Republic of the Philippines

SUPREME COURT
Manila

THIRD DIVISION

SPOUSES ANTONIO F. ALGURA

G.R. No. 150135

and LORENCITA S.J. ALGURA,

Petitioners,
Present:

- versus -

QUISUMBING, J., Chairperson,

CARPIO,
CARPIO MORALES,

THE LOCAL GOVERNMENT

TINGA, and

UNIT OF THE CITY OF NAGA,

VELASCO, JR., JJ.

ATTY. MANUEL TEOXON,

ENGR. LEON PALMIANO,
NATHAN SERGIO and
BENJAMIN NAVARRO, SR.,

Promulgated:

Respondents.

October 30, 2006

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

DECISION

VELASCO, JR., J.:

Anyone who has ever struggled with poverty

knows how extremely expensive it is to be poor.

James Baldwin

The Constitution affords litigantsmoneyed or poorequal access to the

courts; moreover, it specifically provides that poverty shall not bar any person from
having access to the courts.1[1] Accordingly, laws and rules must be formulated,
interpreted, and implemented pursuant to the intent and spirit of this constitutional
provision. As such, filing fees, though one of the essential elements in court
procedures, should not be an obstacle to poor litigants opportunity to seek redress
for their grievances before the courts.

The Case

This Petition for Review on Certiorari seeks the annulment of the September 11,
2001 Order of the Regional Trial Court (RTC) of Naga City, Branch 27, in Civil
Case No. 99-4403 entitled Spouses Antonio F. Algura and Lorencita S.J. Algura v.
The Local Government Unit of the City of Naga, et al., dismissing the case for
failure of petitioners Algura spouses to pay the required filing fees. 2[2] Since the
instant petition involves only a question of law based on facts established from the
pleadings and documents submitted by the parties,3[3] the Court gives due course
to the instant petition sanctioned under Section 2(c) of Rule 41 on Appeal from the
RTCs, and governed by Rule 45 of the 1997 Rules of Civil Procedure.

The Facts

On September 1, 1999, spouses Antonio F. Algura and Lorencita S.J. Algura filed a
Verified Complaint dated August 30, 19994[4] for damages against the Naga City
Government and its officers, arising from the alleged illegal demolition of their
residence and boarding house and for payment of lost income derived from fees
paid by their boarders amounting to PhP 7,000.00 monthly.
2
3
4

Simultaneously, petitioners filed an Ex-Parte Motion to Litigate as Indigent

Litigants,5[5] to which petitioner Antonio Alguras Pay Slip No. 2457360 (Annex
A of motion) was appended, showing a gross monthly income of Ten Thousand
Four Hundred Seventy Four Pesos (PhP 10,474.00) and a net pay of Three
Thousand Six Hundred Sixteen Pesos and Ninety Nine Centavos (PhP 3,616.99)
for [the month of] July 1999. 6[6] Also attached as Annex B to the motion was a
July 14, 1999 Certification7[7] issued by the Office of the City Assessor of Naga
City, which stated that petitioners had no property declared in their name for
taxation purposes.

Finding that petitioners motion to litigate as indigent litigants was meritorious,

Executive Judge Jose T. Atienza of the Naga City RTC, in the September 1, 1999
Order,8[8] granted petitioners plea for exemption from filing fees.

Meanwhile, as a result of respondent Naga City Governments demolition of

a portion of petitioners house, the Alguras allegedly lost a monthly income of PhP
7,000.00 from their boarders rentals. With the loss of the rentals, the meager
income from Lorencita Alguras sari-sari store and Antonio Alguras small take
5
6
7
8

home pay became insufficient for the expenses of the Algura spouses and their six
(6) children for their basic needs including food, bills, clothes, and schooling,
among others.

On October 13, 1999, respondents filed an Answer with Counterclaim dated

October 10, 1999,9[9] arguing that the defenses of the petitioners in the complaint
had no cause of action, the spouses boarding house blocked the road right of way,
and said structure was a nuisance per se.

Praying that the counterclaim of defendants (respondents) be dismissed, petitioners

then filed their Reply with Ex-Parte Request for a Pre-Trial Setting10[10] before
the Naga City RTC on October 19, 1999. On February 3, 2000, a pre-trial was
held wherein respondents asked for five (5) days within which to file a Motion to
Disqualify Petitioners as Indigent Litigants.
On March 13, 2000, respondents filed a Motion to Disqualify the Plaintiffs for
Non-Payment of Filing Fees dated March 10, 2000.11[11] They asserted that in
addition to the more than PhP 3,000.00 net income of petitioner Antonio Algura,
who is a member of the Philippine National Police, spouse Lorencita Algura also
had a mini-store and a computer shop on the ground floor of their residence along
Bayawas St., Sta. Cruz, Naga City. Also, respondents claimed that petitioners
9
10
11

second floor was used as their residence and as a boarding house, from which they
earned more than PhP 3,000.00 a month.

In addition, it was claimed that

petitioners derived additional income from their computer shop patronized by

students and from several boarders who paid rentals to them. Hence, respondents
concluded that petitioners were not indigent litigants.

On March 28, 2000, petitioners subsequently interposed their Opposition to the

Motion12[12] to respondents motion to disqualify them for non-payment of filing
fees.

On April 14, 2000, the Naga City RTC issued an Order disqualifying petitioners as
indigent litigants on the ground that they failed to substantiate their claim for
exemption from payment of legal fees and to comply with the third paragraph of
Rule 141, Section 18 of the Revised Rules of Courtdirecting them to pay the
requisite filing fees.13[13]

On April 28, 2000, petitioners filed a Motion for Reconsideration of the April 14,
2000 Order. On May 8, 2000, respondents then filed their Comment/Objections to
petitioners Motion for Reconsideration.

12
13

On May 5, 2000, the trial court issued an Order 14[14] giving petitioners the
opportunity to comply with the requisites laid down in Section 18, Rule 141, for
them to qualify as indigent litigants.

On May 13, 2000, petitioners submitted their Compliance 15[15] attaching the
affidavits of petitioner Lorencita Algura16[16] and Erlinda Bangate,17[17] to comply
with the requirements of then Rule 141, Section 18 of the Rules of Court and in
support of their claim to be declared as indigent litigants.

In her May 13, 2000 Affidavit, petitioner Lorencita Algura claimed that the
demolition of their small dwelling deprived her of a monthly income amounting to
PhP 7,000.00. She, her husband, and their six (6) minor children had to rely
mainly on her husbands salary as a policeman which provided them a monthly
amount of PhP 3,500.00, more or less. Also, they did not own any real property as
certified by the assessors office of Naga City. More so, according to her, the
meager net income from her small sari-sari store and the rentals of some boarders,
plus the salary of her husband, were not enough to pay the familys basic
necessities.

14
15
16
17

To buttress their position as qualified indigent litigants, petitioners also submitted

the affidavit of Erlinda Bangate, who attested under oath, that she personally knew
spouses Antonio Algura and Lorencita Algura, who were her neighbors; that they
derived substantial income from their boarders; that they lost said income from
their boarders rentals when the Local Government Unit of the City of Naga,
through its officers, demolished part of their house because from that time, only a
few boarders could be accommodated; that the income from the small store, the
boarders, and the meager salary of Antonio Algura were insufficient for their basic
necessities like food and clothing, considering that the Algura spouses had six (6)
children; and that she knew that petitioners did not own any real property.

Thereafter, Naga City RTC Acting Presiding Judge Andres B. Barsaga, Jr.
issued his July 17, 200018[18] Order denying the petitioners Motion for
Reconsideration.

Judge Barsaga ratiocinated that the pay slip of Antonio F. Algura showed
that the GROSS INCOME or TOTAL EARNINGS of plaintiff Algura [was]
10,474.00 which amount [was] over and above the amount mentioned in the first
paragraph of Rule 141, Section 18 for pauper litigants residing outside Metro
Manila.19[19] Said rule provides that the gross income of the litigant should not
exceed PhP 3,000.00 a month and shall not own real estate with an assessed value
of PhP 50,000.00. The trial court found that, in Lorencita S.J. Alguras May 13,
18
19

2000 Affidavit, nowhere was it stated that she and her immediate family did not
earn a gross income of PhP 3,000.00.

The Issue

Unconvinced of the said ruling, the Alguras instituted the instant petition raising a
solitary issue for the consideration of the Court: whether petitioners should be
considered as indigent litigants who qualify for exemption from paying filing fees.

The Ruling of the Court

The petition is meritorious.

A review of the history of the Rules of Court on suits in forma pauperis

(pauper litigant) is necessary before the Court rules on the issue of the Algura
spouses claim to exemption from paying filing fees.

When the Rules of Court took effect on January 1, 1964, the rule on pauper
litigants was found in Rule 3, Section 22 which provided that:

SECTION 22. Pauper litigant.Any court may authorize a litigant to

prosecute his action or defense as a pauper upon a proper showing that he
has no means to that effect by affidavits, certificate of the corresponding
provincial, city or municipal treasurer, or otherwise. Such authority[,] once
given[,] shall include an exemption from payment of legal fees and from
filing appeal bond, printed record and printed brief. The legal fees shall be
a lien to any judgment rendered in the case [favorable] to the pauper, unless
the court otherwise provides.

From the same Rules of Court, Rule 141 on Legal Fees, on the other hand,
did not contain any provision on pauper litigants.

On July 19, 1984, the Court, in Administrative Matter No. 83-6-389-0

(formerly G.R. No. 64274), approved the recommendation of the Committee on the
Revision of Rates and Charges of Court Fees, through its Chairman, then Justice
Felix V. Makasiar, to revise the fees in Rule 141 of the Rules of Court to generate
funds to effectively cover administrative costs for services rendered by the courts. 20
[20] A provision on pauper litigants was inserted which reads:

SECTION 16. Pauper-litigants exempt from payment of court fees.

Pauper-litigants include wage earners whose gross income do not exceed
P2,000.00 a month or P24,000.00 a year for those residing in Metro Manila,
and P1,500.00 a month or P18,000.00 a year for those residing outside
Metro Manila, or those who do not own real property with an assessed
value of not more than P24,000.00, or not more than P18,000.00 as the case
may be.
Such exemption shall include exemption from payment of fees for
filing appeal bond, printed record and printed brief.
20

The legal fees shall be a lien on the monetary or property judgment

rendered in favor of the pauper-litigant.
To be entitled to the exemption herein provided, the pauper-litigant
shall execute an affidavit that he does not earn the gross income
abovementioned, nor own any real property with the assessed value aforementioned [sic], supported by a certification to that effect by the provincial,
city or town assessor or treasurer.

When the Rules of Court on Civil Procedure were amended by the 1997
Rules of Civil Procedure (inclusive of Rules 1 to 71) in Supreme Court Resolution
in Bar Matter No. 803 dated April 8, 1997, which became effective on July 1,
1997, Rule 3, Section 22 of the Revised Rules of Court was superseded by Rule 3,
Section 21 of said 1997 Rules of Civil Procedure, as follows:

SECTION 21. Indigent party.A party may be authorized to litigate

his action, claim or defense as an indigent if the court, upon an ex parte
application and hearing, is satisfied that the party is one who has no money
or property sufficient and available for food, shelter and basic necessities
for himself and his family.
Such authority shall include an exemption from payment of docket and
other lawful fees, and of transcripts of stenographic notes which the court
may order to be furnished him. The amount of the docket and other lawful
fees which the indigent was exempted from paying shall be a lien on any
judgment rendered in the case favorable to the indigent, unless the court
otherwise provides.
Any adverse party may contest the grant of such authority at any time
before judgment is rendered by the trial court. If the court should determine
after hearing that the party declared as an indigent is in fact a person with
sufficient income or property, the proper docket and other lawful fees shall
be assessed and collected by the clerk of court. If payment is not made
within the time fixed by the court, execution shall issue for the payment
thereof, without prejudice to such other sanctions as the court may impose.

At the time the Rules on Civil Procedure were amended by the Court in Bar
Matter No. 803, however, there was no amendment made on Rule 141, Section 16
on pauper litigants.
On March 1, 2000, Rule 141 on Legal Fees was amended by the Court in
A.M. No. 00-2-01-SC, whereby certain fees were increased or adjusted. In this
Resolution, the Court amended Section 16 of Rule 141, making it Section 18,
which now reads:

SECTION 18. Pauper-litigants exempt from payment of legal fees.

Pauper litigants (a) whose gross income and that of their immediate family
do not exceed four thousand (P4,000.00) pesos a month if residing in Metro
Manila, and three thousand (P3,000.00) pesos a month if residing outside
Metro Manila, and (b) who do not own real property with an assessed value
of more than fifty thousand (P50,000.00) pesos shall be exempt from the
payment of legal fees.
The legal fees shall be a lien on any judgment rendered in the case
favorably to the pauper litigant, unless the court otherwise provides.
To be entitled to the exemption herein provided, the litigant shall
execute an affidavit that he and his immediate family do not earn the gross
income abovementioned, nor do they own any real property with the
assessed value aforementioned, supported by an affidavit of a disinterested
person attesting to the truth of the litigants affidavit.
Any falsity in the affidavit of a litigant or disinterested person shall be
sufficient cause to strike out the pleading of that party, without prejudice to
whatever criminal liability may have been incurred.

It can be readily seen that the rule on pauper litigants was inserted in Rule
141 without revoking or amending Section 21 of Rule 3, which provides for the
exemption of pauper litigants from payment of filing fees. Thus, on March 1, 2000,

there were two existing rules on pauper litigants; namely, Rule 3, Section 21
and Rule 141, Section 18.

On August 16, 2004, Section 18 of Rule 141 was further amended in

Administrative Matter No. 04-2-04-SC, which became effective on the same date.
It then became Section 19 of Rule 141, to wit:

SEC. 19. Indigent litigants exempt from payment of legal fees.

INDIGENT LITIGANTS (A) WHOSE GROSS INCOME AND THAT
OF THEIR IMMEDIATE FAMILY DO NOT EXCEED AN AMOUNT
DOUBLE THE MONTHLY MINIMUM WAGE OF AN EMPLOYEE
AND (B) WHO DO NOT OWN REAL PROPERTY WITH A FAIR
MARKET VALUE AS STATED IN THE CURRENT TAX
DECLARATION OF MORE THAN THREE HUNDRED THOUSAND
(P300,000.00) PESOS SHALL BE EXEMPT FROM PAYMENT OF
LEGAL FEES.
The legal fees shall be a lien on any judgment rendered in the case
favorable to the indigent litigant unless the court otherwise provides.
To be entitled to the exemption herein provided, the litigant shall
execute an affidavit that he and his immediate family do not earn a
gross income abovementioned, and they do not own any real property
with the fair value aforementioned, supported by an affidavit of a
disinterested person attesting to the truth of the litigants affidavit. The
current tax declaration, if any, shall be attached to the litigants affidavit.
Any falsity in the affidavit of litigant or disinterested person shall be
sufficient cause to dismiss the complaint or action or to strike out the
pleading of that party, without prejudice to whatever criminal liability may
have been incurred. (Emphasis supplied.)

Amendments to Rule 141 (including the amendment to Rule 141, Section

18) were made to implement RA 9227 which brought about new increases in filing
fees. Specifically, in the August 16, 2004 amendment, the ceiling for the gross
income of litigants applying for exemption and that of their immediate family was
increased from PhP 4,000.00 a month in Metro Manila and PhP 3,000.00 a month
outside Metro Manila, to double the monthly minimum wage of an employee; and
the maximum value of the property owned by the applicant was increased from an
assessed value of PhP 50,000.00 to a maximum market value of PhP 300,000.00, to
be able to accommodate more indigent litigants and promote easier access to
justice by the poor and the marginalized in the wake of these new increases in
filing fees.

Even if there was an amendment to Rule 141 on August 16, 2004, there was
still no amendment or recall of Rule 3, Section 21 on indigent litigants.

With this historical backdrop, let us now move on to the sole issuewhether
petitioners are exempt from the payment of filing fees.

It is undisputed that the Complaint (Civil Case No. 99-4403) was filed on
September 1, 1999. However, the Naga City RTC, in its April 14, 2000 and July
17, 2000 Orders, incorrectly applied Rule 141, Section 18 on Legal Fees when
the applicable rules at that time were Rule 3, Section 21 on Indigent Party which

took effect on July 1, 1997 and Rule 141, Section 16 on Pauper Litigants which
became effective on July 19, 1984 up to February 28, 2000.

The old Section 16, Rule 141 requires applicants to file an ex-parte motion
to litigate as a pauper litigant by submitting an affidavit that they do not have a
gross income of PhP 2,000.00 a month or PhP 24,000.00 a year for those residing
in Metro Manila and PhP 1,500.00 a month or PhP 18,000.00 a year for those
residing outside Metro Manila or those who do not own real property with an
assessed value of not more than PhP 24,000.00 or not more than PhP 18,000.00 as
the case may be. Thus, there are two requirements: a) income requirementthe
applicants should not have a gross monthly income of more than PhP 1,500.00, and
b) property requirementthey should not own property with an assessed value of
not more than PhP 18,000.00.

In the case at bar, petitioners Alguras submitted the Affidavits of petitioner

Lorencita Algura and neighbor Erlinda Bangate, the pay slip of petitioner Antonio
F. Algura showing a gross monthly income of PhP 10,474.00, 21[21] and a
Certification of the Naga City assessor stating that petitioners do not have property
declared in their names for taxation.22[22] Undoubtedly, petitioners do not own
real property as shown by the Certification of the Naga City assessor and so the
property requirement is met. However with respect to the income requirement, it is
clear that the gross monthly income of PhP 10,474.00 of petitioner Antonio F.
21
22

Algura and the PhP 3,000.00 income of Lorencita Algura when combined, were
above the PhP 1,500.00 monthly income threshold prescribed by then Rule 141,
Section 16 and therefore, the income requirement was not satisfied. The trial court
was therefore correct in disqualifying petitioners Alguras as indigent litigants
although the court should have applied Rule 141, Section 16 which was in effect at
the time of the filing of the application on September 1, 1999. Even if Rule 141,
Section 18 (which superseded Rule 141, Section 16 on March 1, 2000) were
applied, still the application could not have been granted as the combined PhP
13,474.00 income of petitioners was beyond the PhP 3,000.00 monthly income
threshold.

Unrelenting, petitioners however argue in their Motion for Reconsideration of the

April 14, 2000 Order disqualifying them as indigent litigants 23[23] that the rules
have been relaxed by relying on Rule 3, Section 21 of the 1997 Rules of Civil
procedure which authorizes parties to litigate their action as indigents if the court is
satisfied that the party is one who has no money or property sufficient and
available for food, shelter and basic necessities for himself and his family. The
trial court did not give credence to this view of petitioners and simply applied Rule
141 but ignored Rule 3, Section 21 on Indigent Party.

The position of petitioners on the need to use Rule 3, Section 21 on their

application to litigate as indigent litigants brings to the fore the issue on whether a
trial court has to apply both Rule 141, Section 16 and Rule 3, Section 21 on such
23

applications or should the court apply only Rule 141, Section 16 and discard Rule
3, Section 21 as having been superseded by Rule 141, Section 16 on Legal Fees.

The Court rules that Rule 3, Section 21 and Rule 141, Section 16 (later
amended as Rule 141, Section 18 on March 1, 2000 and subsequently amended by
Rule 141, Section 19 on August 16, 2003, which is now the present rule) are still
valid and enforceable rules on indigent litigants.

For one, the history of the two seemingly conflicting rules readily reveals
that it was not the intent of the Court to consider the old Section 22 of Rule 3,
which took effect on January 1, 1994 to have been amended and superseded by
Rule 141, Section 16, which took effect on July 19, 1984 through A.M. No. 83-6389-0. If that is the case, then the Supreme Court, upon the recommendation of the
Committee on the Revision on Rules, could have already deleted Section 22 from
Rule 3 when it amended Rules 1 to 71 and approved the 1997 Rules of Civil
Procedure, which took effect on July 1, 1997. The fact that Section 22 which
became Rule 3, Section 21 on indigent litigant was retained in the rules of
procedure, even elaborating on the meaning of an indigent party, and was also
strengthened by the addition of a third paragraph on the right to contest the grant of
authority to litigate only goes to show that there was no intent at all to consider
said rule as expunged from the 1997 Rules of Civil Procedure.

Furthermore, Rule 141 on indigent litigants was amended twice: first on

March 1, 2000 and the second on August 16, 2004; and yet, despite these two
amendments, there was no attempt to delete Section 21 from said Rule 3. This
clearly evinces the desire of the Court to maintain the two (2) rules on indigent
litigants to cover applications to litigate as an indigent litigant.

It may be argued that Rule 3, Section 21 has been impliedly repealed by the
recent 2000 and 2004 amendments to Rule 141 on legal fees. This position is
bereft of merit. Implied repeals are frowned upon unless the intent of the framers
of the rules is unequivocal. It has been consistently ruled that:

(r)epeals by implication are not favored, and will not be decreed, unless it is
manifest that the legislature so intended. As laws are presumed to be
passed with deliberation and with full knowledge of all existing ones on the
subject, it is but reasonable to conclude that in passing a statute[,] it was not
intended to interfere with or abrogate any former law relating to same
matter, unless the repugnancy between the two is not only irreconcilable,
but also clear and convincing, and flowing necessarily from the language
used, unless the later act fully embraces the subject matter of the earlier, or
unless the reason for the earlier act is beyond peradventure removed.
Hence, every effort must be used to make all acts stand and if, by any
reasonable construction they can be reconciled, the later act will not operate
as a repeal of the earlier.24[24] (Emphasis supplied).

Instead of declaring that Rule 3, Section 21 has been superseded and impliedly
amended by Section 18 and later Section 19 of Rule 141, the Court finds that the
two rules can and should be harmonized.
24

The Court opts to reconcile Rule 3, Section 21 and Rule 141, Section 19
because it is a settled principle that when conflicts are seen between two
provisions, all efforts must be made to harmonize them. Hence, every statute [or
rule] must be so construed and harmonized with other statutes [or rules] as to form
a uniform system of jurisprudence.25[25]

In Manila Jockey Club, Inc. v. Court of Appeals, this Court enunciated that in the
interpretation of seemingly conflicting laws, efforts must be made to first
harmonize them. This Court thus ruled:

Consequently, every statute should be construed in such a way that will

harmonize it with existing laws. This principle is expressed in the legal
maxim interpretare et concordare leges legibus est optimus interpretandi,
that is, to interpret and to do it in such a way as to harmonize laws with
laws is the best method of interpretation.26[26]

In the light of the foregoing considerations, therefore, the two (2) rules can stand
together and are compatible with each other. When an application to litigate as an
indigent litigant is filed, the court shall scrutinize the affidavits and supporting
documents submitted by the applicant to determine if the applicant complies with
the income and property standards prescribed in the present Section 19 of Rule 141
25
26

that is, the applicants gross income and that of the applicants immediate family
do not exceed an amount double the monthly minimum wage of an employee; and
the applicant does not own real property with a fair market value of more than
Three Hundred Thousand Pesos (PhP 300,000.00). If the trial court finds that the
applicant meets the income and property requirements, the authority to litigate as
indigent litigant is automatically granted and the grant is a matter of right.

However, if the trial court finds that one or both requirements have not been
met, then it would set a hearing to enable the applicant to prove that the applicant
has no money or property sufficient and available for food, shelter and basic
necessities for himself and his family. In that hearing, the adverse party may
adduce countervailing evidence to disprove the evidence presented by the
applicant; after which the trial court will rule on the application depending on the
evidence adduced. In addition, Section 21 of Rule 3 also provides that the adverse
party may later still contest the grant of such authority at any time before judgment
is rendered by the trial court, possibly based on newly discovered evidence not
obtained at the time the application was heard. If the court determines after
hearing, that the party declared as an indigent is in fact a person with sufficient
income or property, the proper docket and other lawful fees shall be assessed and
collected by the clerk of court. If payment is not made within the time fixed by the
court, execution shall issue or the payment of prescribed fees shall be made,
without prejudice to such other sanctions as the court may impose.

The Court concedes that Rule 141, Section 19 provides specific standards
while Rule 3, Section 21 does not clearly draw the limits of the entitlement to the
exemption. Knowing that the litigants may abuse the grant of authority, the trial
court must use sound discretion and scrutinize evidence strictly in granting
exemptions, aware that the applicant has not hurdled the precise standards under
Rule 141. The trial court must also guard against abuse and misuse of the privilege
to litigate as an indigent litigant to prevent the filing of exorbitant claims which
would otherwise be regulated by a legal fee requirement.

Thus, the trial court should have applied Rule 3, Section 21 to the
application of the Alguras after their affidavits and supporting documents showed
that petitioners did not satisfy the twin requirements on gross monthly income and
ownership of real property under Rule 141. Instead of disqualifying the Alguras as
indigent litigants, the trial court should have called a hearing as required by Rule 3,
Section 21 to enable the petitioners to adduce evidence to show that they didnt
have property and money sufficient and available for food, shelter, and basic
necessities for them and their family.27[27] In that hearing, the respondents would
have had the right to also present evidence to refute the allegations and evidence in
support of the application of the petitioners to litigate as indigent litigants. Since
this Court is not a trier of facts, it will have to remand the case to the trial court to
determine whether petitioners can be considered as indigent litigants using the
standards set in Rule 3, Section 21.

27

Recapitulating the rules on indigent litigants, therefore, if the applicant for

exemption meets the salary and property requirements under Section 19 of Rule
141, then the grant of the application is mandatory. On the other hand, when the
application does not satisfy one or both requirements, then the application should
not be denied outright; instead, the court should apply the indigency test under
Section 21 of Rule 3 and use its sound discretion in determining the merits of the
prayer for exemption.

Access to justice by the impoverished is held sacrosanct under Article III,

Section 11 of the 1987 Constitution. The Action Program for Judicial Reforms
(APJR) itself, initiated by former Chief Justice Hilario G. Davide, Jr., placed prime
importance on easy access to justice by the poor as one of its six major
components. Likewise, the judicial philosophy of Liberty and Prosperity of Chief
Justice Artemio V. Panganiban makes it imperative that the courts shall not only
safeguard but also enhance the rights of individualswhich are considered sacred
under the 1987 Constitution. Without doubt, one of the most precious rights which
must be shielded and secured is the unhampered access to the justice system by the
poor, the underprivileged, and the marginalized.

WHEREFORE, the petition is GRANTED and the April 14, 2000 Order
granting the disqualification of petitioners, the July 17, 2000 Order denying
petitioners Motion for Reconsideration, and the September 11, 2001 Order
dismissing the case in Civil Case No. RTC-99-4403 before the Naga City RTC,
Branch 27 are ANNULLED and SET ASIDE. Furthermore, the Naga City RTC is

ordered to set the Ex-Parte Motion to Litigate as Indigent Litigants for hearing
and apply Rule 3, Section 21 of the 1997 Rules of Civil Procedure to determine
whether petitioners can qualify as indigent litigants.

No costs.

SO ORDERED.

G.R. No. 22783, People v. Sleeper, 46

Phil. 625
Republic of the Philippines
SUPREME COURT
Manila

EN BANC
December 3, 1924
G.R. No. 22783
THE PEOPLE OF THE PHILIPPINE ISLANDS, plaintiff-appellee,
vs.
CHARLES H. SLEEPER, defendant-appellant.
Thomas Cary Welch & James G. Lawrence for appellant.
Attorney-General Villa-Real & Assistant Attorney-General
Buenaventura for appellee.
STATEMENT
The following information was filed against the defendant in the
Court of First Instance of Manila:
That on, during and between the 17th day of October, 1922, and the
16th day of April, 1923, both dates inclusive, in the City of Manila,
Philippine Islands, the said accused was then and there appointed,
qualified and acting secretary-treasurer of the Manila Building and
Loan Association, a corporation duly organized and existing under
the laws of the Philippine Islands with principal office in said city;
that during said period the A. L. Ammen Transportation Co., Inc.,
deposited with said Manila Building and Loan Association the sum of
P30,000 with interest at the rate of 7 per cent per annum with the
condition that said sum could be withdrawn from said Association
after 15 day's notice, and said accused, one in possession of said
sum which he received in said City of Manila and in his
aforementioned capacity instead of applying the said sum for the
purposes intended therefore by the Manila Building and Loan
Association and of rendering proper accounting of the
disbursements made thereof, as it was his duty so to do, did then
and there willfully, unlawfully, feloniously, and fraudulently fail to
comply with his said obligation, but on the contrary, misapply,

misappropriate, and convert said sum to his own personal use and
benefit, to the damage and prejudice of said Manila Building and
Loan Association in said sum of P30,000, equivalent to
150,000 pesetas.
Contrary to law.
Upon which the defendant was tried, found guilty of estafa as
provided in article 535, section 5, as it relates to article 534, section
3, of the Penal Code, and sentenced to two years, eleven months
and eleven days of presidio correccional, from which the defendant
appeals, contending that the court erred in the admission of the
evidence of the witnesses Fisher and Haussermann, in admitting
Exhibit M, and in finding the defendant guilty as charged.
At the inception of the trial, Fred, C. Fisher, of the Manila Bar, was
called to identify a paper known in the record as Exhibit M, to which
the defense objected "on the ground that in the preparation of that
paper the witness had acted as attorney for the defendant who
claimed the privilege arising from that relation." After an
examination of the exhibit, the court sustained the objection. Mr.
Haussermann, whose name appears on the exhibit as a witness, was
then called, sworn and allowed to identify the exhibit over the
defendant's objection, and later Mr. Fisher was recalled, and the
court then reversed its decision, and he was allowed to testify, and
Exhibit M was then introduced as evidence over the strenuous
objection and exception of the defendant.
JOHNS, J.:
Exhibit M is as follows:
Manila, P. I.
September 24, 1923.

In consideration of the assumption by a ground of American citizens,

residents of Manila, of my obligation to the Manila. Building & Loan
Association, approximating P127,146.90, arising from the
unauthorized conversation of funds of that corporation for which I
was responsible in a fiduciary capacity, I agree that I will leave the
Philippine Island permanently as soon as possible; that I will at once
resign from the positions held by me, including membership on
boards of directors; that I will execute my demand note to F. C.
Fisher, trustee, for the benefit of said contributors, for the full
amount which may be paid on my account to the Manila Building &
Loan Association; that I will, upon demand, transfer to F. C. Fisher, as
trustee for the contributors above mentioned, all property now
owned by me, other than personal effect, and particularly any and
all interest in mining claims and mining companies, with authority of
dispose of the same and apply the proceeds to the payment of said
note.
(Sgd.) C. H. SLEEPER
Witness:
(Sgd.) JOHN W. HAUSSERMANN
We agree with counsel for the defendant that, in the absence of
Exhibit M, the conviction could not be sustained. If appears that a
short time before it was executed, Mr. Fisher was called to the office
of the late Mr. McCoy, who was then the president of the Manila
Building and Loan Association, and who held that position for a
number of years along with the defendant as treasurer. At this
conference it developed that the defendant was short in his
accounts for a very large amount, and it was suggested that, to
protect the honor and good name of the Americans in the
community, an effort should be made to cover the shortage, and

steps were taken along that line in which Mr. Fisher took more or
less of an active part. It is conceded that he drafted Exhibit M in his
own office in which the amount and the name of the association was
left blank, and that later the blanks were filled in his own
handwriting.
With all due respect to counsel for the defendant, there is no
evidence which shows or tends to show that in the preparing of this
document or the raising of the funds, Mr. Fisher was acting as
attorney for the defendant, or that he represented him in any
manner. After the full amount of the shortage was obtained and the
money with which to make it good was raised, Exhibit M was
submitted to the defendant for his signature, and it was then signed
by him in the presence of Fisher and of Haussermann, the latter of
whom subscribed his name as a witness. At the time this was done,
no other persons were present. There is no evidence with shows or
tends to show that at or prior to his signing any question were asked
by the defendant, or that any statements or representation were
made to him of any kind by anyone. Neither is there any evidence
that Fisher claimed or represented that he was the attorney for the
defendant in the transaction or that the defendant relied upon either
of them as his attorney, or that the relation of attorney and client
existed between the defendant and Fisher or Haussermann or either
or them. It is true that the record shows that they had been lifelong
personal friends, but there is no evidence that in preparing the
document or presenting it for signature, or that in any other manner,
Mr. Fisher was acting for or representing the defendant. It may be
true that at the time the defendant signed the writing, and as a
result of the shortage having been made good, the defendant
expected to leave the country and avoid prosecution. Be that as it
may, the record shows that when it was prepared, the defendant
read the instrument and signed it voluntarily without asking any
questions from anyone, and there is no evidence that any one

promised him immunity from prosecution or that defendant relied on

any such promise. The question as to whether or not Fisher was
acting as attorney for the defendant was a fact to be determined by
competent evidence like any other fact. Upon that point Mr. Fisher
was the only witness, and he testified positively that he was not
attorney for the defendant and was not acting for him in the
transaction. Opposed to his positive testimony there is nothing but
conjectures and inferences. Upon that question the burden of proof
was upon the defendant, and there was a failure of proof. It follows
that the relation of attorney and client did not exist between Mr.
Fisher and the defendant and that Exhibit M was not a privileged
communication, and hence it was competent evidence.
It is conceded that the checks in question of the Ammen
Transportation Company to the amount of P30,000 were drawn in
favor of the Manila Building and Loan Association and delivered to
the defendant as its treasurer, and that the identical checks were
deposited in the bank to the credit of the association, and that its
overdraft in the bank was reduced in that amount. Relying upon
such facts, defendant's counsel vigorously and ably contend that he
cannot be convicted of the crime charged in the information. That is
the real question in this case.
In a well-written opinion, the trial court overruled that contention
and points out that during the trial, through his counsel, the
defendant admitted that P20,000 was received from the
Transportation Company between the 17th and 24th days of
October, 1922, and the remaining P10,000 between the 9th and
16th days of April, 1923, for which the three certificates of deposit
Nos. 1198, 1199, and 1303, Exhibits G, H, and L, were issued by the
defendant. Also, that no entries were made in the books of the
association of such amounts until about September 24, 1923, which
is the date of Exhibit M, at which time the whole amount of the

shortage was made good. In Exhibit M the defendant says that "in
consideration of my obligation to the Building and Loan Association
approximating P127,146.90, arising from the unauthorized
conversion of funds of that corporation for which I was responsible in
a fiduciary capacity, etc."
Notwithstanding the large overdraft of the association in the bank, it
appears from the corporation books that about P10,000 in cash was
supposed to be kept in the company's safe, and that when previous
examinations were made by the auditor, the required amount of
money was found to be in the safe in the share of $500 bills. It also
appears that at the time the discovery of the shortage was made,
the accountant appeared at the office of the company about 8 a.m.
to investigate the corporate records. Mr. Sleeper then stated that he
did not have the key to the safe, went away and returned about 10
a. m., and then opened the safe and the money was found to be
intact. It was pointed out by the trial court that in opening the same
upon his return, the defendant had his back to the clerk and
accountant, and that they could not see what he did. It is also
pointed out that at the time the money was deposited by the
Transaction Company, no corresponding slips or debits were made of
the transaction, and for such reason, it was not entered in the
books, and hence could not be detected by the accountant whose
duty it was to examine the records of the company.
Upon that point, Manuel Pea, a bookkeeper for the Loan
Association, testified:
Q. In what books of the Manila Building & Loan Association should
the receipt of the P30,000 mentioned in the complaint appear? A.
In the cash book and in the ledger, and also in the book of interest
payable.

Q. Should a credit slip be made for that amount? A. Yes, sir, so

that it might be entered in the cash book and in the ledger.
Q. Why was it not entered in those books? A. Because there was
no cash slip.
xxx xxx xxx
Q. What did the defendant tell you when you asked him for the cash
credit slips for the three amount of P10,000 each? A. He told me
that he would see the auditor about it."
Among others counsel for the defendant at the trial made the
following admission:
That the funds in question described in the complaint do not appear
upon the books of the Manila Building and Loan Association until on
or after the 24th day of September, 1923, at which time the check,
Exhibit O, was deposited to the credit of that association, and that
this amount covered by the complaint was paid by Exhibit O, it
being understood by this admission that the deposits mentioned in
the complaint appear in the stub account of `Bills Payable' dated
October 24, 1922, numbered 1198 and 1199, respectively, and
dated April 16, 1923, numbered 1303, those being the only entries
in the books of the corporation of the three sums mentioned.
In an argument between counsel, when C. B. Moore was testifying as
a witness for the defense, the force and effect of this admission was
pointed out, and the attorney for the defendant made the following
statement to the court:
I did not admit, I could not admit, because I did not know that it
covered the specific amount charged in the complaint. I do not know

that, and I ask that that admission be corrected on the record

accordingly.
Based upon which the court made an order striking out the following
portion of the admission:
And that this amount covered by the complaint was paid by Exhibit
O," on condition that the prosecution would have the right to prove
that fact by other evidence, and it later called Rafael Fernandez,
who testified that he had been a bank examiner since August 5,
1921, and that he had examined the books of the Loan Association
several times in 1921, 1922, and 1923, and the last time on May 4,
1923. His attention was called to Exhibit G in which the association
promised and agreed to pay the Ammen Transportation Company
P10,000 fifteen days after written demand, with interest at the rate
of 7 per centum, and Exhibit H which is also for another P10,000,
both dated October 24, 1922, and asked whether these two bills
payable had been entered in the books of the association.
A. I would have seen them because I examined all the books of the
Association.
Q. Did anything attract your attention while examining the cash of
the Manila Building & Loan Association at that time? A. There
were two things that came to my attention; the first being the big
amount of the notes on hand they were all P500 bills and,
second, that there was too much cash for such an association as the
Manila Building & Loan Association kept in the vaults of that
Association.
Q. Up to what date were the transaction of the Manila Building &
Loan Association entered in the books of the Manila Building & Loan
Association at the time you made your examination on May 4, 1923?
A. February 28, 1923.

He also testified to the same thing about Exhibit L, which is for

another P10,000, executed on April 16, 1923.
Q. So that you did not consider this transaction when you made your
report to the Insular Treasurer? A. No, sir, I did not.
Q. Had you considered the P30,000, which is the amount of the
transaction appearing in Exhibits G, H, and L, what would have been
the effect in the balance that you found? A. The balance would
have been increased by the P30,000.
Walter Brooks, as a witness for the prosecution, testified that he was
a public accountant in the employ of Fleming, Percy, Smith & Seth
who were the auditors for the Building Association, and that he
examined its books in the year 1923 for the first time in June, "and
other nine or ten occasions between then and September." That it
was his duty to examined the cash on hand, and that in June, 1923,
he went to the office of the association for that purpose, but found
that Sleeper was absent, the safe was locked, and that no one
present has access to it. He then testified:
Q. Did you, on behalf of the firm of Fleming, Percy, Smith & Seth,
examine the books of the Manila Building and Loan Association in
June, 1923? A. Yes, sir.
Q. In the course of that examination, did you find the account and
books in order? A. No, sir.
Q. Please inform the court what you did not find in order in the
books of the Manila Building & Loan Association. A. I found three
bills payable missing from the books.
Q. Showing you these three bills payable, marked as Exhibits G, H,
and L, please inform the court whether these three exhibits have

any connection with the three bills payable referred to by you in

your previous answer, as missing. A. These are the three bills
which were missing from the books of the Association.
Q. How did you happen to notice that these three bills payable,
marked as Exhibits G, H, and L, were missing and did not appear in
the books of the Manila Building and Loan Association? A. I found
that they were missing by checking the consecutive numbers of bills
payable issued. These three number did not appear.
Q. What steps did you take on finding that these three bills payable
were unrecorded in the books of the Association? A. I asked the
bookkeeper, the only person present, for an explanation. His answer
was: "A" (Cont.) And he answered that he would refer my request for
information to Captain Sleeper.
Q. Did Captain Sleeper give you the desire explanation? A. No, sir.
Q. Did you ascertain the amount involved in those three bills
payable, marked as Exhibits G, H, and L? A. Yes, sir.
Q. How did you ascertain the amount involved? A. By reference to
the stubs of the bills payable issued.
Q. Please explain to the court what should have been the correct
procedure to properly record in the books of the Manila Building &
Loan Association these transactions. A. On receipt of the money
or checks, a receipts would be given as a bill payable. The entry into
the books would have been to the debit of cash and from there
posted to the credit of bills payable.
Q. What would have been the effect of such entries? A. It would
have charged cash with the amount received and added a like

amount to the indebtedness of the Association under the heading of

the `Bills Payable.'
Q. And how could that cash so charged be cleared? A. It could be
cleared in two ways by deposits into the bank or by cash
disbursements.
Q. Considering that the defendant received the checks, Exhibits C,
D, and J, from the A. L. Ammen Transportation Company, Inc., and
that the receipt of these checks was not entered in the books of the
association, and considering also that these checks were deposited
at the International Banking Corporation, had the accused any
means of appropriating the amount as represented by these checks?
A. The effect of a payment into the bank account of a check which
has not been charged to the cash is to substitute actual cash on
hand by this check deposited in the bank.
Q. Assuming that a large amount of about P100,000 appeared to
have been carried as cash on hand, could that substitution of the
amount involved in these three checks be made? A. Yes, sir.
Q. Showing you this check marked as Exhibit O, drawn in the
amount of P127,145.90, against the Hongkong & Shanghai Banking
Corporation, by Mr. Fisher, do you know whether the amount
involved in this check was paid to the Manila Building & Loan
Association, and, if so, when? A. Yes, sir, it was in September,
1923.
Q. Do you know whether the P30,000 represented by the checks,
Exhibits C, D, and J, were included in this check, Exhibit O? A. Yes,
sir, they were included.
Q. How do you know it? A. I made a statement of receipts and
disbursement by which the amount of the check was determined,

and I included the three bills payable not recorded in the books in
that amount.
Q. Showing you this Exhibit Q, I ask you whether you recognize this
document? A. Yes, sir, I do.
Q. Why do you recognize it? A. It contains my signature.
Q. To whom did you deliver this letter, Exhibit Q? A. To Mr. Fisher.
Q. Do you know whether this letter has any connection with the
check, Exhibit O? A. The letter you have just exhibited was given
on the same date as the check, and I can only assume that there is
a connection between that and the check.
Q. What connection is that? A. The connection between the letter
and the check is that the letter was given to Judge Fisher at his
request after ascertaining what the cash balance of the Manila
Building and Loan Association should be.
Q. Before or after including this P30,000? A. After including the
P30.000.
Q. Do you know to how much did it amount, or it should amount, the
cash on hand of the Manila Building and Loan Association, in June,
1923, when you examined the books of that Association here for the
first time, according to the books of the corporation? A. The
balance appearing in the books at the time was short the amount of
the three bills payable not entered.
The record shows that the witness Brooks is an experienced
accountant, that he knows his business, and his testimony is clear
and convincing and not dispute. He testified as a fact that the
P30,000 in question was included in and is a part of the gross

amount of P127,146.90, which the defendant over his own signature

admits was an "unauthorized conversation of funds of that
corporation for which I was responsible in a fiduciary capacity." He
also testifies that "the balance appearing in the books at that time
was short the amount of the three bills payable not entered," the
three bills payable about which he testifies being for the P30,000
here in question.
Upon all of such matter, there is no dispute or conflict in the
evidence. The defendant having admitted in writing that he
misappropriated the P127,146.90, and the testimony being
undisputed that the P30,000 in question was a part of the
P127,146,90, the proof upon that point is conclusive.
Assuming that to be true, the defendant contends that there is a
fatal variance between the proof and the crime charged in the
information. That point is not tenable.
The information alleged in substance that the defendant once in
possession of the P30,000 "instead of applying the said sum for the
purpose intended therefor by the Manila Building and Loan
Association and of rending proper accounting of the disbursements
made thereof, as it was his duty so to do, did then and there
willfully, unlawfully, feloniously, and fraudulently fail to comply with
his said obligation, but on the contrary, misapply, misappropriate
and convert said sum to his own personal use and benefit, etc." The
defendant was not misled or deceived by the information. In legal
effect it charged him with taking the amount of the P30,000
evidence by those checks, which was the property of the
association, and wrongfully converting that amount of the funds of
the association to his own use. In other words, that upon the receipt
of the checks he took that amount of the funds of the association
and converted it to his own use. Of course, he could not appropriate

the checks, but the proof is conclusive that he did take the amount
evidence by the checks and converted it to his own use. He is not
charged with estafa of the checks, but with estafa of the amount of
money evidenced by the checks.
It is fair to say that defendant's counsel have made a very vigorous,
able, and adroit defense. But in the final analysis, the stubborn fact
remains that the defendant over his own signature admits the
appropriation of the P127,146.90 and the proof is conclusive that
the P30,000 in question enters into and is a part of that gross
amount.
The judgment of the lower court is affirmed, with costs. So ordered.
Malcolm, Avancea, Villamor and Ostrand, JJ., concur.
Separate Opinions
JOHNSON, J., dissenting:
I fully agree with the reasoning and conclusions of Justices Street
and Romualdez in their dissenting opinion. I cannot give my assent
to a procedure which will permit a complaint for one crime and a
conviction for another, as has been done in the present case, even
though the accused is guilty of the other. Before that can be done, a
new complaint or an amended complaint must be presented.
STREET, J., dissenting:
It is plain enough that the appellant in this case was short in the
funds of the Manila Building and Loan Association, on September 24,
1923, to the extent of P127,146.90; and if the information had
charged the embezzlement of funds of the association to that
amount, or less, without specifying what particular money was
embezzled, the Government would have had a clear case. The fiscal,
however, in drawing the information, saw fit to charge the appellant
with the appropriation of the specific sum of P30,000, which had
been deposited on two occasions with the association by the A. L.

Ammen Transportation Co., Inc.; and unfortunately for the

prosecution we know precisely what became of the money after the
checks drawn by the Ammen Company reached the hands of the
appellant, which is, that said checks were deposited by the
appellant to the credit of the association in its proper account in a
bank. This fact is admitted; and it seems to me that this must be the
end of the charge of embezzling that money. The prosecuting officer
simply made the mistake of being a little too particular in his
accusation and his upon transactions that were in fact straight.
But it is said that the P30,000, proceeds of the Ammen money, is
merely part of the large sum of P127,146,90, representing the
appellant's shortage in the general funds of the association; and, as
proving this, reliance is placed upon certain irregularities shown in
the association's books with respect to the Ammen deposits,
namely, that the amount received had not been debited to "Cash" in
the cash-book and had not been credited to "Bills Payable" in the
ledger, as should have been done. These irregularities show that the
appellant was attempting to conceal a defalcation, but they do not
prove that the appellant had appropriated the proceeds of the
Ammen checks.
Walter Brooks, a public accountant, was introduced as a witness with
a view to showing that the P30,000 in question formed a part of the
larger amount for which the appellant is shown to have been short.
This witness stated that when the proper entries in the cash-book
and ledger were made, it resulted that the appellant's shortage was
greater by P30,000 than it would have been if those irregularities
had been disregarded. It was only in this sense that the witness
meant to say, as I understand him, that the Ammen deposits were
included in the large amount; and this is far from showing that the
appellant had embezzled those particular deposits.

In my opinion the appellant's offense did not consist in the

misappropriation of the funds mentioned in the information, and
hence he is entitled to an acquittal on the charged brought against
him.
ROMUALDEZ, J., dissenting:
With due respect to the majority, I dissent from its decision in the
instant case. I believe that the accused is entitled to an acquittal on
the ground that the crime alleged in the complaint was not proven.
He is accused of having misappropriated, to the damage of the
Manila Building and Loan Association, of which he was secretarytreasurer, the sum of P30,000 received by him from the A. L. Ammen
Transportation Company during the period between October 17,
1922, and April 16, 1923. This sum is represented by the check C, D,
and J. The decision of the majority cannot but admit the following
with regard to these checks and their amount:
It is conceded that the checks in question of the Ammen
Transportation Company to the amount of P30,000 were drawn in
favor of the Manila Building and Loan Association and delivered to
the defendant as its treasurer, and that the identical checks were
deposited in the bank to the credit of the association, and that its
overdraft in the bank was reduced in that amount. Relying upon
such facts, defendant's counsel vigorously and ably contend that he
cannot be convicted of the crime charged in the information. That is
that real question in this case. (Emphasis are ours. See majority
decision, folio 5.)
If the accused deposited, as he is fact did deposit, in the
International Banking Corporation in the name and to the benefit, of
the Manila Building and Loan Association the P30,000 paid by A. L.
Ammen Transportation Company, Inc., there resulting from such an

operation a reduction by an equal amount of the overdraft that then

the aforesaid Manila Building and Loan Association had with said
bank, it is clear that the accused did not misappropriate said
P30.000.
But Exhibit M signed by the accused was introduced as evidence,
wherein there is an admission of the fact of the sum of P127,146.90
having been misappropriated, and it is asserted that the P30,000,
which is the subject-matter of the complaint, is a part of this
amount.
The evidence, however, does not show, in my opinion, that the
accused has ever understood that the P30,000 in question was
included in the sum stated in Exhibit M.
It must be taken into account that it is not the accused who
prepared Exhibited M, but Mr. Fisher, who also did not know the
precise amount that was to be stated in said document Exhibit M,
and for this reason the space for the proper figures was left in blank.
It was only a few minutes before the accused was caused to sign
said Exhibit M on the morning of September 24, 1923, that Mr. Fisher
filled out the space in blank, by writing the said sum of P127,146.90,
which he copied from the letter Exhibit Q, which had just then been
delivered to him by Mr. Brooks.
And this amount of P127,146.90, appearing on the letter Exhibit Q of
Mr. Brooks addressed to Mr. Fisher, was obtained by an examination
of the books of the company made by Mr. Brooks in the said month
of September, 1923, which books did not contain complete data, for
the last entry made thereon was of February 28, 1923, the
operations made by the company from said date up to September
24th of the same year not appearing, therefore, in said books.

Mr. Brooks took only those deficient books as his guide, and did not
examine the contents of the safe in making his examination, as he
expressly states in said letter Exhibit Q. He took into account against
the accused the P30,000 that was the value of the checks C, D, and
J, for the reason that the bills payable corresponding to said checks
had not been entered on the books of the company. It must be noted
that the very fact of the accused having issued said bills payable,
which are Exhibits G, H, and L submitted for the signature of, and
signed by, the president-manager of the Manila Building and Loan
Association, removes all suspicion of concealment from said
company by the accused of the receipt of said amount and could
prevent the accused from taking from the safe of the company a
sum equivalent to that represented by said bills payable, the
corresponding stubs of which, Exhibits 2, 2-a, and 2-b, existed
among the books of the company and were presented as evidence.
The fact that said bills payable were not opportunely entered on the
books of the company really constitutes an irregularity, tending to
show negligence on the part of said accused who kept said books,
but under the facts in this case it does not necessarily imply bad
faith, much less an intention to cheat, when there positively appear
the legitimate and regular whereabouts of the sum of P30,000, the
subject-matter of this action, deposited by the accused in the bank
in the name and to the benefit of the Manila Building and Loan
Association.
The evidence of record shows that the P127,146.90 stated in Exhibit
M does not represent the true status of the account of the Manila
Building and Loan Association on the 24th day of September, 1923,
when said exhibit was signed. It also appears from the records that
before signing Exhibit M, the accused did not have sufficient
opportunity to verify the sum therein written, or to ascertain
whether or not the sum of P30,000, the value of the checks C, D,
and J, now the subject-matter of the instant case, was included

therein. It was not, therefore, sufficiently shown that the accused

understood the P30,000, which is the subject-matter of the
complaint, to have been included in his confession in Exhibit M, nor
that said sum must in justice be included in the amount written on
said Exhibit M. Any sum of money that the appellant desired to
confess in Exhibit M having misappropriated does not, and cannot,
include the P30,000 mentioned in the complaint.
From this it follows that Exhibit M does not show the facts alleged in
the herein complaint; and if said document is any proof at all of any
crime, such crime is not alleged nor included in the complaint filed
in this case.

EN BANC

[A.C. No. 1526. January 31, 2005]

NAZARIA S. HERNANDEZ (DECEASED), SUBSTITUTED BY LUCIANO

S.
HERNANDEZ,
JR., complainant, vs. ATTY.
JOSE
C.
GO, respondent.
DECISION
PER CURIAM:

For our resolution is the verified letter-complaint for disbarment against

Atty. Jose C. Go dated June 23, 1975 filed by Nazaria S. Hernandez (now
deceased). Both parties are from Zamboanga City.
[1]

The allegations in the letter-complaint are:

Sometime in 1961, complainants husband abandoned her and her son,
Luciano S. Hernandez, Jr. Shortly thereafter, her husbands numerous
creditors demanded payments of his loans. Fearful that the various mortgage
contracts involving her properties will be foreclosed and aware of impending
suits for sums of money against her, complainant engaged the legal services
of Atty. Jose C. Go, herein respondent.
Respondent instilled in complainant a feeling of helplessness, fear,
embarrassment, and social humiliation. He advised her to give him her land
titles covering Lots 848-A, 849-Q, and 849-P at Zamboanga City so he could
sell them to enable her to pay her creditors. He then persuaded her to
execute deeds of sale in his favor without any monetary or valuable
consideration. Complainant agreed on condition that he would sell the lots and
from the proceeds pay her creditors.
Complainant also owned Lots 2118, 2139, and 1141-A, likewise located in
Zamboanga City, which were mortgaged to her creditors. When the
mortgages fell due, respondent redeemed the lots. Again, he convinced her
to execute deeds of sale involving those lots in his favor. As a result,
respondent became the registered owner of all the lots belonging to
complainant.
Sometime in 1974, complainant came to know that respondent did not sell
her lots as agreed upon. Instead, he paid her creditors with his own funds

and had her land titles registered in his name, depriving her of her real
properties worth millions.
In our Resolution dated September 24, 1975, respondent was required to
file his comment on the complaint.
Instead of filing his comment, respondent submitted a motion to dismiss
on the ground that the complaint is premature since there is pending before
the then Court of First Instance of Zamboanga City Civil Case No. 1781 for
recovery of ownership and declaration of nullity of deeds of sale filed by
complainant against him involving the subject lots.
[2]

On November 14, 1975, we issued a Resolution denying respondents

motion and requiring him to submit his answer.
In his answer dated December 19, 1975, respondent denied the
allegations in the instant complaint. He averred that he sold, in good faith,
complainants lots to various buyers, including himself, for valuable
consideration. On several occasions, he extended financial assistance to
complainant and even invited her to live with his family. His children used to
call her Lola due to her frequent visits to his residence. He prayed that the
complaint be dismissed for failure to state a cause of action.
On January 17, 1977, we referred the case to the Office of the Solicitor
General (OSG) for investigation, report, and recommendation.
It was only on March 13, 1990 or after 13 years, 1 month and 26 days that
the OSG filed a motion to refer the instant case to the IBP for the retaking of
the testimonies of complainants witnesses and the submission of its report
and recommendation.
On April 4, 1990, we issued a Resolution referring the case to the IBP for
investigation, report, and recommendation.
The Report and Recommendation dated June 15, 2004 of Atty. Lydia A.
Navarro, Commissioner of the IBP Commission on Bar Discipline, is quoted as
follows:
A careful examination and evaluation of the evidence submitted by the parties
showed that all the properties of the complainant are presently owned by the

respondent by virtue of several deeds of sale executed by the complainant in favor of

the respondent without monetary consideration except Lot 849-D situated in Tomas
Claudio which was returned by the respondent to the complainant on September 5,
1974.
It is evident from the records that respondent was the one who notarized the
documents involving the said properties redeemed or repurchased by the complainant
from her creditors which ended up in respondents name like in the deed of sale
executed by Victoriano Dejerano in favor of Nazaria Hernandez over Lots 1141-A-3A and 1141-A-3-B; deed of sale executed by Antonio Masrahon on September 3,
1961regarding Lot No. 1141-A; deed of absolute sale executed by Francisco Esperat
over the Curuan properties on November 9, 1971 and the cancellation of the mortgage
executed by Alfonso Enriquez on July 18, 1964 over the Tomas Claudio properties.
The foregoing legal activities and operations of the respondent in addition to his
having discussed, advised and gave solutions to complainants legal problems and
liabilities to her creditors and even requested her creditors for extension of time to pay
complainants accounts constitute practice of law as legal counsel for consultation
aside from representing complainant in other cases; a mute proof of a lawyer-client
relations between them, a fact also admitted by the respondent.
It is incumbent upon the respondent to have rendered a detailed report to the
complainant on how he paid complainants creditors without selling her properties.
Instead of selling to buyers at higher price, he paid them out of his own funds; then
later on admitted that he was one of the purchasers of complainants properties in utter
disregard of their agreement and no evidence was submitted by the respondent
concerning the value of the said sale of complainants properties.
As such, respondent did not adhere faithfully and honestly in his obligation and duty
as complainants legal adviser and counsel when he took advantage of the trust and
confidence reposed in him by the complainant in ultimately putting complainants
properties in his name and possession in violation of Canon 17 of the Code of
Professional Responsibility.
WHEREFORE, in view of the foregoing, the undersigned respectfully recommends
that respondent Atty. Jose C. Go be suspended from the practice of law for a period of
six (6) months from receipt hereof and the IBP Chapter where he is a registered
member be furnished a copy of the same for implementation hereof, subject to the
approval of the Honorable Members of the Board of Governors.

On July 30, 2004, the IBP Board of Governors passed Resolution No. XVI2004-39 adopting and approving the Report of Commissioner Navarro with
modification in the sense that the recommended penalty of suspension from
the practice of law was increased from six (6) months to three (3) years.
We sustain the Resolution of the IBP Board of Governors finding that
respondent violated the Code of Professional Responsibility. However, we
have to modify its recommended penalty.
Canon 16 of the Code of Professional Responsibility, the principal source
of ethical rules for lawyers in this jurisdiction, provides:
A lawyer shall hold in trust all moneys and properties of his client that may
come into his possession.
Respondent breached this Canon. His acts of acquiring for himself
complainants lots entrusted to him are, by any standard, acts constituting
gross misconduct, a grievous wrong, a forbidden act, a dereliction in duty,
willful in character, and implies a wrongful intent and not mere error in
judgment. Such conduct on the part of respondent degrades not only himself
but also the name and honor of the legal profession. He violated this Courts
mandate that lawyers must at all times conduct themselves, especially in their
dealing with their clients and the public at large, with honesty and integrity in a
manner beyond reproach.
[3]

[4]

Canon 17 of the same Code states:

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

Obviously, had he sold the lots to other buyers, complainant could have
earned more. Records show that she did not receive any amount from
respondent. Clearly, respondent did not adhere faithfully and honestly in his
duty as complainants counsel.
Undoubtedly, respondents conduct has made him unfit to remain in the
legal profession. He has definitely fallen below the moral bar when he
engaged in deceitful, dishonest, unlawful and grossly immoral acts. We have
been exacting in our demand for integrity and good moral character of
members of the Bar. They are expected at all times to uphold the integrity and
dignity of the legal profession and refrain from any act or omission which
might lessen the trust and confidence reposed by the public in the fidelity,
honesty, and integrity of the legal profession. Membership in the legal
profession is a privilege. And whenever it is made to appear that an attorney
is no longer worthy of the trust and confidence of his clients and the public, it
becomes not only the right but also the duty of this Court, which made him
one of its officers and gave him the privilege of ministering within its Bar, to
withdraw the privilege. Respondent, by his conduct, blemished not only his
integrity as a member of the Bar, but also the legal profession.
[5]

[6]

[7]

[8]

Public interest requires that an attorney should exert his best efforts and
ability to protect the interests of his clients. A lawyer who performs that duty
with diligence and candor not only protects his clients cause; he also serves
the ends of justice and does honor to the bar and helps maintain the respect
of the community to the legal profession.
It is a time-honored rule that good moral character is not only a condition
precedent to admission to the practice of law. Its continued possession is also
essential for remaining in the legal profession.
[9]

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

In Rayos-Ombac vs. Rayos, we ordered the disbarment of lawyer when

he deceived his 85-year old aunt into entrusting him with all her money and
later refused to return the same despite demand. In Navarro vs. Meneses III,
we disbarred a member of the Bar for his refusal or failure to account for
the P50,000.00 he received from a client to settle a case. InDocena vs.
Limson, we expelled from the brotherhood of lawyers, an attorney who
extorted money from his client through deceit and misrepresentation.
In Busios vs. Ricafort, an attorney was stripped of his license to practice
law for misappropriating his clients money.
[11]

[12]

[13]

[14]

Considering the depravity of respondents offense, we find the penalty

recommended by the IBP too light. It bears reiterating that a lawyer who
takes advantage of his clients financial plight to acquire the latters properties
for his own benefit is destructive of the confidence of the public in the fidelity,
honesty, and integrity of the legal profession. Thus, for violation of Canon 16
and Canon 17 of the Code of Professional Responsibility, which constitutes
gross misconduct, and consistent with the need to maintain the high
standards of the Bar and thus preserve the faith of the public in the legal
profession, respondent deserves the ultimate penalty, that of expulsion from
the esteemed brotherhood of lawyers.
WHEREFORE, respondent JOSE S. GO is found guilty of gross
misconduct and is DISBARRED from the practice of law. His name is ordered
STRICKEN from the Roll of Attorneys EFFECTIVE IMMEDIATELY.
Let copies of this Decision be furnished the Bar Confidant, the Integrated
Bar of the Philippines and all courts throughout the country.
SO ORDERED.