G.R. No.

L-19450

May 27, 1965

THE
PEOPLE
OF
THE
PHILIPPINES, plaintiff-appellee,
vs.
SIMPLICIO VILLANUEVA, defendant-appellant.
Office
of
the
Solicitor
General
Magno T. Buese for defendant-appellant.

for

plaintiff-appellee.

PAREDES, J.:
On September 4, 1959, the Chief of Police of Alaminos, Laguna, charged
Simplicio Villanueva with the Crime of Malicious Mischief before the Justice of
the Peace Court of said municipality. Said accused was represented by
counsel de officio but later on replaced by counsel de parte. The complainant in
the same case was represented by City Attorney Ariston Fule of San Pablo City,
having entered his appearance as private prosecutor, after securing the
permission of the Secretary of Justice. The condition of his appearance as such,
was that every time he would appear at the trial of the case, he would be
considered on official leave of absence, and that he would not receive any
payment for his services. The appearance of City Attorney Fule as private
prosecutor was questioned by the counsel for the accused, invoking the case
of Aquino,
et
al.
vs.
Blanco,
et
al.,
L-1532, Nov. 28, 1947, wherein it was ruled that "when an attorney had been
appointed to the position of Assistant Provincial Fiscal or City Fiscal and therein
qualified, by operation of law, he ceased to engage in private law practice."
Counsel then argued that the JP Court in entertaining the appearance of City
Attorney Fule in the case is a violation of the above ruling. On December 17,
1960 the JP issued an order sustaining the legality of the appearance of City
Attorney Fule.
Under date of January 4, 1961, counsel for the accused presented a "Motion to
Inhibit Fiscal Fule from Acting as Private Prosecutor in this Case," this time
invoking Section 32, Rule 27, now Sec. 35, Rule 138, Revised Rules of Court,
which bars certain attorneys from practicing. Counsel claims that City Attorney
Fule falls under this limitation. The JP Court ruled on the motion by upholding
the right of Fule to appear and further stating that he (Fule) was not actually
enagaged in private law practice. This Order was appealed to the CFI of Laguna,
presided by the Hon. Hilarion U. Jarencio, which rendered judgment on
December 20, 1961, the pertinent portions of which read:
The present case is one for malicious mischief. There being no
reservation by the offended party of the civil liability, the civil action

was deemed impliedly instituted with the criminal action. The offended
party had, therefore, the right to intervene in the case and be
represented by a legal counsel because of her interest in the civil
liability of the accused.
Sec. 31, Rule 127 of the Rules of Court provides that in the court of a
justice of the peace a party may conduct his litigation in person, with
the aid of an agent or friend appointed by him for that purpose, or with
the aid of an attorney. Assistant City Attorney Fule appeared in the
Justice of the Peace Court as an agent or friend of the offended party. It
does not appear that he was being paid for his services or that his
appearance was in a professional capacity. As Assistant City Attorney of
San Pablo he had no control or intervention whatsoever in the
prosecution of crimes committed in the municipality of Alaminos,
Laguna, because the prosecution of criminal cases coming from
Alaminos are handled by the Office of the Provincial Fiscal and not by
the City Attornev of San Pablo. There could be no possible conflict in the
duties of Assistant City Attorney Fule as Assistant City Attorney of San
Pablo and as private prosecutor in this criminal case. On the other hand,
as already pointed out, the offended party in this criminal case had a
right to be represented by an agent or a friend to protect her rights in
the civil action which was impliedly instituted together with the criminal
action.
In view of the foregoing, this Court holds that Asst. City Attorney Ariston
D. Fule may appear before the Justice of the Peace Court of Alaminos,
Laguna as private prosecutor in this criminal case as an agent or a
friend of the offended party.
WHEREFORE, the appeal from the order of the Justice of the Peace Court
of Alaminos, Laguna, allowing the apprearance of Ariston D. Fule as
private prosecutor is dismissed, without costs.
The above decision is the subject of the instant proceeding.
The appeal should be dismissed, for patently being without merits.1wph1.t
Aside from the considerations advanced by the learned trial judge, heretofore
reproduced, and which we consider plausible, the fallacy of the theory of
defense counsel lies in his confused interpretation of Section 32 of Rule 127
(now Sec. 35, Rule 138, Revised Rules), which provides that "no judge or other
official or employee of the superior courts or of the office of the Solicitor
General, shall engage in private practice as a member of the bar or give

Page 1 of 82

professional advice to clients." He claims that City Attorney Fule, in appearing

as private prosecutor in the case was engaging in private practice. We believe
that the isolated appearance of City Attorney Fule did not constitute private
practice within the meaning and contemplation of the Rules. Practice is more
than an isolated appearance, for it consists in frequent or customary actions, a
succession of acts of the same kind. In other words, it is frequent habitual
exercise (State vs. Cotner, 127, p. 1, 87 Kan. 864, 42 LRA, M.S. 768). Practice of
law to fall within the prohibition of statute has been interpreted as customarily
or habitually holding one's self out to the public, as customarily and demanding
payment for such services (State vs. Bryan, 4 S.E. 522, 98 N.C. 644, 647). The
appearance as counsel on one occasion is not conclusive as determinative of
engagement in the private practice of law. The following observation of the
Solicitor General is noteworthy:
Essentially, the word private practice of law implies that one must have
presented himself to be in the active and continued practice of the legal
profession and that his professional services are available to the public
for a compensation, as a source of his livelihood or in consideration of
his said services.
For one thing, it has never been refuted that City Attorney Fule had been given
permission by his immediate superior, the Secretary of Justice, to represent the
complainant in the case at bar, who is a relative.
CONFORMABLY WITH ALL THE FOREGOING, the decision appealed from should
be, as it is hereby affirmed, in all respects, with costs against appellant..
G.R. No. 100113 September 3, 1991
RENATO
CAYETANO, petitioner,
vs.
CHRISTIAN MONSOD, HON. JOVITO R. SALONGA, COMMISSION ON
APPOINTMENT, and HON. GUILLERMO CARAGUE, in his capacity as
Secretary of Budget and Management, respondents.
Renato L. Cayetano for and in his own behalf.
Sabina E. Acut, Jr. and Mylene Garcia-Albano co-counsel for petitioner.

PARAS, J.:p

We are faced here with a controversy of far-reaching proportions. While

ostensibly only legal issues are involved, the Court's decision in this case would
indubitably have a profound effect on the political aspect of our national
existence.
The 1987 Constitution provides in Section 1 (1), Article IX-C:
There shall be a Commission on Elections composed of a
Chairman and six Commissioners who shall be natural-born
citizens of the Philippines and, at the time of their appointment,
at least thirty-five years of age, holders of a college degree, and
must not have been candidates for any elective position in the
immediately preceding -elections. However, a majority thereof,
including the Chairman, shall be members of the Philippine Bar
who have been engaged in the practice of law for at least ten
years. (Emphasis supplied)
The aforequoted provision is patterned after Section l(l), Article XII-C of the 1973
Constitution which similarly provides:
There shall be an independent Commission on Elections composed of a
Chairman and eight Commissioners who shall be natural-born citizens of the
Philippines and, at the time of their appointment, at least thirty-five years of
age and holders of a college degree. However, a majority thereof, including the
Chairman, shall be members of the Philippine Bar who have been engaged in
the practice of law for at least ten years.' (Emphasis supplied)
Regrettably, however, there seems to be no jurisprudence as to what
constitutes practice of law as a legal qualification to an appointive office.
Black defines "practice of law" as:
The rendition of services requiring the knowledge and the
application of legal principles and technique to serve the
interest of another with his consent. It is not limited to
appearing in court, or advising and assisting in the conduct of
litigation, but embraces the preparation of pleadings, and other
papers incident to actions and special proceedings,
conveyancing, the preparation of legal instruments of all kinds,
and the giving of all legal advice to clients. It embraces all
advice to clients and all actions taken for them in matters
connected with the law. An attorney engages in the practice of
law by maintaining an office where he is held out to be-an

Page 2 of 82

attorney, using a letterhead describing himself as an attorney,

counseling clients in legal matters, negotiating with opposing
counsel about pending litigation, and fixing and collecting fees
for services rendered by his associate. (Black's Law Dictionary,
3rd ed.)
The practice of law is not limited to the conduct of cases in court. (Land Title
Abstract and Trust Co. v. Dworken,129 Ohio St. 23, 193 N.E. 650) A person is
also considered to be in the practice of law when he:
... for valuable consideration engages in the business of
advising person, firms, associations or corporations as to their
rights under the law, or appears in a representative capacity as
an advocate in proceedings pending or prospective, before any
court, commissioner, referee, board, body, committee, or
commission constituted by law or authorized to settle
controversies and there, in such representative capacity
performs any act or acts for the purpose of obtaining or
defending the rights of their clients under the law. Otherwise
stated, one who, in a representative capacity, engages in the
business of advising clients as to their rights under the law, or
while so engaged performs any act or acts either in court or
outside of court for that purpose, is engaged in the practice of
law. (State ex. rel. Mckittrick v..C.S. Dudley and Co., 102 S.W. 2d
895, 340 Mo. 852)
This Court in the case of Philippine Lawyers Association v.Agrava, (105 Phil.
173,176-177) stated:
The practice of law is not limited to the conduct of cases
or litigation in court; it embraces the preparation of pleadings
and other papers incident to actions and special proceedings,
the management of such actions and proceedings on behalf of
clients before judges and courts, and in addition, conveying. In
general, all advice to clients, and all action taken for them in
mattersconnected
with
the
law incorporation
services,
assessment and condemnation services contemplating an
appearance before a judicial body, the foreclosure of a
mortgage, enforcement of a creditor's claim in bankruptcy and
insolvency proceedings, and conducting proceedings in
attachment, and in matters of estate and guardianship have
been held to constitute law practice, as do the preparation and
drafting of legal instruments, where the work done involves the

determination by the trained legal mind of the legal effect of

facts and conditions. (5 Am. Jr. p. 262, 263). (Emphasis supplied)
Practice of law under modem conditions consists in no small
part of work performed outside of any court and having no
immediate relation to proceedings in court. It embraces
conveyancing, the giving of legal advice on a large variety of
subjects, and the preparation and execution of legal instruments
covering an extensive field of business and trust relations and
other affairs. Although these transactions may have no direct
connection with court proceedings, they are always subject to
become involved in litigation. They require in many aspects a
high degree of legal skill, a wide experience with men and
affairs, and great capacity for adaptation to difficult and
complex situations. These customary functions of an attorney or
counselor at law bear an intimate relation to the administration
of justice by the courts. No valid distinction, so far as concerns
the question set forth in the order, can be drawn between that
part of the work of the lawyer which involves appearance in
court and that part which involves advice and drafting of
instruments in his office. It is of importance to the welfare of the
public that these manifold customary functions be performed by
persons possessed of adequate learning and skill, of sound
moral character, and acting at all times under the heavy trust
obligations to clients which rests upon all attorneys.
(Moran, Comments on the Rules of Court, Vol. 3 [1953 ed.] , p.
665-666, citing In re Opinion of the Justices [Mass.], 194 N.E.
313, quoted in Rhode Is. Bar Assoc. v. Automobile Service
Assoc. [R.I.] 179 A. 139,144). (Emphasis ours)
The University of the Philippines Law Center in conducting orientation briefing
for new lawyers (1974-1975) listed the dimensions of the practice of law in even
broader terms as advocacy, counselling and public service.
One may be a practicing attorney in following any line of
employment in the profession. If what he does exacts
knowledge of the law and is of a kind usual for attorneys
engaging in the active practice of their profession, and he
follows some one or more lines of employment such as this he is
a practicing attorney at law within the meaning of the statute.
(Barr v. Cardell, 155 NW 312)

Page 3 of 82

Practice of law means any activity, in or out of court, which requires the
application of law, legal procedure, knowledge, training and experience. "To
engage in the practice of law is to perform those acts which are characteristics
of the profession. Generally, to practice law is to give notice or render any kind
of service, which device or service requires the use in any degree of legal
knowledge or skill." (111 ALR 23)
The following records of the 1986 Constitutional Commission show that it has
adopted a liberal interpretation of the term "practice of law."
MR. FOZ. Before we suspend the session, may I
make a manifestation which I forgot to do during
our review of the provisions on the Commission
on Audit. May I be allowed to make a very brief
statement?
THE PRESIDING OFFICER (Mr. Jamir).
The Commissioner will please proceed.
MR. FOZ. This has to do with the qualifications
of the members of the Commission on Audit.
Among others, the qualifications provided for by
Section I is that "They must be Members of the
Philippine Bar" I am quoting from the
provision "who have been engaged in the
practice of law for at least ten years".
To avoid any misunderstanding which would result in excluding
members of the Bar who are now employed in the COA or
Commission on Audit, we would like to make the clarification
that this provision on qualifications regarding members of the
Bar does not necessarily refer or involve actual practice of law
outside the COA We have to interpret this to mean that as long
as the lawyers who are employed in the COA are using their
legal knowledge or legal talent in their respective work within
COA, then they are qualified to be considered for appointment
as members or commissioners, even chairman, of the
Commission on Audit.
This has been discussed by the Committee on Constitutional
Commissions and Agencies and we deem it important to take it
up on the floor so that this interpretation may be made

available whenever this provision on the qualifications as

regards members of the Philippine Bar engaging in the practice
of law for at least ten years is taken up.
MR. OPLE. Will Commissioner Foz yield to just
one question.
MR. FOZ. Yes, Mr. Presiding Officer.
MR. OPLE. Is he, in effect, saying that service in
the COA by a lawyer is equivalent to the
requirement of a law practice that is set forth in
the Article on the Commission on Audit?
MR. FOZ. We must consider the fact that the
work of COA, although it is auditing, will
necessarily involve legal work; it will involve
legal work. And, therefore, lawyers who are
employed in COA now would have the
necessary qualifications in accordance with the
Provision on qualifications under our provisions
on the Commission on Audit. And, therefore, the
answer is yes.
MR. OPLE. Yes. So that the construction given to
this is that this is equivalent to the practice of
law.
MR. FOZ. Yes, Mr. Presiding Officer.
MR. OPLE. Thank you.
... ( Emphasis supplied)
Section 1(1), Article IX-D of the 1987 Constitution, provides, among others, that
the Chairman and two Commissioners of the Commission on Audit (COA) should
either be certified public accountants with not less than ten years of auditing
practice, or members of the Philippine Bar who have been engaged in
the practice of law for at least ten years. (emphasis supplied)
Corollary to this is the term "private practitioner" and which is in many ways
synonymous with the word "lawyer." Today, although many lawyers do not

Page 4 of 82

engage in private practice, it is still a fact that the majority of lawyers are
private practitioners. (Gary Munneke, Opportunities in Law Careers [VGM Career
Horizons: Illinois], [1986], p. 15).
At this point, it might be helpful to define private practice. The term, as
commonly understood, means "an individual or organization engaged in the
business of delivering legal services." (Ibid.). Lawyers who practice alone are
often called "sole practitioners." Groups of lawyers are called "firms." The firm is
usually a partnership and members of the firm are the partners. Some firms
may be organized as professional corporations and the members called
shareholders. In either case, the members of the firm are the experienced
attorneys. In most firms, there are younger or more inexperienced salaried
attorneyscalled "associates." (Ibid.).
The test that defines law practice by looking to traditional areas of law practice
is essentially tautologous, unhelpful defining the practice of law as that which
lawyers do. (Charles W. Wolfram, Modern Legal Ethics [West Publishing Co.:
Minnesota, 1986], p. 593). The practice of law is defined as the performance of
any acts . . . in or out of court, commonly understood to be the practice of law.
(State Bar Ass'n v. Connecticut Bank & Trust Co., 145 Conn. 222, 140 A.2d 863,
870 [1958] [quoting Grievance Comm. v. Payne, 128 Conn. 325, 22 A.2d 623,
626 [1941]). Because lawyers perform almost every function known in the
commercial and governmental realm, such a definition would obviously be too
global to be workable.(Wolfram, op. cit.).
The appearance of a lawyer in litigation in behalf of a client is at once the most
publicly familiar role for lawyers as well as an uncommon role for the average
lawyer. Most lawyers spend little time in courtrooms, and a large percentage
spend their entire practice without litigating a case. (Ibid., p. 593). Nonetheless,
many lawyers do continue to litigate and the litigating lawyer's role colors much
of both the public image and the self perception of the legal profession. (Ibid.).
In this regard thus, the dominance of litigation in the public mind reflects
history, not reality. (Ibid.). Why is this so? Recall that the late Alexander SyCip, a
corporate lawyer, once articulated on the importance of a lawyer as a business
counselor in this wise: "Even today, there are still uninformed laymen whose
concept of an attorney is one who principally tries cases before the courts. The
members of the bench and bar and the informed laymen such as businessmen,
know that in most developed societies today, substantially more legal work is
transacted in law offices than in the courtrooms. General practitioners of law
who do both litigation and non-litigation work also know that in most cases they
find themselves spending more time doing what [is] loosely desccribe[d] as
business counseling than in trying cases. The business lawyer has been

described as the planner, the diagnostician and the trial lawyer, the surgeon.
I[t] need not [be] stress[ed] that in law, as in medicine, surgery should be
avoided where internal medicine can be effective." (Business Star, "Corporate
Finance Law," Jan. 11, 1989, p. 4).
In the course of a working day the average general practitioner wig engage in a
number of legal tasks, each involving different legal doctrines, legal skills, legal
processes, legal institutions, clients, and other interested parties. Even the
increasing numbers of lawyers in specialized practice wig usually perform at
least some legal services outside their specialty. And even within a narrow
specialty such as tax practice, a lawyer will shift from one legal task or role such
as advice-giving to an importantly different one such as representing a client
before an administrative agency. (Wolfram, supra, p. 687).
By no means will most of this work involve litigation, unless the lawyer is one of
the relatively rare types a litigator who specializes in this work to the
exclusion of much else. Instead, the work will require the lawyer to have
mastered the full range of traditional lawyer skills of client counselling, advicegiving, document drafting, and negotiation. And increasingly lawyers find that
the new skills of evaluation and mediation are both effective for many clients
and a source of employment. (Ibid.).
Most lawyers will engage in non-litigation legal work or in litigation work that is
constrained in very important ways, at least theoretically, so as to remove from
it some of the salient features of adversarial litigation. Of these special roles,
the most prominent is that of prosecutor. In some lawyers' work the constraints
are imposed both by the nature of the client and by the way in which the lawyer
is organized into a social unit to perform that work. The most common of these
roles are those of corporate practice and government legal service. (Ibid.).
In several issues of the Business Star, a business daily, herein below quoted are
emerging trends in corporate law practice, a departure from the traditional
concept of practice of law.
We are experiencing today what truly may be called a
revolutionary transformation in corporate law practice. Lawyers
and other professional groups, in particular those members
participating in various legal-policy decisional contexts, are
finding that understanding the major emerging trends in
corporation law is indispensable to intelligent decision-making.
Constructive adjustment to major corporate problems of today
requires an accurate understanding of the nature and

Page 5 of 82

implications of the corporate law research function

accompanied by an accelerating rate of information
accumulation. The recognition of the need for such improved
corporate legal policy formulation, particularly "model-making"
and "contingency planning," has impressed upon us the
inadequacy of traditional procedures in many decisional
contexts.
In a complex legal problem the mass of information to be
processed, the sorting and weighing of significant conditional
factors, the appraisal of major trends, the necessity of
estimating the consequences of given courses of action, and the
need for fast decision and response in situations of acute
danger have prompted the use of sophisticated concepts of
information flow theory, operational analysis, automatic data
processing,
and
electronic
computing
equipment.
Understandably, an improved decisional structure must stress
the predictive component of the policy-making process, wherein
a "model", of the decisional context or a segment thereof is
developed to test projected alternative courses of action in
terms of futuristic effects flowing therefrom.
Although members of the legal profession are regularly engaged
in predicting and projecting the trends of the law, the subject of
corporate finance law has received relatively little organized
and formalized attention in the philosophy of advancing
corporate legal education. Nonetheless, a cross-disciplinary
approach to legal research has become a vital necessity.
Certainly, the general orientation for productive contributions by
those trained primarily in the law can be improved through an
early introduction to multi-variable decisional context and the
various approaches for handling such problems. Lawyers,
particularly with either a master's or doctorate degree in
business administration or management, functioning at the
legal policy level of decision-making now have some
appreciation for the concepts and analytical techniques of other
professions which are currently engaged in similar types of
complex decision-making.
Truth to tell, many situations involving corporate finance
problems would require the services of an astute attorney
because of the complex legal implications that arise from each

and every necessary step in securing and maintaining the

business issue raised. (Business Star, "Corporate Finance Law,"
Jan. 11, 1989, p. 4).
In our litigation-prone country, a corporate lawyer is assiduously
referred to as the "abogado de campanilla." He is the "big-time"
lawyer, earning big money and with a clientele composed of the
tycoons and magnates of business and industry.
Despite the growing number of corporate lawyers, many people
could not explain what it is that a corporate lawyer does. For
one, the number of attorneys employed by a single corporation
will vary with the size and type of the corporation. Many smaller
and some large corporations farm out all their legal problems to
private law firms. Many others have in-house counsel only for
certain matters. Other corporation have a staff large enough to
handle most legal problems in-house.
A corporate lawyer, for all intents and purposes, is a lawyer who
handles the legal affairs of a corporation. His areas of concern
or jurisdiction may include, inter alia: corporate legal research,
tax laws research, acting out as corporate secretary (in board
meetings), appearances in both courts and other adjudicatory
agencies (including the Securities and Exchange Commission),
and in other capacities which require an ability to deal with the
law.
At any rate, a corporate lawyer may assume responsibilities
other than the legal affairs of the business of the corporation he
is representing. These include such matters as determining
policy and becoming involved in management. ( Emphasis
supplied.)
In a big company, for example, one may have a feeling of being
isolated from the action, or not understanding how one's work
actually fits into the work of the orgarnization. This can be
frustrating to someone who needs to see the results of his work
first hand. In short, a corporate lawyer is sometimes offered this
fortune to be more closely involved in the running of the
business.
Moreover, a corporate lawyer's services may sometimes be
engaged by a multinational corporation (MNC). Some large

Page 6 of 82

MNCs provide one of the few opportunities available to

corporate lawyers to enter the international law field. After all,
international law is practiced in a relatively small number of
companies and law firms. Because working in a foreign country
is perceived by many as glamorous, tills is an area coveted by
corporate lawyers. In most cases, however, the overseas jobs go
to experienced attorneys while the younger attorneys do their
"international practice" in law libraries. (Business Star,
"Corporate Law Practice," May 25,1990, p. 4).
This brings us to the inevitable, i.e., the role of the lawyer in the
realm of finance. To borrow the lines of Harvard-educated
lawyer Bruce Wassertein, to wit: "A bad lawyer is one who fails
to spot problems, a good lawyer is one who perceives the
difficulties, and the excellent lawyer is one who surmounts
them." (Business Star, "Corporate Finance Law," Jan. 11, 1989,
p. 4).
Today, the study of corporate law practice direly needs a "shot
in the arm," so to speak. No longer are we talking of the
traditional law teaching method of confining the subject study
to the Corporation Code and the Securities Code but an
incursion as well into the intertwining modern management
issues.
Such corporate legal management issues deal primarily with
three (3) types of learning: (1) acquisition of insights into
current advances which are of particular significance to the
corporate counsel; (2) an introduction to usable disciplinary
skins applicable to a corporate counsel's management
responsibilities; and (3) a devotion to the organization and
management of the legal function itself.
These three subject areas may be thought of as intersecting
circles, with a shared area linking them. Otherwise known as
"intersecting managerial jurisprudence," it forms a unifying
theme for the corporate counsel's total learning.
Some current advances in behavior and policy sciences affect
the counsel's role. For that matter, the corporate lawyer reviews
the globalization process, including the resulting strategic
repositioning that the firms he provides counsel for are required
to make, and the need to think about a corporation's; strategy

at multiple levels. The salience of the nation-state is being

reduced as firms deal both with global multinational entities and
simultaneously with sub-national governmental units. Firms
increasingly collaborate not only with public entities but with
each other often with those who are competitors in other
arenas.
Also, the nature of the lawyer's participation in decision-making
within the corporation is rapidly changing. The modem
corporate lawyer has gained a new role as a stakeholder in
some cases participating in the organization and operations of
governance through participation on boards and other decisionmaking roles. Often these new patterns develop alongside
existing legal institutions and laws are perceived as barriers.
These trends are complicated as corporations organize for
global operations. ( Emphasis supplied)
The practising lawyer of today is familiar as well with
governmental policies toward the promotion and management
of technology. New collaborative arrangements for promoting
specific technologies or competitiveness more generally require
approaches from industry that differ from older, more
adversarial relationships and traditional forms of seeking to
influence governmental policies. And there are lessons to be
learned
from
other
countries.
In
Europe, Esprit, Eureka and Race are examples of collaborative
efforts between governmental and business Japan's MITI is
world famous. (Emphasis supplied)
Following the concept of boundary spanning, the office of the
Corporate Counsel comprises a distinct group within the
managerial structure of all kinds of organizations. Effectiveness
of both long-term and temporary groups within organizations
has been found to be related to indentifiable factors in the
group-context interaction such as the groups actively revising
their knowledge of the environment coordinating work with
outsiders,
promoting
team
achievements
within
the
organization. In general, such external activities are better
predictors of team performance than internal group processes.
In a crisis situation, the legal managerial capabilities of the
corporate lawyer vis-a-vis the managerial mettle of corporations
are challenged. Current research is seeking ways both to

Page 7 of 82

anticipate effective managerial procedures and to understand

relationships of financial liability and insurance considerations.
(Emphasis supplied)
Regarding the skills to apply by the corporate counsel, three
factors are apropos:
First System Dynamics. The field of systems dynamics has been
found an effective tool for new managerial thinking regarding
both planning and pressing immediate problems. An
understanding of the role of feedback loops, inventory levels,
and rates of flow, enable users to simulate all sorts of
systematic problems physical, economic, managerial, social,
and psychological. New programming techniques now make the
system dynamics principles more accessible to managers
including corporate counsels. (Emphasis supplied)
Second Decision Analysis. This enables users to make better
decisions involving complexity and uncertainty. In the context
of a law department, it can be used to appraise the settlement
value of litigation, aid in negotiation settlement, and minimize
the cost and risk involved in managing a portfolio of cases.
(Emphasis supplied)
Third Modeling for Negotiation Management. Computer-based
models can be used directly by parties and mediators in all
lands of negotiations. All integrated set of such tools provide
coherent and effective negotiation support, including hands-on
on instruction in these techniques. A simulation case of an
international joint venture may be used to illustrate the point.
[Be this as it may,] the organization and management of the
legal function, concern three pointed areas of consideration,
thus:
Preventive Lawyering. Planning by lawyers requires special skills
that comprise a major part of the general counsel's
responsibilities. They differ from those of remedial law.
Preventive lawyering is concerned with minimizing the risks of
legal trouble and maximizing legal rights for such legal entities
at that time when transactional or similar facts are being
considered and made.

Managerial Jurisprudence. This is the framework within which

are undertaken those activities of the firm to which legal
consequences attach. It needs to be directly supportive of this
nation's evolving economic and organizational fabric as firms
change to stay competitive in a global, interdependent
environment. The practice and theory of "law" is not adequate
today to facilitate the relationships needed in trying to make a
global economy work.
Organization and Functioning of the Corporate Counsel's Office.
The general counsel has emerged in the last decade as one of
the most vibrant subsets of the legal profession. The corporate
counsel hear responsibility for key aspects of the firm's strategic
issues, including structuring its global operations, managing
improved relationships with an increasingly diversified body of
employees, managing expanded liability exposure, creating new
and varied interactions with public decision-makers, coping
internally with more complex make or by decisions.
This whole exercise drives home the thesis that knowing
corporate law is not enough to make one a good general
corporate counsel nor to give him a full sense of how the legal
system shapes corporate activities. And even if the corporate
lawyer's aim is not the understand all of the law's effects on
corporate activities, he must, at the very least, also gain a
working knowledge of the management issues if only to be able
to grasp not only the basic legal "constitution' or makeup of the
modem corporation. "Business Star", "The Corporate Counsel,"
April 10, 1991, p. 4).
The challenge for lawyers (both of the bar and the bench) is to
have more than a passing knowledge of financial law affecting
each aspect of their work. Yet, many would admit to ignorance
of vast tracts of the financial law territory. What transpires next
is a dilemma of professional security: Will the lawyer admit
ignorance and risk opprobrium?; or will he feign understanding
and risk exposure? (Business Star, "Corporate Finance law," Jan.
11, 1989, p. 4).
Respondent Christian Monsod was nominated by President Corazon C. Aquino to
the position of Chairman of the COMELEC in a letter received by the Secretariat
of the Commission on Appointments on April 25, 1991. Petitioner opposed the
nomination because allegedly Monsod does not possess the required

Page 8 of 82

qualification of having been engaged in the practice of law for at least ten
years.

accountability and the party-list system for the House of Representative. (pp.
128-129 Rollo) ( Emphasis supplied)

On June 5, 1991, the Commission on Appointments confirmed the nomination of

Monsod as Chairman of the COMELEC. On June 18, 1991, he took his oath of
office. On the same day, he assumed office as Chairman of the COMELEC.

Just a word about the work of a negotiating team of which Atty. Monsod used to
be a member.

Challenging the validity of the confirmation by the Commission on

Appointments of Monsod's nomination, petitioner as a citizen and taxpayer, filed
the instant petition for certiorari and Prohibition praying that said confirmation
and the consequent appointment of Monsod as Chairman of the Commission on
Elections be declared null and void.
Atty. Christian Monsod is a member of the Philippine Bar, having passed the bar
examinations of 1960 with a grade of 86-55%. He has been a dues paying
member of the Integrated Bar of the Philippines since its inception in 1972-73.
He has also been paying his professional license fees as lawyer for more than
ten years. (p. 124, Rollo)
After graduating from the College of Law (U.P.) and having hurdled the bar, Atty.
Monsod worked in the law office of his father. During his stint in the World Bank
Group (1963-1970), Monsod worked as an operations officer for about two years
in Costa Rica and Panama, which involved getting acquainted with the laws of
member-countries negotiating loans and coordinating legal, economic, and
project work of the Bank. Upon returning to the Philippines in 1970, he worked
with the Meralco Group, served as chief executive officer of an investment bank
and subsequently of a business conglomerate, and since 1986, has rendered
services to various companies as a legal and economic consultant or chief
executive officer. As former Secretary-General (1986) and National Chairman
(1987) of NAMFREL. Monsod's work involved being knowledgeable in election
law. He appeared for NAMFREL in its accreditation hearings before the Comelec.
In the field of advocacy, Monsod, in his personal capacity and as former CoChairman of the Bishops Businessmen's Conference for Human Development,
has worked with the under privileged sectors, such as the farmer and urban
poor groups, in initiating, lobbying for and engaging in affirmative action for the
agrarian reform law and lately the urban land reform bill. Monsod also made
use of his legal knowledge as a member of the Davide Commission, a quast
judicial body, which conducted numerous hearings (1990) and as a member of
the Constitutional Commission (1986-1987), and Chairman of its Committee on
Accountability of Public Officers, for which he was cited by the President of the
Commission, Justice Cecilia Muoz-Palma for "innumerable amendments to
reconcile government functions with individual freedoms and public

In a loan agreement, for instance, a negotiating panel acts as a

team, and which is adequately constituted to meet the various
contingencies that arise during a negotiation. Besides top
officials of the Borrower concerned, there are the legal officer
(such as the legal counsel), the finance manager, and
an operations officer (such as an official involved in negotiating
the contracts) who comprise the members of the team.
(Guillermo V. Soliven, "Loan Negotiating Strategies for
Developing Country Borrowers," Staff Paper No. 2, Central Bank
of the Philippines, Manila, 1982, p. 11). (Emphasis supplied)
After a fashion, the loan agreement is like a country's
Constitution; it lays down the law as far as the loan transaction
is concerned. Thus, the meat of any Loan Agreement can be
compartmentalized into five (5) fundamental parts: (1) business
terms; (2) borrower's representation; (3) conditions of closing;
(4) covenants; and (5) events of default. (Ibid., p. 13).
In the same vein, lawyers play an important role in any debt
restructuring program. For aside from performing the tasks of
legislative drafting and legal advising, they score national
development policies as key factors in maintaining their
countries' sovereignty. (Condensed from the work paper,
entitled "Wanted: Development Lawyers for Developing
Nations," submitted by L. Michael Hager, regional legal adviser
of the United States Agency for International Development,
during the Session on Law for the Development of Nations at
the Abidjan World Conference in Ivory Coast, sponsored by the
World Peace Through Law Center on August 26-31, 1973).
( Emphasis supplied)
Loan concessions and compromises, perhaps even more so
than purely renegotiation policies, demand expertise in the law
of contracts, in legislation and agreement drafting and in
renegotiation. Necessarily, a sovereign lawyer may work with an
international business specialist or an economist in the
formulation of a model loan agreement. Debt restructuring

Page 9 of 82

contract agreements contain such a mixture of technical

language that they should be carefully drafted and signed only
with the advise of competent counsel in conjunction with the
guidance of adequate technical support personnel. (See
International Law Aspects of the Philippine External Debts, an
unpublished dissertation, U.S.T. Graduate School of Law, 1987,
p. 321). ( Emphasis supplied)
A critical aspect of sovereign debt restructuring/contract
construction is the set of terms and conditions which
determines the contractual remedies for a failure to perform one
or more elements of the contract. A good agreement must not
only define the responsibilities of both parties, but must also
state the recourse open to either party when the other fails to
discharge an obligation. For a compleat debt restructuring
represents a devotion to that principle which in the ultimate
analysis is sine qua non for foreign loan agreements-an
adherence to the rule of law in domestic and international
affairs of whose kind U.S. Supreme Court Justice Oliver Wendell
Holmes, Jr. once said: "They carry no banners, they beat no
drums; but where they are, men learn that bustle and bush are
not the equal of quiet genius and serene mastery." (See Ricardo
J. Romulo, "The Role of Lawyers in Foreign Investments,"
Integrated Bar of the Philippine Journal, Vol. 15, Nos. 3 and 4,
Third and Fourth Quarters, 1977, p. 265).
Interpreted in the light of the various definitions of the term Practice of law".
particularly the modern concept of law practice, and taking into consideration
the liberal construction intended by the framers of the Constitution, Atty.
Monsod's past work experiences as a lawyer-economist, a lawyer-manager, a
lawyer-entrepreneur of industry, a lawyer-negotiator of contracts, and a lawyerlegislator of both the rich and the poor verily more than satisfy the
constitutional requirement that he has been engaged in the practice of law
for at least ten years.
Besides in the leading case of Luego v. Civil Service Commission, 143 SCRA 327,
the Court said:
Appointment is an essentially discretionary power and must be
performed by the officer in which it is vested according to his
best lights, the only condition being that the appointee should
possess the qualifications required by law. If he does, then the
appointment cannot be faulted on the ground that there are

others better qualified who should have been preferred. This is

a political question involving considerations of wisdom which
only the appointing authority can decide. (emphasis supplied)
No less emphatic was the Court in the case of (Central Bank v. Civil Service
Commission, 171 SCRA 744) where it stated:
It is well-settled that when the appointee is qualified, as in this
case, and all the other legal requirements are satisfied, the
Commission has no alternative but to attest to the appointment
in accordance with the Civil Service Law. The Commission has
no authority to revoke an appointment on the ground that
another person is more qualified for a particular position. It also
has no authority to direct the appointment of a substitute of its
choice. To do so would be an encroachment on the discretion
vested upon the appointing authority. An appointment is
essentially within the discretionary power of whomsoever it is
vested, subject to the only condition that the appointee should
possess the qualifications required by law. ( Emphasis supplied)
The appointing process in a regular appointment as in the case at bar, consists
of four (4) stages: (1) nomination; (2) confirmation by the Commission on
Appointments; (3) issuance of a commission (in the Philippines, upon
submission by the Commission on Appointments of its certificate of
confirmation, the President issues the permanent appointment; and (4)
acceptance e.g., oath-taking, posting of bond, etc. . . . (Lacson v. Romero, No. L3081, October 14, 1949; Gonzales, Law on Public Officers, p. 200)
The power of the Commission on Appointments to give its consent to the
nomination of Monsod as Chairman of the Commission on Elections is mandated
by Section 1(2) Sub-Article C, Article IX of the Constitution which provides:
The Chairman and the Commisioners shall be appointed by the
President with the consent of the Commission on Appointments
for a term of seven years without reappointment. Of those first
appointed, three Members shall hold office for seven years, two
Members for five years, and the last Members for three years,
without reappointment. Appointment to any vacancy shall be
only for the unexpired term of the predecessor. In no case shall
any Member be appointed or designated in a temporary or
acting capacity.

Page 10 of 82

Anent Justice Teodoro Padilla's separate opinion, suffice it to say

that his definition of the practice of law is the traditional or
stereotyped notion of law practice, as distinguished from the
modern concept of the practice of law, which modern
connotation is exactly what was intended by the eminent
framers of the 1987 Constitution. Moreover, Justice Padilla's
definition would require generally a habitual law practice,
perhaps practised two or three times a week and would
outlaw say, law practice once or twice a year for ten
consecutive years. Clearly, this is far from the constitutional
intent.
Upon the other hand, the separate opinion of Justice Isagani Cruz states that in
my written opinion, I made use of a definition of law practice which really means
nothing because the definition says that law practice " . . . is what people
ordinarily mean by the practice of law." True I cited the definition but only by
way of sarcasm as evident from my statement that the definition of law practice
by "traditional areas of law practice is essentially tautologous" or defining a
phrase by means of the phrase itself that is being defined.
Justice Cruz goes on to say in substance that since the law covers almost all
situations, most individuals, in making use of the law, or in advising others on
what the law means, are actually practicing law. In that sense, perhaps, but we
should not lose sight of the fact that Mr. Monsod is a lawyer, a member of the
Philippine Bar, who has been practising law for over ten years. This is different
from the acts of persons practising law, without first becoming lawyers.
Justice Cruz also says that the Supreme Court can even disqualify an elected
President of the Philippines, say, on the ground that he lacks one or more
qualifications. This matter, I greatly doubt. For one thing, how can an action or
petition be brought against the President? And even assuming that he is indeed
disqualified, how can the action be entertained since he is the incumbent
President?

interfere with the Commission's judgment. In the instant case, there is no

occasion for the exercise of the Court's corrective power, since no abuse, much
less a grave abuse of discretion, that would amount to lack or excess of
jurisdiction and would warrant the issuance of the writs prayed, for has been
clearly shown.
Additionally, consider the following:
(1) If the Commission on Appointments rejects a nominee by the
President, may the Supreme Court reverse the Commission, and
thus in effect confirm the appointment? Clearly, the answer is in
the negative.
(2) In the same vein, may the Court reject the nominee, whom
the Commission has confirmed? The answer is likewise clear.
(3) If the United States Senate (which is the confirming body in
the U.S. Congress) decides to confirma Presidential nominee, it
would be incredible that the U.S. Supreme Court would
still reverse the U.S. Senate.
Finally, one significant legal maxim is:
We must interpret not by the letter that killeth, but by the spirit
that giveth life.
Take this hypothetical case of Samson and Delilah. Once, the procurator of
Judea asked Delilah (who was Samson's beloved) for help in capturing Samson.
Delilah agreed on condition that
No blade shall touch his skin;
No blood shall flow from his veins.

We now proceed:
The Commission on the basis of evidence submitted doling the public hearings
on Monsod's confirmation, implicitly determined that he possessed the
necessary qualifications as required by law. The judgment rendered by the
Commission in the exercise of such an acknowledged power is beyond judicial
interference except only upon a clear showing of a grave abuse of discretion
amounting to lack or excess of jurisdiction. (Art. VIII, Sec. 1 Constitution). Thus,
only where such grave abuse of discretion is clearly shown shall the Court

When Samson (his long hair cut by Delilah) was captured, the procurator placed
an iron rod burning white-hot two or three inches away from in front of
Samson's eyes. This blinded the man. Upon hearing of what had happened to
her beloved, Delilah was beside herself with anger, and fuming with righteous
fury, accused the procurator of reneging on his word. The procurator calmly
replied: "Did any blade touch his skin? Did any blood flow from his veins?" The
procurator was clearly relying on the letter, not the spirit of the agreement.

Page 11 of 82

In view of the foregoing, this petition is hereby DISMISSED.

SO ORDERED.
A.M. No. 3360 January 30, 1990
PEOPLE
OF
THE
vs.
ATTY. FE T. TUANDA, respondent.

PHILIPPINES, complainant

(b) convicted respondent of violation of B.P. Blg. 22 in all three

(3) cases, and sentenced respondent to pay a fine of P6,000.00,
with subsidiary imprisonment in case of insolvency and to
indemnify the complainant in the amount of P5,400.00 in
Criminal Case No. 8538359;
to pay a fine of P 6,000.00, with subsidiary imprisonment in
case of insolvency and to indemnify the complainant in the
amount of P5,400.00, in Criminal Case No. 85-38360; and
to pay a fine of P16,000.00, with subsidiary imprisonment in
case of insolvency, and to indemnify the complainant in the
amount of P15,450.00, in Criminal Case No. 85-38361, and to
pay the costs in all three (3) cases.

PER CURIAM:
In a Motion to Lift Order of Suspension dated 12 July 1989, respondent Fe T.
Tuanda, a member of the Philippine Bar, asks this Court to lift the suspension
from the practice of law imposed upon her by a decision of the Court of Appeals
dated 17 October 1988 in C.A.-G.R. CR No. 05093.
On 17 December 1983, respondent received from one Herminia A. Marquez
several pieces of jewelry, with a total stated value of P36,000.00, for sale on a
commission basis, with the condition that the respondent would turn over the
sales proceeds and return the unsold items to Ms. Marquez on or before 14
February 1984. Sometime in February 1984, respondent, instead of returning
the unsold pieces of jewelry which then amounted to approximately P26,250.00,
issued three checks: (a) a check dated 16 February 1984 for the amount of
P5,400.00; (b) a check dated 23 February 1984 also for the amount of
P5,400.00; and (c) a check dated 25 February 1984 for the amount of
P15,450.00. Upon presentment for payment within ninety (90) days after their
issuance, all three (3) checks were dishonored by the drawee bank, Traders
Royal Bank, for insufficiency of funds. Notwithstanding receipt of the notice of
dishonor, respondent made no arrangements with the bank concerning the
honoring of checks which had bounced and made no effort to settle her
obligations to Ms. Marquez.
Consequently, four (4) informations were filed against respondent with the
Regional Trial Court of Manila: (a) one for estafa, docketed as Criminal Case No.
85-38358; and (b) three (3) for violation of B.P. Blg. 22, docketed respectively as
Criminal Cases Nos. 85-38359, 85-38360 and 85-38361. In due time, after trial,
the trial court rendered a decision dated 25 August 1987 which:
(a) acquitted respondent of the charge of estafa; and

On appeal, the Court of Appeals in C.A.-G.R. CR No. 05093 affirmed in toto the
decision of the trial court but, in addition, suspended respondent Tuanda from
the practice of law. The pertinent portion of the decision read as follows:
For reasons above stated and finding the evidence sufficient to
sustain the conviction, the judgment is hereby AFFIRMED
subject to this modification.
It appearing from the records that the accused Fe Tuanda is a
member of the Bar, and the offense for (sic) which she is found
guilty involved moral turpitude, she is hereby ordered
suspended from the practice of law and shall not practice her
profession until further action from the Supreme Court, in
accordance with Sections 27 and 28 of Rule 138 of the Rules of
Court. A copy of this decision must be forwarded to the
Supreme Court as required by Section 29 of the same Rule.
SO ORDERED.

On 16 December 1988, respondent filed a Notice of Appeal with the Court of

Appeals. The Court of Appeals, in a Resolution dated 9 January 1989, noted
respondent's Notice of Appeal and advised her "to address her Notice of Appeal
to the Honorable Supreme Court, the proper forum." On 1 February 1989,
respondent filed with this Court a Notice of Appeal.
In a Resolution dated 31 May 1989, the Supreme Court noted without action
respondent's Notice of Appeal and declared that the Court of Appeals' decision

Page 12 of 82

of 17 October 1988 had become final and executory upon expiration of the
period for filing a petition for review on certiorari on 16 December 1988. In that
Resolution, the Court found that respondent had lost her right to appeal
by certiorari when she posted with this Court a Notice of Appeal instead of filing
a petition for review on certiorari under Section 1, Rule 45 of the Revised Rules
of Court within the reglementary period.
In the instant Motion to Lift Order of Suspension, respondent states:
that suspension from the practice of law is indeed a harsh if not
a not painful penalty aggravating the lower court's penalty of
fine considering that accused-appellant's action on the case
during the trial on the merits at the lower court has always been
motivated purely by sincere belief that she is innocent of the
offense charged nor of the intention to cause damage to the
herein plaintiff-appellee.
We read the above statement as a claim by the respondent that, she had not
violated her oath as a member of the Philippine Bar upon the ground that when
she issued the checks which bounced, she did not intend to cause damage to
complainant Ms. Marquez.
The Court affirms the suspension from the practice of law imposed by the Court
of Appeals upon respondent Tuanda. The Court of Appeals correctly ruled that
"the offense [of] which she is found guilty involved moral turpitude." We should
add that violation of B.P. Blg. 22 is a serious criminal offense which deleteriously
affects public interest and public order. In Lozano v. Martinez, 2 the Court
explained the nature of the offense of violation of B.P. Blg. 22 in the following
terms:
xxx xxx xxx
The gravamen of the offense punished by B.P. Blg. 22 is the act
of making and issuing a worthless check or a check that is
dishonored upon its presentation for payment. . . . The thrust of
the law is to prohibit under pain of penal sanctions, the making
of worthless checks and putting them in circulation. Because of
its deleterious effects on the public interest, the practice is
prescribed by the law. The law punishes the act not as an
offense against property but an offense against public order.
xxx xxx xxx

The effects of the issuance of a worthless check transcends the

private interests of the parties directly involved in the
transaction and touches the interests of the community at
large. The mischief it creates is not only a wrong to the payee
or holder, but also an injury to the public. The harmful practice
of putting valueless commercial papers in circulation, multiplied
a thousandfold, can very well pollute the channels of trade and
commerce, injure the banking system and eventually hurt the
welfare of society and the public interest. 3(Italics supplied)
Respondent was thus correctly suspended from the practice of law because she
had been convicted of crimes involving moral turpitude. Sections 27 and 28 of
Rule 138 of the Revised Rules of Court provide as follows:
Sec. 27. Attorneys renewed or suspended by Supreme Court on
what grounds. A member of the bar may be removed or
suspended from his office as attorney by the Supreme Court of
any deceit, malpractice, or other gross misconduct in such
office, grossly immoral conduct, or by reason of his conviction of
a crime involving moral turpitude, or for any violation of the
oath which he is required to take before admission to practice,
or for a wilful disobedience of any lawful order of a superior
court, or for corruptly or wilfully appearing as an attorney for a
party to a case without authority so to do. The practice of
soliciting cases at law for the purpose of gain, either personally
or through paid agents or brokers, constitutes malpractice.
(Italics supplied)
Sec. 28. Suspension of attorney by the Court of Appeals or a
Court of First Instance. The Court of Appeals or a Court of
First Instance may suspend an attorney from practice for any of
the causes named in the last preceding section, and after such
suspension such attorney shall not practice his profession until
further action of the Supreme Court in the premises. (Italics
supplied)
We should add that the crimes of which respondent was convicted also import
deceit and violation of her attorney's oath and the Code of Professional
Responsibility under both of which she was bound to "obey the laws of the
land." Conviction of a crime involving moral turpitude might not (as in the
instant case, violation of B.P. Blg. 22 does not) relate to the exercise of the
profession of a lawyer; however, it certainly relates to and affects the good

Page 13 of 82

moral character of a person convicted of such offense. In Melendrez v.

Decena, 4 this Court stressed that:
the nature of the office of an attorney at law requires that she
shall be a person of good moral character. This qualification is
not only a condition precedent to an admission to the practice
of law; its continued possession is also essential for remaining
in the practice of law. 5
ACCORDINGLY, the Court Resolved to DENY the Motion to Lift Order of
Suspension. Respondent shall remain suspended from the practice of law until
further orders from this Court. A copy of this Resolution shall be forwarded to
the Bar Confidant and to the Integrated Bar of the Philippines and spread on the
record of respondent.
A.M. No. 1608 August 14, 1981
MAGDALENA
T.
vs.
SEGUNDINO D. MANIWANG respondent.

sexual intercourse with him, she jokingly said that she was in love with another
man and that she had a child with still another man. Segundino remarked that
even if that be the case, he did not mind because he loved her very much.
Thereafter, they had repeated acts of cohabitation. Segundino started telling his
acquaintances that he and Magdalena were secretly married.
In 1972 Segundino transferred his residence to Padada, Davao del Sur. He
continued his law studies in Davao City. .Magdalena remained in Cebu. He sent
to her letters and telegrams professing his love for her (Exh. K to Z).
When Magdalena discovered in January, 1973 that she was pregnant, she and
Segundino went to her hometown, Ivisan, Capiz, to apprise Magdalena's parents
that they were married although they were not really so. Segundino convinced
Magdalena's father to have the church wedding deferred until after he had
passed the bar examinations. He secured his birth certificate preparatory to
applying for a marriage license.

ARCIGA complainant,

AQUINO, J.:

Segundino continued sending letters to Magdalena wherein he expressed his

love and concern for the baby in Magdalena's womb. He reassured her time and
again that he would marry her once he passed the bar examinations. He was
not present when Magdalena gave birth to their child on September 4, 1973 in
the Cebu Community Hospital. He went to Cebu in December, 1973 for the
baptism of his child.

Magdalena T. Arciga in her complaint of February 24, 1976 asked for the
disbarment of lawyer Segundino D. Maniwang (admitted to the Bar in 1975 ) on
the ground of grossly immoral conduct because he refused to fulfill his promise
of marriage to her. Their illicit relationship resulted in the birth on September 4,
1973 of their child, Michael Dino Maniwang.

Segundino passed the bar examinations. The results were released on April 25,
1975. Several days after his oath-taking, which Magdalena also attended, he
stopped corresponding with Magdalena. Fearing that there was something
amiss, Magdalena went to Davao in July, 1975 to contact her lover. Segundino
told her that they could not get married for lack of money. She went back to
Ivisan.

Magdalena and Segundino got acquainted sometime in October, 1970 at Cebu

City. Magdalena was then a medical technology student in the Cebu Institute of
Medicine while Segundino was a law student in the San Jose Recoletos College.
They became sweethearts but when Magdalena refused to have a tryst with
Segundino in a motel in January, 1971, Segundino stopped visiting her.

In December, 1975 she made another trip to Davao but failed to see Segundino
who was then in Malaybalay, Bukidnon. She followed him there only to be told
that their marriage could not take place because he had married Erlinda Ang on
November 25, 1975. She was broken-hearted when she returned to Davao.

Their paths crossed again during a Valentine's Day party in the following month.
They renewed their relationship. After they had dinner one night in March, 1971
and finding themselves alone (like Adam and Eve) in her boarding house since
the other boarders had gone on vacation, they had sexual congress. When
Segundino asked Magdalena why she had refused his earlier proposal to have

Segundino followed her there and inflicted physical injuries upon her because
she had a confrontation with his wife, Erlinda Ang. She reported the assault to
the commander of the Padada police station and secured medical treatment in a
hospital (Exh. I and J).

Page 14 of 82

Segundino admits in his answer that he and Magdalena were lovers and that he
is the father of the child Michael. He also admits that he repeatedly promised to
marry Magdalena and that he breached that promise because of Magdalena's
shady past. She had allegedly been accused in court of oral defamation and had
already an illegitimate child before Michael was born.

misbehavior or deviation from the path of rectitude is not glaringly scandalous.

It is in connection with a lawyer's behavior to the opposite sex where the
question of immorality usually arises. Whether a lawyer's sexual congress with a
woman not his wife or without the benefit of marriage should be characterized
as "grossly immoral conduct," will depend on the surrounding circumstances.

The Solicitor General recommends the dismissal of the case. In his opinion,
respondent's cohabitation with the complainant and his reneging on his promise
of marriage do not warrant his disbarment.

This Court in a decision rendered in 1925, when old-fashioned morality still

prevailed, observed that "the legislator well knows the frailty of the flesh and
the ease with which a man, whose sense of dignity, honor and morality is not
well cultivated, falls into temptation when alone with one of the fair sex toward
whom he feels himself attracted. An occasion is so inducive to sin or crime that
the saying "A fair booty makes many a thief" or "An open door may tempt a
saint" has become general." (People vs. De la Cruz, 48 Phil. 533, 535).

An applicant for admission to the bar should have good moral character. He is
required to produce before this Court satisfactory evidence of good moral
character and that no charges against him, involving moral turpitude, have
been filed or are pending in any court.
If good moral character is a sine qua non for admission to the bar, then the
continued possession of good moral character is also a requisite for retaining
membership in the legal profession. Membership in the bar may be terminated
when a lawyer ceases to have good moral character (Royong vs. Oblena, 117
Phil. 865).
A lawyer may be disbarred for grossly immoral conduct, or by reason of his
conviction of a crime involving moral turpitude". A member of the bar should
have moral integrity in addition to professional probity.

Disbarment of a lawyer for grossly immoral conduct is illustrated in the

following cases:
(1) Where lawyer Arturo P. Lopez succeeded in having carnal knowledge of
Virginia C. Almirez, under promise of marriage, which he refused to fulfill,
although they had already a marriage license and despite the birth of a child in
consequence of their sexual intercourse; he married another woman and during
Virginia's pregnancy, Lopez urged her to take pills to hasten the flow of her
menstruation and he tried to convince her to have an abortion to which she did
not agree. (Almirez vs. Lopez, Administrative Case No. 481, February 28, 1969,
27 SCRA 169. See Sarmiento vs. Cui, 100 Phil. 1102).

It is difficult to state with precision and to fix an inflexible standard as to what is

"grossly immoral conduct" or to specify the moral delinquency and obliquity
which render a lawyer unworthy of continuing as a member of the bar. The rule
implies that what appears to be unconventional behavior to the straight-laced
may not be the immoral conduct that warrants disbarment.

(2) Where lawyer Francisco Agustin made Anita Cabrera believe that they were
married before Leoncio V. Aglubat in the City Hall of Manila, and, after such fake
marriage, they cohabited and she later give birth to their child (Cabrera vs.
Agustin, 106 Phil. 256).

Immoral conduct has been defined as "that conduct which is willful, flagrant, or
shameless, and which shows a moral indifference to the opinion of the good and
respectable members of the community" (7 C.J.S. 959).

(3) Where lawyer Jesus B. Toledo abandoned his lawful wife and cohabited with
another women who had borne him a child (Toledo vs. Toledo, 117 Phil. 768. As
to disbarment for contracting a bigamous marriage, see Villasanta vs. Peralta,
101 Phil. 313).

Where an unmarried female dwarf possessing the intellect of a child became

pregnant by reason of intimacy with a married lawyer who was the father of six
children, disbarment of the attorney on the ground of immoral conduct was
justified (In re Hicks 20 Pac. 2nd 896).
There is an area where a lawyer's conduct may not be inconsonance with the
canons of the moral code but he is not subject to disciplinary action because his

(4) The conduct of Abelardo Simbol in making a dupe of Concepcion Bolivar by

living on her bounty and allowing her to spend for his schooling and other
personal necessities, while dangling before her the mirage of a marriage,
marrying another girl as soon as he had finished his studies, keeping his
marriage a secret while continuing to demand money from the complainant,
and trying to sponge on her and persuade her to resume their broken

Page 15 of 82

relationship after the latter's discovery of his perfidy are indicative of a

character not worthy of a member of the bar (Bolivar vs. Simbol, 123 Phil. 450).
(5) Where Flora Quingwa, a public school teacher, who was engaged to lawyer
Armando Puno, was prevailed upon by him to have sexual congress with him
inside a hotel by telling her that it was alright to have sexual intercourse
because, anyway, they were going to get married. She used to give Puno money
upon his request. After she became pregnant and gave birth to a baby boy,
Puno refused to marry her. (Quingwa vs. Puno, Administrative Case No. 389,
February 28, 1967, 19 SCRA 439).
(6) Where lawyer Anacleto Aspiras, a married man, misrepresenting that he was
single and making a promise of marriage, succeeded in having sexual
intercourse with. Josefina Mortel. Aspiras faked a marriage between Josefina and
his own son Cesar. Aspiras wrote to Josefina: "You are alone in my life till the end
of my years in this world. I will bring you along with me before the altar of
matrimony." "Through thick and thin, for better or for worse, in life or in death,
my Josephine you will always be the first, middle and the last in my life." (Mortel
vs. Aspiras, 100 Phil. 586).
(7) Where lawyer Ariston Oblena, who had been having adulterous relations for
fifteen years with Briccia Angeles, a married woman separated from her
husband, seduced her eighteen-year-old niece who became pregnant and begot
a child. (Royong vs. Oblena, 117 Phil. 865).
The instant case can easily be differentiated from the foregoing cases. This case
is similar to the case of Soberano vs. Villanueva, 116 Phil. 1206, where lawyer
Eugenio V. Villanueva had sexual relations with Mercedes H. Soberano before his
admission to the bar in 1954. They indulged in frequent sexual intercourse. She
wrote to him in 1950 and 1951 several letters making reference to their trysts in
hotels.
On letter in 1951 contain expressions of such a highly sensual, tantalizing and
vulgar nature as to render them unquotable and to impart the firm conviction
that, because of the close intimacy between the complainant and the
respondent, she felt no restraint whatsoever in writing to him with impudicity.
According to the complainant, two children were born as a consequence of her
long intimacy with the respondent. In 1955, she filed a complaint for disbarment
against Villanueva.
This Court found that respondent's refusal to marry the complainant was not so
corrupt nor unprincipled as to warrant disbarment. (See Montana vs. Ruado,

Administrative Case No. 507, February 24, 1975, 62 SCRA 382; Reyes vs. Wong,
Administrative Case No. 547, January 29, 1975, 63 SCRA 667, Viojan vs. Duran,
114 Phil. 322; Abaigar vs. Paz, Administrative Case No. 997, September 10,
1979,93 SCRA 91).
Considering the facts of this case and the aforecited precedents, the complaint
for disbarment against the respondent is hereby dismissed.
Republic
SUPREME
Manila

of

the

Philippines
COURT

EN BANC
A.C. No. 376

April 30, 1963

JOSEFINA
vs.
ATTY. ARISTON OBLENA, respondent.

ROYONG, complainant,

BARRERA, J.:
In a verified complaint filed with this Court on January 14, 1959, complainant
Josefina Royong charged the respondent Ariston J. Oblena, a member of the
Philippine Bar, with rape allegedly committed on her person in the manner
described therein. Upon requirement of this Court, the respondent filed his
answer denying all the allegations in the complaint and praying that he be not
disbarred. On February 3, 1959, this Court referred the case to the Solicitor
General for investigation, report and recommendation.
On July 10, 1961, the Solicitor General submitted his report on the case with the
recommendation that the respondent "be permanently removed from his office
lawyer and his name be stricken from the roll of attorneys". The pertinent part
of the report reads as follows:
The complainant testified that after lunch on August 5, 1958, Cecilia
Angeles, her foster mother, left her alone in their house and went down
to the pig sty to feed the pigs. At about 1:00 p.m., while she"
(complainant) was ironing clothes on the second floor of the house the
respondent entered and read a newspaper at her back. Suddenly he
covered her mouth with one hand and with the other hand dragged her
to one of the bedrooms of the house and forced her to lie down on the

Page 16 of 82

floor. She did not shout for help because he threatened her and her
family with death. He next undressed as she lay on the floor, then had
sexual intercourse with her after he removed her panties and gave her
hard blows on the thigh with his fist to subdue her resistance. After the
sexual intercourse, he warned her not to report him to her foster
parents, otherwise, he would kill her and all the members of her family.
She resumed ironing clothes after he left until 5:00 o'clock that
afternoon when she joined her foster mother on the first floor of the
house. As a result of the sexual intercourse she became pregnant and
gave birth to a baby on June 2, 1959 (pp. 4-8, 21, 23, 26, 27, t.s.n.,
hearing of Aug. 5, 1959).
She admitted that had she shouted for help she would have been heard
by the neighbors that she did not report the outrage to anyone because
of the threat made by the respondent; that she still frequented the
respondent's house after August 5, 1959, sometimes when he was
alone, ran errands for him, cooked his coffee, and received his mail for
him. Once, on November 14, 1958, when respondent was sick of
influenza, she was left alone with him in his house while her aunt Briccia
Angeles left for Manila to buy medicine (pp. 11, 14-18, 24, t.s.n.,
hearing of August 5, 1959).
The respondent on the witness stand denied that he raped the
complainant (p. 3, t.s.n., hearing of March 25 1960). He testified that
after lunch on August 5, 1958, he went to the Commission Of Civil
Service to follow up his appointment as technical assistant in the office
of the mayor of Makati, Rizal, and read the record of the administrative
case against Buenaventura Perez (pp. 23, 24, 34, t.s.n., hearing of
March 25, 1960, Exhs. 1 and 2).
The respondent, however, admitted that he had illicit relations with the
complainant from January, 1957 to December, 1958, when their
clandestine affair was discovered by the complainant's foster parents,
but to avoid criminal liability for seduction, according to him, he limited
himself to kissing and embracing her and sucking her tongue before she
completed her eighteenth birthday. They had their first sexual
intercourse on May 11, 1958, after she had reached eighteen, and the
second one week later, on May 18. The last intercourse took place
before Christmas in December, 1958. In all, they had sexual intercourse
about fifty times, mostly in her house and sometimes in his house
whenever they had the opportunity. He intended to marry her when she
could legally contract marriage without her foster parents' intervention,
'in case occasion will permit ... because we cannot ask permission to

marry, for her foster parents will object and even my common-law wife,
will object.' After the discovery of their relationship by the complainant's
foster parents, he confessed the affair to Briccia, explaining that he
wanted to have a child, something she (Briccia) could not give him. (pp.
14-16, 19-25, t.s.n., hearing of March 25, 1960).
xxx

xxx

xxx

FINDINGS AND COMMENT

There is no controversy that the respondent had carnal knowledge of
the complainant. The complainant claims she surrendered to him under
circumstances of violence and intimidation, but the undersigned are
convinced that the sexual intercourse was performed not once but
repeatedly and with her consent. From her behaviour before and after
the alleged rape, she appears to have been more a sweetheart than of
the victim of an outrage involving her honor ....
But the foregoing observations notwithstanding, the undersigned
cannot in conscience recommend respondent's exoneration. The
respondent tempted Briccia Angeles to live maritally with him not long
after she and her husband parted, and it is not improbable that the
spouses never reconciled because of him. His own evidence shows that,
tiring of her after more than fifteen years of adulterous relationship with
her and on the convenient excuse that she, Briccia Angeles, could not
bear a child, he seduced Josefina Andalis, then 17 or 18 years of age,
resulting in her pregnancy and the birth of a child, on June 2, 1959. The
seduction was accomplished with grave abuse of confidence and by
means of promises of marriage which he knew he could not fulfill
without grievous injury to the woman who forsook her husband so that
he, respondent, could have all of her. He also took advantage of his
moral influence over her. From childhood, Josefina Andalis, treated him
as an uncle and called him 'tata' (uncle), undoubtedly because he is the
paramour of a sister of her mother. Considering her age (she was 17 or
18 years old then), it is not difficult to see why she could not resist him.
The evidence further shows that on July 22, 1954, the respondent filed a
sworn petition dated May 22, 1954 alleging "that he is a person of good
moral character" (Par. 3) and praying that the Supreme Court permit
him "to take the bar examinations to be given on the first Saturday of
August, 1954, or at any time as the Court may fix.."

Page 17 of 82

But he was not then the person of good moral character he represented
himself to be. From 1942 to the present, he has continuously lived an
adulterous life with Briccia Angeles whose husband is still alive, knowing
that his concubine is a married woman and that her marriage still
subsists. This fact permanently disqualified him from taking the bar
examinations, and had it been known to the Supreme Court in 1954, he
would not have been permitted to take the bar examinations that year
or thereafter, or to take his oath of office as a lawyer. As he was then
permanently disqualified from admission to the Philippine Bar by reason
of his adulterous relations with a married woman, it is submitted that
the same misconduct should be sufficient ground for his permanent
disbarment, unless we recognize a double standard of morality, one for
membership to the Philippine Bar and another for disbarment from the
office of a lawyer.

On September 13, 1961, this Court designated the Court Investigators to

receive the additional evidence. Accordingly the case was set for hearing of
which the parties were duly notified. On September 29, 1961, respondent asked
leave to submit a memorandum which was granted, and on October 9, 1961 the
same was filed, alleging the following: 1) That the charge of rape has not been
proven; 2) That no act of seduction was committed by the respondent; 3) That
no act of perjury or fraudulent concealment was committed by the respondent
when he filed his petition for admission to the bar; and 4) That the respondent
is not morally unfit to be a member of the bar.

xxx

At the hearing on November 16, 1961, respondent presented his common-law

wife, Briccia Angeles, who testified as follows:

xxx

xxx

Wherefore, the parties respectfully pray that the foregoing stipulation of facts
be admitted and approved by this Honorable Court, without prejudice to the
parties adducing other evidence to prove their case not covered by this
stipulation of facts. 1wph1.t

RECOMMENDATION
Wherefore, the undersigned respectfully recommend that after due
hearing, respondent Ariston J. Oblena be permanently removed from his
office as a lawyer and his name be stricken from the roll of attorneys.
In view of his own findings as a result of his investigation, that even if
respondent did not commit the alleged rape nevertheless he was guilty of other
misconduct, the Solicitor General formulated another complaint which he
appended to his report, charging the respondent of falsely and deliberately
alleging in his application for admission to the bar that he is a person of good
moral character; of living adulterously with Briccia Angeles at the same time
maintaining illicit relations with the complainant Josefina Royong, niece of
Briccia, thus rendering him unworthy of public confidence and unfit and unsafe
to manage the legal business of others, and praying that this Court render
judgment ordering "the permanent removal of the respondent ... from his office
as a lawyer and the cancellation of his name from the roll of attorneys."
In his answer to this formal complaint, respondent alleged the special defense
that "the complaint does not merit action", since the causes of action in the said
complaint are different and foreign from the original cause of action for rape
and that "the complaint lacks the necessary formalities called for in Sec. 1, Rule
128 of the Rules of Court." Respondent prayed that after due notice and hearing
for additional evidence, the complaint be dismissed.

... Respondent is her common-law husband (t.s.n. 23). She first met
respondent on December 16, 1941 at Cavinti, Laguna (t.s.n. 23). She
and her sister Cecilia Angeles-Royong were evacuated to Cavinti by the
Red Cross (t.s.n. 23). She was already married (to Teodoro Arines) at the
time (t.s.n. 24). She and Arines are from Iriga, Camarines Sur (t.s.n. 24).
Respondent and one Mr. Flores registered them (t.s.n. 24) as evacuees.
When Mr. Flores asked her about her status she told him she was
'single' (t.s.n. 25). She and her sister, Cecilia, were then told to stay at
respondent's house, respondent courted her (t.s.n. 26). Respondent
asked her if she was married and she told him 'we will talk about that
later on' (t.s.n. 26). She told respondent she was married (to Arines)
when she and respondent were already living together as 'husband and
wife', in 1942( t.s.n. 26). Respondent asked her to marry him, when they
were living as husband and wife (t.s.n. 27). Her sister Cecilia left Cavinti
2 months after their arrival thereat, but she did not go with her because
she and respondent 'had already a good understanding'(sexual
relations) [t.s.n. 27]. Later, she left Cavinti and went to her hometown in
Iriga, Camarines Sur, because respondent was already reluctant to live
with her and he told her it was better for her to go home to Iriga (t.s.n.
25). Arriving at Iriga, she met her legitimate husband (Arines), who told
her he had already a wife, named Conching Guevara (t.s.n. 28-29). She
then went back to Cavinti (in 1943), with her father, and lived with
respondent (t.s.n. 29). Respondent eventually agreed that she live with
him (t.s.n. 35); in fact, she is still presently living with respondent (t.s.n.
35) [Report of Court Investigators, March 6, 1962, pp. 5-6]."

Page 18 of 82

Thereafter, respondent requested permission to submit an affidavit at a later

date, which request was also granted. The affidavit was filed on December 16,
1961, the respondent averring, among others, the following:.
... That he never committed any act or crime of seduction against the
complainant, because the latter was born on February 19, 1940, and his
first sexual intercourse with her took place on May 11, 1958, when she
was already above 18 years of age; that he had been living with his
common-law wife, Briccia Angeles, for almost 20 years, but from the
time he began courting her, he 'had no intention to alienate' her love for
her husband, Arines, or to commit the crime of adultery; that he courted
Briccia on October 16, 1941, and was shortly thereafter accepted by
her; that on February 21, 1942, he found Briccia alone in his house, who
told him that her sister, Cecilia, had gone to Pagsanjan with the other
evacuees; that from said date (February 21), to the present, he and
Briccia had been living together as common-law husband and wife; that
2 or 3 weeks thereafter, he asked Briccia to marry him, but she
confessed she was already married, and maybe her husband (Arines)
was still living in Iriga; that he could not then drive Briccia away,
because she was a stranger in the place, nor could he urge her to join
her sister Cecilia, as the latter had left Pagsanjan; that in 1943 she told
Briccia to separate from him and to return to Iriga, and urged her never
to see him again; that contrary to his expectations, Briccia returned to
Cavinti 3 months thereafter; that Briccia strongly insisted to live with
him again, telling him that she cannot separate from him anymore, as
he was ashamed; that Briccia's father told him that Briccia's husband
(Arines) had agreed not to molest them as in fact he (Arines) was
already living with another woman; that he had 'no choice but to live
with her' (Briccia) again; that when he filed his petition to take the bar
examinations in 1954, he 'did not have the slightest intention to hide'
from this Court the fact of his 'open cohabitation with a married woman'
(Briccia Angeles); that he did not state said fact in his petition, because
he did not see in the form of the petition being used in 1954 that the
fact must be stated; and that since his birth, he thought and believed he
was a man of good moral character, and it was only from the Solicitor
General that he first learned he was not so; and that he did not commit
perjury or fraudulent concealment when he filed his petition to take the
bar examinations in 1954." (Report of the Court Investigators, pp. 6-8,
March 6, 1962).
After hearing, the investigators submitted a report with the finding that: 1)
Respondent used his knowledge of the law to take advantage by having illicit
relations with complainant, knowing as he did, that by committing immoral acts

on her, he was free from any criminal liability; and 2) Respondent committed
gross immorality by continuously cohabiting with a married woman even after
he became a lawyer in 1955 to the present; and 3) That respondent falsified the
truth as to his moral character in his petition to take the 1954 bar examinations,
being then immorally (adulterously) in cohabitation with his common-law wife,
Briccia Angeles, a married woman. The investigators also recommended that
the respondent be disbarred or alternatively, be suspended from the practice of
law for a period of one year.
Upon the submission of this report, a copy of which was served on respondent,
through his counsel of record, the case was set for hearing before the Court on
April 30, 1962. Respondent asked leave to file his memorandum in lieu of oral
argument. This was granted and the corresponding memorandum was duly
filed.
It is an admitted and uncontroverted fact that the respondent had sexual
relations with the complainant several times, and as a consequence she bore
him a child on June 2, 1959; and that he likewise continuously cohabited with
Briccia Angeles, in an adulterous manner, from 1942 up to the present.
The main point in issue is thus limited illicit relations with the complainant
Josefina Royong the and the open cohabitation with Briccia Angeles, a married
woman, are sufficient grounds to cause the respondent's disbarment.
It is argued by the respondent that he is not liable for disbarment
notwithstanding his illicit relations with the complainant and his open
cohabitation with Briccia Angeles, a married woman, because he has not been
convicted of any crime involving moral turpitude. It is true that the respondent
has not been convicted of rape, seduction, or adultery on this count, and that
the grounds upon which the disbarment proceedings is based are not among
those enumerated by Section 25, Rule 127 of the Rules of Court for which a
lawyer may be disbarred. But it has already been held that this enumeration is
not exclusive and that the power of the courts to exclude unfit and unworthy
members of the profession is inherent; it is a necessary incident to the proper
administration of justice; it may be exercised without any special statutory
authority, and in all proper cases unless positively prohibited by statute; and
the power may be exercised in any manner that will give the party be disbarred
a fair trial and a fair opportunity to be heard. (1 Francisco, Rules of Court [1958
ed.] 698, citing In Re Pelaez, 44 Phil. 567). Although it is a well settled rule that
the legislature (or the Supreme Court by virtue of its rule-making power) may
provide that certain acts or conduct shall require disbarment, the accepted
doctrine is that statutes and rules merely regulate the power to disbar instead
of creating it, and that such statutes (or rules) do not restrict the general

Page 19 of 82

powers of the court over attorneys, who are its officers, and that they may be
removed for other than statutory grounds (7 C.J.S. 734). In the United States,
where from our system of legal ethics is derived, "the continued possession of a
fair private and professional character or a good moral character is a requisite
condition for the rightful continuance in the practice of law for one who has
been admitted, and its loss requires suspension or disbarment even though the
statutes do not specify that as a ground of disbarment". The moral turpitude for
which an attorney may be disbarred may consist of misconduct in either his
professional or non-professional activities (5 Am. Jur. 417). The tendency of the
decisions of this Court has been toward the conclusion that a member of the bar
may be removed or suspended from office as a lawyer for other than statutory
grounds. Indeed, the rule is so phrased as to be broad enough to cover
practically any misconduct of a lawyer (In Re Pelaez, 44 Phil. 567). In the case at
bar, the moral depravity of the respondent is most apparent. His pretension that
before complainant completed her eighteenth birthday, he refrained from
having sexual intercourse with her, so as not to incur criminal liability, as he
himself declared and that he limited himself merely to kissing and embracing
her and sucking her tongue, indicates a scheming mind, which together with his
knowledge of the law, he took advantage of, for his lurid purpose.
Moreover, his act becomes more despicable considering that the complainant
was the niece of his common-law wife and that he enjoyed a moral ascendancy
over her who looked up to him as her uncle. As the Solicitor General observed:
"He also took advantage of his moral influence over her. From childhood,
Josefina Andalis (Royong), treated him as an uncle and called him 'tata' (uncle),
undoubtedly because he is the paramour of a sister of her mother. Considering
her age (she was 17 or 18 years old then), her inexperience and his moral
ascendency over her, it is not difficult to see why she could not resist him."
Furthermore, the blunt admission of his illicit relations with the complainant
reveals the respondent to be a person who would suffer no moral compunction
for his acts if the same could be done without fear of criminal liability. He has,
by these acts, proven himself to be devoid of the moral integrity expected of a
member of the bar.
The respondent's misconduct, although unrelated to his office, may constitute
sufficient grounds for disbarment. This is a principle we have followed since the
ruling in In Re Pelaez, 44 Phil. 567, where this Court quoted with approval the
following portion of the decision of the Supreme Court of Kansas in the case of
Peyton's Appeal (12 Kan. 398, 404), to wit:.
The nature of the office, the trust relation which exists between attorney
and client, as well as between court and attorney, and the statutory rule
prescribing the qualifications of attorneys, uniformly require that an

attorney be a person of good moral character. If that qualification is a

condition precedent to a license or privilege to enter upon the practice
of the law, it would seem to be equally essential during the continuance
of the practice and the exercise of the privilege. So it is held that an
attorney will be removed not only for malpractice and dishonesty in his
profession, but also for gross misconduct not connected with his
professional duties, which shows him to be unfit for the office and
unworthy of the privileges which his license and the law confer upon
him. (Emphasis supplied).
Respondent's conduct though unrelated to his office and in no way directly
bearing on his profession, has nevertheless rendered him unfit and unworthy of
the privileges of a lawyer. We cannot give sanction to his acts. For us to do so
would be as the Solicitor General puts it recognizing "a double standard of
morality, one for membership to the Philippine Bar, and another for disbarment
from the office of the lawyer." If we concede that respondent's adulterous
relations and his simultaneous seduction of his paramour's niece did not and do
not disqualify him from continuing with his office of lawyer, this Court would in
effect be requiring moral integrity as an essential prerequisite for admission to
the bar, only to later on tolerate and close its eyes to the moral depravity and
character degeneration of the members of the bar.
The decisions relied upon by the respondent in justifying his stand that even if
he admittedly committed fornication, this is no ground for disbarment, are not
controlling. Fornication, if committed under such scandalous or revolting
circumstances as have proven in this case, as to shock common sense of
decency, certainly may justify positive action by the Court in protecting the
prestige of the noble profession of the law. The reasons advanced by the
respondent why he continued his adulterous relations with Briccia Angeles, in
that she helped him in some way finish his law studies, and that his "sense of
propriety and Christian charity" did not allow him to abandon her after his
admission to the bar after almost 13 years of cohabitation, are hardly an excuse
for his moral dereliction. The means he employed, as he stated, in order to
extricate himself from the predicament he found himself in, by courting the
complainant and maintaining sexual relations with her makes his conduct more
revolting. An immoral act cannot justify another immoral act. The noblest
means he could have employed was to have married the complainant as he was
then free to do so. But to continue maintaining adulterous relations with a
married woman and simultaneously maintaining promiscuous relations with the
latter's niece is moral perversion that can not be condoned. Respondent's
conduct therefore renders him unfit and unworthy for the privileges of the legal
profession. As good character is an essential qualification for admission of an

Page 20 of 82

attorney to practice, he may be removed therefrom whenever he ceases to

possess such character (7 C.J.S. 735).
The respondent further maintains that the Solicitor General exceeded his
authority in filing the present complaint against him for seduction, adultery and
perjury, as it charges an offense or offenses different from those originally
charged in the complaint of January 14, 1959 for rape, and cites as authority
Sections 4 and 5 of Rule 128 of the Rules of Court, which state:.
SEC. 4. Report of the Solicitor General. Based upon the evidence
adduced at the hearing, if the Solicitor General finds no sufficient
ground to proceed against the respondent, he shall submit a report to
the Supreme Court containing his findings of fact and conclusion,
whereupon the respondent shall be exonerated unless the court orders
differently.
SEC. 5. Complaint of the Solicitor General. Answer of the respondent.
If the Solicitor General finds sufficient ground to proceed against the
respondent, he shall file the corresponding complaint, accompanied
with all the evidence introduced in his investigation, with the Supreme
Court, and the respondent shall be served by the clerk of the Supreme
Court with a copy of the complaint with direction to answer the same
within fifteen days.
The contention is devoid of merit. Nothing in the language of the foregoing rules
requires the Solicitor General to charge in his complaint the same offense
charged in the complaint originally filed by the complainant for disbarment.
Precisely, the law provides that should the Solicitor General find sufficient
grounds to proceed against the respondent, he shall file the corresponding
complaint, accompanied by the evidence introduced in his investigation. The
Solicitor General therefore is at liberty to file any case against the respondent
he may be justified by the evidence adduced during the investigation..
The respondent also maintains that he did not falsify his petition to take the bar
examinations in 1954 since according to his own opinion and estimation of
himself at that time, he was a person of good moral character. This contention
is clearly erroneous. One's own approximation of himself is not a gauge to his
moral character. Moral character is not a subjective term, but one which
corresponds to objective reality. Moral character is what a person really is, and
not what he or other people think he is. As former Chief Justice Moran observed:
An applicant for license to practice law is required to show good moral
character, or what he really is, as distinguished from good reputation, or from
the opinion generally entertained of him, the estimate in which he is held by the

public in the place where he is known. As has been said, ante the standard of
personal and professional integrity which should be applied to persons admitted
to practice law is not satisfied by such conduct as merely enables them to
escape the penalties of criminal law. Good moral character includes at least
common honesty (3 Moran, Comments on the Rules of Court, [1957 ed.] 626,
citing In Re Weinstein, 42 P. [2d] 744 B.L.D., Cooper v. Greeley. 1 Den. [N.Y.]
3447; In Re Del Rosario, 52 Phil. 399; and People v. Macauley, 82 N.E. 612).
Respondent, therefore, did not possess a good moral character at the time he
applied for admission to the bar. He lived an adulterous life with Briccia Angeles,
and the fact that people who knew him seemed to have acquiesced to his
status, did not render him a person of good moral character. It is of no moment
that his immoral state was discovered then or now as he is clearly not fit to
remain a member of the bar.
WHEREFORE, judgment is hereby entered striking the name of herein
respondent, Ariston J. Oblena, from the roll of attorneys.
G.R. No. L-27072 January 9, 1970
SURIGAO
MINERAL
RESERVATION
BOARD,
ET
AL., petitioners,
vs.
HON. GAUDENCIO CLORIBEL ETC., ET AL., respondents, In Re: Contempt
Proceedings Against Attorneys Vicente L. Santiago, Jose Beltran Sotto,
Graciano C. Regala and Associates, Erlito R. Uy, Juanito M. Caling; and
Morton F. Meads.
RESOLUTION

SANCHEZ, J.:
After the July 31, 1968 decision of this Court adverse to respondent MacArthur
International Minerals Co., the Solicitor General brought to our attention
statements of record purportedly made by Vicente L. Santiago, Erlito R. Uy,
Graciano Regala, and Jose Beltran Sotto, members of the Bar, with the
suggestion that disciplinary action be taken against them. On November 21,
1968, this Court issued a show-cause order.
The following statements, so the Solicitor General avers, are set forth in the
memoranda personally signed by Atty. Jose Beltran Sotto:

Page 21 of 82

a. They (petitioners, including the Executive Secretary) have

made these false, ridiculous and wild statements in a desperate
attempt to prejudice the courts against MacArthur International.
Such efforts could be accurately called "scattershot
desperation" (Memorandum for Respondents dated March 27,
1968, pp. 13-14, three lines from the bottom of page 13 and
first line page 14).
b. Such a proposition is corrupt on its face and it lays bare the
immoral and arrogant attitude of the petitioners. (Respondents'
Supplemental Memorandum and Reply to Petitioner's
Memorandum Brief, dated April 13, 1968, p. 16, last two lines on
bottom of the page).
c. The herein petitioners ... opportunistically change their claims
and stories not only from case to case but from pleading to
pleading in the same case. (Respondents' Supplemental
Memorandum,Ibid., p.17, sixth, seventh and eighth lines from
bottom of the page).
MacArthur's third motion for reconsideration signed by Atty. Vicente L. Santiago,
on his behalf and purportedly for Attys. Erlito R. Uy, Graciano Regala and
Associates, and Jose B. Sotto, the Solicitor General points out, contain the
following statements:
d. ... ; and [the Supreme Court] has overlooked the applicable
law due to the misrepresentation and obfuscation of the
petitioners' counsel. (Last sentence, par. 1, Third Motion for
Reconsideration dated Sept. 10, 1968).
e. ... Never has any civilized, democratic tribunal ruled that such
a gimmick (referring to the "right to reject any and all bids") can
be used by vulturous executives to cover up and excuse losses
to the public, a government agency or just plain fraud ... and it
is thus difficult, in the light of our upbringing and schooling,
even under many of the incumbent justices, that the Honorable
Supreme Court intends to create a decision that in effect does
precisely that in a most absolute manner. (Second sentence,
par. 7, Third Motion for Reconsideration dated Sept. 10, 1968).

Roberto Concepcion and Mr. Justice Fred Ruiz Castro to inhibit themselves from
considering, judging and resolving the case or any issue or aspect thereof
retroactive to January 11, 1967. The motion charges "[t]hat the brother of the
Honorable Associate Justice Castro is a vice-president of the favored party who
is the chief beneficiary of the false, erroneous and illegal decision dated January
31, 1968" and the ex parte preliminary injunction rendered in the above-entitled
case, the latter in effect prejudging and predetermining this case even before
the joining of an issue. As to the Chief Justice, the motion states "[t]hat the son
of the Honorable Chief Justice Roberto Concepcion was given a significant
appointment in the Philippine Government by the President a short time before
the decision of July 31, 1968 was rendered in this case." The appointment
referred to was as secretary of the newly-created Board of Investments. The
motion presents a lengthy discourse on judicial ethics, and makes a number of
side comments projecting what is claimed to be the patent wrongfulness of the
July 31, 1968 decision. It enumerates "incidents" which, according to the
motion, brought about respondent MacArthur's belief that "unjudicial prejudice"
had been caused it and that there was "unjudicial favoritism" in favor of
"petitioners, their appointing authority and a favored party directly benefited by
the said decision." The "incidents" cited are as follows:
(a) said decision is in violation of the law, which law has not
been declared unconstitutional.
(b) said decision ignores totally the applicable law in the aboveentitled case.
(c) said decision deprives respondent of due process of law and
the right to adduce evidence as is the procedure in all previous
cases of this nature.
(d) due course was given to the unfounded certiorari in the first
place when the appeal from a denial of a motion to dismiss was
and is neither new nor novel nor capable of leading to a
wholesome development of the law but only served to delay
respondent for the benefit of the favored party.
(e) the preliminary injunction issued herein did not maintain
the status quo but destroyed it, and the conclusion cannot be
avoided that it was destroyed for a reason, not for no reason at
all.

The motion to inhibit filed on September 21, 1968 after judgment herein was
rendered and signed by Vicente L. Santiago for himself and allegedly for
Attys. Erlito R. Uy, and Graciano Regala and Associates, asked Mr. Chief Justice

Page 22 of 82

(f) there are misstatements and misrepresentations in the said

decision which the Honorable Supreme Court has refused to
correct.

explanation for such mentality? Is it outright dishonesty? Lack of

intelligence? Serious deficiency in moral comprehension? Or is it
that many of our government officials are just amoral?

(g) the two main issues in the said decision were decided
otherwise in previous decisions, and the main issue "right to
reject any or all bids" is being treated on a double standard
basis by the Honorable Supreme Court.

And, in addition, he attempted to explain further subparagraphs (f) and (h) of

paragraph 7 thereof.

(h) the fact that respondent believes that the Honorable

Supreme Court knows better and has greater understanding
than the said decision manifests.
(i) the public losses (sic) one hundred and fifty to two hundred
million dollars by said decision without an effort by the
Honorable Supreme Court to learn all the facts through
presentation through the trial court, which is elementary.
On November 21, 1968, Atty. Vicente L. Santiago, again for himself and Attys.
Erlito R. Uy and Graciano Regala and Associates, in writing pointed out to this
Court that the statements specified by the Solicitor General were either quoted
out of context, could be defended, or were comments legitimate and justifiable.
Concern he expressed for the fullest defense of the interests of his clients. It
was stressed that if MacArthur's attorney could not plead such thoughts, his
client would be deprived of due process of law. However, counsel sought to
change the words "Chief Justice" to "Supreme Court" appearing on line 7,
paragraph 2 of the motion to inhibit. Atty. Santiago also voluntarily deleted
paragraph 6 of the said motion, which in full reads:
6. Unfortunately for our people, it seems that many of our
judicial authorities believe that they are the chosen messengers
of God in all matters that come before them, and that no matter
what the circumstances are, their judgment is truly ordained by
the Almighty unto eternity. Some seem to be constitutionally
incapable of considering that any emanation from their mind or
pen could be the product of unjudicial prejudice or unjudicial
sympathy or favoritism for a party or an issue. Witness the
recent absurdity of Judge Alikpala daring to proceed to judge a
motion to hold himself in contempt of court seemingly totally
oblivious or uncomprehending of the violation of moral principle
involved and also of Judge Geraldez who refuses to inhibit
himself in judging a criminal case against an accused who is
also his correspondent in two other cases. What is the

It was on December 2, 1968 that Atty. Vicente L. Santiago filed his compliance
with this Court's resolution of November 21, 1968. He there stated that the
motion to inhibit and third motion for reconsideration were of his exclusive
making and that he alone should be held responsible therefor. He further
elaborated on his explanations made on November 21, 1968.
On December 5, 1968, he supplemented his explanations by saying that he
already deleted paragraph 6 of the Motion to Inhibit heretofore quoted from his
rough draft but that it was still included through inadvertence.
On March 1, 1969, Atty. Vicente L. Santiago, as counsel for MacArthur,
registered an amended motion to inhibit. While it repeats the prayer that Mr.
Chief Justice Concepcion and Mr. Justice Castro inhibit themselves, it left but
three paragraphs of the original motion to inhibit, taking out the dissertation on
judicial ethics and most of the comments attacking the decision of this Court of
July 31, 1968.
On the part of Atty. Jose Beltran Sotto, it must be stated that as early as October
7, 1968, he insisted in withdrawing his appearance in this case as one of the
lawyers of MacArthur. His ground was that he did not agree with the filing of the
motion to inhibit the two justices. According to him, "[t]he present steps (sic)
now being taken is against counsel's upbringing and judicial conscience."
In Atty. Jose Beltran Sotto's return of November 29, 1968, he took pains to say
that the questioned statements he made were also taken out of context and
were necessary for the defense of his client MacArthur. He made the admission,
though, that those statements lifted out of context would indeed be sufficient
basis for a finding that Section 20(f), Rule 138, had been violated.
On January 8, 1969, additional arguments were filed by Atty. Jose Beltran Sotto.
He there averred that the Supreme Court had no original jurisdiction over the
charge against him because it is one of civil contempt against a party and the
charge is originally cognizable by the Court of First Instance under Sections 4
and 10, Rule 71 of the Rules of Court. He also stressed that said charge was not
signed by an "offended party or witness", as required by law; and that the

Page 23 of 82

Solicitor General and his assistants could not stand in the stead of an "offended
Party or witness."

more. This provision also applies to the Honorable Justices

Claudio Teehankee and Antonio Barredo.

We now come to Atty. Graciano C. Regala. In his explanation of December 2,

1968, as further clarified by a supplemental motion of December 27, 1968, he
manifested that the use of or reference to his law firm in this case was neither
authorized nor consented to by him or any of his associates; that on July 14,
1967, one Morton F. Meads, in MacArthur's behalf, offered to retain his services,
which was accepted; that Meads inquired from him whether he could appear in
this case; that he advised Meads that this case was outside his professional
competence and referred Meads to another lawyer who later on likewise turned
down the offer; that in view of the rejection, Meads and he agreed to terminate
their previous retainer agreement; that he had not participated in any manner
in the preparation or authorship of any pleading or any other document in
connection with this case.

xxx xxx xxx

On February 4, 1969, Atty. Erlito R. Uy explained his side of the case. In brief, he
denied participation in any of the court papers subject of our November 21,
1968 order; claimed that he was on six months' leave of absence from July 1,
1968 to December 31, 1968 as one of the attorneys for MacArthur but that he
gave his permission to have his name included as counsel in all of MacArthur's
pleadings in this case (L-27072), even while he was on leave of absence.
Hearing on this contempt incident was had on March 3, 1969.
A second contempt proceeding arose when, on July 14, 1969, respondent
MacArthur, through new counsel, Atty. Juanito M. Caling who entered a special
appearance for the purpose, lodged a fourth motion for reconsideration without
express leave of court. Said motion reiterated previous grounds raised, and
contained the following paragraphs:
4. The said decision is illegal because it was penned by the
Honorable Chief Justice Roberto Concepcion when in fact he was
outside the borders of the Republic of the Philippines at the time
of the Oral Argument of the above-entitled case which
condition is prohibited by the New Rules of Court Section 1,
Rule 51, and we quote: "Justices; who may take part. ... . only
those members present when any matter is submitted for oral
argument will take part in its consideration and adjudication ..."
This requirement is especially significant in the present instance
because the member who penned the decision was the very
member who was absent for approximately four months or

6. That if the respondent MacArthur International Minerals

Company abandons its quest for justice in the Judiciary of the
Philippine Government, it will inevitably either raise the graft
and corruption of Philippine Government officials in the bidding
of May 12, 1965, required by the Nickel Law to determine the
operator of the Surigao nickel deposits, to the World Court on
grounds of deprivation of justice and confiscation of property
and /or to the United States Government, either its executive or
judicial branches or both, on the grounds of confiscation of
respondent's proprietary vested rights by the Philippine
Government without either compensation or due process of law
and invoking the Hickenlooper Amendment requiring the
cutting off of all aid and benefits to the Philippine Government,
including the sugar price premium, amounting to more than fifty
million dollars annually, until restitution or compensation is
made.
This elicited another resolution from this Court on July 18, 1969, requiring Atty.
Juanito M. Caling "to show cause within five (5) days from receipt of notice
hereof why he should not be dealt with for contempt of court."
On July 30, 1969, Atty. Juanita M. Caling filed his return. He there alleged that
the said fourth motion for reconsideration was already finalized when Atty.
Vicente L. Santiago came to his office and requested him to accommodate
MacArthur by signing the motion; that he turned down said request twice on the
ground that he did not know anything about the case, much less the truth of the
allegations stated in the motion; that "the allegations in said motion were
subsequently explained to the undersigned counsel together with the
background of the case involved by Atty. Vicente L. Santiago and by one Morton
F. Meads"; that upon assurance that there was nothing wrong with the motion
he was persuaded in good faith to sign the same; that he was misled in so
signing and the true facts of the allegations were not revealed to him especially
the oral argument allegedly made in the case.
Because of the foregoing explanation by Atty. Caling, this Court, on August 4,
1969, resolved "to require Atty. Vicente L. Santiago and Morton Meads to file in
writing their answer to the said return [of Atty. Caling] and at the same time to
show cause why they, Atty. Vicente L. Santiago and Morton Meads, should not

Page 24 of 82

be dealt with for contempt of court, on or before August 16, 1969; and ... to
direct that the three, Atty. Juanita M. Caling, Atty. Vicente L. Santiago, and
Morton Meads, personally appear Before this Court on Thursday, August 27,
1969, at 9:30 a.m., on which date the contempt proceedings against all of them
will be heard by this Court."

1. We start with the case of Atty. Vicente L. Santiago. In his third motion for
reconsideration, we, indeed, find language that is not to be expected of an
officer of the courts. He pictures petitioners as "vulturous executives". He
speaks of this Court as a "civilized, democratic tribunal", but by innuendo would
suggest that it is not.

On August 13, 1969, Atty. Vicente L. Santiago gave his explanation. He

disavowed the truth of Atty. Caling's statement that he (Santiago) convinced
Caling to sign the motion. The truth, according to Santiago, is that one day
Morton Meads went to his office and asked him if he knew of a lawyer nearby
who could help him file another motion for reconsideration, and he (Santiago)
mentioned Atty. Caling; he there upon accompanied Meads to Caling, told Caling
of Meads' desire and left Meads with Caling. Santiago insists that he never
prepared the motion and that he never even read it.

In his motion to inhibit, his first paragraph categorizes our decision of July 31,
1968 as "false, erroneous and illegal" in a presumptuous manner. He there
charges that the ex parte preliminary injunction we issued in this case
prejudiced and predetermined the case even before the joining of an issue. He
accuses in a reckless manner two justices of this Court for being interested in
the decision of this case: Associate Justice Fred Ruiz Castro, because his brother
is the vice president of the favored party who is the chief beneficiary of the
decision, and Chief Justice Roberto Concepcion, whose son was appointed
secretary of the newly-created Board of Investments, "a significant appointment
in the Philippine Government by the President, a short time before the decision
of July 31, 1968 was rendered." In this backdrop, he proceeds to state that "it
would seem that the principles thus established [the moral and ethical
guidelines for inhibition of any judicial authority by the Honorable Supreme
Court should first apply to itself." He puts forth the claim that lesser and further
removed conditions have been known to create favoritism, only to conclude that
there is no reason for a belief that the conditions obtaining in the case of the
Chief Justice and Justice Castro "would be less likely to engender favoritism or
prejudice for or against a particular cause or party." Implicit in this at least is
that the Chief Justice and Justice Castro are insensible to delicadeza, which
could make their actuation suspect. He makes it plain in the motion that the
Chief Justice and Justice Castro not only were not free from the appearance of
impropriety but did arouse suspicion that their relationship did affect their
judgment. He points out that courts must be above suspicion at all times like
Caesar's wife, warns that loss of confidence for the Tribunal or a member
thereof should not be allowed to happen in our country, "although the process
has already begun."

On August 15, 1969, Morton Meads answered. Meads' version is as follows: On

July 14, 1969, he went to Atty. Santiago's office with the fourth motion for
reconsideration which he himself prepared. Santiago started to read the motion
and in fact began to make some changes in Pencil in the first or second
paragraph when Meads told him that MacArthur wanted a new lawyer, not
Santiago, to file the same. Meads asked Santiago if he could recommend one.
They then went to Caling whose office was on the same floor. Santiago
introduced Meads to Caling at the same time handing the fourth motion to
Caling. While Caling was reading the document, Santiago left. After reading the
motion, Caling gave his go-signal. He signed the same after his name was typed
therein. The motion was then filed. According to Meads, from the time he
entered the office of Santiago to the time the motion was filed, the period that
elapsed was approximately one hour and a half. Santiago was with Caling for
about three minutes and Meads was with Caling for about fifteen minutes.
In defending himself from the contempt charge, Meads asserts that the
quotation from the Rules of Court set forth in the fourth motion for
reconsideration has not been taken out of context because said quotation is
precisely accurate; that the "xs" indicate that it is not a complete quotation and
that it is a common practice in court pleadings to submit partial quotations.
Meads further contends that the announced plan to bring the case to the World
Court is not a threat. In fact, his answer also included a notice of appeal to the
World Court.
On August 27, 1969, this Court heard Attys. Vicente L. Santiago and Juanito
Caling and Morton Meads in oral argument with respect to the second contempt
incident. We shall now discuss the first and second contempt incidents seriatim.

It is true that Santiago voluntarily deleted paragraph 6 which contained

language that is as disrespectful. But we cannot erase the fact that it has been
made. He explained that, he deleted this paragraph in his rough draft, which
paragraph was included in the motion filed in this Court only because of mere
inadvertence. This explanation does not make much of a distinguishing
difference; it erects no shield. Not only because it was belatedly made but also
because his signature appeared on the motion to inhibit which included
paragraph 6. And this paragraph 6 describes with derision "many of our judicial
authorities" who "believe that they are the chosen messengers of God in all
matters that come before them, and that no matter what the circumstances are,

Page 25 of 82

their judgment is truly ordained by the Almighty unto eternity." It depicts them
as seemingly "incapable of considering that any emanation from their mind or
pen could be the product of unjudicial prejudice or unjudicial sympathy or
favoritism for a party or an issue." After citing acts of two judges of first
instance, he paused to ask: "What is the explanation for such mentality? Is it
outright dishonesty? Lack of intelligence? Serious deficiency in moral
comprehension? Or is it that many of our government officials are just amoral?"
Paragraph 7 also of the motion to inhibit repeated mention of "unjudicial
prejudice" against respondent MacArthur and spoke of "unjudicial favoritism" for
petitioners, their appointing authority and a favored party directly benefited by
the decision. Paragraph 8 is a lecture on judicial ethics. Paragraph 9 is a warning
to this Court about loss of confidence, and paragraph 10 makes a sweeping
statement that "any other justices who have received favors or benefits directly
or indirectly from any of the petitioners or members of any board-petitioner, or
their agents or principals, including the President", should also inhibit
themselves.
What is disconcerting is that Atty. Santiago's accusations have no basis in fact
and in law. The slur made is not limited to the Chief Justice and Mr. Justice
Castro. It sweepingly casts aspersion on the whole court. For, inhibition is also
asked of, we repeat, "any other justices who have received favors or benefits
directly or indirectly from any of the petitioners or any members of any boardpetitioner or their agents or principals, including the president." The absurdity of
this posture is at once apparent. For one thing, the justices of this Court are
appointed by the President and in that sense may be considered to have each
received a favor from the President. Should these justices inhibit themselves
every time a case involving the Administration crops up? Such a thought may
not certainly be entertained. The consequence thereof would be to paralyze the
machinery of this Court. We would in fact, be wreaking havoc on the tripartite
system of government operating in this country. Counsel is presumed to know
this. But why the unfounded charge? There is the not-too-well concealed effort
on the part of a losing litigant's attorney to downgrade this Court.
The mischief that stems from all of the foregoing gross disrespect is easy to
discern. Such disrespect detracts much from the dignity of a court of justice.
Decidedly not an expression of faith, counsel's words are intended to create an
atmosphere of distrust, of disbelief. We are thus called upon to repeat what we
have said in Rheem of the Philippines vs. Ferrer (1967), 20 SCRA 441, 444, as
follows: "By now, a lawyer's duties to the Court have become common place.
Really, there could hardly be any valid excuse for lapses in the observance
thereof. Section 20(b), Rule 138 of the Rules of Court, in categorical terms,
spells out one such duty: 'To observe and maintain the respect due to the courts

of justice and judicial officers.' As explicit is the first canon of legal ethics which
pronounces that '[i]t is the duty of the lawyer to maintain towards the Courts a
respectful attitude, not for the sake of the temporary incumbent of the judicial
office, but for the maintenance of its supreme importance.' That same canon, as
a corollary, makes it peculiarly incumbent upon lawyers to support the courts
against 'unjust criticism and clamor.' And more. The attorney's oath solemnly
binds him to a conduct that should be 'with all good fidelity ... to the courts.'
Worth remembering is that the duty of an attorney to the courts can only be
maintained by rendering no service involving any disrespect to the judicial
office which he is bound to uphold.' "
A lawyer is an officer of the courts; he is, "like the court itself, an instrument or
agency to advance the ends of justice." 1 His duty is to uphold the dignity and
authority of the courts to which he owes fidelity, "not to promote distrust in the
administration of justice."2 Faith in the courts a lawyer should seek to preserve.
For, to undermine the judicial edifice "is disastrous to the continuity of
government and to the attainment of the liberties of the people." 3 Thus has it
been said of a lawyer that "[a]s an officer of the court, it is his sworn and moral
duty to help build and not destroy unnecessarily that high esteem and regard
towards the courts so essential to the proper administration of justice." 4
It ill behooves Santiago to justify his language with the statement that it was
necessary for the defense of his client. A client's cause does not permit an
attorney to cross the line between liberty and license. Lawyers must always
keep in perspective the thought that "[s]ince lawyers are administrators of
justice, oath-bound servants of society, their first duty is not to their clients, as
many suppose, but to the administration of justice; to this, their clients' success
is wholly subordinate; and their conduct ought to and must be scrupulously
observant of law and ethics." 5 As rightly observed by Mr. Justice Malcolm in his
well-known treatise, a judge from the very nature of his position, lacks the
power to defend himself and it is the attorney, and no other, who can better or
more appropriately support the judiciary and the incumbent of the judicial
position.6 From this, Mr. Justice Malcolm continued to say: "It will of course be a
trying ordeal for attorneys under certain conditions to maintain respectful
obedience to the court. It may happen that counsel possesses greater
knowledge of the law than the justice of the peace or judge who presides over
the court. It may also happen that since no court claims infallibility, judges may
grossly err in their decisions. Nevertheless, discipline and self-restraint on the
part of the bar even under adverse conditions are necessary for the orderly
administration
of
justice."7

Page 26 of 82

The precepts, the teachings, the injunctions just recited are not unfamiliar to
lawyers. And yet, this Court finds in the language of Atty. Santiago a style that
undermines and degrades the administration of justice. The stricture in Section
3 (d) of Rule 71 of the Rules against improper conduct tending to degrade the
administration of justice8 is thus transgressed. Atty. Santiago is guilty of
contempt of court.
2. We next take the case of Atty. Jose Beltran Sotto. We analyze the statements
pointed out to us by the Solicitor General hereinbefore quoted. Sotto accuses
petitioners of having made "false, ridiculous and wild statements in a desperate
attempt to prejudice the courts against MacArthur." He brands such efforts as
"scattershot desperation". He describes a proposition of petitioners as "corrupt
on its face", laying bare "the immoral and arrogant attitude of the petitioners."
He charges petitioners with opportunistically changing their claims and stories
not only from case to case but from pleading to pleading in the same case. Such
language is not arguably protected; it is the surfacing of a feeling of contempt
towards a litigant; it offends the court before which it is made. It is no excuse to
say that these statements were taken out of context. We have analyzed the
lines surrounding said statements. They do not in any manner justify the
inclusion of offensive language in the pleadings. It has been said that "[a]
lawyer's language should be dignified in keeping with the dignity of the legal
profession."9 It is Sotto's duty as a member of the Bar "[t]o abstain from all
offensive personality and to advance no fact prejudicial to the honor or
reputation of a party or witness, unless required by the justice of the cause with
which
he
is
charged." 10
Not far from the case of Atty. Sotto is People vs. Young, 83 Phil. 702, 708, where
counsel for the accused convicted of murder made use of the following raw
language in his brief : "The accused since birth was a poor man and a son of a
poor farmer, that since his boyhood he has never owned a thousand pesos in
his own name. Now, here comes a chance for him. A cold fifty thousand bucks in
exchange of a man's life. A simple job. Perhaps a question of seconds' work and
that would transform him into a new man. Once in a small nipa shack, now in a
palatial mansion! This poor ignorant man blinded by the promise of wealth,
protection and stability was given to do the forbidden deed." We there held that
"[s]uch a plea is a disgrace to the bar and an affront to the court."
It will not avail Sotto any to say that the Solicitor General or his assistants may
not be considered offended parties in this case. This Court may motu
proprio start proceedings of this nature. There should be no doubt about the
power of this Court to punish him for contempt under the circumstances. For,
inherent in courts is the power "[t]o control, in furtherance of justice, the

conduct of its ministerial officers, and of all other persons in any manner
connected with a case before it, in every manner appertaining thereto." 11
We, accordingly, hold that Atty. Jose Beltran Sotto has misbehaved, under
Section 3 (a), Rule 71 of the Rules of Court, as an officer of the court in the
performance of his official duties; and that he too has committed, under Section
3 (d) of the same rule, improper conduct tending to degrade the administration
of justice. He is, therefore, guilty of contempt.
3. Not much need be said of the case of Atty. Graciano C. Regala. It was
improper for Atty. Santiago to have included the name of the firm of Atty. Regala
without the latter's knowledge and consent. Correctly did Regala insist and
this is confirmed by the other lawyers of respondents that he had not
participated in any way in the pleadings of the above-entitled case. Regala did
not even know that his name was included as co-counsel in this case. He is
exonerated.
4. Last to be considered with respect to the first contempt incident is the case of
Atty. Erlito R. Uy. Borne out by the record is the fact that Atty. Uy was not also
involved in the preparation of any of the pleadings subject of the contempt
citation. He should be held exempt from contempt.
5. We now turn our attention to the second contempt incident. The fourth
motion for reconsideration is, indeed, an act of contumacy.
First. It was filed without express leave of court. No explanation has been made
why this has been done.
Second. It lifted Section 1. Rule 51, Rules of Court, out of context. Said Section 1
was quoted as follows: "Justices; who may take part. ... only those members
present when any matter is submitted for oral argument will take part in its
consideration and adjudication ..." However, the provision in its entire thought
should be read thus
SECTION 1. Justices; who may take part. All matters
submitted to the court for its consideration and adjudication will
be deemed to be submitted for consideration and adjudication
by any and all of the Justices who are members of the division of
the court at the time when such matters are taken up for
consideration and adjudication, whether such Justices were or
were not present at the date of submission; however, only those
members present when any matter is submitted for oral
argument will take part in its consideration and adjudication, if

Page 27 of 82

the parties or either of them, express a desire to that effect in

writing
filed
with
the
clerk
at
the
date
of
submission. 12

7. As for Morton F. Meads, he had admitted having prepared the fourth motion
for reconsideration. He cannot beg off from the contempt charge against him
even though he is not a lawyer. He is guilty of contempt.

Atty. Caling, who was admitted to the Bar in 1966, did not attempt to explain
this point.

8. We go back to Atty. Vicente L. Santiago. His insistence that he had nothing to

do with the fourth motion for reconsideration and that he had not even read the
same is too transparent to survive fair appraisal. It goes against the grain of
circumstances. Caling represents before us that it was Santiago who convinced
him to sign the motion, who with Meads explained to him the allegations thereof
and the background of the case. Caling says that if not for his friendship with
Santiago, he would not have signed the motion. On the other hand, Meads
states that Santiago began to read the fourth motion for reconsideration and
even started to make changes thereon in pencil. We must not forget, too, that
according to Meads himself, he spent, on July 14, 1969, quite some time with
Santiago before they proceeded to Caling. It is highly improbable that Santiago
did not read the fourth motion for reconsideration during all that time.

Meads, however, for his part tried to reason out why such a distorted quotation
came about the portion left out was anyway marked by "XS" which is a
common practice among lawyers. Canon 22 of the Canons of Legal Ethics
reminds the lawyer to characterize his conduct with candor and fairness, and
specifically states that "it is not candid nor fair for the lawyer knowingly to
misquote." While Morton Meads is admittedly not a lawyer, it does not take a
lawyer to see the deliberate deception that is being foisted upon this Court.
There was a qualification to the rule quoted and that qualification was
intentionally omitted.
Third. The motion contained an express threat to take the case to the World
Court and/or the United States government. It must be remembered that
respondent MacArthur at that time was still trying to overturn the decision of
this Court of July 31, 1968. In doing so, unnecessary statements were injected.
More specifically, the motion announced that MacArthur "will inevitably ... raise
the graft and corruption of [the] Philippine government officials in the bidding of
May 12, 1965 ... to the World Court" and would invoke "the Hickenlooper
Amendment requiring the cutting off of all aid and benefits to the Philippine
Government, including the sugar price premium, amounting to more than fifty
million dollars annually ... ."
This is a clear attempt to influence or bend the mind of this Court to decide the
case in its favor. A notice of appeal to the World Court has even been embodied
in Meads' return. There is a gross inconsistency between the appeal and the
move to reconsider the decision. An appeal from a decision presupposes that a
party has already abandoned any move to reconsider that decision. And yet, it
would appear that the appeal to the World Court is being dangled as a threat to
effect a change of the decision of this Court. Such act has no aboveboard
explanation.
6. Atty. Caling has not shown to the satisfaction of this Court that he should be
exempted from the contempt charge against him. He knows that he is an officer
of this Court. He admits that he has read the fourth motion for reconsideration
before he signed it. While he has been dragged in only at the last minute, still it
was plainly his duty to have taken care that his name should not be attached to
pleadings contemptuous in character.

Furthermore, Santiago is a lawyer of record for respondent MacArthur in this

case. He has not resigned from his position as such lawyer. He has control of the
proceedings. Whatever steps his client takes should be within his knowledge
and responsibility. Indeed, Canon 16 of the Canons of Legal Ethics should have
reminded him that "[a] lawyer should use his best efforts to restrain and to
prevent his clients from doing those things which the lawyer himself ought not
to do, particularly with reference to their conduct towards courts, judicial
officers, jurors, witnesses and suitors. If a client persists in such wrongdoing the
lawyer should terminate their relation."
The dignity of the Court, experience teaches, can never be protected where
infraction of ethics meets with complacency rather than punishment. The
people should not be given cause to break faith with the belief that a judge is
the epitome of honor amongst men. To preserve its dignity, a court of justice
should not yield to the assaults of disrespect. Punctilio of honor, we prefer to
think, is a standard of behavior so desirable in a lawyer pleading a cause before
a court of justice.
9. One last word. It would seem apropos to say again that, if only for one
reason, this Court had really no alternative but to decide the main case against
respondent MacArthur. As we held in our decision of July 31, 1968, MacArthur
did not even adhere to the terms and conditions of the invitation to bid. For, this
invitation to bid explicitly warned that "bids not accompanied by bid bonds will
be rejected. And We repeat, "[a]dmittedly, the bid of the Company [MacArthur]
had been submitted without the requisite bond." 13 It would not require the

Page 28 of 82

adroit mind of a lawyer to say that a bid unaccompanied by a bond., contrary to

the instructions to bidders, is not entitled to any consideration.
It should be emphasized, too, that because the decision herein was by a
unanimous Court, even if the Chief Justice and Mr. Justice Fred Ruiz Castro had
not taken part in the decision on the merits of this case, the result would have
been the same: MacArthur's cause would just the same have failed.
For the reasons given, this Court hereby finds:
1. On the first contempt charge, Atty. Vicente L. Santiago and Atty. Jose Beltran
Sotto guilty of contempt of court, and fines Atty. Santiago in the sum of P1,000,
and Atty. Sotto, P100; and holds Attys. Graciano C. Regala and Associates and
Atty. Erlito R. Uy not guilty of contempt of court; and
2. On the second contempt charge, Atty. Vicente L. Santiago, Morton F. Meads
and Atty. Juanita M. Caling guilty of contempt of court, and fines Atty. Vicente L.
Santiago, an additional P1,000, Morton F. Meads, P1,000, and Atty. Juanito M.
Caling, P200.
Let a copy of this resolution be forwarded to the Honorable, the Secretary of
Justice, for whatever action he may deem proper to take in the premises against
Morton F. Meads who is an alien.
Let another copy of this resolution be forwarded to the Honorable, the Solicitor
General, for such action as he may deem proper in relation to the disbarment or
suspension of Attys. Vicente L. Santiago, Jose Beltran Sotto and Juanito M.
Caling.
The Clerk of this Court is hereby directed to append a copy of this decision to
the personal records of Attorneys Vicente L. Santiago, Jose Beltran Sotto and
Juanito M. Caling. So ordered.
G.R. No. 111474 August 22, 1994
FIVE
J
TAXI
and/or
JUAN
S.
ARMAMENTO, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, DOMINGO MALDIGAN and
GILBERTO SABSALON,respondents.
Edgardo G. Fernandez for petitioners.

R E SO L U T I O N

REGALADO, J.:
Petitioners Five J Taxi and/or Juan S. Armamento filed this special civil action
for certiorari to annul the decision 1of respondent National Labor Relations
Commission (NLRC) ordering petitioners to pay private respondents Domingo
Maldigan and Gilberto Sabsalon their accumulated deposits and car wash
payments, plus interest thereon at the legal rate from the date of promulgation
of judgment to the date of actual payment, and 10% of the total amount as and
for attorney's fees.
We have given due course to this petition for, while to the cynical the de
minimis amounts involved should not impose upon the valuable time of this
Court, we find therein a need to clarify some issues the resolution of which are
important to small wage earners such as taxicab drivers. As we have heretofore
repeatedly demonstrated, this Court does not exist only for the rich or the
powerful, with their reputed monumental cases of national impact. It is also the
Court of the poor or the underprivileged, with the actual quotidian problems
that beset their individual lives.
Private respondents Domingo Maldigan and Gilberto Sabsalon were hired by the
petitioners as taxi drivers 2 and, as such, they worked for 4 days weekly on a
24-hour shifting schedule. Aside from the daily "boundary" of P700.00 for airconditioned taxi or P450.00 for non-air-conditioned taxi, they were also required
to pay P20.00 for car washing, and to further make a P15.00 deposit to answer
for any deficiency in their "boundary," for every actual working day.
In less than 4 months after Maldigan was hired as an extra driver by the
petitioners, he already failed to report for work for unknown reasons. Later,
petitioners learned that he was working for "Mine of Gold" Taxi Company. With
respect to Sabsalon, while driving a taxicab of petitioners on September 6,
1983, he was held up by his armed passenger who took all his money and
thereafter stabbed him. He was hospitalized and after his discharge, he went to
his home province to recuperate.
In January, 1987, Sabsalon was re-admitted by petitioners as a taxi driver under
the same terms and conditions as when he was first employed, but his working
schedule was made on an "alternative basis," that is, he drove only every other
day. However, on several occasions, he failed to report for work during his
schedule.

Page 29 of 82

On September 22, 1991, Sabsalon failed to remit his "boundary" of P700.00 for
the previous day. Also, he abandoned his taxicab in Makati without fuel refill
worth P300.00. Despite repeated requests of petitioners for him to report for
work, he adamantly refused. Afterwards it was revealed that he was driving a
taxi for "Bulaklak Company."
Sometime in 1989, Maldigan requested petitioners for the reimbursement of his
daily cash deposits for 2 years, but herein petitioners told him that not a single
centavo was left of his deposits as these were not even enough to cover the
amount spent for the repairs of the taxi he was driving. This was allegedly the
practice adopted by petitioners to recoup the expenses incurred in the repair of
their taxicab units. When Maldigan insisted on the refund of his deposit,
petitioners terminated his services. Sabsalon, on his part, claimed that his
termination from employment was effected when he refused to pay for the
washing of his taxi seat covers.
On November 27, 1991, private respondents filed a complaint with the Manila
Arbitration Office of the National Labor Relations Commission charging
petitioners with illegal dismissal and illegal deductions. That complaint was
dismissed, the labor arbiter holding that it took private respondents two years
to file the same and such unreasonable delay was not consistent with the
natural reaction of a person who claimed to be unjustly treated, hence the filing
of the case could be interpreted as a mere afterthought.
Respondent NLRC concurred in said findings, with the observation that private
respondents failed to controvert the evidence showing that Maldigan was
employed by "Mine of Gold" Taxi Company from February 10, 1987 to December
10, 1990; that Sabsalon abandoned his taxicab on September 1, 1990; and that
they voluntarily left their jobs for similar employment with other taxi operators.
It, accordingly, affirmed the ruling of the labor arbiter that private respondents'
services were not illegally terminated. It, however, modified the decision of the
labor arbiter by ordering petitioners to pay private respondents the awards
stated at the beginning of this resolution.
Petitioners' motion for reconsideration having been denied by the NLRC, this
petition is now before us imputing grave abuse of discretion on the part of said
public respondent.
This Court has repeatedly declared that the factual findings of quasi-judicial
agencies like the NLRC, which have acquired expertise because their jurisdiction
is confined to specific matters, are generally accorded not only respect but, at
times, finality if such findings are supported by substantial evidence. 3 Where,
however, such conclusions are not supported by the evidence, they must be

struck down for being whimsical and capricious and, therefore, arrived at with
grave abuse of discretion. 4
Respondent NLRC held that the P15.00 daily deposits made by respondents to
defray any shortage in their "boundary" is covered by the general prohibition in
Article 114 of the Labor Code against requiring employees to make deposits,
and that there is no showing that the Secretary of Labor has recognized the
same as a "practice" in the taxi industry. Consequently, the deposits made were
illegal and the respondents must be refunded therefor.
Article 114 of the Labor Code provides as follows:
Art. 114. Deposits for loss or damage. No employer shall
require his worker to make deposits from which deductions shall
be made for the reimbursement of loss of or damage to tools,
materials, or equipment supplied by the employer, except when
the employer is engaged in such trades, occupations or
business where the practice of making deposits is a recognized
one, or is necessary or desirable as determined by the Secretary
of Labor in appropriate rules and regulations.
It can be deduced therefrom that the said article provides the rule on deposits
for loss or damage to tools, materials or equipments supplied by the employer.
Clearly, the same does not apply to or permit deposits to defray any deficiency
which the taxi driver may incur in the remittance of his "boundary." Also, when
private respondents stopped working for petitioners, the alleged purpose for
which petitioners required such unauthorized deposits no longer existed. In
other case, any balance due to private respondents after proper accounting
must be returned to them with legal interest.
However, the unrebutted evidence with regard to the claim of Sabsalon is as
follows:
YEAR DEPOSITS SHORTAGES VALES
1987 P 1,403.00 P 567.00 P 1,000.00
1988 720.00 760.00 200.00
1989 686.00 130.00 1,500.00
1990 605.00 570.00

Page 30 of 82

1991 165.00 2,300.00

P 3,579.00
2,700.00

4,327.00

The foregoing accounting shows that from 1987-1991, Sabsalon was able to
withdraw his deposits through valesor he incurred shortages, such that he is
even indebted to petitioners in the amount of P3,448.00. With respect to
Maldigan's deposits, nothing was mentioned questioning the same even in the
present petition. We accordingly agree with the recommendation of the Solicitor
General that since the evidence shows that he had not withdrawn the same, he
should be reimbursed the amount of his accumulated cash deposits. 5
On the matter of the car wash payments, the labor arbiter had this to say in his
decision: "Anent the issue of illegal deductions, there is no dispute that as a
matter of practice in the taxi industry, after a tour of duty, it is incumbent upon
the driver to restore the unit he has driven to the same clean condition when he
took it out, and as claimed by the respondents (petitioners in the present case),
complainant(s) (private respondents herein) were made to shoulder the
expenses for washing, the amount doled out was paid directly to the person
who washed the unit, thus we find nothing illegal in this practice, much more
(sic) to consider the amount paid by the driver as illegal deduction in the
context of the law." 6 (Words in parentheses added.)
Consequently, private respondents are not entitled to the refund of the P20.00
car wash payments they made. It will be noted that there was nothing to
prevent private respondents from cleaning the taxi units themselves, if they
wanted to save their P20.00. Also, as the Solicitor General correctly noted, car
washing after a tour of duty is a practice in the taxi industry, and is, in fact,
dictated by fair play.
On the last issue of attorney's fees or service fees for private respondents'
authorized representative, Article 222 of the Labor Code, as amended by
Section 3 of Presidential Decree No. 1691, states that non-lawyers may appear
before the NLRC or any labor arbiter only (1) if they represent themselves, or (2)
if they represent their organization or the members thereof. While it may be
true that Guillermo H. Pulia was the authorized representative of private
respondents, he was a non-lawyer who did not fall in either of the foregoing
categories. Hence, by clear mandate of the law, he is not entitled to attorney's
fees.

Furthermore, the statutory rule that an attorney shall be entitled to have and
recover from his client a reasonable compensation for his services 7 necessarily
imports the existence of an attorney-client relationship as a condition for the
recovery of attorney's fees, and such relationship cannot exist unless the
client's representative is a lawyer. 8
WHEREFORE, the questioned judgment of respondent National Labor Relations
Commission is hereby MODIFIED by deleting the awards for reimbursement of
car wash expenses and attorney's fees and directing said public respondent to
order and effect the computation and payment by petitioners of the refund for
private respondent Domingo Maldigan's deposits, plus legal interest thereon
from the date of finality of this resolution up to the date of actual payment
thereof.
SO ORDERED.
OSMUNDO S. CANLAS and ANGELINA CANLAS, petitioner, vs. COURT OF
APPEALS, ASIAN SAVINGS BANK, MAXIMO C. CONTRERAS and VICENTE
MAOSCA, respondents.
DECISION
PURISIMA, J.: Mi-so
At bar is a Petition for Review on Certiorari under Rule 45 of the Rules of Court,
seeking to review and set aside the Decision [1] of the Court of Appeals in CA-G.R.
CV No. 25242, which reversed the Decision [2] of Branch 59 of the Regional Trial
Court of Makati City in Civil Case No. M-028; the dispositive portion of which
reads:
"WHEREFORE, the decision appealed from is hereby REVERSED
and SET ASIDE and a new one is hereby entered DISMISSING
the complaint of the spouses Osmundo and Angelina Canlas. On
the counterclaim of defendant Asian Savings Bank, the plaintiffs
Canlas spouses are hereby ordered to pay the defendant Asian
Savings Bank the amount of P50,000.00 as moral and
exemplary damages plus P15,000.00 as and for attorney's fees.
With costs against appellees.
SO ORDERED."[3]

Page 31 of 82

The facts that matter:

Sometime in August, 1982, the petitioner, Osmundo S. Canlas, and private
respondent, Vicente Maosca, decided to venture in business and to raise the
capital needed therefor. The former then executed a Special Power of Attorney
authorizing the latter to mortgage two parcels of land situated in San
Dionisio, (BF Homes) Paranaque, Metro Manila, each lot with semi-concrete
residential house existing thereon, and respectively covered by Transfer
Certificate of Title No. 54366 in his (Osmundo's) name and Transfer Certificate
of Title No. S-78498 in the name of his wife Angelina Canlas.
Subsequently, Osmundo Canlas agreed to sell the said parcels of land to Vicente
Manosca, for and in consideration of P850,000.00, P500,000.00 of which
payable within one week, and the balance of P350,000.00 to serve as
his (Osmundo's) investment in the business. Thus, Osmundo Canlas delivered to
Vicente Maosca the transfer certificates of title of the parcels of land involved.
Vicente Maosca, as his part of the transaction, issued two postdated checks in
favor of Osmundo Canlas in the amounts of P40,000.00 and P460,000.00,
respectively, but it turned out that the check covering the bigger amount was
not sufficiently funded.[4]Ne-xold
On September 3, 1982, Vicente Maosca was able to mortgage the same
parcels of land for P100,000.00 to a certain Attorney Manuel Magno, with the
help of impostors who misrepresented themselves as the spouses, Osmundo
Canlas and Angelina Canlas.[5]
On September 29, 1982, private respondent Vicente Maosca was granted a
loan by the respondent Asian Savings Bank (ASB) in the amount of P500,000.00,
with the use of subject parcels of land as security, and with the involvement of
the same impostors who again introduced themselves as the Canlas spouses.
[6]
When the loan it extended was not paid, respondent bank extrajudicially
foreclosed the mortgaged.
On January 15, 1983, Osmundo Canlas wrote a letter informing the respondent
bank that the execution of subject mortgage over the two parcels of land in
question was without their (Canlas spouses) authority, and request that steps
be taken to annul and/or revoke the questioned mortgage. On January 18, 1983,
petitioner Osmundo Canlas also wrote the office of Sheriff Maximo C. Contreras,
asking that the auction sale scheduled on February 3, 1983 be cancelled or held
in abeyance. But respondents Maximo C. Contreras and Asian Savings Bank
refused to heed petitioner Canlas' stance and proceeded with the scheduled
auction sale.[7]

Consequently, on February 3, 1983 the herein petitioners instituted the present

case for annulment of deed of real estate mortgage with prayer for the issuance
of a writ of preliminary injunction; and on May 23, 1983, the trial court issued an
Order restraining the respondent sheriff from issuing the corresponding
Certificate of Sheriffs Sale.[8]
For failure to file his answer, despite several motions for extension of time for
the filing thereof, Vicente Maosca was declared in default. [9]
On June 1, 1989, the lower court a quo came out with a decision annulling
subject deed of mortgage and disposing, thus:
"Premises considered, judgment is hereby rendered as follows:
1. Declaring the deed of real estate mortgage (Exhibit 'L)
involving the properties of the plaintiffs as null and void; Manikx
2. Declaring the public auction sale conducted by the defendant
Sheriff, involving the same properties as illegal and without
binding effect;
3. Ordering the defendants, jointly and severally, to pay the
plaintiffs the sum of P20,000.00 representing attorney's fees;
4. On defendant ASB's crossclaim: ordering the cross-defendant
Vicente Maosca to pay the defendant ASB the sum
of P350,000.00, representing the amount which he received as
proceeds of the loan secured by the void mortgage, plus
interest at the legal rate, starting February 3, 1983, the date
when the original complaint was filed, until the amount is fully
paid;
5. With costs against the defendants.
SO ORDERED."[10]
From such Decision below, Asian Savings Bank appealed to the Court of
Appeals, which handed down the assailed judgment of reversal, dated
September 30, 1983, in CA-G.R. CV No. 25242. Dissatisfied therewith, the
petitioners found their way to this Court via the present Petition; theorizing that:

Page 32 of 82

"I
RESPONDENT COURT OF APPEALS ERRED IN HOLDING THAT THE
MORTGAGE OF THE PROPERTIES SUBJECT OF THIS CASE WAS VALID.
II
RESPONDENT COURT OF APPEALS ERRED IN HIOLDING THAT
PETITIONERS ARE NOT ENTITLED TO RELIEF BECAUSE THEY WERE
NEGLIGENT AND THEREFORE MUST BEAR THE LOSS.
III
RESPONDENT COURT OF APPEALS ERRED IN HOLDING THAT
RESPONDENT ASB EXERCISED DUE DILIGENCE IN GRANTING THE LOAN
APPLICATION OF RESPONDENT.Manik-s
IV
RESPONDENT COURT OF APPEALS ERRED IN HOLDING THAT
RESPONDENT ASB DID NOT ACT WITH BAD FAITH IN PROCEEDING WITH
THE FORECLOSURE SALE OF THE PROPERTIES.
V
RESPONDENT COURT OF APPEALS ERRED IN AWARDING RESPONDENT
ASB MORAL DAMAGES."[11]
The Petition is impressed with merit.
Article 1173 of the Civil Code, provides:
"Article 1173. The fault or negligence of the obligor consist in
the omission of that diligence which is required by the nature of
the obligation and corresponds with the circumstances of the
persons, of the time and of the place. When negligence shows
bad faith, the provisions of articles 1171 and 2201, paragraph
2, shall apply.
If the law or contract does not state the diligence which is to be
observed in the performance, that which is expected of a good
father of a family shall be required. (1104)"

The degree of diligence required of banks is more than that of a good father of a
family;[12] in keeping with their responsibility to exercise the necessary care and
prudence in dealing even on a register or titled property. The business of a bank
is affected with public interest, holding in trust the money of the depositors,
which bank deposits the bank should guard against loss due to negligence or
bad faith, by reason of which the bank would be denied the protective mantle of
the land registration law, accorded only to purchases or mortgagees for value
and in good faith.[13]Man-ikan
In the case under consideration, from the evidence on hand it can be gleaned
unerringly that respondent bank did not observe the requisite diligence in
ascertaining or verifying the real identity of the couple who introduced
themselves as the spouses Osmundo Canlas and Angelina Canlas. It is worthy to
note that not even a single identification card was exhibited by the said
impostors to show their true identity; and yet, the bank acted on their
representations simply on the basis of the residence certificates bearing
signatures which tended to match the signatures affixed on a previous deed of
mortgage to a certain Atty. Magno, covering the same parcels of land in
question. Felizado Mangubat, Assistant Vice President of Asian Savings Bank,
thus testified inter alia:
"x x x
Q:.....According to you, the basis for your having recommended
for the approval of MANASCO's (sic) loan particularly that one
involving the property of plaintiff in this case, the spouses
OSMUNDO CANLAS and ANGELINA CANLAS, the basis for such
approval was that according to you all the signatures and other
things taken into account matches with that of the document
previously executed by the spouses CANLAS?
A:.....That is the only basis for accepting the signature on the
mortgage, the basis for the recommendation of the approval of
the loan are the financial statement of MAOSCA?
A:.....Yes, among others the signature and TAX Account Number,
Residence Certificate appearing on the previous loan executed
by the spouses CANLAS, I am referring to EXHIBIT 5, mortgage
to ATTY. MAGNO, those were made the basis.
A:.....That is just the basis of accepting the signature, because
at that time the loan have been approved already on the basis
of the financial statement of the client the Bank Statement.

Page 33 of 82

Wneh (sic) it was approved we have to base it on the Financial

statement of the client, the signatures were accepted only for
the purpose of signing the mortgage not for the approval, we
don't (sic) approve loans on the signature.
ATTY. CLAROS:
.....Would you agree that as part of ascertaining the identify of
the parties particularly the mortgage, you don't consider also
the signature, the Residence Certificate, the particular address
of the parties involved.
A:.....I think the question defers (sic) from what you asked a
while ago.
Q:.....Among others?
A:.....We have to accept the signature on the basis of the other
signatures given to us it being a public instrument. Ol-dmiso
ATTY. CARLOS:
.....You mean to say the criteria of ascertaining the identity of
the mortgagor does not depend so much on the signature on
the residence certificate they have presented.
A:.....We have to accept that
xxx.....xxx.....xxx
A:.....We accepted the signature on the basis of the mortgage in
favor of ATTY. MAGNO duly notarized which I have been
reiterrting (sic) entitled to full faith considering that it is a public
instrument.
ATTY. CARLOS:
.....What other requirement did you take into account in
ascertaining the identification of the parties particularly the
mortgagor in this case.

Q:.....Is that all, is that the only requirement?

A:.....We requested for others but they could not produce, and
because they presented to us the Residence Certificate which
matches on the signature on the Residence Certificate in favor
of Atty. Magno."[14]M-isjuris
Evidently, the efforts exerted by the bank to verify the identity of the couple
posing as Osmundo Canlas and Angelina Canlas fell short of the responsibility of
the bank to observe more than the diligence of a good father of a family. The
negligence of respondent bank was magnified by the fact that the previous
deed of mortgage (which was used as the basis for checking the genuineness of
the signatures of the suppose Canlas spouses) did not bear the tax account
number of the spouses,[15] as well as the Community Tax Certificate of Angelina
Canlas.[16] But such fact notwithstanding, the bank did not require the impostors
to submit additional proof of their true identity.
Under the doctrine of last clear chance, which is applicable here, the respondent
bank must suffer the resulting loss. In essence, the doctrine of last clear chance
is to the effect that where both parties are negligent but the negligent act of
one is appreciably later in point of time than that of the other, or where it is
impossible to determine whose fault or negligence brought about the
occurrence of the incident, the one who had the last clear opportunity to avoid
the impending harm but failed to do so, is chargeable with the consequences
arising therefrom. Stated differently, the rule is that the antecedent negligence
of a person does not preclude recovery of damages caused by the supervening
negligence of the latter, who had the last fair chance to prevent the impending
harm by the exercise of due diligence.[17]
Assuming that Osmundo Canlas was negligent in giving Vicente Maosca the
opportunity to perpetrate the fraud, by entrusting to latter the owner's copy of
the transfer certificates of title of subject parcels of land, it cannot be denied
that the bank had the last clear chance to prevent the fraud, by the simple
expedient of faithfully complying with the requirements for banks to ascertain
the identity of the persons transacting with them.
For not observing the degree of diligence required of banking institutions, whose
business is impressed with public interest, respondent Asian Savings Bank has
to bear the loss sued upon.
In ruling for respondent bank, the Court of Appeals concluded that the petitioner
Osmundo Canlas was a party to the fraudulent scheme of Maosca and

A:.....Residence Certificate.

Page 34 of 82

therefore, estopped from impugning the validity of subject deed of mortgage;

ratiocinating thus: Sd-aamiso
"x x x
Thus, armed with the titles and the special power of attorney,
Manosca went to the defendant bank and applied for a loan.
And when Maosca came over to the bank to submit additional
documents pertinent to his loan application, Osmundo Canlas
was with him, together with a certain Rogelio Viray. At that
time, Osmundo Canlas was introduced to the bank personnel as
'Leonardo Rey.
When he was introduced as 'Leonardo Rey for the first time
Osmundo should have corrected Maosca right away. But he did
not. Instead, he even allowed Maosca to avail of his
(Osmundo's) membership privileges at the Metropolitan Club
when Maosca invited two officers of the defendant bank to a
luncheon meeting which Osmundo also attended. And during
that meeting, Osmundo did not say who he really is, but even
let Maosca introduced him again as 'Leonardo Rey, which all
the more indicates that he connived with Maosca in deceiving
the defendant bank.
Finally after the loan was finally approved, Osmundo
accompanied Maosca to the bank when the loan was released.
At that time a manger's check for P200,000.00 was issued in
the name of Oscar Motorworks, which Osmundo admits he owns
and operates.
Collectively, the foregoing circumstances cannot but conjure to
a single conclusion that Osmundo actively participated in the
loan application of defendant Asian Savings Bank, which
culminated in his receiving a portion of the process thereof." [18]
A meticulous and painstaking scrutiny of the Records on hand, reveals,
however, that the findings arrived at by the Court of Appeals are barren of any
sustainable basis. For instance, the execution of the deeds of mortgages
constituted by Maosca on subject pieces of property of petitioners were made
possible not by the Special Power of Attorney executed by Osmundo Canlas in
favor of Maosca but through the use of impostors who misrepresented
themselves as the spouses Angelina Canlas and Osmundo Canlas. It cannot be

said therefore, that the petitioners authorized Vicente Maosca to constitute the
mortgage on their parcels of land.
What is more, Osmundo Canlas was introduced as "Leonardo Rey" by Vicente
Maosca, only on the occasion of the luncheon meeting at the Metropolitan
Club.[19] Thereat, the failure of Osmundo Canlas to rectify Maosca's
misrepresentations could not be taken as a fraudulent act. As well explained by
the former, he just did not want to embarrass Maosca, so that he waited for
the end of the meeting to correct Maosca.[20]
Then, too, Osmundo Canlas recounted that during the said luncheon meeting,
they did not talk about the security or collateral for the loan of Maosca with
ASB.[21] So also, Mrs. Josefina Rojo, who was the Account Officer of Asian Savings
Bank when Maosca applied for subject loan, corroborated the testimony of
Osmundo Canlas, she testified: S-daad
"xxx.....xxx.....xxx
QUESTION:.....Now could you please describe
out the lunch conference at the Metro Club in
Makati?
ANSWER:.....Mr. Mangubat, Mr. Maosca and I
did not discuss with respect to the loan
application and discuss primarily his business.
xxx.....xxx.....xxx
xxx.....xxx.....xxx
QUESTION:..... So, what is the main topic of your discussion
during the meeting?
ANSWER:..... The main topic was then, about his business
although, Mr, Leonardo Rey, who actually turned out as Mr.
Canlas, supplier of Mr. Maosca.
QUESTION:..... I see ... other than the business of Mr. Maosca,
were there any other topic discussed?
ANSWER:..... YES.

Page 35 of 82

QUESTION:..... And what was the topic?

ANSWER:..... General Economy then.
x x x"[22]
Verily, Osmundo Canlas was left unaware of the illicit plan of Maosca,
explaining thus why he (Osmundo) did not bother to correct what Maosca
misrepresented and to assert ownership over the two parcels of land in
question. Scs-daad
Not only that; while it is true that Osmundo Canlas was with Vicente Maosca
when the latter submitted the documents needed for his loan application, and
when the check of P200,000.000 was released, the former did not know that the
collateral used by Maosca for the said loan were their (Canlas
spouses) properties. Osmundo happened to be with Maosca at the time
because he wanted to make sure that Maosca would make good his promise to
pay the balance of the purchase price of the said lots out of the proceeds of the
loan.[23]
The receipt by Osmundo Canlas of the P200,000.00 check from ASB could not
estop him from assailing the validity of the mortgage because the said amount
was in payment of the parcels of land he sold to Maosca. [24]
What is decisively clear on record is that Maosca managed to keep Osmundo
Canlas uninformed of his (Maosca's) intention to use the parcels of land of the
Canlas spouses as security for the loan obtained from Asian Savings Bank. Since
Vicente Maosca showed Osmundo Canlas several certificates of title of lots
which, according to Maosca were the collaterals, Osmundo Canlas was
confident that their (Canlases) parcels of land were not involved in the loan
transaction with the Asian Savings Bank. [25] Under the attendant facts and
circumstances, Osmundo Canlas was undoubtedly negligent, which negligence
made them (petitioners) undeserving of an award of Attorneys fees.
Settled is the rule that a contract of mortgage must be constituted only by the
absolute owner on the property mortgaged; [26] a mortgage, constituted by an
impostor is void.[27] Considering that it was established indubitably that the
contract of mortgage sued upon was entered into and signed by impostors who
misrepresented themselves as the spouses Osmundo Canlas and Angelina
Canlas, the Court is of the ineluctible conclusion and finding that subject
contract of mortgage is a complete nullity.

WHEREFORE, the Petition is GRANTED and the Decision of the Court of

Appeals, dated September 30, 1993, in CA-G.R. CV No. 25242 SET ASIDE. The
Decision of Branch 59 of the Regional Trial Court of Makati City in Civil Case No.
M-028 is hereby REINSTATED. No pronouncement as to costs.
SO ORDERED.
In the matter of the proceedings against MARCELINO AGUAS for
contempt of the COURT OF FIRST INSTANCE OF PAMPANGA.
Claudio

Gabriel,

for

appellant.

Office of the Solicitor-General Araneta, representing the respondents.

SMITH, J.:
It appears from the record in this matter that on the 29th of August, 1900,
during the progress of a trial then being held before the Court of First Instance
at Bacolor, in the Province of Pampanga, the court had occasion to caution
Angel Alberto, a witness in the case, not to look at the attorney for the
defendant but to fix his attention on the judge who was at the time examining
him. It seems that the witness did not give heed to this warning, and the judge
thereupon arose from his seat and approaching the witness, seized him by the
shoulders, and using the expression, Lingon ang mucha (Look at me), either
shook him, as insisted by the attorney for the defendant, or only turned him
about, as claimed by the judge and others. Whether the witness was shaken or
only turned about, at all events seizing him, brought the defendants attorney
to his feet, who, protesting against the action of the judge as coercive of the
witness, demanded that a record be made of the occurrence and that the
further hearing of the case be postponed. Two days afterward the clerk entered
in his record as recital of the incident substantially as above, and also a
statement that on other and prior occasions the attorney, Marcelino Aguas, had
been wanting in respect to the court by making use of improper phrases, and
by interrupting opposing counsel in their examination of witnesses. The court on
this record adjudged the attorney to be in contempt of court and suspended him
from the practice of his profession for a period of twenty days. The attorney

Page 36 of 82

appealed, but his appeal having been disallowed by the lower court, he asked to

specific act from which it was inferred that his attitude was menacing should

be heard in justification, which was granted.

have been testified to by the witnesses and found by the court, and failing that,
the record does not show concrete facts sufficient to justify the conclusion that

On the hearing in justification evidence was taken touching the contempt

he was disrespectful to the court or offensive to its dignity.

alleged to have been committed by Seor Aguas, from which the court found
that during the trial of the case of Roberto Toledo vs. Valeriano Balatbat, the

The judgment appealed from must therefore be reversed, and it is so ordered,

judge, having had occasion to seize the witness, Alberto Angel, by the shoulders

with costs de oficio.

to turn him around, Seor Aguas, attorney for defendant, had risen from his
seat in a menacing attitude, and with a voice and body tremblingprotested
that the action of the judge was coercive of the witness; and further that his
attention being called to the fact that he was wanting in respect to the court
and that he should sit down, he waived his right to go on with the trial and
moved a postponement of the hearing. On this finding the court again adjudged
the attorney guilty of contempt of court, and suspended him from the practice
of his profession for a period of twenty days. From this judgment Seor Aguas
appealed to this court.
In our opinion the action of the judge in seizing the witness, Alberto Angel, by
the shoulder and turning him about was unwarranted and an interference with
that freedom from unlawful personal violence to which every witness is entitled
while giving testimony in a court of justice. Against such conduct the appellant
had the right to protest and to demand were respectfully made and with due

.R. No. 164947

January 31, 2006

SONIA MACEDA ALIAS SONIALITA MACEDA AND GEMMA MACEDAMACATANGAY, Petitioners,

vs.
ENCARNACION DE GUZMAN VDA. DE MACATANGAY, Respondent.
DECISION
CARPIO MORALES, J.:
Petitioner Sonia Maceda (Sonia) and Bonifacio Macatangay (Macatangay)
contracted marriage on July 26, 1964. 1The union bore one child, petitioner
Gemma Macatangay (Gemma), on March 27, 1965. 2
The couple separated not long after the marriage.

regard for the dignity of the court. The only question, therefore in this case is,
Was the appellant respectful and regardful of the courts dignity in presenting
his objection and asking that it be recorded in the proceedings? The witnesses
say and the judge finds that his attitude was menacing (bastante
amenazadora) in the moment of making his protest, but beyond that there is
nothing in the record which even tends to show that he was disrespectful to the
court or unmindful of its dignity. In our opinion both testimony and finding state
a mere conclusion which, in the absence of the facts from which it was deduced,
is wholly valueless to support a judgment of contempt. The statement that the

In 1967, the couple executed a Kasunduan3 whereby they agreed to live

separately.
Macatangay soon lived with Carmen Jaraza (Carmen).
After the death on December 7, 1998 of Macatangay who was a member of the
Social Security System (SSS) or on December 14, 1998, his common-law wife
Carmen filed a death benefit application before the SSS Lucena Branch. The SSS
denied4 her application, it ruling that it is Macatangays wife who is his primary
beneficiary.

attorneys attitude was menacing tended no more to competently establish

the alleged offense of contempt than if the witnesses had testified and the court
had found that his conduct was contemptuous or lacking in respect. The

On January 9, 1999, petitioner Sonia filed before the SSS a death benefit
application.

Page 37 of 82

Macatangays children with his common-law wife Carmen, namely Jay, Elena,
and Joel, aged 27, 31, and 29 years old, respectively, also filed in
19995 separate applications for death benefits following the SSS denial of their
mothers application.
On September 10, 1999, the SSS denied Macatangays illegitimate childrens
claim on the ground that under Republic Act 8282, "THE SOCIAL SECURITY ACT
OF 1997," it is the dependent spouse, until he or she remarries, who is the
primary beneficiary of the deceased member.6
Petitioner Sonias application for death benefit was approved on December 20,
1999. She received a lump sum amount of P33,000 representing
"pensions" 7 from the SSS.
On February 22, 2000, Macatangays mother, herein respondent Encarnacion de
Guzman, filed a petition before the Social Security Commission (SSC) in Makati
City8 against herein petitioners Sonia and Gemma, for the grant to her of social
security benefits, she claiming that her son designated her and his three
illegitimate children as his beneficiaries under the SSS; 9 she was made to sign a
document regarding the distribution of benefits of Macatangay by SSS Lucena
Branch Chief Atty. Corazon M. Villamayor who, however, did not furnish her a
copy thereof nor inform her of its nature; 10 and after she signed the document,
the three illegitimate children received notices denying their application for
death benefits.11
The SSS office in Quezon City filed a petition-in-intervention in the petition filed
by respondent before the SSC in Makati City. 12
In her position paper, respondent contended as follows:
[I]n the present case, the agreement of the spouses to live separately four (4)
months after their marriage and which agreement was finally made in writing
before the Barangay will unquestionably show that Sonia or Sonialita Maceda
was not dependent upon the late member for support and therefore
cannot be considered as his primary beneficiary under the aforesaid law. Said
agreement, though proscribed by law by reasons of public policy, was a mutual
agreement short of a court decree for legal separation and will not in any way
change the fact that the two lived separately. This under any circumstances
will dispute the presumption of the dependency for support arising from the
legitimacy of the marital union as reasoned out by the SSS in their Petition for
Intervention.13 (Emphasis and underscoring supplied)

Petitioners, on the other hand, hinged their claim on Section 8(e) and (k) of The
Social Security Act of 1997. Thus they argued:
Section 8 (e) and (k) of Republic Act 8282 is crystal clear on who should be
Bonifacio De Guzman Macatangays beneficiary, thus:
(e) Dependents The dependents shall be the following:
(1) The legal spouse entitled by law to receive support from the
member;
(2) The legitimate, legitimated or legally adopted, and
illegitimate child who is unmarried, not gainfully employed and
has not reached twenty-one years (21) of age, or if over twentyone (21) years of age, he is congenitally or while still a minor
has been permanently incapacitated and incapable of selfsupport, physically or mentally, and
(3) The parent who is receiving regular support from the
member.
(k) Beneficiaries The dependent spouse until he or she remarries, the
dependent legitimate, legitimated or legally adopted, and illegitimate
children,
who shall be the primary beneficiaries of the
member; Provided, That the dependent illegitimate children shall be
entitled to fifty percent (50%) of the share of the legitimate, legitimated
or legally adopted children: Provided, further, That in the absence of the
dependent legitimate, legitimated or legally adopted children of the
member, his/her dependent illegitimate children shall be entitled to one
hundred percent (100%) of the benefits. In their absence, the
dependent parents who shall be the second beneficiaries of the
member. In the absence of all the foregoing, any other person
designated by the member as his/her secondary beneficiary.
(Underscoring and emphasis in the original)14
As for the SSS, it argued that:
[T]o be considered dependent for support, a surviving spouse of a
member must only show that she is entitle[d] for support from the
member by virtue of a valid marriage. The surviving spouse is not
required to show that he/she actually received support from the
member during his/her lifetime. Her dependency for support is actually

Page 38 of 82

presumed from the legitimacy of the marital union.15 (Emphasis and

underscoring supplied)

receipt evidencing payment of IBP dues. 24 (Italics in the original; underscoring

supplied)

The SSC, taking the Kasunduan16 as proof that Sonia was no longer dependent
for support on Bonifacio,17 and declaring that the SSS Lucena Branch acted in
good faith in granting the benefits to Sonia, granted respondents petition by
Resolution of November 14, 2001.18 It accordingly disposed as follows:

Via an Omnibus Motion,25 petitioners prayed the Court of Appeals to (a)

RECONSIDER its Resolution dated October 21, 2002 dismissing the Petition for
Review; and (b) ADMIT the thereto attached certified true copies of the parties
Position Papers and the petitioners Motion to Dismiss filed with the SSC, 26 the
Certificate of Life Membership of their counsel Atty. Ronaldo Antonio
Calayan,27 and the Official Receipt showing said counsels payment of lifetime
membership fee to the Integrated Bar of the Philippines. 28

IN VIEW OF ALL THE FOREGOING, the Commission hereby orders respondent

Sonia (Sonialita) Macatangay to refund the monthly pensions paid to her by
mistake and for the SSS to collect the same immediately upon receipt hereof.
Meanwhile, the System is ordered to grant the SS lump sum death benefits of
member Bonifacio Macatangay to designated beneficiaries Encarnacion
Macatangay, Elena, Joel, and Jay Macatangay, subject to existing rules and
regulations.
SO ORDERED.19 (Underscoring supplied)
Petitioners motion for reconsideration20 of the SSC Resolution was denied by
Order of August 14, 2002.21
Petitioners thereupon filed a petition for review, 22 docketed as CA G.R. No.
73038, before the Court of Appeals which dismissed it outright, by the present
challenged Resolution of October 21, 2002, 23 on the following procedural
grounds:
A perusal of the petition however shows that there was no written explanation
as to why respondents were not personally served copies of the petition as
required under Section 11, Rule 13 of the 1997 Rules of Civil Procedure.
Also, the petition is not accompanied by copies of the pleadings and documents
relevant and pertinent thereto(i.e., position papers filed by the parties before
the SSC, motion to dismiss filed by petitioner before the SSC) as required
under Section 6, Rule 43 of the 1997 Rules of Civil Procedure.
Finally, petitioners counsel failed to comply with the requirements under Bar
Matter No. 287 which requires that "all lawyers shall indicate in all pleadings,
motions and papers signed and filed by them the number and date of their
official receipt indicating payment of their annual membership dues to the
Integrated Bar of the Philippines for the current year x x x." In the instant
petition, Atty. Calayan failed to indicate the number and date of the official

The Court of Appeals, finding no substantial compliance by petitioners with the

requirement in Section 11, Rule 13 of the 1997 Rules of Civil Procedure reading:
Section 11. Priorities in Modes of Service and Filing Whenever practicable, the
service and filing of pleadings and other papers shall be done personally. Except
with respect to papers emanating from the court, a resort to other modes must
be accompanied by a written explanation why the service or filing was not done
personally. A violation of this rule may cause to consider the paper as not filed.,
denied the Omnibus Motion by Resolution of August 4, 2004. 29
Hence, the present Petition for Review30 faulting the appellate court as follows:
I. THE HONORABLE COURT OF APPEALS ERRED IN STRICTLY ADHERING TO
TECHNICALITIES, RATHER THAN IN SUBSTANTIAL COMPLIANCE, IN THE
APPLICATION OF THE PROVISIONS OF THE 1997 RULES ON CIVIL PROCEDURE.
II. THE CIRCUMSTANCES PREVAILING IN THIS PETITION FIND SUPPORT IN
DECISIONS OF THIS HONORABLE COURT IN FAVOR OF THE REVERSAL OF THE
COURT OF APPEALS DECISION UNDER REVIEW.31(Underscoring supplied)
Petitioners posit that they complied substantially with Section 11, Rule 13 of the
Rules of Court, as follows:
Sonias affidavit of service clearly shows the impracticability of personal service
of copies of the petition to the adverse parties. Manifest in the same affidavit is
the intervenor Social Security Systems address in Quezon City; that of the
private respondents lawyer in Lopez, Quezon, and that of Social Security
Commission in Makati City. Sonias counsels address is Lucena City. The
distance between these addresses, it is most respectfully submitted as a matter

Page 39 of 82

of judicial notice, may be construed as more than competent indicia as to why

Sonia resorted to service by mail.32 (Underscoring supplied)
And they cite jurisprudence calling for a liberal interpretation of the Rules in the
interest of substantial justice,33specifically Barnes v. Reyes34 which classifies
Section 11, Rule 13 of the Rules as a directory, rather than a mandatory, rule.
The petition is meritorious.
In Solar Team Entertainment, Inc. v. Ricafort,35 this Court, passing upon Section
11 of Rule 13 of the Rules of Court, held that a court has the discretion to
consider a pleading or paper as not filed if said rule is not complied with.
Personal service and filing are preferred for obvious reasons. Plainly, such
should expedite action or resolution on a pleading, motion or other paper; and
conversely, minimize, if not eliminate, delays likely to be incurred if service or
filing is done by mail, considering the inefficiency of the postal service.
Likewise, personal service will do away with the practice of some lawyers who,
wanting to appear clever, resort to the following less than ethical practices: (1)
serving or filing pleadings by mail to catch opposing counsel off-guard, thus
leaving the latter with little or no time to prepare, for instance, responsive
pleadings or an opposition; or (2) upon receiving notice from the post office that
the registered containing the pleading of or other paper from the adverse party
may be claimed, unduly procrastinating before claiming the parcel, or, worse,
not claiming it at all, thereby causing undue delay in the disposition of such
pleading or other papers.
If only to underscore the mandatory nature of this innovation to our set of
adjective rules requiring personal service whenever practicable, Section 11 of
Rule 13 then gives the court the discretion to consider a pleading or
paper as not filed if the other modes of service or filing were not
resorted to and no written explanation was made as to why personal
service was not done in the first place. The exercise of discretion must,
necessarily consider the practicability of personal service, for Section
11 itself begins with the clause "whenever practicable".
We thus take this opportunity to clarify that under Section 11, Rule 13 of the
1997 Rules of Civil Procedure, personal service and filing is the general rule, and
resort to other modes of service and filing, the exception. Henceforth, whenever
personal service or filing is practicable, in the light of the circumstances of time,
place and person, personal service or filing is mandatory. Only when personal
service or filing is not practicable may resort to other modes be had, which
must then be accompanied by a written explanation as to why personal service

or filing was not practicable to begin with. In adjudging the plausibility of an

explanation, a court shall likewise consider the importance of the subject matter
of the case or the issues involved therein, and the prima facie merit of the
pleading sought to be expunged for violation of Section 11. 36 (Emphasis and
underscoring supplied)
In Musa v. Amor, this Court, on noting the impracticality of personal service,
exercised its discretion and liberally applied Section 11 of Rule 13: 37
As [Section 11, Rule 13 of the Rules of Court] requires, service and filing of
pleadings must be done personally whenever practicable. The court notes
that in the present case, personal service would not be
practicable. Considering the distance between the Court of Appeals
and Donsol, Sorsogon where the petition was posted, clearly, service
by registered mail [sic] would have entailed considerable time, effort
and expense. A written explanation why service was not done
personally might have been superfluous. In any case, as the rule is so
worded with the use of "may", signifying permissiveness, a violation thereof
gives the court discretion whether or not to consider the paper as not filed.
While it is true that procedural rules are necessary to secure an orderly and
speedy administration of justice, rigid application of Section 11, Rule 13
may be relaxed in this case in the interest of substantial
justice.38 (Emphasis and underscoring supplied)
In the case at bar, the address of respondents counsel is Lopez, Quezon, while
petitioner Sonias counsels is Lucena City. 39 Lopez, Quezon is 83 kilometers
away from Lucena City.40 Such distance makes personal service impracticable.
As in Musa v. Amor,41 a written explanation why service was not done personally
"might have been superfluous."
As this Court held in Tan v. Court of Appeals,42 liberal construction of a rule of
procedure has been allowed where, among other cases, "the injustice to the
adverse party is not commensurate with the degree of his thoughtlessness in
not complying with the procedure prescribed."
Without preempting the findings of the Court of Appeals on the merits of
petitioners petition in CA G.R. No. 73038, if petitioners allegations of fact and
of law therein are true and the outright dismissal of their petition is upheld
without giving them the opportunity to prove their allegations, petitioner Sonia
would be deprived of her rightful death benefits just because

Page 40 of 82

of the Kasunduan she forged with her husband Macatangay which contract is, in
the first place, unlawful.43 The resulting injustice would not be commensurate to
petitioners counsels "thoughtlessness" in not explaining why respondents were
not personally served copies of the petition.
WHEREFORE, the petition is GRANTED. The Resolutions of the Court of
Appeals dated October 21, 2002 and August 4, 2004 in CA G.R. No. 73038
are REVERSED and SET ASIDE.
Let the records of the case be REMANDED to the Court of Appeals which
is DIRECTED to take appropriate action on petitioners petition for review in
light of the foregoing discussions.
SO ORDERED.
FIRST PHILIPPINE INTERNATIONAL BANK (Formerly Producers Bank of
the Philippines) and MERCURIO RIVERA, petitioners, vs. COURT
OF APPEALS, CARLOS EJERCITO, in substitution of DEMETRIO
DEMETRIA, and JOSE JANOLO, respondents.
DECISION
PANGANIBAN, J.:
In the absence of a formal deed of sale, may commitments given by bank
officers in an exchange of letters and/or in a meeting with the buyers constitute
a perfected and enforceable contract of sale over 101 hectares of land in Sta.
Rosa, Laguna? Does the doctrine of apparent authority apply in this case? If
so, may the Central Bank-appointed conservator of Producers Bank (now First
Philippine International Bank) repudiate such apparent authority after said
contract has been deemed perfected? During the pendency of a suit for specific
performance, does the filing of a derivative suit by the majority shareholders
and directors of the distressed bank to prevent the enforcement or
implementation of the sale violate the ban against forum-shopping?
Simply stated, these are the major questions brought before this Court in
the instant Petition for review on certiorari under Rule 45 of the Rules of Court,
to set aside the Decision promulgated January 14, 1994 of the respondent Court
of Appeals[1] in CA-G.R. CV No. 35756 and the Resolution promulgated June 14,
1994 denying the motion for reconsideration. The dispositive portion of the said
Decision reads:
WHEREFORE, the decision of the lower court is MODIFIED by the elimination of
the damages awarded under paragraphs 3, 4 and 6 of its dispositive portion and
the reduction of the award in paragraph 5 thereof to P75,000.00, to be assessed
against defendant bank. In all other aspects, said decision is hereby AFFIRMED.

All references to the original plaintiffs in the decision and its dispositive portion
are deemed, herein and hereafter, to legally refer to the plaintiff-appellee Carlos
C. Ejercito.
Costs against appellant bank.
The dispositive portion of the trial courts [2] decision dated July 10, 1991, on
the other hand, is as follows:
WHEREFORE, premises considered, judgment is hereby rendered in favor of the
plaintiffs and against the defendants as follows:
1. Declaring the existence of a perfected contract to buy and sell over the six
(6) parcels of land situated at Don Jose, Sta. Rosa, Laguna with an area of 101
hectares, more or less, covered by and embraced in Transfer Certificates of Title
Nos. T-106932 to T-106937, inclusive, of the Land Records of Laguna, between
the plaintiffs as buyers and the defendant Producers Bank for an agreed price of
Five and One Half Million (P5,500,000.00) Pesos;
2. Ordering defendant Producers Bank of the Philippines, upon finality of this
decision and receipt from the plaintiffs the amount of P5.5 Million, to execute in
favor of said plaintiffs a deed of absolute sale over the aforementioned six (6)
parcels of land, and to immediately deliver to the plaintiffs the owners copies of
T.C.T. Nos. T-106932 to T-106937, inclusive, for purposes of registration of the
same deed and transfer of the six (6) titles in the names of the plaintiffs;
3. Ordering the defendants, jointly and severally, to pay plaintiffs Jose A. Janolo
and Demetrio Demetria the sums of P 200,000.00 each in moral damages;
4. Ordering the defendants, jointly and severally, to pay plaintiffs the sum of P
100,000.00 as exemplary damages;
5. Ordering the defendants, jointly and severally, to pay the plaintiffs the
amount of P400,000.00 for and by way of attorneys fees;
6. Ordering the defendants to pay the plaintiffs, jointly and severally, actual
and moderate damages in the amount of P20,000.00;
With costs against the defendants.
After the parties filed their comment, reply, rejoinder, sur-rejoinder and
reply to sur-rejoinder, the petition was given due course in a Resolution
dated January 18, 1995. Thence, the parties filed their respective memoranda
and reply memoranda. The First Division transferred this case to the Third
Division per resolution dated October 23, 1995. After carefully deliberating on

Page 41 of 82

the aforesaid submissions, the Court assigned the case to the undersigned
ponente for the writing of this Decision.

Makati, Metro Manila

The Parties

Gentlemen:

Petitioner First Philippine International Bank (formerly Producers Bank of

the Philippines; petitioner Bank, for brevity) is a banking institution organized
and existing under the laws of the Republic of the Philippines. Petitioner
Mercurio Rivera (petitioner Rivera, for brevity) is of legal age and was, at all
times material to this case, Head Manager of the Property Management
Department of the petitioner Bank.

Attn.

I have the honor to submit my formal offer to purchase your properties covered
by titles listed hereunder located at Sta. Rosa, Laguna, with a total area of 101
hectares, more or less.
TCT NO.

AREA
T-106932
T-106933
T-106934
T-106935
T-106936
T-106937

Respondent Carlos Ejercito (respondent Ejercito, for brevity) is of legal age

and is the assignee of original plaintiffs-appellees Demetrio Demetria and Jose
Janolo.
Respondent Court of Appeals is the court which issued the Decision and
Resolution sought to be set aside through this petition.

The Facts

Mr. Mercurio Q. Rivera

Manager, Property Management Dept.

113,580
70,899
52,246
96,768
187,114
481,481

sq.m.
sq.m.
sq.m.
sq.m.
sq.m.
sq.m.

My offer is for PESOS: THREE

(P3,500,000.00) PESOS, in cash.

MILLION

FIVE

HUNDRED

THOUSAND

Kindly contact me at Telephone Number 921-1344.

[3]

The facts of this case are summarized in the respondent Courts Decision,
as follows:

(1) In the course of its banking operations, the defendant Producer Bank of the
Philippines acquired six parcels of land with a total area of 101 hectares located
at Don Jose, Sta. Rosa, Laguna, and covered by Transfer Certificates of Title Nos.
T-106932 to T-106937. The property used to be owned by BYME Investment and
Development Corporation which had them mortgaged with the bank as
collateral fora loan. The original plaintiffs, Demetrio Demetria and Jose O. Janolo,
wanted to purchase the property and thus initiated negotiations for that
purpose.

(3) On September 1, 1987, defendant Rivera made on behalf of the bank a

formal reply by letter which is hereunder quoted (Exh. C):
September 1, 1987
J-P M-P GUTIERREZ ENTERPRISES
142 Charisma St., Doa Andres II
Rosario, Pasig, Metro Manila
Attention:

JOSE O. JANOLO Dear Sir:

(2) In the early part of August 1987 said plaintiffs, upon the suggestion of
BYME Investments legal counsel, Jose Fajardo, met with defendant Mercurio
Rivera, Manager of the Property Management Department of the defendant
bank. The meeting was held pursuant to plaintiffs plan to buy the property (TSN
of Jan. 16, 1990, pp. 7-10). After the meeting, plaintiff Janolo, following the
advice of defendant Rivera, made a formal purchase offer to the bank through a
letter dated August 30, 1987 (Exh. B), as follows:

Thank you for your letter-offer to buy our six (6) parcels of acquired lots at Sta.
Rosa, Laguna (formerly owned by Byme industrial Corp.). Please be informed
however that the banks counter-offer is at P5.5 million for more than 101
hectares on lot basis.

August 30, 1987

We shall be very glad to hear your position on the matter.

The Producers Bank of the Philippines

Dear Sir:

Best regards.

Page 42 of 82

(4)On September 17, 1987, plaintiff Janolo, responding to Riveras aforequoted

reply, wrote (Exh.

Acting Conservator in the person of defendant Leonida T. Encarnacion.

On November 4, 1987, defendant Rivera wrote plaintiff Demetria the following
letter (Exh. F):

September 17, 1987

Attention:
Producers Bank
Paseo de Roxas
Makati, Metro Manila
Attention:

Dear Sir:

Mr. Mercurio Rivera

Gentlemen:
In reply to your letter regarding my proposal to purchase your 101-hectare lot
located at Sta. Rosa Laguna, I would like to amend my previous offer and I now
propose to buy the said lot at P4.250 million in CASH.
Hoping that this proposal meets your satisfaction.
(5) There was no reply to Janolos foregoing letter of September 17, 1987.
What took place was a meeting on September 28, 1987 between the plaintiffs
and Luis Co, the Senior Vice-President of defendant bank. Rivera as well as
Fajardo, the BYME lawyer, attended the meeting. Two days later, or
on September 30, 1987, plaintiff Janolo sent to the bank, through Rivera, the
following letter (Exh. E):
The Producers Bank of the Philippines
Paseo de Roxas, Makati
Metro Manila
Attention:

Atty. Demetrio Demetria

Your proposal to buy the properties the bank foreclosed from Byme Investment
Corp. located at Sta. Rosa, Laguna is under study yet as of this time by the
newly created committee for submission to the newly designated Acting
Conservator of the bank.
For your information.
(7) What thereafter transpired was a series of demands by the plaintiffs for
compliance by the bank with what plaintiff considered as a perfected contract of
sale, which demands were in one form or another refused by the bank. As
detailed by the trial court in its decision, on November 17, 1987, plaintiffs
through a letter to defendant Rivera (Exhibit G) tendered payment of the
amount of P5.5 million pursuant to (our) perfected sale agreement.
Defendants refused to receive both the payment and the letter. Instead, the
parcels of land involved in the transaction were advertised by the bank for sale
to any interested buyer (Exhs. H and H-1). Plaintiffs demanded the
execution by the bank of the documents on what was considered as a
perfected agreement. Thus:
Mr. Mercurio Rivera
Manager, Producers Bank
Paseo de Roxas, Makati
Metro Manila

Mr. Mercurio Rivera

Dear Mr. Rivera:
Re:

101 Hectares of Land in Sta. Rosa, Laguna

Gentlemen:
Pursuant to our discussion last 28 September 1987, we are pleased to inform
you that we are accepting your offer for us to purchase the property at Sta.
Rosa, Laguna, formerly owned by Byme In-vestment, for a total price of PESOS:
FIVE MILLION FIVE HUNDRED THOUSAND (P5,500,000.00).

This is in connection with the offer of our client, Mr. Jose O. Janolo, to purchase
your 101-hectare lot located in Sta. Rosa, Laguna, and which are covered by
TCT No. T-106932 to 106937.
From the documents at hand, it appears that your counter-offer dated
September 1, 1987 of this same lot in the amount of P5.5 million was accepted
by our client thru a letter dated September 30, 1987 and was received by you
on October 5, 1987.

Thank you.
(6) On October 12, 1987, the conservator of the bank (which has been placed
under conservatorship by the Central Bank since 1984) was replaced by an

In view of the above circumstances, we believe that an agreement has been

perfected. We were also informed that despite repeated follow-up to
consummate the purchase, you now refuse to honor your commitment. Instead,
you have advertised for sale the same lot to others.

Page 43 of 82

In behalf of our client, therefore, we are making this formal demand upon you
to consummate and execute the necessary actions/documentation within three
(3) days from your receipt hereof We are ready to remit the agreed amount of
P5.5 million at your advice. Otherwise, we shall be constrained to file the
necessary court action to protect the interest of our client.
We trust that you will be guided accordingly.
(8) Defendant bank, through defendant Rivera, acknowledged receipt of the
foregoing letter and stated, in its communication of December 2, 1987 (Exh.
I), that said letter has been referred x x x to the office of our Conservator for
proper disposition. However, no response came from the Acting Conservator.
On December 14, 1987, the plaintiffs made a second tender of payment (Exhs.
L and L-1), this time through the Acting Conservator, defendant Encarnacion.
Plaintiffs letter reads:
PRODUCERS BANK OF
THE PHILIPPINES
Paseo de Roxas,
Makati, Metro Manila
Attn.:

Atty. NIDA ENCARNACION Central Bank Conservator

Gentlemen:

We are sending you herewith, in-behalf of our client, Mr. JOSE O. JANOLO, MBTC
Check No. 258387 in the amount of P5.5 million as our agreed purchase price of
the 101-hectare lot covered by TCT Nos. 106932, 106933, 106934, 106935,
106936 and 106937 and registered under Producers Bank.
This is in connection with the perfected agreement consequent from your offer
of P5.5 Million as the purchase price of the said lots. Please inform us of the
date of documentation of the sale immediately.
Kindly acknowledge receipt of our payment.
(9) The foregoing letter drew no response for more than four months. Then,
on May 3, 1988, plaintiff, through counsel, made a final demand for compliance
by the bank with its obligations under the considered perfected contract of sale
(Exhibit N). As recounted by the trial court (Original Record, p. 656), in a reply
letter dated May 12, 1988 (Annex 4 of defendants answer to amended
complaint), the defendants through Acting Conservator Encarnacion repudiated
the authority of defendant Rivera and claimed that his dealings with the
plaintiffs, particularly his counter-offer of P5.5 Million are unauthorized or illegal.
On that basis, the defendants justified the refusal of the tenders of payment
and the non-compliance with the obligations under what the plaintiffs
considered to be a perfected contract of sale.

(10) On May 16, 1988, plaintiffs filed a suit for specific performance with
damages against the bank, its Manager Rivera and Acting Conservator
Encarnacion. The basis of the suit was that the transaction had with the bank
resulted in a perfected contract of sale. The defendants took the position that
there was no such perfected sale because the defendant Rivera is not
authorized to sell the property, and that there was no meeting of the minds as
to the price.
On March 14, 1991, Henry L. Co (the brother of Luis Co), through counsel Sycip
Salazar Hernandez and Gatmaitan, filed a motion to intervene in the trial court,
alleging that as owner of 80% of the Banks outstanding shares of stock, he had
a substantial interest in resisting the complaint. On July 8, 1991, the trial court
issued an order denying the motion to intervene on the ground that it was filed
after trial had already been concluded. It also denied a motion for
reconsideration filed thereafter. From the trial courts decision, the Bank,
petitioner Rivera and conservator Encarnacion appealed to the Court of Appeals
which subsequently affirmed with modification the said judgment. Henry Co did
not appeal the denial of his motion for intervention.
In the course of the proceedings in the respondent Court, Carlos Ejercito
was substituted in place of Demetria and Janolo, in view of the assignment of
the latters rights in the matter in litigation to said private respondent.
On July 11, 1992, during the pendency of the proceedings in the Court of
Appeals, Henry Co and several other stockholders of the Bank, through counsel
Angara Abello Concepcion Regala and Cruz, filed an action (hereafter, the
Second Case) -purportedly a derivative suit - with the Regional Trial Court of
Makati, Branch 134, docketed as Civil Case No. 92-1606, against Encarnacion,
Demetria and Janolo to declare any perfected sale of the property as
unenforceable and to stop Ejercito from enforcing or implementing the
sale.[4] In his answer, Janolo argued that the Second Case was barred by litis
pendentia by virtue of the case then pending in the Court of Appeals. During the
pre-trial conference in the Second Case, plaintiffs filed a Motion for Leave of
Court to Dismiss the Case Without Prejudice. Private respondent opposed this
motion on the ground, among others, that plaintiffs act of forum shopping
justifies the dismissal of both cases, with prejudice. [5] Private respondent, in his
memorandum, averred that this motion is still pending in the Makati RTC.
In their Petition[6] and
position as follows:

Memorandum,[7] petitioners

summarized

their

I.
The Court of Appeals erred in declaring that a contract of sale was perfected
between Ejercito (in substitution of Demetria and Janolo) and the bank.
II.

Page 44 of 82

The Court of Appeals erred in declaring the existence of an enforceable

contract of sale between the parties.

3) Assuming there was, was the said contract enforceable under the
statute of frauds?

III.

4) Did the bank conservator have the unilateral power to repudiate the
authority of the bank officers and/or to revoke the said contract?

The Court of Appeals erred in declaring that the conservator does not have the
power to overrule or revoke acts of previous management.

5) Did the respondent Court commit any reversible error in its findings of
facts?

IV.
The First Issue: Was There Forum-Shopping?
The findings and conclusions of the Court of Appeals do not conform to the
evidence on record.
On the other hand, private respondents prayed for dismissal of the instant
suit on the ground[8] that:
I.
Petitioners have engaged in forum shopping.
II.
The factual findings and conclusions of the Court of Appeals are supported by
the evidence on record and may no longer be questioned in this case.
III.
The Court of Appeals correctly held that there was a perfected contract
between Demetria and Janolo (substituted by respondent Ejercito) and the bank.
IV.
The Court of Appeals has correctly held that the conservator, apart from being
estopped from repudiating the agency and the contract, has no authority to
revoke the contract of sale.

The Issues
From the foregoing positions of the parties, the issues in this case may be
summed up as follows:
1) Was there forum-shopping on the part of petitioner Bank?
2) Was there a perfected contract of sale between the parties?

In order to prevent the vexations of multiple petitions and actions, the

Supreme Court promulgated Revised Circular No. 28-91 requiring that a party
must certify under oath x x x [that] (a) he has not (t)heretofore commenced
any other action or proceeding involving the same issues in the Supreme Court,
the Court of Appeals, or any other tribunal or agency; (b) to the best of his
knowledge, no such action or proceeding is pending in said courts or agencies.
A violation of the said circular entails sanctions that include the summary
dismissal of the multiple petitions or complaints. To be sure, petitioners have
included a VERIFICATION/CERTIFICATION in their Petition stating for the
record(,) the pendency of Civil Case No. 92-1606 before the Regional Trial Court
of Makati, Branch 134, involving a derivative suit filed by stockholders of
petitioner Bank against the conservator and other defendants but which is the
subject of a pending Motion to Dismiss Without Prejudice. [9]
Private respondent Ejercito vigorously argues that in spite of this
verification, petitioners are guilty of actual forum shopping because the instant
petition pending before this Court involves identical parties or interests
represented, rights asserted and reliefs sought (as that) currently pending
before the Regional Trial Court, Makati Branch 134 in the Second Case. In fact,
the issues in the two cases are so intertwined that a judgment or resolution in
either case will constitute res judicata in the other.[10]
On the other hand, petitioners explain[11] that there is no forum-shopping
because:
1) In the earlier or First Case from which this proceeding arose, the Bank was
impleaded as a defendant, whereas in the Second Case (assuming the Bank is
the real party in interest in a derivative suit), it was the plaintiff;
2) The derivative suit is not properly a suit for and in behalf of the corporation
under the circumstances;
3) Although the CERTIFICATION/VERIFICATION (supra) signed by the Bank
president and attached to the Petition identifies the action as a derivative
suit, it does not mean that it is one and (t)hat is a legal question for the
courts to decide;

Page 45 of 82

4) Petitioners did not hide the Second Case as they mentioned it in the said
VERIFICATION/CERTIFICATION.
We rule for private respondent.
To begin with, forum-shopping originated as a concept in private
international law,[12] where non-resident litigants are given the option to choose
the forum or place wherein to bring their suit for various reasons or excuses,
including to secure procedural advantages, to annoy and harass the defendant,
to avoid overcrowded dockets, or to select a more friendly venue. To combat
these less than honorable excuses, the principle of forum non conveniens was
developed whereby a court, in conflicts of law cases, may refuse impositions on
its jurisdiction where it is not the most convenient or available forum and the
parties are not precluded from seeking remedies elsewhere.
In this light, Blacks Law Dictionary[13] says that forum-shopping occurs
when a party attempts to have his action tried in a particular court or
jurisdiction where he feels he will receive the most favorable judgment or
verdict. Hence, according to Words and Phrases, [14] a litigant is open to the
charge of forum shopping whenever he chooses a forum with slight connection
to factual circumstances surrounding his suit, and litigants should be
encouraged to attempt to settle their differences without imposing undue
expense and vexatious situations on the courts.
In the Philippines, forum-shopping has acquired a connotation
encompassing not only a choice of venues, as it was originally understood in
conflicts of laws, but also to a choice of remedies. As to the first (choice of
venues), the Rules of Court, for example, allow a plaintiff to commence personal
actions where the defendant or any of the defendants resides or may be found,
or where the plaintiff or any of the plaintiffs resides, at the election of the
plaintiff (Rule 4, Sec. 2 [b]). As to remedies, aggrieved parties, for example, are
given a choice of pursuing civil liabilities independently of the criminal, arising
from the same set of facts. A passenger of a public utility vehicle involved in a
vehicular accident may sue on culpa contractual, culpa aquiliana or culpa
criminal - each remedy being available independently of the others - although
he cannot recover more than once.
In either of these situations (choice of venue or choice of remedy), the litigant
actually shops for a forum of his action. This was the original concept of the
term forum shopping.
Eventually, however, instead of actually making a choice of the forum of their
actions, litigants, through the encouragement of their lawyers, file their actions
in all available courts, or invoke all relevant remedies simultaneously. This
practice had not only resulted to (sic) conflicting adjudications among different
courts and consequent confusion enimical (sic) to an orderly administration of
justice. It had created extreme inconvenience to some of the parties to the
action.

Thus, forum-shopping had acquired a different concept - which is unethical

professional legal practice. And this necessitated or had given rise to the
formulation of rules and canons discouraging or altogether prohibiting the
practice.[15]
What therefore originally started both in conflicts of laws and in our
domestic law as a legitimate device for solving problems has been abused and
misused to assure scheming litigants of dubious reliefs.
To avoid or minimize this unethical practice of subverting justice, the
Supreme Court, as already mentioned, promulgated Circular 28-91. And even
before that, the Court had proscribed it in the Interim Rules and Guidelines
issued on January 11, 1983 and had struck down in several cases [16] the
inveterate use of this insidious malpractice. Forum-shopping as the filing of
repetitious suits in different courts has been condemned by Justice Andres R.
Narvasa (now Chief Justice) in Minister of Natural Resources, et al. vs. Heirs of
Orval Hughes, et al., as a reprehensible manipulation of court processes and
proceedings x x x.[17] When does forum-shopping take place?
There is forum-shopping whenever, as a result of an adverse opinion in one
forum, a party seeks a favorable opinion (other than by appeal or certiorari) in
another. The principle applies not only with respect to suits filed in the courts
but also in connection with litigations commenced in the courts while an
administrative proceeding is pending, as in this case, in order to defeat
administrative processes and in anticipation of an unfavorable administrative
ruling and a favorable court ruling. This is specially so, as in this case, where the
court in which the second suit was brought, has no jurisdiction [18]
The test for determining whether a party violated the rule against forumshopping has been laid down in the 1986 case of Buan vs. Lopez, [19] also by
Chief Justice Narvasa, and that is, forum-shopping exists where the elements
of litis pendentia are present or where a final judgment in one case will amount
to res judicata in the other, as follows:
There thus exists between the action before this Court and RTC Case No. 8636563 identity of parties, or at least such parties as represent the same
interests in both actions, as well as identity of rights asserted and relief prayed
for, the relief being founded on the same facts, and the identity on the two
preceding particulars is such that any judgment rendered in the other action,
will, regardless of which party is successful, amount to res adjudicata in the
action under consideration: all the requisites, in fine, of auter action pendant.
xxx

xxx

xxx

As already observed, there is between the action at bar and RTC Case No. 8636563, an identity as regards parties, or interests represented, rights asserted
and relief sought, as well as basis thereof, to a degree sufficient to give rise to
the ground for dismissal known as auter action pendant or lis pendens. That

Page 46 of 82

same identity puts into operation the sanction of twin dismissals just
mentioned. The application of this sanction will prevent any further delay in the
settlement of the controversy which might ensue from attempts to seek
reconsideration of or to appeal from the Order of the Regional Trial Court in Civil
Case No. 86-36563 promulgated on July 15, 1986, which dismissed the petition
upon grounds which appear persuasive.
Consequently, where a litigant (or one representing the same interest or
person) sues the same party against whom another action or actions for the
alleged violation of the same right and the enforcement of the same relief is/are
still pending, the defense of litis pendencia in one case is a bar to the others;
and, a final judgment in one would constitute res judicata and thus would cause
the dismissal of the rest. In either case, forum shopping could be cited by the
other party as a ground to ask for summary dismissal of the two [20] (or more)
complaints or petitions, and for the imposition of the other sanctions, which are
direct contempt of court, criminal prosecution, and disciplinary action against
the erring lawyer.
Applying the foregoing principles in the case before us and comparing it
with the Second Case, it is obvious that there exist identity of parties or
interests represented, identity of rights or causes and identity of reliefs sought.
Very simply stated, the original complaint in the court a quo which gave
rise to the instant petition was filed by the buyer (herein private respondent and
his predecessors-in-interest) against the seller (herein petitioners) to enforce
the alleged perfected sale of real estate. On the other hand, the complaint [21] in
the Second Case seeks to declare such purported sale involving the same real
property as unenforceable as against the Bank, which is the petitioner herein.
In other words, in the Second Case, the majority stockholders, in representation
of the Bank, are seeking to accomplish what the Bank itself failed to do in the
original case in the trial court. In brief, the objective or the relief being sought,
though worded differently, is the same, namely, to enable the petitioner Bank to
escape from the obligation to sell the property to respondent. In Danville
Maritime, Inc. vs. Commission on Audit,[22] this Court ruled that the filing by a
party of two apparently different actions, but with the same objective,
constituted forum shopping:
In the attempt to make the two actions appear to be different, petitioner
impleaded different respondents therein - PNOC in the case before the lower
court and the COA in the case before this Court and sought what seems to be
different reliefs. Petitioner asks this Court to set aside the questioned letterdirective of the COA dated October 10, 1988 and to direct said body to approve
the Memorandum of Agreement entered into by and between the PNOC and
petitioner, while in the complaint before the lower court petitioner seeks to
enjoin the PNOC from conducting a rebidding and from selling to other parties
the vessel T/T Andres Bonifacio, and for an extension of time for it to comply
with the paragraph 1 of the memorandum of agreement and damages. One can
see that although the relief prayed for in the two (2) actions are ostensibly
different, the ultimate objective in both actions is the same, that is, the
approval of the sale of vessel in favor of petitioner, and to overturn the letter-

directive of the COA of October 10, 1988 disapproving the sale.(italics

supplied)
In an earlier case,[23] but with the same logic and vigor, we held:
In other words, the filing by the petitioners of the instant special civil action
for certiorari and prohibition in this Court despite the pendency of their action in
the Makati Regional Trial Court, is a species of forum-shopping. Both actions
unquestionably involve the same transactions, the same essential facts and
circumstances. The petitioners claim of absence of identity simply because the
PCGG had not been impleaded in the RTC suit, and the suit did not involve
certain acts which transpired after its commencement, is specious. In the RTC
action, as in the action before this Court, the validity of the contract to purchase
and sell of September 1, 1986, i.e., whether or not it had been efficaciously
rescinded, and the propriety of implementing the same (by paying the pledgee
banks the amount of their loans, obtaining the release of the pledged shares,
etc.) were the basic issues. So, too, the relief was the same: the prevention of
such implementation and/or the restoration of the status quo ante. When the
acts sought to be restrained took place anyway despite the issuance by the Trial
Court of a temporary restraining order, the RTC suit did not become functus
oflcio. It remained an effective vehicle for obtention of relief; and petitioners
remedy in the premises was plain and patent: the filing of an amended and
supplemental pleading in the RTC suit, so as to include the PCGG as defendant
and seek nullification of the acts sought to be enjoined but nonetheless done.
The remedy was certainly not the institution of another action in another forum
based on essentially the same facts. The adoption of this latter recourse renders
the petitioners amenable to disciplinary action and both their actions, in this
Court as well as in the Court a quo, dismissible.
In the instant case before us, there is also identity of parties, or at least, of
interests represented. Although the plaintiffs in the Second Case (Henry L. Co.
et al.) are not name parties in the First Case, they represent the same interest
and entity, namely, petitioner Bank, because:
Firstly, they are not suing in their personal capacities, for they have no direct
personal interest in the matter in controversy. They are not principally or even
subsidiarily liable; much less are they direct parties in the assailed contract of
sale; and
Secondly, the allegations of the complaint in the Second Case show that the
stockholders are bringing a derivative suit. In the caption itself, petitioners
claim to have brought suit for and in behalf of the Producers Bank of
the Philippines.[24] Indeed, this is the very essence of a derivative suit:
An individual stockholder is permitted to institute a derivative suit on behalf of
the corporation wherein he holds stock in order to protect or vindicate corporate
rights, whenever the officials of the corporation refuse to sue, or are the ones to
be sued or hold the control of the corporation. In such actions, the suing

Page 47 of 82

stockholder is regarded as a nominal party, with the corporation as the real

party in interest. (Gamboa v. Victoriano, 90 SCRA 40, 47 [1979]; italics
supplied).
In the face of the damaging admissions taken from the complaint in the
Second Case, petitioners, quite strangely, sought to deny that the Second Case
was a derivative suit, reasoning that it was brought, not by the minority
shareholders, but by Henry Co et al., who not only own, hold or control over
80% of the outstanding capital stock, but also constitute the majority in the
Board of Directors of petitioner Bank. That being so, then they really represent
the Bank. So, whether they sued derivatively or directly, there is undeniably
an identity of interests/entity represented.
Petitioner also tried to seek refuge in the corporate fiction that the
personality of the Bank is separate and distinct from its shareholders. But the
rulings of this Court are consistent: When the fiction is urged as a means of
perpetrating a fraud or an illegal act or as a vehicle for the evasion of an
existing obligation, the circumvention of statutes, the achievement or perfection
of a monopoly or generally the perpetration of knavery or crime, the veil with
which the law covers and isolates the corporation from the members or
stockholders who compose it will be lifted to allow for its consideration merely
as an aggregation of individuals.[25]
In addition to the many cases [26] where the corporate fiction has been
disregarded, we now add the instant case, and declare herewith that the
corporate veil cannot be used to shield an otherwise blatant violation of the
prohibition against forum-shopping. Shareholders, whether suing as the
majority in direct actions or as the minority in a derivative suit, cannot be
allowed to trifle with court processes, particularly where, as in this case, the
corporation itself has not been remiss in vigorously prosecuting or defending
corporate causes and in using and applying remedies available to it. To rule
otherwise would be to encourage corporate litigants to use their shareholders
as fronts to circumvent the stringent rules against forum shopping.
Finally, petitioner Bank argued that there cannot be any forum shopping,
even assuming arguendo that there is identity of parties, causes of action and
reliefs sought, because it (the Bank) was the defendant in the (first) case while
it was the plaintiff in the other (Second Case), citing as authority Victronics
Computers, Inc. vs. Regional Trial Court, Branch 63, Makati, etc. et al.,[27]where
the Court held:
The rule has not been extended to a defendant who, for reasons known only to
him, commences a new action against the plaintiff - instead of filing a
responsive pleading in the other case - setting forth therein, as causes of action,
specific denials, special and affirmative defenses or even counterclaims. Thus,
Velhagens and Kings motion to dismiss Civil Case No. 91-2069 by no means
negates the charge of forum-shopping as such did not exist in the first place.
(italics supplied)

Petitioner pointed out that since it was merely the defendant in the original
case, it could not have chosen the forum in said case.
Respondent, on the other hand, replied that there is a difference in factual
setting between Victronics and the present suit. In the former, as underscored
in the above-quoted Court ruling, the defendants did not file any responsive
pleading in the first case. In other words, they did not make any denial or raise
any defense or counter-claim therein. In the case before us however, petitioners
filed a responsive pleading to the complaint - as a result of which, the issues
were joined.
Indeed, by praying for affirmative reliefs and interposing counter-claims in
their responsive pleadings, the petitioners became plaintiffs themselves in the
original case, giving unto themselves the very remedies they repeated in the
Second Case.
Ultimately, what is truly important to consider in determining whether
forum-shopping exists or not is the vexation caused the courts and partieslitigant by a party who asks different courts and/or administrative agencies to
rule on the same or related causes and/or to grant the same or substantially the
same reliefs, in the process creating the possibility of conflicting decisions being
rendered by the different fora upon the same issue. In this case, this is exactly
the problem: a decision recognizing the perfection and directing the
enforcement of the contract of sale will directly conflict with a possible decision
in the Second Case barring the parties from enforcing or implementing the said
sale. Indeed, a final decision in one would constitute res judicata in the other.[28]
The foregoing conclusion finding the existence of forum-shopping
notwithstanding, the only sanction possible now is the dismissal of both cases
with prejudice, as the other sanctions cannot be imposed because petitioners
present counsel entered their appearance only during the proceedings in this
Court, and the Petitions VERIFICATION/CERTIFICATION contained sufficient
allegations as to the pendency of the Second Case to show good faith in
observing Circular 28-91. The lawyers who filed the Second Case are not before
us; thus the rudiments of due process prevent us from motu propio imposing
disciplinary measures against them in this Decision. However, petitioners
themselves (and particularly Henry Co, et al.) as litigants are admonished to
strictly follow the rules against forum-shopping and not to trifle with court
proceedings and processes. They are warned that a repetition of the same will
be dealt with more severely.
Having said that, let it be emphasized that this petition should be
dismissed not merely because of forum-shopping but also because of the
substantive issues raised, as will be discussed shortly.

The Second Issue: Was The Contract Perfected?

The respondent Court correctly treated the question of whether or not
there was, on the basis of the facts established, a perfected contract of sale as

Page 48 of 82

the ultimate issue. Holding that a valid contract has been established,
respondent Court stated:
There is no dispute that the object of the transaction is that property owned by
the defendant bank as acquired assets consisting of six (6) parcels of land
specifically identified under Transfer Certificates of Title Nos. T-106932 to T106937. It is likewise beyond cavil that the bank intended to sell the property.
As testified to by the Banks Deputy Conservator, Jose Entereso, the bank was
looking for buyers of the property. It is definite that the plaintiffs wanted to
purchase the property and it was precisely for this purpose that they met with
defendant Rivera, Manager of the Property Management Department of the
defendant bank, in early August 1987. The procedure in the sale of acquired
assets as well as the nature and scope of the authority of Rivera on the matter
is clearly delineated in the testimony of Rivera himself, which testimony was
relied upon by both the bank and by Rivera in their appeal briefs. Thus (TSN of
July 30, 1990. pp. 19-20):
A:
The procedure runs this way: Acquired assets was turned over to me
and then I published it in the form of an inter-office memorandum distributed to
all branches that these are acquired assets for sale. I was instructed to
advertise acquired assets for sale so on that basis, I have to entertain offer; to
accept offer, formal offer and upon having been offered, I present it to the
Committee. I provide the Committee with necessary information about the
property such as original loan of the borrower, bid price during the foreclosure,
total claim of the bank, the appraised value at the time the property is being
offered for sale and then the information which are relative to the evaluation of
the bank to buy which the Committee considers and it is the Committee that
evaluate as against the exposure of the bank and it is also the Committee that
submit to the Conservator for final approval and once approved, we have to
execute the deed of sale and it is the Conservator that sign the deed of sale, sir.
The plaintiffs, therefore, at that meeting of August 1987 regarding their
purpose of buying the property, dealt with and talked to the right person.
Necessarily, the agenda was the price of the property, and plaintiffs were
dealing with the bank official authorized to entertain offers, to accept offers and
to present the offer to the Committee before which the said official is authorized
to discuss information relative to price determination. Necessarily, too, it being
inherent in his authority, Rivera is the officer from whom official information
regarding the price, as determined by the Committee and approved by the
Conservator, can be had. And Rivera confirmed his authority when he talked
with the plaintiff in August 1987. The testimony of plaintiff Demetria is clear on
this point (TSN of May 31, 1990, pp. 27-28):
Q: When you went to the Producers Bank and talked with Mr.
Mercurio Rivera, did you ask him point-blank his authority to sell
any property?
A:

No, sir. Not point blank although it came from him. (W)hen I asked
him how long it would take because he was saying that the

matter of pricing will be passed upon by the committee. And

when I asked him how long it will take for the committee to
decide and he said the committee meets every week. If I am not
mistaken Wednesday and in about two weeks (sic) time, in effect
what he was saying he was not the one who was to decide. But
he would refer it to the committee and he would relay the
decision of the committee to me.
Q: Please answer the question.
A:

He did not say that he had the authority(.) But he said he would
refer the matter to the committee and he would relay the
decision to me and he did just like that.

Parenthetically, the Committee referred to was the Past Due Committee of

which Luis Co was the Head, with Jose Entereso as one of the members.
What transpired after the meeting of early August 1987 are consistent with the
authority and the duties of Rivera and the banks internal procedure in the
matter of the sale of banks assets. As advised by Rivera, the plaintiffs made a
formal offer by a letter dated August 20, 1987 stating that they would buy at
the price of P3.5 Million in cash. The letter was for the attention of Mercurio
Rivera who was tasked to convey and accept such offers. Considering an aspect
of the official duty of Rivera as some sort of intermediary between the plaintiffsbuyers with their proposed buying price on one hand, and the bank Committee,
the Conservator and ultimately the bank itself with the set price on the other,
and considering further the discussion of price at the meeting of August
resulting in a formal offer of P3.5 Million in cash, there can be no other logical
conclusion than that when, on September 1, 1987, Rivera informed plaintiffs by
letter that the banks counter-offer is at P5.5 Million for more than 101
hectares on lot basis, such counter-offer price had been determined by the
Past Due Committee and approved by the Conservator after Rivera had duly
presented plaintiffs offer for discussion by the Committee of such matters as
original loan of borrower, bid price during foreclosure, total claim of the bank,
and market value. Tersely put, under the established facts, the price of P5.5
Million was, as clearly worded in Riveras letter (Exh. E), the official and
definitive price at which the bank was selling the property.
There were averments by defendants below, as well as before this Court, that
the P5.5 Million price was not discussed by the Committee and that it was
merely quoted to start negotiations regarding the price. As correctly
characterized by the trial court, this is not credible. The testimonies of Luis Co
and Jose Entereso on this point are at best equivocal and considering the
gratuitous and self-serving character of these declarations, the banks
submission on this point does not inspire belief. Both Co and Entereso, as
members of the Past Due Committee of the bank, claim that the offer of the
plaintiff was never discussed by the Committee. In the same vein, both Co and
Entereso openly admit that they seldom attend the meetings of the Committee.
It is important to note that negotiations on the price had started in early August
and the plaintiffs had already offered an amount as purchase price, having been

Page 49 of 82

made to understand by Rivera, the official in charge of the negotiation, that the
price will be submitted for approval by the bank and that the banks decision
will be relayed to plaintiffs. From the facts, the amount of P5.5 Million has a
definite significance. It is the official bank price. At any rate, the bank placed its
official, Rivera, in a position of authority to accept offers to buy and negotiate
the sale by having the offer officially acted upon by the bank. The bank cannot
turn around and later say, as it now does, that what Rivera states as the banks
action on the matter is not in fact so. It is a familiar doctrine, the doctrine of
ostensible authority, that if a corporation knowingly permits one of its officers,
or any other agent, to do acts within the scope of an apparent authority, and
thus holds him out to the public as possessing power to do those acts, the
corporation will, as against any one who has in good faith dealt with the
corporation through such agent, he estopped from denying his authority
(Francisco v. GSIS, 7 SCRA 577, 583-584; PNB v. Court of Appeals, 94 SCRA 357,
369-370; Prudential Bank v. Court of Appeals, G.R. No. 103957, June 14,
1993).[29]
Article 1318 of the Civil Code enumerates the requisites of a valid and
perfected contract as follows: (1) Consent of the contracting parties; (2) Object
certain which is the subject matter of the contract; (3)
Cause of the
obligation which is established.
There is no dispute on requisite no. 2. The object of the questioned
contract consists of the six (6) parcels of land in Sta. Rosa, Laguna with an
aggregate area of about 101 hectares, more or less, and covered by Transfer
Certificates of Title Nos. T-106932 to T-106937. There is, however, a dispute on
the first and third requisites.
Petitioners allege that there is no counter-offer made by the Bank, and
any supposed counter-offer which Rivera (or Co) may have made is
unauthorized. Since there was no counter-offer by the Bank, there was nothing
for Ejercito (in substitution of Demetria and Janolo) to accept. [30] They disputed
the factual basis of the respondent Courts findings that there was an offer
made by Janolo for P3.5 million, to which the Bank counter-offered P5.5 million.
We have perused the evidence but cannot find fault with the said Courts
findings of fact. Verily, in a petition under Rule 45 such as this, errors of fact -if
there be any - are, as a rule, not reviewable. The mere fact that respondent
Court (and the trial court as well) chose to believe the evidence presented by
respondent more than that presented by petitioners is not by itself a reversible
error. in fact, such findings merit serious consideration by this Court, particularly
where, as in this case, said courts carefully and meticulously discussed their
findings. This is basic.
Be that as it may, and in addition to the foregoing disquisitions by the
Court of Appeals, let us review the question of Riveras authority to act and
petitioners allegations that the P5.5 million counter-offer was extinguished by
the P4.25 million revised offer of Janolo. Here, there are questions of law which
could be drawn from the factual findings of the respondent Court. They also
delve into the contractual elements of consent and cause.

The authority of a corporate officer in dealing with third persons may be

actual or apparent. The doctrine of apparent authority, with special reference
to banks, was laid out in Prudential Bank vs. Court of Appeals, [31] where it was
held that:
Conformably, we have declared in countless decisions that the principal is
liable for obligations contracted by the agent. The agents apparent
representation yields to the principals true representation and the contract is
considered as entered into between the principal and the third person (citing
National Food Authority vs. Intermediate Appellate Court, 184 SCRA 166).
A bank is liable for wrongful acts of its officers done in the interests of the bank
or in the course of dealings of the officers in their representative capacity but
not for acts outside the scope of their authority (9 C.J.S., p. 417). A bank holding
out its officers and agents as worthy of confidence will not be permitted to profit
by the frauds they may thus be enabled to perpetrate in the apparent scope of
their employment; nor will it be permitted to shirk its responsibility for such
frauds, even though no benefit may accrue to the bank therefrom (10 Am Jur
2d, p. 114). Accordingly, a banking corporation is liable to innocent third
persons where the representation is made in the course of its business by an
agent acting within the general scope of his authority even though, in the
particular case, the agent is secretly abusing his authority and attempting to
perpetrate a fraud upon his principal or some other person, for his own ultimate
benefit (McIntosh v. Dakota Trust Co., 52 ND 752, 204 NW 818, 40 ALR 1021).
Application of these principles is especially necessary because banks have a
fiduciary relationship with the public and their stability depends on the
confidence of the people in their honesty and efficiency. Such faith will be
eroded where banks do not exercise strict care in the selection and supervision
of its employees, resulting in prejudice to their depositors.
From the evidence found by respondent Court, it is obvious that petitioner
Rivera has apparent or implied authority to act for the Bank in the matter of
selling its acquired assets. This evidence includes the following:
(a) The petition itself in par. II-1 (p. 3) states that Rivera was at all times
material to this case, Manager of the Property Management Department of the
Bank. By his own admission, Rivera was already the person in charge of the
Banks acquired assets (TSN, August 6, 1990, pp. 8-9);
(b) As observed by respondent Court, the land was definitely being sold by the
Bank. And during the initial meeting between the buyers and Rivera, the latter
suggested that the buyers offer should be no less than P3.3 million (TSN, April
26, 1990, pp. 16-17);
(c) Rivera received the buyers letter dated August 30, 1987 offering P3.5
million (TSN, 30 July 1990, p. 11);

Page 50 of 82

(d) Rivera signed the letter dated September 1, 1987 offering to sell the
property for P5.5 million (TSN, July 30, p. 11);
(e) Rivera received the letter dated September 17, 1987 containing the buyers
proposal to buy the property for P4.25 million (TSN, July 30, 1990, p. 12);
(f)
Rivera, in a telephone conversation, confirmed that the P5.5 million was
the final price of the Bank (TSN, January 16, 1990, p. 18);
(g)
Rivera arranged the meeting between the buyers and Luis Co
on September 28, 1987, during which the Banks offer of P5.5 million was
confirmed by Rivera (TSN, April 26, 1990, pp. 34-35). At said meeting, Co, a
major shareholder and officer of the Bank, confirmed Riveras statement as to
the finality of the Banks counter-offer of P5.5 million (TSN, January 16, 1990, p.
21; TSN, April 26, 1990, p. 35);
(h)
In its newspaper advertisements and announcements, the Bank referred
to Rivera as the officer acting for the Bank in relation to parties interested in
buying assets owned/acquired by the Bank. In fact, Rivera was the officer
mentioned in the Banks advertisements offering for sale the property in
question (cf. Exhs. S and S-I).
In the very recent case of Limketkai Sons Milling, Inc. vs. Court of Appeals,
et al.,[32] the Court, through Justice Jose A. R. Melo, affirmed the doctrine of
apparent authority as it held that the apparent authority of the officer of the
Bank of P.I. in charge of acquired assets is borne out by similar circumstances
surrounding his dealings with buyers.
To be sure, petitioners attempted to repudiate Riveras apparent authority
through
documents
and
testimony
which
seek
to
establish
Riveras actual authority. These pieces of evidence, however, are inherently
weak as they consist of Riveras self-serving testimony and various inter-office
memoranda that purport to show his limited actual authority, of which private
respondent cannot be charged with knowledge. In any event, since the issue is
apparent authority, the existence of which is borne out by the respondent
Courts findings, the evidence of actual authority is immaterial insofar as the
liability of a corporation is concerned.[33]
Petitioners also argued that since Demetria and Janolo were experienced
lawyers and their law firm had once acted for the Bank in three criminal
cases, they should be charged with actual knowledge of Riveras limited
authority. But the Court of Appeals in its Decision (p. 12) had already made a
factual finding that the buyers had no notice of Riveras actual authority prior to
the sale. In fact, the Bank has not shown that they acted as its counsel in
respect to any acquired assets; on the other hand, respondent has proven that
Demetria and Janolo merely associated with a loose aggrupation of lawyers (not
a professional partnership), one of whose members (Atty. Susana Parker) acted
in said criminal cases.

Petitioners also alleged that Demetrias and Janolos P4.25 million counteroffer in the letter dated September 17, 1987 extinguished the Banks offer of
P5.5 million.[34] They disputed the respondent Courts finding that there was a
meeting of minds when on 30 September 1987 Demetria and Janolo through
Annex L (letter dated September 30, 1987) accepted Riveras counter offer of
P5.5 million under Annex J (letter dated September 17, 1987), citing the late
Justice Paras,[35] Art. 1319 of the Civil Code [36] and related Supreme Court rulings
starting withBeaumont vs. Prieto.[37]
However, the above-cited authorities and precedents cannot apply in the
instant case because, as found by the respondent Court which reviewed the
testimonies on this point, what was accepted by Janolo in his letter dated
September 30, 1987 was the Banks offer of P5.5 million as confirmed and
reiterated to Demetria and Atty. Jose Fajardo by Rivera and Co during their
meeting on September 28, 1987. Note that the said letter of September 30,
1987 begins with (p)ursuant to our discussion last 28 September 1987 x x x.
Petitioners insist that the respondent Court should have believed the
testimonies of Rivera and Co that the September 28, 1987 meeting was meant
to have the offerors improve on their position of P5.5 million. [38] However, both
the trial court and the Court of Appeals found petitioners testimonial evidence
not credible, and we find no basis for changing this finding of fact.
Indeed, we see no reason to disturb the lower courts (both the RTC and the
CA) common finding that private respondents evidence is more in keeping with
truth and logic - that during the meeting on September 28, 1987, Luis Co and
Rivera confirmed that the P5.5 million price has been passed upon by the
Committee and could no longer be lowered (TSN of April 27, 1990, pp. 3435).[39] Hence, assuming arguendo that the counter-offer of P4.25 million
extinguished the offer of P5.5 million, Luis Cos reiteration of the said P5.5
million price during the September 28, 1987 meeting revived the said offer. And
by virtue of the September 30, 1987 letter accepting this revived offer, there
was a meeting of the minds, as the acceptance in said letter was absolute and
unqualified.
We note that the Banks repudiation, through Conservator Encarnacion, of
Riveras authority and action, particularly the latters counter-offer of P5.5
million, as being unauthorized and illegal came only on May 12, 1988 or more
than seven (7) months after Janolos acceptance. Such delay, and the absence
of any circumstance which might have justifiably prevented the Bank from
acting earlier, clearly characterizes the repudiation as nothing more than a lastminute attempt on the Banks part to get out of a binding contractual
obligation.
Taken together, the factual findings of the respondent Court point to an
implied admission on the part of the petitioners that the written offer made
on September 1, 1987 was carried through during the meeting of September
28, 1987. This is the conclusion consistent with human experience, truth and
good faith.

Page 51 of 82

It also bears noting that this issue of extinguishment of the Banks offer of
P5.5 million was raised for the first time on appeal and should thus be
disregarded.
This Court in several decisions has repeatedly adhered to the principle that
points of law, theories, issues of fact and arguments not adequately brought to
the attention of the trial court need not be, and ordinarily will not be, considered
by a reviewing court, as they cannot be raised for the first time on appeal
(Santos vs. IAC, No. 74243, November 14, 1986, 145 SCRA 592). [40]
xxx It is settled jurisprudence that an issue which was neither averred in the
complaint nor raised during the trial in the court below cannot be raised for the
first time on appeal as it would be offensive to the basic rules of fair play,
justice and due process (Dihiansan vs. CA, 153 SCRA 713 [1987]; Anchuelo vs.
IAC, 147 SCRA 434 [1987]; Dulos Realty & Development Corp. vs. CA, 157 SCRA
425 [1988]; Ramos vs. IAC, 175 SCRA 70 [1989]; Gevero vs. IAC, G.R. 77029,
August 30, 1990).[41]
Since the issue was not raised in the pleadings as an affirmative defense,
private respondent was not given an opportunity in the trial court to controvert
the same through opposing evidence. Indeed, this is a matter of due process.
But we passed upon the issue anyway, if only to avoid deciding the case on
purely procedural grounds, and we repeat that, on the basis of the evidence
already in the record and as appreciated by the lower courts, the inevitable
conclusion is simply that there was a perfected contract of sale.

The Third Issue:

Is the Contract Enforceable?

The petition alleged:[42]

Even assuming that Luis Co or Rivera did relay a verbal offer to sell at P5.5
million during the meeting of 28 September 1987, and it was this verbal offer
that Demetria and Janolo accepted with their letter of 30 September 1987, the
contract produced thereby would be unenforceable by action - there being no
note, memorandum or writing subscribed by the Bank to evidence such
contract. (Please see Article 1403[2], Civil Code.)
Upon the other hand, the respondent Court in its Decision (p. 14) stated:

x x x Of course, the banks letter of September 1, 1987 on the official price and
the plaintiffs acceptance of the price on September 30, 1987, are not, in
themselves, formal contracts of sale. They are however clear embodiments of
the fact that a contract of sale was perfected between the parties, such contract
being binding in whatever form it may have been entered into (case citations
omitted). Stated simply, the banks letter ofSeptember 1, 1987, taken together
with plaintiffs letter dated September 30, 1987, constitute in law a sufficient
memorandum of a perfected contract of sale.
The respondent Court could have added that the written communications
commenced not only from September 1, 1987 but from Janolos August 20,
1987 letter. We agree that, taken together, these letters constitute sufficient
memoranda - since they include the names of the parties, the terms and
conditions of the contract, the price and a description of the property as the
object of the contract.
But let it be assumed arguendo that the counter-offer during the meeting
on September 28, 1987 did constitute a new offer which was accepted by
Janolo on September 30, 1987. Still, the statute of frauds will not apply by
reason of the failure of petitioners to object to oral testimony proving petitioner
Banks counter-offer of P5.5 million. Hence, petitioners - by such utter failure to
object - are deemed to have waived any defects of the contract under the
statute of frauds, pursuant to Article 1405 of the Civil Code:
Art. 1405. Contracts infringing the Statute of Frauds, referred to in No. 2 of
Article 1403, are ratified by the failure to object to the presentation of oral
evidence to prove the same, or by the acceptance of benefits under them.
As private respondent pointed out in his Memorandum, oral testimony on
the reaffirmation of the counter-offer of P5.5 million is aplenty -and the silence
of petitioners all throughout the presentation makes the evidence binding on
them thus:
A - Yes, sir. I think it was September 28, 1987 and I was again present
because Atty. Demetria told me to accompany him and we were
able to meet Luis Co at the Bank.
xxx

xxx

xxx

Q - Now, what transpired during this meeting with Luis Co of the

Producers Bank?
A - Atty. Demetria asked Mr. Luis Co whether the price could be
reduced, sir.
Q - What price?
A - The 5.5 million pesos and Mr. Luis Co said that the amount cited
by Mr. Mercurio Rivera is the final price and that is the price they
intends (sic) to have, sir.
Q - What do you mean?

Page 52 of 82

A - That is the amount they want, sir.

Q - What is the reaction of the plaintiff Demetria to Luis Cos statment
(sic) that the defendant Riveras counter-offer of 5.5 million was
the defendants bank (sic) final offer?
A - He said in a day or two, he will make final acceptance, sir.
Q - What is the response of Mr. Luis Co?
A - He said he will wait for the position of Atty. Demetria, sir.

Q - According to Atty. Demetrio Demetria, the amount of P5.5 million

was reached by the Committee and it is not within his power to
reduce this amount. What can you say to that statement that the
amount of P5.5 million was reached by the Committee?
A - It was not discussed by the Committee but it was discussed
initially by Luis Co and the group of Atty. Demetrio Demetria and
Atty. Pajardo (sic), in that September 28, 1987 meeting, sir.
[Direct testimony of Mercurio Rivera, TSN, 30 July 1990, pp. 14-15.]

[Direct testimony of Atty. Jose Fajardo, TSN, January 16, 1990, at pp. 18-21.]
----0---Q - What transpired during that meeting between you and Mr. Luis Co
of the defendant Bank?
A - We went straight to the point because he being a busy person, I
told him if the amount of P5.5 million could still be reduced and
he said that was already passed upon by the committee. What
the bank expects which was contrary to what Mr. Rivera stated.
And he told me that is the final offer of the bank P5.5 million and
we should indicate our position as soon as possible.
Q - What was your response to the answer of Mr. Luis Co?
A - I said that we are going to give him our answer in a few days and
he said that was it. Atty. Fajardo and I and Mr. Mercurio [Rivera]
was with us at the time at his office.
Q - For the record, your Honor please, will you tell this Court who was
with Mr. Co in his Office in Producers Bank Building during this
meeting?
A - Mr. Co himself, Mr. Rivera, Atty. Fajardo and I.
Q - By Mr. Co you are referring to?
A - Mr. Luis Co.
Q - After this meeting with Mr. Luis Co, did you and your partner
accede on (sic) the counter offer by the bank?
A - Yes, sir, we did. Two days thereafter we sent our acceptance to
the bank which offer we accepted, the offer of the bank which is
P5.5 million.
[Direct testimony of Atty. Demetria, TSN, 26 April 1990, at pp. 34-36.]
---- 0 ----

The
Fourth
Issue: May
the
the Perfected and Enforceable Contract?

Conservator

Revoke

It is not disputed that the petitioner Bank was under a conservator placed
by the Central Bank of the Philippines during the time that the negotiation and
perfection of the contract of sale took place. Petitioners energetically contended
that the conservator has the power to revoke or overrule actions of the
management or the board of directors of a bank, under Section 28-A of Republic
Act No. 265 (otherwise known as the Central Bank Act) as follows:
Whenever, on the basis of a report submitted by the appropriate supervising or
examining department, the Monetary Board finds that a bank or a non-bank
financial intermediary performing quasi - banking functions is in a state of
continuing inability or unwillingness to maintain a state of liquidity deemed
adequate to protect the interest of depositors and creditors, the Monetary Board
may appoint a conservator to take charge of the assets, liabilities, and the
management of that institution, collect all monies and debts due said institution
and exercise all powers necessary to preserve the assets of the institution,
reorganize the management thereof, and restore its viability. He shall have the
power to overrule or revoke the actions of the previous management and board
of directors of the bank or non-bank financial intermediary performing quasibanking functions, any provision of law to the contrary notwithstanding, and
such other powers as the Monetary Board shall deem necessary.
In the first place, this issue of the Conservators alleged authority to revoke
or repudiate the perfected contract of sale was raised for the first time in this
Petition - as this was not litigated in the trial court or Court of Appeals. As
already stated earlier, issues not raised and/or ventilated in the trial court, let
alone in the Court of Appeals, cannot be raised for the first time on appeal as it
would be offensive to the basic rules of fair play, justice and due process. [43]
In the second place, there is absolutely no evidence that the Conservator,
at the time the contract was perfected, actually repudiated or overruled said
contract of sale. The Banks acting conservator at the time, Rodolfo Romey,
never objected to the sale of the property to Demetria and Janolo. What
petitioners are really referring to is the letter of Conservator Encarnacion, who
took over from Romey after the sale was perfected on September 30,

Page 53 of 82

1987 (Annex V, petition) which unilaterally repudiated - not the contract - but
the authority of Rivera to make a binding offer - and which unarguably came
months after the perfection of the contract. Said letter dated May 12, 1988 is
reproduced hereunder:

Please be advised accordingly.

Very truly yours,
(Sgd.) Leonida T.
Encarnacion
LEONIDA
T.
ENCARNACION
Acting Conservator

May 12, 1988

Atty. Noe C. Zarate
Zarate Carandang Perlas & Ass.
Suite 323 Rufino Building
Ayala Avenue, Makati, Metro Manila
Dear Atty. Zarate:
This pertains to your letter dated May 5, 1988 on behalf of Attys. Janolo and
Demetria regarding the six (6) parcels of land located at Sta. Rosa, Laguna.
We deny that Producers Bank has ever made a legal counter-offer to any of
your clients nor perfected a contract to sell and buy with any of them for the
following reasons.
In the Inter-Office Memorandum dated April 25, 1986 addressed to and
approved by former Acting Conservator Mr. Andres I. Rustia, Producers Bank
Senior Manager Perfecto M. Pascua detailed the functions of Property
Management Department (PMD) staff and officers (Annex A), you will
immediately read that Manager Mr. Mercurio Rivera or any of his subordinates
has no authority, power or right to make any alleged counter-offer. In short,
your lawyer-clients did not deal with the authorized officers of the bank.
Moreover, under Secs. 23 and 36 of the Corporation Code of
the Philippines (Batas Pambansa Blg. 68) and Sec. 28-A of the Central Bank Act
(Rep. Act No. 265, as amended), only the Board of Directors/Conservator may
authorize the sale of any property of the corporation/bank.
Our records do not show that Mr. Rivera was authorized by the old board or by
any of the bank conservators (starting January, 1984) to sell the aforesaid
property to any of your clients. Apparently, what took place were just
preliminary discussions/ consultations between him and your clients, which
everyone knows cannot bind the Banks Board or Conservator.
We are, therefore, constrained to refuse any tender of payment by your clients,
as the same is patently violative of corporate and banking laws. We believe that
this is more than sufficient legal justification for refusing said alleged tender.
Rest assured that we have nothing personal against your clients. All our acts
are official, legal and in accordance with law. We also have no personal interest
in any of the properties of the Bank.

In the third place, while admittedly, the Central Bank law gives vast and
far-reaching powers to the conservator of a bank, it must be pointed out that
such powers must be related to the (preservation of) the assets of the bank,
(the reorganization of) the management thereof and (the restoration of) its
viability. Such powers, enormous and extensive as they are, cannot extend to
the post-facto repudiation of perfected transactions, otherwise they would
infringe against the non-impairment clause of the Constitution. [44] If the
legislature itself cannot revoke an existing valid contract, how can it delegate
such non-existent powers to the conservator under Section 28-A of said law?
Obviously, therefore, Section 28-A merely gives the conservator power to
revoke contracts that are, under existing law, deemed to be defective - i.e.,
void, voidable, unenforceable or rescissible. Hence, the conservator merely
takes the place of a banks board of directors. What the said board cannot do such as repudiating a contract validly entered into under the doctrine of implied
authority - the conservator cannot do either. Ineluctably, his power is not
unilateral and he cannot simply repudiate valid obligations of the Bank. His
authority would be only to bring court actions to assail such contracts - as he
has already done so in the instant case. A contrary understanding of the law
would simply not be permitted by the Constitution. Neither by common sense.
To rule otherwise would be to enable a failing bank to become solvent, at the
expense of third parties, by simply getting the conservator to unilaterally revoke
all previous dealings which had one way or another come to be considered
unfavorable to the Bank, yielding nothing to perfected contractual rights nor
vested interests of the third parties who had dealt with the Bank.

The Fifth Issue:

Were There Reversible Errors of Fact?

Basic is the doctrine that in petitions for review under Rule 45 of the Rules
of Court, findings of fact by the Court of Appeals are not reviewable by the
Supreme Court. In Andres vs. Manufacturers Hanover & Trust Corporation, [45] we
held:
x x x. The rule regarding questions of fact being raised with this Court in a
petition for certiorari under Rule 45 of the Revised Rules of Court has been
stated in Remalante vs. Tibe, G.R. No. 59514, February 25, 1988, 158 SCRA 138,
thus:

Page 54 of 82

The rule in this jurisdiction is that only questions of law may be raised in a
petition for certiorari under Rule 45 of the Revised Rules of Court. The
jurisdiction of the Supreme Court in cases brought to it from the Court of
Appeals is limited to reviewing and revising the errors of law imputed to it, its
findings of the fact being conclusive [Chan vs. Court of Appeals, G.R. No. L27488, June 30, 1970, 33 SCRA 737, reiterating a long line of decisions]. This
Court has emphatically declared that it is not the function of the Supreme
Court to analyze or weigh such evidence all over again, its jurisdiction being
limited to reviewing errors of law that might have been committed by the lower
court (Tiongco v. De la Merced, G.R. No. L-24426, July 25, 1974, 58 SCRA
89; Corona vs. Court of Appeals, G.R. No. L-62482, April 28, 1983, 121 SCRA
865; Baniqued vs. Court of Appeals, G.R. No. L-47531, February 20, 1984, 127
SCRA 596). Barring, therefore, a showing that the findings complained of are
totally devoid of support in the record, or that they are so glaringly erroneous
as to constitute serious abuse of discretion, such findings must stand, for this
Court is not expected or required to examine or contrast the oral and
documentary evidence submitted by the parties [Santa Ana, Jr. vs. Hernandez,
G.R. No. L-16394, December 17, 1966, 18 SCRA 973] [at pp. 144-145.]
Likewise, in Bernardo vs. Court of Appeals,[46] we held:
The resolution of this petition invites us to closely scrutinize the facts of the
case, relating to the sufficiency of evidence and the credibility of witnesses
presented. This Court so held that it is not the function of the Supreme Court to
analyze or weigh such evidence all over again. The Supreme Courts jurisdiction
is limited to reviewing errors of law that may have been committed by the lower
court. The Supreme Court is not a trier of facts. x x x

We see no valid reason to discard the factual conclusions of the appellate

court. x x x (I)t is not the function of this Court to assess and evaluate all over
again the evidence, testimonial and documentary, adduced by the parties,
particularly where, such as here, the findings of both the trial court and the
appellate court on the matter coincide. (italics supplied)
Petitioners, however, assailed the respondent Courts Decision as fraught
with findings and conclusions which were not only contrary to the evidence on
record but have no bases at all, specifically the findings that (1) the Banks
counter-offer price of P5.5 million had been determined by the past due
committee and approved by conservator Romey, after Rivera presented the
same for discussion and (2) the meeting with Co was not to scale down the
price and start negotiations anew, but a meeting on the already determined
price of P5.5 million. Hence, citing Philippine National Bank vs. Court of
Appeals,[49] petitioners are asking us to review and reverse such factual findings.
The first point was clearly passed upon by the Court of Appeals, [50] thus:
There can be no other logical conclusion than that when, on September 1,
1987, Rivera informed plaintiffs by letter that the banks counter-offer is at P5.5
Million for more than 101 hectares on lot basis, such counter-offer price had
been determined by the Past Due Committee and approved by the Conservator
after Rivera had duly presented plaintiffs offer for discussion by the Committee
x x x. Tersely put, under the established fact, the price of P5.5 Million was, as
clearly worded in Riveras letter (Exh. E), the official and definitive price at
which the bank was selling the property. (p. 11, CA Decision)
xxx

As held in the recent case of Chua Tiong Tay vs. Court of Appeals and
Goldrock Construction and Development Corp.:[47]
The Court has consistently held that the factual findings of the trial court, as
well as the Court of Appeals, are final and conclusive and may not be reviewed
on appeal. Among the exceptional circumstances where a reassessment of facts
found by the lower courts is allowed are when the conclusion is a finding
grounded entirely on speculation, surmises or conjectures; when the inference
made is manifestly absurd, mistaken or impossible; when there is grave abuse
of discretion in the appreciation of facts; when the judgment is premised on a
misapprehension of facts; when the findings went beyond the issues of the case
and the same are contrary to the admissions of both appellant and appellee.
After a careful study of the case at bench, we find none of the above grounds
present to justify the re-evaluation of the findings of fact made by the courts
below.
In the same vein, the ruling of this Court in the recent case of South Sea
Surety and Insurance Company, Inc. vs. Hon. Court of Appeals, et al. [48] is
equally applicable to the present case:

xxx

xxx

xxx. The argument deserves scant consideration. As pointed out by plaintiff,

during the meeting of September 28, 1987 between the plaintiffs, Rivera and
Luis Co, the senior vice-president of the bank, where the topic was the possible
lowering of the price, the bank official refused it and confirmed that the P5.5
Million price had been passed upon by the Committee and could no longer be
lowered (TSN of April 27, 1990, pp. 34-35) (p. 15, CA Decision).
The respondent Court did not believe the evidence of the petitioners on
this point, characterizing it as not credible and at best equivocal,
and considering the gratuitous and self-serving character of these declarations,
the banks submissions on this point do not inspire belief.
To become credible and unequivocal, petitioners should have presented
then Conservator Rodolfo Romey to testify on their behalf, as he would have
been in the best position to establish their thesis. Under the rules on evidence,
[51]
such suppression gives rise to the presumption that his testimony would
have been adverse, if produced.
The second point was squarely raised in the Court of Appeals, but
petitioners evidence was deemed insufficient by both the trial court and the

Page 55 of 82

respondent Court, and instead, it was respondents submissions that were

believed and became bases of the conclusions arrived at.

P1.023 billion x x x and there were (other) offers to buy the subject properties
for a substantial amount of money.[53]

In fine, it is quite evident that the legal conclusions arrived at from the
findings of fact by the lower courts are valid and correct. But the petitioners are
now asking this Court to disturb these findings to fit the conclusion they are
espousing. This we cannot do.

While we do not deny our sympathy for this distressed bank, at the same
time, the Court cannot emotionally close its eyes to overriding considerations of
substantive and procedural law, like respect for perfected contracts, nonimpairment of obligations and sanctions against forum-shopping, which must be
upheld under the rule of law and blind justice.

To be sure, there are settled exceptions where the Supreme Court may
disregard findings of fact by the Court of Appeals. [52] We have studied both the
records and the CA Decision and we find no such exceptions in this case. On the
contrary, the findings of the said Court are supported by a preponderance of
competent and credible evidence. The inferences and conclusions are
reasonably based on evidence duly identified in the Decision. Indeed, the
appellate court patiently traversed and dissected the issues presented before it,
lending credibility and dependability to its findings. The best that can be said in
favor of petitioners on this point is that the factual findings of respondent Court
did not correspond to petitioners claims, but were closer to the evidence as
presented in the trial court by private respondent. But this alone is no reason to
reverse or ignore such factual findings, particularly where, as in this case, the
trial court and the appellate court were in common agreement thereon. Indeed,
conclusions of fact of a trial judge - as affirmed by the Court of Appeals - are
conclusive upon this Court, absent any serious abuse or evident lack of basis or
capriciousness of any kind, because the trial court is in a better position to
observe the demeanor of the witnesses and their courtroom manner as well as
to examine the real evidence presented.

This Court cannot just gloss over private respondents submission that,
while the subject properties may currently command a much higher price, it is
equally true that at the time of the transaction in 1987, the price agreed upon
of P5.5 million was reasonable, considering that the Bank acquired these
properties at a foreclosure sale for no more than P 3.5 million. [54] That the
Bank procrastinated and refused to honor its commitment to sell cannot now be
used by it to promote its own advantage, to enable it to escape its binding
obligation and to reap the benefits of the increase in land values. To rule in favor
of the Bank simply because the property in question has algebraically
accelerated in price during the long period of litigation is to reward lawlessness
and delays in the fulfillment of binding contracts. Certainly, the Court cannot
stamp its imprimatur on such outrageous proposition.
WHEREFORE, finding no reversible error in the questioned Decision and
Resolution, the Court hereby DENIES the petition. The assailed Decision is
AFFIRMED. Moreover, petitioner Bank is REPRIMANDED for engaging in forumshopping and WARNED that a repetition of the same or similar acts will be dealt
with more severely. Costs against petitioners.
SO ORDERED.

Epilogue

G.R. No. L-9231

In summary, there are two procedural issues involved - forum-shopping and

the raising of issues for the first time on appeal [viz., the extinguishment of the
Banks offer of P5.5 million and the conservators powers to repudiate contracts
entered into by the Banks officers] - which per se could justify the dismissal of
the present case. We did not limit ourselves thereto, but delved as well into the
substantive issues - the perfection of the contract of sale and its enforceability,
which required the determination of questions of fact. While the Supreme Court
is not a trier of facts and as a rule we are not required to look into the factual
bases of respondent Courts decisions and resolutions, we did so just the same,
if only to find out whether there is reason to disturb any of its factual
findings, for we are only too aware of the depth, magnitude and vigor by which
the parties, through their respective eloquent counsel, argued their positions
before this Court.

UY
CHICO, plaintiff-appellant,
vs.
THE UNION LIFE ASSURANCE SOCIETY, LIMITED, ET AL., defendantsappellees.

We are not unmindful of the tenacious plea that the petitioner Bank is
operating abnormally under a government-appointed conservator and there is
need to rehabilitate the Bank in order to get it back on its feet x x x as many
people depend on (it) for investments, deposits and well as employment. As of
June 1987, the Banks overdraft with the Central Bank had already reached

January 6, 1915

Beaumont
and
Tenney
Bruce, Lawrence, Ross and Block for appellees.

for

appellant.

TRENT, J.:
An appeal from a judgment dismissing the complaint upon the merits, with
costs.
The plaintiff seeks to recover the face value of two insurance policies upon a
stock of dry goods destroyed by fire. It appears that the father of the plaintiff
died in 1897, at which time he was conducting a business under his own name,

Page 56 of 82

Uy Layco. The plaintiff and his brother took over the business and continued it
under the same name, "Uy Layco." Sometime before the date of the fire, the
plaintiff purchased his brother's interest in the business and continued to carry
on the business under the father's name. At the time of the fire "Uy Layco" was
heavily indebted and subsequent thereto the creditors of the estate of the
plaintiff's father. During the course of these proceedings, the plaintiff's attorney
surrendered the policies of insurance to the administrator of the estate, who
compromised with the insurance company for one-half their face value, or
P6,000. This money was paid into court and is now being held by the sheriff.
The plaintiff now brings this action, maintaining that the policies and goods
insured belonged to him and not to the estate of his deceased father and
alleges that he is not bound by the compromise effected by the administrator of
his father's estate.
The defendant insurance company sought to show that the plaintiff had agreed
to compromise settlement of the policies, and for that purpose introduced
evidence showing that the plaintiff's attorney had surrendered the policies to
the administrator with the understanding that such a compromise was to be
effected. The plaintiff was asked, while on the witness stand, if he had any
objection to his attorney's testifying concerning the surrender of the policies, to
which he replied in the negative. The attorney was then called for that purpose.
Whereupon, counsel for the plaintiff formally withdrew the waiver previously
given by the plaintiff and objected to the testimony of the attorney on the
ground that it was privileged. Counsel, on this appeal, base their argument of
the proposition that a waiver of the client's privilege may be withdrawn at any
time before acted upon, and cite in support thereof Ross vs. Great Northern Ry.
Co., (101 Minn., 122; 111 N. W., 951). The case of Natlee Draft Horse Co. vs.
Cripe and Co. (142 Ky., 810), also appears to sustain their contention. But a
preliminary question suggest itself, Was the testimony in question privileged?
Our practice Act provides: "A lawyer must strictly maintain inviolate the
confidence and preserve the secrets of his client. He shall not be permitted in
any court, without the consent of his client, given in open court, to testify to any
facts imparted to him by his client in professional consultation, or for the
purpose of obtaining advice upon legal matters." (Sec. 31, Act No. 190.)
A similar provision is inserted in section 383, No. 4, of the same Act. It will be
noted that the evidence in question concerned the dealings of the plaintiff's
attorney with a third person. Of the very essence of the veil of secrecy which
surrounds communications made between attorney and client, is that such
communications are not intended for the information of third persons or to be
acted upon by them, put of the purpose of advising the client as to his rights. It
is evident that a communication made by a client to his attorney for the express

purpose of its being communicated to a third person is essentially inconsistent

with the confidential relation. When the attorney has faithfully carried out his
instructions be delivering the communication to the third person for whom it
was intended and the latter acts upon it, it cannot, by any reasoning whatever,
be classified in a legal sense as a privileged communication between the
attorney and his client. It is plain that such a communication, after reaching the
party for whom it was intended at least, is a communication between the client
and a third person, and that the attorney simply occupies the role of
intermediary or agent. We quote from but one case among the many which may
be found upon the point:
The proposition advanced by the respondent and adopted by the trial
court, that one, after fully authorizing his attorney, as his agent, to
enter into contract with a third party, and after such authority has been
executed and relied on, may effectively nullify his own and his duly
authorized agent's act by closing the attorney's mouth as to the giving
of such authority, is most startling. A perilous facility of fraud and
wrong, both upon the attorney and the third party, would result. The
attorney who, on his client's authority, contracts in his behalf, pledges
his reputation and integrity that he binds his client. The third party may
well rely on the assurance of a reputable lawyer that he has authority in
fact, though such assurance be given only by implication from the doing
of the act itself. It is with gratification, therefore, that we find
overwhelming weight of authority, against the position assumed by the
court below, both in states where the privilege protecting
communications with attorneys is still regulated by the common law and
in those where it is controlled by statute, as in Wisconsin. (Koeber vs.
Sommers, 108 Wis., 497; 52 L. R. A., 512.)
Other cases wherein the objection to such evidence on the ground of privilege
has been overruled are: Henderson vs. Terry (62 Tex., 281); Shove vs. Martin (85
Minn., 29); In re Elliott (73 Kan., 151); Collins vs. Hoffman (62 Wash., 278);
Gerhardt vs. Tucker (187 Mo., 46). These cases cover a variety of
communications made by an authority in behalf of his client to third persons.
And cases wherein evidence of the attorney as to compromises entered into by
him on behalf of his client were allowed to be proved by the attorney's
testimony are not wanting. (Williams vs. Blumenthal, 27 Wash., 24; Koeber vs.
Sommers, supra.)
It is manifest that the objection to the testimony of the plaintiff's attorney as to
his authority to compromise was properly overruled. The testimony was to the
effect that when the attorney delivered the policies to the administrator, he
understood that there was a compromise to be effected, and that when he

Page 57 of 82

informed the plaintiff of the surrender of the policies for that purpose the
plaintiff made no objection whatever. The evidence is sufficient to show that the
plaintiff acquiesced in the compromise settlement of the policies. Having agreed
to the compromise, he cannot now disavow it and maintain an action for the
recovery of their face value.
For the foregoing reasons the judgment appealed from is affirmed, with costs.
So ordered.
TEODORO R. REGALA, EDGARDO J. ANGARA, AVELINO V. CRUZ, JOSE C.
CONCEPCION, ROGELIO A. VINLUAN, VICTOR P. LAZATIN, and
EDUARDO
U.
ESCUETA, petitioners, vs. THE
HONORABLE
SANDIGANBAYAN, First Division, REPUBLIC OF THE PHILIPPINES,
ACTING THROUGH THE PRESIDENTIAL COMMISSION ON GOOD
GOVERNMENT, and RAUL S. ROCO, respondents.
[G.R. No. 108113. September 20, 1996]
PARAJA G. HAYUDINI, petitioner, vs. THE SANDIGANBAYAN and THE
REPUBLIC OF THE PHILIPPINES, respondents.
DECISION
KAPUNAN, J.:
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 clientlawyer 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.[3] Respondent 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:

Page 58 of 82

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
petitioners ACCRA lawyers alleged that:

Expanded

Amended

Complaint,

4.4. Defendants-ACCRA lawyers participation in the acts with which their codefendants are charged, was in furtherance of legitimate lawyering.
4.4.1. In the course of rendering professional and legal services to clients,
defendants-ACCRA lawyers, Jose C. Concepcion, Teodoro D. Regala, Rogelio A.
Vinluan and Eduardo U. Escueta, became holders of shares of stock in the
corporations listed under their respective names in Annex A of the expanded
Amended Complaint as incorporating or acquiring stockholders only and, as
such, they do not claim any proprietary interest in the said shares of stock.
4.5. Defendant ACCRA-lawyer Avelino V. Cruz was one of the incorporators in
1976 of Mermaid Marketing Corporation, which was organized for legitimate
business purposes not related to the allegations of the expanded Amended
Complaint. However, he has long ago transferred any material interest therein
and therefore denies that the shares appearing in his name in Annex A of the
expanded Amended Complaint are his assets.[6]

Petitioner Paraja Hayudini, who had separated from ACCRA law firm, filed a
separate answer denying the allegations in the complaint implicating him in the
alleged ill-gotten wealth.[7]
Petitioners ACCRA lawyers subsequently filed their "COMMENT AND/OR
OPPOSITION" dated October 8, 1991 with Counter-Motion that respondent PCGG
similarly grant the same treatment to them (exclusion as parties-defendants) as
accorded private respondent Roco.[8] The Counter-Motion for dropping
petitioners from the complaint was duly set for hearing on October 18, 1991 in
accordance with the requirements of Rule 15 of the Rules of Court.
In its "Comment," respondent PCGG set the following conditions precedent
for the exclusion of petitioners, namely: (a) the disclosure of the identity of its
clients; (b) submission of documents substantiating the lawyer-client
relationship; and (c) the submission of the deeds of assignments petitioners
executed in favor of its 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:
x x x.
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

Page 59 of 82

choice. But until they do identify their clients, considerations of whether or not
the privilege claimed by the ACCRA lawyers exists cannot even begin to be
debated. The
ACCRA
lawyers
cannot
excuse
themselves
from
the consequences of their acts until they have begun to establish the basis for
recognizing the privilege; the existence and identity of the client.

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.

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

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.

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.

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).

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.

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

Page 60 of 82

respondent Sandiganbayan. Thus, he filed a separate petition for certiorari,

docketed as G.R. No. 108113, assailing respondent Sandiganbayan's resolution
on essentially the same grounds averred by petitioners in G.R. No. 105938.
Petitioners contend that the exclusion of respondent Roco as partydefendant in PCGG Case No. 33 grants him a favorable treatment, on the
pretext of his alleged undertaking to divulge the identity of his client, giving him
an advantage over them who are in the same footing as partners in the ACCRA
law firm. Petitioners further argue that even granting that such an undertaking
has been assumed by private respondent Roco, they are prohibited from
revealing the identity of their principal under their sworn mandate and fiduciary
duty as lawyers to uphold at all times the confidentiality of information obtained
during such lawyer-client relationship.
Respondent PCGG, through its counsel, refutes petitioners' contention,
alleging that the revelation of the identity of the client is not within the ambit of
the lawyer-client confidentiality privilege, nor are the documents it required
(deeds of assignment) protected, because they are evidence of nominee status.
[13]

consequences of their acts until they have begun to establish the basis for
recognizing the privilege; the existence and identity of the client.
This is what appears to be the cause for which they have been impleaded by
the PCGG as defendants herein. (Underscoring ours)
In a closely related case, Civil Case No. 0110 of the Sandiganbayan, Third
Division, entitled Primavera Farms, Inc., et al. vs. Presidential Commission on
Good Government respondent PCGG, through counsel Mario Ongkiko,
manifested at the hearing on December 5, 1991 that the PCGG wanted to
establish through the ACCRA that their so called client is Mr. Eduardo
Cojuangco; that it was Mr. Eduardo Cojuangco who furnished all the monies to
those subscription payments in corporations included in Annex A of the Third
Amended Complaint; that the ACCRA lawyers executed deeds of trust and deeds
of assignment, some in the name of particular persons, some in blank.
We quote Atty. Ongkiko:
ATTY. ONGKIKO:

In his comment, respondent Roco asseverates that respondent PCGG acted

correctly in excluding him as party-defendant because he "(Roco) has not filed
an Answer. PCGG had therefore the right to dismiss Civil Case No. 0033 as to
Roco `without an order of court by filing a notice of dismissal,'"[14] and he has
undertaken to identify his principal.[15]
Petitioners' contentions are impressed with merit.
I
It is quite apparent that petitioners were impleaded by the PCGG as codefendants to force them to disclose the identity of their clients. Clearly,
respondent PCGG is not after petitioners but the bigger fish as they say in
street parlance. This ploy is quite clear from the PCGGs willingness to cut a
deal with petitioners -- the names of their clients in exchange for exclusion from
the complaint. The statement of the Sandiganbayan in its questioned resolution
dated March 18, 1992 is explicit:
ACCRA lawyers may take the heroic stance of not revealing the identity of the
client for whom they have acted, i.e., their principal, and that will be their
choice. But until they do identify their clients, considerations of whether or not
the privilege claimed by the ACCRA lawyers exists cannot even begin to be
debated. The ACCRA lawyers cannot excuse themselves from the

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

Page 61 of 82

complaint is merely being used as leverage to compel them to name their

clients and consequently to enable the PCGG to nail these clients. Such being
the case, respondent PCGG has no valid cause of action as against petitioners
and should exclude them from the Third Amended Complaint.
II
The nature of lawyer-client relationship is premised on the Roman Law
concepts of locatio conductio operarum (contract of lease of services) where
one person lets his services and another hires them without reference to the
object of which the services are to be performed, wherein lawyers' services may
be compensated by honorarium or for hire,[17] and mandato (contract of agency)
wherein a friend on whom reliance could be placed makes a contract in his
name, but gives up all that he gained by the contract to the person who
requested him.[18] But the lawyer-client relationship is more than that of the
principal-agent and lessor-lessee.

the court to administer them in a corresponding spirit, and to be watchful and

industrious, to see that confidence thus reposed shall not be used to the
detriment or prejudice of the rights of the party bestowing it. [27]
In our jurisdiction, this privilege takes off from the old Code of Civil
Procedure enacted by the Philippine Commission on August 7, 1901. Section
383 of the Code specifically forbids counsel, without authority of his client to
reveal any communication made by the client to him or his advice given
thereon in the course of professional employment. [28] Passed on into various
provisions of the Rules of Court, the attorney-client privilege, as currently
worded provides:
Sec. 24. Disqualification by reason of privileged communication. - The following
persons cannot testify as to matters learned in confidence in the following
cases:
xxx

In modern day perception of the lawyer-client relationship, an attorney is

more than a mere agent or servant, because he possesses special powers of
trust and confidence reposed on him by his client. [19] A lawyer is also as
independent as the judge of the court, thus his powers are entirely different
from and superior to those of an ordinary agent. [20] Moreover, an attorney also
occupies what may be considered as a "quasi-judicial office" since he is in fact
an officer of the Court [21] and exercises his judgment in the choice of courses of
action to be taken favorable to his client.
Thus, in the creation of lawyer-client relationship, there are rules, ethical
conduct and duties that breathe life into it, among those, the fiduciary duty to
his client which is of a very delicate, exacting and confidential character,
requiring a very high degree of fidelity and good faith, [22] that is required by
reason of necessity and public interest[23] based on the hypothesis that
abstinence from seeking legal advice in a good cause is an evil which is fatal to
the administration of justice.[24]
It is also the strict sense of fidelity of a lawyer to his client that
distinguishes him from any other professional in society. This conception is
entrenched and embodies centuries of established and stable tradition.
[25]
In Stockton v. Ford,[26] the U.S. Supreme Court held:
There are few of the business relations of life involving a higher trust and
confidence than that of attorney and client, or generally speaking, one more
honorably and faithfully discharged; few more anxiously guarded by the law, or
governed by the sterner principles of morality and justice; and it is the duty of

An attorney cannot, without the consent of his client, be examined as to any

communication made by the client to him, or his advice given thereon in the
course of, or with a view to, professional employment, can an attorneys
secretary, stenographer, or clerk be examined, without the consent of the client
and his employer, concerning any fact the knowledge of which has been
acquired in such capacity.[29]
Further, Rule 138 of the Rules of Court states:
Sec. 20. It is the duty of an attorney:
(e) to maintain inviolate the confidence, and at every peril to himself, to
preserve the secrets of his client, and to accept no compensation in connection
with his clients business except from him or with his knowledge and approval.
This duty is explicitly mandated in Canon 17 of the Code of Professional
Responsibility which provides that:
Canon 17. A lawyer owes fidelity to the cause of his client and he shall be
mindful of the trust and confidence reposed in him.
Canon 15 of the Canons of Professional Ethics also demands a lawyer's
fidelity to client:

Page 62 of 82

The lawyer owes "entire devotion to the interest of the client, warm zeal in the
maintenance and defense of his rights and the exertion of his utmost learning
and ability," to the end that nothing be taken or be withheld from him, save by
the rules of law, legally applied. No fear of judicial disfavor or public popularity
should restrain him from the full discharge of his duty. In the judicial forum the
client is entitled to the benefit of any and every remedy and defense that is
authorized by the law of the land, and he may expect his lawyer to assert every
such remedy or defense. But it is steadfastly to be borne in mind that the great
trust of the lawyer is to be performed within and not without the bounds of the
law. The office of attorney does not permit, much less does it demand of him
for any client, violation of law or any manner of fraud or chicanery. He must
obey his own conscience and not that of his client.
Considerations favoring confidentiality in lawyer-client relationships are
many and serve several constitutional and policy concerns. In the constitutional
sphere, the privilege gives flesh to one of the most sacrosanct rights available
to the accused, the right to counsel. If a client were made to choose between
legal representation without effective communication and disclosure and legal
representation with all his secrets revealed then he might be compelled, in
some instances, to either opt to stay away from the judicial system or to lose
the right to counsel. If the price of disclosure is too high, or if it amounts to self
incrimination, then the flow of information would be curtailed thereby rendering
the right practically nugatory. The threat this represents against another
sacrosanct individual right, the right to be presumed innocent is at once selfevident.
Encouraging full disclosure to a lawyer by one seeking legal services opens
the door to a whole spectrum of legal options which would otherwise be
circumscribed by limited information engendered by a fear of disclosure. An
effective lawyer-client relationship is largely dependent upon the degree of
confidence which exists between lawyer and client which in turn requires a
situation which encourages a dynamic and fruitful exchange and flow of
information. It necessarily follows that in order to attain effective
representation, the lawyer must invoke the privilege not as a matter of option
but as a matter of duty and professional responsibility.
The question now arises whether or not this duty may be asserted in
refusing to disclose the name of petitioners' client(s) in the case at bar. Under
the facts and circumstances obtaining in the instant case, the answer must be
in the affirmative.

the United States is that a lawyer may not invoke the privilege and refuse to
divulge the name or identity of his client.[31]
The reasons advanced for the general rule are well established.
First, the court has a right to know that the client whose privileged
information is sought to be protected is flesh and blood.
Second, the privilege begins to exist only after the attorney-client
relationship has been established. The attorney-client privilege does not attach
until there is a client.
Third, the privilege generally pertains to the subject matter of the
relationship.
Finally, due process considerations require that the opposing party should,
as a general rule, know his adversary. A party suing or sued is entitled to know
who his opponent is.[32] He cannot be obliged to grope in the dark against
unknown forces.[33]
Notwithstanding these considerations, the general rule is however qualified
by some important exceptions.
1) Client identity is privileged where a strong probability exists that
revealing the clients name would implicate that client in the very
activity for which he sought the lawyers advice.
In Ex-Parte Enzor,[34] a state supreme court reversed a lower court order
requiring a lawyer to divulge the name of her client on the ground that the
subject matter of the relationship was so closely related to the issue of the
clients identity that the privilege actually attached to both. In Enzor, the
unidentified client, an election official, informed his attorney in confidence that
he had been offered a bribe to violate election laws or that he had accepted a
bribe to that end. In her testimony, the attorney revealed that she had advised
her client to count the votes correctly, but averred that she could not remember
whether her client had been, in fact, bribed. The lawyer was cited for contempt
for her refusal to reveal his clients identity before a grand jury. Reversing the
lower courts contempt orders, the state supreme court held that under the
circumstances of the case, and under the exceptions described above, even the
name of the client was privileged.

As a matter of public policy, a clients identity should not be shrouded in

mystery.[30] Under this premise, the general rule in our jurisdiction as well as in

Page 63 of 82

U.S. v. Hodge and Zweig,[35] involved the same exception, i.e. that client
identity is privileged in those instances where a strong probability exists that
the disclosure of the client's identity would implicate the client in the very
criminal activity for which the lawyers legal advice was obtained.
The Hodge case involved federal grand jury proceedings inquiring into the
activities of the Sandino Gang, a gang involved in the illegal importation of
drugs in the United States. The respondents, law partners, represented key
witnesses and suspects including the leader of the gang, Joe Sandino.
In connection with a tax investigation in November of 1973, the IRS issued
summons to Hodge and Zweig, requiring them to produce documents and
information regarding payment received by Sandino on behalf of any other
person, and vice versa. The lawyers refused to divulge the names. The Ninth
Circuit of the United States Court of Appeals, upholding non-disclosure under
the facts and circumstances of the case, held:
A clients identity and the nature of that clients fee arrangements may be
privileged where the person invoking the privilege can show that a strong
probability exists that disclosure of such information would implicate that client
in the very criminal activity for which legal advice was sought Baird v. Koerner,
279 F.2d at 680. While in Baird Owe enunciated this rule as a matter of
California law, the rule also reflects federal law. Appellants contend that
the Baird exception applies to this case.
The Baird exception is entirely consonant with the principal policy behind
the attorney-client privilege. In order to promote freedom of consultation of
legal advisors by clients, the apprehension of compelled disclosure from the
legal advisors must be removed; hence, the law must prohibit such disclosure
except on the clients consent. 8 J. Wigmore, supra sec. 2291, at 545. In
furtherance of this policy, the clients identity and the nature of his fee
arrangements are, in exceptional cases, protected as confidential
communications.[36]
2) Where disclosure would open the client to civil liability, his identity
is privileged. For instance, the peculiar facts and circumstances
of Neugass v. Terminal Cab Corporation, [37] prompted the New York
Supreme Court to allow a lawyers claim to the effect that he
could not reveal the name of his client because this would expose
the latter to civil litigation.

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; x
x x 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. xxx.
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 courts 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 lawyers refusal to
divulge the names of his clients the court held:

In the said case, Neugass, the plaintiff, suffered injury when the taxicab
she was riding, owned by respondent corporation, collided with a second

Page 64 of 82

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 governments lawyers have no case against an attorneys
client unless, by revealing the clients 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 clients name is privileged.
In Baird vs Korner,[42] a lawyer was consulted by the accountants and the
lawyer of certain undisclosed taxpayers regarding steps to be taken to place the
undisclosed taxpayers in a favorable position in case criminal charges were
brought against them by the U.S. Internal Revenue Service (IRS).
It appeared that the taxpayers returns of previous years were probably
incorrect and the taxes understated. The clients themselves were unsure about
whether or not they violated tax laws and sought advice from Baird on the
hypothetical possibility that they had. No investigation was then being
undertaken by the IRS of the taxpayers. Subsequently, the attorney of the
taxpayers delivered to Baird the sum of $12,706.85, which had been previously
assessed as the tax due, and another amount of money representing his fee for
the advice given. Baird then sent a check for $12,706.85 to the IRS in
Baltimore, Maryland, with a note explaining the payment, but without naming
his clients. The IRS demanded that Baird identify the lawyers, accountants, and
other clients involved. Baird refused on the ground that he did not know their
names, and declined to name the attorney and accountants because this
constituted privileged communication. A petition was filed for the enforcement
of the IRS summons. For Bairds 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 clients income tax liability pending. The court
emphasized the exception that a clients name is privileged when so much has

been revealed concerning the legal services rendered that the disclosure of the
clients 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 clients 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).

Page 65 of 82

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 clients 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 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 prosecutions
suspicions, then the clients 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

Page 66 of 82

client(s) a duty and an obligation not to disclose the latter's identity which in
turn requires them to invoke the privilege.
In fine, the crux of petitioners' objections ultimately hinges on their
expectation that if the prosecution has a case against their clients, the latter's
case should be built upon evidence painstakingly gathered by them from their
own sources and not from compelled testimony requiring them to reveal the
name of their clients, information which unavoidably reveals much about the
nature of the transaction which may or may not be illegal. The logical nexus
between name and nature of transaction is so intimate in this case 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-avis 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] "xxx 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? x x x But that is not all. What a subject is
this in which we are united - this abstraction called the Law, wherein as in a
magic mirror, we see reflected, not only in our lives, but the lives of all men that
have been. When I think on this majestic theme my eyes dazzle. If we are to
speak of the law as our mistress, we who are here know that she is a mistress
only to be won with sustained and lonely passion - only to be won by straining
all the faculties by which man is likened to God.
We have no choice but to uphold petitioners' right not to reveal the identity
of their clients under pain of the breach of fiduciary duty owing to their clients,
because the facts of the instant case clearly fall within recognized exceptions to
the rule that the clients name is not privileged information.
If we were to sustain respondent PCGG that the lawyer-client confidential
privilege under the circumstances obtaining here does not cover the identity of
the client, then it would expose the lawyers themselves to possible litigation by
their clients in view of the strict fiduciary responsibility imposed on them in the
exercise of their duties.
The complaint in Civil Case No. 0033 alleged that the defendants therein,
including herein petitioners and Eduardo Cojuangco, Jr. conspired with each
other in setting up through the use of coconut levy funds the financial and
corporate framework and structures that led to the establishment of UCPB,
UNICOM and others and that through insidious means and machinations,
ACCRA, using its wholly-owned investment arm, ACCRA 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.

Page 67 of 82

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.
x x x. 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 PCGGs demand not only touches upon the
question of the identity of their clients but also on documents related to the

Page 68 of 82

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 PCGGs legal mandate to recover illgotten wealth, we will not sanction acts which violate the equal protection
guarantee and the right against self-incrimination and subvert the lawyer-client
confidentiality privilege.
WHEREFORE, IN VIEW OF THE FOREGOING, the Resolutions of
respondent Sandiganbayan (First Division) promulgated on March 18, 1992 and
May 21, 1992 are hereby ANNULLED and SET ASIDE. Respondent
Sandiganbayan is further ordered to exclude petitioners Teodoro D. Regala,
Edgardo J. Angara, Avelino V. Cruz, Jose C. Concepcion, *Rogelio A. Vinluan,
Victor P. Lazatin, Eduardo U. Escueta and Paraja G. Hayuduni as partiesdefendants in SB Civil Case No. 0033 entitled "Republic of the Philippines v.
Eduardo Cojuangco, Jr., et al.".
SO ORDERED.
[G.R. No. 94457. October 16, 1997]

VICTORIA LEGARDA, petitioner, vs. THE HONORABLE COURT OF

APPEALS, NEW CATHAY HOUSE, INC., THE HONORABLE
REGIONAL
TRIAL
COURT
OF
QUEZON
CITY,
BRANCH
94, respondents.
RESOLUTION
ROMERO, J.:
For our resolution is the motion for reconsideration of the March 18, 1991,
decision of the Courts's First Division, filed by private respondents New Cathay
House, Inc. (Cathay). A brief narration of facts is in order.
The parties hereto entered into a lease agreement over a certain Quezon
City property owned by petitioner Victoria Legarda. For some reason or
another, she refused to sign the contract although respondent lessee, Cathay,
made a deposit and a down payment of rentals, prompting the latter to file
before the Regional Trial Court of Quezon City, Branch 94 a complaint[1] against
the former for specific performance with preliminary injunction and
damages. The court a quo issued the injunction. In the meantime, Legardas
counsel, noted lawyer Dean Antonio Coronel, requested a 10-day extension of
time to file an answer which the court granted. Atty. Coronel, however, failed to
file an answer within the extended period. His client was eventually declared in
default, Cathay was allowed to present evidence ex-parte, and on March 25,
1985, a judgment by default was reached by the trial court ordering Legarda to
execute the lease contract in favor of, and to pay damages to, Cathay.
On April 9, 1985, a copy of said decision was served on Atty. Coronel but he
took no action until the judgment became final and executory. A month later,
the trial court issued a writ of execution and a public auction was held where
Cathays manager, Roberto V. Cabrera, Jr., as highest bidder, was awarded the
property for P376,500.00 in satisfaction of the judgment debt. Consequently, a
Certificate of Sale was issued by the sheriff on June 27, 1985. Upon failure of
Legarda to redeem her property within the one-year redemption period, a Final
Deed of Sale was issued by the sheriff on July 8, 1986, which was registered by
Cabrera with the Register of Deeds three days later. Hence, Legardas Transfer
Certificate of Title (TCT) No. 270814 was cancelled with the issuance of TCT No.
350892 in the name of Cabrera.
Despite the lapse of over a year since the judgment by default became
final and executory, Atty. Coronel made no move on behalf of his client. He did
not even inform her of all these developments. When Legarda did learn of the
adverse decision, she nevertheless did not lose faith in her counsel [2] and

Page 69 of 82

prevailed upon him to seek appropriate relief. Thus, on October 23, 1986, he
filed a petition for annulment of judgment with prayer for the issuance of a writ
of preliminary mandatory injunction before the Court of Appeals. [3]
On November 29, 1989, the appellate court rendered a decision affirming
the March 25, 1985, decision of the trial court, dismissing the petition for
annulment of judgment, and holding Legarda bound by the negligence of her
counsel. It considered her allegation of fraud by Cathay to be improbable,
and added that there was pure and simple negligence on the part of
petitioners counsel who failed to file an answer and, later, a petition for relief
from judgment by default. Upon notice of the Court of Appeals decision, Atty.
Coronel again neglected to protect his clients interest by failing to file a motion
for reconsideration or to appeal therefrom until said decision became final on
December 21, 1989.
Sometime in March 1990, Legarda learned of the adverse decision of the
Court of Appeals dated November 29, 1989, not from Atty. Coronel but from his
secretary. She then hired a new counsel for the purpose of elevating her case
to this Court. The new lawyer filed a petition for certiorari praying for the
annulment of the decision of the trial and appellate courts and of the sheriffs
sale, alleging, among other things, that Legarda lost in the courts below
because her previous lawyer was grossly negligent and inefficient, whose
omissions cannot possibly bind her because this amounted to a violation of her
right to due process of law. She, therefore, asked Cathay (not Cabrera) to
reconvey the subject property to her.
On March 18, 1991, a decision [4] was rendered in this case by Mr. Justice
Gancayco, ruling, inter alia, as follows: (a) granting the petition; (b) nullifying
the trial courts decision dated March 25, 1985, the Court of Appeals decision
dated November 29, 1989, the Sheriffs Certificate of Sale dated June 27, 1985,
of the property in question, and the subsequent final deed of sale covering the
same property; and (c) ordering Cathay to reconvey said property to Legarda,
and the Register of Deeds to cancel the registration of said property in the
name of Cathay (not Cabrera) and to issue a new one in Legardas name.
The Court then declared that Atty. Coronel committed, not just ordinary or
simple negligence, but reckless, inexcusable and gross negligence, which
deprived his client of her property without due process of law. His acts, or the
lack of it, should not be allowed to bind Legarda who has been consigned to
penury because her lawyer appeared to have abandoned her case not once
but repeatedly. Thus, the Court ruled against tolerating such unjust
enrichment of Cathay at Legardas expense, and noted that counsels lack of

devotion to duty is so gross and palpable that this Court must come to the aid
of his distraught client.
Aggrieved by this development, Cathay filed the instant motion for
reconsideration, alleging, inter alia, that reconveyance is not possible because
the subject property had already been sold by its owner, Cabrera, even prior to
the promulgation of said decision.
By virtue of the Gancayco decision, Cathay was duty bound to return the
subject property to Legarda. The impossibility of this directive is immediately
apparent, for two reasons: First, Cathay neither possessed nor owned the
property so it is in no position to reconvey the same; second, even if it did,
ownership over the property had already been validly transferred to innocent
third parties at the time of promulgation of said judgment.
There is no question that the highest bidder at the public auction was
Cathays manager. It has not been shown nor even alleged, however, that
Roberto Cabrera had all the time been acting for or in behalf of Cathay. For all
intents and purposes, Cabrera was simply a vendee whose payment effectively
extinguished Legardas liability to Cathay as the judgment creditor. No proof
was ever presented which would reveal that the sale occurred only on paper,
with Cabrera acting as a mere conduit for Cathay. What is clear from the
records is that the auction sale was conducted regularly, that a certificate of
sale and, subsequently, a final deed of sale were issued to Cabrera which
allowed him to consolidate his ownership over the subject property, register it
and obtain a title in his own name, and sell it to Nancy Saw, an innocent
purchaser for value, at a premium price. Nothing on record would demonstrate
that Cathay was the beneficiary of the sale between Cabrera and Saw. Cabrera
himself maintained that he was acting in his private (as distinct from his
corporate) capacity[5] when he participated in the bidding.
Since the decision of the Court of Appeals gained finality on December 21,
1989, the subject property has been sold and ownership thereof transferred no
less than three times, viz.: (a) from Cabrera to Nancy Saw on March 21, 1990,
four months after the decision of the Court of Appeals became final and
executory and one year before the promulgation of the March 18, 1991,
decision under reconsideration; (b) from Nancy Saw to Lily Tanlo Sy Chua on
August 7, 1990, more than one year before the Court issued a temporary
restraining order in connection with this case; and (c) from the spouses Victor
and Lily Sy Chua to Janet Chong Luminlun on April 3, 1992. With these
transfers, Cabreras TCT No. 350892 gave way to Saws TCT No. 31672, then to
Chuas TCT No. 31673, and finally to Luminluns TCT No. 99143, all issued by

Page 70 of 82

the Register of Deeds of Quezon City on April 3, 1990, August 8, 1990, and
November 24, 1993, respectively.
We do not have to belabor the fact that all the successors-in-interest of
Cabrera to the subject lot were transferees for value and in good faith, having
relied as they did on the clean titles of their predecessors. The successive
owners were each armed with their own indefeasible titles which automatically
brought them under the aegis of the Torrens System. As the Court declared in
Sandoval v. Court of Appeals,[6] (i)t is settled doctrine that one who deals with
property registered under the Torrens system need not go beyond the same, but
only has to rely on the title. He is charged with notice only of such burdens and
claims as are annotated on the title. [7] In the case at bar, it is not disputed that
no notice of lis pendens was ever annotated on any of the titles of the
subsequent owners. And even if there were such a notice, it would not have
created a lien over the property because the main office of a lien is to warn
prospective buyers that the property they intend to purchase is the subject of a
pending litigation. Therefore, since the property is already in the hands of
Luminlun, an innocent purchaser for value, it can no longer be returned to its
original owner by Cabrera, much less by Cathay itself.
Another point to consider, though not raised as an issue in this case, is the
fact that Cabrera was impleaded as a party-respondent only on August 12,
1991, after the promulgation of the Gancayco decision. [8] The dispositive
portion itself ordered Cathay, instead of Cabrera to reconvey the property to
Legarda. Cabrera was never a party to this case, either as plaintiff-appellee
below or as respondent in the present action. Neither did he ever act as
Cathays representative. As we held in the recent case of National Power
Corporation v. NLRC, et al.,[9] (j)urisdiction over a party is acquired by his
voluntary appearance or submission to the court or by the coercive process
issued by the court to him, generally by service of summons. [10] In other words,
until Cabrera was impleaded as party respondent and ordered to file a comment
in the August 12, 1991, resolution, the Court never obtained jurisdiction over
him, and to command his principal to reconvey a piece of property which used
to be HIS would not only be inappropriate but would also constitute a real
deprivation of ones property without due process of law.
Assuming arguendo that reconveyance is possible, that Cathay and
Cabrera are one and the same and that Cabreras payment redounded to the
benefit of his principal, reconveyance, under the facts and evidence obtaining in
this case, would still not address the issues raised herein
The application of the sale price to Legardas judgment debt constituted a
payment which extinguished her liability to Cathay as the party in whose favor

the obligation to pay damages was established. [11] It was a payment in the sense
that Cathay had to resort to a court-supervised auction sale in order to execute
the judgment.[12] With the fulfillment of the judgment debtors obligation,
nothing else was required to be done.
Under the Gancayco ruling, the order of reconveyance was premised on
the alleged gross negligence of Legardas counsel which should not be allowed
to bind her as she was deprived of her property without due process of law.
It is, however, basic that as long as a party was given the opportunity to
defend her interests in due course, she cannot be said to have been denied due
process of law, for this opportunity to be heard is the very essence of due
process. The chronology of events shows that the case took its regular course
in the trial and appellate courts but Legardas counsel failed to act as any
ordinary counsel should have acted, his negligence every step of the way
amounting to abandonment, in the words of the Gancayco decision. Yet, it
cannot be denied that the proceedings which led to the filing of this case were
not attended by any irregularity. The judgment by default was valid, so was the
ensuing sale at public auction. If Cabrera was adjudged highest bidder in said
auction sale, it was not through any machination on his part. All of his
actuations that led to the final registration of the title in his name were
aboveboard, untainted by any irregularity.
The fact that Cabrera is an officer of Cathay does not make him a
purchaser in bad faith. His act in representing the company was never
questioned nor disputed by Legarda. And while it is true that he won in the
bidding, it is likewise true that said bidding was conducted by the book. There
is no call to be alarmed that an official of the company emerges as the winning
bidder since in some cases, the judgment creditor himself personally
participates in the bidding.
There is no gainsaying that Legarda is the judgment debtor here. Her
property was sold at public auction to satisfy the judgment debt. She cannot
claim that she was illegally deprived of her property because such deprivation
was done in accordance with the rules on execution of judgments. Whether the
money used to pay for said property came from the judgment creditor or its
representative is not relevant. What is important is that it was purchased for
value. Cabrera parted with real money at the auction. In his Sheriffs
Certificate of Sale dated June 27, 1985, [13]Deputy Sheriff Angelito R. Mendoza
certified, inter alia, that the highest bidder paid to the Deputy Sheriff the said
amount of P376,500.00, the sale price of the levied property. If this does not
constitute payment, what then is it? Had there been no real purchase and
payment below, the subject property would never have been awarded to

Page 71 of 82

Cabrera and registered in his name, and the judgment debt would never have
been satisfied. Thus, to require either Cathay or Cabrera to reconvey the
property would be an unlawful intrusion into the lawful exercise of his
proprietary rights over the land in question, an act which would constitute an
actual denial of property without due process of law.
It may be true that the subject lot could have fetched a higher price during
the public auction, as Legarda claims, but the fail to betray any hint of a bid
higher than Cabreras which was bypassed in his favor. Certainly, he could not
help it if his bid of only P376,500.00 was the highest. Moreover, in spite of this
allegedly low selling price, Legarda still failed to redeem her property within the
one-year redemption period. She could not feign ignorance of said sale on
account of her counsels failure to so inform her, because such auction sales
comply with requirements of notice and publication under the Rules of Court. In
the absence of any clear and convincing proof that such requirements were not
followed, the presumption of regularity stands. Legarda also claims that she was
in the United States during the redemption period, but she admits that she left
the Philippines only on July 13, 1985, or sixteen days after the auction sale of
June 27, 1985. Finally, she admits that her mother Ligaya represented her
during her absence.[14] In short, she was not totally in the dark as to the fate of
her property and she could have exercised her right of redemption if she chose
to, but she did not.
Neither Cathay nor Cabrera should be made to suffer for the gross
negligence of Legardas counsel. If she may be said to be innocent because
she was ignorant of the acts of negligence of her counsel, with more reason are
respondents truly innocent. As between two parties who may lose due to the
negligence or incompetence of the counsel of one, the party who was
responsible for making it happen should suffer the consequences. This reflects
the basic common law maxim, so succinctly stated by Justice J.B.L. Reyes, that
. . . (B)etween two innocent parties, the one who made it possible for the
wrong to be done should be the one to bear the resulting loss. [15] In this case, it
was not respondents, Legarda, who misjudged and hired the services of the
lawyer who practically abandoned her case and who continued to retain him
even after his proven apathy and negligence.

The Gancayco decision makes much of the fact that Legarda is now
consigned to penury and, therefore, this Court must come to the aid of the
distraught client. It must be remembered that this Court renders decisions, not
on the basis of emotions but on its sound judgment, applying the relevant,
appropriate law. Much as it may pity Legarda, or any losing litigant for that
matter, it cannot play the role of a knight in shining armor coming to the aid
of someone, who through her weakness, ignorance or misjudgment may have
been bested in a legal joust which complied with all the rules of legal
proceedings.
In Vales v. Villa,[16] this Court warned against the danger of jumping to the
aid of a litigant who commits serious error of judgment resulting in his own loss:
x x x Courts operate not because one person has been defeated or overcome
by another, but because he has been defeated or overcome illegally. Men may
do foolish things, make ridiculous contracts, use miserable judgment, and lose
money by them - indeed, all they have in the world; but not for that alone can
the law intervene and restore. There must be, in addition, a violation of law, the
commission of what the law knows as an actionable wrong, before the courts
are authorized to lay hold of the situation and remedy it."
Respondents should not be penalized for Legardas mistake. If the subject
property was at all sold, it was only after the decisions of the trial and appellate
courts had gained finality. These twin judgments, which were nullified by the
Gancayco decision, should be respected and allowed to stand by this Court for
having become final and executory.
A judgment may be broadly defined as the decision or sentence of the law
given by a court or other tribunal as the result of proceedings instituted
therein.[17] It is a judicial act which settles the issues, fixes the rights and
liabilities of the parties, and determines the proceeding, and it is regarded as
the sentence of the law pronounced by the court on the action or question
before it.[18]
In the case at bar, the trial courts judgment was based on Cathays
evidence after Legarda was declared in default. Damages were duly awarded to
Cathay, not whimsically, but upon proof of its entitlement thereto. The issue of
whether the plaintiff (Cathay) deserved to recover damages because of the
defendants (Legardas) refusal to honor their lease agreement was
resolved. Consequently, the right of Cathay to be vindicated for such breach
and the liability incurred by Legarda in the process were determined.

Page 72 of 82

This judgment became final when she failed to avail of remedies available
to her, such as filing a motion for reconsideration or appealing the case. At the
time, the issues raised in the complaint had already been determined and
disposed of by the trial court.[19] This is the stage of finality which judgments
must at one point or another reach. In our jurisdiction, a judgment
becomes ipso facto final when no appeal is perfected or the reglementary
period to appeal therefrom expires. The necessity of giving finality to
judgments that are not void is self-evident. The interests of society impose
it. The opposite view might make litigations more unendurable than the wrongs
(they are) intended to redress. It would create doubt, real or imaginary, and
controversy would constantly arise as to what the judgment or order
was. Public policy and sound practice demand that, at the risk of occasional
errors, judgments of courts should become final at some definite date fixed by
law. The very object for which courts were instituted was to put an end to
controversies.[20] When judgments of lower courts gain finality, they, too,
become inviolable, impervious to modification. They may, then, no longer be
reviewed, or in any way modified directly or indirectly, by a higher court, not
even by the Supreme Court. [21] In other words, once a judgment becomes final,
the only errors that may be corrected are those which are clerical. [22]
From the foregoing precedents, it is readily apparent that the real issue
that must be resolved in this motion for reconsideration is the alleged illegality
of the final judgments of the trial and appellate courts.
Void judgments may be classified into two groups: those rendered by a
court without jurisdiction to do so and those obtained by fraud or collusion.
[23]
This case must be tested in light of the guidelines governing the latter class
of judgments. In this regard, an action to annul a judgment on the ground of
fraud will not lie unless the fraud is extrinsic or collateral and facts upon which it
is based (have) not been controverted or resolved in the case where (the)
judgment was rendered.[24] Where is the fraud in the case at bar? Was Legarda
unlawfully barred from the proceedings below? Did her counsel sell her out to
the opponent?
It must be noted that, aside from the fact that no extrinsic fraud attended
the trial and resolution of this case, the jurisdiction of the court a quo over the
parties and the subject matter was never raised as an issue by Legarda. Such
being the case, the decision of the trial court cannot be nullified. Errors of
judgment, if any, can only be reviewed on appeal, failing which the decision
becomes final and executory, valid and binding upon the parties in the case
and their successors in interest.[25]

At this juncture, it must be pointed out that while Legarda went to the
Court of Appeals claiming precisely that the trial courts decision was
fraudulently obtained, she grounded her petition before the Supreme Court
upon her estranged counsels negligence. This could only imply that at the time
she filed her petition for annulment of judgment, she entertained no notion that
Atty. Coronel was being remiss in his duties. It was only after the appellate
courts decision had become final and executory, a writ of execution issued, the
property auctioned off then sold to an innocent purchasers for value, that she
began to protest the alleged negligence of her attorney. In most cases, this
would have been dismissed outright for being dilatory and appearing as an act
of desperation on the part of a vanquished litigant. The Gancayco ruling,
unfortunately, ruled otherwise.
Fortunately, we now have an opportunity to rectify a grave error of the
past.
WHEREFORE, the Motion for Reconsideration of respondent New Cathay
House, Inc. is hereby GRANTED. Consequently, the decision dated March 18,
1991, of the Courts First Division is VACATED and SET ASIDE. A new judgment
is hereby entered DISMISSING the instant petition for review and AFFIRMING the
November 29, 1989, decision of the Court of Appeals in CA-G.R. No. SP10487. Costs against petitioner Victoria Legarda.
SO ORDERED.
VICENTE SOTTO

January 21, 1949

In re VICENTE SOTTO, for contempt of court.

Vicente Sotto in his own behalf.
FERIA, J.:
This is a proceeding for contempt of our court against the respondent Atty.
Vicente Sotto, who was required by their Court on December 7, 1948, to show
cause why he should not be punished for contempt to court for having issued a
written statement in connection with the decision of this Court in In re Angel
Parazo for contempt of court, which statement, as published in the Manila Times
and other daily newspapers of the locality, reads as follows:
As author of the Press Freedom Law (Republic Act No. 53.) interpreted
by the Supreme Court in the case of Angel Parazo, reporter of a local

Page 73 of 82

daily, who now has to suffer 30 days imprisonment, for his refusal to
divulge the source of a news published in his paper, I regret to say that
our High Tribunal has not only erroneously interpreted said law, but that
it is once more putting in evidence the incompetency of narrow
mindedness o the majority of its members, In the wake of so many
mindedness of the majority deliberately committed during these last
years, I believe that the only remedy to put an end to so much evil, is to
change the members of the Supreme Court. To his effect, I announce
that one of the first measures, which as its objects the complete
reorganization of the Supreme Court. As it is now constituted, a
constant peril to liberty and democracy. It need be said loudly, very
loudly, so that even the deaf may hear: the Supreme Court very of
today is a far cry from the impregnable bulwark of Justice of those
memorable times of Cayetano Arellano, Victorino Mapa, Manuel Araullo
and other learned jurists who were the honor and glory of the Philippine
Judiciary.
Upon his request, the respondent was granted ten days more besides the five
originally given him to file his answer, and although his answer was filed after
the expiration of the period of time given him the said answer was admitted.
This Court could have rendered a judgment for contempt after considering his
answer, because he does not deny the authenticity of the statement as it has
been published. But, in order to give the respondent ample opportunity to
defend himself or justify the publication of such libelous statement, the case
was set for hearing or oral argument on January 4, the hearing being later
postponed to January 10, 1949. As the respondent did not appear at the date
set for hearing, the case was submitted for decision.
In his answer, the respondent does not deny having published the above quoted
threat, and intimidation as well as false and calumnious charges against this
Supreme Court. But he therein contends that under section 13, Article VIII of the
Constitution, which confers upon this Supreme Court the power to promulgate
rules concerning pleading, practice, and procedure, "this Court has no power to
impose correctional penalties upon the citizens, and that the Supreme Court can
only impose fines and imprisonment by virtue of a law, and has to be
promulgated by Congress with the approval of the Chief Executive." And he also
alleges in his answer that "in the exercise of the freedom of speech guaranteed
by the Constitution, the respondent made his statement in the press with the
utmost good faith and with no intention of offending any of the majority of the
honorable members of this high Tribunal, who, in his opinion, erroneously
decided the Parazo case; but he has not attacked, or intended to attack the
honesty or integrity of any one.' The other arguments set forth by the
respondent in his defenses observe no consideration.

Rules 64 of the rules promulgated by this court does not punish as for contempt
of court an act which was not punishable as such under the law and the
inherent powers of the court to punish for contempt. The provisions of section 1
and 3 of said Rule 64 are a mere reproduction of section 231 and 232 of the old
Code of Civil Procedure, Act No. 190, amended, in connection with the doctrine
laid down by this Court on the inherent power if the superior courts to punish for
contempt is several cases, among them In re Kelly, 35 Phil., 944. That the power
to punish for contempt is inherent in all courts of superior statue, is a doctrine
or principle uniformly accepted and applied by the courts of last resort in the
United States, which is applicable in this jurisdiction since our Constitution and
courts of justice are patterned as expounded in American Jurisprudence is as
follows:
The power of inflicting punishment upon persons guilty of contempt of
court may be regarded as an essential element of judicial authority, IT is
possessed as a part of the judicial authority granted to courts created
by the Constitution of the United States or by the Constitutions of the
several states. It is a power said to be inherent in all courts general
jurisdiction, whether they are State or Federal; such power exists in
courts of general jurisdiction independently of any special express grant
of statute. In many instances the right of certain courts of tribunals to
punish for contempt is expressly bestowed by statue, but such statutory
authorization is unnecessary, so far as the courts of general jurisdiction
are concerned, and in general adds nothing statutory authority may be
necessary as concerns the inferior courts statutory authority may be
necessary to empower them to act. (Contempt, 12 Jur., pp. 418, 419.)
In conformity with the principle enunciated in the above quotation from
American Jurisprudence, this Court, in In reKelly, held the following:
The publication of a criticism of a party or of the court to a pending
cause, respecting the same, has always been considered as
misbehavior, tending to obstruct the administration of justice, and
subjects such persons to contempt proceedings. Parties have a
constitutional right to have their fairly in court, by an impartial tribunal,
uninfluenced by publications or public clamor. Every citizen has a
profound personal interest in the enforcement of the fundamental right
to have justice administered by the courts, under the protection and
forms of law, free from outside coercion or interference. Any publication,
pending a suit, reflecting upon the upon court, the parties, the officers
of the court, the counsel, etc., with reference to the suit, or tending to
influence the decision of the controversy, is contempt of court and is
punishable. The power to punish for contempt is inherent in all court.

Page 74 of 82

The summary power to commit and punish for contempt tending to

obstructed or degrade the administration of justice, as inherent in
courts as essential to the execution of their powers and to the
maintenance of their authority is a part of the law of the land. (In
reKelly, 35 Phil., 944, 945.)
Mere criticism or comment on the correctness or wrongness, soundness or
unsoundness of the decision of the court in a pending case made in good faith
may be tolerated; because if well founded it may enlighten the court and
contribute to the correction of an error if committed; but if it is not well taken
and obviously erroneous, it should, in no way, influence the court in reversing or
modifying its decision. Had the respondent in the present case limited himself to
as statement that our decision is wrong or that our construction of the intention
of the law is not correct, because it is different from what he, as proponent of
the original bill which became a law had intended, his criticism might in that
case be tolerated, for it could not in any way influence the final disposition of
the Parazo case by the court; inasmuch as it is of judicial notice that the bill
presented by the respondent was amended by both Houses of Congress, and
the clause "unless the court finds that such revelation is demanded by the
interest of the State" was added or inserted; and that, as the Act was passed by
Congress and not by any particular member thereof, the intention of Congress
and not that of the respondent must be the one to be determined by this Court
in applying said act.
But in the above-quoted written statement which he caused to be published in
the press, the respondent does not merely criticize or comment on the decision
of the Parazo case, which was then and still is pending reconsideration by this
Court upon petition of Angel Parazo. He not only intends to intimidate the
members of this Court with the presentation of a bill in the next Congress, of
which he is one of the members, reorganizing the Supreme Court and reducing
the members, reorganizing the Supreme Court and reducing the members of
Justices from eleven to seven, so as to change the members of this Court which
decided the Parazo case, who according to his statement, are incompetent and
narrow minded, in order to influence the final decision of said case by this
Court, and thus embarrass or obstruct the administration of justice. But the
respondent also attacks the honesty and integrity of this Court for the apparent
purpose of bringing the Justices of this Court into disrepute and degrading the
administration of justice, for in his above-quoted statement he says:
In the wake of so many blunders and injustices deliberately committed
during these last years, I believe that the only remedy to put an end to
so much evil, is to change the members of the Supreme Court. To this
effect, I announce that one of the first measures, which I will introduce

in the coming congressional sessions, will have as its object the

complete reorganization of the Supreme Court. As it is now the Supreme
Court of today constitutes a constant peril to liberty and democracy.
To hurl the false charge that this Court has been for the last years committing
deliberately "so many blunders and injustices," that is to say, that it has been
deciding in favor of one party knowing that the law and justice is on the part of
the adverse party and not on the one in whose favor the decision was rendered,
in many cases decided during the last years, would tend necessarily to
undermine the confidence of the people in the honesty and integrity of the
members of this Court, and consequently to lower or degrade the
administration of justice by this Court. The Supreme Court of the Philippines is,
under the Constitution, the last bulwark to which the Filipino people may repair
to obtain relief for their grievances or protection of their rights when these are
trampled upon, and if the people lose their confidence in the honesty and
integrity of the members of this Court and believe that they cannot expect
justice therefrom, they might be driven to take the law into their own hands,
and disorder and perhaps chaos might be the result. As a member of the bar
and an officer of the courts Atty. Vicente Sotto, like any other, is in duty bound
to uphold the dignity and authority of this Court, to which he owes fidelity
according to the oath he has taken as such attorney, and not to promote
distrust in the administration of justice. Respect to the courts guarantees the
stability of other institutions, which without such guaranty would be resting on a
very shaky foundation.
Respondent's assertion in his answer that "he made his statement in the press
with the utmost good faith and without intention of offending any of the
majority of the honorable members of this high Tribunal," if true may mitigate
but not exempt him from liability for contempt of court; but it is belied by his
acts and statements during the pendency of this proceeding. The respondent in
his petition of December 11, alleges that Justice Gregorio Perfecto is the
principal promoter of this proceeding for contempt, conveying thereby the idea
that this Court acted in the case through the instigation of Mr. Justice Perfecto.
It is true that the constitutional guaranty of freedom of speech and the press
must be protected to its fullest extent, but license or abuse of liberty of the
press and of the citizen should not be confused with liberty in its true sense. As
important as the maintenance of an unmuzzled press and the free exercise of
the right of the citizen, is the maintenance of the independence of the judiciary.
As Judge Holmes very appropriately said U. S vs Sullens (1929), 36 Fed. (2nd),
230, 238, 239: "The administration of justice and the freedom of the press,
though separate and distinct, are equally sacred, and neither should be violated
by the other. The press and the courts have correlative rights and duties and

Page 75 of 82

should cooperate to uphold the principles of the Constitution and laws, from
which the former receives its prerogatives and the latter its jurisdiction. The
right of legitimate publicity must be scrupulously recognized and care taken at
all times to avoid impinging upon it. In a clear case where it is necessary, in
order to dispose of judicial business unhampered by publications which
reasonably tend to impair the impartiality of verdicts, or otherwise obstruct the
administration of justice, this court will not hesitate to exercise its undoubted
power to punish for contempt. This Court must be permitted to proceed with the
disposition if its business in an orderly manner free from outside interference
obstructive of its constitutional functions. This right will be insisted upon as vital
to an impartial court, and, as a last resort, as a individual exercises the right of
self-defense, it will act to preserve its existence as an unprejudiced
tribunal. . . ."
It is also well settled that an attorney as an officer of the court is under special
obligation to be respectful in his conduct and communication to the courts, he
may be removed from office or stricken from the roll of attorneys as being guilty
of flagrant misconduct (17 L. R. A. [N.S.], 586, 594).
In view of all the foregoing, we find the respondent Atty. Vicente Sotto guilty of
contempt of this Court by virtue of the above-quoted publication, and he is
hereby sentenced to pay, within the period of fifteen days from the
promulgation of this judgment, a fine of P1,000, with subsidiary imprisonment in
case of insolvency.
The respondent is also hereby required to appear, within the same period, and
show cause to this Court why he should not be disbarred form practicing as an
attorney-at-law in any of the courts of this Republic, for said publication and the
following statements made by him during the pendency of the case against
Angel Parazo for contempt of Court.
In his statement to the press as published in the Manila Times in its issue of
December 9, 1948, the respondent said "The Supreme Court can send me to
jail, but it cannot close my mouth; " and in his other statement published on
December 10, 1948, in the same paper, he stated among others: "It is not the
imprisonment that is degrading, but the cause of the imprisonment." In his Rizal
day speech at the Abellana High School in Cebu, published on January 3, 1949,
in the Manila Daily Bulletin, the respondent said that "there was more freedom
of speech when American Justices sat in the Tribunal than now when it is
composed of our countrymen;" reiterated that "even if it succeeds in placing
him behind bars, the court can not close his mouth," and added: "I would
consider imprisonment a precious heritage to leave for those who would follow
me because the cause is noble and lofty." And the Manila Chronicle of January 5

published the statement of the respondent in Cebu to the effect that this Court
"acted with malice" in citing him to appear before this Court on January 4 when
"the members of this Court know that I came here on vacation." In all said
statements the respondent misrepresents to the public the cause of the charge
against him for contempt of court. He says that the cause is for criticizing the
decision of this Court in said Parazo case in defense of the freedom of the press,
when in truth and in fact he is charged with intending to interfere and influence
the final disposition of said case through intimidation and false accusations
against this Supreme Court. So ordered.
ATTY. GLADDY S. BERNABE, complainant, vs. HON. JUDGE SALVADOR A.
MEMORACION, respondent.
DECISION
DAVIDE, JR., J.:
In his letter dated 20 June 1994 and addressed to the Court Administrator,
complainant Atty. Gladdy S. Bernabe of the Commission on Human Rights (CHR)
asked this Court to determine the appropriateness of the act of respondent
Judge Salvador A. Memoracion in modifying the sentence of the accused in
Criminal Case No. 1771-227.
From the documents submitted by the complainant to support his
allegations, it appears that an information for Homicide with Double Frustrated
Homicide was filed with the Regional Trial Court (RTC) of Basilan against three
Marine soldiers namely, Pfc. Vicente Machon, Pfc. Jerramy Degollado, and Pfc.
Renato Castulo. That case was docketed as Criminal Case No. 1771-227 and
raffled to Branch 2 of the said court, which is presided by the respondent Judge.
After trial on the merits, the respondent Judge rendered a judgment, the
decretal portion of which reads in part as follows:
WHEREFORE, premises considered, this Court finds the accused, PFC. VICENTE
MACHON, PFC. JERRAMY DEGOLLADO and PFC. RENATO CASTULO, GUILTY
beyond reasonable doubt, all as principal, for the crime of Homicide and Double
Frustrated Homicide as charged in the information and which crime is penalized
and defined under Art. 249 of the Revised Penal Code.
And taking into consideration all the aggravating circumstances, like evident
premeditation, used [sic] of high-powered firearms, revenge, nocturnity and
grave abuse of power, which were presence [sic] in the commission of the
crime, as well as the provisions of the Indeterminate Sentence Law, hereby
sentences each and every accused to suffer an imprisonment of TWELVE (12)

Page 76 of 82

YEARS, FIVE (5) MONTHS AND ELEVEN (11) DAYS, AS MINIMUM to FOURTEEN
(14) YEARS, TEN (10) MONTHS and TWENTY (20) DAYS as maximum period
to Reclusion Temporal in its medium period.
And ordering each of the three (3) accused to jointly and severally pay the heirs
of the late PO1 Efren Cruz in the amount of P50, 000.00 as moral damages. And
further to pay jointly and severally another amount of P500.00 as cost of the
proceeding, but in both cases, no subsidiary imprisonment shall be meted on
anyone of them in case of their insolvency.
Upon the accuseds second motion for reconsideration, however, the
respondent Judge modified the judgment by reducing the imprisonment penalty
to six (6) years. He denied the prosecutions motion for reconsider the
modification and granted the application of the accused for probation.
The respondent Judge admitted that he modified the decision but he did so
before it became final, which is allowed under Section 7, Rule 120 of the 1985
Rules of Criminal Procedure. He claimed that the reasons adduced by the
accused in their motion for the modification of the judgment are legal,
reasonable and justifiable and are within the context of the evidences [sic]
presented by the parties; besides, the prosecution did not file an opposition to
that motion nor did it present any objection during the hearing thereof, but
instead, it manifested that it was submitting the motion for resolution without
any arguments. He further alleged that he denied the prosecutions motion for
the reconsideration of the modified judgement because its opposition, which
was presented after he had already granted the accuseds motion, did not
present any legal issues that would justify the setting aside of the said order. He
then concluded that there was no error of judgment or grave abuse of
discretion ever committed in modifying [the] decision of October 4, 1994.
In his Memorandum to the Court, then Deputy Court Administrator Juanito
A. Bernad, with the approval of Court Administrator Ernani Cruz Pao,
recommended that the respondent Judge be (a) REPRIMANDED for his failure to
exercise due care in applying the penalties provided for in the Revise Penal
Code or the other laws, with a stern warning that a repetition of similar offense
in the future will be dealt with more severely; and (b) REQUIRED to explain the
discrepancies in his date of birth appearing in his service record, GSIS
membership form, and the Office of the Bar Confidant, as well as the reason
why he filed a letter dated 27 August 1991 requesting that his date of birth be
changed from 14 August 1927 to 20 March 1924.

ignorance of law or incompetence and for grave abuse of authority (1) for
imposing upon each of the three accused in Criminal Case No. 1771-227 a
single indeterminate penalty of 12 years, 5 months, and 11 days as minimum,
to 14 years, 10 months, and 20 days, as maximum; and (2) for later reducing
the penalty to six (6) years for each of the accused. It further resolved to
REQUIRE the respondent Judge to explain the discrepancies in his alleged date
of birth as appearing in his service record, GSIS membership form, and his
record in the Office of the Bar Confidant.
In his Reply and Manifestation dated 30 March 1995, the respondent Judge
contended that since the judgment was not yet final, he could modify it
pursuant to Section 7, Rule 120 of the 1985 Rules of Criminal Procedure; that he
found the modification to be in order after a review of all the facts and
circumstances of the cases and an evaluation of the two motions of the
accused; and that if any error was committed, it was one of judgment which
cannot be subject of any administrative charge. He stressed that the
prosecution could have appealed but did not do so, thereby showing that it was
satisfied with the modified sentence. He further contended that he committed
an honest mistake in appreciating in the original decision the aggravating
circumstances of evident premeditation, presence of superior force, nocturnity,
revenge, and grave abuse of power because these are not even alleged in the
information. Besides, he took into account the fact that the accused, who are
members of the Marine Corps of the Philippine Navy, were first offenders and
had no intention to commit so grave a wrong as that committed. Had he not
shown them any compassion and understanding by granting them probation, he
would have suffered outrage, anger and madness from the whole battalion of
Marine Officers and Men in Basilan, and if that outrage and anger were spewed
upon him no government officials, not even members of the judiciary would
come forward to give aid and comfort, except his family and immediate
relatives. He also impressed upon this Court that the situation in Basilan is far
different from that in other provinces in the country, for in Basilan
[k]idnappings with ransoms are weekly occurrences, big time illegal loggers,
high incidents [sic] of drug trafficking are common crimes which in spite of the
presence of large number of armed forces remained unabated. He further
narrated the sad plight of the Judges assigned in Basilan.
As to the discrepancy in his date of birth, the respondent Judge now
believes, after considering the circumstances, that the date appearing in the
baptismal certificate which he submitted is not correct; hence, he will just
continue to perform his duties as a Judge on the basis of the date of birth 14
August 1927 appearing in his service record.

On 15 March 1995, this court directed the respondent Judge to SHOW

CAUSE why no disciplinary sanction should be imposed upon him for gross

Page 77 of 82

On 26 July 1995, the Court referred this case to the Office of the Court
Administrator for evaluation, report, and recommendation.
The Office of the Court Administrator, through Deputy Court Administrator
Zenaida N. Elepao, then submitted a Memorandum wherein it made the
following findings:
A careful perusal of the records and of the circumstances attending the case,
convinces us that respondent Judge indeed committed errors and acted without
careful and prudent examination and study of the facts and the applicable law
when he reduced the sentence he originally imposed to (6) years. This
manifestation of ignorance of the law by respondent Judge cannot be tolerated
with a misplaced compassion, even considering the hazardous environment of
this court in what is often times a war zone in Basilan. As a magistrate of law,
he is called upon to exhibit more than just a cursory acquaintance with statutes
and procedural rules. While judges should not be disciplined for inefficiency on
account merely of occasional mistakes or errors of judgment, it is imperative
that they be conversant with basic legal principles. x x x (Ubongon vs. Mayo, 99
SCRA 30). When a judge acts fraudulently or with gross ignorance,
administrative sanctions are called for as an imperative duty of the court
(Guillermo vs. Judge Reyes, A.M. No. RTJ-93-1088, January 18, 1995).
She then recommended that the respondent Judge be REPRIMANDED and be
meted the penalty of fine in the amount of five thousand pesos (P5,000.00) with
stern warning that a repetition of the same or similar act or offense in the future
will be dealt with more severely.
We agree with the Office of the Court Administrator that the respondent
Judge showed gross ignorance of the law when he reduced the penalty to only
six years. We find, however, more of such ignorance. Accordingly, a more
severe penalty is in order.
Although captioned as one for Homicide with Double Frustrated
Homicide, the information in Criminal Case No. 1771-227 is actually for three
separate crimes of (a) homicide for the death of SPO1 Efren Cruz, (b) frustrated
homicide for the infliction of gunshot wounds on SPO3 Antonio Martin, and (c)
frustrated homicide for the infliction of gunshot wounds on PO3 Amergani
Mariano. The information reads as follows:
That on or about the 16 th day of August 1991, and within the jurisdiction of this
Honorable Court, viz., at Townsite, Municipality of Maluso, Province of Basilan,
Philippines, the above named accused, armed with M-16 Rifles, conspiring and
confederating together, aiding and assisting one with the other, and with intent

to kill, did then and there willfully, unlawfully and feloniously assault, attack and
shoot at the persons of SPO3 Antonio Martin, PO3 Amergani Mariano, PO3 Arip
Mohammad and SPO1 Efren Cruz with their firearms, thereby inflicting gunshot
wound upon the body of SPO1 Efren Cruz which caused his death, while SPO3
Antonio Martin, PO3 Amergani Mariano and PO3 Arip Mohammad sustained
gunshot wounds on their bodies, thus the accused have performed all the acts
of execution which would have produced the crime of multiple homicide as a
consequence thereof, but which nevertheless did not produce it by reasons or
causes that is (sic) due to the medical assistance rendered to the latter, which
prevented their death.
Contrary to law.
Nowhere is it suggested that what was committed was a complex crime under
Article 48 of the Revise Penal Code. Neither is it shown that the accused has
moved to quash the information on the ground of duplicity under paragraph (e),
Section 3, Rule 117 of the Rules of Court. The accused could therefore be
convicted of three separate crimes and sentenced to suffer the penalty for each
of them, as they were deemed to have waived the objection to multiplicity of
charges.[1] Accordingly, the single indeterminate penalty of imprisonment
imposed by the respondent Judge after applying the Indeterminate Sentence
Law is patently wrong.
Even if it be conceded ex gratia that a complex crime was charged and
proved, the application of the indeterminate penalty is also erroneous. Under
such assumption, the penalty imposable is maximum period of the penalty for
the more serious offense, viz., homicide under Article 249 of the Revise Penal
Code, which carries a penalty of reclusion temporal. Such maximum period is
from 17 years, 4 months, and 1 day to 20 years. Applying the Indeterminate
Sentence Law, the indeterminate penalty would be that whose minimum would
be within the range of the penalty next lower in degree (prision mayor) to the
prescribed penalty (reclusion temporal) and whose maximum should be that
which, in view of the modifying circumstances, could be properly imposed under
the Revise Penal Code.[2] Therefore, the minimum of the indeterminate penalty
shall not exceed prision mayor , whose range is from six (6) years and one (1)
day to twelve (12) years.[3]What the respondent Judge imposed as the
minimum, viz., 12 years, 5 months , and 11 days, which he describes to be the
medium period of prision mayor is entirely wrong not only because it already
exceeded prision
mayor,
but
also
because it is not the medium period of prision mayor. The medium period
of prision mayor is from eight (8) years and one (1) day to (10) ten years.

Page 78 of 82

Even assuming further that the respondent Judge did not consider Article
48 of the Revised Penal Code on complex crimes and simply believed, as he did,
that only Article 249 of the Revised Penal Code was violated, still the sentence
imposed by him is wrong. Having found proven the aggravating circumstances,
like evident premeditation, used [sic] of high-powered firearms, revenge,
nocturnity and grave abuse of power, and not having found any mitigating
circumstance, the proper imposable penalty pursuant to paragraphs 3 and 6,
Article 64 of the Revised Penal Code would be reclusion temporal in its
maximum period. Applying the Indeterminate Sentence Law, the accused could
be sentenced to an indeterminate penalty whose minimum would be within the
range of prision mayor and whose maximum would be reclusion temporal in its
maximum period.
The reduction of the penalty to only six years demonstrated beyond cavil
gross ignorance of the law. That penalty falls within the range of prision
correccional, which has a duration of from six (6) months and one (1) day to six
(6) years. The reduced penalty is therefore two degrees lower than that
prescribed by law for homicide. Since no mitigating circumstance was in fact
found in the original decision, nothing could justify the reduction of the penalty
to six (6) years of prision correccional. Not even the claim of the accused in
their motion for reconsideration that they did not intend to commit the act of
killing and harming the policemen [the victims] in the police station, which the
respondent Judge accepted as a mitigating circumstance, could justify such
reduction. Even if the mitigating circumstance of praeter intentionem[4] were
appreciated, and still under the assumption that one single penalty under
Article 249 is permissible, the said mitigating circumstance would be offset by
any of the aforementioned aggravating circumstance pursuant to paragraph 4,
Article 64 of the Revised Penal Code.
All told, the respondent Judges gross ignorance of the law is inexcusable.
That, indeed, would be very distressing considering that his service record
shows that he has been in the Judiciary for twenty-nine years already. Time and
again, this Court has stressed that a judge is called upon to exhibit more than
just a cursory acquaintance with statutes and procedural rules. [5] It is imperative
that he be studious of and conversant with basic legal principles. [6] He owes to
the dignity of the court he sits in, to the legal profession he belongs, and to the
public who depends on him, to know the law which he is called upon to interpret
and apply.[7] Verily, it would not serve the interests of the judicial system for
judges to be woefully lacking in the type of legal knowledge generally presumed
by practitioners of the law to be fundamental.[8]
The penalty then recommended by the Office of the Court Administrator is
too light. A fine of Forty Thousand Pesos (P 40,000.00) is reasonable.

As to the respondents Judges date of birth, there was an obvious attempt

on his part to insist on a date (20 March 1924) earlier than that which appears
in all his records, so that he could have compulsorily retired on 20 March 1994.
He is now withdrawing his request for a change of his date of birth, and he
expresses preference to let stay what appears in his records. A doubt has been
cast on the date of the respondent Judges birth. He should submit indubitable
proof of the correct date.
WHEREFORE, for gross ignorance of law, respondent Judge SALVADOR A.
MEMORACION is hereby fined in the amount of FORTY THOUSAND PESOS
(P40,000.00) and warned that the commission of the same or similar acts in the
future shall be dealt with more severely.
SO ORDERED.
G.R. Nos. 119987-88 October 12, 1995
THE
PEOPLE
OF
THE
PHILIPPINES, petitioner,
vs.
HON. LORENZO B. VENERACION, Presiding Judge of the Regional Trial
Court, National Capital Judicial Region, Branch 47, Manila, HENRY
LAGARTO y PETILLA and ERNESTO CORDERO, respondents.

KAPUNAN, J.:
The sole issue in the case at bench involves a question of law. After finding that
an accused individual in a criminal case has, on the occasion of Rape,
committed Homicide, is the judge allowed any discretion in imposing either the
penalty of Reclusion Perpetua or Death?
The facts antecedent to the case before this Court, as narrated by
petitioner, 1 involve the perpetration of acts so bizarre and devoid of humanity
as to horrify and numb the senses of all civilized men:
On August 2, 1994, the cadaver of a young girl, later identified
as Angel Alquiza wrapped in a sack and yellow table cloth tied
with a nylon cord with both feet and left hand protruding from it
was seen floating along Del Pan St. near the corner of Lavesares
St., Binondo, Manila.

Page 79 of 82

When untied and removed from its cover, the lifeless body of
the victim was seen clad only in a light colored duster without
her panties, with gaping wounds on the left side of the face, the
left chin, left ear, lacerations on her genitalia, and with her head
bashed in.
On the basis of sworn statements of witnesses, booking sheets, arrest reports
and the necropsy report of the victim, Abundio Lagunday, a.k.a. Jr. Jeofrey of no
fixed address, and Henry Lagarto y Petilla, of 288 Area H. Parola Compound,
Tondo, Manila were later charged with the crime of Rape with Homicide in an
Information dated August 8, 1994 filed with the Regional Trial Court of Manila,
National Capital Judicial Region. Said Information, docketed as Criminal Case No.
94-138071, reads:
That on or about August 2, 1994, in the City of Manila,
Philippines, the said accused, conspiring and confederating
together with one alias "LANDO" and other persons whose true
names, identifies and present whereabouts are still unknown
and helping one another, with treachery, taking advantage of
their superior strength and nocturnity, and ignominy, and with
the use of force and violence, that is, by taking ANGEL ALQUIZA
y LAGMAN into a warehouse, covering her mouth, slashing her
vagina, hitting her head with a thick piece of wood and stabbing
her neck did then and there wilfully, unlawfully and feloniously
have carnal knowledge of the person of said ANGEL ALQUIZA y
LAGMAN, a minor, seven (7) years of age, against the latter's
will and consent and on said occasion the said ABUNDIO
LAGUNDAY, a.k.a. "LANDO" and others, caused her fatal injuries
which were the direct cause of her death immediately
thereafter.
CONTRARY TO LAW.
Subsequently thereafter, Ernesto Cordero y Maristela, a.k.a.
"Booster," of 1198 Sunflower St., Tondo, Manila, Rolando
Manlangit y Mamerta, a.k.a. "Lando," of 1274 Kagitingan St.,
Tondo, Manila, Richard Baltazar y Alino, a.k.a. "Curimao," also of
1274 Kagitingan St., Tondo, Manila, and Catalino Yaon y Aberin,
a.k.a. "Joel," of 1282 Lualhati St., Tondo, Manila were accused of
the same crime of Rape with Homicide in an Information dated
August 11, 1994, docketed as Criminal Case No. 94-138138,
allegedly committed as follows:

That on or about the 2nd day of August, 1994,

in the City of Manila, Philippines, the said
accused conspiring and confederating with
ABUNDIO LAGUNDAY Alias "JR," JEOFREY and
HENRY LAGARTO y PETILLA who have already
been charged in the Regional Trial Court of
Manila of the same offense under Criminal Case
No. 94-138071, and helping one another, with
treachery, taking advantage of their superior
strength and nocturnity and ignominy, and with
the use of force and violence, that is, by taking
ANGEL ALQUIZA y LAGMAN into a pedicab, and
once helpless, forcibly bringing her to a nearby
warehouse, covering her mouth, slashing her
vagina, hitting her head with a thick piece of
wood and stabbing her neck, did then and there
wilfully, unlawfully and feloniously have carnal
knowledge of the person of said ANGEL
ALQUIZA y LAGMAN, a minor, seven (7) years of
age, against the latter's will and consent and on
said occasion the said accused together with
their confederates ABUNDIO LAGARTO y PETILLA
caused her fatal injuries which were the direct
cause of her death immediately thereafter.
CONTRARY TO LAW.
The two criminal cases were consolidated to Branch 47 of the
Regional Trial Court of Manila, presided over by respondent
Judge.
Duly arraigned, all the accused, except Abundio Lagunday who
was already dead, (allegedly shot by police escorts after
attempting to fire a gun he was able to grab from SPO1 D. Vidad
on August 12, 1994), pleaded "Not Guilty." Abundio Lagunday
was dropped from the Information.
After trial and presentation of the evidence of the prosecution and the defense,
the trial court rendered a decision 2 on January 31, 1995 finding the defendants
Henry Lagarto y Petilla and Ernesto Cordero y Maristela guilty beyond
reasonable doubt of the crime of Rape with Homicide and sentenced both
accused with the "penalty ofreclusion perpetua with all the accessories provided
for by law." 3 Disagreeing with the sentence imposed, the City Prosecutor of

Page 80 of 82

Manila on February 8, 1995, filed a Motion for Reconsideration, praying that the
Decision be "modified in that the penalty of death be imposed" against
respondents Lagarto and Cordero, in place of the original penalty (reclusion
perpetua). Refusing to act on the merits of the said Motion for Reconsideration,
respondent Judge, on February 10, 1995, issued an Order denying the same for
lack of jurisdiction. The pertinent portion reads:
The Court believes that in the above-entitled cases, the accused
Lagarto and Cordero have complied with the legal requirements
for the perfection of an appeal. Consequently, for lack of
jurisdiction, this Court cannot take cognizance of the Motion for
Reconsideration of the Public Prosecutor of Manila.

government of laws, not of men excludes the exercise of broad discretionary

powers by those acting under its authority. Under this system, judges are
guided by the Rule of Law, and ought "to protect and enforce it without fear or
favor," 4 resist encroachments by governments, political parties, 5 or even the
interference of their own personal beliefs.
In the case at bench, respondent judge, after weighing the evidence of the
prosecution and the defendant at trial found the accused guilty beyond
reasonable doubt of the crime of Rape with Homicide. Since the law in force at
the time of the commission of the crime for which respondent judge found the
accused guilty was Republic Act No. 7659, he was bound by its provisions.
Section 11 of R.A. No. 7659 provides:

WHEREFORE, the order earlier issued by this Court regarding

the Notices of Appeal filed by both herein accused is hereby
reiterated.
The Clerk of this Court is hereby directed to transmit the
complete records of these cases, together with the notices of
appeal, to the Honorable Supreme Court, in accordance with
Sec. 8, Rule 122 of the Revised Rules of Criminal Procedure.
SO ORDERED.
Hence, the instant petition.
The trial court's finding of guilt is not at issue in the case at bench. The basis of
the trial court's determination of guilt and its conclusions will only be subject to
our scrutiny at an appropriate time on appeal. We have thus clinically limited
our narration of events to those cold facts antecedent to the instant case
relevant to the determination of the legal question at hand, i.e., whether or not
the respondent judge acted with grave abuse of discretion and in excess of
jurisdiction when he failed and/or refused to impose the mandatory penalty of
death under Republic Act No. 7659, after finding the accused guilty of the crime
of Rape with Homicide.

Sec. 11. Article 335 of the same Code is hereby amended to

read as follows:
Art. 335. When and how rape is committed. Rape is
committed by having carnal knowledge of a woman under any
of the following circumstances:
1. By using force or intimidation.
2. When the woman is deprived of reason or otherwise
unconscious; and
3. When the woman is under twelve years of age or is
demented.
The crime of rape shall be punished by reclusion perpetua.
Whenever the crime of rape is committed with the use of a
deadly weapon or by two or more persons, the penalty shall
be reclusion perpetua to death.

We find for petitioner.

When by reason or on the occasion of the rape, the victim has

become insane, the penalty shall be death.

Obedience to the rule of law forms the bedrock of our system of justice. If
judges, under the guise of religious or political beliefs were allowed to roam
unrestricted beyond boundaries within which they are required by law to
exercise the duties of their office, then law becomes meaningless. A

When the rape is attempted or frustrated and a homicide is

committed by reason or on the occasion thereof, the penalty
shall be reclusion perpetua to death.

Page 81 of 82

When by reason or on the occasion of the rape, a homicide is

committed, the penalty shall be death. . . . 6

provides for its imposition in certain cases, it is the duty of

judicial officers to respect and apply the law regardless of their
private opinions. It is a well settled rule that the courts are not
concerned with the wisdom, efficacy or morality of laws. That
question falls exclusively within the province of the Legislature
which enacts them and the Chief Executive who approves or
vetoes them. The only function of the judiciary is to interpret
the laws and, if not in disharmony with the Constitution, to
apply them. And for the guidance of the members of the
judiciary we feel it incumbent upon us to state that while they
as citizens or as judges may regard a certain law as harsh,
unwise or morally wrong, and may recommend to the authority
or department concerned, its amendment, modification, or
repeal, still, as long as said law is in force, they must apply it
and give it effect as decreed by the law-making body. 8

Clearly, under the law, the penalty imposable for the crime of Rape with
Homicide is not Reclusion Perpetua but Death. While Republic Act 7659
punishes cases of ordinary rape with the penalty of Reclusion Perpetua, it allows
judges the discretion depending on the existence of circumstances modifying
the offense committed to impose the penalty of either Reclusion
Perpetua only in the three instances mentioned therein. Rape with homicide is
not one of these three instances. The law plainly and unequivocably provides
that "[w]hen by reason or on the occasion of rape, a homicide is committed, the
penalty shall be death." The provision leaves no room for the exercise of
discretion on the part of the trial judge to impose a penalty under the
circumstances described, other than a sentence of death.
We are aware of the trial judge's misgivings in imposing the death sentence
because of his religious convictions. While this Court sympathizes with his
predicament, it is its bounden duty to emphasize that a court of law is no place
for a protracted debate on the morality or propriety of the sentence, where the
law itself provides for the sentence of death as a penalty in specific and welldefined instances. The discomfort faced by those forced by law to impose the
death penalty is an ancient one, but it is a matter upon which judges have no
choice. Courts are not concerned with the wisdom, efficacy or morality of laws.
In People vs. Limaco 7 we held that:
[W]hen . . . private opinions not only form part of their decision
but constitute a decisive factor in arriving at a conclusion and
determination of a case or the penalty imposed, resulting in an
illegality and reversible error, then we are constrained to state
our opinion, not only to correct the error but for the guidance of
the courts. We have no quarrel with the trial judge or with
anyone else, layman or jurist as to the wisdom or folly of the
death penalty. Today there are quite a number of people who
honestly believe that the supreme penalty is either morally
wrong or unwise or ineffective. However, as long as that penalty
remains in the statute books, and as long as our criminal law

Finally, the Rules of Court mandates that after an adjudication of guilt, the judge
should impose "the proper penalty and civil liability provided for by the law on
the accused." 9 This is not a case of a magistrate ignorant of the law. This is a
case in which a judge, fully aware of the appropriate provisions of the law,
refuses to impose a penalty to which he disagrees. In so doing, respondent
judge acted without or in excess of his jurisdiction or with grave abuse of
discretion amounting to a lack of jurisdiction in imposing the penalty
of Reclusion Perpetua where the law clearly imposes the penalty of Death.
WHEREFORE, PREMISES CONSIDERED, the instant petition is GRANTED. The
case is hereby REMANDED to the Regional Trial Court for the imposition of the
penalty of death upon private respondents in consonance with respondent
judge's finding that the private respondents in the instant case had committed
the crime of Rape with Homicide under Article 335 of the Revised Penal Code,
as amended by Section 11 of Republic Act No. 7659, subject to automatic
review by this Court of the decision imposing the death penalty.
SO ORDERED.

Page 82 of 82