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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 respondents relationship with complainant, the nature of their agreement and complainants lack of independent advice when she entered into it, there is neither sufficient ground nor compelling reason to reconsider our earlier resolution. WHEREFORE, respondents motion hereby DENIED WITH FINALITY. for reconsideration is

IMPRESCRIPTIBILITY PROCEEDINGS
EN BANC A.C. No. 6656 [Formerly CBD-98-591]

OF

DISBARMENT

May

4,

2006

BOBIE ROSE V. FRIAS, Complainant, vs. ATTY. CARMELITA S. BAUTISTA-LOZADA,* Respondent. RESOLUTION 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. Respondents 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 or discipline of attorneys prescribes in two (2) years from the date of the professional 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 to disregard the very oath they took as lawyers, prescinding from the fact that as long as no private complainant would immediately come forward, they stand a chance of being completely exonerated from whatever administrative liability they ought to answer for. It is the duty of this Court to protect the integrity of the practice of law as well as the administration of justice. No matter how much time has elapsed from the time of the commission of the act complained of and the time of the institution of the complaint, erring members of the bench and bar cannot escape the disciplining arm of the Court. This categorical pronouncement is aimed at unscrupulous members of the bench and bar, to deter them from committing acts which violate the Code of Professional Responsibility, the Code of Judicial Conduct, or the Lawyers Oath. x x x Thus, even the lapse of considerable time from the commission of the offending act to the institution of the administrative complaint will not erase the administrative 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 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.

CONFLICT OF INTEREST
EN BANC

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

KAPUNAN, J.: These case touch the very cornerstone of every State's judicial system, upon which the workings of the contentious and adversarial system in the Philippine legal process are based the sanctity of fiduciary duty in the client-lawyer relationship. The fiduciary duty of a counsel and advocate is also what makes the law profession a unique position of trust and confidence, which distinguishes it from any other calling. In this instance, we have no recourse but to uphold and strengthen the mantle of protection accorded to the confidentiality that proceeds from the performance of the lawyer's duty to his client. The facts of the case are undisputed. The matters raised herein are an offshoot of the institution of the Complaint on July 31, 1987 before the Sandiganbayan by the Republic of the Philippines, through the Presidential Commission on Good Government against Eduardo M. Cojuangco, Jr., as one of the principal defendants, for the recovery of alleged ill-gotten wealth, which includes shares of stocks in the named corporations in PCGG Case No. 33 (Civil Case No. 0033), entitled "Republic of the Philippines versus Eduardo Cojuangco, et al." 1 Among the dependants named in the case are herein petitioners Teodoro Regala, Edgardo J. Angara, Avelino V. Cruz, Jose C. Concepcion, Rogelio A. Vinluan, Victor P. Lazatin, Eduardo U. Escueta and Paraja G. Hayudini, and herein private respondent Raul S. Roco, who all were then partners of the law firm Angara, Abello, Concepcion, Regala and Cruz Law Offices (hereinafter referred to as

PROBLEMATIC AREAS IN LEGAL ETHICS CASES


the ACCRA Law Firm). ACCRA Law Firm performed legal services for its clients, which included, among others, the organization and acquisition of business associations and/or organizations, with the correlative and incidental services where its members acted as incorporators, or simply, as stockholders. More specifically, in the performance of these services, the members of the law firm delivered to its client documents which substantiate the client's equity holdings, i.e., stock certificates endorsed in blank representing the shares registered in the client's name, and a blank deed of trust or assignment covering said shares. In the course of their dealings with their clients, the members of the law firm acquire information relative to the assets of clients as well as their personal and business circumstances. As members of the ACCRA Law Firm, petitioners and private respondent Raul Roco admit that they assisted in the organization and acquisition of the companies included in Civil Case No. 0033, and in keeping with the office practice, ACCRA lawyers acted as nominees-stockholders of the said corporations involved in sequestration proceedings. 2 On August 20, 1991, respondent Presidential Commission on Good Government (hereinafter referred to as respondent PCGG) filed a "Motion to Admit Third Amended Complaint" and "Third Amended Complaint" which excluded private respondent Raul S. Roco from the complaint in PCGG Case No. 33 as party-defendant. 3Respondent PCGG based its exclusion of private respondent Roco as partydefendant on his undertaking that he will reveal the identity of the principal/s for whom he acted as nominee/stockholder in the companies involved in PCGG Case No. 33. 4 Petitioners were included in the Third Amended Complaint on the strength of the following allegations: 14. Defendants Eduardo Cojuangco, Jr., Edgardo J. Angara, Jose C. Concepcion, Teodoro Regala, Avelino V. Cruz, Rogelio A. Vinluan, Eduardo U. Escueta, Paraja G. Hayudini and Raul Roco of the Angara Concepcion Cruz Regala and Abello law offices (ACCRA) plotted, devised, schemed conspired and confederated with each other in setting up, through the use of the coconut levy funds, the financial and corporate framework and structures that led to the establishment of UCPB, UNICOM, COCOLIFE, COCOMARK, CIC, and more than twenty other coconut levy funded corporations, including the acquisition of San Miguel Corporation shares and its institutionalization through presidential directives of the coconut monopoly. Through insidious means and machinations, ACCRA, being the wholly-owned investment arm, ACCRA Investments Corporation, became the holder of approximately fifteen million shares representing roughly 3.3% of the total outstanding capital stock of UCPB as of 31 March 1987. This ranks ACCRA Investments Corporation number 44 among the top 100 biggest stockholders of UCPB which has approximately 1,400,000 shareholders. On the other hand, corporate books show the name Edgardo J. Angara as holding approximately 3,744 shares as of February, 1984. 5 In their answer to the Expanded Amended Complaint, petitioners ACCRA lawyers alleged that: 4.4 Defendants-ACCRA lawyers' participation in the acts with which their codefendants are charged, was in furtherance of legitimate lawyering. 4.4.1 In the course of rendering professional and legal services to clients, defendants-ACCRA lawyers, Jose C. Concepcion, Teodoro D. Regala, Rogelio A. Vinluan and Eduardo U. Escueta, became holders of shares of stock in the corporations listed under their respective names in Annex "A" of the expanded Amended Complaint as incorporating or acquiring stockholders only and, as such, they do not claim

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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

PROBLEMATIC AREAS IN LEGAL ETHICS CASES


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 by the respondent Sandiganbayan. Hence, the ACCRA lawyers filed the petition for certiorari, docketed as G.R. No. 105938, invoking the following grounds: I The Honorable Sandiganbayan gravely abused its discretion in subjecting petitioners ACCRA lawyers who undisputably acted as lawyers in serving as nominee-stockholders, to the strict application of the law of agency. II The Honorable Sandiganbayan committed grave abuse of discretion in not considering petitioners ACCRA lawyers and Mr. Roco as similarly situated and, therefore, deserving of equal treatment. 1. There is absolutely no evidence that Mr. Roco had revealed, or had undertaken to reveal, the identities of the client(s) for whom he acted as nominee-stockholder. 2. Even assuming that Mr. Roco had revealed, or had undertaken to reveal, the identities of the client(s), the disclosure does not constitute a substantial distinction as would make the classification reasonable under the equal protection clause. 3. Respondent Sandiganbayan sanctioned favoritism and undue preference in favor of Mr. Roco in violation of the equal protection clause. III The Honorable Sandiganbayan committed grave abuse of discretion in not holding that, under the facts of this case, the attorney-client privilege prohibits petitioners ACCRA lawyers from revealing the identity of their client(s) and the other information requested by the PCGG. 1. Under the peculiar facts of this case, the attorney-client

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privilege includes the identity of the client(s). 2. The factual disclosures required by the PCGG are not limited to the identity of petitioners ACCRA lawyers' alleged client(s) but extend to other privileged matters. IV The Honorable Sandiganbayan committed grave abuse of discretion in not requiring that the dropping of party-defendants by the PCGG must be based on reasonable and just grounds and with due consideration to the constitutional right of petitioners ACCRA lawyers to the equal protection of the law. Petitioner Paraja G. Hayudini, likewise, filed his own motion for reconsideration of the March 18, 1991 resolution which was denied by respondent Sandiganbayan. Thus, he filed a separate petition for certiorari, docketed as G.R. No. 108113, assailing respondent Sandiganbayan's resolution on essentially the same grounds averred by petitioners in G.R. No. 105938. Petitioners contend that the exclusion of respondent Roco as partydefendant 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 consequences of their acts until they have begun to establish the basis for recognizing the privilege; the existence and identity of the client. This is what appears to be the cause for which they have been impleaded by the PCGG as defendants herein. (Emphasis ours) In a closely related case, Civil Case No. 0110 of the Sandiganbayan, Third Division, entitled "Primavera Farms, Inc., et al. vs. Presidential

PROBLEMATIC AREAS IN LEGAL ETHICS CASES


Commission on Good Government" respondent PCGG, through counsel Mario Ongkiko, manifested at the hearing on December 5, 1991 that the PCGG wanted to establish through the ACCRA that their "so called client is Mr. Eduardo Cojuangco;" that "it was Mr. Eduardo Cojuangco who furnished all the monies to those subscription payments in corporations included in Annex "A" of the Third Amended Complaint; that the ACCRA lawyers executed deeds of trust and deeds of assignment, some in the name of particular persons; some in blank. We quote Atty. Ongkiko: ATTY. ONGKIKO: With the permission of this Hon. Court. I propose to establish through these ACCRA lawyers that, one, their so-called client is Mr. Eduardo Cojuangco. Second, it was Mr. Eduardo Cojuangco who furnished all the monies to these subscription payments of these corporations who are now the petitioners in this case. Third, that these lawyers executed deeds of trust, some in the name of a particular person, some in blank. Now, these blank deeds are important to our claim that some of the shares are actually being held by the nominees for the late President Marcos. Fourth, they also executed deeds of assignment and some of these assignments have also blank assignees. Again, this is important to our claim that some of the shares are for Mr. Conjuangco and some are for Mr. Marcos. Fifth, that most of thes e corporations are really just paper corporations. Why do we say that? One: There are no really fixed sets of officers, no fixed sets of directors at the time of incorporation and even up to 1986, which is the crucial year. And not only that, they have no permits from the municipal authorities in Makati. Next, actually all their addresses now are care of Villareal Law Office. They really have no address on records. These are some of the principal things that we would ask of these nominees stockholders, as they called themselves. 16 It would seem that petitioners are merely standing in for their clients as defendants in the complaint. Petitioners are being prosecuted solely on the basis of activities and services performed in the course of their duties as lawyers. Quite obviously, petitioners' inclusion as co-defendants in the complaint is merely being used as leverage to compel them to name their clients and consequently to enable the PCGG to nail these clients. Such being the case, respondent PCGG has no valid cause of action as against petitioners and should exclude them from the Third Amended Complaint. II The nature of lawyer-client relationship is premised on the Roman Law concepts of locatio conductio operarum(contract of lease of services) where one person lets his services and another hires them without reference to the object of which the services are to be performed, wherein lawyers' services may be compensated by honorariumor for hire, 17 and mandato (contract of agency) wherein a friend on whom reliance could be placed makes a contract in his name, but gives up all that he gained by the contract to the person who requested him. 18 But the lawyer-client relationship is more than that of the principal-agent and lessor-lessee. In modern day perception of the lawyer-client relationship, an attorney is more than a mere agent or servant, because he possesses special powers of trust and confidence reposed on him by his client. 19 A lawyer is also as independent as the judge of the court, thus his powers are entirely different from and superior to those of an ordinary agent. 20 Moreover, an attorney also occupies what may be considered as a "quasi-judicial office" since he is in fact an officer of the Court 21 and exercises his judgment in the choice of courses of action to be taken favorable to his client. Thus, in the creation of lawyer-client relationship, there are rules, ethical conduct and duties that breathe life into it, among those, the fiduciary duty to his client which is of a very delicate, exacting and confidential character, requiring a very high degree of fidelity and good faith, 22 that is required by reason of necessity and public interest 23 based on the hypothesis that abstinence from seeking legal

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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 InStockton 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 advice given thereon in the course of professional employment." 28 Passed on into various provisions of the Rules of Court, the attorney-client privilege, as currently worded provides: Sec. 24. Disqualification by reason of privileged communication. The following persons cannot testify as to matters learned in confidence in the following cases: 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 acquired in such capacity. 29 Further, Rule 138 of the Rules of Court states: Sec. 20. It is the duty of an attorney: (e) to maintain inviolate the confidence, and at every peril to himself, to preserve the secrets of his client, and to accept no compensation in connection with his client's business except from him or with his knowledge and approval. This duty is explicitly mandated in Canon 17 of the Code of Professional Responsibility which provides that: Canon 17. A lawyer owes fidelity to the cause of his client and he shall be mindful of the trust and confidence reposed in him. Canon 15 of the Canons of Professional Ethics also demands a lawyer's fidelity to client: The lawyers owes "entire devotion to the interest of the client, warm zeal in the maintenance and defense of his rights and the exertion of his utmost learning and ability," to the end that nothing be taken or be withheld from him, save by the rules of law, legally applied. No fear of judicial disfavor or public popularity should restrain him from the full discharge of his duty. In the judicial forum the client is entitled to the benefit of any and every remedy and defense that is authorized by the law of the land, and he may expect his lawyer to assert every such remedy or defense. But it is steadfastly to be borne in mind that the great trust of the lawyer is to be performed within and not without the bounds of the law. The office of attorney does not permit, much less does it demand of him for any client, violation of law or

PROBLEMATIC AREAS IN LEGAL ETHICS CASES


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

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implicate the client in the very criminal activity for which the lawyer's legal advice was obtained. The Hodge case involved federal grand jury proceedings inquiring into the activities of the "Sandino Gang," a gang involved in the illegal importation of drugs in the United States. The respondents, law partners, represented key witnesses and suspects including the leader of the gang, Joe Sandino. In connection with a tax investigation in November of 1973, the IRS issued summons to Hodge and Zweig, requiring them to produce documents and information regarding payment received by Sandino on behalf of any other person, and vice versa. The lawyers refused to divulge the names. The Ninth Circuit of the United States Court of Appeals, upholding non-disclosure under the facts and circumstances of the case, held: A client's identity and the nature of that client's fee arrangements may be privileged where the person invoking the privilege can show that a strong probability exists that disclosure of such information would implicate that client in the very criminal activity for which legal advice was sought Baird v.Koerner, 279 F. 2d at 680. While in Baird Owe enunciated this rule as a matter of California law, the rule also reflects federal law. Appellants contend that the Baird exception applies to this case. The Baird exception is entirely consonant with the principal policy behind the attorney-client privilege. "In order to promote freedom of consultation of legal advisors by clients, the apprehension of compelled disclosure from the legal advisors must be removed; hence, the law must prohibit such disclosure except on the client's consent." 8 J. Wigmore, supra sec. 2291, at 545. In furtherance of this policy, the client's identity and the nature of his fee arrangements are, in exceptional cases, protected as confidential communications. 36 2) Where disclosure would open the client to civil liability; his identity is privileged. For instance, the peculiar facts and circumstances of Neugass v. Terminal Cab Corporation, 37 prompted the New York Supreme Court to allow a lawyer's claim to the effect that he could not reveal the name of his client because this would expose the latter to civil litigation. In the said case, Neugass, the plaintiff, suffered injury when the taxicab she was riding, owned by respondent corporation, collided with a second taxicab, whose owner was unknown. Plaintiff brought action both against defendant corporation and the owner of the second cab, identified in the information only as John Doe. It turned out that when the attorney of defendant corporation appeared on preliminary examination, the fact was somehow revealed that the lawyer came to know the name of the owner of the second cab when a man, a client of the insurance company, prior to the institution of legal action, came to him and reported that he was involved in a car accident. It was apparent under the circumstances that the man was the owner of the second cab. The state supreme court held that the reports were clearly made to the lawyer in his professional capacity. The court said: That his employment came about through the fact that the insurance company had hired him to defend its policyholders seems immaterial. The attorney is such cases is clearly the attorney for the policyholder when the policyholder goes to him to report an occurrence contemplating that it would be used in an action or claim against him. 38 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. . .

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It appears . . . that the name and address of the owner of the second cab came to the attorney in this case as a confidential communication. His client is not seeking to use the courts, and his address cannot be disclosed on that theory, nor is the present action pending against him as service of the summons on him has not been effected. The objections on which the court reserved decision are sustained. 39 In the case of Matter of Shawmut Mining Company , 40 the lawyer involved was required by a lower court to disclose whether he represented certain clients in a certain transaction. The purpose of the court's request was to determine whether the unnamed persons as interested parties were connected with the purchase of properties involved in the action. The lawyer refused and brought the question to the State Supreme Court. Upholding the lawyer's refusal to divulge the names of his clients the court held: If it can compel the witness to state, as directed by the order appealed from, that he represented certain persons in the purchase or sale of these mines, it has made progress in establishing by such evidence their version of the litigation. As already suggested, such testimony by the witness would compel him to disclose not only that he was attorney for certain people, but that, as the result of communications made to him in the course of such employment as such attorney, he knew that they were interested in certain transactions. We feel sure that under such conditions no case has ever gone to the length of compelling an attorney, at the instance of a hostile litigant, to disclose not only his retainer, but the nature of the transactions to which it related, when such information could be made the basis of a suit against his client. 41 3) Where the government's lawyers have no case against an attorney's client unless, by revealing the client's name, the said name would furnish the only link that would form the chain of testimony necessary to convict an individual of a crime, the client's name is privileged. In Baird vs. Korner, 42 a lawyer was consulted by the accountants and the lawyer of certain undisclosed taxpayers regarding steps to be taken to place the undisclosed taxpayers in a favorable position in case criminal charges were brought against them by the U.S. Internal Revenue Service (IRS). It appeared that the taxpayers' returns of previous years were probably incorrect and the taxes understated. The clients themselves were unsure about whether or not they violated tax laws and sought advice from Baird on the hypothetical possibility that they had. No investigation was then being undertaken by the IRS of the taxpayers. Subsequently, the attorney of the taxpayers delivered to Baird the sum of $12, 706.85, which had been previously assessed as the tax due, and another amount of money representing his fee for the advice given. Baird then sent a check for $12,706.85 to the IRS in Baltimore, Maryland, with a note explaining the payment, but without naming his clients. The IRS demanded that Baird identify the lawyers, accountants, and other clients involved. Baird refused on the ground that he did not know their names, and declined to name the attorney and accountants because this constituted privileged communication. A petition was filed for the enforcement of the IRS summons. For Baird's repeated refusal to name his clients he was found guilty of civil contempt. The Ninth Circuit Court of Appeals held that, a lawyer could not be forced to reveal the names of clients who employed him to pay sums of money to the government voluntarily in settlement of undetermined income taxes, unsued on, and with no government audit or investigation into that client's income tax liability pending. The court emphasized the exception that a client's name is privileged when so much has been revealed concerning the legal services rendered that the disclosure of the client's identity exposes him to possible investigation and sanction by government agencies. The Court held: The facts of the instant case bring it squarely within that exception to the general rule. Here money was received by the government, paid by persons who thereby admitted they had not paid a sufficient amount in income taxes some one or more years in the past. The names of the clients are useful to the government for but one purpose to ascertain which taxpayers think they were delinquent, so that it may check the records for

6
that one year or several years. The voluntary nature of the payment indicates a belief by the taxpayers that more taxes or interest or penalties are due than the sum previously paid, if any. It indicates a feeling of guilt for nonpayment of taxes, though whether it is criminal guilt is undisclosed. But it may well be the link that could form the chain of testimony necessary to convict an individual of a federal crime. Certainly the payment and the feeling of guilt are the reasons the attorney here involved was employed to advise his clients what, under the circumstances, should be done. 43 Apart from these principal exceptions, there exist other situations which could qualify as exceptions to the general rule. For example, the content of any client communication to a lawyer lies within the privilege if it is relevant to the subject matter of the legal problem on which the client seeks legal assistance. 44 Moreover, where the nature of the attorney-client relationship has been previously disclosed and it is the identity which is intended to be confidential, the identity of the client has been held to be privileged, since such revelation would otherwise result in disclosure of the entire transaction. 45 Summarizing these exceptions, information relating to the identity of a client may fall within the ambit of the privilege when the client's name itself has an independent significance, such that disclosure would then reveal client confidences. 46 The circumstances involving the engagement of lawyers in the case at bench, therefore, clearly reveal that the instant case falls under at least two exceptions to the general rule. First, disclosure of the alleged client's name would lead to establish said client's connection with the very fact in issue of the case, which is privileged information, because the privilege, as stated earlier, protects the subject matter or the substance (without which there would be not attorney-client relationship). The link between the alleged criminal offense and the legal advice or legal service sought was duly establishes in the case at bar, by no less than the PCGG itself. The key lies in the three specific conditions laid down by the PCGG which constitutes petitioners' ticket to nonprosecution should they accede thereto: (a) the disclosure of the identity of its clients; (b) submission of documents substantiating the lawyer-client relationship; and (c) the submission of the deeds of assignment petitioners executed in favor of their clients covering their respective shareholdings. From these conditions, particularly the third, we can readily deduce that the clients indeed consulted the petitioners, in their capacity as lawyers, regarding the financial and corporate structure, framework and set-up of the corporations in question. In turn, petitioners gave their professional advice in the form of, among others, the aforementioned deeds of assignment covering their client's shareholdings. There is no question that the preparation of the aforestated documents was part and parcel of petitioners' legal service to their clients. More important, it constituted an integral part of their duties as lawyers. Petitioners, therefore, have a legitimate fear that identifying their clients would implicate them in the very activity for which legal advice had been sought, i.e., the alleged accumulation of ill-gotten wealth in the aforementioned corporations. Furthermore, under the third main exception, revelation of the client's name would obviously provide the necessary link for the prosecution to build its case, where none otherwise exists. It is the link, in the words of Baird, "that would inevitably form the chain of testimony necessary to convict the (client) of a . . . crime." 47 An important distinction must be made between a case where a client takes on the services of an attorney for illicit purposes, seeking advice about how to go around the law for the purpose of committing illegal activities and a case where a client thinks he might have previously committed something illegal and consults his attorney about it. The first case clearly does not fall within the privilege

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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 a shield for an illegal act, as in the first example; while the prosecution may not have a case against the client in the second example and cannot use the attorney client relationship to build up a case against the latter. The reason for the first rule is that it is not within the professional character of a lawyer to give advice on the commission of a crime. 48 The reason for the second has been stated in the cases above discussed and are founded on the same policy grounds for which the attorney-client privilege, in general, exists. In Matter of Shawmut Mining Co., supra, the appellate court therein stated that "under such conditions no case has ever yet gone to the length of compelling an attorney, at the instance of a hostile litigant, to disclose not only his retainer, but the nature of the transactions to which it related, when such information could be made the basis of a suit against his client." 49 "Communications made to an attorney in the course of any personal employment, relating to the subject thereof, and which may be supposed to be drawn out in consequence of the relation in which the parties stand to each other, are under the seal of confidence and entitled to protection as privileged communications." 50 Where the communicated information, which clearly falls within the privilege, would suggest possible criminal activity but there would be not much in the information known to the prosecution which would sustain a charge except that revealing the name of the client would open up other privileged information which would substantiate the prosecution's suspicions, then the client's identity is so inextricably linked to the subject matter itself that it falls within the protection. The Baird exception, applicable to the instant case, is consonant with the principal policy behind the privilege, i.e., that for the purpose of promoting freedom of consultation of legal advisors by clients, apprehension of compelled disclosure from attorneys must be eliminated. This exception has likewise been sustained in In re Grand Jury Proceedings 51 and Tillotson v. Boughner. 52 What these cases unanimously seek to avoid is the exploitation of the general rule in what may amount to a fishing expedition by the prosecution. There are, after all, alternative source of information available to the prosecutor which do not depend on utilizing a defendant's counsel as a convenient and readily available source of information in the building of a case against the latter. Compelling disclosure of the client's name in circumstances such as the one which exists in the case at bench amounts to sanctioning fishing expeditions by lazy prosecutors and litigants which we cannot and will not countenance. When the nature of the transaction would be revealed by disclosure of an attorney's retainer, such retainer is obviously protected by the privilege. 53 It follows that petitioner attorneys in the instant case owe their client(s) a duty and an obligation not to disclose the latter's identity which in turn requires them to invoke the privilege. In fine, the crux of petitioners' objections ultimately hinges on their expectation that if the prosecution has a case against their clients, the latter's case should be built upon evidence painstakingly gathered by them from their own sources and not from compelled testimony requiring them to reveal the name of their clients, information which unavoidably reveals much about the nature of the transaction which may or may not be illegal. The logical nexus between name and nature of transaction is so intimate in this case the it would be difficult to simply dissociate one from the other. In this sense, the name is as much "communication" as information revealed directly about the transaction in question itself, a communication which is clearly and distinctly privileged. A lawyer cannot reveal such communication without exposing himself to charges of violating a principle which forms the bulwark of the entire attorney-client relationship. The uberrimei fidei relationship between a lawyer and his client therefore imposes a strict liability for negligence on the former. The ethical duties owing to the client, including confidentiality, loyalty, competence, diligence as well as the responsibility to keep clients informed and protect their rights to make decisions have been zealously sustained. In Milbank, Tweed, Hadley and McCloy v. Boon, 54 the US Second District Court rejected the plea of the petitioner law firm that it breached its fiduciary duty to its client by helping the latter's former agent in closing a deal for the agent's benefit only after its client hesitated in proceeding with the transaction, thus causing no harm to its client. The Court instead ruled that breaches of a fiduciary relationship in any context comprise a special breed of cases that often loosen normally stringent

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requirements of causation and damages, and found in favor of the client. To the same effect is the ruling in Searcy, Denney, Scarola, Barnhart, and Shipley P.A. v. Scheller 55 requiring strict obligation of lawyers vis-a-vis clients. In this case, a contingent fee lawyer was fired shortly before the end of completion of his work, and sought payment quantum meruit of work done. The court, however, found that the lawyer was fired for cause after he sought to pressure his client into signing a new fee agreement while settlement negotiations were at a critical stage. While the client found a new lawyer during the interregnum, events forced the client to settle for less than what was originally offered. Reiterating the principle of fiduciary duty of lawyers to clients in Meinhard v. Salmon 56 famously attributed to Justice Benjamin Cardozo that "Not honesty alone, but the punctilio of an honor the most sensitive, is then the standard of behavior," the US Court found that the lawyer involved was fired for cause, thus deserved no attorney's fees at all. The utmost zeal given by Courts to the protection of the lawyer-client confidentiality privilege and lawyer's loyalty to his client is evident in the duration of the protection, which exists not only during the relationship, but extends even after the termination of the relationship. 57 Such are the unrelenting duties required by lawyers vis-a-vis their clients because the law, which the lawyers are sworn to uphold, in the words of Oliver Wendell Holmes, 58 ". . . is an exacting goddess, demanding of her votaries in intellectual and moral discipline." The Court, no less, is not prepared to accept respondents' position without denigrating the noble profession that is lawyering, so extolled by Justice Holmes in this wise: Every calling is great when greatly pursued. But what other gives such scope to realize the spontaneous energy of one's soul? In what other does one plunge so deep in the stream of life so share its passions its battles, its despair, its triumphs, both as witness and actor? . . . But that is not all. What a subject is this in which we are united this abstraction called the Law, wherein as in a magic mirror, we see reflected, not only in our lives, but the lives of all men that have been. When I think on this majestic theme my eyes dazzle. If we are to speak of the law as our mistress, we who are here know that she is a mistress only to be won with sustained and lonely passion only to be won by straining all the faculties by which man is likened to God. We have no choice but to uphold petitioners' right not to reveal the identity of their clients under pain of the breach of fiduciary duty owing to their clients, because the facts of the instant case clearly fall within recognized exceptions to the rule that the client's name is not privileged information. If we were to sustain respondent PCGG that the lawyer-client confidential privilege under the circumstances obtaining here does not cover the identity of the client, then it would expose the lawyers themselves to possible litigation by their clients in view of the strict fiduciary responsibility imposed on them in the exercise of their duties. The complaint in Civil Case No. 0033 alleged that the defendants therein, including herein petitioners and Eduardo Cojuangco, Jr. conspired with each other in setting up through the use of coconut levy funds the financial and corporate framework and structures that led to the establishment of UCPB, UNICOM and others and that through insidious means and machinations, ACCRA, using its wholly-owned investment arm, ACCRA Investment Corporation, became the holder of approximately fifteen million shares representing roughly 3.3% of the total capital stock of UCPB as of 31 March 1987. The PCGG wanted to establish through the ACCRA lawyers that Mr. Cojuangco is their client and it was Cojuangco who furnished all the monies to the subscription payment; hence, petitioners acted as dummies, nominees and/or agents by allowing themselves, among others, to be used as instrument in accumulating ill-gotten wealth through government concessions, etc., which acts constitute gross abuse of official position and authority, flagrant breach of public trust, unjust enrichment, violation of the Constitution and laws of the Republic of the Philippines.

PROBLEMATIC AREAS IN LEGAL ETHICS CASES


By compelling petitioners, not only to reveal the identity of their clients, but worse, to submit to the PCGG documents substantiating the client-lawyer relationship, as well as deeds of assignment petitioners executed in favor of its clients covering their respective shareholdings, the PCGG would exact from petitioners a link "that would inevitably form the chain of testimony necessary to convict the (client) of a crime." III In response to petitioners' last assignment of error, respondents alleged that the private respondent was dropped as party defendant not only because of his admission that he acted merely as a nominee but also because of his undertaking to testify to such facts and circumstances "as the interest of truth may require, which includes . . . the identity of the principal." 59 First, as to the bare statement that private respondent merely acted as a lawyer and nominee, a statement made in his out-of-court settlement with the PCGG, it is sufficient to state that petitioners have likewise made the same claim not merely out-of-court but also in the Answer to plaintiff's Expanded Amended Complaint, signed by counsel, claiming that their acts were made in furtherance of "legitimate lawyering." 60 Being "similarly situated" in this regard, public respondents must show that there exist other conditions and circumstances which would warrant their treating the private respondent differently from petitioners in the case at bench in order to evade a violation of the equal protection clause of the Constitution. To this end, public respondents contend that the primary consideration behind their decision to sustain the PCGG's dropping of private respondent as a defendant was his promise to disclose the identities of the clients in question. However, respondents failed to show and absolute nothing exists in the records of the case at bar that private respondent actually revealed the identity of his client(s) to the PCGG. Since the undertaking happens to be the leitmotif of the entire arrangement between Mr. Roco and the PCGG, an undertaking which is so material as to have justified PCGG's special treatment exempting the private respondent from prosecution, respondent Sandiganbayan should have required proof of the undertaking more substantial than a "bare assertion" that private respondent did indeed comply with the undertaking. Instead, as manifested by the PCGG, only three documents were submitted for the purpose, two of which were mere requests for re-investigation and one simply disclosed certain clients which petitioners (ACCRA lawyers) were themselves willing to reveal. These were clients to whom both petitioners and private respondent rendered legal services while all of them were partners at ACCRA, and were not the clients which the PCGG wanted disclosed for the alleged questioned transactions. 61 To justify the dropping of the private respondent from the case or the filing of the suit in the respondent court without him, therefore, the PCGG should conclusively show that Mr. Roco was treated as species apart from the rest of the ACCRA lawyers on the basis of a classification which made substantial distinctions based on real differences. No such substantial distinctions exist from the records of the case at bench, in violation of the equal protection clause. The equal protection clause is a guarantee which provides a wall of protection against uneven application of status and regulations. In the broader sense, the guarantee operates against uneven application of legal norms so that all persons under similar circumstances would be accorded the same treatment. 62 Those who fall within a particular class ought to be treated alike not only as to privileges granted but also as to the liabilities imposed. . . . What is required under this constitutional guarantee is the uniform operation of legal norms so that all persons under similar circumstances would be accorded the same treatment both in the privileges conferred and the liabilities imposed. As was noted in a recent decision: "Favoritism and undue preference cannot be allowed. For the principle is that equal protection and security shall be given to every person under circumstances,

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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 upon the question of the identity of their clients but also on documents related to the suspected transactions, not only in violation of the attorney-client privilege but also of the constitutional right against selfincrimination. Whichever way one looks at it, this is a fishing expedition, a free ride at the expense of such rights. An argument is advanced that the invocation by petitioners of the privilege of attorney-client confidentiality at this stage of the proceedings is premature and that they should wait until they are called to testify and examine as witnesses as to matters learned in confidence before they can raise their objections. But petitioners are not mere witnesses. They are co-principals in the case for recovery of alleged ill-gotten wealth. They have made their position clear from the very beginning that they are not willing to testify and they cannot be compelled to testify in view of their constitutional right against self-incrimination and of their fundamental legal right to maintain inviolate the privilege of attorney-client confidentiality. It is clear then that the case against petitioners should never be allowed to take its full course in the Sandiganbayan. Petitioners should not be made to suffer the effects of further litigation when it is obvious that their inclusion in the complaint arose from a privileged attorney-client relationship and as a means of coercing them to disclose the identities of their clients. To allow the case to continue with respect to them when this Court could nip the problem in the bud at this early opportunity would be to sanction an unjust situation which we should not here countenance. The case hangs as a real and palpable threat, a proverbial Sword of Damocles over petitioners' heads. It should not be allowed to continue a day longer. While we are aware of respondent PCGG's legal mandate to recover ill-gotten wealth, we will not sanction acts which violate the equal protection guarantee and the right against self-incrimination and subvert the lawyer-client confidentiality privilege. WHEREFORE, IN VIEW OF THE FOREGOING, the Resolutions of respondent Sandiganbayan (First Division) promulgated on March 18, 1992 and May 21, 1992 are hereby ANNULLED and SET ASIDE. Respondent Sandiganbayan is further ordered to exclude petitioners Teodoro D. Regala, Edgardo J. Angara, Avelino V. Cruz, Jose C. Concepcion, Victor P. Lazatin, Eduardo U. Escueta and Paraja G. Hayuduni as parties-defendants in SB Civil Case No. 0033 entitled "Republic of the Philippines v. Eduardo Cojuangco, Jr., et al." SO ORDERED. EN BANC A.C. No. 6632. August 2, 2005 NORTHWESTERN UNIVERSITY, INC., NICOLAS, Complainant, vs. Atty. MACARIO D. ARQUILLO, Respondent. DECISION PANGANIBAN, J.: and BEN A.

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Representing conflicting interests is prohibited by the Code of Professional Responsibility. Unless all the affected clients written consent is given after a full disclosure of all relevant facts, attorneys guilty of representing conflicting interests shall as a rule be sanctioned with suspension from the practice of law. The Case and the Facts This administrative case stems from a sworn Letter-Complaint1 filed with the Integrated Bar of the Philippines-Commission on Bar Discipline (IBP-CBD) by Ben A. Nicolas, acting for himself and on behalf of Northwestern University, Inc. In that Letter-Complaint, Atty. Macario D. Arquillo was charged with deceit, malpractice, gross misconduct and/or violation of his oath as attorney by representing conflicting interests. The material averments of the Complaint are summarized by the IBP-CBD as follows: "Herein [c]omplainants, Northwestern University, Inc. and Mr. Ben A. Nicolas, accuses (sic) herein [r]espondent, Atty. Macario D. Arquillo, of engaging in conflicting interest in a case before the National Labor Relations Commission, Regional Arbitration Branch No. 1, San Fernando, La Union. "Complainant alleges that in a consolidated case, herein [r]espondent appeared and acted as counsels for both complainants (eight out of the eighteen complainants therein) and respondent (one out of the ten respondents therein). "In a consolidation of NLRC Cases [Nos.] 1-05-1086-97, 1-05-108797, 1-05-1088-97, 1-05-1091-97, 1-05-1092-97, 1-05-1097-97, 1-051109-97, 1-05-1096-97 ("consolidated cases"), herein [r]espondent appeared as counsel for complainants therein, Teresita A. Velasco, Gervacio A. Velasco, Mariel S. Hernando, Virginio C. Rasos, Bonifacio S. Blas, Ronald A. Daoang, Luzviminda T. Urcio and Araceli Quimoyog. In the very same consolidated case, [r]espondent was also the counsel of one of the respondents therein, Jose G. Castro. "Complainants, as their evidence, submitted the Motion to Dismiss dated August 12, 1997 filed by Jose G. Castro, represented by his counsel, herein [r]espondent filed before the NLRC of San Fernando, La Union. Sixteen (16) days later or on August 28, 1997, [r]espondent filed a Complainants Consolidated Position Paper, this time representing some of the complainants in the very same consolidated case."2 (Citations omitted) Respondent failed to file his Answer to the Complaint despite a June 24 1998 Order3 of the IBP-CBD directing him to do so. Even after receiving five notices, he failed to appear in any of the scheduled hearings. Consequently, he was deemed to have waived his right to participate in the proceedings. Thereafter, the complainants were ordered to submit their verified position paper with supporting documents, after which the case was to be deemed submitted for decision.4 In their Manifestation5 dated August 30, 2004, they said that they would no longer file a position paper. They agreed to submit the case for decision on the basis of their Letter-Affidavit dated March 16, 1998, together with all the accompanying documents. Report and Recommendation of the IBP In his Report,6 Commissioner Dennis B. Funa found respondent guilty of violating the conflict-of-interests rule under the Code of Professional Responsibility. Thus, the former recommended the latters suspension from the practice of law for a period of six (6) months. In Resolution No. XVI-2004-415 dated October 7, 2004, the Board of Governors of the IBP adopted the Report and Recommendation of Commissioner Funa, with the modification that the period of suspension was increased to two (2) years. On December 12, 2004, the Resolution and the records of the case were transmitted to this Court for final action, pursuant to Section 12(b) of Rule 139-B of the Rules of Court. On January 20, 2005, respondent filed a Motion for Reconsideration to set aside Resolution No. XVI-2004-415. The IBP denied the Motion. The Courts Ruling We agree with the findings of the IBP Board of Governors, but reduce the recommended period of suspension to one year. Administrative Liability of Respondent

The Code of Professional Responsibility requires lawyers to observe candor, fairness and loyalty in all their dealings and transactions with their clients.7 Corollary to this duty, lawyers shall not represent conflicting interests, except with all the concerned clients written consent, given after a full disclosure of the facts.8 When a lawyer represents two or more opposing parties, there is a conflict of interests, the existence of which is determined by three separate tests: (1) when, in representation of one client, a lawyer is required to fight for an issue or claim, but is also duty-bound to oppose it for another client; (2) when the acceptance of the new retainer will require an attorney to perform an act that may injuriously affect the first client or, when called upon in a new relation, to use against the first one any knowledge acquired through their professional connection; or (3) when the acceptance of a new relation would prevent the full discharge of an attorneys duty to give undivided fidelity and loyalty to the client or would invite suspicion of unfaithfulness or double dealing in the performance of that duty. 9 In the present case, Atty. Macario D. Arquillo, as counsel for Respondent Jose C. Castro in NLRC Case Nos. I-05-1083-97 to I-051109-97, filed a Motion to Dismiss those cases. Shortly thereafter, a position paper was filed by Atty. Arquillo as counsel for several complainants in consolidated NLRC Case Nos. I-05-1087-97, I-051088-97, I-05-1091-97, I-05-1092-97, I-05-1096-97, I-05-1097-97, and I-05-1109-97. All the cases in the second set were included in the first one, for which he had filed the subject Motion to Dismiss. Furthermore, in his position paper for the complainants, Atty. Arquillo protected his other client, Respondent Jose C. Castro, in these words: "3. More than lack of valid cause for the dismissal of complainants, respondents, except Atty. Jose C. Castroand Atty. Ernesto B. Asuncion, should be made accountable for not according complainants their right to due process."10 In his two-page Motion for Reconsideration, Atty. Arquillo claims that there was no conflict of interest in his representation of both the respondent and the complainants in the same consolidated cases, because all of them were allegedly on the same side. Attaching to the Motion the Decision of Labor Arbiter Norma C. Olegario on the consolidated NLRC cases, Atty. Arquillo theorizes that her judgment absolved Castro of personal liability for the illegal dismissal of the complainants; this fact allegedly showed that there was no conflict in the interests of all the parties concerned. This Court does not agree. Atty. Arquillos acts cannot be justified by the fact that, in the end, Castro was proven to be not personally liable for the claims of the dismissed employees. Having agreed to represent one of the opposing parties first, the lawyer should have known that there was an obvious conflict of interests, regardless of his alleged belief that they were all on the same side. It cannot be denied that the dismissed employees were the complainants in the same cases in which Castro was one of the respondents. Indeed, Commissioner Funa correctly enounced: "As counsel for complainants, [r]espondent had the duty to oppose the Motion to Dismiss filed by Jose G. Castro. But under the circumstance, it would be impossible since [r]espondent is also the counsel of Jose G. Castro. And it appears that it was [r]espondent who prepared the Motion to Dismiss, which he should be opposing [a]s counsel of Jose G. Castro, Respondent had the duty to prove the Complaint wrong. But Respondent cannot do this because he is the counsel for the complainants. Here lies the inconsistency. The inconsistency of interests is very clear. "Thus it has been noted The attorney in that situation will not be able to pursue, with vigor and zeal, the clients claim against the other and to properly represent the latter in the unrelated action, or, if he can do so, he cannot avoid being suspected by the defeated client of disloyalty or partiality in favor of the successful client. The foregoing considerations will strongly tend to deprive the relation of attorney and client of those special elements which make it one of trust and confidence[.] (Legal Ethics, Agpalo, p. 230, 4th ed.; In re De la Rosa, 21 Phil. 258) "11 An attorney cannot represent adverse interests. It is a hornbook doctrine grounded on public policy that a lawyers representation of both sides of an issue is highly improper. The proscription applies when the conflicting interests arise with respect to the same general

PROBLEMATIC AREAS IN LEGAL ETHICS CASES


matter, however slight such conflict may be. It applies even when the attorney acts from honest intentions or in good faith. 12 The IBP Board of Governors recommended that respondent be suspended from the practice of law for two years. Considering, however, prior rulings in cases also involving attorneys representing conflicting interests, we reduce the suspension to one (1) year. 13 WHEREFORE, Atty. Macario D. Arquillo is found GUILTY of misconduct and is hereby SUSPENDED from the practice of law for a period of one (1) year effective upon his receipt of this Decision, with a warning that a similar infraction shall be dealt with more severely in the future. SO ORDERED. EN BANC

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entitled: "Makadaya L. Sadik and Linang Minalang, plaintiffs versus Great Pacific Life Assurance Corporation, defendant" for Specific Performance. 5. On November 17, 1989, the Regional Trial Court rendered a decision in favor of plaintiffs and against the defendant ordering the latter to pay to the former the sum of P30,000.00 as "benefit due them under Insurance Policy No. 503033." The court denied plaintiffs" claim for double indemnity of P60,000.00 under the accidental death rider. At this time, respondent was already the presiding Judge of the 5th Municipal Circuit Trial Court of Kolambugan-Maigo (now, MCTC of KolambuganTangcal), having assumed such office on September 1, 1989, EXh.7. 6. Upon receipt of the decision, respondent as counsel for plaintiffs filed a notice of appeal to the Court of Appeals even as defendant likewise filed an appeal. Respondent represented the plaintiffs in the appeal. On September 22, 1992, the Court of Appeals affirmed in toto the decision of the lower court. Defendant elevated the case on petition for review to the Supreme Court which dismissed the petition. 7. After the dismissal of its petition by the Supreme Court, Grepalife filed a Manifestation dated 6 July 1993 with the Regional Trial Court, Br. 13, Cotabato City declaring its willingness to pay the judgment award and depositing with said court RCBC check No. 62837 in the amount of P30,000.00 payable to the plaintiffs. Copy of the manifestation was furnished to "Atty. Abdallah M. Casar, Counsel for the Plaintiffs, Kolambugan, Lanao del Norte" (pp. 44 & 55, Records). 8. On October 1, 1992, respondent collected the check from the Clerk of Court of the Regional Trial Court, Br, 13, Cotabato City and thereafter cashed it. 9. Respondent did not deliver the said money judgment to the plaintiffs. 10. On January 26, 1995, complainants filed their administrative complaint. Respondent admitted that he retained the sum of P30,000.00 representing the judgment award in civil Case No. 2747 and that he did not deliver it to the plaintiffs. He interposes the following defenses: 1. He is not guilty of any misconduct because he accepted the case long before he became a judge; 2. He did not misappropriate the money he collected from the court. It is intact but he has the right to retain the amount of P30,000.00 until he is paid his expenses pursuant to Section 137, Rule 138 on attorney's lien; 3. The complainant, Makadaya Sadik is not the real Makadaya Sadik, plaintiff in Civil Case No. 2747 and being an impostor she is not entitled to the money. There is no dispute that when respondent agreed to file the complaint in behalf of Makadaya Sadik and Linang Minalang, he was not yet a member of the judiciary. He was a trial attorney of the Bureau of Forest Development. He claimed that he was authorized to engage in practice in behalf of relatives but presented no documentary authority. He continued to represent the plaintiffs in Civil Case No. 2747 when he joined the Citizens Legal Assistance Office in a private capacity. In fact he took pains to emphasize that he handled the case not as a CLAO lawyer (tsn, p. 39; 11-13-95)

G.R. No. MTJ-95-1053 January 2, 1997 SPOUSES MAKADAYA SADIK SADIK, complainants, vs. JUDGE ABDALLAH CASAR, respondent. and USODAN

PER CURIAM: The case before us stemmed from a verified complaint filed by Spouses Makadaya and Usodan Sadik charging Judge Abdallah Casar, Municipal Circuit Trial Court of Kolambugan-Tangcal, Lanao del Norte with misconduct and misappropriation. Judge Casar filed his answer dated February 28, 1995 averring that the complaint is merely for harassment and intended to ruin his reputation. In the resolution of August 14, 1995, this Court referred this case to Executive Judge Valerio M. Salazar of the Regional Trial Court of Iligan City and Lanao del Norte, Branch 6 for investigation, report and recommendation. In his Report and Recommendation dated November 25, 1995, the Investigating Judge made the following findings: The basic facts are not in dispute are not in dispute, to wit: 1. On February 14, 1985, one Lekiya Paito filed an application for life insurance with the Great Pacific Life Assurance Corporation (Grepalife) in Cotabato City, Exh. 5. The application was approved and Policy No. 0503033 was issued in her name for the amount of P30,000.00 with an accidental death benefit rider. Named as beneficiaries were her daughters, Linang Minalang and Makadaya Sadik. She paid the initial premium of P410.00. 2. On October 12, 1985, Lekiya Paito died in Pagayawan, Tampara, Lanao del Sur. 3. The beneficiaries and/or through their representatives sought for and obtained the assistance of respondent, who was then a trial attorney of the Bureau of Forest Development, Cotabato City, to pursue the approval of their claim for payment of the insurance benefits with Grepalife. Respondent made the necessary follow-ups but in due course Grepalife denied the claim on the grounds of misrepresentation and concealment. 4. On October 10, 1986, respondent, as counsel for the beneficiaries, filed a complaint in the Regional Trial Court, Br. 13, Cotabato City which was docketed therein as Civil Case No. 2747

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although in his notices of change of address, he gave his new addresses as follows: "Atty. Abdallah M. Casar, CLAO, Capitol, Pigcarangan, Tubod, Lanao del Norte" Exh. 10 and "CLAO, Kabacan District Office, Municipal Hall Bldg., Kabacan, Province of Cotabato" Exh. 11. (pp. 119120, Records). Similarly in his Memorandum dated 24 October 1988, he signed as "Attorney for Plaintiffs, CLAO, Kabacan, Cotabato," Exh. B (pp. 89-96, Records). In those instances, while he was actually prosecuting the case in his private capacity, he gave the impression that he was handling the case for the CLAO. By his own admission, he was engaged in a private practice while employed as trial attorney with the BFD and citizen's attorney with the CLAO. He failed to produce proof of authority. But as he correctly states, those were acts performed before he joined the judiciary. However, he failed to mention that even after he became a municipal judge, he continued to act as counsel for the plaintiffs in Civil Case No. 2747 on appeal to the Court of Appeals and the Supreme Court. He assumed office on September 1, 1989. The decision of the Regional Trial Court was rendered on November 17, 1989. He filed an appeal in behalf of the plaintiffs even as Grepalife also appealed. He testified: "Q. After that what happened? A. The case' decision was affirmed by the Court of Appeals and eventually appealed again to the Supreme Court where I made several manifestatio ns". (tsn, p. 36; 11/13/95). He actively handled the case on appeal. He violated Rule 5:07 of the Code of Judicial Conduct which states that "A judge shall not engage in the private practice of law." He reasoned out that he was forced to continue as counsel for the plaintiffs because he failed to get in touch with them after he received the decision of the lower court. He even went to Davao to look for them but failed. A transparent and flimsy justification. At that time he was stationed in Kolambugan, Lanao del Norte. He knew that plaintiffs are from Pagayawan, Tamparan, Lanao del Sur. He is himself a native of Tatayawon, Tamparan. He could have easily went to his hometown or sent someone there to get in touch with plaintiffs. He did not have to go to Davao which is much further from Kolambugan than Tamparan. At any rate failure to contact his clients is not reason enough to continue as counsel for plaintiffs on appeal. The least which he should have done was to secure permission from the Supreme Court before proceeding with the case on appeal. He also denies having converted and misappropriated the judgment award of P30,000.00. He claims the amount is intact but he has the right to retain the same until he is paid for his expenses pursuant to Sec. 37, Rule 138 of the Rule of Court. He declared: "A. They failed to come and for all these,

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I estimated my expenses to be more than Thirty Thousand (P30,000.00 ) Pesos. Q. What is your right in getting the amount of P30,000.00 ? A. Well, pursuant to Rule 138, Section 37 of the Rules of Court known as attorney's liens by virtue of that I have the right to retain the amount until payment of my expenses was paid . . ." (sic) (tsn, pp. 38-39; 11/13/95). This is ridiculous. The judgment award is only P30,000.00 but he spent more than P30,000.00 to recover it. Thus despite winning the case, the client could not collect a single cent and will still have to pay his lawyer. This may be one reason why the ordinary layman holds an unflattering perception of lawyers. His evidence fails to prove the amount of expenses claimed by him. He said that to followup the claim, he went to Manila six times spending for fare alone P3000.00 for each trip. When the case was on appeal to the Supreme Court, he went to Manila to follow-up thrice (tsn, p. 38; 11/13/95). Except for his uncorroborated testimony, there are only two documents showing he was indeed in Manila. Those are Exhs. 26 and 32 indicating that he personally served those letters to Grepalife in Manila. But there is no evidence that he went there for this purpose alone. It is highly probable that the visit to Grepalife was merely one of his purposes in going to Manila. On the other hand, his claim that he went to Manila three times to follow-up the case while it was pending with the Supreme Court is unworthy of credence. He was then already a municipal judge. He could not have openly exposed himself to the Supreme Court as being engaged in private practice. Besides there is no reason to follow-up in person any case with the Supreme Court. Similarly, his claims that he spent a lot of money in looking for witnesses and trying to trace the whereabouts of his clients are selfserving, devoid of corroboration and unsupported by document evidence. Finally, he presented the receipts for the payment of docket fees in the amount of P580.00, Exhs. 28 and 29, which he alleges was paid by him out of his own pocket. Standing alone, those receipts do not prove his claim. The normal practice is for the client to advance to his lawyer the amount for the filing fees. It is the lawyer who pays the docket fees and he can easily procure the issuance of the receipts in his own name. Complainant Makadaya Sadik declared that her husband took care of the payment of the docket fees. Respondent did not cross-examine Usodan Sadik on this point.

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In sum, respondent failed to show by clear and convincing evidence that he did indeed spent more than P30,000.00 to prosecute the insurance claim. His various claims of expenses for travels to Manila, to find witnesses and to look for his clients are all designed to inflate his demand for reimbursement and justify his withholding of the judgment award from his clients. To be generous, the sum of P6,000.00 corresponding to his trips to Manila in March and May, 1986 may be allowed. Added to that may be his claim for attorney's fees, although to be generous again, he is not really entitled to it. From the testimonies of both Usodan Sadik and respondent, it appears that there was an agreement for the payment of P10,000.00 if respondent succeeds in recovering the sum of P60,000.00 under the accidental death rider. But this amount was not obtained and only the basic claim of P30,000.00 was adjudged by the court. It is logical to assume that in such case, the amount of attorney's fees should also be proportionally reduced to P5,000.00. Thus his total claim is not more than P11,000.00. Nonetheless, it appears that his reliance on Section 37, Rule 138 of the Rules of Court is nothing more than an afterthought. If indeed, he was claiming attorney's lien pursuant to said section, then he should have known that to be entitled thereto he must comply with.certain pre-conditions. Said section provides that with respect to judgments for payment of money, like in Civil Case No. 2747, a lawyer shall have a lien thereto "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 . . . and shall have caused written notice thereof to be delivered to his client and the adverse party." From July, 1993 when he learned of the dismissal of Grepalife's petition by the Supreme Court until now, he did not file the necessary pleadings to enforce his alleged lien. It surfaces only when the administrative case was filed. His last line of defense is that the complainant Makadaya Sadik is not the real Makadaya Sadik who is the beneficiary of Lekiya Paito and plaintiff in Civil Case No. 2747. He declared: A. As far as I know they were recruited as witnesses. COURT: Q. You said they, are you referring to Usodan Sadik and Makadaya Sadik? A. Yes, Your Honor, because of the failure of the beneficiarie s to come to Court. COURT: Proceed. Judge Casar: Q. Do you have any evidence for that, that Makadaya Sadik or referring to these persons who are complainants, Usodan Sadik and Makadaya Sadik were recruited to testify in this case, but these are not the true complainants? A. Yes. Q. Who recruited them?

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A. The claimants. (tsn, pp. 2122; 11/13/95). xxx xxx xxx COURT: WHO FAILED TO APPEAR? A. Makadaya Sadik and Linang Minalang despite notice. The claimants failed to appear and procured another persons (sic) who are impostors. This Kunug Minalang and Sadik Paito took charge of the witnesses and they presented another witnesses (sic). COURT: I DO NOT UNDERSTAND THIS. ANOTHER WITNESSES OR ANOTHER PERSON WAS PRESENTED TO TESTIFY AS LINANG MINALANG AND SADIK? A. At that time we needed more witnesses so the parties and Barogong Paito agreed to testify but two persons who are principal witnesses failed to come. COURT: SO WHEN THEY FAILED TO COME, WHAT DID SADIK PAITO DO? A. They took charge of presenting another witnesses (sic). Q. WHAT DO YOU MEAN BY "TOOK CHARGE", YOU MEAN, THEY PRESENTED TO YOU PERSONS WHO WERE NOT REALLY LINANG MINALANG AND MAKADAYA SADIK? A. They told me that instead of them who could not go to court, they faked another persons (sic). Q. AND THESE PERSONS WHO WERE FAKED APPEARED AND TESTIFIED AS LINANG MINALANG AND MAKADAYA SADIK? A. As a matter of fact, only Makadaya Sadik took the stand because Linang Minalang failed to come. Q. MAKADAYA SADIK TESTIFIED IN COURT? A. In reality, Makadaya Sadik failed to appear also. Q. BUT SOMEBODY TESTIFIED AS IF HE IS MAKADAYA SADIK? A. Yes. Q. I WANT THIS VERY CLEAR, HADJI SARIP PAITO PRESENTED TO YOU ANOTHER PERSON WHO CLAIM TO BE MAKADAYA SADIK BUT HE IS REALLY NOT MAKADAYA? A. Yes. Q. AND THAT PERSON WHO ACTUALLY TESTIFIED CLAIMING TO BE MAKADAYA SADIK WAS THE PERSON WHO TESTIFIED THE LAST TIME AS MAKADAYA SADIK? A. That is what I can recall. COURT: PROCEED.

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Judge Casar: Q. What was the arrangement for that matter for the recruitment of other substitute witnesses? A. Well, I told my client, I have to give them Five Thousand (P5,000.00) pesos. COURT: TO WHOM WILL THE P5,000.00 BE PAID? A. To the substitute witnesses. Q. YOU TOLD SARIP PAITO AND KUNUG MINALANG THAT THESE WITNESSES BE PAID P5,000.00? A. Yes. Q. DID THEY AGREE? A. I presume so because they testified. Q. KUNUG MINALANG AND SARIP PAITO AGREED THAT THE P5,000.00 BE PAID TO THE SUBSTITUTE WITNESSES? A. Seems to me that they agreed. (tsn, pp.34-36; 11/13/95). By his own categorical admission, he deliberately, knowingly and willfully agreed to procure a substitute witness, an impostor, to pose as claimant Makadaya Sadik and testify in Civil Case No. 2747. He even proposed that such witness be paid P5,000.00. And he actually presented such witness as Makadaya Sadik in that case and that impostor is the Makadaya Sadik who is the complainant in this case. She is, respondent says, the step-daughter of Lekiya Paito, the daughter of Batobarani Lugpangan and another woman (tsn, p. 17; 11/13/95). By any language, this is subornation of perjury. To make matters worse, he declared that even before he filed the complaint in Civil Case No. 2747, he was already informed that the insurance policy of Lekiya Paito was fraudulent. Thus: "Q. What else happened? A. Naga Datumanong approached me and told me about the facts of the case and that this was done by unscrupulous persons. COURT: WHAT WAS DONE BY UNSCRUPULOUS PERSONS? A. The insurance application of Lekiya Paito, in fact, at the time of the insurance, Lekiya Paito was killed in her hometown. COURT: YOU MEAN LEKIYA PAITO WAS ALREADY SICK WHEN THE INSURANCE FORM WAS MADE? A. Yes, she was sick in Pagayawan, not in Cotabato City. Judge Casar: So, whose work is that insurance

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A. As far as I know, that is the work of Usodan Hadji Ibrahim. COURT: THIS USODAN HADJI IBRAHIM IS NOT THE PERSON NOW IN COURT? A. As far as I know, he is Usodan Ibrahim. Q. IN OTHER WORDS, THIS IS OR THE PERSON WHO APPEARED AS COMPLAINANT IS ACTUALLY USODAN IBRAHIM? A. As far as I know, he is not working with me. Q. SO THAT THIS PERSON NAMED USODAN SADIK, ONE OF THE COMPLAINANTS, IS ACTUALLY USODAN IBRAHIM? A. Yes. Q. AND YOU NOW CLAIM THAT USODAN IBRAHIM WAS THE ONE WHO PREPARED THE FRAUDULENT POLICY FOR LEKIYA PAITO? A. As far as I was told. (tsn, pp. 30-31; 11/13/95). Yet knowing that the insurance claim was fraudulent, he filed the complaint and compounded it by presenting false witnesses in court. He transgressed not only the Canons of Professional Ethics but also the Revised Penal Code. In his single-minded intent to keep the insurance proceeds for himself and deprive complainant Makadaya Sadik of her share, respondent duga deep hole for himself. His cure is worse than the disease. It is possible that the insurance taken for Lekiya Paito was indeed a scam. It is not an uncommon occurrence in these parts to insure a person who is near death or for an insured to fake his death and collect the proceeds. But scam or not we are convinced that the complainant Makadaya Sadik is not an impostor. She denied that she is the step-daughter of Lekiya Paito. She insisted she is the youngest daughter and she named all her brothers and sisters. And it was respondent who presented her in Civil Case No. 2747 as Makadaya Sadik daughter of Lekiya Sadik and one of the beneficiaries of the latter's insurance policy. The Investigating Judge then recommended that a penalty ranging from a fine of twenty thousand (P20,000. 00) pesos to suspension for six (6) months be imposed depending on respondent's record. Respondent was likewise ordered to pay to herein complainant, Makadaya Sadik, the sum of fifteen thousand (P15,000.00) pesos less the sum of five thousand five hundred (P5,500.00) pesos equivalent to one-half of the expenses and attorney's fees demanded by respondent. In the resolution of March 13, 1996, this Court referred this case to the Office of the Court Administrator fo revaluation, report and recommendation. In its memorandum of August 15, 1996, the Office of the Court Administrator made the following findings and evaluation: The undersigned concurs with the finding of Executive Judge Salazar that respondent be found

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guilty of the charges of misconduct and misappropriation, but differs insofar as the recommended penalty is concerned. It is an established rule that the personal behavior of a member of the judiciary in the performance of his official duties and in his everyday life should be beyond reproach. Respondent's act of collecting the judgment award of P30,000.00 from the Clerk of Court of RTC, Cotabato City and his refusal to turn over the amount to his client, complainant Makadaya Sadik and her sister, is an act of misappropriation amounting to gross misconduct and/or dishonesty. His defense that he has the right to retain the entire P30,000.00 as attorney's lien in unacceptable. For he has no right to retain the judgment award allegedly to secure payment of litigation expenses and attorney's fees. He had no authority to practice law while in government service. In continuing to handle the case of herein complainants against Grepalife after he joined the government and without first securing proper authority is no less constitutive of abuse of authority. Furthermore, he violated Rule 5.06 of the Code of Judicial Conduct which prohibits a judge to engage in the private practice of law. He likewise violated the Attorney's Oath in agreeing to file Civil Case No. 2747 for the purpose of claiming the insurance proceeds from Grepalife despite his having been informed that the insurance policy of Lekiya Paito was fraudulently applied for. Agreeing to handle the claim said to have arisen from a fraudulent act against the insurer certainly speaks of a moral flaw in his character. This Court has held that: "A judge should always be a symbol of rectitude and propriety, comporting himself in a manner that will raise no doubt whatsoever about his honesty . . . He should ever strive to preserve the good name of the court on which he sits and avoid any indiscretion that will defile its probity. The respondent has not lived up to these exacting standards. He has betrayed his oath and debased his position. He has impaired the image of the Judiciary to which he owes the duty of loyalty and obligation to keep it at all times above suspicion and worthy of the people's trust. No less importantly, he has also injured the herein complainant, who has yet to receive the money entrusted to the respondent for the satisfaction of the judgment that became final and executory more than three years ago." (Dr. Ernesto J. Yuson vs. Judge Federico V. Noel, AM No. RTJ-91-762, 1 October 1993). Records show that in MTJ-92-728 filed by Mayor Perlita Libardos against herein respondent judge for gross ignorance of the law, grave misconduct, etc. he was fined P5,000.00 and sternly warned. He has still five (5) other administrative cases docketed against him namely: 1) MTJ-95-1048, for gross ignorance of the law, gross incompetence, violation of Section 7, 15 and 17 of Rule 37 of the New Comelec Rules of Procedures, etc.; 2) 951061 for Illegal Possession of Firearms and Ammunitions; 3) OCA-IPI No. 95-59-MTJ for Gross Ignorance of the Law, Gross Incompetence; and 4) OCA IPI No. 95-59-MTJ for Falsification of Public Documents. The first two (2) cases are pending investigation by the Executive Judge while the two (2) others are now pending with the Court with respondent's Comment dated 29 November 1995 and 7 December 1995 and pending evaluation by this Office, respectively. It is clear from the facts established that respondent does not deserve to remain in the service of the Judiciary where honesty, probity and integrity are indispensable credentials. It then recommended: Respectfully submitted for the consideration of the Honorable Court is our recommendation that: a) Judge Abdallah M. Casar, MCTC KolambuganTangcal, Lanao del Norte be DISMISSED from the

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service with prejudice to his appointment to any position in the government, including governmentowned or controlled corporations, and with forfeiture of all retirement benefits except this accrued leave credits; and b) he be ORDERED to turnover to complainant Makadaya-Sadik and Linang Minalang (co-plaintiff in Civil Case No. 2747) the sum of Thirty Thousand Pesos (P30,000.00) which he received from the Clerk of Court of RTC, Branch 13, Cotabato City last 1 October 1993 within fifteen (15) days from receipt of notice. The Court has thoroughly studied the record of this case and has ascertained that the findings of the investigating judge, concurred in by the Office of the Court Administrator, are adequately supported by the evidence and are in accord with applicable legal principles. Consequently, the Court hereby adopts the OCA's recommendation of meting out the supreme penalty of dismissal on herein respondent judge. It must be borne in mind that courts exist to dispense and to promote justice. 1 However, the reality of justice depends, above all, on the intellectual, moral and personal quality of the men and women who are called to serve as our judges. 2 In a piece written by Rosenberg, this point was emphasized, thus: Justice is an alloy of men and mechanisms in which, as Roscoe Pound remarked, "men count more than machinery." Assume the clearest rules, the most enlightened procedures, the most sophisticated court techniques; the key factor is still the judge. In the long run, "There is no guarantee of justice except the personality of the judge. The reason the judge makes or breaks the system of justice is that rules are not self-declaring or self-applying. Even in a government of laws, men make the decisions." 3 In the recent case of Jocelyn Talens-Dabon v. Judge Hermin E. Arceo, 4 the Court emphasized the importance of the role played by judges in the judicial system, thus: The integrity of the Judiciary rests not only upon the fact that it is able to administer justice but also upon the perception and confidence of the community that the people who run the system have done justice. At times, the strict manner by which we apply the law may, in fact, do justice but may not necessarily create confidence among the people that justice, indeed, is served. Hence, in order to create such confidence, the people who run the judiciary, particularly judges and justices, must not only be proficient in both the substantive and procedural aspects of the law, but more importantly, they must possess the highest integrity, probity, and unquestionable moral uprightness, both in their public and private lives. Only then can the people be reassured that the wheels of justice in this country run with fairness and equity, thus creating confidence in the judicial system. Insistence on personal integrity and honesty as indispensable qualifications for judicial office reflect an awareness in the legal profession of the immensity of the damage that can be done to the legal order by judicial corruption. The rationale for this was succinctly put by Jones, thus: If a physician or a professor or a businessman is discovered to be a thief or an influence peddler, the disclosure will not put medicine, higher education, or business into general disrepute. But judges are different and more representative; revelations of judicial corruption create suspicion and loss of confidence in legal processes generally and endanger public respect for law. 5 Indeed, to be effective in his role, a judge must be a man of exceptional integrity and honesty. The special urgency for requiring these qualities in a judge is not hard to understand for the judge acts directly upon the property, liberty, even life, of his countrymen. Hence, being in a position of such grave responsibility in the

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administration of justice, a judge must conduct himself in a manner befitting the dignity of such exalted office. Respondent judge, however, not only failed in this respect but proved himself repeatedly unworthy of his post. The records show that even after he became judge, respondent acted as counsel for herein complainants and misappropriated the judgment award of P30,000.00 which rightfully belongs to complainants. Moreover, respondent's line of defense revealed a significant and deplorable flaw in his character. In hoping to redeem himself, he categorically admitted that he deliberately, knowingly and willfully agreed to handle a case involving a fraudulent insurance claim and in the process procured and presented false witnesses in court. Under the circumstances, this Court is amazed at how brazen respondent has comported himself and without compunctions at leaving a "paper trail" behind him. This Court notes that respondent had been previously fined P5,000.00 and sternly warned for knowingly issuing an order without jurisdiction and with grave abuse of discretion. 6 Moreover, he has four other administrative cases docketed against him involving various charges such as gross ignorance of the law, gross incompetence, illegal possession of firearms and ammunitions and falsification of public documents. Respondent judge's seeming propensity to transgress the very law he is sworn to uphold makes him unfit to discharge the functions of a judge. Judicial office demands the best possible men and this Court will not hesitate to rid its ranks of undesirables who undermine its efforts towards effective and efficient administration of justice, thus tainting its image in the eyes of the public. WHEREFORE, Judge Abdallah M. Casar is hereby DISMISSED from the service for misconduct and misappropriation with FORFEITURE of all retirement benefits and accrued leave credits and with prejudice to re-employment in any branch, agency or instrumentality of the government, including government-owned or controlled corporations. He is further ordered to turn over to complainant Makadaya Sadik and Linang Minalang the sum of Thirty Thousand Pesos (P30,000.00) which he received from the Clerk of Court of RTC, Branch 13, Cotabato City last October 1,1993. This judgment is immediately executory and the respondent judge is further ordered to cease and desist from discharging the functions of his office upon receipt of this decision. Let a copy be entered in the personal records of the respondent. SO ORDERED. FIRST DIVISION A.C. No. 5804 July 1, 2003 FEDERICO D.

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interest because he was engaged by the PPSTA, of which complainants were members, and was being paid out of its corporate funds where complainants have contributed. Despite being told by PPSTA members of the said conflict of interest, respondent refused to withdraw his appearance in the said cases. Moreover, complainants aver that respondent violated Rule 15.062 of the Code of Professional Responsibility when he appeared at the meeting of the PPSTA Board and assured its members that he will win the PPSTA cases. In his Answer,3 respondent stressed that he entered his appearance as counsel for the PPSTA Board Members for and in behalf of the ASSA Law and Associates. As a partner in the said law firm, he only filed a "Manifestation of Extreme Urgency" in OMB Case No. 0-970695.4 On the other hand, SEC Case No. 05-97-5657 was handled by another partner of the firm, Atty. Agustin V. Agustin. Respondent claims that it was complainant Atty. Ricafort who instigated, orchestrated and indiscriminately filed the said cases against members of the PPSTA and its Board. Respondent pointed out that his relationship to Aurelio S. Salunat was immaterial; and that when he entered into the retainer contract with the PPSTA Board, he did so, not in his individual capacity, but in representation of the ASSA Law Firm. He denied that he ensured the victory of the PPSTA Board in the case he was handling. He merely assured the Board that the truth will come out and that the case before the Ombudsman will be dismissed for lack of jurisdiction, considering that respondents therein are not public officials, but private employees. Anent the SEC case, respondent alleged that the same was being handled by the law firm of Atty. Eduardo de Mesa, and not ASSA. By way of Special and Affirmative Defenses, respondent averred that complainant Atty. Ricafort was himself guilty of gross violation of his oath of office amounting to gross misconduct, malpractice and unethical conduct for filing trumped-up charges against him and Atty. De Mesa. Thus, he prayed that the complaint against him be dismissed and, instead, complainant Ricafort be disciplined or disbarred. The complainant was docketed as CBD Case No. 97-531 and referred to the IBP Commission on Bar Discipline. After investigation, Commissioner Lydia A. Navarro recommended that respondent be suspended from the practice of law for six (6) months. The Board of Governors thereafter adopted Resolution No. XV-3003-230 dated June 29, 2002, approving the report and recommendation of the Investigating Commissioner. Respondent filed with this Court a Motion for Reconsideration of the above Resolution of the IBP Board of Governors. The pertinent rule of the Code of Professional Responsibility provides: RULE 15.03. A lawyer shall not represent conflicting interests except by written consent of all concerned given after a full disclosure of the facts. There is conflict of interest when a lawyer represents inconsistent interests of two or more opposing parties. The test is "whether or not in behalf of one client, it is the lawyers duty to fight for an issue or claim, but it is his duty to oppose it for the other client. In brief, if he argues for one client, this argument will be opposed by him when he argues for the other client."5 This rule covers not only cases in which confidential communications have been confided, but also those in which no confidence has been bestowed or will be used. 6 Also, there is conflict of interests if the acceptance of the new retainer will require the attorney to perform an act which will injuriously affect his first client in any matter in which he represents him and also whether he will be called upon in his new relation to use against his first client any knowledge acquired through their connection. 7 Another test of the inconsistency of interests is whether the acceptance of a new relation will prevent an attorney from the full discharge of his duty of undivided fidelity and loyalty to his client or invite suspicion of unfaithfulness or double dealing in the performance thereof. 8 In this jurisdiction, a corporations board of directors i s understood to be that body which (1) exercises all powers provided for under the Corporation Code; (2) conducts all business of the corporation; and (3) controls and holds all property of the corporation. 9 Its members have been characterized as trustees or directors clothed with a fiduciary character.10 It is clearly separate and distinct from the corporate entity itself.

BENEDICTO HORNILLA and ATTY. RICAFORT, complainants, vs. ATTY. ERNESTO S. SALUNAT, respondent. RESOLUTION YNARES-SANTIAGO, J.:

On November 21, 1997, Benedicto Hornilla and Federico D. Ricafort filed an administrative complaint 1 with the Integrated Bar of the Philippines (IBP) Commission on Bar Discipline, against respondent Atty. Ernesto S. Salunat for illegal and unethical practice and conflict of interest. They alleged that respondent is a member of the ASSA Law and Associates, which was the retained counsel of the Philippine Public School Teachers Association (PPSTA). Respondents brother, Aurelio S. Salunat, was a member of the PPSTA Board which approved respondents engagement as retained counsel of PPSTA. Complainants, who are members of the PPSTA, filed an intracorporate case against its members of the Board of Directors for the terms 1992-1995 and 1995-1997 before the Securities and Exchange Commission, which was docketed as SEC Case No. 05-97-5657, and a complaint before the Office of the Ombudsman, docketed as OMB Case No. 0-97-0695, for unlawful spending and the undervalued sale of real property of the PPSTA. Respondent entered his appearance as counsel for the PPSTA Board members in the said cases. Complainants contend that respondent was guilty of conflict of

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Where corporate directors have committed a breach of trust either by their frauds, ultra vires acts, or negligence, and the corporation is unable or unwilling to institute suit to remedy the wrong, a stockholder may sue on behalf of himself and other stockholders and for the benefit of the corporation, to bring about a redress of the wrong done directly to the corporation and indirectly to the stockholders.11 This is what is known as a derivative suit, and settled is the doctrine that in a derivative suit, the corporation is the real party in interest while the stockholder filing suit for the corporations behalf is only nominal party. The corporation should be included as a party in the suit.12 Having thus laid a suitable foundation of the basic legal principles pertaining to derivative suits, we come now to the threshold question: can a lawyer engaged by a corporation defend members of the board of the same corporation in a derivative suit? On this issue, the following disquisition is enlightening: The possibility for conflict of interest here is universally recognized. Although early cases found joint representation permissible where no conflict of interest was obvious, the emerging rule is against dual representation in all derivative actions. Outside counsel must thus be retained to represent one of the defendants. The cases and ethics opinions differ on whether there must be separate representation from the outset or merely from the time the corporation seeks to take an active role. Furthermore, this restriction on dual representationshould not be waivable by consent in the usual way; the corporation should be presumptively incapable of giving valid consent.13 (underscoring ours) In other jurisdictions, the prevailing rule is that a situation wherein a lawyer represents both the corporation and its assailed directors unavoidably gives rise to a conflict of interest. The interest of the corporate client is paramount and should not be influenced by any interest of the individual corporate officials. 14 The rulings in these cases have persuasive effect upon us. After due deliberation on the wisdom of this doctrine, we are sufficiently convinced that a lawyer engaged as counsel for a corporation cannot represent members of the same corporations board of directors in a derivative suit brought against them. To do so would be tantamount to representing conflicting interests, which is prohibited by the Code of Professional Responsibility. In the case at bar, the records show that SEC Case No. 05-97-5657, entitled "Philippine Public School Teachers Assn., Inc., et al. v. 1992 1995 Board of Directors of the Philippine Public School Teachers Assn. (PPSTA), et al.," was filed by the PPSTA against its own Board of Directors. Respondent admits that the ASSA Law Firm, of which he is the Managing Partner, was the retained counsel of PPSTA. Yet, he appeared as counsel of record for the respondent Board of Directors in the said case. Clearly, respondent was guilty of conflict of interest when he represented the parties against whom his other client, the PPSTA, filed suit. In his Answer, respondent argues that he only represented the Board of Directors in OMB Case No. 0-97-0695. In the said case, he filed a Manifestation of Extreme Urgency wherein he prayed for the dismissal of the complaint against his clients, the individual Board Members. By filing the said pleading, he necessarily entered his appearance therein.15 Again, this constituted conflict of interests, considering that the complaint in the Ombudsman, albeit in the name of the individual members of the PPSTA, was brought in behalf of and to protect the interest of the corporation. Therefore, respondent is guilty of representing conflicting interests. Considering however, that this is his first offense, we find the penalty of suspension, recommended in IBP Resolution No. XV-2002-230 dated June 29, 2002, to be too harsh. Instead, we resolve to admonish respondent to observe a higher degree of fidelity in the practice of his profession. ACCORDINGLY, respondent Atty. Ernesto Salunat is found GUILTY of representing conflicting interests and is ADMONISHED to observe a higher degree of fidelity in the practice of his profession. He is further WARNED that a repetition of the same or similar acts will be dealt with more severely. SO ORDERED. SECOND DIVISION A.C. No. 5098 April 11, 2012

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JOSEFINA M. ANION, Complainant, vs. ATTY. CLEMENCIO SABITSANA, JR., Respondent. DECISION BRION, J.: We resolve this disbarment complaint against Atty. Clemencio Sabitsana, Jr. who is charged of: (1) violating the lawyers duty to preserve confidential information received from his client; 1 and (2) violating the prohibition on representing conflicting interests. 2 In her complaint, Josefina M. Anion (complainant) related that she previously engaged the legal services of Atty. Sabitsana in the preparation and execution in her favor of a Deed of Sale over a parcel of land owned by her late common-law husband, Brigido Caneja, Jr. Atty. Sabitsana allegedly violated her confidence when he subsequently filed a civil case against her for the annulment of the Deed of Sale in behalf of Zenaida L. Caete, the legal wife of Brigido Caneja, Jr. The complainant accused Atty. Sabitsana of using the confidential information he obtained from her in filing the civil case. Atty. Sabitsana admitted having advised the complainant in the preparation and execution of the Deed of Sale. However, he denied having received any confidential information. Atty. Sabitsana asserted that the present disbarment complaint was instigated by one Atty. Gabino Velasquez, Jr., the notary of the disbarment complaint who lost a court case against him (Atty. Sabitsana) and had instigated the complaint for this reason. The Findings of the IBP Investigating Commissioner In our Resolution dated November 22, 1999, we referred the disbarment complaint to the Commission on Bar Discipline of the Integrated Bar of the Philippines (IBP) for investigation, report and recommendation. In his Report and Recommendation dated November 28, 2003, IBP Commissioner Pedro A. Magpayo Jr. found Atty. Sabitsana administratively liable for representing conflicting interests. The IBP Commissioner opined: In Bautista vs. Barrios, it was held that a lawyer may not handle a case to nullify a contract which he prepared and thereby take up inconsistent positions. Granting that Zenaida L. Caete, respondents present client in Civil Case No. B-1060 did not initially learn about the sale executed by Bontes in favor of complainant thru the confidences and information divulged by complainant to respondent in the course of the preparation of the said deed of sale, respondent nonetheless has a duty to decline his current employment as counsel of Zenaida Caete in view of the rule prohibiting representation of conflicting interests. In re De la Rosa clearly suggests that a lawyer may not represent conflicting interests in the absence of the written consent of all parties concerned given after a full disclosure of the facts. In the present case, no such written consent was secured by respondent before accepting employment as Mrs. Caetes counsel -of-record. x x x xxx Complainant and respondents present client, being contending claimants to the same property, the conflict of interest is obviously present. There is said to be inconsistency of interest when on behalf of one client, it is the attorneys duty to contend for that which his duty to another client requires him to oppose. In brief, if he argues for one client this argument will be opposed by him when he argues for the other client. Such is the case with which we are now confronted, respondent being asked by one client to nullify what he had formerly notarized as a true and valid sale between Bontes and the complainant. (footnotes omitted)3 The IBP Commissioner recommended that Atty. Sabitsana be suspended from the practice of law for a period of one (1) year. 4 The Findings of the IBP Board of Governors In a resolution dated February 27, 2004, the IBP Board of Governors resolved to adopt and approve the Report and Recommendation of the IBP Commissioner after finding it to be fully supported by the evidence on record, the applicable laws and rules. 5 The IBP Board of Governors agreed with the IBP Commissioners recommended penalty.

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Atty. Sabitsana moved to reconsider the above resolution, but the IBP Board of Governors denied his motion in a resolution dated July 30, 2004. The Issue The issue in this case is whether Atty. Sabitsana is guilty of misconduct for representing conflicting interests. The Courts Ruling After a careful study of the records, we agree with the findings and recommendations of the IBP Commissioner and the IBP Board of Governors. The relationship between a lawyer and his/her client should ideally be imbued with the highest level of trust and confidence. This is the standard of confidentiality that must prevail to promote a full disclosure of the clients most confidential information to his/her lawyer for an unhampered exchange of information between them. Needless to state, a client can only entrust confidential information to his/her lawyer based on an expectation from the lawyer of utmost secrecy and discretion; the lawyer, for his part, is duty-bound to observe candor, fairness and loyalty in all dealings and transactions with the client.6 Part of the lawyers duty in this regard is to avoid representing conflicting interests, a matter covered by Rule 15.03, Canon 15 of the Code of Professional Responsibility quoted below: 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. "The proscription against representation of conflicting interests applies to a situation where the opposing parties are present clients in the same action or in an unrelated action."7 The prohibition also applies even if the "lawyer would not be called upon to 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 acquired from one to the disadvantage of the other as the two actions are wholly unrelated."8 To be held accountable under this rule, it is "enough that the opposing parties in one case, one of whom would lose the suit, are present clients and the nature or conditions of the lawyers respective retainers with each of them would affect the performance of the duty of undivided fidelity to both clients." 9 Jurisprudence has provided three tests in determining whether a violation of the above rule is present in a given case. One test is whether a lawyer is duty-bound to fight for an issue or claim in behalf of one client and, at the same time, to oppose that claim for the other client.http://sc.judiciary.gov.ph/jurisprudence/2005/aug2005/ac_6708. htm - _ftn Thus, if a lawyers argument for one client has to be opposed by that same lawyer in arguing for the other client, there is a violation of the rule. Another test of inconsistency of interests is whether the acceptance of a new relation would prevent the full discharge of the lawyers duty of undivided fidelity and loyalty to the client or invite suspicion of unfaithfulness or double-dealing in the performance of that duty.http://sc.judiciary.gov.ph/jurisprudence/2005/aug2005/ac_6708.h tm - _ftn Still another test is whether the lawyer would be called upon in the new relation to use against a former client any confidential information acquired through their connection or previous employment.10http://sc.judiciary.gov.ph/jurisprudence/2005/aug2005/ ac_6708.htm - _ftn [emphasis ours] On the basis of the attendant facts of the case, we find substantial evidence to support Atty. Sabitsanas violation of the above rule, as established by the following circumstances on record: One, his legal services were initially engaged by the complainant to protect her interest over a certain property. The records show that upon the legal advice of Atty. Sabitsana, the Deed of Sale over the property was prepared and executed in the complainants favor. Two, Atty. Sabitsana met with Zenaida Caete to discuss the latters legal interest over the property subject of the Deed of Sale. At that point, Atty. Sabitsana already had knowledge that Zenaida Caetes interest clashed with the complainants interests.

17
Three, despite the knowledge of the clashing interests between his two clients, Atty. Sabitsana accepted the engagement from Zenaida Caete. Four, Atty. Sabitsanas actual knowledge of the conflicting interests between his two clients was demonstrated by his own actions: first, he filed a case against the complainant in behalf of Zenaida Caete; second, he impleaded the complainant as the defendant in the case; and third, the case he filed was for the annulment of the Deed of Sale that he had previously prepared and executed for the complainant. By his acts, not only did Atty. Sabitsana agree to represent one client against another client in the same action; he also accepted a new engagement that entailed him to contend and oppose the interest of his other client in a property in which his legal services had been previously retained. To be sure, Rule 15.03, Canon 15 of the Code of Professional Responsibility provides an exception to the above prohibition. However, we find no reason to apply the exception due to Atty. Sabitsanas failure to comply with the requirements set forth under the rule. Atty. Sabitsana did not make a full disclosure of facts to the complainant and to Zenaida Caete before he accepted the new engagement with Zenaida Caete. The records likewise show that although Atty. Sabitsana wrote a letter to the complainant informing her of Zenaida Caetes adverse claim to the property covered by the Deed of Sale and, urging her to settle the adverse claim; Atty. Sabitsana however did not disclose to the complainant that he was also being engaged as counsel by Zenaida Caete. 11 Moreover, the records show that Atty. Sabitsana failed to obtain the written consent of his two clients, as required by Rule 15.03, Canon 15 of the Code of Professional Responsibility. Accordingly, we find as the IBP Board of Governors did Atty. Sabitsana guilty of misconduct for representing conflicting interests. We likewise agree with the penalty of suspension for one (1) year from the practice of law recommended by the IBP Board of Governors. This penalty is consistent with existing jurisprudence on the administrative offense of representing conflicting interests. 12 We note that Atty. Sabitsana takes exception to the IBP recommendation on the ground that the charge in the complaint was only for his alleged disclosure of confidential information, not for representation of conflicting interests. To Atty. Sabitsana, finding him liable for the latter offense is a violation of his due process rights since he only answered the designated charge. We find no violation of Atty. Sabitsanas due process rights. Althoug h there was indeed a specific charge in the complaint, we are not unmindful that the complaint itself contained allegations of acts sufficient to constitute a violation of the rule on the prohibition against representing conflicting interests. As stated in paragraph 8 of the complaint: Atty. Sabitsana, Jr. accepted the commission as a Lawyer of ZENAIDA CANEJA, now Zenaida Caete, to recover lands from Complainant, including this land where lawyer Atty. Sabitsana, Jr. has advised his client [complainant] to execute the second sale[.] Interestingly, Atty. Sabitsana even admitted these allegations in his answer.13 He also averred in his Answer that: 6b. Because the defendant-to-be in the complaint (Civil Case No. B1060) that he would file on behalf of Zenaida Caneja-Caete was his former client (herein complainant), respondent asked [the] permission of Mrs. Caete (which she granted) that he would first write a letter (Annex "4") to the complainant proposing to settle the case amicably between them but complainant ignored it. Neither did she object to respondents handling the case in behalf of Mrs. Caete on the ground she is now invoking in her instant complaint. So respondent felt free to file the complaint against her. 141wphi1 We have consistently held that the essence of due process is simply the opportunity to be informed of the charge against oneself and to be heard or, as applied to administrative proceedings, the opportunity to explain ones side or the opportunity to seek a reconsideration of the action or ruling complained of.15 These opportunities were all afforded to Atty. Sabitsana, as shown by the above circumstances. All told, disciplinary proceedings against lawyers are sui generis.16 In the exercise of its disciplinary powers, the Court merely calls upon a

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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. We likewise aim to ensure the proper and honest administration of justice by purging the profession of members who, by their misconduct, have proven themselves no longer worthy to be entrusted with the duties and responsibilities of an attorney.17 This is all that we did in this case. Significantly, we did this to a degree very much lesser than what the powers of this Court allows it to do in terms of the imposable penalty. In this sense, we have already been lenient towards respondent lawyer. WHEREFORE, premises considered, the Court resolves to ADOPT the findings and recommendations of the Commission on Bar Discipline of the Integrated Bar of the Philippines. Atty. Clemencio C. Sabitsana, Jr. is found GUILTY of misconduct for representing conflicting interests in violation of Rule 15.03, Canon 15 of the Code of Professional Responsibility. He is hereby SUSPENDED for one (1) year from the practice of law. Atty. Sabitsana is DIRECTED to inform the Court of the date of his receipt of this Decision so that we can determine the reckoning point when his suspension shall take effect. SO ORDERED. EN BANC A.C. No. 6664 July 16, 2013 SAMSON, Complainant,

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Samson and his relatives later demanded from Atty. Era that they be given instead a deed of absolute sale to enable them to liquidate the property among themselves. It took some period of negotiations between them and Atty. Era before the latter delivered to them on November 27, 2003 five copies of a deed of absolute sale involving the property. However, Atty. Era told them that whether or not the title of the property had been encumbered or free from lien or defect would no longer be his responsibility. He further told them that as far as he was concerned he had already accomplished his professional responsibility towards them upon the amicable settlement of the cases between them and ICS Corporation.4 When Samson and his co-complainants verified the title of the property at the Registry of Deeds and the Assessors Office of Antipolo City, they were dismayed to learn that they could not liquidate the property because it was no longer registered under the name of ICS Corporation but was already under the name of Bank Wise Inc.5Upon their urging, Atty. Era negotiated as their counsel with ICS Corporation. Due to the silence of Atty. Era for sometime thereafter, Samson and his group wrote to him on September 8, 2004 to remind him about his guarantee and the promise to settle the issues with Sison and her cohorts. But they did not hear from Atty. Era at all.6 During the hearings in the RTC, Atty. Era did not anymore appear for Samson and his group. This forced them to engage another lawyer. They were shocked to find out later on, however, that Atty. Era had already been entering his appearance as the counsel for Sison in her other criminal cases in the other branches of the RTC in Quezon City involving the same pyramiding scam that she and her ICS Corporation had perpetrated.7 In this regard, they established Atty. Eras legal representation of Sison by submitting several certified copies of the minutes of the proceedings in the criminal cases involving Sison and her group issued by Branch 102 and Branch 220 of the RTC in Quezon City showing that Atty. Era had appeared as the counsel of Sison in the cases for estafa pending and being tried in said courts.8 They also submitted a certification issued on November 3, 2004 indicating that Atty. Era had visited Sison, an inmate in the Female Dormitory in Camp Karingal, Sikatuna Village, Quezon City as borne out by the blotter logbook of that unit.9 On January 20, 2005, Samson executed an affidavit alleging the foregoing antecedents, and praying for Atty. Eras disbarment on the ground of his violation of the trust, confidence and respect reposed in him as their counsel.10 Upon being required by the Court to comment on the complaint against him within 10 days from notice, Atty. Era several times sought the extension of his period to file the comment to supposedly enable him to collate documents relevant to his comment. 11 The Court granted his request and allowed him an extension totaling 40 days. But despite the lapse of the extended period, he did not file his comment. On September 27, 2005, Samson reiterated his complaint for disbarment against Atty. Era.12 By its resolution dated March 1, 2006, 13 the Court required Atty. Era to show cause why he should not be disciplinarily dealt with or held in contempt for such failure to submit his comment. In the comment that he subsequently filed on April 11, 2006 in the Office of the Bar Confidant,14 Atty. Era alleged that the conclusion on April 23, 2002 of the compromise settlement between Samson and his group, on one hand, and Sison and her ICS Corporation, on the other, had terminated the lawyer-client relationship between him and Samson and his group; and that on September 1, 2003, he had been appointed as counsel de officio for Sison by Branch 102 of the RTC in Quezon City only for purposes of her arraignment. On July 17, 2006, the Court referred the case to the Integrated Bar of the Philippines (IBP) for investigation, report and recommendation. 15 In his report and recommendation dated October 1, 2007, 16 the Investigating Commissioner of the IBP Commission on Bar Discipline (IBPCBD) found Atty. Era guilty of misconduct for representing conflicting interests, for failing to serve his clients with competence and diligence, and for failing to champion his clients cause with wholehearted fidelity, care and devotion. The Investigating Commissioner observed that the evidence did not sustain Atty. Eras claim that his legal services as counsel for Samson

FERDINAND A. vs. ATTY. EDGARDO O. ERA, Respondent. DECISION BERSAMIN, J.:

An attorney who wittingly represents and serves conflicting interests may be suspended from the practice of law, or even disbarred when circumstances so warrant. Antecedents Ferdinand A. Samson has brought this complaint for disbarment charging respondent Atty. Edgardo O. Era with violation of his trust and confidence of a client by representing the interest of Emilia C. Sison, his present client, in a manner that blatantly conflicted with his interest. Samson and his relatives were among the investors who fell prey to the pyramiding scam perpetrated by ICS Exports, Inc. Exporter, Importer, and Multi-Level Marketing Business (ICS Corporation), a corporation whose corporate officers were led by Sison. The other officers were Ireneo C. Sison, William C. Sison, Mimosa H. Zamudio, Mirasol H. Aguilar and Jhun Sison. Samson engaged Atty. Era to represent and assist him and his relatives in the criminal prosecution of Sison and her group. Pursuant to the engagement, Atty. Era prepared the demand letter dated July 19, 2002 demanding the return or refund of the money subject of their complaints. He also prepared the complaint-affidavit that Samson signed and swore to on July 26, 2002. Subsequently, the complaintaffidavit charging Sison and the other corporate officials of ICS Corporation with several counts of estafa1was presented to the Office of the City Prosecutor of Quezon City (OCPQC). After the preliminary investigation, the OCPQC formally charged Sison and the others with several counts of estafa in the Regional Trial Court, Branch 96 (RTC), in Quezon City.2 In April 2003, Atty. Era called a meeting with Samson and his relatives to discuss the possibility of an amicable settlement with Sison and her cohorts. He told Samson and the others that undergoing a trial of the cases would just be a waste of time, money and effort for them, and that they could settle the cases with Sison and her group, with him guaranteeing the turnover to them of a certain property located in Antipolo City belonging to ICS Corporation in exchange for their desistance. They acceded and executed the affidavit of desistance he prepared, and in turn they received a deed of assignment covering land registered under Transfer Certificate of Title No. R-4475 executed by Sison in behalf of ICS Corporation. 3

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and his group had terminated on April 23, 2003 upon the execution of the compromise settlement of the criminal cases; that he even admitted during the mandatory conference that there was no formal termination of his legal services;17 that his professional obligation towards Samson and his group as his clients did not end upon execution of the settlement agreement, because he remained dutybound to see to it that the settlement was duly implemented; that he also had the obligation to appear in the criminal cases until their termination; and that his acceptance of the engagement to appear in behalf of Sison invited suspicion of his double-dealing and unfaithfulness. The Investigating Commissioner recommended that Atty. Era be suspended from the practice of law for six months, viz: From the foregoing, it is clear that respondent is guilty of misconduct for representing conflicting interests, failing to serve his client, complainant herein, with competence and diligence and champion the latters cause with wholehearted fidelity, care and devotion. It is respectfully recommended that respondent be SUSPENDED from the practice of law for a period of six (6) months and WARNED that a repetition of the same or similar act would merit a more severe penalty.18 In Resolution No. XVIII-2007-195 passed on October 19, 2007, 19 the IBP Board of Governors adopted and approved the report and recommendation of the Investigating Commissioner of the IBP-CBD, with the modification that Atty. Era be suspended from the practice of law for two years. On June 9, 2012, the IBP Board of Governors passed Resolution No. XX-2012-180,20 denying Atty. Eras motion for reconsideration and affirming Resolution No. XVIII-2007-195. The IBP Board of Governors then forwarded the case to the Court pursuant to Section 12(b), Rule 139-B of the Rules of Court.21 On October 17, 2012, Atty. Era filed a Manifestation and Motion (With Leave of Court).22 However, on November 26, 2012, the Court merely noted the manifestation, and denied the motion for its lack of merit.23 Ruling We affirm the findings of the IBP. In his petition for disbarment, Samson charged Atty. Era with violating Canon 15 of the Code of Professional Responsibility for representing conflicting interests by accepting the responsibility of representing Sison in the cases similar to those in which he had undertaken to represent Samson and his group, notwithstanding that Sison was the very same person whom Samson and his group had accused with Atty. Eras legal assistance. He had drafted the demand letters and the complaint-affidavit that became the bases for the filing of the estafa charges against Sison and the others in the RTC in Quezon City. Atty. Eras contention that the lawyer -client relationship ended when Samson and his group entered into the compromise settlement with Sison on April 23, 2002 was unwarranted. The lawyer-client relationship did not terminate as of then, for the fact remained that he still needed to oversee the implementation of the settlement as well as to proceed with the criminal cases until they were dismissed or otherwise concluded by the trial court. It is also relevant to indicate that the execution of a compromise settlement in the criminal cases did not ipso facto cause the termination of the cases not only because the approval of the compromise by the trial court was still required, but also because the compromise would have applied only to the civil aspect, and excluded the criminal aspect pursuant to Article 2034 of the Civil Code.24 Rule 15.03, Canon 15 of the Code of Professional Responsibility provides that: "A lawyer shall not represent conflicting interests except by written consent of all concerned given after a full disclosure of the facts." Atty. Era thus owed to Samson and his group entire devotion to their genuine interest, and warm zeal in the maintenance and defense of their rights.25 He was expected to exert his best efforts and ability to preserve the clients cause, for the unwavering loyal ty displayed to his clients likewise served the ends of justice. 26 In Hornilla v. Atty. Salunat,27 the Court discussed the concept of conflict of interest in this wise:

19
There is conflict of interest when a lawyer represents inconsistent interests of two or more opposing parties. The test is "whether or not in behalf of one client, it is the lawyers 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. Also, there is conflict of interests if the acceptance of the new retainer will require the attorney to perform an act which will injuriously affect his first client in any matter in which he represents him and also whether he will be called upon in his new relation to use against his first client any knowledge acquired through their connection. Another test of the inconsistency of interests is whether the acceptance of a new relation will prevent an attorney from the full discharge of his duty of undivided fidelity and loyalty to his client or invite suspicion of unfaithfulness or double dealing in the performance thereof.28 The prohibition against conflict of interest rests on five rationales, rendered as follows: x x x. First, the law seeks to assure clients that their lawyers will represent them with undivided loyalty. A client is entitled to be represented by a lawyer whom the client can trust. Instilling such confidence is an objective important in itself. x x x. Second, the prohibition against conflicts of interest seeks to enhance the effectiveness of legal representation. To the extent that a conflict of interest undermines the independence of the lawyers professional judgment or inhibits a lawyer from working with appropriate vigor in the clients behalf, the clients expectation of effective representation x x x could be compromised. Third, a client has a legal right to have the lawyer safeguard the clients confidential information xxx. 1wphi1 Preventing use of confidential client information against the interests of the client, either to benefit the lawyers personal interest, in aid of some other client, or to foster an assumed public purpose is facilitated through conflicts rules that reduce the opportunity for such abuse. Fourth, conflicts rules help ensure that lawyers will not exploit clients, such as by inducing a client to make a gift to the lawyer xxx. Finally, some conflict-of-interest rules protect interests of the legal system in obtaining adequate presentations to tribunals. In the absence of such rules, for example, a lawyer might appear on both sides of the litigation, complicating the process of taking proof and compromise adversary argumentation x x x.29 The rule prohibiting conflict of interest was fashioned to prevent situations wherein a lawyer would be representing a client whose interest is directly adverse to any of his present or former clients. In the same way, a lawyer may only be allowed to represent a client involving the same or a substantially related matter that is materially adverse to the former client only if the former client consents to it after consultation.30 The rule is grounded in the fiduciary obligation of loyalty.31 Throughout 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. Knowledge and information gathered in the course of the relationship must be treated as sacred and guarded with care.1wphi1 It behooves lawyers not only to keep inviolate the clients 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 paramount in the administration of justice.32 The nature of that relationship is, therefore, one of trust and confidence of the highest degree.33 Contrary to Atty. Eras ill-conceived attempt to explain his disloyalty to Samson and his group, the termination of the attorney-client relationship does not justify a lawyer to represent an interest adverse to or in conflict with that of the former client. The spirit behind this rule is that the clients confidence once given should not be stripped by the mere expiration of the professional employment. Even after the severance of the relation, a lawyer should not do anything that will injuriously affect his former client in any matter in which the lawyer previously represented the client. Nor should the lawyer disclose or use any of the clients confidences acquired in the previous relation.34 In this regard, Canon 17 of the Code of Professional Responsibility expressly declares that: "A lawyer owes fidelity to the cause of his client and he shall be mindful of the trust and confidence reposed in him."

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The lawyers highest and most unquestioned duty is to protect the client at all hazards and costs even to himself. 35 The protection given to the client is perpetual and does not cease with the termination of the litigation, nor is it affected by the clients 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. 36 In the absence of the express consent from Samson and his group after full disclosure to them of the conflict of interest, therefore, the most ethical thing for Atty. Era to have done was either to outrightly decline representing and entering his appearance as counsel for Sison, or to advice Sison to engage another lawyer for herself. Unfortunately, he did neither, and should now suffer the proper sanction. WHEREFORE, the Court FINDS and PRONOUNCES Atty. EDGARDO O. ERA guilty of violating Rule 15.03 of Canon 15, and Canon 17 of the Code of Professional Responsibility; and SUSPENDS him from the practice of law for two years effective upon his receipt of this decision, with a warning that his commission of a similar offense will be dealt with more severely. Let copies of this decision be included in the personal record of Atty. EDGARDO 0. ERA and entered m his file in the Office of the Bar Confidant. Let copies of this decision be disseminated to all lower courts by the Office of the Court Administrator, as well as to the Integrated Bar of the Philippines for its guidance. SO ORDERED. THIRD DIVISION

20
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 said partition 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 Abadilla and complainant spouses, filed a petition on behalf of the heirs of Carlos, Dionisia and Francisco all 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 R trial court on 2 September 1974 on the ground of prescription. 7 E At the hearing before the Office of the Solicitor General and in his S Answer, respondent Hernando admitted his involvement in the cadastral case as counsel for the Abadillas but denied having seen or O hold of the controversial Transfer Certificate of Title, and having taken availed himself of any confidential information relating to Lot 9439-B. L In U its Report and Recommendation dated 29 March 1990, the Solicitor General recommends that respondent be suspended from theTpractice of law for three (3) months for violation of the Canons of Professional Ethics by representing clients with conflicting interests, and I filed before this Court the corresponding Complaint 8 dated 30 March 1990. O The issue raised in this proceeding is: whether or not respondent N 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.

A.C. No. 1359 October 17, 1991 GENEROSA BUTED and BENITO BOLISAY, petitioners, vs. ATTY. HAROLD M. HERNANDO, respondent. Jorge A. Dolorfino for petitioners.

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

PROBLEMATIC AREAS IN LEGAL ETHICS CASES


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 for this 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 condition precedent; 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 to him. 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

21
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)

LAWYER-CLIENT PRIVILEGE / RULE ON PRIVILEGED COMMUNICATION


FIRST DIVISION A.C. No. 6711 July 3, 2007

MA. LUISA HADJULA, complainant, vs. ATTY. ROCELES F. MADIANDA, respondent. DECISION 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-COMPLAINT1 bearing date September 7, 2002 and filed with the IBP Commission on Bar Discipline, complainant charged Atty. Roceles F. Madianda with violation of Article 2092 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.

PROBLEMATIC AREAS IN LEGAL ETHICS CASES


According to complainant, respondent, in retaliation to the filing of the aforesaid actions, filed a COUNTER COMPLAINT3 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 AFFIDAVITCOMPLAINT for reason that she never WAS MY CLIENT nor we ever had any LAWYER-CLIENT RELATIONSHIP that ever existed ever since and that never obtained any legal advice from me regarding her PERSONAL PROBLEMS or PERSONAL SECRETS. She likewise never delivered to me legal documents much more told me some confidential information or secrets. That is because I never entertain LEGAL QUERIES or CONSULTATION regarding PERSONAL MATTERS since I know as a LAWYER of the Bureau of Fire Protection that I am not allowed to privately practice law and it might also result to CONFLICT OF INTEREST. As a matter of fact, whenever there will be PERSONAL MATTERS referred to me, I just referred them to private law practitioners and never entertain the same, NOR listen to their stories or examine or accept any document. 9. I specifically deny the allegation of F/SUPT. MA. LUISA C. HADJULA in paragraph 8 of her AFFIDAVITCOMPLAINT, the truth of the matter is that her ILLICIT RELATIONSHIP and her illegal and unlawful activities are known in the Bureau of Fire Protection since she also filed CHILD SUPPORT case against her lover where she has a child . Moreover, the alleged DOCUMENTS she purportedly have shown to me sometime in 1998, are all part of public records . Furthermore, F/SUPT. MA. LUISA C. HADJULA, is filing the instant case just to get even with me or to force me to settle and withdraw the CASES I FILED AGAINST HER since she knows that she will certainly be DISMISSED FROM SERVICE, REMOVED FROM THE PRC ROLL and CRIMINALLY CONVICTED of her ILLICIT, IMMORAL, ILLEGAL and UNLAWFUL ACTS. On October 7, 2004, the Investigating Commissioner of the IBP Commission on Bar Discipline came out with aReport 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 that respondent Atty. Roceles Madianda be reprimanded for revealing the secrets of the complainant. On November 4, 2004, the IBP Board of Governors issued Resolution No. XVI-2004-472 reading as follows:

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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 as Annex "A"; and , finding the recommendation fully supported by the evidence on record and the applicable laws and rules, and considering the actuation of revealing 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 inBurbe v. Magulta,6 A lawyer-client relationship was established from the very first moment complainant asked respondent for legal advise regarding the former's business. To constitute professional employment, it is not essential that the client employed the 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 case for which his service had been sought. It a person, in respect to business affairs or troubles of any kind, consults a lawyer with a view to obtaining professional advice or assistance, and the attorney voluntarily permits or acquiesces with the consultation, then the professional employments is established. Likewise, a lawyer-client relationship exists notwithstanding the close personal 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 legal adviser 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 permanently protected (7) from disclosure by himself or by the legal advisor, (8) except the protection 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

PROBLEMATIC AREAS IN LEGAL ETHICS CASES


giving vent to a negative sentiment, she was violating the rule on confidentiality. IN VIEW WHEREOF, respondent Atty. Roceles F. Madianda is hereby REPRIMANDED and admonished to be circumspect in her handling of information acquired as a result of a lawyer-client relationship. She is alsoSTERNLY WARNED against a repetition of the same or similar act complained of. SO ORDERED. SECOND DIVISION A.C. No. 5108 May 26, 2005

23
was found guilty of misconduct and meted out the penalty of one month suspension without pay;8 and, (4) the Information for violation of Section 7(b)(2) of Republic Act No. 6713, as amended, otherwise known as the Code of Conduct and Ethical Standards for Public Officials and Employees before the Sandiganbayan. 9 Complainant Mercado alleged that said criminal complaint for falsification of public document (I.S. No. PSG 99-9823) disclosed confidential facts and information relating to the civil case for annulment, then handled by respondent Vitriolo as her counsel. This prompted complainant Mercado to bring this action against respondent. She claims that, in filing the criminal case for falsification, respondent is guilty of breaching their privileged and confidential lawyer-client relationship, and should be disbarred. Respondent filed his Comment/Motion to Dismiss on November 3, 1999 where he alleged that the complaint for disbarment was all hearsay, misleading and irrelevant because all the allegations leveled against him are subject of separate fact-finding bodies. Respondent claimed that the pending cases against him are not grounds for disbarment, and that he is presumed to be innocent until proven otherwise.10 He also states that the decision of the Ombudsman finding him guilty of misconduct and imposing upon him the penalty of suspension for one month without pay is on appeal with the Court of Appeals. He adds that he was found guilty, only of simple misconduct, which he committed in good faith.11 In addition, respondent maintains that his filing of the criminal complaint for falsification of public documents against complainant does not violate the rule on privileged communication between attorney and client because the bases of the falsification case are two certificates of live birth which are public documents and in no way connected with the confidence taken during the engagement of respondent as counsel. According to respondent, the complainant confided to him as then counsel only matters of facts relating to the annulment case. Nothing was said about the alleged falsification of the entries in the birth certificates of her two daughters. The birth certificates are filed in the Records Division of CHED and are accessible to anyone.12 In a Resolution dated February 9, 2000, this Court referred the administrative case to the Integrated Bar of the Philippines (IBP) for investigation, report and recommendation. 13 The IBP Commission on Bar Discipline set two dates for hearing but complainant failed to appear in both. Investigating Commissioner Rosalina R. Datiles thus granted respondent's motion to file his memorandum, and the case was submitted for resolution based on the pleadings submitted by the parties.14 On June 21, 2003, the IBP Board of Governors approved the report of investigating commissioner Datiles, finding the respondent guilty of violating the rule on privileged communication between attorney and client, and recommending his suspension from the practice of law for one (1) year. On August 6, 2003, complainant, upon receiving a copy of the IBP report and recommendation, wrote Chief Justice Hilario Davide, Jr., a letter of desistance. She stated that after the passage of so many years, she has now found forgiveness for those who have wronged her. At the outset, we stress that we shall not inquire into the merits of the various criminal and administrative cases filed against respondent. It is the duty of the tribunals where these cases are pending to determine the guilt or innocence of the respondent. We also emphasize that the Court is not bound by any withdrawal of the complaint or desistance by the complainant. The letter of complainant to the Chief Justice imparting forgiveness upon respondent is inconsequential in disbarment proceedings. We now resolve whether respondent violated the rule on privileged communication between attorney and client when he filed a criminal case for falsification of public document against his former client. A brief discussion of the nature of the relationship between attorney and client and the rule on attorney-client privilege that is designed to protect such relation is in order. In engaging the services of an attorney, the client reposes on him special powers of trust and confidence. Their relationship is strictly personal and highly confidential and fiduciary. The relation is of such

ROSA F. MERCADO, complainant, vs. ATTY. JULITO D. VITRIOLO, respondent. DECISION PUNO, J.: Rosa F. Mercado filed the instant administrative complaint against Atty. Julito D. Vitriolo, seeking his disbarment from the practice of law. The complainant alleged that respondent maliciously instituted a criminal case for falsification of public document against her, a former client, based on confidential information gained from their attorneyclient relationship. Let us first hearken to the facts. Complainant is a Senior Education Program Specialist of the Standards Development Division, Office of Programs and Standards while respondent is a Deputy Executive Director IV of the Commission on Higher Education (CHED). 1 Complainant's husband filed Civil Case No. 40537 entitled "Ruben G. Mercado v. Rosa C. Francisco," for annulment of their marriage with the Regional Trial Court (RTC) of Pasig City. This annulment case had been dismissed by the trial court, and the dismissal became final and executory on July 15, 1992.2 In August 1992, Atty. Anastacio P. de Leon, counsel of complainant, died. On February 7, 1994, respondent entered his appearance before the trial court as collaborating counsel for complainant. 3 On March 16, 1994, respondent filed his Notice of Substitution of Counsel,4 informing the RTC of Pasig City that he has been appointed as counsel for the complainant, in substitution of Atty. de Leon. It also appears that on April 13, 1999, respondent filed a criminal action against complainant before the Office of the City Prosecutor, Pasig City, entitled "Atty. Julito Vitriolo, et al. v. Rose Dela Cruz F. Mercado," and docketed as I.S. No. PSG 99-9823, for violation of Articles 171 and 172 (falsification of public document) of the Revised Penal Code.5 Respondent alleged that complainant made false entries in the Certificates of Live Birth of her children, Angelica and Katelyn Anne. More specifically, complainant allegedly indicated in said Certificates of Live Birth that she is married to a certain Ferdinand Fernandez, and that their marriage was solemnized on April 11, 1979, when in truth, she is legally married to Ruben G. Mercado and their marriage took place on April 11, 1978. Complainant denied the accusations of respondent against her. She denied using any other name than "Rosa F. Mercado." She also insisted that she has gotten married only once, on April 11, 1978, to Ruben G. Mercado. In addition, complainant Mercado cited other charges against respondent that are pending before or decided upon by other tribunals (1) libel suit before the Office of the City Prosecutor, Pasig City;6 (2) administrative case for dishonesty, grave misconduct, conduct prejudicial to the best interest of the service, pursuit of private business, vocation or profession without the permission required by Civil Service rules and regulations, and violations of the "Anti-Graft and Corrupt Practices Act," before the then Presidential Commission Against Graft and Corruption;7 (3) complaint for dishonesty, grave misconduct, and conduct prejudicial to the best interest of the service before the Office of the Ombudsman, where he

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delicate, exacting and confidential nature that is required by necessity and public interest.15 Only by such confidentiality and protection will a person be encouraged to repose his confidence in an attorney. The hypothesis is that abstinence from seeking legal advice in a good cause is an evil which is fatal to the administration of justice. 16 Thus, the preservation and protection of that relation will encourage a client to entrust his legal problems to an attorney, which is of paramount importance to the administration of justice. 17 One rule adopted to serve this purpose is the attorney-client privilege: an attorney is to keep inviolate his client's secrets or confidence and not to abuse them.18 Thus, the duty of a lawyer to preserve his client's secrets and confidence outlasts the termination of the attorney-client relationship,19 and continues even after the client's death. 20 It is the glory of the legal profession that its fidelity to its client can be depended on, and that a man may safely go to a lawyer and converse with him upon his rights or supposed rights in any litigation with absolute assurance that the lawyer's tongue is tied from ever disclosing it.21 With full disclosure of the facts of the case by the client to his attorney, adequate legal representation will result in the ascertainment and enforcement of rights or the prosecution or defense of the client's cause. Now, we go to the rule on attorney-client privilege. Dean Wigmore cites the factors essential to establish the existence of the privilege, viz: (1) Where legal advice of any kind is sought (2) from a professional legal adviser 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 permanently protected (7) from disclosure by himself or by the legal advisor, (8) except the protection be waived. 22 In fine, the factors are as follows: (1) There exists an attorney-client relationship, or a prospective attorney-client relationship, and it is by reason of this relationship that the client made the communication. Matters disclosed by a prospective client to a lawyer are protected by the rule on privileged communication even if the prospective client does not thereafter retain the lawyer or the latter declines the employment.23 The reason for this is to make the prospective client free to discuss whatever he wishes with the lawyer without fear that what he tells the lawyer will be divulged or used against him, and for the lawyer to be equally free to obtain information from the prospective client.24 On the other hand, a communication from a (prospective) client to a lawyer for some purpose other than on account of the (prospective) attorney-client relation is not privileged. Instructive is the case of Pfleider v. Palanca,25 where the client and his wife leased to their attorney a 1,328-hectare agricultural land for a period of ten years. In their contract, the parties agreed, among others, that a specified portion of the lease rentals would be paid to the client-lessors, and the remainder would be delivered by counsel-lessee to client's listed creditors. The client alleged that the list of creditors which he had "confidentially" supplied counsel for the purpose of carrying out the terms of payment contained in the lease contract was disclosed by counsel, in violation of their lawyer-client relation, to parties whose interests are adverse to those of the client. As the client himself, however, states, in the execution of the terms of the aforesaid lease contract between the parties, he furnished counsel with the "confidential" list of his creditors. We ruled that this indicates that client delivered the list of his creditors to counsel not because of the professional relation then existing between them, but on account of the lease agreement. We then held that a violation of the confidence that accompanied the delivery of that list would partake more of a private and civil wrong than of a breach of the fidelity owing from a lawyer to his client. (2) The client made the communication in confidence. The mere relation of attorney and client does not raise a presumption of confidentiality.26 The client must intend the communication to be confidential.27 A confidential communication refers to information transmitted by voluntary act of disclosure between attorney and client in confidence and by means which, so far as the client is aware, discloses the information to no third person other than one reasonably necessary for the transmission of the information or the accomplishment of the purpose for which it was given.28

24
Our jurisprudence on the matter rests on quiescent ground. Thus, a compromise agreement prepared by a lawyer pursuant to the instruction of his client and delivered to the opposing party, 29 an offer and counter-offer for settlement,30 or a document given by a client to his counsel not in his professional capacity, 31 are not privileged communications, the element of confidentiality not being present. 32 (3) The legal advice must be sought from the attorney in his professional capacity.33 The communication made by a client to his attorney must not be intended for mere information, but for the purpose of seeking legal advice from his attorney as to his rights or obligations. The communication must have been transmitted by a client to his attorney for the purpose of seeking legal advice.34 If the client seeks an accounting service, 35 or business or personal assistance,36 and not legal advice, the privilege does not attach to a communication disclosed for such purpose. Applying all these rules to the case at bar, we hold that the evidence on record fails to substantiate complainant's allegations. We note that complainant did not even specify the alleged communication in confidence disclosed by respondent. All her claims were couched in general terms and lacked specificity. She contends that respondent violated the rule on privileged communication when he instituted a criminal action against her for falsification of public documents because the criminal complaint disclosed facts relating to the civil case for annulment then handled by respondent. She did not, however, spell out these facts which will determine the merit of her complaint. The Court cannot be involved in a guessing game as to the existence of facts which the complainant must prove. Indeed, complainant failed to attend the hearings at the IBP. Without any testimony from the complainant as to the specific confidential information allegedly divulged by respondent without her consent, it is difficult, if not impossible to determine if there was any violation of the rule on privileged communication. Such confidential information is a crucial link in establishing a breach of the rule on privileged communication between attorney and client. It is not enough to merely assert the attorney-client privilege.37 The burden of proving that the privilege applies is placed upon the party asserting the privilege.38 IN VIEW WHEREOF, the complaint against respondent Atty. Julito D. Vitriolo is hereby DISMISSED for lack of merit. SO ORDERED. ANGARA VS. SB GO TO CASES ON CONFLICT OF INTEREST EN BANC G.R. No. L-9231 January 6, 1915 CHICO, plaintiff-appellant, SOCIETY, LIMITED, ET

UY vs. THE UNION LIFE ASSURANCE AL., defendants-appellees.

Beaumont and Tenney for Bruce, Lawrence, Ross and Block for appellees. TRENT, J.:

appellant.

An appeal from a judgment dismissing the complaint upon the merits, with costs. The plaintiff seeks to recover the face value of two insurance policies upon a stock of dry goods destroyed by fire. It appears that the father of the plaintiff died in 1897, at which time he was conducting a business under his own name, Uy Layco. The plaintiff and his brother took over the business and continued it under the same name, "Uy Layco." Sometime before the date of the fire, the plaintiff purchased his brother's interest in the business and continued to carry on the business under the father's name. At the time of the fire "Uy Layco" was heavily indebted and subsequent thereto the creditors of the estate of the plaintiff's father. During the course of these proceedings, the plaintiff's attorney surrendered the policies of insurance to the administrator of the estate, who compromised with the insurance company for one-half their face value, or P6,000. This money was

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paid into court and is now being held by the sheriff. The plaintiff now brings this action, maintaining that the policies and goods insured belonged to him and not to the estate of his deceased father and alleges that he is not bound by the compromise effected by the administrator of his father's estate. The defendant insurance company sought to show that the plaintiff had agreed to compromise settlement of the policies, and for that purpose introduced evidence showing that the plaintiff's attorney had surrendered the policies to the administrator with the understanding that such a compromise was to be effected. The plaintiff was asked, while on the witness stand, if he had any objection to his attorney's testifying concerning the surrender of the policies, to which he replied in the negative. The attorney was then called for that purpose. Whereupon, counsel for the plaintiff formally withdrew the waiver previously given by the plaintiff and objected to the testimony of the attorney on the ground that it was privileged. Counsel, on this appeal, base their argument of the proposition that a waiver of the client's privilege may be withdrawn at any time before acted upon, and cite in support thereof Ross vs. Great Northern Ry. Co., (101 Minn., 122; 111 N. W., 951). The case of Natlee Draft Horse Co. vs. Cripe and Co. (142 Ky., 810), also appears to sustain their contention. But a preliminary question suggest itself, Was the testimony in question privileged? Our practice Act provides: "A lawyer must strictly maintain inviolate the confidence and preserve the secrets of his client. He shall not be permitted in any court, without the consent of his client, given in open court, to testify to any facts imparted to him by his client in professional consultation, or for the purpose of obtaining advice upon legal matters." (Sec. 31, Act No. 190.) A similar provision is inserted in section 383, No. 4, of the same Act. It will be noted that the evidence in question concerned the dealings of the plaintiff's attorney with a third person. Of the very essence of the veil of secrecy which surrounds communications made between attorney and client, is that such communications are not intended for the information of third persons or to be acted upon by them, put of the purpose of advising the client as to his rights. It is evident that a communication made by a client to his attorney for the express purpose of its being communicated to a third person is essentially inconsistent with the confidential relation. When the attorney has faithfully carried out his instructions be delivering the communication to the third person for whom it was intended and the latter acts upon it, it cannot, by any reasoning whatever, be classified in a legal sense as a privileged communication between the attorney and his client. It is plain that such a communication, after reaching the party for whom it was intended at least, is a communication between the client and a third person, and that the attorney simply occupies the role of intermediary or agent. We quote from but one case among the many which may be found upon the point: The proposition advanced by the respondent and adopted by the trial court, that one, after fully authorizing his attorney, as his agent, to enter into contract with a third party, and after such authority has been executed and relied on, may effectively nullify his own and his duly authorized agent's act by closing the attorney's mouth as to the giving of such authority, is most startling. A perilous facility of fraud and wrong, both upon the attorney and the third party, would result. The attorney who, on his client's authority, contracts in his behalf, pledges his reputation and integrity that he binds his client. The third party may well rely on the assurance of a reputable lawyer that he has authority in fact, though such assurance be given only by implication from the doing of the act itself. It is with gratification, therefore, that we find overwhelming weight of authority, against the position assumed by the court below, both in states where the privilege protecting communications with attorneys is still regulated by the common law and in those where it is controlled by statute, as in Wisconsin. (Koeber vs. Sommers, 108 Wis., 497; 52 L. R. A., 512.) Other cases wherein the objection to such evidence on the ground of privilege has been overruled are: Henderson vs. Terry (62 Tex., 281); Shove vs. Martin (85 Minn., 29); In re Elliott (73 Kan., 151); Collins vs. Hoffman (62 Wash., 278); Gerhardt vs. Tucker (187 Mo., 46). These cases cover a variety of communications made by an authority in behalf of his client to third persons. And cases wherein evidence of the attorney as to compromises entered into by him on behalf of his client were allowed to be proved by the attorney's testimony are not wanting. (Williams vs. Blumenthal, 27 Wash., 24; Koeber vs. Sommers, supra.)

25
It is manifest that the objection to the testimony of the plaintiff's attorney as to his authority to compromise was properly overruled. The testimony was to the effect that when the attorney delivered the policies to the administrator, he understood that there was a compromise to be effected, and that when he informed the plaintiff of the surrender of the policies for that purpose the plaintiff made no objection whatever. The evidence is sufficient to show that the plaintiff acquiesced in the compromise settlement of the policies. Having agreed to the compromise, he cannot now disavow it and maintain an action for the recovery of their face value. For the foregoing reasons the judgment appealed from is affirmed, with costs. So ordered. THIRD DIVISION A.C. No. 4078 July 14, 2003 GENATO, complainant,

WILLIAM ONG vs. ATTY. ESSEX L. SILAPAN, respondent. PUNO, J.:

In this complaint for disbarment filed by William Ong Genato against respondent Atty. Essex L. Silapan, complainant alleged that in July 1992, respondent asked if he could rent a small office space in complainant's building in Quezon City for his law practice. Complainant acceded and introduced respondent to Atty. Benjamin Dacanay, complainant's retained lawyer, who accommodated respondent in the building and made him handle some of complainant's cases. Hence, the start of the legal relationship between complainant and respondent. The conflict between the parties started when respondent borrowed two hundred thousand pesos (P200,000.00) from complainant which he intended to use as downpayment for the purchase of a new car. In return, respondent issued to complainant a postdated check in the amount of P176,528.00 to answer for the six (6) months interest on the loan. He likewise mortgaged to complainant his house and lot in Quezon City but did not surrender its title claiming that 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 City Trust Company. In January 1993, respondent introduced to complainant a certain Emmanuel Romero. Romero likewise wanted to borrow money from complainant. Complainant lent Romero the money and, from this transaction, respondent earned commission in the amount of P52,289.90. Complainant used the commission to pay respondent's arrears with the car financing firm. Subsequently, respondent failed to pay the amortization on the car and the financing firm sent demand letters to complainant. Complainant tried to encash respondent's postdated check with 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. Complainant then filed a criminal case against respondent for violation of Batas Pambansa Blg. 22 and a civil case for judicial foreclosure of real estate mortgage. In the foreclosure case, respondent made the following allegation in his Answer: xxx xxx xxx

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 and has many cases pending in court; xxx xxx xxx

Complainant denied respondent's charges and claimed that respondent's allegation is libelous and not privilege as it

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was irrelevant to the foreclosure case. Complainant further pointed 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 of the crime that was charged of in the above-mentioned case. (emphasis supplied) Complainant gripes that the foregoing allegations are false, immaterial to the foreclosure case 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 held administratively liable therefor. Consequently, he filed this complaint for disbarment, praying also that an administrative sanction be meted against respondent for his issuance of a bouncing check. When required by the Court to comment, respondent explained 1 that it was complainant who offered him an office space in his building and retained him as counsel as the latter was impressed with the way he handled a B.P. 22 case2 filed against complainant. Respondent insisted that there was nothing libelous in his imputations of dishonest business practices to complainant and his revelation of complainant's desire to bribe government officials in relation to his pending criminal case. He claimed to have made these statements in the course of judicial proceedings to defend his case and discredit complainant's credibility by establishing his criminal propensity to commit fraud, tell lies and violate laws. He argued that he is not guilty of breaking his confidential lawyer-client relationship with complainant as he made the disclosure in defense of his honor and reputation. Secondly, respondent asserted that he executed the real estate mortgage in favor of complainant without consideration and only as a "formal requirement" so he could obtain the P200,000.00 loan and for this reason, he did not surrender his title over the mortgaged property 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 a portion of his attorney's fees from the complainant for the legal services he rendered, and (b) as a 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 loan which he allegedly helped facilitate. He alleged that the amount was paid to him by Romero as attorney's fees, the latter being his client. He used this amount to pay his arrears with the car financing firm. On January 29, 1993, before paying the next amortization on the car, he asked complainant to execute a deed of sale transferring ownership of the car to him. Complainant refused and insisted that he would transfer ownership of the car only after the termination of his criminal case which respondent was handling as his defense lawyer. Consequently, respondent stopped paying the amortization on the car. Respondent also alleged that he filed a perjury case 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 the Integrated 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 the investigating commissioner finding the respondent guilty as charged and recommending his suspension from the practice of law for one (1) year. We affirm the findings and recommendation of the IBP.

26

Prefatorily, we stress that we shall not delve into the merits of the various criminal and civil cases pending between the parties. It is for the trial courts handling these cases to ascertain the truth or falsity of the allegations made therein. For this reason, it is not for us to sanction respondent for his issuance of a bouncing check. His liability has yet to be determined by the trial court where his case is pending. The only issue in this administrative case is whether respondent committed a breach of trust and confidence by imputing to complainant illegal practices and disclosing complainant's alleged intention to bribe government officials in connection with a pending case. 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. 3 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. 4 It must be stressed, however, that the privilege against disclosure of confidential communications or information is limited only to communications which are legitimately and properly within the scope of a lawful employment of a lawyer. It does not extend to those made in contemplation of a crime or perpetration of a fraud. 5 If the unlawful purpose is avowed, as in this 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 lawyer professionally. It is not within the profession of a lawyer to advise a client as to how he may commit a crime as a lawyer is not a gun for hire. Thus, the attorney-client privilege does not attach, 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 the disclosures in his pleadings fails to satisfy us. The disclosures were not indispensable to protect his rights as they were not pertinent to the foreclosure case. It was improper for the respondent to use it against the complainant in the foreclosure case as it was not the subject matter of litigation therein and respondent's professional competence and legal advice were not being attacked 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 be characterized by the highest degree of good faith and fairness. Thus, the Court agrees with the evaluation of the IBP and finds that respondent's allegations and disclosures in the foreclosure case amount to a breach of fidelity sufficient to warrant the imposition 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 his breach of duty considering that a review of the records of this Court reveals that this is the first administrative complaint against him. IN VIEW WHEREOF, respondent Atty. Essex L. Silapan 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. SECOND DIVISION ADM. CASE No. 4426 February 17, 2000

RAMON SAURA, JR., complainant, vs. ATTY. LALAINE LILIBETH AGDEPPA, respondent. x-----------------------------x ADM. CASE No. 4429 February 17, 2000

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HELEN BALDORIA and RAYMUNDO SAURA, complainants, vs. ATTY. LALAINE LILIBETH AGDEPPA, respondent. RESOLUTION Sec. 30, Rule 138 of the Rules of Court specifically provides that: DE LEON, JR., J.: Two (2) petitions, one by Ramon Saura, Jr. 1 and the other by Helen S. Baldoria and Raymundo Y. Saura2, were filed before this Court charging Atty. Lalaine Lilibeth Agdeppa for violation of her lawyer's oath and disregard of Sections 15, 22, 25, 29, 31 and 32 of the Canons of Professional Ethics.3 The two (2) complaints are related and arose from the handling of the respondent of a settlement case involving a piece of property owned in common by the petitioners with their other siblings, Macrina, Romeo and Amelita, all surnamed Saura, who were then the administrators of the said property of the late Ramon E. Saura who died intestate on May 15, 1992. 1wphi1.nt The pertinent facts, as delineated in the report of the National Grievance Investigation Office of the Integrated Bar of the Philippines, are as follows: It appears that negotiations for the settlement of the property (referring to the intestate estate of Ramon E. Saura) dragged on far three (3) years until on April 27, 1995, petitioners learned that the administrators of the property, Macrina, Romeo and Amelita, had, with the assistance of the respondent, who in fact notarized the Deed of Sale, sold the property to Sandalwood Real Estate and Development Corporation without the knowledge and participation of petitioners. To compound matters, petitioners alledge [sic] that despite repeated demands, the vendors or their counsel, respondent herein, have refused to disclose the amount of the sale or account for the proceeds. The petitioners have thus been constrained to institute criminal and civil actions to enforce and protect their rights. This case was refered [sic] to the Integrated Bar by the Supreme Court in a resolution dated November 20, 1995, after its earlier resolution dated June 19, 1995, was returned unserved with the Postmaster's notation that the same was "unclaimed". At the scheduled hearing of this case on February 5, 1998, the petitioner's counsel, Atty. Carolina Esguerra-Ochoa filed a written entry of appearance. There was no appearance for the respondent but this office, noting the new address of the respondent as furnished by Atty. Ochoa, suggested that the latter furnish a copy of the complaint to respondent at the latter's new address. In a Compliance dated February 10, 1998, Atty. Ochoa informed this Office that she had furnished the respondent with a copy of the petition dated May 24, 1995, plus the Supreme Court's resolution dated June 19, and November 20, 1995, plus our Order dated December 8, 1997, and Notice of Appearance dated February 5, 1998. On March 10, 1998, the petitioners counsel submitted a Manifestation attached to which were photocopies of the front and dorsal portion of the return card evidencing receipt by herein respondent of the documents enumerated by Atty. Ochoa in her Compliance dated February 10, 1998. The return card is dated March 2, 1998. To date, no response has been forth coming from Atty. Agdeppa.4 For her continued defiance of orders of this Court for her to answer the administrative charges leveled against her, respondent was recommended to be penalized with a fine of P10,000.00 and suspension from practice for one (1) year in each of the two (2) cases pending against her. Respondent filed a motion for reconsideration alleging that the petitions should be dismissed because she was not accorded her right to due process and that she could not answer the administrative charges against her without divulging certain pieces of information in violation of the attorney-client privilege. Respondent does not convince.

27

First. The respondent was given notice on various occasions but she chose to ignore them and failed to exercise her right to be heard.

Sec. 30. Attorney to be heard before removal or suspension. No attorney shall be removed or suspended from the practice of his profession, until he has full opportunity upon reasonable notice to answer the charges against him, to produce witness in his behalf, and to be heard by himself or counsel. But if upon reasonable notice he fails to appear and answer the accusations, the court may proceed to determine the matter ex parte. Since respondent repeatedly ignored the notices sent to her by this Court, we cannot be expected to wait indefinitely for her answer. While respondent may have changed her address and did not, thus, receive the previous notices, still, on March 2, 1998, she came to know of the Supreme Court Resolution dated June 19, 1995. 5 The prudent thing for her to do was to file an answer immediately and not to delay the matter any further. Sadly, the respondent ignored the Resolution6 of the Supreme Court ordering her to file an answer. Second. The request for the information regarding the sale of the property and to account for the proceeds is not a violation of the attorney-client privilege. Rule 130, Section 24 (b) of the Rules of Court 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

(b) An attorney cannot, without the consent of his client, be examined as to any communication made by the client to him, or his advice given thereon in the course of, or with a view to, professional employment, nor can an attorney's secretary, stenographer, or clerk be examined, without the consent of the client and his employer, concerning any fact the knowledge of which has been acquired in such capacity. The information requested by petitioners is not privileged. The petitioners are only asking for the disclosure of the amount of the sale or account for the proceeds. Petitioners certainly have the right to ask for such information since they own the property as co-heirs of the late Ramon E. Saura and as co-administrators of the property. Hence, respondent cannot refuse to divulge such information to them and hide behind the cloak of the attorney-client relationship. WHEREFORE, for the refusal of Atty. Lalaine Lilibeth Agdeppa to comply with our Resolutions dated June 7 and 19, 1995 directing her to file an answer to the petitions. the Court hereby penalizes her with a FINE of two thousand pesos (P2,000.00) which. should be paid within ten (10) days from receipt hereof; otherwise, a penalty of imprisonment for five (5) days shall be imposed. This resolution shall be immediately executory. SO ORDERED. EN BANC

A.C. No. 2597 March 12, 1998 GLORITO V. MATURAN, petitioner, vs. ATTY. CONRADO S. GONZALES, respondent. RESOLUTION

ROMERO, J.: A complaint for disbarment was filed with this Court on October 25, 1983, by Glorito V. Maturan against his counsel, Atty. Conrado S.

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Gonzales, charging him with immoral, unethical, and anomalous acts. The respondent filed his comment thereto on February 6, 1984. On November 11, 1997, or after thirteen (13) years, the Board of Governors of the Integrated Bar of the Philippines submitted their report and recommendation on the instant case. The facts, as culled from the records, are as follows: Spouses Antonio and Gloria Casquejo instituted their son-in-law, Glorito V. Maturan (herein petitioner), as their attorney-in-fact, through a Special Power of Attorney (SPA) dated November 6, 1981. Said SPA authorized Maturan to file ejectment cases against squatters occupying Lot 1350-A, Psd-50375, located in General Santos City, as well as criminal cases against the latter for violation of P.D. 772, again in connection with said lot. Respondent, Atty. Conrado Gonzales, prepared and notarized said Special Power of Attorney. Subsequently, Glorito Maturan engaged the services of respondent in ejecting several squatters occupying Lot 1350-A, Psd-50735. While said lot was registered in the name of Celestino Yokingco, Antonio Casquejo had, however, instituted a case for reconveyance of property and declaration of nullity against the former, docketed as Civil Case No. 2067. As a consequence of his engagement by petitioner, respondent Gonzales filed Civil Case No. 1783-11 for Forcible Entry and Damages against several individuals. On February 18, 1983, a judgment was rendered in favor of petitioner. Petitioner, through respondent, filed a motion for issuance of a writ of execution on March 10, 1983. In the interim, the parties to Civil Case No. 2067 entered into a compromise agreement, which was judicially approved in a judgment dated March 28, 1983. On June 22, 1983, while the motion for issuance of a writ of execution was pending, and without withdrawing as counsel for petitioner, respondent filed, on behalf of Celestino Yokingco, et al., Civil Case No. 2746, an action to annul the judgment rendered in Civil Case No. 2067. The action was predicated on the lack of authority on the part of petitioner to represent Antonio and Gloria Casquejo, as no such authorization was shown to be on record in Civil Case No. 2067. On August 24, 1983, respondent, on behalf of Celestino Yokingco, et al., also filed Special Civil Case No. 161 for injunction with a prayer for preliminary injunction, with damages, against petitioner. Aggrieved by respondent's acceptance of professional employment from their adversary in Civil Case No. 2067, and alleging that privileged matters relating to the land in question had been transmitted by petitioner to respondent in Civil Case 1783-11, petitioner filed an administrative complaint against the former for immoral, unethical, and anomalous acts and asked for his disbarment. Respondent, in a comment dated January 25, 1984, denied having committed any malicious, unethical, unbecoming, immoral, or anomalous act against his client. Respondent declared that he was of the belief that filing a motion for issuance of a writ of execution was the last and final act in the lawyer-client relationship between himself and petitioner, and that his formal withdrawal as counsel for the Casquejos was unnecessary in order to sever the lawyer-client relationship between them. Furthermore, he alleged that his acceptance of employment from Yokingco was for him, an opportunity to honestly earn a little more for his children's sustenance. The investigating commissioner of the Integrated Bar of the Philippines, in his report dated August 21, 1997, found respondent guilty of representing conflicting interests and recommended that he be suspended for three (3) years. The Board of Governors of the IBP adopted and approved the report and recommendation of the investigating commissioner but recommended that the suspension be reduced from three (3) years to one (1) year. This Court adopts the findings of the investigating commissioner finding respondent guilty of representing conflicting interests. It is improper for a lawyer to appear as counsel for one party against the adverse party who is his client in a related suit, as a lawyer is 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 of his present or former client. 1 That the representation of conflicting interest is in good faith and with honest intention on the part of the lawyer does not make the prohibition inoperative.

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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. A lawyer becomes familiar with all the facts connected with his client's case. He learns from his client the weak points of the action as well as the strong ones. Such knowledge must be considered sacred and guarded with care. No opportunity must be given him to take advantage of the client's secrets. A lawyer must have the fullest confidence of his client. For if the confidence is abused, the profession will suffer by the loss thereof. 2 This Court finds respondent's actuations violative of Canon 6 of the Canons of Professional Ethics which provide in part: 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. Moreover, respondent's justification for his actions reveal a patent ignorance of the fiduciary obligations which a lawyer owes to his client. A lawyer-client relationship is not terminated by the filing of a motion for a writ of execution. His acceptance of a case implies that he will prosecute the case to its conclusion. He may not be permitted to unilaterally terminate the same to the prejudice of his client. As to the recommendation that the term of suspension be reduced from three years to one year, we find the same to be unwarranted. In similar cases decided by the Supreme Court, the penalty of two or three years suspension has been imposed where respondent was found guilty of representing conflicting interests. In Vda. De Alisbo vs.Jalandoon, Sr., 3 the respondent, who appeared for complainant in a case for revival of judgment, even though he had been the counsel of the adverse party in the case sought to be revived, was suspended for a period of two years. In Bautista vs. Barrios, 4 a suspension of two years was imposed on respondent Barrios, who had drafted a deed of partition for petitioner, but who appeared for the other party therein, when the same was sought to be enforced by petitioner. In PNB vs. Cedo, 5 the Court even suspended the respondent therein for three years, but only because respondent not only represented conflicting interests, but also deliberately intended to attract clients with interests adverse to his former employer. Finally, in Natan vs. Capule, 6 respondent was suspended for two years after he accepted professional employment in the very case in which his former client was the adverse party. ACCORDINGLY, this Court resolves to MODIFY the IBP recommendation to suspend respondent for one year and modifies it to SUSPENSION from the practice of law for TWO (2) YEARS, effective immediately. SO ORDERED. EN BANC

G.R. Nos. 115439-41 July 16, 1997 PEOPLE OF THE PHILIPPINES, petitioner, vs. HONORABLE SANDIGANBAYAN, MANSUETO V. HONRADA, CEFERINO S. PAREDES, JR. and GENEROSO S. SANSAET, respondents.

REGALADO, J.: Through the special civil action for certiorari at bar, petitioner seeks the annulment of the resolution of respondent Sandiganbayan, promulgated on December 22, 1993, which denied petitioner's motion for the discharge of respondent Generoso S. Sansaet to be utilized as a state witness, and its resolution of March 7, 1994 denying the motion for reconsideration of its preceding disposition. 1 The records show that during the dates material to this case, respondent Honrada was the Clerk of Court and Acting Stenographer of the First Municipal Circuit Trial Court, San Francisco-BunawanRosario in Agusan del Sur. Respondent Paredes was successively the Provincial Attorney of Agusan del Sur, then Governor of the same

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province, and is at present a Congressman. Respondent Sansaet was a practicing attorney who served as counsel for Paredes in several instances pertinent to the criminal charges involved in the present recourse. The same records also represent that sometime in 1976, respondent Paredes applied for a free patent over Lot No. 3097-A, Pls-67 of the Rosario Public Land Subdivision Survey. His application was approved and, pursuant to a free patent granted to him, an original certificate of title was issued in his favor for that lot which is situated in thepoblacion of San Francisco, Agusan del Sur. However, in 1985, the Director of Lands filed an action 2 for the cancellation of respondent Paredes' patent and certificate of title since the land had been designated and reserved as a school site in the aforementioned subdivision survey. The trial court rendered judgment 3 nullifying said patent and title after finding that respondent Paredes had obtained the same through fraudulent misrepresentations in his application. Pertinently, respondent Sansaet served as counsel of Paredes in that civil case. 4 Consequent to the foregoing judgment of the trial court, upon the subsequent complaint of the Sangguniang Bayan and the preliminary investigation conducted thereon, an information for perjury 5 was filed against respondent Paredes in the Municipal Circuit Trial Court. 6 On November 27, 1985, the Provincial Fiscal was, however, directed by the Deputy Minister of Justice to move for the dismissal of the case on the ground inter aliaof prescription, hence the proceedings were terminated. 7 In this criminal case, respondent Paredes was likewise represented by respondent Sansaet as counsel. Nonetheless, respondent Sansaet was thereafter haled before the Tanodbayan for preliminary investigation on the charge that, by using his former position as Provincial Attorney to influence and induce the Bureau of Lands officials to favorably act on his application for free patent, he had violated Section 3(a) of Republic Act No. 3019, as amended. For the third time, respondent Sansaet was Paredes' counsel of record therein. On August 29, 1988, the Tanodbayan, issued a resolution 8 recommending the criminal prosecution of respondent Paredes. Atty. Sansaet, as counsel for his aforenamed corespondent, moved for reconsideration and, because of its legal significance in this case, we quote some of his allegations in that motion: . . . respondent had been charged already by the complainants before the Municipal Circuit Court of San Francisco, Agusan del Sur, went to jail on detention in 1984 under the same set of facts and the same evidence . . . but said case after arraignment, was ordered dismissed by the court upon recommendation of the Department of Justice. Copy of the dismissal order, certificate of arraignment and the recommendation of the Department of Justice are hereto attached for ready reference; thus the filing of this case will be a case of double jeopardy for respondent herein . . . 9 (Emphasis supplied.) A criminal case was subsequently filed with the Sandiganbayan 10 charging respondent Paredes with a violation of Section 3 (a) of Republic Act No. 3019, as amended. However, a motion to quash filed by the defense was later granted in respondent court's resolution of August 1, 1991 11 and the case was dismissed on the ground of prescription. On January 23, 1990, one Teofilo Gelacio, a taxpayer who had initiated the perjury and graft charges against respondent Paredes, sent a letter to the Ombudsman seeking the investigation of the three respondents herein for falsification of public documents. 12 He claimed that respondent Honrada, in conspiracy with his herein corespondents, simulated and certified as true copies certain documents purporting to be a notice of arraignment, dated July 1, 1985, and transcripts of stenographic notes supposedly taken during the arraignment of Paredes on the perjury charge. 13 These falsified documents were annexed to respondent Paredes' motion for reconsideration of the Tanodbayan resolution for the filing of a graft charge against him, in order to support his contention that the same would constitute double jeopardy. In support of his claim, Gelacio attached to his letter a certification that no notice of arraignment was ever received by the Office of the Provincial Fiscal of Agusan del Sur in connection with that perjury

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case; and a certification of Presiding Judge Ciriaco Ario that said perjury case in his court did not reach the arraignment stage since action thereon was suspended pending the review of the case by the Department of Justice. 14 Respondents filed their respective counter-affidavits, but Sansaet subsequently discarded and repudiated the submissions he had made in his counter-affidavit. In a so-called Affidavit of Explanations and Rectifications, 15respondent Sansaet revealed that Paredes contrived to have the graft case under preliminary investigation dismissed on the ground of double jeopardy by making it appear that the perjury case had been dismissed by the trial court after he had been arraigned therein. For that purpose, the documents which were later filed by respondent Sansaet in the preliminary investigation were prepared and falsified by his co-respondents in this case in the house of respondent Paredes. To evade responsibility for his own participation in the scheme, he claimed that he did so upon the instigation and inducement of respondent Paredes. This was intended to pave the way for his discharge as a government witness in the consolidated cases, as in fact a motion therefor was filed by the prosecution pursuant to their agreement. Withal, in a resolution 16 dated February 24, 1992, the Ombudsman approved the filing of falsification charges against all the herein private respondents. The proposal for the discharge of respondent Sansaet as a state witness was rejected by the Ombudsman on this evaluative legal position: . . . Taking his explanation, it is difficult to believe that a lawyer of his stature, in the absence of deliberate intent to conspire, would be unwittingly induced by another to commit a crime. As counsel for the accused in those criminal cases, Atty. Sansaet had control over the case theory and the evidence which the defense was going to present. Moreover, the testimony or confession of Atty. Sansaet falls under the mantle of privileged communication between the lawyer and his client which may be objected to, if presented in the trial. The Ombudsman refused to reconsider that resolution 17 and, ostensibly to forestall any further controversy, he decided to file separate informations for falsification of public documents against each of the herein respondents. Thus, three criminal cases, 18 each of which named one of the three private respondents here as the accused therein, were filed in the graft court. However, the same were consolidated for joint trial in the Second Division of the Sandiganbayan. As stated at the outset, a motion was filed by the People on July 27, 1993 for the discharge of respondent Sansaet as a state witness. It was submitted that all the requisites therefor, as provided in Section 9, Rule 119 of the Rules of Court, were satisfied insofar as respondent Sansaet was concerned. The basic postulate was that, except for the eyewitness testimony of respondent Sansaet, there was no other direct evidence to prove the confabulated falsification of documents by respondents Honrada and Paredes. Unfortunately for the prosecution, respondent Sandiganbayan, hewing to the theory of the attorney-client privilege adverted to by the Ombudsman and invoked by the two other private respondents in their opposition to the prosecution's motion, resolved to deny the desired discharge on this ratiocination: From the evidence adduced, the opposition was able to establish that client and lawyer relationship existed between Atty. Sansaet and Ceferino Paredes, Jr., before, during and after the period alleged in the information. In view of such relationship, the facts surrounding the case, and other confidential matter must have been disclosed by accused Paredes, as client, to accused Sansaet, as his lawyer in his professional capacity. Therefore, the testimony of Atty. Sansaet on the facts surrounding the offense charged in the information is privileged. 19 Reconsideration of said resolution having been likewise denied, 20 the controversy was elevated to this Court by the prosecution in an original action for the issuance of the extraordinary writ of certiorari against respondent Sandiganbayan.

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The principal issues on which the resolution of the petition at bar actually turns are therefore (1) whether or not the projected testimony of respondent Sansaet, as proposed state witness, is barred by the attorney-client privilege; and (2) whether or not, as a consequence thereof, he is eligible for discharge to testify as a particeps criminis. As already stated, respondent Sandiganbayan ruled that due to the lawyer-client relationship which existed between herein respondents Paredes and Sansaet during the relevant periods, the facts surrounding the case and other confidential matters must have been disclosed by respondent Paredes, as client, to respondent Sansaet, as his lawyer. Accordingly, it found "no reason to discuss it further since Atty. Sansaet cannot be presented as a witness against accused Ceferino S. Paredes, Jr. without the latter's consent." 21 The Court is of a contrary persuasion. The attorney-client privilege cannot apply in these cases, as the facts thereof and actuations of both respondents therein constitute an exception to the rule. For a clearer understanding of that evidential rule, we will first sweep aside some distracting mental cobwebs in these cases. 1. It may correctly be assumed that there was a confidential communication made by Paredes to Sansaet in connection with Criminal Cases Nos. 17791-93 for falsification before respondent court, and this may reasonably be expected since Paredes was the accused and Sansaet his counsel therein. Indeed, the fact that Sansaet was called to witness the preparation of the falsified documents by Paredes and Honrada was as eloquent a communication, if not more, than verbal statements being made to him by Paredes as to the fact and purpose of such falsification. It is significant that the evidentiary rule on this point has always referred to "any communication," without distinction or qualification. 22 In the American jurisdiction from which our present evidential rule was taken, there is no particular mode by which a confidential communication shall be made by a client to his attorney. The privilege is not confined to verbal or written communications made by the client to his attorney but extends as well to information communicated by the client to the attorney by other means. 23 Nor can it be pretended that during the entire process, considering their past and existing relations as counsel and client and, further, in view of the purpose for which such falsified documents were prepared, no word at all passed between Paredes and Sansaet on the subject matter of that criminal act. The clincher for this conclusion is the undisputed fact that said documents were thereafter filed by Sansaet in behalf of Paredes as annexes to the motion for reconsideration in the preliminary investigation of the graft case before the Tanodbayan. 24 Also, the acts and words of the parties during the period when the documents were being falsified were necessarily confidential since Paredes would not have invited Sansaet to his house and allowed him to witness the same except under conditions of secrecy and confidence. 2. It is postulated that despite such complicity of Sansaet at the instance of Paredes in the criminal act for which the latter stands charged, a distinction must be made between confidential communications relating to past crimes already committed, and future crimes intended to be committed, by the client. Corollarily, it is admitted that the announced intention of a client to commit a crime is not included within the confidences which his attorney is bound to respect. Respondent court appears, however, to believe that in the instant case it is dealing with a past crime, and that respondent Sansaet is set to testify on alleged criminal acts of respondents Paredes and Honrada that have already been committed and consummated. The Court reprobates the last assumption which is flawed by a somewhat inaccurate basis. It is true that by now, insofar as the falsifications to be testified to in respondent court are concerned, those crimes were necessarily committed in the past. But for the application of the attorney-client privilege, however, the period to be considered is the date when the privileged communication was made by the client to the attorney in relation to either a crime committed in the past or with respect to a crime intended to be committed in the future. In other words, if the client seeks his lawyer's advice with respect to a crime that the former has theretofore committed, he is given the protection of a virtual confessional seal which the attorneyclient privilege declares cannot be broken by the attorney without the client's consent. The same privileged confidentiality, however, does not attach with regard to a crime which a client intends to commit thereafter or in the future and for purposes of which he seeks the lawyer's advice.

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Statements and communications regarding the commission of a crime already committed, made by a party who committed it, to an attorney, consulted as such, are privileged communications. Contrarily, the unbroken stream of judicial dicta is to the effect that communications between attorney and client having to do with the client'scontemplated criminal acts, or in aid or furtherance thereof, are not covered by the cloak of privileges ordinarily existing in reference to communications between attorney and client. 25 (Emphases supplied.) 3. In the present cases, the testimony sought to be elicited from Sansate as state witness are the communications made to him by physical acts and/or accompanying words of Parades at the time he and Honrada, either with the active or passive participation of Sansaet, were about to falsify, or in the process of falsifying, the documents which were later filed in the Tanodbayan by Sansaet and culminated in the criminal charges now pending in respondent Sandiganbayan. Clearly, therefore, the confidential communications thus made by Paredes to Sansaet were for purposes of and in reference to the crime of falsification which had not yet been committed in the past by Paredes but which he, in confederacy with his present co-respondents, later committed. Having been made for purposes of a future offense, those communications are outside the pale of the attorney-client privilege. 4. Furthermore, Sansaet was himself a conspirator in the commission of that crime of falsification which he, Paredes and Honrada concocted and foisted upon the authorities. It is well settled that in order that a communication between a lawyer and his client may be privileged, it must be for a lawful purpose or in furtherance of a lawful end. The existence of an unlawful purpose prevents the privilege from attaching. 26 In fact, it has also been pointed out to the Court that the "prosecution of the honorable relation of attorney and client will not be permitted under the guise of privilege, and every communication made to an attorney by a client for a criminal purpose is a conspiracy or attempt at a conspiracy which is not only lawful to divulge, but which the attorney under certain circumstances may be bound to disclose at once in the interest of justice." 27 It is evident, therefore, that it was error for respondent Sandiganbayan to insist that such unlawful communications intended for an illegal purpose contrived by conspirators are nonetheless covered by the so-called mantle of privilege. To prevent a conniving counsel from revealing the genesis of a crime which was later committed pursuant to a conspiracy, because of the objection thereto of his conspiring client, would be one of the worst travesties in the rules of evidence and practice in the noble profession of law. II On the foregoing premises, we now proceed to the consequential inquiry as to whether respondent Sansaet qualifies, as a particeps criminis, for discharge from the criminal prosecution in order to testify for the State. Parenthetically, respondent court, having arrived at a contrary conclusion on the preceding issue, did not pass upon this second aspect and the relief sought by the prosecution which are now submitted for our resolution in the petition at bar. We shall, however, first dispose likewise of some ancillary questions requiring preludial clarification. 1. The fact that respondent Sandiganbayan did not fully pass upon the query as to whether or not respondent Sansaet was qualified to be a state witness need not prevent this Court from resolving that issue as prayed for by petitioner. Where the determinative facts and evidence have been submitted to this Court such that it is in a position to finally resolve the dispute, it will be in the pursuance of the ends of justice and the expeditious administration thereof to resolve the case on the merits, instead of remanding it to the trial court. 28 2. A reservation is raised over the fact that the three private respondents here stand charged in three separate informations. It will be recalled that in its resolution of February 24, 1992, the Ombudsman recommended the filing of criminal charges for falsification of public documents against all the respondents herein. That resolution was affirmed but, reportedly in order to obviate further controversy, one information was filed against each of the three respondents here, resulting in three informations for the same acts of falsification. This technicality was, however, sufficiently explained away during the deliberations in this case by the following discussion thereof by Mr. Justice Davide, to wit:

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Assuming no substantive impediment exists to block Sansaet's discharge as state witness, he can, nevertheless, be discharged even if indicted under a separate information. I suppose the three cases were consolidated for joint trial since they were all raffled to the Second Division of the Sandiganbayan. Section 2, Rule XV of the Revised Rules of the Sandiganbayan allows consolidation in only one Division of cases arising from the same incident or series of incidents, or involving common questions of law and fact. Accordingly, for all legal intents and purposes, Sansaet stood as co-accused and he could be discharged as state witness. It is of no moment that he was charged separately from his coaccused. While Section 9 of Rule 119 of the 1985 Rules of Criminal Procedure uses the word jointly, which was absent in the old provision, the consolidated and joint trial has the effect of making the three accused co-accused or joint defendants, especially considering that they are charged for the same offense. In criminal law, persons indicted for the same offense and tried together are called joint defendants. As likewise submitted therefor by Mr. Justice Francisco along the same vein, there having been a consolidation of the three cases, the several actions lost their separate identities and became a single action in which a single judgment is rendered, the same as if the different causes of action involved had originally been joined in a single action. 29 Indeed, the former provision of the Rules referring to the situation "(w)hen two or more persons are charged with the commission of a certain offense" was too broad and indefinite; hence the word "joint" was added to indicate the identity of the charge and the fact that the accused are all together charged therewith substantially in the same manner in point of commission and time. The word "joint" means "common to two or more," as "involving the united activity of two or more," or "done or produced by two or more working together," or "shared by or affecting two or more. 30 Had it been intended that all the accused should always be indicted in one and the same information, the Rules could have said so with facility, but it did not so require in consideration of the circumstances obtaining in the present case and the problems that may arise from amending the information. After all, the purpose of the Rule can be achieved by consolidation of the cases as an alternative mode. 2. We have earlier held that Sansaet was a conspirator in the crime of falsification, and the rule is that since in a conspiracy the act of one is the act of all, the same penalty shall be imposed on all members of the conspiracy. Now, one of the requirements for a state witness is that he "does not appear to be the most guilty." 31 not that he must be the least guilty 32 as is so often erroneously framed or submitted. The query would then be whether an accused who was held guilty by reason of membership in a conspiracy is eligible to be a state witness. To be sure, in People vs. Ramirez, et al. 33 we find this obiter: It appears that Apolonio Bagispas was the real mastermind. It is believable that he persuaded the others to rob Paterno, not to kill him for a promised fee. Although he did not actually commit any of the stabbings, it was a mistake to discharge Bagispas as a state witness. All the perpetrators of the offense, including him, were bound in a conspiracy that made them equally guilty. However, prior thereto, in People vs. Roxas, et al., 34 two conspirators charged with five others in three separate informations for multiple murder were discharged and used as state witnesses against their confederates. Subsequent thereto, in Lugtu, et al. vs. Court of Appeals, et al., 35 one of the co-conspirators was discharged from the information charging him and two others with the crime of estafa. The trial court found that he was not the most guilty as, being a poor and ignorant man, he was easily convinced by his two co-accused to open the account with the bank and which led to the commission of the crime. On appeal, this Court held that the finding of respondent appellate court that Lugtu was just as guilty as his co-accused, and should not be discharged as he did not appear to be not the most guilty, is untenable. In other words, the Court took into account the gravity or nature of the acts committed by the accused to be discharged

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compared to those of his co-accused, and not merely the fact that in law the same or equal penalty is imposable on all of them. Eventually, what was just somehow assumed but not explicity articulated found expression in People vs. Ocimar, et al., 36 which we quote in extenso: Ocimar contends that in the case at bar Bermudez does not satisfy the conditions for the discharge of a co-accused to become a state witness. He argues that no accused in a conspiracy can lawfully be discharged and utilized as a state witness, for not one of them could satisfy the requisite of appearing not to be the most guilty. Appellant asserts that since accused Bermudez was part of the conspiracy, he is equally guilty as the others. We do not agree. First, there is absolute necessity for the testimony of Bermudez. For, despite the presentation of four (4) other witnesses, none of them could positively identify the accused except Bermudez who was one of those who pulled the highway heist which resulted not only in the loss of cash, jewelry and other valuables, but even the life of Capt. Caeba, Jr. It was in fact the testimony of Bermudez that clinched the case for the prosecution. Second, without his testimony, no other direct evidence was available for the prosecution to prove the elements of the crime. Third, his testimony could be, as indeed it was, substantially corroborated in its material points as indicated by the trial court in its well-reasoned decision. Fourth, he does not appear to be the most guilty . As the evidence reveals, he was only invited to a drinking party without having any prior knowledge of the plot to stage a highway robbery. But even assuming that he later became part of the conspiracy, he does not appear to be the most guilty. What the law prohibits is that the most guilty will be set free while his co-accused who are less guilty will be sent to jail. And by "most guilty" we mean the highest degree of culpability in terms of participation in the commission of the offense and not necessarily the severity of the penalty imposed . While all the accused may be given the same penalty by reason of conspiracy, yet one may be considered least guilty if We take into account his degree of participation in the perpetration of the offense. Fifth, there is no evidence that he has at any time been convicted of any offense involving moral turpitude. xxx xxx xxx Thus, We agree with the observations of the Solicitor General that the rule on the discharge of an accused to be utilized as state witness clearly looks at his actual and individual participation in the commission of the crime, which may or may not have been perpetrated in conspiracy with the other accused. Since Bermudez was not individually responsible for the killing committed on the occasion of the robbery except by reason of conspiracy, it cannot be said then that Bermudez appears to be the most guilty. Hence, his discharge to be a witness for the government is clearly warranted. (Emphasis ours.) The rule of equality in the penalty to be imposed upon conspirators found guilty of a criminal offense is based on the concurrence of criminal intent in their minds and translated into concerted physical action although of varying acts or degrees of depravity. Since the Revised Penal Code is based on the classical school of thought, it is the identity of the mens rea which is considered the predominant consideration and, therefore, warrants the imposition of the same penalty on the consequential theory that the act of one is thereby the act of all. Also, this is an affair of substantive law which should not be equated with the procedural rule on the discharge of particeps criminis. This adjective device is based on other considerations, such as the need for giving immunity to one of them in order that not all shall escape, and the judicial experience that the candid admission of an accused regarding his participation is a guaranty that he will testify truthfully. For those reasons, the Rules provide for certain qualifying criteria which, again, are based on judicial experience distilled into a judgmental policy. III The Court is reasonably convinced, and so holds, that the other requisites for the discharge of respondent Sansaet as a state witness

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are present and should have been favorably appreciated by the Sandiganbayan. Respondent Sansaet is the only cooperative eyewitness to the actual commission of the falsification charged in the criminal cases pending before respondent court, and the prosecution is faced with the formidable task of establishing the guilt of the two other corespondents who steadfastly deny the charge and stoutly protest their innocence. There is thus no other direct evidence available for the prosecution of the case, hence there is absolute necessity for the testimony of Sansaet whose discharge is sought precisely for that purpose. Said respondent has indicated his conformity thereto and has, for the purposes required by the Rules, detailed the substance of his projected testimony in his Affidavit of Explanation and Rectifications. His testimony can be substantially corroborated on its material points by reputable witnesses, identified in the basic petition with a digest of their prospective testimonies, as follows: Judge Ciriaco C. Ario, Municipal Circuit Trial Court in San Francisco, Agusan del Sur; Provincial Prosecutor and Deputized Ombudsman Prosecutor Claudio A. Nistal; Teofilo Gelacio, private complainant who initiated the criminal cases through his letter-complaint; Alberto Juvilan of the Sangguniang Bayan of San Fernando, Agusan del Sur, who participated in the resolution asking their Provincial Governor to file the appropriate case against respondent Paredes, and Francisco Macalit, who obtained the certification of non-arraignment from Judge Ario. On the final requirement of the Rules, it does not appear that respondent Sansaet has at any time been convicted of any offense involving moral turpitude. Thus, with the confluence of all the requirements for the discharge of this respondent, both the Special Prosecutor and the Solicitor General strongly urge and propose that he be allowed to testify as a state witness. This Court is not unaware of the doctrinal rule that, on this procedural aspect, the prosecution may propose but it is for the trial court, in the exercise of its sound discretion, to determine the merits of the proposal and make the corresponding disposition. It must be emphasized, however, that such discretion should have been exercised, and the disposition taken on a holistic view of all the facts and issues herein discussed, and not merely on the sole issue of the applicability of the attorney-client privilege. This change of heart and direction respondent Sandiganbayan eventually assumed, after the retirement of two members of its Second Division 37 and the reconstitution thereof. In an inversely anticlimactic Manifestation and Comment 38 dated June 14, 1995, as required by this Court in its resolution on December 5, 1994, the chairman and new members thereof 39 declared: 4) That the questioned Resolutions of December 22, 1993 and March 7, 1994 upon which the Petition for Certiorari filed by the prosecution are based, was penned by Associate Justice Narciso T. Atienza and concurred in by the undersigned and Associate Justice Augusto M. Amores; 5) That while the legal issues involved had been already discussed and passed upon by the Second Division in the aforesaid Resolution, however, after going over the arguments submitted by the Solicitor-General and reassessing Our position on the matter, We respectfully beg leave of the Honorable Supreme Court to manifest that We are amenable to setting aside the questioned Resolutions and to grant the prosecution's motion to discharge accused Generoso Sansaet as state witness, upon authority of the Honorable Supreme Court for the issuance of the proper Resolution to that effect within fifteen (15) days from notice thereof. WHEREFORE, the writ of certiorari prayed for is hereby granted SETTING ASIDE the impunged resolutions and ORDERING that the present reliefs sought in these cases by petitioner be allowed and given due course by respondent Sandiganbayan. SO ORDERED.

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