass to dwelling; and People v. Nestor Campo, Branch XIV, Criminal Case No. 053650-CR, for threats;

(e) Fulgencio A. Ngayan and Tomasa K. Ngayan v. Rowena Soriano and Robert Leonido for grave threats and trespass; Fulgencio A. Ngayan and Tomasa K. Ngayan v. Rowena Soriano, for grave defamation, Office of the City Fiscal of Manila before Assistant City Fiscal Elmer K. Calledo, I.S. No. 82-8564. (pp. 1-2, Rollo)

The factual antecedents of this case are as follows:

Complainants alleged that they asked respondent to prepare an affidavit to be used as basis for a complaint to be filed against Mrs. Rowena Soriano and Robert Leonido as a consequence of the latter's unauthorized entry into complainants' dwelling. Without thoroughly reading the same, Mrs. Tomasa A. Ngayan allegedly signed it because she was rushed to do the same. After signing, Mrs. Ngayan noted a paragraph which did not mention that Robert Leonido was with Rowena Soriano when both suddenly barged into complainants' residence. Mrs. Ngayan allegedly told respondent about his omission and in front of her, respondent crossed out the paragraph she complained about and promised to make another affidavit. In the meantime, complainants filed motions to discharge the respondent as their counsel.

Complainants allegedly made a follow up after discharging respondent and found that the name of Robert Leonido was not included in the charge. Since the omission was remedied by their new counsel and the case was subsequently filed in court, the adverse parties filed a motion

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for reinvestigation and attached thereto the first affidavit of complainants which was crossed out. Complainants averred that the motion was filed by Atty. Apolo P. Gaminda, a former classmate of respondent. They further said that respondent was also a lawyer of the brother of Robert Leonido in an insurance company. Complainants further alleged that the motion for reinvestigation was set for hearing before Assistant City Fiscal Milagros F. Garcia-Beza where respondent himself executed and submitted an affidavit as exhibit for Robert Leonido and Rowena Soriano controverting the affidavit of complainants notwithstanding the fact that he prepared the latter's affidavit when he was still their counsel.

They further alleged that before he executed and submitted his affidavit, respondent sent a personal letter to Fiscal Beza denouncing complainants and stating that he is filing criminal and civil cases against them.

Complainants charged respondent for violation of paragraphs (e) and (f) of Section 20, Rule 138, Rules of Court, which provide:

(e) To maintain inviolate the confidence, and at every peril to himself, to preserve the secrets of his client, and to accept no compensation in connection with his client's business except from him or with his knowledge and approval;

(f) To abstain from all offensive personality and to advance no fact prejudicial to the honor or reputation of a party or witnesses, unless required by the justice of the cause with which he is charged;

Complainants claim that paragraph (e) above was violated by respondent when the affidavit he prepared for complainants but subsequently crossed-out was submitted as evidence against complainants in the motion for reinvestigation. As to paragraph (f), complainants averred that respondent violated it when he sent a letter to the fiscal saying that his name was being adversely affected by the false affidavits of complainants and for that reason, respondent was contemplating to file a criminal and civil action for damages against them.

In a resolution of the Second Division of this Court dated January 19, 1983, respondent was required to answer the complaint against him but respondent failed. Thus, on May 25, 1983, for failure of the respondent to file an answer, this Court resolved to refer this case to the Solicitor General for investigation, report and recommendation. Thereupon, the Solicitor General set the complaint for hearing on September 26, 1983, October 17 and 18,1983 and November 24,1983, all of which dates, respondent was duly notified. However, respondent never appeared on any date. Accordingly, the Solicitor General made findings of facts based on the aforesaid claims of complainants and said:

Consistent with respondent's failure to file an answer to the complaint herein filed against him, he also did not appear, despite due notice on the four occasions when the hearing of the present complaint was set at the Office of the Solicitor General. Neither has respondent shown concern or interest about the status of the complaint filed against him. The inaction of respondent to the resolutions of this Honorable Court requiring him to file his Answer to the Complaint filed against him and his subsequent failure to attend the hearings

on the said complaint indicate that respondent has not obeyed the legal orders of the duly constituted authorities and he has not conducted himself as a lawyer according to the best of his knowledge and discretion with all good fidelity as well to the courts as to his clients (Sec. 3, Rule 138, Rules of Court). Further, lawyers are particularly called upon to obey court orders and processes. They should stand foremost in complying with the court's directives or instructions being themselves officers of the court (p. 75, Legal Ethics, Ruben Agpalo, 2nd Ed.). This lack of concern shown by respondent regarding the matter that involved the very foundation of his right to engage in the practice of law would show how much less he would regard the interest of Ms clients. 1

He thus recommended that the respondent lawyer be disbarred and his name dropped from attorney's roll. In this report, he averred that the conduct of respondent as above-shown constitutes unprofessional conduct and an outright violation of the provisions of Section 3 and paragraphs (e) and (f) of Section 20 of Rule 138 of the Rules of Court.

In disbarment proceedings, the burden of proof rests upon the complainant, and for the court to exercise its disciplinary powers, the case against the respondent must be established by clear, convincing and satisfactory proof (Santos v. Dichoso, Adm. Case No. 1825, August 22, 1978, 84 SCRA 622).

In the case at bar, complainants claim that respondent furnished the adverse parties in a certain criminal case with a copy of their discarded affidavit, thus enabling them to use it as evidence against complainants. This actuation constitutes betrayal of trust and confidence of his former clients in violation of paragraph (e), Section 20, Rule 138 of the Rules of Court. Inasmuch as respondent failed to answer the complaint filed against him and despite due notice on four occasions, he consistently did not appear on the scheduled hearing set by the Office of the Solicitor General, this claim remained uncontroverted. Besides, We tend to believe the said claim of complainants when it is taken together with their other claim that respondent's actuations from the beginning tend to show that he was partial to the adverse parties as he even tried to dissuade complainants from filing charges against Robert Leonido. This partiality could be explained by the fact that respondent is the former classmate of Atty. Apolo P. Gaminda, the adverse parties' counsel and the fact that respondent is the lawyer of the brother of Robert Leonido in an insurance company.

Respondent's act of executing and submitting an affidavit as exhibit for Robert Leonido and Rowena Soriano advancing facts prejudicial to the case of his former clients such as the fact that the crime charged in complainants' affidavit had prescribed and that he was asked to prepare an affidavit to make the offense more grave so as to prevent the offense from prescribing demonstrates clearly an act of offensive personality against complainants, violative of the first part of paragraph (f), Section 20, Rule 138, Rules of Court. Likewise, respondent's act of joining the adverse parties in celebrating their victory over the dismissal of the case against them shows not only his bias against the complainants but also constitutes a degrading act on the part of a lawyer. It was meant only to titillate the anger of complainants.

Additionally, respondent's failure to answer the complaint against him and his failure to appear at the investigation are evidence of his flouting resistance to lawful orders of the court and illustrate his despiciency for his oath of office in violation of Section 3, Rule 138, Rules of Court.

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We have fully scrutinized and evaluated the records of this case and We cannot but find that strong and unassailable reasons exist to render it Our irremissible duty to impose a disciplinary sanction on respondent. But We feel that disbarment is too harsh considering the circumstances of the case. We hold that suspension from the practice of law for a period of one (1) year should be imposed on respondent for the aforestated misconduct.

ACCORDINGLY, respondent Faustino F. Tugade is hereby SUSPENDED from the practice of law for a period of one (1) year, effective from receipt of this resolution.

Let a copy of this resolution be furnished to the Bar Confidant and the Integrated Bar of the Philippines and spread on the personal records of respondent.

SO ORDERED.

Fernan, C.J., Narvasa, Melencio-Herrera, Gutierrez, Jr., Cruz, Paras, Feliciano, Gancayco, Padilla, Bidin, Sarmiento, Griño-Aquino, Medialdea and Regalado, JJ., concur.

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Republic of the PhilippinesSUPREME COURT

Manila

EN BANC

A.M. No. 1311 July 18, 1991

RAMONA L. VDA. DE ALISBO and NORBERTO S. ALISBO, petitioners, vs.ATTY. BENITO JALANDOON, SR., respondent.

GRIÑO-AQUINO, J.:

A verified complaint for disbarment was filed with then Secretary of National Defense Juan Ponce Enrile on January 2, 1974, by Ramona L. Vda. de Alisbo and Norberto S. Alisbo against their former counsel, Attorney Benito Jalandoon, Sr., charging him with deceit, malpractice, and professional infidelity. The complaint was referred to this Court on February 5, 1974.

After the complainants had submitted the required number of copies of their complaint, the respondent was ordered to file his answer thereto which he did on June 5, 1974.

On August 20, 1974, the complainants filed a reply.

On August 28, 1974, the Court referred the complaint to the Solicitor General for investigation, report and recommendation. On February 2, 1990, or after sixteen (16) years, the Solicitor General submitted his report to the Court, together with the transcripts of stenographic notes taken at the investigation and folders of exhibits submitted by the parties.

The facts of the case, as found by the Solicitor General, are the following:

On March 16, 1970, Ramon Alisbo engaged respondent Attorney Benito Jalandoon, Sr., as his counsel to commence an action to recover his share of the estate of the deceased spouses Catalina Sales and Restituto Gozuma which had been adjudicated to him under the judgment dated April 29, 1961 of the Court of First Instance of Negros Oriental in Civil Case No. 4963, because Alisbo failed to file a motion for execution of the judgment in his favor within the reglementary five-year period (Sec. 6, Rule, 39, Rules of Court). The salient provisions of the Contract for Professional Services (Exhibit A) between Alisbo and Attorney Jalandoon were the following:

1. That respondent will decide whether or not to file a suit for the recovery of Ramon Alisbo's share or claim;

2. That respondent will shoulder all expenses of litigation; and

3. As attorney's fees, respondent will be paid fifty per cent (50%) of the value of the property recovered.

On April 18, 1970, respondent prepared a complaint for revival of the judgment in Civil Case No. 4963 but filed it only on September 12,

1970 on five (5) months later. It was docketed as Civil Case No. 9559, entitled: "Ramon S. Alisbo, Teotimo S. Alisbo and Pacifico S. Alisbo vs. Carlito Sales, in his own capacity and as Judicial Administrator of the deceased Pedro Sales." The complaint was signed by respondent alone. However, no sooner had he filed the complaint than he withdrew it and filed in its stead (on the same day and in the same case) a second complaint dated August 31, 1970, with Ramon S. Alisbo as the lone plaintiff, praying for the same relief. Teotimo S. Alisbo and Pacifico S. Alisbo were excluded as plaintiffs and were impleaded as defendants instead. Attorneys Bernardo B. Pablo and Benito Jalandoon, Sr. (herein respondent) signed as counsel.

On December 8, 1971, an amended complaint was filed wherein the plaintiffs were: Ramon S. Alisbo, assisted by his judicial guardian, Norberto S. Alisbo, and eight (8) others, namely: Pacifico S. Alisbo, Ramona Vda. de Alisbo and Ildefonso, Evangeline, Teotimo, Jr., Reynaldo, Elizabeth and Teresita, all surnamed Alisbo. The amended complaint was signed by Attorney Bernardo B. Pablo alone as counsel of the plaintiffs.

On August 21, 1973, defendant Carlito Sales filed a Motion to Dismiss the complaint on the ground that the action for revival of judgment in Civil Case No. 4963 had already prescribed (Exh. 21). Plaintiffs filed an Opposition to the Motion to Dismiss (Exh. 22).

On October 3, 1973, the Court of First Instance of Negros Occidental dismissed the complaint on the ground of prescription as the judgment in Civil Case No. 4963 became final on May 30, 1961 yet, and, although a complaint for revival of said judgment was filed by Ramon Alisbo on September 12, 1970, before the ten-year prescriptive period expired, that complaint was null and void for Ramon Alisbo was insane, hence, incompetent and without legal capacity to sue when he instituted the action. The subsequent filing of an Amended Complaint on December 8, 1972, after the statutory limitation period had expired, was too late to save the plaintiffs right of action. Thereafter, nothing more was done by any of the parties in the case.

On January 2, 1974, the complainants charged respondent Attorney Benito Jalandoon, Sr. with having deliberately caused the dismissal of Civil Case No. 9559 and with having concealed from them the material fact that he had been the former legal counsel of Carlito Sales, their adversary in the probate proceedings. The respondent filed a general denial of the charges against him.

When Ramon S. Alisbo engaged the services of Attorney Jalandoon to enforce the decision in Civil Case No. 4963, that decision was already nine (9) years old, hence, it could no longer be executed by mere motion (Sec. 6, Rule 39, Rules of Court). Complainants had only about a year left within which to enforce the judgment by an independent action.

Ramon Alisbo was already insane or incompetent when he hired Attorney Jalandoon to file Civil Case No. 9559 for him. Attorney Jalandoon concealed from Alisbo the fact that he (Atty. Jalandoon) had been the former counsel of Carlito Sales in the probate proceedings where Alisbo and Sales had litigated over their shares of the inheritance.

However, according to Attorney Jalandoon, it was only on October 6, 1972, when Civil Case No. 9559 was called for pre-trial, that he discovered his previous professional relationship with Sales. At that time, the ten-year prescriptive period for revival of the judgment in favor of Alisbo had already expired. He thereupon asked Alisbo's permission to allow him (Jalandoon) to withdraw from the case. He also informed

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the court about his untenable position and requested that he be allowed to retire therefrom. His request was granted.

In his report to the Court, the Solicitor General made the following observations:

Evident from the foregoing is the fact that in handling the case for Ramon S. Alisbo which eventually led to its dismissal, respondent committed several errors, among which are:

1. He did not verify the real status of Ramon Alisbo before filing the case. Otherwise, his lack of capacity to sue would not have been at issue.

2. He postponed the motion to revive judgment and gave way instead to a motion to resolve pending incidents in Civil Case 4963. In doing so, he frittered away precious time.

3. He dropped Ramon Alisbo's co-plaintiffs and impleaded them as defendants. Otherwise, the complaint would have been defective only in part.

Had not respondent committed the above mistakes, Civil Case No. 9559 in all probability would not have been dismissed on the ground of prescription. (pp. 9-10, Solicitor General's Report.)

While the Solicitor General does not believe that Attorney Jalandoon's mistakes in handling Alisbo's case were deliberate or made with malice aforethought because there is no "proof of collusion or conspiracy between respondent and those who would benefit from the dismissal of Civil Case No. 9559 . . . and that, on the other hand, respondent stood to gain substantially (50% of the amount recovered) if he had succeeded in having the judgment revived and executed" (pp. 10-11, Solicitor General's Report), still those errors are so gross and glaring that they could not have resulted from mere negligence or lack of due care.

Attorney Jalandoon's pretense that he did not know before the pre-trial that the Sales defendants had been his clients in the past, is unbelievable because:

1. Before he filed the complaint for revival of judgment, he had had several interviews with Ramon S. Alisbo and Norberto Alisbo regarding Civil Case No. 4963.

2. He must have done some research on the court records of Civil Case No. 4963, so he could not have overlooked his own participation in that case as counsel for Carlito Sales, et al.

3. To prepare the complaint for revival of judgment (Civil Case No. 9559), he had to inform himself

about the personal circumstances of the defendants-Carlito Sales, et al. The fact that they had been his clients could not have eluded him.

In view of his former association with the Saleses, Attorney Jalandoon, as a dutiful lawyer, should have declined the employment proffered by Alisbo on the ground of conflict of interest. Had he done that soon enough, the Alisbos (herein complainants) would have had enough time to engage the services of another lawyer and they would not have lost their case through prescription of the action.

The actuations of respondent attorney violated Paragraphs 1 and 2, No. 6 of the Canons of Professional Ethics which provide:

6. ADVERSE INFLUENCE AND CONFLICTING INTEREST

It is the duty of a lawyer at the time of retainer to disclose to the client all the circumstances of his relations to the parties, and any interest in or connection with the controversy, which might influence the client in the selection of counsel.

It is unprofessional to represent conflicting interests, except by express consent of all concerned given after a full disclosure of the facts. Within the meaning of this canon, a lawyer represents conflicting interests when, in behalf of one client, it is his duty to contend for that which duty to another client requires him to oppose. (pp. 14-15, Solicitor General's Report.)

The impression we gather from the facts is that Attorney Jalandoon used his position as Alisbo's counsel precisely to favor his other client, Carlito Sales, by delaying Alisbo's action to revive the judgment in his favor and thereby deprive him of the fruits of his judgment which Attorney Jalandoon, as Sales' counsel, had vigorously opposed. Thus, although Atty. Jalandoon prepared Alisbo's complaint for revival of judgment on April 18, 1970, he delayed its filing until September 12, 1970. He postponed filing the action by asking the Court instead to resolve pending incidents in said Civil Case No. 4963. By doing that, he frittered away what little time was left before the action would prescribe. The original complaint which he filed in the names of Ramon Alisbo and his brothers was onlypartially defective because of Ramon's incompetence. By dropping the other plaintiffs, leaving alone the incompetent Ramon to prosecute the action, respondent made the second complaint wholly defective and ineffectual to stop the running of the prescriptive period.

After filing the complaint, Attorney Jalandoon sat on the case. While he allegedly found out about Ramon Alisbo's insanity on July 17, 1971 only, he amended the complaint to implead Alisbo's legal guardian as plaintiff on December 8, 1971 only, or almost five (5) months later. By that time the prescriptive period had run out.

The surrounding circumstances leave us with no other conclusion than that Attorney Jalandoon, betrayed his client Ramon Alisbo's trust and did not champion his cause with that wholehearted fidelity, care and devotion that a lawyer is obligated to give to every case that he accepts from a client. There is more than simple negligence resulting in the extinguishment and loss of his client's right of action; there is a hint of duplicity and lack of candor in his dealings with his client, which call for the exercise of this Court's disciplinary power.

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The Honorable Solicitor General who conducted the investigation of this case found respondent Attorney Benito Jalandoon, Sr. guilty of serious misconduct and infidelity. Although the Solicitor General recommended the suspension of respondent Attorney Benito Jalandoon Sr. from the practice of law for a period of one (1) year, the Court, after due deliberation, decided to suspend him for a period of two (2) years from the finality of this decision.

IT IS SO ORDERED.

Separate Opinions

FELICIANO, J., concurring and dissenting:

I agree with the conclusion of the Court that respondent Atty. Benito Jalandoon, Sr. was guilty of serious misconduct and infidelity. I, however, believe that the penalty of suspension for a period of two (2) years from the practice of law is not commensurate with the very serious character of the misconduct and infidelity of which the Court has found him guilty.

That misconduct was not an ordinary act of placing himself in a conflict of interest situation. Respondent attorney in this case not only acted where he had a clear conflict of interest but also, and worst, so acted as to in effect destroy the legal rights which pertained to the complainants. As pointed out by the Court, respondent attorney delayed the filing of the complaint for the Alisbos for revival of judgment and

by doing that, he [respondent attorney] frittered away what little time was left before the action would prescribe. The original complaint which he filed in the names of Ramon Alisbo and his brothers was only partially defective because of Ramon's incompetence. By dropping the other plaintiffs leaving alone the incompetent Ramon to prosecute the action, respondent made the second complaint wholly defective and ineffectual to stop the running of the prescriptive period.

Thus, there was here a utilization of the lawyer's craft and profession to defeat and dissolve the rights of one client for the benefit of the other client. This is infidelity to a client's cause in a particularly aggravated form, the use of the professional knowledge and technique deliberately to harm a client. Those who deal with members of the legal profession have the right to expect not just a reasonable amount of professional learning and competence but also whole-hearted loyalty to the client's cause, of course, within the bounds of law. A client must be able to deal with his attorney free from the intolerable apprehension that such attorney may, at some other time, turn around, not just to betray the client's confidence, but also deliberately to destroy the very rights that the client went to him in the first place to defend and prosecute.

I believe that the penalty justly merited by respondent in this case is suspension from the practice of law for five (5) years or outright disbarment and vote accordingly.

Melencio-Herrera, J., concurring.

Republic of the PhilippinesSUPREME COURT

Manila

EN BANC

G.R. No. L-32994 October 29, 1971

THE PEOPLE OF THE PHILIPPINES, plaintiff-appellee, vs.GAUDENCIO INGCO, defendant-appellant. IN RE ALFREDO R. BARRIOS, respondent.

Office of the Solicitor General for plaintiff-appellee.Alfredo R. Barrios for defendant-appellant.FERNANDO, J.:

Respondent Alfredo R. Barrios, a member of the Philippine Bar, who was appointed counsel de oficio for the accused in this case, Gaudencio Ingco, sentenced to death on September 28, 1970 for the crime of rape with homicide, was required in a resolution of this Court

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on September 9, 1971 to show cause within ten days why disciplinary action should not be taken against him for having filed fifteen days late a motion for the extension of time for submitting the brief for appellant Ingco. The explanation came in a manifestation of September 16, 1971. It was therein stated that respondent "was then busy with the preparation of the brief of one Benjamin Apelo pending in the Court of Appeals; that while he had made studies in preparation for the brief in this case, during such period he had to appear before courts in Manila, Quezon City, Pasay City, Bulacan and Pampanga; and that likewise he did file, on July 27, 1971, motions for extension in the aforesaid case of Benjamin Apelo with the Court of Appeals, which motions were duly granted. He would impress on this Court then that he was misled into assuming that he had also likewise taken the necessary steps to file a motion for extension of time for the submission of his brief in this case by the receipt of the resolution from the Court of Appeals granting him such extension.

Clearly, it is a lame excuse that respondent did offer. By his own confession, he was woefully negligent. Considering that the accused is fighting for his life, the least that could be expected of a counsel de oficio is awareness of the period within which he was required to file appellant's brief. The mere fact that according to him his practice was extensive, requiring his appearance in courts in Manila and environs as well as the provinces of Bulacan and Pampanga, should not have lessened that degree of care necessary for the fulfillment of his responsibility. What is worse is that by sheer inattention, he would confuse the proceedings in a matter pending before the Court of Appeals with this present case. Such grave neglect of duty is deserving of severe condemnation. It is clearly unworthy of membership in the Bar which requires dedication and zeal in the defense of his client's rights, a duty even more exacting when one is counsel de oficio. On such an occasion, the honor and respect to which the legal profession is entitled demand the strictest accountability of one called upon to defend an impoverished litigant. He who falls in his obligation then has manifested a diminished capacity to be enrolled in its ranks.

WHEREFORE, respondent Alfredo R. Barrios is severely reprimanded, this reprimand to be entered in his record.

Republic of the PhilippinesSUPREME COURT

Manila

EN BANC

A.M. Case No. 3195. December 18, 1989

MA. LIBERTAD SJ CANTILLER, complainant, vs.ATTY. HUMBERTO V. POTENCIANO, respondent.

Eduardo Cabreros, Jr. for complainant.

R E S O L U T I O N

PER CURIAM

Public interest requires that an attorney exert his best efforts and ability in the prosecution or defense of his client's cause. A lawyer who performs that duty with diligence and candor not only protects the interests of his client; he also serves the ends of justice, does honor to the bar and helps maintain the respect of the community to

the legal profession. This is so because the entrusted privilege to practice law carries with it the correlative duties not only to the client but also to the court, to the bar or to the public. That circumstance explains the public concern for the maintenance of an untarnished standard of conduct by every attorney towards his client. 1

Subject of this administrative complaint is Humberto V. Potenciano, a practicing lawyer and a member of the Philippine Bar under Roll No. 21862. He is charged with deceit, fraud, and misrepresentation, and also with gross misconduct, malpractice and of acts unbecoming of an officer of the court.

The essential facts are as follows: 2

Complainant herein is the sister of Peregrina Cantiller, defendant in an action for "ejectment" docketed as Civil Case No. 6046 before the Metropolitan Trial Court of Manila, Branch 57, San Juan, Metro Manila.

Another action, likewise involving Peregrina but this time as plaintiff, was then pending before the Regional Trial Court, Branch 168, Pasig, Metro Manila docketed as Civil Case No. 54117 for "reconveyance with damages." Both actions involve the apartment unit being rented by complainant and her sister.

When the two cases were concluded, Peregrina came out the losing party. Civil Case No. 54117 for reconveyance was ordered dismissed by the Regional Trial Court on June 8, 1987 while Civil Case No. 6046 for ejectment was decided by the Metropolitan Trial Court against her.

On October 8, 1987 pursuant to the writ of execution issued in Civil Case No. 6046 for ejectment, complainant and Peregrina were served a notice to vacate the rented premises within four (4) days from receipt of notice.

Desperate and at a loss on what to do, they consulted a certain Sheriff Pagalunan, on the matter. Pagalunan, in turn, introduced them to herein respondent. After such introduction, the parties "impliedly agreed" that respondent would handle their case. Forthwith, a petition entitled "Annulment of Judgment, Annulment of Sale and Damages with prayer for Preliminary Injunction and/or Status Quo Order, etc." was prepared by respondent to forestall the execution of the order to vacate in Civil Case No. 6046.

In the afternoon of October 9,1987, the complainant was made to sign by respondent what she described as a "[h]astily prepared, poorly conceived, and haphazardly composed 3 petition for annulment of judgment. Complainant alleges that respondent promised her that the necessary restraining order would be secured if only because the judge who would hear the matter was his "katsukaran" (close friend).

Thereupon, the petition was filed with the Regional Trial Court, Branch 153, Pasig, Metro Manila and docketed as Civil Case No. 55118. Respondent demanded from the complainant one thousand pesos (P l,000.00) as attorney's fee which the latter paid that same afternoon.

However, when the case was raffled and assigned to Branch 153, the presiding judge asked respondent to withdraw as counsel in the case on the ground of their friendship.

On October 11, 1987, respondent went to the house of complainant and asked her to be ready with two thousand pesos (P 2,000.00) to be

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given to another judge who will issue the restraining order in the ejectment case (Civil Case No. 6046). Complainant and her sister were only able to raise the amount of one thousand pesos which they immediately gave to respondent.

Later respondent informed the complainant and her sister that he could not locate the judge who would issue the restraining order. The parties, then, instead went to the Max's Restaurant where respondent ordered some food - including two plastic bags of food allegedly to be given to the judge who would issue the restraining order. At this juncture, respondent asked for the remaining balance of the two thousand pesos (P 2,000.00) which he earlier demanded. Complainant gave her last money-a ten dollar ($ 10.00) bill.

Sometime after the filing of Civil Case No. 55118, respondent informed complainant and Peregrina that there was a need to file another case with the Regional Trial Court to enable them to retain possession of the apartment. For this purpose, respondent told complainant to prepare the amount of Ten Thousand Pesos (P 10,000.00) allegedly to be deposited with the Treasurer's Office of Pasig as purchase price of the apartment and another one thousand pesos (P 1,000.00) to cover the expenses of the suit. Respondent stressed to the complainant the need and urgency of filing the new complaint.

Complainant and Peregrina raised the said amounts through the kindness of some friends and relatives. On October 26,1987, the money was handed over to the respondent.

On the same date, a complaint for "Specific Performance, Annulment of Simulated or Spurious Sale with Damages," later docketed as Civil Case No. 55210, was filed by respondent with the Regional Trial Court, Branch 165, Pasig, Metro Manila.

At the hearing of the preliminary injunction in Civil Case No. 55118 on October 30, 1987, respondent, contrary to his promise that he would secure a restraining order, withdrew his appearance as counsel for complainant. Complainant was not able to get another lawyer as replacement. Thus, no restraining order or preliminary injunction was obtained. As a consequence, the order to vacate in Civil Case No. 6046 was eventually enforced and executed.

Sometime thereafter, it came to complainant's knowledge that there was really no need to make a deposit of ten thousand pesos (P l0,000.00) relative to Civil Case No. 55210. After further inquiry, she found out that in fact there was no such deposit made. Thus, on December 23,1987, complainant sent a demand letter to respondent asking for the return of the total amount of eleven thousand pesos (P 11,000.00) which the former earlier gave to the latter. However, this letter was never answered and the money was never returned. Hence, complainant lodged this administrative complaint against herein respondent.

Meanwhile, on December 29,1987, the Regional Trial Court, Branch 153, dismissed Civil Case No. 55118 for failure to state a cause of action. 4 On January 20,1988, Civil Case No. 5521 0 was likewise dismissed for being identical with Civil Case No. 55118. 5

Respondent in his answer contends that the filing of Civil Cases Nos. 55118 and 55210 was done in good faith and that the allegations of complainant relative to the administrative charge against him are all lies, product of one's imagination and only intended to harrass him. 6

This Court agrees that the petitions in Civil Cases Nos. 55118 and 55210 appear to be poorly prepared and written. having represented

himself capable of picking up the cudgels for the apparently lost cause of complainant respondent should have carefully prepared the pleadings if only to establish the justness of his representation. The little time involved is no excuse. Complainant reposed full faith in him. His first duty was to file the best pleading within his capability. Apparently respondent was more interested in getting the most out of the complainant who was in a hopeless situation. He bragged about his closeness to the judge concerned in one case and talked about the need to "buy" the restraining order in the other. Worse still he got P 10,000.00 as alleged deposit in court which he never deposited. Instead he pocketed the same. The pattern to milk the complainant dry is obvious.

When a lawyer takes a client's cause, he thereby covenants that he will exert all effort for its prosecution until its final conclusion. The failure to exercise due diligence or the abandonment of a client's cause makes such lawyer unworthy of the trust which the client had reposed on him. The acts of respondent in this case violate the most elementary principles of professional ethics . 7

The Court finds that respondent failed to exercise due diligence in protecting his client's interests. Respondent had knowledge beforehand that he would be asked by the presiding judge in Civil Case No. 55118 to withdraw his appearance as counsel by reason of their friendship. Despite such prior knowledge, respondent took no steps to find a replacement nor did he inform complainant of this fact.

Even assuming that respondent had no previous knowledge that he would be asked to withdraw, the record is quite clear that four (4) days prior to the hearing of the preliminary injunction in Civil Case No. 55118 respondent already filed a motion therein withdrawing as complainant's counsel interposing as reason therefor his frequent attacks of pain due to hemorrhoids. Despite this void, respondent failed to find a replacement. He did not even ask complainant to hire another lawyer in his stead. 8

His actuation is definitely inconsistent with his duty to protect with utmost dedication the interest of his client and of the fidelity, trust and confidence which he owes his client. 9 More so in this case, where by reason of his gross negligence complainant thereby suffered by losing all her cases.

The filing of Civil Case No. 55210 on October 26, 1987, the same day that he had already filed a motion to withdraw as counsel for complainant in Civil Case No. 55118, reveals his lack of good faith as an advocate. He also failed to appear for the complainant in said case. It was all a show to get more money from her. This adversely reflects on his fitness to practice law. When confronted with this evident irregularity, he lamely stated that while he did not physically appear for complainant he nevertheless prepared and drafted the pleadings.

His services were engaged by complainant hoping that the property subject of the ejectment proceeding would be returned to her. In fact, it was respondent who persuaded complainant that the filing of these two cases simultaneously were the means by which this objective can be achieved. His duty was not only to prepare the pleadings but to represent complainant until the termination of the cases. This he failed to do.

His representation that there was an immediate need to file Civil Case No. 55210 when he already knew that he could no longer physically handle the same is an act of deception of his client. 10 It shows lack of fidelity to his oath of office as a member of the Philippine bar.

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The allegation of respondent that the ten thousand pesos (P 10,000.00) was given to him as fee for his services, is simply incredible. Indeed, such amount is grossly disproportionate with the service he actually rendered. 11 And his failure to return even a portion of the amount upon demand of complainant all the more bolsters the protestation of complainant that respondent does not deserve to remain as an officer of the court.

Lawyers are indispensable part of the whole system of administering justice in this jurisdiction. At a time when strong and disturbing criticisms are being hurled at the legal profession, strict compliance with one's oath of office and the canons of professional ethics is an imperative.

Lawyers should be fair, honest, respectable, above suspicion and beyond reproach in dealing with their clients. The profession is not synonymous with an ordinary business proposition. It is a matter of public interest.

WHEREFORE, after considering the entirety of the circumstances present in this case, this Court finds Atty. Humberto V. Potenciano to be guilty of the charges against him and hereby SUSPENDS him from the practice of law for an indefinite period until such time he can demonstrate that he has rehabilitated himself as to deserve to resume the practice of law.

Finally, respondent is hereby ordered to return to complainant herein the sum of eleven thousand pesos (P11,000.00) with legal interest from the date of this resolution until it is actually returned.

SO ORDERED.

Fernan, C.J., Narvasa, Melencio-Herrera, Gutierrez Jr., Cruz, Paras, Feliciano, Gancayco, Padilla, Bidin, Sarmiento, Cortes, Griño-Aquino, Medialdea and Regalado, JJ., concur.

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Republic of the PhilippinesSUPREME COURT

Manila

EN BANC

A.C. No. 7922 October 1, 2013

MARY ANN T.MATTUS, Complainant, vs.ATTY. ALBERT T. VILLASECA, Respondent.

D E C I S I O N

PER CURIAM:

Before us is a complaint for disbarment filed by complainant Mary Ann T. Mattus against Atty. Albert T. Villaseca for gross and inexcusable negligence in handling Criminal Case No. 10309-02.

Background Facts

The complainant, German Bernardo D. Mattus and Dexter Aligan were the accused in Criminal Case No. 10309-02 – a case for estafa thru falsification of public document filed in the Regional Trial Court (RTC), Branch 20, Imus, Cavite. The complainant and her husband, German, engaged the services of Atty. Villaseca to represent them in the proceedings. The complainant maintained that she and German were convicted due to Atty. Villaseca’s gross and inexcusable negligence in performing his duties as their counsel.

In her complaint-affidavit,1 the complainant alleged, among others, that Atty. Villaseca: (1) was often absent during court hearings but still collected appearance fees; (2) frequently sought the postponement of trial when he was present; (3) failed to ask the RTC to direct a National Bureau of Investigation expert to examine the signatures of the spouses Leslie and Zuraida Porter2 in the special power of attorney (SPA); (4) failed to file a demurrer to evidence despite having been granted sufficient time by the RTC to submit one; (5) failed to present evidence on behalf of the defense, and only filed a memorandum; (6) did not inform her and German of the dates of the presentation of defense evidence and the promulgation of judgment; and (7) erroneously indicated the wrong case number in the notice of appeal. According to the complainant, Atty. Villaseca’s negligence in handling the case resulted in her own and her husband’s conviction.

In the Court’s Resolution3 of July 16, 2008, we required Atty. Villaseca to comment on the complaint.

On September 10, 2008, Atty. Villaseca filed his comment,4 refuting the allegations against him. Atty. Villaseca explained that he made known to the complainant that the testimony of a handwriting expert was necessary only if the prosecution would be able to produce the original copy of the SPA. Atty. Villaseca also claimed that his absences during the hearings, as well as his numerous motions for postponement, were justified and were never intended for delay. He denied having collected appearance fees when he did not attend the scheduled hearings, and maintained that the fees he received were intended to compensate him for his services in the other cases filed by the complainant. Atty. Villaseca further claimed that he immediately corrected the case number in the notice of appeal when he discovered this error.

In a Resolution5dated October 15, 2008, we referred the case to the Integrated Bar of the Philippines (IBP) for investigation, report and recommendation.

The IBPs’ Report and Recommendation

In his Report and Recommendation6 dated September 16, 2009,Investigating Commissioner Salvador B. Hababag recommended that Atty. Villaseca be suspended for six (6) months from the practice of law.

Commissioner Hababag ruled that Atty. Villaseca’s reckless and gross negligence deprived his clients of due process; his actuations in the criminal case showed utter disregard for his clients’ life and liberty. Commissioner Hababag explained that Atty. Villaseca failed to file a demurrer to evidence despite the sufficient length of time that had been given to him by the RTC to submit this pleading, and waived his right to present evidence for the defense, opting instead to file a memorandum only. Commissioner Hababag concluded that Atty. Villaseca’s failure to properly attend to the interests of his clients led to their conviction.

In Resolution No. XIX-2011-2517 dated May 14, 2011, the IBP Board of Governors adopted and approved the findings of the Investigating Commissioner, but increased Atty. Villaseca’s period of suspension from the practice of law from six (6) months to one (1) year.

Our Ruling

After a careful review of the records, the Court finds the evidence on record sufficient to support the IBP’s findings. We, however, increase Atty. Villaseca’s period of suspension from the practice of law from one (1) year to five (5) years.

We stress at the outset that a lawyer "is expected to exert his best efforts and ability to preserve his client's cause, for the unwavering loyalty displayed to his client likewise serves the ends of justice."8 Once a lawyer agrees to take up the cause of a client, the lawyer owes fidelity to such cause and must always be mindful of the trust and confidence reposed in him. He owes entire devotion to the interest of the client, warm zeal in maintenance and defense of his client’s rights, and the exertion of his utmost learning and ability to the end that nothing be taken or withheld from his client, save by the rules of law, legally applied. A lawyer who performs his duty with diligence and candor not only protects the interest of his client; he also serves the ends of justice, does honor to the bar, and helps maintain the respect of the community to the legal profession.9

The records of the present case show that Atty. Villaseca had been grossly remiss in handling Criminal Case No. 10309-02. To recall, Atty. Villaseca requested for time to file demurrer to evidence after the prosecution had rested its case. In its order 10 of July 1, 2004, the RTC gave him 20 days from receipt of the transcript of stenographic notes within which to file a demurrer to evidence. Atty. Villaseca, however, did not file a demurrer to evidence, without offering any explanation why he failed to do so. As a result, the RTC issued an order 11 stating that Atty. Villaseca "is deemed to have waived his right to file the said pleading."

To our mind, Atty. Villaseca’s failure to submit a demurrer to evidence to explain such omission constitutes inexcusable negligence; it showed his lack of devotion and zeal in preserving his clients’ cause. We point out that nine months had lapsed from the time the RTC granted Atty. Villaseca 20 days to file the demurrer to the time it ruled that he was deemed to have waived his right to file this pleading. Clearly, Atty.

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Villaseca’s actuations violated Rule 12.03 of the Code of Professional Responsibility which states that "a lawyer shall not, after obtaining extensions of time to file pleadings, memoranda or briefs, let the period lapse without submitting the same or offering an explanation for his failure to do so."

The records further disclosed that after Atty. Villaseca’s failure to file a demurrer to evidence, the RTC set the initial presentation of defense evidence on May 9, 2005. However, this hearing was postponed thrice: the May 9, 2005 hearing was reset to August 8, 2005 due to Atty. Villaseca’s failure to appear;12 the August 8, 2005 hearing was reset to November 17, 2005 upon Atty. Villaseca’s motion;13 and the November 17, 2005 hearing was reset to March 1, 2006 because of Atty. Villaseca’s manifestation that his intended first witness was unavailable.14 During the March 1, 2006hearing, the respondent manifested that the defense would no longer present any evidence, and moved that he be given time to file a memorandum.15

We point out that the prosecution rested its case on July 1, 2004; yet Atty. Villaseca waited until March 1, 2006 only to manifest that he would no longer present any evidence. We are at a loss why Atty. Villaseca chose not to present any evidence for the defense, considering that the accused wanted and were ready to take the witness stand. As a result, the testimony of the lone prosecution witness remained uncontroverted. To make matters worse, Atty. Villaseca directed German to attend the hearing on June 6, 2007without informing him that it was already the date of the promulgation of judgment.1âwphi1

The Code of Professional Responsibility states that "a lawyer owes fidelity to the cause of his client and he shall be mindful of the trust and confidence reposed in him."16 It further mandates that "a lawyer shall serve his client with competence and diligence."17 It also states that "a lawyer shall not neglect a legal matter entrusted to him, and his negligence in connection therewith shall render him liable."18

Atty. Villaseca’s failure to present any testimonial, object or documentary evidence for the defense reveals his lack of diligence in performing his duties as an officer of the Court; it showed his indifference towards the cause of his clients. Considering that the liberty and livelihood of his clients were at stake, Atty. Villaseca should have exerted efforts tore but the presented prosecution evidence. He could have presented the complainant and/or her husband to the witness stand, instead of just opting to file a memorandum. Or, at the very least, the reason for this move should have been fully explained to the clients, and later to the IBP and to this Court. But no such explanation ever came. We are thus left with the stark reality that Atty. Villaseca failed to file, despite the promise made to the lower court, a demurrer to evidence. After failing in this first line of defense for his clients, it should have been incumbent upon Atty. Villaseca to present evidence for the defense, but again, he unexplainably failed to do this, leaving the lower court with no evidence to appreciate except that of the prosecution, to the detriment of his clients’ cause.

We emphasize that while a lawyer has complete discretion on what legal strategy to employ in a case entrusted to him, he must present every remedy or defense within the authority of the law to support his client’s cause. A memorandum, no matter how lengthy, should not be made a substitute for testimonial, object or documentary evidence, more so in a criminal case where a conviction could lead to dire consequences. In saying so, we are not insinuating that the RTC decision would have tilted in favor of the defense had Atty. Villaseca presented evidence; we simply stress that utmost fidelity and attention are demanded once counsel agrees to take the cudgels for his client's cause.

We again remind members of the bar to live up to the standards and norms expected of the legal profession by upholding the ideals and principles embodied in the Code of Professional Responsibility. A lawyer engaged to represent a client bears the responsibility of protecting the latter's interest with utmost diligence. It is his duty to serve his client with competence and diligence, and he should exert his best efforts to protect, within the bounds of the law, the interests of his client.19 A lawyer’s diligence and vigilance is more imperative in criminal cases, where the life and liberty of an accused is at stake. Verily, the entrusted privilege to practice law carries with it the corresponding duties, not only to the client, but also to the court, to the bar and to the public. As we explained in Spouses Bautista v. Atty. Arturo Cefra:20

The practice of law is a privilege bestowed by the State on those who show that they possess the legal qualifications for it. Lawyers are expected to maintain at all times a high standard of legal proficiency and morality, including honesty, integrity and fair dealing. They must perform their fourfold duty to society, the legal profession, the courts and their clients, in accordance with the values and norms of the legal profession as embodied in the Code of Professional Responsibility.

"The appropriate penalty on an errant lawyer depends on the exercise of sound judicial discretion based on the surrounding facts."21 Under the circumstances, we find that the IBP’s recommended penalty of one year’s suspension from the practice of law is not commensurate to Atty. Villaseca’s transgressions. His incompetence and appalling indifference to his duty to his client, the courts and society indicate a high degree of irresponsibility that casts dishonor on the legal profession.

The present case finds a close forerunner in Santeco v. Atty. Avance,22 where we suspended Atty. Luna B. Avance from the practice of law for five(5) years for being grossly remiss in the performance of her duties as counsel. In this cited case, the civil case entrusted to Atty. Avance was dismissed for failure to prosecute. During the pendency of her motion for reconsideration (which she had filed way beyond the reglementary period), she told her client that she would file a petition for certiorari before the CA to assail the dismissal of the civil case. She did not file this petition, but failed to inform her client of this omission. Moreover, Atty. Avance stopped appearing as counsel for her client without notifying the latter.

Atty. Villaseca’s negligence in the present case had much graver implications, as the legal matter entrusted to him involved not merely money or property, but the very liberty and livelihood of his clients. We stress that the moment Atty. Villaseca agreed to handle the complainant’s criminal case, he became duty-bound to serve his clients with competence and diligence, and to champion their cause with whole-hearted fidelity. By failing to afford his clients every remedy and defense that is authorized by the law, Atty. Villaseca fell short of what is expected of him as an officer of the Court. We cannot overstress the duty of a lawyer to uphold the integrity and dignity of the legal profession by faithfully performing his duties to society, to the bar, to the courts and to his clients.

All told, Atty. Villaseca showed a wanton and utter disregard to his clients’ cause; his failure to exercise due diligence in attending to their interest in the criminal case caused them grave prejudice. Under the circumstances, we find a five-year suspension from the practice of law to be a sufficient and appropriate sanction against him. The increased penalty serves the purpose of protecting the interest of the Court, the legal profession and the public.

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WHEREFORE premises considered, we find Atty. Albert T. Villaseca guilty of negligence, in violation of Rules 12.03 and 18.03 and Canon 17 of the Code of Professional Responsibility. He is hereby SUSPENDED from the practice of law for five (5) years, effective upon his receipt of this Decision, and STERNLY WARNED that a repetition of the same or similar offense will be dealt with more severely.

Let a copy of this Decision be furnished to the Office of the Bar Confidant, the Integrated Bar of the Philippines, and the Office of the Court Administrator for circulation to all the courts.

SO ORDERED.