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SYLLABUS
DECISION
KAPUNAN, J : p
These cases 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 defendants named in the case are herein petitioners
Teodoro Regala, Edgardo J. Angara, Avelino V. Cruz, Jose C. Concepcion,
Rogelio A. Vinluan, Victor P. Lazatin, Eduardo U. Escueta and Paraja G. Hayudini,
and herein private respondent Raul S. Roco, who all were then partners of the law
firm Angara, Abello, Concepcion, Regala and Cruz Law Offices (hereinafter
referred to as the ACCRA Law Firm). ACCRA Law Firm performed legal services
for its clients, which included, among others, the organization and acquisition of
business associations and/or organizations, with the correlative and incidental
services where its members acted as incorporators, or simply, as stockholders.
More specifically, in the performance of these services, the members of the law
firm delivered to its client documents which substantiate the client's equity
holdings, i.e., stock certificates endorsed in blank representing the shares
registered in the client's name, and a blank deed of trust or assignment covering
said shares. In the course of their dealings with their clients, the members of the
law firm acquire information relative to the assets of clients as well as their personal
and business circumstances. As members of the ACCRA Law Firm, petitioners
and private respondent Raul Roco admit that they assisted in the organization and
acquisition of the companies included in Civil Case No. 0033, and in keeping with
the office practice, ACCRA lawyers acted as nominees-stockholders of the said
corporations involved in sequestration proceedings. 2
On August 20, 1991, respondent Presidential Commission on Good
government (hereinafter referred to as respondent PCGG) filed a "Motion to Admit
Third Amended Complaint" and "Third Amended Complaint" which excluded
private respondent Raul S. Roco from the complaint in PCGG Case No. 33 as
party-defendant. 3Respondent PCGG based its exclusion of private respondent
Roco as party-defendant on his undertaking that he will reveal the identity of the
principal/s for whom he acted as nominee/stockholder in the companies involved
in PCGG Case No. 33. 4
Petitioners were included in the Third Amended Complaint on the strength
of the following allegations:
14. Defendants Eduardo Cojuangco, Jr., Edgardo J. Angara, Jose
C. Concepcion, Teodoro Regala, Avelino V. Cruz, Rogelio A. Vinluan,
Eduardo U. Escueta, Paraja G. Hayudini and Raul Roco of the Angara
Concepcion Cruz Regala and Abello law offices (ACCRA) plotted,
devised, schemed, conspired and confederated with each other in setting
up, through the use of the coconut levy funds, the financial and corporate
framework and structures that led to the establishment of UCPB,
UNICOM, COCOLIFE, COCOMARK, CIC, and more than twenty other
coconut levy funded corporations, including the acquisition of San Miguel
Corporation shares and its institutionalization through presidential
directives of the coconut monopoly. Through insidious means and
machinations, ACCRA, being the wholly-owned investment arm, ACCRA
Investments Corporation, became the holder of approximately fifteen
million shares representing roughly 3.3% of the total outstanding capital
stock of UCPB as of 31 March 1987. This ranks ACCRA Investments
Corporation number 44 among the top 100 biggest 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 co-defendants are charged, was in furtherance of legitimate
lawyering.
4.4.1. In the course of rendering professional and legal
services to clients, defendants-ACCRA lawyers, Jose C.
Concepcion, Teodoro D. Regala, Rogelio A. Vinluan and Eduardo
U. Escueta, became holders of shares of stock in the corporations
listed under their respective names in Annex 'A' of the expanded
Amended Complaint as incorporating or acquiring stockholders
only and, as such, they do not claim any proprietary interest in the
said shares of stock.
4.5. Defendant ACCRA-lawyer Avelino V. Cruz was one of
the incorporators in 1976 of Mermaid Marketing Corporation, which
was organized for legitimate business purposes not related to the
allegations of the expanded Amended Complaint. However, he has
long ago transferred any material interest therein and therefore
denies that the 'shares' appearing in his name in Annex 'A' of the
expanded Amended Complaint are his assets. 6
Petitioner Paraja Hayudini, who had separated from ACCRA law firm, filed
a separate answer denying the allegations in the complaint implicating him in the
alleged ill-gotten wealth. 7
Petitioners ACCRA lawyers subsequently filed their "COMMENT AND/OR
OPPOSITION" dated October 8, 1991 with Counter-Motion that respondent PCGG
similarly grant the same treatment to them (exclusion as parties-defendants) as
accorded private respondent Roco. 8 The Counter-Motion for dropping petitioners
from the complaint was duly set for hearing on October 18, 1991 in accordance
with the requirements of Rule 15 of the Rules of Court.
In its "Comment," respondent PCGG set the following conditions precedent
for the exclusion of petitioners, namely: (a) the disclosure of the identity of its
clients; (b) submission of documents substantiating the lawyer-client relationship;
and (c) the submission of the deeds of assignments petitioners executed in favor
of its clients covering their respective shareholdings. 9
Consequently, respondent PCGG presented supposed proof to substantiate
compliance by private respondent Roco of the conditions precedent to warrant the
latter's exclusion as party-defendant in PCGG Case No. 33, to wit: (a) Letter to
respondent PCGG of the counsel of respondent Roco dated May 24, 1989
reiterating a previous request for reinvestigation by the PCGG in PCGG Case No.
33; (b) Affidavit dated March 8, 1989 executed by private respondent Roco as
Attachment to the letter aforestated in (a); and (c) Letter of the Roco, Bunag, and
Kapunan Law Offices dated September 21, 1988 to the respondent PCGG in
behalf of private respondent Roco originally requesting the reinvestigation and/or
re-examination of the evidence of the PCGG against Roco in its Complaint in
PCGG Case No. 33. 10
It is noteworthy that during said proceedings, private respondent Roco did
not refute petitioners' contention that he did actually not reveal the identity of the
client involved in PCGG Case No. 33, nor had he undertaken to reveal the identity
of the client for whom he acted as nominee-stockholder. 11
On March 18, 1992, respondent Sandiganbayan promulgated the
Resolution, herein questioned, denying the exclusion of petitioners in PCGG Case
No. 33, for their refusal to comply with the conditions required by respondent
PCGG. It held:
xxx xxx xxx
ACCRA lawyers may take the heroic stance of not revealing the
identity of the client for whom they have acted, i.e. their principal, and that
will be their choice. But until they do identify their clients, considerations
of whether or not the privilege claimed by the ACCRA lawyers exists
cannot even begin to be debated. The ACCRA lawyers cannot excuse
themselves from the consequences of their acts until they have begun to
establish the basis for recognizing the privilege; the existence andidentity
of the client.
This is what appears to be the cause for which they have been
impleaded by the PCGG as defendants herein.
5. The PCGG is satisfied that defendant Roco has demonstrated
his agency and that Roco has apparently identified his principal, which
revelation could show the lack of cause against him. This in turn has
allowed the PCGG to exercise its power both under the rules of Agency
and under Section 5 of E.O. No. 14-A in relation to the Supreme Court's
ruling in Republic v. Sandiganbayan (173 SCRA 72).
The PCGG has apparently offered to the ACCRA lawyers the same
conditions availed of by Roco; full disclosure in exchange for exclusion
from these proceedings (par. 7, PCGG's COMMENT dated November 4,
1991). The ACCRA lawyers have preferred not to make the disclosures
required by the PCGG.
The ACCRA lawyers cannot, therefore, begrudge the PCGG for
keeping them as party defendants. In the same vein, they cannot compel
the PCGG to be accorded the same treatment accorded to Roco.
Neither can this Court.
WHEREFORE, the Counter Motion dated October 8, 1991 filed by
the ACCRA lawyers and joined in by Atty. Paraja G. Hayudini for the same
treatment by the PCGG as accorded to Raul S. Roco is DENIED for lack
of merit. 12
ACCRA lawyers moved for a reconsideration of the above resolution but the
same was denied by the respondent Sandiganbayan. Hence, the ACCRA lawyers
filed the petition for certiorari, docketed as G.R. No. 105938, invoking the following
grounds:
I
The Honorable Sandiganbayan gravely abused its discretion in
subjecting petitioners ACCRA lawyers who undisputably acted as lawyers
in serving as nominee-stockholders, to the strict application of the law of
agency.
II
The Honorable Sandiganbayan committed grave abuse of
discretion in not considering petitioners ACCRA lawyers and Mr. Roco as
similarly situated and, therefore, deserving of equal treatment.
1. There is absolutely no evidence that Mr. Roco had revealed, or
had undertaken to reveal, the identities of the client(s) for
whom he acted as nominee-stockholder.
2. Even assuming that Mr. Roco had revealed, or had undertaken
to reveal, the identities of the client(s), the disclosure does
not constitute a substantial distinction as would make the
classification reasonable under the equal protection clause.
3. Respondent Sandiganbayan sanctioned favoritism and undue
preference in favor of Mr. Roco in violation of the equal
protection clause.
III
The Honorable Sandiganbayan committed grave abuse of
discretion in not holding that, under the facts of this case, the attorney-
client privilege prohibits petitioners ACCRA lawyers from revealing the
identity of their client(s) and the other information requested by the PCGG.
1. Under the peculiar facts of this case, the attorney-client privilege
includes the identity of the client(s).
2. The factual disclosures required by the PCGG are not limited to
the identity of petitioners ACCRA lawyers' alleged client(s)
but extend to other privileged matters.
IV
The Honorable Sandiganbayan committed grave abuse of
discretion in not requiring that the dropping of party-defendants by the
PCGG must be based on reasonable and just grounds and with due
consideration to the constitutional right of petitioners ACCRA lawyers to
the equal protection of the law.
Petitioner Paraja G. Hayudini, likewise, filed his own motion for
reconsideration of the March 18, 1991 resolution which was denied by
respondent Sandiganbayan. Thus, he filed a separate petition for certiorari,
docketed as G.R. No. 108113, assailing respondent Sandiganbayan's resolution
on essentially the same grounds averred by petitioners in G.R. No. 105938.
Petitioners contend that the exclusion of respondent Roco as party-
defendant in PCGG Case No. 33 grants him a favorable treatment, on the pretext
of his alleged undertaking to divulge the identity of his client, giving him an
advantage over them who are in the same footing as partners in the ACCRA law
firm. Petitioners further argue that even granting that such an undertaking has
been assumed by private respondent Roco, they are prohibited from revealing the
identity of their principal under their sworn mandate and fiduciary duty as lawyers
to uphold at all times the confidentiality of information obtained during such lawyer-
client relationship.cdasia
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 in such cases is clearly the attorney for the
policyholder when the policyholder goes to him to report an occurrence
contemplating that it would be used in an action or claim against him. 38
xxx xxx xxx.
All communications made by a client to his counsel, for the purpose
of professional advice or assistance, are privileged, whether they relate to
a suit pending or contemplated, or to any other matter proper for such
advice or aid; . . . And whenever the communication made, relates to a
matter so connected with the employment as attorney or counsel as to
afford presumption that it was the ground of the address by the client, then
it is privileged from disclosure. . . .
It appears . . . that the name and address of the owner of the
second cab came 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 taxpayer's returns of previous years were probably
incorrect and the taxes understated. The clients themselves were unsure about
whether or not they violated tax laws and sought advice from Baird on the
hypothetical possibility that they had. No investigation was then being undertaken
by the IRS of the taxpayers. Subsequently, the attorney of the taxpayers delivered
to Baird the sum of $12,706.85, which had been previously assessed as the tax
due, and another amount of money representing his fee for the advice given. Baird
then sent a check for $12,706.85 to the IRS in Baltimore, Maryland, with a note
explaining the payment, but without naming his clients. The IRS demanded that
Baird identify the lawyers, accountants, and other clients involved. Baird refused
on the ground that he did not know their names, and declined to name the attorney
and accountants because this constituted privileged communication. A petition
was filed for the enforcement of the IRS summons. For Baird's repeated refusal to
name his clients he was found guilty of civil contempt. The Ninth Circuit Court of
Appeals held that, a lawyer could not be forced to reveal the names of clients who
employed him to pay sums of money to the government voluntarily in settlement
of undetermined income taxes, unsued on, and with no government audit or
investigation into that client's income tax liability pending. The court emphasized
the exception that a client's name is privileged when so much has been revealed
concerning the legal services rendered that the disclosure of the client's identity
exposes him to possible investigation and sanction by government agencies. The
Court held:
The facts of the instant case bring it squarely within that exception
to the general rule. Here money was received by the government, paid by
persons who thereby admitted they had not paid a sufficient amount in
income taxes some one or more years in the past. The names of the
clients are useful to the government for but one purpose — to ascertain
which taxpayers think they were delinquent, so that it may check the
records for that one year or several years. The voluntary nature of the
payment indicates a belief by the taxpayers that more taxes or interest or
penalties are due than the sum previously paid, if any. It indicates a feeling
of guilt for nonpayment of taxes, though whether it is criminal guilt is
undisclosed. But it may well be the link that could form the chain of
testimony necessary to convict an individual of a federal crime. Certainly
the payment and the feeling of guilt are the reasons the attorney here
involved was employed — to advise his clients what, under the
circumstances, should be done. 43
Apart from these principal exceptions, there exist other situations which
could qualify as exceptions to the general rule.
For example, the content of any client communication to a lawyer lies within
the privilege if it is relevant to the subject matter of the legal problem on which the
client seeks legal assistance. 44 Moreover, where the nature of the attorney-client
relationship has been previously disclosed and it is the identity which is intended
to be confidential, the identity of the client has been held to be privileged, since
such revelation would otherwise result in disclosure of the entire transaction. 45
Summarizing these exceptions, information relating to the identity of a client
may fall within the ambit of the privilege when the client's name itself has an
independent significance, such that disclosure would then reveal client
confidences. 46
The circumstances involving the engagement of lawyers in the case at
bench, therefore, clearly reveal that the instant case falls under at least two
exceptions to the general rule. First, disclosure of the alleged client's name would
lead to establish said client's connection with the very fact in issue of the case,
which is privileged information, because the privilege, as stated earlier, protects
the subject matter or the substance (without which there would be no attorney-
client relationship).
The link between the alleged criminal offense and the legal advice or legal
service sought was duly established in the case at bar, by no less than the PCGG
itself. The key lies in the three specific conditions laid down by the PCGG which
constitutes petitioners' ticket to non-prosecution should they accede thereto:
(a) the disclosure of the identity of its clients;
(b) submission of documents substantiating the lawyer-client
relationship; and
(c) the submission of the deeds of assignment petitioners executed
in favor of their clients covering their respective shareholdings.
From these conditions, particularly the third, we can readily deduce that the
clients indeed consulted the petitioners, in their capacity as lawyers, regarding the
financial and corporate structure, framework and set-up of the corporations in
question. In turn, petitioners gave their professional advice in the form of, among
others, the aforementioned deeds of assignment covering their client's
shareholdings.
There is no question that the preparation of the aforestated documents was
part and parcel of petitioners' legal service to their clients. More important, it
constituted an integral part of their duties as lawyers. Petitioners, therefore, have
a legitimate fear that identifying their clients would implicate them in the very
activity for which legal advice had been sought, i.e., the alleged accumulation of
ill-gotten wealth in the aforementioned corporations.
Furthermore, under the third main exception, revelation of the client's name
would obviously provide the necessary link for the prosecution to build its case,
where none otherwise exists. It is the link, in the words of Baird, "that would
inevitably form the chain of testimony necessary to convict the (client) of a . . .
crime." 47
An important distinction must be made between a case where a client takes
on the services of an attorney, for illicit purposes, seeking advice about how to go
around the law for the purpose of committing illegal activities and a case where a
client thinks he might have previously committed something illegal and consults
his attorney about it. The first case clearly does not fall within the privilege because
the same cannot be invoked for purposes illegal. The second case falls within the
exception because whether or not the act for which the client sought 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 sources 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 petitioner's 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 that it would be difficult to simply
dissociate one from the other. In this sense, the name is as much "communication"
as information revealed directly about the transaction in question itself, a
communication which is clearly and distinctly privileged. A lawyer cannot reveal
such communication without exposing himself to charges of violating a principle
which forms the bulwark of the entire attorney-client relationship.
The uberrimei fidei relationship between a lawyer and his client therefore
imposes a strict liability for negligence on the former. The ethical duties owing to
the client, including confidentiality, loyalty, competence, diligence as well as the
responsibility to keep clients informed and protect their rights to make decisions
have been zealously sustained. In Milbank, Tweed, Hadley and
McCloy v. Boon, 54 the US Second District Court rejected the plea of the petitioner
law firm that it breached its fiduciary duty to its client by helping the latter's former
agent in closing a deal for the agent's benefit only after its client hesitated in
proceeding with the transaction, thus causing no harm to its client. The Court
instead ruled that breaches of a fiduciary relationship in any context comprise a
special breed of cases that often loosen normally stringent requirements of
causation and damages, and found in favor of the client.
To the same effect is the ruling in Searcy, Denney, Scarola, Barnhart, and
Shipley P.A. v. Scheller 55 requiring strict obligation of lawyers vis-a-vis clients. In
this case, a contingent fee lawyer was fired shortly before the end of completion of
his work, and sought payment quantum meruit of work done. The court, however,
found that the lawyer was fired for cause after he sought to pressure his client into
signing a new fee agreement while settlement negotiations were at a critical stage.
While the client found a new lawyer during the interregnum, events forced the
client to settle for less than what was originally offered. Reiterating the principle of
fiduciary duty of lawyers to clients in Meinhard v. Salmon 56 famously attributed to
Justice Benjamin Cardozo that "Not honesty alone, but the punctilio of an honor
the most sensitive, is then the standard of behavior," the US Court found that the
lawyer involved was fired for cause, thus deserved no attorney's fees at all.
The utmost zeal given by Courts to the protection of the lawyer-client
confidentiality privilege and lawyer's loyalty to his client is evident in the duration
of the protection, which exists not only during the relationship, but extends even
after the termination of the relationship. 57
Such are the unrelenting duties required of 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 by 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.LLphil
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 Investments Corporation, became the
holder of approximately fifteen million shares representing roughly 3.3% of the total
capital stock of UCPB as of 31 March 1987. The PCGG wanted to establish
through the ACCRA lawyers that Mr. Cojuangco is their client and it was
Cojuangco who furnished all the monies to the subscription payment; hence,
petitioners acted as dummies, nominees and/or agents by allowing themselves,
among others, to be used as instrument in accumulating ill-gotten wealth through
government concessions, etc., which acts constitute gross abuse of official position
and authority, flagrant breach of public trust, unjust enrichment, violation of the
Constitution and laws of the Republic of the Philippines.
By compelling petitioners, not only to reveal the identity of their clients, but
worse, to submit to the PCGG documents substantiating the client-lawyer
relationship, as well as deeds of assignment petitioners executed in favor of its
clients covering their respective shareholdings, the PCGG would exact from
petitioners a link, "that would inevitably form the chain of testimony necessary to
convict the (client) of a crime."
III
In response to petitioners' last assignment of error, respondents allege 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 their 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 absolutely 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 a 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 statutes 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,
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 self-incrimination. Whichever way one looks at it, this is a fishing
expedition, a free ride at the expense of such rights.
An argument is advanced that the invocation by petitioners of the privilege
of attorney-client confidentiality at this stage of the proceedings is premature and
that they should wait until they are called to testify and examine as witnesses as
to matters learned in confidence before they can raise their objections. But
petitioners are not mere witnesses. They are co-principals in the case for recovery
of alleged ill-gotten wealth. They have made their position clear from the very
beginning that they are not willing to testify and they cannot be compelled to testify
in view of their constitutional right against self-incrimination and of their
fundamental legal right to maintain inviolate the privilege of attorney-client
confidentiality.
It is clear then that the case against petitioners should never be allowed to
take its full course in the Sandiganbayan. Petitioners should not be made to suffer
the effects of further litigation when it is obvious that their inclusion in the complaint
arose from a privileged attorney-client relationship and as a means of coercing
them to disclose the identities of their clients. To allow the case to continue with
respect to them when this Court could nip the problem in the bud at this early
opportunity would be to sanction an unjust situation which we should not here
countenance. The case hangs as a real and palpable threat, a proverbial Sword of
Damocles over petitioners' heads. It should not be allowed to continue a day
longer.
While we are aware of respondent PCGG's legal mandate to recover ill-
gotten wealth, we will not sanction acts which violate the equal protection
guarantee and the right against self-incrimination and subvert the lawyer-client
confidentiality privilege.LibLex
The legal profession, despite all the unrestrained calumny hurled against it,
is still the noblest of professions. It exists upon the thesis that, in an orderly society
that is opposed to all forms of anarchy, it so occupies, as it should, an exalted
position in the proper dispensation of justice. In time, principle have evolved that
would help ensure its effective ministration. The protection of confidentiality of the
lawyer-client relationship is one, and it has been since an accepted firmament in
the profession. It allows the lawyer and the client to institutionalize a unique
relationship based on full trust and confidence essential in a justice system that
works on the basis of substantive and procedural due process. To be sure, the rule
is not without its pitfalls, and demands against it may be strong, but these problems
are, in the ultimate analysis, no more than mere tests of vigor that have made and
will make that rule endure.
I see in the case before us, given the attendant circumstances already
detailed in the ponencia, a situation of the Republic attempting to establish a case
not on what it perceives to be the strength of its own evidence but on what it could
elicit from a counsel against his client. I find it unreasonable for
the Sandiganbayan to compel petitioners to breach the trust reposed on them and
succumb to a thinly disguised threat of incrimination. cda
Accordingly, I join my other colleague who vote for the GRANT of the
petition.
In the case below, the PCGG decided to drop or exclude from the complaint
original co-defendant Raul Roco because he had allegedly complied with the
condition prescribed by the PCGG, viz., undertake that he will reveal the identity
of the principals for whom he acted as nominee/stockholder in the companies
involved in PCGG Case No. 0033. In short, there was an agreement or
compromise settlement between the PCGG and Roco. Accordingly, the PCGG
submitted a Third Amended Complaint without Roco as a defendant. No obstacle
to such an agreement has been insinuated. If Roco's revelation violated the
confidentiality of a lawyer-client relationship, he would be solely answerable
therefor to his principals/clients and, probably, to this Court in an appropriate
disciplinary action if warranted. There is at all no showing that Civil Case No. 0033
cannot further be proceeded upon or that any judgment therein cannot be binding
without Roco remaining as a defendant. Accordingly, the admission of the Third
Amended Complaint cannot be validly withheld by the Sandiganbayan.
Are the petitioners, who did not file a formal motion to be excluded but only
made the request to that effect as a rider to their Comment to the Motion to Admit
Third Amended Complaint, entitled to be excluded from the Third Amended
Complaint such that denial thereof would constitute grave abuse of discretion on
theSandiganbayan's part? To me, the answer is clearly in the negative.
The petitioners seek to be accorded the same benefit granted to or to be
similarly treated as Roco. Reason and logic dictate that they cannot, unless they
too would make themselves like Roco. Otherwise stated, they must first voluntarily
adopt for themselves the factual milieu created by Roco and must bind themselves
to perform certain obligations as Roco. It is precisely for this that in response to
the petitioners' comment on the aforementioned Motion to Admit Third Amended
Complaint the PCGG manifested that it is willing to accord the petitioners the
treatment it gave Roco provided they would do what Roco had done, that is,
disclose the identity of their principals/clients and submit documents substantiating
their claimed lawyer-client relationship with the said principals/clients, as well as
copies of deeds of assignments the petitioners executed in favor of their
principals/clients. The petitioners did not do so because they believed that
compliance thereof would breach the sanctity of their fiduciary duty in a lawyer-
client relationship.
It, indeed, appears, that Roco has complied with his obligation as a
consideration for his exclusion from the Third Amended Complaint.
The Sandiganbayan found that
5. The PCGG is satisfied that defendant Roco has demonstrated
his agency and that Roco has apparently identified his principal, which
revelation could show the lack of action against him. This in turn has
allowed the PCGG to exercise its power both under the rules of agency
and under Section 5 of E.O. No. 14-1 in relation to the Supreme Court's
ruling in Republic v. Sandiganbayan (173 SCRA 72).
As a matter of fact, the PCGG presented evidence to substantiate Roco's
compliance. The ponencia itself so stated, thus:
. . . respondent PCGG presented evidence to substantiate
compliance by private respondent Roco of the conditions precedent to
warrant the latter's exclusion as party-defendant in PCGG Case No. 33,
to wit: (a) Letter to respondent PCGG of the counsel of respondent Roco
dated May 24, 1989 reiterating a previous request for reinvestigation by
the PCGG in PCGG Case No. 33; (b) Affidavit dated March 8, 1989
executed by private respondent Roco as Attachment to the letter
aforestated in (a); and (c) Letter of Roco, Bunag, and Kapunan Law
Offices dated September 21, 1988 to the respondent in behalf of private
respondent Roco originally requesting the reinvestigation and/or re-
examination of evidence by the PCGG it Complaint in PCGG Case No.
33. (Id., 5–6).
These are the pieces of evidence upon which the Sandiganbayan founded its
conclusion that the PCGG was satisfied with Roco's compliance. The
petitioners have not assailed such finding as arbitrary.
The ponencia's observation then that Roco did not refute the petitioners'
contention that he did not comply with his obligation to disclose the identity of his
principals is entirely irrelevant.
In view of their adamantine position, the petitioners did not, therefore, allow
themselves to be like Roco. They cannot claim the same treatment, much less
compel the PCGG to drop them as defendants, for nothing whatsoever. They have
no right to make such a demand for until they shall have complied with the
conditions imposed for their exclusion, they cannot be excluded except by way of
a motion to dismiss based on the grounds allowed by law (e.g., those enumerated
in §1, Rule 16, Rules of Court). The rule of confidentially under the lawyer-client
relationship is not a cause to exclude a party. It is merely a ground for
disqualification of a witness (§24, Rule 130, Rules of Court) and may only be
invoked at the appropriate time, i.e., when a lawyer is under compulsion to answer
as witness, as when, having taken the witness stand, he is questioned as to such
confidential communication or advice, or is being otherwise judicially coerced to
produce, through subpoenae duces tecumor otherwise, letters or other documents
containing the same privileged matter. But none of the lawyers in this case is being
required to testify about or otherwise reveal "any [confidential] communication
made by the client to him, or his advice given thereon in the course of, or with a
view to, professional employment." What they are being asked to do, in line with
their claim that they had done the acts ascribed to them in pursuance of their
professional relation to their clients, is to identify the latter to the PCGG and the
Court; but this, only if they so choose in order to be dropped from the complaint,
such identification being the condition under which the PCGG has expressed
willingness to exclude them from the action. The revelation is entirely optional,
discretionary, on their part. The attorney-client privilege is not therefor applicable.
Thus, the Sandiganbayan did not commit any abuse of discretion when it
denied the petitioners' prayer for their exclusion as party-defendants because they
did not want to abide with any of the conditions set by the PCGG. There would
have been abuse if the Sandiganbayan granted the prayer because then it would
have capriciously, whimsically, arbitrarily, and oppressively imposed its will on the
PCGG.
Again, what the petitioners want is their exclusion from the Third Amended
Complaint or the dismissal of the case insofar as they are concerned because
either they are invested with immunity under the principle of confidentially in a
lawyer-client relationship, or the claims against them in Civil Case No. 0033 are
barred by such principle.
Even if we have to accommodate this issue, I still submit that the lawyer-
client privilege provides the petitioners no refuge. They are sued as principal
defendants in Civil Case No. 0033, a case for the recovery of alleged ill-gotten
wealth. Conspiracy is imputed to the petitioners therein. In short, they are,
allegedly, conspirators in the commission of the acts complained of for being
nominees of certain parties.
Their inclusion as defendants is justified under Section 15, Article XI of the
Constitution — which provides that the right of the State to recover properties
unlawfully acquired by public officials or employees, from them or from their
nominees or transferees, shall not be barred by prescription, laches or estoppel —
and E.O. No. 1 of 28 February 1986, E.O. No. 2 of 12 March 1986, E.O. No. 14 of
7 May 1986, and the Rules and Regulations of the PCGG. Furthermore, §2,Rule
110 of the Rules of Court requires that the complaint or information should be
"against all persons who appear to be responsible for the offense involved."
Hypothetically admitting the allegations in the complaint in Civil Case No.
0033, I find myself unable to agree with the majority opinion that the petitioners are
immune from suit or that they have to be excluded as defendants, or that they
cannot be compelled to reveal or disclose the identity of their principals, all
because of the sacred lawyer-client privilege.
This privilege is well put in Rule 130 of the Rules of Court, to wit:
§24. Disqualification by reason of privileged communication. —
The following persons cannot testify as to matters learned in confidence
in the following cases:
xxx xxx xxx
(b) An attorney cannot, without the consent of his client, be
examined as to any communication made by the client to him, or his
advice given thereon in the course of, or with a view to, professional
employment, nor can an attorney's secretary, stenographer, or clerk be
examined, without the consent of the client and his employer, concerning
any fact the knowledge of which has been acquired in such capacity.
The majority seeks to expand the scope of the Philippine rule on the lawyer-
client privilege by copious citations of American jurisprudence which includes in
the privilege the identity of the client under the exceptional situations narrated
therein. From the plethora of cases cited, two facts stand out in bold relief. Firstly,
the issue of privilege contested therein arose in grand jury proceedings on different
States, which are preliminary proceedings before the filing of the case in court, and
we are not even told what evidentiary rules apply in the said hearings. In the
present case, the privilege is invoked in the court where it was already filed and
presently pends, and we have the foregoing specific rules above-quoted.
Secondly, and more important, in the cases cited by the majority, the lawyers
concerned were merely advocating the cause of their clients but were not indicted
for the charges against their said clients. Here, the counsel themselves are co-
defendants duly charged in court as co-conspirators in the offenses charged. The
cases cited by the majority evidently do not apply to them.
Hence, I wish to repeat and underscore the fact that the lawyer-client
privilege is not a shield for the commission of a crime or against the prosecution of
the lawyer therefor. I quote, with emphases supplied, from 81 AMJUR 2d,
Witnesses, §393 to 395, pages 356–357:
§393. Effect of unlawful purpose.
The existence of an unlawful purpose prevents the attorney-client
privilege from attaching. The attorney-client privilege does not generally
exist where the representation is sought to further criminal or fraudulent
conduct either past, present, or future. Thus, a confidence received by an
attorney in order to advance a criminal or fraudulent purpose is beyond
the scope of the privilege.
Observation: The common-law rule that the privilege protecting confidential
communications between attorney and client is lost if the relation is abused by a client
who seeks legal assistance to perpetrate a crime or fraud has been codified.
§394. Attorney participation.
The attorney-client privilege cannot be used to protect a client in
the perpetration of a crime in concert with the attorney, even where the
attorney is not aware of his client's purpose. The reason for the rule is that
it is not within the professional character of a lawyer to give advice on the
commission of crime. Professional responsibility does not countenance
the use of the attorney-client privilege as a subterfuge, and all
conspiracies, either active or passive, which are calculated to hinder the
administration of justice will vitiate the privilege. In some jurisdictions,
however, this exception to the rule of privilege is confined to such intended
acts in violation of the law as are mala in se, as distinguished from those
which are merely mala prohibita.
§395. Communication in contemplation of crime.
Communications between attorney and client having to do with the
client's contemplated criminal acts, or in aid or furtherance thereof, are not
covered by the cloak of privilege ordinarily existing in reference to
communications between attorney and client. But, the mere charge of
illegality, not supported by evidence, will not defeat the privilege; there
must be at least prima facie evidence that the illegality has some
foundation in fact.
Underhill also states:
There are many other cases to the same effect, for the rule
is prostitution of the honorable relation of attorney and client will not be
permitted under the guise of privilege, and every communication made to
an attorney by a client for a criminal purpose is a conspiracy or attempt at
a conspiracy which is not only lawful to divulge, but which the attorney
under certain circumstances may be bound to disclose at once in the
interest of justice. In accordance with this rule, where a forged will or other
false instrument has come into possession of an attorney through the
instrumentality of the accused, with the hope and expectation that the
attorney would take some action in reference thereto, and the attorney
does act, in ignorance of the true character of the instrument, there is no
privilege, inasmuch as full confidence has been withheld. The attorney is
then compelled to produce a forged writing against the client. The fact that
the attorney is not cognizant of the criminal or wrongful purpose, or,
knowing it, attempts to dissuade his client, is immaterial. The attorney's
ignorance of his client's intentions deprives the information of a
professional character as full confidence has been withheld. (H.C.
Underhill, A Treatise on the Law of Criminal Evidence, vol. 2 Fifth ed.
(1956), Sec. 332, pp. 836–837; italics mine).
125 AMERICAN LAW REPORTS ANNOTATED, 516–519, summarizes the
rationale of the rule excepting communications with respect to contemplated
criminal or fraudulent acts, thus:
c. Rationale of rule excepting communications with respect to
contemplated criminal or fraudulent act.
Various reasons have been announced as being the foundation for
the holdings that communications with respect to contemplated criminal
or fraudulent acts are not privileged.
The reason perhaps most frequently advanced is that in such
cases there is no professional employment, properly speaking. Standard
F. Ins. Co. v. Smithhart(1919) 183 Ky 679, 211 SW. 441, 5 ALR
972; Cummings v. Com. (1927) 221 Ky 301, 298 SW
943; Strong v. Abner (1937) 268 Ky 502, 105 SW(2d) 599; People v. Van
Alstine(1885) 57 Mich 69, 23 NW 594; Hamil & Co. v. England (1892) 50
Mo App 338; Carney v. United R. Co. (1920) 205 Mo App 495, 226 SW
308; Matthews v. Hoagland (1891) 48 NJ Eq 455, 21 A
1054; Covency v. Tannahill (1841) 1 Hill (NY) 33, 37 AM Dec 287; People
ex rel. Vogelstein v. Warden (1934) 150 Misc 714, 270 NYS 362 (affirmed
without opinion in (1934) 242 App Div 611, 271 NYS
1059); Russell v. Jackson (1851) 9 Hare 387, 68 Eng Reprint
558; Charlton v. Coombes (1863) 4 Giff 372, 66 Eng Reprint
751; Reg. v. Cox (1884) LR 14 QB Div (Eng) 153 — CCR; Re
Postlethwaite (1887) LR 35 Ch Div (Eng) 722.
In Reg. v. Cox (1884) LR 14 QB Div (Eng) 153 — CCR, the court
said: "In order that the rule may apply, there must be both professional
confidence and professional employment, but if the client has a criminal
object in view in his communications with his solicitor one of these
elements must necessarily be absent. The client must either conspire with
his solicitor or deceive him. If his criminal object is avowed, the client does
not consult his adviser professionally, because it cannot be the solicitor's
business to further any criminal object. If the client does not avow his
object, he reposes no confidence, for the state of facts which is the
foundation of the supposed confidence does not exist. The solicitor's
advice is obtained by a fraud."
So, in Standard F. Ins. Co. v. Smithhart (1919) 183 Ky 679, 211
SW 441, 5 ALR 972, the court said: "The reason of the principle which
holds such communications not to be privileged is that it is not within the
professional character of a lawyer to give advice upon such subjects, and
that it is no part of the profession of an attorney or counselor at law to be
advising persons as to how they may commit crimes or frauds, or how
they may escape the consequences of contemplated crimes and frauds.
If the crime or fraud has already been committed and finished, a client
may advise with an attorney in regard to it, and communicate with him
freely, and the communications cannot be divulged as evidence without
the consent of the client, because it is a part of the business and duty of
those engaged in the practice of the profession of law, when employed
and relied upon for that purpose, to give advice to those who have made
infractions of the laws; and, to enable the attorney to properly advise and
to properly represent the client in court or when prosecutions are
threatened, it is conducive to the administration of justice that the client
shall be free to communicate to his attorney all the facts within his
knowledge, and that he may be assured that a communication made by
him shall not be used to his prejudice."
The protection which the law affords to communications between
attorney and client has reference to those which are legitimately and
properly within the scope of a lawful employment, and does not extend to
communications made in contemplation of a crime, or perpetration of a
fraud. Strong v. Abner (1937) 268 Ky 502, 105 SW (2d) 599.
The court in People v. Van Alstine (1885) 57 Mich 69, 23 NW 594,
in holding not privileged communications to an attorney having for their
object the commission of a crime, said: "They then partake of the nature
of a conspiracy, or attempted conspiracy, and it is not only lawful to divulge
such communications, but under certain circumstances it might become
the duty of the attorney to do so. The interests of public justice require that
no such shield from merited exposure shall be interposed to protect a
person who takes counsel how he can safely commit a crime. The relation
of attorney and client cannot exist for the purpose of counsel in concocting
crimes." prcd
PUNO, J ., dissenting:
EN BANC
RESOLUTION
MELENCIO-HERRERA, J : p
Two separate Petitions were filed before this Court 1) by the surviving
partners of Atty. Alexander Sycip, who died on May 5, 1975, and 2) by the
surviving partners of Atty. Herminio Ozaeta, who died on February 14, 1976,
praying that they be allowed to continue using, in the names of their firms, the
names of partners who had passed away. In the Court's Resolution of
September 2, 1976, both Petitions were ordered consolidated. prLL
SO ORDERED.
Teehankee, Concepcion Jr., Santos, Fernandez, Guerrero and De
Castro, JJ., concur.
Fernando, C.J, and Abad-Santos, J., took no part.
CERTIFICATION
FERNANDO, C.J. : p
The petitions are denied, as there are only four votes for granting them,
seven of the .Justices being of the contrary view, as explained in the plurality
opinion of Justice Ameurfina Melencio-Herrera. It is out of delicadeza that the
undersigned did not participate in the disposition of these petitions, as the law
office of Sycip, Salazar, Feliciano, Hernandez and Castillo started with the
partnership of Quisumbing, Sycip, and Quisumbing, the senior partner, the late
Ramon Quisumbing, being the father-in-law of the undersigned, and the most
junior partner then, Norberto J. Quisumbing, being his brother-in-law. For the
record, the undersigned wishes to invite the attention of all concerned, and not
only of petitioners, to the last sentence of the opinion of Justice Ameurfina
Melencio-Herrera: 'Those names [Sycip and Ozaeta] may, however, be
included in the listing of individuals who have been partners in their firms
indicating the years during which they served as such." It represents a happy
compromise.
Separate Opinions
AQUINO, J., dissenting:
EN BANC
SYNOPSIS
DECISION
AQUINO, J : p
||| (Daroy v. Legaspi, A.C. No. 936, [July 25, 1975], 160 PHIL 306-317)
EN BANC
SYLLABUS
DECISION
TUASON, J : p
No. 882
Syllabus
Citizens' Savings Bank v. Owensboro, 173 U. S. 636, followed to the point that in the
case of a bank whose charter was granted subsequently to the year 1866, and which
had accepted the provisions of the Hewitt Act
and had thereafter paid the tax specified therein, there was no irrepealable contract in
favor of such bank that it should be thereafter and during its corporate existence taxed
under the provisions of that act.
The agreement set forth in the statement of facts between the City of Louisville, the
sinking fund commissioners of that city, represented by the city attorney, and the
various banks of that city acting by their attorneys, was not a valid agreement within the
power of an attorney at law to make.
An attorney, in his capacity merely as such, has no power to make any agreement for
his client before a suit has been commenced or before he has been retained to
commence one, and if, under such circumstances, he assumes to act for his principal, it
must be as agent, and his actual authority must appear.
An equitable estoppel which would prevent the state from exercising its power to alter
the rate of taxation in this case should be based upon the clearest equity, and the
payment of the money under the circumstances of this case, not exceeding the amount
really legally due for taxes, although disputed at the time, does not work such an
equitable estoppel as to prevent the assertion of the otherwise legal rights of the city.
The bill in this case was filed in 1897 by the Bank of Commerce, a citizen and resident
of the City of Louisville, in the State of Kentucky, for the purpose of obtaining an
injunction restraining the defendants from assessing the complainant, and from
collecting or attempting to collect any taxes based upon the assessment spoken of in
the bill, and for a final decree establishing the contract right of the complainant to be
taxed in the method prescribed by the Act of May 17, 1886, known as the "Hewitt Act,"
the terms of which it alleged it had accepted. The bill sought to perpetually enjoin the
defendants from assessing the franchise or property of the complainant in any other
manner than under that act. The material provisions of the Hewitt Act are set out in the
opinion of the court, delivered by MR. JUSTICE WHITE, in the case of Citizens' Savings
Bank of Owensboro v. Owensboro, 173 U. S. 636.
In 1891, Kentucky adopted a new constitution, section 174 of which, providing for the
taxation of all property in proportion to its value, is also set forth in the above-cited case.
The legislature of the state in 1892 passed an act in relation to the taxation of banks
and other corporations which was in conflict with the Hewitt Act, and provided for taxing
the
The complainant was incorporated under an Act of the legislature of Kentucky approved
February 10, 1865, and it had all the powers granted by that act and the several
amendments thereof as alleged in its bill.
There were various other banks in the City of Louisville which also alleged that they had
accepted the terms of the Hewitt Act, and by reason thereof had a valid contract with
the state that they should be taxed only under the provisions of that act.
The complainant alleges in its bill that early in the year 1894, a demand was made on
the part of the defendant the City of Louisville, based upon the act of 1892 and the
ordinance adopted in pursuance thereof, for the payment of a license tax equal to four
percent of its gross receipts into the sinking fund of the city. The banks denied their
liability to pay any tax other than that provided in the Hewitt Act, and hence arose the
differences between the city and the banks.
No litigation had been commenced for the purpose of testing the questions at issue
between the city and the banks, although negotiations looking to that end had been in
progress between the city attorney of Louisville and the members of the sinking fund
board, on the one hand, and the counsel for the various banks and trust companies, on
the other. There is set forth in the bill of the complainant the action of the sinking fund
board, as follows:
"A committee, consisting of Messrs. Thomas L. Barrett, John H. Leathers, and George
W. Swearingen appeared before the board on behalf of the banks who are members of
the Louisville Clearing House and stated that it was the purpose of said banks to resist
the payment of the license fee demanded of them under the license ordinance approved
January 29, 1894, on the ground that said banks were not legally liable to pay the same,
but, in order to save the sinking fund
from any embarrassment occasioned by their refusal to pay said license fee, the banks,
with two or three exceptions, were willing to enter into an arrangement whereby they
would pay a part of the amount demanded of them and lend the sinking fund the
balance thereof, to be repaid, with interest at four percentum per annum, if it was finally
decided and adjudged that the banks were not liable to pay said license fees."
"After discussion, the president was, on motion of Mr. Tyler, seconded by Mr. Summers,
authorized to enter into the following arrangement with the different banks, trust and title
companies who will be subject to the payment of the license fees if the license
ordinance is finally adjudged to be valid and enforceable:"
"First. To accept from each of said banks and companies a payment equal to the
difference between the amount they now pay to the state for state taxes and the amount
they would be required to pay for state taxes under the provisions of what is known as
the 'Hewitt Bill.' This sum shall be an actual payment, not to be repaid under any
circumstances, but its payment shall not in any manner or to any extent prejudice the
banks or companies paying it, or be taken as a waiver of any legal right which they have
in the premises."
"Second. In addition to making the above payments, the said banks and companies,
save those selected to test the question involved, shall each lend to the sinking fund a
sum which, added to said payment, will equal four percentum of its gross earnings
during the year 1893, and the sinking fund will execute for said loans its obligations,
agreeing to repay the same, with interest at four percentum per annum, when and if it
shall be finally adjudged by the court of last resort that said banks or companies are not
liable to pay the license fee required by the ordinance aforesaid; but if it is finally
adjudged that they are liable to pay said license fee, then the said loan shall be taken
and deemed as a payment of said license fee, and the obligation to repay the same
shall be void."
"Third. The banks or companies selected to test the question involved will each lend the
sinking fund a sum equal to four percentum of their gross earnings for the year 1893,
and
will receive therefor the obligations of the sinking fund as above described."
"Fourth. This arrangement is to be entered into with the understanding that the said
banks and companies will institute without delay and diligently prosecute such actions
as may be necessary to settle and adjudge the right and liabilities of the parties in the
premises, and pending such proceedings, the sinking fund will not prosecute them, or
any of them, for doing business without license."
"Stipulation between the City of Louisville, the Commissioners of the Sinking Fund of
the City of Louisville, and the Banks, Trust, and Title Companies of the City of
Louisville,"
"First. That in February, 1894, it was agreed between the City of Louisville and the
board of sinking fund commissioners, acting together in the interest of the said city, and
the various banks, trust and title companies, acting through their committee, to-wit,
Messrs. Thomas L. Barrett, John H. Leathers, and George W. Swearingen, and their
counsel, to-wit, Messrs. Humphrey & Davie and Helm & Bruce, that the question of the
liability of said banks and trust and title companies to pay municipal taxes, either license
or ad valorem,otherwise than as provided by the revenue law, commonly known as the
'Hewitt Bill,' should be tested by appropriate litigation looking to that end. "
"Second. In order to effectually test the question as to all of said companies, they were
divided into three classes, it being understood that all who had accepted the provisions
of the said Hewitt Bill would fall in one or the other of the classes named, to-wit:"
"(B) Banks whose whose charters had been granted subsequent to 1856."
"It being understood that the trust and title companies which had accepted the
provisions of the Hewitt Bill would fall in class B, above named."
"It was distinctly understood and agreed at that time -- and this agreement was made for
the best interest of all parties to it -- that if any bank in any class should eventually fail to
establish the existence and validity of the contract which it was claimed was made
under the Hewitt Bill, that all of that class should thereafter regularly and promptly
submit to the existing laws and pay their taxes, and it was also agreed that if any bank
of any class should succeed in establishing a contract and the validity thereof under the
Hewitt Bill, that that should exempt all banks and companies falling within that class
from the payment of taxes except as provided in the Hewitt Bill."
"Fourth. On the faith of this agreement, all of the banks and companies aforesaid paid
into the sinking fund the amounts of taxes claimed against them under the terms and
conditions named in the minutes of the sinking fund commissioners of February 13,
1894, an attested copy of which is hereto attached as part hereof; but at a later date,
and in further
reliance upon said agreement, all said banks and companies, except those actually
involved in the test cases, paid the whole of the amount of taxes claimed as against
them by the City of Louisville, without reservation, until the question thus raised should
be finally disposed of."
"Approved:"
"C. H. Gibson"
"Huston Quinn"
"Arthur Peter"
"M. McLoughlin"
The Louisville Banking Company was one of the banks which brought an action for the
purpose of testing the question of its liability to taxation. The charter of that company
was granted subsequent to the year 1856, and in that respect it was like the defendant
bank. It also claimed to have accepted the provisions of the Hewitt Act. In the litigation
which followed, the Louisville Banking Company was adjudged by the Court of Appeals
of Kentucky to have an irrepealable contract, throughout its charter existence, to be
taxed under the Hewitt Act, and judgment pursuant to that adjudication was entered in
favor of that company. The complainant herein claimed the benefit of the foregoing
adjudication, and the circuit court allowed it, and gave judgment as follows:
"1. That the complainant is entitled to the benefit of the proceedings taken in the case
of Louisville Banking Company v. R. H. Thompson, Judge, etc., in the Jefferson Court of
Common Pleas, and the proceedings taken in said cause on appeal to the Court of
Appeals of Kentucky wherein the Louisville Banking Company was appellant, and the
said R. H. Thompson, judge, etc., and the City of Louisville, were appellees, to the
same extent as if the complainant had been a party to said proceedings. "
"(2) That it is res judicata between the complainant and the City of Louisville that the
complainant is entitled to be taxed under what is known as the 'Hewitt Revenue Law,'
and not otherwise, and it is therefore adjudged, ordered, and decreed that the
defendants Samuel H. Stone, Charles Findley, and George W. Long are perpetually
enjoined and restrained from making any assessment under the Act of November 11,
1892, or certifying the same, to the City of Louisville, upon any rights, properties, or
franchises, or shares of stock, of the complainant, and that any provisions of the
constitution of the State of Kentucky, and any provision of the said Act of November 11,
1892, or of the city charter, which may be construed as authorizing the levy or
assessment of any tax against the complainant, its rights, properties, or franchises,
other than as allowed by the said Hewitt Law, is, during the corporate existence of the
complainant, unconstitutional and void, and that the complainant and its shares of stock
are exempt from all other taxation whatsoever except as prescribed in the said Hewitt
Law, so long as said tax shall be paid during the corporate existence of complainant."
The defendants appealed directly to this Court from the judgment of the circuit court
under the provisions of section 5 of the act of 1891, 26 Stat. 826, because the case
involved the application of the Constitution of the United States and because a law of
the State of Kentucky was claimed to be in contravention of that Constitution.
SECOND DIVISION
SYNOPSIS
Respondent was charged with misconduct or malpractice and with
having committed misrepresentation as to exhibition of residence certificate. On
the malpractice charge respondent, in an action for partition against
complainant, impleaded certain persons in the case as plaintiffs although,
allegedly, he was not authorized to do so. Respondent explained, however, he
did so at the behest of their uncle who assured the former that said persons
were interested in the subject matter of the action and that four of them had
executed a special power of attorney designating the uncle as their
representative. On the misrepresentation charge, respondent allegedly
indicated in the jurat of a tenancy contract, as the residence certificate of an
affiant, the residence certificate corresponding to another person. Respondent
explained that the erroneous entry was a purely harmless, clerical or
typographical error.
The Supreme Court dismissed the malpractice charge, but severely
censured respondent for the falsehood which he had committed as regards to
the jurat and at the same time barred or disqualified him from acting as a notary
public for a period of one year.
SYLLABUS
RESOLUTION
AQUINO, J : p
SECOND DIVISION
RESOLUTION
AUSTRIA-MARTINEZ, J : p
||| (Uy v. Gonzales, A.C. No. 5280 (Resolution), [March 30, 2004])
FIRST DIVISION
SYNOPSIS
Declaring that the judge committed no abuse of discretion in denying
petitioner's motion for enforcement of attorney's lien, the Court of Appeals
dismissed petitioner's petition for certiorari. Hence, this action.
No one shall be unjustly enriched at the expense of another. A lawyer has
the right to be paid for the legal services he has extended to his client, which
compensation must be reasonable. A lawyer would be entitled to receive what he
merits for his services.
The trial court has the principal task of fixing the amount of attorney's fees.
Hence, the necessity of a hearing is beyond cavil.
As to petitioner's contention that it is entitled to a charging lien, the Court
held that a charging lien to be enforceable as security for the payment of attorney's
fees requires as a condition sine qua non a judgment for money and execution in
pursuance of such judgment secured in the main action by the attorney in favor of
his client. From the facts of the case, it would seem that petitioner had no hand in
the amicable settlement that occurred, nor did it ever obtain a favorable judgment
for its client.
CSIcHA
SYLLABUS
DECISION
PARDO, J : p
The Issue
The basic issue submitted for consideration of the Court is whether or not
petitioner is entitled to recover attorney's fees amounting to Twenty Six Million
Three Hundred Fifty Thousand Seven Hundred Seventy Nine Pesos and Ninety
One Centavos (P26,350,779.91) for handling the case for its
client Eastern Telecommunications Philippines, Inc. filed with the Regional Trial
Court, Makati, though its services were terminated in midstream and the client
directly compromised the case with the adverse party. dctai
The Facts
In giving due course to the petition, we carefully considered the facts
attendant to the case. On August 28, 1987, Eastern Telecommunications
Philippines, Inc. (ETPI) represented by the law firm San Juan, Africa, Gonzales
and San Agustin (SAGA), filed with the Regional Trial Court, Makati, a complaint
for recovery of revenue shares against Philippine Long Distance Telephone
Company (PLDT). Atty. Francisco D. Rilloraza, a partner of the firm appeared for
ETPI.
After ETPI rested its case, it paid SAGA the billed amount of One Hundred
Thousand Pesos (P100,000.00). On September 18, 1987, the trial court issued a
resolution granting ETPI's application for preliminary restrictive and mandatory
injunctions. During this period, SAGA was dissolved and four of the junior partners
formed the law firm Rilloraza, Africa, De Ocampo & Africa (RADA), which took over
as counsel in the case for ETPI. The latter signed a retainer agreement with
counsel dated October 1, 1987. 1
Petitioners presented the three aspects of the main case in the trial court.
First, the traffic revenue shares which ETPI sought to recover from PLDT in
accordance with the contract between them. Second, ETPI sought preventive
injunctive relief against the PLDT's threats to deny ETPI access to the Philippines
international gateway switch. Third, ETPI called this the "foreign
correspondentships aspect" where ETPI sought preventive injunctive relief against
PLDT's incursions and inducements directed at ETPI's foreign correspondents in
Hongkong, Taiwan and Singapore, to break their correspondentship contracts with
PLDT, using the threat of denying them access to the international gateway as
leverage.
In this connection, ETPI filed with the trial court two urgent motions for
restraining order, one on October 30, 1987 and another on November 4, 1987. As
the applications were not acted upon, ETPI brought the case up to the Court of
Appeals by petition for certiorari.
On June 28, 1988, petitioner received a letter from ETPI signed by E. M.
Villanueva, President and Chief Executive Officer. In substance, the letter stated
that ETPI was terminating the retainer contract dated October 1, 1987, effective
June 30, 1988.
On June 29, 1988, petitioner filed with the Regional Trial Court a notice of
attorney's lien, furnishing copies to the plaintiff ETPI, to the signatory of the
termination letter and PLDT. On the same date, petitioner additionally sent a letter
to ETPI attaching its partial billing statement. In its notice, RADA informed the court
that there were negotiations toward a compromise between ETPI and PLDT.
In April 1990, petitioner confirmed that indeed the parties arrived at an
amicable settlement and that the same was entered as a judgment. On April 26,
1990, petitioner filed a motion for the enforcement of attorney's lien with the
Regional Trial Court of Makati and then appraised the Supreme Court thereof by
manifestation. 2We noted the manifestation in a resolution dated July 23, 1990.
On May 24, 1990, PLDT filed with the trial court a manifestation that it is not
a party to nor in any manner involved in the attorney's lien being asserted by
Atty.Rilloraza for and in behalf of the law firm, 3 while ETPI filed its opposition
thereto on June 11, 1990.
The Lower Court's Ruling
The trial court in its resolution dated September 14, 1990 denied the motion
for enforcement of attorney's lien. Thus:
"WHEREFORE, premises considered, the court finds that the
Notice of Attorney's Lien filed by the law firm of Rilloraza, Africa, De
Ocampo and Africa has no basis in fact and in law, and therefore denies
the Motion for Enforcement of Attorney's Lien.dctai
"SO ORDERED.
"Makati, Metro Manila, September 4, 1990.
"(s/t) ZEUS C. ABROGAR
"Judge" 4
On October 10, 1990, petitioner filed with the trial court a notice of appeal
from the above-mentioned order to the Supreme Court. On November 6, 1990,
ETPI filed a Motion to Dismiss Appeal contending that the case could be brought
to the Supreme Court only via a petition for review on certiorari, not by a mere
notice of appeal. In an order dated January 16, 1991, the trial court dismissed
RADA's appeal.
The trial court said:
"There is no more regular appeal from the Regional Trial Court to
the Supreme Court. Under the amendment of Section 17 of the Judiciary
Act by R.A. 5440, orders and judgments of the Regional Trial Court may
be elevated to the Supreme Court only by petition for review on certiorari.
xxx xxx xxx
"Wherefore, premises considered, the order dated September 14,
1990 is hereby reconsidered and set aside. The Notice of Appeal filed by
movant RADA is dismissed.
"SO ORDERED.
"Given this 16th day of January, 1991, at Makati, Metro Manila.
"(s/t) ZEUS C. ABROGAR
"Judge" 5
Hence, on February 9, 1991, petitioner filed a petition for certiorari with the
Supreme Court, which we remanded to the Court of Appeals. The latter dismissed
the petition in a decision promulgated on November 14, 1991, 6 ruling that the
judge committed no abuse of discretion in denying petitioner's motion for
enforcement of attorney's lien. Thus:
"We therefore rule that respondent judge committed no abuse of
discretion, much less a grave one, in denying petitioner's motion for
enforcement of attorney's lien.
"Assuming that respondent judge committed an error in denying
petitioner's motion for enforcement of attorney's lien, it cannot be
corrected by certiorari.
"WHEREFORE, the writs prayed for are DENIED, and the petition
is hereby DISMISSED, with cost against petitioner.
"SO ORDERED.
"(s/t) REGINA G. ORDOÑEZ-BENITEZ
"Associate Justice"
"WE CONCUR:
"(s/t) JOSE A. R. MELO "(s/t) EMETERIO C. CUI
"Associate Justice "Associate Justice" 7
DISCUSSION
A. The Procedural Aspect
There is nothing sacrosanct about procedural rules, which are liberally
construed in order to promote their objectives and assist the parties in obtaining
just, speedy and inexpensive determination of every action or proceeding. 8 In an
analogous case, 9 we ruled that where the rigid application of the rules would
frustrate substantial justice, 10 or bar the vindication of a legitimate grievance, the
courts are justified in exempting a particular case from the operation of the rules.
In A-One Feeds, Inc. vs. Court of Appeals, we said —
"Litigations should, as much as possible, be decided on the merits
and not on technicality. Dismissal of appeals purely on technical grounds
is frowned upon, and the rules of procedure ought not to be applied in a
very rigid, technical sense, for they are adopted to help secure, not
override, substantial justice and thereby defeat their very claims. As has
been the constant ruling of this Court, every party litigant should be
afforded the amplest opportunity for the proper and just determination of
his cause, free from the constraints of technicalities." 11
A basic legal principle is that no one shall be unjustly enriched at the
expense of another. 12 This principle is one of the mainstays of every legal system
for centuries and which the Civil Code echoes:
"ARTICLE 22. Every person who through an act of performance by
another, or any other means, acquires or comes into possession of
something at the expense of the latter without just or legal ground, shall
return the same to him." 13
The Code Commission, its report, emphasized that:
"It is most needful that this ancient principle be clearly and
specifically consecrated in the proposed Civil Code to the end that in
cases not foreseen by the lawmaker, no one may unjustly benefit himself
to the prejudice of another. The German Civil Code has a similar provision
(Art. 812)." 14
With this in mind, one could easily understand why, despite technical
deficiencies, we resolved to give due course to this petition. More importantly, the
case on its face appears to be impressed with merit. LLjur
No costs.
SO ORDERED.
Davide, Jr., C.J., Kapunan and Ynares-Santiago, JJ., concur.
Melo, J., took no part.
EN BANC
SYLLABUS
DECISION
MALCOLM, J : p
FIRST DIVISION
RESOLUTION
TEEHANKEE, J : p
SECOND DIVISION
DECISION
FERNANDO, J : p
FIRST DIVISION
[G.R. No. L-33821. June 22, 1973.]
DECISION
CASTRO, J : p
EN BANC
SYLLABUS
DECISION
ROMERO, J : p
In the instant petition for mandamus and prohibition with prayer for the issuance
of a temporary restraining order, petitioner submits for the Court's adjudication
the twin issues of whether or not the Solicitor General neglected his public duty
by withdrawing as counsel for the Republic of the Philippines and the Presidential
Commission on Good Government (PCGG) in cases he had filed in court and
whether or not the PCGG acted without or in excess of jurisdiction in hiring
private lawyers as a result of such withdrawal of appearance.
The PCGG further asserts that the hiring of private lawyers is "not an ultra
vires" act but a "means by which (it) can effectively exercise its powers." It
emphasizes the fact that it hired private lawyers "only after the Office of the
Solicitor General had unilaterally withdrawn its appearance" for the PCGG in the
various pending PCGG-instituted cases. Its own Litigation Division, which was
constituted after the Solicitor General's withdrawal, is "sorely undermanned" but it
has to contend with "affluent and influential individuals and entities" who can
"afford to hire skilled lawyers and organize vast litigation networks." The PCGG
tried to seek the assistance of the Department of Justice and the Office of the
Government Corporate Counsel but only the former sent two additional
prosecutors to handle its cases. 14
The PCGG clarifies that its powers are circumscribed, not only by the executive
orders aforementioned but also by the inherent police power of the State. By
hiring private lawyers, it was merely trying to assist the President of the
Philippines in protecting the interest of the State. As such, it was acting as
an alter ego of the President and therefore, it was the Executive which
determined the necessity of engaging the services of private prosecutors.
Contending that "overwhelming necessity" impelled it to hire private lawyers, the
PCGG avers that inasmuch as the Central Bank of the Philippines or the
Philippine National Bank may engage the services of private lawyers, with more
reason may it be allowed to hire private prosecutors after it was abandoned by
the Solicitor General in the prosecution of the ill-gotten wealth cases.
Consequently, "the Solicitor General's withdrawal of assistance is tantamount to
his tacit approval of the PCGG's hiring of private prosecutors in replacement of
the solicitors handling the said civil cases." 15
The PCGG concludes that the reasonableness of the compensation for its hired
lawyers can hardly be questioned considering the expertise of said lawyers and
the complexity of the cases they would be handling for the PCGG. Thus, the
prayer for a preliminary injunction must be denied otherwise "the harm that would
be done would be far greater than the perceived mischief petitioner seeks to
prevent." 16
Solicitor General Francisco I. Chavez inhibits himself from appearing in this case
"considering that as far as the Office of the Solicitor General (OSG for brevity) is
concerned, the subject is a closed matter among the OSG, the PCGG and the
Courts." 17 In the comment filed by Assistant Solicitor General Edgardo L. Kilayko
and Solicitor Iderlina P. Pagunuran, the OSG sets out at length the history of the
PCGG from its creation until the filing in the Sandiganbayan of thirty-nine
(39) "prima faciecases" for ill-gotten wealth against former President Marcos and
his cronies. As suits and countersuits stemmed from the original thirty-nine (39)
civil cases, "the OSG had been put to a tremendous task and thus invariably in
urgent need of being consulted or informed by PCGG of the facts and
circumstances material to the prosecution and progress not only of the original
39 civil cases, but also of all kinds of 'incidents.'"
Nonetheless, the OSG lawyers faced the challenges and the odds if only to live
up to their task as "the best lawyers there are in the country." The OSG further
explains:18
"On many a time, however, the lack of the above-mentioned consultation
or information resulted in situations that rendered the OSG unavoidably
incapable of performing its functions and duties as lawyer of the
Government, not only as mandated upon it by law and as spelled out
in Orbos v. CSC, G.R. No. 92561, September 12, 1990, but also in
consonance with its office motto: 'Integrity In Advocacy.'
"Once the OSG argued before the Sandiganbayan that an asset was
under sequestration, only to be informed by the adverse party waving a
document before the Sandiganbayan Justices that the sequestration had
earlier been lifted, with a PCGG resolution, the document, to boot
(Razon case). Then, again, OSG argued, even before this Honorable
Court, that an ill-gotten asset had 'mysteriously' disappeared, only to be
informed by the Honorable Court, that a PCGG Commissioner had
earlier by resolution authorized the disposition of the asset (COCOFED
case). All the instances need not be enumerated here, as they are not of
meat and substance, even as OSG is rendered thereby a laughing stock
in its professionalism.
"As to matters that are of great pith and moment, suffice it to say that the
recent Benedicto 'compromise' agreement, not to mention the SMC-
UCPB Compromise settlement is sub judice or under advisement not
only of the Sandiganbayan but also of this Honorable Court in separate
'incidents,' and suffice it to state that the relationship, obtaining between
the Government offices/agencies and the Office of the Solicitor General
as counsel, is not at all like one that simply would obtain between private
client and private lawyer in private practice, although constant
consultation and advice are sine qua non in both types of relationship.
The relationship is rather one, created as it is by law, where imposed
upon OSG is the responsibility to present to the courts the position that
will uphold the best interest of the People, the Government and the
State, albeit the same may run counter to its client's position or route of
action. At any rate, the PCGG through nationwide TV broadcast and
print media, publicly announced that PCGG had dispensed with or
otherwise did not need the legal services of the Lawyer of the
Government, and thus on OSG descended, not the unmerited remark of
having 'abandoned' the ill-gotten wealth cases, but the time-honored
principle of impossibilium nulla obligatio est. i.e., there is no obligation to
do impossible things (Lim Co Chui v. Paredes, 47 Phil. 463), without in
any way casting any aspersion on the moral integrity of any
Commissioner or PCGG official, as made clear by the Solicitor General
to the President in a meeting with PCGG.
"Hence, in the light of all the foregoing circumstances, at rock-bottom
precisely so as not to prejudice 'the interest of the Government' (Orbos),
the Solicitor General withdrew as counsel for PCGG in all said cases by
filing a notice of 'Withdrawal of Appearance with Reservation.'"
In arguing that the instant petition should be dismissed, the OSG contends that
this case has become moot and academic as this very Court had resolved to
allow the withdrawal of appearance of the Solicitor General in all the cases
pending before it "with reservation, conformably with PD No. 478, Executive
Order No. 292,as well as the doctrine laid down in 'Orbos v. Civil Service
Commission, et al.,' G.R. No. 92561, September 12, 1990, . . ." 19 For its part, the
Sandiganbayan had also resolved that "the appearance of the Solicitor General
is deemed withdrawn to be substituted by the PCGG's legal panel." 20
The OSG maintains further that the instant petition does not present a case and
controversy as the petitioner himself does not even have a "court standing" and a
"litigable interest." All the petitioner seeks is an "advisory opinion." The OSG
asserts that the "incident" (referring to the Solicitor General's withdrawal of
appearance) should be distinguished from that in JPC Enterprise, Inc. v. Court of
Appeals, et al., 21 wherein the Assets Privatization Trust (APT) decided to appear
for itself because the law names the Minister of Justice only as its ex oficio legal
adviser while by itself it can file suits and institute proceedings and engage
external expertise in the fulfillment of its tasks. However, since the APT has no
personality of its own, it should have appeared through the Solicitor General. The
OSG argues that said "adversarial incident" is not present in this case.
In his reply to the comments of the PCGG and the OSG, the petitioner insists that
although as between the Solicitor General and the PCGG, this case may have
been rendered moot and academic, as between him on the one hand and the
Solicitor General and the PCGG on the other hand, a "real controversy" still
exists and the issues raised herein have not ceased to exist either. Moreover, a
judgment of prohibition and mandamus would have a "practical legal effect and
can be enforced." 22
Citing Miguel v. Zulueta, 23 and Tañada v. Tuvera, 24 petitioner asserts that he
has a standing in court because where a question of public right is involved and
the object of the mandamus is the enforcement of a public duty, the relator need
not show any legal or special interest in the result of the proceeding. It is
sufficient that, as a citizen, he is interested in having the laws executed and the
duty in question enforced.
The petitioner rebuts the PCGG's contention that its power to hire private lawyers
may be implied from its expressly enumerated powers. He asserts that
since P.D. No. 478 mandates that "the Solicitor General as law office of the
government with the duty to appear for the PCGG," no implication from the
express powers of (the) PCGG can stand against the language of P.D. No. 478.
On the other hand, the law regarding the PCGG and that regarding the Solicitor
General should be harmonized. 25
The Court considers these pleadings sufficient bases for resolving this petition
and, on account of the importance and imperativeness of the issues raised
herein, the filing of memoranda by the parties is dispensed with.
We shall, first of all, confront a preliminary issue interposed by the OSG —
whether or not this case has been rendered moot and academic by this Court's
resolution granting the Solicitor General's motion to withdraw appearance as
counsel in the several cases pending herein. It should be clarified that the
resolution had to be issued with the national interest in mind. Time was of the
essence and any hedging on the part of the PCGG and/or its counsel could, not
merely set back but prejudice, the government's all-out efforts to recover ill-
gotten wealth.
All these legal provisions ineluctably lead to no other conclusion but that under
the law of its creation and the complementary Rules, the law office of the PCGG,
as it is for the rest of the Government, is the Office of the Solicitor General.
Although the PCGG is "empowered to file and prosecute all cases investigated
by it" under Executive Orders Nos. 1 and 2, it does not thereby oust the Office of
the Solicitor General from its lawful mandate to represent the Government and its
agencies in any litigation, proceeding, investigation or matter requiring the
services of a lawyer. Moreover, such express grant of power to PCGG does not
imply that it may abdicate such power and turn over the prosecution of the cases
to private lawyers whom it may decide to employ. In those instances where
proceedings are to be conducted outside of the Philippines, the Solicitor General,
continuing to discharge his duties, may employ counsel to assist
him, 56 particularly because he may not be licensed to appear before the courts
in a foreign jurisdiction.
Under its own Rules and Regulations, specifically the provision aforequoted, the
PCGG certifies to the Solicitor General the cases for which it had found
reasonable ground to believe that certain assets and properties are ill-gotten
under Executive Orders Nos. 1 and 2. The Solicitor General shall then proceed
"in accordance with law."
Upon receipt of a case certified to him, the Solicitor General exercises his
discretion in the management of the case. He may start the prosecution of the
case by filing the appropriate action in court or he may opt not to file the case at
all. He may do everything within his legal authority but always conformably with
the national interest and the policy of the government on the matter at hand.
After filing a case, he may even move for its dismissal in the event that, along the
way, he realizes that prosecuting the case would not serve the government's
purposes. In other words, because he was appointed to the position on account
of his qualification as a man "learned in the law," the Solicitor General is
obligated to perform his functions and to perform them well. He may not,
however, abdicate his function through an arbitrary exercise of his discretion. We
find that a withdrawal of appearance on flimsy or petty grounds is tantamount to
withdrawing on no grounds at all and to a dereliction of duty.
The Office of the Solicitor General repeatedly invoked the ruling in Orbos v. Civil
Service Commission, 57 which hardly constitutes authority to uphold its position
with respect to the withdrawal of the Solicitor General in the instant case. On the
contrary, in said case, this Court struck down private respondent's motion to
disqualify the OSG from appearing for petitioner Department of Transportation
and Communications Secretary Orbos. At the risk of being repetitious, the parties
were reminded that under Section 1 of Presidential Decree No. 478 —
"The Office of the Solicitor General shall represent the Government of
the Philippines, its agencies and instrumentalities and its officials and
agents in any litigation, proceeding, investigation, or matter requiring the
services of a lawyer." (Underscoring supplied)
This Court clarified that even when "confronted with a situation where one
government office takes an adverse position against another government
agency, as in this case, the Solicitor General should not refrain from performing
his duty as the lawyer of the government. It is incumbent upon him to present to
the court what he considers would legally uphold the best interest of the
government although it may run counter to a client's position. In such an
instance, the government office adversely affected by the position taken by the
Solicitor General, if it still believes in the merit of its case may appear in its own
behalf through its legal personnel or representative."
The Court further pointed out that it is not entirely impossible that the Office of
the Solicitor General may take a position adverse to his clients like the Civil
Service Commission and the National Labor Relations Commission, among
others, and even the People of the Philippines. In such instances, however, it is
not proper for the Solicitor General to simply decline to handle the case or
arbitrarily withdraw therefrom. The Court enjoins him to "nevertheless manifest
his opinion and recommendations to the Court which is an invaluable aid in the
disposition of the case." 58
However, in those cases where a government agency declines the services of
the Solicitor General or otherwise fails or refuses to forward the papers of the
case to him for appropriate action, the Court categorically held that ". . . this
practice should be stopped." 59 By the same token, the Solicitor General should
not decline to appear in court to represent a government agency without just and
valid reason, especially the PCGG which is under the Office of the President, he
being a part of the Executive Department.
In the case at bar, the reason advanced by the Solicitor General for his motion to
withdraw his appearance as lawyer for the PCGG is that he has been, more than
once embarrassed in court and thereby made "a laughing stock in its (his)
professionalism." Examples are when the OSG lawyers betrayed ignorance in
open court of certain moves taken by the PCGG, such as the lifting of a
sequestration of an asset or when it was under the impression that an asset had
mysteriously disappeared only to be informed that "a PCGG Commissioner had
earlier by resolution authorized the disposition of said asset."
The last straw, as it were, was the public announcement through media by the
PCGG that it had "dispensed with or otherwise did not need the legal services of
the lawyer of the government." 60 It is evident that the withdrawal of the Solicitor
General was precipitated by institutional pique, the lawyers concerned having
allowed their collective pride to prevail over their sense of duty in protecting and
upholding the public interest.
One wistfully wishes that the OSG could have been as zealous in representing
the PCGG as it was in appearing for the head of their office, the Solicitor
General, in a civil suit for damages filed against him in a Regional Trial Court
arising from allegedly defamatory remarks uttered by him.
Such enthusiasm, according to this Court, was misplaced. For Section 1
of Presidential Decree No. 478 which authorizes the OSG to represent the
Government of the Philippines, its agencies and instrumentalities and its officials
and agents in any litigation, admits of an exception, and that is, it stops short of
representing "public official at any stage of a criminal case or in a civil suit for
damages arising from a felony." 61
In instances such as the above, the OSG can, with reason, withdraw its
representation even if it has already entered its appearance. But the Solicitor
General, as the officially-mandated lawyer of the Government, is not empowered
to take a similar step on the basis of a petty reason like embarrassment, as that
to which the individual lawyers assigned to appear for their office were subjected.
Had they not been too preoccupied with their personal feelings, they could have
checked themselves in time. For a sense of professional responsibility and
proper decorum would dictate that they distinguish between the institution which,
from the very beginning, had been constituted as the law office of the
Government and the individuals through whom its powers and duties are
exercised. No emotions, of whatever kind and degree, should be allowed to
becloud their high sense of duty and commitment to country and people.
The OSG itself admitted refraining from citing other incidents as additional bases
for the Solicitor General's withdrawal "as they are not of meat and substance" but
apparently, their overwhelming sense of shame overcame them as the OSG was
"rendered thereby a laughing stock in its professionalism." 62
Now a word on the incidents that allegedly caused humiliation to the OSG
lawyers, thus provoking the Solicitor General into withdrawing his appearance as
counsel for the PCGG. No litigation can be assured of success if counsel does
not enjoy the confidence of his client. This is manifested by, among other things,
holding regular, constant and untrammeled consultations with each other. Who
can say but that if the communication lines had been kept open between the
OSG and the PCGG, no surprises would have been sprung on the former by the
latter in open court?
Petitioner's claim that the Solicitor General could not withdraw his appearance as
lawyer of PCGG inasmuch as he had neither the consent of his client nor the
authority from the court, applying the pertinent provisions of the Rules of Court, is
not well-taken. Here is no ordinary lawyer-client relationship. Let it be
remembered that the client is no less than the Republic of the Philippines in
whom the plenum of sovereignty resides. Whether regarded as an abstract entity
or an ideal person, it is to state the obvious that it can only act through the
instrumentality of the government which, according to the Administrative Code of
1987, refers to the "corporate governmental entity through which the functions of
government are exercised throughout the Philippines . . ." 63 And the OSG is, by
law, constituted the law office of the Government whose specific powers and
functions include that of representing the Republic and/or the people before any
court in any action which affects the welfare of the people as the ends of justice
may require.
Indeed, in the final analysis, it is the Filipino people as a collectivity that
constitutes the Republic of the Philippines. Thus, the distinguished client of the
OSG is the people themselves of which the individual lawyers in said office are a
part.
In order to cushion the impact of his untimely withdrawal of appearance which
might adversely affect the case, the Solicitor General has offered "to submit his
comment/observation on incidents/matters pending with this Honorable Court, if
called for by circumstances in the interest of the government or if he is so
required by the court." However, as correctly pointed out by the petitioner, while
the Solicitor General may be free to express his views and comments before the
Court in connection with a case he is handling, he may not do so anymore after
he has formally expressed his refusal to appear therein. For by then, he has lost
his standing in court. Unless his views are sought by the court, the Solicitor
General may not voluntarily appear in behalf of his client after his withdrawal
from the case; otherwise, such reappearance would constitute a blatant
disregard for court rules and procedure, and that, on the part of one who is
presumed to be "learned in the law."
In the face of such express refusal on the part of the Solicitor General to continue
his appearance as counsel of the PCGG in the cases to recover the ill-gotten
wealth of the Filipino people from the Marcoses and their cronies, the PCGG has
had to employ the services of a group of private attorneys lest the national
interest be prejudiced. Were this Court to allow such action to remain
unchallenged, this could well signal the laying down of the novel and
unprecedented doctrine that the representation by the Solicitor General of the
Government enunciated by law is, after all, not mandatory but merely directory.
Worse, that this option may be exercised on less than meritorious grounds; not
on substance but on whimsy, depending on the all too human frailties of the
lawyers in the OSG assigned to a particular case. Under such circumstances, it
were better to repeal the law than leave the various government agencies, all
dependent on the OSG for legal representation, in a condition of suspenseful
uncertainty. With every looming legal battle, they will be speculating whether they
can rely on the Solicitor General to defend the Government's interest or whether
they shall have to depend on their own "in-house" resources for legal assistance.
The Court is firmly convinced that, considering the spirit and the letter of the law,
there can be no other logical interpretation of Sec. 35 of the Administrative
Code than that it is, indeed, mandatory upon the OSG to "represent the
Government of the Philippines, its agencies and instrumentalities and its officials
and agents in any litigation, proceeding, investigation or matter requiring the
services of a lawyer."
Sound management policies require that the government's approach to legal
problems and policies formulated on legal issues be harmonized and coordinated
by a specific agency. The government owes it to its officials and their respective
offices, the political units at different levels, the public and the various sectors,
local and international, that have dealings with it, to assure them of a degree of
certitude and predictability in matters of legal import.
From the historical and statutory perspectives detailed earlier in this ponencia, it
is beyond cavil that it is the Solicitor General who has been conferred the
singular honor and privilege of being the "principal law officer and legal defender
of the Government." One would be hard put to name a single legal group or law
firm that can match the expertise, experience, resources, staff and prestige of the
OSG which were painstakingly built up for almost a century.
Moreover, endowed with a broad perspective that spans the legal interests of
virtually the entire government officialdom, the OSG may be expected to
transcend the parochial concerns of a particular client agency and instead,
promote and protect the public weal. Given such objectivity, it can discern,
metaphorically speaking, the panoply that is the forest and not just the individual
trees. Not merely will it strive for a legal victory circumscribed by the narrow
interests of the client office or official, but as well, the vast concerns of the
sovereign which it is committed to serve.
In light of the foregoing, the Solicitor General's withdrawal of his appearance on
behalf of the PCGG was beyond the scope of his authority in the management of
a case. As a public official, it is his sworn duty to provide legal services to the
Government, particularly to represent it in litigations. And such duty may be
enjoined upon him by the writ of mandamus. Such order, however, should not be
construed to mean that his discretion in the handling of his cases may be
interfered with. The Court is not compelling him to act in a particular
way. 64 Rather, the Court is directing him to prevent a failure of justice 65
resulting from his abandonment in midstream of the cause of the PCGG and the
Republic and ultimately, of the Filipino people.
In view of the foregoing, there need be no proof adduced that the petitioner has a
personal interest in the case, as his petition is anchored on the right of the
people, through the PCGG and the Republic, to be represented in court by the
public officer duly authorized by law. The requirement of personal interest is
satisfied by the mere fact that the petitioner is a citizen and hence, part of the
public which possesses the right. 66
The writ of prohibition, however, may not be similarly treated and granted in this
petition. The said writ, being intended to prevent the doing of some act that is
about to be done, it may not provide a remedy for acts which are already fait
accompli. 67 Having been placed in a situation where it was constrained to hire
private lawyers if the Republic's campaign to legally recover the wealth amassed
by the Marcoses, their friends and relatives was to prosper, the PCGG's action is
justified. However, it was not entirely blameless. Its failure to coordinate closely
with the Solicitor General has spawned the incidents which culminated in the
withdrawal of the latter from appearing as counsel in its cases.
WHEREFORE, the petition for a writ of mandamus is hereby GRANTED. The
Solicitor General is DIRECTED to immediately re-enter his appearance in the
cases wherein he had filed a motion to withdraw appearance and the PCGG
shall terminate the services of the lawyers it had employed but not before paying
them the reasonable fees due them in accordance with rules and regulations of
the Commission on Audit.
This decision is immediately executory.
SO ORDERED.
Narvasa, C. J., Melencio-Herrera, Gutierrez, Jr., Cruz, Paras, Padilla, Bidin,
Griño-Aquino, Medialdea, Regalado, Davide, Jr. and Nocon, JJ., concur.
Feliciano, J., concurs in the result.
||| (Gonzales v. Chavez, G.R. No. 97351, [February 4, 1992], 282 PHIL 858-892)
EN BANC
SYLLABUS
RESOLUTION
FERNANDO, J : p
This administrative proceeding was started by Pedro Oparel, Sr., who identified
himself as a pauper in his complaint filed with this Court on August 27, 1970
against respondent Dominador Abaria, a member of the Philippine Bar. The
charge was that respondent, whose services were retained to assist complainant
recover damages from his employer for injuries suffered, acted dishonestly.
Apparently, a settlement was reached, complainant having been made to sign a
receipt in the sum of P500.00 for his claim, out of which was deducted P55.00 as
attorney's fees, when the truth, according to the complaint, was that respondent
did receive the much larger amount of P5,000.00. In a resolution of September 14,
1970, the respondent was required to file an answer within ten days from notice. It
was duly filed on October 19, 1970 with a vehement denial on the part of the
respondent, alleging that the complaint was "irresponsible, baseless and [should]
not merit even the scantiest consideration" of this Court. He further alleged that
while complainant was asking only for P200.00, he was able to secure a settlement
from the employer in the sum of P500.00, admitting that he was given as fees the
aforesaid amount of P55.00. He accounted for the alleged sum of P5,000.00 by
stating that P3,500.00 was spent by the employer for plaintiff's operation and
medical bills, another P1,000.00 given to complainant's family during his
confinement in the hospital, and then the P500.00 received in cash by way of
additional settlement. He prayed that the complaint be dismissed.
This Court, in a resolution of October 23, 1970, referred the matter to the Solicitor
General for investigation, report and recommendation. Such report and
recommendation was submitted on June 2, 1971. It was therein stated that the city
fiscal of Bacolod City, who was designated to act as investigator, as the parties
were residents of the place, submitted on March 2, 1971 a report recommending
dismissal due to the desistance of complainant. It appeared that when the case
was called for investigation on February 17, 1971, the complainant manifested that
he was no longer interested in pushing through his complaint against respondent.
In his affidavit of desistance, he admitted that the administrative charge arose out
of a misunderstanding between him and respondent. He likewise admitted that
there was no deception practiced on him by respondent when he was made to sign
the affidavit of September 20, 1966 wherein it appeared that the amount received
by him was P500.00, no mention being made therein of the other P4,500.00 which,
as noted in the answer of respondent, consisted of P3,500.00 for expenses
incurred for complainant's operation and medical bills and P1,000.00 given to his
family for support while he was staying in the hospital. The Solicitor General
agreed with such a recommendation and prayed that the case be dismissed.
While it would appear that under the circumstances no case lies against
respondent Dominador Abaria, it is not amiss to impress on members of the Bar
that the utmost care be taken to minimize occasions for any misunderstanding
between them and their clients. The relationship being one of confidence, there is
ever present the need for the latter being adequately and fully informed of the mode
and manner in which their interest is defended. They should not be left in the dark.
They are entitled to the fullest disclosure of why certain steps are taken and why
certain matters are either included or excluded from the documents they are made
to sign. It is only thus that their faith in counsel may remain unimpaired.
Where, as did happen here, the client happens to be poor and unlettered, seeking
to enforce what he considers his just demands against an employer, it is even
more imperative that matters be explained to him with all precision and clarity.
More than that, no effort should be spared for him to get fully what he is entitled to
under the law. The same zeal should characterize a lawyer's efforts as when he is
defending the rights of property. As it is, there is even the fear that a lawyer works
harder when he appears for men of substance. To show how unfounded is such a
suspicion he must exert his utmost, whoever be his client.
More specifically, in a case like the present, he should not invite loss of trust by
inadvertence or even by a failure to use the simplest and most understandable
language in communicating matters. For he may lend himself to the suspicion that
he is lacking in candor and may be taking undue advantage of his client for his
own profit and advantage in any dealing with the adverse party. At any rate, with
complainant having been satisfied with the explanation of respondent, he could not
be justly charged of being recreant to his trust for personal gain. The dismissal of
this case is therefore warranted.
WHEREFORE, the administrative case filed by Pedro Oparel, Sr. against
respondent Dominador Abaria is dismissed.
Concepcion, C.J., Reyes, J.B.L., Makalintal, Zaldivar, Castro, Teehankee,
Barredo and Makasiar, JJ., concur.
Villamor, J., took no part.
Dizon, J., is on official leave.
(Oparel, Sr. v. Abaria, A.C. No. 959 (Resolution), [July 30, 1971], 148-B PHIL
|||
109-112)