Republic of the PhilippinesSUPREME COURT

Manila

THIRD DIVISION

A.C. No. 6155 March 14, 2006

MA. GINA L. FRANCISCO, JOSEPHINE S. TAN and CARLOS M. JOAQUIN, Complainants, vs.ATTY. JAIME JUANITO P. PORTUGAL, Respondent.

D E C I S I O N

TINGA, J.:

Complainants filed before this Court an affidavit-complaint1 on 15 August 2003 against Atty. Jaime Juanito P. Portugal (respondent) for violation of the Lawyer’s Oath, gross misconduct, and gross negligence. Complainants are related to petitioners in G.R. No. 152621-23 entitled SPO1 Ernest C. Francisco, SPO1 Donato F. Tan and PO3 Rolando M. Joaquin v. People of the Philippines, in whose behalf respondent filed the Petition for Review on Certiorari (Ad Cautelam) in the case.

The complaint against respondent originated from his alleged mishandling of the above-mentioned petition which eventually led to its denial with finality by this Court to the prejudice of petitioners therein.

The facts are as follows:

On 21 March 1994, SPO1 Ernesto C. Francisco, SPO1 Donato F. Tan and PO3 Rolando M. Joaquin (eventually petitioners in G.R. No. 152621-23, collectively referred to herein as the accused) were involved in a shooting incident which resulted in the death of two individuals and the serious injury of another. As a result, Informations were filed against them before the Sandiganbayan for murder and frustrated murder. The accused pleaded not guilty and trial ensued. After due trial, the Sandiganbayan2 found the accused guilty of two counts of homicide and one count of attempted homicide.

At that juncture, complainants engaged the services of herein respondent for the accused. Respondent then filed a Motion for Reconsideration with the Sandiganbayan but it was denied in a Resolution dated 21 August 2001. Unfazed by the denial, respondent filed an Urgent Motion forLeave to File Second Motion for Reconsideration, with the attached Second Motion for Reconsideration.3 Pending resolution by the Sandiganbayan, respondent also filed with this Court a Petition for Review on Certiorari (Ad Cautelam) on 3 May 2002.

Thereafter, complainants never heard from respondent again despite the frequent telephone calls they made to his office. When respondent did not return their phone inquiries, complainants went to respondent’s last known address only to find out that he had moved out without any forwarding address.

More than a year after the petition was filed, complainants were constrained to personally verify the status of thead cautelam petition as they had neither news from respondent about the case nor knowledge of his whereabouts. They were shocked to discover that the Court had already issued a Resolution4 dated 3 July 2002, denying the petition for late filing and non-payment of docket fees.

Complainants also learned that the said Resolution had attained finality and warrants of arrest5 had already been issued against the accused because respondent, whose whereabouts remained unknown, did nothing to prevent the reglementary period for seeking reconsideration from lapsing.

In his Comment,6 respondent states that it is of vital significance that the Court notes that he was not the original counsel of the accused. He only met the accused during the promulgation of the Sandiganbayan decision convicting the accused of two counts of homicide and one count of attempted homicide. He was merely requested by the original counsel to be on hand, assist the accused, and be present at the promulgation of the Sandiganbayan decision.

Respondent claims that there was no formal engagement undertaken by the parties. But only because of his sincere effort and in true spirit of the Lawyer’s Oath did he file the Motion for Reconsideration. Though admitting its highly irregular character, respondent also made informal but urgent and personal representation with the members of the Division of the Sandiganbayan who promulgated the decision of conviction. He asserts that because of all the efforts he put into the case of the accused, his other professional obligations were neglected and that all these were done without proper and adequate remuneration.

As to the ad cautelam petition, respondent maintains that it was filed on time. He stresses that the last day of filing of the petition was on 3 April 2002 and on that very day, he filed with this Court a Motion for Extension of Time to File Petition for Review,7 seeking an additional thirty (30) days to file the petition. Subsequently, on 3 May 2002, he filed the petition by registered mail andpaid the corresponding docket fees. Hence, so he concludes, it was filed within the reglementary period.

Soon thereafter, respondent recounted all the "herculean" efforts he made in assisting the accused for almost a year after the promulgation of the Sandiganbayan decision. He considered the fact that it was a case he had just inherited from the original counsel; the effect of his handling the case on his other equally important professional obligations; the lack of adequate financial consideration for handling the case; and his plans to travel to the United States to explore further professional opportunities. He then decided to formally withdraw as counsel for the accused. He wrote a letter to PO3 Rolando Joaquin (PO3 Joaquin), who served as the contact person between respondent and complainants, explaining his decision to withdraw as their counsel, and attaching the Notice to Withdraw which respondent instructed the accused to sign and file with the Court. He sent the letter through registered mail but unfortunately, he could not locate the registry receipt issued for the letter.

Respondent states that he has asked the accused that he be discharged from the case and endorsed the Notice of Withdrawal to PO3 Joaquin for the latter to file with the Court. Unfortunately, PO3 Joaquin did not do so, as he was keenly aware that it would be difficult to finda new counsel who would be as equally accommodating as respondent. Respondent suggests this might have been the reason for the several calls complainants made to his office.

On 9 February 2004, the Court resolved to refer the matter to the Integrated Bar of the Philippines (IBP) for investigation, report and recommendation.1awph!l.net

The case was assigned to Investigating Commissioner Leland R. Villadolid, Jr. (Commissioner Villadolid) who sent notices of hearing to the parties but of the three complainants, only complainant Carlos Joaquin appeared. Thus, in the mandatory conference held, the other two complainants were declared as having waived their rights to further participate in the IBP proceedings.8

The parties were directed to file their respective position papers and on 27 May 2005, Commissioner Villadolid submitted his Report and Recommendation finding respondent guilty of violation of the Code of Professional Responsibility9 and recommended the imposition of penalty ranging from reprimand to suspension of six (6) months.1awph!l.net10 On 12 November 2005, theBoard of Directors of the IBP resolved to adopt and approve Commissioner Villadolid’s recommendation to find respondent guilty and specifically to recommend his suspension for six (6) months as penalty.

The only issue to be resolved in the case at bar is, considering all the facts presented, whether respondent committed gross negligence or misconduct in handling G.R. No. 152621-23, which eventually led to the ad cautelam petition’s dismissal with finality.

After careful consideration of the records of the case, the Court finds the suspension recommended by the IBP proper.

In a criminal case like that handled by respondent in behalf of the accused, respondent has a higher duty to be circumspect in defending the accused for it is not only the property of the accused which stands to be lost but more importantly, their right to their life and liberty. As held inRegala v. Sandiganbayan:11

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 very delicate, exacting and confidential character, requiring a very high degree of fidelity and good faith, that is required by reason of necessity and public interest x x x .

It is also the strict sense of fidelity of a lawyer to his client that distinguishes him from any other profession in society. x x x12

At the onset, the Court takes notice that the ad cautelam petition was actually filed out of time. Though respondent filed with the Sandiganbayan an Urgent Motion for Leave to File Second Motion for Reconsideration with the attached Second Motion for Reconsideration, he should have known that a second motion for reconsideration is a prohibited pleading13 and it rests on thesound discretion of the Sandiganbayan to admit it or not. Thus, in effect, the motion did not toll the reglementary period to appeal. Having failed to do so, the accused had already lost their rightto appeal long before respondent filed his motion for extension. Therefore, respondent cannot now say he filed the ad cautelam petition on time. Also important to note is the allegation of complainants that the Sandiganbayan denied the second motion for reconsideration in its Resolution dated 7 February 2002. This respondent does not dispute.

As to respondent’s conduct in dealing with the accused and complainants, he definitely fell short of the high standard of assiduousness that a counsel must perform to safeguard the rights of his

clients. As aptly observed by Commissioner Villadolid, respondent had not been quite candid in his dealings with the accused or complainants. The Court notes that though respondent represented to the accused that he had changed his office address, still, from the examination of the pleadings14 he filed, it can be gleaned that all of the pleadings have the same mailing addressas that known to complainants. Presumably, at some point, respondent’s office would have received the Court’s Resolution dismissing the petition. Of course, the prudent step to take in thatsituation was to at least inform the client of the adverse resolution since they had constantly called respondent’s office to check the status of the case. Even when he knew that complainants had been calling his office, he opted not to return their calls.

Respondent professed an inkling that the several phone calls of complainants may have been about the letter he sent PO3 Joaquin regarding his desire to be discharged as counsel of the case. However, though aware of such likelihood, respondent still did not return their calls. Had hedone so, he and complainants could have threshed out all unresolved matters between them.

Had respondent truly intended to withdraw his appearance for the accused, he as a lawyer who is presumably steeped in court procedures and practices, should have filed the notice of withdrawal himself instead of the accused. At the very least, he should have informed this Court through the appropriate manifestation that he had already given instructions to his clients on the proper way to go about the filing of the Notice of Withdrawal, as suggested by Commissioner Villadolid. In not so doing, he was negligent in handling the case of the accused.

Certainly, respondent ought to know that he was the one who should have filed the Notice to Withdraw and not the accused. His tale that he sent a registered letter to the accused and gave them instructions on how to go about respondent’s withdrawal from the case defies credulity. It should have been respondent who undertook the appropriate measures for the proper withdrawal of his representation. He should not have relied on his client to do it for him if such was truly the case. Without the presentation of the alleged registry receipt (or the return card, which confirms the receipt of the mail by the recipient) of the letter he allegedly sent to PO3 Joaquin, the Court cannot lend credence to respondent’s naked claim, especially so that complainants have been resolute in their stand that they did not hear from respondent after the latter had filed the ad cautelam petition. He could relieve himself of his responsibility as counsel only first by securing the written conformity of the accused and filing it with the court pursuant to Rule 138, Section 26 of the Rules of Court.15

The rule in this jurisdiction is that a client has the absolute right to terminate the attorney-client relation at anytime with or without cause. The right of an attorney to withdraw or terminate the relation other than for sufficient cause is, however, considerably restricted. Among the fundamental rules of ethics is the principle that an attorney who undertakes to conduct an action impliedly stipulates to carry it to its conclusion. He is not at liberty to abandon it without reasonable cause. A lawyer’s right to withdraw from a case before its final adjudication arises only from the client’s written consent or from a good cause.16

We agree with Commissioner Villadolid that the dismissal of the ad cautelam petition was primarily due to the gross negligence of respondent. The Court has stressed in Aromin v. Boncavil17 that:

Once he agrees to take up the cause of the client, the lawyer owes fidelity to such cause and must always be mindful of the trust and confidence reposed in him. He must serve the client with competence and diligence, and champion the latter’s cause with wholehearted fidelity, care, and

devotion. Elsewise stated, he owes entire devotion to the interest of the client, warm zeal in the maintenance and defense of his client’s rights, and the exertion of the his utmost learning and ability to the end that nothing be taken or withheld from his client, save by the rules of law, legallyapplied. This simply means that his 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. If much is demanded from an attorney, it is 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, and to the public. 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.18

Respondent has time and again stated that he did all the endeavors he enumerated without adequate or proper remuneration. However, complainants have sufficiently disputed such claim when they attached in their position paper filed before the IBP a machine validated deposit slip inthe amount of P15,500.00 for the Metro Bank savings account of one Jaime Portugal with account number 7186509273.19 Respondent has neither admitted nor denied having claimed the deposited amount.

The Court also rejects respondent’s claim that there was no formal engagement between the parties and that he made all his efforts for the case without adequate and proper consideration. In the words of then Justice Panganiban (presently Chief Justice) in Burbe v. Atty. Magulta:20

After agreeing to take up the cause of a client, a lawyer owes fidelity to both cause and client, even if the client never paid any fee for the attorney-client relationship. Lawyering is not a business; it is a profession in which duty of public service, not money, is the primary consideration.21

Also to the point is another case where this Court ruled, thus:

A written contract 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. x x x 22

Hence, even if respondent felt under-compensated in the case he undertook to defend, his obligation embodied in the Lawyer’s Oath and the Code of Professional Responsibility still remains unwavering. The zeal and the degree of fervor in handling the case should neither diminish nor cease just because of his perceived insufficiency of remuneration.

Lastly, the Court does not appreciate the offensive appellation respondent called the shooting incident that the accused was engaged in. He described the incident, thus: "the accused police officers who had been convicted of [h]omicide for the ‘salvage’ of Froilan G. Cabiling and Jose M.Chua and [a]ttempted [h]omicide of Mario C. Macato."23 Rule 14.0124 of the Code of Professional Responsibility clearly directs lawyers not to discriminate clients as to their belief of the guilt of thelatter. It is ironic that it is the defense counsel that actually branded his own clients as being the culprits that "salvaged" the victims. Though he might think of his clients as that, still it is unprofessional to be labeling an event as such when even the Sandiganbayan had not done so.

The IBP Board of Governors recommended the suspension of respondent for six (6) months, the most severe penalty recommended by Commissioner Villadolid, but did not explain why such penalty was justified. In a fairly recent case where the lawyer failed to file an appeal brief which

resulted to the dismissal of the appeal of his client in the Court of Appeals, the Court imposed upon the erring lawyer the penalty of three (3) months’ suspension.25The Court finds it fit to impose the same in the case at bar.

WHEREFORE, premises considered, respondent is hereby SUSPENDED from the practice of law for three (3) months. Let a copy of the Resolution be furnished the Bar Confidant for appropriate annotation in the record of respondent.

SO ORDERED.

G.R. No. L-3455 July 31, 1951

THE PEOPLE OF THE PHILIPPINES, plaintiff-appellee, vs.SOTERO ULIP and ANDRES ULIP, defendants-appellants.

Augusto L. Valencia for appellants.First Assistant Solicitor General Roberto A. Gianzon, Solicitor Felix V. Makasiar and Solicitor Rafael P. Caniza for appellee.

BENGZON, J.:

Early in the night of May 24, 1949 Paulino Ulip, 72, was comfortably seated on a bed near the kitchen of his house in Tibanglin, Naujan, Mindoro. Suddenly and without warning he was shot several times with a carbine by a person who had stealthily approached the dwelling under coverof darkness. Paulino died on the spot.

After a few days, for some reason that does not appear Andres Ulip was arrested and after beingquestioned by Sgt. Martinez of the Constabulary, he admitted having conspired with Sotero Ulip and Alfonso Bergonio to kill the deceased. The latter (Bergonio) soon confessed, saying that, induced by Andres Ulip and Sotero Ulip, sons of Paulino, he committed the assassination, as he

was disgusted, like them, with his stinginess and unbearable disposition. The two brothers admitted their guilt in affidavits subscribed before the justice of the peace of the capital, Calapan.

Two informations were filed: one against Alfonso Bergonio for murder; another against Andres Ulip and Sotero Ulip for parricide. On a plea of guilty, Alfonso Bergonio was sentenced to cadenaperpetua and is now serving sentence. The two brothers pleaded not guilty, were tried and were convicted. Hence this appeal.

There is presently no question about the violent death of Paulino Ulip at the hands of Alfonso Bergonio. The carbine is marked Exh. A and Sgt. Exequiel Martinez, who investigated the case found in the scene of the crime one magazine with three rounds of ammunition and three empty shells. The only question is whether the two brothers did actually conspire with and induce Alfonso Bergonio to assassinate their aged father.

Presented as witness for the prosecution after he had been convicted of the murder, Alfonso Bergonio substantially repeated before the court the contents of his confession. He swore that heshot Paulino Ulip with the carbine given to him that night by Sotero Ulip, who had purchased it with money contributed by Andres Ulip; that upon delivering the gun to him, Sotero told him to shoot his father (Sotero's); that he complied with the suggestion of Sotero because he was slightly drunk; that after Paulino had died Sotero came and told him to report the death to Andres— which he did. it seems, however, that afraid of Andres Ulip — whom he described as a fightingcharacter — Alfonso Bergonio did not dare repeat some things be related about Andres in his confession Exh. F, to wit, that Andres had been chased, The month before, by Paulino Ulip armed with a bolo, and that Andres accompanied Sotero when the latter proceeded to buy the carbine.

Exequiel Martinez, Sergeant of the Philippine Constabulary, declared that he conducted the investigation of the bloody affair; that Andres and Sotero Ulip admitted their guilt as inducers of the crime, the latter saying "that he was the one who ordered Alfonso Bergonio to kill Paulino Ulip," because the old man was "very strict" and refused to give them (Andres and Sotero) their share of the lands; that Sotero also recounted the incident when his father Paulino had angrily chased Andres with a bolo in his hand. This officer further declared that he found the carbine in the possession of Sotero, who declared he had bought it for the purpose with money furnished by Andres. He also stated that according to Bergonio, the two brothers promised not to collect hisindebtedness if he would kill their father.

The confessions of Sotero Ulip and Andres Ulip are in the record as Exhibits D and E. The first states in substance that one day Andres Ulip and Alfonso Bergonio were chased out of their farmby Paulino Ulip armed with a bolo; that resenting the old man's bad temper, on May 22, 1949 Alfonso gave Sotero went to Andres and the three of them conspired to do away with Paulino; that Andres gave Sotero one hundred pesos with which to buy a rifle; that the next day Andres together with Sotero went to the barrio of Baruyan, Calapan but failed to purchase the gun; that afterwards Sotero returned to the same barrio and finally acquired a carbine, which he handed toAlfonso Bergonio a few minutes before the murderous assault; that the brothers were resentful oftheir father because he was stingy and was so hot-tempered that when provoked, he would pursue them with a bolo in his hand.

From the affidavit of Andres Ulip Exh. E it appears that Alfonso Bergonio was his second cousin. He admits in that statement that on May 22, 1949 Sotero and Alfonso went to see him to get money for a carbine with which to kill Paulino Ulip; that he gave the money one hundred pesos

saying "sila ang bahala" (meaning either "they could do it on their own responsibility" or "go ahead.") That statement, in our opinion, could mean nothing but approval, coming as it does froma son who is apprised of their intention to put his father to death. This admission coupled with thefact that he took no steps to prevent the deed or to dissuade the two conspirators (Sotero and Alfonso) and his silence in not immediately denouncing them to the authorities is proof — confirmatory of his oral admission to Sgt. Martinez — that he conspired to liquidate his unfortunate parent. The circumstance that immediately after the shooting Alfonso Bergonio reported the victim's death to Andres, is additional indication of the latter's participation in the conspiracy to kill. Anyway, he knowingly contributed the money to buy the fatal weapon; and that is sufficient to make him responsible as principal for having cooperated with an act without which the crime could not have been accomplished.1

Alfonso Bergonio has no reason falsely to implicate his two cousins, the accused herein. And their version about the confessions Exhibits D and E having been obtained thru violence and threats has been rightly rejected by the trial judge, because they refused to identify the officers who had allegedly tortured or threatened them, never mentioned the maltreatment to any of their relatives who visited them in jail, and the justice of the peace of Calapan before whom they executed the affidavits, positively asserted that they told him, when subscribing the documents, they were acting voluntarily and freely, without any duress.

In this connection we may advert to the point raised by appellant's attorney that, according to ourdecisions, to consider as principal by induction one who advises or incites another to perpetrate the offense it is essential to show that the advisor had a great ascendancy or great influence and that his words were so efficacious and powerful as to amount to moral coercion. Undoubtedly proof of such extremes is usually required to justify the conclusion that his words or advice actually moved the hands of the principal actor. But such proof would seem to be unnecessary where — as in this case — such principal actor admits having been so impelled, and says that heacted pursuant to a previous plan or conspiracy to kill, and a promise to condone his indebtedness.

In conclusion, these two prisoners are, without reasonable doubt, guilty as charged. The Solicitor-General suggests premeditation as aggravating circumstance. But that would be compensated by their lack of instruction.

Consequently, the penalty of life imprisonment imposed by the trial court is affirmed. But the sum of P1,500 fixed as indemnity should be raised to P6,000.2 With this modification the appealed judgment is affirmed, with costs against the appellants.

Paras, C. J., Feria, Pablo, Padilla, Tuason, Montemayor, Reyes and Jugo, JJ., concur.

[A.C. No. 5235. March 22, 2000]

FERNANDO C. CRUZ AND AMELIA CRUZ, complainants, vs. ATTY. ERNESTO C. JACINTO, respondents. Jurisä

R E S O L U T I O N

MELO, J.:

In their sworn complaint, spouses Fernando C. Cruz and Amelia Manimbo Cruz seek the disbarment of Atty. Ernesto C. Jacinto. The Integrated Bar of the Philippines, through Commissioner Jesulito A. Manalo of the Commissioner on Bar discipline, conducted an investigation. Thereafter, he submitted his Findings and Recommendation, thusly:

This is a disbarment case filed by the spouses Fernando and Amelia Cruz against Atty. Ernesto C. Jacinto. This case was filed with the Commission on Bar Discipline last 30 January 1991.

The evidence of the complainants show that sometime in June 1990, Atty. Ernesto Jacinto, lawyer of the couple in an unrelated case, requested the Cruz spouses for a loan in behalf of a certain Concepcion G. Padilla, who he claimed to be an old friend as she was allegedly in need of money. The loan requested was for PhP 285,000.00 payable after 100 days for PhP 360,000 to be secured by a real estate mortgage on a parcel of land located at Quezon City. Scä juris

The spouses, believing and trusting the representations of their lawyer that Padilla was a good risk, authorized him to start preparing all the necessary documents relative to the registration of the Real Estate Mortgage to secure the payment of the loan in favor of the Cruz spouses.

On 4 July 1990, the complainants agreed to the request of Atty. Jacinto and were presented by the latter with a Real Estate Mortgage Contract and a Transfer Certificate of Title No. 127275 in the name of Concepcion G. Padilla. The amount of PhP 285,000.00 was given by the spouses to the respondent in cash (PhP 270,000.00) and a PBCom check no. 713929 for PhP 15,000.00.

Upon maturity of the loan on 15 October 1990, the spouses demanded payment from Concepcion G. Padilla by going to the address given by the respondent but there proved to be no person by that name living therein. When the complainants verified the genuineness of TCT No. 127275 with Register of Deeds of Quezon City, it was certified by the said office to be a fake and spurious title. Further efforts to locate the debtor-mortgagor likewise proved futile. Jurisä sc

In their sworn affidavits given before the National Bureau of Investigation (NBI), the spouses claim that they relied much on the reassurances made by Atty. Jacinto as to Concepcion G. Padilla’s credit, considering that he was their lawyer.It was also their trust and confidence in Atty. Jacinto that made them decide to forego meeting the debtor-mortgagor.

The complainants’ evidence also included the sworn statements of Estrella Ermino-Palipada, the secretary of the respondent at the Neri Law Office, and Avegail Payos, a housemaid of Atty. Jacinto. Ms. Palipada stated that:

1. she was the one who prepared the Real Estate Mortgage Contract and the Receipt of the loan upon the instruction of the respondents;

2. she was a witness to the transaction and never once saw the person of Concepcion G. Padilla, the alleged mortgagor; and that

3. she was instructed by Atty. Jacinto to notarize the said contract by signing the name of one Atty. Ricardo Neri.

Avegail Payos, the housemaid of the respondent, in turn stated that she was the one who simulated the signature of one Emmanuel Gimarino, the Deputy Register of Deeds of Quezon City upon the instruction of Atty. Jacinto. This was done to make it appear that the real estate mortgage was registered and the annotation to appear at the back of the TCT as an encumbrance.

On 14 November 1997, a case for Estafa thru Falsification of Public documents under Art. 315 was filed against Atty. Jacinto. He was arrested and detained by the NBI.

The defense of the respondent, on the other hand, was embodied in his Answer with Motion to Dismiss filed with the Commission on Bar Discipline. Therein, he alleged that the criminal information for estafa thru falsification filed against him had already been dismissed because of the voluntary desistance of the complainants. MisjÓ uris

In his version of the facts, Atty. Jacinto averred that while he indeed facilitated theloan agreement between the Cruz spouses and Concepcion G. Padilla, he had no idea that the latter would give a falsified Certificate of Title and use it to obtain a loan. He claimed that he himself was a victim under the circumstances.

Respondent further alleged that he had not been remiss nor negligent in collecting the proceeds of the loan; that in fact, he had even advanced the full payment of the loan due to the complainants from his own savings, even if Concepcion G. Padilla had not yet paid, much less found.

RECOMMENDATIONS

It is every lawyer’s sworn duty to obey the laws of the land to promote respect for law and legal processes. The Code of Professional Responsibility command that he shall not engage in unlawful, dishonest, immoral or deceitful conduct. (Rule 1.01, Code of Professional Responsibility) Jjä lex

In the instant case, there was a clear yet unrebutted allegation in the complaint that the Respondent had ordered his secretary and housemaid to falsify the signatures of the notary public and the Deputy Register of Deeds respectively to make it appear that the real estate mortgage contract was duly registered and thus binding.

While it may be true that the complaint for Estafa thru Falsification filed against the Respondent had been dismissed, the dismissal was because of the complainant’s voluntary desistance and not a finding of innocence. It neither confirms nor denies Respondent’s non-culpability. Furthermore, it is well-settled that disciplinary proceedings are "sui generis", the primary object of which 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 lawyers, and to remove from the professions persons whose disregard of their oath have proven them unfit to continue discharging the trust reposed in them as members of the bar. Thus, disciplinary cases may still proceed despite the dismissal of civil and/or criminal cases against a lawyer.

A lawyer who does any unlawful fraudulent or dishonest act may and should be held administratively liable therefor. In the case at bar, the Respondent should notbe made an exception. While it may be shown that he indeed advanced the payment due to his erstwhile clients, such will not exempt him from administrativeliability. At best it can only mitigate. Respondent is recommended to be suspended for six (6) months from the practice of law.

(Findings and Recommendation, pp. 1-4) NewÓ miso

On February 28, 1998, the Board of Governors of the IBP passed Resolution XIII-97-199 adopting and approving the Findings and Recommendation of the Investigating Commissioner, which reads:

RESOLVED to ADOPT and APPROVE, as it is hereby ADOPTED and APPROVED, the Report and Recommendation of the Investigating Commissioner in 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, respondent Atty. Ernesto C. Jacinto is SUSPENDED from the practice of law for six (6) months for his unlawful, fraudulent or dishonest act.

(Notice of resolution [dated Feb. 28, 1998]).

In his Comment and Answer with Motion to Dismiss, respondent averred that complainants have no cause of action against him as the same has been waived, settled, and extinguished on account of the affidavits of voluntary desistance and quitclaim executed by them in the criminal case filed against him. Ncmmis

The assertion must necessarily fail. The practice of law is so intimately affected with public interest that it is both a right and a duty of the State to control and regulate it in order to promote the public welfare. The Constitution vests this power of control and regulation in this Court. Sincethe practice of law is inseparably connected with the exercise of its judicial power in administration of justice, the Court cannot be divested of its constitutionally ordained prerogative which includes the authority to discipline, suspend or disbar any unfit and unworthy member of the Bar by a mere execution of affidavits of voluntary desistance and quitclaim (par. [5], Sec. 5, 1987 Constitution).

A lawyer may be disciplined or suspended for any misconduct, whether in his professional or private capacity, which shows him to be wanting in moral character, in honesty, in probity and good demeanor, thus rendering unworthy to continue as an officer of the court (Maligsa vs. Cabanting, 272 SCRA 408 [1997]), and the complainants who called the attention of the Court to the attorney’s alleged misconduct are in no sense a party, and have generally no interest in the

outcome except as all good citizens may have in the proper administration of justice (Rayos-Ombac vs. Rayos, 285 SCRA 93 [1998]).

Undeniably, respondent represented complainants in the loan transaction. By his own admission,he was the one who negotiated with the borrower, his long-time friend and a former client. He acted not merely as an agent but as a lawyer of complaints, thus, the execution of the real estatemortgage contract, as well as its registration and annotation on the title were entrusted to him. In fact, respondent even received his share in the interest earnings which complainants realized from the transaction. His refusal to recognize any wrongdoing or carelessness by claiming that he is likewise a victim when it was shown that the title to the property, the registration of the real estate mortgage contract, and the annotation thereon were all feigned, will not at all exonerate him. Scncm

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. However, the measure of good faith which an attorney is required to exercise in his dealings with this client is a much higher standard than is required in business dealings where the parties trade at arms length. 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 be sure 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 (Nakpit vs. Valdes, 286 SCRA 758 [1998]). Further, his fidelity to the cause of his client requires him to be evermindful of the responsibilities that should be expected of him.

Verily, a lawyer may not, without being guilty of professional misconduct, act as counsel for a person whose interest conflicts with that of his former client. The reason for the prohibition is found in the relation of attorney and client, which is one of trust and confidence at the highest degree (Maturan vs. Gonzales, 287 SCRA 943 [1998]). Sdaamiso

Respondent utterly failed to perform his duties and responsibilities faithfully and well as to protectthe rights and interests of his clients and by his deceitful actuations constituting violations of the Code of Professional Responsibilities must be subjected to disciplinary measures for his own good, as well as for the good of the entire membership of the Bar as a whole.

WHEREFORE, the Court hereby adopts the resolution of the Board of Governors of the Integrated Bar of the Philippines and orders respondent Atty. Ernesto C. Jacinto suspended from the practice of law for six (6) months with the warning that a repetition of the same or similar offense will be dealt with more severely. Sdaad

SO ORDERED.

Vitug, Panganiban, Purisima, and Gonzaga-Reyes, JJ., concur.

HUMBERTO C. LIM, JR., A.C. No. 5303in behalf of PENTA RESORTSCORPORATION/Attorney-in-Fact of LUMOT A. JALANDONI, Complainant, Present:

PUNO, J., Chairperson,

SANDOVAL-GUTIERREZ,- v e r s u s - CORONA,

AZCUNA and GARCIA, JJ. ATTY. NICANOR V. VILLAROSA, Respondent. Promulgated:

June 15, 2006 x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x

R E S O L U T I O N CORONA, J.

Humberto C. Lim Jr.[1] filed a verified complaint for disbarment against respondent Atty.

Nicanor V. Villarosa on July 7, 2000.[2] On February 19, 2002, respondent moved for the

consolidation of the said complaint with the following substantially interrelated cases earlier filed

with the First Division of this Court:

1. Administrative Case No. 5463: Sandra F. Vaflor v. Atty. Adoniram P.

Pamplona and Atty. Nicanor V. Villarosa;

2. Administrative Case No. 5502: Daniel A. Jalandoni v. Atty. Nicanor V.

Villarosa.

In a resolution dated February 24, 2003, this Court considered Administrative Case No.

5463 closed and terminated.[3] On February 4, 2004, considering the pleadings filed in

Administrative Case No. 5502, the Court resolved:

(a) to NOTE the notice of the resolution dated September 27, 2003 ofthe Integrated Bar of the Philippines dismissing the case againstrespondent for lack of merit; and

(b) to DENY, for lack of merit, the petition filed by complainant praying

that the resolution of the Integrated Bar of the Philippines dismissing theinstant case be reviewed and that proper sanctions be imposed uponrespondent.[4]

No motion for reconsideration of the aforesaid denial in Administrative Case No. 5502

appears in the records. The Court is now called upon to determine the merits of this remaining

case (A.C. No. 5303) against respondent.

The complaint read:

AS FIRST CAUSE OF ACTION

xxx xxx xxx

- II -

That respondent is a practicing lawyer and a member of the IntegratedBar of the Philippines, Bacolod City, Negros Occidental Chapter…. Thatsometime on September 19, 1997, Lumot A. Jalandoni, Chairman/President ofPRC was sued before RTC, Branch 52 in Civil Case No. 97-9865, RE: Cabiles etal. vs. Lumot Jalandoni, et al. The latter engaged the legal services of hereinrespondent who formally entered his appearance on October 2, 1997 as counselfor the defendants Lumot A. Jalandoni/Totti Anlap Gargoles…. Respondent as aconsequence of said Attorney-Client relationship represented Lumot A. Jalandoniet al in the entire proceedings of said case. Utmost trust and confidence wasreposed on said counsel, hence delicate and confidential matters involving all thepersonal circumstances of his client were entrusted to the respondent. The latterwas provided with all the necessary information relative to the property inquestion and likewise on legal matters affecting the corporation (PRC) particularly[involving] problems [which affect] Hotel Alhambra. Said counsel was privy to alltransactions and affairs of the corporation/hotel….

- III - That it was respondent who exclusively handled the entire proceedings ofafore-cited Civil Case No. 97-9865 [and] presented Lumot A. Jalandoni as hiswitness prior to formally resting his case. However, on April 27,1999 respondent, without due notice prior to a scheduled hearing, surprisinglyfiled a Motion to withdraw as counsel, one day before its scheduled hearing onApril 28, 1999…. A careful perusal of said Motion to Withdraw as Counsel willconclusively show that no copy thereof was furnished to Lumot A. Jalandoni,neither does it bear her conformity…. No doubt, such notorious act ofrespondent resulted to (sic) irreparable damage and injury to Lumot A. Jalandoni,et al since the decision of the court RTC, Branch 52 proved adverse to Lumot A.Jalandoni, et al…. The far reaching effects of the untimely and unauthorizedwithdrawal by respondent caused irreparable damage and injury to Lumot A.Jalandoni, et al; a highly meritorious case in favor of his client suddenly [suffered]unexpected defeat.

- IV -

That the grounds alleged by respondent for his withdrawal as counsel ofLumot A. Jalandoni, et al. was that he is [a] retained counsel of Dennis G.Jalbuena and the Fernando F. Gonzaga, Inc. It was Dennis G. Jalbuena whorecommended him to be the counsel of Lumot A. Jalandoni, et al. It is worthy tonote that from the outset, respondent already knew that Dennis G. Jalbuena isthe son-in-law of Lumot A. Jalandoni being married to her eldest daughter,Carmen J. Jalbuena. The other directors/officers of PRC were comprised of theeldest sibling of the remaining children of Lumot A. Jalandoni made inaccordance with her wishes, with the exception of Carmen J. Jalbuena, the onlydaughter registered as one of the incorporators of PRC, obviously, being theauthor of the registration itself [sic]…. Respondent further stated that he cannotrefuse to represent Dennis G. Jalbuena in the case filed against the latter beforethe City Prosecutors Office by PRC/Lumot A. Jalandoni due to an allegedretainership agreement with said Dennis G. Jalbuena. [He] likewise representedCarmen J. Jalbuena and one Vicente Delfin when PRC filed the criminalcomplaint against them…. On April 06, 1999, twenty-one (21) days prior torespondent’s filing of his Motion to Withdraw as Counsel of Lumot A. Jalandoni, etal., respondent entered his appearance with Bacolod City Prosecutor OIC-Vicente C. Acupan, through a letter expressly stating that effective said date hewas appearing as counsel for both Dennis G. Jalbuena and Carmen J. Jalbuenaand Vicente Delfin in the “Estafa” case filed by the corporation (PRC) againstthem…. Simply stated, as early as April 6, 1999 respondent already appeared forand in behalf of the Sps. Carmen and Dennis Jalbuena/Vicente Delfin whileconcurrently representing Lumot A. Jalandoni, et al. in Civil Case No. 97-9865….However, despite being fully aware that the interest of his client Lumot A.Jalandoni [holding an equivalent of Eighty-two (82%) percent of PRC’s shares ofstocks] and the interest of PRC are one and the same, notwithstanding the factthat Lumot A. Jalandoni was still his client in Civil Case No. 97-9862, respondentopted to represent opposing clients at the same time. The corporation’scomplaint for estafa (P3,183,5525.00) was filed against the Sps. Dennis andCarmen J. Jalbuena together with UCPB bank manager VicenteDelfin. Succeeding events will show that respondent instead of desisting fromfurther violation of his [lawyer’s] oath regarding fidelity to his client, with extremearrogance, blatantly ignored our laws on Legal Ethics, by palpably and despicablydefending the Sps. Dennis and Carmen J. Jalbuena in all the cases filed against

them by PRC through its duly authorized representatives, before the PublicProsecutors Office, Bacolod City (PP vs. Sps. Dennis and Carmen J. Jalbuenafor False Testimony/Perjury, viol. of Art. 183 RPC under BC I.S. No. 2000-2304;viol. of Art. 363, 364, 181 and 183 RPC under BC I.S. 2000-2343, PP vs. CarmenJ. Jalbuena for viol. of Art. 315 … under BC I.S. 2000-2125 and various otherrelated criminal cases against the Sps. Dennis and Carmen Jalbuena)….

AS SECOND CAUSE OF ACTION

xxx xxx xxx

- I -

xxx xxx xxx There is no dispute that respondent was able to acquire vast resources ofconfidential and delicate information on the facts and circumstances of [CivilCase No. 97-9865] when Lumot A. Jalandoni was his client … which knowledgeand information was acquired by virtue of lawyer-client relationship betweenrespondent and his clients. Using the said classified information which shouldhave been closely guarded … respondent did then and there, willfully, unlawfully,feloniously conspired and confabulated with the Sps. Dennis and Carmen J.Jalbuena in concocting the despicable and fabricated charges against his formerclients denominated as PP vs. Lumot A. Jalandoni, Pamela J. Yulo, Cristina J.Lim and Leica J. Lim for viol. of Art. 172 of Revised Penal Code due to a boardresolution executed by the corporation which the Sps. Jalbuena, with theassistance of herein respondent, claimed to have been made without an actualboard meeting due to an alleged lack of quorum, [among other things]. Were itnot for said fiduciary relation between client and lawyer, respondent will not be ina position to furnish his conspirator spouses with confidential information onLumot A. Jalandoni/PRC, operator of Alhambra Hotel.

- II - Adding insult to injury, respondent opted to deliberately withhold the entirecase file including the marked exhibits of the Cabiles case for more than three (3)months after his untimely unilateral withdrawal therefrom, despite repeateddemands from [his] client. On July 26, 1999, capitalizing on his knowledge of theindispensability of said documents particularly the marked exhibits, whichdeadline to file the formal offer of exhibits was continually impressed upon thenew counsel by the court, respondent suddenly interposed an amount of fivethousand (P5,000.00) pesos as consideration prior to or simultaneous to theturnover of said documents…. [On] July 29, 1999, left with no other alternativeowing to the urgency of the situation, PRC issued Check No. 2077686 forP5,000.00 in payment thereof. This was duly received by respondent’s office onthe same date…. Such dilatory tactics employed by respondent immenselyweakened the case of Lumot A. Jalandoni eventually resulting to (sic) an adversedecision against [her]…. Further demonstrating before this Honorable Court the notoriety ofrespondent in representing conflicting interest which extended even beyond thefamily controversy was his improper appearance in court in Civil Case No. 99-10660, RE: Amy Albert Que vs. Penta Resorts Corp., this time favoring the partyopponent of defendant who is even outside the family circle. During the pre-trialhearing conducted on May 5, 1999, while still [holding] exclusive possession of

the entire case file of his client in Civil Case No. 97-9865, respondent brazenlypositioned himself beside Atty. Adoniram P. Pamplona, counsel of plaintiff [in] asuit against his client Lumot A. Jalandoni/PRC, coaching said counsel on matters[he was privy to] as counsel of said client. Facts mentioned by said counsel ofthe plaintiff starting from the last par. of page 25 until and including the entire firstpar. of page 26 were the exact words dictated by respondent. The entire incidentwas personally witnessed by herein complainant [who was] only an arms lengthaway from them during the hearing…. However, the particular portion showingthe said irregular acts of respondent was deliberately excluded by the courtstenographer from the transcript, despite her detailed recollection and affirmationthereof to herein complainant. This prompted the new counsel of Lumot A.Jalandoni/PRC to complain to the court why Atty. Nicanor Villarosa was coachingAtty. Pamplona in such proceedings…. Said corrections were only effected afterrepeated demands to reflect the actual events which [transpired] on said pre-trial….[5] (emphasis ours)

In an addendum to the July 4, 2000 complaint, Lim also pointed to certain acts of

respondent which allegedly violated the Rules of Court ― perpetration of falsehood and abuse of

his influence as former public prosecutor. These supposedly affected the status of the cases that

Lim filed against the clients of respondent.[6]

In a motion to dismiss dated October 30, 2000, respondent claimed that the complainant

violated Circular No. 48-2000 because, in his verification, Lim stated:

3. That [he] prepared this instant complaint for disbarment against Atty. Nicanor V.Villarosa, read its contents, the same are all true and correct to [his] ownpersonal knowledge and belief.[7] (emphasis ours)

Section 4, Rule 7 of the Rules of Court explicitly provides that: SEC. 4. Verification. – Except when otherwise specifically required by lawor rule, pleadings need not be under oath, verified or accompanied by affidavit.(5a) A pleading is verified by an affidavit that the affiant has read the pleadingand that the allegations therein are true and correct of his personal knowledge orbased on authentic records. A pleading required to be verified which contains verification basedon “information and belief” or upon “knowledge, information and belief,” orlacks a proper verification, shall be treated as an unsigned pleading. (Asamended, A.M. 00-2-10, May 1, 2000.) (emphasis ours)

While the Rules provide that an unsigned pleading produces no legal effect, [8] the court

may, in its discretion, allow such deficiency to be remedied if it appears that the same was due to

mere inadvertence and not intended for delay.[9] We find that Lim was not shown to have

deliberately filed the pleading in violation of the Rules.

In his comment dated December 1, 2000, respondent, reiterating his ground for the

dismissal of the complaint, added: [that] complainant Humberto C. Lim, Jr. has not only violated the Rule on CivilProcedure but he was/is NOT duly authorize[d] by the Penta Resorts Corp.(PRC) nor [by] Lumot A. Jalandoni to file this complaint against [him]. Neither[was Lim] a proper party to file this complaint. This fact is an additional ground tohave his case dismissed because Humberto C. Lim Jr. exceeded whateverauthority was granted to him as embodied in a resolution and the Special Powerof Attorney allegedly granted to him by the complainants.[10]

To bolster his assertion that the complaint against him was unfounded, respondent

presented the following version in his defense:

FACTS OF THE CASE

xxx xxx xxx That Mrs. Jalandoni has two sons-in-law, namely Dennis G. Jalbuenamarried to her daughter, Carmen J. Jalbuena, and Humberto C. Lim Jr., theherein complainant married to her daughter, Cristina J. Lim. That Mrs. Lumot Jalandoni organized a corporation namely the PentaResorts Corporation (PRC) where she owned almost ninety seven percent (97%).In other words, in reality, Penta Resorts Corporation is a single proprietorshipbelonging to Mrs. Jalandoni. That the only property of the corporation is asabove-stated, the Alhambra Hotel, constructed solely through the effort of thespouses Jalbuena on that parcel of land now claimed by the Cabiles family. That sometime on the year 1997 the case above-cited (Civil Case No. 97-9865) was filed before the court against the sisters.

That [he], being RETAINED counsel of the spouses Dennis and CarmenJ. Jalbuena was RECOMMENDED by the spouses to the sisters to answer thecomplaint filed against them.

II.

That as counsel to the sisters, [he] filed a Motion for Extension Of Time ToFile Answer … and ultimately, [he] filed an Answer With Counter-Claim AndPrayer For Issuance Of Writ Of Preliminary Injunction…. That reading the Answer … it is clear that the defense of the sisters totallyrest on public documents (the various titles issued to the land in question

because of the series [of changes] in ownership) and the sisters’ and theirparents’ actual occupation and possession thereof. xxx xxx xxx Mr. Lim[’s] accusation against [him] in the light of the above-facts is thebest evidence of Humberto C. Lim, Jr.’s penchant for exaggeration and distortionof the truth. Since the defense of the sisters to retain ownership of the land inquestion is based on PUBLIC documents, what delicate and confidential mattersinvolving personal circumstances of the sisters allegedly entrusted to [him], is Mr.Humberto C. Lim, Jr. talking about in paragraphs I and II of his Complaint? What[privity] to all transactions and affairs of the corporation/hotel is he referringto? Whatever transactions the corporation may have been involved in or [may begetting involved into], is totally immaterial and irrelevant to the defense of thesisters. There was nothing personal [about the] circumstances of the sisters nortransactions of the corporation [which were] discussed. The documents beingoffered as evidence, [he] reiterate[s] for emphasis, are public; the presumption isthat the whole world knows about them…. That [he] [also] vehemently den[ies] another distorted allegation of Mr. Limthat [he] represented Mrs. Jalandoni [in] the entire proceedings of [the]case. [Lim] himself attested that [he] [filed] [his] Motion to Withdraw As Counsel,dated April 26, 1999 … , before the trial court, sometime on April 27, 1999. Howthen could [he] have represented Mrs. Jalandoni for [the] entire proceedings ofthe case? Further, Mr. Lim intentionally hid from this Honorable Court the important factthat [his] Motion to Withdraw was APPROVED by the trial court because ofthe possibility of a conflict of interest. xxx xxx xxx. [11]

Respondent discredited Lim’s claim that he deliberately withheld the records of the cited

civil case. He insisted that it took him just a few days, not three months, to turn over the records

of the case to Lim.[12] While he admitted an oversight in addressing the notice of the motion to

withdraw as counsel to Mrs. Totti Anlap Gargoles instead of Mrs. Jalandoni at Hotel Alhambra, he

maintained that it was the height of hypocrisy to allege that Mrs. Jalandoni was not aware of his

motion to withdraw[13] since Mrs. Gargoles is Mrs. Jalandoni’s sister and Hotel Alhambra is owned

by PRC which, in turn, actually belongs to Mrs. Jalandoni. Respondent also argued that no

prejudice was suffered by Mrs. Jalandoni because she was already represented by Atty. Lorenzo

S. Alminaza from the first hearing date.[14] In fact, respondent contended, it was he who was not

notified of the substitution of counsels.[15]

As to the bill of P 5,000, respondent stated:

That Mr. Lim begrudge[s] [him] for billing Mrs. Jalandoni Five Thousand(Php5,000.00) Pesos. Mr. Humberto C. Lim Jr. conveniently forgets that the networth of the property together with its improvements, under litigation in that

Cabiles, et al. vs. Gargoles et al. case, is a minimum of THIRTY MILLION(Php30,000,000.00) PESOS then, and more so now. [He] cannot find any lawwhich prohibits a counsel from billing a client for services in proportion to theservices he rendered.[16]

In view of these developments, respondent was adamant that: the only real question to be answered in this complaint is why Mr. Lim soconsistently [determined] to immerse the Jalandoni family [in] a series of criminaland civil suits and to block all attempts to reconcile the family by prolonginglitigations, complaints and filing of new ones in spite of the RESOLUTION of thecorporation and the UNDERTAKING of the members….[17]

On June 18, 2001, the Court resolved to refer the complaint to the Integrated Bar of the

Philippines (IBP) for investigation. Commissioner Lydia A. Navarro made the following report

and recommendation:

xxx xxx xxx

After going over the [pieces of evidence] submitted by the parties[,] theundersigned noted that from the onset, PRC had a case wherein respondent wasits counsel. Later on, complainant had a case against spouses Jalbuena wherethe parties were related to each other and the latter spouses were represented bythe respondent as their retained counsel; after respondent had allegedlywithdrawn as counsel for the complainant in Civil Case No. 97-9865. Being the husband of one of the complainants which respondent himselfaverred in his answer, it is incumbent upon Humberto Lim Jr. to represent his wifeas one of the representatives of PRC and Alhambra Hotel in the administrativecomplaint to protect not only her interest but that of the [family’s]. From the facts obtaining, it is evident that complainant had a lawyer-clientrelationship with the respondent before the latter [was] retained as counsel by theSpouses Jalbuena when the latter were sued by complainant’s representative. We cannot disregard the fact that on this situation for some reason oranother there existed some confidentiality and trust between complainants andrespondent to ensure the successful defense of their cases. Respondent for having appeared as counsel for the Spouses Jalbuenawhen charged by respondent’s former client Jalandoni of PRC and AlhambraHotel, represented conflicting interests … in violation of the Canon ofProfessional Responsibility. As such therefore, the Undersigned has no alternative but to respectfullyrecommend the suspension of the respondent from the practice of law for aperiod of six (6) months from receipt hereof. RESPECTFULLY SUBMITTED.

Pasig City, June 20, 2002.[18]

The IBP Board of Governors (Board), however, reversed the recommendation of the

investigating commissioner and resolved to dismiss the case on August 3, 2002. [19] Lumot A.

Jalandoni filed a motion for reconsideration (MR) on October 18, 2002 but the Board denied the

MR since it no longer had jurisdiction to consider and resolve a matter already endorsed

to this Court.[20]

Before delving into the core issues of this case, we need to address some preliminary

matters.

Respondent argues that the alleged resolution of PRC and the special power of attorney

given by Lumot A. Jalandoni to Humberto did not contemplate the filing of an administrative

complaint.[21] Citing the Rules of Court, respondent said that: [s]uch complaints are personal in nature and therefore, the filing of the same,cannot be delegated by the alleged aggrieved party to any third person unlessexpressly authorized by law.

We must note, however, the following: SECTION 1. How instituted. – Proceedings for disbarment, suspension ordiscipline of attorneys may be taken by the Supreme Court motu propio, or by theIntegrated Bar of the Philippines (IBP) upon the verified complaint of anyperson. The complaint shall state clearly and concisely the facts complained ofand shall be supported by affidavits or persons having personal knowledge ofthe facts therein alleged and/or by such documents a may substantiate said facts. The IBP Board of Governors may, motu propio or upon referral by theSupreme Court or by a Chapter Board of Officers, or at the instance of anyperson, initiate and prosecute proper charges against any erring attorneys….[22] (emphasis ours)

Complaints against members of the Bar are pursued to preserve the integrity of the legal

profession, not for private vendetta. Thus, whoever has such personal knowledge of facts

constituting a cause of action against erring lawyers may file a verified complaint with the Court

or the IBP.[23] Corollary to the public interest in these proceedings is the following rule:

SEC. 11. Defects. – No defect in a complaint, notice, answer, or in theproceeding or the Investigator’s Report shall be considered as substantialunless the Board of Governors, upon considering the whole record, finds thatsuch defect has resulted or may result in a miscarriage of justice , in whichevent the Board shall take such remedial action as the circumstances maywarrant, including invalidation of the entire proceedings.[24] (emphasis ours)

Respondent failed to substantiate his allegation that Lim’s complaint was defective in

form and substance, and that entertaining it would result in a miscarriage of justice. For the

same reason, we will no longer put in issue the filing at the onset of a motion to dismiss by

respondent instead of an answer or comment.[25]

The core issues before us now are:

1. whether there existed a conflict of interest in the cases represented

and handled by respondent, and

2. whether respondent properly withdrew his services as counsel of

record in Civil Case No. 97-9865.

CONFLICT OF INTEREST

Petitioners alleged that as an offshoot of representing conflicting interests, breach of

attorney-client confidentiality and deliberate withholding of records were committed by

respondent. To effectively unravel the alleged conflict of interest, we must look into the cases

involved.

In Civil Case No. 97-9865, respondent represented Lumot A. Jalandoni and Totti Anlap

Gargoles. This was a case for the recovery of possession of property involving Hotel Alhambra,

a hotel owned by PRC.

In BC I.S. No. 99-2192, Lim v. Vicente Delfin, Spouses Dennis and Carmen Jalbuena,

respondent was counsel for Delfin and the spouses Jalbuena. In this case, plaintiff Cristina Lim

sued the spouses Jalbuena and Delfin on the basis of two checks issued by PRC for the

construction of Hotel Alhambra.[26] The corporate records allegedly reflected that the contractor,

AAQ Sales and Construction (AAQSC), was already paid in full yet Amy Albert Que of AAQSC

still filed a collection case against PRC for an unpaid balance. [27] In her complaint-affidavit,

Cristina averred: 11. That it was respondent Carmen J. Jalbuena, who took advantage of [her]signatures in blank in DBP Check Nos. 0865590 and 0865591, and who filled upthe spaces of the payee, date and amount without the knowledge and consent ofany officer of the corporation and [herself], after which she caused the delivery ofthe same checks to her husband Dennis Jalbuena, who encashed without [their]knowledge and consent, and received the proceeds of the same checks… (asevidenced by his signature in receipt of payment on the dorsal side of the saidchecks) with the indispensable participation and cooperation of respondentVicente B. Delfin, the Asst. Vice President and Branch Head of UCPB….[28]

Notably, in his comment, respondent stated: There was a possibility of conflict of interest because by this time, or onemonth before [he] filed [his] Motion to Withdraw, Mrs. Jalandoni /Penta ResortsCorporation, Mr. Lim, through his wife, Cristina J. Lim, by another counsel, Atty.Lorenzo S. Alminaza, filed a criminal complaint against the spouses Dennis andCarmen J. Jalbuena on March 26, 1999… under BC-I.S. Case No. 99-2192.[29]

Similarly, in BC I.S. Nos. 00-1370, 2000-2304, 2000-2343, 00-2125, 00-2230, 00-880,

respondent positioned himself against PRC’s interests.

And, in Civil Case No. 99-10660, a collection case against PRC, Atty. Alminaza of PRC

was alarmed by the appearance of respondent at the table in court for AAQSC’s counsel.[30]

Canon 15 of the Code of Professional Responsibility (CPR) highlights the need for candor,

fairness and loyalty in all the dealings of lawyers with their clients . Rule 15.03 of the CPR aptly

provides: Rule 15.03 – A lawyer shall not represent conflicting interests except bywritten consent of all concerned given after a full disclosure of the facts.

It is only upon strict compliance with the condition of full disclosure of facts that a lawyer

may appear against his client; otherwise, his representation of conflicting interests is

reprehensible.[31] Conflict of interest may be determined in this manner:There is representation of conflicting interests if the acceptance of the newretainer will require the attorney to do anything which will injuriously affect

his first client in any matter in which he represents him and also whether hewill be called upon in his new relation, to use against his first client anyknowledge acquired through their connection.[32] (emphasis ours)

The rule on conflict of interests 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.[33]

Another test of the inconsistency of interests is whether the acceptance of a newrelation will prevent an attorney from the full discharge of his duty of undividedfidelity and loyalty to his client or invite suspicion of unfaithfulness or double-dealing in the performance thereof, and also whether he will be called upon in hisnew relation to use against his first client any knowledge acquire in the previousemployment. The first part of the rule refers to cases in which the opposingparties are present clients either in the same action or in a totally unrelatedcase; the second part pertains to those in which the adverse party against whomthe attorney appears is his former client in a matter which is related, directly orindirectly, to the present controversy.[34] (emphasis ours)

The rule prohibits a lawyer from representing new clients whose interests oppose those of a

former client in any manner, whether or not they are parties in the same action or in totally

unrelated cases. The cases here directly or indirectly involved the parties’ connection to PRC,

even if neither PRC nor Lumot A. Jalandoni was specifically named as party-litigant in some of

the cases mentioned. An attorney owes to his client undivided allegiance. After being retained andreceiving the confidences of the client, he cannot, without the free and intelligentconsent of his client, act both for his client and for one whose interest is adverseto, or conflicting with that of his client in the same general matter…. Theprohibition stands even if the adverse interest is very slight; neither is itmaterial that the intention and motive of the attorney may have been honest.[35] (emphasis ours)

The representation by a lawyer of conflicting interests, in the absence of the written consent

of all parties concerned after a full disclosure of the facts, constitutes professional misconduct

which subjects the lawyer to disciplinary action.[36]

Even respondent’s alleged effort to settle the existing controversy among the family

members[37] was improper because the written consent of all concerned was still required. [38] A

lawyer who acts as such in settling a dispute cannot represent any of the parties to it.[39]

WITHDRAWAL AS COUNSEL IN CIVIL CASE NO. 97-9865

The next bone of contention was the propriety of respondent’s withdrawal as counsel for

Lumot A. Jalandoni in Civil Case No. 97-9865 to fulfill an alleged retainership agreement with the

spouses Jalbuena in a suit by PRC, through Cristina Lim, against the Jalbuenas and Delfin (BC

I.S. No. 99-2192). In his December 1, 2000 comment, respondent stated that it was he who was

not notified of the hiring of Atty. Alminaza as the new counsel in that case and that he withdrew

from the case with the knowledge of Lumot A. Jalandoni and with leave of court.

The rule on termination of attorney-client relations may be summarized as follows: The relation of attorney and client may be terminated by the client, by the lawyeror by the court, or by reason of circumstances beyond the control of the client orthe lawyer. The termination of the attorney-client relationship entails certainduties on the part of the client and his lawyer.[40]

Accordingly, it has been held that the right of an attorney to withdraw or terminate the

relation other than for sufficient cause is considerably restricted. Canon 22 of the CPR reads: Canon 22 – A lawyer shall withdraw his services only for good cause and uponnotice appropriate in the circumstances.

An attorney may only retire from a case either by written consent of his client or by

permission of the court after due notice and hearing, in which event the attorney should see to it

that the name of the new lawyer is recorded in the case. [41] A lawyer who desires to retire from an

action without the written consent of his client must file a petition for withdrawal in court. [42] He

must serve a copy of his petition upon his client and the adverse party at least three days before

the date set for hearing, otherwise the court may treat the application as a “mere scrap of

paper.”[43] Respondent made no such move. He admitted that he withdrew as counsel on April 26,

1999, which withdrawal was supposedly approved by the court on April 28, 1999. The conformity

of Mrs. Jalandoni was only presumed by Atty. Villarosa because of the appearance of Atty.

Alminaza in court, supposedly in his place. [A client] may discharge his attorney at any time with or without cause andthereafter employ another lawyer who may then enter his appearance. Thus, it

has been held that a client is free to change his counsel in a pending case andthereafter retain another lawyer to represent him. That manner of changing alawyer does not need the consent of the lawyer to be dismissed. Nor does itrequire approval of the court.[44]

The appearance of Atty. Alminaza in fact was not even to substitute for respondent but to

act as additional counsel.[45] Mrs. Jalandoni’s conformity to having an additional lawyer did not

necessarily mean conformity to respondent’s desire to withdraw as counsel. Respondent’s

speculations on the professional relationship of Atty. Alminaza and Mrs. Jalandoni find no support

in the records of this case.

Respondent should not have presumed that his motion to withdraw as counsel [46] would

be granted by the court. Yet, he stopped appearing as Mrs. Jalandoni’s counsel beginning April

28, 1999, the first hearing date. No order from the court was shown to have actually granted his

motion for withdrawal. Only an order dated June 4, 1999 had a semblance of granting his motion: When this case was called for hearing Atty. Lorenzo Alminaza appeared for thedefendants considering that Atty. Nicanor Villarosa has already withdrawnhis appearance in this case which the Court considered it to beapproved as it bears the conformity of the defendants.[47] (emphasis ours)

That Mrs. Jalandoni continued with Atty. Alminaza’s professional engagement on her behalf

despite respondent’s withdrawal did not absolve the latter of the consequences of his

unprofessional conduct, specially in view of the conflicting interests already discussed.

Respondent himself stated that his withdrawal from Civil Case No. 97-9865 was due to the

“possibility of a conflict of interest.”[48]

Be that as it may, the records do not support the claim that respondent improperly

collected P5,000 from petitioner. Undoubtedly, respondent provided professional services to

Lumot A. Jalandoni. Furthermore, there is no evidence that the documents belonging to Mrs.

Jalandoni were deliberately withheld. The right of an attorney to retain possession of a client’s

documents, money or other property which may have lawfully come into his possession in his

professional capacity, until his lawful fees and disbursements have been fully paid, is well-

established.[49]

Finally, we express our utter dismay with Lim’s apparent use of his wife’s community tax

certificate number in his complaint for disbarment against respondent. [50] This is not, however, the

forum to discuss this lapse.

WHEREFORE, in view of the foregoing, respondent Atty. Nicanor V. Villarosa is hereby

found GUILTY of violating Canon 15 and Canon 22 of the Code of Professional Responsibility

and is SUSPENDED from the practice of law for one (1) year, effective upon receipt of this

decision, with a STERN WARNING that a repetition of the same or similar acts will be dealt with

more severely.

Let a copy of this resolution be entered into the records of respondent and furnished to the

Office of the Clerk of Court, the Office of the Bar Confidant, the Integrated Bar of the Philippines,

and all courts in the Philippines, for their information and guidance.

SO ORDERED.

[G.R. Nos. 151809-12. April 12, 2005]

PRESIDENTIAL COMMISSION ON GOOD GOVERNMENT (PCGG), petitioner,vs. SANDIGANBAYAN (Fifth Division), LUCIO C. TAN, CARMEN KHAO TAN,FLORENCIO T. SANTOS, NATIVIDAD P. SANTOS, DOMINGO CHUA, TAN HUI NEE,MARIANO TAN ENG LIAN, ESTATE OF BENITO TAN KEE HIONG (represented byTARCIANA C. TAN), FLORENCIO N. SANTOS, JR., HARRY C. TAN, TAN ENG CHAN,CHUNG POE KEE, MARIANO KHOO, MANUEL KHOO, MIGUEL KHOO, JAIMEKHOO, ELIZABETH KHOO, CELSO RANOLA, WILLIAM T. WONG, ERNESTO B. LIM,BENJAMIN T. ALBACITA, WILLY CO, ALLIED BANKING CORP., ALLIED LEASINGAND FINANCE CORPORATION, ASIA BREWERY, INC., BASIC HOLDINGS CORP.,FOREMOST FARMS, INC., FORTUNE TOBACCO CORP., GRANDSPANDEVELOPMENT CORP., HIMMEL INDUSTRIES, IRIS HOLDINGS ANDDEVELOPMENT CORP., JEWEL HOLDINGS, INC., MANUFACTURING SERVICESAND TRADE CORP., MARANAW HOTELS AND RESORT CORP., NORTHERNTOBACCO REDRYING PLANT, PROGRESSIVE FARMS, INC., SHAREHOLDINGS,INC., SIPALAY TRADING CORP., VIRGO HOLDINGS & DEVELOPMENT CORP., andATTY. ESTELITO P. MENDOZA, respondents.

D E C I S I O N

PUNO, J.:

This case is prima impressiones and it is weighted with significance for it concerns on onehand, the efforts of the Bar to upgrade the ethics of lawyers in government service and on theother, its effect on the right of government to recruit competent counsel to defend its interests.

In 1976, General Bank and Trust Company (GENBANK) encountered financial difficulties.GENBANK had extended considerable financial support to Filcapital Development Corporationcausing it to incur daily overdrawings on its current account with the Central Bank. [1] It was laterfound by the Central Bank that GENBANK had approved various loans to directors, officers,

stockholders and related interests totaling P172.3 million, of which 59% was classified asdoubtful and P0.505 million as uncollectible.[2] As a bailout, the Central Bank extendedemergency loans to GENBANK which reached a total of P310 million.[3] Despite the megaloans, GENBANK failed to recover from its financial woes. On March 25, 1977, the Central Bankissued a resolution declaring GENBANK insolvent and unable to resume business withsafety to its depositors, creditors and the general public, and ordering its liquidation.[4] A publicbidding of GENBANK’s assets was held from March 26 to 28, 1977, wherein the Lucio Tangroup submitted the winning bid.[5] Subsequently, former Solicitor General Estelito P. Mendozafiled a petition with the then Court of First Instance praying for the assistance and supervisionof the court in GENBANK’s liquidation as mandated by Section 29 of Republic Act No. 265.

In February 1986, the EDSA I revolution toppled the Marcos government. One of the firstacts of President Corazon C. Aquino was to establish the Presidential Commission on GoodGovernment (PCGG) to recover the alleged ill-gotten wealth of former President FerdinandMarcos, his family and his cronies. Pursuant to this mandate, the PCGG, on July 17, 1987, filedwith the Sandiganbayan a complaint for “reversion, reconveyance, restitution, accountingand damages” against respondents Lucio Tan, Carmen Khao Tan, Florencio T. Santos, NatividadP. Santos, Domingo Chua, Tan Hui Nee, Mariano Tan Eng Lian, Estate of Benito Tan Kee Hiong,Florencio N. Santos, Jr., Harry C. Tan, Tan Eng Chan, Chung Poe Kee, Mariano Khoo, ManuelKhoo, Miguel Khoo, Jaime Khoo, Elizabeth Khoo, Celso Ranola, William T. Wong, Ernesto B.Lim, Benjamin T. Albacita, Willy Co, Allied Banking Corporation (Allied Bank), Allied Leasing andFinance Corporation, Asia Brewery, Inc., Basic Holdings Corp., Foremost Farms, Inc., FortuneTobacco Corporation, Grandspan Development Corp., Himmel Industries, Iris Holdings andDevelopment Corp., Jewel Holdings, Inc., Manufacturing Services and Trade Corp., MaranawHotels and Resort Corp., Northern Tobacco Redrying Plant, Progressive Farms, Inc.,Shareholdings, Inc., Sipalay Trading Corp., Virgo Holdings & Development Corp., (collectivelyreferred to herein as respondents Tan, et al.), then President Ferdinand E. Marcos, Imelda R.Marcos, Panfilo O. Domingo, Cesar Zalamea, Don Ferry and Gregorio Licaros. The case wasdocketed as Civil Case No. 0005 of the Second Division of the Sandiganbayan.[6] Inconnection therewith, the PCGG issued several writs of sequestration on properties allegedlyacquired by the above-named persons by taking advantage of their close relationship andinfluence with former President Marcos.

Respondents Tan, et al. repaired to this Court and filed petitions for certiorari, prohibition andinjunction to nullify, among others, the writs of sequestration issued by the PCGG. [7] After thefiling of the parties’ comments, this Court referred the cases to the Sandiganbayan for properdisposition. These cases were docketed as Civil Case Nos. 0096-0099. In all these cases,respondents Tan, et al. were represented by their counsel, former Solicitor General Estelito P.Mendoza, who has then resumed his private practice of law.

On February 5, 1991, the PCGG filed motions to disqualify respondent Mendoza ascounsel for respondents Tan, et al. with the Second Division of the Sandiganbayan in CivilCase Nos. 0005[8] and 0096-0099.[9] The motions alleged that respondent Mendoza, as thenSolicitor General[10] and counsel to Central Bank, “actively intervened” in the liquidation ofGENBANK, which was subsequently acquired by respondents Tan, et al. and became AlliedBanking Corporation. Respondent Mendoza allegedly “intervened” in the acquisition ofGENBANK by respondents Tan, et al. when, in his capacity as then Solicitor General,he advised the Central Bank’s officials on the procedure to bring about GENBANK’s liquidationand appeared as counsel for the Central Bank in connection with its petition for assistance in theliquidation of GENBANK which he filed with the Court of First Instance (now Regional Trial Court)

of Manila and was docketed as Special Proceeding No. 107812. The motions to disqualifyinvoked Rule 6.03 of the Code of Professional Responsibility. Rule 6.03 prohibits formergovernment lawyers from accepting “engagement or employment in connection with any matterin which he had intervened while in said service.”

On April 22, 1991 the Second Division of the Sandiganbayan issued aresolution denying PCGG’s motion to disqualify respondent Mendoza in Civil Case No. 0005.[11] It found that the PCGG failed to prove the existence of an inconsistency between respondentMendoza’s former function as Solicitor General and his present employment as counsel of theLucio Tan group. It noted that respondent Mendoza did not take a position adverse to that takenon behalf of the Central Bank during his term as Solicitor General. [12] It further ruled thatrespondent Mendoza’s appearance as counsel for respondents Tan, et al. was beyond the one-year prohibited period under Section 7(b) of Republic Act No. 6713 since he ceased to beSolicitor General in the year 1986. The said section prohibits a former public official or employeefrom practicing his profession in connection with any matter before the office he used to be withwithin one year from his resignation, retirement or separation from public office. [13] The PCGG didnot seek any reconsideration of the ruling.[14]

It appears that Civil Case Nos. 0096-0099 were transferred fromthe Sandiganbayan’s Second Division to the Fifth Division.[15] In its resolution dated July 11,2001, the Fifth Division of the Sandiganbayan denied the other PCGG’s motion to disqualifyrespondent Mendoza.[16] It adopted the resolution of its Second Division dated April 22, 1991,and observed that the arguments were the same in substance as the motion to disqualify filed inCivil Case No. 0005. The PCGG sought reconsideration of the ruling but its motion was denied inits resolution dated December 5, 2001.[17]

Hence, the recourse to this Court by the PCGG assailing the resolutions dated July 11, 2001and December 5, 2001 of the Fifth Division of the Sandiganbayan via a petitionforcertiorari and prohibition under Rule 65 of the 1997 Rules of Civil Procedure. [18] The PCGGalleged that the Fifth Division acted with grave abuse of discretion amounting to lack or excessof jurisdiction in issuing the assailed resolutions contending that: 1) Rule 6.03 of the Code ofProfessional Responsibility prohibits a former government lawyer from accepting employment inconnection with any matter in which he intervened; 2) the prohibition in the Rule is not time-bound; 3) that Central Bank could not waive the objection to respondent Mendoza’s appearanceon behalf of the PCGG; and 4) the resolution in Civil Case No. 0005 was interlocutory, thus resjudicata does not apply.[19]

The petition at bar raises procedural and substantive issues of law. In view, however, of theimport and impact of Rule 6.03 of the Code of Professional Responsibility to the legal professionand the government, we shall cut our way and forthwith resolve the substantive issue.

I

Substantive Issue

The key issue is whether Rule 6.03 of the Code of Professional Responsibility applies torespondent Mendoza. Again, the prohibition states: “A lawyer shall not, after leaving governmentservice, accept engagement or employment in connection with any matter in which hehad intervened while in the said service.”

I.A. The history of Rule 6.03

A proper resolution of this case necessitates that we trace the historical lineage of Rule6.03 of the Code of Professional Responsibility.

In the seventeenth and eighteenth centuries, ethical standards for lawyers werepervasive in England and other parts of Europe. The early statements of standards did notresemble modern codes of conduct. They were not detailed or collected in one source butsurprisingly were comprehensive for their time. The principal thrust of the standards was directedtowards the litigation conduct of lawyers. It underscored the central duty of truth and fairness inlitigation as superior to any obligation to the client. The formulations of the litigation duties wereat times intricate, including specific pleading standards, an obligation to inform the court offalsehoods and a duty to explore settlement alternatives. Most of the lawyer's other basic duties-- competency, diligence, loyalty, confidentiality, reasonable fees and service to the poor --originated in the litigation context, but ultimately had broader application to all aspects of alawyer's practice.

The forms of lawyer regulation in colonial and early post-revolutionary America did notdiffer markedly from those in England. The colonies and early states used oaths, statutes, judicialoversight, and procedural rules to govern attorney behavior. The difference from England was inthe pervasiveness and continuity of such regulation. The standards set in England varied overtime, but the variation in early America was far greater. The American regulation fluctuated withina single colony and differed from colony to colony. Many regulations had the effect of settingsome standards of conduct, but the regulation was sporadic, leaving gaps in the substantivestandards. Only three of the traditional core duties can be fairly characterized as pervasive in theformal, positive law of the colonial and post-revolutionary period: the duties of litigation fairness,competency and reasonable fees.[20]

The nineteenth century has been termed the “dark ages” of legal ethics in the UnitedStates. By mid-century, American legal reformers were filling the void in two ways. First, DavidDudley Field, the drafter of the highly influential New York “Field Code,” introduced a new set ofuniform standards of conduct for lawyers. This concise statement of eight statutory dutiesbecame law in several states in the second half of the nineteenth century. At the same time, legaleducators, such as David Hoffman and George Sharswood, and many other lawyers wereworking to flesh out the broad outline of a lawyer's duties. These reformers wrote about legalethics in unprecedented detail and thus brought a new level of understanding to a lawyer'sduties. A number of mid-nineteenth century laws and statutes, other than the Field Code,governed lawyer behavior. A few forms of colonial regulations – e.g., the “do no falsehood” oathand the deceit prohibitions -- persisted in some states. Procedural law continued to directly, orindirectly, limit an attorney's litigation behavior. The developing law of agency recognized basicduties of competence, loyalty and safeguarding of client property. Evidence law started torecognize with less equivocation the attorney-client privilege and its underlying theory ofconfidentiality. Thus, all of the core duties, with the likely exception of service to the poor, hadsome basis in formal law. Yet, as in the colonial and early post-revolutionary periods, thesestandards were isolated and did not provide a comprehensive statement of a lawyer's duties. Thereformers, by contrast, were more comprehensive in their discussion of a lawyer's duties, andthey actually ushered a new era in American legal ethics.[21]

Toward the end of the nineteenth century, a new form of ethical standards began to guidelawyers in their practice — the bar association code of legal ethics. The bar codes were detailed

ethical standards formulated by lawyers for lawyers. They combined the two primary sources ofethical guidance from the nineteenth century. Like the academic discourses, the bar associationcodes gave detail to the statutory statements of duty and the oaths of office. Unlike the academiclectures, however, the bar association codes retained some of the official imprimatur of thestatutes and oaths. Over time, the bar association codes became extremely popular that statesadopted them as binding rules of law. Critical to the development of the new codes was the re-emergence of bar associations themselves. Local bar associations formed sporadically duringthe colonial period, but they disbanded by the early nineteenth century. In the late nineteenthcentury, bar associations began to form again, picking up where their colonial predecessors hadleft off. Many of the new bar associations, most notably the Alabama State Bar Association andthe American Bar Association, assumed on the task of drafting substantive standards of conductfor their members.[22]

In 1887, Alabama became the first state with a comprehensive bar association code ofethics. The 1887 Alabama Code of Ethics was the model for several states’ codes, and it was thefoundation for the American Bar Association's (ABA) 1908 Canons of Ethics.[23]

In 1917, the Philippine Bar found that the oath and duties of a lawyer were insufficient toattain the full measure of public respect to which the legal profession was entitled. In that year,the Philippine Bar Association adopted as its own, Canons 1 to 32 of the ABA Canons ofProfessional Ethics.[24]

As early as 1924, some ABA members have questioned the form and function of thecanons. Among their concerns was the “revolving door” or “the process by which lawyers andothers temporarily enter government service from private life and then leave it for large fees inprivate practice, where they can exploit information, contacts, and influence garnered ingovernment service.”[25] These concerns were classified as adverse-interestconflicts” and “congruent-interest conflicts.” “Adverse-interest conflicts” exist where thematter in which the former government lawyer represents a client in private practice issubstantially related to a matter that the lawyer dealt with while employed by the government andthe interests of the current and former are adverse.[26] On the other hand, “congruent-interestrepresentation conflicts” are unique to government lawyers and apply primarily to formergovernment lawyers.[27] For several years, the ABA attempted to correct and update the canonsthrough new canons, individual amendments and interpretative opinions. In 1928, the ABAamended one canon and added thirteen new canons.[28] To deal with problems peculiar to formergovernment lawyers, Canon 36 was minted which disqualified them both for “adverse-interestconflicts” and “congruent-interest representation conflicts.”[29] The rationale for disqualification isrooted in a concern that the government lawyer’s largely discretionary actions would beinfluenced by the temptation to take action on behalf of the government client that later could beto the advantage of parties who might later become private practice clients. [30] Canon36provides, viz.:

36. Retirement from judicial position or public employment

A lawyer should not accept employment as an advocate in any matter upon the merits of which he has previously acted in a judicial capacity.

A lawyer, having once held public office or having been in the public employ should not, after his retirement, accept employment in connection with any matter he has investigatedor passed upon while in such office or employ.

Over the next thirty years, the ABA continued to amend many of the canons and addedCanons 46 and 47 in 1933 and 1937, respectively.[31]

In 1946, the Philippine Bar Association again adopted as its own Canons 33 to 47 of theABA Canons of Professional Ethics.[32]

By the middle of the twentieth century, there was growing consensus that the ABACanons needed more meaningful revision. In 1964, the ABA President-elect Lewis Powell askedfor the creation of a committee to study the “adequacy and effectiveness” of the ABA Canons.The committee recommended that the canons needed substantial revision, in part because theABA Canons failed to distinguish between “the inspirational and the proscriptive” and were thusunsuccessful in enforcement. The legal profession in the United States likewise observedthat Canon 36 of the ABA Canons of Professional Ethics resulted in unnecessary disqualificationof lawyers for negligible participation in matters during their employment with the government.

The unfairness of Canon 36 compelled ABA to replace it in the 1969 ABA Model Codeof Professional Responsibility.[33] The basic ethical principles in the Code of ProfessionalResponsibility were supplemented by Disciplinary Rules that defined minimum rules of conductto which the lawyer must adhere.[34] In the case of Canon 9, DR 9-101(b)[35]became the applicablesupplementary norm. The drafting committee reformulated the canons into the Model Code ofProfessional Responsibility, and, in August of 1969, the ABA House of Delegates approvedthe Model Code.[36]

Despite these amendments, legal practitioners remained unsatisfied with the results andindefinite standards set forth by DR 9-101(b) and the Model Code of Professional Responsibilityas a whole. Thus, in August 1983, the ABA adopted new Model Rules of ProfessionalResponsibility. The Model Rules used the “restatement format,” where the conduct standardswere set-out in rules, with comments following each rule. The new format was intended to givebetter guidance and clarity for enforcement “because the only enforceable standards were theblack letter Rules.” The Model Rules eliminated the broad canons altogether and reduced theemphasis on narrative discussion, by placing comments after the rules and limiting commentdiscussion to the content of the black letter rules. The Model Rules made a number ofsubstantive improvements particularly with regard to conflicts of interests. [37] In particular, theABA did away with Canon 9, citing the hopeless dependence of the concept of improprietyon the subjective views of anxious clients as well as the norm’s indefinite nature.[38]

In cadence with these changes, the Integrated Bar of the Philippines (IBP) adopted aproposed Code of Professional Responsibility in 1980 which it submitted to this Court forapproval. The Code was drafted to reflect the local customs, traditions, and practices of the barand to conform with new realities. On June 21, 1988, this Court promulgated the Code ofProfessional Responsibility.[39] Rule 6.03 of the Code of Professional Responsibility dealsparticularly with former government lawyers, and provides, viz.:

Rule 6.03 – A lawyer shall not, after leaving government service, accept engagement or employment in connection with any matter in which he had intervened while in said service.

Rule 6.03 of the Code of Professional Responsibility retained the general structure ofparagraph 2, Canon 36 of the Canons of Professional Ethics but replaced the expansivephrase“investigated and passed upon” with the word “intervened.” It is, therefore, properlyapplicable to both “adverse-interest conflicts” and “congruent-interest conflicts.”

The case at bar does not involve the “adverse interest” aspect of Rule 6.03. Respondent Mendoza, it is conceded, has no adverse interest problem when he acted asSolicitor General in Sp. Proc. No. 107812 and later as counsel of respondents Tan, et al. in CivilCase No. 0005 and Civil Case Nos. 0096-0099 before the Sandiganbayan. Nonetheless, thereremains the issue of whether there exists a “congruent-interest conflict” sufficient todisqualify respondent Mendoza from representing respondents Tan, et al.

I.B. The “congruent interest” aspect of Rule 6.03

The key to unlock Rule 6.03 lies in comprehending first, the meaning of “matter” referredto in the rule and, second, the metes and bounds of the “intervention” made by the formergovernment lawyer on the “matter.” The American Bar Association in its Formal Opinion 342,defined “matter” as any discrete, isolatable act as well as identifiable transaction or conductinvolving a particular situation and specific party, and not merely an act of drafting, enforcing orinterpreting government or agency procedures, regulations or laws, or briefing abstract principlesof law.

Firstly, it is critical that we pinpoint the “matter” which was the subject of intervention byrespondent Mendoza while he was the Solicitor General. The PCGG relates the following acts ofrespondent Mendoza as constituting the “matter” where he intervened as a SolicitorGeneral, viz:[40]

The PCGG’s Case for Atty. Mendoza’s Disqualification

The PCGG imputes grave abuse of discretion on the part of the Sandiganbayan (Fifth Division) inissuing the assailed Resolutions dated July 11, 2001 and December 5, 2001 denying the motion to disqualify Atty. Mendoza as counsel for respondents Tan, et al. The PCGG insists that Atty. Mendoza, as then Solicitor General, actively intervened in the closure of GENBANK by advising the Central Bank on how to proceed with the said bank’s liquidation and even filing the petition for its liquidation with the CFI of Manila.

As proof thereof, the PCGG cites the Memorandum dated March 29, 1977 prepared by certain key officials of the Central Bank, namely, then Senior Deputy Governor Amado R. Brinas, then Deputy Governor Jaime C. Laya, then Deputy Governor and General Counsel Gabriel C. Singson, then Special Assistant to the Governor Carlota P. Valenzuela, then Asistant to the Governor Arnulfo B. Aurellano and then Director of Department of Commercial and Savings BankAntonio T. Castro, Jr., where they averred that on March 28, 1977, they had a conference with the Solicitor General (Atty. Mendoza), who advised them on how to proceed with the liquidation of GENBANK. The pertinent portion of the said memorandum states:

Immediately after said meeting, we had a conference with the Solicitor General and he advised that the following procedure should be taken:

1. Management should submit a memorandum to the Monetary Board reporting that studies and evaluation had been made since the last examination of the bank as of August 31, 1976 and it is believed that the bank can not be reorganized or placed ina condition so that it may be permitted to resume business with safety to its depositors and creditors and the general public.

2. If the said report is confirmed by the Monetary Board, it shall order the liquidation of the bank and indicate the manner of its liquidation and approve a liquidation plan.

3. The Central Bank shall inform the principal stockholders of Genbank of the foregoing decision to liquidate the bank and the liquidation plan approved by the Monetary Board.

4. The Solicitor General shall then file a petition in the Court of First Instance reciting the proceedings which had been taken and praying the assistance of the Court in the liquidation of Genbank.

The PCGG further cites the Minutes No. 13 dated March 29, 1977 of the Monetary Board where it was shown that Atty. Mendoza was furnished copies of pertinent documents relating to GENBANK in order to aid him in filing with the court the petition for assistance in the bank’s liquidation. The pertinent portion of the said minutes reads:

The Board decided as follows:

. . .

E. To authorize Management to furnish the Solicitor General with a copy of the subject memorandum of the Director, Department of Commercial and Savings Bank dated March 29, 1977, together with copies of:

1. Memorandum of the Deputy Governor, Supervision and Examination Sector, to the Monetary Board, dated March 25, 1977, containing a report on the current situation of Genbank;

2. Aide Memoire on the Antecedent Facts Re: General Bank and Trust Co., dated March 23, 1977;

3. Memorandum of the Director, Department of Commercial and Savings Bank, to the Monetary Board, dated March 24, 1977, submitting, pursuantto Section 29 of R.A. No. 265, as amended by P.D. No. 1007, a repot on the state of insolvency of Genbank, together with its attachments; and

4. Such other documents as may be necessary or needed by the Solicitor General for his use in then CFI-praying the assistance of the Court in the liquidation of Genbank.

Beyond doubt, therefore, the “matter” or the act of respondent Mendoza as SolicitorGeneral involved in the case at bar is “advising the Central Bank, on how to proceed with thesaid bank’s liquidation and even filing the petition for its liquidation with the CFI of Manila.” Infine, the Court should resolve whether his act of advising the Central Bank on the legalprocedure to liquidate GENBANK is included within the concept of “matter” under Rule6.03. The procedure of liquidation is given in black and white in Republic Act No. 265, section29, viz:

The provision reads in part:

SEC. 29. Proceedings upon insolvency. – Whenever, upon examination by the head of the appropriate supervising or examining department or his examiners or agents into the condition of any bank or non-bank financial intermediary performing quasi-banking functions, it shall be disclosed that the condition of the same is one of insolvency, or that its continuance in business would involve probable loss to its depositors or creditors, it shall be the duty of the department head concerned forthwith, in writing, to inform the Monetary Board of the facts, and the Board may, upon finding the statements of the department head to be true, forbid the institution to do business inthe Philippines and shall designate an official of the Central Bank or a person of recognized competence in banking or finance, as receiver to immediately take charge of its assets and liabilities, as expeditiously as possible collect and gather all the assets and administer the same for the benefit of its creditors, exercising all the powers necessary for these purposes including, but not limited to, bringing suits and foreclosingmortgages in the name of the bank or non-bank financial intermediary performing quasi-banking functions.

. . .

If the Monetary Board shall determine and confirm within the said period that the bank or non-bank financial intermediary performing quasi-banking functions is insolventor cannot resume business with safety to its depositors, creditors and the general public, it shall, if the public interest requires, order its liquidation, indicate the manner of its liquidation and approve a liquidation plan. The Central Bank shall, by the Solicitor General, file a petition in the Court of First Instance reciting the proceedings which havebeen taken and praying the assistance of the court in the liquidation of such institution. The court shall have jurisdiction in the same proceedings to adjudicate disputed claims against the bank or non-bank financial intermediary performing quasi-banking functions and enforce individual liabilities of the stockholders and do all that is necessary to preserve the assets of such institution and to implement the liquidation plan approved by the Monetary Board. The Monetary Board shall designate an official of the Central Bank, or a person of recognized competence in banking or finance, as liquidator who shall take over the functions of the receiver previously appointed by the Monetary Board under this Section. The liquidator shall, with all convenient speed, convert the assets of the banking institution or non-bank financial intermediary performing quasi-banking functions to money or sell, assign or otherwise dispose of the same to creditorsand other parties for the purpose of paying the debts of such institution and he may, in the name of the bank or non-bank financial intermediary performing quasi-banking functions, institute such actions as may be necessary in the appropriate court to collect and recover accounts and assets of such institution.

The provisions of any law to the contrary notwithstanding, the actions of the Monetary Board under this Section and the second paragraph of Section 34 of this Act shall be final and executory, and can be set aside by the court only if there is convincingproof that the action is plainly arbitrary and made in bad faith. No restraining order or injunction shall be issued by the court enjoining the Central Bank from implementing its actions under this Section and the second paragraph of Section 34 of this Act, unless there is convincing proof that the action of the Monetary Board is plainly arbitrary and made in bad faith and the petitioner or plaintiff files with the clerk or judge of the court inwhich the action is pending a bond executed in favor of the Central Bank, in an amount to be fixed by the court. The restraining order or injunction shall be refused or, if

granted, shall be dissolved upon filing by the Central Bank of a bond, which shall be in the form of cash or Central Bank cashier(s) check, in an amount twice the amount of the bond of the petitioner or plaintiff conditioned that it will pay the damages which the petitioner or plaintiff may suffer by the refusal or the dissolution of the injunction. The provisions of Rule 58 of the New Rules of Court insofar as they are applicable and not inconsistent with the provisions of this Section shall govern the issuance and dissolutionof the restraining order or injunction contemplated in this Section.

Insolvency, under this Act, shall be understood to mean the inability of a bank or non-bank financial intermediary performing quasi-banking functions to pay its liabilities as they fall due in the usual and ordinary course of business. Provided, however, That this shall not include the inability to pay of an otherwise non-insolvent bank or non-bankfinancial intermediary performing quasi-banking functions caused by extraordinary demands induced by financial panic commonly evidenced by a run on the bank or non-bank financial intermediary performing quasi-banking functions in the banking or financial community.

The appointment of a conservator under Section 28-A of this Act or the appointment of a receiver under this Section shall be vested exclusively with the Monetary Board, the provision of any law, general or special, to the contrary notwithstanding. (As amended by PD Nos. 72, 1007, 1771 & 1827, Jan. 16, 1981)

We hold that this advice given by respondent Mendoza on the procedure to liquidateGENBANK is not the “matter” contemplated by Rule 6.03 of the Code of ProfessionalResponsibility. ABA Formal Opinion No. 342 is clear as daylight in stressing that the“drafting, enforcing or interpreting government or agency procedures, regulations or laws, orbriefing abstract principles of law” are acts which do not fall within the scope of theterm “matter” and cannot disqualify.

Secondly, it can even be conceded for the sake of argument that the above act ofrespondent Mendoza falls within the definition of matter per ABA Formal Opinion No. 342. Bethat as it may, the said act of respondent Mendoza which is the “matter” involved in Sp. Proc.No. 107812 is entirely different from the “matter” involved in Civil Case No. 0096. Again, theplain facts speak for themselves. It is given that respondent Mendoza had nothing to do with thedecision of the Central Bank to liquidate GENBANK. It is also given that he did not participate inthe sale of GENBANK to Allied Bank. The “matter” where he got himself involved was ininforming Central Bank on the procedure provided by law to liquidate GENBANK thru the courtsand in filing the necessary petition in Sp. Proc. No. 107812 in the then Court of FirstInstance. The subject “matter” of Sp. Proc. No. 107812, therefore, is not the same nor isrelated to but is different from the subject “matter” in Civil Case No. 0096. Civil Case No.0096 involves the sequestration of the stocks owned by respondents Tan, et al., in Allied Bankon the alleged ground that they are ill-gotten. The case does not involve the liquidation ofGENBANK. Nor does it involve the sale of GENBANK to Allied Bank. Whether the shares ofstock of the reorganized Allied Bank are ill-gotten is far removed from the issue of thedissolution and liquidation of GENBANK. GENBANK was liquidated by the Central Bank due,among others, to the alleged banking malpractices of its owners and officers. In other words, thelegality of the liquidation of GENBANK is not an issue in the sequestration cases. Indeed, thejurisdiction of the PCGG does not include the dissolution and liquidation of banks. It goeswithout saying that Code 6.03 of the Code of Professional Responsibility cannot apply torespondent Mendoza because his alleged intervention while a Solicitor General in Sp.

Proc. No. 107812 is an intervention on a matter different from the matter involved in CivilCase No. 0096.

Thirdly, we now slide to the metes and bounds of the “intervention” contemplated by Rule6.03. “Intervene” means, viz.:

1: to enter or appear as an irrelevant or extraneous feature or circumstance . . . 2: to occur, fall, or come in between points of time or events . . . 3: to come in or between by way of hindrance or modification: INTERPOSE . . . 4: to occur or lie between two things (Paris, where the same city lay on both sides of an intervening river . . .)[41]

On the other hand, “intervention” is defined as:

1: the act or fact of intervening: INTERPOSITION; 2: interference that may affect the interests of others.[42]

There are, therefore, two possible interpretations of the word “intervene.” Under the firstinterpretation, “intervene” includes participation in a proceeding even if the intervention isirrelevant or has no effect or little influence.[43] Under the second interpretation, “intervene” onlyincludes an act of a person who has the power to influence the subject proceedings. [44]We holdthat this second meaning is more appropriate to give to the word “intervention” under Rule 6.03of the Code of Professional Responsibility in light of its history. The evils sought to be remediedby the Rule do not exist where the government lawyer does an act which can be considered asinnocuous such as “x x x drafting, enforcing or interpreting government or agency procedures,regulations or laws, or briefing abstract principles of law.”

In fine, the intervention cannot be insubstantial and insignificant. Originally, Canon 36provided that a former government lawyer “should not, after his retirement, accept employment inconnection with any matter which he has investigated or passed upon while in such office oremploy.” As aforediscussed, the broad sweep of the phrase “which he has investigated or passedupon” resulted in unjust disqualification of former government lawyers. The 1969 Code restrictedits latitude, hence, in DR 9-101(b), the prohibition extended only to a matter in which the lawyer,while in the government service, had “substantial responsibility.” The 1983 Model Rulesfurther constricted the reach of the rule. MR 1.11(a) provides that “a lawyer shall not represent aprivate client in connection with a matter in which the lawyer participated personally andsubstantially as a public officer or employee.”

It is, however, alleged that the intervention of respondent Mendoza in Sp. Proc. No. 107812is significant and substantial. We disagree. For one, the petition in the special proceedings isan initiatory pleading, hence, it has to be signed by respondent Mendoza as the then sittingSolicitor General. For another, the record is arid as to the actualparticipation of respondentMendoza in the subsequent proceedings. Indeed, the case was in slumberville for a longnumber of years. None of the parties pushed for its early termination. Moreover, we note thatthe petition filed merely seeks the assistance of the court in the liquidation of GENBANK. Theprincipal role of the court in this type of proceedings is to assist the Central Bank indetermining claims of creditors against the GENBANK. The role of the court is not strictly as acourt of justice but as an agent to assist the Central Bank in determining the claims of creditors. In such a proceeding, the participation of the Office of the Solicitor General is not that of theusual court litigator protecting the interest of government.

II

Balancing Policy Considerations

To be sure, Rule 6.03 of our Code of Professional Responsibility represents a commendableeffort on the part of the IBP to upgrade the ethics of lawyers in the government service. Asaforestressed, it is a take-off from similar efforts especially by the ABA which have not beenwithout difficulties. To date, the legal profession in the United States is still fine tuning its DR 9-101(b) rule.

In fathoming the depth and breadth of Rule 6.03 of our Code of Professional Responsibility,the Court took account of various policy considerations to assure that its interpretation andapplication to the case at bar will achieve its end without necessarily prejudicing other values ofequal importance. Thus, the rule was not interpreted to cause a chilling effect on governmentrecruitment of able legal talent. At present, it is already difficult for government to matchcompensation offered by the private sector and it is unlikely that government will be able toreverse that situation. The observation is not inaccurate that the only card that the governmentmay play to recruit lawyers is have them defer present income in return for the experience andcontacts that can later be exchanged for higher income in private practice. [45] Rightly, JudgeKaufman warned that the sacrifice of entering government service would be too great for mostmen to endure should ethical rules prevent them from engaging in the practice of a technicalspecialty which they devoted years in acquiring and cause the firm with which they becomeassociated to be disqualified.[46] Indeed, “to make government service more difficult to exit canonly make it less appealing to enter.”[47]

In interpreting Rule 6.03, the Court also cast a harsh eye on its use as a litigation tactic toharass opposing counsel as well as deprive his client of competent legal representation. Thedanger that the rule will be misused to bludgeon an opposing counsel is not a mere guesswork. The Court of Appeals for the District of Columbia has noted “the tactical use of motions todisqualify counsel in order to delay proceedings, deprive the opposing party of counsel of itschoice, and harass and embarrass the opponent,” and observed that the tactic was “so prevalentin large civil cases in recent years as to prompt frequent judicial and academiccommentary.”[48] Even the United States Supreme Court found no quarrel with the Court ofAppeals’ description of disqualification motions as “a dangerous game.” [49] In the case at bar,the new attempt to disqualify respondent Mendoza is difficult to divine. The disqualification ofrespondent Mendoza has long been a dead issue. It was resuscitated after the lapse of manyyears and only after PCGG has lost many legal incidents in the hands of respondent Mendoza.For a fact, the recycled motion for disqualification in the case at bar was filed more than fouryears after the filing of the petitions for certiorari, prohibition and injunction with the SupremeCourt which were subsequently remanded to the Sandiganbayan and docketed as Civil CaseNos. 0096-0099.[50] At the very least, the circumstances under which the motion to disqualify inthe case at bar were refiled put petitioner’s motive as highly suspect.

Similarly, the Court in interpreting Rule 6.03 was not unconcerned with the prejudiceto the client which will be caused by its misapplication. It cannot be doubted that granting adisqualification motion causes the client to lose not only the law firm of choice, but probably anindividual lawyer in whom the client has confidence.[51] The client with a disqualified lawyer muststart again often without the benefit of the work done by the latter.[52] The effects of this prejudiceto the right to choose an effective counsel cannot be overstated for it can result in denial of dueprocess.

The Court has to consider also the possible adverse effect of a truncated reading ofthe rule on the official independence of lawyers in the government service. According toProf. Morgan: “An individual who has the security of knowing he or she can find privateemployment upon leaving the government is free to work vigorously, challenge official positionswhen he or she believes them to be in error, and resist illegal demands by superiors. Anemployee who lacks this assurance of private employment does not enjoy such freedom.” [53] Headds: “Any system that affects the right to take a new job affects the ability to quit the old job andany limit on the ability to quit inhibits official independence.” [54] The case at bar involves theposition of Solicitor General, the office once occupied by respondent Mendoza. It cannot beoverly stressed that the position of Solicitor General should be endowed with a greatdegree of independence. It is this independence that allows the Solicitor General torecommend acquittal of the innocent; it is this independence that gives him the right to refuse todefend officials who violate the trust of their office. Any undue dimunition of the independence ofthe Solicitor General will have a corrosive effect on the rule of law.

No less significant a consideration is the deprivation of the former government lawyerof the freedom to exercise his profession. Given the current state of our law, thedisqualification of a former government lawyer may extend to all members of his law firm.[55] Former government lawyers stand in danger of becoming the lepers of the legal profession.

It is, however, proffered that the mischief sought to be remedied by Rule 6.03 of the Code ofProfessional Responsibility is the possible appearance of impropriety and loss of publicconfidence in government. But as well observed, the accuracy of gauging public perceptions is ahighly speculative exercise at best[56] which can lead to untoward results.[57] No less than JudgeKaufman doubts that the lessening of restrictions as to former government attorneys will haveany detrimental effect on that free flow of information between the government-client and itsattorneys which the canons seek to protect.[58] Notably, the appearance of impropriety theoryhas been rejected in the 1983 ABA Model Rules of Professional Conduct[59] and some courtshave abandoned per se disqualification based on Canons 4 and 9 when an actual conflict ofinterest exists, and demand an evaluation of the interests of the defendant, government, thewitnesses in the case, and the public.[60]

It is also submitted that the Court should apply Rule 6.03 in all its strictness for it correctlydisfavors lawyers who “switch sides.” It is claimed that “switching sides” carries the dangerthat former government employee may compromise confidential official information in theprocess. But this concern does not cast a shadow in the case at bar. As afore-discussed, the actof respondent Mendoza in informing the Central Bank on the procedure how to liquidateGENBANK is a different matter from the subject matter of Civil Case No. 0005 which is aboutthe sequestration of the shares of respondents Tan, et al., in Allied Bank. Consequently, thedanger that confidential official information might be divulged is nil, if not inexistent. To be sure,there are no inconsistent “sides” to be bothered about in the case at bar. For there is noquestion that in lawyering for respondents Tan, et al., respondent Mendoza is not working againstthe interest of Central Bank. On the contrary, he is indirectly defending the validity of the actionof Central Bank in liquidating GENBANK and selling it later to Allied Bank. Their interestscoincide instead of colliding. It is for this reason that Central Bank offered no objection to thelawyering of respondent Mendoza in Civil Case No. 0005 in defense of respondents Tan, etal. There is no switching of sides for no two sides are involved.

It is also urged that the Court should consider that Rule 6.03 is intended to avoid conflict ofloyalties, i.e., that a government employee might be subject to a conflict of loyalties while still in

government service.[61] The example given by the proponents of this argument is that a lawyerwho plans to work for the company that he or she is currently charged with prosecuting might betempted to prosecute less vigorously.[62] In the cautionary words of the Association of the BarCommittee in 1960: “The greatest public risks arising from post employment conduct may welloccur during the period of employment through the dampening of aggressive administration ofgovernment policies.”[63] Prof. Morgan, however, considers this concern as “probablyexcessive.”[64] He opines “x x x it is hard to imagine that a private firm would feel secure hidingsomeone who had just been disloyal to his or her last client – the government. Interviews withlawyers consistently confirm that law firms want the ‘best’ government lawyers – the ones whowere hardest to beat – not the least qualified or least vigorous advocates.” [65] But again, thisparticular concern is a non factor in the case at bar. There is no charge against respondentMendoza that he advised Central Bank on how to liquidate GENBANK with an eye in laterdefending respondents Tan, et al. of Allied Bank. Indeed, he continues defending both theinterests of Central Bank and respondents Tan, et al. in the above cases.

Likewise, the Court is nudged to consider the need to curtail what is perceived asthe “excessive influence of former officials” or their “clout.”[66] Prof. Morgan again warnsagainst extending this concern too far. He explains the rationale for his warning, viz: “Much ofwhat appears to be an employee’s influence may actually be the power or authority of his or herposition, power that evaporates quickly upon departure from government x x x.” [67] More, hecontends that the concern can be demeaning to those sitting in government. To quote himfurther: “x x x The idea that, present officials make significant decisions based on friendshiprather than on the merit says more about the present officials than about their former co-workerfriends. It implies a lack of will or talent, or both, in federal officials that does not seem justified orintended, and it ignores the possibility that the officials will tend to disfavor their friends in order toavoid even the appearance of favoritism.”[68]

III

The question of fairness

Mr. Justices Panganiban and Carpio are of the view, among others, that the congruentinterest prong of Rule 6.03 of the Code of Professional Responsibility should be subject to aprescriptive period. Mr. Justice Tinga opines that the rule cannot apply retroactively torespondent Mendoza. Obviously, and rightly so, they are disquieted by the fact that (1) whenrespondent Mendoza was the Solicitor General, Rule 6.03 has not yet adopted by the IBP andapproved by this Court, and (2) the bid to disqualify respondent Mendoza was made after thelapse of time whose length cannot, by any standard, qualify as reasonable. At bottom, the pointthey make relates to the unfairness of the rule if applied without any prescriptive period andretroactively, at that. Their concern is legitimate and deserves to be initially addressed by theIBP and our Committee on Revision of the Rules of Court.

IN VIEW WHEREOF, the petition assailing the resolutions dated July 11, 2001 andDecember 5, 2001 of the Fifth Division of the Sandiganbayan in Civil Case Nos. 0096-0099 isdenied.

No cost.

SO ORDERED.

FIRST DIVISION

FELICITAS S. QUIAMBAO, Adm. Case No. 6708

Complainant, (CBD Case No. 01-874) Present: DAVIDE, JR., C.J., (Chairman), - versus - QUISUMBING, SANTIAGO, CARPIO, and AZCUNA, JJ.

ATTY. NESTOR A. BAMBA , Promulgated: Respondent.

August 25, 2005 X- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -X

RESOLUTION DAVIDE, JR., C.J.:

We are aware of the hapless fact that there are not enough lawyers to

serve an exploding populat ion. This unfor tunate state of affa irs, however, wi l l

not seize this Court from exercis ing i ts discipl inary power over lawyers culpable

of ser ious indiscret ions. The incidence of publ ic force must be deployed to bear

upon the community to eventual ly forge a legal profession that provides qual i ty,

ethical , accessible, and cost-effect ive legal service to our people and whose

members are wil l ing and able to answer the cal l to publ ic service.

In this administrat ive case for disbarment, complainant Fel ic i tas S.

Quiambao charges respondent Atty. Nestor A. Bamba with v iolat ion of the Code

of Professional Responsibi l i ty for represent ing confl ict ing interests when the

latter f i led a case against her whi le he was at that t ime representing her in

another case, and for committ ing other acts of dis loyalty and double-deal ing.

From June 2000 to January 2001, the complainant was the president and

managing director of Al l ied Invest igat ion Bureau, Inc. (AIB), a family-owned

corporat ion engaged in providing securi ty and invest igat ion services. She avers

that she procured the legal services of the respondent not only for the corporate

affairs of AIB but also for her personal case. Part icular ly, the respondent acted

as her counsel of record in an ejectment case against Spouses Sant iago and

Flor i ta Torroba f i led by her on 29 December 2000 before the Metropol i tan Trial

Court (MeTC) of Parañaque City, which was docketed as Civi l Case No. 11928.

She paid attorney’s fees for respondent ’s legal services in that case. [ 1 ] About

six months af ter she resigned as AIB president, or on 14 June 2001, the

respondent f i led on behal f of AIB a complaint for replevin and damages against

her before the MeTC of Quezon City for the purpose of recovering from her the

car of AIB assigned to her as a service vehic le. This he did wi thout wi thdrawing

as counsel of record in the ejectment case, which was then st i l l pending. [ 2 ]

Apart from the foregoing l i t igat ion matter, the complainant, in her Posit ion

Paper, charges the respondent wi th acts of dis loyalty and double-deal ing. She

avers that the respondent proposed to her that she organize her own securi ty

agency and that he would assist her in i ts organizat ion, causing her to resign as

president of AIB. The respondent indeed assisted her in December 2000 in the

formation of another secur i ty agency, Quiambao Risk Management Special ists,

Inc., (QRMSI) , which was later registered under complainant ’s name, with the

respondent as a “s i lent par tner” represented by his associate Atty. Gerardo P.

Hernandez. The respondent was paid attorney’s fees for his legal services in

organizing and incorporat ing QRMSI. He also planned to “steal” or “pirate”

some of the more important c l ients of AIB. While serving as legal counsel for

AIB and a “s i lent partner” of QRMSI, he convinced complainant’s brother

Leodegario Quiambao to organize another securi ty agency, San Esteban

Securi ty Services, Inc. (SESSI) where he (the respondent) served as i ts

incorporator, director, and president. The respondent and Leodegar io then

i l legal ly diverted the funds of AIB to fund the incorporat ion of SESSI, and

l ikewise planned to eventual ly c lose down the operat ions of AIB and transfer the

business to SESSI. [ 3 ]

For his part, the respondent admits that he represented the complainant

in the aforementioned ejectment case and later represented AIB in the replevin

case against her. He, however, denies that he was the “personal lawyer” of the

complainant, and avers that he was made to bel ieve that i t was part of h is

funct ion as counsel for AIB to handle even the “personal cases” of i ts off icers.

Even assuming that the complainant confided to him pr iv i leged informat ion

about her legal interests, the ejectment case and the replevin case are

unrelated cases involv ing dif ferent issues and part ies and, therefore, the

pr iv i leged information which might have been gathered from one case would

have no use in the other. At any rate, i t was the complainant herself who

insisted that he stay as her counsel despite the perceived differences among

her, her brother, and AIB over the motor vehic le subject of the replevin case.

The complainant even asked him to assist her in her monetary cla ims against

AIB. [ 4 ]

The respondent also denies the charge raised by the complainant in her

posit ion paper that he agreed to be a “s i lent par tner” of QRMSI through his

nominee, Atty. Gerardo P. Hernandez, who was his former law partner. He

decl ined complainant’s offer to assume that role and suggested Atty. Hernandez

in his place; thus, 375 shares of stock were registered in Atty. Hernandez’s

name as considerat ion of his (Atty. Hernandez’s) legal services as corporate

secretary and legal counsel of QRMSI. The respondent also denies that he

convinced complainant ’s brother Leodegar io to organize another secur i ty

agency and that the funds of AIB were unlawful ly diverted to SESSI. I t was to

complement the business of AIB, which was then in danger of col lapse, that

SESSI was establ ished. Leodegario’s wife and her son have the effect ive

control over SESSI. Respondent’s subscribed shareholdings in SESSI comprise

only 800 shares out of 12,500 subscribed shares. He serves AIB and SESSI in

different capacit ies: as legal counsel of the former and as president of the

latter. [ 5 ]

In his Report and Recommendation [ 6 ] dated 31 August 2004, the

invest igat ing commissioner of the IBP found the respondent gui l ty of

representing conf l ict ing interests based on the fo l lowing undisputed facts: f i rst ,

the respondent was st i l l complainant’s counsel of record in the ejectment case

when he f i led, as legal counsel of AIB, the replevin case against her; and

second, the respondent was st i l l the legal counsel of AIB when he advised the

complainant on the incorporat ion of another securi ty agency, QRMSI, and

recommended his former law partner, Atty. Gerardo Hernandez, to be i ts

corporate secretary and legal counsel and also when he conferred with

Leodegario to organize another securi ty agency, SESSI, where the respondent

became an incorporator, stockholder, and president. Thus, the invest igat ing

commissioner recommended that the respondent be suspended from the

pract ice of law for one year.

The IBP Board of Governors adopted and approved the invest igat ing

commissioner ’s report and recommendation, but reduced the penalty from one

year to a stern repr imand. [ 7 ]

The issue in th is case is whether the respondent is gui l ty of misconduct

for represent ing confl ict ing interests in contravent ion of the basic tenets of the

legal profession.

Rule 15.03, Canon 5 of the Code of Professional Responsibi l i ty

provides: “A lawyer shal l not represent confl ict ing interests except by wr it ten

consent of al l concerned given after a ful l disclosure of the facts.” This

prohibit ion is founded on pr inciples of publ ic pol icy and good taste. [ 8 ] In the

course of a lawyer-cl ient relat ionship, the lawyer learns al l the facts connected

with the cl ient ’s case, including the weak and strong points of the case. The

nature of that relat ionship is, therefore, one of trust and confidence of the

highest degree. [ 9 ] I t behooves lawyers not only to keep inviolate the cl ient ’s

conf idence, but also to avoid the appearance of treachery and double-deal ing

for only then can l i t igants be encouraged to entrust their secrets to their

lawyers, which is of paramount importance in the administrat ion of just ice. [ 1 0 ]

In broad terms, lawyers are deemed to represent confl ict ing interests

when, in behalf of one cl ient, i t is their duty to contend for that which duty to

another c l ient requires them to oppose. [ 11 ] Developments in jur isprudence have

part icular ized various tests to determine whether a lawyer ’s conduct l ies within

this proscript ion. One test is whether a lawyer is duty-bound to f ight for an

issue or c laim in behalf of one cl ient and, at the same t ime, to oppose that cla im

for the other c l ient. [ 1 2 ] Thus, i f a lawyer ’s argument for one cl ient has to be

opposed by that same lawyer in arguing for the other c l ient , there is a v io lat ion

of the rule.

Another test of inconsistency of interests is whether the acceptance of a

new relat ion would prevent the fu l l discharge of the lawyer ’s duty of undiv ided

fidel i ty and loyalty to the cl ient or invite suspic ion of unfaithfulness or double-

deal ing in the performance of that duty. [ 1 3 ] St i l l another test is whether the

lawyer would be cal led upon in the new relat ion to use against a former c l ient

any conf idential informat ion acquired through their connection or previous

employment. [ 1 4 ]

The proscript ion against representat ion of confl ict ing interests appl ies to

a situat ion where the opposing part ies are present c l ients in the same act ion or

in an unrelated act ion. I t is of no moment that the lawyer would not be cal led

upon to contend for one cl ient that which the lawyer has to oppose for the other

cl ient, or that there would be no occasion to use the conf ident ial informat ion

acquired from one to the disadvantage of the other as the two act ions are

wholly unrelated. I t is enough that the opposing part ies in one case, one of

whom would lose the suit , are present c l ients and the nature or condit ions of

the lawyer ’s respect ive retainers wi th each of them would affect the

performance of the duty of undiv ided f idel i ty to both c l ients. [ 1 5 ]

In this case, i t is undisputed that at the t ime the respondent f i led the

replevin case on behal f of AIB he was st i l l the counsel of record of the

complainant in the pending ejectment case. We do not sustain respondent ’s

theory that s ince the ejectment case and the replevin case are unrelated cases

fraught wi th different issues, part ies, and subject matters, the prohibit ion is

inappl icable. His representat ion of opposing cl ients in both cases, though

unrelated, obviously const i tutes conf l ict of interest or, at the least, invites

suspicion of double-deal ing. While the respondent may assert that the

complainant expressly consented to his continued representat ion in the

ejectment case, the respondent fai led to show that he ful ly disclosed the facts

to both his cl ients and he fai led to present any writ ten consent of the

complainant and AIB as required under Rule 15.03, Canon 15 of the Code of

Professional Responsibi l i ty.

Neither can we accept respondent ’s plea that he was duty-bound to

handle al l the cases referred to him by AIB, including the personal cases of i ts

off icers which had no connection to i ts corporate affairs. That the

representat ion of confl ict ing interest is in good faith and with honest intent ion

on the part of the lawyer does not make the prohibi t ion inoperat ive. [ 1 6 ]

Moreover, lawyers are not obl iged to act either as an adviser or advocate for

every person who may wish to become their c l ient . They have the r ight to

decl ine such employment, subject, however, to Canon 14 of the Code of

Professional Responsibi l i ty. [ 1 7 ] Although there are instances where lawyers

cannot decl ine representat ion, [ 1 8 ] they cannot be made to labor under conf l ict of

interest between a present c l ient and a prospective one. [ 1 9 ]

Addit ional ly, in his posit ion paper, the respondent al leges that when the

complainant invited the respondent to join QRMSI, he “vehement ly refused to

join them due to his perception of conflicting interest as he was then (and st i l l

is at present) the Legal Counsel” of AIB, which is also a secur i ty agency. [ 2 0 ] To

bolster his al legation, he invoked the aff idavits of complainant’s wi tnesses

which contained statements of h is apprehension of conf l ict of interest should he

join QRMSI. [ 2 1 ]

Surpr is ingly, despite his apprehension or awareness of a possible

conf l ict of interest should he join QRMSI, the respondent later al lowed himself

to become an incorporator, stockholder, and president of SESSI, which is also a

securi ty agency. He just i f ied his act by c laiming that that whi le both AIB and

SESSI are engaged in securi ty agency business, he is serving in di fferent

capacit ies. As the in-house legal counsel of AIB, he “serves i ts legal interest

the parameter of which evolves around legal matters” such as protect ing the

legal r ights and interest of the corporat ion; conducting an invest igat ion or a

hearing on violat ions of company rules and regulat ions of their off ice employees

and securi ty guards; sending demand letters in col lect ion cases; and

representing the corporat ion in any l i t igat ion for or against i t . And as president

of SESSI, he serves the operat ional aspects of the business such as “how does

it operate[ ] , how much do they pr ice their services, what k ind or how do they

train[] their securi ty guards, how they sol ic i t c l ients.” Thus, confl ict of interest

is far- fetched. Moreover, the respondent argues that the complainant, not being

a stockholder of AIB and SESSI, has no r ight to quest ion his al leged confl ict of

interest in serving the two securi ty agencies. [ 2 2 ]

While the complainant lacks personal i ty to quest ion the al leged confl ict

of interests on the part of the respondent in serving both secur i ty agencies, we

cannot just turn a bl ind eye to respondent’s act. I t must be noted that the

proscript ion against representat ion of confl ict ing interests f inds appl icat ion

where the confl ict ing interests ar ise with respect to the same general matter

however sl ight the adverse interest may be. I t appl ies even i f the confl ict

pertains to the lawyer ’s pr ivate act iv i ty or in the performance of a funct ion in a

non-professional capacity. [ 2 3 ] In the process of determining whether there is a

conf l ict of interest, an important cr i ter ion is probabi l i ty, not certainty, of

conf l ict .

Since the respondent has f inancial or pecuniary interest in SESSI, which

is engaged in a business competing with his c l ient ’s, and, more important ly, he

occupies the highest posit ion in SESSI, one cannot help entertaining a doubt on

his loyalty to his c l ient AIB. This kind of s i tuat ion passes the second test of

conf l ict of interest, which is whether the acceptance of a new relat ionship would

prevent the ful l discharge of the lawyer ’s duty of undiv ided f idel i ty and loyal ty to

the cl ient or invite suspic ion of unfaithfulness or double-deal ing in the

performance of that duty. The close relat ionship of the major i ty stockholders of

both companies does not negate the confl ict of interest. Neither does his

protestat ion that his shareholding in SESSI is “a mere pebble among the

sands.”

In view of al l of the foregoing, we f ind the respondent gui l ty of ser ious

misconduct for representing confl ict ing interests.

Furthermore, i t must be noted that Republic Act No. 5487, otherwise

known as the Private Securi ty Agency Law , prohibi ts a person from organizing

or having an interest in more than one securi ty agency. From respondent ’s

posit ion paper, i t can be cul led that Leodegario Quiambao is the president and

managing director of AIB, holding 60% of the outstanding shares; whi le his four

other s ibl ings who are permanent residents in the United States own the

remaining 40%. [ 2 4 ] This prohibit ion notwithstanding, the respondent organized

SESSI, with Leodegario’s wi fe and son as major i ty stockholders holding about

70% of the outstanding shares and with him (the respondent), as well as the

rest of the stockholders, holding minimal shares. [ 2 5 ] In doing so, the

respondent v ir tual ly al lowed Leodegario and the latter ’s wife to v iolate or

circumvent the law by having an interest in more than one securi ty agency. I t

must be noted that in the aff idavit [ 2 6 ] of Leodegar io ’s wife, she mentioned of

their conjugal property. In the absence of evidence to the contrary, the

property relat ion of Leodegar io and his wi fe can be presumed to be that of

conjugal partnership of gains; hence, the major i ty shares in AIB and SESSI are

the conjugal property of Leodegario and his wi fe, thereby placing themselves in

possession of an interest in more than one securi ty agency in contravention of

R.A. No. 5487. Thus, in organizing SESSI, the respondent v io lated Rule 1.02,

Canon 1 of the Code of Professional Responsibi l i ty, which mandates lawyers to

promote respect for the law and refrain from counsel ing or abett ing act iv i t ies

aimed at def iance of the law.

As to the recommendation that the penalty be reduced from a suspension

of one year to a stern warning, we f ind the same to be without basis. We are

disturbed by the reduct ion made by the IBP Board of Governors of the penalty

recommended by the invest igat ing commissioner without clearly and dist inct ly

stat ing the facts and reasons on which that reduct ion is based.

Sect ion 12(a) , Rule 139-B of the Rules of Court reads in part as

fol lows:

SEC. 12. Review and decis ion by the Board of Governors . – (a) Every case heard by an invest igator shal l be reviewed by

the IBP Board of Governors upon the record and evidencetransmit ted to i t by the Invest igator wi th his report. The decis ion ofthe Board upon such review shal l be in wri t ing and shal l clear lyand dist inct ly state the facts and the reasons on which i t is based.

We may consider the resolut ion of the IBP Board of Governors as a

memorandum decis ion adopting by reference the report of the invest igat ing

commissioner. However, we look with disfavor the change in the recommended

penalty without any explanation therefor. Again, we remind the IBP Board of

Governors of the importance of the requirement to announce in plain terms i ts

legal reasoning, s ince the requirement that i ts decis ion in discipl inary

proceedings must state the facts and the reasons on which i ts decis ion is based

is akin to what is required of the decis ions of courts of record. [ 2 7 ] The reasons

for handing down a penal ty occupy no lesser stat ion than any other port ion of

the rat io.

In s imi lar cases where the respondent was found gui l ty of representing

conf l ict ing interests a penalty ranging from one to three years’ suspension was

imposed. [ 2 8 ] In this case, we f ind that a suspension from the pract ice of law for

one year is warranted.

WHEREFORE , respondent Atty. Nestor A. Bamba is hereby

held GUILTY of vio lat ion of Rule 15.03 of Canon 15 and Rule 1.02 of Canon 1 of

the Code of Professional Responsibi l i ty. He is SUSPENDED f rom the pract ice

of law for a per iod of ONE (1) YEAR effect ive from receipt of this Resolut ion,

with a warning that a s imilar infract ion in the future shal l be dealt with more

severely.

Let copies of this Resolut ion be furnished to the Office of the Bar

Confidant and the Integrated Bar of the Phi l ippines.

A.C. No. 4354 April 22, 2002

LOLITA ARTEZUELA, complainant, vs.ATTY. RICARTE B. MADERAZO, respondent.

PUNO, J.:

For his failure to meet the exacting standards of professional ethics, the Board of Governors of the Integrated Bar of the Philippines (IBP) in its Resolution of May 2, 2000 recommended the suspension from the practice of law of respondent Atty. Ricarte B. Maderazo for the period of six (6) months, with a stern warning that repetition of the same act will be dealt with more severely. Respondent allegedly represented conflicting interests in violation of Canon 6 of the Code of Professional Ethics, and Canon 15 and Rule 15.03 of the Code of Professional Responsibility.1

By way of a Motion for Reconsideration,2 respondent now comes before this Court to challenge the basis of the IBP's resolution, and prays for its reversal.

The factual antecedents of the case are as follows: On or about 3:00 in the early morning of December 24, 1992, Allan Echavia had a vehicular accident at Caduman St., corner H. Abellana St., Mandaue City. At the time of the accident, Echavia was driving a Ford Telstar car owned by aJapanese national named Hirometsi Kiyami, but was registered in the name of his brother-in-law,Jun Anthony Villapez. The car rammed into a small carinderia owned by complainant Lolita Artezuela.3

The destruction of the complainant's carinderia caused the cessation of the operation of her small business, resulting to her financial dislocation. She incurred debts from her relatives and due to financial constraints, stopped sending her two children to college.4

Complainant engaged the services of the respondent in filing a damage suit against Echavia, Villapez and one Bernardo Sia.5 Docketed as Civil Case No. 13666, the case was assigned to Branch 14 of the Regional Trial Court of Cebu. An Amended Complaint was thereafter filed, impleading Echavia, Kiyami and Villapez, and dropping Sia as a party-defendant.6 For his services, complainant paid the respondent the amount of Ten Thousand Pesos (P10,000.00) as attorney's fees and Two Thousand Pesos (P2,000.00) as filing fee.7 However, the case was dismissed on March 22, 1994, allegedly upon the instance of the complainant and her husband.8

Because of the dismissal of Civil Case No. 13666, complainant filed a civil case for damages against the respondent. It was docketed as CEB-18552 and assigned to Branch 57, Regional Trial Court of Cebu City. The case was dismissed on June 12, 2001.9

On November 24, 1994, Artezuela filed before this Court a verified complaint for disbarment against the respondent. She alleged that respondent grossly neglected his duties as a lawyer and failed to represent her interests with zeal and enthusiasm. According to her, when Civil Case No. 13666 was scheduled for pre-trial conference on August 20, 1993, respondent asked for its postponement although all the parties were present. Notwithstanding complainant's persistent and repeated follow-up, respondent did not do anything to keep the case moving. He withdrew as counsel without obtaining complainant's consent.10

Complainant also claimed that respondent engaged in activities inimical to her interests. While acting as her counsel, respondent prepared Echavia's Answer to the Amended Complaint. The said document was even printed in respondent's office. Complainant further averred that it was respondent who sought the dismissal of the case, misleading the trial court into thinking that the dismissal was with her consent.11

Respondent denied the complainant's allegations and averred that he conscientiously did his partas the complainant's lawyer in Civil Case No. 13666. He withdrew as counsel because the complainant was uncooperative and refused to confer with him. He also gave several notices to the complainant and made known his intention before he filed his Manifestation to withdraw as counsel. Because of the severed relationship, the lower court, after holding a conference, decided to grant respondent's manifestation and advised the complainant to secure the services of a new lawyer. Complainant, however, refused and instead, sought the dismissal of the case.12

Respondent alleged that he sought the postponement of the Pre-Trial Conference scheduled on August 20, 1993 so that he could file the Amended Complaint. He admitted that Echavia's Answer to the Amended Complaint was printed in his office but denied having prepared the document and having acted as counsel of Echavia. He claimed that complainant requested him to prepare Echavia's Answer but he declined. Echavia, however, went back to his office and asked respondent's secretary to print the document. Respondent intimated that the complainant and Echavia have fabricated the accusations against him to compel him to pay the amount ofP500,000.00.13

This Court referred the complaint to the Integrated Bar of the Philippines (IBP). The IBP-Visayas Regional Committee on Bar Discipline formed an Investigating Committee to hear the disbarmentcomplaint.

On October 6, 1999, Commissioner Gabriel T. Ingles issued a Report finding the respondent guilty of representing conflicting interests, in violation of Canon 15 and Rule 15.03 of the Code ofProfessional Responsibility, as well as, of Canon 6 of the Code of Professional Ethics. He recommended that the respondent be suspended from the practice of law for a period of one (1) year.14 Commissioner Ingles did not rule on the other issues.

As aforesaid, the Board of Governors of the Integrated Bar of the Philippines upheld the findings of the Committee with modification only as to the penalty.

Seeking reconsideration of the IBP's resolution, respondent contends that the Investigating Committee did not conduct trial; hence, he was not able to confront and examine the witnesses

against him. He argues that the Investigating Committee's finding that he represented Echavia is contrary to court records and the complainant's own testimony in CEB-18552. He also casts doubt on the credibility of the Investigating Committee to render just and fair recommendations considering that the Investigating Commissioner and the respondent are counsel-adversaries in another case, Civil Case No. R-33277. Finally, he questions the imposition of a six-month suspension, which he claims to be harsh considering that his private practice is his only source ofincome.15

After carefully examining the records, as well as the applicable laws and jurisprudence on the matter, this Court is inclined to uphold the IBP's resolution.1âwphi1.nêt

In administrative cases, the requirement of notice and hearing does not connote full adversarial proceedings, as "actual adversarial proceedings become necessary only for clarification or when there is a need to propound searching questions to witnesses who give vague testimonies."16 Due process is fulfilled when the parties were given reasonable opportunity to be heard and to submit evidence in support of their arguments.17

In the case at bar, records show that respondent repeatedly sought the postponement of the hearings, prompting the Investigating Commissioner to receive complainant's evidence ex parte and to set the case for resolution after the parties have submitted their respective memorandum. Hence:

"The records show that this is already the third postponement filed by respondent namelyDecember 12, 1996 (sic), January 3, 1996 and April 1, 1996.

The Commission for the last time, will cancel today's hearing and can no longer tolerate any further postponement. Notify respondent by telegram for the hearing for (sic) April 22,1996 at 2:00 P.M. Said hearing is intransferable in character.

In the meantime, complainant affirmed her complaint and likewise her witness, Allan Echavia, also affirmed the contents of his affidavit and further stated that he had executed the same and understood the contents thereof."18

It is by his own negligence that the respondent was deemed to have waived his right to cross-examine the complainant and her witness. He cannot belatedly ask this Court to grant new trial after he has squandered his opportunity to exercise his right.

Respondent's contention that the finding of the Investigating Committee was contrary to the records and the complainant's own admission in CEB-18552 is without merit. It is true that Atty. Aviola was Echavia's counsel-of-record in Civil Case No. 13666 as evidenced by the certification from the clerk of court,19 and as admitted by the complainant in CEB-18552, viz:

"ATTY. MADERAZO: (To witness- ON CROSS)

Q: Madam witness, you mentioned that the defendant in this case was the counsel of Allan Echavia as early as August 20, 1993, wherein you learned for the first time of this fact when you say he is counsel of Allan Echavia. (sic) You mean he is the counsel of record of Allan Echavia in the Civil Case before Judge Dacudao? Is that what you mean?

A: What I learned was that Atty. Alviola was the counsel of Allan Echavia in the case before Judge Dacudao but I heard Atty. Maderazo telling Allan Echavia not to admit that Atty. Maderazo is appearing for me because he will be the one to coordinate with Allan's case.

Q: So it is clear that the defendant in this case is not the counsel of record of Allan Echavia. It was Atty. Alviola stated by you now?

A: Atty. Maderazo was not Allan Echavia's counsel but it was Atty. Alviola who was the counsel of record of Allan Echavia."20

Nevertheless, the issue in this case is not whether the respondent also acted as the counsel-of-record of Echavia. Rather, it is whether or not he had a direct hand in the preparation of Echavia's Answer to the Amended Complaint.

To be guilty of representing conflicting interests, a counsel-of-record of one party need not also be counsel-of-record of the adverse party. He does not have to publicly hold himself as the counsel of the adverse party, nor make his efforts to advance the adverse party's conflicting interests of record--- although these circumstances are the most obvious and satisfactory proof of the charge. It is enough that the counsel of one party had a hand in the preparation of the pleading of the other party, claiming adverse and conflicting interests with that of his original client. To require that he also be counsel-of-record of the adverse party would punish only the most obvious form of deceit and reward, with impunity, the highest form of disloyalty.

Canon 6 of the Code of Professional Ethics states:

"It is the duty of a lawyer at the time of the retainer to disclose to the client the circumstances of his relations to the parties and any interest in or in connection with the controversy, which might influence the client in the selection of the 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 of the clients, it is his duty to contend for that which duty to another client requires him to oppose." (emphasis supplied)

An attorney owes his client undivided allegiance. Because of the highly fiduciary nature of the attorney-client relationship, sound public policy dictates that a lawyer be prohibited from representing conflicting interests or discharging inconsistent duties. He may not, without being guilty of professional misconduct, act as counsel for a person whose interest conflicts with that ofhis present or former client. Indeed, good faith and honest intention on the part of the erring lawyer does not make this rule inoperative.21 The lawyer is an officer of the court and his actions are governed by the uncompromising rules of professional ethics. Thus:

"The relations of attorney and client is founded on principles of public policy, on good taste. The question is not necessarily one of the rights of the parties, but as to whether the attorney has adhered to proper professional standard. With these thoughts in mind, it behooves attorneys, like Ceasar's wife, not only to keep inviolate the client's confidence, but also to avoid the appearance of treachery and double-dealing. Only thus can litigants

be encouraged to entrust their secrets to their attorneys which is of paramount importance in the administration of justice."22

The professional obligation of the lawyer to give his undivided attention and zeal for his client's cause is likewise demanded in the Code of Professional Responsibility. Inherently disadvantageous to his client's cause, representation by the lawyer of conflicting interests requires disclosure of all facts and consent of all the parties involved. Thus:

"CANON 15- All lawyers shall observe candor, fairness and loyalty in all his dealings and transactions with his clients.

xxx

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."

While the Resolution of the IBP is purely recommendatory, we find no reason to reverse the same. In disciplinary proceedings against members of the bar, only clear preponderance of evidence is required to establish liability. As long as the evidence presented by complainant or that taken judicial notice of by the Court is more convincing and worthy of belief than that which is offered in opposition thereto, the imposition of disciplinary sanction is justified.23

A perusal of Echavia's Answer to the Amended Complaint shows that it indeed conflicts with the complainant's claims. It reads:

"1. The allegations (sic) in Paragraph One (1) of the Complaint is admitted in so far as it pertains to the personal circumstance and residence of the answering defendant. The rest of the allegations in Paragraph One (1), and all the allegations in Paragraph Two (2) , THREE (3), FOUR (4), FIVE (5), SIX (6), ELEVEN (11), TWELVE (12), and FOURTEEN (14), of the Complaint are DENIED for lack of knowledge sufficient to form a belief as to the truth of such allegations."24

By way of prayer, Echavia states:

"WHEREFORE, it is respectfully prayed that after hearing, judgment be rendered dismissing plaintiff's complaint."25

Anent the authorship by the respondent of the document quoted above, the Investigating Committee found the testimonies of the complainant and Echavia credible as opposed to respondent's bare denial. As pointed out by Echavia, he was approached by Atty. Maderazo, introduced himself as his lawyer and after some sessions in the latter's office, asked him to return and sign a document which he later identified as the Answer to the Amended Complaint.

The Investigating Committee found respondent's defense weak. Respondent did not bother to present his secretary as witness, nor obtain her affidavit to prove his allegations. Instead, he offered a convenient excuse--- that he cannot anymore locate his secretary.

Respondent argued that it was the complainant who asked him to prepare Echavia's Answer to the Amended Complaint, after reaching an agreement whereby Echavia would testify in favor of the complainant. After he declined the request, he claimed that it was the complainant who

prepared the document and asked his secretary to print the same. But as shown, Echavia's Answer to the Amended Complaint was in no way favorable to the complainant.

With the dismissal of Civil Case No. 13666, Echavia is practically off the hook. We cannot find any reason why Echavia would commit perjury and entangle himself, once again, with the law. He does not stand to profit at all by accusing the respondent falsely.

Furthermore, considering complainant's stature and lack of legal education, we can not see how she could have prepared Echavia's Answer to the Amended Complaint and device a legal maneuver as complicated as the present case.

Respondent's attack on the credibility of Investigating Commissioner Ingles to render an impartialdecision, having been an adversary in Civil Case No. R-33277, does not convince us to grant new trial. This is the first time that respondent questions the membership of Commissioner Inglesin the Investigating Committee. If respondent really believed in good faith that Commissioner Ingles would be biased and prejudiced, he should have asked for the latter's inhibition at the first instance. Moreover, we could not find any hint of irregularity, bias or prejudice in the conduct of the investigation that would lead us to set it aside.

Finally, we remind the respondent that the practice of law is not a property right but a mere privilege, and as such, must bow to the inherent regulatory power of the Court to exact compliance with the lawyer's public responsibilities.26 The suspension of the respondent's privilege to practice law may result to financial woes. But as the guardian of the legal profession, we are constrained to balance this concern with the injury he caused to the very same professionhe vowed to uphold with honesty and fairness.1âwphi1.nêt

IN VIEW WHEREOF, the Resolution of the IBP finding the respondent guilty of violating Canon 6of the Code of Professional Ethics, and Canon 15 and Rule 15.03 of the Code of Professional Responsibility is affirmed. Respondent is suspended from the practice of law for six (6) months with a stern warning that a similar act in the future shall be dealt with more severely.

SO ORDERED.

Austria-Martinez, J., concur.Sandoval-Gutierrez, J., per special order no. 220, dated April 22, 2002, concur.Davide, Jr., C.J., Kapunan, and Ynares-Santiago, JJ., on official leave.

A.C. No. 5948 January 22, 2003(Formerly A.M. No. CBD-354)

GAMALIEL ABAQUETA, complainant, vs.ATTY. BERNARDITO A. FLORIDO, respondent.

R E S O L U T I O N

YNARES-SANTIAGO, J.:

This is an administrative complaint 1 against Atty. Bernardito A. Florido filed with the Integrated Bar of the Philippines (IBP) Commission on Bar Discipline, praying that appropriate sanctions be imposed on respondent for representing conflicting interests.

Complainant is a Filipino by birth who had acquired American citizenship. He resides at 15856 N.15th Way, Phoenix, Arizona 85022, U.S.A. Respondent is a practicing lawyer based in Cebu City.

On November 28, 1983, complainant engaged the professional services of respondent trough hisattorney-in-fact, Mrs. Charito Y. Baclig, to represent him in Special Proceedings No. 3971-R, entitled, "In the Matter of the Intestate Estate of Deceased Bonifacia Abaqueta,2 Susana Uy Trazo, petitioner" before the Regional Trial court of Cebu.3

Accordingly, respondent entered his appearance in Special Proceedings No. 3971-R as counsel for herein complainant.4 Subsequently, he filed complainant's "Objections and Comments to Inventory and Accounting," registering complainant's objection —

. . . to the inclusion of the properties under Items 1 to 5 contained in the inventory of the administratrix dated November 9, 1983. These properties are the sole and exclusive properties of the oppositor per the latest tax declarations already marked as Exhibits "2", "3", "4", "5" and "6" in the Formal Offer of Exhibits by oppositor in writing dated August 17, 1983 x x x .5

Several years later, Milagros Yap Abaqueta filed an action for sum of money against complainant, docketed as Civil Case No. CEB-11453 and entitled, "Milagros Yap Abaqueta vs. Gamaliel Abaqueta and Casiano Gerona."6Respondent signed the Complaint as counsel for plaintiff Milagros Yap Abaqueta, averring, inter alia, that:

Plaintiff and defendant Gamaliel Abaqueta are the conjugal owners of those certain parcels of land, more particularly as follows . . .

The "parcels of land" referred to as conjugal property of complainant and Milagros Yap-Abaquetaare the very same parcels of land in Special Proceedings No. 3971-R which respondent, as lawyer of complainant, alleged as the "sole and exclusive properties" of complainant. In short, respondent lawyer made allegations in Civil Case No. CEB-11453 which were contrary to and in direct conflict with his averments as counsel for complainant in Special Proceedings No. 3971-R.

Complainant further averred that respondent admitted he was never authorized by the former to appear as counsel for complainant's ex-wife in Civil Case No. CEB-11453; that respondent failed to indicate in the Complaint the true and correct address of herein complainant, which respondent knew as far back as August 2, 1990, when he wrote a letter to the complainant at the said address.7 Consequently, complainant failed to receive summons and was declared in defaultin Civil Case No. CEB-11453. While the order of default was eventually set aside, complainant

incurred expenses to travel to the Philippines, which were conservatively estimated at $10,000.00. He argues that respondent's conduct constitute professional misconduct and malpractice as well as trifling with court processes.

In his defense, respondent claims in his Answer8 that he always acted in good faith in his professional relationship with complainant in spite of the fact that they have not personally met. He based the matters he wrote in the Complaint on information and documents supplied by Mrs. Charito Y. Baclig, complainant's sister-in-law and attorney-in-fact, indicating that he was sole and exclusive owner of the properties. This was sometime in November 1983. No affidavit of adjudication was ever furnished respondent by complainant and this was apparently suppressed because it would show that the properties formed part of the estate.

Eight years later, in November 1991, long after Special Proceedings No. 3971-R was settled and the attorney-client relationship between complainant and respondent was terminated, Mrs. Milagros Abaqueta through Mrs. Baclig, engaged his services to file Civil Case No. CEB-11453. Mrs. Baclig presented to him a deed of absolute sale dated July 7, 1975,9 showing that the properties subject hereof were not complainant's exclusive property but his conjugal property with his wife, the same having been acquired during the subsistence of their marriage. Thus, in all good faith, respondent alleged in the complaint that said properties were conjugal assets of the spouses.

Respondent further pointed out that his law firm handles on the average eighty new court cases annually and personally interviews four or five clients, prospective clients and/or witnesses daily except Saturdays and Sundays. It regularly closes to the public at 7:00 p.m., but work continues sometimes until 8:30 p.m. This has been going on for the last twenty-five years out of respondent's thirty-three years of private practice. The absence of personal contact with complainant and the lapse of eight years resulted in the oversight of the respondent's memory that complainant was a former client. Furthermore, the caption of the Special Proceeding was notin the name of complainant but was entitled, "In the Matter of the Intestate Estate of Bonifacia Payahay Abaqueta."

Respondent expressed regret over the oversight and averred that immediately after discovering that the formerly represented complainant in Special Proceeding No. 3971-R, he filed a motion towithdraw as counsel for plaintiff, which was granted by the trial court.10 He denied any malice in his acts and alleged that it is not in his character to do malice or falsehood particularly in the exercise of his profession.

In his Comments/Observations on Respondent's Answer,11 complainant averred that respondent's conduct was geared towards insuring a court victory for Milagros Yap in Civil Case No. CEB-11453, wherein he deliberately stated that complainant's address was 9203 Riverside Lodge Drive, Houston, Texas 77083, U.S.A., when he knew fully well that complainant's true and correct address was c/o V.A. Hospital, 7th Street & Italian School Road, Phoenix, Arizona, 85013, U.S.A. By falsely stating and concealing his true and correct address, respondent eventually succeeded in obtaining a default judgment in favor of his client.

During the pendency of these proceedings before the IBP, it appeared that respondent's son got married to the daughter of IBP National President Arthur D. Lim. Thus, Atty. Lim inhibited himself from participating in the resolution of the case.12 Subsequently, a Resolution was issued requiringthe IBP to elevate the entire records of the case within thirty (30) days from notice.13

The main issue to be resolved in the case at bar is whether or not respondent violated Rule 15.03 of the Code of Professional Responsibility. The investigating Commissioner found that respondent clearly violated the prohibition against representing conflicting interests and recommended that he be suspended from the practice of law for a period of three (3) months.

We find the recommendation well-taken.

Rule 15.03 of the Code of Professional Responsibility explicitly provides that —

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 a conflict of interest if there is an inconsistency in the 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.14 In short, if he argues for one client, this argument will be opposed by him when he argues for the other client.15

There is a representation of conflicting interests if the acceptance of the new retainer will require the attorney to do anything 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 firstclient any knowledge acquired through their connection.16

As pointed out by the investigating commissioner, respondent does not deny that he representedcomplainant in Special Proceedings No. 3971-R. He also does not deny that he is the lawyer of Milagros Yap Abaqueta in Civil Case No. CEB-11453, filed against complainant and involving the same properties which were litigated in Special Proceedings No. 3971-R. Respondent also admitted that he did not secure the consent of complainant before he agreed to act as Milagros Yap Abaqueta's lawyer in Civil Case No. CEB-11453.

The reasons proffered by respondent are hardly persuasive to excuse his clear representation of conflicting interests in this case. First, the investigating commissioner observed that the name "Gamaliel Abaqueta" is not a common name. Once heard, it will surely ring a bell in one's mind if he came across the name again.

In this case, respondent actively prosecuted the cause of complainant in Special Proceedings No. 3971-R, such that it would be impossible for respondent not to have recalled his name.

Second, assuming arguendo that respondent's memory was indeed faulty, still it is incredible thathe could not recall that complainant was his client, considering that Mrs. Charito Baclig, who wascomplainant's attorney-in-fact and the go-between of complainant and respondent in Special Proceedings No. 3971-R, was the same person who brought Milagros Yap Abaqueta to him. Even a person of average intelligence would have made the connection between Mrs. Baclig andcomplainant under such circumstances.

Lastly, the fact that the subject matter of Civil Case No. CEB-11453 and Special Proceedings No.3971-R are thesame properties could not have escaped the attention of respondent. With such an abundance of circumstances to aid respondent's memory, it simply strains credulity for him to have conveniently forgotten his past engagement as complainant's lawyer. What rather appears, given the prevailing facts of this case, is that he chose to ignore them on the assumption that the

long period of time spanning his past and present engagement would effectively blur the memories of the parties to such a discrepancy.

It is axiomatic that no lawyer is obliged to act either as adviser or advocate for every person who may wish to become his client. He has the right to decline such employment,17 subject, however, to Canon 14 of the Code of Professional Responsibility.18 Once he agrees to take up the cause ofthe client, the lawyer owes fidelity to such cause and must always be mindful of the trust and confidence reposed in him.19 He must serve the client with competence and diligence20 and champion the latter's cause with wholehearted fidelity, care and devotion.21

A lawyer May not, without being guilty of professional misconduct, act as counsel for a person whose interest conflicts with that of his former client22 The reason for the prohibition is found in the relation of attorney and client which is one of trust and confidence of the highest degree.23 Indeed, as we stated in Sibulo v. Cabrera,24 "The relation of attorney and client is basedon trust, so that double dealing, which could sometimes lead to treachery, should be avoided."25

Credence cannot, however, be given to the charge that respondent fraudulently and maliciously falsified the true and correct address of the complainant notwithstanding respondent's knowledgethereof. Lawyers normally do not have knowledge of the personal circumstances of a party in a case and usually rely on the information supplied by their clients. The fact that respondent sent a letter to complainant at the latter's correct address26sixteen months before the filing of Civil Case No. CEB-11453 does not by itself prove malice on the part of respondent. A new address was furnished by Milagros Yap Abaqueta days before the complaint was filed. Respondent had no reason to doubt the correctness of the address of the complainant given to him by Milagros Yap Abaqueta considering that she was complainant's wife.

WHEREFORE, Atty. Bernardito A. Florido is SUSPENDED from the practice of law for Three (3) months. He is further ADMONISHED to exercise greater care and diligence in the performance of his duties towards his clients and the court. He is warned that a repetition of the same or similar offense will be dealt with more severely.

SO ORDERED.

Puno, Vitug, Mendoza, Panganiban, Quisumbing, Sandoval-Gutierrez, Carpio, Austria-Martinez, Corona, Carpio-Morales, Callejo, Sr., and Azcuna, JJ ., concur. Davide, Jr., C .J ., took no part due to closeness to a party.Bellosillo, J ., on leave

LETICIA GONZALES, A.C. No. 6836

Complainant,

Present:

PANGANIBAN, C.J., Chairman,

YNARES-SANTIAGO,

- versus - AUSTRIA-MARTINEZ,

CALLEJO, and

CHICO-NAZARIO, JJ.

Promulgated:

ATTY. MARCELINO CABUCANA,

Respondent. January 23, 2006

x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x

R E S O L U T I O N

AUSTRIA-MARTINEZ, J.:

Before this Court is a complaint filed by Leticia Gonzales (Gonzales) praying that Atty.

Marcelino Cabucana, (respondent) be disbarred for representing conflicting interests.

On January 8, 2004, Gonzales filed a petition before the Integrated Bar of the Philippines

(IBP) alleging that: she was the complainant in a case for sum of money and damages filed

before the Municipal Trial Court in Cities (MTCC) of Santiago City, docketed as Civil Case No. 1-

567 where she was represented by the law firm CABUCANA, CABUCANA, DE GUZMAN AND

CABUCANA LAW OFFICE, with Atty. Edmar Cabucana handling the case and herein respondent

as an associate/partner; on February 26, 2001, a decision was rendered in the civil case ordering

the losing party to pay Gonzales the amount of P17,310.00 with interest and P6,000.00 as

attorney’s fees; Sheriff Romeo Gatcheco, failed to fully implement the writ of execution issued in

connection with the judgment which prompted Gonzales to file a complaint against the said

sheriff with this Court; in September 2003, Sheriff Gatcheco and his wife went to the house of

Gonzales; they harassed Gonzales and asked her to execute an affidavit of desistance regarding

her complaint before this Court; Gonzales thereafter filed against the Gatchecos criminal cases

for trespass, grave threats, grave oral defamation, simple coercion and unjust vexation;

notwithstanding the pendency of Civil Case No. 1-567, where respondent’s law firm was still

representing Gonzales, herein respondent represented the Gatchecos in the cases filed by

Gonzales against the said spouses; respondent should be disbarred from the practice of law

since respondent’s acceptance of the cases of the Gatchecos violates the lawyer-client

relationship between complainant and respondent’s law firm and renders respondent liable under

the Code of Professional Responsibility (CPR) particularly Rules 10.01,[1] 13.01,[2] 15.02,[3] 15.03,[4] 21.01[5] and 21.02.[6]

On January 9, 2004, the IBP-Commission on Bar Discipline ordered Atty. Marcelino

Cabucana, Jr. to submit his Answer to the complaint.[7]

In his Answer, respondent averred: He never appeared and represented complainant in

Civil Case No. 1-567 since it was his brother, Atty. Edmar Cabucana who appeared and

represented Gonzales in said case. He admitted that he is representing Sheriff Gatcheco and

his wife in the cases filed against them but claimed that his appearance is pro bono and that the

spouses pleaded with him as no other counsel was willing to take their case. He entered his

appearance in good faith and opted to represent the spouses rather than leave them

defenseless. When the Gatchecos asked for his assistance, the spouses said that the cases

filed against them by Gonzales were merely instigated by a high ranking official who wanted to

get even with them for their refusal to testify in favor of the said official in another case. At first,

respondent declined to serve as counsel of the spouses as he too did not want to incur the ire of

the high-ranking official, but after realizing that he would be abdicating a sworn duty to delay no

man for money or malice, respondent entered his appearance as defense counsel of the

spouses free of any charge. Not long after, the present complaint was crafted against

respondent which shows that respondent is now the subject of a ‘demolition job.’ The civil case

filed by Gonzales where respondent’s brother served as counsel is different and distinct from the

criminal cases filed by complainant against the Gatcheco spouses, thus, he did not violate any

canon on legal ethics. [8]

Gonzales filed a Reply contending that the civil case handled by respondent’s brother is

closely connected with the cases of the Gatchecos which the respondent is handling; that the

claim of respondent that he is handling the cases of the spouses pro bono is not true since he

has his own agenda in offering his services to the spouses; and that the allegation that she is

filing the cases against the spouses because she is being used by a powerful person is not true

since she filed the said cases out of her own free will.[9]

The Commission on Bar Discipline of the IBP sent to the parties a Notice of Mandatory

Conference dated March 1, 2004.[10] On the scheduled conference, only a representative of

complainant appeared.[11] Commissioner Demaree Raval of the IBP-CBD then directed both

parties to file their respective verified position papers.[12]

Complainant filed a Memorandum reiterating her earlier assertions and added that

respondent prepared and notarized counter-affidavits of the Gatcheco spouses; that the high-

ranking official referred to by respondent is Judge Ruben Plata and the accusations of

respondent against the said judge is an attack against a brother in the profession which is a

violation of the CPR; and that respondent continues to use the name of De Guzman in their law

firm despite the fact that said partner has already been appointed as Assistant Prosecutor of

Santiago City, again in violation of the CPR.[13]

Respondent filed his Position Paper restating his allegations in his Answer.[14]

On August 23, 2004, Commissioner Wilfredo E.J.E. Reyes issued an Order notifying both

parties to appear before his office on October 28, 2004 for a clarificatory question regarding said

case.[15] On the said date, only respondent appeared[16] presenting a sworn affidavit executed by

Gonzales withdrawing her complaint against respondent. It reads:

SINUMPAANG SALAYSAYTUNGKOL SA PAG-UURONG NG DEMANDA

Ako, si LETICIA GONZALES, nasa tamang edad, Pilipino, may asawa, atnakatira sa Barangay Dubinan East, Santiago City, makaraang manumpa ayonsa batas ay nagsasabing:

Ako ang nagdedemanda o petitioner sa CBD Case No. 04-1186 na maypamagat na “Leticia Gonzales versus Atty. Marcelino C. Cabucana, Jr.” nakasalukuyang nahaharap saCommission on Bar Discipline ng Integrated Bar ofthe Philippines

Ang pagkakahain ng naturang demanda ay nag-ugat sa di-pagkakaintindihan na namamagitan sa akin at nina Mr. and Mrs. Romeo andAnita Gatcheco.

Dahil sa aking galit sa naturang mag-asawa, idinawit ko si Atty. MarcelinoC. Cabucana, Jr. sa sigalot na namamagitan sa akin at sa mag-asawang Gatcheco, gayong nalalaman ko na si Atty. Marcelino C. Cabucana aywalang nalalaman sa naturang di pagkakaintindihan.

Makaraang pag-isipang mabuti ang paghain ko ng demanda kontrakay Atty. Marcelino C. Cabucana, Jr., nakumbinsi ako na ang pagdedemanda kokay Atty. Marcelino C. Cabucana, Jr. ay isang malaking pagkakamali dahil siyaay walang kinalalaman (sic) sa di pagkakaintindihan naming(sic) ng mag-asawang Gatcheco.

Si Atty. Marcelino C. Cabucana, Jr. ay di ko rin naging abogado sa CivilCase No. 1-567 (MTCC Br. I Santiago City) na inihain ko kontra kay EduardoMangano.

Nais kong ituwid ang lahat kung kaya’t aking iniuurong ang naturangkasong inihain ko kontra kay Atty. Marcelino C. Cabucana, Jr. at dahil dito ayhindi na ako interesado pang ituloy and naturang kaso, at aking hinihiling sakinauukulan na dismisin na ang naturang kaso.

Ginawa ko ang sinumpaang salaysay na ito upang patotohanan sa lahatng nakasaad dito.[17]

Commissioner Reyes issued an Order dated October 28, 2004 requiring Gonzales to

appear before him on November 25, 2004, to affirm her statements and to be subject to

clarificatory questioning.[18] However, none of the parties appeared.[19] On February 17, 2005,

only respondent was present. Commissioner Reyes then considered the case as submitted for

resolution.[20]

On February 24, 2005, Commissioner Reyes submitted his Report and Recommendation,

portions of which are quoted hereunder:

The Undersigned Commissioner believes that the respondent made amistake in the acceptance of the administrative case of Romeo Gatcheco,however, the Commission (sic) believes that there was no malice and bad faith inthe said acceptance and this can be shown by the move of the complainant tounilaterally withdraw the case which she filed against Atty. Marcelino C.Cabucana, Jr. However, Atty. Cabucana is reminded to be more careful in theacceptance of cases as conflict of interests might arise.

It is respectfully recommended that Atty. Marcelino C. Cabucana, Jr. (be)sternly warned and reprimanded and…advised to be more circumspect andcareful in accepting cases which might result in conflict of interests.[21]

On June 25, 2005, a Resolution was passed by the Board of Governors of the IBP, to wit:

RESOLUTION NO. XVI-2005-153CBD CASE NO. 03-1186

Leticia Gonzales vs.

Atty. Marcelino Cabucana, Jr.

RESOLVED to ADOPT and APPROVE, as it is hereby ADOPTED andAPPROVED, the Report and Recommendation of the InvestigatingCommissioner of the above-entitled case, herein made part of this Resolution asAnnex “A”; and, finding the recommendation fully supported by the evidence onrecord and the applicable laws and rules, and considering that respondent made(a) mistake in the acceptance of the administrative case of Romeo Gatcheco,Atty. Marcelino Cabucana, Jr. is hereby WARNED and REPRIMANDED andadvised to be more circumspect and careful in accepting cases which mightresult in conflict of interests.[22]

Before going to the merits, let it be clarified that contrary to the report of Commissioner

Reyes, respondent did not only represent the Gatcheco spouses in the administrative case filed

by Gonzales against them. As respondent himself narrated in his Position Paper, he likewise

acted as their counsel in the criminal cases filed by Gonzales against them.[23]

With that settled, we find respondent guilty of violating Rule 15.03 of Canon 15 of the Code

of Professional Responsibility, to wit:

Rule 15.03 – A lawyer shall not represent conflicting interest except bywritten consent of all concerned given after a full disclosure of the facts.

It is well-settled that a lawyer is barred from representing conflicting interests except by

written consent of all concerned given after a full disclosure of the facts. [24] Such prohibition is

founded on principles of public policy and good taste as the nature of the lawyer-client relations

is one of trust and confidence of the highest degree. [25] Lawyers are expected not only to keep

inviolate the client’s confidence, but also to avoid the appearance of treachery and double-

dealing for only then can litigants be encouraged to entrust their secrets to their lawyers, which is

of paramount importance in the administration of justice.[26]

One of the tests of inconsistency of interests is whether the acceptance of a new relation

would prevent the full discharge of the lawyer’s duty of undivided fidelity and loyalty to the client

or invite suspicion of unfaithfulness or double-dealing in the performance of that duty.[27]

As we expounded in the recent case of Quiambao vs. Bamba,[28]

The proscription against representation of conflicting interests applies to asituation where the opposing parties are present clients in the same action or inan unrelated action. It is of no moment that the lawyer would not be called uponto contend for one client that which the lawyer has to oppose for the other client,or that there would be no occasion to use the confidential information acquiredfrom one to the disadvantage of the other as the two actions are whollyunrelated. It is enough that the opposing parties in one case, one of whom wouldlose the suit, are present clients and the nature or conditions of the lawyer’srespective retainers with each of them would affect the performance of the duty ofundivided fidelity to both clients.[29]

The claim of respondent that there is no conflict of interests in this case, as the civil case

handled by their law firm where Gonzales is the complainant and the criminal cases filed by

Gonzales against the Gatcheco spouses are not related, has no merit. The representation of

opposing clients in said cases, though unrelated, constitutes conflict of interests or, at the very

least, invites suspicion of double-dealing which this Court cannot allow.[30]

Respondent further argued that it was his brother who represented Gonzales in

the civil case and not him, thus, there could be no conflict of interests. We do not agree.

As respondent admitted, it was their law firm which represented Gonzales in the civil

case. Such being the case, the rule against representing conflicting interests applies.

As we explained in the case of Hilado vs. David:[31]

…[W]e… can not sanction his taking up the cause of the adversary of the

party who had sought and obtained legal advice from his firm; this, notnecessarily to prevent any injustice to the plaintiff but to keep above reproach thehonor and integrity of the courts and of the bar. Without condemning therespondent’s conduct as dishonest, corrupt, or fraudulent, we do believe thatupon the admitted facts it is highly inexpedient. It had the tendency to bring theprofession, of which he is a distinguished member, “into public disrepute andsuspicion and undermine the integrity of justice.”[32]

The claim of respondent that he acted in good faith and with honest intention will also not

exculpate him as such claim does not render the prohibition inoperative.[33]

In the same manner, his claim that he could not turn down the spouses as no other lawyer

is willing to take their case cannot prosper as it is settled that while there may be instances

where lawyers cannot decline representation they cannot be made to labor under conflict of

interest between a present client and a prospective one.[34] Granting also that there really was no

other lawyer who could handle the spouses’ case other than him, still he should have observed

the requirements laid down by the rules by conferring with the prospective client to ascertain as

soon as practicable whether the matter would involve a conflict with another client then seek the

written consent of all concerned after a full disclosure of the facts. [35] These respondent failed to

do thus exposing himself to the charge of double-dealing.

We note the affidavit of desistance filed by Gonzales. However, we are not bound by such

desistance as the present case involves public interest.[36] Indeed, the Court’s exercise of its

power to take cognizance of administrative cases against lawyers is not for the purpose of

enforcing civil remedies between parties, but to protect the court and the public against an

attorney guilty of unworthy practices in his profession.[37]

In similar cases where the respondent was found guilty of representing conflicting interests

a penalty ranging from one to three years’ suspension was imposed.[38]

We shall consider however as mitigating circumstances the fact that he is representing the

Gatcheco spouses pro bono and that it was his firm and not respondent personally, which

handled the civil case of Gonzales. As recounted by complainant herself, Atty. Edmar Cabucana

signed the civil case of complainant by stating first the name of the law firm CABUCANA,

CABUCANA, DE GUZMAN AND CABUCANA LAW OFFICE, under which, his name and

signature appear; while herein respondent signed the pleadings for the Gatcheco spouses only

with his name,[39] without any mention of the law firm. We also note the observation of the IBP

Commissioner Reyes that there was no malice and bad faith in respondent’s acceptance of the

Gatchecos’ cases as shown by the move of complainant to withdraw the case.

Thus, for violation of Rule 15.03, Canon 15 of the Code of Professional Responsibility and

taking into consideration the aforementioned mitigating circumstances, we impose the penalty of

fine of P2,000.00.

WHEREFORE, Resolution No. XVI-2005-153 of the Integrated Bar of the Philippines

is APPROVED with MODIFICATION that respondent Atty. Marcelino Cabucana, Jr. is FINED the

amount of Two Thousand Pesos (P2,000.00) with a STERN WARNING that a commission of the

same or similar act in the future shall be dealt with more severely.

BOBIE ROSE V. FRIAS, A.C. No. 6656

Complainant, (formerly CBD-98-591)

Present:

PANGANIBAN, C.J.

PUNO,*

QUISUMBING,

YNARES-SANTIAGO,

SANDOVAL-GUTIERREZ,

CARPIO,

AUSTRIA-MARTINEZ,

- v e r s u s - CORONA,

CARPIO MORALES,

CALLEJO, SR.,

AZCUNA,

TINGA,

CHICO-NAZARIO,

GARCIA and

VELASCO, JJ.

ATTY. CARMELITA S.

BAUTISTA-LOZADA,**

Respondent.

Promulgated:

May 4, 2006

x-- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x

R E S O L U T I O N

CORONA, J.:

Respondent Atty. Carmelita Bautista-Lozada seeks reconsideration of our December 13,

2005 resolution finding her guilty of violating Rules 15.03 and 16.04 of the Code of Professional

Responsibility and of willfully disobeying a final and executory decision of the Court of Appeals

and suspending her from the practice of law for two years.

Respondent contends that, pursuant to Rule VIII of the Rules of Procedure of the

Commission on Bar Discipline (CBD) of the Integrated Bar of the Philippines (IBP), the complaint

against her was already barred by prescription. She also asserts that her December 7, 1990 loan

agreement with complainant complied with Rule 16.04 because the interest of complainant was

fully protected.

Respondent’s contentions have no merit.

Respondent anchors her defense of prescription on Rule VIII, Section 1 of the Rules of

Procedure of the CBD-IBP which provides:

SECTION 1. Prescription. A complaint for disbarment, suspension ordiscipline of attorneys prescribes in two (2) years from the date of theprofessional misconduct.

However, as early as 1967, we have held that the defense of prescription does not lie in

administrative proceedings against lawyers.[1] And in the 2004 case of Heck v. Santos,[2] we

declared that an administrative complaint against a member of the bar does not prescribe.

If the rule were otherwise, members of the bar would be emboldened todisregard the very oath they took as lawyers, prescinding from the fact that aslong as no private complainant would immediately come forward, they stand achance of being completely exonerated from whatever administrative liabilitythey ought to answer for. It is the duty of this Court to protect the integrity of thepractice of law as well as the administration of justice. No matter how much timehas elapsed from the time of the commission of the act complained of and thetime of the institution of the complaint, erring members of the bench and barcannot escape the disciplining arm of the Court.This categorical pronouncementis aimed at unscrupulous members of the bench and bar, to deter them fromcommitting acts which violate the Code of Professional Responsibility, the Codeof Judicial Conduct, or the Lawyer’s Oath. x x x

Thus, even the lapse of considerable time from the commission of theoffending act to the institution of the administrative complaint will not erase theadministrative culpability of a lawyer….[3] (emphasis supplied)

The CBD-IBP derives its authority to take cognizance of administrative complaints

against lawyers from this Court which has the inherent power to regulate, supervise and control

the practice of law in the Philippines. Hence, in the exercise of its delegated power to entertain

administrative complaints against lawyers, the CBD-IBP should be guided by the doctrines and

principles laid down by this Court.

Regrettably, Rule VIII, Section 1 of the Rules of Procedure of the CBD-IBP which

provides for a prescriptive period for the filing of administrative complaints against lawyers runs

afoul of the settled ruling of this Court. It should therefore be struck down as void and of no legal

effect for being ultra vires.

Moreover, assuming that prescription is a valid defense, respondent raised it only at this

late stage. We presume she was familiar with that rule yet she failed to invoke it at the earliest

opportunity. Instead she opted to insist on her innocence.

On the other ground raised by respondent, we have sufficiently discussed the

implications of her loan agreement with complainant in relation to Rule 16.04 of the Code of

Professional Responsibility in our December 13, 2005 resolution. Considering the fiduciary

character of respondent’s relationship with complainant, the nature of their agreement and

complainant’s lack of independent advice when she entered into it, there is neither sufficient

ground nor compelling reason to reconsider our earlier resolution.

WHEREFORE, respondent’s motion for reconsideration is hereby DENIED WITH

FINALITY.

Rule VIII, Section 1 of the Rules of Procedure of the Commission on Bar Discipline of the

Integrated Bar of the Philippines is hereby declared null and void.

Let copies of this resolution be furnished the Integrated Bar of the Philippines and the Office

of the Bar Confidant for their information and guidance.

SO ORDERED.

CARLOS REYES, Complainant, -versus- ATTY. JEREMIAS R. VITAN, Respondent. x - - - - - - - - - - - - - - - - - - - - - - x CELIA ARROYO-POSIDIO, Complainant, -versus- ATTY. JEREMIAS R. VITAN, Respondent. x - - - - - - - - - - - - - - - - - - - - - - x VIOLETA TAHAW, Complainant, -versus- ATTY. JEREMIAS R. VITAN, Respondent. x - - - - - - - - - - - - - - - - - - - - - - x MAR YUSON, Complainant, -versus- ATTY. JEREMIAS R. VITAN, Respondent. x - - - - - - - - - - - - - - - - - - - - - - x

A.C. No. 5835 A.C. No. 6051 A.C. No. 6441 A.C. No. 6955 Present: CORONA, C.J.,CARPIO, CARPIO-MORALES, VELASCO, JR.,*

NACHURA, LEONARDO-DE CASTRO,BRION,PERALTA,BERSAMIN,

DEL CASTILLO,ABAD,VILLARAMA, JR.,PEREZ, andMENDOZA, JJ. Promulgated:August 10, 2010

x--------------------------------------------------------------------------------------x

R E S O L U T I O N

NACHURA, J.:

This refers to the undated Petition filed with the Office of the Bar Confidant (OBC) on July

28, 2009 by Atty. Jeremias R. Vitan, praying that he be reinstated as member in good standing of

the Philippine Bar and be allowed to resume the practice of law, claiming that he had already

served the penalty of suspension imposed on him, and that he is now reformed.

As background, four (4) administrative cases were filed against Atty. Jeremias R. Vitan, in

each of which he was found guilty and meted the penalty of suspension from the practice of law.

In the first case, A.C. No. 6441, (Violeta R. Tahaw v. Atty. Jeremias R. Vitan), promulgated

on October 21, 2004,[1] Atty. Vitan was suspended for

six (6)months, effective immediately upon receipt of the Decision. He was further ordered to

return the amount of P30,000 to complainant for legal services he did not render. The records

disclose that respondent received the Decision on November 12, 2004 and the period of

suspension would have ended on May 12, 2005.

In A.C. No. 5835, (Carlos B. Reyes v. Atty. Jeremias R. Vitan), promulgated on April 15,

2005,[2] Atty. Vitan was suspended for six (6) months; and ordered to pay

complainant P17,000.00 with interest of 12% per annum from the date of the promulgation of the

Decision until the full amount shall have been returned. Per records, the Court’s decision was

received by him on May 13, 2005, and his suspension would have ended on November 13,

2005.

In A.C. No. 6955 (Mar Yuson v. Atty. Jeremias R. Vitan), promulgated on July 27, 2006,[3] respondent was found liable for his failure to pay a just debt in the amount

ofP100,000.00. Upon investigation, the Integrated Bar of the Philippines (IBP) imposed the

penalty of Suspension for two (2) years. This was modified by the Court after finding that there

was partial payment of the loan, and the penalty was reduced to six (6) months suspension with

warning, effective upon receipt of the Decision. In a Motion to Lift Order of Suspension,

respondent moved for the reconsideration of the decision, asserting that there was full payment

of the loan. The motion was denied in the Resolution dated March 6, 2007.

In this connection, the OBC noted respondent’s shrewdness by moving out of his given

address to evade receipt of the copy of the decision/resolutions of the Court. After diligent efforts

at searching for respondent’s correct address proved unavailing, the Court in its Resolution dated

July 17, 2007, considered the March 6, 2007 Resolution as having been served on respondent.

In the decision in the fourth case, A.C. No. 6051, (Celia Arroyo-Pesidio v. Atty. Jeremias R.

Vitan), promulgated on April 2, 2007,[4] respondent was found to have failed to render the legal

services sought after he had received the amount of P100,000, and was once again, suspended

for one (1) year, with stern warning. The Decision was received on April 18, 2007, so the

suspension period should have lapsed on April 18, 2008.

Upon the recommendation of the OBC, the four administrative cases were consolidated.[5]

In a Report dated February 23, 2010, the OBC noted that respondent has been repeatedly

suspended from the practice of law, for an aggregate period of 30 months or 2 ½

years. Accordingly, respondent should have served the orders of suspension successively

pursuant to the Court’s resolution in A.M. No. RTJ-04-1857, entitled “Gabriel de la Paz v. Judge

Santos B. Adiong,” where the Court clearly stated that “in case of two or more suspensions, the

same shall be served successively by the erring respondent.” [6] It is, therefore, incumbent upon

respondent to show to the Court that he has desisted from the practice of law for a period of at

least 2 ½ years.

The Court, in the recent case of Ligaya Maniago v. Atty. Lourdes I. De Dios,[7] issued the

guidelines on the lifting of orders of suspension, and has advised strict observance

thereof. However, the Court will not hesitate to withhold the privilege of the practice of law if it is

shown that respondent, as an officer of the Court, is still not worthy of the trust and confidence of

his clients and of the public.

Thus, applying the guidelines in Maniago, the Court Resolved to GRANT Respondent’s

Petition for Reinstatement, effective upon his submission to the Court of a Sworn Statement

attesting to the fact:

1) that he has completely served the four (4) suspensions imposed on him successively;

2) that he had desisted from the practice of law, and has not appeared as counsel in any

court during the periods of suspension, as follows:

(a) Six (6) months suspension in A.C. No. 5835 from May 13, 2005to November 13, 2005; (b) One (1) year suspension in A.C. No. 6051 from April 18, 2007 to April18, 2008; (c) Six (6) months suspension in A.C. No. 6441 from November 12, 2004to May 12, 2005; and (d) Six (6) months suspension in A.C. No. 6955 from date of receipt of theResolution dated March 6, 2007 denying the Motion for Reconsiderationof the Decision dated July 27, 2006.

3) that he has returned the sums of money to the complainants as ordered by the Court

in the following cases, attaching proofs thereof:

(a) In A.C. No. 5835 – the sum of P17,000 with interest of 12% per

annum from the date of promulgation of the Decision until the full amount shallhave been returned; and

(b) In A.C. No. 6441 – the amount of P30,000.

Atty. Jeremias R. Vitan is further directed to FURNISH copies of the Sworn Statement to

the Integrated Bar of the Philippines and Executive Judge(s), as mandated inManiago.

Any finding or report contrary to the statements made by the Respondent under oath shall

be a ground for the imposition of a more severe punishment, or disbarment, as may be

warranted.

SO ORDERED.

NESTOR PEREZ , A.C. No. 6160

Complainant,

Present:

Panganiban, C.J.,

Puno,

Quisumbing,

Ynares-Santiago,

Sandoval-Gutierrez,

- versus - Carpio,

Austria-Martinez,

Corona,

Carpio-Morales,

Callejo, Sr.,

Azcuna,

Tinga,

Chico-Nazario, and

Garcia, JJ.

ATTY. DANILO DE LA TORRE,

Respondent. Promulgated:

March 30, 2006

x ---------------------------------------------------------------------------------------- x

DECISION

YNARES-SANTIAGO, J.:

In a letter-complaint[1] dated July 30, 2003 addressed to then Chief Justice Hilario G.Davide, Jr., complainant Nestor Perez charged respondent Atty. Danilo de la Torre withmisconduct or conduct unbecoming of a lawyer for representing conflicting interests.

Perez alleged that he is the barangay captain of Binanuaanan, Calabanga, Camarines

Sur; that in December 2001, several suspects for murder and kidnapping for ransom, among

them Sonny Boy Ilo and Diego Avila, were apprehended and jailed by the police authorities; that

respondent went to the municipal building of Calabanga where Ilo and Avila were being detained

and made representations that he could secure their freedom if they sign the prepared

extrajudicial confessions; that unknown to the two accused, respondent was representing the

heirs of the murder victim; that on the strength of the extrajudicial confessions, cases were filed

against them, including herein complainant who was implicated in the extrajudicial confessions

as the mastermind in the criminal activities for which they were being charged.

Respondent denied the accusations against him. He explained that while being detained

at the Calabanga Municipal Police Jail, Avila sought his assistance in drafting an extrajudicial

confession regarding his involvement in the crimes of kidnapping for ransom, murder and

robbery. He advised Avila to inform his parents about his decision to make an extrajudicial

confession, apprised him of his constitutional rights and of the possibility that he might be utilized

as a state-witness.

Respondent claimed that when Ilo sought his assistance in executing his extrajudicial

confession, he conferred with Ilo in the presence of his parents; and only after he was convinced

that Ilo was not under undue compulsion did he assist the accused in executing the extrajudicial

confession.

The complaint was referred to the Integrated Bar of the Philippines (IBP) for investigation,

report and recommendation.[2] On August 16, 2005, the Investigating Commissioner submitted

his report with the following recommendation:

WHEREFORE, it is respectfully recommended that Atty. Danilo de laTorre be suspended for one (1) year from the practice of the legal profession forviolation of Rule 15.03 of the Code of Professional Responsibility.

RESPECTFULLY SUBMITTED.

The Board of Governors of the IBP modified the recommendation by increasing the

period of suspension to two years.

In finding the respondent guilty of representing conflicting interests, the Investigating

Commissioner opined that:

In administrative proceedings, the complainant has the burden of proving,by substantial evidence, the allegations in his complaint. The complainant wasable to prove by substantial evidence his charge against Atty. de la Tor[r]e. Therespondent admitted that his services as a lawyer were retained byboth Avila and Ilo. Perez was able to show that at the time that Atty. de la Torre

was representing the said two accused, he was also representing the interest ofthe victim’s family. This was declared by the victim’s daughter, Vicky de Chavez,who testified before Branch 63 of the Regional Trial Court of Camarines Sur thather family retained the services of Atty. Danilo de la Torre to prosecute the caseagainst her father’s killers. She even admitted that she was present when Atty. dela Torre met with and advised Avila and Ilo on one occasion. This is proof thatthe respondent consciously offered his services to Avila and Ilo despite the factthat he was already representing the family of the two accused’s victim. It maynot even be improbable that respondent purposely offered to help the accused inorder to further his other clients’ interest. The respondent failed to deny thesefacts or offer competent evidence to refute the said facts despite the ampleopportunity given him.

Under Rule 15.03 of the Code of Professional Responsibility, a lawyershall not represent conflicting interests except by written consent of all concernedgiven after a full disclosure of the facts. Respondent is therefore duty bound torefrain from representing two parties having conflicting interests in acontroversy. By doing precisely the foregoing, and without any proof that hesecured the written consent of both parties after explaining to them the existingconflict of interest, respondent should be sanctioned.

We agree with the findings of the IBP except for the recommended penalty.

There is conflict of interests 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.” 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.[3]

There is a representation of conflicting interests if the acceptance of the new retainer will

require the attorney to do anything 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.[4]

The prohibition against representing conflicting interest is founded on principles of public

policy and good taste. In the course of a lawyer-client relationship, the lawyer learns all the facts

connected with the client’s case, including the weak and strong points of the case. The nature of

that relationship is, therefore, one of trust and confidence of the highest degree. It behooves

lawyers not only to keep inviolate the client’s confidence, but also to avoid the appearance of

impropriety and double-dealing for only then can litigants be encouraged to entrust their secrets

to their lawyers, which is of paramount importance in the administration of justice.[5]

To negate any culpability, respondent explained that he did not offer his legal services to

accused Avila and Ilo but it was the two accused who sought his assistance in executing their

extrajudicial confessions. Nonetheless, he acceded to their request to act as counsel after

apprising them of their constitutional rights and after being convinced that the accused were

under no compulsion to give their confession.

The excuse proferred by the respondent does not exonerate him from the clear violation

of Rule 15.03 of the Code of Professional Responsibility which prohibits a lawyer from

representing conflicting interests except by written consent of all concerned given after a full

disclosure of the facts.

As found by the IBP, at the time respondent was representing Avila and Ilo, two of the

accused in the murder of the victim Resurreccion Barrios, he was representing the family of the

murder victim. Clearly, his representation of opposing clients in the murder case invites

suspicion of double-dealing and infidelity to his clients.

What is unsettling is that respondent assisted in the execution by the two accused of their

confessions whereby they admitted their participation in various serious criminal offenses

knowing fully well that he was retained previously by the heirs of one of the

victims. Respondent, who presumably knows the intricacies of the law, should have exercised

his better judgment before conceding to accused’s choice of counsel. It did not cross his mind to

inhibit himself from acting as their counsel and instead, he even assisted them in executing the

extrajudicial confession.

Considering that this is respondent’s first infraction, disbarment as sought by the

complaint is deemed to be too severe. Under the present circumstances, we find that a

suspension from the practice of law for three years is warranted.

WHEREFORE, Atty. Danilo de la Torre is found GUILTY of violation of Rule 15.03 of the

Code of Professional Responsibility for representing conflicting interests. He

is SUSPENDED for THREE YEARS from the practice of law, effective upon his receipt of this

Decision. He is WARNED that a repetition of the same or similar acts will be dealt with more

severely.

Let copies of this Decision be entered in the record of respondent and served on the IBP,

as well as on the Court Administrator who shall circulate it to all courts for their information and

guidance.

A.C. No. 1359 October 17, 1991

GENEROSA BUTED and BENITO BOLISAY, petitioners, vs.ATTY. HAROLD M. HERNANDO, respondent.

Jorge A. Dolorfino for petitioners.

R E S O L U T I O N

PER CURIAM:p

On 22 August 1974, spouses Generosa Buted and Benito Bolisay filed an administrative complaint for malpractice against respondent Atty. Harold M. Hernando, charging the latter with having wantonly abused professional secrets or information obtained by him as their counsel.

After respondent Hernando filed his Answer on 25 June 1974, the Court, in a resolution dated 4 October 1974 referred the complaint to the Solicitor-General for investigation, report and recommendation.

On 10 February 1975, complainants presented a Joint Affidavit of Desistance. 1

On 24 October 1975, the Solicitor-General conducted a hearing where respondent took the witness stand on his own behalf.

The record of the case shows the following background facts:

In an action for partition instituted by Generosa as compulsory heir of the deceased Teofilo Buted, respondent was counsel for Luciana Abadilla and a certain Angela Buted. Involved in saidpartition case was a parcel of land Identified as Lot 9439-B. Respondent ultimately succeeded in defending Luciana Abadilla's claim of exclusive ownership over Lot 9439-B. When Luciana died, respondent withdrew his appearance from that partition case.

It appears that Luciana Abadilla sold the lot to Benito Bolisay and a new Transfer Certificate of Title over the lot was issued in the name of complainant spouses.

When an action for specific performance was lodged by a couple named Luis Sy and Elena Sy against Benito Bolisay as one of the defendants, 2 the latter retained the services of respondent Atty. Hernando however claims that he rendered his services to Benito Bolisay free of charge. Subject of this case was a contract of lease executed by Benito's co-defendant therein, Enrique Buted, over a house standing on a portion of Lot No. 9439-B. It appears that the Sy's were claiming that the lease extended to the aforementioned lot. Benito was then asserting ownership over the realty by virtue of a Deed of Sale executed by Luciana Abadilla in his favor. Eventually, the Sy's were ordered to vacate the house subject of the lease. Respondent avers that the relationship between himself and Benito Bolisay as regards this case was terminated on 4 December 1969. 3

On 23 February 1974, respondent Hernando, without the consent of the heirs of Luciana Abadillaand complainant spouses, filed a petition on behalf of the heirs of Carlos, Dionisia and Franciscoall surnamed Abadilla, seeking the cancellation of the Transfer Certificate of Title (TCT) of complainant spouses over the lot. Carlos, Dionisia and Francisco were Luciana's registered co-owners in the original certificate of title covering Lot No. 9439-B. 4 At the hearing, respondent Hernando testified that if the petition for cancellation of TCT was granted, Lot 9439-B would no longer be owned by complainant spouses but would be owned in common by all the heirs of Luciana Abadilla. 5

Complainant spouses, upon learning of respondent's appearance against them in the cadastral proceeding, manifested their disapproval thereof in a letter dated 30 July 1974. 6 Respondent however, pursued the case until it was eventually dismissed by the trial court on 2 September 1974 on the ground of prescription. 7

At the hearing before the Office of the Solicitor General and in his Answer, respondent Hernandoadmitted his involvement in the cadastral case as counsel for the Abadillas but denied having seen or taken hold of the controversial Transfer Certificate of Title, and having availed himself of any confidential information relating to Lot 9439-B.

In its Report and Recommendation dated 29 March 1990, the Solicitor General recommends thatrespondent be suspended from the practice of law for three (3) months for violation of the Canons of Professional Ethics by representing clients with conflicting interests, and filed before this Court the corresponding Complaint 8 dated 30 March 1990.

The issue raised in this proceeding is: whether or not respondent Hernando had a conflict of interests under the circumstances described above.

The Canons of Professional Ethics, the then prevailing parameters of behavior of members of the bar, defines a conflict of interests situation in the following manner:

6. Adverse influence and conflicting interests.—

xxx xxx xxx

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.

The obligation to represent the client with undivided fidelity and not to divulge his secrets or confidence forbids also the subsequent acceptance of retainers or employment from others in matters adversely affecting any interest of the client with respect to which confidence has been reposed. (Emphasis supplied)

Though as regards the first and second cases handled by respondent, no conflict of interest existed, the same cannot be said with respect to the action for specific performance and the cadastral proceeding. By respondent's own admission, he defended the right of ownership over Lot 9439-B of complainant Benito Bolisay in the action for specific performance. He assailed this same right of ownership when he subsequently filed a petition for cancellation of complainants' Transfer Certificate of Title over that same lot. Respondent Hernando was in a conflict of interest situation.

It is clear from the above-quoted portion of the Canons of Professional Ethics that in cases where a conflict of interests may exist, full disclosure of the facts and express consent of all the parties concerned are necessary. 9The present Code of Professional Responsibility is stricter on this matter considering that consent of the parties is now required to be in written form. 10 In the case at bar, such consent was wanting.

Respondent persistently argues that contrary to the claims of complainant spouses, he had never seen nor taken hold of the Transfer Certificate of Title covering Lot No. 9439-B nor obtained any confidential information in handling the action for specific performance. 11 The contention of respondent is, in effect, that because complainant has not clearly shown that respondent had obtained any confidential information from Benito Bolisay while representing the

latter in the action for specific performance, respondent cannot be penalized for representing conflicting interests. That is not the rule in this jurisdiction. The rule here is, rather, that the mere fact that respondent had acted as counsel for Benito Bolisay in the action for specific performance should have precluded respondent from acting or appearing as counsel for the other side in the subsequent petition for cancellation of the Transfer Certificate of Title of the spouses Generosa and Benito Bolisay. There is no necessity for proving the actual transmission of confidential information to an attorney in the course of his employment by his first client in order that he may be precluded from accepting employment by the second or subsequent client where there are conflicting interests between the first and the subsequent clients. The reason forthis rule was set out by the Court in Hilado v. David 12 in the following terms:

Communications between attorney and client are, in a great number of litigations,a complicated affair, consisting of entangled relevant and irrelevant, secret and well known facts. In the complexity of what is said in the course of the dealings between an attorney and a client, inquiry of the nature suggested would lead to the revelation, in advance of the trial, of other matters that might only further prejudice the complainant's cause. And the theory would be productive of other unsalutary results.To make the passing of confidential communication a conditionprecedent; i.e., to make the employment conditioned on the scope and character of the knowledge acquired by an attorney in determining his right to change sides, would not enhance the freedom of litigants, which is to be sedulously fostered, to consult with lawyers upon what they believe are their rights in litigation. The condition would of necessity call for an investigation of what information the attorney has received and in what way it is or it is not in conflict with his new position. Litigants would be in consequence be wary in going to an attorney, lest by an unfortunate turn of the proceeding, if an investigation be held,the court should accept the attorney's inaccurate version of the facts that came tohim.

Hence the necessity of setting down the existence of the bare relationship of attorney and client as the yardstick for testing incompatibility of interests. This stern rule is designed not alone to prevent the dishonest practitioner from fraudulent conduct, but as well to protect the honest lawyer from unfounded suspicion of unprofessional practice. (Strong vs. Int. Bldg., etc.; Ass'n.183 III., 97; 47 L.R.A., 792) It is founded on principles of public policy, on good taste. As has been said another case, the question is not necessarily one of the rights of the parties, but as to whether the attorney has adhered to proper professional standard. With these thoughts in mind, it behooves attorneys, like Caesar's wife, not only to keep inviolate the client's confidence, but also to avoid the appearance of treachery and double-dealing. Only thus can litigants be encouraged to entrust their secrets to their attorneys which is of paramount importance in the administration of justice. 13 (Emphasis supplied)

This Court went further in San Jose v. Cruz, 14 where the lawyer was charged with malpractice for having represented a new client whose interest was opposed to those of his former clients in another case:

The record shows that the respondent offered his services to the Matienzo spouses knowing that the petitioner had obtained a favorable judgment in the civil case No. 5480 and that his efforts in the subsequent civil case No. 5952

would frustrate said judgment and render it ineffectual, as has really been the result upon his obtaining the writ of injunction above-mentioned. Obviously his conduct is unbecoming to an attorney and cannot be sanctioned by the courts. An attorney owes loyalty to his client not only in the case in which he has represented him but also after the relation of attorney and client has terminated and it is not a good practice to permit him afterwards to defend in another case other persons against his former client under the pretext that the case is distinct from, and independent of the former case. 15 (Emphasis supplied)

The appropriate rule has been expressed by Justice Malcolm in the following manner:

An attorney is not permitted, in serving a new client as against a former one, to do anything which will injuriously affect the former client in any manner in which the attorney formerly represented him, though the relation of attorney and client has terminated, and the new employment is in a different case; nor can the attorney use against his former client any knowledge or information gained through their former connection. 16 (Emphasis supplied)

The absence of monetary consideration does not exempt the lawyer from complying with the prohibition against pursuing cases where a conflict of interest exists. The prohibition attaches from the moment the attorney-client relationship is established and extends beyond the duration of the professional relationship.

The Court therefore agrees with the Solicitor-General that respondent Hernando is guilty of violation of the Canons of Professional Ethics by representing clients with conflicting interests. We believe, however, that a heavier penalty is appropriate.

ACCORDINGLY, the Court Resolved to SUSPEND Atty. Harold M. Hernando from the practice oflaw for a period of five (5) months, with a WARNING that repetition of the same or similar offensewill warrant a more severe penalty. A copy of this Resolution shall be furnished to all courts and to the Office of the Bar Confidant and spread on the personal record of respondent.

Fernan, C.J., Gutierrez, Jr., Feliciano, Bidin and Davide, Jr., JJ., concur.

[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 trustand confidence necessarily reposed by clients require in the attorney a high standard andappreciation of his duty to his clients, his profession, the courts and the public. The bar shouldmaintain a high standard of legal proficiency as well as of honesty and fair dealing. Generallyspeaking, a lawyer can do honor to the legal profession by faithfully performing his duties tosociety, to the bar, to the courts and to his clients. To this end, nothing should be done by anymember of the legal fraternity which might tend to lessen in any degree the confidence of thepublic 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 thePhilippines (IBP), complainant Felicitas Berbano seeks the disbarment of Atty. WenceslaoBarcelona for Malpractice and Gross Misconduct Unbecoming a Lawyer, Dereliction of Duty andUnjust Enrichment.[2] Complainant alleges:

1. I am one of the heirs of Rufino Esteban Hilapo, owner of a 244-hectare lot situated atAlabang, Muntinlupa, which property is being claimed by Filinvest Dev. Corp. in acase pending with the Commission on the Settlement of Land Problems (COSLAP),Quezon City. The heirs of REH has appointed Mr. PORFIRIO DAEN as theirattorney-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 thestrength of an expired warrant of arrest-it was issued on February 1990-andsubsequently detained at the Muntinlupa City Jail, Tunasan, Muntinlupa City, until hisrelease 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 ofMr. Daen, who recommended Atty. Wenceslao Barcelona to us, his wife being Naty’scousin/relative.

4. So on January 26, 1999, at about 10:30 in the evening, Atty. Wenceslao Barcelonaarrived at the Muntinlupa City Jail and conferred with Mr. Daen. We learned laterthat Mr. Daen has engaged the services of Atty. Barcelona for the latter to secure therelease of the former from prison. After their conversation, Atty. Barcelona told usthat 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 itwas already late in the evening and I cannot any more produce the amount. But heinsisted that I must produce even just a small amount. So, what I did was ask myrelatives who were with me at the time to contribute and we were able to raiseFIFTEEN THOUSAND SEVEN-HUNDRED (P15,700.00) Pesos. In the meantime,Atty. Barcelona proceeded to Chowking Restaurant which is just located across thecity jail where he waited for us there.

5. At the aforesaid restaurant, I handed to Atty. Barcelona the amount who accepted thesame. He reiterated his promise to secure the release of Mr. Daen the followingday. Before he left, he asked us to meet him at Max’ Restaurant at around 12:00noon at EDSA Crossing. He thereafter left because according to him, he would goand see somebody, (a justice) from the Supreme Court who could help the releaseof 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 1:00P.M. He even told us that he just came from the Supreme Court where he “fixed” thecase of Mr. Daen. It surprised me though, that he did not have with him any singledocument 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 thatthe check may be encashed on the said date. Although, he said that the Justices ofthe Supreme Court do not accept check he nonetheless, accepted it saying that hewill have the same rediscounted. We thereafter left.

7. The following morning, January 28, 1999, at around 7:00 o’clock Atty. Barcelonacalled me up by phone to say that since he was unable to have the checkrediscounted, I must produce the amount of P5,000.00 and give the amount to himat Max’ Restaurant at EDSA Crossing at around 12:00 noon. We were unable tomeet him because we arrived at about 1:00 o’clock already. Nonetheless, we waitedfor him until 3:00 in the afternoon. Thereafter, I called him through his pager sayingthat we were waiting for him at Max’. I also called up our house and inquire (sic) if alawyer has called up. I was able to talk to my husband who informed me that acertain Atty. Barcelona called up. That Atty. Barcelona wanted to meet us atMcDonald’s at Barangka Drive, Mandaluyong. So we rushed to the place but hewas not there. I again paged him informing him that we were already at McDonald’sand to return my call through my cell phone. After a while, his wife called up toinform us to proceed to their house which was just five houses away fromMcDonald’s. When we reached their house, we were met by his daughter whocalled her mother. We were ushered inside the house and after introducingourselves, we gave not only P5,000.00, but TEN THOUSAND (P10,000.00) Pesos incash 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 sawAtty. Barcelona. We informed him that we left the P10,000.00 with his wife at theirhouse. 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 PorfirioDaen, gave him FIFTEEN THOUSAND (P15,000.00) Pesos in cash. I also gave himan additional P1,000.00 for his gasoline expenses.

9. The next time that we saw Atty. Barcelona was on February 3, 1999, Wednesday ataround 6:00 in the evening at Putatan, Muntinlupa. He informed us that he justcame from the city jail where he had a conversation with Mr. Daen. He told us thathe 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 shereturned my call that her husband had left for Mindanao early that morning on boarda private plane owned by Chiongbian allegedly to attend a peace talk with theMuslims.

10. After more than a week, I went to Putatan, Muntinlupa, because I was informed bythe son of Mr. Daen that he saw Atty. Barcelona there. When I saw him, I confrontedhim about his undertaking to release Mr. Daen from prison, but he only advised usnot to worry and promised (again) that he will return the entire amount of P64,000.00more or less, on Thursday, February 18, 1999. But I never saw him again sincethen. I have repeatedly paged him to return my call but he never returned any of mycalls.[3]

In an Order dated April 15, 1999, Investigating Commissioner J. Virgilio A. Bautista of theCommission on Bar Discipline of the IBP, required respondent to submit his answer to thecomplaint, with a warning that he will be considered in default and the case will be heard exparte, 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 inabeyance by the Investigating Commissioner who required the parties to appear for hearingbefore the Commission on August 13, 1999. [7] On said date, respondent again failed to appeardespite due receipt of notice.[8] Commissioner Bautista was thus constrained to considerrespondent in default and complainant was allowed to present her evidence exparte. Complainant testified and affirmed under oath the truthfulness and veracity of herAffidavit-Complaint.[9] Complainant also manifested that she will present the check in the amountof 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 onsaid 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 ProfessionalResponsibility and recommending that respondent be disbarred and ordered to return tocomplainant the amount of P64,000.00. The IBP Board of Governors adopted CommissionerBautista’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 upholdsthe findings and recommendation of Commissioner Bautista. Under the facts established bycomplainant, respondent should not only be suspended, but disbarred from practice.

The object of a disbarment proceeding is not so much to punish the individual attorneyhimself, as to safeguard the administration of justice by protecting the court and the public fromthe misconduct of officers of the court, and to remove from the profession of law persons whosedisregard for their oath of office have proved them unfit to continue discharging the trust reposedin 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 personto 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’soath, he became a guardian of truth and the rule of law, and an indispensable instrument in thefair and impartial administration of justice – a vital function of democracy a failure of which isdisastrous to society.[15] In disbarment proceedings, the burden of proof rests upon thecomplainant, and for the court to exercise its disciplinary powers, the case against therespondent must be established by clear, convincing and satisfactory proof. [16] Considering theserious consequence of the disbarment or suspension of a member of the Bar, this Court hasconsistently held that clear preponderant evidence is necessary to justify the imposition of theadministrative penalty.[17]

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

The non-presentation of the check given to respondent does not affect complainant’s caseas it will merely serve to corroborate her testimony and there is no law which requires that thetestimony of a single witness needs corroboration except where the law expressly mandatessuch 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 theInvestigating Commission, despite due notice, emphasized his contempt for legalproceedings. Thus, the Court finds no compelling reason to overturn the InvestigatingCommissioner’s judgment.

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

CANON 1 – A lawyer shall uphold the constitution, obey the laws of the land and promote respectfor 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.

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 theclient.

The Code exacts from lawyers not only a firm respect for law, legal processes and the courtsbut also mandates the utmost degree of fidelity and good faith in dealing with clients and themoneys entrusted to them pursuant to their fiduciary relationship. Instead of promoting respectfor law and the legal processes, respondent callously demeaned the legal profession by takingmoney 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 casesinvolving similar offenses, e. g.:

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

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

In Dumadag vs. Lumaya,[23] the Court ordered the indefinite suspension of a lawyer for notremitting 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 wasdisbarred for obtaining from his client the amount of US$2,555.00 allegedly as cash bond in anappealed case before this Court, when in fact no such amount has been paid or that the Courtrequired such payment.

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

This is not the first time that respondent has been charged with and found guilty of conductunbecoming a lawyer. In Gil T. Aquino vs. Atty. Wenceslao C. Barcelona,[25] respondentmisrepresented to the complainant that he could secure the restructuring of the complainant’sloan with the PNB through his connection with a certain Gonzalo Mericullo, legal assistant in thePNB. Based on such misrepresentation, respondent asked and received the amount ofP60,000.00 from the complainant allegedly to be paid to the PNB. It turned out that there was nosuch employee in the PNB by the name Gonzalo Mericullo and the complainant’s property waseventually 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. Afterdue proceedings, the IBP Board of Governors found respondent guilty of professionalmisconduct, and recommended that he be suspended from the practice of law for six months andordered to render the accounting and restitute whatever remained of the P60,000.00 to thecomplainant. The Court adopted such finding and recommendation and respondent was orderedsuspended from the practice of law for six months, effective immediately.

Respondent has demonstrated a penchant for misrepresenting to clients that he has theproper connections to secure the relief they seek, and thereafter, ask for money, which willallegedly be given to such connections. In this case, respondent misrepresented to complainantthat he could get the release of Mr. Porfirio Daen through his connection with a Supreme CourtJustice. Not only that, respondent even had the audacity to tell complainant that the Justices ofthe Supreme Court do not accept checks.

In so doing, respondent placed the Court in dishonor and public contempt. In SurigaoMineral 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 andmalpractice. For a member of the legal profession to further stoke the embers of mistrust on thejudicial system with such irresponsible representations is reprehensible and cannot betolerated. Respondent made a mockery of the Judiciary and further eroded public confidence incourts and lawyers when he ignored the proceedings in the Aquino case and in the presentcase. More so, when he misrepresented to complainant that he has connections with a Memberof 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 rigidstandards of mental fitness, maintenance of the highest degree of morality and faithfulcompliance with the rules of the legal profession are the conditions required for remaining amember of good standing of the bar and for enjoying the privilege to practice law. The SupremeCourt, as guardian of the legal profession, has ultimate disciplinary power over attorneys. Thisauthority to discipline its members is not only a right but a bounden duty as well . . . That is whyrespect and fidelity to the Court is demanded of its members.[27]

WHEREFORE, for gross misconduct, respondent Wenceslao C. Barcelona is DISBARREDfrom the practice of law. His name is ordered STRICKEN from the Roll of Attorneys. He isfurther directed to return to complainant Felicitas Berbano the amount of Sixty Four ThousandPesos (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 torespondent’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 theirinformation and guidance.

SO ORDERED.

[A.C. No. 5808. May 4, 2005]

OSCAR M. ESPIRITU, complainant, vs. ATTY. JAIME C. ULEP, respondent.

R E S O L U T I O N

CORONA, J.:

In a letter[1] addressed to the president of the Integrated Bar of the Philippines (IBP), NuevaEcija Chapter, complainant Oscar M. Espiritu sought assistance to enable him to talk torespondent Atty. Jaime C. Ulep who had allegedly been avoiding him for more than a year. Hewanted a meeting with respondent lawyer for the following reasons:

(1) respondent failed to turn-over to his client, Mr. Ricardo Maon, the amount of P50,000 given to him by complainant on December 22, 1997 as settlement of Civil Case No. 1028, Municipal Trial Court (MTC), Rizal, Nueva Ecija, and

(2) respondent refused to give complainant the amount of P30,000 plus interest and expenses as balance for a deed of absolute sale dated December 22, 1997 which the respondent brokered and notarized.

On April 5, 1999, the IBP Commission on Bar Discipline (CBD), through Commissioner J.V.Bautista invited respondent to a meeting at IBP Cabanatuan to determine whether an amicablesettlement of the impending complaint could be reached.[2]

Due to respondent’s failure to appear in the meeting, the IBP Nueva Ecija Chapter formallyendorsed the verified letter-complaint to the IBP - CBD on April 19, 1999.

In an order[3] dated May 28, 1999, the IBP-CBD ordered respondent to file his answer to thecomplaint pursuant to Rule 139-B, Sec. 6 of the Rules of Court.[4]

Respondent complied with the order by filing an affidavit which turned out to be the sameaffidavit he submitted to the Provincial Prosecutor’s Office for the preliminary investigation of theestafa case filed against him involving the same subject matter. We quote:

COUNTER-AFFIDAVIT

I, Atty. Jaime C. Ulep, of legal age, married, and a resident of and with postal address at Rizal, Nueva Ecija, after having been duly sworn, in accordance with law, depose and state:

1. The case should be dismissed because the same has no elements of estafa;

2. The truth of the matter is that, at the time the Deed of Sale of that agricultural landwas prepared, Mr. ESPIRITU admitted for the first time that the owner’s copy of the Title was lost but the petition for the issuance of the owner’s copy was being prepared;

3. In order to please Mr. ESPIRITU and not to hamper the transaction and, at the same time protect the interest of the clients (Buyers), Mr. ESPIRITU agreed to hold the amount of fifty thousand pesos (P50,000.00) in trust to be given to him after giving to me the Owner’s Copy;

4. Afterwards, his niece kept coming to my office to ask for money in order, according to her, to facilitate the issuance of the Title. On November 3, 1998, his niece demanded and received the amount of five thousand pesos (P5,000.00) from me. In other words, the total amount demanded and received from me (out of the P50,000.00) was twenty five thousand (P25,000.00), as of November 3, 1998. (A copy of the receipt with a note “Balance Twenty Five Thousand only (P25,000.00) was written.);

5. After that date, no word was received by the undersigned from Mr. ESPIRITU whether the owner’s copy was issued;

6. I am obligated to give the amount of Twenty Five Thousand Pesos (P25,000.00), provided that he will give to me the genuine owner’s copy of the Title;

7. In view thereof, the case should be dismissed because this is a clear case of specific performance and not Estafa.

Atty. Jaime C. Ulep

Affiant[5]

In the cover letter[6] of the counter-affidavit, respondent lawyer sought a formal hearing onthe administrative case.

Consequently, notice of hearing[7] was served upon the parties to appear before theCommission on August 13, 1999.

Both parties failed to appear on the scheduled hearing. On record, however, is a letterrequest[8] earlier filed by respondent to cancel the scheduled hearing due to a prior engagement. He also asked for a transfer of venue from Pasig City to Cabanatuan City. The Commission didnot immediately act on this request pending complainant’s conformity.

In the next scheduled hearing, only complainant appeared although respondent had beenduly notified of the hearing as evidenced by the registry receipt card. In the order[9] datedSeptember 17, 1999 the Commission denied the request for transfer of venue because ofcomplainant’s protestation.

Over the vehement objection of the complainant, respondent was given a last chance by theCommission to appear in a hearing reset to October 29, 1999. It warned that a motion forpostponement would no longer be entertained. In case respondent still failed to appear, theCommission was going to receive the complainant’s evidence ex-parte and deem the casesubmitted for resolution.

In a letter[10] dated October 28, 1999, respondent once again requested a cancellation of thehearing, alleging that he was undergoing “eye treatment.”

The hearing was reset to November 19, 1999; again respondent failed to appear. TheCommission, once again exercising leniency, afforded respondent “one last chance” to appearbefore it on January 21, 2000, with another warning of an ex-parte reception of evidence.[11]

In a letter[12] dated January 18, 2000, respondent again requested a cancellation. Heexplained that he had to appear before the MTC of Talavera, Nueva Ecija on the same date “inconnection with a criminal case.”

Considering that respondent failed to appear successively in all the scheduled hearings ofthe case, the Commission proceeded to conduct a hearing on January 21, 2000. Complainantwas allowed to submit and offer his evidence against the respondent ex-parte, consisting of thefollowing:

Exhibit “A” – Complainant’s verified letter-request dated March 15, 1999;

Exhibit “B” – Certification by Atty. Jaime C. Ulep dated December 22, 1997 that he had in his possession the amount of P50,000 as consideration for the settlement of Civil Case No. 1028;

Exhibit “C” – Promissory note issued by Atty. Jaime C. Ulep dated December 22, 1997 for the amount of P30,000;

Exhibit “D” – Deed of Absolute Sale executed by Oscar M. Espiritu dated December 22, 1997;

Exhibit “E” – Letter of Ricardo Maon dated March 9, 1999 addressed to the Tanggapan ng Punong Barangay of Barangay Bicos, Rizal, Nueva Ecija that he has not received any amount from Atty. Jaime C. Ulep for the settlement of Civil Case No. 1028; and

Exhibit “F” – Decision of the MTC of Rizal, Nueva Ecija in Civil Case No. 1028 incorporating the compromise agreement between Oscar Espiritu and Ricardo Maon.

After the pieces of evidence were marked, the case was submitted for decision.[13]

On December 29, 2000 Investigating Commissioner J.V. Bautista submitted his report andrecommendation[14] to the IBP Board of Governors. He found respondent lawyer guilty of violatingCanon 16 of the Code of Professional Responsibility when he misappropriated the moneyreceived by him for his client. A six-month suspension from the practice of law wasrecommended for his transgression.

In a notice of resolution[15] dated June 29, 2002, the IBP Board of Governors adopted andapproved the report and recommendation of the Investigating Commissioner. It found that therecommendation was fully supported by the evidence on record and the applicable laws andrules. By failing to deliver the amount of P50,000 to his client Ricardo Maon despite demand —which constituted misappropriation of the client’s money — it found respondent guilty of violatingCanon 16 of the Code of Professional Responsibility. It ordered the immediate delivery toRicardo Maon of the amount of P50,000 plus interest computed at the legal rate from December22, 1997 to the date of delivery and suspended respondent from the practice of law for sixmonths.

We agree with the IBP Board of Governors that respondent was guilty of violating Canon 16of the Code of Professional Responsibility.

The relation between attorney and client is highly fiduciary in nature. Being such, it requiresutmost good faith, loyalty, fidelity and disinterestedness on the part of the attorney. Its fiduciarynature is intended for the protection of the client.[16]

The Code of Professional Responsibility mandates every lawyer to hold in trust all moneyand properties of his client that may come into his possession. [17] Accordingly, he shall accountfor all money or property collected or received for or from the client. [18] Even more specific is theCanon of Professional Ethics:

The lawyer should refrain from any action whereby for his personal benefit or gain he abuses or takes advantage of the confidence reposed in him by his client.

Money of the client or collected for the client or other trust property coming into the possession ofthe lawyer should be reported and accounted for promptly and should not under any circumstances be commingled with his own or be used by him.

Consequently, a lawyer’s failure to return upon demand the funds or property held by him onbehalf of his client gives rise to the presumption that he has appropriated the same for his ownuse to the prejudice of, and in violation of the trust reposed in him by, his client. It is a grossviolation of general morality as well as of professional ethics; it impairs the public confidence inthe legal profession and deserves punishment.[19]

Lawyers who misappropriate the funds entrusted to them are in gross violation ofprofessional ethics and are guilty of betrayal of public confidence in the legal profession. [20] Thosewho are guilty of such infraction may be disbarred or suspended indefinitely from the practice oflaw.

Here, it was established that respondent lawyer received for his client Ricardo Maon theamount of P50,000 as settlement of Civil Case No. 1028 and that he did not deliver the sameupon demand. As summarized by the IBP Investigating Commissioner:

First, Exhibit “F”[21] proved that there was an obligation on the part of complainant Espiritu to deliver to Ricardo Maon, who was respondent’s client, the amount of P50,000 as full settlement of Civil Case No. 1028. Second, Exhibit “B”[22] proved that complainant Espiritu gave to respondent lawyer who acknowledged receipt thereof the amount of P50,000 as settlement of Civil Case No. 1028. And finally, Exhibit “E”[23] proved that Ricardo Maon, respondent’s client, did not receive any amount of P50,000 from his lawyer as settlement of Civil Case No. 1028.[24]

His failure to appear on five consecutive, scheduled hearing dates — requesting thecancellation and resetting of three and absolutely ignoring two — showed an evasive attitudetowards the resolution of the administrative case filed against him and of which he himself soughta formal hearing. Aside from his patent lack of respect for the Commission and its proceedings,his repeated and obviously deliberate failure to appear in the scheduled hearings revealed anattempt to wiggle away from having to explain and ventilate his side. Worse, he did not file ananswer to controvert the allegations in the complaint. Instead, he filed a counter-affidavit he hadearlier submitted in a criminal case which, upon scrutiny, referred only to a transaction involvingwhat appeared to be a sale of real property documented in exhibit “D”[25] of the complainant.

Respondent has no one else to blame but himself. Had he taken the time to appear beforethe Commission and present his defenses, he could have explained why he kept the moneydelivered to him by the complainant as settlement of the civil case. As things stand therefore,complainant’s allegations against respondent remain completely uncontroverted.

For misappropriating and failing to promptly report and deliver money received on behalf oftheir clients, some lawyers have been disbarred while others have been suspended for sixmonths.[26] Since this appears to be the first case of respondent in the IBP-CBD, we impose thelighter penalty on him.

As to complainant’s other claim for P30,000 which respondent lawyer allegedly promisedhim, we rule the evidence to be lacking and therefore find it premature to grant the award.

WHEREFORE, respondent Atty. Jaime C. Ulep is hereby found GUILTY of violating Canon16 of the Code of Professional Responsibility and is hereby SUSPENDED from the practice oflaw for a period of six months from notice, with a STERN WARNING that a repetition of the sameor similar act will be dealt with more severely.

Respondent is further ordered to restitute to his client Ricardo Maon, in cash within 30 daysfrom notice, the amount of P50,000 with interest at the legal rate, computed from December 22,1997 to the date of delivery.

Let copies of this Resolution be furnished all courts of the land, the Integrated Bar of thePhilippines, as well as the Office of the Bar Confidant for their information and guidance, and letit be entered in respondent’s record in this Court.

SO ORDERED.

Panganiban, (Chairman), Sandoval-Gutierrez, Carpio-Morales, and Garcia, JJ., concur.

LETICIA ADRIMISIN,

Complainant, A.C. No. 2591

Present:

PANGANIBAN, C.J.,

PUNO,

QUISUMBING,

YNARES-SANTIAGO,

SANDOVAL-GUTIERREZ,

CARPIO,

- versus - AUSTRIA-MARTINEZ,

CORONA,

CARPIO MORALES,

CALLEJO, SR.,

AZCUNA,

TINGA,

CHICO-NAZARIO, GARCIA, and

VELASCO, JR., JJ.

ATTY. ROLANDO S. JAVIER, Promulgated: Respondent. September 8, 2006

x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

D E C I S I O N

CARPIO, J.:

The Case

On 12 September 1983, Leticia Adrimisin (“complainant”) filed a complaint-affidavit [1] with

the Ministry of Justice seeking the disbarment of Atty. Rolando S. Javier (“respondent”) for deceit

and misrepresentation.

The Facts

Complainant alleges that on 12 July 1983, she was introduced by her cousin, Pablo

Adrimisin, to respondent. She needed the help of a lawyer in having her son-in-law, Alfredo

Monterde (“Monterde”), who was charged with the crime of qualified theft, released from the

Caloocan City Jail. Complainant claims that respondent advised her to file a bail bond.

Complainant informed respondent that her only money was P500. Complainant contends that

respondent received the money, issued a receipt[2] and promised that Monterde would be

released from jail the following day.

Complainant also alleges that respondent failed to keep his promise in having Monterde

released. Complainant went to respondent’s office several times but it seemed that respondent

was avoiding her. Monterde was later released upon settlement of the case with his employer.

Complainant claims that she demanded for the return of the P500 but respondent failed to return

this amount.

Respondent did not file any comment or answer. He only appeared in the investigative

hearings conducted by the Office of the Solicitor General (“OSG”). Respondent, in his testimony,

claims he was not hired by complainant as legal counsel. Respondent alleges complainant only

asked his help to secure a bail bond.[3] Respondent admits he received P500 for the bail bond

and called up Carlos Alberto (“Alberto”), an insurance agent. [4] Respondent claims he

gave the P500 to Alberto. However, the amount was notsufficient to pay for the bond.[5] Respondent denies that he promised to have Monterde released immediately.[6] Respondent

claims he advised complainant to get back her money directly from Alberto.[7]

Alberto, the insurance agent, was presented during the hearing. He testified that on 20 July

1983, respondent came to him to secure a bail bond for qualified theft.[8]Alberto showed a copy of

the personal bail bond dated 20 July 1983, issued by Philippine Phoenix Surety & Insurance, Inc.

(“Philippine Phoenix Surety”) with a premium ofP940 and costs of documentary stamps, notarial

fees and clearances at P279 for a total of P1,219.[9] Alberto claimed he issued a genuine bond

but it was not filed in court because complainant failed to pay the balance.[10] He also testified

that Pablo Adrimisin asked for the refund of the P500 but the amount could not be refunded due

to expensesalready incurred and forfeiture of the remainder in favor of Alberto’s office.[11]

The bail bond which was marked as Exhibit “1” contained a stamped “Limitation of Liability”

clause. The clause states “Authorized limit of the bond shall not exceedP20,000 and it is not valid

for theft and robbery cases.”[12] The portion “Not valid for theft and robbery cases” was deleted

with a marking pen but this cancellation was not signed or initialed. Alberto was asked why the

cancellation was unsigned. Alberto replied that he had no knowledge on who made the stamp or

the cancellation.[13] When asked if it is the policy of Philippine Phoenix Surety not to post

personal bail bond with respect to theft and robbery cases, Alberto answered in the affirmative. [14]

Alberto also clarified that he is not connected with Philippine Phoenix Surety but he is an

employee of the House of Bonds, which is the general agent of the former.[15]

Mr. Alfredo Brigoli (“Brigoli”), General Manager of the House of Bonds, was also presented

as one of respondent’s witnesses. Brigoli explained that he gives Alberto 5 sets of pre-signed bail

bond forms.[16] However, in theft, robbery and drug cases, Alberto is required to seek his approval

before the bond is issued.

Brigoli testified that it was Alberto’s daughter who called him up for approval to issue a

bond for qualified theft.[17] He informed Alberto’s daughter to bring the original bond and its

duplicate copies to his office in Intramuros for his signature, but the same was not done. [18] Due

to the lack of his signature, Brigoli claimed that the bond has not been approved. [19] Brigoli

also testified that since the bond was not forwarded to his office, the same was not recorded and

the payment was not remitted.

The OSG’s Report and Recommendation

The OSG’s Investigating Solicitor Antonio G. Castro heard the case and submitted a Report

and Recommendation (“Report”). The OSG recommended that respondent be suspended from

the practice of law for not less than one year. The Report reads:

The charge of deceit and misrepresentation against respondent has beensufficiently established. Respondent himself admits that he received fromcomplainant the sum of P500.00 for the bail bond of complainant’s son-in-lawAlfredo Monterde; that he failed to secure Monterde’s release from jail; and thathe did not return the sum of P500.00 to complainant (pp. 9-20, tsn,March 14,1985).

x x x x

Respondent’s defense that he actually secured a bail bond for Monterde isa mere afterthought. Firstly, complainant confided to him that she had no moremoney except P500.00. He would not, therefore, secure a bail bond with higherpremium than P500.00.

Secondly, while he declared that the records of Monterde’s case in theRegional Trial Court in Caloocan City, Branch XXV, sala of Judge Oscar Herrerashowed that the recommended bail was P8,000.00 (pp. 8-9, tsn, March 14,1985), the personal bail bond, marked as Exhibit “1”, which was allegedlyprepared, was for P9,400.00 (Exh. “1”, p. 7, Folder of Exhs.).

Thirdly, respondent’s witness, Alfredo Brigoli, the general manager of theAAF House of Bonds, admitted that Exhibit “1” was not finally approved. Oncross-examination, he declared:

“Q Have you signed that as finally approved?

A No, sir. When they called up asking for my signature on thedeleted portion of the bond, Mr. Alberto never came to my office.

Q In other words that bond has not been finally approved.

A Not finally approved because there is no signature yet.”

(p. 20, tsn, Sept. 30, 1985).

As held by this Honorable Court in Royong v. Oblena, 7 SCRA 859, 868-869 (1963), “The respondent’s misconduct, although unrelated to his office, mayconstitute sufficient grounds for disbarment.” And in Quingwa v. Puno, 19 SCRA439, 445 (1967), it also held that, “Indeed, it is important that members of thisancient and learned profession of law must conform themselves in accordancewith the highest standards of morality.”

Specifically, for deceit and misrepresentation, respondent may besuspended or disbarred (In re Paraiso, 41 Phil. 24, 25 [1920]).[20]

The Court’s Ruling

The Court finds respondent liable for violation of Canon 16 and Rule 18.03 of the Code of

Professional Responsibility (“Code”). The Code mandates every lawyer to hold in trust all

moneys and properties of his client that may come into his possession. [21] Consequently, a lawyer

should account for the money received from a client.[22] The Code also enjoins a lawyer not to

neglect a legal matter entrusted to him,[23] and his negligence in connection therewith shall render

him liable.

Respondent himself admitted the receipt of P500 from complainant as payment for the

bail bond as shown in his testimony and in Exhibit “A”. By his receipt of theamount, respondent

agreed to take up complainant’s cause and owed fidelity to complainant and her cause, even if

complainant never paid any fee. Lawyering is not a business.It is a profession in which duty to

public service, not money, is the primary consideration.[24]

Respondent claims that on 12 July 1983, he called up Alberto for the issuance of the bail

bond but it took 8 days before the bail bond was prepared. In failing to immediately secure the

bail bond, respondent clearly neglected to exercise ordinary diligence or that reasonable degree

of care and skill required by the circumstances.

There were also irregularities in the personal bail bond. Firstly, it was issued on 20 July

1983 but notarized sometime in 1984 as seen in the Notarial Certificate. The Court therefore

agrees with OSG’s finding that respondent’s defense that he secured a bail bond was a mere

afterthought. Furthermore, complainant filed her complaint on 12 September 1983, which means

that the bond was notarized only after the complaint was filed. Secondly, the bail bond was not

valid for theft and robbery cases. Although there was a cancellation of such phrase through

marking pen, the same was not countersigned, and hence the cancellation was void. Thirdly, the

payment for the bond was not recorded and neither was it remitted to the issuer of the bond.

This means that the bond was a mere piece of paper without any value for it failed to serve its

purpose.

Complainant demanded for the return of the P500 but respondent kept on insisting that

complainant seek refund from Alberto. Respondent has the duty to account for the money

entrusted to him by complainant. In Pariñas v. Paguinto,[25] we held that “a lawyer shall account

for all money or property collected from the client. Money entrusted to a lawyer for a specific

purpose, such as for filing fee, but not used for failure to file the case must immediately be

returned to the client on demand.” In the present case, money for the payment of the bond’s

premium was not used for the purpose intended. Hence, respondent must return the amount to

complainant upon demand.

A lawyer’s failure to return upon demand the funds held by him on behalf of his client

gives rise to the presumption that he has appropriated the same for his own use in violation of

the trust reposed in him by his client. Such act is a gross violation of general morality as well as

of professional ethics. It impairs public confidence in the legal profession and deserves

punishment.[26]

This is not the first time respondent is found to have unlawfully withheld and

misappropriated money. In Igual v. Javier,[27] the Court held that respondent had unjustifiably

refused to return Igual’s money upon demand and his absence of integrity was highlighted by his

“half-baked excuses, hoary pretenses and blatant lies in his testimony before the IBP Committee

on Bar Discipline.” The Court suspended Javier from the practice of law for a period of one

month and ordered him to restitute the amount of P7,000 to Igual. In that case, we reminded

respondent that he was “expected to always live up to the standards embodied in the Code of

Professional Responsibility for the relationship between an attorney and his client is highly

fiduciary in nature and demands utmost fidelity and good faith.” [28]

We reiterate this reminder. Lawyers who convert the funds entrusted to them are in gross

violation of professional ethics and are guilty of betrayal of public confidence in the legal

profession.[29] Those who are guilty of such infraction may be disbarred or suspended from the

practice of law.[30]

WHEREFORE, we SUSPEND Atty. Rolando S. Javier from the practice of law for SIX

MONTHS effective upon finality of this Decision. We ORDER respondent to restitute complainant

Leticia Adrimisin the Five Hundred Pesos (P500) with legal interest computed from 12

September 1983 until full payment. Respondent shall submit to the Court proof

of restitution within ten (10) days from

payment.

Let copies of this resolution be furnished the Office of the Bar Confidant to be appended to

respondent’s personal record, and the Integrated Bar of the Philippines. The Court Administrator

shall furnish copies to all courts of the land for their information and guidance.

SO ORDERED.

A.C. No. 5019 April 6, 2000

Judge ADORACION G. ANGELES, complainant, vs.Atty. THOMAS C. UY JR., respondent.

PANGANIBAN, J.:

Lawyers must promptly account for money or property they receive on behalf of their clients. Failure to do so constitutes professional misconduct and justifies the imposition of disciplinary sanctions.

The Case and the Facts

In a letter dated February 11, 1999 addressed to the Office of the Chief Justice, Judge AdoracionG. Angeles of the Regional Trial Court of Caloocan City (Branch 121) charged Atty. Thomas C. Uy Jr. with violation of Canon 16 of the Code of Professional Responsibility. Complainant states that respondent's acts, which had earlier been held contemptible in her February 10, 1999 Order,1 also rendered him administratively liable. In the said Order, she narrated the following facts:

When the case was called for the second time at 11:25 o'clock in the morning, the privateprosecutor Atty. Thomas C. Uy, Jr. appeared. In open court, accused Norma Trajano manifested that she had already settled in full the civil aspect in Crim. Case No. C-54177 (98) in the total amount of [t]hirty [s]ix [t]housand [f]ive [h]undred (P36,500.00) [p]esos. She further alleged that she paid P20,000.00 directly to the private complainant and the balance of P16,500.00 was delivered to Atty. Thomas C. Uy, Jr., the lawyer of the private complainant and accordingly produced in open court the receipt for such payment signedby no less than the aforesaid lawyer. Indeed, the civil liability of the accused had already been satisfied in full.

However, the private complainant, Primitiva Malansing [Del Rosario] manifested that she did not receive the amount of [s]ixteen [t]housand [f]ive [h]undred (P16,500.00) [p]esos

which was paid to his lawyer Atty. Thomas C. Uy, Jr., thereby constraining this court to direct Atty. Thomas C. Uy to turn over the money to the private complainant which he received in trust for his client. Atty. Uy however argued that his client did not like to accept the money but the assertion of the lawyer was belied by his own client, the herein private complainant, who manifested in open court . . . her willingness to accept the money. The Court again directed Atty. Uy to produce the money but the latter argued that he kept it in his office. Consequently, the Court suspended the proceedings to enable Atty. Uy to get the money from his law office which is located only at the second floor of the same building where this court is located.

Unfortunately, it is already 12:15 o'clock past noon but Atty. Uy did not show up anymore and not even his shadow appeared in Court.

It cannot be denied that the act of Atty. Thomas Uy in deliberately failing to return to the Court [the] proceedings [of which] were suspended just because of his representations, mirrors not only an undisguised disobedience of a court order but also manifests his propensity to mock the dignity of the Court. Disgustingly, he deliberately ignored his solemn oath to conduct himself as befitting the status of an officer of the court.

Indeed, this gross misbehavior of Atty. Uy cannot simply be ignored for it is a raw challenge to the authority of the Court.

It must also be pointedly emphasized that Atty. Thomas Uy committed a brazen violation of the provisions of Canon 16 of the Code of Professional Responsibility, to wit:

x x x x x x x x x

Obviously, Atty. Thomas Uy fell short of the duties expected from him as a member of thebar.

In compliance with this Court's March 24, 1999 Resolution, Respondent Uy2 filed his Comment on June 7, 1999. Denying that he violated Canon 16 of the Code of Professional Responsibility, he explained:

1). In a criminal case, then pending before the Regional Trial Court, Branch 121 of Kalookan City, Metro Manila, presided by the complainant Honorable Adoracion G. Angeles, entitled "People of the Philippines vs. Norma Trajano, et., al", Criminal Case No.C-54176-77 (98), Atty. Thomas C. Uy Jr., herein referred to as [r]espondent, was engaged as [p]rivate [p]rosecutor of the complainant therein, Mrs. Primitiva Malansing Del Rosario. At the outset Norma Trajano, accused in said criminal case, expressed her desire and offered to settle the civil aspect of the criminal case against her to which Primitiva Del Rosario acceded. On separate hearings, Norma Trajano made installment payments to Primitiva Del Rosario some of which payments were duly acknowledged by the latter in the presence of [r]espondent;

2). On a previously cancelled date of hearing of the aforesaid criminal case . . . on December 14, 1998, Norma Trajano went to the office of the [r]espondent at about 8:45 o'clock in the morning, . . . and met Mr. Romeo C. Jamisola Jr., who is acting as [r]espondent's personal secretary and at the same time the liason officer of the law firm De Veyra, Uy and Associates . . . .Mr[.] Romeo Jamisola Jr., is the lone staff of the law

firm . . . . Respondent was at that time not in the office as he was attending a hearing before the Regional Trial Court, Branch 122, Kalookan City, Metro Manila. . . .

3). On the aforesaid date and time (December 14, 1998) at the office of the [r]espondent, Norma Trajano told Mr. Romeo Jamisola Jr. that she will make another partial payment toPrimitiva M. Del Rosario because she cannot attend the hearing the following day (8[:]30 o'clock a.m. of December 15, 1999) before Judge Adoracion G. Angeles due to a conflict of schedule with her [other] case in the Regional Trial Court, Branch 19, Malolos, Bulacan, where she is likewise the accused for [e]stafa[.] Mr. Romeo Jamisola told Norma Trajano to wait for a while as he will fetch [r]espondent at the ground floor in the sala of the Honorable Remigio E. Zari. Respondent, upon being informed of the presenceof Norma Trajano in the office of the [r]espondent by Romeo Jamisola Jr. went to his office and Norma Trajano immediately told [r]espondent that she knew that the setting forthat day (December 14, 1998) was previously cancelled and that she cannot attend the hearing the following day (8[:]30 o'clock a.m. December 15, 1998) and further told the [r]espondent that she (Norma Trajano) will make another partial payment to Primitiva M. Del Rosario and that she will just leave her payment in the sum of [s]ixteen [t]housand [five hundred] [p]esos (P16,500.00), Philippine [c]urrency, in the office of the [r]espondent. Respondent then told Norma Trajano to inform Primitiva M. Del Rosario first but Norma Trajano replied that she will just call Primitiva [Del Rosario]. Nonetheless, [r]espondent told Romeo Jamisola Jr. to call Primitiva Del Rosario, using the office phone, and let her talk with Norma Trajano, and, if Primitiva Del Rosario agreed [r]espondent instructed Romeo Jamisola Jr., to just prepare a receipt. Respondent, fearing that his case (People vs. Rommel Senadrin, et al. above-stated) might have beencalled in the calendar, immediately left the office and proceeded [at] the sala of the Honorable Remigio E. Zari. Respondent, after the hearing . . ., returned to his office and upon learning that his signature was affixed by Romeo Jamisola Jr. upon the insistence of Norma Trajano scolded Romeo Jamisola Jr. and for his unsuccessful attempt to contact first Primitiva Del Rosario before receiving the sum of money left by Norma Trajano;

4). The following day [o]n the morning of December 15, 1998, [r]espondent arrived at his office and met Primitiva Del Rosario and her daughter Aurora Del Rosario and immediately the trio appeared before the sala of Judge Adoracion G. Angeles in the hearing of the Norma Trajano case. Returning [to] the office of the [r]espondent after the hearing, Primitiva Del Rosario and Aurora Del Rosario, being earlier informed that on December 14, 1998 Norma Trajano went [to] his office and made partial payment in the sum of P16,500 thru Mr. Romeo Jamisola Jr., the [r]espondent told Mr. Romeo Jamisola to get the money from the filing cabinet and while the money in the envelope [was] being handed over to Primitiva Del Rosario, [the latter] and her daughter . . ., however, told [r]espondent to just let the money in the sum of P16,500.00 be kept at the office of the [r]espondent so that future payments of Norma Trajano will be save[d] in whole and for them to avoid spending the same as what had happened to the past installment payments of Norma Trajano. Respondent then acceded to the request of Primitiva Del Rosario and her daughter and told them that they can get the money anytime they want from the [r]espondent's office. Hence, the money was kept locked [in] the filing cabinet of the [r]espondent where he used to keep all his personal file[s].1âwphi1.nêt

5). On December 23, 1998, early before noon, Primitiva Del Rosario and her daughter Aurora Del Rosario, on a prior invitation, attended the Christmas Party of the office of

[r]espondent and undersigned counsel. . . . Respondent, after the . . . lunch, instructed Mr. Romeo Jamisola Jr., to give the sum of money (P16,500.00) and for Primitiva Del Rosario to receive the same for fear of a repetition of a burglary incident before, where some cash and minor office appliances of undersigned were lost. Primitiva Del Rosario, however, insisted that said sum of money be kept at the office of the [r]espondent to savein whole the installment payments of Norma Trajano and that [was] the wish of her son Fernando "Bong" Del Rosario, who is a long time friend and a compadre of the [r]espondent. Respondent, respecting the trust reposed upon him by Primitiva Del Rosario, her daughter Aurora Del Rosario, and son Fernando Del Rosario, acceded to hold in trust the said sum of [s]ixteen [t]housand [f]ive [h]undred (P16,500.00) [p]esos, Philippine [c]urrency, which [was] locked and safely kept [in] the filing cabinet of the [r]espondent until February 12, 1999; . . .;

6). On February 10, 1999 [during] the hearing of the Norma Trajano case before the Hon.Adoracion G. Angeles, [r]espondent appeared shortly before 10:30 o'clock in the morning, pursuant to a "Motion to Call Case at 10:30 o'clock in the Morning". . .

7). When the said Norma Trajano [case] . . . was called on second call at 11[:]25 a.m., [i]nsaid February 10, 1999 hearing, respondent was first scolded by the Honorable Court (Judge Adoracion G. Angeles) . . . [for] giving more preference to the Metropolitan Trial Court than her Court. Resp[o]ndent, however, beg[ged the] indulgence of the Honorable Court (Judge Adoracion G. Angeles) and explained why [he] first attend[ed] the Mandaluyong hearing of Manny Chua's case, to wit; . . . .

8). That it was during the course of [the] litany of sermon, [i]n that hour, made by the Honorable Court addressed to the [r]espondent that Norma Trajano . . . butted in and informed the Honorable Court (Judge Adoracion G. Angeles) that she will be tendering another partial payment; it was at that moment that Judge Adoracion G. Angeles asked Norma Trajano how much had she paid Primitiva Del Rosario, and, Norma [T]rajano answered that she had already paid P36,500.00 as full payment for one case, and that ofthe P36,500, P20,000.00 was paid to Primitiva Del Rosario and HESITANTLY said that the P16,500 was paid to the [r]espondent. Judge Angeles then took the receipt from Norma Trajano and had it xeroxed by a personnel of the Court. The carbon duplicate original of the Receipt, dated [D]ecember 14, 1998, showing the receipt by the office of the [r]espondent, through Romeo Jamisola Jr., whose printed [name] was pre[ceded] by the word "By", indicating that he received the sum of money on behalf of or in representation of the [r]espondent, is hereto [attached] and marked as ANNEX "5", to form part hereof;

9). That it was perhaps due to the belief [in] and the immediate impression of Judge Adoracion G. Angeles [of the] answer of Norma Trajano that prompted Judge Angeles to ask, instantaneously in a loud manner, Primitiva Del Rosario "IN TAGALOG", the question, "NATANGGAP MO BA KAY ATTY. UY ANG PERA NA P16,500.00?". Primitiva Del Rosario, a seventy-year-old, who was shocked by the tone and the manner she was asked by Judge Angeles simply just answered "HINDI PO, KASI GUSTO [KO] PO NA MABUO ANG PERA". Primitiva Del Rosario, however, tried to explain her answer "HINDI PO" and why she did not yet [receive] the money from the [r]espondent by raising her hand but was prevented by Judge Adoracion G. Angeles from further answering by tellingPrimitiva Del Rosario to stop. With that answer of Primitiva Del Rosario, [r]espondent butted in to explain Primitiva Del Rosario's answer of "HINDI PO" and her having not yet

received the sum of money, subject of the inquisition of Judge Angeles by manifesting to wit; . . . that Primitiva Del Rosario did not get the money when . . . handed the same on December 15, 1998 because she wanted [it] to be save[d] in whole together with the future installment payments of Norma Trajano and to be kept in the office of the [r]espondent as wished by her son Bong Del Rosario; and, that the said sum of money [was] kept in the filing cabinet in the office of the [r]espondent. All explanation[s] of the [r]espondent went to . . . naught as the [r]espondent was cut short by . . . Judge Angeles, [who] in a loud and angry voice orally directed the [r]espondent to get the money from [r]espondent's office and give the same to Primitiva Del Rosario. It was already 11:45 o'clock in the morning, more or less, and the [r]espondent was given fifteen (15) minutes to comply; [r]espondent requested Judge Angeles to be accompanied by Primitiva Del Rosario and her daughter Aurora Del Rosario but both were ordered to stay in court by Judge Angeles;

10). Respondent in compliance with the oral order of Judge Angeles immediately proceeded [to] his office but only to find out that Romeo Jamisola Jr., who [held] the only key [to r]espondent's filing cabinet, was on errand . . . that morning of February 10, 1999 [for] Atty. Angel B. De Veyra (the Undersigned Counsel) [who had sent him] to the offices of the solicitor general in Makati City, and, the City Prosecutor's Office of Manila to [furnish copies to] both offices; . . .;

11). Respondent, expecting that Romeo Jamisola Jr. would [arrive] before 12[:]00 noon, . . . waited for Romeo Jamisola Jr. while at the same time called up [his] wife to immediately [come] to his office to spare the sum of P16,500.00 as Romeo Ja[mi]sola may not [arrive] [within] the time allotted by Judge Angeles. The wife of respondent, however, arrived at about 12:25 P.M., more or less, ahead of Romeo Jamisola Jr. and spared [r]espondent the sum of P16,500.00 and [r]espondent immediately went [to] the fourth floor, where the sala of Judge Angeles [was] located but unfortunately the session was already adjourned. Respondent then talked to "Armand", one of the court personnel and is known as the door keeper of the chamber of Judge Angeles, and [requested that he be allowed to go inside the chamber to show [his] compliance, though late. Respondent, however, was told by "Armand" that Judge Angeles was on her lunch break and that it [was] better for [r]espondent to take his lunch too and return a little later;

12). At about 1:30 o'clock in the afternoon of that day (February 10, 1999) [r]espondent returned [to] the sale of Judge Angeles together with Primitiva Del Rosario and her daughter Aurora Del Rosario, who likewise returned to the court, to seek an audience in [the] chamber [of] Judge Angeles. Said audience with Judge Angeles was desired by Primitiva Del Rosario to let Judge Angeles [witness] the giving of the money to Primitiva Del Rosario. But request[s] for the same, through "Armand", were twice denied by Judge Angeles because at that time Judge Angeles was being interviewed by several media personnel of some TV stations. The Del [Rosarios], however, left earlier upon knowing that Judge Angeles denied their request for an audience. [T]hey told [r]espondent that they will be back the following day. It was only when Romeo Jamisola arrived at about 3:00 o'clock, more or less, in the afternoon and went at the fourth floor at the premises of the sala of Judge Angeles and informed the [r]espondent that he carried with him the key to [r]espondent's cabinet and the presence of some [squatter] families of Batasan Hills, Quezon City at the office of the [r]espondent, who has an appointment with the [r]espondent, that the [r]espondent left the premises of the sala of Judge Angeles. [sic] Respondent, at his office ordered Romeo Jamisola Jr. to open the filing cabinet and

returned to the premises of the sala of Judge Angeles alone at about 4:00 o'clock P.M. after his meeting with the squatter families. But again, his request to "Armand" to talk withJudge Angeles, after the media interview, was denied. At about 5:30 o'clock in the afternoon, "Armand", the court personnel, served the Order, of said date, February 10, 1999 at the office of the [r]espondent;

13). In the early afternoon of the following day, February 11, 1999, [r]espondent together with Primitiva Del Rosario and her daughter Aurora Del Rosario went again [to] the sala of Judge Angeles . . . to seek an audience with Judge Angeles. Their request . . . w[as] likewise in vain. Primitiva Del Rosario, after the last attempt to seek audience with Judge Angeles and already tired of going [to] and [from] the sala of Judge Angeles, decided on February 12, 1999, to receive the sum of money in the amount of P16,500.00 from the office of the [r]espondent, through, Romeo Jamisola Jr. and executed a Sinumpaang Salaysay. . . .;

14). The Sinumpaang Salaysay of Primitiva Del Rosario, dated February 16, 1999 as wellas the Acknowledgment Receipt, dated February 12, 199[9] was attached to a Manifestation caused to be filed by the [r]espondent on March 3, 1999 when the respondent was confined in Fatima Hospital in Valenzuela City, Metro Manila on March 2,1999;

15). Learning of the instant administrative case against the [r]espondent, Bong Del Rosario, the son of Primitiva Del Rosario, upon whose wish the subject sum of money was kept at the office of the [r]espondent to save the same in whole as well as the future in[s]tallment payments of Norma Trajano executed a Sinumpaang Salaysay, attesting [to]and confirming the statement of [his] mother Primitiva Del Rosario. . . .3

Stripped of unnecessary verbiage, the Comment contends that the respondent kept the money inhis office because that was the alleged wish of both his client and her son. He allegedly informedthem of such money and tried to give it to them, but they insisted that he retain it. He further maintained that it was only after Judge Angeles issued the February 10, 1999 Order that his client relented and accepted the money on February 12, 1999.

After the judge filed her Reply on June 30, 1999, this Court referred the case to the Office of the Bar Confidant for report and recommendation. The Court dispensed with the normal referral to the Integrated Bar of the Philippines because the records were complete and the question raisedwas simple. No further factual investigation was necessary in the premises.

Bar Confidant's Report and Recommendation

Recommending that Atty. Thomas C. Uy Jr. be suspended from the practice of law for one month, the Office of the Bar Confidant in its Report and Recommendation dated December 15, 1999 said:

. . . [I]t is clear that it is the sworn duty of a member of the bar to be accountable, at all times, for anything which he receives for and in behalf of his client.

In the case at bar, this Office is more inclined to believe the story of the complainant.

First, it cannot be disputed that the transcript of stenographic notes is the most reliable record of what indeed transpired (and what words were uttered by the parties involved) on February 10, 1999 at the hearing of Crim. Case No. C-54176-77 (98). Records clearly show that the private complainant in the criminal case, when asked by Judge Angeles as to the whereabouts of the P16,500.00, spontaneously replied that she had no knowledge of the same; in effect saying that Atty. Uy has not given her the subject P16,500.00. If, indeed, Primitiva Del Rosario requested Atty. Uy to keep the money as far back as December 1998, then she should have told the same to Judge Angeles.

Atty. Uy's allegation that Judge Angeles prevented Primitiva Del Rosario from saying in open court the words "HINDI PO KASI GUSTO KO PO NA MABUO ANG PERA" does not have any proof as nothing of that sort appears in the transcript of stenographic notes.Atty. Uy has not even bothered to refute the truth of the contents of the stenographic notes, all the more bolstering this Office's opinion that the said notes are accurate and truthful.

Second, the affidavits executed by Primitiva Del Rosario and her son, Fernando Del Rosario, dated February 16, 1999 and June 7, 1999, respectively, attesting to Atty. Uy's averment that his act of personally keeping the subject P16,500.00 was with and at their request cannot be given much credence to outweigh the arguments of Judge Angeles. The said affidavits, both executed after February 10, 1999, are suspect. Caught by surprise when Judge Angeles inquired of the whereabouts of his client's money, Atty. Uy .. . resorted to seeking the help of his client to corroborate his defense. Being the clients of Atty. Uy, Primitiva Del Rosario and her son could have been persuaded to help extricate their counsel from the latter's predicament.

In the absence of any contradicting evidence to dispute the allegation that Atty. Uy failed to immediately remit to his client the money due the latter, it is safe to conclude that Atty. Uy has violated his sworn duty to uphold, at all times, the trust and confidence reposed inhim by his client(s).

x x x x x x x x x

In the instant case, Atty. Uy, upon receipt of the P16,500.00 from the accused in the criminal case, should have promptly remitted the same to his client, Primitiva Del Rosario. Had Judge Angeles not inquired of the whereabouts of the money, the same would have remained with Atty. Uy, to the prejudice of the latter's client. 4

This Court's Ruling

We agree with the findings and the recommendation of the Office of the Bar Confidant.

Administrative Liability of Respondent

The relationship between a lawyer and a client is highly fiduciary; it requires a high degree of fidelity and good faith. It is designed "to remove all such temptation and to prevent everything of that kind from being done for the protection of the client."5

Thus, Canon 16 of the Code of Professional Responsibility provides that "a lawyer shall hold in trust all moneys and properties of his client that may come into his possession." Furthermore,

Rule 16.01 of the Code also states that "a lawyer shall account for all money or property collected or received for or from the client." The Canons of Professional Ethics is even more explicit:

The lawyer should refrain from any action whereby for his personal benefit or gain he abuses or takes advantage of the confidence reposed in him by his client.

Money of the client collected for the client or other trust property coming into the possession of the lawyer should be reported and accounted for promptly and should not under any circumstances be commingled with his own or be used by him.6

In the present case, it is clear that respondent failed to promptly report and account for the P16,500 he had received from Norma Trajano on behalf of his client, Primitiva Del Rosario. Although the amount had been entrusted to respondent on December 14, 1998, his client revealed during the February 10, 1999 hearing that she had not yet received it. Worse, she did not even know where it was.

Respondent maintains that on December 15, 1998 he informed Mrs. Del Rosario about the payment.1âwphi1 He further avers that he kept the money upon her instruction, as she had allegedly wanted "future payments . . . [to] be saved in whole and for them to avoid spending the same as what had happened to the past installment payments."7 This assertion allegedly finds support in her answer to the question of Judge Angeles, who had asked her whether she had received the disputed payment: "Hindi po, kasi gusto [ko] po na mabuo ang pera."

The Court is not persuaded. Respondent's assertions are contradicted by the following transcript of stenographic notes:

Court: This P16,500, did you turn it over to the private complainant?

Atty. Uy: No your Honor, because she wanted the full amount of the settlement.

Court: Private complainant, is it true that you did not want to accept the money?

Mrs. Del Rosario: Hindi po, sila po ang nagbigayan.

Court: Hindi po ibinibigay sa inyo ni Atty. Uy?

Mrs. Del Rosario: Hindi po.

x x x x x x x x x

Court: Nasaan iyong P16,500?

Huwag kayong matakot.

Mrs. Del Rosario: Aywan ko po sa kanilang dalawa. 8

If it were true that Mrs. Del Rosario was informed about the payment and that she entrusted it to respondent, she would have known its whereabouts. That she did not know it showed the falsity of his claim.

It is noteworthy that respondent did not dispute the foregoing transcript although it belied his allegation that Mrs. Del Rosario's express wish was to have the payments in full.

Neither are we convinced by the affidavits of Mrs. Del Rosario and her son, both of whom affirmed their intention to have their money in the safekeeping of respondent. It should be stressed that he was her counsel and the compadre of her son. Moreover, the affidavits were executed after the filing of this Complaint. As the Office of the Bar Confidant observed, these considerations militate against the credibility of the affiants. In any event, their affidavits fail to explain adequately why Mrs. Del Rosario, during the hearing on February 10, 1999, did not knowwhere her money was.

The records do not clearly show whether Attorney Uy had in fact appropriated the said amount; infact, Mrs. Del Rosario acknowledged that she had received it on February 12, 1999. They do show, however, that respondent failed to promptly report that amount to her. This is clearly a violation of his professional responsibility. Indeed, inAya v. Bigornia, 9 the Court ruled that money collected by a lawyer in favor of his clients must be immediately turned over to them. In Daroy v. Legaspi, 10 the Court held that "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."

Verily, the question is not necessarily whether the rights of the clients have been prejudiced, but whether the lawyer has adhered to the ethical standards of the bar. 11 In this case, respondent has not done so. Indeed, we agree with the following observation of the Office of the Bar Confidant:

Keeping the money in his possession without his client's knowledge only provided Atty. Uy the tempting opportunity to appropriate for himself the money belonging to his client. This situation should, at all times, be avoided by members of the bar. Like judges, lawyers must not only be clean; they must also appear clean. This way, the people's faith in the justice system would remain undisturbed. 12

In this light, the Court must stress that it has the duty to look into dealings between attorneys andtheir clients and to guard the latter from any undue consequences resulting from a situation in which they may stand unequal. 13The present situation calls for the exercise of this duty.

For misappropriating and failing to promptly report and deliver money they received on behalf of their clients, some lawyers have been disbarred 14 and others have been suspended for six months. 15 In the present case, the records merely show that respondent did not promptly report that he received money on behalf of his client. There is no clear evidence of misappropriation. Under the circumstances, we rule that he should be suspended for one month.

WHEREFORE, Atty. Thomas C. Uy Jr. is hereby SUSPENDED for one month. He is warned that a repetition of the same or similar acts will be dealt with more severely.

Let copies of this Decision be served on Atty. Thomas C. Uy Jr. at his given address or any other known one. Copies of this Decision shall also be entered in his record as attorney and served on the IBP, as well as the Court Administrator who shall circulate them to all the courts in the countryfor their information and guidance.1âwphi1.nêt

SO ORDERED.

Melo, Vitug, Purisima and Gonzaga-Reyes, JJ., concur.

A.C. No. 9872 January 28, 2014

NATIVIDAD P. NAVARRO and HILDA S. PRESBITERO, Complainants, vs.ATTY. IVAN M. SOLIDUM, JR., Respondent.

D E C I S I O N

PER CURIAM:

This case originated from a complaint for disbarment, dated 26 May 2008, filed by Natividad P. Navarro (Navarro) and Hilda S. Presbitero (Presbitero) against Atty. Ivan M. Solidum, Jr. (respondent) before the Integrated Bar of the Philippines Commission on Bar Discipline (IBP-CBD).

From the Report, dated 1July 2009, of the IBP-CBD, we gathered the following facts of the case:

On 4 April 2006, respondent signed a retainer agreement with Presbitero to follow up the release of the payment for the latter’s 2.7-hectare property located in Bacolod which was the subject of a Voluntary Offer to Sell (VOS) to the Department of Agrarian Reform (DAR). The agreement also included the payment of the debts of Presbitero’s late husband to the Philippine National Bank (PNB), the sale of the retained areas of the property, and the collection of the rentals due for the retained areas from their occupants. It appeared that the DAR was supposed to pay P700,000 for the property but it was mortgaged by Presbitero and her late husband to PNB for P1,200,000.Presbitero alleged that PNB’s claim had already prescribed, and she engaged the services of respondent to represent her in the matter. Respondent proposed the filing of a case for quieting of title against PNB. Respondent and Presbitero agreed to an attorney’s fee of 10% of the proceeds from the VOS or the sale of the property, with the expenses to be advanced by Presbitero but deductible from respondent’s fees. Respondent received P50,000 from Presbitero,supposedly for the expenses of the case, but nothing came out of it.

In May 2006, Presbitero’s daughter, Ma. Theresa P. Yulo (Yulo), also engaged respondent’s services to handle the registration of her 18.85-hectare lot located in Nasud-ong, Caradio-an, Himamaylan, Negros. Yulo convinced her sister, Navarro, to finance the expenses for the

registration of the property. Respondent undertook to register the property in consideration of 30% of the value of the property once it is registered. Respondent obtainedP200,000 from Navarro for the registration expenses. Navarro later learned that the registration decree over the property was already issued in the name of one Teodoro Yulo. Navarro alleged that she would not have spent for the registration of the property if respondent only apprised her of the real situation of the property.

On 25 May 2006, respondent obtained a loan of P1,000,000 from Navarro to finance his sugar trading business. Respondent and Navarro executed a Memorandum of Agreement (MOA) and agreed that the loan (a) shall be for a period of one year; (b) shall earn interest at the rate of 10%per month; and (c) shall be secured by a real estate mortgage over a property located in Barangay Alijis, Bacolod City, covered by Transfer Certificate of Title No. 304688. They also agreed that respondent shall issue postdated checks to cover the principal amount of the loan aswell as the interest thereon. Respondent delivered the checks to Navarro, drawn against an account in Metrobank, Bacolod City Branch, and signed them in the presence of Navarro.

In June 2006, respondent obtained an additional loan of P1,000,000 from Navarro, covered by a second MOA with the same terms and conditions as the first MOA. Respondent sent Navarro, through a messenger, postdated checks drawn against an account in Bank of Commerce, Bacolod City Branch. Respondent likewise discussed with Navarro about securing a "Tolling Agreement" with Victorias Milling Company, Inc. but no agreement was signed.

At the same time, respondent obtained a loan of P1,000,000 from Presbitero covered by a third MOA, except that the real estate mortgage was over a 263-square-meter property located in Barangay Taculing, Bacolod City. Respondent sent Presbitero postdated checks drawn against an account in Metrobank, Bacolod City Branch.

Presbitero was dissatisfied with the value of the 263-square-meter property mortgaged under thethird MOA, and respondent promised to execute a real estate mortgage over a 1,000-square-meter parcel of land adjacent to the 4,000-square-meter property he mortgaged to Navarro.

However, respondent did not execute a deed for the additional security.

Respondent paid the loan interest for the first few months. He was able to pay complainants a total of P900,000. Thereafter, he failed to pay either the principal amount or the interest thereon. In September 2006, the checks issued by respondent to complainants could no longer be negotiated because the accounts against which they were drawn were already closed. When complainants called respondent’s attention, he promised to pay the agreed interest for September and October 2006 but asked for a reduction of the interest to 7% for the succeeding months.

In November 2006, respondent withdrew as counsel for Yulo. On the other hand, Presbitero terminated the services of respondent as counsel. Complainants then filed petitions for the judicial foreclosure of the mortgages executed by respondent in their favor. Respondent countered that the 10% monthly interest on the loan was usurious and illegal. Complainants also filed cases for estafa and violation of Batas Pambansa Blg. 22 against respondent.

Complainants alleged that respondent induced them to grant him loans by offering very high interest rates. He also prepared and signed the checks which turned out to be drawn against his son’s accounts. Complainants further alleged that respondent deceived them regarding the

identity and value of the property he mortgaged because he showed them a different property from that which he owned. Presbitero further alleged that respondent mortgaged his 263-square-meter property to her for P1,000,000 but he later sold it for only P150,000.

Respondent, for his defense, alleged that he was engaged in sugar and realty business and that it was Yulo who convinced Presbitero and Navarro to extend him loans. Yulo also assured him that Presbitero would help him with the refining of raw sugar through Victorias Milling Company, Inc. Respondent alleged that Navarro fixed the interest rate and he agreed because he needed the money. He alleged that their business transactions were secured by real estate mortgages and covered by postdated checks. Respondent denied that the property he mortgaged to Presbitero was less than the value of the loan. He also denied that he sold the property because the sale was actually rescinded. Respondent claimed that the property he mortgaged to Navarro was valuable and it was actually worth more than P8,000,000.

Respondent alleged that he was able to pay complainants when business was good but he was unable to continue paying when the price of sugar went down and when the business with Victorias Milling Company, Inc. did not push through because Presbitero did not help him. Respondent also denied that he was hiding from complainants.

Respondent further alleged that it was Yulo who owed him P530,000 as interest due for September to December 2005. He denied making any false representations. He claimed that complainants were aware that he could no longer open a current account and they were the ones who proposed that his wife and son issue the checks. Respondent further alleged that he already started with the titling of Yulo’s lot but his services were terminated before it could be completed.

A supplemental complaint was filed charging respondent with accepting cases while under suspension. In response, respondent alleged that he accepted Presbitero’s case in February 2006 and learned of his suspension only in May 2006.

After conducting a hearing and considering the position papers submitted by the parties, the IBP-CBD found that respondent violated the Code of Professional Responsibility.

The IBP-CBD found that respondent borrowed P2,000,000 from Navarro and P1,000,000 from Presbitero which he failed to pay in accordance with the MOAs he executed. The IBP-CBD foundthat based on the documents presented by the parties, respondent did not act in good faith in obtaining the loans. The IBP-CBD found that respondent either promised or agreed to pay the very high interest rates of the loans although he knew them to be exorbitant in accordance with jurisprudence. Respondent likewise failed to deny that he misled Navarro and her husband regarding the identity of the property mortgaged to them. Respondent also mortgaged a property to Presbitero for P1,000,000 but documents showed that its value was only P300,000. Documents also showed that he sold that property for only P150,000. Respondent conspired withYulo to secure loans by promising her a 10% commission and later claimed that they agreed that Yulo would "ride" on the loan by borrowing P300,000 from the amount he obtained from Navarro and Presbitero. Respondent could not explain how he lost all the money he borrowed in three months except for his claim that the price of sugar went down.

The IBP-CBD found that respondent misled Navarro and Presbitero regarding the issuance of the postdated checks, and there was nothing in the records that would show that he informed them that it would be his wife or son who would issue the checks. The IBP-CBD also found that

respondent had not been transparent in liquidating the money he received in connection with Presbitero’s VOS with DAR. He was also negligent in his accounting regarding the registration of Yulo’s property which was financed by Navarro.

The IBP-CBD found that respondent was guilty of violating Rule 1.01 of the Code of Professional Responsibility for committing the following acts:

(1) signing drawn checks against the account of his son as if they were from his own account;

(2) misrepresenting to Navarro the identity of the lot he mortgaged to her;

(3) misrepresenting to Presbitero the true value of the 263-square-meter lot he mortgaged to her;

(4) conspiring with Yulo to obtain the loans from complainants;

(5) agreeing or promising to pay 10% interest on his loans although he knew that it was exorbitant; and

(6) failing to pay his loans because the checks he issued were dishonored as the accounts were already closed.

The IBP-CBD also found that respondent violated Canon 16 and Rule 16.01 of the Code of Professional Responsibility when he failed to properly account for the various funds he received from complainants.

In addition, the IBP-CBD found that respondent violated Rule 16.04 of the Code of Professional Responsibility which prohibits borrowing money from a client unless the client’s interest is fully protected or the client is given independent advice.

On the matter of practicing law while under suspension, the IBP-CBD found that the records were not clear whether the notice of suspension respondent received on 29 May 2006 was the report and recommendation of the IBP-CBD or the final decision of this Court. The IBP-CBD likewise found that there was insufficient evidence to prove that respondent mishandled his cases.

The IBP-CBD recommended that respondent be meted the penalty of disbarment.

In Resolution No. XIX-2011-267 dated 14 May 2011, the IBP Board of Governors adopted and approved the recommendation of the IBP-CBD with modification by reducing the recommended penalty from disbarment to suspension from the practice of law for two years. The IBP Board of Governors likewise ordered respondent to return the amount of his unpaid obligation to complainants.

Complainants filed a motion for reconsideration, praying that the penalty of disbarment be instead imposed upon respondent.

The only issue in this case is whether respondent violated the Code of Professional Responsibility.

The records show that respondent violated at least four provisions of the Code of Professional Responsibility.

Rule 1.01 of the Code of Professional Responsibility provides:

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

With respect to his client, Presbitero, it was established that respondent agreed to pay a high interest rate on the loan he obtained from her. He drafted the MOA. Yet, when he could no longerpay his loan, he sought to nullify the same MOA he drafted on the ground that the interest rate was unconscionable. It was also established that respondent mortgaged a 263-square-meter property to Presbitero for P1,000,000 but he later sold the property for only P150,000, showing that he deceived his client as to the real value of the mortgaged property. Respondent’s allegation that the sale was eventually rescinded did not distract from the fact that he did not apprise Presbitero as to the real value of the property.

Respondent failed to refute that the checks he issued to his client Presbitero and to Navarro belonged to his son, Ivan Garcia Solidum III whose name is similar to his name. He only claimed that complainants knew that he could no longer open a current bank account, and that they even suggested that his wife or son issue the checks for him. However, we are inclined to agree with the IBP-CBD’s finding that he made complainants believe that the account belonged to him. In fact, respondent signed in the presence of Navarro the first batch of checks he issued to Navarro. Respondent sent the second batch of checks to Navarro and the third batch of checks to Presbitero through a messenger, and complainants believed that the checks belonged to accounts in respondent’s name.

It is clear that respondent violated Rule 1.01 of the Code of Professional Responsibility. We haveruled that conduct, as used in the Rule, is not confined to the performance of a lawyer’s professional duties.1 A lawyer may be disciplined for misconduct committed either in his professional or private capacity.2 The test is whether his conduct shows him to be wanting in moral character, honesty, probity, and good demeanor, or whether it renders him unworthy to continue as an officer of the court.3

In this case, the loan agreements with Navarro were done in respondent’s private capacity. Although Navarro financed the registration of Yulo’s lot, respondent and Navarro had no lawyer-client relationship. However, respondent was Presbitero’s counsel at the time she granted him a loan. It was established that respondent misled Presbitero on the value of the property he mortgaged as a collateral for his loan from her. To appease Presbitero, respondent even made a Deed of Undertaking that he would give her another 1,000-square-meter lot as additional collateral but he failed to do so.

Clearly, respondent is guilty of engaging in dishonest and deceitful conduct, both in his professional capacity with respect to his client, Presbitero, and in his private capacity with respect to complainant Navarro. Both Presbitero and Navarro allowed respondent to draft the terms of the loan agreements. Respondent drafted the MOAs knowing that the interest rates were exorbitant. Later, using his knowledge of the law, he assailed the validity of the same MOAshe prepared. He issued checks that were drawn from his son’s account whose name was similar to his without informing complainants. Further, there is nothing in the records that will show that respondent paid or undertook to pay the loans he obtained from complainants.

Canon 16 and Rule 16.01 of the Code of Professional Responsibility provide:

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 theclient.

The fiduciary nature of the relationship between the counsel and his client imposes on the lawyerthe duty to account for the money or property collected or received for or from his client.4 We agree with the IBP-CBD that respondent failed to fulfill this duty. In this case, the IBP-CBD pointed out that respondent received various amounts from complainants but he could not account for all of them.

Navarro, who financed the registration of Yulo’s 18.85-hectare lot, claimed that respondent received P265,000 from her. Respondent countered that P105,000 was paid for real estate taxesbut he could not present any receipt to prove his claim. Respondent also claimed that he paid P70,000 to the surveyor but the receipt was only for P15,000. Respondent claimed that he paid P50,000 for filing fee, publication fee, and other expenses but again, he could not substantiate his claims with any receipt. As pointed out by the IBP-CBD, respondent had been less than diligent in accounting for the funds he received from Navarro for the registration of Yulo’s property.

Unfortunately, the records are not clear whether respondent rendered an accounting to Yulo who had since passed away.

As regards Presbitero, it was established during the clarificatory hearing that respondent received P50,000 from Presbitero. As the IBP-CBD pointed out, the records do not show how respondent spent the funds because he was not transparent in liquidating the money he receivedfrom Presbitero.

Clearly, respondent had been negligent in properly accounting for the money he received from his client, Presbitero.1âwphi1 Indeed, his failure to return the excess money in his possession gives rise to the presumption that he has misappropriated it for his own use to the prejudice of, and in violation of the trust reposed in him by, the client.5

Rule 16.04 of the Code of Professional Responsibility provides:

Rule 16.04. - A lawyer shall not borrow money from his client unless the client’s interests are fullyprotected by the nature of the case or by independent advice. Neither shall a lawyer lend money to a client except, when in the interest of justice, he has to advance necessary expenses in a legal matter he is handling for the client.

Here, respondent does not deny that he borrowed P1,000,000 from his client Presbitero. At the time he secured the loan, respondent was already the retained counsel of Presbitero.

While respondent’s loan from Presbitero was secured by a MOA, postdated checks and real estate mortgage, it turned out that respondent misrepresented the value of the property he mortgaged and that the checks he issued were not drawn from his account but from that of his son. Respondent eventually questioned the terms of the MOA that he himself prepared on the

ground that the interest rate imposed on his loan was unconscionable. Finally, the checks issued by respondent to Presbitero were dishonored because the accounts were already closed. The interest of his client, Presbitero, as lender in this case, was not fully protected. Respondent violated Rule 16.04 of the Code of Professional Responsibility, which presumes that the client is disadvantaged by the lawyer’s ability to use all the legal maneuverings to renege on his obligation.6 In his dealings with his client Presbitero, respondent took advantage of his knowledge of the law as well as the trust and confidence reposed in him by his client.

We modify the recommendation of the IBP Board of Governors imposing on respondent the penalty of suspension from the practice of law for two years. Given the facts of the case, we see no reason to deviate from the recommendation of the IBP-CBD imposing on respondent the penalty of disbarment. Respondent failed to live up to the high standard of morality, honesty, integrity, and fair dealing required of him as a member of the legal profession.7 Instead, respondent employed his knowledge and skill of the law and took advantage of his client to secure undue gains for himself8 that warrants his removal from the practice of law. Likewise, we cannot sustain the IBP Board of Governors’ recommendation ordering respondent to return his unpaid obligation to complainants, except for advances for the expenses he received from his client, Presbitero, that were not accounted at all. In disciplinary proceedings against lawyers, the only issue is whether the officer of the court is still fit to be allowed to continue as a member of the Bar.9 Our only concern is the determination of respondent’s administrative liability.10

Our findings have no material bearing on other judicial action which the parties may choose to file against each other.11 Nevertheless, when a lawyer receives money from a client for a particular purpose involving the client-attorney relationship, he is bound to render an accounting to the client showing that the money was spent for that particular purpose.12 If the lawyer does not use the money for the intended purpose, he must immediately return the money to his client.13 Respondent was given an opportunity to render an accounting, and he failed. He must return the full amount of the advances given him by Presbitero, amounting to P50,000.

WHEREFORE, the Court finds Atty. Ivan M. Solidum, Jr. GUILTY of violating Rule 1.01, Canon 16, Rule 16.01, and Rule 16.04 of the Code of Professional Responsibility. Accordingly, the CourtDISBARS him from the practice of law effective immediately upon his receipt of this Decision.

Atty. Solidum is ORDERED to return the advances he received from Hilda S. Presbitero, amounting to P50,000, and to submit to the Office of the Bar Confidant his compliance with this order within thirty days from finality of this Decision.

Let copies of this Decision be furnished the Office of the Bar Confidant, the Integrated Bar of the Philippines for distribution to all its chapters, and the Office of the Court Administrator for dissemination to all courts all over the country. Let a copy of this Decision be attached to the personal records of respondent.

SO ORDERED.

A.C. No. 7023 March 30, 2006

BUN SIONG YAO, Complainant, vs.ATTY. LEONARDO A. AURELIO, Respondent.

D E C I S I O N

YNARES-SANTIAGO, J.:

On November 11, 2004, a complaint-affidavit1 was filed against Atty. Leonardo A. Aurelio by Bun Siong Yao before the Integrated Bar of the Philippines (IBP) seeking for his disbarment for alleged violations of the Code of Professional Responsibility.

The complainant alleged that since 1987 he retained the services of respondent as his personal lawyer; that respondent is a stockholder and the retained counsel of Solar Farms & Livelihood Corporation and Solar Textile Finishing Corporation of which complainant is a majority stockholder; that complainant purchased several parcels of land using his personal funds but were registered in the name of the corporations upon the advice of respondent; that respondent, who was also the brother in-law of complainant’s wife, had in 1999 a disagreement with the latterand thereafter respondent demanded the return of his investment in the corporations but when complainant refused to pay, he filed eight charges for estafa and falsification of commercial documents against the complainant and his wife and the other officers of the corporation; that respondent also filed a complaint against complainant for alleged non-compliance with the reportorial requirements of the Securities and Exchange Commission (SEC) with the Office of theCity Prosecutor of Mandaluyong City and another complaint with the Office of the City Prosecutorof Malabon City for alleged violation of Section 75 of the Corporation Code; that respondent also filed a similar complaint before the Office of the City Prosecutor of San Jose Del Monte, Bulacan.

Complainant alleged that the series of suits filed against him and his wife is a form of harassmentand constitutes an abuse of the confidential information which respondent obtained by virtue of his employment as counsel. Complainant argued that respondent is guilty of representing conflicting interests when he filed several suits not only against the complainant and the other officers of the corporation, but also against the two corporations of which he is both a stockholderand retained counsel.

Respondent claimed that he handled several labor cases in behalf of Solar Textile Finishing Corporation; that the funds used to purchase several parcels of land were not the personal fundsof complainant but pertain to Solar Farms & Livelihood Corporation; that since 1999 he was no longer the counsel for complainant or Solar Textile Finishing Corporation; that he never used any confidential information in pursuing the criminal cases he filed but only used those information which he obtained by virtue of his being a stockholder.

He further alleged that his requests for copies of the financial statements were ignored by the complainant and his wife hence he was constrained to file criminal complaints for estafa thru concealment of documents; that when he was furnished copies of the financial statements, he discovered that several parcels of land were not included in the balance sheet of the corporations; that the financial statements indicated that the corporations suffered losses when in

fact it paid cash dividends to its stockholders, hence, he filed additional complaints for falsification of commercial documents and violation of reportorial requirements of the SEC.

On July 19, 2005, the Investigating Commissioner2 submitted a Report and Recommendation3 finding that from 1987 up to 1999, respondent had been the personal lawyer of the complainant and incorporator and counsel of Solar Farms & Livelihood Corporation. However, in 1999 complainant discontinued availing of the services of respondent in view of the admission of his (complainant’s) son to the bar; he also discontinued paying dividends to respondent and even concealed from him the corporations’ financial statements which compelledthe respondent to file the multiple criminal and civil cases in the exercise of his rights as a stockholder.

The investigating commissioner further noted that respondent is guilty of forum shopping when he filed identical charges against the complainant before the Office of the City Prosecutor of Malabon City and in the Office of the City Prosecutor of San Jose del Monte, Bulacan. It was alsoobserved that respondent was remiss in his duty as counsel and incorporator of both corporations for failing to advise the officers of the corporation, which he was incidentally a member of the Board of Directors, to comply with the reportorial requirements of the SEC and theBureau of Internal Revenue. Instead, he filed cases against his clients, thereby representing conflicting interests.

The investigating commissioner recommended that respondent be suspended from the practice of law for a period of six months4 which was adopted and approved by the IBP Board of Governors.

We agree with the findings and recommendation of the IBP.

We find that the professional relationship between the complainant and the respondent is more extensive than his protestations that he only handled isolated labor cases for the complainant’s corporations. Aside from being the brother-in-law of complainant’s wife, it appears that even before the inception of the companies, respondent was already providing legal services to the complainant, thus:

COMM. NAVARRO:

Was there a formal designation or you where only called upon to do so?

ATTY. AURELIO:

Well, I understand in order to show to the employees that they have labor lawyer and at that timeI went to the office at least half day every week but that was cut short. And so when there are cases that crop-up involving labor then they called me up.

x x x x

ATTY. OLEDAN:

Will counsel deny that he was the personal lawyer of the complainant long before he joined the company?

ATTY. AURELIO:

Yes, with respect to the boundary dispute between his land and his neighbor but the subject matter of all the cases I filed they all revolved around the Financial Statement of the 2 corporations. I never devolves any information with respect to labor cases and the MERALCO case with respect to boundary dispute, nothing I used.

ATTY. OLEDAN:

Was he not also the lawyer at that time of complainant when he incorporated the second corporation in 1992?

ATTY. AURELIO:

Well, I was the one submitted the corporate papers and I think after that I have nothing to do withthe SEC requirements regarding this corporation. Just to submit the incorporation papers to the SEC and anyway they have already done that before. They have already created or established the first corporation way back before the second corporation started and there was no instance where I dealt with the Financial Statement of the corporation with respect to its filing with the SEC.

ATTY. OLEDAN:

My only question is whether he incorporated and therefore was aware of the corporate matters involving Solar Farms?

ATTY. AURELIO:

As a stockholder I’m aware.

ATTY. OLEDAN:

As a lawyer?

ATTY. AURELIO:

Well, as a stockholder I’m aware.

x x x x

ATTY. OLEDAN:

You are not the one who filed….

ATTY. AURELIO:

I was the one who filed the corporate paper but that’s all the participation I had with respect to the requirement of the SEC with respect to the corporation.

COMM. NAVARRO:

So, you acted as legal counsel of the corporation even before the initial stage of the incorporation?

ATTY. AURELIO:

There are two (2) corporations involving in this case, Your Honor, and the first was I think Solar Textile and this was….

COMM. NAVARRO:

You were already the legal counsel?

ATTY. AURELIO:

No, this was created before I became a stockholder.

COMM. NAVARRO:

Who was then the legal counsel before of Solar?

MR. YAO:

Siya pa rin pero hindi pa siya stockholder.

ATTY. OLEDAN:

Because, Your Honor, he happens to be the brother-in-law of the wife of the complainant and he is the husband of the wife of her sister so that’s why he was… (inaudible)… other legal matters even before the corporation that was formed and he became also a stockholder and in fact he charge the corporation certain amounts for professional service rendered it is part of the Resolution of the Office of the City Prosecutor of Malabon as annex to the complaint so he cannot say that he only presented, that he only filed the papers at SEC and aside from that whenthe corporation, the Solar Farms was already formed and the property which he is now questioning was purchased by complainant. He was the one who negotiated with the buyer, he was always with the complainant and precisely acted as complainant’s personal lawyer. The truthof the matter he is questioning the boundary and in fact complainant had survey conducted in said parcel of land which he bought with the assistance and legal advice of respondent and in fact complainant gave him only a copy of that survey. Him alone. And he used this particular copyto insists that this property allegedly belong to the corporation when in truth and in fact he was fully aware that it was the complainant’s personal funds that were used to pay for the whole area and this was supported by the stockholders who admitted that they were aware that the parcel of land which he claims does not appear in the Financial Statement of the corporation was purchased by the complainant subject to reimbursement by the Board and should the corporationfinally have sufficient fund to cover the payment advance by complainant then the property will be transferred to the corporation. All of these facts he was privy to it, Your Honor, so he cannot say that and he is also a stockholder but the fact is, prior to the incorporation and during the negotiation he was the personal counsel of the complainant.5

It appears that the parties’ relationship was not just professional, but they are also related by affinity. The disagreement between complainant’s wife and the respondent affected their

professional relationship. Complainant’s refusal to disclose certain financial records prompted respondent to retaliate by filing several suits.

It is essential to note that the relationship between an attorney and his client is a fiduciary one.6 Canon 17 of the Code of Professional Responsibility provides that a lawyer owes fidelity to the cause of his client and shall be mindful of the trust and confidence reposed on him. The long-established rule is that an attorney is not permitted to disclose communications made to him in his professional character by a client, unless the latter consents. This obligation to preserve the confidences and secrets of a client arises at the inception of their relationship. The protection given to the client is perpetual and does not cease with the termination of the litigation, nor is it affected by the party's ceasing to employ the attorney and retaining another, or by any other change of relation between them. It even survives the death of the client.7

Notwithstanding the veracity of his allegations, respondent’s act of filing multiple suits on similar causes of action in different venues constitutes forum-shopping, as correctly found by the investigating commissioner. This highlights his motives rather than his cause of action. Respondent took advantage of his being a lawyer in order to get back at the complainant. In doing so, he has inevitably utilized information he has obtained from his dealings with complainant and complainant’s companies for his own end.

Lawyers must conduct themselves, especially in their dealings with their clients and the public at large, with honesty and integrity in a manner beyond reproach.8 Lawyers cannot be allowed to exploit their profession for the purpose of exacting vengeance or as a tool for instigating hostility against any person—most especially against a client or former client. As we stated in Marcelo v. Javier, Sr.:9

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.10 (Emphasis supplied)

In sum, we find that respondent's actuations amount to a breach of his duty to uphold good faith and fairness, sufficient to warrant the imposition of disciplinary sanction against him.

WHEREFORE, respondent Atty. Leonardo A. Aurelio is ordered SUSPENDED from the practice of law for a period of SIX (6) MONTHS effective upon receipt of this Decision. Let a copy of this Decision be furnished the Office of the Bar Confidant and the Integrated Bar of the Philippines. The Court Administrator is directed to circulate this order of suspension to all courts in the country.

SO ORDERED.

CONSUELO YNARES-SANTIAGOAssociate Justice

WE CONCUR:

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 workingsof 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 theclient'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 corporationsinvolved 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 andconfederated 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 31March 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 approximately3,744 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 undertheir 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:

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 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.

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 bythe 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 tothe 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 rightof 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 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 consequencesof 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 latePresident 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 agentor 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 hisclient.

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 his advicegiven 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:

xxx xxx xxx

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 acquiredin 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 mindfulof 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 andability," 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 shouldrestrain 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 ordefense. 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 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 bySandino 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 soughtBaird 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 nameof 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

xxx xxx xxx

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 tothe attorney in this case as a confidential communication. His client is not seekingto 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 undersuch conditions no case has ever gone to the length of compelling an attorney, atthe 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

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 oftestimony 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 andsought 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 withoutnaming 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 petitionwas 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 moreyears 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 itmay 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 entiretransaction. 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 anattorney 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 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 ashield 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 entitledto 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 theagent'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 causationand 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 principleof 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.

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 responsibilityimposed 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." 60Being "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 clientsto whom both petitioners and private respondent rendered legal services while all of themwere 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 accordedthe same treatment both in the privileges conferred and the liabilities imposed. Aswas 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 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 uponthe question of the identity of their clients but also on documents related to the suspectedtransactions, 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, wewill 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.

Bellosillo, Melo and Francisco, JJ., concur.

Padilla, Panganiban and Torres, Jr., JJ., concur in the result.

Romero and Hermosisima, Jr., JJ., took no part.

A.M. No. 1625 February 12, 1990

ANGEL L. BAUTISTA, complainant, vs.ATTY. RAMON A. GONZALES, respondent.

R E S O L U T I O N

PER CURIAM:

In a verified complaint filed by Angel L. Bautista on May 19, 1976, respondent Ramon A. Gonzales was charged with malpractice, deceit, gross misconduct and violation of lawyer's oath. Required by this Court to answer the charges against him, respondent filed on June 19, 1976 a motion for a bill of particulars asking this Court to order complainant to amend his complaint by making his charges more definite. In a resolution dated June 28, 1976, the Court granted respondent's motion and required complainant to file an amended complaint. On July 15, 1976, complainant submitted an amended complaint for disbarment, alleging that respondent committed the following acts:

1. Accepting a case wherein he agreed with his clients, namely, Alfaro Fortunado, Nestor Fortunado and Editha Fortunado [hereinafter referred to as the Fortunados] to pay all expenses, including court fees, for a contingent fee of fifty percent (50%) of the value of the property in litigation.

2. Acting as counsel for the Fortunados in Civil Case No. Q-15143, wherein Eusebio Lopez, Jr. is one of the defendants and, without said case being terminated, acting as counsel for EusebioLopez, Jr. in Civil Case No. Q-15490;

3. Transferring to himself one-half of the properties of the Fortunados, which properties are the subject of the litigation in Civil Case No. Q-15143, while the case was still pending;

4. Inducing complainant, who was his former client, to enter into acontract with him on August 30, 1971 for the development into a residential subdivision of the land involved in Civil Case No. Q-15143, covered by TCT No. T-1929, claiming that he acquired fiftypercent (50%) interest thereof as attorney's fees from the Fortunados, while knowing fully well that the said property was already sold at a public auction on June 30, 1971, by the Provincial Sheriff of Lanao del Norte and registered with the Register of Deeds of Iligan City;

5. Submitting to the Court of First Instance of Quezon City falsified documents purporting to be true copies of "Addendum to the Land Development Agreement dated August 30, 1971" and submitting the same document to the Fiscal's Office of Quezon City, in connection with the complaint for estafa filed by respondent against complainant designated as I.S. No. 7512936;

6. Committing acts of treachery and disloyalty to complainant whowas his client;

7. Harassing the complainant by filing several complaints without legal basis before the Court of First Instance and the Fiscal's Office of Quezon City;

8. Deliberately misleading the Court of First Instance and the Fiscal's Office by making false assertion of facts in his pleadings;

9. Filing petitions "cleverly prepared (so) that while he does not intentionally tell a he, he does not tell the truth either."

Respondent filed an answer on September 29, 1976 and an amended answer on November 18, 1976, denying the accusations against him. Complainant filed a reply to respondent's answer on December 29, 1976 and on March 24, 1977 respondent filed a rejoinder.

In a resolution dated March 16, 1983, the Court referred the case to the Office of the Solicitor General for investigation, report and recommendation. In the investigation conducted by the Solicitor General, complainant presented himself as a witness and submitted Exhibits "A" to "PP", while respondent appeared both as witness and counsel and submitted Exhibits "1" to "11".The parties were required to submit their respective memoranda.

On May 16, 1988 respondent filed a motion to dismiss the complaint against him, claiming that the long delay in the resolution of the complaint against him constitutes a violation of his constitutional right to due process and speedy disposition of cases. Upon order of the Court, the Solicitor General filed a comment to the motion to dismiss on August 8, 1988, explaining that the delay in the investigation of the case was due to the numerous requests for postponement of scheduled hearings filed by both parties and the motions for extension of time to file their respective memoranda." [Comment of the Solicitor General, p. 2; Record, p. 365]. Respondent filed a reply to the Solicitor General's comment on October 26, 1988. In a resolution dated January 16, 1989 the Court required the Solicitor General to submit his report and recommendation within thirty (30) days from notice.

On April 11, 1989, the Solicitor General submitted his report with the recommendation that Atty. Ramon A. Gonzales be suspended for six (6) months. The Solicitor General found that respondent committed the following acts of misconduct:

a. transferring to himself one-half of the properties of his clients during the pendency of the case where the properties were involved;

b. concealing from complainant the fact that the property subject of their land development agreement had already been sold at a public auction prior to the execution of said agreement; and

c. misleading the court by submitting alleged true copies of a document where two signatories who had not signed the original (or even the xerox copy) were made to appear as having fixed their signatures [Report and Recommendation of the Solicitor General, pp. 17-18; Rollo, pp. 403-404].

Respondent then filed on April 14, 1989 a motion to refer the case to the Integrated Bar of the Philippines (IBP) for investigation and disposition pursuant to Rule 139-B of the Revised Rules ofCourt. Respondent manifested that he intends to submit more evidence before the IBP. Finally, on November 27, 1989, respondent filed a supplemental motion to refer this case to the IBP, containing additional arguments to bolster his contentions in his previous pleadings.

I.

Preliminarily, the Court will dispose of the procedural issue raised by respondent. It is respondent's contention that the preliminary investigation conducted by the Solicitor General waslimited to the determination of whether or not there is sufficient ground to proceed with the case and that under Rule 139 the Solicitor General still has to file an administrative complaint against him. Respondent claims that the case should be referred to the IBP since Section 20 of Rule 139-B provides that:

This Rule shall take effect on June 1, 1988 and shall supersede the present Rule 139 entitled DISBARMENT OR SUSPENSION OF ATTORNEYS. All cases

pending investigation by the Office of the Solicitor General shall be transferred to the Integrated Bar of the Philippines Board of Governors for investigation and disposition as provided in this Rule except those cases where the investigation has been substantially completed.

The above contention of respondent is untenable. In the first place, contrary to respondent's claim, reference to the IBP of complaints against lawyers is not mandatory upon the Court [Zaldivar v. Sandiganbayan, G.R. Nos. 79690-707; Zaldivar v. Gonzales, G.R. No. 80578, October 7, 1988]. Reference of complaints to the IBP is not an exclusive procedure under the terms of Rule 139-B of the Revised Rules of Court [Ibid]. Under Sections 13 and 14 of Rule 139-B, the Supreme Court may conduct disciplinary proceedings without the intervention of the IBP by referring cases for investigation to the Solicitor General or to any officer of the Supreme Court or judge of a lower court. In such a case, the report and recommendation of the investigating official shall be reviewed directly by the Supreme Court. The Court shall base its final action on the case on the report and recommendation submitted by the investigating official and the evidence presented by the parties during the investigation.

Secondly, there is no need to refer the case to the IBP since at the time of the effectivity of Rule 139-B [June 1, 1988] the investigation conducted by the Office of the Solicitor General had been substantially completed. Section 20 of Rule 139-B provides that only pending cases, the investigation of which has not been substantially completed by the Office of the Solicitor General,shall be transferred to the IBP. In this case the investigation by the Solicitor General was terminated even before the effectivity of Rule 139-B. Respondent himself admitted in his motion to dismiss that the Solicitor General terminated the investigation on November 26, 1986, the datewhen respondent submitted his reply memorandum [Motion to Dismiss, p. 1; Record, p. 353].

Thirdly, there is no need for further investigation since the Office of the Solicitor General already made a thorough and comprehensive investigation of the case. To refer the case to the IBP, as prayed for by the respondent, will result not only in duplication of the proceedings conducted by the Solicitor General but also to further delay in the disposition of the present case which has lasted for more than thirteen (13) years.

Respondent's assertion that he still has some evidence to present does not warrant the referral of the case to the IBP. Considering that in the investigation conducted by the Solicitor General respondent was given ample opportunity to present evidence, his failure to adduce additional evidence is entirely his own fault. There was therefore no denial of procedural due process. The record shows that respondent appeared as witness for himself and presented no less than eleven (11) documents to support his contentions. He was also allowed to cross-examine the complainant who appeared as a witness against him.

II.

The Court will now address the substantive issue of whether or not respondent committed the acts of misconduct alleged by complainant Bautista.

After a careful review of the record of the case and the report and recommendation of the Solicitor General, the Court finds that respondent committed acts of misconduct which warrant the exercise by this Court of its disciplinary power.

The record shows that respondent prepared a document entitled "Transfer of Rights" which was signed by the Fortunados on August 31, 1971. The document assigned to respondent one-half (1/2) of the properties of the Fortunados covered by TCT No. T-1929, with an area of 239.650 sq.mm., and TCT No. T-3041, with an area of 72.907 sq. m., for and in consideration of his legal services to the latter. At the time the document was executed, respondent knew that the abovementioned properties were the subject of a civil case [Civil Case No. Q-15143] pending before the Court of First Instance of Quezon City since he was acting as counsel for the Fortunados in said case [See Annex "B" of Original Complaint, p. 12; Rollo, p. 16]. In executing the document transferring one-half (1/2) of the subject properties to himself, respondent violated the law expressly prohibiting a lawyer from acquiring his client's property or interest involved in any litigation in which he may take part by virtue of his profession [Article 1491, New Civil Code]. This Court has held that the purchase by a lawyer of his client's property or interest in litigation is a breach of professional ethics and constitutes malpractice [Hernandez v. Villanueva, 40 Phil. 774 (1920); Go Beltran v. Fernandez, 70 Phil. 248 (1940)].

However, respondent notes that Canon 10 of the old Canons of Professional Ethics, which statesthat "[t]he lawyer should not purchase any interests in the subject matter of the litigation which heis conducting," does not appear anymore in the new Code of Professional Responsibility. He therefore concludes that while a purchase by a lawyer of property in litigation is void under Art. 1491 of the Civil Code, such purchase is no longer a ground for disciplinary action under the newCode of Professional Responsibility.

This contention is without merit. The very first Canon of the new Code states that "a lawyer shall uphold the Constitution, obey the laws of the land and promote respect for law and legal process" (Emphasis supplied), Moreover, Rule 138, Sec. 3 of the Revised Rules of Court requires every lawyer to take an oath to 44 obey the laws [of the Republic of the Philippines] as well as the legal orders of the duly constituted authorities therein." And for any violation of this oath, a lawyer may be suspended or disbarred by the Supreme Court [Rule 138, Sec. 27, Revised Rules of Court]. All of these underscore the role of the lawyer as the vanguard of our legal system. The transgression of any provision of law by a lawyer is a repulsive and reprehensible act which the Court will not countenance. In the instant case, respondent, having violated Art. 1491 of the Civil Code, must be held accountable both to his client and to society.

Parenthetically, it should be noted that the persons mentioned in Art. 1491 of the Civil Code are prohibited from purchasing the property mentioned therein because of their existing trust relationship with the latter. A lawyer is disqualified from acquiring by purchase the property and rights in litigation because of his fiduciary relationship with such property and rights, as well as with the client. And it cannot be claimed that the new Code of Professional Responsibility has failed to emphasize the nature and consequences of such relationship. Canon 17 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." On the other hand, Canon 16 provides that "a lawyer shall hold in trust all moneys and properties of his client that may come into his possession." Hence, notwithstanding the absence of a specific provision on the matter in the new Code, the Court, considering the abovequoted provisions of the new Code in relation to Art. 1491 of the Civil Code, as well as the prevailing jurisprudence, holds that the purchase by a lawyer of his client's property in litigation constitutes a breach of professional ethics for which a disciplinary action may be brought against him.

Respondent's next contention that the transfer of the properties was not really implemented, because the land development agreement on which the transfer depended was later rescinded,

is untenable. Nowhere is it provided in the Transfer of Rights that the assignment of the properties of the Fortunados to respondent was subject to the implementation of the land development agreement. The last paragraph of the Transfer of Rights provides that:

... for and in consideration of the legal services of ATTY. RAMON A. GONZALES, Filipino, married to Lilia Yusay, and a resident of 23 Sunrise Hill, New Manila, Quezon City, rendered to our entire satisfaction, we hereby, by these presents, do transfer and convey to the said ATTY. RAMON A. GONZALES, his heirs, successor, and assigns, one-half (1/2) of our rights and interests in the abovedescribed property, together with all the improvements found therein [Annex D of the Complaint, Record, p. 28; Emphasis supplied].

It is clear from the foregoing that the parties intended the transfer of the properties to respondent to be absolute and unconditional, and irrespective of whether or not the land development agreement was implemented.

Another misconduct committed by respondent was his failure to disclose to complainant, at the time the land development agreement was entered into, that the land covered by TCT No. T-1929 had already been sold at a public auction. The land development agreement was executed on August 31, 1977 while the public auction was held on June 30, 1971.

Respondent denies that complainant was his former client, claiming that his appearance for the complainant in an anti-graft case filed by the latter against a certain Gilbert Teodoro was upon the request of complainant and was understood to be only provisional. Respondent claims that since complainant was not his client, he had no duty to warn complainant of the fact that the landinvolved in their land development agreement had been sold at a public auction. Moreover, the sale was duly annotated at the back of TCT No. T-1929 and this, respondent argues, serves as constructive notice to complainant so that there was no concealment on his part.

The above contentions are unmeritorious. Even assuming that the certificate of sale was annotated at the back of TCT No. T-1929, the fact remains that respondent failed to inform the complainant of the sale of the land to Samauna during the negotiations for the land development agreement. In so doing, respondent failed to live up to the rigorous standards of ethics of the law profession which place a premium on honesty and condemn duplicitous conduct. The fact that complainant was not a former client of respondent does not exempt respondent from his duty to inform complainant of an important fact pertaining to the land which is subject of their negotiation.Since he was a party to the land development agreement, respondent should have warned the complainant of the sale of the land at a public auction so that the latter could make a proper assessment of the viability of the project they were jointly undertaking. This Court has held that a lawyer should observe honesty and fairness even in his private dealings and failure to do so is a ground for disciplinary action against him [Custodio v. Esto, Adm. Case No. 1113, February 22, 1978, 81 SCRA 517].

Complainant also charges respondent with submitting to the court falsified documents purporting to be true copies of an addendum to the land development agreement.

Based on evidence submitted by the parties, the Solicitor General found that in the document filed by respondent with the Court of First Instance of Quezon City, the signatories to the addendum to the land development agreement namely, Ramon A. Gonzales, Alfaro T. Fortunado,Editha T. Fortunado, Nestor T. Fortunado, and Angel L. Bautista—were made to appear as

having signed the original document on December 9, 1972, as indicated by the letters (SGD.) before each of their names. However, it was only respondent Alfaro Fortunado and complainant who signed the original and duplicate original (Exh. 2) and the two other parties, Edith Fortunado and Nestor Fortunado, never did. Even respondent himself admitted that Edith and Nestor Fortunado only signed the xerox copy (Exh. 2-A) after respondent wrote them on May 24, 1973, asking them to sign the said xerox copyattached to the letter and to send it back to him after signing [Rejoinder to Complainant's Reply, pp. 4-6; Rollo, pp. 327-329]. Moreover, respondent acknowledged that Edith and Nestor Fortunado had merely agreed by phone to sign, but had notactually signed, the alleged true copy of the addendum as of May 23, 1973 [Respondent's Supplemental Motion to Refer this Case to the Integrated Bar of the Philippines, p. 16]. Thus, when respondent submitted the alleged true copy of the addendum on May 23, 1973 as Annex "A" of his Manifestation filed with the Court of First Instance of Quezon City, he knowingly misled the Court into believing that the original addendum was signed by Edith Fortunado and Nestor Fortunado. Such conduct constitutes willful disregard of his solemn duty as a lawyer to act at all times in a manner consistent with the truth. A lawyer should never seek to mislead the court by an artifice or false statement of fact or law [Section 20 (d), Rule 138, Revised Rules of Court; Canon 22, Canons of Professional Ethics; Canon 10, Rule 10.01, Code of Professional Responsibility].

Anent the first charge of complainant, the Solicitor General found that no impropriety was committed by respondent in entering into a contingent fee contract with the Fortunados [Report and Recommendation, p. 8; Record, p. 394]. The Court, however, finds that the agreement between the respondent and the Fortunados, which provides in part that:

We the [Fortunados] agree on the 50% contingent fee, provided, you [respondentRamon Gonzales] defray all expenses, for the suit, including court fees.

Alfaro T. Fortunado [signed]Editha T. Fortunado [signed]Nestor T. Fortuna

do [signed]

CONFORME

Ramon A.Gonzales [signed]

[Annex A to the Complaint, Record, p. 4].

is contrary to Canon 42 of the Canons of Professional Ethics which provides that a lawyer may not properly agree with a client to pay or bear the expenses of litigation. [See also Rule 16.04, Code of Professional Responsibility]. Although a lawyer may in good faith, advance the expensesof litigation, the same should be subject to reimbursement. The agreement between respondent and the Fortunados, however, does not provide for reimbursement to respondent of litigation expenses paid by him. An agreement whereby an attorney agrees to pay expenses of proceedings to enforce the client's rights is champertous [JBP Holding Corp. v. U.S. 166 F. Supp.324 (1958)]. Such agreements are against public policy especially where, as in this case, the attorney has agreed to carry on the action at his own expense in consideration of some bargain to have part of the thing in dispute [See Sampliner v. Motion Pictures Patents Co., et al., 255 F. 242 (1918)]. The execution of these contracts violates the fiduciary relationship between the lawyer and his client, for which the former must incur administrative sanctions.

The Solicitor General next concludes that respondent cannot be held liable for acting as counsel for Eusebio Lopez, Jr. in Civil Case No. Q-15490 while acting as counsel for the Fortunados against the same Eusebio Lopez, Jr. in Civil Case No. Q-15143. The Court, after considering the record, agrees with the Solicitor General's findings on the matter. The evidence presented by respondent shows that his acceptance of Civil Case No. Q-15490 was with the knowledge and consent of the Fortunados. The affidavit executed by the Fortunados on June 23, 1976 clearly states that they gave their consent when respondent accepted the case of Eusebio Lopez, Jr. [Affidavit of Fortunados, dated June 23, 1976; Rollo, p. 198]. One of the recognized exceptions tothe rule against representation of conflicting interests is where the clients knowingly consent to the dual representation after full disclosure of the facts by counsel [Canon 6, Canons of Professional Ethics; Canon 15, Rule 15.03, Code of Professional Responsibility].

Complainant also claims that respondent filed several complaints against him before the Court ofFirst Instance and the Fiscal's Office of Quezon City for the sole purpose of harassing him.

The record shows that at the time of the Solicitor General's investigation of this case, Civil Case No. Q-18060 was still pending before the Court of First Instance of Quezon City, while the

complaints for libel (I.S. No. 76-5912) and perjury (I.S. No. 5913) were already dismissed by the City Fiscal for insufficiency of evidence and lack of interest, respectively [Report and Recommendation, pp. 16-17; Rollo, pp. 402-403]. The Solicitor General found no basis for holding that the complaints for libel and perjury were used by respondent to harass complainant. As to Civil Case No. Q-18060, considering that it was still pending resolution, the Solicitor General made no finding on complainants claim that it was a mere ploy by respondent to harass him. The determination of the validity of the complaint in Civil Case No. Q-18060 was left to the Court of First Instance of Quezon City where the case was pending resolution.

The Court agrees with the above findings of the Solicitor General, and accordingly holds that there is no basis for holding that the respondent's sole purpose in filing the aforementioned cases was to harass complainant.

Grounds 6, 8 and 9 alleged in the complaint need not be discussed separately since the above discussion on the other grounds sufficiently cover these remaining grounds.

The Court finds clearly established in this case that on four counts the respondent violated the law and the rules governing the conduct of a member of the legal profession. Sworn to assist in the administration of justice and to uphold the rule of law, he has "miserably failed to live up to the standards expected of a member of the Bar." [Artiaga v. Villanueva, Adm. Matter No. 1892, July 29, 1988, 163 SCRA 638, 647]. The Court agrees with the Solicitor General that, consideringthe nature of the offenses committed by respondent and the facts and circumstances of the case,respondent lawyer should be suspended from the practice of law for a period of six (6) months.

WHEREFORE, finding that respondent Attorney Ramon A. Gonzales committed serious misconduct, the Court Resolved to SUSPEND respondent from the practice of law for SIX (6) months effective from the date of his receipt of this Resolution. Let copies of this Resolution be circulated to all courts of the country for their information and guidance, and spread in the personal record of Atty. Gonzales.

SO ORDERED.

Fernan, C.J., Narvasa, Melencio-Herrera, Cruz, Paras, Feliciano, Gancayco, Padilla, Bidin and Cortes, JJ., concur.

Gutierrez, Jr., Sarmiento, Griño-Aquino, Medialdea, Regalado, JJ., took no part.

A.M. No. 681 September 30, 1982

ELISEO GUEVARA, complainant, vs.MAXIMO CALALANG, respondent.

R E S O L U T I O N

GUTIERREZ, JR., J.:

In a complaint for malpractice filed by complainant Eliseo Guevara, the respondent Atty. Maximo Calalang was charged with having acquired by transfer or assignment a parcel of land in violation of Article 1491 of the Civil Code which provides:

ART. 1491. The following persons cannot acquire by purchase, even at a public or judicial auction, either in person or 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, theproperty and rights in litigation or levied upon an execution before the court withinwhose jurisdiction or territory they exercise their respective functions; this prohibition includes the act of acquiring by assignment and shall apply to lawyers,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.

6. Any others specially disqualified by law.

Respondent Maximo Calalang died on August 8, 1978. His death rendered the case moot and academic. However, the investigation of the charges conducted during the respondent's lifetime indicates that the charges filed against him have no merit. Consequently, We also dismiss the complaint to clear the name of the deceased respondent insofar as this case is concerned.

The report and recommendation of the Solicitor General filed on July 29, 1981 states:

After a careful consideration of the above-stated facts, as wen as of the applicable law, rules and jurisprudence, undersigned are of the opinion that respondent was not guilty of professional misconduct or unethical practice.

According to respondent, under his agreement with Bernabe Flores, he was to get for attorney's fees one-half (1/2) of what would be awarded to Flores in Civil Case No. Q- 2171. Because of the agreement, he actually paid to Flores only one-half of the total consideration of P18,348.45 mentioned in the deed of assignment, Exhibit E.

(Respondent's Memorandum, pp. 3, 4, 9) The other half was set-off with his attorney's fees.

The agreement of respondent and Bernabe Flores is a contract for contingent fee. It has already been held that contingent fee is not prohibited in the Philippines and is impliedly sanctioned by the Canons of Professional Ethics (Recto vs. Harden, 100 Phil. 427 [1956]. In the absence of a prohibiting statute, acontingent fee agreement between an attorney and his client, under which the attorney is to have a portion of the thing in litigation in the event of a successful prosecution or defense of an action, is generally recognized as valid (14 Am Jur 2d 41, p. 845), if not attended by fraud, mistake, undue influence, or suppression of facts (7 Am Jur 2d 414, p. 171). The presence of any of the vitiating circumstances has not been shown in this case. Indeed, the absence of fraud or undue influence is indicated by the fact that the complainant in this case is not Flores but one of the third-party claimants to the lot assigned to respondent.

In some jurisdictions, a contract for contingent fee is even deemed to create a equitable pro tantoequitable assignment, or to transfer an equitable interest in favor of the attorney in the judgment or the proceeds of settlement, or to give him a lien on the judgment or its proceeds (7 Am Jur 2d. 218, p. 173).

Even if the assignment of rights in question is considered an outright purchase by the respondentof the subject lot or of the rights therein, still respondent was not guilty of breach of professional ethics, misconduct or malpractice by reason of said transaction. It is true that Canon No. 10 of the Canons of Professional Ethics prohibits the lawyer from purchasing any interest in the subject-matter of the litigation which he is conducting, and Article 1491, paragraph 5, of the New Civil Code prohibits him from acquiring by purchase or assignment the property and rights which may be the object of any litigation in which he may take part by virtue of his profession. Butin those cases where these provisions were applied, the rights or properties purchased by the lawyer were the very subject of the litigation handled by him (Rubias vs. Batiller, 51 SCRA 120 [1973]; Sotto vs. Samson 5 SCRA 733 [1962]; Go Beltran vs. Fernandez, 70 Phil. 248 [1940]; In re Ruste, 70 Phil. 243 [1940]; Director of Lands vs. Abagat et al., 53 Phil. 147 [1929]; Hernandezvs. Villanueva, 70 Phil. 775 [1920], or were properties of the minor in guardianship proceedings

in which the lawyer appeared as counsel for the guardian (Junquera vs. Vaño, 72 Phil. 293 [1941], or were properties belonging to the estate for which he appeared as counsel (In re Calderon 7 Phil. 427 [1907]). In the case at bar, the lot in which respondent acquired rights by assignment was not the subject of Civil Case No. 2171 in which he approved (sic) as counsel for Bernabe Flores and others. The said case was purely one for damages and did not involve the lot in question. The lot was simply levied upon on execution after judgment was rendered in favorof the plaintiffs. Therefore Article 1491 of the New Civil Code did not apply. Consequently, respondent had not violated the said provision of law.

We agree.

It was not professional misconduct or unethical practice for the respondent to acquire the rights and interests of his client to the 439 square meter parcel of land subject of the administrative charges because the land was not involved in the litigation he was handling. The land was acquired by Bernabe Flores in an execution sale conducted to satisfy the judgment secured in the course of Civil Case No. 2171. The case handled by the respondent was for damages.

WHEREFORE, the complaint against the respondent is dismissed for lack of merit.

SO ORDERED.

A.M. No. 632 June 27, 1940

In re Attorney MELCHOR E. RUSTE, respondent,

The respondent in his own behalf.Office of the Solicitor-General Hilado for the Government.

LAUREL, J.:

By virtue of an administrative complaint filed by Mateo San Juan against Melchor E. Ruste on February 27, 1934, to which the respondent made answer on March 15, 1934, this Court, by resolution of December 1, 1934, referred the case to the Solicitor-General for report. The reference brought forth the following formal complaint filed by the Solicitor-General against the respondent on March 26, 1935:

Comes now the undersigned Solicitor-General of the Philippine Islands in the above entitled administrative case, and pursuant to the provisions of Rule 5 of the rules

concerning disbarment or suspension of attorneys-at-law, to this Honorable Supreme Court, respectively alleges:

1. That in cadastral case No. 6, G. L. R. O. Record No. 483 of the Court of First Instance of Zamboanga, the respondent, Melchor E. Ruste, appeared for and represented, as counsel, Severa Ventura and her husband, Mateo San Juan, the herein complainant, who claimed lot No. 3765; and as a result of said cadastral proceedings, an undivided eleven-twentieth (11/20) share of said lot was adjudicated by said court to said claimants;

2. That there was no agreement the respondent and his said clients as to the amount of his fees; but that they paid to him upon demand on different occasions the sums of (30 and P25 as attorney's fees;

3. That after said payments, the respondent again demanded of the complainant and his wife as additional fees the sum of P25, but they had no money to pay, him, and so he asked them to execute in his favor a contract of lease, and a contract of sale, of their share in said lot No. 3764 in order that he may be able to borrow or raise said sum of P25;

4. That in accordance with said respondent's request, the complainant and his wife executed on September 22, 1930, a contract of lease, whereby in consideration of P100, they leased to him their coconut and banana plantation in said lot No. 3764 for a term of five years, and also a deed of sale, whereby in consideration of P1,000, they sold and transferred to him their undivided eleven-twentieth (11/20) share in said lot No . 3764, although, ,in fact and in truth, neither of the consideration mentioned in said contracts of lease and sale were ever receive by them;

5. That on March 21, 1931, the respondent executed a deed of sale, whereby in consideration of P370 he sold and transferred to Ong Chua said undivided eleven-twentieth (11/20) share in lot No. 3764 excluding the house and its lot, occupied by the complainant and his wife; and on March 28, 1931, the respondent executed another deedof sale, whereby in consideration of the same amount of P370 paid to him by the same Ong Chua, he sold and transferred to the latter the same undivided eleven-twentieth (11/20") share in lot No. 3764, but already including said houses and its lot;

6. That by virtue of the sale to him, Ong Chua has taken possession of said eleven-twentieth share in lot No. 3764;

7. That notwithstanding said second deed of sale, the respondent obtained from Ong Chua to allow the complaint and his wife to continue living house for a period of two years without paying any rent;

8. That on October 10, 1933, however, the respondent notified the complainant and his wife in writing that the said house still belonged to the respondent, and requires said spouses to pay, the sum of P40.50, representing ten months' rental in arrears, and thereafter a monthly rental of P1.50; and

9. That the respondent did not turn over to the complainant and his wife the amount of P370 paid by Ong Chua nor any part thereof.

Wherefore, the undersigned prays that disciplinary action be taken against the respondent.

To the foregoing complaint, the respondent, on April 23, 1935, interposed the following answer:

Comprarece el infrascrito, en su propiarepresentacion y a la Honorable Corte Suprema, alega:

Niega, general y especificamente sus alegaciones en dicha demanda, sobretodo en cuanto al pago de cantidades monetarias alli especificadas, y como defensa especial, alega:

Que el denunciante Mateo San Juan, y sus testigos Esperato Bucoy y Severa Ventura han infringido la Ley del Perjurio; ademasd el Fiscal Provincial Jose Evangelista es una parte interesada en el resultado de este asunto;

Por todo lo expuesto, al Honorable Tribunal pide:

(a) Que para la substanciacion de esta causa que actue de Fiscal, el Honorable Enrique Braganza, Fiscal de Jolo, Sulu;

(b) Que dicho Honorable Fiscal Enrique Braganza, sea requerido a investigar a los testigos, Esperato Bucoy y Severa, Ventura, y la Ley del Perjirio tal como esta enmendada.

Sometido respetuosamente.

By resolution of this court of April 24, 1935, the said formal complaint and answer were referred to the judge of First Instance of Zamboanga for investigation, report, and recommendation. After various and postponements, transpiring between August 3, 1935 and October 18, 1939, the Honorable Catalino Buenaventura, then presiding over the Court of First Instance of Zamboanga,elevated the record of the case of this court. On October 31, 1939, the case was included in the January, 1940 calendar, and at the hearing thereof on February 1, 1940, the respondent submitted the case without oral argument, and the memorandum presented by the Solicitor-General, recommending the dismissal of the complaint filed against respondent, was ordered attached to the record.

From a perusal of the entire record, particularly of the formal complaint filed by the Solicitor-General against the respondent attorney, we gather the following material charges formulated against the latter, to wit, (1) that he engineered the execution in his favor, by the spouses Mateo San Juan and Severa Ventura, of the contract of lease, Exhibit A, and of the deed of sale, ExhibitB, covering the property in question; (2) that he did turn over the considerations therefor to the said spouses; (3) that he likewise deeded the same property to one Ong Chua, for P370, without paying the spouses the said purchase price, and (4) that he required the spouses to pay (40.50 for ten months' rental in arrears, and thereafter a monthly rental of P1.50 for the house occupied by the said spouses.

Sometime in July, 1930, the respondent acted as counsel for the complainant and his wife when the latter laid claim of ownership upon lot No. 3764 in case No. 6, G. L. R. O., Cadastral Record 483 of the Court of First Instance of Zamboanga, eleven-twentieth of said lot having been

eventually adjudicated to the wife, Severa Ventura, on December 20, 1933. On September 22, 1930, that is, during pendency of said cadastral case, the spouses purportedly leased a part of said lot to the respondent for P100, which lease was cancelled and superseded by a deed of sale executed on the same date, whereby the said spouses, in consideration of P1,000, conveyed eleven-twentieth of the same land in favor of the respondent. This is also the finding of the Solicitor-General in his report submitted in this case:

. . . convinieron cancelar el arrendamiento y otorgar en sustitucion un contrato de compraventa absoluta a favor del recurrido, como en efecto se hizo y es el Exhibito B (pp. 37-38, Rollo 1), por cuyo documento Severa Ventura con el consentimiento marital correspondiente vendio definitivamente al recurrido su participacion pro indivisa da 11/20partes en el rferido lote, y estando aun el mismo pendiente de vista u decision el Expediente Catastral No. 6, Record No. 483, del Juzgado de Primera Instancia de Zamboanga. (Pp. 19-20.)

The property being thus in suit, which the respondent was waging on behalf of his clients, his acquisition thereof by the deed of sale, Exhibit B, constitutes malpractice. (Hernandez vs. Villanueva, 40 Phil., 775; In re Calderon, 7 Phil. 427.) 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 as 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." (Hernandez vs. Villanueva, supra.)

There is evidence to show that the respondent has failed to account to the aggrieved spouses forthe various amounts received by him on account of the transactions effected by him pertaining tothe portion of lot No. 3764. However, as the evidence is conflicting and the statements of the parties are contradictory on this point, it is believed that the determination of the exact amount due them by the respondent should better elucidated and determined in an appropriate action which the complaint and his spouse may institute against the respondent for this purpose.

For having improperly acquired the property referred to in Exhibits A and B, under the above circumstances, which property was then subject matter of a judicial proceedings, in which he wascounsel, the respondent is found guilty of malpractice and is hereby suspended for a period of one year, reserving to the complainant and his spouse such action as may by proper for the recovery of such amount or amounts as may be due from the respondent. So ordered.

Avanceña, C.J., Imperial, Diaz, Conce

[A.C. No. 6590. June 27, 2005]

JESUS M. FERRER, complainant, vs. ATTY. JOSE ALLAN M. TEBELIN, respondent.

D E C I S I O N

CARPIO-MORALES, J.:

It appears that on December 3, 2001, the jeepney of Jesus M. Ferrer (complainant) wasinvolved in a vehicular accident allegedly due to the reckless driving of the driver of Global LinkMultimodal Transport, Inc. (Global Link). As a result of the vehicular accident, complainantclaimed to have suffered damages in the amount of P34,650.00 representing cost of repair of thejeepney and P800.00 per day representing lost earnings.

Complainant sought assistance from the Complaint/Information Assistance Office of thePasay City Prosecutor’s Office wherein one Victor Veron referred him to Atty. Jose Allan M.Tebelin (respondent).

Agreeing to render legal services to complainant, respondent charged and received fromhim the amount of P5,000.00 as acceptance fee.

Complainant later brought to the attention of the Integrated Bar of the Philippines (IBP), byletter of March 23, 2002,[1] his complaint against respondent for allegedly abandoning his caseand refusing to talk or see him.

Having been advised[2] by the IBP Commission on Bar Discipline (CBD) to file a verifiedcomplaint in accordance with Section 1, Rule 139-B of the Rules of Court, [3] complainant filed onMay 16, 2002 a letter-complaint-affidavit[4] against respondent, the pertinent portions of whichread:

This is to follow up my complaint against Atty. Jose Allan M. Tebelin who was highly recommended to handle my case (Vehicle accident against Global Link Multimodal Transport) by Mr. Victor Veron of the Complainant/Information Assistance Office of the Pasay City Prosecutor.

Atty. Jose Allan M. Tebelin agreed and charged me 5,000.00 Php as his Attorney’s Acceptance Fee, which I gave him together with the necessary document needed. However, after accepting my 5,000.00 Php, he committed fraud by abandoning my case. He refused to talk to me or see me at his appointed given time at the office of Mr. Victor Veron. He hanged up when I called him in his cellular phone whose number was given to me by his secretary so that I can surely contact him.

I wrote a letter to Mr. Victor Veron requesting his goodself to contact Atty. Jose Allan M. Tabelin tofind out the situation and score of my case and also to inform him that I want him to return my 5,000.00 Php so that I can engage the service of another lawyer to carry on my case.

Mr. Victor Veron received my letter and his immediate reply was for me to write a letter addressed to Atty. Jose Allan M. Tebelin informing him that I am withdrawing from our agreement and [to return] my 5,000.00 Php since he abandoned me. This I did.

I wrote a letter to Atty. Jose Allan M. Tebelin and sent it by registered mail with Registry No. 2809 at Pasay City Hall (Cuneta Astrodome) Post Office. I did not receive any reply and somebody in the office of Mr. Victor Veron suggested that I refer my case to the Integrated Bar ofthe Philippines (IBP) and I will surely get an answer. This I did.

x x x

I am attaching herewith photocopies of all my letters whose contents when summed up will clearly and concisely state and support the facts complained of.

Sheet 1: Photocopy of Atty. Jose Allan M. Tebelin’s Calling card and at the back is his acknowledgment that he received my 5,000.00 Php as his Atty.’s Acceptance fee;

Sheet 2: Photocopy of my letter addressed to Mr. Victor Veron informing that Atty. Jose Allan M. Tebelin have abandoned my case and to kindly contact him to find out the situation of my case and informed him too that I am withdrawing from our agreement and return my 5,000.00Php.

Sheet 3: Photocopy of my letter [dated March 18, 2002] addressed to Atty. Jose Allan M. Tebelin and sent it by registered mail [on March 19, 2002] with Registry No. 2809 at Pasay City Hall (Cuneta Astrodome) Post Office.

Sheet 4: Photocopy of my letter addressed to the IBP sent by registered mail Registry No. 3014 at Pasay City Hall (Cuneta Astrodome) Post Office.

Sheet 5: Photocopy of the reply of Atty. Victor C. Fernandez, Director for Bar Discipline of the IBP.

x x x (Emphasis and underscoring supplied)

Acting on the complaint, the IBP-CBD, by Order [5] of May 17, 2002, required respondent tosubmit his Answer.

Respondent, by Answer[6] dated August 1, 2002, denying some of the allegations againsthim, explained as follows: He agreed to handle the case of complainant for which hereceived P5,000.00 as acceptance fee. Prior to his acceptance to handle the case, however, heextensively interviewed complainant and advised him that the only “appropriate” case that couldbe filed against Global Link is a civil case for damages as a result of the reckless driving ofGlobal Link’s unidentified driver, but that the filing of a complaint would take some time as he(respondent) would “work first to have an audience or talk with [Global Link’s] manager orrepresentative”. He thus accordingly called the attention of Global Link, through one Mr.Bongalos, “sometime in the last week of January 2002,” regarding the claim of complainant buthe received no word from Global Link, prompting him to send a demand letter [7] dated February20, 2002 to it, photocopy of which letter he attached to his Answer.

Respecting complainant’s allegation that he (respondent) would always hang up thetelephone whenever complainant called him, respondent denied the same, he asseverating thatcomplainant never called him up, albeit his (complainant’s) daughter called him up and it was toher that he explained that Global Link’s reply to the demand for payment of damages had to beawaited first.

Respondent did deny too having abandoned complainant’s case, he advancing that he infact prepared a draft of a complaint[8] dated January 15, 2002 against Global Link a copy of whichhe also attached to his Answer.

Respondent nevertheless proffered that he was willing to return the P5,000.00 andcomplainant’s records of the case.

Complainant, in a pleading entitled “COMPLAINANT’S ANSWER AND COMMENTS TOANSWER OF RESPONDENT,”[9] manifested that he welcomed and appreciated respondent’soffer to return the P5,000.00 “as that is the very intention under the sound discretion of theHonorable Commission on Bar Discipline (sic).”

The IBP-CBD set the case for hearing on March 13, 2003 during which respondent, whowas the only one who showed up, furnished the IBP-CBD his new address — 2nd Floor, LomatBuilding, 111 Pasadeña Street, F.B. Harrison, Pasay City.[10]

The hearing of the case was reset on May 29, 2003 at which only two ladies who identifiedthemselves as Conchita Ferrer and Grace Ochoa appeared and informed the IBP-CBD thatcomplainant had died on January 2, 2003. The heirs of complainant were thus ordered to submita certified true copy of his death certificate and a formal notice of substitution of party-complainant,[11] but there is no showing that they complied therewith.

On the scheduled hearing on July 10, 2003, only Conchita Ferrer appeared. [12] Whattranspired on said date, the records do not show.

The IBP-CBD subsequently issued on January 30, 2004 a Notice of Mandatory Conferenceon March 12, 2004.[13]

On the scheduled mandatory conference, no one showed up. While a copy of the notice ofsaid conference was sent to respondent at his given address, it was returned with a notation“moved out.”[14]

The hearing of the case was reset to April 16, 2004 [15] and June 24, 2004[16] during which,again, no one showed up.

The IBP-CBD thereupon acted on the pleadings and submitted its Report andRecommendation prepared by Commissioner Wilfredo E. J. E. Reyes reading asfollows, quotedverbatim:

Based on the pleadings submitted by the parties, the following facts are undisputed:

The undersigned admits that it agreed that to handle the case of the complainant Mr. Jesus M. Ferrer against Global Link Multimodal Transport (GLMT for brevity) referred to by Mr. Vic Beron of the Pasay City Prosecutor’s Office, however, it is true that I undertake to handle the same for P5,000.00 as my acceptance fee because he is a friend of Mr. Beron;

That the undersigned is willing to return the P 5,000.00 and the complainant’s records if only toavoid any slightest prejudice between the herein two parties.

In fact, in one occasion on March 13, 2003, the respondent appeared and informed the Commission that he was willing to return the money to the complainant. He failed to return the money and failed to respond to the notices of the Commission and he failed to comply with his obligation to his client. Obviously, the complainant has been telling the truth when he alleged that the respondent has failed in his duty to act as his counsel.

The undersigned Commissioner believes in the allegation of the complainant that Atty. Jose AllanM. Tebelin agreed and charged him in the amount of P5,000.00 as attorney’s fees and after accepting the fee, has abandoned his case.

The complainant was able to show as part of his Annex the receipt of P5,000.00 at the back of his calling card and he was able to show the demand letter wherein he requested to return to himthe amount ofP5,000.00 as acceptance fee because respondent failed to act as his counsel.

In his Answer, the respondent had the temerity to even offer the reimbursement of the P5,000.00 only to disappear and never heard from.

Under Canon 18 – A lawyer shall serve his client with competence and diligence.

“Rule 18.03 – A lawyer shall not neglect legal matters entrusted to him [x x x].”

In this case the respondent lawyer has an obligation to his client.

RECOMMENDATION

It is respectfully recommended that respondent Atty. Jose Allan M. Tebelin be suspended for a period of two (2) years for his failure to perform his services for a client and returning the acceptance fee upon demand. It is further recommended that respondent be ordered to return to his client the money in the amount of P 5,000.00 to the heirs of complainant. And an additional penalty of at least one (1) year for failure of said lawyer to appear and present his proper address before the Commission on Bar Discipline. (Emphasis and underscoring supplied)

By Resolution[17] of July 30, 2004, the Board of Governors of the IBP:

. . . 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 records and the applicable laws and rules, and for failure to perform his services for a client and failure to return the acceptance fee upon demand, Atty. Jose Allan M. Tebelin is hereby SUSPENDED from the practice of law for two (2) years and Ordered to Return to the heirs of complainant the money inthe amount of P 5,000.00. (Emphasis in the original; underscoring supplied)

As reflected above and confirmed by the records, after respondent showed up during whatappears to be the initial setting of the case for hearing on March 13, 2003, nothing had beenheard from him. In complainant’s case, he naturally did not show up on March 13, 2003 for, if theinformation given to the IBP-CBD by Conchita Ferrer and Grace Ochoa were true, he had earlierdied on January 2, 2003.

The death of a complainant in an administrative case notwithstanding, the case may stillproceed and be resolved. As Tudtud v. Colifores instructs:[18]

x x x The death of the complainant herein does not warrant the non-pursuance of the charges against respondent Judge. In administrative cases against public officers and employees, the complainants are, in a real sense, only witnesses. Hence, the unilateral decision of a complainant to withdraw from an administrative complaint, or even his death, as in the case at bar, does not prevent the Court from imposing sanctions upon the parties subject to its administrative supervision.

From respondent’s Answer, it is gathered that while he contends that it was only whencomplainant lodged the complaint against him at the IBP that he learned of complainant’s desireto have the P5,000.00 acceptance fee returned, he never categorically denied having receivedcomplainant’s letter of March 18, 2002 advising him that he was withdrawing from theiragreement to represent him in the case against Global Link “since [he] refused to talk with[complainant] personally or by phone, make appointments that [he] will see [complainant] at theHall of Justice, Pasay City Hall but did not show up at the Office of Mr. Victor Veron who hadhighly recommended [him] to represent [complainant] and lastly by hanging up on [complainant]when [the latter] called [him] on [his] cell phone whose number was given to [complainant] by[his] secretary so that [complainant] will surely contact [him],” [19] and asking him to returnthe P 5,000.00 acceptance fee, he having abandoned him.

Given, however, respondent’s asseveration that he first brought to the attention of GlobalLink in the last week of January 2002 the claim of complainant arising from the December 3,2001 vehicular accident, through one Mr. Bongalos and that he followed it up by a February 20,2002 demand letter to Global Link, which asseveration was not refuted by complainant in hisComments on respondent’s Answer, it cannot be reasonably concluded that respondent failed toperform services for complainant when complainant, by letter [20] of March 23, 2002 or five (5)days after he sent the March 18, 2002 letter [21] to respondent asking for a refund ofthe P5,000.00, complained to the IBP.

That complainant failed to contact or communicate with respondent immediately before hewas prompted to seek a refund due to respondent’s alleged unavailability, as conveyed byrespondent’s secretary, does not necessarily make out a case of abandonment, especially in lightof respondent’s above-mentioned unrefuted claim that in January and February 2002, he hadproffered demands for damages to Global Link and explained to complainant’s daughter that theystill had to await for the response of Global Link.

This Court faults respondent, however, for ignoring the notices of hearing sent to him athis address which he himself furnished, or to notify the IBP-CBD his new address if indeed hehad moved out of his given address. His actuation betrays his lack of courtesy, hisirresponsibility as a lawyer.

This Court faults respondent too for welching on his manifestation-undertaking to returnthe P5,000.00, not to mention the documents bearing on the case, to complainant or his heirs. Such is reflective of his reckless disregard of the duty imposed on him by Rule 22.02 of the Codeof Professional Responsibility:

Rule 22.02 – A lawyer who withdraws or is discharged shall, subject to a retaining lien, immediately turn over all papers and property to which the client is entitled, and shall cooperate with his successor in the orderly transfer of the matter, including all information necessary for the proper handling of the matter.

WHEREFORE, respondent Atty. Jose Allan M. Tebelin is hereby SUSPENDED from thepractice of law for Two (2) Months and ORDERED to return to complainant’s heirs the amountof P5,000.00, with legal interest, with a WARNING that a repetition of the same or similaroffenses will be dealt with more severely.

Let a copy of this Decision be furnished the Integrated Bar of the Philippines and all thecourts in the Philippines, and entered in the personal records of Atty. Tebelin in the Office of theBar Confidant.

SO ORDERED.

G.R. No. 93707 January 23, 2001

ROSITA TAN, petitioner, vs.ATTY. JOSE L. LAPAK, respondent.

MENDOZA, J.:

This is a complaint filed by Rosita Tan against Atty. Jose L. Lapak for misconduct, based on respondent's failure to file with this Court a petition for review on certiorari of a resolution of the Court of Appeals dismissing complainant's appeal. Complainant alleged that despite the fact that

this Court had granted respondent an extension of the time to file the petition for review on certiorari and she had paid respondent his fee, the latter nonetheless failed to file the petition in this Court. Complainant's letter, dated January 10, 1991, addressed to then Chief Justice Marcelo B. Fernan, stated:

Ako po ay sumusulat sa iyo upang ihingi ng tulong ang aking suliranin na may kaugnayan sa aking kaso, G.R. No. 93707 ROSITA TAN v. CA, et al. Na dahilan sa kapabayaan ng aking abogado na si Atty. Jose Lapak ay hindi nakapagfile ng Certiorari nasa ngayon kanyang inihihinging palugit ay naibigay naman, at ako po ay nagbigay naman ng halagang P4,000.00 upang gawain lamang ang petition sa pagrerepaso ng Certiorari subalit inuulit pang hindi gawain.

Kgg. Na Chief Justice ako po'y pinaasa lamang ng aking abogado na wala man lamang nagawa kung ano ang nararapat. Ako naman ay isang walang karanasan sa bagay na itoay naniwala at naghintay. Nang makausap ko po siya ay aking tinapat kung ano na at walang nadating na resulta sa ginawa niya ang sagot sa aking maghintay na lamang dawako. Ngunit ng ako po ay pumunta sa Maynila at napadaan ako sa Korte Suprema saka ko pa lamang napag-alaman na ang aking abogado ay hindi nakapaggawa ng brief ng Certiorari at kaya napawalaan ng bisa ang aking apelasyon.1âwphi1.nêt

Akin pong naisip na idulog ang aking kaapihan sa Pangulo ng IBP ng Camarines Norte ang mga bagay na ito ang sagot po sa aking ay maari akong maghain ng demanda labansa aking abogado na si Atty. Jose L. Lapak ngunit ako po ay mahirap lamang at isa pa wala akong matutustos sa aking abogado. Isa pa po wala akong pera at sapat na pinag-aralan kaya po hindi ko alam kung sino ang aking dudulungan para tumulong sa mahihirap. Kaya naisip ko pong sumulat sa opisina ninyo, para ihain ang aking karaingan. Kung inyo pong mamarapatin ako ay humihingi ng tulong sa iyo bilang pinakamataas na hustisya ang aking kaapihan.

Respondent denied the allegations against him. In his manifestation and comment, dated March 4, 1991, he contended:

a) Ms. Rosita Tan was formerly represented by Atty. Juanito Subia in Civil Case No. 5295, Rosita Tan vs. Wilfredo Enriquez before the Regional Trial Court of Camarines Norte; said case was dismissed due to failure of Rosita Tan and his (sic) counsel to appear during the scheduled Pre-Trial of the case; . . . said Order of dismissal was however reconsidered;

b) On November 11, 1986, Atty. Marciano C. Dating, Jr. entered his appearance for the said Rosita Tan as her original counsel, Atty. Juanito Subia, had withdrawn for reasons only known to her; . . . Atty. Marciano C. Dating, Jr. filed an Amended Complaint;

c) That on September 20, 1988, the Court, through Hon. Luis Dictado, who heard the case, rendered a decision dismissing Rosita Tan's complaint;

d) That on October 13, 1988, Atty. Dating, Rosita Tan's counsel, appealed from the adverse decision against her to the Court of Appeals;

e) That Atty. Marciano Dating also withdrew later as Rosita Tan's counsel and a certain Leopoldo P. San Buenaventura entered his appearance as new counsel for the said

Rosita Tan in the appealed case before the Court of Appeals which was docketed as C.A.G.R. CV No. 20669;

f) On October 26, 1989, Atty. Leopoldo E. San Buenaventura filed a Motion for Extension of Time to File Brief for Rosita Tan; . . . however, for reasons only known to said lawyer, he failed to file his Appellant's Brief; hence, on February 20, 1990, the Court of Appeals issued a Resolution dismissing the appeal for failure to Rosita Tan's counsel to file Appellant's Brief despite extension of time granted to him;

g) That upon receipt by Ms. Rosita Tan of said Resolution dismissing her appeal due to the failure of her Manila lawyer to file Appellant's Brief, she came to the law office of undersigned counsel in the company of her friend, Mrs. Gloria Gatan, to employ the latter's services to seek reconsideration of the Order of dismissal and file Appellant's Briefto enable her to pursue her appeal; Rosita employed the legal services of undersigned counsel not to file a Petition for Review but to seek reconsideration of the order to dismissal of her appeal; considering then that she does not have the papers to the case on appeal, Rosita Tan agreed to pay counsel P5,000.00 to go to Manila, study the records of the case in the Court of Appeals, file a Motion for Reconsideration and prepareAppellant's Brief for her; she was able to pay P3,000.00 only instead of P5,000.00 promising to pay the balance later; consequently, the undersigned counsel filed an URGENT MOTION FOR RECONSIDERATION with the Court of Appeals . . . .;

h) Unfortunately, the Court of Appeals denied said Motion for Reconsideration in a Resolution promulgated on May 2, 1990 . . . .;

i) That upon receipt by the undersigned counsel of said Resolution of the Court of Appeals denying the Motion for Reconsideration, the undersigned counsel summoned the appellant Rosita Tan and requested her to bring the balance of P2,000.00 so that a Petition for Review on Certiorari could be filed with the Supreme Court; however, the saidappellant Rosita Tan upon knowing of the adverse Resolution of the Court of Appeals became apathetic and when she came to the law office of the undersigned she expressed her misgivings of bringing the case to the Supreme Court and told counsel that she has no more money; despite her indifference and lukewarm attitude, the undersigned counsel filed a Motion for Extension of Time to file a Petition for Review withthe Supreme Court paying the docket fees therefore in behalf of said appellant; in the meantime the undersigned counsel went to Manila to make researches preparatory to thefiling of the Petition for Review with the Supreme Court; . . . The undersigned counsel then requested the appellant Rosita Tan to pay him the balance of P2,000.00 as per agreement for him to be able to prepare the Petition for Review in Manila and file it with the Supreme Court; but said appellant hesitantly paid only P1,000.00 which was her only money available promising to pay the balance of P1,000.00 later; thereafter, the undersigned counsel went to the Court of Appeals to get certified true copies of the Resolution denying the Motion for Reconsideration; he then learned that there was already an Entry of Judgment in the case as the Resolution dismissing the appeal had already become final; the undersigned then informed Rosita Tan of her misfortune and informed her that he would study the propriety of filing an action for annulment of the decision because of his discovery of an anomaly which resulted in a mistrial; because of continuous setbacks she suffered from beginning to end; Rosita Tan said she had lost all hope and was unwilling to go any further; she then demanded the refund of P4,000.00 from the undersigned; when the undersigned gave back the P1,000.00 he received from

her, she refused to receive the amount insisting that the whole amount of P4,000.00 be returned to her claiming that the undersigned counsel had not done anything for her anyway; hence the misunderstanding which culminated in her sending a letter complaint to the Honorable Chief Justice of the Supreme Court.

The case was referred to the Integrated Bar of the Philippines for investigation, report, and recommendation. On July 29, 2000, the IBP passed a resolution adopting the report and recommendation of its Investigating Commissioner Jaime M. Vibar that respondent be reprimanded and ordered to restitute to complainant the amount of P1,000.00.

In finding respondent guilty of betrayal of his client's trust and confidence, the investigating commissioner said in his report:

Regardless of the agreement on the total amount of the fees, it is clear that respondent committed to prepare and file a "petition with the Supreme Court" and for which he received P1,000.00 from the complainant (Annex "B", Sagot, dated May 31, 1991). Despite such commitment, he failed to file the petition.

It is not explained why the payment of PHP1,000.00 was made by complainant for the "petition" on August 8, 1990. At that time, the period to file the petition for review as contemplated by respondent and which was the subject of an extension motion, dated May 18, 1990, filed with and granted by the Hon. Supreme Court, had already expired. It is to be noted that respondent's motion sought an extension of "thirty (30) days from May 26, 1990 or up to June 25, 1990". It would appear that respondent received P1,000.00 onAugust 8, 1990 from complainant at a time when the remedy of a review of the dismissal order of the Court of Appeals was no longer available. Yet, complainant was never informed or favored with an explanation that a petition for review was no longer possible, or perhaps that another remedy was still open to the complaint. To aggravate his situation, respondent alleges in his comment to the complaint (at page 3) that after he received P1,000.00 from the complainant he immediately went to the Court of Appeals to get certified copies of the resolution denying his motion for reconsideration and that thereat he discovered that an "Entry of Judgment" had already been issued. Respondent should have known that when he went to the Court of Appeals after receipt of P1,000.00, or after August 8, 1990. The period he requested from the Hon. Supreme Court to institute the petition for review had long expired.

But the silence of respondent at the time of receipt of the amount of P1,000.00 on August8, 1990 and the "petition with the Supreme Court" was no longer an available remedy smacks of a betrayal of a client's cause and the trust and confidence reposed in him. If indeed his client's cause was no longer worth fighting for, the lawyer should not have demanded a fee…and made representations that there is merit in her case. He should have dealt with his client with all candor and honesty by informing her that on August 8, 1990 the period to file the petition had already expired.

Complainant has been a victim of negligence on the part of the law firm of San Buenaventura, et al., or particularly Atty. Leopoldo San Buenaventura, for their failure to file the Appellant's Brief in behalf of complainant within the period allowed. The dismissal of the appeal gave complainant a slim chance, if not a futile remedy, with the Hon. Supreme Court. Atty. Lapak would have been shackled in any disquisition for complainant's cause considering that she already lost in the trial court and her appeal

had been dismissed without any argument being advanced in her behalf. Atty. Lapak should have been candid with complainant. He should not have asked more at a time when nothing fruitful could be done anymore.

With respect to respondent's offer to return the amount of P1,000.00 paid to him to file the petition for review on certiorari, the investigating commissioner stated:

. . . [T]his willingness to return P1,000.00 does not erase his breach of the Code of Professional Responsibility for lacking in honesty, diligence and fairness in dealing with his client as shown by the very fact that he received the amount at a time when he could no longer file the "petition with the Supreme Court". His client deserved the information that on such date the decision of the Court of Appeals was already final. Respondent's actuation of filing an extension motion with the Hon. Supreme Court and yet not filing the pleading within the period requested and granted speaks well of respondent's lack of candor, honesty and judicious conduct in dealing with his client or in the handling of his case. This conduct violates Canon 17, & Rule 18.03, Rule 18.04 of Canon 18 of the Codeof Professional Responsibility.

The investigating commissioner recommends that respondent only be reprimanded considering his old age and the negligent conduct of complainant's previous counsel. The commissioner reasoned that it was the negligent conduct of complainant's previous counsel which caused the dismissal of the appeal and rendered inutile any further legal action before the Supreme Court.

The investigating commissioner's findings are supported by the evidence. However, we hold that the appropriate sanction should be reprimand and order respondent to return the amount of P4,000.00 which he received from complainant.1âwphi1.nêt

Respondent advances two reasons why he did not file a petition for review on certiorari in this Court, to wit: (1) because he found that the resolution of the Court of Appeals to be appealed to the Supreme Court had become final on May 27, 1990 and (2) because complainant failed to paythe balance of P1,000.00 of his fee.

First. With respect to the first reason, Rule 18.03 thereof which provides that "A lawyer shall not neglect a legal matter entrusted to him and his negligence in connection therewith shall render him liable." Respondent alleges that upon receipt of the Court of Appeals resolution denying the motion for reconsideration which he had filed, he summoned complainant and told her that it wasimperative that a petition for review on certiorari be filed with this Court.

At this point, it is important to note the material dates on record to determine if respondent's justification for his failure to file a petition for review is tenable. The resolution of the Court of Appeals dismissing complainant's appeal for failure to file an appellant's brief was promulgated on February 20, 1990. Within the reglementary period for filing an appeal, respondent filed a motion for reconsideration which the Court of Appeals denied on May 2, 1990. Respondent received a copy of this resolution (denying the motion for reconsideration) on May 11, 1990 so that respondent had 15 days from May 11, 1990, or until May 26, within which to file a petition forreview on certiorari with the Supreme Court. Respondent thereafter asked for, and was granted by this Court, an extension of 30 days "counted from the reglementary period," or until June 25, 1990, within which to file the petition. As respondent failed to file the petition within the extended period, the Supreme Court issued a resolution on August 20, 1990 declaring the judgment sought to be reviewed to have become final and executory.

It is not true, therefore, that respondent failed to file a petition for review on certiorari because thejudgment sought to be reviewed had become final on May 27, 1990.

When respondent summoned complainant and told her that in view of the denial of his motion forreconsideration it was imperative that a petition for review be filed with this Court, the resolution of the Court of Appeals was not yet final. In fact, this Court granted respondent's motion for extension of time to file the petition for review, because the resolution of the Court of Appeals denying the motion for reconsideration had not yet attained finality. Despite having been granted an extension, however, respondent failed to file the petition within the reglementary period. This constitutes a serious breach. Rule 12.03 of the Code of Professional Responsibility provides 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 filing of a petition for review is similar to the filing of an appellant's or appellee's brief. In Mariveles v. Mallari,1it was held that the lawyer's failure to file an appellant's brief despite numerous extensions of time to file the same constitutes a blatant violation of Rule 12.03 of the Code of Professional Responsibility. As already noted, this Rule provides that after obtaining extensions of time to file pleadings, memoranda, or briefs, a lawyer should not let the period lapse without submitting the same or offering an explanation for his failure to do so.

In Re: Santiago F. Marcos,2 the Court considered a lawyer's failure to file a brief for his client as amounting to inexcusable negligence. Said the Court:

An attorney is bound to protect his client's interest to the best of his ability and with utmost diligence. (Del Rosario v. CA, 114 SCRA 159). A failure to file brief for his client certainly constitutes inexcusable negligence on his part. (People v. Villar, 46 SCRA 107) The respondent has indeed committed a serious lapse in the duty owed by him to his client as well as to the Court not to delay litigation and to aid in the speedy administrationof justice. (People v. Daban, 43 SCRA 185; People v. Estocada, 43 SCRA 515).

At any rate, even assuming that the resolution of the Court of Appeals expired on May 27, 1990, he should not have asked on August, 8, 1990 for the balance of P5,000.00 which complainant had agreed to pay since the resolution had already become final at that time. As the investigatingcommissioner pointed out in his report:

To aggravate his situation, respondent alleges in his comment to the complaint (at page 3) that after he received P1,000.00 from the complainant he immediately went to the Court of Appeals to get certified copies of the resolution denying his motion for reconsideration and that thereat he discovered that an "Entry of Judgment" had already been issued. Respondent should have known that when he went to the Court of Appeals after receipt of P1,000.00, or after August 8, 1990, (t)he period he requested from the Hon. Supreme Court to institute the petition for review had long expired.3

It would, therefore, appear that if an entry of judgment had been made in the Court of Appeals, it was precisely because respondent failed to file a petition for review with the Supreme Court within the extended period granted him. He cannot, therefore, excuse his breach of the duty to his client by his own negligent act.

Second. Respondent asserts that complainant only engaged his services to pursue her appeal inthe Court of Appeals which was dismissed due to the failure of complainant's former counsel,

Atty, Leopoldo E. San Buenaventura, to file the appellant's brief. Whether or not he was engagedto represent complainant only in the Court of Appeals and not also in the Supreme Court is immaterial. For the fact is that respondent already commenced the representation of complainantin the Supreme Court by filing a motion for extension of the time of file a petition for review. In fact, according to respondent, upon receipt of the Court of Appeals resolution denying reconsideration of the dismissal of complainant's appeal, respondent summoned complainant to his office precisely to tell her that it was imperative that a petition for review be filed with the Supreme Court. Once he took the cudgels of his client's case and assured her that he would represent her in the Supreme Court, respondent owed it to his client to do his utmost to ensure that every remedy allowed by law was availed of. As this Court has held:

It is axiomatic that no lawyer is obliged to act either as adviser or advocate for every person who may wish to become his client. He has the right to decline employment, subject, however, to Canon 14 of the Code of Professional Responsibility. Once he 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 must serve the client with competence and diligence, and champion the latter's cause with wholehearted fidelity, care and devotion. Elsewise stated, he owes entire devotion to the interest of his client, warm zeal in the maintenance and defense of his client's rights, and the exertion ofhis utmost learning and ability to the end that nothing be taken or withheld from his client,save by the rules of law legally applied. This simply means that his client is entitled to thebenefit 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.4

Third. Nor can respondent excuse himself for his failure to file the petition for review on certiorari on the ground that complainant failed to pay what she promised to pay. Complainant agreed to pay P5,000.00. Of this amount, she paid respondent P3,000.00 and later P1,000.00, leaving onlya balance of P1,000.00. Even if this balance had not been paid, this fact was not sufficient to justify the failure of respondent to comply with his professional obligation which does not depend for compliance on the payment of a lawyer's fees.

As respondent utterly failed to comply with his professional commitment to complainant, it is, therefore, not just for him to keep the legal fee of P4,000.00 which complainant paid him. He has not rightfully earned that fee and should return it to complainant.

WHEREFORE, Atty. Jose L. Lapak is REPRIMANDED and ORDERED to refund to complainant Rosita Tan the amount of P4,000.00. He is admonished henceforth to exercise greater care and diligence in the performance of his duties towards his clients and the courts and warned that repetition of the same or similar offense will be more severely dealt with.1âwphi1.nêt

SO ORDERED.

Bellosillo, Quisumbing, Buena, and De Leon

G.R. No. 77656 August 31, 1987

ROBERTO ANTONIO, DIONISIO BENSION, CONRADA CHAN, MARINO CUMLAT, VICENTE DIMACUHA, PROCOPIO ESPEJON, RODRIGO FORBES, MANITO FUENTES, ET AL., petitioners, vs.THE HONORABLE COURT OF APPEALS, SPECIAL ELEVENTH DIVISION, HON. ANTONIA C. MACANDOG, in her capacity as then presiding judge of the Regional Trial Court of Caloocan City, Branch CXX and ALICIA BILAN, respondents.

GANCAYCO, J:

This is a petition for certiorari and mandamus with a prayer for a writ of preliminary injunction. It seeks to annul the Resolution of the Court of Appeals 1 promulgated on March 10, 1987 which denied the admission of the petitioners' Motion for Reconsideration of the decision 2 earlier rendered. Also, it prays that a writ of preliminary injunction be immediately issued to restrain the respondent Regional Trial Court in Caloocan City, Branch CXX, from implementing its Order dated March 6, 1987, which issued a writ of execution in accordance with the Court of Appeals decision on the case, thereby asking that said court be directed to defer or stay the execution pending the resolution of this petition and an annulment case allegedly appealed with the Court of Appeals.

The petitioners are lessees of an apartment building located in No. 121, 2nd Street, 9th Avenue, Caloocan City. This property was foreclosed by the Government Service Insurance System (GSIS) after its original owner failed to pay back his loan.

After due notice to the petitioners and all others concerned, the property was sold to the private respondent at a public bidding held on July 29, 1982. It appears, petitioners deliberately did not participate in the said bidding because they believed that, as tenants therein, they have priority inlaw to acquire the property. Their thinking was that their participation would be deemed a waiver of their right to question the act of the GSIS in selling the property and would adversely affect their offer to buy the same.

The award or sale of the property to the private respondent was duly approved by the GSIS Board of Trustees in its Resolution No. 772 adopted on August 20, 1982. It was then certified thatthe possession and administration of the property had been transferred to the private respondentA conditional deed of sale was executed in favor of private respondent by the GSIS stating that for all intents and purposes, the private respondent is the owner of the property.

The GSIS advised the petitioners that they should now pay their rent and arrearages to the private respondent. But despite repeated written demands, the petitioners failed and refused to settle their accounts.

After a barangay conciliation proceeding proved futile, the private respondent filed a complaint for ejectment against the petitioners with the Metropolitan Trial Court in that locality. Said court rendered judgment on January 8, 1985, ordering the petitioners to vacate the premises occupied by them and to pay certain amounts as damages.

Not satisfied therewith, the petitioners appealed to the respondent Regional Trial Court which, onAugust 20, 1985, rendered a decision affirming in toto the judgment of the Metropolitan Trial Court.

The petitioners then filed a petition for review on certiorari with the respondent Court of Appeals. This case was docketed as CA-G.R. SP No. 07828.

On December 5, 1986, the respondent Court of Appeals rendered a decision dismissing the petitioner for review. Later an entry of judgment dated February 3, 1987, was duly certified thereupon by the Clerk of Court attesting to the fact that the judgment became final and executory as of January 22, 1987. The records of the case were consequently, remanded to the respondent Regional Trial Court on February 11, 1987.

On February 23, 1987, the petitioners, through their new counsel, filed an "Appearance And Motion For Leave To Admit Motion For Reconsideration, together with the Motion For Reconsideration With Prayer For Issuance Of Temporary Restraining Order," with the respondentCourt of Appeals. They moved that the respondent Court of Appeals admit their motion for reconsideration, which was obviously filed beyond the reglementary period for filing the same, alleging that their counsel of record abandoned them and migrated to the United States without at least informing them that a decision was rendered against them.

The petitioners' motion was denied by the respondent Court of Appeals in the Resolution dated March 10, 1987, now put in issue. It is hereunder reproduced, thus:

Now before this Court is an Appearance and Motion for Leave to Admit Motion forReconsideration' filed by petitioners in the above-entitled case on February 23, 1987 on the ground that their former counsel Atty. Funelas had abandoned the case and is now abroad, together with the corresponding Motion For Reconsideration With Prayer for Issuance of Temporary Restraining Order.

Considering that the decision sought to be reconsidered dated December 5, 1986had become final, entry of judgment having been issued on February 3, 1987 andthe records remanded to the court a quo on February 11, 1987, for which reason the said decision has become final and this Court has become bereft of jurisdiction to act thereupon, the abovementioned Motions are hereby noted.Parenthetically, and merely for purposes of record, it is observed that counsel of record of petitioners is the law office Funelas, Perez and Associates and not Atty. Funelas alone. Therefore, the fact that Atty. Funelas has abandoned the case and is now abroad is not a valid ground for the late filing of the motion for reconsideration. 3

Earlier, on March 6, 1987, the respondent Regional Trial Court issued an order 4 for a writ of execution to be issued against the petitioners for the enforcement of the decision in CA-G.R. No. 07828.

Henceforth, the petitioners, believing that they were deprived of their day in court when the respondent Court of Appeals denied their motion for reconsideration, instituted this petition.

As their initial argument in this petition and as contained in their "Appearance And Motion For Leave To Admit Motion For Reconsideration," the petitioners maintain that they were deprived of their day in court-equivalent to a denial of due process of law-when their motion for reconsideration was refused due course by the respondent Court of Appeals. They alleged that their counsel at that time, Atty. Pitty A. Funelas, virtually abandoned them by leaving abroad without at least notifying them. So when the Court of Appeals decision was rendered and a copy was sent to Atty. Funelas, no notice thereof was ever received by the petitioners. The petitioners only had knowledge of the judgment against them after it was eventually entered in the Book of Entries Of Judgments for being final and executory.

A certain Romeo S. Obligar, representing himself as the former messenger of Atty. Funelas, executed an affidavit on February 19, 1987 stating among others that while getting the mails fromthe Post Office last January 6, 1987, for his new employer, he received the decision in CA-G.R. SP No. 07828; that since the records of that case was with Atty. Funelas, he was not able to contact the petitioners herein; and that he forgot all about said decision until a secretary informedhim that the petitioners were verifying the said case when they happened to visit the office of his new employer.

We agree with the Court of Appeals in denying the petitioners' motion for reconsideration. It is well-settled that after the lapse of fifteen (1 5) days from notice of judgment, the same becomes final and the Court of Appeals loses, jurisdiction over the case. And the subsequent filing of a motion for reconsideration cannot disturb the finality of the judgment nor restore jurisdiction which had already been lost. 5 The court a quo cannot decide the case anew. decision rendered anew notwithstanding the finality of the original one is null and void. 6

In this case, the messenger, Mr. Obligar, received a copy of the decision on January 6, 1987. This decision became final and executory on January 22, 1987. Thus, the motion for reconsideration filed by the petitioners on February 23, 1987, could not be acted upon on the merits and could only be noted by the respondent Court of Appeals. It was properly denied.

The negligence attributed by the petitioners to their then counsel, Atty. Funelas, is not excusable.Clear and as it can be seen from the pleadings filed that the petitioners' counsel of record is the law office of Funelas Perez and Associates and not Atty. Funelas alone. Atty. Funelas signed the documents in his capacity as the representative of the said law firm. The respondent Court of Appeals made this same observation in its questioned resolution.

In an attempt to belie the preceding observation, the petitioners submitted to this Court another affidavit executed by Mr. Obligar dated March 17, 1987. This affidavit stated that the law firm of Funelas, Perez and Associates was actually composed of only Atty. Funelas; that Atty. Perez wasonly a partner in name, never handled any case of the law office, and did not actually report in said office; that there were no associates of Atty. Funelas; and that said law firm was dissolved inAugust, 1986. This affidavit has no evidentiary value. It was executed and submitted after the questioned resolution was already promulgated. Hence, it could not have affected or influenced the adjudication of the said resolution.

It is safe to presume that a law firm which registered and represented itself as such, with at least two named partners, is composed of at least two lawyers. And if it is true that this law office was earlier dissolved, the winding up process is presumed to have been performed in a regular manner, with all the obligations properly accounted for. Very concrete evidence must be presented in order that these presumptions may be rebutted.

At most, the affidavit must be classified as a mere afterthought and a futile attempt to contradict the findings of the respondent Court of Appeals.

Recently, this Court laid down a ruling that is applicable to this case. It reads:

When a party appears by attorney in an action or proceeding all court, all notices required to be given therein must be given to their attorney and not to the client. Hence, a notice given to the client and not to his attorney is not a notice in law.

The rule in this jurisdiction is that the client is bound by the negligence or failings of counsel. It is the duty of an attorney to himself and to his clients to invariably adopt a system whereby he can be sure of receiving promptly all judicial notices during his absence from his address of record. The attorney must so arrange matters that communications sent by mail addressed to his office or residence, may reach him promptly. ... 7

In the motion for reconsideration, the sole issue presented for reconsideration was a mere amplification of one argument already passed upon by the respondent Court of Appeals in its decision.

On January 18, 1983 before the ejectment case was instituted, the petitioners filed a complaint inthe then Court of First Instance to annul the award in a public auction of the leased premises by the GSIS to the private respondent for they claimed that as tenants therein, they have the priority

in law over the same. The court, in a decision rendered on January 28, 1985, dismissed the casefor lack of a cause of action. Now, this case is allegedly pending appeal in the Court of Appeals.

The issue, thus, advanced in the motion for reconsideration is whether the pendency of an annulment case of an award in public auction is prejudicial to an ejectment suit as to warrant the suspension of the latter proceeding.

We quote with approval the holding of the respondent Court of Appeals on this matter, thus:

The pendency of an action for title filed by the defendants (now petitioners) with the Regional Trial Court does not have the effect of removing the ejectment case from the jurisdiction of the Metropolitan Trial Court. The rule is well- settled that an action for ownership or annulment of title is not a bar to an action for forcible entry and detainer (Alviar, et al. vs. Pampolina, et al., 84 Phil. 45, at p. 47; Padillavs. de Jesus, et al., 95 Phil. 688, at p. 691; Aguilar vs. Cabrera, et al., 74 Phil. 658, at p. 868.) 8

In an ejectment case, the issue is possession, while in an annulment case the issue is ownership. 9 Therefore, an ejectment case can very well proceed independently of an annulment case. The only recognized exception to the preceding doctrine is the situation wherein the question of possession is so intertwined with the question of ownership to the effect that the question of possession cannot be resolved without resolving the question of ownership. This case at bar does not fall within the exception. Accordingly, the petitioners' position that this ejectment proceeding should be suspended in deference to an annulment proceeding presently pending in another forum must necessarily be rejected.

The order of the respondent Regional Trial Court for the issuance of a writ of execution was because the decision in the ejectment case had already become final and executory. Its implementation cannot be stayed.

WHEREFORE, the instant petition for certiorari and mandamus with preliminary injunction is hereby DISMISSED for lack of merit. With costs against petitioners. This is immediately executory.

Teehankee, C.J., Narvasa and Cruz, JJ., concur.

Paras, J., took no part.

THIRD DIVISION

[G.R. No. 111478. March 13, 1997]

GEORGE F. SALONGA and SOLID INTERTAIN CORPORATION, petitioner, vs. COURT OFAPPEALS, HON. JULIO R. LOGARTA, and PAUL GENEVE ENTERTAINMENTCORPORATION, respondents.

D E C I S I O N

PANGANIBAN, J.:

Are the professional lapses, inefficiency, carelessness and negligence of a lawyer enough toannul a default judgment? Do they constitute "extrinsic fraud"? Alternatively, do they amount todeprivation of due process? Is a motion (as distinguished from an independent and separatepetition) sufficient to vest contempt jurisdiction on a trial court? These questions are answeredby the Court as it resolves this petition assailing the Decision of respondent Court of Appeals [1] inCA-G.R. SP No. 29138 promulgated on August 26, 1993, affirming with slight modification thejudgment by default rendered by the trial court.

The Antecedent Facts

The court of origin (Regional Trial Court of Makati, Branch 63, presided by Judge Julio R.Logarta) narrated the facts it culled from the evidence, as follows:

"Astra Realty Development Corporation owned a property located at No. 32 Jupiter St., Bel-Air Village, Makati. This property is being leased to Alelie A. Montojima under a 'bilateral' contract of lease. Alelie Montojima constructed a building in the leased premises and opened a restaurant (sic) under the name and style Aquatic Chef Seafoods Restaurant which however, did not prosper. Alelie Montojima then came to transact with (herein private respondent) Paul Geneve Entertainment Corporation and with the consent of the lessor Astra Realty they agreed on a Joint Venture Agreement (JVA) with the following terms: that upon the signing and due execution of the JVA, Alelie Montojima will be selling all her existing rights and interests over the leased premises in favor of (herein private respondent) for P3 Million pesos. The JVA was executed and signed on September 1, 1989. (Herein private respondent) paid Alelie Montojima the total amount ofP1,000,000.00. (Herein private respondent) took over thepossession of the leased premises, but before (herein private respondent) could open her business, a complaint was lodged by Bel-Air Village Homeowner's Association for violation of some municipal ordinances. Astra was also informed by the Bel-Air Village Association of the complaint and Alelie Montojima demanded (herein private respondent) to vacate the premises. Meanwhile, (herein private respondent), through Mrs. Milagros Izon, the president, was looking for a possible taker of the leased premises for a consideration, so she could recover the huge investments she had made. Thereafter, (herein private respondent) filed a civil case with prayer for preliminary injunction and writ of attachment against Montojima. A Temporary Restraining Order against Montojima was issued on March 22, 1990 while the writ of preliminary injunction was granted on November 29, 1991. Mrs. Milagros Izon was

introduced by her friend, Ed Calveria, to (herein petitioner) George Salonga. (Herein petitioner) Salonga was supposed to buy-out all the leaseholding rights of the (herein private respondent) in the amount of P5.5 Million. Since (herein petitioner) Salonga did not have the sum of money(,) he proposed instead to Mrs. Izon a joint venture enterprise between (herein petitioner) Salonga's company (herein petitioner) Solid Intertain and (herein private respondent). The idea was that (herein petitioner) Solid Intertain Corporation and (herein private respondent) Paul Geneve Corporation will forma new corporation and the name Solidisque Inc. (sic). The documents all in seven (7) sets were drafted by both parties' respective counsels, Atty. Garlitos for (herein petitioners) and Atty. Sadili for (herein private respondent). (Herein private respondent) through Mrs. Izon has signed the joint venture agreement. The document with extra copies were then delivered to (herein petitioner) Salonga for his signature and for notarization. The document together with the extra copies remained unsigned and unexecuted. With the memorandum of agreement still unsigned, not notarized and in the possession of (herein petitioner) Salonga, the latter transferred all his equipments and properties from his former business site, Metro Disco, to the subject premises in question after informing Mrs. Izon that he did not have a place where he can transfer histhings and asked that he be allowed to put it at No. 32 Jupiter St. Club Ibiza was thus opened and made operational on the leased premises in question under the name (of herein petitioner) Solid Intertain Corporation. No corporation under the name Solidisque (sic) Inc. was ever registered as agreed upon in the Securities and Exchange Commission. (Herein private respondent) was totally left out."[2]

To continue the story, we now quote from the respondent Court of Appeals:

"It appears that on November 26, 1991 herein private respondent (Paul Geneve Entertainment Corporation) filed a complaint for specific performance with temporary restraining order and preliminary injunction with prayer for damages against herein petitioners (George Salonga and Solid Intertain Corporation) to enforce a memorandumof agreement that was supposedly perfected between the parties (Rollo, p. 157). On November 29, 1991 petitioners received a copy of the summons and complaint, including a copy of the restraining order issued in the said civil case by public respondent, enjoining 'petitioners from further operating club Ibiza,' which order was referred by petitioners to Atty. Onofre G. Garlito, Jr., the former counsel of record (Petition, p. 8 paragraph 16).

During the scheduled hearing for injunction on December 4, 1991, only private respondents appeared despite notice to petitioners (Rollo, p. 31 Annex 'A'). For disobeying the restraining order issued on November 29, 1991, private respondent sought to cite petitioner for indirect criminal contempt (Rollo, p. 217) during the hearing on the civil case whereby Atty. Garlito, Jr. presented George F. Salonga in support of theopposition to the issuance of the Writ of Preliminary Injunction (Rollo, p. 125, Comment).

On December 9, 1991, petitioners and their counsel failed to appear on the date set for hearing the motion for issuance of the writ of preliminary injunction (Rollo, p. 38). Acting on private respondent's motion to submit the application for the writ of preliminary injunction, the (Regional Trial Court a quo) resolved to grant the same on December 12, 1991 (Rollo, p. 38, Decision, Annex 'A').

In the meantime, and despite two motions for extension of time to file an answer, (Petition, paragraphs 21 and 22) no answer was filed (Rollo, p. 39). However, (the) trial court received on June 16, 1992 (Petition, p. 10) an answer purportedly dated January 14, 1992.

On January 15, 1992, petitioner's counsel move (sic) to dissolve the injunction (Rollo, p.232) and set the hearing thereof on January 17, but on said latter date, only private respondent's counsel showed up (Rollo, p. 237).

Due to petitioner's failure to file an answer, private respondent submitted a third ex parte motion to declare petitioner, as defendant (before the Regional Trial Court), in default on March 4, 1992 (Rollo, p. 238) which was favorably acted upon on March 10, 1992 (Petition, paragraph 25).

On April 14, 1992, the impugned decision was handed down by (the Regional Trial Court) judge, thus:

"WHEREFORE, judgment is hereby rendered as follows:

1. The writ of preliminary injunction issued on December 12, 1991 is hereby made permanent;

2. Ordering defendants to sign, perform and execute the formalities of the Memorandum of Agreement (Exh. 'K'), pursuant to the Joint Venture Agreement (Exh. 'C');

3. Ordering defendants to undertake the creation and formation, organization and registration of a new corporation pursuant to and in accordance with Philippine Laws before the Securities and Exchange Commission, under the business name and style 'Solidisque Inc.' whose primary purpose shall be to operate a discotique (sic), club restaurant and/or other forms of business similar thereto onthe aforesaid leased premises setting the authorized capital stock of the Joint Venture Corporation to be registered at PESOS TEN MILLION (P10,000,000.00), twenty five (25 %) per cent of the total subscription as paid-upcapital, in compliance to paragraphs Nos. 1 and 2, page (3), of the Memorandum of Agreement;

4. Ordering defendants to perform and provide as its equity participation to SOLIDISQUE, INC. a total of SEVEN MILLION PESOS (P7,000,000,00), more or less consisting of audio and lighting equipment, inclusive of electrical and construction materials, among others, and to prepare a list of the aforesaid equipment, materials together with their present value and cost of improvementsto be introduced on the establishment to be operated on the leased premises and make such list available to the plaintiff the soonest possible time, in compliance to paragraph No. 3, of the Memorandum of Agreement;

5. Ordering defendants to faithfully and religiously perform, comply, fulfill and satisfy all the terms and conditions as embodied under paragraphs Nos. 4, 5, 5(a) and 5(b), 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, and 16, pages (3) to (6), of the Memorandum of Agreement, Exh. 'K';

6. Ordering the defendants to pay the plaintiff, jointly and severally the cash amount of P500,000.00 plus legal interest, computed from November 1, 1990, for being in default, until fully paid, pursuant to paragraph No. 6, page (4) of the MOA as ACTUAL DAMAGES;

7. Ordering the defendants to pay the plaintiff, jointly and severally the amount of P100,000.00 as exemplary damages;

8. Ordering the defendants jointly (and) severally to pay the amount of P100,000.00 attorney's fees; and

9. Costs of Suit.

SO ORDERED." (PETITION, pp. 2-3)

Petitioner claims that he received a copy of the decision only on October 7, 1992 (Petition, par. 3). Yet, a Motion for Reconsideration was filed on July 28, 1992 by his counsel (Petition, par. 24).

On September 25, 1992, herein petitioner George F. Salonga was adjudged guilty of civil contempt, thus:

'IN VIEW THEREOF, plaintiff's motion are hereby GRANTED and defendant George F. Salonga, is hereby adjudged guilty of indirect contempt of court. Accordingly, the (Regional Trial Court) hereby orders defendant George F. Salonga jointly and severally with the corporation to pay a fine of TWO THOUSAND (P2,000.00) PESOS), a day reckoned from November 1991 until he complies with the orders of the Court aforementioned and the default judgment. Such fine shall pertain to the benefit of plaintiff.

Let a warrant of arrest issue on defendant George F. Salonga, who shall be placed under the custody of the law until such time that he obeys the orders and judgment of the Court afore-mentioned (sic).

SO ORDERED.' (Rollo, pp. 115-116)

Four days later, an order for issuance of a writ of execution was issued over petitioner's plea for a period of five days within which to submit an opposition. (Rollo, p. 300)

On October 13, 1992, (the Court of Appeals) issued a Temporary Restraining Order enjoining public respondent (trial court) from enforcing the Decision dated April 14, 1992and the Order dated September 15, 1992 (Rollo, p. 45) and on November 3, 1992, a writ of preliminary injunction was issued by the (Court of Appeals) upon approval of the required bond (Rollo, p. 300)."[3]

Petitioners raised before the public respondent Court of Appeals the following arguments:

"1. The Judgment/Decision dated 14 April 1992 and the Order dated 25 September1992 issued in Civil Case No. 91-3261 must be annulled on the ground of fraud on the part of petitioners' previous counsel.

2. The public respondent judge never acquired jurisdiction over the person of petitioner Salonga in hearing the criminal contempt proceedings, thereby depriving petitioner Salonga of his basic constitutional right to due process and justifying the annulment of the Order dated 25 September 1992."[4]

The respondent Court disagreed with these arguments and ruled that:

"WHEREFORE, IN THE LIGHT OF THE FOREGOING, the petition is hereby DENIED. The Writ of Preliminary Injunction earlier issued by this Court is hereby LIFTED and SET ASIDE. Insofar as the fine for contempt is concerned, the same is reduced to only P1,000.00, pursuant to and as provided under Section 6, Rule 71 of theRules of Court."[5]

The Issues

Before us, petitioners allege the following "errors" in the challenged Decision of publicrespondent:

I

The public respondent Court of Appeals grievously erred in denying the Petition for Annulment of Default Judgment filed in CA-G.R. SP No. 29138 and disregarding the blatant, serious and culpable negligence and professional misconduct of petitioners' previous counsel amounting to deprivation of due process of law.

II

The public respondent Court of Appeals committed grave and serious reversible error in merely reducing the fine for the indirect contempt instead of nullifying the entire contempt proceedings as having no basis in law and procedure."[6]

In the main, the issue is whether extrinsic fraud and denial of due process obtain in this caseto justify annulment of the default judgment rendered by the trial court against petitioners.

The Court's Ruling

The petition has no merit.

First Issue: Annulment of Judgment

Well-settled is the doctrine that "a judgment can be annulled only on two (2) grounds: (a)that the judgment is void for want of jurisdiction or lack of due process of law; or (b) that it hasbeen obtained by fraud."[7] Absent any of these grounds, a final and executory judgment cannotbe voided.

Petitioners George Salonga and Solid Intertain Corporation allege that the "inimical andantagonistic acts" of their counsel Atty. Onofre G. Garlitos constitute extrinsic fraud "entitlingthem to the remedy of annulment of the assailed Judgment/Decision dated 14 April 1992 and ofthe Order dated 25 September 1992" that they "may be afforded substantial justice and their dayin court."[8] These allegedly fraudulent acts of their previous counsel Garlitos in handling Civil

Case No. 91-3261 are:[9] (1) his "very late" arrival at the December 4, 1991 hearing tacklingprivate respondent's application for a Writ of Preliminary Injunction, arriving only after thetestimony of private respondent's witness; (2) his failure to appear at the December 9, 1991hearing "for purposes of submitting evidence/opposition to private respondent's aforementionedapplication for the issuance of a Writ of Preliminary Injunction, as a consequence of which saidprivate respondent's application was deemed 'submitted for resolution' x x x" by the trial judge;(3) his failure to appear on the date he himself requested, January 17, 1992, for the hearing ofthe Motion for Dissolution of Injunction he had filed on behalf of petitioners; (4) his failure to filean answer within the period required by the Rules of Court, which resulted in a decision bydefault in favor of private respondents; (5) his failure to appear on the date he requested forhearing petitioners' Motion for Reconsideration on July 8, 1992, as a result of which the motionwas considered submitted for resolution since only the counsel for private respondent waspresent; and (6) his failure to appear at the August 26, 1992 hearing during which the counsel forprivate respondent successfully obtained denial of the aforementioned motion.

No Extrinsic Fraud

Jurisprudence teaches us that "(i)n order for fraud to serve as a basis for the annulment of ajudgment, it must be extrinsic or collateral in character, otherwise there would be no end tolitigations. Extrinsic fraud refers to any fraudulent act of the prevailing party which is committedoutside the trial of the case, whereby the defeated party has been prevented from exhibiting fullyhis side of the case, by fraud or deception practised on him by his opponent." [10] Thus, it "refers tosome act or conduct of the prevailing party which has prevented the aggrieved party from havinga trial or presenting his case to the court, or was used to procure judgment without a fairsubmission of the controversy. x x x It must be distinguished from intrinsic fraud which refers toacts of a party at a trial which prevented a fair and just determination of the case and which couldhave been litigated and determined at the trial or adjudication of the case."[11]

The petitioners argue that "(e)xtrinsic fraud justifying the annulment of a judgment shouldnot and cannot be solely limited to acts attributable to the adverse party. It likewise includesinstances wherein a party was prevented from defending the action brought against him onaccount of the delinquent acts and omissions of his attorney. In other words, there is extrinsicfraud when a party was prevented from having presented all of his case to the court as when thelawyer connives at his defeat or corruptly sells out his client's interests (Laxamana vs. Court ofAppeals, 87 SCRA 48)."[12] (Underscoring found in the original.)

We disagree. The nature of extrinsic fraud, as discussed previously, necessarily requiresthat its cause be traceable to some fraudulent act of the prevailing party committed outside thetrial of the case. The Court notes that the previously enumerated negligent acts attributed topetitioner's former counsel Garlitos were in no way shown or alleged to have been caused byprivate respondents. Atty. Garlitos neither connived nor sold out to the latter.

Laxamana vs. Court of Appeals[13] cited by petitioners does not support their cause becauseits factual background is different from the instant case. In that case, the Court found that"Laxamana had directly charged his lawyer with having deliberately failed to appear at the trialafter having received P1,500 from Mallari. He introduced evidence in support of that charge. Hislawyer, although subpoenaed by the Mallari plaintiffs, did not testify to deny that charge." Thus,the fraudulent act of the aggrieved parties' counsel in the cited case was clearly caused by anddone in connivance with the prevailing party. In contrast, Atty. Garlitos, in the instant case, wasnot even charged with, much less shown guilty of, having neglected his duties to his clients by

reason of any compensatory arrangement or collusion with Private Respondent Paul GeneveEntertainment Corporation. In fact, petitioners never alleged that private respondent hadanything to do with petitioner's counsel Garlitos. Since there was no extrinsic fraud, the assailedjudgment may not be annulled on such ground.[14]

Negligence of Counsel Binds Client

On the other hand, it is well-settled that the negligence of counsel binds the client. [15] This isbased on the rule that any act performed by a lawyer within the scope of his general or impliedauthority is regarded as an act of his client. [16] Consequently, the mistake or negligence ofpetitioners' counsel may result in the rendition of an unfavorable judgment against them.[17]

Exceptions to the foregoing have been recognized by the Court in cases where reckless orgross negligence of counsel deprives the client of due process of law,[18] or when its application"results in the outright deprivation of one's property through a technicality." [19] None of theseexceptions has been sufficiently shown in the present case.

Gross or Simple Negligence?

Petitioners argue that their previous counsel Garlitos was guilty of gross negligence inhandling their case before the trial court and, thus, they should not be bound by theconsequences of his said negligence. They insist on the applicability of Legarda vs. Court ofAppeals[20] asserting that "it sets the correct directions upon which the Public Respondent Courtof Appeals should have steered its course."[21] We are not persuaded. The factual scenarioin Legarda is not on all fours with the case before us. The counsel in the cited case was foundgrossly negligent because of the sheer absence of real effort on his part to defend his client'scause. In the present case, however, counsel Garlitos was merely guilty of simplenegligence. Although his failure to file a timely answer had led to a judgment by default againsthis clients, his efforts at defending their cause were palpably real, albeit bereft of zeal. Assuccinctly stated by the Court of Appeals:

"x x x It may be noted that in the case of Legarda vs. Court of Appeals, supra, counsel for petitioner Legarda merely entered his appearance and filed a motion for extension oftime to file answer before the lower court. When the lower court declared petitioner Legarda as in default and subsequently issued a judgment by default, her counsel did nothing and allowed the judgment to become final and executory. Upon the prodding of petitioner Legarda, her counsel filed a petition for annulment of judgment before the (Court of Appeals). When the (Court of Appeals) denied the petition, her counsel allowed the judgment to become final and executory. Petitioner Legarda's counsel was,therefore, adjudged as grossly negligent by the Supreme Court. The case at bar is different. Herein petitioners' previous counsel presented petitioner Salonga as witness to oppose the issuance of the writ of preliminary injunction. When the writ of injunction was issued by (the trial court), petitioners' counsel filed a motion to dissolve the writ. When the assailed judgment was rendered by (the trial court), petitioners' counsel filed a motion for reconsideration. Petitioners' previous counsel was present during oneof the hearings of the motion for contempt and even filed and objection/comment to the private respondent's offer of exhibits in support of their motion. Thus, while petitioners' counsel failed to file some pleadings or to attend other hearings before (the trial court), (the Court of Appeals) holds that such negligence is purely simple, not gross as would amount to a deprivation of petitioner's right to due process of law."[22]

No Denial of Due Process

The Constitution mandates that "(n)o person shall be deprived of life, liberty, or propertywithout due process of law x x x"[23] The "essence of due process is to be found in the reasonableopportunity to be heard and submit any evidence one may have in support of one's defense. 'Tobe heard' does not mean only verbal arguments in court; one may be heard also throughpleadings. Where opportunity to be heard, either through oral arguments or pleadings, isaccorded, there is no denial of procedural due process." [24] Hence, due process was neverdenied petitioners Salonga and Solid Intertain Corporation because the trial court had given thema reasonable opportunity to be heard and present their side in all the proceedings before it. Therecords reveal that the judgment by default was rendered by the trial court in faithful compliancewith Rule 18 of the Rules of Court and the constitutional guaranty of due process.

In fact, petitioners were declared in default only on the third ex parte motion filed by privaterespondents on March 4, 1992.[25] Acting on the private respondents' first motion to declarepetitioners in default for their failure to appear at the hearing of the Motion for Dissolution ofInjunction, on the hearing date petitioners themselves requested, the trial court issued an orderdated February 3, 1992, which read as follows:

"After examination of the record this court finds that the interest of justice would be better served by giving the parties opportunities to ventilate their respective positions.

Furthermore, this Court finds that motion to Declare Defendants (herein petitioners) in Default prematurely filed considering that (herein petitioners) filed a Motion for Extension of Time to File Responsive Pleading on December 27, 1991, which was granted by the Court."

The failure of petitioners and their counsel Garlitos to take full advantage of this opportunityto be heard does not change the fact that they were accorded such opportunity.

To agree with petitioners' tenuous argument would enable any defeated party to renderinutile any default judgment through the simple expedient of alleging negligence of counsel infiling a timely answer. This Court will not countenance such a farce which contradicts long-settled doctrines of trial and procedure. As correctly stated by Respondent Court of Appeals:

"Neither can petitioners claim that they were denied of their day in court. It is axiomatic that as long as the parties were given the chance to present their case or defense before judgment was rendered, the demands of due process are sufficiently met. In the case at bar, petitioners were served with copies of the summons and the complaint. Petitioners were allowed to present their evidence in support of their opposition to the writ of preliminary injunction. They were given the chance to oppose the motion to cite them in contempt of court. Counsel for petitioners had filed before respondent court several pleadings and had attended hearings of the case. Indeed, it cannot be gainsaid that petitioners were given the opportunity to be heard.

xxx xxx xxx

Corollarily, the records of the case would suggest that petitioner Salonga is also negligent. For instance, petitioner Salonga knew that the initial hearing of the

application for issuance of writ of injunction was set on December 4, 1991 but he did notattend. His former counsel attended, albeit he arrived late. During the hearing on December 6, 1991, petitioner Salonga arrived late such that (the Regional Trial Court), the private respondent and his former counsel had to wait for him. After giving his testimonies on December 6, 1991, petitioner Salonga knew that the next hearing for injunction was on December 9, 1991 but he, as well as his counsel, did not arrive on said date. (The Court of Appeals) also notes that the motion for dissolution of injunctionfiled by petitioner's former counsel was verified by petitioner Salonga. Therefore, petitioner Salonga must have known that as requested by his counsel, the motion for dissolution was set for hearing on January 17, 1972, yet he and his counsel again failedto appear during the hearing. Petitioner Salonga knew about private respondent's motion to cite him in contempt of court but he did not attend the hearing of said motion. The above incidents clearly manifest the in officiousness or lack of zeal on the part of petitioner Salonga in pursuing his defense."[26]

Parenthetically, petitioners admit that on July 22, 1992, Atty. Garlitos was able to file a timelyMotion for Reconsideration on their behalf which was set for hearing by the trial court. [27]The factthat petitioners and their counsel Garlitos failed to attend said hearing and adduce evidence ontheir behalf is of no moment. What is important is that they were given the chance to doso. "Indeed, deprivation of due process cannot be successfully invoked where a party was giventhe chance to be heard in his motion for reconsideration."[28]

Memorandum of Agreement Consented to by Petitioners

Petitioners further attack the validity of the decision of the trial court by contending that they"were unjustly and unlawfully compelled to pay the Private Respondent Corporation the amountof five hundred thousand pesos (P500,000.00), compelled to make Private RespondentCorporation a partner of the petitioners in the latter's business under the name and style'Solidisque, Inc.' and to provide the former with thirty percent (30%) equity participation inexchange for the alleged three million pesos (P3,000,000.00) capital contribution, compelled toprovide as petitioners' alleged equity participation in the supposed Joint Venture with PrivateRespondent Corporation the exorbitant amount of seven million pesos (P7,000,000.00)consisting of audio and lightning (sic) equipment, electrical and construction materials and otherassets necessary in the creation and construction of a discoteque, (sic) and, compelled to enterinto a Joint Venture with the Private Respondent Corporation, all on the basis of an unsignedMemorandum of Agreement x x x"[29] Thus, petitioners' contention is based on their alleged lackof consent to the Memorandum of Agreement.

Prevailing jurisprudence uniformly holds that findings of fact of the trial court, particularlywhen affirmed by the Court of Appeals, are binding upon this Court.[30] Hence, the factual findingof the trial court affirmed by the respondent Court of Appeals as to the perfection of theMemorandum of Agreement between petitioners and private respondent, is binding on this Court.This is more than sufficient to debunk petitioners' contention.

Understood properly, it is clear that the lower courts are not compelling petitioners to enterinto any contract or to pay any sum of money. The courts are merely enforcing the terms of theagreement voluntarily entered into by the parties, particularly petitioners.

Second Issue: Petitioners Guilty of Indirect Contempt?

Petitioners argue that the trial court never acquired jurisdiction over the person of PetitionerSalonga because the contempt proceedings were "wrongly initiated." Citing Slade Perkins vs.Director of Prisons,[31] they contend that the Motion to Cite for Indirect Contempt filed by privaterespondent partakes of the nature of criminal contempt as distinguished from civil contempt;hence, the mode of procedure and rules of evidence in criminal prosecutions should apply.[32]

The Court is not persuaded. The distinction between civil and criminal contempt made bythis Court in Slade Perkins does not support petitioners' contention. As we stated in SladePerkins, the "question of whether the contempt for which the petitioner was committed in jail iscivil or criminal, does not affect either the jurisdiction or the power of the court in thepremises."[33] The Court of Appeals correctly ruled that "(in) indirect contempt proceedings suchas in the case at bar, a mere motion to that effect will suffice for the (trial court) to acquirejurisdiction."[34] For after all, Section 3 of the Rules of Court requires merely that "a charge inwriting has been filed, and an opportunity given to the accused to be heard by himself orcounsel" before one guilty of indirect contempt may be punished therefor. The conclusion ofRespondent Court of Appeals was based on the pronouncement of this Court in Gavieres vs.Falcis:

"A court's power to punish for contempt is primarily self-preservative, in the exercise of which the interest of private parties -- be they litigants or not in the case in which it is invoked -- is at best only a coincidental, not a necessary or an indispensable, factor. A citation for indirect contempt issued by the Court itself, even if based on information only privately or informally communicated to the court, operates as the written charge prescribed by the Rule and if duly and regularly heard, makes a resulting contempt order no less valid than if it had been rendered upon formal charges preferred by a party-litigant. Indeed, it has been held that such charges may be made, not only by the court or the prosecuting office, but 'x x x even by a private person.'"[35]

Incidentally, as aptly observed by respondent appellate court, the order for petitioners to paya fine inuring to the benefit of private respondent finds support in Slade Perkins, viz.:

"Where the punishment is by fine directed to be paid to a party in the nature of damagesfor the wrong inflicted or by imprisonment as a coercive measure to enforce the performance of some act for the benefit of the party or in aid of the final judgment or decree rendered in his behalf, the contempt judgment will, if made before final decree, be treated as in the nature of an interlocutory order, or, if made after final decree, as remedial in nature, and may be reviewed only on appeal from the final decree, or in such other mode as in appropriate to the review of judgments in civil cases."[36]

Finally, this Decision is without prejudice to whatever cause of action petitioners may have inlaw against their former counsel Garlitos. Elementary dictates of due process prevent us fromacting against him in this proceeding.

WHEREFORE, premises considered, the petition is hereby DENIED for lack of merit, for itsfailure to show any reversible error on the part of Respondent Court. The assailed Decisionis AFFIRMED in toto. No costs.

SO ORDERED.

Narvasa, C.J., (Chairman), Davide, Jr., Melo, and Francisco, JJ., concur.

[G.R. No. 110399. August 15, 1997]

SAN MIGUEL CORPORATION SUPERVISORS AND EXEMPT UNION AND ERNESTO L.PONCE, President, petitioners, vs. HONARABLE BIENVENIDO E. LAGUESMA INHIS CAPACITY AS UNDERSECRETARY OF LABOR AND EMPLOYMENT,HONORABLE DANILO L. REYNANTE IN HIS CAPACITY AS MED-ARBITER ANDSAN MIGUEL CORPORATION, respondents.

D E C I S I O N

ROMERO, J.:

This is a Petition for Certiorari with Prayer for the Issuance of Preliminary Injunction seekingto reverse and set aside the Order of public respondent, Undersecretary of the Department ofLabor and Employment, Bienvenido E. Laguesma, dated March 11, 1993, in Case No. OS MA A-2-70-91[1] entitled “In Re: Petition for Certification Election Among the Supervisory and ExemptEmployees of the San Miguel Corporation Magnolia Poultry Plants of Cabuyao, San Fernandoand Otis, San Miguel Corporation Supervisors and Exempt Union, Petitioner.” The Orderexcluded the employees under supervisory levels 3 and 4 and the so-called exempt employeesfrom the proposed bargaining unit and ruled out their participation in the certification election.

The antecedent facts are undisputed:

On October 5, 1990, petitioner union filed before the Department of Labor and Employment(DOLE) a Petition for District Certification or Certification Election among the supervisors andexempt employees of the SMC Magnolia Poultry Products Plants of Cabuyao, San Fernando andOtis.

On December 19, 1990, Med-Arbiter Danilo L. Reynante issued an Order ordering theconduct of certification among the supervisors and exempt employees of the SMC MagnoliaPoultry Products Plants of Cabuyao, San Fernando and Otis as one bargaining unit.

On January 18, 1991, respondent San Miguel Corporation filed a Notice of Appeal withMemorandum on Appeal, pointing out, among others, the Med-Arbiter’s error in groupingtogether all three (3) separate plants, Otis, Cabuyao and San Fernando, into one bargaining unit,and in including supervisory levels 3 and above whose positions are confidential in nature.

On July 23, 1991, the public respondent, Undersecretary Laguesma, granted respondentcompany’s Appeal and ordered the remand of the case to the Med-Arbiter of origin fordetermination of the true classification of each of the employees sought to be included in theappropriate bargaining unit.

Upon petitioner-union’s motion dated August 7, 1991, Undersecretary Laguesma grantedthe reconsideration prayed for on September 3, 1991 and directed the conduct of separate

certification elections among the supervisors ranked as supervisory levels 1 to 4 (S1 to S4) andthe exempt employees in each of the three plants at Cabuyao, San Fernando and Otis.

On September 21, 1991, respondent company, San Miguel Corporation filed a Motion forReconsideration with Motion to suspend proceedings.

On March 11, 1993, an Order was issued by the public respondent granting the Motion,citing the doctrine enunciated in Philips Industrial Development, Inc. v. NLRC[2] case. Said Orderreads in part:

“x x x Confidential employees, like managerial employees, are not allowed to form, join or assist a labor union for purposes of collective bargaining.

In this case, S3 and S4 and the so-called exempt employees are admittedly confidential employees and therefore, they are not allowed to form, join or assist a labor union for purposes of collective bargaining following the above court’s ruling. Consequently, they are not allowed to participate in the certification election.

WHEREFORE, the motion is hereby granted and the Decision of this Office dated 03 September 1991 is hereby modified to the extent that employees under supervisory levels 3 and 4 (S3 and S4) and the so-called exempt employees are not allowed to join the proposed bargaining unit and are therefore excluded from those who could participate in the certification election.” [3]

Hence this petition.

For resolution in this case are the following issues:

1. Whether Supervisory employees 3 and 4 and the exempt employees of the companyare considered confidential employees, hence ineligible from joining a union.

2. If they are not confidential employees, do the employees of the three plantsconstitute an appropriate single bargaining unit.

On the first issue, this Court rules that said employees do not fall within the term“confidential employees” who may be prohibited from joining a union.

There is no question that the said employees, supervisors and the exempt employees, arenot vested with the powers and prerogatives to lay down and execute management policiesand/or to hire, transfer, suspend, layoff, recall, discharge or dismiss employees. They are,therefore, not qualified to be classified as managerial employees who, under Article 245 [4] of theLabor Code, are not eligible to join, assist or form any labor organization. In the very sameprovision, they are not allowed membership in a labor organization of the rank-and-fileemployees but may join, assist or form separate labor organizations of their own. The onlyquestion that need be addressed is whether these employees are properly classified asconfidential employees or not.

Confidential employees are those who (1) assist or act in a confidential capacity, (2) topersons who formulate, determine, and effectuate management policies in the field of laborrelations.[5] The two criteria are cumulative, and both must be met if an employee is to beconsidered a confidential employee – that is, the confidential relationship must exist between the

employees and his supervisor, and the supervisor must handle the prescribed responsibilitiesrelating to labor relations.[6]

The exclusion from bargaining units of employees who, in the normal course of their duties,become aware of management policies relating to labor relations is a principal objective soughtto be accomplished by the “confidential employee rule.” The broad rationale behind this rule isthat employees should not be placed in a position involving a potential conflict of interests.[7] “Management should not be required to handle labor relations matters through employees whoare represented by the union with the company is required to deal and who in the normalperformance of their duties may obtain advance information of the company’s position withregard to contract negotiations, the disposition of grievances, or other labor relations matters.” [8]

There have been ample precedents in this regard, thus in Bulletin Publishing Company v.Hon. Augusto Sanchez,[9] the Court held that “if these managerial employees would belong to orbe affiliated with a Union, the latter might not be assured of their loyalty to the Union in view ofevident conflict of interest. The Union can also become company-dominated with the presenceof managerial employees in Union membership.” The same rationale was applied to confidentialemployees in “Golden Farms, Inc. v. Ferrer-Calleja”[10] and in the more recent case of “PhilipsIndustrial Development, Inc. v. NLRC”[11] which held that confidential employees, by the verynature of their functions, assist and act in a confidential capacity to, or have access toconfidential matters of, persons who exercise managerial functions in the field of laborrelations. Therefore, the rationale behind the ineligibility of managerial employees to form, assistor join a labor union was held equally applicable to them.[12]

An important element of the “confidential employee rule” is the employee’s need to use laborrelations information. Thus, in determining the confidentiality of certain employees, a keyquestions frequently considered is the employees’ necessary access to confidential laborrelations information.[13]

It is the contention of respondent corporation that Supervisory employees 3 and 4 and theexempt employees come within the meaning of the term “confidential employees” primarilybecause they answered in the affirmative when asked “Do you handle confidential data ordocuments?” in the Position Questionnaires submitted by the Union.[14] In the samequestionnaire, however, it was also stated that the confidential information handled byquestioned employees relate to product formulation, product standards and product specificationwhich by no means relate to “labor relations.”[15]

Granting arguendo that an employee has access to confidential labor relations informationbut such is merely incidental to his duties and knowledge thereof is not necessary in theperformance of such duties, said access does not render the employee a confidential employee.[16] “If access to confidential labor relations information is to be a factor in the determination of anemployee’s confidential status, such information must relate to the employer’s labor relationspolicies. Thus, an employee of a labor union, or of a management association, must haveaccess to confidential labor information with respect to his employer, the union, or theassociation, to be regarded a confidential employee, and knowledge of labor relationsinformation pertaining to the companies with which the union deals, or which the associationrepresents, will not clause an employee to be excluded from the bargaining unit representingemployees of the union or association.”[17] “Access to information which is regarded by theemployer to be confidential from the business standpoint, such as financial information [18] ortechnical trade secrets, will not render an employee a confidential employee.”[19]

Herein listed are the functions of supervisors 3 and higher:

1. To undertake decisions to discontinue/temporarily stop shift operations whensituations require.

2. To effectively oversee the quality control function at the processing lines in thestorage of chicken and other products.

3. To administer efficient system of evaluation of products in the outlets.

4. To be directly responsible for the recall, holding and rejection of direct manufacturingmaterials.

5. To recommend and initiate actions in the maintenance of sanitation and hygienethroughout the plant.[20]

It is evident that whatever confidential data the questioned employees may handle will haveto relate to their functions. From the foregoing functions, it can be gleaned that the confidentialinformation said employees have access to concern the employer’s internal businessoperations. As held in Westinghouse Electric Corporation v . National Labor Relations Board,[21] “an employee may not be excluded from appropriate bargaining unit merely because he hasaccess to confidential information concerning employer’s internal business operations and whichis not related to the field of labor relations.”

It must be borne in mind that Section 3 of Article XIII of the 1987 Constitution mandates theState to guarantee to “all” workers the right to self-organization. Hence, confidential employeeswho may be excluded from bargaining unit must be strictly defined so as not to needlesslydeprive many employees of their right bargain collectively through representatives of theirchoosing.[22]

In the case at bar, supervisors 3 and above may not be considered confidential employeesmerely because they handle “confidential data” as such must first be strictly classified aspertaining to labor relations for them to fall under said restrictions. The information they handleare properly classifiable as technical and internal business operations data which, to our mind,has no relevance to negotiations and settlement of grievances wherein the interests of a unionand the management are invariably adversarial. Since the employees are not classifiable underthe confidential type, this Court rules that they may appropriately form a bargaining unit forpurposes of collective bargaining. Furthermore, even assuming that they are confidentialemployees, jurisprudence has established that there is no legal prohibition against confidentialemployees who are not performing managerial functions to form and join a union.[23]

In this connection, the issue of whether the employees of San Miguel Corporation MagnoliaPoultry Products Plants of Cabuyao, San Fernando, and Otis constitute a single bargaining unitneeds to be threshed out.

It is the contention of the petitioner union that the creation of three (3) separate bargainingunits, one each for Cabuyao Otis and San Fernando as ruled by the respondent Undersecretary,is contrary to the one-company, one-union policy. It adds that Supervisors level 1 to 4 andexempt employees of the three plants have a similarity or a community of interests.

This Court finds the contention of the petitioner meritorious.

An appropriate bargaining unit may be defined as “a group of employees of a givenemployer, comprised of all or less than all of the entire body of employees, which the collectiveinterest of all the employees, consistent with equity to the employer, indicate to be best suited toserve the reciprocal rights and duties of the parties under the collective bargaining provisions ofthe law.”[24]

A unit to be appropriate must effect a grouping of employees who have substantial, mutualinterests in wages, hours, working conditions and other subjects of collective bargaining. [25]

It is readily seen that the employees in the instant case have “community or mutuality ofinterest,” which is the standard in determining the proper constituency of a collective bargainingunit.[26] It is undisputed that they all belong to the Magnolia Poultry Division of San MiguelCorporation. This means that, although they belong to three different plants, they perform workof the same nature, receive the same wages and compensation, and most importantly, share acommon stake in concerted activities.

In light of these considerations, the Solicitor General has opined that separate bargainingunits in the three different plants of the division will fragmentize the employees of the saiddivision, thus greatly diminishing their bargaining leverage. Any concerted activity held againstthe private respondent for a labor grievance in one bargaining unit will, in all probability, notcreate much impact on the operations of the private respondent. The two other plants still inoperation can well step up their production and make up for the slack caused by the bargainingunit engaged in the concerted activity. This situation will clearly frustrate the provisions of theLabor Code and the Mandate of the Constitution.[27]

The fact that the three plants are located in three different places, namely, in Cabuyao,Laguna, in Otis, Pandacan, Metro Manila, and in San Fernando, Pampanga isimmaterial. Geographical location can be completely disregarded if the communal or mutualinterests of the employees are not sacrificed as demonstrated in UP v. Calleja-Ferrer where allnon-academic rank and file employees of the University of the Philippines inDiliman, QuezonCity, Padre Faura, Manila, Los Baños, Laguna and the Visayas were allowed to participate in acertification election. We rule that the distance among the three plants is not productive ofinsurmountable difficulties in the administration of union affairs. Neither are there regionaldifferences that are likely to impede the operations of a single bargaining representative.

WHEREFORE, the assailed Order of March 11, 1993 is hereby SET ASIDE and the Order ofthe Med-Arbiter on December 19, 1990 is REINSTATED under which a certification electionamong the supervisors (level 1 to 4) and exempt employees of the San Miguel CorporationMagnolia Poultry Products Plants of Cabuyao, San Fernando, and Otis as one bargaining unit isordered conducted.

SO ORDERED.

Regalado, (Chairman), Puno, Mendoza, and Torres, Jr., JJ., concur.

A.C. No. 9532, October 08, 2013

MARIA CRISTINA ZABALJAUREGUI PITCHER, Complainant, v. ATTY. RUSTICO B.GAGATE,Respondent.

D E C I S I O N

PERLAS-BERNABE, J.:

For the Court's resolution is an administrative complaint1 filed by Maria Cristina Zabaljauregui Pitcher (complainant) against Atty. Rustico B. Gagate (respondent), charging him for gross ignorance of the law and unethical practice of law.

The Facts

Complainant claimed to be the legal wife of David B. Pitcher (David),2 a British national who passed away on June 18, 2004.3 Prior to his death, David was engaged in business in the Philippines and owned, among others, 40% of the shareholdings in Consulting Edge, Inc.4 (Consulting Edge), a domestic corporation. In order to settle the affairs of her deceased husband, complainant engaged the services of respondent.5cralawlibrary

On June 22, 2004, complainant and respondent met with Katherine Moscoso Bantegui (Bantegui),6 a major stockholder of Consulting Edge,7 in order to discuss the settlement of David’s interest in the company.8 They agreed to another meeting which was, however, postponed by Bantegui. Suspecting that the latter was merely stalling for time in order to hide something, respondent insisted that the appointment proceed as scheduled.9cralawlibrary

Eventually, the parties agreed to meet at the company premises on June 28, 2004. However, prior to the scheduled meeting, complainant was prevailed upon by respondent to put a paper seal on the door of the said premises, assuring her that the same was legal.10cralawlibrary

On the scheduled meeting, Bantegui expressed disappointment over the actions of complainant and respondent, which impelled her to just leave the matter for the court to settle. She then asked them to leave, locked the office and refused to give them a duplicate key.11cralawlibrary

Subsequently, however, respondent, without the consent of Bantegui, caused the change in the lock of the Consulting Edge office door,12 which prevented the employees thereof from entering and carrying on the operations of the company. This prompted Bantegui to file before the Office of the City Prosecutor of Makati (Prosecutor’s Office) a complaint for grave coercion against complainant and respondent.13 In turn, respondent advised complainant that criminal and civil cases should be initiated against Bantegui for the recovery of David's personal records/business interests in Consulting Edge.14 Thus, on January 17, 2005, the two entered into a Memorandum of Agreement,15whereby respondent undertook the filing of the cases against Bantegui, for which complainant paid the amount of P150,000.00 as acceptance fee and committed herself to pay respondent P1,000.00 for every court hearing.16cralawlibrary

On November 18, 2004, the Prosecutor’s Office issued a Resolution17 dated October 13, 2004, finding probable cause to charge complainant and respondent for grave coercion. The corresponding Information was filed before the Metropolitan Trial Court of Makati City, Branch 63,docketed as Criminal Case No. 337985 (grave coercion case), and, as a matter of course, warrants of arrest were issued against them.18 Due to the foregoing, respondent advised complainant to go into hiding until he had filed the necessary motions in court. Eventually, however, respondent abandoned the grave coercion case and stopped communicating with complainant.19 Failing to reach respondent despite diligent efforts,20 complainant filed the instant administrative case before the Integrated Bar of the Philippines (IBP) - Commission on Bar Discipline (CBD), docketed as CBD Case No. 06-1689.

Despite a directive21 from the IBP-CBD, respondent failed to file his answer to the complaint. Thecase was set for mandatory conference on November 24, 2006,22 which was reset twice,23 on

January 12, 2007 and February 2, 2007, due to the absence of respondent. The last notice sent to respondent, however, was returned unserved for the reason “moved out.”24 In view thereof, Investigating Commissioner Tranquil S. Salvador III declared the mandatory conference terminated and required the parties to submit their position papers, supporting documents and affidavits.25cralawlibrary

The IBP’s Report and Recommendation

On March 18, 2009, Investigating Commissioner Pedro A. Magpayo, Jr. (Commissioner Magpayo) issued a Report and Recommendation,26 observing that respondent failed to safeguard complainant's legitimate interest and abandoned her in the grave coercion case. Commissioner Magpayo pointed out that Bantegui is not legally obliged to honor complainant as subrogee of David because complainant has yet to establish her kinship with David and, consequently, her interest in Consulting Edge.27 Hence, the actions taken by respondent, such asthe placing of paper seal on the door of the company premises and the changing of its lock, wereall uncalled for. Worse, when faced with the counter legal measures to his actions, he abandonedhis client's cause.28 Commissioner Magpayo found that respondent’s acts evinced a lack of adequate preparation and mastery of the applicable laws on his part, in violation of Canon 529 of the Code of Professional Responsibity (Code), warranting his suspension from the practice of law for a period of six months.30cralawlibrary

The IBP Board of Governors adopted and approved the aforementioned Report and Recommendation in Resolution No. XX-2011-261 dated November 19, 2011 (November 19, 2011Resolution), finding the same to be fully supported by the evidence on record and the applicable laws and rules.31cralawlibrary

In a Resolution32 dated October 8, 2012, the Court noted the Notice of the IBP’s November 19, 2011 Resolution, and referred the case to the Office of the Bar Confidant (OBC) for evaluation, report and recommendation.33cralawlibrary

The OBC's Report and Recommendation

On February 11, 2013, the OBC submitted a Report and Recommendation34 dated February 6, 2013, concluding that respondent grossly neglected his duties to his client and failed to safeguard the latter's rights and interests in wanton disregard of his duties as a lawyer.35 It deemed that the six-month suspension from the practice of law as suggested by the IBP was an insufficient penalty and, in lieu thereof, recommended that respondent be suspended for three years.36 Likewise, it ordered respondent to return the P150,000.00 he received from complainant as acceptance fee.37cralawlibrary

The Court's Ruling

After a careful perusal of the records, the Court concurs with and adopts the findings and conclusions of the OBC.

The Court has repeatedly emphasized that the relationship between a lawyer and his client is one imbued with utmost trust and confidence. In this regard, clients are led to expect that lawyerswould be ever-mindful of their cause and accordingly exercise the required degree of diligence inhandling their affairs. For his part, the lawyer is expected to maintain at all times a high standard of legal proficiency, and to devote his full attention, skill, and competence to the case, regardless of its importance and whether he accepts it for a fee or for free.38 To this end, he is enjoined to employ only fair and honest means to attain lawful objectives.39 These principles are embodied inCanon 17, Rule 18.03 of Canon 18, and Rule 19.01 of Canon 19 of the Code which respectively state:chanroblesvirtualawlibraryCANON 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 18 – A lawyer shall serve his client with competence and diligence.

x x x x

Rule 18.03 – A lawyer shall not neglect a legal matter entrusted to him, and his negligence in connection therewith shall render him liable.

x x x x

CANON 19 – A lawyer shall represent his client with zeal within the bounds of the law.

Rule 19.01 – A lawyer shall employ only fair and honest means to attain the lawful objectives of his client and shall not present, participate in presenting or threaten to present unfounded criminal charges to obtain an improper advantage in any case or proceeding.

x x x xKeeping with the foregoing rules, the Court finds that respondent failed to exercise the required diligence in handling complainant’s cause since he: first, failed to represent her competently anddiligently by acting and proffering professional advice beyond the proper bounds of law; and,second, abandoned his client’s cause while the grave coercion case against them was pending.

Anent the first infraction, it bears emphasis that complainant's right over the properties of her deceased husband, David, has yet to be sufficiently established. As such, the high-handed actiontaken by respondent to enforce complainant's claim of ownership over the latter’s interest in Consulting Edge – i.e., causing the change of the office door lock which thereby prevented the free ingress and egress of the employees of the said company – was highly improper. Verily, a person cannot take the law into his own hands, regardless of the merits of his theory. In the samelight, respondent's act of advising complainant to go into hiding in order to evade arrest in the criminal case can hardly be maintained as proper legal advice since the same constitutes transgression of the ordinary processes of law. By virtue of the foregoing, respondent clearly violated his duty to his client to use peaceful and lawful methods in seeking justice,40 in violation of Rule 19.01, Canon 19 of the Code as above-quoted. To note further, since such courses of action were not only improper but also erroneous, respondent equally failed to serve his client with competence and diligence in violation of Canon 18 of the Code. In the same regard, he also remained unmindful of his client’s trust in him – in particular, her trust that respondent would only provide her with the proper legal advice in pursuing her interests – thereby violating Canon 17 of the Code.

With respect to the second infraction, records definitively bear out that respondent completely abandoned complainant during the pendency of the grave coercion case against them; this notwithstanding petitioner’s efforts to reach him as well as his purported receipt of the P150,000.00 acceptance fee. It is hornbook principle that a lawyer’s duty of competence and diligence includes not merely reviewing the cases entrusted to his care or giving sound legal advice, but also consists of properly representing the client before any court or tribunal, attendingscheduled hearings or conferences, preparing and filing the required pleadings, prosecuting the handled cases with reasonable dispatch, and urging their termination even without prodding fromthe client or the court.41 Hence, considering respondent’s gross and inexcusable neglect by leaving his client totally unrepresented in a criminal case, it cannot be doubted that he violated Canon 17, Rule 18.03 of Canon 18, and Rule 19.01 of Canon 19 of the Code.

In addition, it must be pointed out that respondent failed to file his answer to the complaint despite due notice. This demonstrates not only his lack of responsibility but also his lack of interest in clearing his name, which, as case law directs, is constitutive of an implied admission ofthe charges leveled against him.42 In fine, respondent should be held administratively liable for his infractions as herein discussed. That said, the Court now proceeds to determine the appropriate penalty to be imposed against respondent.

Several cases show that lawyers who have been held liable for gross negligence for infractions

similar to those committed of respondent were suspended from the practice of law for a period of two years. In Jinon v. Jiz,43 a lawyer who neglected his client's case, misappropriated the client's funds and disobeyed the IBP’s directives to submit his pleadings and attend the hearings was suspended from the practice of law for two years. In Small v. Banares,44 the Court meted a similar penalty against a lawyer who failed to render any legal service even after receiving money from the complainant; to return the money and documents he received despite demand; to update his client on the status of her case and respond to her requests for information; and to file an answer and attend the mandatory conference before the IBP. Also, in Villanueva v. Gonzales,45 a lawyer who neglected complainant’s cause; refused to immediately account for his client’s money and to return the documents received; failed to update his client on the status of her case and to respond to her requests for information; and failed to submit his answer and to attend the mandatory conference before the IBP was suspended from the practice of law for two years. However, the Court observes that, in the present case, complainant was subjected to a graver injury as she was prosecuted for the crime of grave coercion largely due to the improper and erroneous advice of respondent. Were it not for respondent’s imprudent counseling, not to mention his act of abandoning his client during the proceedings, complainant would not have unduly suffered the harbors of a criminal prosecution. Thus, considering the superior degree of the prejudice caused to complainant, the Court finds it apt to impose against respondent a higherpenalty of suspension from the practice of law for a period of three years as recommended by the OBC.

In the same light, the Court sustains the OBC's recommendation for the return of the P150,000.00 acceptance fee received by respondent from complainant since the same is intrinsically linked to his professional engagement. While the Court has previously held that disciplinary proceedings should only revolve around the determination of the respondent-lawyers's administrative and not his civil liability,46 it must be clarified that this rule remains applicable only to claimed liabilities which are purely civil in nature - for instance, when the claim involves moneys received by the lawyer from his client in a transaction separate and distinct and not instrinsically linked to his professional engagement (such as the acceptance fee in this case).Hence, considering further that the fact of respondent's receipt of the P150,000.00 acceptance fee from complainant remains undisputed,47 the Court finds the return of the said fee, as recommended by the OBC, to be in order:chanroblesvirtualawlibrary

WHEREFORE, respondent Atty. Rustico B. Gagate is found guilty Gfviolating Canon 17, Rule 18.03 of Canon 18, and Rule 19.01 of Canon 19 of the Code of Professional Responsibility. Accordingly, he is hereby SUSPENDED from the practice of law for a period of three (3) years, effective upon the finality of this Decision, with a stem warning that a repetition of the same or similar acts will be dealt with more severely.

Further, respondent is ORDERED to return to complainant Maria Cristina Zabaljauregui Pitcher the P150,000.00 acceptance fee he received from the latter within ninety (90) days from the finality of this Decision. Failure to comply with the foregoing directive will warrant the imposition of a more severe penalty.

Let a copy of this Decision be furnished 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.

Sereno, C.J., Carpio, Velasco, Jr., Leonardo-De Castro, Brion, Peralta, Bersamin, Del Castillo, Abad, Perez, Mendoza, and Leonen, JJ., concur.Villarama, Jr., J., on official leave.Reyes, J., no part - had been my associate.

A.C. No. 4552 December 14, 2004

JOSE A. ROLDAN, complainant, vs.ATTY. NATALIO PANGANIBAN and ATTY. JUANITO P. NOEL, respondents.

R E S O L U T I O N

AUSTRIA-MARTINEZ, J.:

Before us is an administrative case for disbarment filed by complainant Jose A. Roldan against respondents Atty. Natalio M. Panganiban and Atty. Juanito P. Noel. Complainant charges that respondent lawyers reneged in their duties and obligations towards him as their client, especially in the complainant's right to appeal to the higher court after losing his case in the lower courts. The allegations in the complaint dated February 12, 19961 in support of the accusations are as follows:

1. Na ako ang plaintiff sa Civil Case No. 144860-CV M.I.T. Branch 25 "Jose A. Roldan vs.Ramon Montano & Robert Montano," na ang Judge ay si Honorable Severino De Castro,Jr. na ang kaso ay "Recovery of possession with damages." Ito'y iniapila ko sa RTC Branch 43 with Civil Case No. 95-73739 na ang Judge naman dito ay si Honorable Manuel F. Lorenzo ng RTC. Si Atty. Panganiban at Atty. Noel ang abogado ko.

. . .

4. Na noong February 6, 1995 bago kami pumasok sa court room ay nagtanong sa akin si Atty. Noel, ng ganito: "Mr. Roldan nasaan nga pala yung resibo na ibinigay ni Tessie saiyo na nagbigay ka ng down payment na Ten Thousand Pesos (P10,000.00) noong March 1, 1986." Agad akong sumagot at sinabi ko sa kaniya, "Atty. Noel lahat po ng original ay hiningi ninyo sa akin, lahat po ay binigay ko sa inyo kasama iyong resibo ni Tessie Dalusong, na ako'y magbigay ng Ten Thousand Pesos bilang downpayment sa ipinagbili niyang bahay sa akin. Agad siyang sumagot "Wala kang ibinibigay sa akin!"

5. Na kaya nga sinabi ko kay Atty. Noel na: "Ibigay ninyo sa akin ang folder at ako ang hahanap ng resibo ni Tessie Dalusong." Tumulong din si Atty. Noel, at nakita din namin. Sinabi ni Atty. Noel "Sayang hindi na natin maipasok ito, hindi na kasi pwedeng magpasok pa ng mga ibidensya." Di ko alam kung bakit hindi niya ipinasok noon pa man.(Ang resibo na nagpapatunay na ako ang unang nakabili ng bahay sa 1723 Pedro Gil St.,Paco, Maynila).

6. Na noong nasa loob na kami ng court room ay handa na ako sa sinasabi ni Atty. Noel no "Rebuttal" pero nagtaka ako kinumbinsi ako na diumano ay malinaw na ang aking deklarasyon at malinaw ang mga ebidensya kaya hindi na raw dapat mag "rebuttal" i-waive na lang daw sa Memorandum kaya nga sinabi ng Judge na: "Gumawa kayo ng Memoranda within fifteen days submitted for decision." Noong March 8, 1995 ang memorandum ay submitted for decision;

7. Na noong Abril 7, 1995 sinabi ko kay Atty. Noel, "Bakit may ibinigay na zerox copies ngdecision si Robert Montano na aking kalaban "sumagot si Atty. Noel, at sinabi sa akin "Tsekin mo sa court." Gayon nga ang aking ginawa. At bumalik ako kay Atty. Noel, at sinabi ko: Totoo nga na may decision na. Sinabi ni Atty. Noel na: "Ginapang nila yun,

sapalagay mo, magkano ang inilagay nila?" Sa palagay ko ay hindi lang trenta mil (P30,000.00) pesos ang magagastos nila sa kasong ito, yun ang isinagot ko;

8. Na iminungkahi ko kay Atty. Noel na magpayl ng "motion for reconsideration, sinagat ako ni Atty. Noel na: 'Ginapang na nila yun kaya dapat umapila na lang tayo.' Sinabi ko kay Atty. Noel na: Kung matalo pa rin ako dito, ay dalhin natin sa Supreme Court" para parehas ang laban; Na bilang bahagi nito inilakip ko dito ang decision ng MTC; at ang apilasyon sa RTC, at ang petsa ng decision ng RTC na tinaggap ni Atty. Noel.

9. Na noong Abril 24, 1995 umapila ako sa "Court of Appeal" makaraan ang ilang buwan ay dumating sa office ni Atty. Noel at Atty. Panganiban, noong November 13, 1995 ang decision subalit tinawagan ako ng sekretarya nila Atty. Noel at Atty. Panganiban noon lang November 24, 1995. Tinanong ko ang sekretarya ni Atty. Panganiban kung nasaan si Atty. Noel, ang sagot ng sekretarya ay "Nasa probinsiya maraming inaasikaso doon." Agad kong sinabi: "Hindi ba fifteen days lang para maka-apila sa Supreme Court." Sumagot si Zeny at sinabi "Isang buwan daw yun para sagutin."

10. Na madalas kong tawagan si Zeny (ang sekretarya ni Atty. Panganiban) na sinasabi kong nakahanda na ang pangbayad gawin na ninyo ang apilasyon sa "Supreme Court," ito'y madalas kong sabihin sa sekretarya (si Zeny) kaya't ibinigay niya ang bagong office ni Atty. Noel sa Gedisco Centre Rm. 134, 1564 Mabini St., Ermita, Manila.

11. Na madalas akong magpunta sa bagong office ni Atty. Noel gaya noong Dec. 1, 1995,Dec. 4, 1995, Dec. 5, 1995, Dec. 7, 1995, Dec. 8, 1995 at noon pang huling linggo ng November ay sisimulan ko ng sabihin sa dalawang sekretarya (si Zeny at Marie Cris) na gawin na ang aking apilasyon sabihin kay Atty. Noel sa "Supreme Court."

12. Na noong December 12, 1995 maaga pa ay nagpunta ako sa office ni Atty. Noel sa Gedisco 3rd Flr. Mabini St., Ermita, Manila. Tinanong ko ang kaniyang sekretarya kung nakausap si Atty. Noel, sinagot ako ng sekretarya at sinabing 'Tinanong ko si Atty. Noel kung yari na yung apilasyong ipinagagawa ninyo (Jose Roldan) hindi po niya ako sinasagot.'

13. Na kaya agad akong magpunta sa RTC Branch 43 upang alamin ang katotohanan nabatid ko noon lang, na ako'y natalo ng walang kalaban-laban, pagkat nag-laps na o lampas na ang panahong ibinibigay ng batas para makapag-payl ng apilasyon sa Supreme Court.

14. Na dahil dito sa mga panloloko, at pagwawalang bahala sa aking kaso ni Atty. Noel, at Atty. Panganiban ay idinidimanda ko sila ng Damages na halagang one hundred fifty thousand (P150,000.00) pesos at dapat silang alisan ng karapatan na makapag-practice sa kanilang propesyon.

In his Comment dated August 8, 1996, Atty. Panganiban avers that he was neither aware nor did he participate in the prosecution of "Civil Case No. 144860-CV M.I.T. Branch 25 "Jose A. Roldan vs. Ramon Montano & Robert Montano" and in the appeal of said case to the Regional Trial Court (RTC), Branch 43; they do not have a lawyer-client relationship because he is on leave in the practice of law since October 18, 1993 when he was designated Acting Mayor of Laurel, Batangas, and during his incumbency as such, and up to the filing of this administrative complaint in 1996, he is still on leave as law practitioner because he was elected Mayor of Laurel, Batangas in the last 1995 election; probably, complainant included him as respondent because he thought that he is practicing law and is still an associate of Atty. Juanito P. Noel, due to the fact that on some occasions complainant might have seen him or they might have talked casually in the law office from which he was on leave in his practice of law because he drops there from time to time to meet visitors from Laurel who are living and who have problems in Metro Manila; and he has not received any single centavo from the complainant.

In his Comment, dated August 29, 1996, Atty. Noel alleges: Sometime in 1994, he agreed to represent complainant in recovering a one-half portion of the ground floor of a house located at 1723 Pedro Gil St., Paco, Manila which complainant bought from one Simplicia Villanueva represented by her daughter Teresita Dalusong on November 28, 1986. A civil complaint for recovery of ownership and possession was filed on February 8, 1994 with the RTC but upon the effectivity of the law expanding the jurisdiction of the Metropolitan Trial Court (MTC) the case wastransferred to the MTC. From the evidence of the defendant, he honestly saw no need to presenta rebuttal evidence. The MTC rendered a decision dismissing the case on the alleged ground that the identity of the subject matter of the action was not clearly established. He filed an appeal in due time to the RTC of Manila (Branch 43) and not with the Court of Appeals as stated in paragraph 9 of the complaint. On November 13, 1995, he received a copy of the RTC decision dated October 10, 1995, affirming the decision of the MTC. Through the telephone, he informed the complainant about the decision of the RTC. Complainant instructed him to prepare an appealto the higher court which actually refers to the Court of Appeals and not with the Supreme Court as complainant claims. He advised the complainant that he could find no error in the said decision and a further appeal would be frivolous and without merit and requested the complainant to come over so that he could discuss the matter with him. Whenever the complainant went to the law office, he failed to see him because the latter was still attending court hearings. The complainant asked for the records of the case which was given by his secretary. Complainant never returned the case folder to him, neither did he call up by phone, or see him personally. He then assumed that the complainant had hired another lawyer to handle the appeal. He was surprised when he received on July 18, 1996 a copy of the resolution of this Honorable Court dated June 19, 1996, requiring them to file their comment on the complaint of Jose A. Roldan.

We referred the matter to the Integrated Bar of the Philippines (IBP) for investigation. After hearing, IBP Investigating Commissioner Manuel A. Quiambao submitted his Report and Recommendation dismissing the complaint against Atty. Panganiban and imposing censure to Atty. Noel. In a Resolution dated February 27, 2004, the IBP adopted and approved the said Report and Recommendation.

We shall first resolve the issue of the existence or non-existence of lawyer-client relationship between Atty. Panganiban and the complainant.

From a careful reading of the records of this case, it appears that Atty. Panganiban and Atty. Noelused to be law associates. However, Atty. Panganiban went on leave from the practice of law since October 18, 1993 when he was designated as acting mayor of Laurel, Batangas2 due to theindefinite leave of absence filed by the mayor and by reason of his election as mayor of the said municipality in 1995. The complainant claims that he secured the services of Atty. Panganiban onJanuary 6, 1994.3 It is thus clear that Atty. Panganiban was not an active associate of the law firm, since at that time, he was already on leave from the practice of law. Moreover, the complaintfiled in 1996 before the RTC for Recovery of Possession and Ownership with Damages was prepared and signed by Atty. Noel alone and not in any representation of any law firm. In fact from the filing of the said civil case in the RTC, it was Atty. Noel who represented the complainant. Not once did Atty. Panganiban appear for the complainant nor did he sign any document pertaining with the aforesaid case. Necessarily, the complaint against Atty. Panganiban must be dismissed.

As to the complaint against Atty. Noel.

The main issues to be resolved are: (1) whether there was a deliberate attempt to suppress evidence on the part of Atty. Noel, to the prejudice of complainant and (2) whether it was correct for Atty. Noel to refuse to file a further appeal of the case to the Court of Appeals by way of petition for review despite the manifest desire of the complainant to do so.

Anent the first issue.

Complainant insists that Atty. Noel's failure to present in evidence the receipt dated March 1, 1986 was fatal to his cause. The receipt shows that complainant made a partial payment of P10,000.00 of the P40,000.00 price of the subject property. Complainant claims that this piece of document proves that complainant bought the subject property ahead of the defendants who bought it only on July 30, 1986. Thus, to the mind of the complainant, the non-presentation of thesubject receipt is suppression of evidence.

Atty. Noel denied receiving the subject receipt and asserts that the same was mere fabrication of the complainant. He insists that said receipt did not exist during the preparation and filing of the complaint and even during the presentation of evidence. Otherwise, he argues that such fact should have been alleged in the complaint to show that complainant bought the subject property ahead of the other buyer. Atty. Noel also claims that assuming that the receipt was given to him, the same cannot be used as evidence because the receipt shows that it was signed by one Romeo Dalusong who is not a party to the sale; neither does it appear in the receipt that Romeo was acting in a representative capacity.

A short historical backdrop is necessary for a clearer insight of this issue.

It appears that the subject property was subjected to a double sale by the same seller. The Deed of Sale of the complainant is dated November 28, 1986 while that of the other buyer is dated July30, 1986. But complainant claims that actually the sale as to him took place on March 1, 1986 as evidenced by the subject receipt. Complainant however failed to take possession of the subject property as the same is already in the possession of the other buyer. Complainant filed an ejectment case4 against the tenant of the other buyer but the same was dismissed for the reason that "complainant failed to show that he had proprietary right over the property in question." Unable to take possession of the subject property, complainant filed a case against the seller for the annulment of the contract of sale, the Deed of Sale dated November 28, 1986. Complainant won and the court awarded him damages of P80,000.00.

Subsequently, the seller and the complainant entered into a Compromise Agreement.5 The seller,agreed to sell one-half of her duplex house which is the same property that was previously sold to complainant on November 28, 1986, including all her proprietary rights over the land, in the amount of P80,000.00. Since the Court awarded damages to the complainant in the same amount, this was set-off against the price of the property. Pursuant to the said compromise agreement, a Deed of Absolute Sale and Transfer of Right6 in favor of the complainant was executed on December 22, 1990 by the seller over the said property.

Even with the sale on December 22, 1990 over the subject property as a result of the compromise agreement, complainant still failed to take possession of the subject property, hencehe filed a complaint for Recovery of Possession and Ownership with Damages against the other buyer. It is in this case that complainant claims that Atty. Noel failed to present the subject receipt. The MTC dismissed the complaint and the RTC on appeal, dismissed it again. Upon failure of Atty. Noel to file a petition for review with the Court of Appeals, complainant filed the present administrative complaint against him.

We find credence to the allegation of Atty. Noel that the subject receipt was not in existence at the time he prepared the complaint or even at the time of presentation of evidence. The complaint was verified by the complainant stating the fact that he caused its preparation, that he read the same and attested that the contents thereof are true and correct. If complainant's allegation that he gave the receipt to Atty. Noel at that time, and considering the importance of the subject receipt to his case, he should have called the attention of Atty. Noel that there was noallegation of the existence of the subject receipt.

We thus hold that Atty. Noel is not guilty of suppressing evidence.

As to the second issue, that is, the issue of propriety of Atty. Noel's refusal or failure to file a petition for review before the Court of Appeals.

It is the contention of the complainant that he lost the right to file a further appeal because he was not informed immediately of the result of the appeal to the RTC. Complainant insists that Atty. Noel, through his secretary, called the complainant only on November 24, 1995 or 11 days after the receipt of the adverse RTC decision and was given the impression that he has still one month within which to file an appeal. The complainant also said that he paid the respondents visits on December 1, 4, 5, 7 and 8, 1995, to follow up the filing of the appeal to the higher court but that he was not able to talk to Atty. Noel; that it was only when he went to the RTC that he learned that he lost the case because the period of the appeal has lapsed.

Atty. Noel contends that he received the RTC decision on November 13, 1995 and on the following day, he instructed his secretary to contact the complainant to inform him of the adverse RTC decision with the directive for the complainant to call up Atty. Noel; that when complainant called, he was instructed by the complainant to prepare an appeal to the higher court; that he told the complainant that there is no need to appeal the case because, first, the decision of the court is "correct," and second, he is obligated by the code of professional responsibilities to refrain from filing a frivolous and unmeritorious appeal; that thereafter, complainant went to his office twice, the last of this instance was when complainant took all the records of the case and never came back which led him to believe that complainant will not appeal the adverse RTC decision. Atty. Noel further states that, in any event, his relationship with the complainant ended upon the issuance of the decision and that the complainant should not expect that he would still appeal the case.

We find for the complainant.

It is noted that the complainant has been very diligent in following up the status of the case. Fromthe time, complainant filed the case with the MTC up to the time he appealed with the RTC, complainant was vigilant with his rights constantly in contact with Atty. Noel. We find it strange therefore that upon receipt of the adverse RTC decision, it would seem, if Atty. Noel's version is to be given credence, the complainant had lost his zeal and just allowed the time to appeal to lapse. As correctly observed by the Investigating Commissioner in his Report:

Here was a complainant who went through several litigations over the same subject matter, including a case of ejectment, a case of annulment of contract of sale with damages, a case of action for recovery of ownership and possession, an appeal to the Regional Trial Court, and he did not seem perturb that he lost it (the appeal) and did not find it essential to discuss the matter with his lawyer for possible remedial action? That is,as claimed by his lawyer?

. . .

As opposed to the general denial given by the respondent about the claim that the complainant followed up his case several times with his office (outside of the two occasions that he conceded the complainant did so), the complainant was precise in detailing the circumstances which described how he tried his best to seek the presence of Atty. Noel to no avail. There were dates, detailed circumstances, and specific places. Given the character which had characterized the effort of the complainant to seek appropriate legal remedies for his complaints, the assertions would be consistent, that is, that he made great efforts to find Atty. Noel.

We note that the complainant was informed about the adverse RTC decision within the 15-day prescriptive period to appeal. As stated elsewhere, Atty. Noel received the adverse RTC decision on November 13, 1995 and the complainant was informed about the adverse RTC decision on November 24, 1995. Hence, complainant has still four days to file an appeal. However, Atty. Noel

failed to ensure that the client was advised appropriately. Atty. Noel entrusted entirely with his secretary the duty to inform the complainant about the adverse decision. And the secretary informed the complainant rather late and worse with the wrong information that the complainant has still a month within which to file an appeal. This resulted to the lapse of the prescriptive period to appeal without complainant having availed of the said remedy.

A lawyer shall not neglect a legal matter entrusted to him and his negligence in connection therewith shall render him liable.7 If only Atty. Noel's position of not filing an appeal because it would only be frivolous has been properly communicated to the complainant at the earliest possible time so that the complainant would be able to seek the services of another lawyer for help, it would have been commendable. A lawyer's duty is not to his client but to the administration of justice; to that end, his client's success is wholly subordinate; and his conduct ought to and must always be scrupulously observant of law and ethics."8 But as it was, Atty. Noel's negligence as afore-discussed robbed the complainant of the opportunity to at least look for another lawyer for professional help and file an appeal, after all, it is the client who finally decides whether to appeal or not an adverse decision.

We cannot also accept the reasoning of Atty. Noel that he should not be expected to file an appeal for the complainant because their lawyer-client relationship ended with the RTC decision. First, a lawyer continues to be a counsel of record until the lawyer-client relationship is terminated either by the act of his client or his own act, with permission of the court. Until such time, the lawyer is expected to do his best for the interest of his client.9Second, Atty. Noel admitted that complainant instructed him to file an appeal with the higher court. Even assuming that their contract does not include filing of an appeal with the higher courts, it is still the duty of Atty. Noel to protect the interest of the complainant by informing and discussing with the complainant of the said decision and his assessment of the same. A lawyer shall represent his client with zeal within the bounds of the law.10 It is the obligation of counsel to comply with his client's lawful request. Counsel should exert all effort to protect the interest of his client.

The determination of the appropriate penalty to be imposed on an errant lawyer involves the exercise of sound judicial discretion based on the facts of the case.11 In cases of similar nature, the penalty imposed by the Court consisted of reprimand,12 fine of five hundred pesos with warning,13 suspension of three months,14 six months15and even disbarment16 in aggravated case.

The facts of the case show that Atty. Noel failed to live up to his duties as a lawyer pursuant to the Code of Professional Responsibility. We conclude that a suspension from the practice of law for one month is just penalty under the circumstances.

Complainant's claim for damages cannot be entertained in the present disbarment case as it is not the proper forum. It is not an ordinary civil case where damages could be awarded.17 A disbarment case is a proceeding that is intended to protect the Court and the public from the misconduct of its officers; to protect the administration of justice by requiring that those who exercise this important function shall be competent, honorable and reliable, men in whom courts and clients may repose confidence.18 It has been emphasized in a number of cases that disbarment proceedings belong to a class of their own, distinct from that of a civil or a criminal action.19

Wherefore, the complaint against Atty. Natalio M. Panganiban is DISMISSED. Atty. Juanito P. Noel is SUSPENDED for one month with a warning that a repetition of the same would be meted a more severe penalty. Let a copy of this decision be attached to respondent's personal record inthe Office of the Bar Confidant and copies be furnished to all chapters of the Integrated Bar of the Philippines and to all courts of the land.

SO ORDERED.

G.R. No. 100643 December 12, 1995

ADEZ REALTY, INCORPORATED, petitioner, vs.HONORABLE COURT OF APPEALS, THE PRESIDING JUDGE, REGIONAL TRIAL COURT, Br. 79, Morong Rizal, THE REGISTER OF DEEDS FOR QUEZON CITY, and AGUEDO EUGENIO, respondents.

R E S O L U T I O N

BELLOSILLO, J.:

On 30 October 1992 the Court found movant, Atty. Benjamin M. Dacanay, guilty of intercalating amaterial fact in a decision of the Court of Appeals, which he appealed to this Court on certiorari, thereby altering the factual findings of the Court of Appeals with the apparent purpose of misleading this Court in order to obtain a favorable judgment. Consequently, Atty. Dacanay was disbarred from the practice of law. 1

On 20 November 1992 movant filed a Motion for Reconsideration and Leave to Offer Evidence Re Charge of Unauthorized Intercalation in a Judicial Record dated 18 November 1992. He claimed that the inserted words were written by his client, the President of Adez Realty, Inc., in the draft of the petition to be filed before the Supreme Court and unwittingly adopted by movant'ssecretary when the latter formalized the petition. He manifested that he would not risk committingthe act for which he was found guilty considering that he was a nominee of the Judicial and Bar Council to the President for appointment as regional trial judge. 2 But the Court on 3 December 1992 denied the motion for want of a compelling reason to justify a reversal of the questioned resolution. 3

On 23 February 1994 movant Dacanay filed a Motion to Lift (Disbarment) stating that he was already 62 years old, has learned his lesson from his mistake, was terribly sorry for what he had done, and in all candor promised that if given another chance he would live up to the exacting demands of the legal profession. He appended to his motion certifications of good moral character from: Fr. Celso Fernando, Parochial Vicar, Parish of St. Michael Archangel, Marilao, Bulacan; Fr. Lauro V. Larlar, OAR, Rector, San Sebastian College-Recoletos; Sis. Aniceta B. Abion, EMM, Chairperson, Center for Housing and Ecology Development Foundation, Inc.; DeanRufus B. Rodriquez, College of Law, San Sebastian College-Recoletos; Judge Pedro T. Santiago, Executive Judge, RTC, Quezon City; Judge Teodoro P. Regino, RTC-Br. 84, Quezon City; Judge Antonio P. Solano, RTC-Br. 86, Quezon City; and Judge Gregorio D. Dayrit, MTC-Br. 35, Quezon City. 4 However, on 11 August 1994 the Court denied the motion. 5

On 1 December 1994 movant again filed an Ex-Parte Motion to Lift Disbarment alleging among others that he had been deprived of his means to life; he had pursued civic, religious and community work, especially for the poor and the underprivileged short of extending legal assistance because of his incapacity; he had admitted "with profound regret and with utmost humility his commission of an unpardonable mistake and ask(ed) that he be given another chance;" and, he was "remorseful for what he has done and comes to this Honorable Court with a contrite heart." 6

His wife Norma M. Dacanay likewise wrote the Court on 1 December 1994 saying that while she did not condone what her husband had done, it had been her fervent wish that the Court took a second look into its decision disbarring her husband as her entire family had been traumatized by his disbarment. 7

On 6 March 1995 movant sent a letter addressed to the Chief Justice and the Associate Justices of the Court reiterating his Ex-Parte Motion to Lift Disbarment of 1 December 1994. Thus —

I am truly penitent for the serious offense I committed and admit full responsibility for it. I realize it was dishonest and unfair to pass the blame to my secretary who was merely following my instructions. The intercalation was my own act and I am justly punished for it.

Your Honors, I do not question your decision but I only beg for your mercy. I have a wife and children to support but my only means of livelihood has been withdrawn from me. I am destitute and desperate and can only turn to you for relief . . . .

Looking back, I cannot imagine how I could have even thought of blackening the law profession, to which I owe so much. Please let me redeem myself by admitting me back to its precincts, where I swear to live strictly according to its canons . . . . 8

On 21 March 1995 the Court noted the letter of 6 March 1995 of movant Dacanay.

On 4 August 1995 movant again prayed for his reinstatement —

It has been 33 long months since my disbarment, during which time I have been struggling to make both ends meet to provide for my wife and three children. Please give me the chance to prove that I am a reformed offender who will henceforth do nothing whatsoever to dishonor the legal profession.9

On 12 September 1995 the Court noted respondent's 4 August 1995 letter. 10

On 17 November, 1995 movant once more wrote the Court —

I humbly acknowledge again that I committed a grievous offense for which I was justly punished at the time with the extreme sanction of disbarment.

I have been suffering much since my disbarment more than 36 months ago, but itis my wife and children who have suffered more for my transgression. Although innocent, they bear with me the stigma and burden of my punishment. 11

The disbarment of movant Benjamin M. Dacanay for three (3) years has, quite apparently, given him sufficient time and occasion to soul-search and reflect on his professional conduct, redeem himself and prove once more that he is worthy to practice law and be capable of upholding the dignity of the legal profession. His admission of guilt and repeated pleas for compassion and reinstatement show that he is ready once more to meet the exacting standards the legal profession demands from its practitioners. Accordingly, the Court lifts the disbarment of BenjaminM. Dacanay. However he should be sternly warned that —

[T]he 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 . . . 12

WHEREFORE, the disbarment of BENJAMIN M. DACANAY from the practice of law is LIFTED and he is therefore allowed to resume the practice of law upon payment of the required legal fees. This resolution is effective immediately.

SO ORDERED.

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

Feliciano, J., is on leave.

[A.C. No. 4724. April 30, 2003]

GORETTI ONG, complainant, vs. ATTY. JOEL M. GRIJALDO, respondent.

D E C I S I O N

PER CURIAM:

The fiduciary duty of a lawyer and advocate is what places the law profession in a uniqueposition of trust and confidence, and distinguishes it from any other calling. Once this trust andconfidence is betrayed, the faith of the people not only in the individual lawyer but also in thelegal profession as a whole is eroded. To this end, all members of the bar are strictly required toat all times maintain the highest degree of public confidence in the fidelity, honesty, and integrityof their profession.[1] In this administrative case for disbarment, respondent Atty. Joel M. Grijaldofailed to perform his sworn duty to preserve the dignity of the legal profession.

Complainant Goretti Ong is a widow residing in Talayan Village, Quezon City. Sometime inthe early part of 1996, she engaged the services of respondent, a practicing lawyer in BacolodCity, as private prosecutor in Criminal Case No. 52843 before the Metropolitan Trial Court inCities of Bacolod City, Branch 5, against Lemuel Sembrano and Arlene Villamil for violationof Batas Pambansa Bilang 22.[2] During one of the hearings of the case, the accused offered toamicably settle their civil obligation to complainant by paying the amount of P180,000.00.Complainant accepted the offer on the condition that payment shall be made in cash.

At the hearing held on July 17, 1996, respondent advised complainant to wait outside thecourtroom. When he came out, he handed to complainant cash in the amount of P100,000.00and Metrobank Check No. 0701263862 for P80,000.00, postdated August 16, 1996, drawn byAtty. Roger Reyes, counsel for the accused. Complainant objected to the check payment andrefused to settle the case, but he assured her that the check was drawn by a reputable lawyer.Complainant was prevailed upon by respondent into signing an affidavit of desistance, but sheinstructed him not to file it in court until the check is cleared.

Upon presentment on its maturity date, the check was dishonored due to a stop-paymentorder from the drawer. Complainant immediately informed respondent of the dishonor, and thelatter told her that he will talk to Atty. Reyes about it. Later, when complainant met withrespondent in Manila, he relayed to her Atty. Reyes’ offer to replace the check with cash. Several

weeks passed without any payment of the proceeds of the check, despite complainant’srepeated telephone calls to respondent. Sometime in December 1996, she suggested thatrespondent move for a hearing of the case, but he told her that courts are not inclined to sethearings near the Christmas season.

On December 17, 1996, complainant personally went to Bacolod City to inquire about hercase. She was surprised to learn that the same was dismissed as early as September 26, 1996.[3] Apparently, respondent submitted her Affidavit of Desistance[4] and, on the basis thereof, thepublic prosecutor moved for the dismissal of the case which was granted by the court. Whencomplainant confronted respondent, he admitted to her that he had already received the amountof P80,000.00 from Atty. Reyes but he used the same to pay for his financial obligations.

Thus, on April 2, 1997, complainant filed an Administrative Complaint against respondent fordisbarment.[5]

Complainant further alleged in her complaint that respondent represented her in anothercase, entitled “People of the Philippines versus Norma Mondia,” also for violation of B.P. 22,where she was the offended party. Respondent approached the accused, Norma Mondia, andoffered to delay the hearing of the case in consideration of the amount of P10,000.00. However,Mondia did not have that amount of money. Attached to the complaint is the affidavit of NormaMondia attesting to this fact.[6]

Furthermore, Henry Tiu, a former client of respondent, executed an affidavit, which isattached to the complaint, alleging that he gave respondent the amount of P3,000.00 for thepurpose of posting his bail bond, but respondent did not post his bail which resulted in Tiu’sarrest.[7]

Likewise, a certain Luz Dimailig, whose affidavit is also attached to the complaint, averredthat respondent represented her as counsel for plaintiff in a civil case before the Regional TrialCourt of Bacolod City, Branch 52; that the case was dismissed by the trial court; that the appealfiled by respondent to the Court of Appeals was dismissed due to his failure to file the appellant’sbrief; and that the petition for review before the Supreme Court was denied for lack of proof ofservice on the Court of Appeals, late filing and late payment of docket fees. Moreover, Dimailigalleged that she gave respondent the amount of P10,000.00 for settling the said civil case, butshe later learned that he did not remit the money to the defendants or their counsel.[8]

On June 25, 1997, respondent was required to file his comment within ten days from notice.[9] Respondent filed a Motion for Extension of Time, alleging that he has not received a copy ofthe complaint.[10] On February 5, 1998,[11] complainant furnished respondent a copy of thecomplaint. However, despite receipt of a copy of the complaint, respondent still failed to file hiscomment.

On October 19, 1998, respondent was required to show cause why he should not bedisciplinarily dealt with or held in contempt for failing to file his comment. [12] Respondent filed aCompliance, stating that the copy of the complaint he received from complainant was not legible.Complainant again furnished respondent with a clearer and more legible copy of the complaintincluding its annexes; but respondent still did not file his comment.

Consequently, on June 14, 2000, another show cause order was issued against respondent.[13] Respondent replied by stating that the quality of the copy furnished him by complainant wasworse than the first one he received.

Dissatisfied with respondent’s explanation, respondent was ordered to pay a fine ofP1,000.00, which he complied with on November 27, 2000. [14] However, he again failed to file hiscomment and, instead, moved for additional time to file said comment.

On August 13, 2001, this case was referred to the Integrated Bar of the Philippines (IBP) forinvestigation, report and recommendation.[15] The records of the IBP show that respondent hasnot filed his comment to the complaint. On January 18, 2002, the Investigating Commissioner,Manuel A. Tiuseco, submitted his report recommending the disbarment of respondent.[16]However, in its Resolution No. XV-2002-553 dated October 19, 2002, the IBP Board ofGovernors modified the penalty of disbarment and recommended instead respondent’s indefinitesuspension from the practice of law for grossly immoral conduct and deceit.[17]

After a careful review of the records of this case, we find the recommendation ofCommissioner Manuel A. Tiuseco well-taken.

It is clear that respondent gravely abused the trust and confidence reposed in him by hisclient, the complainant. Were it not for complainant’s vigilance in inquiring into the status of hercase, she would not have known that the same had already been dismissed on September 26,1996. Respondent deliberately withheld this fact from her, notwithstanding that she talked to himsometime in December 1996.

Canon 18 of the Code of Professional Responsibility provides that a lawyer shall serve hisclient with competence and diligence. More specifically, Rule 18.03 and Rule 18.04 state:

Rule 18.03. A lawyer shall not neglect a legal matter entrusted to him, and his negligence in connection therewith shall render him liable.

Rule 18.04. A lawyer shall keep the client informed of the status of his case and shall respond within a reasonable time to the client’s request for information.

Respondent breached his duty to his client when he failed to inform complainant of thestatus of the criminal case. His negligence shows a glaring lack of the competence and diligencerequired of every lawyer.[18] His infraction is rendered all the more deplorable by the fact thatcomplainant is a resident of Quezon City and the case was filed in Bacolod City. It was preciselyfor this reason that complainant engaged the services of respondent, a Bacolod-based lawyer, sothat her interests in the case may be amply protected in her absence. Respondent’s failure tolook after his client’s welfare in the case was a gross betrayal of his fiduciary duty and a breachof the trust and confident which was reposed in him. In a similar case, we held:

It is settled that a lawyer is not obliged to act as counsel for every person who may wish to become his client. He has the right to decline employment subject however, to the provision of Canon 14 of the Code of Professional Responsibility. Once he agrees to take up the cause of a client, he owes fidelity to such cause and must always be mindful of the trust and confidence reposed to him. Respondent Meneses, as counsel, had the obligation to inform his client of the status of the case and to respond within a reasonable time to his client’s request for information. Respondent’s failure to communicate with his client by deliberately disregarding its request for an

audience or conference is an unjustifiable denial of its right to be fully informed of the developments in and the status of its case.[19]

Worse, when respondent used the money which he received from Atty. Reyes to pay for hisown obligations, he violated Canon 16 of the Code of Professional Responsibility, which statesthat “[a] lawyer shall hold in trust all moneys and properties of his client that may come into hispossession.” Furthermore:

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 lawful lees 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 misappropriation of the money entrusted to him and his refusal to account forit to his client despite repeated demands were competent proof of his unfitness for theconfidence and trust reposed on him. His acts showed a lack of personal honesty and goodmoral character as to render him unworthy of public confidence. He held the money in trust forhis client as settlement of the case he was handling. Upon receipt thereof, he was underobligation to immediately turn it over, in the absence of a showing that he had a lien over it. As alawyer, he should have been scrupulously careful in handling money entrusted to him in hisprofessional capacity, because a high degree of fidelity and good faith on his part is exacted.[20]

A lawyer, under his oath, pledges himself not to delay any man for money or malice and isbound to conduct himself with all good fidelity to his clients. He is obligated to report promptly themoney of his client that has come into his possession. He should not commingle it with hisprivate property or use it for his personal purposes without his client’s consent. Respondent, byconverting the money of his client to his own personal use without her consent, was guilty ofdeceit, malpractice and gross misconduct. Not only did he degrade himself but as an unfaithfullawyer he besmirched the fair name of an honorable profession.[21]

Aside from violating the Code of Professional Responsibility, respondent’s failure to promptlyturn over the money to his client and his conversion of the same for his personal use renderedhim liable for contempt under Rule 138, Section 25 of the Rules of Court, to wit:

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.

Furthermore, respondent violated his oath of office and duties as counsel when heapproached his client’s opponent and offered to delay the case in exchange for money. His offerto delay the case would have frustrated the interests of his client which he had sworn to protect.

As a lawyer, respondent should avoid any unethical or improper practices that impede, obstructor prevent the speedy, efficient and impartial adjudication of cases.[22]

Once he 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 must serve the client with competence and diligence, and champion the latter’s cause with wholehearted fidelity, care, and devotion. Elsewise stated, he owes entire devotion to the interest of the client, warm zeal in the 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. This simply means that his 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. If much is demanded from an attorney, it is 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, and to the public. 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.[23]

Respondent’s act of propositioning his client’s .opponent and offering to delay the caseagainst her was intended to benefit the latter. Hence, such act amounted to double-dealing andconflict of interest, and was unethical practice of law. Attorneys, like Caesar’s wife, must not onlykeep inviolate their client’s confidence, but must also avoid the appearance of treachery anddouble-dealing, for only then can litigants be encouraged to entrust their secrets to theirattorneys which is of paramount importance in the administration of justice.[24]

Finally, respondent’s cavalier attitude in repeatedly ignoring the directives of this Court to filehis comment constitutes utter disrespect to the judicial institution. His conduct indicates a highdegree of irresponsibility. A resolution of this Court is not to be construed as a mere request, norshould it be complied with partially, inadequately or selectively.[25] Respondent’s obstinate refusalto comply therewith not only betrays a recalcitrant flaw in his character; it also underscores hisdisrespect of our lawful orders which is only too deserving of reproof.

Any departure from the path which a lawyer must follow as demanded by the virtues of hisprofession shall not be tolerated by this Court as the disciplining authority. This is especially so,as in the instant case, where respondent even deliberately defied the lawful orders of the Courtfor him to file his comment on the complaint, thereby transgressing Canon 11 of the Code ofProfessional Responsibility which requires a lawyer to observe and maintain the respect due thecourts.[26]

All told, respondent’s transgressions manifested dishonesty and amounted to gravemisconduct and grossly unethical behavior which caused dishonor, not only to complainant, butto the noble profession to which he belongs, for it cannot be denied that the respect of litigantsfor the profession is inexorably diminished whenever a member of the Bar betrays their trust andconfidence.[27] He has proved himself unworthy of membership in the legal profession and must,therefore, be disbarred.

WHEREFORE, for dishonesty, grave misconduct, and grossly unethical behavior,respondent ATTY. JOEL GRIJALDO is DISBARRED from the practice law. His name is orderedSTRICKEN from the Roll of Attorneys. He is further directed to PAY complainant Goretti Ong theamount of P80,000.00 within ten (10) days from notice of this Decision.

This Decision shall take effect immediately. Copies thereof shall be furnished the Office ofthe Bar Confidant, to be appended to respondent’s personal record; the Integrated Bar of thePhilippines; the Office of the President; the Department of Justice; the Court of Appeals; theSandiganbayan; the Philippines Judges Association; and all courts of the land for theirinformation and guidance.

SO ORDERED.

Davide, Jr., C.J., Bellosillo, Puno, Vitug, Panganiban, Ynares-Santiago, Sandoval-Gutierrez,Carpio, Austria-Martinez, Corona, Carpio-Morales, Callejo, Sr., and Azcuna, JJ., concur.

Quisumbing, J., on leave.

A.C. No. 6591 May 4, 2005

MARISSA L. MACARILAY, complainant, vs.FELIX B. SERIÑA, respondent.

D E C I S I O N

PANGANIBAN, J.:

Failure to render the legal services agreed upon, despite the undisputed receipt of an acceptance fee, is a clear violation of the Code of Professional Responsibility. Negligence in attending to the needs of a client and a deceitful cover-up of such carelessness likewise constitute major breaches of the lawyer's oath.

The Case

Before us is a verified Complaint1 for "malpractice and/or gross misconduct" against Atty. Felix B. Seriña, filed by Marissa L. Macarilay with the Integrated Bar of the Philippines Commission on Bar Discipline (IBP-CBD) on September 22, 2003.

The IBP-CBD, through Director Rogelio A. Vinluan, required respondent to answer the charges.2 It thereafter held a mandatory conference/hearing on January 13, 2004, during which the parties were able to enter into a stipulation of facts as well as to present and mark their documentary evidence.3 After they submitted their respective Position Papers,4 the case was deemed submitted for resolution.

The investigator of the case, Commissioner Leland R. Villadolid Jr., summarized the antecedentsthus:

"Complainant's version of the facts pertinent to this case is as follows:

"Sometime in year 2000, Complainant and one Jenelyn Balaoro ('Balaoro') bought a lot from one Albaria Mohammad ('Mohammad'). Complainant and Balaoro, however, could not register the sale with the Register of Deeds and cause the transfer of the title in their names because Mohammad failed to surrender the owner's duplicate certificate of title for said lot. Subsequently, Complainant learned from one Reina Ong ('Ong') that Mohammad had mortgaged the said lot to a third party. Ong advised Complainant to get a copy of the mortgage contract and to do this the latter needs to have a contact in the Register of Deeds. Sometime in January or February 2002, Ong introduced Complainant to one Vic Paule ('Paule'), an employee of the Register of Deeds of Quezon City, who advised Complainant to get a lawyer to handle the case. Complainant allegedly gave Paule P8,000.00 for the help the latter will give her in securing a copy of the mortgage

contract concerned. On March 18, 2002, Complainant, Balaoro and Ong met with Paule at the Star Mall in Mandaluyong and proceeded to the office of Respondent, the lawyer recommended by Paule. During said meeting, Complainant consulted Respondent about the problem concerning the transfer of the subject lot title in her and Balaoro's names and the latter advised that the first thing [they have to do], is to file an adverse claim with the Register of Deeds. Respondent, however, required an acceptance fee ofP20,000.00 before he could act on the matter. Thus, on the same day, Complainant issued a check toRespondent for P20,000.00 as payment of the acceptance fee. Subsequently, Respondent asked Complainant for P3,000.00 as notarization fee and P5,000.00 as filingfee for the adverse claim. On April 5, 2002, Complainant and Balaoro went to Respondent's office and paid said amounts. On the same day, Respondent himself typedthe affidavit of adverse claim in the presence of Complainant and Balaoro and the latter subsequently signed the same. On May 16, 2002, upon Respondent's advice, Complainant gave Respondent another P20,000.00 in check as filing fee for the suits to be filed against Mohammad.

"Towards the middle part of the year, Complainant inquired from Respondent about the status of the case(s) against Mohammad but the latter could not give any further developments other than that the affidavit of adverse claim had already been filed with the Register of Deeds. It appears that Respondent was having problems about the fact that Mohammad's whereabouts are unknown and Respondent was not sure what to do about it. Subsequently, Complainant received assurance from Respondent that the case against Mohammad was already filed in court although Respondent could not identify theparticular court except that it was pending in the sala of one Judge Regala. Upon verification with the courts and the fiscal's office [at] Quezon City, Complainant learned that no case, whether criminal or civil, was ever filed by Respondent against Mohammad.Complainant then called Respondent regarding her findings and even suggested service of summons by publication upon Mohammad, having receiv[ed] advice from one Atty. Noel Sorreda ('Atty. Sorreda') that such manner of service is appropriate in view of the lack of information regarding Mohammad's whereabouts. Respondent, however, immediately got angry so Complainant did not insist on her inquiries and suggestions.

"On March 24, 2003, upon Complainant's request, Atty. Sorreda called Respondent to inquire about the specific branch where the case against Mohammad was supposedly pending. Respondent got angry and hung up the phone. Upon learning this, Complainantauthorized Atty. Sorreda to terminate the services of Respondent on her behalf. Atty. Sorreda called Respondent a second time but was able to talk only with presumably Respondent's lady-receptionist or secretary whom Atty. Sorreda requested to just relay toRespondent his message regarding the termination of Respondent's services. On March 26, 2003, Atty. Sorreda, upon Complainant's request, sent a letter to Respondent confirming the verbal termination of services, and also asking for the turnover of the pertinent documents that were with Respondent. Subsequently, Complainant herself wrote Respondent a letter affirming the contents of the earlier letter of Atty. Sorreda. In a letter dated April 4, 2003, Respondent denied the fact of his termination by Atty. Sorreda and invited Complainant to his office to talk things over. Complainant responded through Atty. Sorreda in a letter dated May 16, 2003 by reiterating the termination of Respondent's services and the request for the turnover of documents. In a letter dated May 23, 2003, Respondent enclosed the documents requested. Since it appears from thedocuments turned over that Respondent never filed a suit against Mohammad, Complainant wrote Respondent demanding the return of the money she paid for the

anticipated legal services Respondent was supposed to render but which were not actually rendered. Respondent's failure to respond to said letter prompted Complainant [to] send a follow-up letter dated July 16, 2003. Instead of returning the money, Respondent wrote Complainant a letter dated July 14, 2003 denying receipt of any amount from Complainant other than the P20,000.00 acceptance fee and demanding payment of alleged unpaid attorney's fee of P40,000 and fees for notarial services of P3,000.00 which Respondent allegedly advanced for Complainant. Thus, Complainantfiled the present administrative case for disciplinary action, likewise praying for the return of the money she paid for the anticipated legal services Respondent was supposed to render but which were not actually rendered.

"On the other hand, Respondent's version of the facts pertinent to this case is as follows:

"On March 16, 2002, Complainant, Balaoro and Ong went to Respondent's office during which Complainant related to Respondent her various problems and cases. Respondent advised Complainant that the solutions to her problem regarding Mohammad consist of two (2) phases. The first phase consists of: (1) having the notary public of the deed covering the sale of the subject property sign the acknowledgment page (since although the said deed contained the notarial seal of said notary, the latter did not sign the same); (2) preparing a complaint in court to compel Mohammad to surrender the owner's certificate of title; and (3) executing an affidavit of adverse claim to cause its inscription on the copy of the said title in the Registry of Deeds to protect their interest. The second [phase] consists of: (1) filing the complaint in court to compel Mohammad to surrender the owner's duplicate certificate of title, to cause the cancellation of said title and the issuance of another title in the names of Complainant and Balaoro, and to cause the removal from said title of the mortgage lien thereon in favor of Hernando and Nenita Rosario; and (2) filing of a criminal complaint for estafa against Mohammad. On the sameday, Complainant engaged Respondent to provide the legal services to pursue the foregoing remedies. The parties' verbal agreement with respect to Respondent's fees is as follows: (1) payment of acceptance fee of P20,000.00; (2) payment of attorney's fees of P15,000 after Respondent has accomplished the first [phase] of the remedies; (3) payment of attorney's fees of P15,000 after Respondent has accomplished the second [phase] of the remedies; and (4) for hearings/follow-ups, payment of per appearance fee of P3,000.00. Complainant paid the acceptance fee by issuing Respondent a check dated March 18, 2002 covering P20,000.00.

"Thereafter, Respondent caused the notary public whose seal appeared on the deed covering the sale of the subject property to sign the acknowledgment page thereof, advancing the notarial fee of P3,000.00 which Complainant failed to pay for which reasonsaid notary did not sign said deed. On April 5, 2002, Complainant and Balaoro went to hisoffice and signed the affidavit of adverse claim, which Respondent prepared. On the same date, Respondent requested Complainant and Balaoro to sign the civil complaint and criminal complaint against Mohammad which Respondent prepared but Complainantand Balaoro refused to sign because according to the latter two the residence of Mohammad in said complaints is already wrong since Mohammad's whereabouts are already unknown. Complainant and Balaoro promised to locate Mohammad's whereabouts and asked Respondent to wait for such data. Thereafter, Respondent even advised Complainant and Balaoro to locate Mohammad because resorting to the remedy of complaint and summons by publication is very expensive and should be resorted to only as a last recourse. Respondent adds that even as late as January 8, 2003, the civil

and criminal complaints could not be filed because Complainant herself wanted Respondent to amend the pleadings by including an additional defendant or respondent and increasing the claim, for damages.

"Respondent further claims that he also extensively gave legal advise to Complainant with respect to the following matters: (1) Complainant's litigation against spouses Casido to recover her 10% retention in architect's fee; (2) collection of P800,000.00 indebtedness of one Mrs. Dizon; and (3) recovery of Complainant's investments in her 2001 and 2002 car transactions.

"Claiming that Complainant did not pay him any amount other than the P20,000.00 acceptance fee, Respondent argues that Complainant still owes him the following amounts: (1) the P3,000.00 he paid to the notary public to sign the acknowledgment page of the deed covering the sale of the subject property; (2) the P200 he spent in the notarization, registration and inscription of the affidavit of adverse claim; (3) theP15,000.00 attorney's fees agreed upon for accomplishing the first [phase] of Complainant's remedies relative to her problem with Mohammad; and (4) an additional P40,000.00 for the legal services he rendered with respect to Complainant's other problems. Respondent further claims that Complainant should pay him the costs relative to the filing of this administrative case."5

Report of the Investigating Commissioner

In the investigating commissioner's opinion, respondent had been remiss in attending to the cause of his client, in violation of Rules 18.03 and 18.04 of the Code of Professional Responsibility. Regarded as a mere afterthought was his defense that his failure to file the civil and the criminal complaints was the fault of complainant. It was noted that if she was indeed responsible for the non-filing of the complaints, he should have pointed out this fault at the earliest opportunity, which was in his April 4, 2003 letter. The commissioner further opined that this defense had been invoked only in respondent's letter dated July 14, 2003, after complainant demanded the return of the amounts she had paid.

While likewise rejecting respondent's claim for unpaid legal fees amounting to P15,000, the commissioner upheld Balaoro's sworn testimony. It corroborated that of complainant, who had said that the only agreement between her and respondent was the acceptance fee of P20,000. His claim of P40,000 as consultation fee for the advice he had allegedly given her concerning other legal problems was also rejected for lack of evidence.

Commissioner Villadolid then wrote the following recommendation:

"x x x [T]his Commissioner finds that Respondent violated Canons 17 and 18 of the CPR and recommends a penalty of reprimand or suspension subject to the discretion of the Commission.

Further, considering that it is established from the records that Respondent received a total of P48,000.00 from Complainant and that the only legal service rendered by Respondent consists of the notarization of the deed of sale covering the subject property and the filing of the adverse claim, this Commissioner believes that P8,000.00 is sufficient compensation for the services actually rendered and thus recommends that

Respondent be ordered to pay Complainant P40,000.00 by way of restitution to Complainant."6

Acting on the above recommendation, the IBP board of governors approved on July 30, 2004, the following Resolution:

"RESOLUTION NO. XVI-2004-386CBD Case No. 03-1141Marissa L. Macarilay vs.

Atty. Felix B. Seriña

RESOLVED to ADOPT and APPROVE, as it is hereby ADOPTED and APPROVED, with modification, the Report and Recommendation of the Investigating Commissioner of theabove-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 for respondent's violation of Canons 17 and 18 of the Code of Professional Responsibility by his failure to exercise due diligence in protecting and attending to the interest of complainant after receiving payment for the legal services he was supposed torender, Atty. Felix B. Seriña is hereby SUSPENDED from the practice of law for six (6) months and Ordered to Pay complainant P40,000.00 by way of Restitution."7

The Court's Ruling

We agree with the foregoing Resolution of the IBP board of governors.

Administrative Liability

A lawyer-client relationship is highly fiduciary in nature;8 it is delicate, exacting and confidential.9 It requires a high standard of conduct and demands utmost fidelity, candor, fairness, and good faith.10 The legal profession demands vigilance and attention expected of a "good father of a family."11 Lawyers should adopt the norm expected of people of good intentions.In brief, they must always be protective of the interests of their clients as good parents would be protective of their own families.12

Indeed, under their sacred oath, lawyers pledge not to delay any person for money or malice. They are bound to conduct themselves according to the best of their knowledge and discretion, with all good fidelity to their clients.13

These duties are further stressed in the Code of Professional Responsibility, specifically in the following pertinent provisions:

"CANON 15 – A lawyer shall observe candor, fairness and loyalty in all his dealings and transactions with his clients.

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

x x x x x x x x x

"Rule 16.03 – A lawyer shall deliver the funds and property of his client when due or upondemand. x x x.

"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 18 – A lawyer shall serve his client with competence and diligence.

x x x x x x x x x

"Rule 18.03 – A lawyer shall not neglect a legal matter entrusted to him and his negligence in connection therewith shall render him liable.

"Rule 18.04 – A lawyer shall keep the client informed of the status of his case and shall respond within a reasonable time to the client's request for information."

Admittedly, respondent received the amount of P20,000 as acceptance fee for the cases he had agreed to file on behalf of complainant. Plainly, he was less than candid in his dealings with his client; he displayed lack of honesty and fidelity to her cause. Sufficiently established were the following acts: (1) despite his receipt on May 16, 2002, of P20,000 for filing fees, he did not file the cases he had agreed to handle; (2) he deceived complainant when he lied by saying that a civil complaint had been filed in the sala of one "Judge Regala" of the Regional Trial Court of Quezon City; (3) respondent refused to return the money he had received for the filing fees. These misrepresentations, lies and lapses constituted a breach of his sworn duty as a lawyer and of the ethical standards he was required to honor and observe.

Lawyers owe full devotion to the protection of the interests of their clients, as well as warmth and zeal in the defense of the latter's rights.14 Once they agree to handle a case, lawyers are bound to give to it their utmost attention, skill and competence, regardless of its significance.15 Public interest requires that they exert their best efforts and use all their learning and ability in the speedy prosecution or defense of the client's cause.16 Those who perform that duty with diligenceand candor not only safeguard the interests of the client, but also serve the ends of justice.17 They do honor to the bar and help maintain the community's respect for the legal profession.18

Moreover, the lawyer-client relationship, being one of confidence, requires lawyers to give the client timely, adequate and truthful updates on the developments of the case.19 In this manner, the trust and faith of clients in their counsel would remain unimpaired.

Indeed, respondent neglected a legal matter entrusted to him by failing to file the complaints as he was supposed to. Unbelievable is his claim that the complaints were ready as early as April 5,2002, but that these were not filed anyway because complainant had refused to sign them, absent the correct address of the defendant (Albaria Mohammad).

First, evidence abound that it was complainant who was insistent that the cases be filed. She repeatedly inquired about the case, but respondent would not give her any clear answer. Later on, he lied to her by saying that the complaint was pending in the sala of one Judge Regala. His deception on top of his failure to file the cases were raised in the letter dated March 26, 2003,20 written by Atty. Noel Sorreda, her new counsel. In his April 4, 2003 reply,21 respondent did

not mention anything about the complaints that had allegedly been prepared as early as April 5, 2002. Commissioner Villadolid aptly observed in his Report:

"x x x The fact that respondent's 4 April 2003 letter-response to said letter, as well as respondent's subsequent letter dated 23 May 2003, did not contain either gives further credence to complainant's version of the facts. Notably, it was only in respondent's letter dated 14 July 2003 that respondent raised such defenses for the first time. Considering that said 14 July 2003 letter was in response to complainant's 28 June 2003 letter demanding the return of certain amounts for legal services which complainant believed respondent did not render, this Commissioner is inclined to believe that such defenses are mere afterthought to defeat complainant's claim for the return of said amounts."

Were it not for the vigilance of complainant in inquiring about the status of her cases, she would not have known that the complaints had not been filed at all. Respondent deliberately withheld informing her of his inaction, notwithstanding her repeated follow-ups. Thus, he is deemed to have wronged her and effectively betrayed the trust she had placed in him.

Second, his alleged lack of knowledge of the correct address of the defendant is not a hindrance to the filing of a complaint. Indeed, such address is material to the service of summons22 which, however, presupposes that a complaint has been properly filed in court. Furthermore, Section 14 of Rule 14 of the Rules of Court23 provides for remedies when the defendant's address is unknown. Thus, respondent should have nevertheless filed the complaint, especially because complainant had already given him payment for the filing fees. His attempt to cover up his negligence by wrongfully shifting the blame to her cannot be countenanced by this Court.

Finally, respondent should have returned the money to complainant following his failure to file thecases.24 Where the client gives money to the lawyer for a specific purpose -- such as to file an action or to appeal an adverse judgment -- the latter should, upon failure to do so, immediately return it to the former.25 The unjustified withholding of funds belonging to the client warrants the imposition of disciplinary action against the lawyer.26

It was sufficiently proven that, all in all, complainant had paid respondent P48,000:

"Similarly, a review of the records reveals that contrary to Respondent's claim, in additionto the P20,000.00 covered by the check dated 18 March 2002 which complainant paid during the parties' initial meeting, complainant made subsequent payments to respondent. Balaoro confirms that when she and complainant went back to respondent's office on 5 April 2002, complainant paid respondent P3,000.00 and P5,000.00 in cash. Another P20,000.00 was likewise paid to respondent as evidenced by the RCBC check dated 16 May 2002 issued by complainant to respondent."27

Likewise established was the obvious fact that the only legal service rendered by respondent consisted of the notarization of the Deed of Sale covering the property purchased by complainantand the filing of the adverse claim. We agree with Commissioner Villadolid that P8,000 was sufficient compensation for the services actually rendered. Hence, respondent must return to complainant the balance of P40,000 plus legal interest.

The failure of respondent to discharge his duty properly constitutes an infringement of ethical standards and of his oath. Such failure makes him answerable not just to his client, but also to

this Court, to the legal profession, and to the general public.28 The recommended penalty of suspension from the practice of law for six months is in accordance with jurisprudence.29

WHEREFORE, Atty. Felix B. Seriña is found GUILTY of violating Canons 15, 16, 17 and 18 of theCode of Professional Responsibility and is hereby SUSPENDED from the practice of law for a period of six (6) months, effective upon his receipt of this Decision. He is further ORDERED to return to Marissa L. Macarilay, within thirty (30) days from notice, the amount of P40,000, with interest at 6 percent per annum from May 16, 2002, until full payment. Let copies of this Decisionbe furnished all courts as well as the Office of the Bar Confidant, which is instructed to include a copy in respondent's personal file.

SO ORDERED.

Sandoval-Gutierrez, Corona, Carpio-Morales, and Garcia, JJ., concur.

G.R. No. L-30136 February 4, 1929

ASIATIC PETROLEUM COMPANY (PHILIPPINE ISLANDS), LIMITED, plaintiff-appellee, vs.JUAN POSADAS, JR., Collector of Internal Revenue, defendant-appellant.

Attorney-General Jaranilla for appellant.Ross, Lawrence and Selph and John B. Miller for appellee.

STATEMENT

Plaintiff is a foreign corporation duly licensed to do business in the Philippine Islands, with its principal office therein at Manila. The defendant is the Collector of Internal Revenue.

Plaintiff alleges that it is engaged in the business here of importing and selling petroleum and petroleum products; that it is customary, when such products are imported, to place them in bond, and the Collector of Customs, as the agent of the defendant, from time to time upon application and payment of the internal-revenue tax provided by law, issues his permit for the withdrawal of the amount of such products upon which the tax has been paid, and the same is then at the convenience of the plaintiff placed in its supply tanks, from which deliveries are made to its customers. Allegations are then made that a certain amount of kerosene was imported on January 14, 1927, and placed in its bonded tank No. 1, at Pandacan; that on March 22, 1927, withdrawal permits therefor were obtained and the internal-revenue tax thereon was paid for all of such kerosene, except 559.0118 tons; that on March 2, 1927, plaintiff imported another amount of kerosene which was placed in its bonded tank No. 1 at Pandacan and mingled with the other kerosene in that tank; that on March 23, 1927, plaintiff procured from the Collector of Customs withdrawal permit No. 8443 for 300 tons of such kerosene, paying therefor the specific tax of P5,609.82; that, thereafter, that amount of 300 tons was removed from the bonded tank No. 1 to its supply tank; that on March 30, 1927, plaintiff procured from the Collector of Customs withdrawn permit No. 8495, for which he paid the specific tax theron amounting to P4,843.33; that the last amount was not removed to plaitiff's supply tank under its withdrawal permit, but remained in its bonded tank No. 1 until April seventh, when it was shipped to its refinery as herein after alleged; that of the 300 tons taken out of bond under permit No. 8443 and removed to plaintiff's supply tank, 6.1717 tons only was sold or used in the Philippine Islands, the tax thereon amounting to P114.82; that about April 1, 1927, and soon after the removal from bond of said lot of 300 tons, plaintiff discovered that it was discolored and unfit for market or use in the Philippine Islands; that at once upon such discovery, it applied to the Collector of Customs for leave to reexport all of such kerosene, which was granted, and on April 7, 1927, plaintif shipped to its refinery in Singapore on the steamship La Crescenta 293.8583 tons remaining in the supplytank, which were withdrawn under permit No. 8443, and 259.0118 tons from its bonded tank No. 1, for which withdrawal permit No. 8495 had been issued, together with another lot of 2,279.1569tons from its bonded tank No. 1, for which withdrawal permit was never issued, and for which no specific tax was ever levied or paid; that the total amount of kerosene so shipped was 2,832.025 tons; that of the 300 tons of discolored kerosene withdrawn permit No. 8443, 293.8583 tons werereturned to plaintiff's refinery from its supply tank, and that the defendant has erroneously and illegaly collected and the plaintiff has paid the specific tax thereon of, P5,495; that the 259.0118 tons of discolored kerosene evidenced by withdrawal permit No. 8495 were returned to plaintiff's refinery fom its bonded tank No. 1, upon which there has been erroneously collected and paid

the specific tax of P4,843.33, by reason of which there is now due and owning the plaintiff from the defendant the sum of P10,338.33, for which demand has been made and payment refused.

It is then alleged that plaintiff secured the said withdrawal permits and paid the specific tax thereon under the belief that the kerosene in question was fit for use in the Philippine Islands, and that had known that it wasdiscolored and unfit for use, it would not have obtained the withdrawal permits or paid the specific tax, but would have returned all of said kerosene to its refinery; that at oonce the discovery thereof, plaintiff made a protest and demamded the refund of the amount, for which it prays a corresponding judgment.

To the complaint the defendant filed a general demurrer upon the ground that it did not state facts sufficient to constitute a cause of action, which was overruled.

For answer the defendant denies all the material allegations of the complaint, and alleges that the taxes which the plaintiff now seeks to recover were legally assessed and collected as internal-revenue taxes.

Upon such issues the case was tried and submitted upon the following stipulation of facts:

It is hereby agreed by and between the parties in the above-entitled action:

1. That the plaintiff is a foreign corporation duly authorized to transact business in the Philippine Islands, with its principal office therein in the City of Manila.

2. That the defendant is, and was at all times mentioned herein, the duly qualified and acting Collector of Internal Revenue of the Philippine Islands.

3. That the plaintiff herein, as a merchant, imported kerosene on two occasions and placed the same in its bonded tank No. 1 at Pandacan. On March 23, 1927, the plaintiff procured from the Insular Colector of Customs withdrawal permit No. 8443 for the withdrawal of 300 tons of said kerosene, paying to the said official specific taxes amounting to P5,609.82. The said 300 tons of kerosene were removed by the plaintiff from its bonded tank to its supply tank, which is used for the storage of consumption stock not under bond. Of the 300 tons of kerosene, 6.1417 tons where either sold or usedin the Philippine Islands. The rest, together with the 259.0118 tons, which will be treated hereafter, was reexported.

4. On March 30, 1927, the plaintiff herein procured from the Insular Collector of Customs withdrawal permit No. 8495 for the withdrawal of 259.0118 tons of kerosene, paying to the said official specific taxes amounting to P4,843.33. The said 259.0118 tons of kerosene were not removed to plaintiff's supply tank under said withdrawal permit, but remained in its bonded tank until it was reexported. The said tax of P4,843.33 was paid on March 30, 1927.

5. The reexportation of the kerosene involved in this case, together with other quantities of similar kerosene, was decided upon and finally carried out by the plaintiff, for the reason that the same had been found, after said withdrawal permits were obtained, to be discolored and unfit for marketing in the Philippine Islands.

6. That on April 1, 1927, the plaintiff wrote to the Insular Collector of Customs as follows:

THE ASIATIC PETROLEUM COMPANY (PHILIPPINE ISLANDS), LIMITED

1st April, 1927 S-1-M HCBW

THE INSULAR COLLECTOR OF CUSTOMS Manila

SIR:

REEXPORTATION OF DISCOLORED KEROSENE

We beg to inform you that we have 2,835.1667 tons of discolored kerosene in our tanks, which we respectfully request permission to return to Singapore by the steamship La Crescenta, which is due to arrive here about the 4th of april, as owing to discoloration it isunfit for marketing. Of the above quantity 2,279.1549 tons are in our tank No. 1, whihc has not been withdrawn from bond and was imported from Balikpapan and arrived on thesteamship Perlakon the 2d March, 1927 -- bond No. 5289, entry No. 9092, ship's reg. 176. The balance of the above quantity we wish to reexport is made up as follows:

1. Two hundred fifty-nine and one hundred eighteen ten thousandths tons was withdrawnfrom bond on the 30th of March, 1927, on which duties and taxes were paid, but this amount remains intact in our bonded tank No. 1.

2. Three hundred tons was withdrawn from bond on the 23d March, 1927, on which duties and taxes were paid on that date. This amount is now in our tank No. 3, which is not under bond, but none of this kerosene has been used.

The 559.0118 tons of kerosene on which duties and taxes have been paid was imported from Balikpapan and arrived on the steamship Usedom on the 14th January, 1927 — bond No. 5220, entry No. 2451-XH, ship's reg No. 44.

Under the circumstances, we should be glad of favorable considertion of our application and, when liquidation of the entries on which we have already paid duties and taxes are made, we shall be glad to receive refunds for the amount shipped out.

Very respectfully,

For the Asiatic Petroleum Co. (P. I.), Ltd.: (Sgd.) "H. C. WHITTAL"

7. That leave was duly granted to reexport the kerosene referred to in the letter of April 1st, said kerosene was reexported on April 7, 1927. That customs duties had been paid upon all of said kerosene. That no specific tax was levied or paid upon the said 2,279.1549 tons reffered to in said letter.

8. That on April 12, 1927, the plaintiff addressed the following letter to the Insular Collector of Customs which was received by this official on April 13, 1927:

12th April, 1927 S-1-M HCBW

THE ASIATIC PETROLEUM COMPANY(PHILIPPINE ISLANDS)

LIMITED, Manila

THE INSULAR COLLECTOR OF CUSTOMS Manila

SIR:

REEXPORTATION OF DISCOLORED KEROSENE

Per steamship La Crescenta

With reference to the reexportation of 2,832.025 tons of discolored kerosene by the above steamer, which sailed from here on the 7th instant, we respectfullr beg to apply for refund of internal revenue taxes amounting to P10,338.33 on 552.8701 tons of the abovewhich was withdrawn for consumption and then foundf unfit for marketing. This amount ismade up as follows:

552.8701 tons — 561,716 ks. — 689,222 liters at P0.015 liter, P10,338.33.

Specific gravity, .815.

1 kilo — 1.22699386 liters.

Bond No. 5220.

Entry No. 2451-HG & XH. (Withdrawals.)

I. R. Statements Nos. 991 and 1075.

The kerosene on which we are applying for refund of internal revenue taxes arrived here per steamship Usedom Reg. No. 44, 15th January, 1927.

Trusting that the above will meet with your favorable consideration and approval.

Very respectfully,

For the Asiatic Petroleum Co. (P. I.), Ltd.:(Sgd.) "H. C. WHITTAL"

9. That the Collector of Internal Revenue has failed and refused to allow the claim of the plaintiff for the refund of the taxes mentioned in paragraphs 3 and 4, less the sum of P114.82 corresponding to the 6.1417 tons of the kerosene in question which had been sold or used in the philippine Islands, or P10,338.33.

The lower court rendered judgment for the plaintiff for the full amount of its claim, without interest or costs, to which the defendant duly excepted and upon appeal assigns the following errors:

I. The lower court erred in not finding that the specific tax on the 300 tons of kerosene in question accrued upon its importation and become payable upon its transfer from the bonded tank to the supply tank of the plaintiff.

II. The lower court erred in not finding that the specific tax on the other 259.0118 tons of kerosene in question became legally due and collectible because of the fact that the plaintiff procured customs withdrawal permit No. 8495 for the withdrawal of said 259.0118tons of kerosene from its bonded tank.

III. The lower court erred in not finding that even granting that the taxes in question were illegally collected, the plaintiff cannot recover them because they were not paid under protest in accordance with law. In other words, the payment was voluntary.

IV. The lower court erred in not finding that, even granting that the plaintiff protested the payment of said taxes, such protest was made outside of the time prescibed by law which, therefore, bars the plaintiff from recovering.

V. The lower court erred in not finding that the mistake of the fact which plaintiff alleged led it to pay the taxes in question was entirely due to its own negligence, and is, moreover, not such a mistake of fact as would entitle the plaintiff to a refund.

VI. The lower court erred in ordering the defendant-appellant to return to the plaintiff-appellee the sum of P10,338.33 in question and in not granting a new trial.

JOHNS, J.:

The question presented by assignment of error Nos. 1, 2 and 5 are both novel and interesting, and involved the legal construction to be placed upon sections 1478 and 1480 of the Administration Code, which are as follows:

SEC. 1478. Articles subject to specific tax. — Specific internal-revenue taxes apply to things manufactured or produced in the Philippine Islands for domestic sale or consumption and to things imported from the United States or foreign countries, but not to any thing produced or manufactured here which shall be removed for exportation and is actually exported without returning to the Islands, whether so exported to its original state or as an ingredient or part of any manufactured article or product.

In case of importations the internal-revenue tax shall be in addition to the customs duties,if any.

No specific tax shall be collected on the any articles sold and delivered directly to the United States Army or Navy for actual use or issue by the Army or Navy, or on any article sold to the Bureau of Coast and Geodetic Survey, purchased with funds furnished by the Government of the United States, and any taxes which have been paid on articles so sold and delivered for such use or issue shall be refunded upon such sale and delivery.

SEC. 1480. Payment of specific tax on imported articles. — Internal-revenue taxes on imported articles shall be paid by the owner or importer to the customs offices, conformably with regulations of the Bureau of Internal Revenue and before the release ofthe such articles from the customhouse.

The defendant contends that the tax on the 300 tons of kerosene now in dispute accrued upon the importation of the kerosene in question, and that it became due and payable upon its transferfrom the bonded to the supply tank of the plaintiff. That it then became a part of the mass of the property of the state, and that its subsequent disposition is immaterial to this decision, citing the case of Asiatic Petroleum Co. vs. Rafferty (38 Phil., 475-479), in which this court said:

The theory of the law, with reference to the internal-revenue tax upon such merchandise, seems to be that the tax is not due and payable until it is about to be put into the commerce or trade of the country.

And admits that the kerosene in question was not only "about to be put into the commerce or trade of the country," but that it was actually put into the commerce and trade of the country by itsremoval from plaintiff's bonded tank No. 1 to its supply tank, and defendant then says:

But even granting, for the sake of argument, that the tax on said kerosene was not legallydue, the same cannot be recovered, for the reason that no protest accompanied its payment, as will be shown later.

He also says that while it is true that the 259.0118 tons were not actually put into the commerce and trade of the country, because they were not removed to plaintiff's supply tank, yet the fact that the plaintiff procured customs withdrawal permit No. 8495 for the kerosene conclusively shows that it was about to be removed therefrom, and that for such reason, the tax thereon became legally due and collectible, again citing the case of Asiatic Petroleum Co. vs. Rafferty, where it is said:

While the law permits the producer of taxable merchandise to delay the payment of the internal-revenue tax until "immediately before removal of the same from the place of production," the duly authorized and promulgated regulation of the defendant himself permits the importer of taxable merchadise to deposit the same in the bonded warehouse and to delay the payment of the internal-revenue tax until the same is about to be removed therefrom.

From which he contends that "the momment a withdrawal permit is obtained, the tax becomes due and collectible."

The plaintiff contends that from the use of the words "for domestic sale or consumption" in section 1478, it is apparent that it was the intention of the Legislature that the tax should be collected only upon those things "which are sold or consumed locally," citing section 1460 which says:

In computing the tax above imposed transactions in the following commodities shall be excluded:

(a) Things subjected to a specific tax.

(b) Agricultural products when sold by the producer or owner of the land where grown, or by any other person other than a merchant or commission merchant, whether in their original state, or not.

It then points out that the merchant's sales tax is not collectible upon things subject to a specific tax, and that the specific tax is collected before sale, and the merchant's sales tax after sale. That the one is on quantity or measure, and the other on value, and appellee the says:

But aside from these differences, they are intended for the same purpose, that is, a tax on "thingsfor domestic sales or consumption," otherwise why should the Legislature have exempted those things covered by the specific tax from the provisions of the law covering tax on sales? It is essentially the same tax but collected in a different manner and at a different time. The reason forthis in all probability, is that on certain commodities it was deemed more expedient to collect the tax before sale than after sale.

And also cites the Rafferty case in which this court says:

The theory of the law, with reference to the internal-revenue tax upon such merchandise, seems to be that the tax is not due and payable until it is about to be put into the commerce or trade of the country. The condition of the market at a particular time, or the situation in business generally, might cause the producer to withhold his merchandise and not allow it to be removed from the place of production for months, or even years; could he, under the above quoted provision of the law, be required to pay the internal revenue taxes until he saw fit to place his product upon the market?

The decision in the Rafferty case was founded upon the following material facts: Plaintiff there, with the approval of the defendant, entered the oils in bond, for storage in Internal Revenue Bonded Warehouse No. 59, in the City of Manila, and furnished the bond for the payment of all taxes that might accrue on the oils, and the defendant issued a permit for the discharge of the oils from the ship into the bonded warehouse. During the removal of the oils from the ship to the bonded warehouse 2,485 cases of gasoline and 500 cases of kerosene were totally destroyed byfire and never reached the bonded warehouse. The defendant required the plaintiff to make applications for withdrawal from the bonded warehouse of the oils which had been destroyed andto pay a specific tax of P3,033.20, which was paid under protest. Upon those facts the court held that the plaintiff was entitled to have its money refunded.

The decision in the Rafferty case was well written and is legally sound, and although the facts are somewhat different, the underlying fundamental law laid down in that case by inference at least tends to support plaintiff's contention in this case.

The very purpose and intent of the plaintiff herein removing the kerosene in question from the bonded warehouse to its supply tank was to place it on the market; otherwise, it would not have removed it or paid the tax, and the removal was made on the assumption that the kerosene was in a fit and suitable condition to sell to plaintiff's customers. At once upon the discovery that it was not, plaintiff called attention of that fact to the Collector of Customs and asked for and obtained a permit from him to ship the discolored kerosene out of the Philippine Islands to its plant in Singapore, to have it there refined and made suitable for the market. In the very nature ofthings, plaintiff would not want to sell the discolored kerosene in the Philippine Islands and could not do so without a substantial injury to its business reputation. It was for such reason that upon

making the discovery, plaintiff applied for and obtained the permits and went to a large amount oftrouble and expense in removing the kerosene from the Philippine Islands to its Singapore plant.

The real purpose and intent of the law in question is to require the payment of the specific tax on things imported from foreign countries for the purpose of domestic sale or consumption in the Philippine Islands. It is very apparent that the discolored kerosene in question was never imported by the plaintiff for domestic sale or consumption in the Philippine Islands; otherwise, it never would have gone to the trouble and heavy expense of removing it from the Islands to its Singapore plant for the purpose of having it refined and made suitable for the market. It never was the purpose or intent of the plaintiff to ship to the Philippine Islands discolored kerosene to be there sold and distributed to its customers, as there is no evidence that the plaintiff was ever engaged in the sale or distribution of colored kerosene. That is to say, it was the purpose and intent of the plaintiff to import into the Philippine Islands kerosene which was fit and suitable for sale on the market, and that it never was its intention to import discolored kerosene. That when itdiscovered that it had done so, it at once applied for and obtained a permit from the Government to reship it to its Singapore plant for refining purposes, which involved much trouble and a heavy expense, from all of which it is very apparent that the plaintiff never imported into the Philippine Islands discolored kerosene for domestie sale or consumption. If that it had been its purpose andintent, it never would have applied for and obtained a permit for its removal, and would never have reshipped the kerosene to its refining plant in Singapore, so as to have it refined and put in a fit and suitable condition for sale.

The defendant contends that the plaintiff should have made its discovery before it paid the tax, and that having paid the tax before the discovery, it is now estopped to claim or assert that the kerosene was not imported for domestic sale or consumption. That is not tenable. There is no evidence that, in the ordinary course of business, the plaintiff could have made the discovery before it paid the tax or that it was negligent in making the discovery. In the very nature of things, plaintiff could not make the discovery until after the oil in question was removed from the bonded tank to its supply tank, and when it was removed, the discovery was made. How then could the plaintiff be charged with negligence?

The next result of defendant's contention would be to collect a double specific tax on the quantityof kerosene in question. The discolored oil on which the tax was paid was removed with the consent of the government, and in the very nature of things, the plaintiff would have to again import that same amount of kerosene, and to do so, it would have to pay the same amount of specific tax as a condition precedent to its consumption or domestic sale in the Philippine Islands. In legal effect that would amount to the payment of two specific taxes on that amount of oil.

We attach importance to the language in the third paragraph of section 1478, not cited in either brief, which provides that no specific tax shall be collected on any articles sold and delivered directly to the United States Army, etc., and any taxes "which have been paid on articles so sold and delivered for such use or issue shall be refunded upon such sale and delivery."

It will be noted that this paragraph, which is a part of section 1478, uses the words "sold and delivered," and provides for a refund on all of such articles "so sold and delivered."

The defendant also relies on section 1579 of the Administrative Code, which provides:

When the validity of any tax is questioned, or its amount disputed, or other question raised as to liability therefor, the person against whom or against whose property the same is sought to be enforced shall pay the tax under instant protest, or upon protest within ten days, and shall thereupon request the decision of the Collector of Internal Revenue. . . .

But in the instant case, when the plaintiff paid the tax, there was no occasion to question the validity of the tax or the amount of it, for the simple reason that its validity never arose until after the discovery of the discolored kerosene, and in the final analysis the tax was paid under a mistake of fact and not of law, beween which there is a very marked difference in the authorities.

Proceedings of this kind are more or less of an equitable nature and are to be decided upon and are governed by rules of equity. Tested by that rule, why should the plaintiff be required to pay two specific taxes on the same amount of kerosene, of and fo rwhich, in the very nature of things,there was not and could not be but one domestic sale or consumption?

It appears from the stipulation of facts that withdrawal permit No. 8443 was issued on March 23, 1927; that permit No. 8495 was issued on March 30, 1927; and that on April 1, 1927, the plaintiff wrote a letter to the Insular Collector of Customs in which, among other things, it is said:

Under the circumstances, we shall be glad of favorable consideration of our application and, when liquidation of the entries on which we have already paid duties and taxes are made, we shall be gald to receive refunds for the amount shipped out.

It is conceded that this letter was written within the ten-day limit, but the defendant contends that it was not a protest within the maening of section 1579 above quoted. If the question involved here were one of law and not a mistake of fact, there would be much force in that contention. Buteven so plaintiff in that letter specifically says that when the proper liquidations on the entries on which we have already paid duties and taxes, "we shall be glad to receive funds for the amount shipped out." In the ordinary course of business, that language should be construed to mean thatthe plaintiff, even then, claimed and asserted that it was entitled to a refund of its money. This letter was followed by another of April 12, 1927, in which specific application was made "for refund of internal revenue taxes amounting to P10,338.33." The defendant says: "This letter may be considered a protest because it is sufficiently clear and specific." The letter of April 1st was also clear and specific, except as to the amount in pesos and the number of tons on which the refund was requested. But that was the mere question of mathematics and computation, all the data for which was in the possession and knowledge of the defendant.

In its final analysis, the letter of April first should be construed as a polite and courteous demand and request for the refund of the tax in question, to be paid at such time as the correct amount was ascertained and determined.

The case of Shevango Furnace Co. vs. Fairfield Township (78 Atl., 937), is not in point under the facts in this case. There, it appeared that the vice-president of the company wrote a letter after the payment of the tax, showing that at the time the company did not intend to contest the amount of the tax on certain grounds which were afterwards urged, and it was held that the tax there was not paid by a mistake of fact. Here condition is just the reverse. Upon making the discovery, the plaintiff promptly notified the defendant that when the amount of the refund was ascertained, "we shall be glad to receive refunds for the amount shipped out."

The case of Wright vs. Blakeslee, (101 U. S., 174; 25 Law. ed., 1048), lays down the rule that under the internal revenue laws, it is not necessary that the protest be reduced to writing. A verval protest is sufficient to give notice that the legality of the demand is disputed.

If the letter of April 1st was not intended as a demand and a request for the refund of money, whywas that portion of the letter ever written? The mere fact that it was couched in polite courteous language ought not to be construed against the plaintiff. To deny the plaintiff's right of discovery, upon the undisputed facts, would be to compel it to pay a double tax upon the amount of kerosene in question, which equity and good conscience will not permit.

The learned and well written opinion of the trial court is affirmed, without costs. So ordered.

Johnson, Street, Malcolm, Villamor, Ostrand, Romualdez and Villa-Real, JJ., concur.

[A.M. No. MTJ-95-1063. February 9, 1996]

ALFONSO C. CHOA, complainant, vs. JUDGE ROBERTO S. CHIONGSON, respondent.

R E S O L U T I O N

DAVIDE, JR., J.:

The uncomplicated issues in this administrative complaint have been properly joined withthe filing of the respondent’s comment as required in the 1st Indorsement of 18 August 1995ofHon. Bernardo P. Abesamis, Deputy Court Administrator. No further pleadings need be requiredfrom the parties.

In the complaint signed by Atty. Raymundo A. Quiroz as counsel for the complainant andverified by the latter, the respondent is charged with grave misconduct, gross bias and partiality,and having knowingly rendered an unjust judgment in Criminal Case No. 50322 entitled, “Peopleof the Philippines vs. Alfonso C. Choa.”

Criminal Case No. 50322 was for Perjury and initiated by the complainant’s wife, Leni L.Ong-Choa, through the filing of a letter-complaint with the Office of the City Prosecutor ofBacolod City. This complaint arose from the alleged untruthful statements or falsehoods in thecomplainant’s Petition for Naturalization dated 30 March 1989 which was docketed as CaseNo. 5395, of Branch 41 of the Regional Trial Court (RTC) of Bacolod City.

In due course, an Information was filed, in the Municipal Trial Court in Cities (MCTC)of Bacolod City by the Office of the Prosecutor, charging the complainant herein with perjuryallegedly committed as follows:

That on or about the 30th day of March, 1989, in the City of Bacolod, Philippines, and withinthe jurisdiction of this Honorable Court, the herein accused, did, then and there wilfully,unlawfully, feloniously and knowingly made untruthful statements of [sic] falsehoods uponmaterial matters required by the Revised Naturalization Law (C.A. No. 473) in his verified“Petition for Naturalization” dated April 13, 1989, subscribed and sworn to before Notary PublicFelomino B. Tan, Jr., who is authorized to administer oath[s], which petition bears Doc. No. 140;Page No. 29; Book No. XXIII; and Series of 1989, in the Notarial Register of said Notary Public,by stating therein the following, to wit:

5. 1 am married to a Filipino. My wife’s name is Leni Ong Choa and now resides at 46 MalaspinaStreet, Bacolod City. I have two (2) children, whose names, dates and places of birth, and residences are as follows:

NAME DATE OF PLACE RESIDENCE BIRTH OF BIRTH

ALBRYAN July 19, Bacolod 46 Malaspina St.,ONG CUQA 1981 City Bacolod City

CHERYL LYNNE May 5, Bacolod 46 Malaspina St.,

ONG CHOA 1983 City Bacolod City

xxx xxx xxx

10. I am of good moral character, I believe in the principles underlying the Philippine Constitution.I have conducted myself in a proper and irreprQachable manner during the entire period of my residence in the Philippines in my relations with the constituted government as well as with

the community in which 1 am living.

xxx xxx xxx

When in truth and in fact said accused knew that his wife Leni Ong Choa and their two (2) children were not then residing at the said address at No. 46 Malaspina Street, Villamonte, Bacolod City, having left the aforesaid residence in 1984, or about five (5) years earlier and were then residing at Hervias Subdivision, Bacolod City, that contrary to his aforesaid allegations in hisverified Petition for Naturalization, accused while residing at 211, 106 Street, Greenplains Subdivision, Bacolod City, has been carrying on an immoral and illicit relationship with one Stella Flores Saludar, a woman not his wife since 1984, and begotting [sic] two (2) children with her as a consequence, as he and his wife, the private offended party herein, have long been separated from bed and boards [sic] since 1984; which falsehoods and/ or immoral and improper conduct are grounds for disqualifications [sic] of [sic] becoming a citizen of the Philippines.

Act contrary to law.

The case was docketed as Criminal Case No. 50322 and was assigned to Branch III thereofwhere the respondent is the presiding Judge.

After trial, the respondent Judge rendered judgment on 21 February 1995 and found thecomplainant herein guilty beyond reasonable doubt of the crime of perjury. The respondentJudge accordingly sentenced him to suffer the penalty of six months and one day of prisioncorreccional and to pay the costs.

The complainant moved for a reconsideration of the judgment alleging that: (1) there is nobasis for the conviction since his petition for naturalization had been withdrawn and therefore hadbecome functus officio; (2) the petition for naturalization is a pleading, hence its allegations areprivileged; and (3) his prosecution violates the equal protection clause of the Constitution. Thelast ground is founded on an admission made by a representative of the Office of the SolicitorGeneral of her lack of knowledge of any perjury case filed based on a withdrawn or dismissedpetition for naturalization.

The respondent Judge denied the motion for reconsideration for lack of merit in an orderdated 31 March 1995.

The complainant filed the instant complaint on 14 July. 1995 and prayed for the removal ofthe respondent fudge from office. As grounds therefor, he alleges that:

(1) The respondent Judge is guilty of Grave Misconduct, Gross Bias andPartiality, and Knowingly Rendering An Unjust Judgment when he intentionally failedto divulge the next-door-neighbor relationship between him and the family of LeniOng Choa and to disqualify himself from sitting in the criminal case on such groundas part of the grand design and preconceived intention to unjustly convict thecomplainant of the crime charged without due process.

(2) The allegations in the Information do not constitute the offense of perjury.

(3) The petition having been withdrawn with finality, it has become functusoficio and it is as if the Petition was not filed at all so that whatever false statemeuts

were contained therein were no longer requiredby law and had ceased to be on amaterial matter.

(4) The respondent Judge admitted for prosecution Exhibit “P” (handwritten list ofproperties) even if this was self-serving as it was undated and unsigned; and Exhibit“Q” (letter of Leni Ong Choa’s counsel to the complainant) even if it was also self-serving as there was no showing that he received the letter.

(5) The respondent Judge has sentenced the complainant to suffer a penaltyhigher than that provided by law, without applying the Indeterminate Sentence Law.

The respondent Judge refutes the charge in his Comment dated 12 September 1995, thus:

He denies being the next-door-neighbor of Leni Ong Choa there being a house, belonging to the Sia family, separating his house and that of Leni Choa; he and the rest of the members of his family are not acquainted with Leni Choa or any member of her family and had not exchanged greetings nor is he even a nodding acquaintance of Leni Choa or any member of her family.

He asserts that if the allegations in the Information do not constitute an offense, the complainant should have filed a Motion to Quash but he did not. Just the same, when the complainant stated in the Petition that he together with his wife and children lived at 46 Malaspina St., Bacolod City, he committed a falsehood under oath because the truth is two (2) years before the filing of the Petition, his wife and two (2) children were not living with him anymore, making him liable for perjury.

Respondent also avers that the complainant is not of good moral character contrary to what he stated in the Petition for Naturalization since he is conducting an extra-marital relationship with Stella Flores Saludar, his former employee, with whom he has begotten two (2) children. As a matter of fact, a case for concubinage against complainant was filed and is now pending in Court.

According to the respondent, a reading of the Order granting the Motion to Withdraw the Petition will show that the Prosecutor representing the Office of the Solicitor General opposed the Motion to Withdraw the Petition for the reason that the complainant had abandoned his wife and two (2) children, is not giving them support and is now living with his paramour.

On the claim of the complainant that his petition for naturalization has became functus officio in view of its withdrawal, hence no longer existent, the respondent Judge maintains that the withdrawal reduced the petition to functus officio only for the purpose of the Special Proceedings.but not when it is used as evidence in other cases.

On the issue of the admissibility of the Exhibits P. Q and R, the respondent Judge contends that Exhibits P. Q and R were duly identified by Leni Ong Choa and her testimonies on these were found to be credible by the Court.

Finally, respondent Judge asserts that the Indeterminate Sentence Law is not applicable in the perjury case as the penalty imposed by the court did not exceed one (1) year.

The respondent Judge then prays for the dismissal of the complaint for being patentlywithout merit and for the censure and reprimand of the complainant’s counsel with a warning torefrain from filing similar harassment suits.

In the Evaluation contained in a Memorandum dated 17 November 1995 and duly approvedby the Court Mministrator, Hon. Zenaida N. Elepaño, Deputy Court Administrator, makes thefollowing findings and conclusions:

EVALUATION: A careful study of the records shows that the allegations of the complainant are devoid of any merit.

The charge that respondent Judge and Leni Choa are neighbors [sic] appears to be petty under the circumstances. Granting that they are indeed next-door neighbors does not necessarily meanthat respondent Judge has violated Rule 137 of the Rules of Court for Disqualification of Judges. Nowhere in said Rule is it ordained that being the neighbor of a party-litigant is reason enough for the Judge to disqualify himself from hearing the former’s case.

With respect to the complainant’s claim that the allegations in the information do not constitute the offense of perjury, an administrative proceeding is not the forum to decide whether the judge has erred or not, especially as complainant has appealed his conviction.

Even if the matter can be examined, we do not find any error in the Court’s decision.

The elements of perjury as enumerated in the case of People of the Philippines vs. Bautista(C.A., 40 O.G. 2491) are as follows:

(a) Statement in the affidavit upon material matter made under oath;

(b) The affiant swears to the truthfulness of the statements in his affidavit beforea competent officer authorized to administer oath;

(c) There is a willful and deliberate assertion of falsehood; and

(d) Sworn statement containing the falsity is required by law.

It cannot be denied that the petition for naturalization filed by Alfonso C. Choa was made under oath and before a competent officer authorized to administer oath as shown by the records (p. 4, APPENDIX “A”). This petition for naturalization is required by law as a condition precedent for thegrant of Philippine citizenship (Section 7 Corn. Act No. 473).

The question now boils down to whether there is a willful and deliberate assertion of falsehood.

As shown by the records (p. 1, APPENDIX “A”), Alfonso C. Choa declared in his petition dated 30March 1989 that his wife Leni Ong Choa resides at 46 Ma!aspina St. Bacolod City while in the administrative complaint he filed against respondent Judge, he stated that his wife Leni Ong Choa left their family residence (46 Malaspina St., Bacolod City) in the latter part of 1984 (p. 6, par. 2 of Adrn. Complaint). This simply means that when he filed his petition for naturalization, Leni Ong Choa was not residing at the abovementioned address anymore.

It was also proven that Alfonso C. Choa had a child with a woman not his wife and he himself signed the birth certificate as the father of that child (p. 4, APPENDIX “E”). This is contrary to what he declared in his petition that he is of good moral character which is required under the Naturalization Law (par. 3, Sec. 2 Corn. Act No. 473).

There wa€ therefore a deliberate assertion of falsehood by Alfonso C.. Choa to warrant conviction for perjury as found by Judge Chiongson.

As to the complainant’s claim that the withdrawal of the petitiorr makes it functus officio, we sustain the respondent Judge’s view that the Petition can be used as evidence in another case. In the case of People of the Philippines vs. Cainglet (16 SCRA 748) the Court held that “every interest of public policy demands that perjury be not shielded by artificial refinements and narrow technicalities. For perjury strikes at the very administration of the laws (Jay vs. State, [1916] 15 Ala. App. 255, 43 So. 137). It is the policy of the law that judicial proceedings and judgment shall be fair and free from fraud, Sand that litigants and parties be encouraged to tell the truth and thatthey be punished if they do not (People vs. Niles, 300 III., 458, 133 N.E. 252,37 A.R.L. 1284, 1289).”

On whether the judge erred in not applying the Indeterminate Sentence Law to the case, we cite Section 2 of R.A. N’o. 4103 (Indeterminate Sentence Law) which provides in part that “This Act

shall not apply to x x x those whose maximum term of imprisonment does not exceed one year, xx x” Since the penalty for perjury under Article 183 of the Revised Penal Code is arresto mayor inits maximum period which is one (1) month and one (1) day to six (6) months toprision correccional in its minimum period which is six (6) months and one (1) day to two (2) years and four (4) months, the respondent Judge was correct in not applying the Indeterminate Sentence Law.

As earlier stated, the foregoing discussion is in no way the final appreciation of the Court’s decision which is on appeal, but is made only to illustrate the utter lack of merit of this charge. Counsel for the complainant must be reprimanded for assisting in the filing of this complaint.

Deputy Court Administrator Elepaflo then recommends:

Premises considered, it is respectfully recommended that this complaint against Judge Roberto S. Chiongson be DISMISSED for lack of merit. It is further recommended that Atty. Raymundo A. Quiroz be REPRIMANDED for assisting in the filing of a patently unmeritorious complaint.

We fully agree with Deputy Court Administrator Elepaflo that the allegations in the complaint areutterly devoid of merit. Good faith and good motive did not seem to have inspired the filing of thecomplaint.

Indeed, as correctly pointed out by the respondent, if the complainant and his counselhonestly believed that the allegations in the Information in the perjury case did not constitute anoffense, they should have filed a motion to quash. Under Section 3(a), Rule 117 of the Rules ofCourt, the accused may move to quash the complaint or information on this ground.

The complainant never did; he was arraigned and entered intp trial. Although his failure todo so did not operate as a waiver of the said ground pursuant to Section 8 of the same Rule, itshowed, nevertheless, his admission of the weakness of the ground. If he had perceived it to bestrong, he would not have wasted an opportunity to put an early end to the ordeal of a prolongedlitigation. Besides, this ground had not at all been invoked by him, as shown in the order of 31March 1995 denying the complainant’s motion for the reconsideration.

The withdrawal of the Petition for Naturalization did not and cannot amount to a recall of thequestioned untruthful statements. Neither could it extinguish any offense which may have beencommitted by reason of such untruthful statements.

As to the respondent Judge’s being a next-door neighbor of the complainant’s wife - thecomplainant in the perjury case - it must be stressed that that alone is not a ground for either amandatory disqualification under the first paragraph or for a voluntary disqualification under thesecond paragraph of Section 1, Rule 137 of the Rules of Court. In any event, the complainanthas failed to disclose in his complaint that he had raised this matter at any time before therendition of the judgment. In fact, the summary of the grounds of his motion for reconsideration inthe respondent’s order denying the said motion does not include this matter. If indeed thecomplainant honestly believed in the justness of this grievance, he would have raised it in anappropriate pleading before the trial court.

Finally, the nature and character of the complainant’s grievances relative to the respondent’sjudgment finding the former guilty of perjury. May only be properly ventilated in an appropriatejudicial proceeding, such as an appeal from the judgment.

This kind of recourse, whether made in addition to a regular appeal from the judgment, or inlieu thereof, if none had been made, is clearly without any basis and cannot be tolerated for itrobs Judges of precious time which they could otherwise devote to the cases in their courts or tothe unclogging of their dockets.

Atty. Raymundo A. Quiroz, counsel for the complainant, must have been aware of the utterlack of merit of the charges against the respondent. As a Member of the Philippine Bar he isbound: (1) by his oath, not to, wittingly or willingly, promote or sue any groundless, false, orunlawful suit nor give aid nor consent to the same; (2) by Section 20(c), Rule 138 of the Rules of

Court, to counsel or maintain such action or proceedings only as appear to him to be just; and (3)to uphold the Code of Professional Responsibility. It was incumbent upon him to give a candidand honest opinion on the merits and probable results of the complainant’s case(Rule 15.05, Canon 15, Code of Professional Responsibility) with the end in view of promotingrespect for the law and legal processes (Canon 1, Id.). He should, therefore, be required to showcause why no disciplinary action should be taken against him for his apparent failure to observethe foregoing duties and responsibilities.

WHEREFORE, for want of merit, the instant complaint is DISMISSED.

For the reasons above stated, Atty. Raymundo A. Quiroz is hereby directed to SHOWCAUSE, within fifteen (15) days from notice hereof, why he should not be disciplinarily dealt withfor his apparent failure to comply with his duties and responsibilities above stated.

SO ORDERED.

G.R. No. L-48241 June 11, 1987

REPUBLIC OF THE PHILIPPINES, petitioner, vs.HON. JOSE P. ARRO, in his capacity as Presiding Judge, Br. III, Court of First Instance of Davao, ISABELO I. PACQUING respondents.

GANCAYCO, J.:

This is a Petition for Certiorari, Mandamus, Prohibition and Injunction, seeking the nullification of the Orders of March 9, 1978 and April 21, 1978 of the Court of First Instance of Davao in Civil Case No. 6509, the resolution of which revolves on whether the negligence of counsel who went abroad and practically abandoned a case can bind his client.

On May 16, 1969, the petitioner filed a complaint entitled "Republic of the Philippines vs. Isabelo I. Pacquing and Carmen B. Pacquing, " for the collection of deficiency taxes 1 based on the income tax returns filed by the respondents-spouses, for the years of 1956, 1957 and 1958. Afterprivate respondents filed their answer to the original complaint through the assistance of their counsel, Atty. Vicente Garcia, petitioner filed, with leave of court 2 an amended complaint, 3 increasing the income tax deficiency sought. 4 Private respondents moved to dismissthe amended complaint. 5 On June 7, 1973, respondent court denied the motion to dismiss. Private respondents' Answer to the original complaint was adopted as their Answer to the amended complaint.

After trial on the merits and the submission of the memorandum of the parties a decision was rendered on October 10, 1977, the dispositive portion of which reads:

IN VIEW OF ALL THE FOREGOING judgment is hereby rendered ordering the defendants to pay to the plaintiff:

UNDER THE FIRST CAUSE OF ACTION

1. The sum of P26,819.90 as sales and percentage taxes from 1954 to 1957;

UNDER THE SECOND CAUSE OF ACTION

2. The sum of P260,071.22 as deficiency income taxes for 1956, 1957 and 1958, plus 5% surcharge and 1% monthly interest from August 6, 1962 Until fully paid, pursuant to Section 5(a) of the National Internal Revenue Code, as amended by Republic Act No. 2343.

COMMON TO BOTH CAUSES OF ACTION

The sum of P 25,000.00 is hereby directed to be deducted from the total liability ordered to be paid to the plaintiff under the above first and second causes of actions, defendants' unauthorized payments under the tax amnesty.

Without special pronouncement, as to costs.

SO ORDERED. 6

On December 19,1977, notice and a copy of the decision was delivered at the office of Atty. Vicente Garcia, which was received by his clerk. On January 19, 1978, there being no appeal taken, 7 petitioner filed a motion for execution of the judgment. 8 Meanwhile, on January 23, 1978, private respondents, thru another counsel, Atty. Alberto Lumakang, filed a Notice of Appealwith a motion for extension of time 9 to submit record on appeal. Petitioner filed an opposition on the ground that the copy of the decision was duly received by Atty. Garcia's clerk and that from the date of said receipt thereof,10 the thirty (30) day period for appeal 11 had already lapsed. In the Order of March 9, 1978, 12 the trial court gave due course to the appeal and granted the motion for extension of time of twenty (20) days to file the record on appeal. A motion for reconsideration was filed by petitioner. On April 21, 1978, the respondent court issued an Order 13 denying petitioner's motion for reconsideration 14 as well as the motion for Writ of Execution.

Hence, the present petition.

The pertinent rules on appeal is found in Rule 41 of the Revised Rules of Court as follows:

SEC. 3. How appeal is taken. — Appeal may be taken by serving upon the adverse party and filing with the trial court within thirty (30) days from notice of order or judgment, a notice of appeal, an appeal bond, and a record on appeal. The time during which a motion to set aside the judgment or order or for a new trial has been pending shall be deducted, unless such motion fails to satisfy the requirements of Rule 37.

xxx xxx xxx

SEC. 5. Appeal bond. — The appeal bond shall answer for the payment of costs. It shall be in the amount of one hundred and twenty pesos (P l20) unless the court shall fix a different amount. If the appeal bond is not in cash it must be approved by the court before the transmittal of the record on appeal to the appellate court.

SEC. 9. When appeal deemed perfected; effect thereof.-If the notice of appeal, the appeal bond and the record on appeal have been filed in due time, the appealis deemed perfected upon the approval of the record on appeal and of the appealbond other than a cash bond, and thereafter the trial court loses its jurisdiction over the case, except to issue orders for the protection and preservation of the rights of the parties which do not involve any matter litigated by the appeal, to approve compromises offered by the parties prior to the transmittal of the record on appeal to the appellate court, and to permit the prosecution of pauper's appeals.

It is a requirement under the aforequoted provisions that a notice of appeal, appeal bond and record on appeal should be filed in court and served upon the adverse party within thirty (30) days from notice of judgment.15 This is mandatory and jurisdictional. 16

When a party appears by attorney in an action or proceeding in court, all notices required to be given therein must be given to the attorney and not to the client. Hence a notice given to the client and not to his attorney is not a notice in law. 17

The rule in this jurisdiction is that the client is bound by the negligence or failings of counsel. 18 Itis the duty of an attorney to himself and to his clients to invariably adopt a system whereby he can be sure of receiving promptly all judicial notices during his absence from his address of record. 19 The attorney must so arrange matters that communications sent by mail, addressed tohis office or residence, may reach him promptly. 20 The negligence of a counsel's secretary in failing to note down the trial date on his desk calendar is negligence and failings of counsel in having a negligent secretary — said circumstances not constituting excusable negligence. 21

This rule, however, is not without exception. In the case of an irresponsible lawyer who totally forgot about the case and failed to inform his client of the decision, this Court held that the client should not be bound by the negligence of the counsel. 22

Under the peculiar circumstances of the instant case the negligence of the counsel is far from excusable. Atty. Vicente Garcia who was the counsel of private respondents went to the United States of America but had a clerk in-charge of his office. The copy of the decision was received on December 19, 1977 by said clerk. He did not do anything about the same so the reglementaryperiod of appeal lapsed. It can be assumed that said clerk received appropriate instructions from Atty. Garcia as to what to do with any processes, orders or notices that maybe received or otherwise that no such instruction were given. In either case there is inexcusable negligence. Private respondents have no one to blame except their lawyer. They are bound by the negligence and failings of their lawyer. And the appeal not having been interposed within the reglementary period, the decision has now become final and executory.

WHEREFORE, the petition is hereby GRANTED. The Orders of March 9, 1978 and April 21, 1978 of the Court of First Instance of Davao in Civil Case No. 6509 are hereby set aside for being null and void, and the decision of the trial court in said case of October 10, 1977 is hereby declared final and executory with costs against private respondents.

SO ORDERED.

Yap (Chairman), Narvasa, Melencio-Herrera, Cruz, Feliciano and Sarmiento, JJ., concur.

G.R. No. 40457 May 8, 1992

MOBIL OIL PHILIPPINES, INC., petitioner, vs.COURT OF FIRST INSTANCE OF RIZAL, BRANCH VI, GEMINIANO F. YABUT and AGUEDA ENRIQUEZ YABUT, respondents.

Ramon O. Nolasco and Manuel N. Camacho for petitioner.

Felipe C. Magat for private respondents.

NOCON, J.:

This is a petition for review on certiorari filed by petitioner Mobil Oil Philippines, Inc. questioning (1) the Order of respondent Court of First Instance, Branch VI, Pasig, Rizal, promulgated on November 20, 1974 declaring its earlier Decision dated July 25, 1974 as null and void insofar as it concerned private respondents Geminiano F. Yabut and Agueda Enriquez-Yabut, and (2) the Order promulgated on February 20, 1975 and denying petitioner's Motion for the Issuance of a Writ of Execution and Appointment of Special Sheriff.

The facts of the case are as follows:

On November 8, 1972, petitioner filed a complaint 1 in the Court of First Instance of Rizal against the partnership La Mallorca and its general partners, which included private respondents, for collection of a sum of money arising from gasoline purchased on credit but not paid, for damagesand attorney's fees.

On December 22, 1972, petitioner, with leave of court, filed an Amended Complaint 2 impleading the heirs of the deceased partners as defendants. During the hearing held on April 1, 1974, after petitioner had presented its evidence, the parties agreed to submit the case for decision on the basis of the evidence on record adduced by petitioner but "to exclude past interest in the amount of P150,000.00 and to award nominal attorney's fees." Consequently, on July 25, 1974, a Decision 3 was rendered in favor of the petitioner and against defendants. Private respondents thereafter filed a Petition to Modify Decision and/or Petition for Reconsideration, 4 which was opposed 5 by petitioner.

The Petition to Modify Decision and/or Reconsideration is predicated on the following grounds:

1. That there was no stipulation or agreement of the parties on the award of attorney's fees;

2. That Miguel Enriquez, not being a general partner, could not bind the partnership in the Sales Agreement he signed with plaintiff; and

3. That defendant Geminiano Yabut already withdrew as partner and president of La Mallorca as of September 14, 1972.

On November 20, 1974, respondent court issued its disputed Order 6 declaring its decision null and void insofar as private respondents were concerned on the ground that there was no evidence to show that the counsel for the defendants had been duly authorized by their respective clients to enter into a stipulation or facts, a compromise agreement or a confession judgment with petitioner, a ground never raised by the parties. Petitioner filed a Motion for Reconsideration and Clarification, 7 seeking the reconsideration of said order or, if not reconsidered, clarification from respondent court as to whether or not there will be further proceedings for reception of private respondents' evidence in court. Respondent court denied themotion, as well as petitioner's Motion for the Issuance of a Writ of Execution and Appointment of Special Sheriff, by way of the Order dated February 20, 1975. Hence, this petition.

The issue presented before Us is whether or not public respondent acted with grave abuse of discretion amounting to lack of jurisdiction in declaring null and void its earlier decision of July 25,1974.

We find merit in the instant petition.

In the Order of November 20, 1974, 8 respondent court declared the decision dated July 25, 1974 null and void for the following reason:

There is no evidence on record to show that the attorneys of record for the defendants had been duly authorized by their respective clients, including presentmovants, to enter into a stipulation of facts or a compromise agreement of confession of judgment. Ant any settlement or confession of judgment which an

attorney may enter for his client without any written authority cannot bind the client. To be sure, the stipulation of facts which amounts to or approximates a compromise agreement, or waives a right or practically confesses judgment, entered into by a lawyer without the consent and conformity of his clients, is an absolute nullity. This precisely is what appears to be the stipulation of the movants, as well as the other defendants as the records show. In view of the conclusion thus reached, it would appear that there is no necessity to discuss theother grounds raised by the movants.

The records show that the petitioner had already adduced evidence and formally offered its evidence in court; that at the hearing of April 1, 1974, for the presentation of defendants' evidence, the parties through their counsels, 9 mutually agreed to the waiver of the presentation of defendants' evidence on one hand, and the waiver of past interest in the amount of P150,000.00 on the part of the plaintiff and the payment of only nominal attorney's fees, thus the respondent court issued the following Order:

Calling this case for hearing today, the parties pray the Court that they are submitting the case for decision on the basis of the evidence thus presented but to exclude past interest in the amount of about P150,000.00 and to award nominal attorney's fees.

Finding the said motion in order, let judgment be rendered in accordance with theevidence so far presented. 10

The foregoing Order is not a stipulation of facts nor a confession of judgment. If at all, there has been a mutual waiver by the parties of the right to present evidence in court on the part of the defendants on one hand, and waiver of interest in the amount of P150,000.00 and the stipulated attorney's fees of 25% of the principal amount on the part of the plaintiff, except a nominal one.

The counsels of the parties in this case had the implied authority to do all acts necessary or incidental to the prosecution and management of the suit in behalf of their clients of their clients who were all present and never objected to the disputed order of the respondent court. They have the exclusive management of the procedural aspect of the litigation including the enforcement of the rights and remedies of their client. Thus, when the case was submitted for decision on the evidence so far presented, the counsel for private respondents acted within the scope of his authority as agent and lawyer in negotiating for favorable terms for his clients. It maybe that in waiving the presentation of defendants' evidence, counsel believed that petitioner's evidence was insufficient to prove its cause of action or knowing the futility of resisting the claim, defendants opted to waive their right to present evidence in exchange for the condonation of pastinterest in the amount of around P150,000.00 and the award of a nominal attorney's fees instead of the 25% stipulated in the Sales Agreement and Invoices. In fact, when counsel secured a waiver of the accumulated interest of P150,000.00 and the 25% stipulated attorney's fees, the defendants were certainly benefited.

Parties are bound by the acts and mistakes of their counsel in procedural matters. Mistakes of counsel as to the relevancy or irrelevancy of certain evidence or mistakes in the proper defense, in the introduction of certain evidence, or in argumentation are, among others all mistakes of procedure, and they bind the clients, as in the instant case. 11

Having obtained what defendants bargained for and having wrongly appreciated the sufficiency or insufficiency of petitioner's evidence, private respondents are now estopped from assailing thedecision dated July 25, 1974.

Records would show that private respondents have not submitted any evidence or pleading to contest the authority of their counsel to waive as he did waive presentation of their evidence in exchange for and in consideration of petitioner's waiver of past interest and the stipulated 25% ofattorney' fees.

Even if We construe the Order of April 1, 1974 to be based on an oral compromise agreement, the same is valid for as held in the case of Cadano vs. Cadano 12 an oral compromise may be thebasis of a judgment although written evidence thereof is not signed. It has been said that the elements necessary to a valid agreement of compromise are the reality of the claim made and the bona fides of the compromise. 13

The validity of a judgment or order of a court cannot be assailed collaterally unless the ground of attack is lack of jurisdiction or irregularity in their entry apparent on the face of the record or because it is vitiated by fraud. If the purported nullity of the judgment lies on the party's lack of consent to the compromise agreement, the remedy of the aggrieved party is to have it reconsidered, and if denied, to appeal from such judgment, or if final to apply for relief under rule 38. 14 It is well settled that a judgment on compromise is not appealable and is immediately executory unless a motion is field to set aside the compromise on the ground of fraud, mistake orduress, in which case an appeal may be taken from the order denying the motion. 15

Moreover, We do not find the grounds relied upon in private respondents' Petition to Modify Decision to be meritorious.

Mr. Miguel Enriquez automatically became a general partner of the partnership La Mallorca beingone of the heirs of the deceased partner Mariano Enriquez. Article IV of the uncontested Articles of Co-Partnership of La Mallorca provides:

IV. Partners. –– The parties above-named, with their civil status, citizenship and residences set forth after their respective names, shall be members comprising this partnership, all of whom shall be general partners.

If during the existence of this co-partnership, any of the herein partners should die, the co-partnership shall continue to exist amongst the surviving partners and the heir or heirs of the deceased partner or partners; Provided, However, that if the heir or heirs of the deceased partner or partners elect not to continue in the co-partnership, the surviving partners shall have the right to acquire the interests of the deceased partner or partners at their book value based upon the last balance sheet of the co-partnership, and in proportion to their respective capital contributions; And, Provided Further, that should a partner or partners desire to withdraw from the co-partnership and the remaining partners are not willing to acquire his or their shares or interest in the co-partnership in accordance with theforegoing provisions, the co-partnership shall not thereby be dissolved, but such retiring partner or partners shall only be entitled to his or their shares in the assets of the co-partnership according to the latest balance sheet which have been drawn prior to the date of his or their withdrawal. In such event, the co-partnership shall continue amongst the remaining partners. 16

As to respondent Geminiano Yabut's claim that he cannot be liable as a partner, he having withdrawn as such, does not convince Us. The debt was incurred long before his withdrawal as partner and his resignation as President of La Mallorca on September 14, 1972. Respondent Geminiano Yabut could not just withdraw unilaterally from the partnership to avoid his liability as a general partner to third persons like the petitioner in the instant case.

This is likewise true with regard to the alleged non-active participation of respondent Agueda Yabut in the partnership. Active participation in a partnership is not a condition precedent for membership in a partnership so as to be entitled to its profits nor be burdened with its liabilities.

From the foregoing, it is evident that the court a quo erred in issuing the Orders of November 20, 1974 and February 20, 1975 nullifying the decision dated July 25, 1974 and dismissing the complaint against private respondents Geminiano Yabut and Agueda Enriquez Yabut.

WHEREFORE, the Orders of November 20, 1974 and February 20, 1975 is hereby REVERSED and SET ASIDE and the Decision dated July 25, 1975 is reinstated and declaring the same valid and binding against private respondents Geminiano Yabut and Agueda Enriquez-Yabut. With costs de officio.

SO ORDERED.

Melencio-Herrera, Paras and Regalado, JJ., concur.

Padilla, J., took no part.

G.R. No. 117438 June 8, 1995

RAUL SESBREÑO, petitioner, vs.HON, COURT OF APPEALS, and PATRICIA GIAN, SOTERO BRANZUELA, ANDRES C. YPIL,SANTIAGO BACAYO, BRIGIDO COHITMINGAO, VICTORINO DINOY, GUILLERMO MONTEJO and EMILIO RETUBADO,respondents.

ROMERO, J.:

Of interest to all law practitioners is the issue at bench, namely, whether the Court of Appeals had the authority to reduce the amount of attorney's fees awarded to petitioner Atty. Raul H. Sesbreño, notwithstanding the contract for professional services signed by private respondents.

The antecedent facts of the case follow.

Fifty-two employees sued the Province of Cebu and then Governor Rene Espina for reinstatement and backwages. 1 Herein petitioner, Raul H. Sesbreño, replaced the employees' former counsel Atty. Catalino Pacquiao.

Thirty-two of the fifty-two employees signed two documents whereby the former agreed to pay petitioner 30% as attorney's fees and 20% as expenses to be taken from their back salaries.

On September 12, 1974, the trial court rendered a decision ordering the Province of Cebu to reinstate the petitioning employees and pay them back salaries. Said decision became final and executory after it was affirmedin toto by the Court of Appeals and the petition to review the appellate decision, denied by this Court in 1978. 2

A compromise agreement was entered into by the parties below in April 1979 whereby the formeremployees waived their right to reinstatement among others. Likewise, pursuant to said compromise agreement, the Province of Cebu released P2,300,000.00 to the petitioning employees through petitioner as "Partial Satisfaction of Judgment." The amount represented back salaries, terminal leave pay and gratuity pay due to the employees.

Sometime November and December 1979, ten employees, herein private respondents, 3 filed manifestations before the trial court asserting that they agreed to pay petitioner 40% to be taken only from their back salaries.

The lower court issued two orders, with which petitioner complied, requiring him to release P10,000.00 to each of the ten private respondents and to retain 40% of the back salaries pertaining to the latter out of the P2,300,000.00 released to him.

On March 28, 1980, the trial court fixed petitioner's attorney's fees at 40% of back salaries, terminal leave, gratuity pay and retirement benefits and 20% as expenses, or a total of 60% of allmonies paid to the employees.

Private respondents' motion for reconsideration was granted and on June 10, 1980, the trial courtmodified the award after noting that petitioner's attorney's lien was inadvertently placed as 60% when it should have been only 50%. The dispositive portion of the order reads:

WHEREFORE, in view of all the foregoing the order of this Court fixing 60% as attorney's fee[s] of Atty. Sesbreño should be 50% of all monies which the petitioners (Suico, et al.) may receive from the Provincial Government.

Obviously not satisfied with the attorney's fees fixed by the trial court, petitioner appealed to the Court of Appeals claiming additional fees for legal services before the Supreme Court, reimbursement for expenses and a clear statement that the fee be likewise taken from retirementpay awarded to his clients. Unfortunately, the respondent appellate court did not agree with him as the generous award was further reduced. 4

The appellate court noted that in this jurisdiction, attorney 's fees are always subject to judicial control and deemed the award of 20% of the back salaries awarded to private respondents as a fair, equitable and reasonable amount of attorney's fee. The decretal portion of the decision reads:

WHEREFORE, the questioned order is MODIFIED. The attorney's fees due Atty. Raul Sesbreño is fixed at an amount equivalent to 20% of all back salaries which the Province of Cebu has awarded to herein 10 petitioners. 5

Hence this petition for review where he claims that attorney's fees amounting to 50% of all monies awarded to his clients as contingent fees should be upheld for being consistent with prevailing case law and the contract of professional services between the parties. He adds that since private respondents did not appeal, they are not entitled to affirmative relief other than that granted in the regional trial court.

We find no reversible error in the decision of the Court of Appeals and vote to deny the petition.

Respondent court found that the contract of professional services entered into by the parties 6 authorized petitioner to take a total of 50% from the employees' back salaries only. The trial court, however, fixed the lawyer's fee on the basis of all monies to be awarded to private respondents.

Fifty per cent of all monies which private respondents may receive from the provincial government, according to the Court of Appeals, is excessive and unconscionable, not to say, contrary to the contract of professional services. 7 After considering the facts and the nature of the case, as well as the length of time and effort exerted by petitioner, respondent court reduced the amount of attorney's fees due him.

It is a settled rule that what a lawyer may charge and receive as attorney's fees is always subjectto judicial control. 8 A lawyer is primarily an officer of the court charged with the duty of assisting the court in administering impartial justice between the parties. When he takes his oath, he submits himself to the authority of the court and subjects his professional fees to judicial control. 9

As stated by the Court in the case of Sumaong v. Judge: 10

A lawyer is not merely the defender of his client's cause and a trustee of his clientin respect of the client's cause of action and assets; he is also, and first and foremost, an officer of the court and participates in the fundamental function of administering justice in society. It follows that a lawyer's compensation for professional services rendered are subject to the supervision of the court, not just

to guarantee that the fees he charges and receives remain reasonable and commensurate with the services rendered, but also to maintain the dignity and integrity of the legal profession to which he belongs. Upon taking his attorney 's oath as an officer of the court, a lawyer submits himself to the authority of the courts to regulate his right to professional fees. 11

In the case at bench, the parties entered into a contingent fee contract. The Agreement provides:

WE, the undersigned petitioners in the case of POLICRONIO BELACHO, ET AL.,VS. RENE ESPINA ET AL., hereby agree to pay Atty. Sesbreño, our lawyer, the following to be taken from our back salaries:

30% as attorney's fees20% as expenses

That we enter into agreement in order to be paid our back salaries as early as possible and so that we may be reinstated as early as possible.

A stipulation on a lawyer's compensation in a written contract for professional services ordinarily controls the amount of fees that the contracting lawyer may be allowed, unless the court finds such stipulated amount unreasonable unconscionable. 12

A contingent fee arrangement is valid in this jurisdiction 13 and is generally recognized as valid and binding but must be laid down in an express contract. 14 The amount of contingent fees agreed upon by the parties is subject to the stipulation that counsel will be paid for his legal services only if the suit or litigation prospers. A much higher compensation is allowed as contingent fees in consideration of the risk that the lawyer may get nothing if the suit fails.

Contingent fee contracts are under the supervision and close scrutiny of the court in order that clients may be protected from unjust charges. 15 Its validity depends in large measure on the reasonableness of the stipulated fees under the circumstances of each case. 16

When the courts find that the stipulated amount is excessive or the contract is unreasonable or unconscionable, or found to have been marred by fraud, mistake, undue influence or suppression of facts on the part of the attorney, public policy demands that said contract be disregarded to protect the client from unreasonable exaction. 17

Stipulated attorney's fees are unconscionable whenever the amount is by far so disproportionate compared to the value of the services rendered as to amount to fraud perpetrated upon the client. This means to say that the amount of the fee contracted for, standing alone and unexplained would be sufficient to show that an unfair advantage had been taken of the client, or that a legal fraud had been perpetrated on him. 18

The decree of unconscionability or unreasonableness of a stipulated amount in a contingent fee contract, will not however, preclude recovery. It merely justifies the court's fixing a reasonable amount for the lawyer's services.

Courts may always ascertain, if the attorney's fees are found to be excessive, what is reasonableunder the circumstances. Quantum meruit, meaning "as much as he deserves," is used as the basis for determining the lawyer's professional fees in the absence of a contract. Factors such as

the time spent and extent of services rendered; novelty and difficulty of the questions involved; importance of the subject matter; skill demanded; probability of losing other employment as a result of acceptance of the proffered case; customary charges for similar services; amount involved in the controversy and the benefits resulting to the client; certainty of compensation; character of employment; and professional standing of the lawyer, are considered in determining his fees. 19

There is nothing irregular about the respondent court's finding that the 50% fee of petitioner is unconscionable As aptly put by the court:

It effectively deprives the appellees of a meaningful victory of the suit they have passionately pursued. Balancing the allocation of the monetary award, 50% of all monies to the lawyer and the other 50% to be allocated among all his 52 clients, is too lop-sided in favor of the lawyer. The ratio makes the practice of law a commercial venture, rather than a noble profession.

. . . Also, the 52 employees who are the plaintiffs in the aforementioned civil case were dismissed from employment, their means of livelihood. All 52 hired claimant-appellant as counsel so that they could be reinstated and their source of income restored. It would, verily be ironic if the counsel whom they had hired to help would appropriate for himself 50% or even 60% of the total amount collectible by these employees. Here is an instance where the courts should intervene. 20

Considering the nature of the case, which is a labor case, the amount recovered and petitioner's participation in the case, an award of 50% of back salaries of his 52 clients indeed strikes us as excessive. Under the circumstances, a fee of 20% of back salaries would be a fair settlement in this case. In any event, this award pertains only to the ten private respondents herein. Petitioner has already been compensated in the amount of 50% of all monies received, by the rest of his clients in the case below.

WHEREFORE, in view of the foregoing, the petition is DENIED and the appealed decision AFFIRMED.

SO ORDERED.

Melo, Vitug and Francisco, JJ., concur.

Feliciano, J., is on leave.

[G.R. No. 124074. January 27, 1997]

RESEARCH and SERVICES REALTY, INC., petitioner, vs. COURT OF APPEALS andMANUEL S. FONACIER, JR., respondents.

D E C I S I O N

DAVIDE, JR., J.:

This petition for review on certiorari under Rule 45 of the Rules of Court questions thepropriety of the award for, and the reasonableness of the amount of, attorney's fees granted infavor of the private respondent by the Regional Trial Court (RTC) of Makati City, Branch 64, [1] inCivil Case No. 612,[2] which the Court of Appeals affirmed in its decision [3] of 31 March 1995 inCA-G.R. CV No. 44839.

The undisputed facts are as follows:

On 3 November 1969, the petitioner entered into a Joint Venture Agreement with Jose,Fidel, and Antonia Carreon. Under the said agreement, the petitioner undertook to develop,subdivide, administer, and promote the sale of the parcels of land owned by the Carreons. Theproceeds of the sale of the lots were to be paid to the Philippine National Bank (PNB) for thelandowner's mortgage obligation, and the net profits to be shared by the contracting parties on a50-50 basis.

On 4 April 1983, the Carreons and a certain Patricio C. Sarile instituted before the RTC ofMakati City an action against the petitioner for rescission of the Joint Venture Agreement. Theyprayed therein that pending the hearing of the case, a writ of preliminary injunction be issued toenjoin the petitioner from selling the lots subject of the agreement and that after hearing, the writbe made permanent; the agreement be rescinded; and the petitioner be ordered to pay the PNB

the stipulated 15% per annum of the outstanding obligation and to pay the plaintiffs attorney'sfees, exemplary damages, expenses of litigation, and costs of suit. This case was docketed asCivil Case No. 612 at Branch 64 of the said court.

In its answer, which was prepared and signed by Atty. Apolonio G. Reyes, the petitionersought the denial of the writ of preliminary injunction, the dismissal of the complaint, andpayment in its favor of (a) P10 million by way of actual damages; (b) P5 million by way of returnto the petitioner of the amount advanced to the Carreons, payments to the PNB, and cost of thework on the subdivision; (c) P100,000.00 by way of exemplary damages; (d) any and alldamages up to the amount of P4,638,420.00 which the petitioner may suffer under the terms ofits Performance Bond in favor of the National Housing Authority; (e) P50,000.00 as attorney'sfees; and (f) costs of suit.

On 9 April 1985, the petitioner engaged the services of private respondent Atty. Manuel S.Fonacier, Jr., [4] who then entered his appearance in Civil Case No. 612.

While the said case was pending, or on 24 July 1992, the petitioner, without the knowledgeof the private respondent, entered into a Memorandum of Agreement (MOA) [5] with another landdeveloper, Filstream International, Inc. (hereinafter Filstream). Under this MOA, the formerassigned its rights and obligations under the Joint Venture Agreement in favor of the latter for aconsideration of P28 million, payable within twenty-four months.

On 31 March 1993, the petitioner terminated the legal services of the private respondent. Atthe time the petitioner had already received P7 million from Filstream.

Upon knowing the existence of the MOA, the private respondent filed in Civil Case No. 612an Urgent Motion to Direct Payment of Attorney's Fees and/or Register Attorney's Charging Lienpraying, among other things, that the petitioner be ordered to pay him the sum of P700,000.00 ashis contingent fee in the case.[6]

After hearing the motion, the trial court issued an order dated 11 October 1993 directing thepetitioner to pay the private respondent the sum of P600,000.00 as attorney's fees on the basisof quantum meruit.

The trial court justified the award in this manner:

Insofar as material to the resolution of this Motion the records of this case show that movant Atty.Fonacier became the counsel of defendant Research in May 1985 while this case has been in progress. (Records, p.770). By this time also, the defendant Research has been enjoined by the Court from executing Contracts To Sell involving Saranay Homes Subdivision . . . . (Order dated December 3, 1984, Records pp. 625-626). However, the said counsel for defendant Research prepared for the latter various pleadings and represented it in Court (See Records after May 1985). Until his services were terminated the lawyer client relationship between Atty. Fonacier and Research was governed by a "contract" embodied in a letter addressed to Atty. Fonacier on April 19, 1985 [sic], the pertinent portion of which is reproduced below, as follows . . .

x x x

Soon after said letter, cases were referred to him including this case. In accordance with their agreement, there were instances that Research gave Atty. Fonacier ten (10%) percent of the amount received as the latter's attorney's fees pursuant to their agreement.

The instant case in which defendant is praying to be awarded attorney's fees, is an action for rescission of the Joint Venture Agreement between plaintiffs, Patricio Sarile, et al., as owners of aparcel of land and defendant Research & Service Realty, Inc., as developer of the land. At the time Atty. Fonacier entered his appearance as counsel for defendant Research, the Court has issued a preliminary injunction against Research. Thus all developmental and commercial activities of defendant had to stop. In this regard, Atty. Fonacier did spade work towards persuading the plaintiffs to agree to the relaxation of the effects of the injunction to pave the way to a negotiation with a third-party, the Filstream. Atty. Fonancier's efforts were complemented by the efforts of his counterpart in the plaintiff's side. The third-party Filstream Inc., became the assignee of defendant Research. In this connection, a memorandum of agreement was entered into between them. By the terms of agreement, defendant Research will be receiving from the third party Filstream International, Inc. (Filstream) the following amount. . . .

x x x

The termination of the legal services of Atty. Fonacier was made definite on March 31, 1993 at which time the Memorandum of Agreement which Research entered into with Filstream, Inc., hasalready been effective. By this time also, defendant Research has already received the first two stipulated consideration of the agreement in the total sum of Six Million (P6,000,000.00). The necessary and legal consequence of said "Memorandum of Agreement" is the termination of the case insofar as plaintiff Patricio Sarile, et al. and defendant Research is concerned. The conclusion of the Memorandum of Agreement insofar as the cause of Research is concerned, is a legal victory for defendant Research. What could have been a loss in investment has been turned to a legal victory. Atty. Fonancier's effort contributed to defendant's victory, albeit outside the Court which would not have been possible without the legal maneuvering of a lawyer.

The dismissal of the case before this Court will come in a matter of time considering that plaintiffs, with the assumption by the third party, Filstream Inc., of what were supposed to be the obligations to them of defendant Research pursuant to their Joint Venture Agreement, is no longer interested in pursuing the rescission.

It is a matter of record that Atty. Fonacier is the last of the three lawyers who handled this case. Moreover it is Atty. Fonacier who contributed to the forging of the memorandum of agreement as testified to by Atty. Rogel Atienza one of the two retained counsels of plaintiffs.

Considering the importance which is attached to this case, certainly it would not be fair for Atty. Fonacier if his attorney's fees in this case would be equated only to the measly monthly allowance of (P800.00) Pesos and office space and other office facilities provided by defendant Research. Ten (10%) per cent of the amount which Research had received from Filstream at thetime of the termination of a lawyer-client relationship between Atty. Fonacier and Research or P600,000.00 will be a just and equitable compensation for Atty. Fonancier's legal services, by way of quantum meruit (See Cabildo v. Provincial Treasurer, Ilocos Norte, et al., 54 SCRA 26).[7]

In its Order[8] of 12 January 1994, the trial court denied the petitioner's motion forreconsideration of the above order.

The petitioner appealed to the Court of Appeals. In its Appellant's Brief,[9] the petitioneralleged that the private respondent was not entitled to attorney's fees under the retainercontract. Moreover, the private respondent did not exert any effort to amicably settle the case,nor was he even present during the negotiations for the settlement of the same. There was,therefore, no legal and factual justification for the private respondent's "fantastic andunreasonable claim for attorney's fees of P600,000.00."

On the other hand, the private respondent asserted that he was assured by the petitionerthat non-collection cases were included in the contingent fee arrangement specified in theretainer contract wherein there was to be contingent compensation for any award arising fromany lawsuit handled by him. According to him, Civil Case No. 612 was not the only "non-collection" case he handled for the petitioner. There was a "right of way" dispute where thepetitioner was awarded P50,000.00, and the latter paid him P5,000.00, or 10% of the award asattorney's fees. He thus stressed that since under the memorandum of agreement the petitionerwas to receive P28 million, he should be entitled to 10% thereof or P2.8 million as attorney'sfees.

In its decision [10] of 31 March 1995, the Court of Appeals affirmed the challenged order ofthe trial court. It ratiocinated as follows:

Movant-appellee, on the other hand, correctly argues that it was the clear intention of appellant and counsel to compensate the latter for any legal services rendered by him to the former. Stated otherwise, it was never the intention of the parties in the instant appeal that counsel's services shall be free or to be rendered ex gratia.

xxx

It must in addition be underscored that the retainer contract of April 9, 1985 is the law that governs the relationship between appellant and appellee. In fact, the following provisions squarely and categorically supports the award of P600,000.00 to counsel, to wit:

Minimal allowance of P800 per month plus contingent fees and collection cases (case to case basis) aside from the attorney's fee recovered from any law suit.

(Paragraph 3, Retainer Contract)

In an American jurisprudence on this point cited in local annotation on the Canon of Professional Ethics, it was held that "if a lawyer renders valuable services to one who receives the benefits thereof, a promise to pay a reasonable value is presumed, unless such services were intended to be gratuitous" (Young vs. Buere, 78 Cal. Am. 127) In effect, to compensate a lawyer, we are faced with the pivotal question: "was the legal services intended to be free or not?" If it is not free, then, appellant must simply pay. The 10% contingent fee of the amount collected and/or to be collected in Civil Case No. 612 of the lower court, is, to Our mind fair and reasonable. As ruled by the Supreme Court in the case of Cosmopolitan Insurance Co. vs. Angel Reyes (G.R. L-20199, Nov. 23, 1965) 15% was even deemed reasonable. [11]

The petitioner filed a motion for reconsideration [12] on the ground among other things, thatthe decision is contrary to the evidence, as the trial court granted the claim for attorney's feesbased on quantum meruit, yet, the Court of Appeals granted the same on a contingent basis

which it based on an erroneous quotation and comprehension of the following provision of theretainer contract:

Minimal allowance of P800.00 per month plus contingent fees on collection cases (case to case basis) aside from the attorney's fees recovered from any law suit. (underscoring ours) [13]

In its decision, the Court of Appeals substituted the word "on" after "contingent fees" with theword "and." Under the aforequoted paragraph, the private respondent was entitled to attorney'sfees on contingent basis in collection cases only. In non collection cases, he was entitled only tothe attorney's fees that might be recovered in the lawsuit. [14] Since Civil Case No. 612 is not acollection case but an action for rescission of a contract, then the aforequoted paragraph is notapplicable as a basis for awarding attorney's fees to the private respondent.[15]

Finding nothing new in the motion for reconsideration, the Court of Appeals denied it in there-solution [16] of 15 February 1996.

The petitioner then came to us via this petition for review wherein it contends that

I

RESPONDENT COURT OF APPEALS HAD DECIDED THE CASE NOT IN ACCORD WITHLAW AND THE UNDISPUTED FACTS OF THE CASE.

II

RESPONDENT COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION INAWARDING ON CONTINGENT BASIS RESPONDENT-APPELLEE'S ATTORNEY'S FEES ONTHE BASIS OF A MEMORANDUM OF AGREEMENT IN WHICH HE HAD NO PARTICIPATIONIN THE NEGOTIATION AND PREPARATION THEREOF.

III

RESPONDENT COURT OF APPEALS GRAVELY ABUSED ITS DISCRETION IN AWARDINGEXCESSIVE AND UNREASONABLE ATTORNEY'S FEES.

IV

THE TRIAL COURT AND THE RESPONDENT COURT OF APPEALS HAVE NO JURISDICTIONTO SATISFY ATTORNEY'S CHARGING LIEN ON A SUM OF MONEY THAT THE COURT HADNO AUTHORITY TO DISPOSE OF AND OVER WHICH THE TRIAL COURT HAD MADE NOFINAL ADJUDICATION.

The petitioner's more important argument in support of the first error is the Court of Appeals'misquotation of the provision in the retainer contract regarding attorney's fees on contingentbasis, which the petitioner had stressed in its motion for reconsideration. The petitionermaintains that under the contract, attorney's fees on contingent basis could only be awardedin collection cases, and Civil Case No. 612 is not a collection case. Hence, the Court of Appealserred in affirming the award on that basis, while the trial court was correct in applying theprinciple of quantum meruit.

In its second assigned error, the petitioner asserts that the private respondent admitted inhis Urgent Motion to Direct Payment of Attorney's Fees and/or Register Attorney's Charging Lienthat he had not participated in the negotiations and preparation of the memorandum ofagreement, thus:

Despite the dishonest concealment, by the light of Providence coupled with a streak of good luck,counsel discovered in the first week of March 1993 that the parties had respectively entered into a meaningful agreement with a third-party as early as July 27, 1992, which in the case of client, case in the form of a "Memorandum of Agreement" (MOA) . . . . [17]

The third assigned error is but a logical consequence of the second, and the petitionermaintains that since the private respondent "did not do anything spectacular or out of theordinary" in Civil Case No. 612, "except to ask for the suspension or postponement of theproceedings thereof from 1985 to 1993," the P600,000.00 attorney's fees, whether on contingentbasis or quantum meruit, is excessive and unreasonable.

In the fourth imputed error, the petitioner argues that the memorandum of agreement wasnever submitted to the trial court, and the trial court never made any disposition or adjudicationover the proceeds of the said agreement. What would eventually happen then is the dismissal ofCivil Case No. 612, as the trial court itself had intimated in its challenged order. Necessarilythen, there would be no money adjudication in favor of the petitioner as the defendanttherein. Since such lien is collectible only from an award of money that a court would adjudicatein a judgment rendered in favor of the attorney's client pursuant to Section 37, Rule 138 of theRules of Court, it would follow that no attorney's charging lien could be validly entered.

We uphold the petitioner, but not necessarily on the strength of it arguments.

The parties are in agreement that the lawyer-client relationship between the petitioner andthe private respondent, Atty. Manuel S. Fonacier, Jr., was governed by a retainer contract dated 9April 1985. The petitioner's undertakings thereunder are outlined as follows:

I. CORPORAT[ION]:

1. Corporation will provide the following:

a. Office space — airconditioned

b. Furnishings, tables, executive chairs, visitor's chair & steelfiling cabinet

c. Telephone facilities and partial secretarial services.

2. Legal service referrals by the corporation to its clients for additional income of the lawyer.

3. Minimal allowance of P800 per month plus contingent fees on contingent fees oncollection cases (case to case basis) aside from the attorney's fees recovered from any lawsuit.

4. That in case of legal problems to be attended to outside Metro Manila and Suburbs, the corporation shall defray expenses for transportation, lodging and other legal expenses incidental in the case. [18]

An analysis of the contract clearly shows that it was a general retainer, since its primarypurpose was to secure beforehand the services of the private respondent for any legal problemwhich might afterward arise. [19] The fixed retaining fee was P800.00 a month. A retaining fee is apreliminary fee paid to ensure and secure a lawyer's future services, to remunerate him for beingdeprived, by being retained by one party, of the opportunity of rendering services to the otherparty and of receiving pay from him. In the absence of an agreement to the contrary, theretaining fee is neither made nor received in consideration of the services contemplated; it isapart from what the client has agreed to pay for the services which he has retained him toperform. [20]

In the retainer contract in question, there was no intention to make the retaining fee as theattorney's fees for the services contemplated. This is evident from the provision allowingadditional attorney's fees in collection cases consisting of (1) a "contingent fee" and (2) whateverthe petitioner might recover as attorney's fees in each case. The latter could only refer to theattorney's fees which the court might award to the petitioner in appropriate cases.

While the contract did not mention non-collection cases, it is, nevertheless, clear therefromthat such cases were not excluded from the retainership, as borne out by the provision requiringthe private respondent to "make appearances in Court for cases involving the corporation or anyallied cases pertaining to the latter." As to such cases, there was no specific stipulation ofadditional attorney's fees. Nevertheless, nothing therein shows that the private respondentagreed to render professional service in such cases gratuitously. The absence then of thestipulation of additional attorney's fees cannot be construed as a bar to the collection ofadditional attorney's fees in non-collection cases.

Two basic principles come into play. The first is as stated earlier, viz., that the retaining feeis neither made nor received in consideration of the services contemplated unless the contractitself so provides. The second is that, unless expressly stipulated, rendition of professionalservices by a lawyer is for a fee or compensation and is not gratuitous. This is implicit from theopening clause of Section 24, Rule 138 of the Rules of Court, which states that "[a]n attorneyshall be entitled to have and recover from his client no more than a reasonable compensation forhis services . . .," and by virtue of the innominate contract of facio ut des (I do and you give), asenunciated by this Court in Corpus v. Court of Appeals, [21] thus:

Moreover, the payment of attorney's fees . . . may also be justified by virtue of the innominate contract of facio ut des (I do and you give) which is based on the principle that "no one shall unjustly enrich himself at the expense of another." Innominate contracts have been elevated to acodal provision in the New Civil Code by providing under Article 1307 that such contracts shall beregulated by the stipulations of the parties, by the general provisions or principles of obligations and contracts, by the rules governing the most analogous nominate contracts, and by the customs of the people. The rationale of this article was stated in the 1903 case of Perez vs. Pomar (2 Phil. 682).

In Perez v. Pomar, [22] this Court stated:

[B]ut whether the plaintiff's services were solicited or whether they were offered to the defendant for his assistance, inasmuch as these services were accepted and made use of by the latter, we must consider that there was a tacit and mutual consent as to the rendition of the services. This gives rise to the obligation upon the person benefited by the services to make compensation therefor, since the bilateral obligation to render service as interpreter, on the one hand, and on the other to pay for the services rendered, is thereby incurred. (Arts. 1088, 1089, and 1262 of theCivil Code).

Accordingly, as to non-collection cases where the petitioner was either a plaintiff or adefendant, the private respondent could still collect attorney's fees, apart from his regularretaining fee, on the basis of any-supplemental agreement or, in its absence, under the principleof quantum meruit. There was no such supplemental agreement in this case.

We cannot sustain the private respondent's theory that he could collect attorney's fees oncontingent basis because in the other "non-collection" cases he handled for the petitioner' hewas paid on contingent basis at the rate of 10% of what was awarded to the petitioner. In thefirst place, Civil Case No. 612 is still unresolved, and no judgment has yet been rendered in favorof the petitioner. The amount in the memorandum of agreement could not be made the basis ofa "contingent fee" in the said case for at least three reasons. First, in his own Urgent Motion toDirect Payment of Attorney's Fees and/or Register Attorney's Charging Lien, the privaterespondent based the contingent fee not only in Civil Case No. 612 but in a "multitude ofperipheral cases," and the contingent fee would become due and collectible only if and when thepetitioner obtains a judgment in his favor in Civil Case No. 612. The second paragraph of page 3of the said motion reads as follows:

Hence, from May 1985 and continuously thru the years without interruption and surviving a series of no less than five (5) changes of Presiding Judges, the undersigned counsel labored tirelessly in handling the defense of client. In addition to the instant lawsuit, a multitude of peripheral cases, civil, criminal and administrative, arising from the non-delivery of titles by client on fully paid lots in the subdivision project were also filed as a consequence, not only against defendant but also against its President and Chief Executive Officer (CEO). Needless to state, the undersigned was designated to handle majority of these cases for both, where he appeared and conducted trial without any "appearance fees" for more than eight (8) long years solely relying on the contingent fee in case of recovery in the instant main case. [23] (underscoring supplied for emphasis)

Second, the amount of P28 million, which Filstream agreed to pay the petitioner, was not ajudgment or award in favor of the petitioner in Civil Case No. 612. It was the consideration of theassignment, transfer, and conveyance to Filstream of all the petitioner's "rights, interest andparticipation embodied and specified in the Joint Venture Agreement (Annex "A") and in all theeight hundred seventy-five (875) parcels of land comprising the SARANAY HOMES subdivision. .. ." The plaintiffs in Civil Case No. 612 were not parties to the memorandum of agreement, andthere is no showing that they agreed to the assignment of the petitioner's rights, interest, andparticipation in the Joint Venture Agreement. While paragraph 10 of the memorandum ofagreement provides that the petitioner

shall cause to sign a JOINT MOTION TO DISMISS, together with the CARREONS regardingCivil Case No. 612 of the Regional Trial Court of Makati and to further DISMISS, the case filed against PNB docketed as Civil Case No. 6918 of the Regional Trial Court of Makati . . .

[and] shall obtain the dismissal of all cases filed by lot buyers against it now pending with the HLURB

the fact remains that no such motion to dismiss has been filed yet in Civil Case No. 612, andthere is no assurance whatsoever that the plaintiffs therein will sign a joint motion to dismiss.Third, as correctly posited by the petitioner, the private respondent had no participation in thenegotiations leading to, and in the preparation of, the memorandum of agreement.

Indisputably then, the private respondent's attorney's fee on "contingent basis" in Civil CaseNo. 612 is unwarranted. If at all, he could only be entitled to attorney's fees on quantummeruit basis as of the expiration of his retainer contract on 31 March 1993.

Quantum meruit simply means "as much as he deserves." [24] In no case, however, must alawyer be allowed to recover more than what is reasonable pursuant to Section 24, Rule 138 ofthe Rules of Court, which provides:

SEC. 24. Compensation of attorneys, agreement as to fees. — An attorney shall be entitled to have and recover from his client no more than a reasonable compensation for his services, with a view to the importance of the subject-matter of the controversy, the extent of the services rendered, and the professional standing of the attorney. No court shall be bound by the opinion of attorneys as expert witnesses as to the proper compensation, but may disregard such testimony and base its conclusion on its own professional knowledge. A written contract for services shall control the amount to be paid therefor unless found by the court to be unconscionable or unreasonable.

This Court had earlier declared the following as circumstances to be considered indetermining the reasonableness of a claim for attorney's fees: (1) the amount and character ofthe service rendered; (2) labor, time, and trouble involved; (3) the nature and importance of thelitigation or business in which the services were rendered; (4) the responsibility imposed; (5) theamount of money or the value of the property affected by the controversy or involved in theemployment; (6) the skill and experience called for in the performance of the services; (7) theprofessional character and social standing of the attorney; (8) the results secured; and (9)whether the fee is absolute or contingent, it being recognized that an attorney may properlycharge a much larger fee when it is contingent than when it is not. [25]

Rule 20.1, Canon 20 of the Code of Professional Responsibility enumerates the followingfactors which should guide a lawyer in determining his fees:

(a) The time spent and the extent of the services rendered or required;

(b) The novelty and difficulty of the questions involved;

(c) The importance of the subject matter;

(d) The skill demanded;

(e) The probability of losing other employment as a result of acceptance of the proffered case;

(f) The customary charges for similar services and the schedule of fees of the IBP Chapter to which he belongs;

(g) The amount involved in the controversy and the benefits resulting to the client from the service;

(h) The contingency or certainty of compensation;

(i) The character of the employment, whether occasional or established; and

(j) The professional standing of the lawyer.

It was incumbent upon the private respondent to prove the reasonable amount of attorney'sfees, taking into account the foregoing factors or circumstances. The records before us and thetrial court's 11 October 1993 order do not confirm that the private respondent proved by eithertestimonial or documentary evidence that the award of P600,000.00 was reasonable. Theprivate respondent's testimony thereon was crucial. Yet, it does not appear from the 11 October1993 order that he took the witness stand. From the Minutes of the trial court attached tothe Rollo of CA-G.R. CV No. 44839, [26] it appears that only Atty. Atienza and Mr. Suazo gave oraltestimony on the motion.

It necessarily follows then that the 11 October 1993 order has insufficient factual basis, andthe trial court committed grave abuse of discretion in arbitrarily fixing the private respondent'sattorney's fees at P600,000.00. The affirmance of the said order by the Court of Appealspremised on the provision in the retainer contract regarding contingent fee is thus fatally flawed.

The interest for both the petitioner and the private respondent demands that the trial courtshould conduct further proceedings in Civil Case No. 612 relative to the private respondent'smotion for the payment of attorney's fees and, thereafter, fix it in light of Section 24, Rule 138 ofthe Rules of Court; Rule 20.1, Canon 20 of the Code of Professional Responsibility; and thejurisprudentially established guiding principles in determining attorney's fees on quantummeruit basis.

WHEREFORE, the instant petition is GRANTED. The challenged Decision of 31 March1995 of the Court of Appeals in CA-G.R. CV No. 44839 and the Order of 11 October 1993 of theRegional Trial Court of Makati, Branch 64, in Civil Case No. 612 are hereby SET ASIDE. Thetrial court is further DIRECTED to set for further hearing the private respondent's Urgent Motionto Direct Payment of Attorney's Fees and/or Register Attorney's Charging Lien and thereafter tofix the private respondent's attorney's fees in Civil Case No. 612 as of 31 March 1993 when hiscontract with the petitioner was effectively terminated, taking into account Section 24, Rule 138of the Rules of Court; Rule 20.1, Canon 20 of the Code of Professional Responsibility; and thejurisprudentially established guiding principles in determining attorney's fees on quantummeruit basis.

No pronouncement as to costs.

SO ORDERED.

Narvasa, C.J., (Chairman), Melo, Francisco, and Panganiban, JJ., concur.

GUENTER BACH,

Petitioner,

- versus -

ONGKIKO KALAW MANHIT & ACORDALAW OFFICES,

Respondent.

G.R. No. 160334 Present:

PANGANIBAN, C.J.

Chairperson,

YNARES-SANTIAGO,

AUSTRIA-MARTINEZ,

CALLEJO, SR., and

CHICO-NAZARIO, JJ.

Promulgated:

September 11, 2006

x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

D E C I S I O N

CHICO-NAZARIO, J.:

This Petition for Review on Certiorari seeks to reverse the Decision[1] dated 8 October

2003 of the Court of Appeals in CA-G.R. CV No. 74445, entitled,

“OngkikoKalaw Manhit & Accorda Law Offices v. Guenter Bach.”

The facts as culled from the records of the case are as follows:

On 7 November 1994, petitioner Guenter Bach engaged the services of respondent law

firm Ongkiko Kalaw Manhit & Accorda Law Offices to represent him in a Petition for Declaration

of Nullity of Marriage filed before the Regional Trial Court (RTC) of Makati City, Branch 143,

docketed as Civil Case No. 95-224. The parties signed a “Fee Agreement,” for the legal services

to be rendered by respondent. The provision for payment of the legal services reads:

(a) seven and one-half (7 ½ % ) of all cash recoveries, includingdamages, interests, attorney’s fees and costs; as well as

(b) five percent (5 %) of the market value of all properties awarded to [thepetitioner] by the court or obtained through the compromise agreement, valued atthe time of recovery.[2]

However, on 5 December 1995, respondent withdrew its appearance as counsel of

petitioner, due to policy differences. On 18 December 1995, respondent sent the termination

billing[3] for the services they rendered and billed petitioner the total amount of P1,000,000.00

plus 2% interest for every month of delay in payment, based on the provision for termination of

services stated in their Fee Agreement, thus:

(C) Interest for late payment

All fees mentioned herein are payable within seven (7) days fromreceipt of our statement of account. It is understood that all late payments shall

be subject to interest payment at the rate of 2 % per month of delay, a fractionof a month being considered as one month, counted from the date the feesshall fall due, without need of prior demand.

x x x x

(F) Termination Clause

It is understood that you may terminate our services at any time. In such anevent, we shall be entitled to collect fees for legal services already performedand results obtained based onquantum meruit.”[4]

On 7 March 1996, respondent filed with the RTC a Notice [5] of Charging Lien over the

properties of the spouses Bach.

On 5 February 1997, the RTC issued an Order [6] directing the annotation of the charging

lien in the amount of P1,000,000.00 on all the titles of the spouses Bach’s personal and real

properties enumerated in the notice of charging lien.

On 11 February 1999, respondent received a copy of the Order[7] dated 8 June 1998,

granting petitioner’s Motion to Withdraw his petition in Civil Case No. 95-224.

Despite respondent’s demands for his legal fees, petitioner failed and refused to

pay. Thus, respondent filed a Complaint[8] for a sum of money also before the RTC ofMakati,

Branch 148, docketed as Civil Case No. 99-514. Respondent prayed for the payment of the

following: P1,000,000.00 as the latter’s lawful fees for services rendered in Civil Case No. 95-

224, plus 2% interest from date of final demand until paid; P250,000.00 as exemplary

damages; P200,000.00 representing billable time spent in prosecuting the case, plus

another P150,000.00 for any appeal taken; and P50,000.00 as litigation expenses and the cost

of suit.

Within the period for filing an Answer, petitioner filed a Motion [9] to dismiss on the ground

that respondent’s claim had already been paid, waived, abandoned or otherwise

extinguished. Petitioner contended that prior to respondent’s withdrawal as counsel in Civil Case

No. 95-224, petitioner had already paid respondent’s services in the total amount

of P200,000.00. On 9 August 1999, the Motion to Dismiss was denied [10] by the RTC for lack of

merit. Petitioner failed to file his Answer; thus, he was declared in default and respondent was

allowed to present its evidence ex parte.[11]

On 24 January 2002, the RTC rendered its judgment in favor of the respondent,

the dispositive portion of which reads:

WHEREFORE, premises considered, judgment is hereby rendered infavor of the plaintiff and against the defendant and the latter is hereby ordered topay the following:

1. The amount of P750,000.00 as plaintiff’s lawful feesfor services rendered under Civil Case No. 95-224, plus interestat the rate of 2% per month from the date of demand until paid;

2. P700,000.00 representing billable time which wasspent in prosecuting this case;

3. P50,000.00 as and litigation expenses, and

4. Costs of suit.[12]

Not satisfied, petitioner appealed to the Court of Appeals, which modified the RTC

Decision, thus:

WHEREFORE, Based on the foregoing premises, the instant appeal isPARTLY GRANTED and the appealed January 24, 2002 Decision of the RegionalTrial Court of Makati City-Branch 148 in Civil Case No. 99-514 is herebyMODIFIED. Accordingly, the award of P700,000.00 representing billable time

allegedly spent in the prosecution of the case a quo is hereby DELETED. Allother aspects of the appealed DECISION are UPHELD.[13]

Hence, this Petition filed by petitioner Guenter Bach raising the following issues to wit:

WHETHER OR NOT UNDER THE CONCEPT OF QUANTUM MERUIT, THEAMOUNT OF P750,000.00 AS FEES FOR SERVICES RENDERED WITHINTEREST PEGGED AT 2% A MONTH FROM DATE OF DEMAND UNTILFULLY PAID IS REASONABLE

WHETHER OR NOT THERE IS LEGAL BASIS TO AWARD P50,000.00 AS ANDFOR LITIGATION EXPENSES AND COSTS OF SUIT.[14]

On the first issue, petitioner contends that the P750,000.00 awarded to the respondent by

way of quantum meruit, with interest of 2% a month from date of demand until fully paid, is

excessive, unreasonable and confiscatory. Thus, petitioner prays for reduction of the same.

Both the Court of Appeals and the trial court approved the attorney’s fees in the total

amounts of P750,000.00 plus 2 % interest for the services rendered by respondent in Civil Case

No. 95-224. In this regard, the rule is that the issue of the reasonableness of attorney’s fees

based on quantum meruit is a question of fact, and well-settled is the rule that conclusions and

findings of fact by the lower courts are entitled to great weight on appeal and will not be disturbed

except for strong and cogent reasons. The findings of the Court of Appeals by itself, which are

supported by substantial evidence, are almost beyond the power of review by the Supreme

Court.[15] Thus, in the exercise of the Supreme Court’s power of review the findings of facts of the

Court of Appeals are conclusive and binding on the Supreme Court. There are, however,

recognized exceptions to this rule, namely: (1) when the findings are grounded entirely on

speculation, surmises or conjectures; (2) when the inference made is manifestly mistaken,

absurd or impossible; (3) when there is grave abuse of discretion; (4) when the judgment is

based on misapprehension of facts; (5) when the findings of facts are conflicting; (6) when in

making the findings the Court of Appeals went beyond the issues of the case, or its findings are

contrary to the admissions of both the appellee and the appellant; (7) when the findings are

contrary to the trial court; (8) when the findings are conclusions without citation of specific

evidence on which they are based; (9) when the facts set forth in the petition as well as in the

petitioner’s main and reply briefs are not disputed by the respondent; (10) when the findings of

facts are premised on the supposed absence of evidence and contradicted by the evidence on

record; and (11) when the Court of Appeals manifestly overlooked certain relevant facts not

disputed by the parties, which if properly considered, would justify a different conclusion.[16] Exceptions (4) and (11) are present in the case at bar, and so this Court shall make its own

determination of the facts relevant for the resolution of the case.

Ordinarily, therefore, we would have remanded this case for further reception of evidence

as to the extent and value of the services rendered by respondent to petitioner. However, so as

not to needlessly prolong the resolution of a comparatively simple controversy, we deem it just

and equitable to fix in the present recourse a reasonable amount of attorney’s fees in favor of

respondent.

There are two concepts of attorney’s fees. In the ordinary sense, attorney’s fees

represent the reasonable compensation paid to a lawyer by his client for the legal services

rendered to the latter. On the other hand, in its extraordinary concept, attorney’s fees may be

awarded by the court as indemnity for damages to be paid by the losing party to the prevailing

party.[17]

The issue in this case concerns attorney’s fees in the ordinary concept. Generally, the

amount of attorney’s fees due is that stipulated in the retainer agreement which is conclusive as

to the amount of the lawyer’s compensation. In the absence thereof, the amount of attorney’s

fees is fixed on the basis of quantum meruit, i.e., the reasonable worth of the attorney’s

services. Courts may ascertain also if the attorney’s fees are found to be excessive, what is

reasonable under the circumstances.[18] In no case, however, must a lawyer be allowed to

recover more than what is reasonable, pursuant to Section 24, Rule 138 of the Rules of Court,

which provides:

SEC. 24. Compensation of attorney’s fees; agreement as to fees.- Anattorney shall be entitled to have and recover from his client no more than areasonable compensation for his services, with a view to the importance of thesubject - matter of the controversy, the extent of the services rendered, and theprofessional standing of the attorney. No court shall be bound by the opinion ofattorneys as expert witnesses as to the proper compensation, but may disregardsuch testimony and base its conclusion on its own professional knowledge. A

written contract for services shall control the amount to bepaid therefor unless found by the court to be unconscionable orunreasonable. (Underscoring supplied.)

We have identified the circumstances to be considered in determining the

reasonableness of a claim for attorney’s fees as follows: (1) the amount and character of the

service rendered; (2) labor, time, and trouble involved; (3) the nature and importance of the

litigation or business in which the services were rendered; (4) the responsibility imposed; (5) the

amount of money or the value of the property affected by the controversy or involved in the

employment; (6) the skill and experience called for in the performance of the services; (7) the

professional character and social standing of the attorney; (8) the results secured; and (9)

whether the fee is absolute or contingent, it being recognized that an attorney may properly

charge a much larger fee when it is contingent than when it is not.[19]

Rule 20.1, Canon 20 of the Code of Professional Responsibility enumerates the

following factors which should guide a lawyer in determining his fees:

(a) the time spent and extent of services rendered or required;

(b) the novelty and difficulty of the questions involved;

(c) the importance of the subject matter;

(d) the skill demanded;

(e) the probability of losing other employment as a result of the acceptanceof the proffered case;

(f) the customary charges for similar services and the schedule of fees of theIBP Chapter to which he belongs;

(g) the amount involved in the controversy and the benefits resulting to theclient from the service;

(h) the contingency or certainty of compensation;

(i) the character of the employment, whether occasional or established; and

(j) the professional standing of the lawyer.

In determining a reasonable fee to be paid to respondent as compensation for their

services on quantum meruit, based on the factors abovequoted, it is proper to consider all the

facts and circumstances obtaining in this case.

It is undisputed that respondent firm had rendered services as counsel for the petitioners

in Civil Case No. 95-244. The services rendered consist of the following:

1. Respondent was able to annotate a notice[20] of lis pendens on the property of

Spouses Bach in Caloocan City covered by TCT No. C-12112, thereby preventing easy

disposition of the property by Luzviminda Bach;

2. Respondent was likewise able to annotate a notice [21] of lis pendens on the property of

Spouses Bach in Pasig City covered by TCT No. 48223, thereby preventing disposition of the

property by Luzviminda Bach;

3. Further, respondent annotated a notice[22] of lis pendens on the property of Spouses

Bach in Dasmarinas, Cavite covered by TCT No. T-339282, thereby preventing disposition of the

property by Luzviminda Bach;

4. Additionally, respondent annotated a notice[23] of lis pendens on the property of

Spouses Bach in Tanza, Cavite, covered by TCT No. T-255263, thereby preventing disposition of

the property by Luzviminda Bach;

5. Respondent also worked on the annotation of the notice[24] of lis pendens on the

property of Spouses Bach in Makati, covered by TCT No. S-62541, thereby preventing

disposition of the property by Luzviminda Bach;

6. Respondent worked on the annotation of a notice of lis pendens on the property of

Spouses Bach in Dasmariñas, Cavite, covered by TCT No. T-380848, thereby preventing

disposition of the property by Luzviminda Bach;

7. Respondent annotated a notice[25] of lis pendens on the property of Spouses Bach

situated in Tagaytay City, covered by TCT No. P-705, thereby preventing disposition of the

property by Luzviminda Bach;

8. Respondent filed the Petition[26] for Declaration of Nullity of Marriage and Dissolution

of the Conjugal Partnership of Gains of petitioner with his wife;

9. Respondent prepared an affidavit[27] in favor of petitioner attesting to the fact of

petitioner’s marriage and their properties acquired during his marriage withLuzviminda Bach:

10. Respondent prepared an ex parte motion[28] to declare petitioner’s wife to have

waived her right to file answer for failure to file the same within the period granted by law and to

direct the public prosecutor to determine whether or not a collusion exist;

11. Respondent prepared a Petition[29] for appointment of a receiver and to compel

petitioner’s wife to render an accounting;

12. Other services included the filling of several oppositions [30] to certain motions filed by

petitioner’s wife;

13. Respondent filed a motion[31] to set the case for preliminary investigation;

14. Respondent filed an ex parte motion[32] to declare petitioner’s wife in default;

15. Respondent submitted a supplemental comment[33] on the motion for leave to

withdraw funds from Certificate of Participation filed by petitioner’s wife;

16. Respondent filed a manifestation and motion[34] praying the court to direct petitioner’s

wife to designate her lead counsel in the case;

17. Respondent prepared a Reply[35] to comments on opposition of petitioner;

18. Respondent was able to secure an Order[36] from the said court freezing the United

Coconut Planters Bank (UCPB) account in the name of petitioner’s wife,Luzviminda Bach,

containing about P6,500,000.00, representing the balance of the proceeds from the sale of their

conjugal property in Pasig City;

19. Respondent represented petitioner in numerous hearings in Civil Case No. 95-224,

evidenced by the signatures of the lawyers of respondent Law Firm in the minutes dated 25 April

1995, 27 April, 1995, 14 June 1995, 27 June 1995, 1 August 1995, 11 August 1995, 22

September 1995,10 October 1995, 17 October 1995, 1 December 1995, 7 December 1995, 29

March 1996 and 16 January 1997;[37]

20. Conducted several preliminary and post litigation conferences in the proceedings for

preliminary injunction leading to the freezing of the bank account of the parties; and

21. Prepared and sent out numerous letters to third parties and entities to protect the

interest of petitioner and notices to petitioner updating him of the status of the case and the

courses of action taken by respondent Law Firm.[38]

In sum, the services rendered by the respondent as enumerated above and as

admitted[39] by Atty. Mario Ongkiko during the ex parte hearing, consist of annotating notice

of lis pendens on the conjugal properties of petitioner and his wife; filing the Petition for

Declaration of Nullity of Marriage; preparing and filing various pleadings and documents relevant

to the case; obtaining a freeze order of petitioner’s funds in the UCPB; attending hearings in Civil

Case No. 05-224, and sending notices to petitioner updating the latter of the status of the

case. Nothing in Civil Case No. 95-224 so far appears complicated and no extra ordinary skill

was needed for lawyers of respondent Law Firm to accomplish what they had done in the case

before they withdrew their appearance. We do not find herein a situation so intricate that

demands more than a careful scrutiny of the legal matters involved. These are simply the normal

duties of a lawyer that he is bound by law to render to his clients with utmost fidelity for which his

client must not be burdened to pay an extra price. It bears stressing that at the time respondent

firm withdrew their appearance due to policy differences with petitioner, the case was still in its

initial stage.

Guided by the above yardstick and so much of the pertinent data as are extant in the

records of this case and in the exercise of our sound discretion, we hold that the amount

of P500,000.00 is a reasonable and fair compensation for the legal services rendered

by respondent to the petitioner.

The imposition of legal interest on the amount payable to private respondent as

attorney’s fees is unwarranted. Even as we agree that parties can freely stipulate on the terms of

payment, still the imposition of interest in the payment of attorney’s fees is not justified. In the

case of Cortes v. Court of Appeals,[40] we ruled that Article 2209[41] of the Civil Code does not

even justify the imposition of legal interest on the payment of attorney’s fees as it is a provision of

law governing ordinary obligations and contracts. It deleted the 6% interest imposed by the

appellate court on the payment of attorney’s fees. It ratiocinated by citing Mambulao Lumber Co.

v. Philippine National Bank,[42] thus:

Contracts for attorney’s services in this jurisdiction stands upon an entirelydifferent footing from contracts for the payment of compensation for any

other services. x x x [A]n attorney is not entitled in the absence of expresscontract to recover more than a reasonable compensation for his services; andeven when an express contract is made, the court can ignore it and limit therecovery to reasonable compensation if the amount of the stipulated fee is foundby the court to be unreasonable. This is a very different rule from that announcedin section 1091 of the Civil Code with reference to the obligation of contracts ingeneral, where it is said that such obligation has the force of law between thecontracting parties. Had the plaintiff herein made an express contract to pay hisattorney an uncontingent fee of P2,115.25 for the services to be rendered inreducing the note here in suit to judgment, it would not have been enforcedagainst him had he seen fit to oppose it, as such a fee is obviously far greaterthan is necessary to remunerate the attorney for the work involved and istherefore unreasonable. In order to enable the court to ignore an express contractfor attorney’s fees, it is necessary to show, as in other contracts, that it iscontrary to morality or public policy (Art.1255, Civil Code). It is enough that itis unreasonable or unconscionable. (Emphases supplied.)

We have held that lawyering is not a moneymaking venture and lawyers are not

merchants.[43] Law advocacy, it has been stressed, is not capital that yields profits. The returns it

births are simple rewards for a job done or service rendered. It is a calling that, unlike mercantile

pursuits which enjoy a greater deal of freedom from governmental interference, is impressed with

a public interest, for which it is subject to State regulation.[44]

A lawyer is not merely the defender of his client’s cause and a trustee of his client’s

cause of action and assets; he is also, and first and foremost, an officer of the court and

participates in the fundamental function of administering justice in society.[45] It follows that a

lawyer’s compensation for professional services rendered are subject to the supervision of the

court, not just to guarantee that the fees he charges and receives remain reasonable and

commensurate with the services rendered, but also to maintain the dignity and integrity of the

legal profession to which he belongs. Upon taking his attorney’s oath as an officer of the court, a

lawyer submits himself to the authority of the courts to regulate his right to charge professional

fees.[46]

Though we reduced the award of attorney’s fees and disallowed the imposition of interest

thereon, the fact that an attorney plays a vital role in the administration of justice underscores the

need to secure to him his honorarium lawfully earned as a means to preserve the decorum and

respectability of the legal profession. A lawyer is as much entitled to judicial protection against

injustice, imposition of fraud on the part of his client as the client against abuse on the part of his

counsel. The duty of the court is not alone to see that a lawyer acts in a proper and lawful

manner; it is also its duty to see that a lawyer is paid his just fees. With his capital consisting

only of his brains and with his skill acquired at tremendous cost not only in money but in

expenditure of time and energy, he is entitled to the protection of any judicial tribunal against any

attempt on the part of his client to escape payment of his just compensation. It would be ironic if

after putting forth the best in him to secure justice for his client, he himself would not get his due.[47]

Thus, the Court of Appeals did not err in awarding expenses of litigation. Article 2208,

paragraphs 2, 5 and 11, of the Civil Code, authorize the recovery of such fees "(2) When the

defendant's act or omission has compelled the plaintiff to litigate x x x or to incur expenses to

protect his interest; x x x (5) Where the defendant acted in gross and evident bad faith in refusing

to satisfy the plaintiff's plainly valid, just and demandable claim; x x x and (11) In any other case

where the court deems it just and equitable that attorney's fees and expenses of litigation should

be recovered." Considering the fact that respondent was drawn into this litigation by petitioner to

protect and defend their interest and taking into account the services already rendered by

respondent to petitioner, the sum of P30,000.00 as expenses of litigation and cost of suit would

be reasonable under the premises.

WHEREFORE, the Decision appealed from is AFFIRMED WITH MODIFICATIONS to the

effect that the attorney’s fees awarded to respondent is REDUCED toP500,000.00, the legal

interest of 2% on the amount due to respondent is DELETED, and the award of litigation

expenses is REDUCED to P30,000.00.

SO ORDERED.

[G.R. No. 121772. January 13, 2003]

ELNORA R. CORTES and EDMUNDO CORTES, petitioners, vs. COURT OF APPEALS, F. S.MANAGEMENT & DEVELOPMENT CORP. and FELIX MOYA, respondents.

D E C I S I O N

AUSTRIA-MARTINEZ, J.:

Before us is a petition for review on certiorari under Rule 45 of the Rules of Court seeking toset aside the Decision of the Court of Appeals dated March 17, 1995[1], the dispositive portion ofwhich reads:

“WHEREFORE, premises considered, the appealed Order dated July 16, 1992 is hereby AFFIRMED with modification. Appellants spouses Cortes in addition to the P100,000.00 is further ORDERED to pay six percent (6%) per annum legal interest of such amount from July 25,1992 until fully paid.

“Cost against appellants spouses Cortes.

“SO ORDERED.”[2]

The controversy stemmed from a civil case for specific performance with damages filed byF.S. Management and Development Corporation (FSMDC) against spouses Edmundo andElnora Cortes involving the sale of the parcel of land owned by the said spouses.[3]

Spouses Cortes retained the professional services of Atty. Felix Moya for the purpose ofrepresenting them in said case. However, they did not agree on the amount of compensation forthe services to be rendered by Atty. Moya.

Before a full-blown trial could be had, defendants spouses Cortes and plaintiff FSMDCdecided to enter into a compromise agreement. On June 4, 1991, defendants spouses receivedfrom plaintiff FSMDC, three checks totaling P2,754,340.00 which represents the remainingbalance of the purchase price of the subject land.

On June 7, 1991, Atty. Moya filed an “Urgent Motion to Fix Attorney’s Fees, Etc.” prayingthat he be paid a sum equivalent to thirty-five percent (35%) of the amount received by thedefendants spouses[4] which the latter opposed contending that the amount Atty. Moya seeks to

recover is utterly excessive and is not commensurate to the nature, extent and quality of theservices he had rendered.[5]

On July 2, 1991, the Cortes spouses and Atty. Moya settled their differences by agreeing inopen court that the former will pay the latter the amount of P100,000.00 as his attorney’sfees. Pursuant to such agreement, the trial court issued an order of even date which reads asfollows:

“Parties in open Court agreed to movant’s attorney’s fees of P100,000.00 to be paid out of any check paid by the plaintiff to defendants.

“Not later than July 15, 1991, parties are hereby ordered to inform the Court whether or not this iscomplied with, so the Court can act accordingly. (Emphasis supplied)

“SO ORDERED.”[6]

Subsequently, the Cortes spouses terminated the services of Atty. Moya and retained theservices of another lawyer.

On January 8, 1992, or about six months after the afore-quoted Order, Atty. Moya filed anEx-Parte Manifestation praying that his Motion to Fix Attorney’s Fees be resolved on the basis ofthe agreement of the parties “in chambers”.[7]

The Cortes spouses filed their Comment claiming:

“1. That they agreed to the settlement of P100,000.00 attorney’s fees expecting that the checks paid by plaintiff by way of settlement will be good and may be encashed by them but it turned outthat they were all dishonored, and no compromise agreement was pushed through;

“2. That defendants are willing to pay Atty. Moya as additional compensation for his services onlyin the amount of P50,000.00 subject to the condition that same shall be paid after the case is terminated in their favor and/or the property involved is sold;

“3. That defendants shall compensate Atty. Moya said amount in addition to what they have paid before.”[8]

On June 26, 1992, Atty. Moya filed a “Motion for Early Resolution of Pending Incidents andto Order Defendants to Pay Their Previous Counsel”.[9]

On July 16, 1992, the trial court issued an Order directing the Cortes spouses to pay Atty.Moya the sum of P100,000.00 as and by way of attorney’s fees.[10] The Cortes spouses filed aNotice of Appeal to the Court of Appeals.[11] On July 31, 1992, Atty. Moya filed an “Ex-ParteMotion to Dismiss Defendant’s Appeal” which was denied by the trial court in its Order datedAugust 4, 1992.[12] Consequently, he filed a notice of appeal questioning the Orders of the trialcourt dated July 16, 1992 and August 4, 1992.[13]

On March 17, 1995, the Court of Appeals rendered the herein assailed decision resolvingthe respective appeals of spouses Cortes and Atty. Moya in favor of the latter.[14] Spouses Cortesmoved for the reconsideration of the decision of the appellate court which the Court denied in itsResolution issued on August 30, 1995.[15]

Hence, herein petition filed by the Cortes spouses, raising the following issues:

“1. Whether the award of P100,000.00 in favor of private respondent as and by way of attorney’s [fees] for the handling of petitioners’ case before the services of the former was legally terminated is tenable under the facts of this case.

“2 Whether the respondent Honorable Court of Appeals misapplied the principle of Estoppel inthis case.”[16]

As both issues are interrelated, we shall resolve them jointly.

Petitioners spouses claim that they have already paid private respondent Moya the totalamount of P36,000.00 in acceptance and appearance fees.[17] However, a perusal of the recordsshows that no competent evidence, oral or documentary, was presented to prove said claim. It issettled that he who alleges a fact has the burden of proving it; that mere allegation is notevidence.[18] Besides, records show that the alleged payment by petitioners of said amount wasnever raised before the lower court. It was only raised on appeal with respondent appellatecourt. Settled is the rule that litigants cannot raise an issue for the first time on appeal as thiswould contravene the basic rules of fair play and justice.[19]

Nevertheless, petitioners’ main contention is that the award of P100,000.00 to privaterespondent Moya as and by way of attorney’s fees “is unconscionable and unreasonable.”

On its face, the Order dated July 2, 1991 appears to be explicit and leaves no room for anyother interpretation. The first paragraph of said Order states that parties in open Court agreedthat the attorney’s fees in the amount of P100,000.00 shall be paid out of any check paid by theplaintiff to defendants.[20] The said agreement is therefore in the nature of a compromiseagreement.

However, petitioners contend that they agreed to pay private respondent P100,000.00 out ofthe three (3) checks paid by FSMDC on June 4, 1991 and not out of any other check issued byFSMDC. This contention finds support in the prayer of private respondent, Atty. Moya himself, inhis Urgent Motion to Fix Attorney’s Fees, Etc.” explicitly asking that he “be paid immediately uponthe encashment of the P1,000,000.00 check dated June 10, 1991 by the defendants”. He evenexpressed concern that he “may not be paid the corresponding attorney’s fees out of the checkthat is due for payment on said date”. [21] Clearly therefrom, the amount of P100,000.00 due toAtty. Moya was expected to be taken not from any check paid by FSMDC to petitioners butspecifically from the check dated June 10, 1991 given to petitioners spouses.

As already stated, the Order in question appears to be a compromise agreement betweenspouses Cortes and Atty. Moya. It is true that under the doctrine of estoppel, an admission orrepresentation is rendered conclusive upon the person making it, and cannot be denied ordisproved as against the person relying thereon.[22] A party may not go back on his own acts andrepresentations to the prejudice of the other party who relied upon them. [23] But, in technicalestoppel, the party to be estopped must knowingly have acted so as to mislead his adversary,and the adversary must have placed reliance on the action and acted as he would otherwise nothave done.[24]

In the present case, petitioners had evidently agreed to pay privaterespondent P100,000.00 out of the checks paid by FSMDC on June 4, 1991. However, the

trial court ordered the payment to be sourced out of any check paid by FSMDC topetitioners. Yet, it does not appear from the original records that both the petitioners and theprivate respondent were actually sent copies of the Order of July 2, 1991. Thus, petitionersspouses were deprived of the opportunity to question the content of the Order on ground ofmistake or excusable negligence, pursuant to the remedy provided for under Section 1, Rule 38of the Rules of Court. Since petitioners did not receive a copy of the said Order they could nottherefore be considered as having knowingly agreed to it as to mislead the court or the privaterespondent into believing that they unconditionally acceded to pay private respondent theamount of P100,000.00 out of any check given by FSMDC. Consequently, they are not estoppedfrom questioning the correctness of such Order. Elementary fairness dictates that petitioners,who were unaware of the questioned Order, should not be estopped from questioning the same.

Having disposed of the issue on estoppel, we now turn to the question of whether or not theamount of P100,000.00 awarded to the private respondent is in consonance with the prevailingprinciples and guidelines governing compensation due to attorneys for the professional servicesthey have rendered.

The reasonableness of the amount of attorney’s fees awarded to private respondent shouldbe properly gauged on the basis of the long-standing rule of quantum meruit, meaning, “as muchas he deserves”. Where a lawyer is employed without agreement as to the amount to be paid forhis services, the courts shall fix the amount on quantum meruit basis. In such a case, he wouldbe entitled to receive what he merits for his services. [25] In this respect, Section 24, Rule 138 ofthe Rules of Court provides:

“Sec. 24. Compensation of attorneys, agreement as to fees. - An attorney shall be entitled to have and recover from his client no more than a reasonable compensation for his services, with a view to the importance of the subject matter of the controversy, the extent of the services rendered, and the professional standing of the attorney. x x x”

In addition, the following circumstances, codified in Rule 20.1, Canon 20 of the Code ofProfessional Responsibility, serves as a guideline in fixing a reasonable compensation forservices rendered by a lawyer on the basis of quantum meruit:

“a) The time spent and the extent of the services rendered or required;

“b) The novelty and difficulty of the questions involved;

“c) The importance of the subject matter;

“d) The skill demanded;

“e) The probability of losing other employment as a result of acceptance of the proffered case;

“f) The customary charges for similar services and the schedule of fees of the IBP chapter to which he belongs;

“g) The amount involved in the controversy and the benefits resulting to the client from the services;

“h) The contingency or certainty of compensation;

“i) The character of the employment, whether occasional or established; and

“j) The professional standing of the lawyer.”

In the present case, aside from invoking his professional standing, private respondent claimsthat he was the one responsible in forging the initial compromise agreement wherein FSMDCagreed to pay P2,754,380.00. The fact remains, however, that such agreement was notconsummated because the checks given by FSMDC were all dishonored. It was not the privaterespondent who was responsible in bringing into fruition the subsequent compromise agreementbetween petitioners and FSMDC.

Nonetheless, it is undisputed that private respondent has rendered services as counsel forthe petitioners. He prepared petitioners’ Answer and Pre- Trial Brief, appeared at the Pre-TrialConference, attended a hearing held on July 13, 1990, cross-examined the witness of FSMDC,and was present in the conference at the Manila Hotel between the parties and their respectivecounsels. All these services were rendered in the years 1990 and 1991 where the value of apeso is higher. Thus, we find the sum of P100,000.00 awarded to private respondent as hisattorney’s fees to be disproportionate to the services rendered by him to petitioners.

The amount of P50,000.00 as compensation for the services rendered by Atty. Moya is justand reasonable.

Besides, the imposition of legal interest on the amount payable to private respondent isunwarranted. Article 2209[26] of the Civil Code invoked by Atty. Moya and cited by the appellatecourt, finds no application in the present case. It is a provision of law governing ordinaryobligations and contracts. Contracts for attorney’s services in this jurisdiction stand upon anentirely different footing from contracts for the payment of compensation for any other services.[27]

We have held that lawyering is not a moneymaking venture and lawyers are not merchants.[28]

“Law advocacy x x x is not capital that yields profits. The returns it births are simple rewards for a job done or service rendered. It is a calling that, unlike mercantile pursuits which enjoy a greater deal of freedom from government interference, is impressed with a public interest, for which it is subject to State regulation.”[29]

Thus, a lawyer’s compensation for professional services rendered are subject to thesupervision of the court, not just to guarantee that the fees he charges and receives remainreasonable and commensurate with the services rendered, but also to maintain the dignity andintegrity of the legal profession to which he belongs.[30]

WHEREFORE, the decision appealed from is AFFIRMED WITH MODIFICATIONS to theeffect that the attorney’s fees awarded to private respondent Felix Moya is REDUCEDtoP50,000.00 and the legal interest of 6% per annum imposed by the Court of Appeals on theamount due to respondent Moya is DELETED.

No costs.

SO ORDERED.

Bellosillo, (Chairman), Mendoza, Quisumbing, and Callejo, Sr., JJ., concur.

A.M. No. 1625 February 12, 1990

ANGEL L. BAUTISTA, complainant, vs.ATTY. RAMON A. GONZALES, respondent.

R E S O L U T I O N

PER CURIAM:

In a verified complaint filed by Angel L. Bautista on May 19, 1976, respondent Ramon A. Gonzales was charged with malpractice, deceit, gross misconduct and violation of lawyer's oath. Required by this Court to answer the charges against him, respondent filed on June 19, 1976 a motion for a bill of particulars asking this Court to order complainant to amend his complaint by making his charges more definite. In a resolution dated June 28, 1976, the Court granted respondent's motion and required complainant to file an amended complaint. On July 15, 1976, complainant submitted an amended complaint for disbarment, alleging that respondent committed the following acts:

1. Accepting a case wherein he agreed with his clients, namely, Alfaro Fortunado, Nestor Fortunado and Editha Fortunado [hereinafter referred to as the Fortunados] to pay all expenses, including court fees, for a contingent fee of fifty percent (50%) of the value of the property in litigation.

2. Acting as counsel for the Fortunados in Civil Case No. Q-15143, wherein Eusebio Lopez, Jr. is one of the defendants and, without said case being terminated, acting as counsel for EusebioLopez, Jr. in Civil Case No. Q-15490;

3. Transferring to himself one-half of the properties of the Fortunados, which properties are the subject of the litigation in Civil Case No. Q-15143, while the case was still pending;

4. Inducing complainant, who was his former client, to enter into acontract with him on August 30, 1971 for the development into a residential subdivision of the land involved in Civil Case No. Q-15143, covered by TCT No. T-1929, claiming that he acquired fiftypercent (50%) interest thereof as attorney's fees from the Fortunados, while knowing fully well that the said property was already sold at a public auction on June 30, 1971, by the Provincial Sheriff of Lanao del Norte and registered with the Register of Deeds of Iligan City;

5. Submitting to the Court of First Instance of Quezon City falsified documents purporting to be true copies of "Addendum to the Land Development Agreement dated August 30, 1971" and submitting the same document to the Fiscal's Office of Quezon

City, in connection with the complaint for estafa filed by respondent against complainant designated as I.S. No. 7512936;

6. Committing acts of treachery and disloyalty to complainant whowas his client;

7. Harassing the complainant by filing several complaints without legal basis before the Court of First Instance and the Fiscal's Office of Quezon City;

8. Deliberately misleading the Court of First Instance and the Fiscal's Office by making false assertion of facts in his pleadings;

9. Filing petitions "cleverly prepared (so) that while he does not intentionally tell a he, he does not tell the truth either."

Respondent filed an answer on September 29, 1976 and an amended answer on November 18, 1976, denying the accusations against him. Complainant filed a reply to respondent's answer on December 29, 1976 and on March 24, 1977 respondent filed a rejoinder.

In a resolution dated March 16, 1983, the Court referred the case to the Office of the Solicitor General for investigation, report and recommendation. In the investigation conducted by the Solicitor General, complainant presented himself as a witness and submitted Exhibits "A" to "PP", while respondent appeared both as witness and counsel and submitted Exhibits "1" to "11".The parties were required to submit their respective memoranda.

On May 16, 1988 respondent filed a motion to dismiss the complaint against him, claiming that the long delay in the resolution of the complaint against him constitutes a violation of his constitutional right to due process and speedy disposition of cases. Upon order of the Court, the Solicitor General filed a comment to the motion to dismiss on August 8, 1988, explaining that the delay in the investigation of the case was due to the numerous requests for postponement of scheduled hearings filed by both parties and the motions for extension of time to file their respective memoranda." [Comment of the Solicitor General, p. 2; Record, p. 365]. Respondent filed a reply to the Solicitor General's comment on October 26, 1988. In a resolution dated January 16, 1989 the Court required the Solicitor General to submit his report and recommendation within thirty (30) days from notice.

On April 11, 1989, the Solicitor General submitted his report with the recommendation that Atty. Ramon A. Gonzales be suspended for six (6) months. The Solicitor General found that respondent committed the following acts of misconduct:

a. transferring to himself one-half of the properties of his clients during the pendency of the case where the properties were involved;

b. concealing from complainant the fact that the property subject of their land development agreement had already been sold at a public auction prior to the execution of said agreement; and

c. misleading the court by submitting alleged true copies of a document where two signatories who had not signed the original (or even the xerox copy) were

made to appear as having fixed their signatures [Report and Recommendation of the Solicitor General, pp. 17-18; Rollo, pp. 403-404].

Respondent then filed on April 14, 1989 a motion to refer the case to the Integrated Bar of the Philippines (IBP) for investigation and disposition pursuant to Rule 139-B of the Revised Rules ofCourt. Respondent manifested that he intends to submit more evidence before the IBP. Finally, on November 27, 1989, respondent filed a supplemental motion to refer this case to the IBP, containing additional arguments to bolster his contentions in his previous pleadings.

I.

Preliminarily, the Court will dispose of the procedural issue raised by respondent. It is respondent's contention that the preliminary investigation conducted by the Solicitor General waslimited to the determination of whether or not there is sufficient ground to proceed with the case and that under Rule 139 the Solicitor General still has to file an administrative complaint against him. Respondent claims that the case should be referred to the IBP since Section 20 of Rule 139-B provides that:

This Rule shall take effect on June 1, 1988 and shall supersede the present Rule 139 entitled DISBARMENT OR SUSPENSION OF ATTORNEYS. All cases pending investigation by the Office of the Solicitor General shall be transferred to the Integrated Bar of the Philippines Board of Governors for investigation and disposition as provided in this Rule except those cases where the investigation has been substantially completed.

The above contention of respondent is untenable. In the first place, contrary to respondent's claim, reference to the IBP of complaints against lawyers is not mandatory upon the Court [Zaldivar v. Sandiganbayan, G.R. Nos. 79690-707; Zaldivar v. Gonzales, G.R. No. 80578, October 7, 1988]. Reference of complaints to the IBP is not an exclusive procedure under the terms of Rule 139-B of the Revised Rules of Court [Ibid]. Under Sections 13 and 14 of Rule 139-B, the Supreme Court may conduct disciplinary proceedings without the intervention of the IBP by referring cases for investigation to the Solicitor General or to any officer of the Supreme Court or judge of a lower court. In such a case, the report and recommendation of the investigating official shall be reviewed directly by the Supreme Court. The Court shall base its final action on the case on the report and recommendation submitted by the investigating official and the evidence presented by the parties during the investigation.

Secondly, there is no need to refer the case to the IBP since at the time of the effectivity of Rule 139-B [June 1, 1988] the investigation conducted by the Office of the Solicitor General had been substantially completed. Section 20 of Rule 139-B provides that only pending cases, the investigation of which has not been substantially completed by the Office of the Solicitor General,shall be transferred to the IBP. In this case the investigation by the Solicitor General was terminated even before the effectivity of Rule 139-B. Respondent himself admitted in his motion to dismiss that the Solicitor General terminated the investigation on November 26, 1986, the datewhen respondent submitted his reply memorandum [Motion to Dismiss, p. 1; Record, p. 353].

Thirdly, there is no need for further investigation since the Office of the Solicitor General already made a thorough and comprehensive investigation of the case. To refer the case to the IBP, as prayed for by the respondent, will result not only in duplication of the proceedings conducted by

the Solicitor General but also to further delay in the disposition of the present case which has lasted for more than thirteen (13) years.

Respondent's assertion that he still has some evidence to present does not warrant the referral of the case to the IBP. Considering that in the investigation conducted by the Solicitor General respondent was given ample opportunity to present evidence, his failure to adduce additional evidence is entirely his own fault. There was therefore no denial of procedural due process. The record shows that respondent appeared as witness for himself and presented no less than eleven (11) documents to support his contentions. He was also allowed to cross-examine the complainant who appeared as a witness against him.

II.

The Court will now address the substantive issue of whether or not respondent committed the acts of misconduct alleged by complainant Bautista.

After a careful review of the record of the case and the report and recommendation of the Solicitor General, the Court finds that respondent committed acts of misconduct which warrant the exercise by this Court of its disciplinary power.

The record shows that respondent prepared a document entitled "Transfer of Rights" which was signed by the Fortunados on August 31, 1971. The document assigned to respondent one-half (1/2) of the properties of the Fortunados covered by TCT No. T-1929, with an area of 239.650 sq.mm., and TCT No. T-3041, with an area of 72.907 sq. m., for and in consideration of his legal services to the latter. At the time the document was executed, respondent knew that the abovementioned properties were the subject of a civil case [Civil Case No. Q-15143] pending before the Court of First Instance of Quezon City since he was acting as counsel for the Fortunados in said case [See Annex "B" of Original Complaint, p. 12; Rollo, p. 16]. In executing the document transferring one-half (1/2) of the subject properties to himself, respondent violated the law expressly prohibiting a lawyer from acquiring his client's property or interest involved in any litigation in which he may take part by virtue of his profession [Article 1491, New Civil Code]. This Court has held that the purchase by a lawyer of his client's property or interest in litigation is a breach of professional ethics and constitutes malpractice [Hernandez v. Villanueva, 40 Phil. 774 (1920); Go Beltran v. Fernandez, 70 Phil. 248 (1940)].

However, respondent notes that Canon 10 of the old Canons of Professional Ethics, which statesthat "[t]he lawyer should not purchase any interests in the subject matter of the litigation which heis conducting," does not appear anymore in the new Code of Professional Responsibility. He therefore concludes that while a purchase by a lawyer of property in litigation is void under Art. 1491 of the Civil Code, such purchase is no longer a ground for disciplinary action under the newCode of Professional Responsibility.

This contention is without merit. The very first Canon of the new Code states that "a lawyer shall uphold the Constitution, obey the laws of the land and promote respect for law and legal process" (Emphasis supplied), Moreover, Rule 138, Sec. 3 of the Revised Rules of Court requires every lawyer to take an oath to 44 obey the laws [of the Republic of the Philippines] as well as the legal orders of the duly constituted authorities therein." And for any violation of this oath, a lawyer may be suspended or disbarred by the Supreme Court [Rule 138, Sec. 27, Revised Rules of Court]. All of these underscore the role of the lawyer as the vanguard of our legal system. The transgression of any provision of law by a lawyer is a repulsive and

reprehensible act which the Court will not countenance. In the instant case, respondent, having violated Art. 1491 of the Civil Code, must be held accountable both to his client and to society.

Parenthetically, it should be noted that the persons mentioned in Art. 1491 of the Civil Code are prohibited from purchasing the property mentioned therein because of their existing trust relationship with the latter. A lawyer is disqualified from acquiring by purchase the property and rights in litigation because of his fiduciary relationship with such property and rights, as well as with the client. And it cannot be claimed that the new Code of Professional Responsibility has failed to emphasize the nature and consequences of such relationship. Canon 17 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." On the other hand, Canon 16 provides that "a lawyer shall hold in trust all moneys and properties of his client that may come into his possession." Hence, notwithstanding the absence of a specific provision on the matter in the new Code, the Court, considering the abovequoted provisions of the new Code in relation to Art. 1491 of the Civil Code, as well as the prevailing jurisprudence, holds that the purchase by a lawyer of his client's property in litigation constitutes a breach of professional ethics for which a disciplinary action may be brought against him.

Respondent's next contention that the transfer of the properties was not really implemented, because the land development agreement on which the transfer depended was later rescinded, is untenable. Nowhere is it provided in the Transfer of Rights that the assignment of the properties of the Fortunados to respondent was subject to the implementation of the land development agreement. The last paragraph of the Transfer of Rights provides that:

... for and in consideration of the legal services of ATTY. RAMON A. GONZALES, Filipino, married to Lilia Yusay, and a resident of 23 Sunrise Hill, New Manila, Quezon City, rendered to our entire satisfaction, we hereby, by these presents, do transfer and convey to the said ATTY. RAMON A. GONZALES, his heirs, successor, and assigns, one-half (1/2) of our rights and interests in the abovedescribed property, together with all the improvements found therein [Annex D of the Complaint, Record, p. 28; Emphasis supplied].

It is clear from the foregoing that the parties intended the transfer of the properties to respondent to be absolute and unconditional, and irrespective of whether or not the land development agreement was implemented.

Another misconduct committed by respondent was his failure to disclose to complainant, at the time the land development agreement was entered into, that the land covered by TCT No. T-1929 had already been sold at a public auction. The land development agreement was executed on August 31, 1977 while the public auction was held on June 30, 1971.

Respondent denies that complainant was his former client, claiming that his appearance for the complainant in an anti-graft case filed by the latter against a certain Gilbert Teodoro was upon the request of complainant and was understood to be only provisional. Respondent claims that since complainant was not his client, he had no duty to warn complainant of the fact that the landinvolved in their land development agreement had been sold at a public auction. Moreover, the sale was duly annotated at the back of TCT No. T-1929 and this, respondent argues, serves as constructive notice to complainant so that there was no concealment on his part.

The above contentions are unmeritorious. Even assuming that the certificate of sale was annotated at the back of TCT No. T-1929, the fact remains that respondent failed to inform the complainant of the sale of the land to Samauna during the negotiations for the land development agreement. In so doing, respondent failed to live up to the rigorous standards of ethics of the law profession which place a premium on honesty and condemn duplicitous conduct. The fact that complainant was not a former client of respondent does not exempt respondent from his duty to inform complainant of an important fact pertaining to the land which is subject of their negotiation.Since he was a party to the land development agreement, respondent should have warned the complainant of the sale of the land at a public auction so that the latter could make a proper assessment of the viability of the project they were jointly undertaking. This Court has held that a lawyer should observe honesty and fairness even in his private dealings and failure to do so is a ground for disciplinary action against him [Custodio v. Esto, Adm. Case No. 1113, February 22, 1978, 81 SCRA 517].

Complainant also charges respondent with submitting to the court falsified documents purporting to be true copies of an addendum to the land development agreement.

Based on evidence submitted by the parties, the Solicitor General found that in the document filed by respondent with the Court of First Instance of Quezon City, the signatories to the addendum to the land development agreement namely, Ramon A. Gonzales, Alfaro T. Fortunado,Editha T. Fortunado, Nestor T. Fortunado, and Angel L. Bautista—were made to appear as having signed the original document on December 9, 1972, as indicated by the letters (SGD.) before each of their names. However, it was only respondent Alfaro Fortunado and complainant who signed the original and duplicate original (Exh. 2) and the two other parties, Edith Fortunado and Nestor Fortunado, never did. Even respondent himself admitted that Edith and Nestor Fortunado only signed the xerox copy (Exh. 2-A) after respondent wrote them on May 24, 1973, asking them to sign the said xerox copyattached to the letter and to send it back to him after signing [Rejoinder to Complainant's Reply, pp. 4-6; Rollo, pp. 327-329]. Moreover, respondent acknowledged that Edith and Nestor Fortunado had merely agreed by phone to sign, but had notactually signed, the alleged true copy of the addendum as of May 23, 1973 [Respondent's Supplemental Motion to Refer this Case to the Integrated Bar of the Philippines, p. 16]. Thus, when respondent submitted the alleged true copy of the addendum on May 23, 1973 as Annex "A" of his Manifestation filed with the Court of First Instance of Quezon City, he knowingly misled the Court into believing that the original addendum was signed by Edith Fortunado and Nestor Fortunado. Such conduct constitutes willful disregard of his solemn duty as a lawyer to act at all times in a manner consistent with the truth. A lawyer should never seek to mislead the court by an artifice or false statement of fact or law [Section 20 (d), Rule 138, Revised Rules of Court; Canon 22, Canons of Professional Ethics; Canon 10, Rule 10.01, Code of Professional Responsibility].

Anent the first charge of complainant, the Solicitor General found that no impropriety was committed by respondent in entering into a contingent fee contract with the Fortunados [Report and Recommendation, p. 8; Record, p. 394]. The Court, however, finds that the agreement between the respondent and the Fortunados, which provides in part that:

We the [Fortunados] agree on the 50% contingent fee, provided, you [respondentRamon Gonzales] defray all expenses, for the suit, including court fees.

Alfaro T. Fortunado [signed]Editha T. Fortunado [signed]Nestor T. Fortunado [signed]

CONFORME

Ramon A. Gonzales [signed]

[Annex A to the Complaint, Record, p. 4].

is contrary to Canon 42 of the Canons of Professional Ethics which provides that a lawyer may not properly agree with a client to pay or bear the expenses of litigation. [See also Rule 16.04, Code of Professional Responsibility]. Although a lawyer may in good faith, advance the expensesof litigation, the same should be subject to reimbursement. The agreement between respondent and the Fortunados, however, does not provide for reimbursement to respondent of litigation expenses paid by him. An agreement whereby an attorney agrees to pay expenses of proceedings to enforce the client's rights is champertous [JBP Holding Corp. v. U.S. 166 F. Supp.324 (1958)]. Such agreements are against public policy especially where, as in this case, the attorney has agreed to carry on the action at his own expense in consideration of some bargain to have part of the thing in dispute [See Sampliner v. Motion Pictures Patents Co., et al., 255 F. 242 (1918)]. The execution of these contracts violates the fiduciary relationship between the lawyer and his client, for which the former must incur administrative sanctions. The Solicitor General next concludes that respondent cannot be held liable for acting as counsel for Eusebio Lopez, Jr. in Civil Case No. Q-15490 while acting as counsel for the Fortunados against the same Eusebio Lopez, Jr. in Civil Case No. Q-15143. The Court, after considering the record, agrees with the Solicitor General's findings on the matter. The evidence presented by respondentshows that his acceptance of Civil Case No. Q-15490 was with the knowledge and consent of theFortunados. The affidavit executed by the Fortunados on June 23, 1976 clearly states that they gave their consent when respondent accepted the case of Eusebio Lopez, Jr. [Affidavit of Fortunados, dated June 23, 1976; Rollo, p. 198]. One of the recognized exceptions to the rule against representation of conflicting interests is where the clients knowingly consent to the dual representation after full disclosure of the facts by counsel [Canon 6, Canons of Professional Ethics; Canon 15, Rule 15.03, Code of Professional Responsibility].

Complainant also claims that respondent filed several complaints against him before the Court ofFirst Instance and the Fiscal's Office of Quezon City for the sole purpose of harassing him.

The record shows that at the time of the Solicitor General's investigation of this case, Civil Case No. Q-18060 was still pending before the Court of First Instance of Quezon City, while the complaints for libel (I.S. No. 76-5912) and perjury (I.S. No. 5913) were already dismissed by the City Fiscal for insufficiency of evidence and lack of interest, respectively [Report and Recommendation, pp. 16-17; Rollo, pp. 402-403]. The Solicitor General found no basis for holding that the complaints for libel and perjury were used by respondent to harass complainant. As to Civil Case No. Q-18060, considering that it was still pending resolution, the Solicitor General made no finding on complainants claim that it was a mere ploy by respondent to harass him. The determination of the validity of the complaint in Civil Case No. Q-18060 was left to the Court of First Instance of Quezon City where the case was pending resolution.

The Court agrees with the above findings of the Solicitor General, and accordingly holds that there is no basis for holding that the respondent's sole purpose in filing the aforementioned cases was to harass complainant.

Grounds 6, 8 and 9 alleged in the complaint need not be discussed separately since the above discussion on the other grounds sufficiently cover these remaining grounds.

The Court finds clearly established in this case that on four counts the respondent violated the law and the rules governing the conduct of a member of the legal profession. Sworn to assist in the administration of justice and to uphold the rule of law, he has "miserably failed to live up to the standards expected of a member of the Bar." [Artiaga v. Villanueva, Adm. Matter No. 1892, July 29, 1988, 163 SCRA 638, 647]. The Court agrees with the Solicitor General that, consideringthe nature of the offenses committed by respondent and the facts and circumstances of the case,respondent lawyer should be suspended from the practice of law for a period of six (6) months.

WHEREFORE, finding that respondent Attorney Ramon A. Gonzales committed serious misconduct, the Court Resolved to SUSPEND respondent from the practice of law for SIX (6) months effective from the date of his receipt of this Resolution. Let copies of this Resolution be circulated to all courts of the country for their information and guidance, and spread in the personal record of Atty. Gonzales.

SO ORDERED.

Fernan, C.J., Narvasa, Melencio-Herrera, Cruz, Paras, Feliciano, Gancayco, Padilla, Bidin and Cortes, JJ., concur.

Gutierrez, Jr., Sarmiento, Griño-Aquino, Medialdea, Regalado, JJ., took no part.

G.R. No. 173188 January 15, 2014

THE CONJUGAL PARTNERSHIP OF THE SPOUSES VICENTE CADAVEDO AND BENITA ARCOY-CADAVEDO (both deceased), substituted by their heirs, namely: HERMINA, PASTORA, Heirs of FRUCTUOSA, Heirs of RAQUEL, EVANGELINE, VICENTE, JR., and ARMANDO, all surnamed CADAVEDO, Petitioners, vs.VICTORINO (VIC) T. LACAYA, married to Rosa Legados, Respondents.

D E C I S I O N

BRION, J.:

We solve in this Rule 45 petition for review on certiorari1 the challenge to the October 11, 2005 decision2 and the May 9, 2006 resolution3 of the Court of Appeals (CA) inPetitioners, CA-G.R. CVNo. 56948. The CA reversed and set aside the September 17, 1996 decision4 of the Regional Trial Court (RTC), Branch 10, of Dipolog City in Civil Case No. 4038, granting in part the complaint for recovery of possession of property filed by the petitioners, the Conjugal Partnership

of the Spouses Vicente Cadavedo and Benita Arcoy-Cadavedo against Atty. Victorino (Vic) T. Lacaya, married to Rosa Legados (collectively, the respondents).

The Factual Antecedents

The Spouses Vicente Cadavedo and Benita Arcoy-Cadavedo (collectively, the spouses Cadavedo) acquired a homestead grant over a 230,765-square meter parcel of land known as Lot 5415 (subject lot) located in Gumay, Piñan, Zamboanga del Norte. They were issued Homestead Patent No. V-15414 on March 13, 1953andOriginal Certificate of Title No. P-376 on July 2, 1953.On April30, 1955, the spouses Cadavedo sold the subject lot to the spouses VicenteAmes and Martha Fernandez (the spouses Ames) Transfer Certificate of Title (TCT) No. T-4792 was subsequently issued in the name of the spouses Ames.

The present controversy arose when the spouses Cadavedo filed an action5 before the RTC(thenCourt of First Instance) of Zamboanga City against the spouses Ames for sum of money and/or voiding of contract of sale of homestead after the latter failed to pay the balance of the purchase price. The spouses Cadavedo initially engaged the services of Atty. Rosendo Bandal who, for health reasons, later withdrew from the case; he was substituted by Atty. Lacaya.

On February 24, 1969, Atty. Lacaya amended the complaint to assert the nullity of the sale and the issuance of TCT No. T-4792 in the names of the spouses Ames as gross violation of the public land law. The amended complaint stated that the spouses Cadavedo hired Atty. Lacaya ona contingency fee basis. The contingency fee stipulation specifically reads:

10. That due to the above circumstances, the plaintiffs were forced to hire a lawyer on contingentbasis and if they become the prevailing parties in the case at bar, they will pay the sum of P2,000.00 for attorney’s fees.6

In a decision dated February 1, 1972, the RTC upheld the sale of the subject lot to the spouses Ames. The spouses Cadavedo, thru Atty. Lacaya, appealed the case to the CA.

On September 18, 1975, and while the appeal before the CAin Civil Case No. 1721was pending, the spouses Ames sold the subject lot to their children. The spouses Ames’ TCT No. T-4792 was subsequently cancelled and TCT No. T-25984was issued in their children’s names. On October 11, 1976, the spouses Ames mortgaged the subject lot with the Development Bank of the Philippines (DBP) in the names of their children.

On August 13, 1980, the CA issued itsdecision in Civil Case No. 1721,reversing the decision of the RTC and declaring the deed of sale, transfer of rights, claims and interest to the spouses Ames null and void ab initio. It directed the spouses Cadavedo to return the initial payment and ordered the Register of Deeds to cancel the spouses Ames’ TCT No. T-4792 and to reissue another title in the name of the spouses Cadavedo. The case eventually reached this Court via the spouses Ames’ petition for review on certiorari which this Court dismissed for lack of merit.

Meanwhile, the spouses Ames defaulted in their obligation with the DBP. Thus, the DBP caused the publication of a notice of foreclosure sale of the subject lot as covered by TCT No. T-25984(under the name of the spouses Ames’ children). Atty. Lacaya immediately informed the spouses Cadavedo of the foreclosure sale and filed an Affidavit of Third Party Claim with the Office of the Provincial Sheriff on September 14, 1981.

With the finality of the judgment in Civil Case No. 1721,Atty. Lacaya filed on September 21, 1981 a motion for the issuance of a writ of execution.

On September 23, 1981,and pending the RTC’s resolution of the motion for the issuance of a writof execution, the spouses Ames filed a complaint7 before the RTC against the spouses Cadavedo for Quieting of Title or Enforcement of Civil Rights due Planters in Good Faith with prayer for Preliminary Injunction. The spouses Cadavedo, thru Atty. Lacaya, filed a motion to dismiss on the ground of res judicata and to cancel TCT No. T-25984 (under the name of the spouses Ames’ children).

On October 16, 1981, the RTC granted the motion for the issuance of a writ of execution in Civil Case No. 1721,andthe spouses Cadavedo were placed in possession of the subject lot on October 24, 1981. Atty. Lacaya asked for one-half of the subject lot as attorney’s fees. He causedthe subdivision of the subject lot into two equal portions, based on area, and selected the more valuable and productive half for himself; and assigned the other half to the spouses Cadavedo.

Unsatisfied with the division, Vicente and his sons-in-law entered the portion assigned to the respondents and ejected them. The latter responded by filing a counter-suit for forcible entry before the Municipal Trial Court (MTC); the ejectment case was docketed as Civil Case No. 215. This incident occurred while Civil Case No. 3352was pending.

On May 13, 1982, Vicente andAtty. Lacaya entered into an amicable settlement (compromise agreement)8 in Civil Case No. 215 (the ejectment case), re-adjusting the area and portion obtained by each. Atty. Lacaya acquired 10.5383 hectares pursuant to the agreement. The MTC approved the compromise agreementin a decision dated June 10, 1982.

Meanwhile, on May 21, 1982, the spouses Cadavedo filed before the RTC an action against the DBP for Injunction; it was docketed as Civil Case No. 3443 (Cadavedo v. DBP).The RTC subsequently denied the petition, prompting the spouses Cadavedo to elevate the case to the CAvia a petition for certiorari. The CA dismissed the petition in its decision of January 31, 1984.

The records do not clearly disclose the proceedings subsequent to the CA decision in Civil Case No. 3443. However, on August 18, 1988, TCT No. 41051was issued in the name of the spouses Cadavedo concerning the subject lot.

On August 9, 1988, the spouses Cadavedo filed before the RTC an action9 against the respondents, assailing the MTC-approved compromise agreement. The case was docketed as Civil Case No. 4038 and is the root of the present case. The spouses Cadavedo prayed, among others, that the respondents be ejected from their one-half portion of the subject lot; that they be ordered to render an accounting of the produce of this one-half portion from 1981;and that the RTC fix the attorney’s fees on a quantum meruit basis, with due consideration of the expenses that Atty. Lacaya incurred while handling the civil cases.

During the pendency of Civil Case No. 4038, the spouses Cadavedo executed a Deed of Partition of Estate in favor of their eight children. Consequently, TCT No. 41051 was cancelled and TCT No. 41690 was issued in the names of the latter. The records are not clear on the proceedings and status of Civil Case No. 3352.

The Ruling of the RTC

In the September 17, 1996 decision10 in Civil Case No. 4038, the RTC declared the contingent fee of 10.5383 hectares as excessive and unconscionable. The RTC reduced the land area to 5.2691 hectares and ordered the respondents to vacate and restore the remaining 5.2692hectares to the spouses Cadavedo.

The RTC noted that, as stated in the amended complaint filed by Atty. Lacaya, the agreed attorney’s fee on contingent basis was P2,000.00. Nevertheless, the RTC also pointed out that the parties novated this agreement when they executed the compromise agreement in Civil CaseNo. 215 (ejectment case), thereby giving Atty. Lacaya one-half of the subject lot. The RTC added that Vicente’s decision to give Atty. Lacaya one-half of the subject lot, sans approval of Benita, was a valid act of administration and binds the conjugal partnership. The RTC reasoned out that the disposition redounded to the benefit of the conjugal partnership as it was done precisely to remunerate Atty. Lacaya for his services to recover the property itself.

These considerations notwithstanding, the RTC considered the one-half portion of the subject lot,as Atty. Lacaya’s contingent fee,excessive, unreasonable and unconscionable. The RTC was convinced that the issues involved in Civil Case No. 1721were not sufficiently difficult and complicated to command such an excessive award; neither did it require Atty. Lacaya to devote much of his time or skill, or to perform extensive research.

Finally, the RTC deemed the respondents’ possession, prior to the judgment, of the excess portion of their share in the subject lot to be in good faith. The respondents were thus entitled to receive its fruits.

On the spouses Cadavedo’s motion for reconsideration, the RTC modified the decision in its resolution11 dated December 27, 1996. The RTC ordered the respondents to account for and deliver the produce and income, valued at 7,500.00 per annum, of the 5.2692hectares that the ₱RTC ordered the spouses Amesto restore to the spouses Cadavedo, from October 10, 1988 untilfinal restoration of the premises.

The respondents appealed the case before the CA.

The Ruling of the CA

In its decision12 dated October 11, 2005, the CA reversed and set aside the RTC’s September 17,1996 decision and maintained the partition and distribution of the subject lot under the compromise agreement. In so ruling, the CA noted the following facts: (1) Atty. Lacaya served as the spouses Cadavedo’s counsel from 1969 until 1988,when the latter filed the present case against Atty. Lacaya; (2) during the nineteen (19) years of their attorney-client relationship, Atty. Lacaya represented the spouses Cadavedo in three civil cases –Civil Case No. 1721, Civil Case No. 3352, and Civil Case No. 3443; (3) the first civil case lasted for twelve years and even reached this Court, the second civil case lasted for seven years, while the third civil case lasted for six years and went all the way to the CA;(4) the spouses Cadavedo and Atty. Lacaya entered into a compromise agreement concerning the division of the subject lot where Atty. Lacaya ultimately agreed to acquire a smaller portion; (5) the MTC approved the compromise agreement; (6) Atty. Lacaya defrayed all of the litigation expenses in Civil Case No. 1721; and (7)the spouses Cadavedo expressly recognized that Atty. Lacaya served them in several cases.

Considering these established facts and consistent with Canon 20.01 of the Code of ProfessionalResponsibility (enumerating the factors that should guide the determination of the lawyer’s fees),

the CA ruled that the time spent and the extent of the services Atty. Lacaya rendered for the spouses Cadavedo in the three cases, the probability of him losing other employment resulting from his engagement, the benefits resulting to the spouses Cadavedo, and the contingency of his fees justified the compromise agreement and rendered the agreed fee under the compromiseagreement reasonable.

The Petition

In the present petition, the petitioners essentially argue that the CA erred in: (1) granting the attorney’s fee consisting of one-half or 10.5383 hectares of the subject lot to Atty. Lacaya, instead of confirming the agreed contingent attorney’s fees of 2,000.00; (2) not holding the ₱respondents accountable for the produce, harvests and income of the 10.5383-hectare portion (that they obtained from the spouses Cadavedo) from 1988 up to the present; and (3) upholding the validity of the purported oral contract between the spouses Cadavedo and Atty. Lacaya when it was champertous and dealt with property then still subject of Civil Case No. 1721.13

The petitioners argue that stipulations on a lawyer’s compensation for professional services, especially those contained in the pleadings filed in courts, control the amount of the attorney’s fees to which the lawyer shall be entitled and should prevail over oral agreements. In this case, the spouses Cadavedo and Atty. Lacaya agreed that the latter’s contingent attorney’s fee was P2,000.00 in cash, not one-half of the subject lot. This agreement was clearly stipulated in the amended complaint filed in Civil Case No. 1721. Thus, Atty. Lacaya is bound by the expresslystipulated fee and cannot insist on unilaterally changing its terms without violating their contract.

The petitioners add that the one-half portion of the subject lot as Atty. Lacaya’s contingent attorney’s fee is excessive and unreasonable. They highlight the RTC’s observations and argue that the issues involved in Civil Case No. 1721, pursuant to which the alleged contingent fee of one-half of the subject lot was agreed by the parties, were not novel and did not involve difficult questions of law; neither did the case require much of Atty. Lacaya’s time, skill and effort in research. They point out that the two subsequent civil cases should not be considered in determining the reasonable contingent fee to which Atty. Lacaya should be entitled for his services in Civil Case No. 1721,as those cases had not yet been instituted at that time. Thus, these cases should not be considered in fixing the attorney’s fees. The petitioners also claim thatthe spouses Cadavedo concluded separate agreements on the expenses and costs for each of these subsequent cases, and that Atty. Lacaya did not even record any attorney’s lien in the spouses Cadavedo’s TCT covering the subject lot.

The petitioners further direct the Court’s attention to the fact that Atty. Lacaya,in taking over the case from Atty. Bandal, agreed to defray all of the litigation expenses in exchange for one-half of the subject lot should they win the case. They insist that this agreement is a champertous contract that is contrary to public policy, prohibited by law for violation of the fiduciary relationshipbetween a lawyer and a client.

Finally, the petitioners maintain that the compromise agreement in Civil Case No. 215 (ejectment case) did not novate their original stipulated agreement on the attorney’s fees. They reason that Civil Case No. 215 did not decide the issue of attorney’s fees between the spouses Cadavedo and Atty. Lacaya for the latter’s services in Civil Case No. 1721.

The Case for the Respondents

In their defense,14 the respondents counter that the attorney’s fee stipulated in the amended complaint was not the agreed fee of Atty. Lacaya for his legal services. They argue that the questioned stipulation for attorney’s fees was in the nature of a penalty that, if granted, would inure to the spouses Cadavedo and not to Atty. Lacaya.

The respondents point out that: (1) both Vicente and Atty. Lacaya caused the survey and subdivision of the subject lot immediately after the spouses Cadavedo reacquired its possession with the RTC’s approval of their motion for execution of judgment in Civil Case No. 1721; (2) Vicente expressly ratified and confirmed the agreement on the contingent attorney’s fee consisting of one-half of the subject lot; (3) the MTC in Civil Case No. 215 (ejectment case) approved the compromise agreement; (4) Vicente is the legally designated administrator of the conjugal partnership, hence the compromise agreement ratifying the transfer bound the partnership and could not have been invalidated by the absence of Benita’s acquiescence; and (5) the compromise agreement merely inscribed and ratified the earlier oral agreement between the spouses Cadavedo and Atty. Lacaya which is not contrary to law, morals, good customs, public order and public policy.

While the case is pending before this Court, Atty. Lacaya died.15 He was substituted by his wife -Rosa -and their children –Victoriano D.L. Lacaya, Jr., Rosevic Lacaya-Ocampo, Reymar L. Lacaya, Marcelito L. Lacaya, Raymundito L. Lacaya, Laila Lacaya-Matabalan, Marivic Lacaya-Barba, Rosalie L. Lacaya and Ma. Vic-Vic Lacaya-Camaongay.16

The Court’s Ruling

We resolve to GRANT the petition.

The subject lot was the core of four successive and overlapping cases prior to the present controversy. In three of these cases, Atty. Lacaya stood as the spouses Cadavedo’s counsel. Forease of discussion, we summarize these cases (including the dates and proceedings pertinent toeach) as follows:

Civil Case No. 1721 – Cadavedo v. Ames (Sum of money and/or voiding of contract of sale of homestead), filed on January 10, 1967. The writ of execution was granted on October 16, 1981.

Civil Case No. 3352 – Ames v. Cadavedo (Quieting of Title and/or Enforcement of Civil Rights due Planters in Good Faith with Application for Preliminary injunction), filed on September 23, 1981.

Civil Case No. 3443 – Cadavedo v. DBP (Action for Injunction with Preliminary Injunction), filed on May 21, 1982.

Civil Case No. 215 –Atty. Lacaya v. Vicente Cadavedo, et. al. (Ejectment Case), filed between the latter part of 1981 and early part of 1982. The parties executed the compromise agreement on May 13, 1982.

Civil Case No. 4038 –petitioners v. respondents (the present case).

The agreement on attorney’s feeconsisting of one-half of the subject

lot is void; the petitioners are entitledto recover possession

The core issue for our resolution is whether the attorney’s fee consisting of one-half of the subject lot is valid and reasonable, and binds the petitioners. We rule in the NEGATIVE for the reasons discussed below.

A. The written agreement providing fora contingent fee of P2,000.00 should prevailover the oral agreement providing for one-half of the subject lot

The spouses Cadavedo and Atty. Lacaya agreed on a contingent fee of P2,000.00 and not, as asserted by the latter, one-half of the subject lot. The stipulation contained in the amended complaint filed by Atty. Lacaya clearly stated that the spouses Cadavedo hired the former on a contingency basis; the Spouses Cadavedo undertook to pay their lawyer P2,000.00 as attorney’sfees should the case be decided in their favor.

Contrary to the respondents’ contention, this stipulation is not in the nature of a penalty that the court would award the winning party, to be paid by the losing party. The stipulation is a representation to the court concerning the agreement between the spouses Cadavedo and Atty. Lacaya, on the latter’s compensation for his services in the case; it is not the attorney’s fees in the nature of damages which the former prays from the court as an incident to the main action.

At this point, we highlight that as observed by both the RTC and the CA and agreed as well by both parties, the alleged contingent fee agreement consisting of one-half of the subject lot was not reduced to writing prior to or, at most, at the start of Atty. Lacaya’s engagement as the spouses Cadavedo’s counsel in Civil Case No. 1721.An agreement between the lawyer and his client, providing for the former’s compensation, is subject to the ordinary rules governing contracts in general. As the rules stand, controversies involving written and oral agreements on attorney’s fees shall be resolved in favor of the former.17 Hence, the contingency fee of P2,000.00 stipulated in the amended complaint prevails over the alleged oral contingency fee agreement of one-half of the subject lot.

B. The contingent fee agreement betweenthe spouses Cadavedo and Atty. Lacaya,awarding the latter one-half of the subjectlot, is champertous

Granting arguendo that the spouses Cadavedo and Atty. Lacaya indeed entered into an oral contingent fee agreement securing to the latter one-half of the subject lot, the agreement is nevertheless void.

In their account, the respondents insist that Atty. Lacaya agreed to represent the spouses Cadavedo in Civil Case No. 1721 and assumed the litigation expenses, without providing for reimbursement, in exchange for a contingency fee consisting of one-half of the subject lot. This agreement is champertous and is contrary to public policy.18

Champerty, along with maintenance (of which champerty is an aggravated form), is a common law doctrine that traces its origin to the medieval period.19 The doctrine of maintenance was

directed "against wanton and in officious intermeddling in the disputes of others in which the intermeddler has no interest whatever, and where the assistance rendered is without justification or excuse."20 Champerty, on the other hand, is characterized by "the receipt of a share of the proceeds of the litigation by the intermeddler."21 Some common law court decisions, however, add a second factor in determining champertous contracts, namely, that the lawyer must also, "athis own expense maintain, and take all the risks of, the litigation."22

The doctrines of champerty and maintenance were created in response "to medieval practice of assigning doubtful or fraudulent claims to persons of wealth and influence in the expectation that such individuals would enjoy greater success in prosecuting those claims in court, in exchange for which they would receive an entitlement to the spoils of the litigation."23 "In order to safeguard the administration of justice, instances of champerty and maintenance were made subject to criminal and tortuous liability and a common law rule was developed, striking down champertous agreements and contracts of maintenance as being unenforceable on the grounds of public policy."24

In this jurisdiction, we maintain the rules on champerty, as adopted from American decisions, for public policy considerations.25 As matters currently stand, any agreement by a lawyer to "conductthe litigation in his own account, to pay the expenses thereof or to save his client therefrom and to receive as his fee a portion of the proceeds of the judgment is obnoxious to the law."26 The ruleof the profession that forbids a lawyer from contracting with his client for part of the thing in litigation in exchange for conducting the case at the lawyer’s expense is designed to prevent the lawyer from acquiring an interest between him and his client. To permit these arrangements is to enable the lawyer to "acquire additional stake in the outcome of the action which might lead him to consider his own recovery rather than that of his client or to accept a settlement which might take care of his interest in the verdict to the sacrifice of that of his client in violation of his duty of undivided fidelity to his client’s cause."27

In Bautista v. Atty. Gonzales,28 the Court struck down the contingent fee agreement between therein respondent Atty. Ramon A. Gonzales and his client for being contrary to public policy. There, the Court held that an reimbursement of litigation expenses paid by the former is against public policy, especially if the lawyer has agreed to carry on the action at his expense in consideration of some bargain to have a part of the thing in dispute. It violates the fiduciary relationship between the lawyer and his client.29

In addition to its champertous character, the contingent fee arrangement in this case expressly transgresses the Canons of Professional Ethics and, impliedly, the Code of Professional Responsibility.30 Under Rule 42 of the Canons of Professional Ethics, a lawyer may not properly agree with a client that the lawyer shall pay or beat the expense of litigation.31 The same reasonsdiscussed above underlie this rule.

C. The attorney’s fee consisting ofone-half of the subject lot is excessiveand unconscionable

We likewise strike down the questioned attorney’s fee and declare it void for being excessive andunconscionable.1âwphi1 The contingent fee of one-half of the subject lot was allegedly agreed tosecure the services of Atty. Lacaya in Civil Case No. 1721.Plainly, it was intended for only one action as the two other civil cases had not yet been instituted at that time. While Civil Case No. 1721 took twelve years to be finally resolved, that period of time, as matters then stood, was not

a sufficient reason to justify a large fee in the absence of any showing that special skills and additional work had been involved. The issue involved in that case, as observed by the RTC(and with which we agree), was simple and did not require of Atty. Lacaya extensive skill, effort and research. The issue simply dealt with the prohibition against the sale of a homestead lot within five years from its acquisition.

That Atty. Lacaya also served as the spouses Cadavedo’s counsel in the two subsequent cases did not and could not otherwise justify an attorney’s fee of one-half of the subject lot. As assertedby the petitioners, the spouses Cadavedo and Atty. Lacaya made separate arrangements for the costs and expenses foreach of these two cases. Thus, the expenses for thetwo subsequent cases had been considered and taken cared of Based on these considerations, we therefore find one-half of the subject lot as attorney’s fee excessive and unreasonable.

D. Atty. Lacaya’s acquisition ofthe one-half portion contravenesArticle 1491 (5) of the Civil Code

Article 1491 (5) of the Civil Code forbids lawyers from acquiring, by purchase or assignment, the property that has been the subject of litigation in which they have taken part by virtue of their profession.32 The same proscription is provided under Rule 10 of the Canons of Professional Ethics.33

A thing is in litigation if there is a contest or litigation over it in court or when it is subject of the judicial action.34Following this definition, we find that the subject lot was still in litigation when Atty. Lacaya acquired the disputed one-half portion. We note in this regard the following established facts:(1)on September 21, 1981, Atty. Lacaya filed a motion for the issuance of a writ of execution in Civil Case No. 1721; (2) on September 23, 1981, the spouses Ames filed Civil Case No. 3352 against the spouses Cadavedo; (3)on October 16, 1981, the RTC granted the motion filed for the issuance of a writ of execution in Civil Case No. 1721 and the spouses Cadavedo took possession of the subject lot on October 24, 1981; (4) soon after, the subject lot was surveyed and subdivided into two equal portions, and Atty. Lacaya took possession of one ofthe subdivided portions; and (5) on May 13, 1982, Vicente and Atty. Lacaya executed the compromise agreement.

From these timelines, whether by virtue of the alleged oral contingent fee agreement or an agreement subsequently entered into, Atty. Lacaya acquired the disputed one-half portion (which was after October 24, 1981) while Civil Case No. 3352 and the motion for the issuance of a writ of execution in Civil Case No. 1721were already pending before the lower courts. Similarly, the compromise agreement, including the subsequent judicial approval, was effected during the pendency of Civil Case No. 3352. In all of these, the relationship of a lawyer and a client still existed between Atty. Lacaya and the spouses Cadavedo.

Thus, whether we consider these transactions –the transfer of the disputed one-half portion and the compromise agreement –independently of each other or resulting from one another, we find them to be prohibited and void35by reason of public policy.36 Under Article 1409 of the Civil Code, contracts which are contrary to public policy and those expressly prohibited or declared void by law are considered in existent and void from the beginning.37

What did not escape this Court’s attention is the CA’s failure to note that the transfer violated the provisions of Article 1491(5) of the Civil Code, although it recognized the concurrence of the

transfer and the execution of the compromise agreement with the pendency of the two civil casessubsequent to Civil Case No. 1721.38 In reversing the RTC ruling, the CA gave weight to the compromise agreement and in so doing, found justification in the unproved oral contingent fee agreement.

While contingent fee agreements are indeed recognized in this jurisdiction as a valid exception tothe prohibitions under Article 1491(5) of the Civil Code,39 contrary to the CA’s position, however, this recognition does not apply to the present case. A contingent fee contract is an agreement in writing where the fee, often a fixed percentage of what may be recovered in the action, is made to depend upon the success of the litigation.40 The payment of the contingent fee is not made during the pendency of the litigation involving the client’s property but only after the judgment hasbeen rendered in the case handled by the lawyer.41

In the present case, we reiterate that the transfer or assignment of the disputed one-half portion to Atty. Lacaya took place while the subject lot was still under litigation and the lawyer-client relationship still existed between him and the spouses Cadavedo. Thus, the general prohibition provided under Article 1491 of the Civil Code, rather than the exception provided in jurisprudence, applies. The CA seriously erred in upholding the compromise agreement on the basis of the unproved oral contingent fee agreement.

Notably, Atty. Lacaya, in undertaking the spouses Cadavedo’s cause pursuant to the terms of thealleged oral contingent fee agreement, in effect, became a co-proprietor having an equal, if not more, stake as the spouses Cadavedo. Again, this is void by reason of public policy; it undermines the fiduciary relationship between him and his clients.42

E.The compromise agreement could notvalidate the void oral contingent feeagreement; neither did it supersede thewritten contingent fee agreement

The compromise agreement entered into between Vicente and Atty. Lacaya in Civil Case No. 215(ejectment case) was intended to ratify and confirm Atty. Lacaya’s acquisition and possession of the disputed one-half portion which were made in violation of Article 1491 (5) of the Civil Code. As earlier discussed, such acquisition is void; the compromise agreement, which had for its object a void transaction, should be void.

A contract whose cause, object or purpose is contrary to law, morals, good customs, public order or public policy is in existent and void from the beginning.43 It can never be ratified44 nor the action or defense for the declaration of the in existence of the contract prescribe;45 and any contract directly resulting from such illegal contract is likewise void and in existent.46

Consequently, the compromise agreement did not supersede the written contingent fee agreement providing for attorney’s fee of P2,000.00; neither did it preclude the petitioners from questioning its validity even though Vicente might have knowingly and voluntarily acquiesced thereto and although the MTC approved it in its June 10, 1982 decision in the ejectment case. The MTC could not have acquired jurisdiction over the subject matter of the void compromise agreement; its judgment in the ejectment case could not have attained finality and can thus be attacked at any time. Moreover, an ejectment case concerns itself only with the issue of possession de facto; it will not preclude the filing of a separate action for recovery of possession founded on ownership. Hence, contrary to the CA’s position, the petitioners–in filing the present

action and praying for, among others, the recovery of possession of the disputed one-half portionand for judicial determination of the reasonable fees due Atty. Lacaya for his services –were not barred by the compromise agreement.

Atty. Lacaya is entitled to receive attorney’s fees on a quantum meruit basis

In view of their respective assertions and defenses, the parties, in effect, impliedly set aside any express stipulation on the attorney’s fees, and the petitioners, by express contention, submit the reasonableness of such fees to the court’s discretion. We thus have to fix the attorney’s fees on aquantum meruit basis.

"Quantum meruit—meaning ‘as much as he deserves’—is used as basis for determining a lawyer’s professional fees in the absence of a contract x x x taking into account certain factors in fixing the amount of legal fees."47 "Its essential requisite is the acceptance of the benefits by one sought to be charged for the services rendered under circumstances as reasonably to notify him that the lawyer performing the task was expecting to be paid compensation"48 for it. The doctrine of quantum meruit is a device to prevent undue enrichment based on the equitable postulate thatit is unjust for a person to retain benefit without paying for it.49

Under Section 24, Rule 138 of the Rules of Court50 and Canon 20 of the Code of Professional Responsibility,51factors such as the importance of the subject matter of the controversy, the time spent and the extent of the services rendered, the customary charges for similar services, the amount involved in the controversy and the benefits resulting to the client from the service, to name a few, are considered in determining the reasonableness of the fees to which a lawyer is entitled.

In the present case, the following considerations guide this Court in considering and setting Atty. Lacaya’s fees based on quantum meruit: (1) the questions involved in these civil cases were not novel and did not require of Atty. Lacaya considerable effort in terms of time, skill or the performance of extensive research; (2) Atty. Lacaya rendered legal services for the Spouses Cadavedo in three civil cases beginning in 1969 until 1988 when the petitioners filed the instant case; (3) the first of these civil cases (Cadavedo v. Ames) lasted for twelve years and reaching up to this Court; the second (Ames v. Cadavedo) lasted for seven years; and the third (Cadavedoand Lacaya v. DBP) lasted for six years, reaching up to the CA; and (4) the property subject of these civil cases is of a considerable size of 230,765 square meters or 23.0765 hectares.

All things considered, we hold as fair and equitable the RTC’s considerations in appreciating the character of the services that Atty. Lacaya rendered in the three cases, subject to modification onvaluation. We believe and so hold that the respondents are entitled to two (2) hectares (or approximately one-tenth [1/10] of the subject lot), with the fruits previously received from the disputed one-half portion, as attorney’s fees. They shall return to the petitioners the remainder of the disputed one-half portion.

The allotted portion of the subject lot properly recognizes that litigation should be for the benefit of the client, not the lawyer, particularly in a legal situation when the law itself holds clear and express protection to the rights of the client to the disputed property (a homestead lot). Premium consideration, in other words, is on the rights of the owner, not on the lawyer who only helped theowner protect his rights. Matters cannot be the other way around; otherwise, the lawyer does indeed effectively acquire a property right over the disputed property. If at all, due recognition of

parity between a lawyer and a client should be on the fruits of the disputed property, which in thiscase, the Court properly accords.

WHEREFORE, in view of these considerations, we hereby GRANT the petition. We AFFIRM the decision dated September 17, 1996 and the resolution dated December 27, 1996of the Regional Trial Court of Dipolog City, Branch 10,in Civil Case No. 4038, with the MODIFICATION that the respondents, the spouses Victorino (Vic) T. Lacaya and Rosa Legados, are entitled to two (2) hectares (or approximately one-tenth [1/10] of the subject lot) as attorney’s fees. The fruits that the respondents previously received from the disputed one-half portion shall also form part of theattorney’s fees. We hereby ORDER the respondents to return to the petitioners the remainder of the 10.5383-hectare portion of the subject lot that Atty. Vicente Lacaya acquired pursuant to the compromise agreement.

SO ORDERED.

G.R. No. 155311 March 31, 2004

DOY MERCANTILE, INC., petitioner, vs.AMA COMPUTER COLLEGE and ERNESTO RIOVEROS, respondents.

R E S O L U T I O N

TINGA, J.:

On June 1, 1990, petitioner Doy Mercantile, Inc. (DOY) through its then counsel, respondent Atty.Eduardo P. Gabriel, Jr., filed before the Regional Trial Court (RTC) of Cebu City a Complaint for Annulment of Contract, Damages with Preliminary Injunction against AMA Computer College, Inc. (AMA) and one Ernesto Rioveros.

Petitioner alleged that it owns Lots 2-A and 2-B, and the improvements thereon, located at No. 640 Osmeña Boulevard, Cebu City, covered by Transfer Certificate of Title (TCT) Nos. 68951 and 68952. DOY assailed theDeed of Conditional Sale supposedly executed by one of DOY’s directors, Dionisio O. Yap, in favor of AMA. Dionisio allegedly sold the properties to AMA without proper authorization from DOY’s Board of Directors. DOY also questioned the Secretary’s Certificate which was executed by DOY Corporate Secretary Francisco P. Yap, authorizing Dionisio to sell the properties and to sign the contract in behalf of DOY.

Through Atty. Gabriel, Jr., DOY filed an Urgent Ex Parte Motion for the Issuance of a Restraining Order, which was granted by the RTC on June 14, 1990. On June 23, 1990, Atty. Gabriel also filed an Answer to Defendant’s Counterclaim. On July 2, 1990, he filed DOY’s Formal Rejoinder to AMA’s Opposition for Issuance of Writ of Preliminary Injunction. He also filed on July 24, 1990,an Omnibus Motion seeking (1) the reconsideration of the order denying DOY’s application for a writ of preliminary injunction, (2) the setting of the case for pre-trial and trial on the merits, and (3)the imposition of disciplinary sanctions to Atty. Winston Garcia, who notarized the Deed of Conditional Sale and the Secretary’s Certificate. On August 31, 1990, Atty. Gabriel also filed a Rejoinder to AMA’s Opposition to Motion for Reconsideration, etc.

During this period, that is, before pre-trial, DOY filed a Petition for Certiorari, Prohibition with a Prayer for a Writ of Preliminary Injunction (CA-G.R. S.P. No. 22727) with the Court of Appeals. It questioned the Order of the RTC dated July 5, 1990, denying DOY’s prayer for the issuance of a writ of preliminary injunction and dissolving the temporary restraining order previously issued. DOY also assailed the Order dated August 10, 1990, which denied DOY’s Omnibus Motion. Atty. Gabriel, Jr., signed the petition together with Atty. Enrique C. Andres of the law firm of Salonga, Andres, Hernandez and Allado.

During pre-trial, AMA proposed to enter into a compromise agreement with DOY, which proposal the parties later agreed to adopt. The agreement was signed by Fernando Yap in behalf of DOY, with the assistance of Atty. Gabriel, Jr. and Atty. Andres. On November 29, 1990, a Judgment based on the compromise agreement was rendered by the RTC. In light of said compromise, the Court of Appeals dismissed CA-G.R. S.P. No. 22727 for mootness.

DOY, however, refused to satisfy Atty. Gabriel, Jr.’s attorney’s fees, prompting the lawyer to file with the RTC aMotion to Allow Commensurate Fees and to Annotate Attorney’s Lien on T.C.T. Nos. 68951 and 68952. At this point, DOY had already obtained the services of a new counsel toattend to the enforcement of the Judgment of the RTC.

On December 27, 1991, the RTC fixed Atty. Gabriel, Jr.’s fees at P200,000.00 and ordered that a lien be annotated on the TCTs. A Writ of Execution was later issued by the trial court in Atty. Gabriel, Jr.’s favor.

Upon Atty. Gabriel Jr.’s motion for reconsideration, the RTC increased his fees to P500,000.00. It then issued another Writ of Execution to enforce the new award but denied the Motion to Annotate the Award at the back of the TCTs.

DOY, for its part, filed several petitions with the Court of Appeals to set aside the RTC Orders involving the award of attorney’s fees. Eventually, the Court of Appeals rendered a Decision,1 fixing Atty. Gabriel, Jr.’s fees atP200,000.00 and affirming the subsequent Order of the RTC not to annotate such award on the TCTs.

This Decision is now the subject of the present petition.

DOY contends that the Decision is not consistent with the guidelines prescribed by Section 24, Rule 1382 of the Rules of Court and Rule 20.013 of the Code of Professional Responsibility. DOY avers that except for the statement that the compromise agreement benefited DOY and that Atty. Gabriel, Jr., was a competent lawyer, the Court of Appeals made no pronouncement as to the importance of the subject matter in controversy, the extent of services rendered and the professional standing of Atty. Gabriel, Jr., DOY also submits that the Court of Appeals should not have merely relied on the value of the properties involved as the basis for its award. Furthermore, while Atty. Gabriel admitted that he already received Eighty Two Thousand Nine Hundred Fifty Pesos (P82,950.00) from DOY for incidental and partial attorney’s fees, a fact affirmed by the Court of Appeals, the latter still awarded P200,000.00 to him.

Atty. Gabriel, Jr., comments, however, that the attorney’s fees awarded by the appellate court were commensurate and, perhaps, even less than, the value of the services he rendered. He then enumerates the pleadings he drafted and the appearances he made to dispose of the main case.

Atty. Gabriel, Jr., also alleges that he handled interrelated cases for DOY. He purportedly prepared and filed with the Metropolitan Trial Court of Cebu City the following: a case for Illegal Detainer with Damages, an Opposition to Motion to Dismiss, an Opposition to Defendant’s Motion for Reconsideration, and a Motion to Dismiss.

Atty. Gabriel, Jr., also draws attention to the criminal case filed by Rolando Piedad, director of AMA, before the Office of the Cebu City Prosecutor charging Dionisio Yap and Francisco Yap with estafa through falsification of public document. He claims that it was he who prepared and filed with said Office the Joint Affidavit of Messrs. Dionisio and Francisco Yap against Rolando Piedad for Perjury, as well as the Yaps’ Counter-Affidavit in the criminal case. The case was eventually dismissed by the fiscal.

Finally, Atty. Gabriel, Jr., stresses that, through his efforts and resourcefulness, AMA had no choice but to concede to the compromise agreement resulting in the cancellation of the Deed of

Conditional Sale between DOY and AMA. According to him, AMA was operating a school on the property, which did not have an area of at least 1,000 square meters as required of a school campus, in violation of the directives of the Department of Education, Culture and Sports (DECS). AMA also did not have a business permit from the city government. Atty. Gabriel thus made formal representations with the DECS and the City of Cebu, which ordered AMA to cease operations. Atty. Gabriel, Jr., also verified from the Philippine National Bank whether AMA appliedfor a loan with which to pay DOY as stipulated in the Deed of Conditional Sale, and was informedthat AMA’s application was held in abeyance due to its poor credit reputation.

The petition has no merit. It is not accurate for petitioner to state that the Court of Appeals did nottake into account the time spent and the extent of the services rendered by Atty. Gabriel Jr. The Court of Appeals found that:

That Atty. Gabriel, Jr. was the counsel of DMI [DOY] up to the time the compromise agreement was confirmed by the trial court. He only withdrew his appearance as counsel for co-plaintiffs Fred and Felipe Yap, who were eventually dropped as parties to the case, along with the other individual defendants, as it was held that only DMI was the real-party-in-interest.

It is evident that Atty. Gabriel, Jr. served as co-counsel together with Atty. Enrique C. Andres. DMIwas assisted by the former. Evidence of which was the service of a copy of the Judgment Based on Compromise Agreement, including the Decision dated January 30, 1991, which dismissed C.A.-G.R. S.P. No. 22727, on Atty. Gabriel, Jr..

A perusal of the pleadings enumerated by the plaintiff-appellant reveals the competence of Atty. Gabriel, Jr. in handling the case. The degree and extent of service rendered by an attorney for a client is best measured in terms other than the mere number of sheets of paper.4

Indeed, the assailed Decision even contains an enumeration of the pleadings filed by counsel in behalf of his client.5

In fixing the award of attorney’s fees, the Court of Appeals also considered the amount involved in the controversy and the benefits resulting to the client from the service in fixing Atty. Gabriel, Jr.’s fees, thus:

…. While it is true that Civil Case No. CEB 9043 was terminated by virtue of a compromise agreement by the parties, this is still to be taken as beneficial to DMI as the dispute was finally resolved without having to resort to a full-blown trial on the merits which often would take time before the light at the end of the tunnel may be seen.

….

DMI also assails the use of the value of the property involved in the litigation to serve as a basis or standard in computing and awarding attorney’s fees. A simple perusal of the provisions of Section 24, Rule 138 of the Revised Rules of Court, as well as Canon 20, Rule 20.01 of the Code of Professional Responsibility, would show that "the value of the property" was not enumerated as one of the factors but instead they used "the importance of the subject matter" as a determinant of the amount of award of attorney’s fees. Nevertheless, the Supreme Court has included as one of the determinants for the reasonableness of the award of attorney’s fees "the value of the property affected by the controversy." ….

....

The issue of the reasonableness of attorney’s fees based on quantum meruit is a question of fact and well-settled is the rule that conclusions and findings of fact by the lower courts are entitled to great weight on appeal and will not be disturbed except for strong and cogent reasons.

The trial court’s initial award of P2000,00.00 as attorney’s fees of Atty. Gabriel, Jr. is reasonable. On the other hand, the increased award of P500,000.00 cannot be justified, taking into account the recognized parameters of quantum meruit.6

The Court of Appeals then ended on this note:

Lastly, we take this occasion to reiterate the fact that while the practice of law is not a business, the attorney plays a vital role in the administration of justice and, hence, the need to secure to him his honorarium lawfully earned as a means to preserve the decorum and respectability of the legal profession. A lawyer is as much entitled to judicialprotection against injustice or imposition on the part of his client just as the client can claim protection against abuse on the part of his counsel. The duty of the court is not alone to see that a lawyer acts in a proper and lawful manner, it is also its duty to see thata lawyer is paid his just fees. With his capital consisting only of his brains and with his skill acquired at tremendous cost not only in money but in expenditure of time and energy, he is entitled to the protection of any judicial tribunal against any attempt on the part of his client to escape payment of his just compensation. It would be ironic if, after putting forth the best in him to secure justice for his client, he himself would not get his due.7

This Court finds no reversible error in the above disquisition.

Petitioner’s contention that the appellate court should also have taken into account the importance of the subject matter in controversy and the professional standing of counsel in determining the latter’s fees is untenable. Although Rule 138 of the Rules of Court and Rule 20.01 of the Code of Professional Responsibility list several other factors in setting such fees, these are mere guides in ascertaining the real value of the lawyer’s service.8Courts are not bound to consider all these factors in fixing attorney’s fees.

While a lawyer should charge only fair and reasonable fees,9 no hard and fast rule maybe set in the determination of what a reasonable fee is, or what is not. That must be established from the facts in each case.10As the Court of Appeals is the final adjudicator of facts, this Court is bound by the former’s findings on the propriety of the amount of attorney’s fees.

ACCORDINGLY, the Court Resolved to DENY the Petition and AFFIRM the Decision of the Courtof Appeals.

SO ORDERED.

Puno, Quisumbing, Austria-Martinez, and Callejo, Sr., JJ., concur.

A.M. No. 1388 March 28, 1980

ANA F. RETUYA, complainant, vs.ATTY. IÑEGO A. GORDUIZ, respondent.

AQUINO, J:

This disbarment case is linked to Administrative Case No. 1431-MJ which was filed by AnaF. Retuya against Municipal Judge Paulo A. Equipilag of Maasin, Leyte and which was decided on July 16, 1979 (Retuya vs. Equipilag). The facts of that case, which also gave rise to this disbarment case, are as follows:

Ana F. Retuya, a widow with four minor children, filed a claim for workmen'scompensation against Eastern Shipping Lines, Inc., the employer of her husband who died in 1968. In a decision dated December 4, 1970 the Workmen's Compensation Unit at Tacloban City awarded to Ana the sum of P8,792.10 consisting of (a) P6,000 as compensation benefits, (b) P2,292.10 for medical and hospitalization expenses, (c) P200 as burial expenses and (d) P300 as attorney's fees of Atty. Iñego Gorduiz (Case No. 9728).

The employer appealed. During the pendency of the appeal, the employer proposed to compromise the claim by paying P4,396.05 or only one-half of the total award. Ana accepted the proposal and directed that the amount be

remitted to Fiscal Mamerto Daclan through the Philippine National Bank's branch at Maasin, Southern Leyte.

The employer paid the reduced award on November 16, 1972. Ana sent to the employer the receipt and release signed by her with a covering letter dated December 19, 1972 wherein she explained that her lawyer, Gorduiz, did not sign the joint motion to dismiss the claim because he wanted twenty percent of the award as his attorney's fees. She was willing to give him ten percent.

After she had cashed the check for P4,396.05, she was not able to contact Gorduiz and pay his fee. Then, unexpectedly, in February, 1973, she was served with a warrant of arrest issued in Criminal Case No. R-2362 of the municipal court of Maasin. To avoid detention, she had to post bail in the sum of one thousand pesos.

It turned out that on January 12, 1973 Atty. Gorduiz executed an affidavit stating that Ana had misappropriated his attorney's fees amounting to threehundred pesos and that he had demanded payment of the amount from her but, she refused to make payment and. instead, she went to Cebu and starved there for a long time.

On the basis of that affidavit, the acting chief of police filed against Ana a complaint for estafa in the municipal court of Maasin. After posting bail, shefiled a motion to quash wherein she explained that she did not pay the fees of Atty. Gorduiz because he was demanding one-third of the award: that when she did not accede to his demand, he lowered his claim to eight hundred pesos, and that she bargained for six hundred fifty pesos but he refused to accept that amount. Ana averred that the estafa case was filed just to harass her.

Judge Paulo A. Equipilag denied the motion to quash. He granted the motion of Atty. Gorduiz requiring Ana to produce a copy of the decision awarding her workmen's compensation for her husband's death.

The estafa case was not tried. Atty. Erasmo M. Diola, as lawyer of Ana, offered to Atty. Gorduiz the sum of five hundred pesos as settlement of the case. The offer was accepted.

On November 22, 1973, the acting child of police filed a motion to dismiss the case on the basis of the affidavit of Atty. Gorduiz ex. executed on that date stating that the prosecution witnesses had allegedly become hostile and that he was no longer interested in further prosecuting the case. Also, on that day, Judge Equipilag dismissed the case.

In spite of the dismissal of the estafa case Ana F. Retuya felt aggrieved by the proceedings therein. In a complaint dated July 24, 1974 but filed in this Court on October 30, 1974, she asked for the disbarment or suspension of Atty. Gorduiz and Judge Equipilag. The disbarment case against Gorduiz was referred to the Solicitor General.

The case against Judge Equipilag was investigated by the Judge of the Court of First Instance of Southern Leyte.

This Court found that there was no justification for suspending respondent Judge. However, he was admonished to be more prudent and circumspect in the discharge of his duties so as to obviate the suspicion that, for an ulterior motive, he wall in cahoots with the offended party in a criminal case for the purpose of using the strong arm of the law that the accused in an oppressive and vindictive manner.

The Solicitor General asked the provincial fiscal of Southern Leyte to investigate the case against Gorduiz. The fiscal in her report of July 8, 1975 recommended the of the case.

The Solicitor General disagreeing with that recommendation, filed in this Court against Gorduiz a complaint wherein he prayed that Gorduiz be suspended for six months because the latter, in filing the estafa case, had promoted a groundless suit against his client.

Ana F. Retuya testified before the investigation Fiscal that in December, 1972 she was willing to pay Gorduiz six hundred fifty pesos as his attorney's few but he demanded a bigger amount.He lodged a complaint for estafa against her and was arrests She had to post bail in the sum of one thousand pesos. As already stated above, the estafa case was later dismissed when Ana paid Gorduiz sum of five hundred pesos.

In his testimony before the investigating fiscal and this Court's legal officer, respondent Gorduiz denied that he demanded as attorney's fees an amount higher than three hundredpesos. He explained that he filed the estafa cam because after Ana had received payment of the award, she did not turn over to him the attorney's fees of three hundred pesos in spite of her promises to pay the same and his demands for payment (Exh. 7 and 8).

Gorduiz declared that Ana filed the disbarment case against him in order that she could evade the payment of his attorney's fees in the other cases which he had handled for her. It was also possible that someone who had a score to settle with Gorduiz had instigated the filing of this case against him.

He further declared that he filed the estafa case because he thought that Ana had absconded when she stayed in Cebu City for a long time (23-24 tsn, June 26, 1979). He claimed that he spent one hundred pesos of his own money in gathering evidence which was presented in the workmen's compensation case. He had also advanced around two hundred pesos to cover the expenses in the other cases which he had handled for Ana.

After reflecting on the conflicting contentions of the parties, the Court finds that there is justification for suspending the respondent.

Respondent acted precipitately in filing a criminal action against his client for the supposed misappropriation of his attomey's fees. It is not altogether clear that his client had swindled him and, therefore, there is some basis for concluding that, contrary to his lawyer's oath, he had filed a suit against her and had harassed and embarrassed her.

Paragraph 14 of the Canons of Legal Ethics prescribes that "controversies with clients concerning compensation are to be avoided by the lawyer so far as shall be compatible

with his self- respect and with his right to receive reasonable recompense for his services; and lawsuits with clients should be resorted to only to prevent injustice, imposition or fraud."

WHEREFORE, the respondent is from the practice of law for a period of six months counted from notice of this decision. A copy of this decision should be attached to his record in the Bar Confidant's office.

SO ORDERED.

Barredo (Chairman), Antonio and Concepcion Jr., JJ., concur.

G.R. No. 120592 March 14, 1997

TRADERS ROYAL BANK EMPLOYEES UNION-INDEPENDENT, petitioner, vs.NATIONAL LABOR RELATIONS COMMISSION and EMMANUEL NOEL A. CRUZ, respondents.

REGALADO, J.:

Petitioner Traders Royal Bank Employees Union and private respondent Atty. Emmanuel Noel A. Cruz, head of the E.N.A. Cruz and Associates law firm, entered into a retainer agreement on February 26, 1987 whereby the former obligated itself to pay the latter a monthly retainer fee of P3,000.00 in consideration of the law firm's undertaking to render the services enumerated in their contract. 1 Parenthetically, said retainer agreement was terminated by the union on April 4, 1990. 2

During the existence of that agreement, petitioner union referred to private respondent the claimsof its members for holiday, mid-year and year-end bonuses against their employer, Traders RoyalBank (TRB). After the appropriate complaint was filed by private respondent, the case was certified by the Secretary of Labor to the National Labor Relations Commission (NLRC) on March24, 1987 and docketed as NLRC-NCR Certified Case No. 0466. 3

On September 2, 1988, the NLRC rendered a decision in the foregoing case in favor of the employees, awarding them holiday pay differential, mid-year bonus differential, and year-end bonus differential. 4 The NLRC, acting on a motion for the issuance of a writ of execution filed by private respondent as counsel for petitioner union, raffled the case to Labor Arbiter Oswald Lorenzo. 5

However, pending the hearing of the application for the writ of execution, TRB challenged the decision of the NLRC before the Supreme Court. The Court, in its decision promulgated on August 30, 1990, 6 modified the decision of the NLRC by deleting the award of mid-year and year-end bonus differentials while affirming the award of holiday pay differential. 7

The bank voluntarily complied with such final judgment and determined the holiday pay differential to be in the amount of P175,794.32. Petitioner never contested the amount thus foundby TRB. 8 The latter duly paid its concerned employees their respective entitlement in said sum through their payroll. 9

After private respondent received the above decision of the Supreme Court on September 18, 1990, 10 he notified the petitioner union, the TRB management and the NLRC of his right to exercise and enforce his attorney's lien over the award of holiday pay differential through a letter dated October 8, 1990. 11

Thereafter, on July 2, 1991, private respondent filed a motion before Labor Arbiter Lorenzo for the determination of his attorney's fees, praying that ten percent (10%) of the total award for holiday pay differential computed by TRB at P175,794.32, or the amount of P17,579.43, be declared as his attorney's fees, and that petitioner union be ordered to pay and remit said amount to him. 12

The TRB management manifested before the labor arbiter that they did not wish to oppose or comment on private respondent's motion as the claim was directed against the union, 13 while petitioner union filed a comment and opposition to said motion on July 15, 1991. 14 After considering the position of the parties, the labor arbiter issued an order 15 on November 26, 1991 granting the motion of private respondent, as follows:

WHEREFORE, premises considered, it is hereby ordered that the TRADERS ROYAL BANK EMPLOYEES UNION with offices at Kanlaon Towers, Roxas Boulevard is hereby ordered (sic) to pay without delay the attorney's fees due themovant law firm, E.N.A. CRUZ and ASSOCIATES the amount of P17,574.43 or

ten (10%) per cent of the P175,794.32 awarded by the Supreme Court to the members of the former.

This constrained petitioner to file an appeal with the NLRC on December 27, 1991, seeking a reversal of that order. 16

On October 19, 1994, the First Division of the NLRC promulgated a resolution affirming the orderof the labor arbiter. 17 The motion for reconsideration filed by petitioner was denied by the NLRC in a resolution dated May 23, 1995, 18hence the petition at bar.

Petitioner maintains that the NLRC committed grave abuse of discretion amounting to lack of jurisdiction in upholding the award of attorney's fees in the amount of P17,574.43, or ten percent (10%) of the P175,794.32 granted as holiday pay differential to its members, in violation of the retainer agreement; and that the challenged resolution of the NLRC is null and void, 19 for the reasons hereunder stated.

Although petitioner union concedes that the NLRC has jurisdiction to decide claims for attorney's fees, it contends that the award for attorney's fees should have been incorporated in the main case and not after the Supreme Court had already reviewed and passed upon the decision of theNLRC. Since the claim for attorney's fees by private respondent was neither taken up nor approved by the Supreme Court, no attorney's fees should have been allowed by the NLRC.

Thus, petitioner posits that the NLRC acted without jurisdiction in making the award of attorney's fees, as said act constituted a modification of a final and executory judgment of the Supreme Court which did not award attorney's fees. It then cited decisions of the Court declaring that a decision which has become final and executory can no longer be altered or modified even by the court which rendered the same.

On the other hand, private respondent maintains that his motion to determine attorney's fees wasjust an incident of the main case where petitioner was awarded its money claims. The grant of attorney's fees was the consequence of his exercise of his attorney's lien. Such lien resulted fromand corresponds to the services he rendered in the action wherein the favorable judgment was obtained. To include the award of the attorney's fees in the main case presupposes that the fees will be paid by TRB to the adverse party. All that the non-inclusion of attorney's fees in the award means is that the Supreme Court did not order TRB to pay the opposing party attorney's fees in the concept of damages. He is not therefore precluded from filing his motion to have his own professional fees adjudicated.

In view of the substance of the arguments submitted by petitioner and private respondent on this score, it appears necessary to explain and consequently clarify the nature of the attorney's fees subject of this petition, in order to dissipate the apparent confusion between and the conflicting views of the parties.

There are two commonly accepted concepts of attorney's fees, the so-called ordinary and extraordinary. 20 In its ordinary concept, an attorney's fee is the reasonable compensation paid to a lawyer by his client for the legal services he has rendered to the latter. The basis of this compensation is the fact of his employment by and his agreement with the client.

In its extraordinary concept, an attorney's fee is an indemnity for damages ordered by the court to be paid by the losing party in a litigation. The basis of this is any of the cases provided by law

where such award can be made, such as those authorized in Article 2208, Civil Code, and is payable not to the lawyer but to the client, unless they have agreed that the award shall pertain to the lawyer as additional compensation or as part thereof.

It is the first type of attorney's fees which private respondent demanded before the labor arbiter. Also, the present controversy stems from petitioner's apparent misperception that the NLRC has jurisdiction over claims for attorney's fees only before its judgment is reviewed and ruled upon bythe Supreme Court, and that thereafter the former may no longer entertain claims for attorney's fees.

It will be noted that no claim for attorney's fees was filed by private respondent before the NLRC when it acted on the money claims of petitioner, nor before the Supreme Court when it reviewed the decision of the NLRC. It was only after the High Tribunal modified the judgment of the NLRC awarding the differentials that private respondent filed his claim before the NLRC for a percentage thereof as attorney's fees.

It would obviously have been impossible, if not improper, for the NLRC in the first instance and for the Supreme Court thereafter to make an award for attorney's fees when no claim therefor was pending before them. Courts generally rule only on issues and claims presented to them for adjudication. Accordingly, when the labor arbiter ordered the payment of attorney's fees, he did not in any way modify the judgment of the Supreme Court.

As an adjunctive episode of the action for the recovery of bonus differentials in NLRC-NCR Certified Case No. 0466, private respondent's present claim for attorney's fees may be filed before the NLRC even though or, better stated, especially after its earlier decision had been reviewed and partially affirmed. It is well settled that a claim for attorney's fees may be asserted either in the very action in which the services of a lawyer had been rendered or in a separate action. 21

With respect to the first situation, the remedy for recovering attorney's fees as an incident of the main action may be availed of only when something is due to the client. 22 Attorney's fees cannot be determined until after the main litigation has been decided and the subject of the recovery is at the disposition of the court. The issue over attorney's fees only arises when something has been recovered from which the fee is to be paid. 23

While a claim for attorney's fees may be filed before the judgment is rendered, the determination as to the propriety of the fees or as to the amount thereof will have to be held in abeyance until the main case from which the lawyer's claim for attorney's fees may arise has become final. Otherwise, the determination to be made by the courts will be premature. 24 Of course, a petition for attorney's fees may be filed before the judgment in favor of the client is satisfied or the proceeds thereof delivered to the client. 25

It is apparent from the foregoing discussion that a lawyer has two options as to when to file his claim for professional fees. Hence, private respondent was well within his rights when he made his claim and waited for the finality of the judgment for holiday pay differential, instead of filing it ahead of the award's complete resolution. To declare that a lawyer may file a claim for fees in thesame action only before the judgment is reviewed by a higher tribunal would deprive him of his aforestated options and render ineffective the foregoing pronouncements of this Court.

Assailing the rulings of the labor arbiter and the NLRC, petitioner union insists that it is not guilty of unjust enrichment because all attorney's fees due to private respondent were covered by the retainer fee of P3,000.00 which it has been regularly paying to private respondent under their retainer agreement. To be entitled to the additional attorney's fees as provided in Part D (Special Billings) of the agreement, it avers that there must be a separate mutual agreement between the union and the law firm prior to the performance of the additional services by the latter. Since there was no agreement as to the payment of the additional attorney's fees, then it is considered waived.

En contra, private respondent contends that a retainer fee is not the attorney's fees contemplatedfor and commensurate to the services he rendered to petitioner. He asserts that although there was no express agreement as to the amount of his fees for services rendered in the case for recovery of differential pay, Article 111 of the Labor Code supplants this omission by providing foran award of ten percent (10%) of a money judgment in a labor case as attorney's fees.

It is elementary that an attorney is entitled to have and receive a just and reasonable compensation for services performed at the special instance and request of his client. As long as the lawyer was in good faith and honestly trying to represent and serve the interests of the client, he should have a reasonable compensation for such services. 26 It will thus be appropriate, at thisjuncture, to determine if private respondent is entitled to an additional remuneration under the retainer agreement 27 entered into by him and petitioner.

The parties subscribed therein to the following stipulations:

xxx xxx xxx

The Law Firm shall handle cases and extend legal services under the parameters of the followingterms and conditions:

A. GENERAL SERVICES

1. Assurance that an Associate of the Law Firm shall be designated and be available on a day-to-day basis depending on the Union's needs;

2. Legal consultation, advice and render opinion on any actual and/or anticipatorysituation confronting any matter within the client's normal course of business;

3. Proper documentation and notarization of any or all transactions entered into by the Union in its day-to-day course of business;

4. Review all contracts, deeds, agreements or any other legal document to which the union is a party signatory thereto but prepared or caused to be prepared by any other third party;

5. Represent the Union in any case wherein the Union is a party litigant in any court of law or quasi-judicial body subject to certain fees as qualified hereinafter;

6. Lia(i)se with and/or follow-up any pending application or any papers with any government agency and/or any private institution which is directly related to any legal matter referred to the Law Firm.

B. SPECIAL LEGAL SERVICES

1. Documentation of any contract and other legal instrument/documents arising and/or required by your Union which do not fall under the category of its ordinary course of business activity but requires a special, exhaustive or detailed study and preparation;

2. Conduct or undertake researches and/or studies on special projects of the Union;

3. Render active and actual participation or assistance in conference table negotiations with TRB management or any other third person(s), juridical or natural, wherein the presence of counsel is not for mere consultation except CBA negotiations which shall be subject to a specific agreement (pursuant to PD 1391 and in relation to BP 130 & 227);

4. Preparation of Position Paper(s), Memoranda or any other pleading for and in behalf of the Union;

5. Prosecution or defense of any case instituted by or against the Union; and,

6. Represent any member of the Union in any proceeding provided that the particular member must give his/her assent and that prior consent be granted by the principal officers. Further, the member must conform to the rules and policies of the Law Firm.

C. FEE STRUCTURE

In consideration of our commitment to render the services enumerated above when required or necessary, your Union shall pay a monthly retainer fee of THREE THOUSAND PESOS (PHP 3,000.00), payable in advance on or before the fifth day of every month.

An Appearance Fee which shall be negotiable on a case-to-case basis.

Any and all Attorney's Fees collected from the adverse party by virtue of a successful litigation shall belong exclusively to the Law Firm.

It is further understood that the foregoing shall be without prejudice to our claim for reimbursement of all out-of-pocket expenses covering filing fees, transportation, publication costs, expenses covering reproduction or authentication of documents related to any matter referred to the Law Firm or thatwhich redound to the benefit of the Union.

D. SPECIAL BILLINGS

In the event that the Union avails of the services duly enumerated in Title B, the Union shall pay the Law Firm an amount mutually agreed upon PRIOR to the performance of such services. The sum agreed upon shall be based on actual time and effort spent by the counsel in relation to the importance and magnitude

of the matter referred to by the Union. However, charges may beWAIVED by the Law Firm if it finds that time and efforts expended on the particular services are inconsequential but such right of waiver is duly reserved for the Law Firm.

xxx xxx xxx

The provisions of the above contract are clear and need no further interpretation; all that is required to be done in the instant controversy is its application. The P3,000.00 which petitioner pays monthly to private respondent does not cover the services the latter actually rendered before the labor arbiter and the NLRC in behalf of the former. As stipulated in Part C of the agreement, the monthly fee is intended merely as a consideration for the law firm'scommitment to render the services enumerated in Part A (General Services) and Part B (Special Legal Services) of the retainer agreement.

The difference between a compensation for a commitment to render legal services and a remuneration for legal services actually rendered can better be appreciated with a discussion of the two kinds of retainer fees a client may pay his lawyer. These are a general retainer, or a retaining fee, and a specialretainer. 28

A general retainer, or retaining fee, is the fee paid to a lawyer to secure his future services as general counsel for any ordinary legal problem that may arise in the routinary business of the client and referred to him for legal action. The future services of the lawyer are secured and committed to the retaining client. For this, the client pays the lawyer a fixed retainer fee which could be monthly or otherwise, depending upon their arrangement. The fees are paid whether or not there are cases referred to the lawyer. The reason for the remuneration is that the lawyer is deprived of the opportunity of rendering services for a fee to the opposing party or other parties. In fine, it is a compensation for lost opportunities.

A special retainer is a fee for a specific case handled or special service rendered by the lawyer for a client. A client may have several cases demanding special or individual attention. If for every case there is a separate and independent contract for attorney's fees, each fee is considered a special retainer.

As to the first kind of fee, the Court has had the occasion to expound on its concept in Hilado vs. David 29 in this wise:

There is in legal practice what is called a "retaining fee," the purpose of which stems from the realization that the attorney is disabled from acting as counsel for the other side after he has given professional advice to the opposite party, even ifhe should decline to perform the contemplated services on behalf of the latter. It is to prevent undue hardship on the attorney resulting from the rigid observance of the rule that a separate and independent fee for consultation and advice was conceived and authorized. "A retaining fee is a preliminary fee given to an attorney or counsel to insure and secure his future services, and induce him to act for the client. It is intended to remunerate counsel for being deprived, by being retained by one party, of the opportunity of rendering services to the other and of receiving pay from him, and the payment of such fee, in the absence of anexpress understanding to the contrary, is neither made nor received in payment of the services contemplated; its payment has no relation to the obligation of the

client to pay his attorney for the services for which he has retained him to perform." (Emphasis supplied).

Evidently, the P3,000.00 monthly fee provided in the retainer agreement between the union and the law firm refers to a general retainer, or a retaining fee, as said monthly fee covers only the law firm's pledge, or as expressly stated therein, its "commitment to render the legal services enumerated." The fee is not payment for private respondent's execution or performance of the services listed in the contract, subject to some particular qualifications or permutations stated there.

Generally speaking, where the employment of an attorney is under an express valid contract fixing the compensation for the attorney, such contract is conclusive as to the amount of compensation. 30 We cannot, however, apply the foregoing rule in the instant petition and treat the fixed fee of P3,000.00 as full and sufficient consideration for private respondent's services, aspetitioner would have it.

We have already shown that the P3,000.00 is independent and different from the compensation which private respondent should receive in payment for his services. While petitioner and private respondent were able to fix a fee for the latter's promise to extend services, they were not able tocome into agreement as to the law firm's actual performance of services in favor of the union. Hence, the retainer agreement cannot control the measure of remuneration for private respondent's services.

We, therefore, cannot favorably consider the suggestion of petitioner that private respondent hadalready waived his right to charge additional fees because of their failure to come to an agreement as to its payment.

Firstly, there is no showing that private respondent unequivocally opted to waive the additional charges in consonance with Part D of the agreement. Secondly, the prompt actions taken by private respondent, i.e., serving notice of charging lien and filing of motion to determine attorney's fees, belie any intention on his part to renounce his right to compensation for prosecuting the labor case instituted by the union. And, lastly, to adopt such theory of petitioner may frustrate private respondent's right to attorney's fees, as the former may simply and unreasonably refuse to enter into any special agreement with the latter and conveniently claim later that the law firm had relinquished its right because of the absence of the same.

The fact that petitioner and private respondent failed to reach a meeting of the minds with regard to the payment of professional fees for special services will not absolve the former of civil liability for the corresponding remuneration therefor in favor of the latter.

Obligations do not emanate only from contracts. 31 One of the sources of extra-contractual obligations found in our Civil Code is the quasi-contract premised on the Roman maxim that nemo cum alterius detrimento locupletari protest. As embodied in our law, 32 certain lawful, voluntary and unilateral acts give rise to the juridical relation of quasi-contract to the end that no one shall be unjustly enriched or benefited at the expense of another.

A quasi-contract between the parties in the case at bar arose from private respondent's lawful, voluntary and unilateral prosecution of petitioner's cause without awaiting the latter's consent andapproval. Petitioner cannot deny that it did benefit from private respondent's efforts as the law firm was able to obtain an award of holiday pay differential in favor of the union. It cannot even

hide behind the cloak of the monthly retainer of P3,000.00 paid to private respondent because, as demonstrated earlier, private respondent's actual rendition of legal services is not compensable merely by said amount.

Private respondent is entitled to an additional remuneration for pursuing legal action in the interest of petitioner before the labor arbiter and the NLRC, on top of the P3,000.00 retainer fee he received monthly from petitioner. The law firm's services are decidedly worth more than such basic fee in the retainer agreement. Thus, in Part C thereof on "Fee Structure," it is even provided that all attorney's fees collected from the adverse party by virtue of a successful litigation shall belong exclusively to private respondent, aside from petitioner's liability for appearance fees and reimbursement of the items of costs and expenses enumerated therein.

A quasi-contract is based on the presumed will or intent of the obligor dictated by equity and by the principles of absolute justice. Some of these principles are: (1) It is presumed that a person agrees to that which will benefit him; (2) Nobody wants to enrich himself unjustly at the expense of another; and (3) We must do unto others what we want them to do unto us under the same circumstances. 33

As early as 1903, we allowed the payment of reasonable professional fees to an interpreter, notwithstanding the lack of understanding with his client as to his remuneration, on the basis of quasi-contract. 34 Hence, it is not necessary that the parties agree on a definite fee for the specialservices rendered by private respondent in order that petitioner may be obligated to pay compensation to the former. Equity and fair play dictate that petitioner should pay the same after it accepted, availed itself of, and benefited from private respondent's services.

We are not unaware of the old ruling that a person who had no knowledge of, nor consented to, or protested against the lawyer's representation may not be held liable for attorney's fees even though he benefited from the lawyer's services. 35 But this doctrine may not be applied in the present case as petitioner did not object to private respondent's appearance before the NLRC in the case for differentials.

Viewed from another aspect, since it is claimed that petitioner obtained respondent's legal services and assistance regarding its claims against the bank, only they did not enter into a special contract regarding the compensation therefor, there is at least the innominate contract of facio ut des (I do that you may give). 36 This rule of law, likewise founded on the principle against unjust enrichment, would also warrant payment for the services of private respondent which proved beneficial to petitioner's members. In any case, whether there is an agreement or not, the courts can fix a reasonable compensation which lawyers should receive for their professional services. 37 However, the value of private respondent's legal services should not be established on the basis of Article 111 of the Labor Code alone. Said article provides:

Art. 111. Attorney's fees. — (a) In cases of unlawful withholding of wages the culpable party may be assessed attorney's fees equivalent to ten percent of the amount of the wages recovered.

xxx xxx xxx

The implementing provision 38 of the foregoing article further states:

Sec. 11. Attorney's fees. — Attorney's fees in any judicial or administrative proceedings for the recovery of wages shall not exceed 10% of the amount awarded. The fees may be deducted from the total amount due the winning party.

In the first place, the fees mentioned here are the extraordinary attorney's fees recoverable as indemnity for damages sustained by and payable to the prevailing part. In the second place, the ten percent (10%) attorney's fees provided for in Article 111 of the Labor Code and Section 11, Rule VIII, Book III of the Implementing Rules is the maximum of the award that may thus be granted. 39 Article 111 thus fixes only the limit on the amount of attorney's fees the victorious party may recover in any judicial or administrative proceedings and it does not even prevent the NLRC from fixing an amount lower than the ten percent (10%) ceiling prescribed by the article when circumstances warrant it. 40

The measure of compensation for private respondent's services as against his client should properly be addressed by the rule of quantum meruit long adopted in this jurisdiction. Quantum meruit, meaning "as much as he deserves," is used as the basis for determining the lawyer's professional fees in the absence of a contract, 41but recoverable by him from his client.

Where a lawyer is employed without a price for his services being agreed upon, the courts shall fix the amount onquantum meruit basis. In such a case, he would be entitled to receive what he merits for his services. 42

It is essential for the proper operation of the principle that there is an acceptance of the benefits by one sought to be charged for the services rendered under circumstances as reasonably to notify him that the lawyer performing the task was expecting to be paid compensation therefor. The doctrine of quantum meruit is a device to prevent undue enrichment based on the equitable postulate that it is unjust for a person to retain benefit without paying for it. 43

Over the years and through numerous decisions, this Court has laid down guidelines in ascertaining the real worth of a lawyer's services. These factors are now codified in Rule 20.01, Canon 20 of the Code of Professional Responsibility and should be considered in fixing a reasonable compensation for services rendered by a lawyer on the basis of quantum meruit. These are: (a) the time spent and the extent of services rendered or required; (b) the novelty anddifficulty of the questions involved; (c) the importance of the subject matter; (d) the skill demanded; (e) the probability of losing other employment as a result of acceptance of the proffered case; (f) the customary charges for similar services and the schedule of fees of the IBP chapter to which the lawyer belongs; (g) the amount involved in the controversy and the benefits resulting to the client from the services; (h) the contingency or certainty of compensation; (i) the character of the employment, whether occasional or established; and (j) the professional standing of the lawyer.

Here, then, is the flaw we find in the award for attorney's fees in favor of private respondent. Instead of adopting the above guidelines, the labor arbiter forthwith but erroneously set the amount of attorney's fees on the basis of Article 111 of the Labor Code. He completely relied on the operation of Article 111 when he fixed the amount of attorney's fees at P17,574.43. 44 Observe the conclusion stated in his order. 45

xxx xxx xxx

FIRST. Art. 111 of the Labor Code, as amended, clearly declares movant's right toa ten (10%) per cent of the award due its client. In addition, this right to ten (10%)per cent attorney's fees is supplemented by Sec. 111, Rule VIII, Book III of the Omnibus Rules Implementing the Labor Code, as amended.

xxx xxx xxx

As already stated, Article 111 of the Labor Code regulates the amount recoverable as attorney's fees in the nature of damages sustained by and awarded to the prevailing party. It may not be used therefore, as the lone standard in fixing the exact amount payable to the lawyer by his clientfor the legal services he rendered. Also, while it limits the maximum allowable amount of attorney's fees, it does not direct the instantaneous and automatic award of attorney's fees in such maximum limit.

It, therefore, behooves the adjudicator in questions and circumstances similar to those in the case at bar, involving a conflict between lawyer and client, to observe the above guidelines in cases calling for the operation of the principles of quasi-contract and quantum meruit, and to conduct a hearing for the proper determination of attorney's fees. The criteria found in the Code of Professional Responsibility are to be considered, and not disregarded, in assessing the properamount. Here, the records do not reveal that the parties were duly heard by the labor arbiter on the matter and for the resolution of private respondent's fees.

It is axiomatic that the reasonableness of attorney's fees is a question of fact. 46 Ordinarily, therefore, we would have remanded this case for further reception of evidence as to the extent and value of the services rendered by private respondent to petitioner. However, so as not to needlessly prolong the resolution of a comparatively simple controversy, we deem it just and equitable to fix in the present recourse a reasonable amount of attorney's fees in favor of private respondent. For that purpose, we have duly taken into account the accepted guidelines therefor and so much of the pertinent data as are extant in the records of this case which are assistive in that regard. On such premises and in the exercise of our sound discretion, we hold that the amount of P10,000.00 is a reasonable and fair compensation for the legal services rendered by private respondent to petitioner before the labor arbiter and the NLRC.

WHEREFORE, the impugned resolution of respondent National Labor Relations Commission affirming the order of the labor arbiter is MODIFIED, and petitioner is hereby ORDERED to pay the amount of TEN THOUSAND PESOS (P10,000.00) as attorney's fees to private respondent for the latter's legal services rendered to the former.

SO ORDERED.

Romero, Puno, Mendoza and Torres, Jr., JJ., concur.

THIRD DIVISION

G.R. No. 191247, July 10, 2013

FRANCISCO L. ROSARIO, JR., Petitioner, v. LELLANI DE GUZMAN, ARLEEN DE GUZMAN,PHILIP RYAN DE GUZMAN, AND ROSELLA DE GUZMAN BAUTISTA, Respondents.

D E C I S I O N

MENDOZA, J.:

This petition for review on certiorari under Rule 45 of the Rules of Court seeks to set aside the November 23, 20091 and the February 11, 20102 Orders of the Regional Trial Court, Branch 7, Manila (RTC), in Civil Case No. 89-50138, entitled "Loreta A. Chong v. Sps. Pedro and Rosita deGuzman," denying the Motion to Determine Attorney's Fees filed by the petitioner.

The Facts

Sometime in August 1990, Spouses Pedro and Rosita de Guzman (Spouses de Guzman) engaged the legal services of Atty. Francisco L. Rosario, Jr. (petitioner) as defense counsel in thecomplaint filed against them by one Loreta A. Chong (Chong) for annulment of contract and recovery of possession with damages involving a parcel of land in Parañaque City, covered by Transfer Certificate of Title (TCT) No. 1292, with an area of 266 square meters, more or less. Petitioner’s legal services commenced from the RTC and ended up in this Court.3 Spouses de Guzman, represented by petitioner, won their case at all levels. While the case was pending before this Court, Spouses de Guzman died in a vehicular accident. Thereafter, they were substituted by their children, namely: Rosella de Guzman-Bautista, Lellani de Guzman, Arleen deGuzman, and Philip Ryan de Guzman (respondents).4

On September 8, 2009, petitioner filed the Motion to Determine Attorney’s Fees5 before the RTC. He alleged, among others, that he had a verbal agreement with the deceased Spouses de Guzman that he would get 25% of the market value of the subject land if the complaint filed against them by Chong would be dismissed. Despite the fact that he had successfully represented them, respondents refused his written demand for payment of the contracted attorney’s fees. Petitioner insisted that he was entitled to an amount equivalent to 25% percent ofthe value of the subject land on the basis ofquantum meruit.

On November 23, 2009, the RTC rendered the assailed order denying petitioner’s motion on the ground that it was filed out of time. The RTC stated that the said motion was filed after the judgment rendered in the subject case, as affirmed by this Court, had long become final and executory on October 31, 2007. The RTC wrote that considering that the motion was filed too late, it had already lost jurisdiction over the case because a final decision could not be amended or corrected except for clerical errors or mistakes. There would be a variance of the judgment rendered if his claim for attorney’s fees would still be included.

Petitioner filed a motion for reconsideration, but it was denied by the RTC for lack of merit. Hence, this petition.

The Issues

This petition is anchored on the following grounds:cralavvonlinelawlibrary

I

THE TRIAL COURT COMMITTED A REVERSIBLE ERROR IN DENYING THE MOTION TO DETERMINE ATTORNEY’S FEES ON THE GROUND THAT IT LOST JURISDICTION OVER

THE CASE SINCE THE JUDGMENT IN THE CASE HAS BECOME FINAL AND EXECUTORY;chanroblesvirtualawlibrary

II

THE TRIAL COURT SERIOUSLY ERRED IN DECLARING THAT PETITIONER’S CLAIM FOR ATTORNEY’S FEES WOULD RESULT IN A VARIANCE OF THE JUDGMENT THAT HAS LONG BECOME FINAL AND EXECUTORY;chanroblesvirtualawlibrary

III

THE TRIAL COURT ERRED IN NOT DECLARING THAT THE FINALITY OF THE DECISION DID NOT BAR PETITIONER FROM FILING THE MOTION TO RECOVER HIS ATTORNEY’S FEES.6nadcralavvonlinelawlibrary

Petitioner claims that Spouses de Guzman engaged his legal services and orally agreed to pay him 25% of the market value of the subject land. He argues that a motion to recover attorney’s fees can be filed and entertained by the court before and after the judgment becomes final. Moreover, his oral contract with the deceased spouses can be considered a quasi-contract upon which an action can be commenced within six (6) years, pursuant to Article 1145 of the Civil Code. Because his motion was filed on September 8, 2009, he insists that it was not yet barred by prescription.7

For their part, respondents counter that the motion was belatedly filed and, as such, it could no longer be granted. In addition, the RTC had already resolved the issue when it awarded the amount of ?10,000.00 as attorney’s fees. Respondents further assert that the law, specifically Article 2208 of the Civil Code, allows the recovery of attorney’s fees under a written agreement. The alleged understanding between their deceased parents and petitioner, however, was never put in writing. They also aver that they did not have any knowledge or information about the existence of an oral contract, contrary to petitioner’s claims. At any rate, the respondents believe that the amount of 25% of the market value of the lot is excessive and unconscionable.8

The Court’s Ruling

Preliminarily, the Court notes that the petitioner filed this petition for review on certiorari under Rule 45 of the Rules of Court because of the denial of his motion to determine attorney’s fees by the RTC. Apparently, the petitioner pursued the wrong remedy. Instead of a petition for review under Rule 45, he should have filed a petition for certiorari under Rule 65 because this case involves an error of jurisdiction or grave abuse of discretion on the part of the trial court.

Moreover, petitioner violated the doctrine of hierarchy of courts which prohibits direct resort to this Court unless the appropriate remedy cannot be obtained in the lower tribunals.9 In this case, petitioner should have first elevated the case to the Court of Appeals (CA) which has concurrent jurisdiction, together with this Court, over special civil actions for certiorari.10 Even so, this principle is not absolute and admits of certain exceptions, such as in this case, when it is demanded by the broader interest of justice.11

Indeed, on several occasions, this Court has allowed a petition to prosper despite the utilization of an improper remedy with the reasoning that the inflexibility or rigidity of the application of the rules of procedure must give way to serve the higher ends of justice. The strict application of procedural technicalities should not hinder the speedy disposition of the case on the merits.12 Thus, this Court deems it expedient to consider this petition as having been filed under Rule 65.

With respect to the merits of the case, the Court finds in favor of petitioner.

In order to resolve the issues in this case, it is necessary to discuss the two concepts of attorney’s fees – ordinary and extraordinary. In its ordinary sense, it is the reasonable

compensation paid to a lawyer by his client for legal services rendered. In its extraordinary concept, it is awarded by the court to the successful litigant to be paid by the losing party as indemnity for damages.13 Although both concepts are similar in some respects, they differ from each other, as further explained below:cralavvonlinelawlibrary

The attorney’s fee which a court may, in proper cases, award to a winning litigant is, strictly speaking, an item of damages. It differs from that which a client pays his counsel for the latter’s professional services. However, the two concepts have many things in common that a treatment of the subject is necessary. The award that the court may grant to a successful party by wayof attorney’s fee is an indemnity for damages sustained by him in prosecuting or defending, through counsel, his cause in court. It may be decreed in favor of the party, not his lawyer, in any of the instances authorized by law. On the other hand, the attorney’s fee which a client pays his counsel refers to the compensation for the latter’s services. The losing party against whom damages by way of attorney’s fees may be assessed is not bound by, nor is his liability dependent upon, the fee arrangement of the prevailing party with his lawyer. The amount stipulated in such fee arrangement may, however, be taken into account by the courtin fixing the amount of counsel fees as an element of damages.

The fee as an item of damages belongs to the party litigant and not to his lawyer. It forms part of his judgment recoveries against the losing party. The client and his lawyer may, however, agree that whatever attorney’s fee as an element of damages the court may award shall pertain to the lawyer as his compensation or as part thereof. In such a case, the court upon proper motion may require the losing party to pay such fee directly to the lawyer of the prevailing party.

The two concepts of attorney’s fees are similar in other respects. They both require, as a prerequisite to their grant, the intervention of or the rendition of professional services by a lawyer.As a client may not be held liable for counsel fees in favor of his lawyer who never rendered services, so too may a party be not held liable for attorney’s fees as damages in favor of the winning party who enforced his rights without the assistance of counsel. Moreover, both fees are subject to judicial control and modification. And the rules governing the determination of their reasonable amount are applicable in one as in the other.14 [Emphases and underscoring supplied]

In the case at bench, the attorney’s fees being claimed by the petitioner refers to the compensation for professional services rendered, and not as indemnity for damages. He is demanding payment from respondents for having successfully handled the civil case filed by Chong against Spouses de Guzman. The award of attorney’s fees by the RTC in the amount of P10,000.00 in favor of Spouses de Guzman, which was subsequently affirmed by the CA and this Court, is of no moment. The said award, made in its extraordinary concept as indemnity for damages, forms part of the judgment recoverable against the losing party and is to be paid directly to Spouses de Guzman (substituted by respondents) and not to petitioner. Thus, to grant petitioner’s motion to determine attorney’s fees would not result in a double award of attorney’s fees. And, contrary to the RTC ruling, there would be no amendment of a final and executory decision or variance in judgment.

The Court now addresses two (2) important questions: (1) How can attorney’s fees for professional services be recovered? (2) When can an action for attorney’s fees for professional services be filed? The case of Traders Royal Bank Employees Union-Independent v. NLRC15 is instructive:cralavvonlinelawlibrary

As an adjunctive episode of the action for the recovery of bonus differentials in NLRC-NCR Certified Case No. 0466, private respondent’s present claim for attorney’s fees may be filed before the NLRC even though or, better stated, especially after its earlier decision had been reviewed and partially affirmed. It is well settled that a claim for attorney’s fees may be asserted either in the very action in which the services of a lawyer had been rendered or in a separate action.

With respect to the first situation, the remedy for recovering attorney’s fees as an incident of the

main action may be availed of only when something is due to the client.Attorney’s fees cannot be determined until after the main litigation has been decided and the subject of the recovery is at the disposition of the court. The issue over attorney’s fees only arises when something has been recovered from which the fee is to be paid.

While a claim for attorney’s fees may be filed before the judgment is rendered, the determination as to the propriety of the fees or as to the amount thereof will have to be held in abeyance until the main case from which the lawyer’s claim for attorney’s fees mayarise has become final. Otherwise, the determination to be made by the courts will be premature. Of course, a petition for attorney’s fees may be filed before the judgment in favor of the client is satisfied or the proceeds thereof delivered to the client.

It is apparent from the foregoing discussion that a lawyer has two options as to when to file his claim for professional fees. Hence, private respondent was well within his rights when he made his claim and waited for the finality of the judgment for holiday pay differential, instead of filing it ahead of the award’s complete resolution. To declare that a lawyer may file a claim for fees in the same action only before the judgment is reviewed by a higher tribunal would deprive him of his aforestated options and render ineffective the foregoing pronouncements of this Court. [Emphases and underscoring supplied]

In this case, petitioner opted to file his claim as an incident in the main action, which is permitted by the rules. As to the timeliness of the filing, this Court holds that the questioned motion to determine attorney’s fees was seasonably filed.

The records show that the August 8, 1994 RTC decision became final and executory on October 31, 2007. There is no dispute that petitioner filed his Motion to Determine Attorney’s Fees on September 8, 2009, which was only about one (1) year and eleven (11) months from the finality of the RTC decision. Because petitioner claims to have had an oral contract of attorney’s fees with the deceased spouses, Article 1145 of the Civil Code16 allows him a period of six (6) years within which to file an action to recover professional fees for services rendered. Respondents never asserted or provided any evidence that Spouses de Guzman refused petitioner’s legal representation. For this reason, petitioner’s cause of action began to run only from the time the respondents refused to pay him his attorney’s fees, as similarly held in the case of Anido v. Negado:17

In the case at bar, private respondent’s allegation in the complaint that petitioners refused to signthe contract for legal services in October 1978, and his filing of the complaint only on November 23, 1987 or more than nine years after his cause of action arising from the breach of the oral contract between him and petitioners point to the conclusion that the six-year prescriptive period within which to file an action based on such oral contract under Article 1145 of the Civil Code hadalready lapsed.

As a lawyer, private respondent should have known that he only had six years from the time petitioners refused to sign the contract for legal services and to acknowledge that they had engaged his services for the settlement of their parents’ estate within which to file his complaint for collection of legal fees for the services which he rendered in their favor. [Emphases supplied]

At this juncture, having established that petitioner is entitled to attorney’s fees and that he filed his claim well within the prescribed period, the proper remedy is to remand the case to the RTC for the determination of the correct amount of attorney’s fees. Such a procedural route, however, would only contribute to the delay of the final disposition of the controversy as any ruling by the trial court on the matter would still be open for questioning before the CA and this Court. In the interest of justice, this Court deems it prudent to suspend the rules and simply resolve the matter at this level. The Court has previously exercised its discretion in the same way in National PowerCorporation v. Heirs of Macabangkit Sangkay:18

In the event of a dispute as to the amount of fees between the attorney and his client, and the intervention of the courts is sought, the determination requires that there be evidence to prove the amount of fees and the extent and value of the services rendered, taking into account the facts determinative thereof. Ordinarily, therefore, the determination of the attorney’s fees on quantum meruit is remanded to the lower court for the purpose. However, it will be just and equitable to now assess and fix the attorney’s fees of both attorneys in order that the resolution of “a comparatively simple controversy,” as Justice Regalado put it in Traders Royal Bank Employees Union-Independent v. NLRC, would not be needlessly prolonged, by taking into due consideration the accepted guidelines and so much of the pertinent data as are extant in the records.19 [Emphasis supplied]

With respect to petitioner’s entitlement to the claimed attorney’s fees, it is the Court’s considered view that he is deserving of it and that the amount should be based on quantum meruit.

Quantum meruit – literally meaning as much as he deserves – is used as basis for determining an attorney’s professional fees in the absence of an express agreement. The recovery of attorney’s fees on the basis of quantum meruit is a device that prevents an unscrupulous client from running away with the fruits of the legal services of counsel without paying for it and also avoids unjust enrichment on the part of the attorney himself. An attorney must show that he is entitled to reasonable compensation for the effort in pursuing the client’s cause, taking into account certain factors in fixing the amount of legal fees.20

Rule 20.01 of the Code of Professional Responsibility lists the guidelines for determining the proper amount of attorney fees, to wit:cralavvonlinelawlibrary

Rule 20.1 – A lawyer shall be guided by the following factors in determining his fees:cralavvonlinelawlibrary

a) The time spent and the extent of the services rendered or required;chanroblesvirtualawlibrary

b) The novelty and difficulty of the questions involved;chanroblesvirtualawlibrary

c) The importance of the subject matter;chanroblesvirtualawlibrary

d) The skill demanded;chanroblesvirtualawlibrary

e) The probability of losing other employment as a result of acceptance of the proffered case;chanroblesvirtualawlibrary

f) The customary charges for similar services and the schedule of fees of the IBP chapter to which he belongs;chanroblesvirtualawlibrary

g) The amount involved in the controversy and the benefits resulting to the client from the service;chanroblesvirtualawlibrary

h) The contingency or certainty of compensation;chanroblesvirtualawlibrary

i) The character of the employment, whether occasional or established; and

j) The professional standing of the lawyer.

Petitioner unquestionably rendered legal services for respondents’ deceased parents in the civil case for annulment of contract and recovery of possession with damages. He successfully represented Spouses de Guzman from the trial court level in 1990 up to this Court in 2007, for a lengthy period of 17 years. After their tragic death in 2003, petitioner filed a notice of death and a motion for substitution of parties with entry of appearance and motion to resolve the case before this Court.21As a consequence of his efforts, the respondents were substituted in the place of their parents and were benefited by the favorable outcome of the case.

As earlier mentioned, petitioner served as defense counsel for deceased Spouses de Guzman and respondents for almost seventeen (17) years. The Court is certain that it was not an easy task for petitioner to defend his clients’ cause for such a long period of time, considering the heavy and demanding legal workload of petitioner which included the research and preparation of pleadings, the gathering of documentary proof, the court appearances, and the various legal work necessary to the defense of Spouses de Guzman. It cannot be denied that petitioner devoted much time and energy in handling the case for respondents. Given the considerable amount of time spent, the diligent effort exerted by petitioner, and the quality of work shown by him in ensuring the successful defense of his clients, petitioner clearly deserves to be awarded reasonable attorney’s fees for services rendered. Justice and equity dictate that petitioner be paid his professional fee based on quantum meruit.

The fact that the practice of law is not a business and the attorney plays a vital role in the administration of justice underscores the need to secure him his honorarium lawfully earned as a means to preserve the decorum and respectability of the legal profession. A layer is as much entitled to judicial protection against injustice, imposition or fraud on the part of his client as the client against abuse on the part of his counsel. The duty of the court is not alone to see that a lawyer acts in a proper and lawful manner; it is also its duty to see that a lawyer is paid his just fees. With his capital consisting of his brains and with his skill acquired at tremendous cost not only in money but in expenditure of time and energy, he is entitled to the protection of any judicialtribunal against any attempt on the part of his client to escape payment of his just compensation. It would be ironic if after putting forth the best in him to secure justice for his client he himself would not get his due.22

The Court, however, is resistant in granting petitioner's prayer for an award of 25% attorney's fees based on the value of the property subject of litigation because petitioner failed to clearly substantiate the details of his oral agreement with Spouses de Guzman. A fair and reasonable amount of attorney's fees should be 15% of the market value of the property.

WHEREFORE, the petition is GRANTED. Accordingly, the Court grants the Motion to Determine Attorney's Fees filed by petitioner Atty. Francisco L. Rosario, Jr. Based on quantum meruit, the amount of attorney's fees is at the rate of 15% of the market value of the parcel of land, covered by Transfer Certificate of Title No. 1292, at the time of payment.

SO ORDERED.

[A.C. No. 1437. April 25, 1989.]

HILARIA TANHUECO, Complainant, v. JUSTINIANO G. DE DUMO, Respondent.

[A.C. No. 1683. April 25, 1989]

HILARIA TANHUECO, Complainant, v. JUSTINIANO G. DE DUMO, Respondent.

SYLLABUS

1. LEGAL ETHICS; ATTORNEY-CLIENT RELATIONSHIP; DEALING WITH TRUST PROPERTY;FAILURE OF THE LAWYER TO ACCOUNT, CONSTITUTES PROFESSIONAL MISCONDUCT. — Moneys collected by an attorney on a judgment rendered in favor of his client, constitute trust funds and must be immediately paid over to the client. Canon 11 of the Canons of Professional Ethics then in force, provides as follows: "11. Dealing with trust property. The lawyer should refrain from any action whereby for his personal benefit or gain he abuses or takes advantage of the confidence reposed in him by his client. Money of the client or collected for the client or other trust property coming into the possession of the lawyer should be reported and accounted for promptly and should not under any circumstances be commingled with his own or be used by him." When respondent withheld and refused to deliver the money received by him for his client, the deceased complainant Hilaria Tanhueco, he breached the trust reposed upon him. The claim of the respondent that complainant had failed to pay his attorney’s fees, is not an excuse for respondent’s failure to deliver any amount to the complainant. It is of course true that under Section 37 of Rule 138 of the Revised Rules of Court, an attorney has — "a lien upon the funds, documents and papers of his client which have lawfully come into his possession and may retain the same until his lawful fees and disbursements have been paid, and may apply such funds to the satisfaction thereof. He shall also have a lien to the same extent upon all judgments for the payment of money, and executions issued in pursuance of such judgments, which he has secured in a litigation of his client, from and after the time when he shall have caused a statement of his claim of such lien to be entered upon the records of the court rendering such judgment, or issuing such execution, and shall have caused written notice thereof to be deliveredto his client and to the adverse party; and he shall have the same right and power over such judgments and executions as his client would have to enforce his lien and secure the payment of his just fees and disbursements." The fact that a lawyer has a lien for fees on moneys in his hands collected for his client, does not relieve him from his duty promptly to account for the moneys received; his failure to do so constitutes professional misconduct.

2. ID.; ID.; ID.; NATURE THEREOF. — The relationship of attorney and client has always been rightly regarded as one of special trust and confidence. An attorney must exercise the utmost good faith and fairness in all his relationships vis-a-vis his client. Respondent fell far short of this standard when he failed to render an accounting for the amount actually received by him and when he refused to turn over any portion of such amount received by him on behalf of his client upon the pretext that his attorney’s fees had not all been paid. Respondent had in fact placed his private and personal interest above that of his client. Respondent’s act constitutes a breach of his lawyer’s oath.

3. ID.; ATTORNEYS; CONTINGENT FEE; NOT PER SE PROHIBITED. — In this jurisdiction, contingent fees are not per se prohibited by law. But when it is shown that a contract for a contingent fee was obtained by undue influence exercised by the attorney upon his client or by any fraud or imposition, or that the compensation is clearly excessive, the Court must and will protect the aggrieved party.

4. ID.; ID.; ID.; WHEN GROSSLY EXCESSIVE, QUANTUM MERUIT BASIS, PROPER. — The contingent fee here claimed was, under the facts obtaining in this case, grossly excessive and

unconscionable. Such a fee structure, when considered in conjunction with the circumstances of this case, also shows that an unfair advantage was taken of the client and legal fraud and imposition perpetrated upon her. The complainant was an old and sickly woman and, in respondent’s own words, "penniless." She was at the time she filed her complaint in 1976, already seventy-six (76) years old. In her circumstances, and given her understandable desire to realize upon debts owed to her before death overtook her, she would easily succumb to the demands of respondent attorney regarding his attorney’s fees. It must be stressed that the mere fact that an agreement had been reached between attorney and client fixing the amount of the attorney’s fees, does not insulate such agreement from review and modification by the Court where the fees clearly appear to be excessive or unreasonable. This Court has power to guard a client, especially an aged and necessitous client, against such a contract. We hold that on a quantum meruit basis, no circumstances of special difficulty attending the collection cases havingbeen shown by respondent, respondent attorney’s fees should be reduced from sixty percent (60%) to fifteen percent (16%) of the total amount (including attorney’s fees stipulated as chargeable to the debtors) collected by him on behalf of his client.

R E S O L U T I O N

PER CURIAM:

On 24 February 1975, complainant Hilaria Tanhueco filed before the Court a Petition for Disbarment (docketed as Administrative Case No. 1437) against respondent Justiniano G. de Dumo for having violated the Canons of Professional Ethics by his (a) refusal to remit to her money collected by him from debtors of the complainant; and (b) refusal to return documents entrusted to him as counsel of complainant in certain collection cases.

In his Answer and Counter-Petition 1 filed on 3 April 1975, respondent denied the charges. Complainant filed a Rejoinder [should be Reply] to Answer with Counter-Petition, on 18 April 1975. By a Resolution 2 dated 16 June 1975, the Court referred this case to the Solicitor Generalfor investigation, report and recommendation.

A year later, on 25 June 1976, one Jose Florencio N. Tanhueco, claiming to be the nephew and representative of the complainant, addressed a sworn letter complaint to Mrs. Imelda R. Marcos against the respondent for (a) refusal to remit the money collected by respondent from debtors ofcomplainant’s aunt, Mrs. Hilaria Tanhueco Vda. de David; (b) refusal to return documents entrusted to him in his capacity as counsel in certain cases; and (c) abandonment of cases in respect of which his professional services had been engaged. On 24 August 1976, the letter complaint was forwarded by the then Public Information Assistance Staff, Department of Public Information, to this Court for appropriate action (and docketed as Administrative Case No. 1683). After respondent had filed his Answer, the Court, by a Resolution 3 dated 9 December 1976, referred this case to then Acting Judicial Consultant Ricardo C. Puno for study, report and recommendation.

Since Administrative Case No. 1683 and Administrative Case No. 1437 involved the same partiesand the same subject matter, Hon. Ricardo C. Puno referred the former case to the Office of the Solicitor General for consolidation with the latter one.

The Office of the Solicitor General held two (2) hearings, one on 3 December 1975 and another on 18 April 1988. In the first hearing, respondent de Dumo was absent although he had been notified thereof. At the end of the first hearing, continuation of the hearing of the case was set for 14 January 1976. The records show that the second hearing took place on 18 April 1988 but do not indicate the reason for the 12-year interregnum. By then, complainant Tanhueco had died. There was no appearance at the second hearing by complainant Jose Florencio Tanhueco but respondent de Dumo was then present.chanrobles virtualawlibrary

chanrobles.com:chanrobles.com.ph

The report of the Solicitor General, dated June 15, 1988 in Administrative Case No. 1437 summarized the evidence for the complainant in the following manner:jgc:chanrobles.com.ph

"EVIDENCE FOR COMPLAINANT

Complainant Hilaria Tanhueco testified that she secured the legal services of respondent to collect indebtedness from her different debtors. Although she offered to execute a document evidencing their lawyer client relationship, respondent told her that it was not necessary. She nonetheless offered to give him 15% of what he may be able to collect from the debtors (pp. 4-7. tsn, Dec. 3, 1975).

Complainant also declared that respondent borrowed from her P2,000.00, P1,300.00, and P3,000.00 on three separate occasions, but she could not remember when she gave those amounts. Respondent did not pay those loans (pp. 89, tsn, Id.)

She confirmed that respondent filed cases against her debtors and that one of them, Constancia Mañosca, paid P12,500.00 to Respondent. Informed of such payment by Mañosca herself, complainant confronted respondent but the later denied having received payment from any of herdebtors. Complainant then brought the matter to the attention of Malacañang which referred her to Camp Crame. Notwithstanding subsequent demands of complainant for the money, respondent had refused to give her the amount (pp. 11-15, tsn, Id.)."cralaw virtua1aw library

The Solicitor General then summed up the evidence for the respondent in the following terms:jgc:chanrobles.com.ph

"EVIDENCE FOR RESPONDENT

Respondent Atty. Justiniano G. de Dumo testified that complainant indeed secured his legal services to collect from her debtors, with the agreement that he gets 50% of what he may be ableto collect. He thus filed collection cases against Tipace, Mañosca, Morena, Jr., and others, and was able to obtain favorable judgment in the cases against Mañosca, Tipace and Leonila Mendoza. The initial payments made by these judgment-debtors were all given to complainant. With respect to Mañosca, respondent obtained a judgment for P19,000.00 although the debt wasonly P12,000.00 (pp. 3-9, tsn, April 18, 1988).

Respondent also declared that complainant, who was then already old and sickly, was influencedby her debtors, who were also her friends, into distrusting him. Ultimately, because complainant filed a complaint against him with Malacañang which referred the matter to Camp Crame, he terminated his relationship with complainant and demanded his attorney’s fees equivalent to 50%of what he had collected. Complainant refused to pay him, hence, he did not also turn over to herthe P12,000.00 initial payment of Mañosca, which he considered, or applied, as part payment of his attorney’s fee (pp. 9-19, tsn, Id.). Respondent estimated his attorney’s fee due from complainant in the amount of P17,000.00 (p. 20, tsn, Id.)

Respondent denied having borrowed the amounts of P2,000.00, P1,300.00, P3,000.00 and P1,000.00, pointing out that complainant did not even have money to pay him so that he handledthe cases for her on contingent basis (p. 17, tsn, id.) He also denied having received documentary evidence from complainant. What evidence he had were all gathered by him on his initiative (pp. 4-7, tsn, id.)."cralaw virtua1aw library

The Solicitor General then set out the following:jgc:chanrobles.com.ph

"FINDINGS

There is in the case at bar clear admissions by both complainant and respondent of an attorney-client relationship between them, specifically in the collection of debts owing complainant.

Respondent also admitted, in his answer to the complaint and in his testimony, having received P12,000.00 from judgment-debtor Constancia Mañosca, without turning over the amount to his client, complainant herein, and applying it instead as part of his attorney’s fees. It has been held that the money collected by a lawyer in pursuance of a judgment in favor of his client is held in trust (Aya v. Bigonia, 67 Phil. 8; Daroy v. Legaspi, 65 SCRA 304), and that the attorney should promptly account for all funds and property received or held by him for the client’s benefit (Daroy v. Legaspi, supra; In re Bamberger, 49 Phil. 962). The circumstance that an attorney has a lien for his attorney’s fees on the money in his hands collected for his client does not relieve him fromthe obligation to make a prompt accounting (Doming[o] v. Doming[o], G.R. No. 30573, Oct. 29, 1971; Daroy v. Legaspi, supra). Undoubtedly, respondent’s failure to account for the P12,000.00, representing payment of the judgment debt of Mañosca constitutes unprofessional conduct and subjects him to disciplinary action. Nonetheless, it has likewise been recognized that a lawyer is as much entitled to judicial protection against injustice, imposition or fraud on the part of his client; and that the attorney is entitled to be paid his just fees. The attorney should be protected against any attempt on the part of his client to escape payment of his just compensation (Fernandez v. Bello, 107 Phil. 1140; Albano v. Coloma, G.R. Adm. Case No. 528, Oct. 11, 1967). This countervailing rule mitigates the actions ofRespondent.chanrobles law library : red

As regards the charges that respondent received documents evidencing the debts to complainant and had refused to return them to the latter, and that respondent also borrowed some amounts from her there [is] no competent, conclusive evidence to support them. Before, such allegations have no factual basis." (Italics supplied)

The Solicitor General then recommended that:jgc:chanrobles.com.ph

"For failure to turn over the amount of P12,000.00 to the complainant, and applying it as his attorney’s fees, respondent Atty. Justiniano G. de Dumo be severely reprimanded and admonished that repetition of the same or similar offense will be dealt with in severely."cralaw virtua1aw library

We find the findings of fact of the Solicitor General supported by the evidence of record. We are, however, unable to accept his recommendation.

Moneys collected by an attorney on a judgment rendered in favor of his client, constitute trust funds and must be immediately paid over to the client. 4 Canon 11 of the Canons of Professional Ethics 5 then in force, provides as follows:jgc:chanrobles.com.ph

"11. Dealing with trust property.

The lawyer should refrain from any action whereby for his personal benefit or gain he abuses or takes advantage of the confidence reposed in him by his client.

Money of the client or collected for the client or other trust property coming into the possession ofthe lawyer should be reported and accounted for promptly and should not under any circumstances be commingled with his own or be used by him." (Italic’s supplied)

When respondent withheld and refused to deliver the money received by him for his client, the deceased complainant Hilaria Tanhueco, he breached the trust reposed upon him. The claim of the respondent that complainant had failed to pay his attorney’s fees, is not an excuse for respondent’s failure to deliver any amount to the complainant. 6 It is of course true that under Section 37 of Rule 138 of the Revised Rules of Court, an attorney has —

"a lien upon the funds, documents and papers of his client which have lawfully come into his possession and may retain the same until his lawful fees and disbursements have been paid, and may apply such funds to the satisfaction thereof. He shall also have a lien to the same extentupon all judgments for the payment of money, and executions issued in pursuance of such judgments, which he has secured in a litigation of his client, from and after the time when he shallhave caused a statement of his claim of such lien to be entered upon the records of the court

rendering such judgment, or issuing such execution, and shall have caused written notice thereofto be delivered to his client and to the adverse party; and he shall have the same right and powerover such judgments and executions as his client would have to enforce his lien and secure the payment of his just fees and disbursements."cralaw virtua1aw library

The fact that a lawyer has a lien for fees on moneys in his hands collected for his client, does notrelieve him from his duty promptly to account for the moneys received; his failure to do so constitutes professional misconduct. 7

In the present case, what respondent could have properly done was to make an accounting with his client, the complainant, deduct his attorney’s fees due in respect of the amount actually collected by him, and turn over the remaining balance to the complainant. The Court notes that the services of respondent de Dumo were engaged by the complainant on a number of cases and that these were on differing stages of completion. Respondent was not entitled to hold on to the entire amount of P12,000.00 collected by him until all his fees for the other cases had also been paid and received by him. There was not enough evidence in the record to show how muchmoney, if any, respondent had in fact previously (i.e., other than the P12,000.00 from Mañosca) collected for and turned over to complainant (thereby waiving his lien thereon) without deducting therefrom his claimed contingent fees in respect of such collections.chanrobles law library : red

The relationship of attorney and client has always been rightly regarded as one of special trust and confidence. An attorney must exercise the utmost good faith and fairness in all his relationships vis-a-vis his client. Respondent fell far short of this standard when he failed to render an accounting for the amount actually received by him and when he refused to turn over any portion of such amount received by him on behalf of his client upon the pretext that his attorney’s fees had not all been paid. Respondent had in fact placed his private and personal interest above that of his client. Respondent’s act constitutes a breach of his lawyer’s oath and a mere reprimand is not an adequate sanction.

There is another aspect to this case which the Court cannot gloss over. Respondent claimed thathe charged complainant, his client, a contingent fee of fifty percent (50%) of the amount collectedby him, plus interest and whatever attorney’s fees may be awarded by the trial court chargeable to the other party. In this jurisdiction, contingent fees are not per se prohibited by law. 8 But whenit is shown that a contract for a contingent fee was obtained by undue influence exercised by the attorney upon his client or by any fraud or imposition, or that the compensation is clearly excessive, the Court must and will protect the aggrieved party. 9

From the Answer of respondent de Dumo, it appears that in three (3) collection cases filed by himfor the complainant and which were decided in favor of the complainant, the awards totalled P31,390.00. Respondent asserted that he was entitled to attorney’s fees amounting to P18,840.00 out of the aggregate total of P31,390.00:jgc:chanrobles.com.ph

"7. That the understanding between Hilaria Tanhueco and me was a fifty-fifty on collected principal and interests. The lawyer has the right to charge attorney’s fees to the other party-defendant and that Hilaria Tanhueco shall not interfere nor be included in the computation.

That of the cases filed, the following made payments:chanrob1es virtual 1aw library

a.’Hilaria Tanhueco v. Constancia Mañosca’

Amount Collectible (principal) P12,000.00

Interest added from May 1972

to Nov/73 at 1% a month P 2,280.00

Attorney’s fees charged to the

defendant and not to be included

in the computation P 4,720.00

TOTAL and Amount specified in P19,000.00

the Compromise Agreement and

Subject of the Decision.

b.’Hilaria Tanhueco v. Melchor Tipace Et. Al.’

Principal amount collectible P7,100.00

Interest at 1% per month

starting June/71 to Sept./74 2,840.00

Attorney’s fees charged to

the defendant and not

included in the computation 1,450.00

TOTAL P11,390.00"

c.’Hilaria Tanhueco v. Estimo’

Principal Amount collectible P1,000.00

SUMMATION OF THE THREE CASES FILED AND AMOUNTS RECEIVABLE BY THE UNDERSIGNED INCLUDING ATTORNEY’S FEES:chanrob1es virtual 1aw library

MAÑOSCA CASE:chanrob1es virtual 1aw library

Attorney’s fees to be paid by

Mañosca and not to be included

in the computation P 4,840.00

Fifty per cent on the

principal amount collectible

plus interests P 7,080.00

TOTAL AMOUNT RECEIVABLE P11,920.00

TIPACE’S CASE:chanrob1es virtual 1aw library

Attorney’s fees to be paid

by Tipace and not to be included

in the computation P 1,450.00

Fifty per cent on the principal

amount collectible from Tipace plus

interests 4,970.00

TOTAL AMOUNT RECEIVABLE P 6,420.00

8. The total amount which I ought to receive as attorney’s fees under paragraph seven, sub-paragraph a, b and c is:chanrob1es virtual 1aw library

P11,920.00

6,420.00

500.00

P18,840.00 TOTAL" 10

We note that respondent attorney claimed as his contingent fee the following.

1) fifty percent (50%) of the sum of principal and interest collectible from different debtors; and

2) attorney’s fees charged to the defendant (presumably under promissory notes or written agreements) and "not to be included in the computation."cralaw virtua1aw library

Under this scheme, respondent was actually collecting as attorney’s fees sixty percent (60%) or more than half of the total amount due from defendant debtors; indeed, he was appropriating for himself more than what he was, according to him, to turn over to his client.chanrobles law library : red

We believe and so hold that the contingent fee here claimed was, under the facts obtaining in this case, grossly excessive and unconscionable. 11 Such a fee structure, when considered in conjunction with the circumstances of this case, also shows that an unfair advantage was taken of the client and legal fraud and imposition perpetrated upon her.

The complainant was an old and sickly woman and, in respondent’s own words, "penniless." Shewas at the time she filed her complaint in 1976, already seventy-six (76) years old. In her circumstances, and given her understandable desire to realize upon debts owed to her before death overtook her, she would easily succumb to the demands of respondent attorney regarding his attorney’s fees. It must be stressed that the mere fact that an agreement had been reached between attorney and client fixing the amount of the attorney’s fees, does not insulate such agreement from review and modification by the Court where the fees clearly appear to be excessive or unreasonable. In Mambulao Lumber Company v. Philippine National Bank, Et Al., 12 this Court stressed:jgc:chanrobles.com.ph

"The principle that courts should reduce stipulated attorney’s fees whenever it is found under the circumstances of the case that the same is unreasonable, is now deeply rooted in this jurisdictionto entertain any serious objection to it. Thus, this Court has explained:chanrob1es virtual 1aw library

‘But the principle that it may be lawfully stipulated that the legal expenses involved in the collection of a debt shall be defrayed by the debtor does not imply that such stipulations must be enforced in accordance with the terms, no matter how injurious or oppressive they may be. The lawful purpose to be accomplished by such a stipulation is to permit the creditor to receive the amount due him under his contract without a deduction of the expenses caused by the delinquency of the debtor. It should not be permitted for him to convert such a stipulation into a source of speculative profit at the expense of the debtor.

x x x

Since then this Court has invariably fixed counsel fees on a quantum meruit basis whenever the fees stipulated appear excessive, unconscionable, or unreasonable, because a lawyer is primarily a court officer charged with the duty of assisting the court in administering impartial justice between the parties, and hence, the fees should be subject to judicial control. Nor should it be ignored that sound public policy demands that courts disregard stipulations for counsel fees,whenever they appear to be a source of speculative profit at the expense of the debtor or mortgagor (See, Gorospe, Et. Al. v. Gochangco, supra). And it is not material that the present action is between attorney and client. As courts have power to fix the fee as between attorney and client, it must necessarily have the right to say whether a stipulation like this, inserted in a mortgage contract, is valid (Bachrach v. Golingco, supra).

x x x" 13

This Court has power to guard a client, 14 especially an aged and necessitous client, 15 against such a contract. We hold that on a quantum meruit basis, no circumstances of special difficulty attending the collection cases having been shown by respondent, respondent attorney’s fees should be reduced from sixty percent (60%) to fifteen percent (16%) of the total amount (including attorney’s fees stipulated as chargeable to the debtors) collected by him on behalf of his client.

With respect to charges of refusal to return documents entrusted to respondent lawyer and abandonment of cases in which his services had been engaged, we accept the findings of the Solicitor General that the evidence of record is not sufficient to prove these allegations.

WHEREFORE, the Court Resolved that:chanrob1es virtual 1aw library

1. respondent is guilty of violation of the attorneys’ oath and of serious professional misconduct and shall be SUSPENDED from the practice of law for six (6) months and WARNED that repetition of the same or similar offense will be more severely dealt with;

2. the attorney’s fees that respondent is entitled to in respect of the collection cases here involved shall be an amount equivalent to fifteen percent (15%) of the total amount collected by respondent from the debtors in those cases;

3. respondent shall return forthwith to the estate of complainant Hilaria Tanhueco, the P12,000.00 respondent received on behalf of his client less attorney’s fees due to him in respect of that amount (P12,000.00 less fifteen percent [15%] thereof) or a net amount of P10,200.00; and

4. respondent shall return to the estate of complainant Hilaria Tanhueco any documents and papers received by him from the deceased complainant in connection with the collection cases for which he was retained. If he has in fact made any other collections from deceased complainant’s debtors, he shall promptly account therefor to complainant’s estate and shall be entitled to receive in respect thereof the fifteen percent (15%) attorney’s fees provided for herein.

Let a copy of this Resolution be furnished each to the Bar Confidant and spread on the personal record of respondent attorney, and to the Integrated Bar of the Philippines.

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

Endnotes:

[A.C. No. 4219. December 8, 2003]

LOTHAR SCHULZ, complainant, vs. ATTY. MARCELO G. FLORES, respondent.

R E S O L U T I O N

YNARES-SANTIAGO, J.:

Only recently, we stressed that membership in the bar is a privilege burdened withconditions. A high sense of morality, honesty and fair dealing is expected and required of amember of the bar. Rule 1.01 of the Code of Professional Responsibility provides that “a lawyershall not engage in unlawful, dishonest, immoral or deceitful conduct.” The nature of the office ofa lawyer requires that he shall be of good moral character. This qualification is not only acondition precedent to the admission to the legal profession, but its continued possession isessential to maintain one’s good standing in the profession. [1] Furthermore, implicit in a vocationcharacterized by professionalism is a certain level of competence and dedication. [2] Far frommeasuring up to the norms of conduct set in the Code, the respondent charged in this case, infact, breached his avowed duty as a lawyer and the ethical standards he was strictly bound toobserve.

On March 22, 1994, Lothar Schulz, a German national filed a verified complaint fordisbarment against Atty. Marcelo G. Flores of Dumaguete City, Negros Oriental.[3] He allegedthat sometime in December 1992, he engaged the services of respondent for the purposes offiling a complaint against Wilson Ong for revocation of contract and damages for the latter’sfailure to deliver the jeep he sold to complainant within the stipulated period. Respondentadvised him that there was no need to refer the complaint for barangay conciliation. Threemonths later, respondent instructed him to file his complaint withthe Lupon Tagapayapa of Tabuc-tubig, Dumaguete City. Wilson Ong refused to appear at theconciliation hearings, arguing that theLupon of Tabuc-tubig had no jurisdiction over his personbecause he was a resident of Barangay Banilad. Complainant thus brought the complaint beforethe Barangay Captain ofBanilad. By that time, however, complainant learned thatWilson Ong had already filed a case for Specific Performance against him before the RegionalTrial Court of Negros Oriental,Brang 31, entitled “Rachel Lisa B. Ong, et al.v. Lothar Schulz,” docketed as Civil Case No. 10527. Complainant argued that respondent’sinordinate delay in acting on his case resulted in his being defendant rather than a complainantagainst Wilson Ong.

Complainant also charged respondent with collecting excessive and unreasonable fees andof unjustifiably refusing to return his files. He undertook to pay respondent attorney’s fees ofP5,000.00 if the case does not reach the court, and P10,000.00 attorney’s fees and P500.00appearance fees if it reaches the court. This notwithstanding, respondent alleged in the Answerwith Counterclaim which he prepared on behalf of complainant in Civil Case No. 10527 that hisattorney’s fees was P50,000.00 and appearance fee was P1,000.00 per hearing. Whencomplainant questioned him about this, respondent explained that it was Wilson Ong who will bemade to pay for the said fees. This, complainant claimed, showed respondent’s deceit and lackof candor in his dealings with the parties in court.

Further, complainant alleged that since he suspected respondent of not protecting hisinterest in Civil Case No. 10527, he instructed respondent to withdraw his appearance as hiscounsel after the filing of the answer. Thereafter, he asked respondent to return the amount of

P12,000.00 out of the total of P17,000.00 that he has paid to the latter, inasmuch as the amountof P5,000.00 should be sufficient compensation for the minimal services rendered byhim. Respondent, however, refused to return the amount to complainant and, instead,demanded additional fees. Complainant’s new counsel wrote a formal demand letter torespondent which, however, was ignored. This prompted complainant to file a complaint withtheLupon Tagapayapa of Barangay Bantayan where respondent resided. After the parties failedto reach a settlement, complainant instituted an action for sum of money against respondent,docketed as Civil Case No. 10645.

Complainant alleged that respondent offered to return his files provided that he signs astatement acknowledging that respondent does not owe him anything. Complainant refused, forfear that it would prejudice the collection suit he filed against respondent. Thus, respondentcontinued to unreasonably retain his files.

In support of his charges against respondent, complainant pointed out that respondent wasformerly a Municipal Judge of Siaton, Negros Oriental who was dismissed from the service afterthe end of the Marcos regime. He submitted a copy of an Order[4] of the Regional Trial Courtof Negros Oriental, , Branch 34, in Civil Case No. 9142 entitled “Bishopof Dumaguete v.Fausta Pajunar, et al.” In that case, respondent sought the inhibition of thePresiding Judge, Rosendo Bandal, Jr. The latter inhibited himself but cited in the said Order nineinstances of anomalous, illegal and unethical practices committed by respondent.

In his Comment,[5] respondent alleged that upon accepting the case of complainant, heimmediately sent a letter to Wilson Ong demanding that he deliver the jeep to complainant forroad test.[6] Ong complied with the demand and allowed complainant to road-test the vehicle,during which he discovered that the jeep was defective. [7] Respondent thereafterrequestedOng to cause the repairs on the jeep. It was only after the negotiations with Ong failedthat he advised complainant to proceed with the filing of his complaint beforethe Barangay Captain of Tabuc-tubig. At the time, he believed Tabuc-tubig was the proper venueconsidering that the South Pacific Metal Works owned by Wilson Ong was located there.

Respondent claims that complainant was to blame for the fact that Wilson Ong filed hiscomplaint in court first. He alleged that complainant failed to follow up his case because he wasinvolved in a traffic accident. Complainant’s inability to attend to his complaint withthe Barangay Lupon in Tabuc-tubig caused the delay thereof.

Anent the attorney’s fees, respondent alleges that complainant agreed to pay him P50,000as attorney’s fees, one-half of which is payable upon the filing of the Answer withCounterclaim[8] in Civil Case No. 10527 less the amount of P17,000.00 given as payment for pastservices. Complainant also agreed to pay him P1,000.00 per appearance. Hence, respondentavers that complainant still owed him P8,000.00 to complete the required one-half of theP50,000.00 attorney’s fees, and P1,000.00 appearance fee for the hearing on April 15,1993. Respondent further explained that he was willing to return complainant’s files providedthat he sign a receipt acknowledging the turn-over, but complainant refused to sign.

Respondent admitted that he was once a Municipal Judge of Siaton, Negros Oriental but hedecided to go on optional retirement. During his 17-year stint in the judiciary, he was held in highesteem by his colleagues and was elected President of the Municipal Judges Leagueof Negros Oriental for 14 consecutive terms. Out of the 15 RTC Judges in Negros Oriental, it is

only Judge Bandal who had shown animosity, hostility and hatred towards him. However, headded that he and Judge Bandal have reconciled and are now on good terms.

On August 29, 1994, the Court referred the case to the Integrated Bar of the Philippines(IBP) for investigation, report and recommendation.[9]

On August 9, 2002, respondent filed a Manifestation and Motion alleging that complainanthad long left the country, for which reason the case may be resolved on the basis of thepleadings.[10]

The IBP Commission on Bar Discipline submitted a Report dated June 28, 2003recommending that: (1) respondent be suspended from the practice of law for six months with awarning that a repetition of the same or similar acts will merit a more severe penalty; (2) he beordered to return to complainant the amount of Twelve Thousand Pesos (P12,000.00) with legalinterest; and (3) he return the papers of complainant which came under his custody during theperiod of his engagement as counsel.

In justifying the recommended penalty, the IBP-CBD made the following observations:

[Respondent] was presumed to be knowledgeable on the laws, but in this case, it turned out that Atty. Flores knew too little of the provisions and application of PD No. 1508 which mandates that all disputes, except those specifically cited (the dispute between Lothar Schulz and Wilson Ong not included), between and among residents of the same city or municipality should be brought first under the system ofbarangay conciliation before recourse to the court can be allowed.

He was not all certain if the complaint of Lothar Schulz falls under PD No. 1508 or not. As Lothar Schulz narrated, Atty. Flores told him at first that there was no need for his complaint to be coursed through the barangay authorities.

Not realizing the need and urgency to avail of PD No. 1508, Atty. Flores found it more important to spend more than two months to dialogue and confer with Wilson and hope that he could get the parties to come to an amicable settlement of their differences, an undertaking that only involves a waste of time and effort as he later realized it because it turned out that Wilson Ong did not appear to have any genuine intent to make good his obligation to put the jeepin good running condition and fee from defects because Lothar Schulz and his mechanics found out from the result of the last road test on the jeep that aside from several defects discovered during previous road tests and which had remained uncorrected/unrepaired, there are twenty-six more new defects.

It was already March 8, 1992, more than two months after becoming Lothar Schulz’s lawyer that Atty. Flores reversed position and suddenly prepared a written complaint for the client which he asked the latter to file with the Barangay Captain of Tabuc-tubig. However, that belated move didnot benefit the cause of his client at all. On the contrary, Atty. Flores even made the problem of delay worse. Upon the misconception that the proper venue was Tabuc-tubig which was the place where the assembly/motor shop of Wilson Ong is located, he directed Lothar Schulz to file his complaint there. That was a wrong advice. Section 3 of PD No. 1508 states that the dispute should be lodged for conciliation with the barangay where the respondent actually resides. Because PD No. 1508 applies only to parties who are natural persons, the location of the assembly should of Wilson Ong is of no consequence to the law. The respondent who could

be made a party under PD No. 1508 in this case is Wilson Ong and the complaint against him must be filed where he resides which is Barangay Banilad in Dumaguete City. Thus, the complaint of Lothar Schulz was not able to move at all for the entire duration that it was inBarangay Tabuc-tubig which had no authority over it. Such was the situation until that barangay was impelled to dismiss the complaint for lack of jurisdiction. It is true that the complaint was eventually brought to the proper barangay (Banilad), but the Lupon in that place was no longer in a position to assert its jurisdiction because at that time there was already a casethat Wilson Ong had succeeded to file against Lothar Schulz on the subject of their failed contract.

xxx xxx xxx.

Between the conflicting versions given by the parties as to the reason why the papers of Lothar Schulz had continued to be possessed by Atty. Flores, the version of the complainant appears more deserving of credence. If the paper which was presented for the signature of Lothar Schulz is really an acknowledgment to evidence the return of the papers of the case to Lothar Schulz, as the respondent would have it appear, there is no reason why Lothar Schulz [should] hesitate or refuse to sign the paper[s] as there is nothing prejudicial to his interest. But certainly if the contents of the paper presented by Atty. Flores to Lothar Schulz for the purpose ofsignature involve[s] an admission on the part of Lothar Schulz that the lawyer is clear on the matter of money accountability, it is understandable that Lothar Schulz will not sign that paper because his signature will have the effect of a desistance in his pending civil case for the recovery of the P12,000.00 which he alleged to be an overcharge on attorney’s fee[s] by Atty. Flores. The continuing possession by Atty. Flores of the papers of Lothar Schulz can only be compatible with the version that Lothar Schulz presented. Atty. Flores would not release the papers for they serve as means to harass and/or pressure Lothar Schulz until the latter is impelled to agree to give up his efforts to pursue Civil Case No. 10645 which will provide Atty. Flores the assurance that a day may come when he will be made to reimburse the amount of P12,000.00 previously collected from the former client.[11]

The findings and recommendation of the IBP-CBD were thereafter approved and adopted bythe IBP Board of Governors in Resolution No. XVI-2003-109 dated August 30, 2003.

We agree with the findings and conclusions of the Committee on Bar Discipline, asapproved by the IBP Board of Governors. The breach of respondent’s sworn duty as a lawyerand of the ethical standards he was strictly to honor and observe has been sufficientlyestablished.

Respondent has fallen short of the competence and diligence required of every member ofthe Bar. The pertinent Canons of the Code of Professional Responsibility state:

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 18. – A LAWYER SHALL SERVE HIS CLIENT WITH COMPETENCE AND DILIGENCE

x x x x x x x x x

Rule 18.03 – A lawyer shall not neglect a legal matter entrusted to him and his negligence in connection therewith shall render him liable.

It is dismaying to note that respondent patently violated his duty as a lawyer in this case. Hecommitted a serious transgression when he failed to exert his utmost learning and ability to giveentire devotion to his client’s cause. His client had relied upon him to file the complaint withdispatch so that he would not be preempted by the adverse party. But he failed him. As aconsequence of respondent’s indolence, his client was haled to court as a party-defendant. Ittherefore behooves this Court to wield its corrective hand on this inexcusable infraction whichcaused undeserved and needless prejudice to his client’s interest, adversely affected theconfidence of the community in the legal profession and eroded the public’s trust in the judicialsystem. As an attorney, respondent is sworn to do his level best and to observe full fidelity to thecourt and his clients.[12]

The Court has time and again emphatically stated that the trust and confidence necessarilyreposed by clients requires in the lawyer a high standard and an appreciation of his duty to hisclients, his profession, the courts and the public.[13] Every case an attorney accepts deserves hisfull attention, diligence, skill and competence, regardless of its importance and whether heaccepts it for a fee or for free.[14] To be sure, any member of the legal fraternity worth his titlecannot afford to practice the profession in a lackadaisical manner.

Likewise, respondent erred in not returning complainant’s money despite demands after hisfailure to file the case and his devious act of compelling complainant to sign a document statingthat he has no financial obligation to complainant in exchange of the return of complainant’spapers. This conduct violated the following Canon:

CANON 15. – A LAWYER SHALL OBSERVE CANDOR, FAIRNESS, AND LOYALTY IN ALL HIS DEALINGS AND TRANSACTIONS WITH HIS CLIENT.

Rule 16.03. – A lawyer shall deliver the funds and property of client when due or upon demand. x x x.

Where a client gives money to his lawyer for a specific purpose, such as to file an action,appeal an adverse judgment, consummate a settlement, or pay the purchase price of a parcel ofland, the lawyer should, upon failure to take such step and spend the money forit, immediately return the money to his client.[15] The fact that a lawyer has a lien for hisattorney’s fees on the money in his hands collected for his client does not relieve him from theobligation to make a prompt accounting.[16] Neither is a lawyer entitled to unilaterally appropriatehis client’s money for himself by the mere fact alone that the client owes him attorney’s fees.[17]

The failure of an attorney to return the client’s money upon demand gives rise to thepresumption that he has misappropriated it for his own use to the prejudice and violation of thetrust reposed in him by the client.[18] It is not only a gross violation of the general morality as wellas of professional ethics; it also impairs public confidence in the legal profession and deservespunishment.[19] In short, it is settled that the unjustified withholding of money belonging to hisclient, as in this case, warrants the imposition of disciplinary action.[20]

A lawyer must conduct himself, especially in his dealings with his clients, with integrity in amanner that is beyond reproach. His relationship with his clients should be characterized by thehighest degree of good faith and fairness.[21]

Therefore, we agree with the evaluation of the IBP-CBD and find that respondent’s actswarrant the imposition of disciplinary sanctions against him. The recommended penalty of sixmonths suspension from the practice of law is well-taken.

WHEREFORE, in view of all the foregoing, respondent Atty. MARCELO G. FLORES isfound guilty of negligence and incompetence, and is SUSPENDED from the practice of law for aperiod of six (6) months effective immediately. He is ordered to RETURN tocomplainant Lothar Schulz the amount of Twelve Thousand Pesos (P12,000.00) with legalinterest from the date of promulgation of this Resolution, and all papers which came into hiscustody as a result of having served as counsel for said complainant. Respondent is furtherSTERNLY WARNED that a commission of the same or similar act in the future will be dealt withmore severely.

Let copies of this Resolution be entered in the record of respondent and served on the IBP,as well as on the Court Administrator who shall circulate it to all courts for their information andguidance.

SO ORDERED.

[G.R. No. 104600. July 2, 1999]

RILLORAZA, AFRICA, DE OCAMPO and AFRICA, petitioners, vs. EASTERNTELECOMMUNICATIONS PHILS., INC. and PHILIPPINE TELEPHONE LONGDISTANCE COMPANY, respondents.

D E C I S I O N

PARDO, J.:

The Issue

The basic issue submitted for consideration of the Court is whether or not petitioner isentitled to recover attorney’s fees amounting to Twenty Six Million Three Hundred Fifty ThousandSeven Hundred Seventy Nine Pesos and Ninety One Centavos (P26,350,779.91) for handlingthe case for its client Eastern Telecommunications Philippines, Inc. filed with the Regional TrialCourt, Makati, though its services were terminated in midstream and the client directlycompromised the case with the adverse party.

The Facts

In giving due course to the petition, we carefully considered the facts attendant to thecase. On August 28, 1987, Eastern Telecommunications Philippines, Inc. (ETPI) represented bythe law firm San Juan, Africa, Gonzales and San Agustin (SAGA), filed with the Regional TrialCourt, Makati, a complaint for recovery of revenue shares against Philippine Long DistanceTelephone Company (PLDT). Atty. Francisco D. Rilloraza, a partner of the firm appeared forETPI.

After ETPI rested its case, it paid SAGA the billed amount of One Hundred Thousand Pesos(P100,000.00). On September 18, 1987, the trial court issued a resolution granting ETPI’sapplication for preliminary restrictive and mandatory injunctions. During this period, SAGA wasdissolved and four of the junior partners formed the law firm Rilloraza, Africa, De Ocampo &Africa (RADA), which took over as counsel in the case for ETPI. The latter signed a retaineragreement with counsel dated October 1, 1987.[1]

Petitioners presented the three aspects of the main case in the trial court. First, the trafficrevenue shares which ETPI sought to recover from PLDT in accordance with the contractbetween them. Second, ETPI sought preventive injunctive relief against the PLDT’s threats todeny ETPI access to the Philippines international gateway switch. Third, ETPI called this the“foreign correspondentships aspect” where ETPI sought preventive injunctive relief againstPLDT’s incursions and inducements directed at ETPI’s foreign correspondents in Hongkong,Taiwan and Singapore, to break their correspondentship contracts with PLDT, using the threat ofdenying them access to the international gateway as leverage.

In this connection, ETPI filed with the trial court two urgent motions for restraining order, oneon October 30, 1987 and another on November 4, 1987. As the applications were not actedupon, ETPI brought the case up to the Court of Appeals by petition for certiorari.

On June 28, 1988, petitioner received a letter from ETPI signed by E. M. Villanueva,President and Chief Executive Officer. In substance, the letter stated that ETPI was terminatingthe retainer contract dated October 1, 1987, effective June 30, 1988.

On June 29, 1988, petitioner filed with the Regional Trial Court a notice of attorney’s lien,furnishing copies to the plaintiff ETPI, to the signatory of the termination letter and PLDT. On thesame date, petitioner additionally sent a letter to ETPI attaching its partial billing statement. In itsnotice, RADA informed the court that there were negotiations toward a compromise betweenETPI and PLDT.

In April 1990, petitioner confirmed that indeed the parties arrived at an amicable settlementand that the same was entered as a judgment. On April 26, 1990, petitioner filed a motion for theenforcement of attorney’s lien with the Regional Trial Court of Makati and then appraised theSupreme Court thereof by manifestation.[2] We noted the manifestation in a resolution dated July23, 1990.

On May 24, 1990, PLDT filed with the trial court a manifestation that it is not a party to nor inany manner involved in the attorney’s lien being asserted by Atty. Rilloraza for and in behalf ofthe law firm,[3] while ETPI filed its opposition thereto on June 11, 1990.

The Lower Court’s Ruling

The trial court in its resolution dated September 14, 1990 denied the motion for enforcementof attorney’s lien. Thus:

“WHEREFORE, premises considered, the court finds that the Notice of Attorney’s Lien filed by the law firm of Rilloraza, Africa, De Ocampo and Africa has no basis in fact and in law, and therefore denies the Motion for Enforcement of Attorney’s Lien.

“SO ORDERED.

“Makati, Metro Manila, September 4, 1990.

“(s/t) ZEUS C. ABROGAR

“J u d g e”[4]

On October 10, 1990, petitioner filed with the trial court a notice of appeal from the above-mentioned order to the Supreme Court. On November 6, 1990, ETPI filed a Motion to DismissAppeal contending that the case could be brought to the Supreme Court only via a petition forreview on certiorari, not by a mere notice of appeal. In an order dated January 16, 1991, the trialcourt dismissed RADA’s appeal.

The trial court said:

“There is no more regular appeal from the Regional Trial Court to the Supreme Court. Under the amendment of Section 17 of the Judiciary Act by R.A. 5440, orders and judgments of the Regional Trial Court may be elevated to the Supreme Court only by petition for review on certiorari.

xxx

“Wherefore, premises considered, the order dated September 14, 1990 is hereby reconsidered and set aside. The Notice of Appeal filed by movant RADA is dismissed.

“SO ORDERED.

“Given this 16th day of January, 1991, at Makati, Metro Manila.

“(s/t) ZEUS C. ABROGAR

“Judge”[5]

Hence, on February 9, 1991, petitioner filed a petition for certiorari with the Supreme Court,which we remanded to the Court of Appeals. The latter dismissed the petition in a decisionpromulgated on November 14, 1991,[6] ruling that the judge committed no abuse of discretion indenying petitioner’s motion for enforcement of attorney’s lien. Thus:

“We therefore rule that respondent judge committed no abuse of discretion, much less a grave one, in denying petitioner’s motion for enforcement of attorney’s lien.

“Assuming that respondent judge committed an error in denying petitioner’s motion for enforcement of attorney’s lien, it cannot be corrected by certiorari.

“WHEREFORE, the writs prayed for are DENIED, and the petition is hereby DISMISSED, with cost against petitioner.

“SO ORDERED.

“(s/t) REGINA G. ORDOÑEZ-BENITEZ

“Associate Justice”

“WE CONCUR:

“(s/t) JOSE A. R. MELO “(s/t) EMETERIO C. CUI

“Associate Justice “Associate Justice”[7]

D I S C U S S I O N

A. The Procedural Aspect

There is nothing sacrosanct about procedural rules, which are liberally construed in order topromote their objectives and assist the parties in obtaining just, speedy and inexpensivedetermination of every action or proceeding.[8] In an analogous case,[9] we ruled that where therigid application of the rules would frustrate substantial justice [10], or bar the vindication of alegitimate grievance, the courts are justified in exempting a particular case from the operation ofthe rules.

In A-One Feeds, Inc. vs. Court of Appeals, we said –

“Litigations should, as much as possible, be decided on the merits and not on technicality. Dismissal of appeals purely on technical grounds is frowned upon, and the rules of procedure ought not to be applied in a very rigid, technical sense, for they are adopted to help secure, not override, substantial justice and thereby defeat their very claims. As has been the constant ruling of this Court, every party litigant should be afforded the amplest opportunity for the proper and just determination of his cause, free from the constraints of technicalities.” [11]

A basic legal principle is that no one shall be unjustly enriched at the expense of another.[12] This principle is one of the mainstays of every legal system for centuries and which the CivilCode echoes:

“ART. 22. Every person who through an act of performance by another, or any other means, acquires or comes into possession of something at the expense of the latter without just or legal ground, shall return the same to him.”[13]

The Code Commission, its report, emphasized that:

“It is most needful that this ancient principle be clearly and specifically consecrated in the proposed Civil Code to the end that in cases not foreseen by the lawmaker, no one may unjustly benefit himself to the prejudice of another. The German Civil Code has a similar provision (Art. 812).”[14]

With this in mind, one could easily understand why, despite technical deficiencies, weresolved to give due course to this petition. More importantly, the case on its face appears to beimpressed with merit.

B. The Attorney’s Fees

We understand that Atty. Francisco Rilloraza handled the case from its inception until ETPIterminated the law firm’s services in 1988. Petitioner’s claim for attorney’s fees hinges on twogrounds: first, the fact that Atty. Rilloraza personally handled the case when he was working forSAGA; and second, the retainer agreement dated October 1, 1987.

We agree that petitioners are entitled to attorneys’ fees. We, however, are not convincedwith the petitioner’s arguments that the services RADA rendered merit the amount they areclaiming.

First, petitioner contends that Atty. Rilloraza initiated the filing of the complaint. When aclient employs the services of a law firm, he does not employ the services of the lawyer who isassigned to personally handle the case. Rather, he employs the entire law firm. In the event thatthe counsel appearing for the client resigns, the firm is bound to provide a replacement. Thus,RADA could not claim to have initiated the filing of the complaint considering that ETPI hiredSAGA. What is more, on September 17, 1987, ETPI paid SAGA the amount of One HundredThousand Pesos (P100,00.00)[15]representing services performed prior to September 17,1987. SAGA assigned one of its associates, Atty. Francisco Rilloraza, to handle the case for thefirm. Although Atty. Rilloraza handled the case personally, he did so for and in behalf of SAGA.

Second, petitioner claims that under the retainer agreement, which provides:

“6.2 B. Court Cases:

Should recourse to judicial action be necessary to effect collection or judicial action be taken by adverse party, our attorney’s fees shall be fifteen percent (15%) of the amounts collected or the value of the property acquired or liability saved.”[16]

the firm is entitled to the fees agreed upon.

However, the retainer agreement has been terminated. True, Attorney Rilloraza played avital role during the inception of the case and in the course of the trial. We cannot also ignore thefact that an attorney-client relationship between petitioner and respondent no longer existedduring its culmination by amicable agreement. To award the attorneys’ fees amounting to 15% ofthe sum of One Hundred Twenty Five Million Six Hundred Seventy One Thousand Eight HundredEighty Six Pesos and Four Centavos (P125,671,886.04) plus Fifty Million Pesos(P50,000,000.00) paid by PLDT to ETPI would be too unconscionable.

“In any case, whether there is an agreement or not, the courts shall fix a reasonablecompensation which lawyers may receive for their professional services.” [17] “A lawyer has theright to be paid for the legal services he has extended to his client, which compensation must bereasonable.”[18] A lawyer would be entitled to receive what he merits for his services. Otherwisestated, the amount must be determined on a quantum meruit basis.

“Quantum meruit, meaning ‘as much as he deserved’ is used as a basis for determining thelawyer’s professional fees in the absence of a contract but recoverable by him from hisclient.”[19] Recovery of attorney’s fees on the basis of quantum meruit is authorized when (1) thereis no express contract for payment of attorney’s fees agreed upon between the lawyer and theclient; (2) when although there is a formal contract for attorney’s fees, the fees stipulated arefound unconscionable or unreasonable by the court; and (3) when the contract for attorney’s feesis void due to purely formal defects of execution; (4) when the counsel, for justifiable cause,was not able to finish the case to its conclusion; (5) when lawyer and client disregard thecontract for attorney’s fees.[20]

In fixing a reasonable compensation for the services rendered by a lawyer on the basisof quantum meruit, the elements to be considered are generally (1) the importance of the subjectmatter in controversy, (2) the extent of services rendered, and (3) the professional standing of thelawyer. A determination of these factors would indispensably require nothing less than a full-blown trial where private respondents can adduce evidence to establish the right to lawfulattorney’s fees and for petitioner to oppose or refute the same. [21] The trial court has the principaltask of fixing the amount of attorney’s fees[22]. Hence, the necessity of a hearing is beyond cavil.

C. Charging Lien

Petitioner contends that pursuant to Rule 138 of the Revised Rules of Court, it is entitled to acharging lien. The rule provides:

“Section 37. Attorney’s liens. – An attorney shall have a lien upon the funds, documents and papers of his client, which have lawfully come into his possession and may retain the same until his lawful fees and disbursements have been paid, and may apply such funds to the satisfaction thereof. He shall also have a lien to the same extent upon all judgements for the payment of money, and executions issued in pursuance of such judgments, which he has secured in a

litigation of his client, from and after the time when he shall have caused a statement of his claim of such lien to be entered upon the records of the court rendering such judgment, or issuing suchexecution, and shall have caused written notice thereof to be delivered to his client and to the adverse party; and he shall have the same right and power over such judgments and executions as his client would have to enforce his lien and secure the payment of his just fees and disbursements.” (Emphasis supplied)

We do not agree. A charging lien to be enforceable as security for the payment of attorney’sfees requires as a condition sine qua non a judgment for money and execution in pursuance ofsuch judgment secured in the main action by the attorney in favor of his client [23]. A charging lienpresupposes that the attorney has secured a favorable money judgment for his client. [24] Fromthe facts of the case it would seem that petitioner had no hand in the settlement that occurred,nor did it ever obtain a favorable judgment for ETPI.

ETPI entered into a compromise agreement when it ended the services of petitioner andthrough the effort of ETPI’s new lawyers, the law firm Romulo, Mabanta, Buenaventura, Sayocand De los Angeles. Whether there was bad faith in the substitution of the lawyers to avoidcompliance with the retainer agreement could only be determined after a trial of the case on themerits.

This decision, however, should not be interpreted as to impose upon petitioner anyadditional burden in collecting its attorney’s fees. The petitioner must avail itself of the properremedy in order to forestall the possibility of any injustice on or unjust enrichment of any of theparties.

The Judgment (Fallo)

ACCORDINGLY, the Court GRANTS the petition, REVERSES the decision of the Court ofAppeals in CA-G. R. SP No. 24463 and REMANDS the case to the court of origin for thedetermination of the amount of attorney’s fees to which petitioner is entitled.

No costs.

SO ORDERED.

Davide, Jr., C.J. (Chairman), Kapunan, and Ynares-Santiago, JJ., concur.

[G.R. No. 140563. July 14, 2000]

DANTE M. POLLOSO, petitioner, vs. HON. CELSO D. GANGAN, Chairman, COMMISSION ON AUDIT, HON. RAUL C. FLORES, COMMISSIONER, COMMISSION

ON AUDIT, HON. EMMANUEL M. DALMAN, COMMISSIONER, COMMISSION ON AUDIT. respondents.

D E C I S I O N

KAPUNAN, J.:

Before this Court is a petition for review from the decision of the Commission on Audit (COA), dated 28 September 1999 of herein petitioner Dante M. Polloso, from the disallowance by the COA Unit Auditor of the amount of P283,763.39 representing payment of legal services rendered by Atty. Benemerito A. Satorre to the National Power Corporation (NPC).

The facts of the case are undisputed.

In 1994, the National Power Corporation (NPC), represented by its President Dr. Francisco L. Viray entered into a service contract with Atty. Benemerito A. Satorre. Under said contract, Satorre was to perform the following services for the Leyte-Cebu and Leyte-Luzon Interconnection Projects of the NPC:

1.....Provide services on administrative and legal matters.

2.....Facilitate, coordinate between the Office of the Project Director and the Project Manager, and the Office of the Regional Legal Counsel and other NPC Offices, Local Government Units and Agencies of Government involving administrative cases and legal problems.

3.....Provide direction, supervision, coordination and control of right-of-way activities in the project.

4.....Perform other pertinent services as may be assigned him by the Project Director and Project Manager from time to time.[1]

The contract provided that in consideration for services rendered, Satorre would receive a monthly salary P21,749.00 plus representation and transportation allowance of P5,300.[2]

On 12 January 1995, Unit Auditor Alexander A. Tan, NPC-VRC, Cebu City issued Notice of Disallowance No. 95-0001-135-94 for the payment of the services rendered by Atty. Satorre for the period covering March to December 1995 in the total amount of P283,763.39. The following reasons were cited for said disallowance:

1)....The contract for services did not have the written conformity and acquiescence of the Solicitor General or the Corporate Counsel and concurrence of the Commission on Audit as required under COA Circular No. 86-255 dated April 2, 1986.

2)....The contract was not supported with Certificate of Availability of Funds as required under Sec. 86 of P.D. 1445.

3)....The contract was not submitted to the Civil Service Commission for final review and was not forwarded to the Compensation and Position Confirmation and Classification Bureau, DBM for appropriate action as required in CSC MC # 5Series of 1985.[3]

Accordingly, the following were held to be personally liable for the amounts due to Atty. Satorre: Dr. Francisco Viray, NPC contracting party; Manolo C. Marquez, for certifying theclaim as necessary, lawful and authorized; Andrea B. Roa and Romeo Gallego, for verifying the supporting documents to be complete and proper; Jesus Aliño, for reviewingthe supporting documents to be complete and proper; Dante M. Polloso, Project ManagerII, Leyte-Cebu Interconnection Project (LCIP), National Power Corporation-Visayas Regional Center, for approving the claim; and Benemerito Satorre, as the payee.[4]

On 27 January 1995, only petitioner Dante Polloso submitted a letter-explanation refutingthe alleged violation contained in the Notice of Disallowance and sought reconsideration thereof.[5] This was denied by the Unit Auditor in a resolution, dated 30 March 1995.[6]

On 10 October 1995, petitioner appealed the denial of the Unit Auditor to the Regional Director, COA Regional Office No. VII;[7] the latter denied the same.[8]

On 29 June 1998, a petition for review was filed before the Commission Proper, Commission on Audit, Central Office.[9] On 29 October 1999, the COA issued the decisionassailed before this Court. The dispositive portion thereof, reads:

Thus, it is crystal clear from the aforequoted provision of law and regulations that the service contract entered into by and between the National Power Corporation and Atty. Satorre is in contravention thereof.

Upon the foregoing considerations, the instant appeal of MR. DANTE M. POLLOSO, has to be, as it is hereby denied. Accordingly, the disallowance of P283,763.39 is hereby affirmed.[10]

Hence, this appeal, petitioner raising the following issues:

I

DOES THE PROHIBITION UNDER COA CIRCULAR NO. 86-255 DATED APRIL 2, 1986 AND SEC. 212 OF THE GOVERNMENT ACCOUNTING AND AUDITING MANUAL IMPOSED ON GOVERNMENT AGENCIES FROM HIRING PRIVATE LAWYERS "TO HANDLE THEIR LEGAL CASES" APPLY TO A LAWYER HIRED BY VIRTUE OF A SERVICE CONTRACT BUT WHO ACTUALLY HANDLE PURELY RIGHT-OF-WAY MATTERS (EXCLUDING HANDLING OF COURT CASES)?

II

WILL COA CIRCULAR NO. 86-255 DATED APRIL 2, 1986 AND SEC. 212, VOLUME I OF THE GOVERNMENT ACCOUNTING AND AUDITING MANUAL OPERATE TO RESTRICT THE PRACTICE OF THE LAW PROFESSION AND THEREFORE REPUGNANT TO SEC. 5, ARTICLE VII OF THE 1987 PHILIPPINE CONSTITUTION?

III

DOES SECTION 38, CHAPTER 9, BOOK I OF EXECUTIVE ORDER NO. 292, OTHERWISE KNOWN AS THE ADMINISTRATIVE CODE OF 1987 APPLY TO PETITIONER FOR HAVING ACTED IN GOOD FAITH AND WITHOUT MALICE AND MERELY IMPLEMENTED A VALID CONTRACT ENTERED INTO BY THE PRESIDENT OF THE NATIONAL POWER CORPORATION?

IV

DOES THE PRINCIPLE OF "QUANTUM MERUIT" APPLY TO THE SERVICES RENDERED BY ATTY. SATORRE WHICH BENEFITTED THE NATIONAL POWER CORPORATION?[11]

The petition is without merit.

In the main, petitioner posits that the phrase "handling of legal cases" should be construed to mean as conduct of cases or handling of court cases or litigation and not to other legal matters, such as legal documentation, negotiations, counseling or right of waymatters.

To test the accuracy of such an interpretation, an examination of the subject COA Circular is in order:

SUBJECT: Inhibition against employment by government agencies and instrumentalities, including government-owned or controlled corporations, of private lawyers to handle their legal cases.

It has come to the attention of this Commission that notwithstanding restrictions or prohibitions on the matter under existing laws, certain government agencies, instrumentalities, and government-owned and/or controlled corporations, notably government banking and financing institutions, persist in hiring or employing private lawyers or law practitioners to render legal services for them and/or to handle their legal cases in consideration of fixed retainer fees, at times in unreasonable amounts, paid from public funds. In keeping with the retrenchment policy of the present administration, this Commission frowns upon such a practice.

Accordingly, it is hereby directed that, henceforth, the payment out of public fundsof retainer fees to private law practitioners who are so hired or employed without the prior written conformity and acquiescence of the Office of the Solicitor General or the Government Corporate Counsel, as the case may be, as well as the written concurrence of the Commission on Audit shall be disallowed in audit and the same shall be a personal liability of the officials concerned. [underscoringsupplied]

What can be gleaned from a reading of the above circular is that government agencies and instrumentalities are restricted in their hiring of private lawyers to render legal services or handle their cases. No public funds will be disbursed for the payment to

private lawyers unless prior to the hiring of said lawyer, there is a written conformity and acquiescence from the Solicitor General or the Government Corporate Counsel.

Contrary to the view espoused by petitioner, the prohibition covers the hiring of private lawyers to render any form of legal service. It makes no distinction as to whether or not the legal services to be performed involve an actual legal controversy or court litigation. Petitioner insists that the prohibition pertains only to "handling of legal cases," perhaps because this is what is stated in the title of the circular. To rely on the title of the circular would go against a basic rule in statutory construction that a particular clause should not be studied as a detached and isolated expression, but the whole and every part of the statute must be considered in fixing the meaning of any of its part.[12] Petitioner, likewise, insists that the service contract in question falls outside the ambit of the circular as what is being curtailed is the payment of retainer fees and not the payment of fees for legal services actually rendered.

A retainer fee has been defined as a "preliminary fee to an attorney or counsel to insure and secure his future services, and induce him to act for the client. It is intended to remunerate counsel for being deprived, by being retained by one party, of the opportunityof rendering services to the other and of receiving pay from him, and payment of such fee, in the absence of an express understanding to the contrary, is neither made nor received in payment of the services contemplated; its payment has no relation to the obligation of the client to pay his attorney for the services for which he has retained him to perform."[13] To give such a technical interpretation to the term "retainer fees" would go against the purpose of the circular and render the same ineffectual. In his resolution, Unit Auditor Alexander Tan expounded on the purpose of the circular, as enunciated therein:

On the claim that COA Circular 86-255 is not applicable in this case because the inhibition provided for in said Circular relates to the handling of legal cases of a government agency and that the contractor was not hired in that capacity but to handle legal matters (sic) involving right-of-way, it is maintained that the contracted service falls within the scope of the inhibition which clearly includes "the hiring or employing private lawyers or law practitioners to render legal services for them and/or to handle their legal cases…" Moreover, it is important to mention that the intention of said Circular is to curb the observed and persistent violation of existing laws and regulations, including CSC MC # 5 series of 1985 pertaining to the employment of private lawyers on a contractual basis in government agencies which involves the disbursement of public funds by subjecting the same to the conformity and concurrence requirements of said Circular. Being so, the manner of agreed payment or consideration, whether termed as a fixed retainer basis or a fixed contract price patterned after existing salary scale of existing and comparable positions in NPC-VRC is immaterial as both still involve the outlay of public funds and also the contractual employment/hiring of a private lawyer.

Hence, while the circular uses the phrase "retainer fees," such should not be given its technical interpretation but should mean any "fee" paid for any legal service rendered. Aspointed out by the Office of the Solicitor General, any interpretation of subject circular to the contrary would open the floodgate to future circumventions thereof by the simple expedience of hiring private lawyers to service the legal needs of the government not on a retainer basis but by way of service contract akin to that which Atty. Satorre and the NPC entered into.[14] No dictum is more fundamental in statutory interpretation than that the intent of the law must prevail over the letter thereof, for whatever is within the spirit of

the statute is within the statute, since adherence to the letter would result in an absurdity, injustice and contradictions and would defeat the plain and vital purpose of the statute.[15]

It bears repeating that the purpose of the circular is to curtail the unauthorized and unnecessary disbursement of public funds to private lawyers for services rendered to the government. This is in line with the Commission on Audit’s constitutional mandate to promulgate accounting and auditing rules and regulations including those for the prevention and disallowance of irregular, unnecessary, excessive, extravagant or unconscionable expenditures or uses of government funds and properties.[16] Having determined the intent of the law, this Court has the imperative duty to give it effect even ifthe policy goes beyond the letter or words of the statute.[17]

Hence, as the hiring of Atty. Satorre was clearly done without the prior conformity and acquiescence of the Office of the Solicitor General or the Government Corporate Counsel, as well as the written concurrence of the Commission on Audit, the payment of fees to Atty. Satorre was correctly disallowed in audit by the COA.

Thus being said, it is no longer necessary to delve into whether or not the hiring of Atty. Satorre is in accord with the rules of the Civil Service Commission.

Petitioner’s claim that the Circular is unconstitutional for being an invalid restriction to the practice of the law profession, is clearly bereft of any merit. The Government has its own counsel, which is the Office of the Solicitor General headed by the Solicitor General,[18] while the Office of the Government Corporate Counsel (OGCC) acts as the principal law office of the government-owned or controlled corporations.[19] It is only in special cases where these government entities may engage the services of private lawyers because of their expertise in certain fields. The questioned COA circular simply sets forth the prerequisites for a government agency instrumentality in hiring a private lawyer, which are reasonable safeguards to prevent irregular, unnecessary, excessive, extravagant or unconscionable expenditures or uses of government funds and properties.We fail to see how the restrictions contained in the COA circular can be considered as a curtailment on the practice of the legal profession.

Anent petitioner’s argument that he cannot be held liable for effecting payment of the disallowed amount because he is not privy to the service contract, we find the same to beunmeritorious. This is because petitioner’s liability arose from the fact that as project manager, he approved the said claim. In addition, his assertion that a refusal on his part to certify payment of the same would subject him to criminal and civil liabilities cannot hold water simply because it was his duty not to approve the same for payment upon finding that such was irregular and in contravention of COA Circular No. 86-255, dated 2 April 1986.

We cannot grant the prayer of the petitioner that Atty. Satorre should be compensated based on the principle of quantum meruit, on the ground that the government will be unjustly enriched at the expense of another. We do not deny that Atty. Satorre has indeedrendered legal services to the government. However to allow the disbursement of public funds to pay for his services, despite the absence of requisite consent to his hiring from the OSG or OGCC would precisely allow circumvention of COA Circular No. 86-255. In any event, it is not Atty. Satorre who is liable to return the money already paid him, rather

the same shall be the responsibility of the officials concerned, among whom include herein petitioner.

WHEREFORE, the petition is hereby DENIED for lack of showing that the respondents committed a reversible error.

SO ORDERED.

Davide, Jr., C.J., Bellosilllo, Melo, Puno, Vitug, Mendoza, Panganiban, Quisumbing, Purisima, Pardo, Buena, Gonzaga-Reyes, Ynares-Santiago, and De Leon, Jr., JJ., concur.

G.R. No. 119088 June 30, 2000

ZAIDA RUBY S. ALBERTO, petitioner, vs.COURT OF APPEALS, EPIFANIO J. ALANO, CECILIA P. ALANO, YOLANDA P. ALANO, and NATALIA REALTY, INC., respondents.

D E C I S I O N

YNARES-SANTIAGO, J.:

Assailed in this Petition for Review on Certiorari is the Decision1 of the Court of Appeals in CA-G.R. CV No. 38380 affirming the Omnibus Order2 of the lower court dismissing petitioner’s second Amended Complaint for insufficiency of cause of action.

Respondent spouses Epifanio and Cecilia Alano retained the legal services of petitioner Atty. Zaida Ruby S. Alberto to represent them before the Securities and Exchange Commission (SEC)in an action to recover real properties, money and other assets that may pertain to them by virtueof their stockholdings in the Natalia Realty, Inc. Both parties formalized their conformity in a retainer agreement3 the salient feature of which is for respondent-spouses to pay petitioner on a contingent basis the following: a) the equivalent in kind of ten percent (10%) of whatever real estate may be awarded, and b) the sum of Two Hundred Thousand Pesos (P200,000.00).

In accordance with said Agreement, petitioner filed on behalf of respondent-spouses SEC Case No. 3054, an action for liquidation, accounting and damages against Eugenio S. Baltao and five other persons of Natalia Realty, Inc., and appeared at the hearings thereof.

On January 3, 1989, petitioner learned that respondent-spouses moved to dismiss SEC Case No. 3054 which motion was confirmed in a manifestation by Baltao and Natalia Realty, Inc. It appeared that during the pendency of the case, the opposing parties reached a settlement without consulting petitioner. Petitioner only learned of the settlement on January 16, 1989 when she received a copy of a SEC order giving Baltao and Natalia Realty, Inc. three days to commenton respondent-spouses’ motion to dismiss on account of said settlement. In effect, Baltao and Natalia Realty, Inc. joined respondent-spouses in their motion to dismiss on account of a satisfactory settlement having been reached between them in said SEC case. Accordingly, the said case was dismissed on January 19, 1989.

When confronted, respondent-spouses admitted that a settlement had indeed been reached and that they expected to receive 35 hectares of land. Petitioner demanded the payment of the fees stipulated in their retainer agreement, however, respondent-spouses refused to pay despite repeated demands.

Petitioner was thus constrained to file a Complaint for collection of sum of money with damages4 against respondent-spouses. The Regional Trial Court of Pasig, Branch 151 rendered a decision on November 17, 1989 in favor of petitioner the dispositive portion of which reads:

"WHEREFORE, judgment is hereby rendered for the plaintiff and against defendant-spouses:

1.....Declaring plaintiff entitled to ten percent (10%) equivalent to three and a half (3 1/2) hectaresof the thirty-five (35) hectares awarded to and/or received by defendant-spouses from those lands and real properties involved in SEC Case No. 3054, located at Sitio Banaba, Barrio No. 3, Antipolo, Rizal covered by Transfer Certificate of Title No. 31527 issued by the Register of Deedsfor the Province of Rizal; Transfer Certificate of Title No. 67845 issued by the Register of Deeds of Rizal, Marikina Branch; as well as those subdivision lots certificates of title (segregated from Transfer Certificate of Title No. 31527) issued by the Register of Deeds of Rizal, Marikina Branchnumbered as follows:(LISTING OF TITLES OMITTED)

and ordering defendant-spouses to transfer, cede, assign and deliver the same to the plaintiff; and,

2.....Ordering defendant-spouses to pay to plaintiff the following amounts:

(a)....P180,000.00 representing the balance of her monetary fee under their retainer agreement, with interest of 12% from the filing of the complaint on February 22, 1989 until fully paid;

(b)....P30,000.00 as moral damages;

(c)....P10,000.00 as exemplary or corrective damages; and

(d)....P10,000.00 as attorney’s fees and litigation expenses, all three (3) foregoingamounts with interest of 12% from date hereof until fully paid."

In a subsequent Order, the lower court declared that the attorney’s fees awarded in the above-cited decision constitute a lien on the properties subject of the case and ordered the Register of Deeds of Rizal, Marikina Branch, to annotate said lien on the covering certificates of title and their derivatives. When the above-cited decision became final and executory, petitioner caused the issuance of a writ of execution. However, per Sheriff’s Return,5 only P3,500.00 of personal properties of respondent-spouses were levied.

Apparently, Natalia Realty, Inc. had sold to private respondent Yolanda Alano, respondent-spouses’ daughter, 230,090 square meters or a little over 23 hectares out of the 32.4 hectares

given to them as settlement of the SEC case.6 The sale was executed on December 28, 1988 or six days before respondent-spouses moved to dismiss the SEC case on January 3, 1989. This discovery prompted petitioner to file a complaint, and thereafter, a second Amended Complaint7 to declare the deed of sale null and void ab initio on the ground that the transfer of the subject parcels of land to Yolanda Alano was simulated. Petitioner likewise caused the annotation of a notice of lis pendens on the transfer certificates of title.

The trial court, in an Omnibus Order,8 dismissed petitioner’s Complaint for insufficiency of cause of action. As a matter of course, the annotations of the notice of lis pendens as well as the attorney’s lien on the transfer certificates of title were cancelled.

The Court of Appeals affirmed the dismissal of the complaint as well as the cancellation of the notice of lis pendens and the annotation of attorney’s lien. In affirming the lower court’s Omnibus Order dismissing the Second Amended Complaint for insufficiency of cause of action, the Court of Appeals held thus:

"The first assigned error is devoid of sustainable basis. Well-settled is the rule that in resolving a motion to dismiss on the ground of failure to state a cause of action, only the averments of the complaint, and no other, are to be consulted. Extraneous matters are irrelevant. We agree with the trial court, as opined in its Omnibus Order under attack, that the Deed of Sale, attached to the Second Amended Complaint as Annex "C", was executed before the filing of the complaint for attorney’s fees in C.C. No. 57023; Plaintiff is not a party to subject Deed of Sale and the defendant movant, Yolanda P. Alano, was not a party in said C.C. No. 57023; that the defendant spouses, Epifanio Alano and Cecilia Alano, were awarded by SEC thirty-five (35) hectares; that only twenty three (23) hectares of the said 35 hectares was sold by the latter to defendant Yolanda P. Alano under the Deed of Sale sought to be annulled here; and under the Judgment in Civil Case No. 57023, plaintiff was adjudged as entitled to 10% of the aforesaid award of 35 hectares, as her attorney’s fees. Such being the case, even assuming that plaintiff is entitled to receive from the defendant spouses, Epifanio and Cecilia Alano, 3 1/2 hectares, as her earned professional fees, the same can be taken from the remaining twelve (12) hectares not deeded out under the Deed of Sale in question. The claim of plaintiff for such attorney’s fees is not at all prejudiced or affected by the sale of twenty three (23) hectares to Yolanda P. Alano, which sale the present complaint of plaintiff seeks to annul.

In the light of the foregoing facts and circumstances, it is therefore decisively clear that the lower court did right in dismissing the Second Amended Complaint for failure to state a cause of action against defendant appellee Yolanda P. Alano, who was not a party in Civil Case No. 57023 and consequently not bound by the judgment therein. The latter was never a client of plaintiff appellant, and is a total stranger in Civil Case No. 57023. Undoubtedly, subject attorney’s fees of plaintiff-appellant of 3 1/2 hectares can not be enforced against the properties of Yolanda P. Alano which she validly purchased under the said Deed of Sale inked prior to the institution of Civil Case No. 57023. Absent any allegation in the second Amended Complaint that Yolanda P. Alano assumed her parent’s obligation to pay such attorney’s fees of plaintiff-appellant or that herown properties would be used to satisfy said obligation of her parents, plaintiff-appellant is without any cause of action against defendant-appellee Yolanda P. Alano. On the basis of its allegation of ultimate facts, dismissal of the Second Amended Complaint under scrutiny is, therefore, inevitable.

What is more, as observed below, appellant is not a party to the Deed of Sale executed between Yolanda P. Alano and Natalia Realty, Inc. A stranger to said contract, appellant has no legal right and personality to assail the same. To the fore, in this connection, is the pertinent provision of Art.1397 of the New Civil Code -- that "The action for annulment of contract may be instituted by all those who are thereby obliged principally or subsidiarily."

Although the aforecited legal provision in point admits of an exception, as when a person not a party to the contract could show that he would suffer damage or injury by reason of the contract, in connection with at least one of the contracting parties, x x x We agree with the lower court that

the case of appellant here is not within the contemplation of Article 1397 supra. So also, as pointed out by appellees, there is no allegation in the Second Amended Complaint that appellant proceeded with the execution of the Decision of the Pasig court in Civil Case No. 57023 and was unable to obtain satisfaction therefor that she had exhausted all available remedies for the satisfaction of such judgment against the judgment debtors, spouses Epifanio Alano and Cecilia Alano."

Indeed, it is irrefutable that the Second Amended Complaint contains no allegation that plaintiff-appellant’s prayer for attorney’s fees equivalent to 3 1/2 hectares in Civil Case No. 57023 is bound to be prejudiced by the Deed of Sale executed by the said spouses in favor of defendant-appellee Yolanda P. Alano. Appellant’s submission, that exhaustion of the properties of her said former clients is not essential to the accrual of her cause of action, is untenable. To repeat: from the remaining twelve (12) hectares of her former clients may be taken her (appellant’s) attorney’sfees of 3 1/2 hectares."9

Hence, this petition. Petitioner submits that the Court of Appeals erred:

(A)....IN FINDING THAT PETITIONER’S AMENDED COMPLAINT IN CIVIL CASE NO. 90-1798 DID NOT STATE A SUFFICIENT CAUSE OF ACTION, AND THAT THE TRIAL COURT COMMITTED NO ERROR IN DISMISSING SAID COMPLAINT ON THAT GROUND; AND

(B)........IN FINDING THAT CIVIL CASE NO. 90-1798 IS NOT AN ACTION AFFECTING TITLE TO OR POSSESSION OF REAL PROPERTY UNDER SECTION 24 OF RULE 14, REVISED RULES OF COURT, HENCE NOT A PROPER SUBJECT OF A NOTICE OF LIS PENDENS.

Petitioner submits that the Court of Appeals erred in ruling that she "had no legal right or personality to assail the deed of sale between Natalia Realty, Inc. and Yolanda P. Alano"10 as shewas a stranger to the contract sought to be annulled, hence without sufficient cause of action.

This contention is impressed with merit. In Parañaque Kings Enterprises, Inc. v. Court of Appeals,11 this Court held:

"To determine the sufficiency of a cause of action, only the facts alleged in the complaint and no other should be considered; and that the test of sufficiency of the facts alleged in a petition or complaint to constitute a cause of action is whether, admitting the facts alleged, the court could render a valid judgment upon the same in accordance with the prayer of the petition or complaint.

A cause of action exists if the following elements are present: (1) a right in favor of the plaintiff by whatever means and under whatever law it arises or is created; (2) an obligation on the part of the named defendant to respect or not to violate such right; and (3) an act or omission on the part of such defendant violative of the right of plaintiff or constituting a breach of the obligation of defendant to the plaintiff for which the latter may maintain an action for recovery of damages.

In determining whether allegations of a complaint are sufficient to support a cause of action, it must be borne in mind that the complaint does not have to establish or allege facts proving the existence of a cause of action at the outset; this will have to be done at the trial on the merits of the case. To sustain a motion to dismiss for lack of cause of action, the complaint must show thatthe claim for relief does not exist, x x x."

The sufficiency of petitioner’s cause of action in the second Amended Complaint is readily apparent. A right in her favor was created by virtue of the retainer agreement executed between her and respondent-spouses. This right was confirmed and upheld by the Regional Trial Court of Pasig when it ruled in favor of petitioner in Civil Case No. 57023 for collection of sum of money and damages.12 Correspondingly, respondent-spouses had the obligation to honor and not to violate the provisions of the retainer agreement it entered into with petitioner. Unfortunately,

respondent-spouses breached their obligation under the retainer agreement when they refused and failed to pay petitioner’s attorney’s fees in accordance with their agreement. Worse, when petitioner moved for the issuance of a writ of execution, she discovered to her dismay that respondent-spouses had no more leviable properties except a few personal properties amounting to only P3,500.00. In fact, by making it appear that it was Natalia Realty, Inc. which sold respondent-spouses’ 23 hectares to respondent Yolanda P. Alano, petitioner not only had a cause of action against respondent-spouses but likewise against Yolanda P. Alano. Clearly, all these instances which were alleged and enumerated in the second Amended Complaint constitute a sufficient cause of action on the part of petitioner.

The trial court and the Court of Appeals should not have been too rigid in applying the rule that inresolving a motion to dismiss on the ground of failure to state a cause of action, only the averments in the complaint and no other are to be consulted. The rule admits of exceptions.

First: All documents attached to a complaint, the due execution and genuineness of which are not denied under oath by the defendant, must be considered as part of the complaint without need of introducing evidence thereon.13

Attached to the second Amended Complaint is the Deed of Sale the due execution and genuineness of which were never denied by respondents. While admittedly, petitioner is not a party to the Deed of Sale, nevertheless, she anchors her right upon the allegation that her share in the 35 hectares of land awarded to respondent-spouses was prejudiced by the simulated sale to Yolanda P. Alano. The allegation that the Deed of Sale was simulated does not have to be proved at the outset as it could be done during the trial on the merits of the case.

Second: Other pleadings submitted by the parties, in addition to the complaint, may be considered in deciding whether the complaint should be dismissed for lack of cause of action.14

In City of Cebu v. Court of Appeals15 this Court held thus -

"In the case of Tan v. Director of Forestry (125 SCRA 302), this court departed from the aforementioned rule and held that, ‘x x x although the evidence of the parties were on the question of granting or denying the petitioner-appellant’s application for a writ of preliminary injunction, the trial court correctly applied said evidence in the resolution of the motion to dismiss.’ Likewise, in Marcopper Mining Corporation v. Garcia (143 SCRA 178), we sanctioned the act of the trial court in considering, in addition to the complaint, other pleadings submitted by the parties in deciding whether or not the complaint should be dismissed for lack of cause of action. This Court deemed such course of action but logical where the trial court had the opportunity to examine the merits of the complaint, the answer with counterclaim, the petitioner’s answer to the counterclaim and its answer to the request for admission."

In the instant case, aside from the original and the amended complaint, the lower court had everyopportunity to study the merits of the case by examining the other pleadings submitted by the parties such as the Motion for Cancellation of the Notices of Lis Pendens and Attorney’s Lien, Answer to Interrogatories of Plaintiff, Opposition to Motion for Cancellation of the Notices of Lis Pendens and Attorney’s Lien, Answer with Counterclaim, Answer with Counterclaim and Special/Affirmative Defenses, Reply to Special/Affirmative Defenses and Answer to Counterclaimof Defendant Spouses Epifanio and Cecilia Alano, Answer of Defendant Natalia Realty, Inc., Answer to Counterclaim of Defendant Natalia Realty, Inc., Interrogatories to Defendant Natalia Realty, Inc., Amended Answer with Counterclaim to Defendant Yolanda P. Alano and Opposition to Admit Amended Answer for Yolanda P. Alano.

It is only logical for the lower court to consider all these pleadings in determining whether there was a sufficient cause of action as the order of dismissal is summary in nature.16 So long as those attached pleadings are procedurally responsive to the complaint, then they may be considered in evaluating the sufficiency of the cause of action in the complaint. In addition, since

the dismissal of a complaint by virtue of a motion to dismiss for failure to state or for insufficiency of cause of action would be tantamount to a summary judgment, the lower court should at least have considered the attached documents and pleadings as a matter of due process. Strictly limiting the evaluation of the merits of the complaint to its averments or allegations would be too constricting an interpretation of the rule. It must be remembered that the complaint itself is accompanied by documentary evidence attached as annexes. The responsive pleadings, in addition, though not attachments to the complaint, clarify its merits since they are already part of the records of the case and should therefore be considered.

What this Court finds unusual is the timing of the sale and the reason why the share of the respondent-spouses as part of the settlement they had with Natalia Realty, Inc. had to be sold to their daughter Yolanda P. Alano by the said corporation. These questions immediately manifestedthemselves from a reading of the two documents attached to the second Amended Complaint. The retainer agreement provided, thus:

"This is to confirm in writing our agreement to retain your legal services to represent us in the Securities and Exchange Commission, and until the Supreme Court, if necessary, in our action torecover whatever real properties, moneys, and other assets, plus damages, as may be due or pertain to us by reason of our stockholdings in the Natalia Realty, Inc. under the following terms and conditions:

x x x.............................x x x.............................x x x." (Emphasis supplied)

The above agreement resulted in the filing of SEC Case No. 3054, for liquidation, accounting anddamages, with preliminary injunction against Eugenio S. Baltao and five others of the Natalia Realty, Inc.

Apparently, on December 28, 1988, or six days before respondent-spouses filed their motion to dismiss the SEC case on January 3, 1989, a deed of sale was already executed between NataliaRealty, Inc. and respondent-spouses’ daughter Yolanda Alano. In said deed, Natalia Realty, Inc. sold 23 hectares, out of the total 32.4 hectares awarded to the Alano spouses, to Yolanda Alano for P500,000.00.

We cannot comprehend why 23 hectares awarded to the Alano spouses as their rightful share byvirtue of their stockholdings in Natalia Realty, Inc. were sold to their daughter. The SEC case wasprecisely initiated by the Alano spouses to recover their rightful share in said company. In fact, a close perusal of the pleadings attached to the records of the case, particularly the Answer to Interrogatories of Plaintiff, would reveal that there are not enough parcels of land to satisfy petitioner’s attorney’s fees. In the Answer to the Interrogatories of Plaintiff, it was disclosed that the remaining 12 hectares of land out of the 35 hectares awarded to respondent-spouses were already ceded to Atty. Antonio Raquiza, respondent-spouses’ former lawyer. This only strengthens and lends credence to the suspicion that respondent-spouses intended to defraud petitioner of her attorney’s fees and that the Deed of Sale was indeed simulated.

In any case, this Court has held that where "the allegations in the complaint are ambiguous, indefinite or uncertain but, nevertheless, a cause of action can, in any manner, be made out therefrom, and the plaintiff would be entitled to recover in any aspect of the facts or any combination of the facts alleged, if they were to be proved, then the motion to dismiss should be denied."17 In other words, a complaint should not be dismissed for insufficiency of cause of actionunless it appears clearly from the face of the complaint that the plaintiff is not entitled to any reliefunder any state of facts which could be proved within the facts alleged therein.18 A reading of said complaint plus the attached documents and pleadings show that petitioner is entitled to relief.

With regard to the second assigned error, petitioner submits that the Court of Appeals erred in ordering the cancellation of the notice of lis pendens on the grounds that it is not necessary for

the protection of petitioner’s rights and that the complaint is not an action affecting title and possession of real property.

Petitioner maintains that the annotation of the notice of lis pendens is necessary to protect her claim inasmuch as -

a)....the respondent spouses had in fact no leviable properties when levy on execution was attempted by the sheriff to satisfy the decision in Civil Case No. 57023, proof thereofbeing the sheriff’s return;

b)....although 32.4 hectares were given to the respondent spouses by virtue of the compromise agreement with respondent Natalia Realty, Inc. in SEC Case No. 3054, 30%of said area was, at the instance of said respondent spouses, directly transferred to their creditor, Antonio Raquiza, by Natalia Realty, Inc., and that the remaining area due the respondent spouses was "rounded off" to 23 hectares, these then being simulated conveyance to their daughter, respondent Yolanda P. Alano.

Petitioner further argues that based on Section 14, Rule 13 of the Revised Rules of Court and Section 76 of the Property Registration Decree, "the whole point of the action initiated by that complaint was and is to vindicate petitioner’s right to an undivided portion of the lands subject of the questioned sale, of which she had been deprived by the fraudulent machinations of private respondents." Such is a real action affecting title or possession of real property in which a notice of lis pendens is proper and justified.

Petitioner’s argument is well-taken. The notice of lis pendens is an announcement to the whole world that a particular real property is in litigation, and serves as a warning that one who acquiresan interest over said property does so at his own risk, or that he gambles on the result of the litigation over said property.19

In Viewmaster Construction Corporation v. Reynaldo Y. Maulit and Edgardo Castro,20 this Court did not confine the availability of lis pendens only to cases involving the title to or possession of real property when it held that:

"According to Section 24, Rule 14 of the Rules of Court and Section 76 of Presidential Decree No. 1529, a notice of lis pendens is proper in the following cases, viz.:

a)....An action to recover possession of real estate;

b)....An action to quiet title thereto;

c)....An action to remove clouds thereon;

d)....An action for partition; and

e)....Any other proceedings of any kind in Court directly affecting the title to the land or the use or occupation thereof or the buildings thereon." (Italics supplied)

Granting that petitioner’s action is not, actually, one directly affecting title to or possession of real property, still, in the Viewmaster case, the perception of this Court is that the rule of lis pendens likewise pertained to the following:

"x x x all suits or actions which directly affect real property and not only those which involve the question of title, but also those which are brought to establish an equitable estate, interest, or right, in specific real property or to enforce any lien, charge, or encumbrance against it, there being in some cases a lis pendens, although at the commencement of the suit there is no

present vested interest, claim, or lien in or on the property which it seeks to charge. It has also been held to apply in the case of a proceeding to declare an absolute deed of mortgage, or to redeem from a foreclosure sale, or to establish a trust, or to suits for the settlement and adjustment of partnership interests." (Italics supplied)

In this case, petitioner claimed an interest or right in the property specifically subject of the alleged simulated sale. In fact, the object of the complaint is not only to enforce a lien or encumbrance against the subject property but to enforce a valid claim as clearly shown in the prayer.

Verily, petitioner’s prayer in her second Amended Complaint is more than adequate to justify the registration of a notice of lis pendens when it prayed for the following reliefs:

"(a)....Declaring the deed of sale executed by Defendant Natalia Realty Inc. in favor of Defendant Yolanda P. Alano, Annex "C" of this complaint, null and void ab initio as well asthe corresponding transfer certificates of title issued by the Register of Deeds for Marikina, Metro Manila, in the name of Defendant Yolanda P. Alano as a consequence of the same, as follows:

Transfer Certificate of Title Book No.

No. 178579 T-891

Nos. 162863 to163034 inclusive

T-813T-814

Nos. 160691 to160941 inclusive

T-802T-803T-804

Nos. 175404 to175433 inclusive

T-875

(b)....Ordering defendants to transfer, cede and assign to plaintiff 23,609 square meters of the land subject of said void and inexistent sale, in partial payment of the attorney’s fees due her for services rendered to Defendants-Spouses Epifanio J. Alano and Cecilia P. Alano in SEC Case No. 3054;

(c)....Ordering the defendants, jointly and severally, to pay plaintiff attorney’s fees in the amount of Fifty Thousand Pesos (P50,000.00), moral damages in the amount of Two Hundred Thousand Pesos (P200,000.00), and exemplary damages in the amount of OneHundred Thousand Pesos (P100,000.00), plus costs of suit."

The above-cited prayer in the second Amended Complaint shows that it directly affects the title toor possession of said real properties. It is specific enough as it refers to a portion covered by the above-mentioned Transfer Certificates of Title covering 23,609 square meters of the subject real property. The Notice of Lis Pendens is necessary to protect petitioner’s right especially since respondents allegedly intended to defraud petitioner as shown by the sale under suspicious circumstances of the respondent-spouses’ settlement share of subject property by Natalia Realty,Inc. to the former’s daughter, respondent Yolanda P. Alano.1awphi1

Plainly, the lower court’s and the Court of Appeals’ misapplication of the rule on lis pendens will leave petitioner’s claim unprotected. As this Court has stated in the Viewmaster case:

"The Court is not here saying that petitioner is entitled to the reliefs prayed for in its Complaint pending in the RTC. Verily, there is no requirement that the right to or the interest in the property subject of a lis pendens be proven by the applicant. The Rule merely requires that an affirmative

relief be claimed. A notation of lis pendensneither affects the merits of a case nor creates a right or a lien. It merely protects the applicant’s rights, which will be determined during the trial."

In Ginete v. Court of Appeals,21 this Court held that [w]hat should guide judicial action is the principle that a party-litigant is to be given the fullest opportunity to establish the merits of his complaint or defense rather than for him to lose life, liberty, honor or property on technicalities. In the same case, this Court emphasized that the rules of procedure should be viewed as mere tools designed to facilitate the attainment of justice. Their strict and rigid application, which wouldresult in technicalities that tend to frustrate rather than promote substantial justice, must always be eschewed.

WHEREFORE, the petition is GRANTED and the Decision dated August 19, 1994 of the Court ofAppeals in CA-G.R. CV 38380 is REVERSED and SET ASIDE. The case is REMANDED to the Regional Trial Court of Antipolo, Rizal, which is ordered to proceed with the trial of Civil Case No.90-1798. The Register of Deeds of the Province of Rizal and the Register of Deeds of Rizal, Marikina Branch are directed to maintain the annotation of lis pendensin the certificates of title to the properties subject of said case until final judgment therein. No costs.

SO ORDERED.

Davide, Jr., C.J., (Chairman), Puno, Kapunan, and Pardo, JJ., concur.

G.R. No. L-77691 August 8,1988

PATERNO R. CANLAS, petitioner, vs.HON. COURT OF APPEALS, and FRANCISCO HERRERA, respondents.

Paterno R. Canlas Law Offices for petitioner.

Abalos, Gatdula & Bermejo for private respondent.

SARMIENTO, J.:

The case dramatizes the unpleasant spectacle of a lawyer tangling with his own client, more often than not, in the matter of fees. The lawyer, the petitioner himself, would have his petition decided on pure questions of procedure, yet, the Court cannot let pass unnoticed the murkier face of the controversy, wherein the law is corrupted to promote a lawyer's selfseeking ends, andthe law profession, debased into a simple business dealing. Accordingly, we resolve it on the basis not only of the questions raised by the petitioner pertaining to procedure, but considering its serious ethical implications, on its merits as well.

We turn to the facts.

The private respondent was the registered owner of eight (six, according to the petitioner) parcels of land located in Quezon City. 1 Between 1977 and 1978, 2 he obtained various loans from the L & R Corporation, a financing institution, in various sums totalling P420,000.00 As

security therefor, he executed deeds of mortgage in favor of the corporation over the parcels aforesaid. On August 28,1979, and upon the maturing of said loans, the firm caused an extrajudicial foreclosure of mortgage following his failure to pay, as a consequence of which, the said eight (six, according to the petitioner) parcels of land were disposed of at public auction, andin which L & R Corporation was itself the highest bidder.

Pending redemption, the private respondent filed a complaint for injunction against L & R Corporation, to enjoin consolidation of title in its name, in which he succeeded in obtaining preliminary injunctive relief. He was represented by the petitioner. Two years later, and with no imminent end to the litigation in sight, the parties entered into a compromise agreement whereby L & R Corporation accorded the private respondent another year to redeem the foreclosed properties subject to payment of P600,000.00, with interest thereon at one per cent per month. They likewise stipulated that the petitioner shall be entitled to attorney's fees of P100,000.00. On November 19, 1982, the court 3 approved the compromise.

The private respondent, however, remained in dire financial straits — a fact the petitioner himself concede 4 — for which reason he failed to acquire the finding to repay the loans in question, let alone the sum of P100,000.00 in attorney's fees demanded by the petitioner. That notwithstanding, the petitioner moved for execution insofar as his fees were concemed. The court granted execution, although it does not appear that the sum was actually collected. 5

Sometime thereafter, the petitioner and the private respondent met to discuss relief for the latter with respect to his liability to L & R Corporation on the one hand, and his obligation to the petitioner on the other. The petitioner contends that the private respondent "earnestly implored" 6 him to redeem the said properties; the private respondent maintains that it was the petitioner himself who 'offered to advance the money," 7 provided that he, the private respondent,executed a "transfer of mortgage" 8 over the properties in his favor. Who implored whom is a bone of contention, but as we shall see shortly, we are inclined to agree with the private respondent's version, considering primarily the petitioner's moral ascendancy over his client and the private respondent's increasing desperation.

The records further show that the parties, pursuant to their agreement, executed a "Deed of Saleand Transfer of Rights of Redemption and/or to Redeem," a document that enabled the petitioner, first, to redeem the parcels in question, and secondly, to register the same in his name. The private respondent alleges that he subsequently filed loan applications with the Family Savings Bank to finance a wet market project upon the subject premises to find, according to him, and to his dismay, the properties already registered in the name of the petitioner. He likewise contends that the "Deed of Sale and Transfer of Rights of Redemption and/or to Redeem" on file with the Register of Deeds (for Quezon City) had been falsified as follows:

WHEREFORE, for and in full settlement of the attorney's fees of TRANSFEREE in the amount of ONE HUNDRED THOUSAND PESOS (Pl00,000.00) I, FRANCISCO HERRERA, hereby transfer, assign and convey unto TRANSFEREE, Atty. Paterno R. Canlas, any and all my rights of the real properties and/or to redeem from the Mortgagee, L & R Corporation my mortgaged properties foreclosed and sold at public auction by the Sheriff of Quezon City and subject matter of the above Compromise Agreement in Civil Case No. Q30679 ... 9

whereas it originally reads:

WHEREFORE, for and in full settlement of the attorney's fees of TRANSFEREE in the amount of ONE HUNDRED THOUSAND PESOS (P100,000.00), I, FRANCISCO HERRERA, hereby transfer, assign and convey unto TRANSFEREE, Atty. Paterno R. Canlas, any and all my rights of equity of redemption and/or to redeem from the Mortgagee, L & R Corporation my mortgaged properties foreclosed and sold at public auction by the Sheriff of Quezon City and subject matter of the above Compromise Agreement in Civil Case No. Q30679. . . 10

As a consequence, the private respondent caused the annotation of an adverse claim upon the respective certificates of title embracing the properties. Upon learning of the same, the petitioner moved for the cancellation of the adverse claim and for the issuance of a writ of possession. The court granted both motions. The private respondent countered with a motion for a temporary restraining order and later, a motion to recall the writ of possession. He likewise alleges that he commenced disbarment proceedings before this Court against the petitioner 11 as well as various criminal complaints for estafa, falsification, and "betrayal of trust" 12 with the Department of Justice. On December 1, 1983, finally, he instituted an action for reconveyance and reformation of document, 13 praying that the certificates of title issued in the name of the petitioner be cancelled and that "the Deed of Sale and Transfer of Rights of Equity of Redemption and/or to Redeem dated May 3, 1983 ... be reformed to reflect the true agreement of Francisco Herrera and Paterno R. Canlas, of a mortgage." 14 He vehemently maintains that the petitioner's "agreement with [him] was that the latter would lend the money to the former for a year, so that [petitioner] would have time to look for a loan for the wet market which [the petitioner] intended toput up on said property." 15 Predictably, the petitioner moved for dismissal.

The trial court, however, denied the private respondent's petition. It held that the alteration complained of did not change the meaning of the contract since it was "well within [the petitioner's] rights" 16 "to protect and insure his interest of P654,000.00 which is the redemption price he has paid;" 17 secondly, that the petitioner himself had acquired an interest in the properties subject of reconveyance based on the compromise agreement approved by Judge Castro in the injunction case, pursuant to Section 29(b), of Rule 39, of the Rules of Court, that had, consequently, made him a judgment creditor in his own right; thirdly, that the private respondent had lost all rights over the same arising from his failure to redeem them from L & R Corporation within the extended period; and finally, that the petitioner cannot be said to have violated the ban against sales of properties in custodia legis to lawyers by their clients pendente lite, since the sale in question took place after judgment in the injunction case abovesaid had attained finality. The complaint was consequently dismissed, a dismissal that eventually attained a character of finality.

Undaunted, the private respondent, on December 6, 1985, filed a suit for "Annulment Of Judgment 18 in the respondent Court of Appeals, 19 praying that the orders of Judge Castro: (1). granting execution over the portion of the compromise agreement obliging the private respondentto pay the petitioner P100,000.00 as attorney's fees; (2) denying the private respondent's prayer for a restraining order directed against the execution: and (3) denying the motion to recall writ of possession, all be set aside.

The petitioner filed a comment on the petition, but followed it up with a motion to dismiss. On December 8, 1986, the respondent Court of Appeals promulgated the first of its challenged

resolutions, denying the motion to dismiss. On March 3, 1987, the Appellate Court denied reconsideration. 20

Hence the instant petition.

As we stated, the petitioner assails these twin resolutions on grounds of improper procedure. Specifically, he assigns the following errors:

I.

THE RESPONDENT COURT GRAVELY ABUSE [sic] ITS DISCRETION IN NOT DISMISSING AC G.R. NO. 07860 ON THE GROUND THAT IT IS IN REALITY A PETITION FOR CERTIORARI FILED OUT OF TIME AND SHOULD NOT BE GIVEN DUE COURSE.

II.

THE RESPONDENT COURT GRAVELY ABUSE [sic] ITS DISCRETION IN NOT DISMISSING AC G.R. NO. 07860 ON THE GROUND OF RES JUDICATA

III.

THE RESPONDENT COURT GRAVELY ABUSE [sic] ITS DISCRETION IN NOT CONSIDERINGAC G. R. 07860 AS MOOT AND ACADEMIC SINCE PETITIONER HAD DISPOSED OF THE SUBJECT PROPERTIES LONG BEFORE THE FILING OF THIS SUIT.

IV

THE RESPONDENT COURT GRAVELY ABUSED ITS DISCRETION IN NOT DENYING PETITIONER'S MOTION TO DISMISS SOLELY ON THE GROUND THAT THE ARGUMENT RAISED THEREIN ARE BUT REHASH OF THE ARGUMENTS IN HIS COMMENT TO THE PETITION. 21

The petitioner argues that the petition pending with the respondent court "is actually a petition forcertiorari," 22disguised as a pleading for annulment of judgment and that in such a case, it faces alleged legal impediments (1) It had been filed out of time, allegedly two years from the issuance of the assailed orders, and (2) It was not preceded by a motion for reconsideration. He adds that assuming annulment of judgment were proper, no judgment allegedly exists for annulment, the aforesaid two orders being in the nature of interlocutory issuances.

On purely technical grounds, the petitioner's arguments are impressive. Annulment of judgment, we have had occasion to rule, rests on a single ground: extrinsic fraud. What "extrinsic fraud" means is explained inMacabingkil v. People's Homesite and Housing Corporation : 23

xxx xxx xxx

It is only extrinsic or collateral fraud, as distinguished from intrinsic fraud, however, that can serve as a basis for the annulment of judgment. Fraud has been regarded as extrinsic or collateral, within the meaning of the rule, "where it is one the effect of which prevents a party from having a trial, or real contest, or from presenting all of his case to the court, or where it operates upon matters

pertaining, not to the judgment itself, but of the manner in which it was procured so that there is not a fair submission of the controversy." In other words, extrinsic fraud refers to any fraudulent act of the prevailing party in the litigation which is committed outside of the trial of the case, whereby the defeated party has been prevented from exhibiting fully his side of the case, by fraud or deception practiced on him by his opponent. 24

A perusal of the petition of therein private respondent Herrera pending before the respondent Court reveals no cause of action for annulment of judgment. In the first place, and as herein petitioner Canlas correctly points out, the judgment itself is not assailed, but rather, the orders merely implementing it. Secondly, there is no showing that extrinsic fraud, as Makabingkil definesit, indeed vitiated the proceedings presided over by Judge Castro. On the contrary, Herrera's petition in the respondent court will show that he was privy to the incidents he complains of, and in fact, had entered timely oppositions and motions to defeat Atty. Canlas' claims under the compromise agreement.

What he objects to is his suspected collusion between Atty. Canlas and His Honor to expedite theformer's collection of his fees. He alleges that his counsel had deliberately, and with malevolent designs, postponed execution to force him (Herrera) to agree to sell the properties in controversyto him (Atty. Canlas) subject to redemption. ("...[I]t was understandable that respondent Atty. Paterno R. Canlas did not implement the writ of execution, instead he contacted petitioner in order that petitioner would sign the questioned documents. This was the clincher of the plan of respondent Atty, Paterno R. Canlas to divest petitioner of his properties. For this purpose, it is obvious that respondent Atty. Paterno R. Canlas had to conspire with the respondent court judge to achieve his plan." 25) Aside from being plain speculation, it is no argument to justify annulment.Clearly, it does not amount to extrinsic fraud as the term is defined in law.

Neither is it proper for the extraordinary remedy of certiorari. Certiorari presupposes the absence of an appeal 26and while there is no appeal from execution of judgment, appeal lies in case of irregular implementation of the writ. 27 In the case at bar, there is no irregular execution to speak of As a rule, "irregular execution" means the failure of the writ to conform to the decree of the decision executed. 28 In the instant case, respondent Herrera's charges, to wit, that Judge Castro had erred in denying his motions for temporary restraining order and to recall writ of possession, or that His Honor had acted hastily (". . . that respondent court/judge took only one [1) day to resolve petitioner's motion for issuance of [a] [restraining] order. . ." 29) in denying his twofold motions, do not make out a case for irregular execution. The orders impugned are conformable to the letter of the judgment approving the parties'compromise agreement.

The lengths the private respondent, Francisco Herrera, would go to in a last-ditch bid to hold on to his lands and constraints of economic privation have not been lost on us. It is obvious that he is uneasy about the judgment on compromise itself, as well as the subsequent contract between him and his lawyer. In such a case, Article 2038 of the Civil Code applies:

Art. 2038. A compromise in which there is mistake, fraud, violence intimidation, undue influence, or falsity of documents, is subject to the provisions of article 1330 of this Code ...

in relation to Article 1330 thereof:

Art. 1330. A contract where consent is given through mistake, violence, intimidation, undue influence, or fraud is voidable.

in relation to its provisions on avoidance of'contracts. 30 The court notes that he had, for this purpose, gone to the Regional Trial Court, a vain effort as we stated, and in which the decision had become final.

We, however, sustain Atty. Canlas' position-on matters of procedure — for the enlightenment solely of the bench and the bar. It does not mean that we find merit in his petition. As we have intimated, we cannot overlook the unseemlier side of the proceeding, in which a member of the bar would exploit his mastery of procedural law to score a "technical knockout" over his own client, of all people. Procedural rules, after all, have for their object assistance unto parties "in obtaining just, speedy, and inexpensive determination of every action and proceeding."31 If procedure were to be an impediment to such an objective, "it deserts its proper office as an aid tojustice and becomes its great hindrance and chief enemy." 32 It was almost eight decades ago that the Court held:

... A litigation is not a game of technicalities in which one, more deeply schooled and skilled in the subtle art of movement and position, entraps and destroys the other. It is, rather, a contest in which each contending party fully and fairly lays before the court the facts in issue and then, brushing aside as wholly trivial and indecisive all imperfections of form and technicalities of procedure, asks that justice be done upon the merits. Lawsuits, unlike duels, are not to be won by the a rapier's thrust ...33

It is a ruling that almost eight decades after it was rendered, holds true as ever.

By Atty. Canlas' own account, "due to lack of paying capacity of respondent Herrera, no financingentity was willing to extend him any loan with which to pay the redemption price of his mortgagedproperties and petitioner's P100,000.00 attorney's fees awarded in the Compromise Judgment," 34 a development that should have tempered his demand for his fees. For obvious reasons, he placed his interests over and above those of his client, in opposition to his oath to "conduct himself as a lawyer ... with all good fidelity ... to [his] clients." 35 The Court finds the occasion fit to stress that lawyering is not a moneymaking venture and lawyers are not merchants, a fundamental standard that has, as a matter of judicial notice, eluded not a few law advocates. The petitioner's efforts partaking of a shakedown" of his own client are not becoming of a lawyer and certainly, do not speak well of his fealty to his oath to "delay no man for money." 36

It is true that lawyers are entitled to make a living, in spite of the fact that the practice of law is nota commercial enterprise; but that does not furnish an excuse for plain lust for material wealth, more so at the expense of another. Law advocacy, we reiterate, is not capital that yields profits. The returns it births are simple rewards for a job done or service rendered. It is a calling that, unlike mercantile pursuits which enjoy a greater deal of freedom from government interference, is impressed with a public interest, for which it is subject to State regulation. 37Anent attomey's fees, section 24, of Rule 138, of the Rules, provides in part as follows:

SEC. 24. Compensation of attorneys, agreement as to fees. — An attorney shall be entitled to have and recover from his client no more than a reasonable compensation for his services, with a view to the importance of the subject matter

of the controversy, the extent of the services rendered, and the professional standing of the attorney... A written contract for services shall control the amount to be paid therefor unless found by the court to be unconscionable or unreasonable.

So also it is decreed by Article 2208 of the Civil Code, reproduced in part, as follows:

Art. 2208 ...

In all cases, the attorney's fees and expenses of litigation must be reasonable.

We do not find the petitioner's claim of attorney's fees in the sum of P100,000.00 reasonable. Wedo not believe that it satisfies the standards set forth by the Rules. The extent of the services he had rendered in Civil Case No. 30679, and as far as the records will yield, is not impressive to justify payment of such a gargantuan amount. The case itself moreover did not involve complex questions of fact or law that would have required substantial effort as to research or leg work for the petitioner to warrant his demands. The fact that the properties subject thereof commanded quite handsome prices in the market should not be a measure of the importance or non-importance of the case. We are not likewise persuaded that the petitioner's stature warrants the sum claimed.

All things considered, we reduce the petitioner's fees, on a quantum meruit basis, to P20,000.00.

It is futile to invoke the rule granting attorneys a lien upon the things won in litigation similar to that vested upon redemptioners. 38 To begin with, the rule refers to realty sold as a result of execution in satisfaction of judgment. In this case, however, redemption was decreed by agreement (on compromise) between the mortgagor and mortgagee. It did not give the petitionerany right to the properties themselves, much less the right of redemption, although provisions for his compensation were purportedly provided. It did not make him a redemptioner for the plain reason that he was not named one in the amicable settlement. To this extent, we reverse Judge Pedro Santiago's ruling in Civil Case No. 40066, recognizing Atty. Canlas' "legal right, independent of the questioned deed of sale and transfer which was executed subsequently on May 3, 1983, to redeem the subject realty from the L & R Corporation pursuant to Sec. 29 (b), Rule 39 of the Rules of Court." 39Whatever right he had, it was, arguably with respect alone to hisrenumeration. It did not extend to the lands.

Secondly, and assuming that such a right exists, it must be in proportion to the "just fees and disbursements" 40due him. It is still subject to the tempering hand of this Court.

The Court notes a hidden agenda in the petitioner's haste to execute the compromise agreementand subsequently, to force the transfer of the properties to himself. As we have observed, in spiteof the issuance of the writ of execution, it does not appear that the petitioner took pains to implement it. We find this perplexing given his passionate and persistent pleas that he was entitled to the proceeds. There can indeed be no plausible explanation other than to enable him to keep an "ace" against the private respondent that led finally, to the conveyance of the properties in his favor. To be sure, he would have us beheve that by redeeming the same from the mortgagee and by in fact parting with his own money he had actually done the private respondent a favor, but this is to assume that he did not get anything out of the transaction. Indeed, he himself admits that "[t]itles to the properties have been issued to the new owners longbefore the filing of private respondents [sic] petition for annulment." 41 To say that he did not profit

therefrom is to take either this Court or the petitioner for naive, a proposition this Court is not prepared to accept under the circumstances.

We are likewise convinced that it was the petitioner who succeeded in having the private respondent sign the "Deed of Sale and Transfer of Rights of Equity of Redemption and/or to Redeem," a pre-prepared document apparently, that allowed him (the petitioner) to exercise the right of redemption over the properties and to all intents and purposes, acquire ownership thereof. As we have earlier averred, the private respondent, by reason of bankruptcy, had become an easy quarry to his counsel's moral influence and ascendancy. We are hard put to believe that it was the private respondent who "earnestly implored" 42 him to undertake the redemption amid the former's obstinate attempts to keep his lands that have indeed led to the multiple suits the petitioner now complains of, apart from the fact that the latter himself had something to gain from the transaction, as alluded to above. We are of the opinion that in ceding his right of redemption, the private respondent had intended merely to forestall the total loss of the parcels to the mortgagee upon the understanding that his counsel shall acquire the same and keep them therefore within reach, subject to redemption by his client under easier terms andconditions. Surely, the petitioner himself would maintain that he agreed to make the redemption"in order that [he] may already be paid the P100,000.00 attorney's fees awarded him in the Compromise Agreement," 43 and if his sole concern was his fees, there was no point in keeping the properties in their entirety.

The Court simply cannot fag for the petitioner's pretensions that he acquired the properties as a gesture of magnanimity and altruism He denies, of course, having made money from it, but what he cannot dispute is the fact that he did resell the properties. 44

But if he did not entertain intents of making any profit, why was it necessary to reword the conveyance document executed by the private respondent? It shall be recalled that the deed, as originally drafted, provided for conveyance of the private respondent's "rights of equity of redemption and/or redeem" 45 the properties in his favor, whereas the instrument registered with the Register of Deeds purported to transfer "any and all my rights of the real properties and/or to redeem," 46 in his favor. He admits having entered the intercalations in question but argues that he did so "to facilitate the registration of the questioned deed with the Register of Deeds" 47 and that it did not change the meaning of the paper, for which Judge Santiago acquitted him of any falsification charges. 48 To start with, the Court is at a loss how such an alteration could "facilitate"registration. Moreover, if it did not change the tenor of the deed, why was it necessary then? And why did he not inform his client? At any rate, the agreement is clearly a contract of adhesion. Its provisions should be read against the party who prepared it.

But while we cannot hold the petitioner liable for falsification — this is not the proper occasion for it — we condemn him nonetheless for infidelity to his oath "to do no falsehood" 49

This brings us to the final question: Whether or not the conveyance in favor of the petitioner is subject to the ban on acquisition by attorneys of things in litigation. The pertinent provisions of the Civil Code state as follows:

Art. 1491. The following persons cannot acquire by purchase, even at a public or judicial action, either in person or through the mediation of another:

(1) The guardian, the property of the person or persons who may be under his guardianship;

(2) Agents, the property whose administration or sale may have been intrusted to them, unless the consent of the principal have been given;

(3) Executors and administrators, the property of the estate under administration;

(4) Public officers and employees, the property of the State or of any subdivision thereof, or of any government owned or controlled corporation, or institution, the administration of which has been instrusted to them; this provision shall apply to judges and government experts who, in any manner whatsoever, take part in the sale;

(5) Justice judges prosecuting attorneys clerks of superior and inferior courts, and other officers and employees connected with the administration of justice, the property and rights 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 by assignment and shall apply to lawyers, 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.

(6) Any others specially disqualified by law.**

In Rubias v. Batiller, 50 we declared such contracts to be void by force of Article 1409, paragraph (7), of the Civil Code, defining inexistent contracts. In Director of Lands v. Ababa 51 however, we said that the prohibition does not apply to contingent contracts, in which the conveyance takes place after judgment, so that the property can no longer be said to be "subject of litigation."

In the instant case, the Court observes that the "Deed of Sale and Transfer of Rights of Equity of Redemption and/or to Redeem" was executed following the finality of the decision approving the compromise agreement. It is actually a new contract — not one in pursuance of what had been agreed upon on compromise — in which, as we said, the petitioner purportedly assumed redemption rights over the disputed properties (but in reality, acquired absolute ownership thereof). By virtue of such a subsequent agreement, the lands had ceased to be properties whichare "the object of any litigation." Parenthetically, the Court states that a writ of possession is improper to eject another from possession unless sought in connection with: (1) a land registration proceeding; (2) an extrajudicial foreclosure of mortgage of real property; (3) in a judicial foreclosure of property provided that the mortgagor has possession and no third party has intervened; and (4) in execution sales. 52 It is noteworthy that in this case, the petitioner moved for the issuance of the writ pursuant to the deed of sale between him and the private respondent and not the judgment on compromise. (He was, as we said, issued a writ of execution on the compromise agreement but as we likewise observed, he did not have the same enforced. The sale agreement between the parties, it should be noted, superseded the compromise.) The writ does not lie in such a case. His remedy is specific performance.

At any rate, the transfer, so we hold, is not subject to the injunction of Article 1491 of the Civil Code. But like all voidable contracts, it is open to annulment on the ground of mistake, fraud, or undue influence, 53 which is in turn subject to the right of innocent purchasers for value. 54

For this reason, we invalidate the transfer in question specifically for undue influence as earlier detailed. While the respondent Herrera has not specifically prayed for invalidation, this is the clear tenor of his petition for annulment in the Appellate Court. It appearing, however, that the

properties have been conveyed to third persons whom we presume to be innocent purchasers for value, the petitioner, Atty. Paterno Canlas, must be held liable, by way of actual damages, for such a loss of properties.

We are not, however, condoning the private respondent's own shortcomings. In condemning Atty.Canlas monetarily, we cannot overlook the fact that the private respondent has not settled his hability for payment of the properties. To hold Atty. Canlas alone liable for damages is to enrich said respondent at the expense of his lawyer. The parties must then set off their obligations against the other. To obviate debate as the actual amounts owing by one to the other, we hold Francisco Herrera, the private respondent, liable to Atty. Paterno Canlas, the petitioner, in the sum of P654,000.00 representing the redemption price of the properties, 55 in addition to the sum of P20,000. 00 as and for attomey's fees. We order Atty. Canlas, in turn, to pay the respondent Herrera the amount of P1,000,000.00, the sum he earned from the resale thereof, 56 such that heshall, after proper adjustments, be indebted to his client in the sum of P326,000.00 as and for damages.

Needless to say, we sustain the action of the respondent Court of Appeals in taking cognizance of the petition below. But as we have stated, we are compelled, as the final arbiter of justiciable cases and in the highest interests ofjustice, to write finis to the controversy that has taxed considerably the dockets of the inferior courts.

Let the Court further say that while its business is to settle actual controversies and as a matter of general policy, to leave alone moot ones, its mission is, first and foremost, to dispense justice. At the outset, we have made clear that from a technical vantage point, certiorari, arguably lies, but as we have likewise stated, the resolution of the case rests not only on the mandate of technical rules, but if the decision is to have any real meaning, on the merits too. This is not the first time we would have done so; in many cases we have eschewed the rigidity of the Rules of Court if it would establish a barrier upon the administration ofjustice. It is especially so in the caseat bar, in which no end to suit and counter-suit appears imminent and for which it is high time thatwe have the final say. We likewise cannot, as the overseer of good conduct in both the bench and the bar, let go unpunished what convinces us as serious indiscretions on the part of a lawyer.

WHEREFORE, judgment is hereby rendered.

1. ORDERING the petitioner, Atty. Patemo Canlas, to pay to the private respondent, Francisco Herrera, the sum of P326,000.00, as and for damages;

2. ORDERING the petitioner to SHOW CAUSE why no disciplinary action may be imposed on him for violation of his oath, as a lawyer, within ten (10) days from notice, after which the same will be consolidated with AC No. 2625;

3. DISMISSING this petition and REMANDING the case to the respondent Court of Appeals for execution; and

4. ORDERING the petitioner to pay costs.

SO ORDERED.

Melencio-Herrera (Chairperson) and Medialdea, ** JJ., concur.

Paras and Padilla, JJ., took no part.

[AC No. 99-634. June 10, 2002]

DOMINADOR P. BURBE, complainant, vs. ATTY. ALBERTO C. MAGULTA, respondent.

D E C I S I O N

PANGANIBAN, J.:

After agreeing to take up the cause of a client, a lawyer owes fidelity to both cause andclient, even if the client never paid any fee for the attorney-client relationship. Lawyering is not abusiness; it is a profession in which duty to public service, not money, is the primaryconsideration.

The Case

Before us is a Complaint for the disbarment or suspension or any other disciplinary actionagainst Atty. Alberto C. Magulta. Filed by Dominador P. Burbe with the Commission on BarDiscipline of the Integrated Bar of the Philippines (IBP) on June 14, 1999, the Complaint isaccompanied by a Sworn Statement alleging the following:

“x x x x x x x x x

“That in connection with my business, I was introduced to Atty. Alberto C. Magulta, sometime in September, 1998, in his office at the Respicio, Magulta and Adan Law Offices at 21-B Otero Building, Juan de la Cruz St., Davao City, who agreed to legally represent me in a money claim and possible civil case against certain parties for breach of contract;

“That consequent to such agreement, Atty. Alberto C. Magulta prepared for me the demand letterand some other legal papers, for which services I have accordingly paid; inasmuch, however, that I failed to secure a settlement of the dispute, Atty. Magulta suggested that I file the necessary complaint, which he subsequently drafted, copy of which is attached as Annex A, the filing fee whereof will require the amount of Twenty Five Thousand Pesos (P25,000.00);

“That having the need to legally recover from the parties to be sued I, on January 4, 1999, deposited the amount of P25,000.00 to Atty. Alberto C. Magulta, copy of the Receipt attached as Annex B, upon the instruction that I needed the case filed immediately;

“That a week later, I was informed by Atty. Alberto C. Magulta that the complaint had already been filed in court, and that I should receive notice of its progress;

“That in the months that followed, I waited for such notice from the court or from Atty. Magulta butthere seemed to be no progress in my case, such that I frequented his office to inquire, and he would repeatedly tell me just to wait;

“That I had grown impatient on the case, considering that I am told to wait [every time] I asked; and in my last visit to Atty. Magulta last May 25, 1999, he said that the court personnel had not yet acted on my case and, for my satisfaction, he even brought me to the Hall of Justice Building at Ecoland, Davao City, at about 4:00 p.m., where he left me at the Office of the City Prosecutor at the ground floor of the building and told to wait while he personally follows up the processes with the Clerk of Court; whereupon, within the hour, he came back and told me that the Clerk of Court was absent on that day;

“That sensing I was being given the run-around by Atty. Magulta, I decided to go to the Office of the Clerk of Court with my draft of Atty. Magulta’s complaint to personally verify the progress of my case, and there told that there was no record at all of a case filed by Atty. Alberto C. Magulta on my behalf, copy of the Certification dated May 27, 1999, attached as Annex C;

“That feeling disgusted by the way I was lied to and treated, I confronted Atty. Alberto C. Magulta at his office the following day, May 28, 1999, where he continued to lie to with the excuse that thedelay was being caused by the court personnel, and only when shown the certification did he admit that he has not at all filed the complaint because he had spent the money for the filing fee for his own purpose; and to appease my feelings, he offered to reimburse me by issuing two (2) checks, postdated June 1 and June 5, 1999, in the amounts of P12,000.00 and P8,000.00, respectively, copies of which are attached as Annexes D and E;

“That for the inconvenience, treatment and deception I was made to suffer, I wish to complain Atty. Alberto C. Magulta for misrepresentation, dishonesty and oppressive conduct;”

x x x x x x x x x.[1]

On August 6, 1999, pursuant to the July 22, 1999 Order of the IBP Commission on BarDiscipline,[2] respondent filed his Answer[3] vehemently denying the allegations of complainant “forbeing totally outrageous and baseless.” The latter had allegedly been introduced asa kumpadre of one of the former’s law partners. After their meeting, complainant requested himto draft a demand letter against Regwill Industries, Inc. -- a service for which the former neverpaid. After Mr. Said Sayre, one of the business partners of complainant, replied to this letter, thelatter requested that another demand letter -- this time addressed to the former -- be drafted byrespondent, who reluctantly agreed to do so. Without informing the lawyer, complainant askedthe process server of the former’s law office to deliver the letter to the addressee.

Aside from attending to the Regwill case which had required a three-hour meeting,respondent drafted a complaint (which was only for the purpose of compelling the owner to settlethe case) and prepared a compromise agreement. He was also requested by complainant to dothe following:

1. Write a demand letter addressed to Mr. Nelson Tan

2. Write a demand letter addressed to ALC Corporation

3. Draft a complaint against ALC Corporation

4. Research on the Mandaue City property claimed by complainant’s wife

All of these respondent did, but he was never paid for his services by complainant.

Respondent likewise said that without telling him why, complainant later on withdrew all thefiles pertinent to the Regwill case. However, when no settlement was reached, the latterinstructed him to draft a complaint for breach of contract. Respondent, whose services had neverbeen paid by complainant until this time, told the latter about his acceptance and legal fees.When told that these fees amounted to P187,742 because the Regwill claim was almost P4million, complainant promised to pay on installment basis.

On January 4, 1999, complainant gave the amount of P25,000 to respondent’s secretaryand told her that it was for the filing fee of the Regwill case. When informed of the payment, thelawyer immediately called the attention of complainant, informing the latter of the need to pay theacceptance and filing fees before the complaint could be filed. Complainant was told that theamount he had paid was a deposit for the acceptance fee, and that he should give the filing feelater.

Sometime in February 1999, complainant told respondent to suspend for the meantime thefiling of the complaint because the former might be paid by another company, the First OrientalProperty Ventures, Inc., which had offered to buy a parcel of land owned by Regwill Industries.The negotiations went on for two months, but the parties never arrived at any agreement.

Sometime in May 1999, complainant again relayed to respondent his interest in filing thecomplaint. Respondent reminded him once more of the acceptance fee. In response,complainant proposed that the complaint be filed first before payment of respondent’sacceptance and legal fees. When respondent refused, complainant demanded the return ofthe P25,000. The lawyer returned the amount using his own personal checks because their lawoffice was undergoing extensive renovation at the time, and their office personnel were notreporting regularly. Respondent’s checks were accepted and encashed by complainant.

Respondent averred that he never inconvenienced, mistreated or deceived complainant,and if anyone had been shortchanged by the undesirable events, it was he.

The IBP’s Recommendation

In its Report and Recommendation dated March 8, 2000, the Commission on Bar Disciplineof the Integrated Bar of the Philippines (IBP) opined as follows:

“x x x [I]t is evident that the P25,000 deposited by complainant with the Respicio Law Office was for the filing fees of the Regwill complaint. With complainant’s deposit of the filing fees for the Regwill complaint, a corresponding obligation on the part of respondent was created and that was to file the Regwill complaint within the time frame contemplated by his client, the complainant. The failure of respondent to fulfill this obligation due to his misuse of the filing fees deposited by complainant, and his attempts to cover up this misuse of funds of the client, which caused complainant additional damage and prejudice, constitutes highly dishonest conduct on his part, unbecoming a member of the law profession. The subsequent reimbursement by the respondent of part of the money deposited by complainant for filing fees, does not exculpate the respondent for his misappropriation of said funds. Thus, to impress upon the respondent the gravity of his offense, it is recommended that respondent be suspended from the practice of law for a period of one (1) year.”[4]

The Court’s Ruling

We agree with the Commission’s recommendation.

Main Issue:

Misappropriation of Client’s Funds

Central to this case are the following alleged acts of respondent lawyer: (a) his non-filing ofthe Complaint on behalf of his client and (b) his appropriation for himself of the money given forthe filing fee.

Respondent claims that complainant did not give him the filing fee for the Regwill complaint;hence, the former’s failure to file the complaint in court. Also, respondent alleges that the amountdelivered by complainant to his office on January 4, 1999 was for attorney’s fees and not for thefiling fee.

We are not persuaded. Lawyers must exert their best efforts and ability in the prosecution orthe defense of the client’s cause. They who perform that duty with diligence and candor not onlyprotect the interests of the client, but also serve the ends of justice. They do honor to the bar andhelp maintain the respect of the community for the legal profession. [5] Members of the bar must

do nothing that may tend to lessen in any degree the confidence of the public in the fidelity, thehonesty, and integrity of the profession.[6]

Respondent wants this Court to believe that no lawyer-client relationship existed betweenhim and complainant, because the latter never paid him for services rendered. The former addsthat he only drafted the said documents as a personal favor for the kumpadre of one of hispartners.

We disagree. A lawyer-client relationship was established from the very first momentcomplainant asked respondent for legal advice regarding the former’s business. To constituteprofessional employment, it is not essential that the client employed the attorney professionallyon any previous occasion. It is not necessary that any retainer be paid, promised, or charged;neither is it material that the attorney consulted did not afterward handle the case for which hisservice had been sought.

If a person, in respect to business affairs or troubles of any kind, consults a lawyer with aview to obtaining professional advice or assistance, and the attorney voluntarily permits oracquiesces with the consultation, then the professional employment is established.[7]

Likewise, a lawyer-client relationship exists notwithstanding the close personal relationshipbetween the lawyer and the complainant or the nonpayment of the former’s fees. [8] Hence,despite the fact that complainant was kumpadre of a law partner of respondent, and thatrespondent dispensed legal advice to complainant as a personal favor to the kumpadre, thelawyer was duty-bound to file the complaint he had agreed to prepare -- and had actuallyprepared -- at the soonest possible time, in order to protect the client’s interest. Rule 18.03 of theCode of Professional Responsibility provides that lawyers should not neglect legal mattersentrusted to them.

This Court has likewise constantly held that once lawyers agree to take up the cause of aclient, they owe fidelity to such cause and must always be mindful of the trust and confidencereposed in them.[9]They owe entire devotion to the interest of the client, warm zeal in themaintenance and the defense of the client’s rights, and the exertion of their utmost learning andabilities to the end that nothing be taken or withheld from the client, save by the rules of lawlegally applied.[10]

Similarly unconvincing is the explanation of respondent that the receipt issued by his officeto complainant on January 4, 1999 was erroneous. The IBP Report correctly noted that it wasquite incredible for the office personnel of a law firm to be prevailed upon by a client to issue areceipt erroneously indicating payment for something else. Moreover, upon discovering the“mistake” -- if indeed it was one -- respondent should have immediately taken steps to correct theerror. He should have lost no time in calling complainant’s attention to the matter and shouldhave issued another receipt indicating the correct purpose of the payment.

The Practice of Law -- a

Profession, Not a Business

In this day and age, members of the bar often forget that the practice of law is a professionand not a business.[11] Lawyering is not primarily meant to be a money-making venture, and lawadvocacy is not a capital that necessarily yields profits. [12] The gaining of a livelihood is not a

professional but a secondary consideration.[13] Duty to public service and to the administration ofjustice should be the primary consideration of lawyers, who must subordinate their personalinterests or what they owe to themselves. The practice of law is a noble calling in whichemolument is a byproduct, and the highest eminence may be attained without making muchmoney.[14]

In failing to apply to the filing fee the amount given by complainant -- as evidenced by thereceipt issued by the law office of respondent -- the latter also violated the rule that lawyers mustbe scrupulously careful in handling money entrusted to them in their professional capacity.[15] Rule 16.01 of the Code of Professional Responsibility states that lawyers shall hold in trust allmoneys of their clients and properties that may come into their possession.

Lawyers who convert the funds entrusted to them are in gross violation of professionalethics and are guilty of betrayal of public confidence in the legal profession. [16] It may be true thatthey have a lien upon the client’s funds, documents and other papers that have lawfully comeinto their possession; that they may retain them until their lawful fees and disbursements havebeen paid; and that they may apply such funds to the satisfaction of such fees anddisbursements. However, these considerations do not relieve them of their duty to promptlyaccount for the moneys they received. Their failure to do so constitutes professional misconduct.[17] In any event, they must still exert all effort to protect their client’s interest within the bounds oflaw.

If much is demanded from an attorney, it is because the entrusted privilege to practice lawcarries with it correlative duties not only to the client but also to the court, to the bar, and to thepublic.[18]Respondent fell short of this standard when he converted into his legal fees the filing feeentrusted to him by his client and thus failed to file the complaint promptly. The fact that theformer returned the amount does not exculpate him from his breach of duty.

On the other hand, we do not agree with complainant’s plea to disbar respondent from thepractice of law. The power to disbar must be exercised with great caution. Only in a clear case ofmisconduct that seriously affects the standing and the character of the bar will disbarment beimposed as a penalty.[19]

WHEREFORE, Atty. Alberto C. Magulta is found guilty of violating Rules 16.01 and 18.03 ofthe Code of Professional Responsibility and is hereby SUSPENDED from the practice of law fora period of one (1) year, effective upon his receipt of this Decision. Let copies be furnished allcourts as well as the Office of the Bar Confidant, which is instructed to include a copy inrespondent’s file.

SO ORDERED.

MA. LUISA HADJULA,

Complainant,

- versus -

ATTY. ROCELES F. MADIANDA,

Respondent.

A.C. No. 6711

Present:

PUNO, C.J., Chairperson,

*SANDOVAL-GUTIERREZ,

CORONA,

AZCUNA, and

GARCIA, JJ.

Promulgated:

July 3, 2007

x------------------------------------------------------------------------------------x

D E C I S I O N

GARCIA, J.:

Under consideration is Resolution No. XVI-2004-472 of the Board of Governors, Integrated

Bar of the Philippines (IBP), relative to the complaint for disbarment filed by herein complainant

Ma. Luisa Hadjula against respondent Atty. Roceles F. Madianda.

The case started when, in an AFFIDAVIT-COMPLAINT[1] bearing date September 7,

2002 and filed with the IBP Commission on Bar Discipline, complainant charged Atty. Roceles F.

Madianda with violation of Article 209[2] of the Revised Penal Code and Canon Nos. 15.02 and

21.02 of the Code of Professional Responsibility.

In said affidavit-complaint, complainant alleged that she and respondent used to be friends

as they both worked at the Bureau of Fire Protection (BFP) whereat respondent was the Chief

Legal Officer while she was the Chief Nurse of the Medical, Dental and Nursing Services.

Complainant claimed that, sometime in 1998, she approached respondent for some legal advice.

Complainant further alleged that, in the course of their conversation which was supposed to be

kept confidential, she disclosed personal secrets and produced copies of a marriage contract, a

birth certificate and a baptismal certificate, only to be informed later by the respondent that she

(respondent) would refer the matter to a lawyer friend. It was malicious, so complainant states,

of respondent to have refused handling her case only after she had already heard her secrets.

Continuing, complainant averred that her friendship with respondent soured after her filing,

in the later part of 2000, of criminal and disciplinary actions against the latter. What, per

complainant’s account, precipitated the filing was when respondent, then a member of the BFP

promotion board, demanded a cellular phone in exchange for the complainant’s promotion.

According to complainant, respondent, in retaliation to the filing of the aforesaid actions,

filed a COUNTER COMPLAINT[3] with the Ombudsman charging her (complainant) with violation

of Section 3(a) of Republic Act No. 3019,[4] falsification of public documents and immorality, the

last two charges being based on the disclosures complainant earlier made to respondent. And

also on the basis of the same disclosures, complainant further stated, a disciplinary case was

also instituted against her before the Professional Regulation Commission.

Complainant seeks the suspension and/or disbarment of respondent for the latter’s act of

disclosing personal secrets and confidential information she revealed in the course of seeking

respondent’s legal advice.

In an order dated October 2, 2002, the IBP Commission on Bar Discipline required

respondent to file her answer to the complaint.

In her answer, styled as COUNTER-AFFIDAVIT,[5] respondent denied giving legal advice

to the complainant and dismissed any suggestion about the existence of a lawyer-client

relationship between them. Respondent also stated the observation that the supposed

confidential data and sensitive documents adverted to are in fact matters of common knowledge

in the BFP. The relevant portions of the answer read:

5. I specifically deny the allegation of F/SUPT. MA. LUISA C.HADJULA in paragraph 4 of her AFFIDAVIT-COMPLAINT for reason that shenever WAS MY CLIENT nor we ever had any LAWYER-CLIENT RELATIONSHIPthat ever existed ever since and that never obtained any legal advice from meregarding her PERSONAL PROBLEMS or PERSONAL SECRETS. She likewisenever delivered to me legal documents much more told me some confidentialinformation or secrets. That is because I never entertain LEGAL QUERIES orCONSULTATION regarding PERSONAL MATTERS since I know as a LAWYERof the Bureau of Fire Protection that I am not allowed to privately practice law andit might also result to CONFLICT OF INTEREST. As a matter of fact, wheneverthere will be PERSONAL MATTERS referred to me, I just referred them to privatelaw practitioners and never entertain the same, NOR listen to their stories orexamine or accept any document.

9. I specifically deny the allegation of F/SUPT. MA. LUISA C.HADJULA in paragraph 8 of her AFFIDAVIT-COMPLAINT, the truth of the matteris that her ILLICIT RELATIONSHIP and her illegal and unlawful activities are

known in the Bureau of Fire Protection since she also filed CHILD SUPPORTcase against her lover … where she has a child ….

Moreover, the alleged DOCUMENTS she purportedly have shown to mesometime in 1998, are all part of public records ….

Furthermore, F/SUPT. MA. LUISA C. HADJULA, is filing the instant casejust to get even with me or to force me to settle and withdraw the CASES I FILEDAGAINST HER since she knows that she will certainly be DISMISSED FROMSERVICE, REMOVED FROM THE PRC ROLL and CRIMINALLY CONVICTED ofher ILLICIT, IMMORAL, ILLEGAL and UNLAWFUL ACTS.

On October 7, 2004, the Investigating Commissioner of the IBP Commission on Bar

Discipline came out with a Report and Recommendation, stating that the information related by

complainant to the respondent is “protected under the attorney-client privilege communication.”

Prescinding from this postulate, the Investigating Commissioner found the respondent to have

violated legal ethics when she “[revealed] information given to her during a legal consultation,”

and accordingly recommended that respondent be reprimanded therefor, thus:

WHEREFORE, premises considered, it is respectfully recommended thatrespondent Atty. Roceles Madianda be reprimanded for revealing the secrets ofthe complainant.

On November 4, 2004, the IBP Board of Governors issued Resolution No. XVI-2004-472

reading as follows:

RESOLVED to ADOPT and APPROVE, as it is hereby ADOPTED andAPPROVED, the Report and Recommendation of the InvestigatingCommissioner of the above-entitled case, herein made part of this Resolution asAnnex “A”; and , finding the recommendation fully supported by the evidence onrecord and the applicable laws and rules, and considering the actuation ofrevealing information given to respondent during a legal consultation, Atty.Roceles Madianda is hereby REPRIMANDED.

We AGREE with the recommendation and the premises holding it together.

As it were, complainant went to respondent, a lawyer who incidentally was also then a

friend, to bare what she considered personal secrets and sensitive documents for the purpose of

obtaining legal advice and assistance. The moment complainant approached the then receptive

respondent to seek legal advice, a veritable lawyer-client relationship evolved between the two.

Such relationship imposes upon the lawyer certain restrictions circumscribed by the ethics of the

profession. Among the burdens of the relationship is that which enjoins the lawyer, respondent in

this instance, to keep inviolate confidential information acquired or revealed during legal

consultations. The fact that one is, at the end of the day, not inclined to handle the client’s case is

hardly of consequence. Of little moment, too, is the fact that no formal professional engagement

follows the consultation. Nor will it make any difference that no contract whatsoever was

executed by the parties to memorialize the relationship. As we said in Burbe v. Magulta,[6] -

A lawyer-client relationship was established from the very first momentcomplainant asked respondent for legal advise regarding the former’s business.To constitute professional employment, it is not essential that the client employedthe attorney professionally on any previous occasion.

It is not necessary that any retainer be paid, promised, or charged;neither is it material that the attorney consulted did not afterward handle the casefor which his service had been sought.

It a person, in respect to business affairs or troubles of any kind, consultsa lawyer with a view to obtaining professional advice or assistance, and theattorney voluntarily permits or acquiesces with the consultation, then theprofessional employments is established.

Likewise, a lawyer-client relationship exists notwithstanding the closepersonal relationship between the lawyer and the complainant or the non-payment of the former’s fees.

Dean Wigmore lists the essential factors to establish the existence of the attorney-client

privilege communication, viz:

(1) Where legal advice of any kind is sought (2) from a professional legaladviser in his capacity as such, (3) the communications relating to that purpose,(4) made in confidence (5) by the client, (6) are at his instance permanentlyprotected (7) from disclosure by himself or by the legal advisor, (8) except theprotection be waived.[7]

With the view we take of this case, respondent indeed breached his duty of preserving the

confidence of a client. As found by the IBP Investigating Commissioner, the documents shown

and the information revealed in confidence to the respondent in the course of the legal

consultation in question, were used as bases in the criminal and administrative complaints

lodged against the complainant.

The purpose of the rule of confidentiality is actually to protect the client from possible

breach of confidence as a result of a consultation with a lawyer.

The seriousness of the respondent’s offense notwithstanding, the Court feels that there is

room for compassion, absent compelling evidence that the respondent acted with ill-will. Without

meaning to condone the error of respondent’s ways, what at bottom is before the Court is two

former friends becoming bitter enemies and filing charges and counter-charges against each

other using whatever convenient tools and data were readily available. Unfortunately, the

personal information respondent gathered from her conversation with complainant became

handy in her quest to even the score. At the end of the day, it appears clear to us that respondent

was actuated by the urge to retaliate without perhaps realizing that, in the process of giving vent

to a negative sentiment, she was violating the rule on confidentiality.

IN VIEW WHEREOF, respondent Atty. Roceles F. Madianda ishereby REPRIMANDED and admonished to be circumspect in her handling of informationacquired as a result of a lawyer-client relationship. She is also STERNLY WARNED againsta repetition of the same or similar act complained of.

SO ORDERED.

April 28, 1969

G.R. No. L-24163

REGINO B. ARO, petitioner,

vs.

THE HON. ARSENIO NAÑAWA, Presiding Judge of Branch IV, Court of First Instance of

Laguna, LUIS MAGTIBAY, PABLO MAGTIBAY, AURELLO MARTINEZ, GREGORIO LONTOK,

MARIA MENDOZA, MAXIMO PORTO and ROSARlO ANDAYA,respondents.

Regino B. Aro in his own behalf as petitioner.

Enrique C. Villanueva for respondents.

BARREDO, J.:

Original petition: (1) for certiorari to annul the order of the Court of First Instance of Laguna,

dated November 21, 1964, dismissing its Civil Case No. SC-525 "without prejudice to the right of

Atty. Regino B. Aro (petitioner herein) to file a separate action against both the plaintiffs and

defendants (private respondents herein) with respect to his alleged attorney's fees", as well as its

order dated January 9, 1965, denying petitioner's motion for reconsideration thereof for lack of

merit and (2) for mandamus to compel respondent Judge to take cognizance of petitioner's

opposition and countermotion or petition dated November 3, 1964 and to resolve the same on

the merits.

There appears to be no dispute as to the following facts alleged in the petition:

2. That the services of herein petitioner, as practising attorney, was engaged by respondents Luis

Magtibay and Pablo Magtibay for the prosecution of their claim, as heirs, in the estate of their

deceased uncle Lucio Magtibay, consisting of properties which were in the possession of the

respondents Aurelia Martinez,[[1]]spouses Gregorio Lontok and Maria Mendoza and spouses

Maximo Porto and Rosario Andaya.

3. That being without means to prosecute their claim against the persons concerned,

respondents Luis Magtibay and Pablo Magtibay agreed with herein petitioner to avail of his

services and entrust the prosecution of their claim on a contingent basis as shown in the

agreement, copy of which is hereto attached as Annex 'A' and is made an integral part hereof.[[2]]

4. That by virtue of said agreement, herein petitioner took the necessary steps to gather the

needed papers and documents for the filing of a petition to litigate as pauper and a complaint in

the Court of First Instance of Laguna, in which respondents Luis Magtibay and Pablo Magtibay

were the plaintiffs and the other respondents, excepting the respondent Judge, were the

defendants, ..

5. That said petition to litigate as pauper filed by herein petitioner for respondents Luis Magtibay

and Pablo Magtibay was granted by the respondent Judge as per the order dated September 10,

1964, ...

6. That to plaintiffs' complaint in Civil Case No. SC-525, the defendants in said case interposed a

motion to dismiss dated September 29, 1964....[[3]]

7. That to the said motion to dismiss herein petitioner, as attorney for the plaintiffs (now

respondents Luis Magtibay and Pablo Magtibay) filed an opposition dated October 5, 1964.....[[4]]

8. That after the hearing of the motion to dismiss filed by the defendants and the opposition

thereto by the plaintiffs, which finally took place on October 24, 1964, the respondent Judge

issued its resolution or order dated October 24, 1964, denying the motion to dismiss, ....[[5]]

9. That on the very day of and after the hearing of the motion to dismiss, or on October 24, 1964,

before receipt of a copy of the said order (Annex 'G'), there was a conversation which took place

between herein petitioner and the attorney of the defendants, Atty. Rustico de los Reyes, Jr., in

the civil case and one who was then acting as a sort of spokesman for the defendants (Ex-Mayor

Cordova of Sta. Maria, Laguna) for the amicable settlement of the case between the plaintiffs

and the defendants to the effect that a certain property of the spouses Lucio Magtibay

(deceased) and respondent Aurelia Martinez, worth P3,000.00, would be given to the plaintiffs in

full settlement of their claim, as share in the properties left by their deceased uncle Lucio

Magtibay, it having been agreed by herein petitioner and Atty. de los Reyes and the spokesman

of the defendants that for the purpose of said amicable settlement, the plaintiffs or one of them

and herein petitioner would go to Sta. Maria, Laguna, on October 23, 1964.

10. That having given notice to the plaintiffs (now respondents Luis Magtibay and Pablo

Magtibay) at their given address in Calauag, Quezon to come to Candelaria for the purpose of

going to Sta. Maria, Laguna on October 23, 1964, petitioner had waited for said plaintiffs to go to

his office on or before said date for the engagement mentioned, but due to their (plaintiffs') failure

to come to Candelaria, petitioner had to send a telegram to Ex-Mayor Cordova notifying him of

his (petitioner's) and plaintiffs' not being able to go to Sta. Maria because of the failure of any of

the plaintiffs to come to Candelria, ..

11. That it was only on October 28, 1964, when herein petitioner received a copy of the order

dated October 24, 1964 (Annex "G") and to his surprise he also received on the said day a

second motion to dismiss dated October 26, 1964; together with Annex "A" of said motion, which

is entitled KASULATAN NG PAGHAHATIAN NA LABAS SA HUKUMAN AT PAGPAPALABI, dated

October 23, 1964 at Sta. Cruz, Laguna and signed by the plaintiffs and defendant Aurelia

Martinez (the three being now respondents in this case), it having been made to appear in said

Annex "A" of the second motion to dismiss, among others, that the plaintiffs and defendant

Aurelia Martinez had made an extrajudicial partition of the properties of the deceased Lucio

Magtibay and the said Aurelia Martinez adjudicating to the plaintiffs one-fourth (¼) share in the

properties of the spouses and three-fourth (3/4) share of the defendant Aurelia Martinez, but

making it appear also that said plaintiffs waived their share in favor of Aurelia Martinez, ..., thru

which fraudulent waiver, herein petitioner was deprived of his contingent fees, agreed upon, as

evidenced by Annex "A" of this petition.[[6]]

x x x x x x x x x

14. That petitioner filed by registered mail, on November 4, 1964, his "OPPOSITION TO THE

SECOND MOTION TO DISMISS AND COUNTER-MOTION OR PETITION TO SET ASIDE

DEED OF EXTRAJUDICIAL PARTITION AND WAIVER DATED OCTOBER 23, 1964 AND TO

RECORD ATTORNEY'S LIEN", dated November 3, 1964, wherein he (petitioner) prayed, among

others, invoking the provisions of Section 5(d) and Section 6, Rule 135 of the Revised Rules of

Court, for the protection of the rights of herein petitioner as an officer of the Court, to wit:

(a) to deny the second motion to dismiss and get aside and annul the deed of

extrajudicial partition and waiver dated October 23, 1964;

(b) to fix the compensation of herein counsel in the proportion of one-third (1/3) of the

shares of plaintiffs, if in land, or in the amount of P1,000.00, if in cash, and to record the

same and expenses advanced by him for the plaintiffs in the sum of P22.15 as lien in

favor of herein claimant-petitioner over the properties in litigation, particularly over the

one-fourth (1/4) share of the plaintiffs in all the properties of the spouses;

x x x x x x x x x

(d) as an alternative to prayer (a) above, to grant the second motion to dismiss,

subjecting, however, the properties in litigation and subject-matters of the extrajudicial

partition and waiver to the lien for attorney's fees and expenses in favor of herein

claimant-petitioner, after fixing said attorney's fees as prayed for in (b) above.

x x x x x x x x x

15. That on the day f finally set for the hearing of the second motion to dismiss, as well

as of the counter-motion or petition, or on November 21, 1964, because of the inquiries

or interpellation made by respondent Judge to herein petitioner as to whether there is a

Philippine precedent which allows or directs the protection by the Court of the rights of

any of its officers (lawyer) against any collusion perpetrated by the parties in a case to

defraud or cheat an attorney of his compensation agreed upon by him and his clients,

and his answer that insofar as his researches were concerned, he could not find any,

although there are a number of cases to that effect in American jurisdiction, the

respondent Judge had opined in open court that the claim for and the fixing of the

attorney's fees should better be done in a separate action and, in spite of petitioner's

memorandum citing American authorities to the effect that,

Though a party may without the consent of his attorney money make a bona fide

adjustment with the adverse party and dismiss an action or suit before a judgment or a

decree has been rendered thereon, if it appears, however, that such settlement was

collosive and consummated pursuant to the intent of both parties to defraud the attorney,

the court in which the action was pending may interfere to protect him as one of its

officers, by setting aside the order of dismissal, .... (Jackson vs. Stearns, 48 Ore. 25, 84

Pac. 798).

... the respondent Judge, instead of denying the second motion to dismiss and fixing his

attorney's fees in the said case and recording the same as lien, ... dismissed the case

and refused to give herein petitioner any kind of immediate protection to safeguard his

rights ... in said Civil Case No. SC-525 of the Court of First Instance of Laguna.

16. That by the express terms of the agreement, Annex "A" of this petition, plaintiffs in

Civil Case No. SC-525 had expressly ceded to herein petitioner one-half (½) [later

verbally reduced to one-third (1/3) or P1,000.00] or whatever share they would get from

the estate of their deceased uncle Lucio Magtibay, and the defendants in said Civil Case

had full knowledge of said right of herein petitioner in the properties in controversy from

and after the time they were served with summons and copies of the complaint in said

civil case — because of the allegations contained in par. 10 thereof. 7 [Emphasis by the

Court]

18. That on December 5, 1964, herein petitioner filed his motion for reconsideration

dated December 4, 1664 asking for the reconsideration of the order dated November 21,

1964, ..

19. That the motion for reconsideration was denied by the court, thru the respondent

Judge, as per the order dated January 9, 1965, ..

Upon these facts, petitioner tries to make out before this Court a case of certiorari for grave

abuse of discretion on the part of respondent Judge in dismissing the case on the basis of the

compromise agreement of the parties, entered into at the back of petitioner notwithstanding the

reservation made in his favor to file an action against both parties "with respect to his alleged

attorney's fees", as well as a case of mandamus "to order and command the said respondent

judge" to take cognizance of and resolve his opposition and counter-motion for the court to fix the

compensation he should be paid. Unable to find any local precedent to support his position, he

cites American authorities thus:

In the American jurisdiction, it would seem that, even without the specific provisions of the rules

of court cited above, courts had always intervened, in the mere exercise of their inherent powers,

to protect attorneys against collusive agreements or fraudulent settlements entered into by the

parties in a case to cheat attorneys out of their costs or of their fees. Thus, it was held or had

been stated in:

(a) Coughlin vs. N.Y. Cont. & H.R.R. Co., 71 N.Y. 443, 27 Am. Rep. 75.

... But since the time of Lord Mansfield, it has been the practice of courts to intervene to

protect attorneys against settlement made to cheat them out of their costs. If an attorney

has commenced an action, and his client settles it with the opposite party before

judgment, collusively, to deprive him of his costs, the court will permit the attorney to go

on with the suit for the purpose of collecting his costs. Swain v. Senate, 5 Bos. & Pul. 99;

Cole v. Bennett, 6 Price, 15; Moore v. Cook, 13 Id. 473; Talcott v. Bronson, 4 Paige, 501;

Rusquin v. The Knickerbocker Stage Col., 12 Abb. Pr 324; Ward v. Syme, 9 How. Pr. 16;

McDonald v. Napier, 14 Ga. 89.

There are many cases where this had been allowed to be done. It is impossible to

ascertain precisely when this practice commenced, nor how originated, nor upon what

principle it was based. It was not upon the principle of a lien, because an attorney has no

lien upon the cause of as it upon the action before judgment for his costs; nor was it upon

principle that his services had produced the money paid his client upon the settlement,

because that could not be known, and in fact no money may have been paid upon the

settlement. So far as I can perceive, it was based upon no principle. It was a mere

arbitrary exercise of power by the courts; not arbitrary in the sense that it was unjust or

improper, but in the sense that it was not based upon any right or principle recognized in

other cases. The parties being in court, and a suit commenced and pending, for the

purpose of protecting attorneys who were their officers and subject to their control, the

courts invented this practice and assumed this extraordinary power to defeat attempts to

cheat the attorneys out of their costs. The attorney's fees were fixed in definite sums,

easily determined by taxation and this power was exercised to secure them their fees.

(pp. 76-77)

(b) Randall v. Van Wagenan et al., 22 N.E. 361, 362.

... But where such settlement is made collusively for the purpose of defrauding the

attorney out of his costs, courts have been accustomed to intervene, and to protect the

attorney by permitting him to proceed with the suit, and, if he is able to establish a right to

recover on the cause of action as it originally stood, to permit such recovery to the extent

of his costs in the action. Coughlin v. Railroad Co., 71 N. Y. 443, and pages cited. And the

court will set aside an order of discontinuance if it stands in the way. This is an adequate

remedy, and we think the exclusive remedy where the suit has been fraudulently settled

by the parties before judgment to cheat the attorney out of his costs. We have found no

case of an equitable action to enforce the inchoate right of an attorney, under such

circumstances, and no such precedent ought, we think, to be established.

(c) Jackson v. Stearns, et al., 43 Ore 25, 84 Pac. 798.

... Though a party may, without the consent of his attorney, make a bona fide adjustment

with the adverse party, and dismiss an action or suit before a judgment or a decree has

been rendered therein, if it appears, however, that such settlement was collusive and

consummated pursuant to the intent of both parties to defraud the attorney, the court in

which the action or suit was pending may interfere to protect him, as one of its officers,

by setting aside the order of dismissal and permitting him to proceed in the cause in the

name of his client to final determination to ascertain what sum of money, or interest in the

subject-matter, if any, is due him for his services when fully performed. Jones v. Morgage

99 Am. Dec. 458; Randall v. Van Wagenen (N.Y.) 22 N.E. 361, 12 Am. St. Rep. 828. (p.

800)

Before a court will set aside an order dismissing a suit or an action, made upon

stipulation of the parties, without the consent of plaintiff's attorney, and allow the latter to

proceed with the cause in the name of his client, to determine the amount of fees due

him, it must appear that the defendant participated in the fraudulent intent to deprive the

attorney of his compensation. Courtney v. McGavock, 25 Wis. 619. When no adequate

consideration is given by the defendant for the settlement and discharge of an action or a

suit, the insufficiency of the inducement to the contract affords evidence of his bad faith.

Young v. Dearborn, 27 N.E. 324. It will be remembered that the complaint alleges that the

value of the real property in question is $3,000.00, and that Stearns executed to Wilson a

deed to the premises for a nominal consideration. This is a sufficient averment of the

defendant's intent to deprive the plaintiff of his compensation thereby imputing to Wilson

bad faith. (p. 800)

(d) Desaman v. Butler Bros., 188 Minn. 198, 136 N.W. 747.

We have recently held that a client has always the right to settle his cause of action and

stop litigation at any stage of the proceeding, subject, however, to the right of the attorney

to receive compensation for services rendered. Burho v. Camichael 135 N.W. 386. It is

therefore contended by defendant that a litigant retains the unrestricted right to determine

for what amount the cause of action may be settled, and, having so done, the lien of his

attorney for services is measured by the amount determined on and actually settled for.

Conceding, without deciding, that this may be true of any time prior to the rendition of a

verdict in the action which the attorney has been employed to bring, we are of opinion

that after verdict fixing the amount of a plaintiff's cause of action a secret and collusive

compromise between parties litigant does not affect the amount of the attorney's lien...;

but therein is also clearly indicated by Mr. Justice Brown that, if there be fraud and

collusion to deprive the attorney of his lien, the settlement will not be permitted to

accomplish such result. (p. 748)

To be sure, these authorities are quite persuasive, but contrary to petitioner's impression, there is

already a precedent setting decision of this Court handed down way back in 1922 in a case very

similar to his, that in Rustia vs. the Judge of the Court of First Instance of Batangas, et al., 44

Phil. 62. As it is very brief, it can be quoted in full:

This is a petition for a writ of certiorari, the petitioner alleging that the respondent Judge of the

Court of First Instance exceeded his jurisdiction in dismissing a pending action at the instance of

the parties but without the intervention of the attorney for the plaintiff in the case, the herein

petitioner.

It appears from the record that on July 31, 1921, the respondent Justo Porcuna, for himself and

on behalf of his wife, the respondent Rosa H. de Porcuna, by means of a written contract,

retained the petitioner to represent them as their lawyer in case No. 1435 then pending in the

Court of First Instance of Batangas and in which Rosa H. de Porcuna was the plaintiff and one

Eulalia Magsombol was the defendant. The contract fixed the petitioner's fee at P200 in advance

with an additional contingent fee of P1,300. It was also provided in the contract that Justo

Porcuna should not compromise the claim against the defendant in the case without express

consent of his lawyer, the herein petitioner.

After trial, the petitioner then being plaintiff's attorney of record, the Court of First Instance, under

date of December 24, 1921, rendered judgment in favor of Justo Porcuna and Rosa H. de

Porcuna ordering the defendant Eulalia Magsombol to return to them 602 pieces of cloth or in

default thereof to pay to them the sum of P3,250. On January 14, 1922, Eulalia Magsombol filed

her exception to the judgment and on the following day presented a motion for a new trial, which

was denied on the 21st of the same month. She thereupon gave notice of appeal and presented

a bill of exceptions which was approved on February 20, 1922. On March 2, 1922, and before the

transmission of the bill of exceptions to this court, the plaintiffs presented the following motion in

the Court of First Instance:

The plaintiffs, without any further intervention of their attorney, now appear before this

Honorable Court and respectfully aver:

That, through Mr. Miguel Olgado they already settled this case with the herein defendant.

That the basis of the compromise is that we, the plaintiffs, finally agree that we should be

paid the amount of eight hundred pesos (P800) in two installments; P300 to be paid on

this same date, and the remaining five hundred pesos (P500) at the end of March, 1922.

That we, the plaintiffs, recognize not to have any further rights in this case than to the

aforesaid amount of eight hundred pesos (P800) and that this is the total amount the

defendant Eulalia Magsombol should pay us, and we have no right whatever to any other

amount than the aforementioned.

That we have not sold to any other person our rights as plaintiffs in this case.

Wherefore, the plaintiffs respectfully request the dismissal of this case, without any

pronouncement as to costs, and that the appeal interposed by the defendant be further

dismissed.

Batangas, Batangas, P.I., March 2, 1922.

(Sgd) ROSA H. PORCUNA

Plaintiff

JUSTO M. PORCUNA

Plaintiff

The defendant, through her attorney, Jose Mayo Librea, having signified her assent to

the motion, the Court of First Instance on the same day, March 2, dismissed the action

without notice to counsel for the plaintiffs.

The petitioner alleges that he did not discover the dismissal of the action until April 4,

1922. After an unsuccessful effort to obtain a reconsideration of the order of dismissal

from the trial court, he filed the present petition for a writ of certiorari. By resolution dated

October 24, 1922, this court denied the petition and upon motion of the petitioner we

shall now briefly state our reasons for such denial.

The burden of the petitioner's contention is (1) that he, as attorney of record, was entitled

to notice of his client's motion to dismiss the case, and (2) that after the approval of the

bill of exceptions the lower court had lost jurisdiction of the case and had no power to

dismiss it. A moment's reflection should make it clear that neither of these propositions is

tenable.

Both at the common law and under section 32 of the Code of Civil Procedure a client

may dismiss his lawyer at any time or at any stage of the proceedings and there is

nothing to prevent a litigant from appearing before the court to conduct his own litigation.

(Sec. 34, Code of Civil Procedure.) The client has also an undoubted right to compromise

a suit without the intervention of his lawyer.

Though there is a valid agreement for the payment to the attorney of a large proportion of

the sum recovered in case of success this does not give the attorney such an interest in

the cause of action that it prevents plaintiff from compromising the suit. (4 Cyc. 990, and

authorities cited in Note 6; see also Louque vs. Dejan 129 La. 519; Price vs. Western

Loan & Savings Co., 19 Am. Cas. 589 and Note.)

In the present instance the clients did nothing that they did not have a perfect right to do.

By appearing personally and presenting a motion they impliedly dismissed their lawyer.

The petitioner's contingent interests in the judgment rendered did not appear of record.

Neither as a party in interest nor as and attorney was he therefore entitled to notice of the

motion.

As to the second proposition that the court below could not dismiss the case after the bill

of exceptions had been approved, it is very true that upon such approval the lower court

loses its jurisdiction over all contentious matters connected with the issues in the case.

But there is nothing to prevent all of the parties by agreement to withdraw the bill of

exceptions with the consent of said court and resubmit the case to the jurisdiction of the

court. That was all that was done in this case. A valid agreement between the parties to a

case is the law of the case in everything covered by the agreement. (Civil Code, art.

1091; Compania General de Tabacos vs. Obed, 13 Phil. 391.) The petitioner might have

protected his interests by entering an attorney's lien under section 37 of the Code of Civil

Procedure.

The petition for a writ of certiorari was therefore properly denied. So ordered.

The difference We perceive, however, between petitioner's case, on the one hand, and that of

Atty. Rustia, in the above decision, on the other, is that in the latter's case, neither the court nor

the party adverse to his clients were aware of the exact agreement as to his fees, whereas in the

case of petitioner, both the court and the other parties knew the terms of the contract for

professional services between petitioner and his clients, the Magtibay brothers, because the

written contract therefor, Annex A, was made part of the complaint, and none seriously disputes

its authenticity. Besides, the court had already dismissed the case when Atty. Rustia raised the

question of his fees before the court; in petitioner's instance, he opposed the motion to dismiss

and pleaded with the court to protect his rights as officer of the court before the first order in

question was issued by respondent judge. Were it not for these differences, We would have

inclined towards denying the herein petition in line with the Rustia ruling that, in any event,

certiorari is not the appropriate remedy, the American authorities cited by petitioner not

withstanding.

Withal, there is another Philippine case which Us to sustain petitioner. In the case of Recto vs.

Harden, 100 Phil. 440, Atty. Claro M. Recto found himself practically in the same situation as

petitioner herein. After Atty. Recto had rendered services to Mrs. Esperanza P. de Harden in a

protracted suit against her husband for the purposes of securing an increase of her and her

daughter's monthly support, (the spouses were separated), to P10,000.00 and of protecting and

preserving her rights in the properties of the conjugal partnership, which suit lasted from 1941 to

1949, and after the Court of First Instance of Manila had rendered a judgment favorable to Mrs.

Harden acknowledging, inter alia, her rights to the assets of the conjugal partnership, which

turned out to be P4,000,000, and awarding her a monthly support of P2,500, practically as

prayed for in Atty. Recto's pleadings, while the case was already pending on appeal before this

Court, Mrs. Harden and her husband, Mr. Fred Harden, entered into a compromise of their case,

without the knowledge of Atty. Recto, whereby said spouses "purportedly agreed to settle their

differences in consideration of the sum of P5,000 paid by Mr. Harden to Mrs. Harden, and a

monthly pension of $500 to be paid by him to her; (2) Mr. Harden created a trust fund of $20,000

from which said monthly pension of $500 would be taken; and (3) Mr. and Mrs. Harden had

mutually released and forever discharged each other from all actions, debts, duties, accounts,

demands and claims to the conjugal partnership, in consideration of the sum of $1." (p. 435)

Whereupon Atty. Recto filed a motion with this Court praying that:

a) Pending the resolution of this motion, the receiver appointed herein be authorized to continue

holding the properties above mentioned in his custody in order not to defeat the undersigned's

inchoate lien on them;

b) A day set aside to receive the evidence of the undersigned and those of the plaintiff and the

defendant Fred M. Harden, in order to determine the amount of fees due to the undersigned, by

the appointment of a referee or commissioner for the reception of such evidence;

c) After due hearing, the undersigned be declared entitled to the sum of P400,000 as his fees for

services rendered in behalf of the plaintiff in this case, under paragraph 3 of the contract, Annex

"A" and to that end a charging lien therefore be established upon the properties above-

mentioned;

d) And the receiver be ordered to pay to the undersigned the full amount of the fees to which the

latter is found to be entitled.

This motion was objected to by Mr. Hardens counsel, who in turn, moved for the dismissal of the

case, to which Atty. Recto objected. Under these circumstances, this Court acceded to Atty.

Recto's prayer that the case be not dismissed, that the receivership be maintained except as to

certain properties not material to mention here, and that the case be remanded to the lower court

so that his fees may be determined and ordered paid. Upon the remand of the case to the lower

court, a commissioner was appointed to hear the matter of the amount of the fees in question,

and after the commissioner had submitted a report recommending the payment to Atty. Recto of

the 20,70 attorney's fees stipulated in the contract for his services, equivalent to P369,410.04,

the court rendered judgment as follows:

The contingent fee to which the claimant is entitled under paragraph 3 of the contract, Exhibit JJJ

or 20, is 20% of P1,920,554.85 or the sum of P384,110.97.

WHEREFORE, this Court hereby approves the recommendation of the Commissioner with the

above-stated modification, and finds that Attorney Claro M. Recto is entitled to the sum of

THREE HUNDRED EIGHTY-FOUR THOUSAND ONE HUNDRED AND TEN PESOS AND

NINETY-SEVEN CENTAVOS (P384,110.97), representing 20% of Esperanza P. de Harden's

share in the conjugal properties owned by her and her husband, Fred M. Harden, as contingent

fee stipulated in paragraph 3 of the Contract of Professional Services, Exhibit JJJ or 20, and the

said Esperanza P. de Harden is hereby ordered to pay the said amount above-stated.

On appeal from this judgment to this Court, the same was affirmed, the decision stating

pertinently in part:

The last objection is based upon principles of equity, but, pursuant thereto, one who seeks equity

must come with clean hands (Bastida et al. vs. Dy Buncio & Co.,93 Phil. 195; 30 C.J.S. 475), and

appellants have not done so, for the circumstances surrounding the case show, to our

satisfaction, that their aforementioned agreements, ostensibly for the settlement of the

differences between husband and wife, were made for the purpose of circumventing or defeating

the rights of herein appellee, under his above-quoted contract of services with Mrs. Harden.

Indeed, having secured a judgment in her favor, acknowledging her rights to the assets of the

conjugal partnership, which turned out to be worth almost P4,000,000 in addition to litis

expensae in the sum of P175,000, it is inconceivable that Mrs. Harden would have waived such

rights, as well as the benefits of all orders and judgments in her favor, in consideration of the

paltry sum of $5,000 allegedly paid to her by Mr. Harden and the additional sum of $20,000 to be

paid by him in installments, at the rate of $500 a month. In fact, no explanation has been given

for this moat unusual avowed settlement between Mr. and Mrs. Harden. One can not even

consider the possibility of a reconciliation between the spouses, the same being inconsistent with

the monetary consideration for said alleged settlement. What is more, the records show that the

relations between said spouses — which were bad indeed, not only in July, 1941, when Mrs.

Harden engaged the services of the appellee, but, even, before, for Mr. and Mrs. Harden were

separated since 1938 — had worsened considerably thereafter, as evidenced by an action for

divorce filed by Mr. Harden in New Jersey, in July 1948, upon the ground of repeated acts of

infidelity allegedly committed by Mrs. Harden in 1940 and 1941.

On the same considerations of equity, and for the better protection of lawyers, who, trusting in

the good faith of their clients, render professional services on contingent basis, and so that it may

not be said that this Court, sanctions in any way the questionable practice of clients of

compromising their cases at the back of their counsel with the consequence that the stipulated

contingent fees of the lawyer are either unreasonably reduced or even completely rendered

without basis, as in this case — wherein the clients waived the whole of their rights in favor of

their opponent after the latter had acknowledged, in effect, the correctness of said clients'

contention — We have decided to grant the herein petition, in so far as the rights of petitioner

have been prejudiced by the questioned compromise agreement. While We here reaffirm the rule

that "the client has an undoubted right to compromise a suit without the intervention of his

lawyer",[[8]] We hold that when such compromise is entered into in fraud of the lawyer, with intent

to deprive him of the fees justly due him, the compromise must be subject to the said fees, and

that when it is evident that the said fraud is committed in confabulation with the adverse party

who had knowledge of the lawyer's contingent interest or such interest appears of record and

who would benefit under such compromise, the better practice is to settle the matter of the

attorney's fees in the same proceeding, after hearing all the affected parties and without

prejudice to the finality of the compromise in so far as it does not adversely affect the rights of the

lawyer. Surely, "the client cannot, by setting, compromising or dismissing his suit during its

pendency, deprive the attorney of his compensation for the agreed amount, unless the lawyer

consents to such settlement, compromise or dismissal", (Legal and Judicial Ethics by Martin,

1967 Rev. Ed p. 121) for the, attorney is or "Shall be entitled to have and recover from his client -

a reasonable compensation (not more) for his services, with a view to the importance of the

subject-matter of the controversy, the extent of the services rendered, and the professional

standing of the attorney", (Sec. 24, Rule 138, on Attorney and Admission to Bar) albeit, under

Canon 12 of the Canons of Professional Ethics, "in fixing fees, it should not be forgotten that the

profession is a branch of the administration of justice and not a mere money-getting trade."

True it is also that "a client may, at anytime, dismiss his attorney or substitute another in his

place", (Sec. 26, Rule 138) but it must be emphasized that the same provision, which is an

incorporation of Republic Act 636 into the Rules of Court, also provides that "if the contract

between client and attorney had been reduced to writing and the dismissal of the attorney was

without justifiable cause, he shall be entitled to recover from the client full compensation ..." In

the case at bar, by entering into the compromise agreement in question and even inserting

therein a prayer to the court to dismiss their case filed by petitioner, (see footnote 6, ante)

petitioner's clients impliedly dismissed him. (Rustia vs. the Court, etc., supra.) Such implied

dismissal appears to Us to have been made without justifiable cause, none is urged anywhere in

the record, and so, the above-quoted provision of Section 26, Rule 138 applies here. The terms

of the compromise in question, as spelled out in Annex A of Annex I of the petition, indicate

clearly that Aurelia Martinez, the defendant aunt in-law of petitioner's clients, acknowledged that

the rights of said clients were practically as alleged by petitioner in the complaint he filed for

them. In other words, through the services of petitioner, his clients secured, in effect, a

recognition, which had been previously denied by their aunt-in-law, that they were entitled to a ¼

share in the estate left by their uncle. We hold that under these circumstances, and since it

appears that said clients have no other means to pay petitioner, since they instituted their case

as paupers, and that their aunt-in-law was aware of the terms of their contract of professional

services with petitioner', said clients had no right to waive the portion of their such acknowledged

rights in favor of their opponent to the extent that such waiver would prejudice the stipulated

contingent interest of their lawyer and their aunt-in-law had no right to accept such waiver

unqualified. The Civil Code enjoins that:

ART. 19. Every person must, in the exercise of his rights and in the performance of his duties, act

with justice, give everyone his due, and observe honesty and good faith.

Under the circumstance extant in the record, it is clear that the compromise agreement in

question falls short of the moral requirements of this quoted article of the Civil Code. If for this

reason alone, it should not be allowed to prejudice the rights of petitioner. Accordingly, as all of

these circumstances were presented to respondent judge before he issued the challenged order

of dismissal and all the parties were heard thereon, it was incumbent upon His Honor, in equity

and to avoid multiplicity of suits, particularly, because the amount claimed by petitioner is only

P1,000.00, to have directly passed upon petitioner's claim, and not having done so, it would

appear that the court a quo abused its discretion gravely enough to warrant the writ of certiorari

herein prayed for in so far as the questioned orders prejudiced petitioner's right to the fees for the

professional services which appear to have been creditably rendered by him. Respondents

allege that the judgment of dismissal in question is already final because no appeal was taken

therefrom, but since We hold that the same was rendered with enough grave abuse of discretion

to warrant the certiorari prayed for, such alleged finality could not have materialized; obviously,

petitioner could not have appealed, not being a party in the case.

IN VIEW OF THE FOREGOING, the orders of the respondent court dated November 21, 1964

and January 9, 1965 in Civil Case No. SC-525 are hereby set aside in so far as they prejudice

the payment of petitioner's claim of attorney's fees in the form of either one-third of the ¼ share

acknowledged as his clients in the compromise in question or P1,000.00, which should constitute

as a lien on the said share, in spite of the waiver thereof in favor of respondent Aurelia Martinez.

It is unnecessary to consider the petition for mandamus. Costs against, private respondents.

Reyes, J.B.L., Dizon,: Makalintal, Zaldivar, Sanchez, Fernando and Teehankee, JJ., concur.

Concepcion, C.J. and Castro, J., are on leave.

[A.C. No. 4078. July 14, 2003]

WILLIAM ONG GENATO, complainant, vs. ATTY. ESSEX L. SILAPAN, respondent.

D E C I S I O N

PUNO, J.:

In this complaint for disbarment filed by William Ong Genato against respondent Atty. EssexL. Silapan, complainant alleged that in July 1992, respondent asked if he could rent a small officespace in complainant’s building in Quezon City for his law practice. Complainant acceded andintroduced respondent to Atty. Benjamin Dacanay, complainant’s retained lawyer, whoaccommodated respondent in the building and made him handle some of complainant’scases. Hence, the start of the legal relationship between complainant and respondent.

The conflict between the parties started when respondent borrowed two hundred thousandpesos (P200,000.00) from complainant which he intended to use as downpayment for thepurchase of a new car. In return, respondent issued to complainant a postdated check in theamount of P176,528.00 to answer for the six (6) months interest on the loan. He likewisemortgaged to complainant his house and lot in Quezon City but did not surrender its title claimingthat it was the subject of reconstitution proceedings before the Quezon City Register of Deeds.

With the money borrowed from complainant, respondent purchased a new car. However,the document of sale of the car was issued in complainant’s name and financed through CityTrust Company.

In January 1993, respondent introduced to complainant a certain EmmanuelRomero. Romero likewise wanted to borrow money from complainant. Complainant lentRomero the money and, from this transaction, respondent earned commission in the amountof P52,289.90. Complainant used the commission to pay respondent’s arrears with the carfinancing firm.

Subsequently, respondent failed to pay the amortization on the car and the financing firmsent demand letters to complainant. Complainant tried to encash respondent’s postdated checkwith the drawee bank but it was dishonored as respondent’s account therein was already closed.

Respondent failed to heed complainant’s repeated demands for payment. Complainantthen filed a criminal case against respondent for violation of Batas Pambansa Blg. 22 anda civil case for judicial foreclosure of real estate mortgage.

In the foreclosure case, respondent made the following allegation in his Answer:

x x x x xx x x x

4. That complainant is a businessman who is engaged in the real estate business, trading and buy and sell of deficiency taxed imported cars, shark loans and other shady deals andhas many cases pending in court;

x x x x xx x x x

Complainant denied respondent’s charges and claimed that respondent’s allegation islibelous and not privilege as it was irrelevant to the foreclosure case. Complainant furtherpointed to paragraph 12 of respondent’s Answer, thus:

12. That on January 29, 1993, before paying for the next installment on his car on January 30, 1993, defendant Essex L. Silapan asked the complainant to execute a Deed of Sale transferring

ownership of the car to him but the latter said that he will only do so after the termination of his criminal case at Branch 138 of the Regional Trial Court of Makati, Metro Manila, x x x where he (complainant) wanted Essex L. Silapan, his former counsel in that case, to offer bribe money to the members of the review committee of the Department of Justice where a petition for review of the resolution of the Investigating Prosecutor was pending at the time, x x x or, in the event that the said petition for review is denied, he wanted Essex L. Silapan to offer bribe money to the prosecutor assigned at the above-mentioned Court, and even to the presiding Judge, for his eventual acquittal, which defendant Essex L. Silapan all refused to do not only because such acts are immoral and illegal, but also because the complainant confided to him that he was really involved in the commission ofthe crime that was charged of in the above-mentioned case. (emphasis supplied)

Complainant gripes that the foregoing allegations are false, immaterial to the foreclosurecase and maliciously designed to defame him. He charged that in making such allegations,respondent is guilty of breaking their confidential lawyer-client relationship and should be heldadministratively liable therefor. Consequently, he filed this complaint for disbarment, praying alsothat an administrative sanction be meted against respondent for his issuance of a bouncingcheck.

When required by the Court to comment, respondent explained[1] that it was complainantwho offered him an office space in his building and retained him as counsel as the latter wasimpressed with the way he handled a B.P. 22 case[2] filed against complainant. Respondentinsisted that there was nothing libelous in his imputations of dishonest business practices tocomplainant and his revelation of complainant’s desire to bribe government officials in relation tohis pending criminal case. He claimed to have made these statements in the course of judicialproceedings to defend his case and discredit complainant’s credibility by establishing his criminalpropensity to commit fraud, tell lies and violate laws. He argued that he is not guilty of breakinghis confidential lawyer-client relationship with complainant as he made the disclosure in defenseof his honor and reputation.

Secondly, respondent asserted that he executed the real estate mortgage in favor ofcomplainant without consideration and only as a “formal requirement” so he could obtaintheP200,000.00 loan and for this reason, he did not surrender his title over the mortgagedproperty to complainant.

Thirdly, respondent claimed that he issued the postdated check, not for account or for value,but only: (a) to serve as “some kind of acknowledgment” that he already received in advance aportion of his attorney’s fees from the complainant for the legal services he rendered, and (b) asa form of assurance that he will not abandon the cases he was handling for complainant.

Lastly, respondent denied that he received a P52,289.90 commission from Romero’s loanwhich he allegedly helped facilitate. He alleged that the amount was paid to him by Romero asattorney’s fees, the latter being his client. He used this amount to pay his arrears with the carfinancing firm. On January 29, 1993, before paying the next amortization on the car, he askedcomplainant to execute a deed of sale transferring ownership of the car to him. Complainantrefused and insisted that he would transfer ownership of the car only after the termination of hiscriminal case which respondent was handling as his defense lawyer. Consequently, respondentstopped paying the amortization on the car. Respondent also alleged that he filed a perjurycase against complainant who, in turn, filed a complaint for libel against him.

In a Resolution, dated October 27, 1993, the Court referred the administrative case to theIntegrated Bar of the Philippines (IBP) for investigation, report and recommendation.

On August 3, 2002, the Board of Governors of the IBP approved the report of theinvestigating commissioner finding the respondent guilty as charged and recommending hissuspension from the practice of law for one (1) year.

We affirm the findings and recommendation of the IBP.

Prefatorily, we stress that we shall not delve into the merits of the various criminal and civilcases pending between the parties. It is for the trial courts handling these cases to ascertain thetruth or falsity of the allegations made therein. For this reason, it is not for us to sanctionrespondent for his issuance of a bouncing check. His liability has yet to be determined by thetrial court where his case is pending.

The only issue in this administrative case is whether respondent committed a breach of trustand confidence by imputing to complainant illegal practices and disclosing complainant’s allegedintention to bribe government officials in connection with a pending case.

Canon 17 of the Code of Professional Responsibility provides that a lawyer owes fidelity tothe cause of his client and shall be mindful of the trust and confidence reposed on him. Thelong-established rule is that an attorney is not permitted to disclose communications made to himin his professional character by a client, unless the latter consents. This obligation to preservethe confidences and secrets of a client arises at the inception of their relationship. [3] Theprotection given to the client is perpetual and does not cease with the termination of the litigation,nor is it affected by the party’s ceasing to employ the attorney and retaining another, or by anyother change of relation between them. It even survives the death of the client.[4]

It must be stressed, however, that the privilege against disclosure of confidentialcommunications or information is limited only to communications which are legitimately andproperly within the scope of a lawful employment of a lawyer. It does not extend to those madein contemplation of a crime or perpetration of a fraud.[5] If the unlawful purpose is avowed, as inthis case, the complainant’s alleged intention to bribe government officials in relation to his case,the communication is not covered by the privilege as the client does not consult the lawyerprofessionally. It is not within the profession of a lawyer to advise a client as to how he maycommit a crime as a lawyer is not a gun for hire. Thus, the attorney-client privilege does notattach, there being no professional employment in the strict sense.

Be that as it may, respondent’s explanation that it was necessary for him to make thedisclosures in his pleadings fails to satisfy us. The disclosures were not indispensable to protecthis rights as they were not pertinent to the foreclosure case. It was improper for the respondentto use it against the complainant in the foreclosure case as it was not the subject matter oflitigation therein and respondent’s professional competence and legal advice were not beingattacked in said case. A lawyer must conduct himself, especially in his dealings with his clients,with integrity in a manner that is beyond reproach. His relationship with his clients should becharacterized by the highest degree of good faith and fairness.

Thus, the Court agrees with the evaluation of the IBP and finds that respondent’s allegationsand disclosures in the foreclosure case amount to a breach of fidelity sufficient to warrant theimposition of disciplinary sanction against him. However, the recommended penalty of one (1)

year suspension of respondent from the practice of law seems to be disproportionate to hisbreach of duty considering that a review of the records of this Court reveals that this is the firstadministrative complaint against him.

IN VIEW WHEREOF, respondent Atty. Essex L. Silapan is ordered suspended from thepractice of law for a period of six (6) months effective upon receipt of this Decision. Let a copy ofthis Decision be furnished the Office of the Bar Confidant and the Integrated Bar of thePhilippines. The Court Administrator is directed to circulate this order of suspension to all courtsin the country.

SO ORDERED.

Panganiban, Corona, and Carpio-Morales, JJ., concur.

Sandoval-Gutierrez, J., on official leave.

[A.C. No. 4215. May 21, 2001]

FELICISIMO M. MONTANO, complainant, vs. INTEGRATED BAR of the PHILIPPINES ANDAtty. JUAN S. DEALCA, respondents.

R E S O L U T I O N

KAPUNAN, J.:

In a verified complaint filed before this Court on March 9, 1994, complainant Felicisimo M.Montano charged Atty. Juan Dealca with misconduct and prays that he be “sternly dealt witadministratively.” The complaint[1] is summarized as follows:

1. On November 14, 1992, the complainant hired the services of Atty. Juan S. Dealca as hiscounsel in collaboration with Atty. Ronando L. Gerona in a case pending before the Court ofAppeals docketed as CA-G.R. CV No. 37467 wherein the complainant was the plaintiff-appellant.

2. The parties agreed upon attorney’s fees in the amount of P15,000.00, fifty percent (50%)of which was payable upon acceptance of the case and the remaining balance upon thetermination of the case. Accordingly, complainant paid respondent the amount of P7,500.00representing 50% of the attorney’s fee.

3. Thereafter, even before the respondent counsel had prepared the appellant’s briefand contrary to their agreement that the remaining balance be payable after the termination ofthe case, Atty. Dealca demanded an additional payment from complainant. Complainant obligedby paying the amount of P4,000.00.

4. Prior to the filing of the appellant’s brief, respondent counsel again demand payment ofthe remaining balance of 3,500.00. When complainant was unable to do so, respondent lawyerwithdrew his appearance as complainant’s counsel without his prior knowledge and/orconformity. Returning the case folder to the complainant, respondent counsel attached a Notedated February 28, 1993,[2] stating:

28 February 1994

Pepe and Del Montano,

For breaking your promise, since you do not want to fulfill your end of the bargain, here’s your reward:

Henceforth, you lawyer for yourselves. Here are your papers.

Johnny

Complainant claimed that such conduct by respondent counsel exceeded the ethicalstandards of the law profession and prays that the latter be sternly dealt withadministratively. Complainant later on filed motions praying for the imposition of the maximumpenalty of disbarment.

After respondent counsel filed his comment on the complaint, the Court in the Resolution ofAugust 1, 1994, referred the case to the Integrated Bar of the Philippines (IBP) for investigation,report and recommendation.

The Investigating Commissioner found respondent counsel guilty of unprofessional conductand recommended that he be “severely reprimanded.” However, in a Resolution [3] by the IBPBoard of Governors on July 26, 1997, it was resolved that the penalty recommended by theInvestigating Commissioner meted to respondent by amended to “three (3) months suspensionfrom the practice of law for having been found guilty of misconduct, which eroded the publicconfidence regarding his duty as a lawyer.”

Respondent counsel sought reconsideration of the aforementioned resolution of the IBP,alleging that the latter misapprehended the facts and that, in any case, he did not deserve thepenalty imposed. The true facts, according to him, are the following:

1. Complainant is being represented by Atty. Ronando L. Gerona in his case on appeal;

2. Due to the ailment of Atty. Gerona’s daughter, he could not prepare and submitcomplainant’s appellant’s brief on time;

3. Complainant went to the respondent to do just that, i.e., prepare and submit hisappellant’s brief on time at the agreed fee of P15,000.00, 50% down and 50% uponits completion;

4. Working overtime, respondent was able to finish the appellant’s brief ahead of itsdeadline, so he advised the complainant about its completion with the request thatthe remaining balance of P7,500.00 be paid. Complainant paid P4,000.00 only,promising to pay the P3,500.00 “tomorrow” or on “later particular date.” Please takenote that, at this juncture, there was already a breach of the agreement oncomplainant’s part.

5. When that “tomorrow” or on a “later particular date” came, respondent, thru amessenger, requested the complainant to pay the P3,500.00 as promised but wordwas sent that he will again pay “tomorrow” or on “later date.” This promise-non-payment cycle went on repeatedly until the last day of the filing of the brief. Pleasetake note again that it was not the respondent but the complainant who sets the datewhen he will pay, yet fails to pay as promised;

6. Even without being paid completely, respondent, of his own free will and accord, filedcomplainant’s brief on time;

7. After the brief was filed, respondent tried to collect from the complainant theremaining balance of P3,500.00, but the latter made himself scarce. As the recordswould show, such P3,500.00 remains unpaid until now;

8. Sensing that something was amiss, respondent sent the February 28, 1993 note andcase folder to the complainant, hoping that the latter would see personally the formerabout it to settle the matter between them;

9. However, instead of seeing the respondent, complainant filed this case;

10. Respondent was constrained to file his withdrawal with the Court of Appealsbecause of this case to avoid further misunderstanding since he was the one whosigned the appellant’s brief although Atty. Gerona was his counsel of record. Suchwithdrawal was accordingly granted by the appellate court;

xxx xxx xxx.[4]

Respondent counsel further averred that complainant’s refusal to pay the agreed lawyer’sfees, measly as it was, was deliberate and in bad faith; hence, his withdrawal as counsel was“just, ethical and proper.” Respondent counsel concluded that not only was the penalty ofsuspension harsh for his act of merely trying to collect payment for his services rendered, but itindirectly would punish his family since he was the sole breadwinner with children in school andhis wife terminally ill with cancer.

In its Resolution No. XIII-97-129 dated October 25, 1997, the IBP denied Atty. Dealca’smotion for reconsideration, to wit:

xxx

RESOLVED TO DENY Atty. Dealca’s Motion For Reconsideration of the Board’s Decision in the above-entitled case there being no substantive reason to reverse the finding therein. Moreover, the motion is improperly laid the remedy of the respondent is to file the appropriate pleading with the Supreme Court within fifteen (15) days from receipt of notice of said Decision pursuant to Sec. 12 [c] of Rule 139-B.[5]

On December 10, 1997, this Court noted the following pleadings filed in the presentcomplaint,

(a) notice and a copy of Resolution No. XII-97-154 dated July 26, 1997 of theIntegrated Bar of the Philippines amending the recommendation of the InvestigatingCommissioner of reprimand to three (3) months suspension of respondent from thepractice of law for having been found guilty of misconduct which eroded the publicconfidence regarding his duty as a lawyer;

(b) complainant’s motion for praying for the imposition of the maximum penalty ofdisbarment;

(c) motion dated September 15, 1997 of respondent for reconsideration of theaforesaid resolution of July 26, 1997;

(d) comment/opposition of respondent praying that the motion for the imposition of themaximum penalty be denied;

(e) comment of complainant praying that the penalty of three (3) months suspension forthe practice of law as recommended by the Integrated Bar of the Philippinespursuant to Resolution No. XII-97-154 be raised to a heavier penalty;

(f) comment/manifestation/opposition of complainant praying that the respondent bedisbarred; and

(g) rejoinder of respondent praying that this case be dismissed for being baseless.[6]

and referred the same to the IBP for evaluation and report.

In compliance therewith, on March 28, 1998, the IBP issued Resolution No. XIII-98-42referring the above-entitled case to Commissioner Vibar for evaluation, report andrecommendation “in view of the Motion for Reconsideration granted by the Supreme Court.”

The Investigating Commissioner, after referring the case, recommended that his originalrecommendation of the imposition of the penalty of reprimand be maintained, noting thatrespondent counsel had served the IBP well as President of the Sorsogon Chapter.[7] Accordingly, on February 23, 1999, the IBP Board of Governors, issued the followingresolution:

RESOLUTION NO. XIII-99-48

xxx

RESOLVED to ADOPT and APPROVE, as it is hereby ADOPTED and APPROVED, the Report and Recommendation of the Investigating Commissioner in the above-entitled case, herein madepart of this Resolution/Decision as Annex “A”; and, finding the recommendation fully supported by the evidence on record and the applicable laws and rules, the Motion for Reconsideration be granted and that the penalty of REPRIMAND earlier recommended by the Investigating Commissioner be imposed on Atty. Juan S. Dealca.[8]

Complainant asked the IBP to reconsider the foregoing resolution but the motion wasdenied.[9]

On April 10, 2000, complainant filed with this Court a petition for review on certiorari inconnection with Administrative Case No. 4215 against the IBP and respondent counsel averringthat the IBP Board of Governors committed grave abuse of discretion when it overturned itsearlier resolution and granted respondent counsel’s motion for reconsideration on February 23,1999. He claimed that the earlier resolution denying the motion for reconsideration issued onOctober 25, 1997 had already become final and executory; hence, any further action or motionsubsequent to such final and executory judgment shall be null and void.

When the Court issued the resolution of December 10, 1997 treating the several pleadingsfiled in the present complaint, it should be noted that the IBP resolution denying respondent’smotion for reconsideration (Resolution No. XIII-97-129) dated October 25, 1997, for somereason, had not yet reached this Court. As of that date, the only IBP resolution attached to therecords of the case was Resolution No. XII-97-54 amending the administrative sanction fromreprimand to three months suspension. Hence, at the time the pleadings were referred back tothe IBP in the same resolution, the Court was not aware that the IBP had already disposed of themotion for reconsideration filed by respondent counsel.

Thus, when the IBP was informed of the said Court resolution, it construed the same asgranting Atty. Dealca’s motion for reconsideration and as an order for IBP to conduct a re-evaluation of the case. The IBP assumed that its resolution of October 25, 1997 was alreadyconsidered by this Court when it referred the case back to the IBP. It failed to notice that itsresolution denying the motion for reconsideration was not among those pleadings and resolutionreferred back to it.

Hence, on the strength of this Court’s resolution which it had inadvertently misconstrued, theIBP conducted a re-evaluation of the case and came up with the assailed resolution now soughtto be reversed. The Court holds that the error is not attributable to the IBP. It is regrettable thatthe procedural infirmity alleged by complainant actually arose from a mere oversight which wasattributable to neither party.

Going into the merits, we affirm the findings made by the IBP that complainant engaged theservices of respondent lawyer only for the preparation and submission of the appellant’s briefand the attorney’s fees was payable upon the completion and submission of the appellant’s briefand not upon the termination of the case.

There is sufficient evidence which indicates complainant’s willingness to pay the attorney’sfees. As agreed upon, complainant paid half of the fees in the amount of P7,500.00 uponacceptance of the case. And while the remaining balance was not yet due as it was agreed to bepaid only upon the completion and submission of the brief, complainant nonetheless delivered torespondent lawyer P4,000.00 as the latter demanded. This, notwithstanding, Atty. Dealcawithdrew his appearance simply because of complainant’s failure to pay the remaining balance ofP3,500.00, which does not appear to be deliberate. The situation was aggravated by respondentcounsel’s note to complainant withdrawing as counsel which was couched in impolite andinsulting language.[10]

Given the above circumstances, was Atty. Dealca’s conduct just and proper?

We find Atty. Dealca’s conduct unbecoming of a member of the legal profession. UnderCanon 22 of the Code of Professional Responsibility, lawyer shall withdraw his services only forgood cause and upon notice appropriate in the circumstances. Although he may withdraw hisservices when the client deliberately fails to pay the fees for the services, [11] under thecircumstances of the present case, Atty. Dealca’s withdrawal was unjustified as complainant didnot deliberately fail to pay him the attorney’s fees. In fact, complainant exerted honest efforts tofulfill his obligation. Respondent’s contemptuous conduct does not speak well of a member ofthe bar considering that the amount owing to him was only P3,500.00. Rule 20.4 of Canon 20,mandates that a lawyer shall avoid controversies with clients concerning his compensation andshall resort to judicial action only to prevent imposition, injustice or fraud. Sadly, for not so largea sum owed to him by complainant, respondent lawyer failed to act in accordance with thedemands of the Code.

The Court, however, does not agree with complainant’s contention that the maximumpenalty of disbarment should be imposed on respondent lawyer. The power to disbar must beexercised with great caution. Only in a clear case of misconduct that seriously affects thestanding and character of the lawyer as an officer of the Court and member of the bar willdisbarment be imposed as a penalty. It should never be decreed where a lesser penalty, such astemporary suspension, would accomplish the end desired. [12] In the present case, reprimand isdeemed sufficient.

WHEREFORE, in view of the foregoing, respondent Atty. Juan S. Dealca isREPRIMANDED with a warning that repetition of the same act will be dealt with more severely.

SO ORDERED.

Davide, Jr., C.J. (Chairman), Puno, Pardo, and Ynares-Santiago, JJ., concur.

[1] Rollo, pp. 1-3.

[A.C. No. 3773. September 24, 1997]

ANGELITA C. ORCINO, complainant, vs. ATTY. JOSUE GASPAR, respondent.

R E S O L U T I O N

PUNO, J.:

On June 14, 1992, complainant Angelita C. Orcino filed with this Court a letter-complaintdated December 10, 1991 against respondent Atty. Josue Gaspar, her formercounsel. Complainant prayed that this Court impose disciplinary sanctions on respondent forabandoning his duties and for failing to return the legal fees she fully paid for his services.

The complaint arose from the following facts: Complainant engaged the services ofrespondent to prosecute a criminal case she intended to file against several suspects in theslaying of her husband. In consideration thereof, complainant bound herself to pay respondentlegal fees of P20,000.00 -- P10,000.00 to be paid upon signing of the contract and the balance tobe paid on or before the conclusion of the case. Complainant was also to pay P500.00 perappearance of respondent before the court and fiscal. This agreement was embodied in acontract executed on February 22, 1991.[1]

In accordance with the contract, complainant paid respondent the sum of P5,000.00 onFebruary 25, 1991,[2] another P5,000.00 on March 31, 1991,[3] and P10,000.00 on May 21, 1991,[4] for a total of P20,000.00.

Forthwith, respondent entered into his duties. He interviewed witnesses and gatheredevidence to build a case against the suspects. He drew up the necessary sworn statements and

dutifully attended the preliminary investigation. The case was thereafter filed with the RegionalTrial Court, Branch 37, Baloc, Sto. Domingo, Nueva Ecija.[5]

As private prosecutor, respondent religiously attended the bail hearings for the accusedalthough these hearings were postponed on motion of the accused's counsel. Respondenthowever failed to attend the hearing scheduled in August 1991. It was at this hearing that thecourt, over complainant's objections, granted bail to all the accused. After the hearing,complainant immediately went to respondent's residence and confronted him with his absence.[6] Respondent explained that he did not receive formal notice of the hearing.[7] Complainantbecame belligerent and started accusing him of jeopardizing the case by hisabsence. Respondent said that her suspicions were based on rumors and intrigues fed to her byher relatives.[8] Complainant, however, continued accusing him belligerently. She asked for therecords of the case saying that she could refer them to another lawyer. Stung by her words,respondent gave her the records.[9]

Complainant never returned the records nor did she see respondent. On September 18,1991, respondent filed before the trial court a "Motion to Withdraw as Counsel." [10] The motion didnot bear the consent of complainant.

On October 23, 1991, the court issued an order directing respondent to securecomplainant's consent to the motion "and his appearance as private prosecutor shall continueuntil he has secured this consent."[11]

Complainant refused to sign her conformity to respondent's withdrawal. [12] Meanwhile, thehearings in the criminal case continued. Respondent did not appear at the hearings nor did hecontact complainant. Complainant was thus compelled to engage the services of anotherlawyer. Hence, the letter-complaint.

We referred the letter-complaint to the Integrated Bar of the Philippines, Commission on BarDiscipline, for investigation, report and recommendation.

The rule in this jurisdiction is that a client has the absolute right to terminate the attorney-client relation at any time with or without cause.[13] The right of an attorney to withdraw orterminate the relation other than for sufficient cause is, however, considerably restricted.[14] Among the fundamental rules of ethics is the principle that an attorney who undertakes toconduct an action impliedly stipulates to carry it to its conclusion. [15] He is not at liberty toabandon it without reasonable cause.[16] A lawyer's right to withdraw from a case before its finaladjudication arises only from the client's written consent or from a good cause.[17]

Section 26 of Rule 138 of the Revised Rules of Court provides:

"Sec. 26. Change of attorneys -- An attorney may retire at any time from any action or special proceeding, by the written consent of his client filed in court. He may also retire at any time from an action or special proceeding, without the consent of his client, should the court, on notice to the client and attorney, and on hearing, determine that he ought to be allowed to retire. In case of substitution, the name of the attorney newly employed shall be entered on the docket of the court in place of the former one, and written notice of the change shall be given to the adverse party.

x x x."

A lawyer may retire at any time from any action or special proceeding with the writtenconsent of his client filed in court and copy thereof served upon the adverse party. Should theclient refuse to give his consent, the lawyer must file an application with the court. The court, onnotice to the client and adverse party, shall determine whether he ought to be allowed toretire. The application for withdrawal must be based on a good cause.[18]

In the instant case, complainant did not give her written consent to respondent'swithdrawal. The court thus ordered respondent to secure this consent. Respondent allegedlyinformed the court that complainant had become hostile and refused to sign his motion. [19] He,however, did not file an application with the court for it to determine whether he should beallowed to withdraw.

Granting that respondent's motion without complainant's consent was an application forwithdrawal with the court, we find that this reason is insufficient to justify his withdrawal from thecase. Respondent's withdrawal was made on the ground that "there no longer exist[ed] the xxxconfidence" between them and that there had been "serious diffferences between them relatingto the manner of private prosecution."[20]

Rule 22.01 of Canon 22 of the Code of Professional Responsibility provides:

"CANON 22 -- A LAWYER SHALL WITHDRAW HIS SERVICES ONLY FOR GOOD CAUSE ANDUPON NOTICE APPROPRIATE IN THE CIRCUMSTANCES.

Rule 22.01-- A lawyer may withdraw his services in any of the following cases:

a) When the client pursues an illegal or immoral course of conduct in connection with the matter he is handling;

b) When the client insists that the lawyer pursue conduct violative of these canons and rules;

c) When his inability to work with co-counsel will not promote the best interest of the client;

d) When the mental or physical condition of the lawyer renders it difficult for him to carry out the employment effectively;

e) When the client deliberately fails to pay the fees for the services or fails to comply with the retainer agreement;

f) When the lawyer is elected or appointed to public office; and

g) Other similar cases."

A lawyer may withdraw his services from his client only in the following instances: (a) when aclient insists upon an unjust or immoral conduct of his case; (b) when the client insists that thelawyer pursue conduct violative of the Code of Professional Responsibility; (c) when the clienthas two or more retained lawyers and the lawyers could not get along to the detriment of thecase; (d) when the mental or physical condition of the lawyer makes him incapable of handlingthe case effectively; (e) when the client deliberately fails to pay the attorney's fees agreed upon;(f) when the lawyer is elected or appointed to public office; (g) other similar cases.

The instant case does not fall under any of the grounds mentioned. Neither can this beconsidered analogous to the grounds enumerated. As found by the Commission on BarDiscipline, this case arose from a simple misunderstanding between complainant andrespondent. Complainant was upset by respondent's absence at the hearing where bail wasgranted to the suspected killers of her husband. She vehemently opposed the grant of bail. Itwas thus a spontaneous and natural reaction for her to confront respondent with hisabsence. Her belligerence arose from her overzealousness, nothing more. Complainant's wordsand actions may have hurt respondent's feelings considering the work he had put into thecase. But her words were uttered in a burst of passion. And even at that moment, complainantdid not expressly terminate respondent's services. She made this clear when she refused to signhis "Motion to Withdraw as Counsel."

Assuming, nevertheless, that respondent was justified in terminating his services, he,however, cannot just do so and leave complainant in the cold unprotected. The lawyer has noright to presume that his petition for withdrawal will be granted by the court. [21] Until hiswithdrawal shall have been approved, the lawyer remains counsel of record who is expected byhis client as well as by the court to do what the interests of his client require. [22] He must stillappear on the date of hearing[23] for the attorney-client relation does not terminate formally untilthere is a withdrawal of record.[24]

Respondent expressly bound himself under the contract to bring the criminal case to itstermination. He was in fact paid in full for his services. Respondent failed to comply with hisundertaking, hence, it is but fair that he return to complainant half of the amount paid him. Thepeculiar circumstances of the case have rendered it impossible for respondent and complainantto continue their relation under the contract.

IN VIEW WHEREOF, respondent is admonished to exercise more prudence andjudiciousness in dealing with his clients. He is also ordered to return to complainant within fifteen(15) days from notice the amount of ten thousand pesos (P10,000.00) representing a portion ofhis legal fees received from the latter with a warning that failure on his part to do so will result inthe imposition of stiffer disciplinary action.

SO ORDERED.

Regalado, (Chairman) and Torres, Jr., JJ., concur.

Mendoza, J., on official leave.

A.C. No. 5486 August 15, 2001[Formerly A.C. CBD Case No. 00-690]

In Re: Atty. David Briones.

PUNO, J.:

This matter arose from the continued failure of Atty. David P. Briones, counsel for accused-appellant in G.R. No. 130965 (People of the Philippines vs. Restituto Cabacan) pending before the Second Division of this Court, to file the required appellant's brief.

The notice to file appellant's brief was mailed to Atty. Briones on July 30, 1998. The registry return card shows that it was received by the addressee on August 6, 1998. Counsel was given thirty (30) days from receipt of the notice within which to file the brief. Atty. Briones failed to file the required brief within the period which expired on September 5, 1998.

On April 28, 1999, the Court ordered Atty. Briones to show cause why he should not be disciplinarily dealt with or held in contempt for such failure and to submit the required brief within ten (10) days from notice. Atty. Briones failed to comply with the Court's directive within the specified period. Copy of said resolution was returned to the Court unserved without specific reason.

On August 9, 1999, the Court issued a resolution stating among others that the resolution of April28, 1999 is considered served on Atty. Briones by substituted service pursuant to Section 8, Rule13 of the 1997 Rules of Civil Procedure. The Court also referred the matter of the repeated failure of Atty. Briones to file appellant's brief to the Integrated Bar of the Philippines (IBP) for evaluation, report and recommendation. The administrative case was docketed as CBD Case No. 00-690.

In a letter dated September 27, 1999, IBP Commissioner Victoria Gonzales-De Los Reyes informed Atty. Briones of the Court's referral of the matter to the IBP and required him to file his Comment within five (5) days from receipt of the letter. The registry return card shows that the letter was received by the agent of Atty. Briones on October 7, 1999. Atty. Briones, however, did not file any Comment.

Commissioner De Los Reyes submitted her Report dated January 25, 2000 with the following observation and recommendation:

"Unfortunately, despite the lapse of the required period of time within which to submit his Comment, respondent failed to do so despite due notice as evidenced by the registry return card.

As can be gleaned from the files, G.R. No. 130965 has remained pending in view of the negligence of Atty. Briones to file the required appellant's brief. It is therefore evident that respondent violated Rule 18.03 of Canon 18 of the Code of Professional Responsibility towit:

A lawyer shall not neglect a legal matter entrusted to him, and his negligence in connection therewith shall render him liable.

Likewise, respondent's repeated failure to file the appellant's brief and his Comment to the Commission in connection with the Supreme Court Resolution dated August 9, 1999 are apparently tantamount to wilfull disobedience to the lawful orders of the Honorable Supreme Court which could not be tolerated, and respondent should not be allowed to goscot-free.

IN VIEW OF THE FOREGOING, the undersigned Commissioner finds that Atty. David P. Briones had the propensity of defying lawful orders, and recommends that for his violation of Rule 18.03 of the Canon 18 of the Code of Professional Responsibility, he be SUSPENDED from the practice of law profession for a period of six (6) months."

On March 18, 2000, the Board of Governors of the IBP passed Resolution No. XIV-2000-56 stating:

"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, Respondent is SUSPENDED/or BARRED from the practice of law for six (6) months for violation of Rule 18.03 of the Canon 18 of the Code of Professional Responsibility."

On May 26, 2000, Atty. Briones filed with the IBP a Motion for Reconsideration/Reinvestigation. The motion was grounded on the alleged denial of due process in the course of the investigation.Atty. Briones claimed that he filed a Comment on the administrative case but the same was not considered by the investigating commissioner. Neither did the IBP conduct a formal investigation.

On July 29, 2000, the Board of Governors of the IBP issued Resolution No. XIV-2000-439 denying the motion for reconsideration, thus:

"RESOLVED to DENY Respondent’s Motion for Reconsideration of the Board’s Decision in the above-entitled case there being no substantive reason to reverse the finding therein, moreover, the pleading is improper as the remedy of the respondent is to file the appropriate Motion with the Supreme Court within fifteen (15) days from receipt of notice of said Decision pursuant to Section 12 (c) of Rule 139-B."

On October 5, 2000, Atty. Briones filed with the Court a Manifestation praying that his Comment submitted to the IBP on October 13, 2000 be considered by the Court. He attached a copy of the Comment to the Manifestation.

Atty. Briones explained both in his Manifestation and his Comment that he failed to file an appellant’s brief in G.R. No. 130965 because he never received a copy of the resolution requiringhim to file said brief. If ever a copy was received by his secretary, the latter was not able to give itto him because he had already ceased practicing law. He further explained that the case was assigned to him as member of the IBP Tarlac Legal Aid Office. After filing the Notice of Appeal, heresigned from the Legal Aid Office because of his failing health. Hence, he presumed that the relatives of the accused would engage the services of a new counsel, or would go directly to the IBP Legal Aid Office. He admitted that he forgot to notify the Legal Aid Office about the case.

We adopt the recommendation of the IBP.

The failure of the counsel to submit the required brief within the reglementary period is an offense that entails disciplinary action.1 The pernicious effect of Atty. Briones’ omission cannot be gainsaid. His failure to file an appellant’s brief in G.R. No. 130965 has caused the appeal to remain inactive for more than a year, to the prejudice of his client, the accused himself, who continues to languish in jail pending the resolution of his case. The accused in a criminal case has the right to a swift and just disposition of his case. Lawyers are obliged to protect, not defeat,such right.

We have considered the explanation of Atty. Briones for his failure to comply with the Court’s directive and we find the same unsatisfactory. Such omission can be attributed to pure negligence on the part of Atty. Briones which we deem inexcusable. He cannot deny that his office received a copy of the Court’s resolution ordering him to submit an appellant’s brief. The registry return card shows that the notice to file appellant’s brief was received by the addressee on August 6, 1998. To exonerate himself from liability, Atty. Briones claims that his secretary did not forward to him the mail matters received in his office. He, however, cannot pass the blame to his secretary as he is personally responsible for his own communications. As a member of the Bar, he is expected to exercise due diligence in the practice of his profession. He should not have passively waited for his secretary to inform him about the letters and communications received in his law office, especially those coming from the courts. He should have taken the initiative to check with her if there are important matters requiring his action or attention. Neither is the cessation of his law practice an excuse for his failure to file the required brief. Even if it were true that Atty. Briones has stopped practicing law, he still could not ignore the directives coming from the Court. It does not appear from the records of G.R. No. 130965 that Atty. Brioneshas withdrawn his appearance. Unless he has withdrawn his appearance in the case, the Court would still consider him as counsel for the accused-appellant and he is expected to comply with all its orders and directives.

It should be stressed that every case a lawyer accepts deserves his full attention, diligence, skill and competence, regardless of its importance and whether he accepts it for a fee or for free.2 A lawyer’s fidelity to the cause of his client requires him to be ever mindful of the responsibilities that should be expected of him. He is mandated to exert his best efforts to protect within the bounds of the law the interest of his client. The Code of Professional Responsibility dictates that a lawyer shall serve his client with competence and diligence and he should never neglect a legal matter entrusted to him.3

IN VIEW WHEREOF, Atty. David P. Briones is SUSPENDED from the practice of law for six (6) months effective immediately. Let a copy of this Decision be furnished to the Office of the Bar Confidant, the Integrated Bar of the Philippines, and to all the courts.1âwphi1.nêt

SO ORDERED.

THIRD DIVISION

ESTELA ANASTACIO-BRIONES, Adm. Case No. 6266 Complainant,

Present:

- versus -

QUISUMBING, J., Chairperson,CARPIO,CARPIO MORALES,TINGA, andVELASCO, JR., JJ.

ATTY. ALFREDO A. ZAPANTA, Respondent.

Promulgated: November 16, 2006

x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION

QUISUMBING, J.:

This is a disbarment complaint filed by Estela Anastacio-Briones against respondent Atty.

Alfredo A. Zapanta for abandonment and neglect of duties.

In her Complaint[1] dated December 1, 2003, Estela Anastacio-Briones stated that she

engaged the services of respondent to file three civil cases involving a parcel of land located

in Antipolo City. The cases were then consolidated[2] before

the Regional Trial Court of Antipolo City, Branch 73.

Complainant averred that on October 25, 2002, she showed respondent a copy of

“Discharge and Appearance of Counsels with Ex-parte Motion to Cancel the October 25,

2002 Hearing” she intended to file that day. She claimed that even prior to the hearing, she

informed respondent of her joint venture agreement with a real estate developer who offered the

services of its own counsel. Complainant added that respondent requested her not to file it and

he would submit a withdrawal of appearance instead. Complainant also informed respondent

that she could not attend the hearing on January 6, 2003 because of other

commitments. Respondent allegedly assured her that he would be present in the hearing.

On January 6, 2003, both respondent and complainant failed to appear in the

hearing. As a result, the trial court declared them to have waived their right to present further

witnesses and directed them to file their formal offer of evidence within ten days from notice. The

trial court noted that respondent received its Order on January 24, 2003, but respondent did not

act on it within the ten-day period. Instead of filing a formal offer of evidence, respondent filed a

withdrawal of appearance on March 5, 2003. On March 10, 2003, the trial court dismissed the

case with prejudice.[3]

On May 5, 2003, complainant learned that the cases were dismissed and that respondent

did not attend the January 6, 2003 hearing and did not file a formal offer of evidence.

Complainant prayed that respondent be disbarred for abandoning her case and

withdrawing his appearance as counsel without her knowledge.

In his Comment[4] dated June 10, 2004, respondent countered that he was discharged as

complainant’s counsel after the October 25, 2002 hearing. Respondent added that he prepared

a withdrawal of appearance on October 30, 2002 but complainant ignored his several requests to

sign it in his office. Nevertheless, he claimed he filed a withdrawal of appearance on March 5,

2003 without complainant’s conformity.

Respondent denied promising complainant that he would attend the January 6,

2003 hearing. According to him, complainant informed his secretary that her new lawyer would

attend. Respondent claimed further that complainant’s new lawyer should be faulted for

belatedly filing an entry of appearance and a motion for reconsideration. Respondent claimed

that he was merely being used as a scapegoat for complainant’s own negligence in pursuing the

cases.

In a Resolution[5] dated September 20, 2004, the Court referred the matter to the

Integrated Bar of the Philippines (IBP) for investigation, report and recommendation.

In his Report and Recommendation dated May 26, 2005, Commissioner Dennis

A.B. Funa of the IBP Commission on Bar Discipline found respondent liable for negligence in the

performance of his duties as counsel, and for violating the Code of Professional

Responsibility. Commissioner Funa recommended respondent’s suspension for three months

from the practice of law.

In Resolution No. XVII-2005-104 dated October 22, 2005, the IBP Board of Governors

adopted and approved the report and recommendation of Commissioner Funa. OnNovember

15, 2005, the IBP Board of Governors forwarded the Report to this Court pursuant to Rule 139-B

of the Rules of Court.

On January 4, 2006, respondent filed with this Court a motion for reconsideration. In its

comment, the IBP, through Commissioner Funa, recommended the denial of the motion.

We sustain the findings of the IBP that respondent was remiss in performing his duties as

counsel of complainant. The Court finds respondent liable for negligence and for violation of

Canon 18[6] specifically Rules 18.03[7] and 18.04[8] of the Code of Professional Responsibility.

Section 26, Rule 138 of the Rules of Court[9] provides the proper procedure for a lawyer’s

withdrawal as counsel in a case. Unless the procedure prescribed in the abovementioned

section is complied with, the attorney of record is regarded as the counsel who should be served

with copies of the judgments, orders and pleadings and who should be held responsible for the

case.[10] For its part, the court could recognize no other representation on behalf of the client

except such counsel of record until a formal substitution of attorney is effected.[11]

In Orcino v. Gaspar,[12] we held that until a lawyer’s withdrawal shall have been approved,

he remains counsel of record and is expected by his client as well as by the court to do what the

interests of his client require. He must still appear on the date of hearing for the attorney-client

relation does not terminate formally until there is a withdrawal of his appearance on record.

In this case, respondent admitted that he did not attend the January 6, 2003 hearing

despite being notified by the court. His claim that he was already discharged as counsel as early

as October 25, 2002 is negated by the record that he withdrew his appearance only on March 5,

2003. Until his dismissal or withdrawal was made of record, any judicial notice sent to him was

binding upon his client even though as between them the professional relationship may have

been terminated.[13] Thus, unless properly relieved, respondent is responsible for the conduct of

the cases and his failure to attend the hearing and comply with the trial court’s directive to file a

formal offer of evidence constituteinexcusable negligence.

Moreover, respondent’s negligence is not excused by his claim that he had prepared his

withdrawal of appearance as early as October 30, 2002 but complainant refused to sign

it. In Macarilay v. Seriña,[14] with similar facts, we rejected the counsel’s excuse for failing to file

the complaints, although the complaints were finished, due to his client’s refusal to sign them.

Certainly not to be overlooked is the duty of an attorney to inform his client of the

developments of the case.[15] We note that it was only on May 5, 2003 that complainant learned

that she defaulted in the case. As a lawyer mindful of the interest of his client, respondent should

have informed the complainant of the court’s order addressed to him, especially if he considered

himself discharged in order for complainant and her new counsel to be guided accordingly.

The appropriate penalty on an errant lawyer depends on the exercise of sound judicial

discretion based on the surrounding facts. The penalties for a lawyer’s failure to file a brief or

other pleading range from reprimand, warning with fine, suspension and, in grave cases,

disbarment.[16] In this case, this Court sustains the recommendation of the IBP for respondent’s

suspension of three months.

WHEREFORE, respondent Atty. Alfredo A. Zapanta is hereby found GUILTY of

negligence and is meted the penalty of SUSPENSION from the practice of law forTHREE

MONTHS effective upon finality of this Decision.

Let copies of this Decision be furnished the Office of the Bar Confidant to be appended to

respondent’s personal record as an attorney, the Integrated Bar of thePhilippines, the

Department of Justice, and all courts in this country for their information and guidance.

SO ORDERED.

G.R. No. 86100-03 January 23, 1990

METROPOLITAN BANK AND TRUST COMPANY, petitioner, vs.THE HONORABLE COURT OF APPEALS and ARTURO ALAFRIZ and ASSOCIATES, respondents.

Bautista, Picazo, Buyco, Tan & Fider for petitioner.

Arturo A. Alafriz & Associates for and in their own behalf.

REGALADO, J.:

This petition for review on certiorari impugns the decision of the Court of Appeals in CA-G.R. Nos. 08265-08268 1affirming the order of Branch 168, Regional Trial Court, National Capital Judicial Region, in Civil Cases Nos. 19123-28, 19136 and 19144, fixing attorney's fees and directing herein petitioner Metropolitan Bank and Trust Company (Metrobank, for brevity), as defendant in said civil cases, to pay its attorneys, herein private respondent Arturo Alafriz and Associates, movant therein, the amount of P936,000.00 as attorney's fees on a quantum meruit basis.

The records show that from March, 1974 to September, 1983, private respondent handled the above-mentioned civil cases before the then Court of First Instance of Pasig (Branches I, II, VI, X, XIII, XIX, XX AND XXIV) in behalf of petitioner. 2 The civil cases were all for the declaration of nullity of certain deeds of sale, with damages.

The antecedental facts 3 which spawned the filing of said actions are undisputed and are hereinunder set forth as found by the trial court and adopted substantially in the decision of respondent court. A certain Celedonio Javier bought seven (7) parcels of land owned by Eustaquio Alejandro, et al., with a total area of about ten (10) hectares. These properties were thereafter mortgaged by Javier with the petitioner to secure a loan obligation of one Felix Angelo Bautista and/orInternational Hotel Corporation. The obligors having defaulted, petitioner foreclosed the mortgages after which certificates of sale were issued by the provincial sheriff in its favor as purchaser thereof Subsequently, Alejandro, alleging deceit, fraud and misrepresentation committed against him by Javier in the sale of the parcels of land, brought suits against Javier et al., and included petitioner as defendant therein.

It was during the pendency of these suits that these parcels of land were sold by petitioner to its sister corporation, Service Leasing Corporation on March 23, 1983 for the purported price of P600,000.00. On the same day, the properties were resold by the latter to Herby Commercial and Construction Corporation for the purported price of P2,500,000.00. Three months later, or onJune 7, 1983, Herby mortgaged the same properties with Banco de Oro for P9,200,000.00. The lower court found that private respondent, did not have knowledge of these transfers and transactions.

As a consequence of the transfer of said parcels of land to Service Leasing Corporation, petitioner filed an urgent motion for substitution of party on July 28, 1983. Private respondent, on its part, filed on August 16, 1983 a verified motion to enter in the records of the aforesaid civil cases its charging lien, pursuant to Section 37, Rule 138 of the Rules of Court, equivalent to twenty-five percent (25%) of the actual and current market values of the litigated properties as itsattorney's fees. Despite due notice, petitioner failed to appear and oppose said motion, as a result of which the lower court granted the same and ordered the, Register of Deeds of Rizal to annotate the attorney's liens on the certificates of title of the parcels of land.

Meanwhile, the plaintiffs Alejandro, et al. in the aforesaid civil cases, which had been consolidated and were pending before the Regional Trial Court of Pasig, filed a motion to dismisstheir complaints therein, which motion the lower court granted with prejudice in its order dated September 5, 1983. On December 29, 1983, the same court ordered the Register of Deeds to annotate the attorney's liens of private respondent on the derivative titles which cancelled Transfer Certificates of Title Nos. 453093 to 453099 of the original seven (7) parcels of land hereinbefore adverted to.

On May 28,1984, private respondent filed a motion to fix its attorney's fees, based on quantum meruit, which motion precipitated an exchange of arguments between the parties. On May 30, 1984, petitioner manifested that it had fully paid private respondent; the latter, in turn, countered that the amount of P50,000.00 given by petitioner could not be considered as full payment but merely a cash advance, including the amount of P14,000.00 paid to it on December 15, 1980. It further appears that private respondent attempted to arrange a compromise with petitioner in order to avoid suit, offering a compromise amount of P600,000.00 but the negotiations were unsuccessful.

Finally, on October 15,1984, the court a quo issued the order assailed on appeal before respondent court, granting payment of attorney's fees to private respondent, under the following dispositive portion:

PREMISES CONSIDERED, the motion is hereby granted and the Metropolitan Bank and Trust Company (METROBANK) and Herby Commercial and Construction Corporation 4 are hereby ordered to pay the movant Arturo Alafriz and Associates the amount of P936,000.00 as its proper, just and reasonable attorney's fees in these cases. 5

On appeal, respondent court affirmed the order of the trial court in its decision promulgated on February 11, 1988. A motion for reconsideration, dated March 3, 1988, was filed by petitioner but the same was denied in a resolution promulgated on November 19, 1988, hence the present recourse.

The issues raised and submitted for determination in the present petition may be formulated thus: (1) whether or not private respondent is entitled to the enforcement of its charging lien for payment of its attorney's fees; (2) whether or not a separate civil suit is necessary for the enforcement of such lien and (3) whether or not private respondent is entitled to twenty-five (25%) of the actual and current market values of the litigated properties on aquantum meruit basis.

On the first issue, petitioner avers that private respondent has no enforceable attorney's charginglien in the civil cases before the court below because the dismissal of the complaints therein were not, in the words of Section 37, Rule 138, judgments for the payment of money or executions issued in pursuance of such judgments. 6

We agree with petitioner.

On the matter of attorney's liens Section 37, Rule 138 provides:

. . . He shall also have a lien to the same extent upon all judgments for the payment of money, and executions issued in pursuance of such judgments, whichhe has secured in a litigation of his client, from and after the time when he shall have caused a statement of his claim of such lien to be entered upon the records of the court rendering such judgment, or issuing such execution, and shall have caused written notice thereof to be delivered to his client and to the adverse party; and he shall have the same right and power over such judgments and executions as his client would have to enforce his lien and secure the payment ofhis just fees and disbursements.

Consequent to such provision, a charging lien, to be enforceable as security for the payment of attorney's fees, requires as a condition sine qua non a judgment for money and execution in pursuance of such judgment secured in the main action by the attorney in favor of his client. A lawyer may enforce his right to fees by filing the necessary petition as an incident in the main action in which his services were rendered when something is due his client in the action from which the fee is to be paid. 7

In the case at bar, the civil cases below were dismissed upon the initiative of the plaintiffs "in viewof the frill satisfaction of their claims." 8 The dismissal order neither provided for any money judgment nor made any monetary award to any litigant, much less in favor of petitioner who was a defendant therein. This being so, private respondent's supposed charging lien is, under our rule, without any legal basis. It is flawed by the fact that there is nothing to generate it and to which it can attach in the same manner as an ordinary lien arises and attaches to real or personal property.

In point is Morente vs. Firmalino, 9 cited by petitioner in support of its position. In that case, movant-appellant attorney sought the payment of his fees from his client who was the defendant in a complaint for injunction which was dismissed by the trial court after the approval of an agreement entered into by the litigants. This Court held:

. . . The defendant having suffered no actual damage by virtue of the issuance of a preliminary injunction, it follows that no sum can be awarded the defendant for damages. It becomes apparent, too, that no amount having been awarded the defendant, herein appellant's lien could not be enforced. The appellant, could, by appropriate action, collect his fees as attorney.

Private respondent would nevertheless insist that the lien attaches to the "proceeds of a judgment of whatever nature," 10 relying on the case of Bacolod-Murcia Milling Co. Inc. vs. Henares 11 and some American cases holding that the lien attaches to the judgment recovered by an attorney and the proceeds in whatever form they may be. 12

The contention is without merit just as its reliance is misplaced. It is true that there are some American cases holding that the lien attaches even to properties in litigation. However, the statutory rules on which they are based and the factual situations involved therein are neither explained nor may it be said that they are of continuing validity as to be applicable in this jurisdiction. It cannot be gainsaid that legal concepts of foreign origin undergo a number of variegations or nuances upon adoption by other jurisdictions, especially those with variant legal systems.

In fact, the same source from which private respondent culled the American cases it cited expressly declares that "in the absence of a statute or of a special agreement providing otherwise, the general rule is that an attorney has no lien on the land of his client, notwithstanding such attorney has, with respect to the land in question, successfully prosecuted a suit to establish the title of his client thereto, recovered title or possession in a suit prosecuted by such client, or defended successfully such client's right and title against an unjust claim or an unwarranted attack," 13 as is the situation in the case at bar. This is an inescapable recognition that a contrary rule obtains in other jurisdictions thereby resulting in doctrinal rulings of converse or modulated import.

To repeat, since in our jurisdiction the applicable rule provides that a charging lien attaches only to judgments for money and executions in pursuance of such judgment, then it must be taken in haec verba. The language of the law is clear and unequivocal and, therefore, it must be taken to mean exactly what it says, barring any necessity for elaborate interpretation. 14

Notably, the interpretation, literal as it may appear to be, is not without support in Philippine case law despite the dearth of cases on all fours with the present case. In Caina et al. vs. Victoriano, et al., 15 the Court had the occasion to rule that "the lien of respondent is not of a nature which attaches to the property in litigation but is at most a personal claim enforceable by a writ of execution." In Ampil vs. Juliano-Agrava, et al., 16 the Court once again declared that a charging lien "presupposes that the attorney has secured a favorable money judgment for his client . . ." Further, in Director of Lands vs. Ababa, et al., 17 we held that "(a) charging lien under Section 37, Rule 138 of the Revised Rules of Court is limited only to money judgments and not to judgments for the annulment of a contract or for delivery of real property as in the instant case."

Even in the Bacolod-Murcia Milling case, which we previously noted as cited by private respondent, there was an express declaration that "in this jurisdiction, the lien does not attach to the property in litigation."

Indeed, an attorney may acquire a lien for his compensation upon money due his client from the adverse party in any action or proceeding in which the attorney is employed, but such lien does not extend to land which is the subject matter of the litigation. 18 More specifically, an attorney merely defeating recovery against his client as a defendant is not entitled to a lien on the property involved in litigation for fees and the court has no power to fix the fee of an attorney defending the client's title to property already in the client'spossession. 19

While a client cannot defeat an attorney's right to his charging lien by dismissing the case, terminating the services of his counsel, waiving his cause or interest in favor of the adverse partyor compromising his action, 20this rule cannot find application here as the termination of the cases below was not at the instance of private respondent's client but of the opposing party.

The resolution of the second issue is accordingly subsumed in the preceding discussion which amply demonstrates that private respondent is not entitled to the enforcement of its charging lien.

Nonetheless, it bears mention at this juncture that an enforceable charging lien, duly recorded, is within the jurisdiction of the court trying the main case and this jurisdiction subsists until the lien is settled. 21 There is certainly no valid reason why the trial court cannot pass upon a petition to determine attorney's fees if the rule against multiplicity of suits is to be activated. 22 These decisional rules, however, apply only where the charging lien is valid and enforceable under the rules.

On the last issue, the Court refrains from resolving the same so as not to preempt or interfere with the authority and adjudicative facility of the proper court to hear and decide the controversy in a proper proceeding which may be brought by private respondent.

A petition for recovery of attorney's fees, either as a separate civil suit or as an incident in the main action, has to be prosecuted and the allegations therein established as any other money claim. The persons who are entitled to or who must pay attorney's fees have the right to be heardupon the question of their propriety or amount. 23Hence, the obvious necessity of a hearing is beyond cavil.

Besides, in fixing a reasonable compensation for the services rendered by a lawyer on the basis of quantum meruit, the elements to be considered are generally (1) the importance of the subjectmatter in controversy, (2) the extent of the services rendered, and (3) the professional standing ofthe lawyer. 24 These are aside from the several other considerations laid down by this Court in a number of decisions as pointed out by respondent court. 25 A determination of all these factors would indispensably require nothing less than a full-blown trial where private respondent can adduce evidence to establish its right to lawful attorney's fees and for petitioner to oppose or refute the same.

Nothing in this decision should, however, be misconstrued as imposing an unnecessary burden on private respondent in collecting the fees to which it may rightfully be entitled. But, as in the exercise of any other right conferred by law, the proper legal remedy should be availed of and the procedural rules duly observed to forestall and obviate the possibility of abuse or prejudice, or what may be misunderstood to be such, often to the undeserved discredit of the legal profession.

Law advocacy, it has been stressed, is not capital that yields profits. The returns it births are simple rewards for a job done or service rendered. It is a calling that, unlike mercantile pursuits which enjoy a greater deal of freedom from government interference, is impressed with public interest, for which it is subject to State regulation. 26

ACCORDINGLY, the instant petition for review is hereby GRANTED and the decision of respondent Court of Appeals of February 11, 1988 affirming the order of the trial court is hereby REVERSED and SET ASIDE, without prejudice to such appropriate proceedings as may be brought by private respondent to establish its right to attorney's fees and the amount thereof.

SO ORDERED.

Melencio-Herrera, Paras, Padilla and Sarmiento, JJ., concur.