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.

Paces Industrial Corporation vs Salandanan, AC No. 1346, July

25, 2017

This is a complaint which Paces Industrial Corporation (Paces) filed

against its former lawyer, Atty. Edgardo M. Salandanan, for allegedly
committing malpractice and/or gross misconduct when he represented
conflicting interests.

The procedural and factual antecedents of the instant case are as follows:

Sometime in October 1973, Salandanan became a stockholder of Paces,

and later became its Director, Treasurer, Administrative Officer, Vice-
President for Finance, then its counsel. As lawyer for Paces, he appeared
for it in several cases such as in Sisenando Malveda, et al. v. Paces
Corporation (NLRC R-04 Case No. 11-3114-73) and Land & Housing
Development Corporation v. Paces Corporation (Civil Case No. 18791). In
the latter case, Salandanan failed to file the Answer, after filing a Motion
for a Bill of Particulars, which the court had denied. As a result, an order
of default was issued against Paces. Salandanan never withdrew his
appearance in the case nor notified Paces to get the services of another
lawyer. Subsequently, a decision was rendered against Paces which later
became final and executory.

On December 4, 1973, E.E. Black Ltd., through its counsel, sent a letter to
Paces regarding the latter's outstanding obligation to it in the amount of
P96,513.91. In the negotiations that transpired thereafter, Salandanan was
the one who represented Paces. He was likewise entrusted with the
documents relative to the agreement between Paces and E.E. Black Ltd.

Meanwhile, disagreements on various management policies ensued

among the stockholders and officers in the corporation. Eventually,
Salandanan and his group were forced to sell out their shareholdings in
the company to the group of Mr. Nicolas C. Balderama on May 27, 1974.

After said sell-out, Salandanan started handling the case between E.E.
Black Ltd. and Paces, but now, representing E.E. Black Ltd. Salandanan
then filed a complaint with application for preliminary attachment against
Paces for the collection of its obligation to E.E. Black Ltd. He later
succeeded in obtaining an order of attachment, writ of attachment, and
notices of garnishment to various entities which Paces had business
dealings with.

Thus, Paces filed a complaint against Salandanan. It argued that when he

acted as counsel for E.E. Black Ltd., he represented conflicting interests
and utilized, to the full extent, all the information he had acquired as its
stockholder, officer, and lawyer. On the other hand, Salandanan claimed
that he was never employed nor paid as a counsel by Paces. There was no
client-lawyer contract between them. He maintained that his being a
lawyer was merely coincidental to his being a stockholder-officer and did
not automatically make him a lawyer of the corporation, particularly with
respect to its account with E.E. Black Ltd. He added that whatever
knowledge or information he had obtained on the operation of Paces only
took place in the regular, routinary course of business as him being an
investor, stockholder, and officer, but never as a lawyer of the company.

After a thorough and careful review of the case, the Commission on Bar
Discipline of the Integrated Bar of the Philippines (IBP) recommended
Salandanan's suspension for one (1) year on November 2, 2011.1 On
September 28, 2013, the IBP Board of Governors passed Resolution No.
XX-2013-1202 adopting and approving, with modification, the
aforementioned recommendation, thus:

RESOLVED to ADOPT and APPROVE, as it is hereby unanimously ADOPTED

and APPROVED, with modification, the Report and Recommendation of the
Investigating Commissioner in the above-entitled case, herein made part
of this Resolution as Annex "A, " and finding the recommendation fully
supported by the evidence on record and the applicable laws and rules
and considering that the Respondent violated the conflict of interest rule,
Atty. Edgardo M Salandanan is hereby SUSPENDED from the practice of
law for three (3) years.

On August 8, 2014, the IBP Board of Governors passed Resolution No. XXI-
2014-413,3 denying Salandanan's motion for reconsideration and affirming
Resolution No. XX-2013-120.

The Court's Ruling

The Court finds no justifiable reason to deviate from the findings and
recommendations of the IBP.

Rule 15.03, Canon 15 and Canon 21 of the Code of Professional

Responsibility (CPR) provide:

CANON 15 – A LAWYER SHALL OBSERVE CANDOR, FAIRNESS AND

LOYALTY IN ALL HIS DEALINGS AND TRANSACTIONS WITH HIS CLIENTS.

x x x x

Rule 15.03 A lawyer shall not represent conflicting interests except by

written consent of all concerned given after a full disclosure of the facts.

x x x x

CANON 21 – A LAWYER SHALL PRESERVE THE CONFIDENCES AND

SECRETS OF HIS CLIENT EVEN AFTER THE ATTORNEY-CLIENT RELATION
IS TERMINATED.

Under the aforecited rules, it is explicit that a lawyer is prohibited from

representing new clients whose interests oppose those of a former client
in any manner, whether or not they are parties in the same action or on
totally unrelated cases.4 Conflict of interest exists when a lawyer
represents inconsistent interests of two or more opposing parties. The
test is whether or not in behalf of one client, it is the lawyer's duty to fight
for an issue or claim, but it is his duty to oppose it for the other client. In
short, if he argues for one client, this argument will be opposed by him
when he argues for the other client. This rule covers not only cases in
which confidential communications have been confided, but also those in
which no confidence has been bestowed or will be used. Also, there is
conflict of interests if the acceptance of the new retainer will require the
attorney to perform an act which will injuriously affect his first client in
any matter in which he represents him and also whether he will be called
upon in his new relation to use against his first client any knowledge
acquired through their connection. Another test of the inconsistency of
interests is whether the acceptance of a new relation will prevent an
attorney from the full discharge of his duty of undivided fidelity and loyalty
to his client or invite suspicion of unfaithfulness or double-dealing in the
performance of said duty.5 The prohibition is founded on the principles of
public policy and good taste.6

The prohibition against conflict of interest rests on the following five (5)
rationales:7

First, the law seeks to assure clients that their lawyers will represent
them with undivided loyalty. A client is entitled to be represented by a
lawyer whom the client can trust. Instilling such confidence is an objective
important in itself.

Second, the prohibition against conflicts of interest seeks to enhance the

effectiveness of legal representation. To the extent that a conflict of
interest undermines the independence of the lawyer's professional
judgment or inhibits a lawyer from working with appropriate vigor in the
client's behalf, the client's expectation of effective representation could be
compromised.

Third, a client has a legal right to have the lawyer safeguard confidential
information pertaining to it. Preventing the use of confidential information
against the interests of the client to benefit the lawyer's personal interest,
in aid of some other client, or to foster an assumed public purpose, is
facilitated through conflicts rules that reduce the opportunity for such
abuse.

Fourth, conflicts rules help ensure that lawyers will not exploit clients,
such as by inducing a client to make a gift or grant in the lawyer's favor.

Finally, some conflict-of-interest rules protect interests of the legal

system in obtaining adequate presentations to tribunals. In the absence of
such rules, for example, a lawyer might appear on both sides of the
litigation, complicating the process of taking proof and compromise
adversary argumentation.

Even the termination of the attorney-client relationship does not justify a

lawyer to represent an interest adverse to or in conflict with that of the
former client. The spirit behind this rule is that the client's confidence once
given should not be stripped by the mere expiration of the professional
employment. Even after the severance of the relation, a lawyer should not
do anything that will injuriously affect his former client in any matter in
which the lawyer previously represented the client. Nor should the lawyer
disclose or use any of the client's confidences acquired in the previous
relation. In this regard, Canon 17 of the CPR expressly declares that: "A
lawyer owes fidelity to the cause of his client and he shall be mindful of
the trust and confidence reposed in him." The lawyer's highest and most
unquestioned duty is to protect the client at all hazards and costs even to
himself. The protection given to the client is perpetual and does not cease
with the termination of the litigation, nor is it affected by the client's
ceasing to employ the attorney and retaining another, or by any other
change of relation between them. It even survives the death of the client. 8

It must, however, be noted that a lawyer's immutable duty to a former

client does not cover transactions that occurred beyond the lawyer's
employment with the client. The intent of the law is to impose upon the
lawyer the duty to protect the client's interests only on matters that he
previously handled for the former client and not for matters that arose
after the lawyer-client relationship has terminated.9

Here, contrary to Salandanan's futile defense, he sufficiently represented

or intervened for Paces in its negotiations for the payment of its obligation
to E.E. Black Ltd. The letters he sent to the counsel of E.E. Black Ltd.
identified him as the Treasurer of Paces. Previously, he had likewise
represented Paces in two (2) different cases. It is clear, therefore, that his
duty had been to fight a cause for Paces, but it later became his duty to
oppose the same for E.E. Black Ltd. His defense for Paces was eventually
opposed by him when he argued for E.E. Black Ltd. Thus, Salandanan had
indisputably obtained knowledge of matters affecting the rights and
obligations of Paces which had been placed in him in unrestricted
confidence. The same knowledge led him to the identification of those
attachable properties and business organizations that eventually made the
attachment and garnishment against Paces a success. To allow him to
utilize said information for his own personal interest or for the benefit of
E.E. Black Ltd., the adverse party, would be to violate the element of
confidence which lies at the very foundation of a lawyer-client
relationship.

The rule prohibiting conflict of interest was fashioned to prevent situations

wherein a lawyer would be representing a client whose interest is directly
adverse to any of his present or former clients. In the same way, a lawyer
may only be allowed to represent a client involving the same or a
substantially related matter that is materially adverse to the former client
only if the former client consents to it after consultation. The rule is
grounded in the fiduciary obligation of loyalty. Throughout the course of a
lawyer-client relationship, the lawyer learns all the facts connected with
the client's case, including the weak and strong points of the case.
Knowledge and information gathered in the course of the relationship
must be treated as sacred and guarded with care.10 It behooves lawyers,
not only to keep inviolate the client's confidence, but also to avoid the
appearance of treachery and double-dealing for only then can litigants be
encouraged to entrust their secrets to their lawyers, which is of
paramount importance in the administration of justice.11 The nature of that
relationship is, therefore, one of trust and confidence of the highest
degree.12

In the absence of the express consent from Paces after full disclosure to
it of the conflict of interest, Salandanan should have either outrightly
declined representing and entering his appearance as counsel for E.E.
Black Ltd., or advised E.E. Black Ltd. to simply engage the services of
another lawyer. Unfortunately, he did neither, and must necessarily suffer
the dire consequences.13

Applying the above-stated principles, the Court agrees with the IBP's
finding that Salandanan represented conflicting interests and, perforce,
must be held administratively liable for the same.14

WHEREFORE, IN VIEW OF THE FOREGOING, the Court SUSPENDS Atty.

Edgardo M. Salandanan from the practice of law for three (3) years
effective upon his receipt of this decision, with a warning that his
commission of a similar offense will be dealt with more severely.

Let copies of this decision be included in the personal record of Atty.

Edgardo M. Salandanan and entered in his file in the Office of the Bar
Confidant.

Let copies of this decision be disseminated to all lower courts by the

Office of the Court Administrator, as well as to the Integrated Bar of the
Philippines for its guidance.

SO ORDERED.
Canon 18

A LAWYER SHALL SERVE HIS CLIENT WITH COMPETENCE AND

DILIGENCE.

Rules 18.01 - A lawyer shall not undertake a legal service which he knows
or should know that he is not qualified to render. However, he may render
such service if, with the consent of his client, he can obtain as
collaborating counsel a lawyer who is competent on the matter.

Rule 18.02 - A lawyer shall not handle any legal matter without adequate
preparation.

Rule 18.03 - A lawyer shall not neglect a legal matter entrusted to him,
and his negligence in connection therewith shall render him liable.

Rule 18.04 - A lawyer shall keep the client informed of the status of his
case and shall respond within a reasonable time to the client's request for
information.
Solatan vs Inocentes, Ac No. 6504, August 9, 2005

The present case focuses on a critical aspect of the lawyer-client

relationship¾the duty of loyalty. The fidelity lawyers owe their clients is
traditionally characterized as "undivided." This means that lawyers must
represent their clients and serve their needs without interference or
impairment from any conflicting interest.

This administrative case traces its roots from the manner by which Attys.
Jose C. Camano and Oscar A. Inocentes responded to the efforts of
complainant, George C. Solatan, to lease a certain Quezon City apartment
belonging to the attorneys‟ clients. On the basis of acts branded by the
Integrated Bar of the Philippines (IBP) as "bordering on technical
extortion," accepting funds and giving unsolicited advice to an adverse
party, and casting doubts as to the procedure of levy, the IBP resolved1 to
recommend the suspension of Atty. Camano from the practice of law for
one (1) year. It likewise recommended the reprimand of Atty. Inocentes,
whom it held liable for the aforementioned acts of his associate, under the
principle of command responsibility.

Only Atty. Inocentes has elected to contest the resolution of the IBP, as he
questions the propriety of his being held administratively liable for acts
done by Atty. Camano.2 However, the recommendation to suspend Atty.
Camano shall also be passed upon by virtue of Section 12, Rule 139-B of
the Rules of Court.3

Attys. Inocentes and Camano were both engaged in the practice of law
under the firm name of Oscar Inocentes and Associates Law Office. Atty.
Inocentes held office in his home located at No. 19 Marunong St., Central
District, Quezon City, while Atty. Camano was stationed at an "extension
office" of the firm located in 3rd/F, 956 Aurora Blvd., Quirino Dist., Quezon
City.

The Oscar Inocentes and Associates Law Office was retained by spouses
Andres and Ludivina Genito (spouses Genito), owners of an apartment
complex (the Genito Apartments) located at 259 Tandang Sora cor. Visayas
Avenue, Quezon City, when the Genito Apartments were placed under
sequestration by the Presidential Commission on Good Government
(PCGG) on 9 July 1986.4 The law office represented the spouses Genito
before the PCGG and the Sandiganbayan, and subsequently, with authority
from the PCGG.5 in ejectment cases against non-paying tenants occupying
the Genito Apartments.6

Complainant‟s sister, Gliceria Solatan, was a tenant in Door 10, Phase B of

the Genito Apartments. It appears from the records that Gliceria Solatan
left for the United States in 1986, and since then, the apartment was either
intermittently used by members of her family or placed under the charge
of caretakers.7 In August 1987, a complaint for ejectment for non-payment
of rentals was filed against Gliceria Solatan.8 On 3 March 1988, in a
judgment by default, a Decision9 was rendered ordering Gliceria Solatan to
vacate the premises of the apartment, pay the spouses Genito the amount
of Thirty Thousand Six Hundred Pesos (₱30,600.00) as unpaid rentals from
February 1986 to July 1987 with interest at 24% per annum from 20 August
1987 until the premises are vacated, Ten Thousand Pesos (₱10,000.00) as
attorney‟s fees, and costs of the suit.10

Complainant was occupying the subject apartment when he learned of the

judgment rendered against his sister. On 10 May 1988, prior to the
implementation of a writ to execute the judgment, complainant and his
mother, Elvira Solatan, approached Atty. Inocentes at his home office.
Complainant informed Atty. Inocentes of his desire to arrange the
execution of a lease contract by virtue of which complainant would be the
new lessee of the apartment and thus make possible his continued stay
therein. Atty. Inocentes referred complainant and his mother to his
associate, Atty. Camano, the attorney in charge of the ejectment cases
against tenants of the Genito apartments. After the exchange, complainant
went to Atty. Camano at the satellite office of Atty. Inocentes‟s firm. From
here on out, events quickly turned sour. Different versions of subsequent
events were presented. The facts reproduced hereunder are by and large
culled from the findings of the IBP Investigating Commissioner, Siegfred B.
Mison.

During the meeting with Atty. Camano, a verbal agreement was made in
which complainant and his mother agreed to pay the entire judgment debt
of Gliceria Solatan, including fifty percent of the awarded attorney‟s fees
and One Thousand Six Hundred Pesos (₱1,600.00) as costs of suit provided
that Atty. Camano would allow complainant‟s continued stay at Door 10,
Phase B of the Genito Apartments. As partial compliance with the
agreement, complainant issued in the name Atty. Camano a check for Five
Thousand Pesos (₱5,000.00) representing half of the ₱10,000.00 attorney‟s
fees adjudged against complainant‟s sister.

Complainant and his mother failed to make any other payment. Thus, the
sheriff in coordination with Atty. Camano and some policemen, enforced
the writ of execution on 22 June 1988 and levied the properties found in
the subject apartment. An attempt at renegotiation took place at the
insistence of complainant, resulting in Atty. Camano‟s acquiescence to
release the levied properties and allowing complainant to remain at the
apartment, subject to the latter‟s payment of costs incurred in enforcing
the writ of execution and issuance of postdated checks representing
installment rental payments. Complainant, thus, issued four (4) checks
drawn on Far East Bank and Trust Company dated the fifteenth (15th) of
July, August, September, and October 1988 each in the amount of Three
Thousand Four Hundred Pesos (₱3,400.00).11 Half of the amount
represented complainant‟s monthly rental, while the other half, a monthly
installment for the payment of Gliceria Solatan‟s judgment debt.

On 28 June 1988, acting on the advice of Atty. Camano, complainant

presented an Affidavit of Ownership to the sheriff who then released the
levied items to complainant. However, a Northern Hill 3-burner gas stove
was not retuned to complainant. The stove was in fact kept by Atty.
Camano in the unit of the Genito Apartments wherein he temporarily
stayed12 and, thereafter, turned over the same to a certain Recto Esberto,
caretaker of the Genito Apartments.13

On 1 August 1988, complainant filed the instant administrative case for

disbarment against Atty. Inocentes and Atty. Camano.14 After formal
investigation, and despite conflicting testimonies on the tenor and content
of agreements and conversations, several disturbing facts were revealed
to have been uncontroverted*Atty. Camano‟s acceptance from
complainant of attorney‟s fees and the costs of implementing the writ of
execution, possession of complainant‟s levied Northern Hill oven, and
advice to complainant on how to recover the latter‟s levied items. Thus,
IBP Investigating Commissioner Siegfred B. Mison, made the following
recommendations, viz:
Based on the facts revealed in their respective Memoranda, the penalty of
six (6) months suspension is therefore recommended to be imposed on
Respondent Camano for committing the following acts that adversely
reflects (sic) on his moral fitness to continue to practice law[:]

1. He received money (₱5,000 then ₱1,000) from the adverse party

purportedly for attorneys fees and for reimbursement of sheriff‟s
expenses. Such act of accepting funds from the adverse party in the
process of implementing a writ, borders on technical extortion particularly
in light of the factual circumstances as discussed.

2. He gave unsolicited advice to the adverse party in suggesting the filing

of an Affidavit of Ownership over the levied properties, a suggestion
evidently in conflict with [the interest of] his own client, supposedly, the
Genitos.

3. He failed to turn over the gas stove to either party thereby casting doubt
as to the procedure of the levy.

Based on the facts revealed, the penalty of Reprimand is therefore

recommended to be imposed on Respondent Inocentes for committing the
following acts that adversely reflects (sic) in his fitness to continue to
practice law[:]

1. He allowed Camano to perform all the aforementioned acts, either by

negligence or inadvertence which are inimical to the legal profession. He
cannot claim ignorance or feign innocence in this particular transaction
considering that the Complainants themselves went to his office on
different occasions regarding this transaction. Ultimately, he exercised
command responsibility over the case and had supervisory control over
Respondent Camano inasmuch as he received periodic reports either by
phone or in person from the latter.

2. The letter disclaimer executed by Mr. Genito filed by Respondent

Inocentes does not mitigate any liability whatsoever since the wrongdoing
done against the profession cannot be undone by a mere letter from a
third party.15 (Emphasis supplied.)
The IBP Board of Governors approved the aforequoted recommendation,
with the modification of an increase in Atty. Camano‟s period of
suspension from six (6) months to one (1) year, in a resolution stating, viz:

RESOLVED to ADOPT and APPROVE, as it is hereby ADOPTED and

APPROVED, the Report and Recommendation of the of the Investigating
Commissioner…finding the recommendation fully supported by the
evidence on record and the applicable laws and rules, with modification,
and for accepting funds from adverse party in the process of
implementing a writ borders on technical extortion, for giving unsolicited
advice to the adverse party a suggestion evidently in conflict with [the
interest of] his own client and for casting doubts to the procedure of the
levy, Atty. Jose C. Camano is hereby SUSPENDED from the practice of law
for one (1) year, likewise, Atty. Oscar Inocentes is hereby REPRIMANDED
for he exercised command responsibility over the case inasmuch as he
received periodic reports either by phone or in person.16

The IBP held that Atty. Camano‟s act of giving unsolicited advice to
complainant is a culpable act because the advice conflicted with the
interest of his clients, the spouses Genito. The rule on conflicting interests,
established in Rule 15.03 of the Code of Professional Responsibility, deals
with conflicts in the interests of an attorney‟s actual clients among
themselves, of existing and prospective clients, and of the attorney and his
clients. It states that a lawyer shall not represent conflicting interests
except by written consent of all concerned given after a full disclosure of
the facts.

The relation of attorney and client begins from the time an attorney is
retained.17 An attorney has no power to act as counsel or legal
representative for a person without being retained.18 To establish the
professional relation, it is sufficient that the advice and assistance of an
attorney are sought and received in any manner pertinent to his
profession.19 At the time the questioned statement was made, Atty.
Camano had called the police to restrain complainant from surreptitiously
pulling out the levied properties from the apartment complex by virtue of
which the latter was brought to the police station for questioning. The
statement was made in response to complainant‟s insistence at the police
station that the levied properties were owned by him and not by the
judgment debtor.20 No employment relation was offered or accepted in the
instant case.

More fitting, albeit, to the mind of this Court, inapplicable to the case, is
Canon 15 of the same Code which encompasses the aforementioned rule.
In general terms, Canon 15 requires lawyers to observe loyalty in all
dealings and transactions with their clients.21 Unquestionably, an attorney
giving legal advice to a party with an interest conflicting with that of his
client resulting in detriment to the latter may be held guilty of disloyalty.
However, far be it that every utterance of an attorney which may have
afforded an individual some relief adverse to the former‟s client may be
labeled as a culpable act of disloyalty. As in every case, the acts alleged to
be culpable must be assessed in light of the surrounding circumstances.

While the levy was made on chattel found in the apartment of the
judgment debtor, Gliceria Solatan, the complainant was the true owner of
the properties. Consequently, the latter had a right to recover the same. In
fact, considering the circumstances, the questioned statement is in
consonance with complainant‟s foremost duty to uphold the law as an
officer of the court. The statement of Atty. Camano in such a context
should not be construed by this Court as giving advice in conflict against
the interest of the spouses Genito as in fact the latter have no interest
over the incorrectly levied properties.

We, thus, note that the act of informing complainant that the levied
properties would be returned to him upon showing proof of his ownership
thereof may hint at infidelity to the interest of the spouses Genito, but, in
this circumstance, lacks the essence of double dealing and betrayal of the
latter‟s confidence so as to deserve outright categorization as infidelity or
disloyalty to his clients‟ cause. Nonetheless, after having noted the
foregoing, we remain convinced with the propriety of meting the one (1)
year suspension from the practice of law on Atty. Camano, as
recommended by the IBP, based on his other culpable acts which tend to
degrade the profession and foment distrust in the integrity of court
processes.

On the other hand, Atty. Inocentes seeks to distance himself from the
events that transpired and the reprimand resulting therefrom by asserting
that he was incorrectly punished for Atty. Camano‟s acts when his mere
participation in the fiasco was to refer complainant and his mother to Atty.
Camano.

However, it is precisely because of such participation, consisting as it did

of referring the complainant to his associate lawyer, that Atty. Inocentes
may be held administratively liable by virtue of his associate‟s unethical
acts. His failure to exercise certain responsibilities over matters under the
charge of his law firm is a blameworthy shortcoming. The term "command
responsibility," as Atty. Inocentes suggests, has special meaning within
the circle of men in uniform in the military; however, the principle does not
abide solely therein. It controls the very circumstance in which Atty.
Inocentes found himself.

We are not unaware of the custom of practitioners in a law firm of

assigning cases and even entire client accounts to associates or other
partners with limited supervision, if at all. This is especially true in the
case of Attys. Inocentes and Camano who, from the records, both appear
to be seasoned enough to be left alone in their work without requiring
close supervision over each other‟s conduct and work output. However, let
it not be said that law firm practitioners are given a free hand to assign
cases to seasoned attorneys and thereafter conveniently forget about the
case. To do so would be a disservice to the profession, the integrity and
advancement of which this Court must jealously protect.

That the firm name under which the two attorneys labored was that
of Oscar Inocentes and Associates Law Office does not automatically
make Atty. Inocentes the default lawyer acting in a supervisory capacity
over Atty. Camano. It did, however, behoove Atty. Inocentes to exert
ordinary diligence to find out what was going on in his law firm. It placed
in Atty. Inocentes the active responsibility to inquire further into the
circumstances affecting the levy of complainant‟s properties, irrespective
of whether the same were in fact events which could possibly lead to
administrative liability. Moreover, as name practitioner of the law office,
Atty. Inocentes is tasked with the responsibility to make reasonable
efforts to ensure that all lawyers in the firm should act in conformity to
the Code of Professional Responsibility.22 It is not without reason or
consequence that Atty. Inocentes‟s name is that which was used as the
official designation of their law office.
With regard to the actual existence of Atty. Inocentes‟s supervisory
capacity over Atty. Camano‟s activities, the IBP Investigating
Commissioner based the same on his finding that Atty. Inocentes received
periodic reports from Atty. Camano on the latter‟s dealings with
complainant. This finding is the linchpin of Atty. Inocentes‟s supervisory
capacity over Atty. Camano and liability by virtue thereof.

Law practitioners are acutely aware of the responsibilities that are

naturally taken on by partners and supervisory lawyers over the lawyers
and non-lawyers of the law office. We have held that lawyers are
administratively liable for the conduct of their employees in failing to
timely file pleadings.23 In Rheem of the Philippines, Inc., et al. v. Zoilo R.
Ferrer, et al.,24 partners in a law office were admonished for the
contemptuous language in a pleading submitted to court despite, and even
due to, the fact that the pleading was not passed upon by any of the
partners of the office. We held therein that partners are duty bound to
provide for efficacious control of court pleadings and other court papers
that carry their names or the name of the law firm.25

We now hold further that partners and practitioners who hold supervisory
capacities are legally responsible to exert ordinary diligence in apprising
themselves of the comings and goings of the cases handled by the
persons over which they are exercising supervisory authority and in
exerting necessary efforts to foreclose the occurrence of violations of the
Code of Professional Responsibility by persons under their charge.
Nonetheless, the liability of the supervising lawyer in this regard is by no
means equivalent to that of the recalcitrant lawyer. The actual degree of
control and supervision exercised by said supervising lawyer varies, inter
alia, according to office practice, or the length of experience and
competence of the lawyer supervised. Such factors can be taken into
account in ascertaining the proper penalty. Certainly, a lawyer charged
with the supervision of a fledgling attorney prone to rookie mistakes
should bear greater responsibility for the culpable acts of the underling
than one satisfied enough with the work and professional ethic of the
associate so as to leave the latter mostly to his/her own devises.

While Atty. Camano‟s irregular acts perhaps evince a need for greater
supervision of his legal practice, there is no question that it has been Atty.
Inocentes‟ practice to allow wide discretion for Atty. Camano to practice
on his own. It does constitute indifference and neglect for Atty. Inocentes
to fail to accord even a token attention to Atty. Camano‟s conduct which
could have brought the then impending problem to light. But such is not
equivalent to the proximate responsibility for Atty. Camano‟s acts.
Moreover, it appears from the records that Atty. Inocentes is a former
judge and a lawyer who, as of yet, is in good standing and it is the first
time in which Atty. Inocentes has been made to answer vicariously for the
misconduct of a person under his charge. An admonition is appropriate
under the circumstances.

WHEREFORE, PREMISES CONSIDERED, the Petition is hereby GRANTED.

The Resolution dated 16 April 2004 is AFFIRMED in respect of the sanction
meted out on Atty. Camano. Atty. Inocentes is hereby ADMONISHED to
monitor more closely the activities of his associates to make sure that the
same are in consonance with the Code of Professional Responsibility with
the WARNING that repetition of the same or similar omission will be dealt
with more severely.

No pronouncement as to costs.

SO ORDERED.
Gone vs Ga, AC No. 7771, April 6, 2011

This case stemmed from the complaint for disciplinary action dated 23
October 1989 filed by Patricio Gone against Atty. Macario Ga before the
Commission on Bar Discipline of the Integrated Bar of the Philippines
(IBP). The complaint was due to Atty. Ga‟s failure to reconstitute or turn
over the records of the case in his possession. Complainant Gone
reported that Atty. Ga is his counsel in NLRC Case No. RB-IV-2Q281-78
entitled "Patricio Gone v. Solid Mills, Inc." The case was dismissed by the
Labor Arbiter and was elevated to the National Labor Relations
Commission (NLRC).

Complainant alleged that on 13 December 1983, the NLRC building in

Intramuros, Manila was burned and among the records destroyed was his
appealed case.

Complainant Gone further reported that as early as 8 March 1984, Atty. Ga

had obtained a certification from the NLRC that the records of NLRC Case
No. RB-IV-2Q281-78 were burned. Despite knowledge of the destruction of
the records, Atty. Ga allegedly did not do anything to reconstitute the
records of the appealed case.

On 9 September 1989, complainant allegedly sent a letter to Atty. Ga

requesting him to return the records of the case in his possession. As of
date of complaint, Atty. Ga has yet to turn over the records. Complainant
submits that his counsel‟s continued refusal has caused great injustice to
him and his family.1

On 16 February 1999, Commissioner Gonzales-delos Reyes, IBP

Commission on Bar Discipline, issued an Order directing respondent Ga to
file his answer on the complaint.2

In a letter dated 22 November 1999, Atty. Ga explained that as far as he

could recall, during the pendency of their motion for reconsideration, the
NLRC Office in Manila caught fire. Although worried of the records of their
case, he was relieved when he received summons from the NLRC setting
the case for hearing. It was unfortunate, however, that in the two
scheduled hearings set by the NLRC herein complainant failed to appear.
For such absence, the NLRC allegedly shelved their case.3
Atty. Ga averred that had it not been for the instant complaint, he would
not have, as he never, heard from complainant Gone since 1984. What he
was aware of was the latter‟s abandonment of his family way back in 1978.
Complainant‟s wife is the relative of Atty. Ga, being the daughter of his
first cousin.4

The instant case was set for presentation of evidence on 17 January 2000.
On said date, complainant appeared without counsel while respondent
failed to appear.5 Several hearings were set for the case but these were
reset for failure of one or both of the parties to appear.6

In the hearing held on 19 June 2000, complainant appeared with counsel

but respondent failed to appear despite notice. During that hearing, the
Commissioner asked complainant if there was a possibility for the case to
be settled amicably considering that respondent is a relative of his wife.
The complainant answered in the affirmative and the case was reset to 24
July 2000. The two succeeding hearings scheduled by the Commissioner
were again reset. On 10 November 2000, a hearing was conducted wherein
respondent Ga appeared while complainant was absent despite notice. In
view of the latter‟s absence, respondent Ga prayed for time to file a Motion
to Dismiss.7

In his Motion to Dismiss dated 8 December 2000,8 respondent Ga alleged

that he had a heart to heart talk with complainant about his labor case and
the latter may have already understood that it was not respondent‟s fault
that the case was shelved by the NLRC. He averred that complainant may
have already been dissuaded from pursuing the case, thus his absence in
the hearing held on 10 November 2000. Nevertheless, if there is still hope
for the case, he commits to help complainant by whatever means he can.

On 14 February 2007, Commissioner Marilyn S. Guzman, IBP Commission

on Bar Discipline, submitted her report recommending that respondent
Atty. Ga be censured for violation of Rule 18.03, Canon 18 of the Code of
Professional Responsibility.9

On 19 September 2007, the Board of Governors of the IBP adopted and

approved with modification, the report and recommendation of the
Investigating Commissioner.10 Respondent Atty. Ga was censured for
violation of Rule 18.03, Canon 18 of the Code of Professional Responsibility
and was directed to reconstitute and turn over the records of the case to
complainant, with stern warning that failure to do so would merit a stiffer
penalty.

In a resolution dated 2 June 2008, the Office of the Bar Confidant and the
IBP were directed to inform the Court if any motion for reconsideration
was filed in the case. The IBP was further directed to confirm if
respondent has complied with Resolution No. XVIII-2007-94 dated 19
September 2007 directing him to reconstitute and turn over the records of
the case to complainant.11

In compliance with the resolution, the Office of the Bar Confidant reported
that no motion for reconsideration or petition for review was filed by
either party.12

The IBP Commission on Bar Discipline, for its part, reported that no motion
for reconsideration was filed by either party and that respondent failed to
comply with IBP Resolution No. XVIII-2007-94 dated 19 September 2007.13

Thus, on 2 September 2009, the Court issued a resolution requiring Atty.

Ga to explain his failure to comply with IBP Resolution No. XVIII-2007-
94.14 Record of the instant case reveals that the resolution dated 2
September 2009 was received by Atty. Ga on 15 October 2009. To date,
Atty. Ga has yet to comply with the resolution.

We agree with the findings and recommendation of the IBP. The Code of
Professional Responsibility mandates lawyers to serve their clients with
competence and diligence. Rule 18.03 and Rule 18.04 state:

Rule 18.03. A lawyer shall not neglect a legal matter entrusted to him, and
his negligence in connection therewith shall render him liable.

Rule 18.04. A lawyer shall keep the client informed of the status of his
case and shall respond within a reasonable time to the client‟s request for
information.

Respondent Atty. Ga breached these duties when he failed to reconstitute

or turn over the records of the case to his client, herein complainant Gone.
His negligence manifests lack of competence and diligence required of
every lawyer. His failure to comply with the request of his client was a
gross betrayal of his fiduciary duty and a breach of the trust reposed upon
him by his client. In the case of Navarro v. Meneses,15 the Court held:

It is settled that a lawyer is not obliged to act as counsel for every person
who may wish to become his client. He has the right to decline
employment subject however, to the provision of Canon 14 of the Code of
Professional Responsibility. Once he agrees to take up the cause of a
client, he owes fidelity to such cause and must always be mindful of the
trust and confidence reposed to him. Respondent Meneses, as counsel,
had the obligation to inform his client of the status of the case and to
respond within a reasonable time to his client‟s request for information.
Respondent‟s failure to communicate with his client deliberately
disregarding its request for an audience or conference is an unjustifiable
denial of its right to be fully informed of the developments in and the
status of its case.

Respondent‟s sentiments against complainant Gone is not a valid reason

for him to renege on his obligation as a lawyer. The moment he agreed to
handle the case, he was bound to give it his utmost attention, skill and
competence. Public interest requires that he exerts his best efforts and all
his learning and ability in defense of his client‟s cause. Those who perform
that duty with diligence and candor not only safeguard the interests of the
client, but also serve the ends of justice.16 They do honor to the bar and
help maintain the community‟s respect for the legal profession.17

If respondent believed that he will not be able to represent complainant

effectively because of what the latter has done to his family, then he
should have withdrawn his services as a lawyer. Had it not been for
complainant‟s insistence, his labor case would have forever remained
dormant. The fact that respondent is retained as the lawyer of the
complainant, he was duty bound to give his best service. His failure to do
so constitutes an infringement of his oath.1avvphi1

In addition, We note respondent‟s disregard of the IBP Commission on Bar

Discipline‟s directive for him to reconstitute and turn over the records of
the case to complainant. Likewise, respondent unjustifiably ignored the
directive of the Court for him to explain his failure to comply with IBP
Resolution No. XVIII-2007-94.
Respondent‟s unjustified disregard of the lawful orders of this Court and
the IBP is not only irresponsible, but also constitutes utter disrespect for
the Judiciary and his fellow lawyers.18 His conduct is unbecoming of a
lawyer, for lawyers are particularly called upon to obey Court orders and
processes and are expected to stand foremost in complying with Court
directives being themselves officers of the Court.19

As an officer of the Court, respondent is expected to know that a

resolution of this Court is not a mere request but an order which should
be complied with promptly and completely.20 This is also true of the orders
of the IBP as the investigating arm of the Court in administrative cases
against lawyers.21

Respondent should strive harder to live up to his duties of observing and

maintaining the respect due to the Courts,22 respect for law and for legal
processes,23 and of upholding the integrity and dignity of the legal
profession24 in order to perform his responsibilities as a lawyer
effectively.

All told, We could suspend respondent for his transgressions. Considering,

however, that he is already in the twilight of his career and considering
further that he was not entirely to be blamed for the archiving of the labor
case, complainant‟s absence during the hearings being contributory
therein, We deem the penalty of fine in the amount of ₱5,000.00 sufficient
sanction under the circumstances. Such consideration would be more in
line with the very purpose of administrative cases against lawyers, that is,
not so much to punish but to instill discipline in them, as well as, protect
the integrity of the Court and shelter the public from the misconduct and
inefficiency of lawyers.

Wherefore, respondent Macario Ga is hereby fined in the amount of Five

Thousand Pesos (₱5,000.00) for his failure to comply with the directive in
Resolution No. XVIII-2007-94 dated 19 September 2007 of the Board of
Governors of the Integrated Bar of the Philippines. Atty. Ga is given a final
warning that a more drastic punishment shall be imposed upon him
should he fail to comply with the directive for him to reconstitute and turn
over the records of the case to complainant.

SO ORDERED.
Heirs of Falame vs Baguio, Ac No 6876, March 7, 2008

On Petition for Review1 is the Resolution of the Integrated Bar of the

Philippines (IBP) Board of Governors dismissing the disbarment complaint
filed by the Heirs of Lydio "Jerry" Falame (complainants) against Atty.
Edgar J. Baguio (respondent), docketed as CBD Case No. 04-1191.

In their Complaint2 against respondent, complainants alleged that on 15

July 1991, their father, the late Lydio "Jerry" Falame (Lydio), engaged the
services of respondent to represent him in an action for forcible entry
docketed as Civil Case No. A-2694 (the first civil case) and entitled "Heirs
of Emilio T. Sy, represented by Anastacia Velayo Vda. De Sy and Belen V.
Sy v. Lydio 'Jerry' Falame, Raleigh Falame and Four (4) John Does," in
which Lydio was one of the defendants.3

Complainants recounted that respondent, as counsel for the defendants,

filed the answer to the complaint in the first civil case. Subsequently,
when the parties to the first civil case were required to file their
respective position papers, respondent used and submitted in evidence
the following: (1) a special power of attorney dated 1 July 1988 executed by
Lydio in favor of his brother, Raleigh Falame, appointing the latter to be
his attorney-in-fact; and (2) the affidavit of Raleigh Falame dated 23 July
1988, executed before respondent, in which Raleigh stated that Lydio
owned the property subject of the first civil case.4

Complainants claimed that even after the Municipal Trial Court of Dipolog
City had ruled in favor of the defendants in the first civil case, Lydio
retained the services of respondent as his legal adviser and counsel for
his businesses until Lydio's death on 8 September 1996.5

However, on 23 October 2000, in representation of spouses Raleigh and

Noemi Falame, respondent filed a case against complainants allegedly
involving the property subject of the first civil case, entitled "Spouses
Rally F. Falame and Noemi F. Falame v. Melba A. Falame, Leo A. Falame,
Jerry A. Falame, Jr., Sugni Realty Holdings and Development Corporations,
their representatives, agents and persons acting in their behalf" and
docketed as Civil Case No. 5568 (the second civil case) before the
Regional Trial Court of Dipolog City, Branch 6. The complaint sought the
declaration of nullity of the deed of sale, its registration in the registry of
deeds, Transfer Certificate of Title No. 20241 issued as a consequence of
the registration of the deed of sale, and the real estate mortgage on the
said property. Alternatively, it prayed for specific performance and
reconveyance or legal redemption and damages with preliminary
injunction and restraining order.6

Firstly, complainants maintained that by acting as counsel for the spouses

Falame in the second civil case wherein they were impleaded as
defendants, respondent violated his oath of office and duty as an attorney.
Plainly, they contended that the spouses Falame's interests are adverse to
those of his former client, Lydio.7

Secondly, complainants claimed that respondent knowingly made false

statements of fact in the complaint in the second civil case to mislead the
trial court. In so doing, respondent violated paragraph (d), Section 208 of
Rule 138 of the Rules of Court,9 complainants asserted further.

Lastly, complainants alleged that the second civil case is a baseless and
fabricated suit which respondent filed as counsel for complainants' uncle
against the heirs of respondent's deceased client. Specifically, they
averred that respondent filed the case for the sole purpose of retaining,
maintaining and/or withholding the possession of the subject property
from complainants who are its true owners. Complainants concluded that
respondent violated paragraph (g), Section 2010 of Rule 138 of the Rules of
Court.11

In his Answer with Motion to Dismiss,12 respondent controverted

complainants' allegations. He emphasizes that it was only Raleigh Falame
who personally engaged his legal services for him and on Lydio's behalf
and that, in fact, it was Raleigh who paid him the attorney's fees. He also
stated that he signed the jurat in Raleigh's affidavit, which was submitted
as evidence in the first civil case, believing to the best of his knowledge
that there is good ground to support it. Insisting that he did not betray the
confidence reposed in him by Lydio as the latter's counsel in the first civil
case, respondent maintained that he did not reveal or use any fact he
acquired knowledge of during the existence of the attorney-client relation
in the first civil case as he had never even conferred with nor talked to
Lydio in the first place. Respondent likewise contended that he did not
knowingly make any misleading or untruthful statement of fact in the
complaint in the second civil case and neither did he employ any means
inconsistent with truth and honor in the hearing of the case.13

Respondent vigorously averred that Lydio had not retained him as counsel
in any case or transaction. Stressing the long interval of twelve years
separating the termination of the first civil case and his acceptance of the
second civil case, respondent pointed out that the first civil case was not
between Lydio and Raleigh but rather between the heirs of Emilio T. Sy on
one hand and Lydio and Raleigh on the other where physical possession of
property was at stake. Respondent further averred that in contrast the
second civil case is one involving the spouses Raleigh and Noemi Falame
as plaintiffs, and Melba, Leo and Jerry Jr., all surnamed Falame, and Sugni
Realty Holdings and Development Corporation, as defendants'a case which
arose from the wrongful acts committed by Melba, Leo and Jerry Jr. after
Lydio's death.14

Respondent maintained that since the second civil case was still pending
before the trial court, the IBP had no jurisdiction over the instant
administrative case. He added that complainants filed this administrative
case when Raleigh could no longer testify in his own favor as he had died
a year earlier.15

In their Position Paper16 dated 7 September 2004, in addition to their

previous charges against respondent, complainants claimed that
respondent violated Rule 15.0317 of the Code of Professional Responsibility
when he represented the cause of the spouses Falame against that of his
former client, Lydio.18

On 25 June 2005, the IBP Board of Governors passed Resolution No. XVI-
2005-167 adopting and approving Investigating Commissioner Winston D.
Abuyuan's report and recommendation for the dismissal of this
administrative case, thus:19

x x x The charge lacks specification as to what part of the lawyer's oath

was violated by the respondent and what confidence was disclosed. The
complainants may have in mind the prohibition against disclosure of
secret information learned in confidence, but there is no specification in
the complaint what secret or information learned in confidence under Civil
Case No. A-2694 was disclosed or will be disclosed by respondent in Civil
Case No. 5568. In administrative complaints for disbarment or suspension
against lawyers, the complainant must specify in the affidavit-complaint
the alleged secrets or confidential information disclosed or will be
disclosed in the professional employment (Uy v. Gonzalez, 426 SCRA 422;
431). In the absence of such specification, the complaint must fail.

In the complaint, there is no specific charge against respondent for

violation of Canon 15, Rule 15.03 of the Code of Professional Responsibility
about the prohibition against representation of conflicting interest. So, the
allegation in paragraph 1, page 8 and 9 of complainants' position paper
stating: With all due respect, it is submitted that respondent violated
Canon 15, Rule 15.03 of the Code of Professional Responsibility" cannot be
countenanced. The reason being that it is an elementary principle of due
process to which the respondent is entitled that only those charged in the
complaint can be proved by the complainants. A charge not specified in
the complaint cannot be proved (Uy v. Gonzales, id.)

x x x But still this charge will not proper for lack of sufficient bases.

xxx

Civil Case No. 5568, which was commenced on 03 October 2000, or three
years since the complainants became owners of Lydio Falame's
properties, is a suit against the complainants, not as representatives of
Lydio Falame, but as owners of their respective aliquot interests in the
property in question (Gayon v. Gayon, 36 SCRA 104; 107-108). The
complainants are sued not on the basis of the acts, rights, obligations and
interest of Lydio Falame on the material possession of the improvements
found on Lot 345 litigated in Civil Case No. A-2694 nor even on such land
itself, but rather on the facts alleged in the second amended and
supplemental complaint which give rise to their cause of action against
them.

While the complainants could not specify under what circumstances the
respondent committed [the] alleged breach of confidence, breach of
secrecy or revelation of secret or confidential information[,] the
respondent has shown that he did not commit any violation of such duties
or obligations of an attorney.
It is clear that only Raleigh Falame engaged the legal services of the
respondent for his and Lydio Falame's defense in Civil Case No. A-2694.

xxx

The other allegations of the complainants that the respondent violated

paragraph (d), Section 20 of Rule 139, Rules of Court, and his lawyer's oath
when he allegedly betrayed the trust and confidence of his former client
by denying knowledge of the fact that the land was owned by Lydio Falame
and when he did not disclose to the Court that at one time his present
clients categorically declared and unconditionally recognized the full
ownership of the late Lydio Falame and complainant Melba Falame over
subject matter of both cases equally lacks evidentiary basis.

xxx

It is beyond the competence of the complainants to conclude and is

outside the jurisdiction of this Honorable Commission to rule as to
whether or nor (sic) the complaint in Civil Case No.5568 is baseless or
fabricated. It is only the Honorable Court which has the exclusive
jurisdiction to determine the same and cannot be the subject of an
administrative complaint against the respondent.

xxx

WHEREFORE, premises considered, it is respectfully recommended that

this complaint be dismissed on grounds of prescription, the same having
been filed four (4) years after the alleged misconduct took place and for
lack of merit.

RESPECTFULLY SUBMITTED.20

Dissatisfied, complainants filed the instant Petition for Review under Rule
45 of the Rules of Court reiterating their allegations in the complaint and
their position paper.21 They likewise assert that the IBP erred in holding
that the instant administrative complaint had been filed out of time since it
was filed on 16 January 2004, or three (3) years, four (4) months and
sixteen (16) days after the second civil case was filed on 23 October
2000.22 In addition, in their Consolidated Comment (should be Consolidated
Reply),23 complainants invoke the Court's ruling in Frias v. Bautista-
Lozada24 to support their contention that administrative complaints
against members of the bar do not prescribe.25

In his Comment,26 respondent principally maintains that the charges

imputed to him have never been proven by clear, convincing and
satisfactory evidence which is the quantum of proof required in
administrative cases against lawyers, and that complainants have the
burden to prove their accusations as he enjoys the presumption of
innocence.27 Respondent likewise asserts that in accusing him of violation
of Rule 15.03 of the Code of Professional Responsibility only in their
position paper and in the instant petition, complainants infringed his right
to due process and to be informed of the nature and cause of accusation
against him.28

There is merit in the petition.

At the outset, the Court holds that the instant administrative action is not
barred by prescription. As early as 1947, the Court held in Calo, Jr. v.
Degamo,29 to wit:

The ordinary statutes of limitation have no application to disbarment

proceedings, nor does the circumstance that the facts set up as a ground
for disbarment constitute a crime, prosecution for which in a criminal
proceeding is barred by limitation, affect the disbarment proceeding x x x
(5 Am. Jur. 434)30

This doctrine was reaffirmed in the relatively recent case of Frias v.

Bautista-Lozada31 where the Court held that Rule VII, Section 1 of the Rules
of Procedure of the CBD-IBP, which provides for a prescriptive period for
the filing of administrative complaints against lawyers, should be struck
down as void and of no legal effect for being ultra vires.32

Prescinding from the unavailability of the defense of prescription, the

Court concurs with the Investigating Commissioner's opinion that some of
the charges raised by complainants in their complaint are
unsubstantiated.
There is, however, sufficient basis to hold respondent accountable for
violation of Rule 15.03 of the Code of Professional Responsibility. While
this charge was not raised in the initiatory pleading, it was put forward in
complainants' position paper filed with the IBP and in the petition filed with
the Court. In fact, respondent proffered his defenses to the charge in his
position paper before the IBP and likewise in his comment before the
Court. In his very first pleading before the IBP, the answer with motion to
dismiss, he denied having Lydio as his client. Such absence of attorney-
client relationship is the essential element of his defense to the charge of
conflict of interest, as articulated in his subsequent submissions.

The Court, therefore, rules and so holds that respondent has been
adequately apprised of and heard on the issue. In administrative cases, the
requirement of notice and hearing does not connote full adversarial
proceedings. Actual adversarial proceedings only become necessary for
clarification when there is a need to propound searching questions to
witnesses who give vague testimonies. Due process is fulfilled when the
parties were given reasonable opportunity to be heard and to submit
evidence in support of their arguments.33

Rule 15.03 of the Code of Professional Responsibility provides:

A lawyer shall not represent conflicting interests except by written

consent of all concerned given after a full disclosure of the facts.

A lawyer may not, without being guilty of professional misconduct, act as

counsel for a person whose interest conflicts with that of his present or
former client.34 The test is whether, on behalf of one client, it is the
lawyer's duty to contest for that which his duty to another client requires
him to oppose or when the possibility of such situation will develop.35 The
rule covers not only cases in which confidential communications have
been confided, but also those in which no confidence has been bestowed
or will be used.36 In addition, the rule holds even if the inconsistency is
remote or merely probable or the lawyer has acted in good faith and with
no intention to represent conflicting interests.37

The rule concerning conflict of interest prohibits a lawyer from

representing a client if that representation will be directly adverse to any
of his present or former clients. In the same way, a lawyer may only be
allowed to represent a client involving the same or a substantially related
matter that is materially adverse to the former client only if the former
client consents to it after consultation. The rule is grounded in the
fiduciary obligation of loyalty.38 In the course of a lawyer-client
relationship, the lawyer learns all the facts connected with the client's
case, including the weak and strong points of the case. The nature of that
relationship is, therefore, one of trust and confidence of the highest
degree.39

The termination of attorney-client relation provides no justification for a

lawyer to represent an interest adverse to or in conflict with that of the
former client. The client's confidence once reposed should not be divested
by mere expiration of professional employment. Even after the severance
of the relation, a lawyer should not do anything which will injuriously
affect his former client in any matter in which he previously represented
him nor should he disclose or use any of the client's confidences acquired
in the previous relation.40

In relation to this, Canon 17 of the Code of Professional Responsibility

provides that a lawyer owes fidelity to the cause of his client and shall be
mindful of the trust and confidence reposed on him. His highest and most
unquestioned duty is to protect the client at all hazards and costs even to
himself.41 The protection given to the client is perpetual and does not
cease with the termination of the litigation, nor is it affected by the party's
ceasing to employ the attorney and retaining another, or by any other
change of relation between them. It even survives the death of the client.42

In the case at bar, respondent admitted having jointly represented Lydio

and Raleigh as defendants in the first civil case. Evidently, the attorney-
client relation between Lydio and respondent was established despite the
fact that it was only Raleigh who paid him. The case of Hilado v.
David43 tells us that it is immaterial whether such employment was paid,
promised or charged for.44

As defense counsel in the first civil case, respondent advocated the stance
that Lydio solely owned the property subject of the case. In the second
civil case involving the same property, respondent, as counsel for Raleigh
and his spouse, has pursued the inconsistent position that Raleigh owned
the same property in common with Lydio, with complainants, who
inherited the property, committing acts which debase respondent's rights
as a co-owner.

The fact that the attorney-client relation had ceased by reason of Lydio's
death or through the completion of the specific task for which respondent
was employed is not reason for respondent to advocate a position
opposed to that of Lydio.45 Precedents tell us that even after the
termination of his employment, an attorney may not act as counsel against
his client in the same general matter, even though, while acting for his
former client, he acquired no knowledge which could operate to his
client's disadvantage in the subsequent adverse employment.46 And while
complainants have never been respondent's clients, they derive their
rights to the property from Lydio's ownership of it which respondent
maintained in the first civil case.

For representing Raleigh's cause which is adverse to that of his former

client Raleigh's supposed co-ownership of the subject property'
respondent is guilty of representing conflicting interests. Having
previously undertaken joint representation of Lydio and Raleigh,
respondent should have diligently studied and anticipated the

potential conflict of interest. Accordingly, disciplinary action is

warranted.47 Heretofore, respondent is enjoined to look at any
representation situation from "the point of view that there are possible
conflicts"; and further, "to think in terms of impaired loyalty" that is to
evaluate if his representation in any way will impair loyalty to a
client.48 Considering, however, that this is respondent's first offense, the
Court resolves to reprimand respondent, with admonition to observe a
higher degree of fidelity in the practice of his profession.49

WHEREFORE, respondent Atty. Edgar J. Baguio is found GUILTY of

representing conflicting interests and meted out the penalty of
REPRIMAND. He is further admonished to observe a higher degree of
fidelity in the practice of his profession and to bear in mind that a
repetition of the same or similar acts will be dealt with more severely.

SO ORDERED.
Canon 19

A LAWYER SHALL REPRESENT HIS CLIENT WITH ZEAL WITHIN THE

BOUNDS OF THE LAW.

Rule 19.01 - A lawyer shall employ only fair and honest means to attain the
lawful objectives of his client and shall not present, participate in
presenting or threaten to present unfounded criminal charges to obtain an
improper advantage in any case or proceeding.

Rule 19.02 - A lawyer who has received information that his client has, in
the course of the representation, perpetrated a fraud upon a person or
tribunal, shall promptly call upon the client to rectify the same, and failing
which he shall terminate the relationship with such client in accordance
with the Rules of Court.

Rule 19.03 - A lawyer shall not allow his client to dictate the procedure in
handling the case.

Canon 20

A LAWYER SHALL CHARGE ONLY FAIR AND REASONABLE FEES.

Rule 20.01 - A lawyer shall be guided by the following factors in

determining his fees:chanroblesvirtuallawlibrary
(a) the time spent and the extent of the service rendered or required;
(b) the novelty and difficulty of the questions involved;
(c) The importance of the subject matter;
(d) The skill demanded;
(e) The probability of losing other employment as a result of acceptance of
the proffered case;
(f) The customary charges for similar services and the schedule of fees of
the IBP chapter to which he belongs;
(g) The amount involved in the controversy and the benefits resulting to
the client from the service;
(h) The contingency or certainty of compensation;
(i) The character of the employment, whether occasional or established;
and
(j) The professional standing of the lawyer.

Rule 20.02 - A lawyer shall, in case of referral, with the consent of the
client, be entitled to a division of fees in proportion to the work performed
and responsibility assumed.

Rule 20.03 - A lawyer shall not, without the full knowledge and consent of
the client, accept any fee, reward, costs, commission, interest, rebate or
forwarding allowance or other compensation whatsoever related to his
professional employment from anyone other than the client.

Rule 20.04 - A lawyer shall avoid controversies with clients concerning

his compensation and shall resort to judicial action only to prevent
imposition, injustice or fraud.

Retainer agreement is a formal document outlining the relationship between an attorney and
client. It details the different obligations and expectations involved, which can include ethical
work principles, retainer fees, modes of communication, and professional ground rules.

Salalima vs Guingona, GR No 117589, May 12, 1996

Petitioners seek to annul and set aside Administrative Order No. 153, signed on 7 October 1994 by the President and by public respondent
Executive Secretary Teofisto T. Guingona, Jr., approving the findings of fact and recommendations of the Ad Hoc Committee and holding the
petitioners administratively liable for the following acts or omissions: (a) wanton disregard of law amounting to abuse of authority in O.P.
Case No. 5470; (b) grave abuse of authority under Section 60 (e) of the Local Government Code of 1991 (R.A. No. 7160) in O.P. Case No.
5469; (c) oppression and abuse of authority under Section 60 (c) and (e) of R.A. No. 7160 in O.P. Case No. 5471; and (d) abuse of authority
and negligence in O.P. Case No. 5450. The said order meted out on each of the petitioners penalties of suspension of different durations, to
be served successively but not to go beyond their respective unexpired terms in accordance with Section 66 (b) of R.A. No. 7160.

Prefacing the petition with a claim that the challenged administrative order is "an oppressive and
capricious exercise of executive power," the petitioners submit that:

I.

THE PUBLIC RESPONDENT HONORABLE EXECUTIVE SECRETARY TEOFISTO

T. GUINGONA, JR. ACTED WITH GRAVE ABUSE OF DISCRETION AMOUNTING
 TO LACK OR EXCESS OF JURISDICTION IN SUSPENDING THE PETITIONERS
FOR PERIODS RANGING FROM TWELVE MONTHS TO TWENTY MONTHS IN
VIOLATION OF THE CONSTITUTIONAL MANDATES ON LOCAL AUTONOMY
AND SECURITY OF TENURE AND APPOINTING UNQUALIFIED PERSONS TO
NON-VACANT POSITIONS AS THEIR SUCCESSORS IN OFFICE.

II.

THE PUBLIC RESPONDENT HONORABLE EXECUTIVE SECRETARY TEOFISTO

T. GUINGONA, JR. ACTED WITH GRAVE ABUSE OF DISCRETION AMOUNTING
TO LACK OR EXCESS OF JURISDICTION IN HOLDING THE PETITIONERS
GUILTY OF ABUSE OF AUTHORITY FOR FAILURE TO SHARE WITH THE
MUNICIPALITY OF TIWI THE AMOUNT OF P40,724,471.74 PAID BY NAPOCOR
TO THE PROVINCE OF ALBAY, PURSUANT TO THE MEMORANDUM OF
AGREEMENT DATED JULY 29, 1992.

III.

THE PUBLIC RESPONDENT TEOFISTO T. GUINGONA, JR. ACTED WITH ABUSE

OF DISCRETION IN SUSPENDING THE PETITIONERS BASED UPON THE
PROVISIONS OF THE LOCAL GOVERNMENT CODE:

A. WHAT WERE NOT COMPLAINED OF;

B. UPON ACTS COMMITTED PRIOR TO ITS EFFECTIVITY; AND

C. WHERE THE ADMINISTRATIVE CASES WHEN FILED WERE

ALREADY COVERED BY PRESCRIPTION.

IV.

THE PUBLIC RESPONDENT EXCEEDED ITS JURISDICTION WHEN IT

PREMATURELY DECIDED THESE CASES ON THE BASIS OF THE SAO REPORT
NO. 93-11 WHICH IS PENDING APPEAL TO THE COMMISSION ON AUDIT
SITTING EN BANC.

We resolved to give due course to this petition and to decide it on the basis of the pleadings thus far
submitted, after due consideration of the satisfactory explanation of the petitioners that his case has
not been mooted by the expiration of their term of office on 30 June 1995 and the comment of the
Office of the Solicitor General that this case be resolved on the merits. In seeking a resolution of this
case on the merits, the office of the Solicitor General invites the attention of the Court to the
following:

(a) While the periods of suspension have been served by petitioners and that some
of them have even been elected to other government positions, there is the primary
issue of whether the suspensions were valid and grounded on sufficient cause.

(b) If the suspensions are found to be valid, petitioners are not entitled to
reimbursement of salaries during their suspension period.
 (c) If upheld, Administrative Order No. 15, would be used as a strong ground in filing
cases against petitioners for violations of the Anti Graft and Corrupt Practices Act.

(d) Corollary [sic] to these issues is the issue of the interpretation and application of
the [R]eal Property Tax Code and the Local Government Code under the
circumstances of this case.

(e) The resolution of these issues would finally put to rest whether respondents acted
with grave abuse of discretion amounting to lack of jurisdiction for having suspended
petitioners on the basis of their findings in the four (4) administrative cases filed
against the petitioners.

The factual antecedents are not complicated.

Sometime in 1993, several administrative complaints against the petitioners, who were elective
officials of the Province of Albay, were filed with the Office of the President and later docketed as
O.P. Cases Nos. 5450, 5469, 5470, and 5471. Acting thereon, the President issued Administrative
Order No. 94 creating an Ad Hoc Committee to investigate the charges and to thereafter submit its
findings and recommendations.

The Ad Hoc committee was composed of Undersecretary Victor R. Sumulong of the Department of
the Interior and Local Government (DILG), Assistant Executive Secretary Renato C. Corona, and
Presidential Assistant Angel V. Saldivar.

On 26 August 1994, after conducting hearings, the Ad Hoc Committee submitted its report to the
Office of the President.

On 7 October 1994, the President promulgated Administrative Order No. 153 quoting with approval
the following pertinent findings and recommendations of the Committee; thus:

The finding of the Ad-Hoc Committee in OP Case Nos. 547(1, 5469, 5471 and 5450
are as follows

I. OP Case No. 5470

This refers to the administrative complaint filed by Tiwi Mayor Naomi Corral against
Albay Governor Romeo Salalima, Vice-Governor Danilo Azaña, and Albay
Sangguniang Panlalawigan Members Juan Victoria, Lorenzo Reyeg, Arturo Osia,
Clenio Cabredo, Vicente Go [S]r., Jesus Marcellana, Ramon Fernandez, Jr. Masikap
Fontilla, and Wilbor Rontas.

Docketed as OP Case No. 5470, the complaint charges the respondents for
malversation and consistent & habitual violation of pars. (c) and (d) of Section 60 of
Republic Act (RA) No. 7160, otherwise known as the "Local Government Code."

The antecedent facts are as follows:

On 4 June 1990, the Supreme Court in the case entitled "National Power Corporation
(NPC) v. The Province of Albay, et al.", G.R. No. 87479 rendered judgment (Exhs. D
to D-14) declaring, inter alia, NPC liable for unpaid real estate taxes on its properties
in Albay covering the period 11 June 1984 to 10 March 1987.
Citing the fact that its tax exemption privileges had been revoked, the Supreme Court
held that NPC's real properties, consisting mainly of geothermal plants in Tiwi and
substation facilities in Daraga, are subject to real estate tax in accordance with
Presidential Decree (PD) No. 464, as amended, otherwise known as the "Real
Property Tax Decree."

Earlier, said properties were sold at an auction sale conducted by the Province of
Albay (the "Province") to satisfy NPC's tax liabilities. Being the sole bidder at the
auction, the Province acquired ownership over said properties.

On 29 July 1992, the NPC through then President Pablo Malixi and the Province
represented by respondent Salalima, entered into a Memorandum of agreement
("MOA") [Exhs. 7 to 7-A] whereby the former agreed to settle its tax liabilities, then
estimated at P214,845,104.76.

Under the MOA, the parties agreed that:

— the actual amount collectible from NPC will have to be

recomputed/revalidated;

— NPC shall make an initial payment of P17,763,000.00 upon

signing of the agreement;

— the balance of the recomputed/revalidated amount (less the

aforesaid initial payment), shall be paid in twenty-four (24) equal
monthly installments to commence in September 1992; and

— ownership over the auctioned properties shall revert to NPC upon

satisfaction of the tax liabilities.

On 3 August 1992, Mayor Corral formally requested the Province through respondent
Salalima, to remit the rightful tax shares of Tiwi and certain barangays of Tiwi where
NPC's properties are located ("concerned barangays") relative to the payments made
by NPC (Exh. B).

On the same day, 3 August 1992, the Tiwi Sangguniang Bayan passed Resolution
No. 12-91 (Exhs. G to G-1) requesting the Albay Sangguniang Panlalawigan to hold
a joint session with the former together with Mayor Corral and the Sangguniang
Pambarangays of the concerned barangays, for the purpose of discussing the
distribution or application of the NPC payments.

On 10 August 1992, respondent Salalima replied that the request cannot be granted
as the initial payment amounting to P17,763,000.00 was only an "earnest money"
and that the total amount to be collected from NPC was still being validated (Exh. 1).

Not satisfied with respondent Salalima's response, Mayor Corral complained to NPC
about the Province's failure to remit Tiwi's and the concerned barangays' shares in
the payments made by NPC (Exh. 50-C).
On 14 August 1992, President Malixi informed respondent Salalima that the
representatives of both NPC and the Province have reconciled their accounts and
determined that the amount due from NPC was down to P207,375,774.52 (Exh. 20).

Due to the brewing misunderstanding between Tiwi and the concerned barangays on
the one hand, and the Province on the other, and so as not to be caught in the
middle of the controversy, NPC requested a clarification from the Office of the
President as to the scope and extent of the shares of local government units in real
estate tax collections (Exh. 6 to 6-A).

Meantime, the Albay Sangguniang Panlalawigan passed Resolution No. 178-92

dated 8 October 1992 (Exh. R) and Resolution No. 204-92 dated 5 November 1992
(Exh. S) appropriating P9,778,932.57 and P17,663,431.58 or a total of
P27,442,364.15 from the general fund to satisfy "prior years" obligations and to
implement certain projects of the Province. These resolutions were approved by
respondent Salalima on 22 October 1992 and 6 November 1992, respectively.

On 3 December 1992, the Office of the President through Chief Presidential Legal
Counsel Antonio Carpio opined that the MOA entered into by NPC and the Province
merely recognized and established NPC's tax liability. He further clarified that the
sharing scheme and those entitled to the payments to be made by NPC under the
MOA should be that provided under the law, and since Tiwi is entitled to share in said
tax liabilities, NPC may remit such share directly to Tiwi. The pertinent portion of
Chief Presidential Legal Counsel Carpio's letter dated 3 December 1992 (Exhs. H to
H-1) addressed to President Malixi reads:

xxx xxx xxx

The Memorandum of Agreement entered into by the Province of

Albay and NPC merely enunciates the tax liability of NPC. The
Memorandum of Agreement does not provide for the manner of
payment of NPC's liability. Thus, the manner of payment as provided
for by law shall govern. In any event, the Memorandum of Agreement
cannot amend the law allowing the payment of said taxes to the
Municipality of Tiwi.

The decision in the case of NPC v. Province of Albay (186 SCRA

198), likewise, only establishes the liability of NPC for real property
taxes but does not specifically provide that said back taxes be paid
exclusively to Albay province.

Therefore, it is our opinion that the NPC may pay directly to the
municipality of Tiwi the real property taxes accruing to the same.

Please be guided accordingly.

 (Sgd.)
ANTO
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Because of this opinion, President Malixi, through a letter dated 9 December 1992
(Exh. I to I-1), informed Mayor Corral and respondent Salalima that starting with the
January 1993 installment, NPC will directly pay Tiwi its share in the payments under
the MOA. He also invited the parties to a clarificatory meeting on 17 December 1992
at his Quezon City office to discuss the matter in detail.

Only Mayor Corral attended the 17 December 1992 meeting with President Malixi as
respondent Salalima was indisposed. President Malixi then provided Mayor Corral
with schedules (Exhs. J to J-2) of the payments already made by NPC under the
MOA and the computation and the distribution of shares.

As of 9 December 1992, payments made by NPC to the Province reached

P40,724,471.74, broken down as follows:

Payment Dates Amount

July 29, 1992 P 17,763,000.00

Sept. 3, 1992 4,660,255.80

Oct. 5, 1992 6,820,480.02

Nov. 5, 1992 5,740,367.96

Dec. 9, 1992 5,740,367.96

——————

Total P 40,724,471.74

On 19 December 1992, in an apparent reaction to NPC's decision to directly remit to

Tiwi its share in the payments made and still to be made pursuant to the MOA, the
Albay Sangguniang Panlalawigan passed Ordinance No. 09-92 (Exhs. K to K-1),
which, among others:

— authorized the Provincial Treasurer upon the direction of the

Provincial Governor to sell the real properties (acquired by the
Province at the auction sale) at a public auction, and to cause the
immediate transfer thereof to the winning bidder; and

— declared as forfeited in favor of the Province, all the payments

already made by NPC under the MOA.

Realizing from the actuations of the respondents that Tiwi's share in the
P40,724,471.74 payments already made by NPC will not be forthcoming, Mayor
Corral filed the present complaint with the Office of the President on 25 January
1993.

In determining whether the respondents are guilty of the charges against them, the
threshold issue of whether the payments to be made by NPC under the MOA should
accrue solely and exclusively in favor of the Province, must first be resolved.
Sections 38, 39, 41, 86 and 87 of PD No. 464, as amended, prescribe the authority
of local government units to levy real property tax as well as the sharing scheme
among local government units including the national government with respect
thereto. Said provisions read:

Sec. 38. Incidence of Real Property Tax. — There shall be levied,

assessed, and collected in all provinces, cities and municipalities an
annual ad valorem tax on real property, such as land, buildings,
machinery and the improvements affixed or attached to real property
not hereinafter specifically exempted.

Sec. 39. Rates of Levy. — The provincial, city or municipal board or

council shall fix a uniform rate of real property tax applicable to their
respective localities as follows:

(1) In the case of a province, the tax shall be fixed by ordinance of the
provincial board at the rate of not less than one-fourth of one percent
but not more than one-half of one percent of the assessed value of
real property;

(2) In the case of a city, the tax shall be fixed by ordinance of the
municipal board or city council at the rate of not less than one-half of
one percent but not more than two percent of the assessed value of
real property; and

(3) In the case of a municipality, the tax shall be fixed by ordinance of

the municipal council subject to the approval of the provincial board at
the rate of not less than one-fourth of one percent but not more than
one-half of one percent of the assessed value of real property.

Sec. 41. An additional one percent tax on real property for the Special
Education Fund. — There is hereby imposed an annual tax of one
percent on real property to accrue to the Special Education
Fund created under Republic Act No. 5447, which shall be in addition
to the basic real property tax which local governments are authorized
to levy, assess and collect under this Code; Provided, That real
property granted exemption under Section 40 of this code shall also
be exempt from the imposition accruing to the Special Education
Fund. (as amended by PD No. 1913).

Sec. 86. Distribution of proceeds. — (a) The proceeds of the real

property tax, except as otherwise provided in this Code, shall accrue
to the province, city or municipality where the property subject to the
tax is situated and shall be applied by the respective local
government unit for its own use and benefit.

(b) Barrio shares in real property tax collections. — The annual

shares of the barrios in real property tax collections shall be as
follows:
 (1) Five percent of the real property tax collections of the province
and another five percent of the collections of the municipality shall
accrue to the barrio where the property subject to the tax is situated.

(2) In the case of the city, ten percent of the collections of the tax
shall likewise accrue to the barrio where the property is situated.

xxx xxx xxx

Sec. 87. Application of proceeds. — (a) The proceeds of the real

property tax pertaining to the city and to the municipality shall accrue
entirely to their respective general funds. In the case of the province,
one-fourth thereof shall accrue to its road and bridge fund and
remaining three-fourths of its general fund.

(b) The entire proceeds of the additional one percent

real property tax Levied for the Special Education
Fund created under R.A. No. 6447 collected in the
province or city on real property situated in their
respective territorial jurisdictions shall be distributed
as follows:

(1) Collections in the provinces: Fifty-five percent shall accrue to the

municipality where the property subject to the tax is situated; twenty-
five percent shall accrue to the province; and twenty percent shall be
remitted to the Treasurer of the Philippines. (as amended by PD No.
1969).

xxx xxx xxx

(c) The proceeds of all delinquent taxes and penalties, as well as the
income realized from the use, lease or other disposition of real
property acquired by the province or city at a public auction in
accordance with the provisions of this Code, and the proceeds of the
sale of the delinquent real property or of the redemption thereof, shall
accrue to the province, city or municipality in the same manner and
proportion as if the tax or taxes had been paid in regular course.

xxx xxx xxx (Emphasis supplied)

The foregoing provisions clearly show that local government units may levy and
collect real property tax ranging from a low of one-fourth of one percent (0.25%) to a
high of two percent (2.0%) of the assessed value of real property depending on the
local government unit levying the same. It is likewise clear that a province, a
municipality and a city may each separately levy said tax on real property located
within their respective jurisdictions but not exceeding the rates prescribed under Sec.
39 of PD No. 464.

And apart from said basic tax; the law authorizes the collection of an additional tax
equivalent to one percent (1.0%) of the assessed value of the real property to accrue
to the Special Education Fund (SEF).
In accordance with the authority confirmed upon them by PD No. 464, the following
tax resolutions or ordinances were passed:

By the province —

Resolution No. 30, series of 1974, of the Provincial Board of Albay, enacting
Provincial Tax Ordinance No. 4 whose Section 1, provides:

There shall be levied, assessed and collected an annual ad valorem

tax on real properties including improvements thereon equivalent
to one-half of one percent of the assessed value of real property.

By the Municipality of Tiwi —

Ordinance No. 25, series of 1974, of the Sangguniang Bayan of Tiwi, Albay, whose
Section 2 provides:

That the tax rate of real property shall be one-half of one percent of
the assessed value of real property.

By the Municipality of Daraga —

Ordinance No. 27, series of 1980, of the Sangguniang Bayan of Daraga, Albay,
whose Section 3 provides:

Rates of Levy — The tax herein levied is hereby fixed at one-half of

one percent (1/2 of 1%) of the assessed value of real property. (see
Exhs. 50-G; Emphasis supplied).

Applying said rates of levy, the real property taxes collectible from the NPC are:

1. A basic tax of 1%, levied by the Province (0.5%) and Tiwi (0.5%)
on the one hand; and the Province (0.5%) and Daraga (0.5%) on the
other; and

2. The additional 1% tax pertaining to the SEF.

or a total of 2.0% on the assessed value of NPC's real properties.

On the other hand, sharing on said taxes, shall be as follows:

1. On the basic tax:

Province 47.5%

Municipality 47.5%

Barangay 5.0%

———
 Total 100.0%

2. On the additional tax pertaining to the SEF:

Province 25.0%

Municipality 55.0%

National Government 20.0%

———

Total 100.0%

In real terms, the P40,724,471.74 in payments earlier made by NPC should be

shared by the Province, Tiwi and Daraga, the concerned barangays and the national
government, as follows:

Province Municipalities Barangay Natl. Govt.

Basic Tax

P 9,672,062.04 9,672,062.04 1,018,111.79 none

SEF

4,072,447.18 10,181,117.93 none 6,108,670.76

————— ————— ————— —————

Total

P13,744,509.22 19,853,179.97 1,018,111.79 6,108,670.76

=========== ========== ========= =========

This shows that the Province is entitled only to P13,744,509.21 of the

P40,724,471.74 aggregate payments by NPC. On the other hand, the balance of
P26,979,962.52 represents the collective shares of Tiwi, Daraga, the concerned
barangays and the national government.

The Province maintains, however, that considering that it acquired ownership over
the properties of NPC subject matter of the auction, all the payments to be made by
NPC under the MOA should accrue exclusively to the Province.

This is untenable. The law clearly provides that "the proceeds of

all the delinquent taxes and penalties as well as the income realized from the . . .
disposition of real property acquired by the province or city at a public auction . . .,
and the sale of delinquent property or the redemption thereof shall accrue to the
province, city or municipality in the same manner and proportion as if the tax or taxes
have been paid in the regular course" (Sec. 87(c) supra.).

It is immaterial that the Province was the highest bidder and eventually became the
owner of the properties sold at the auction sale. What is essential is that the
proceeds of the re-sale of said properties acquired by the Province, be distributed in
the same manner and proportion among the rightful beneficiaries thereof as provided
by law.

This was the import and essence of Chief Presidential Legal Counsel Carpio's
opinion when he stated that the sharing scheme provided by law cannot be amended
by a mere agreement between the taxpayer, in this case NPC, and the collecting
authority, in this instance, the Province of Albay.

Likewise, it is axiomatic that while "contracting parties may establish stipulations,

clauses, terms and conditions as they may deem convenient", they may not do so if
these are "contrary to law, morals, good customs, public order or public policy" (Art
1306, New Civil Code.).

Also relevant to the discussion are the following provisions of the Local Government
Code of 1991:

Sec. 307. Remittance of Government Monies to the Local Treasury.

— Officers of local government authorized to receive and collect
monies arising from taxes, revenues, or receipts of any kind shall
remit the full amount received and collected to the treasury of such
Local government unit which shall be credited to the particular
account or accounts to which the monies in question properly belong.

Sec. 308. Local Funds. — Every local government unit shall maintain
a General Fund which shall be used to account for such monies and
resources as may be received by and disbursed from the local
treasury. The General Fund shall consist of monies and resources of
the local government which are available for the payment of
expenditures, obligations or purposes not specifically declared by law
as accruing and chargeable to, or payable from any other fund.

Sec. 309. Special Funds. — There shall be maintained in every

provincial, city, or municipal treasury the following special funds:

(a) Special Education Fund (SEF) shall consist of the respective

shares of provinces, cities, municipalities and barangays in the
proceeds of the additional tax on real property to be appropriated for
purposes prescribed in Section 272 of this Code; and

(b) Trust Funds shall consist of private and public monies which have
officially come into the possession of the local government or of a
local government official as trustee, agent or administrator, or which
have been received as a guaranty for the fulfillment of some
obligation. A trust fund shall only be used for the specific purpose for
which it was created or for which it came into the possession of the
Local government unit. (Emphasis supplied).
These provisions are restatements of Sec. 3(4) and (5) of PD No. 1445 and both
Sec. 43, Book V and Sec. 2(4) of Book V(B) of Executive Order No. 292, otherwise
known as the "Administrative Code of 1987."

It is unmistakable from the foregoing provisions that the shares of Tiwi, Daraga, the
concerned barangays and the national government in the payments made by NPC
under the MOA, should be, as they are in fact, trust funds. As such, the Province
should have, upon receipt of said payments, segregated and lodged in special
accounts, the respective shares of Tiwi, Daraga, the concerned barangays and the
national government for eventual remittance to said beneficiaries. Said shares
cannot be lodged in, nor remain part of, the Province's general fund. Moreover, the
Province cannot utilize said amounts for its own benefit or account (see also Sec. 86,
PD No. 464, as amended).

Therefore, the balance of P26,979,962.52 representing the collective shares of Tiwi

and Daraga, the concerned barangays and the national government, cannot be
appropriated nor disbursed by the Province for the payment of its own expenditures
or contractual obligations.

However, in total disregard of the law, the Province treated the P40,724,471.74 NPC
payments as "surplus adjustment" (Account 7-92-419) and lodged the same in its
general fund. No trust liability accounts were created in favor of the rightful
beneficiaries thereof as required by law.

Report No. 93-11 (Exh. N), prepared and made by the Special Audit Office (SAG) of
the Commission on Audit (COA) further support our findings, thus —

xxx xxx xxx

Part II. Findings and Observations

The audit findings, which are discussed in detail in the attached report, are
summarized below:

1. The remittances of the NPC of the P40,724,471.74 from July to

December 1992 representing partial payments of real tax
delinquencies from June 22, 1984 to March 10, 1989, were not
shared with the Municipalities of Tiwi, Daraga, and the concerned
barangays and the National Government in violation of PD 464. The
Memorandum of Agreement entered into between the Province of
Albay and Napocor cannot amend the provisions of PD 464 which
specifies the sharing scheme of the real property tax among the
province, city or municipality where the property subject to tax is
situated and the National Government.

xxx xxx xxx

2. The collection of P40,724,471.74 was fully treated as surplus

adjustment (Account 7-92-419) being prior years income, without
creating a trust liability for the municipality and barangays concerned
and national government. As of December 31, 1992, the balance of
the account was only P25,668,653.12 thus, stressing that
 P15,255,818.62 was spent. . . . Under the General Fund, cash
available was only P4,921,353.44 leaving practically no cash to
answer for the shares of the Municipalities of Tiwi and Daraga and
their barangays where the properties are located. (pp. 4 and 16;
(Emphasis supplied).

xxx xxx xxx

As pointed our earlier, the Province was entitled only to P13,744,509.21 of the
P40,724,471.74 in payments made by NPC. Thus, it may only appropriate and
disburse P13,744,509.21. Any disbursements exceeding this amount would therefore
be illegal.

This Committee particularly notes the factual finding of COA that as of 31 December
1992, the actual cash balance of the Province's general fund was only
P4,921,353.44. This means that of the P40,724,471.74 actually paid by the NPC and
lodged in the Province's general fund, P35,803,118.30 was disbursed or spent by the
Province. This exceeds the P13,744,509.21 share of the Province by
P22,058,609.09.

The foregoing may be illustrated as follows:

NPC Payments received by

the Province P40,724,471.74

Less Actual Cash Balance

general fund

as of 12-31-92 4,921,353.44

——————

P35,803,118.30

===========

Less Share of the Province 13,744,509.21

Amount Illegally Disbursed

by the Province P22,058,609.09

===========

We have already shown that Ordinance No. 09-92 (Exhs. K to K-1) declaring as
forfeited in favor of the Province the entire amount of P40,724,471.74 paid by NPC to
be patently illegal as it unlawfully deprives Tiwi and Daraga, the barangays
concerned, and the national government of their rightful shares in said payments.
Being illegal, said ordinance may not be used or relied upon by the respondents to
justify the disbursements of funds in excess of their share.
Neither may Resolution Nos. 178-92 and 204-92 be used to justify the disbursements
considering that the appropriations made thereunder totalling P27,442,364.51 are to
be funded by the P40,724,471.74 "surplus adjustment" that includes the "trust funds"
not belonging to the Province. Even assuring that Resolution No. 178-92 authorizing
the expenditure of P9,778,912.57 were to be taken from the Province's share
amounting to P13,744,509.21, the rest of the disbursements still have no legal basis.
Clearly, this is violative of the fundamental rule that "(n)o money shall be paid out of
the local treasury except in pursuance of an appropriation ordinance or law" (par [a],
Sec. 305, Republic Act No. 7160).

Respondents raise the common defense that the findings obtained in SAO Report
No. 93-11 are not yet final as they have filed an appeal therefrom.

It is important to stress that the exceptions (Exhs. 50-B, 50-I, & 50-J) raised by the
respondents to COA merely involve questions of law, i.e., as to whether the Province
alone should be entitled to the payments made by NPC under the MOA, and whether
the shares of Tiwi and Daraga, the concerned barangays, and the national
government, should be held in trust for said beneficiaries.

Considering that the factual findings under SAO Report 93-11 are not disputed, this
Committee has treated said factual findings as final or, at the very least, as
corroborative evidence.

Respondents' contention that COA's factual findings, contained in SAO Report No.
93-11 cannot be considered in this investigation is untenable. For no administrative
or criminal investigation can proceed, if a respondent is allowed to argue that a
particular COA finding is still the subject of an appeal and move that the resolution of
such administrative or criminal case be held in abeyance. This will inevitably cause
unnecessary delays in the investigation of administrative and criminal cases since an
appeal from a COA finding may be brought all the way up to the Supreme Court.

Besides, the matters raised by the respondents on appeal involve only

conclusions/interpretation of law. Surely, investigative bodies, such as COA, the
Ombudsman and even this Committee, are empowered to make their own
conclusions of law based on a given set of facts.

Finally, sufficient evidence has been adduced in this case apart from the factual
findings contained in SAO Report, 93-11 to enable this Committee to evaluate the
merits of the instant complaint.

We also reject respondent Azaña's defense that since he did not participate in the
deliberation and passage of Resolution No. 09-92, merely signing the same as
presiding officer of the Sangguniang Panlalawigan, and only certifying that the same
had been passed, he did not incur any administrative liability.

The fact remains that as presiding officer of the Sangguniang Panlalawigan and
being the second highest official of the Province, respondent Azaña is jointly
responsible with other provincial officials in the administration of fiscal and financial
transactions of the Province. As presiding officer of the Sangguniang Panlalawigan,
respondent Azaña has a duty to see to it that resolutions or ordinances passed are
within the bounds of the law. He cannot merely preside over the sessions of the
Sangguniang Panlalawigan unmindful of the legality and propriety of resolutions or
ordinances being proposed or deliberated upon by his colleagues.

This collective responsibility is provided under Secs. 304 and 305 of Republic Act.
No. 7160, thus —

Sec. 304. Scope. — This Title shall govern the conduct and
management of financial affairs, transactions and operations of
provinces, cities, municipalities, and barangays.

Sec. 305. Fundamental Principles. — The financial affairs,

transactions, and operations of local government units shall be
governed by the following fundamental principles:

xxx xxx xxx

(1) Fiscal responsibility shall be shared by all those exercising

authority over the financial affairs, transactions, and operations of
local government units; and

xxx xxx xxx (Emphasis supplied)

It cannot be denied that the Sangguniang Panlalawigan has control over the
Province's "purse" as it may approve or not resolutions or ordinances generating
revenue or imposing taxes all well as appropriating and authorizing the disbursement
of funds to meet operational requirements or for the prosecution of projects.

Being entrusted with such responsibility, the provincial governor, vice-governor and
the members of the Sangguniang Panlalawigan, must always be guided by the so-
called "fundamental" principles enunciated under the Local Government Code, i.e.,
"No money shall be paid out of the local treasury except in pursuance of an
appropriations ordinance or law; local revenue is generated only from sources
authorized by law or ordinance and collection thereof shall at all times be
acknowledged properly; all monies officially received by a local government officer in
any capacity or on any occasion shall be accounted for as local funds, unless
otherwise provided by law; and trust funds in the local treasury shall not be paid out
except in fulfillment of the purposes for which the trust was created or the funds
received" (Sec. 305, R.A. 7160).

All the respondents could not claim ignorance of the law especially with respect to
the provisions of PD No. 464 that lay down the sharing scheme among local
government units concerned and the national government, for both the basic real
property tax and additional tax pertaining to the Special Education Fund. Nor can
they claim that the Province could validly forfeit the P40,724,471.74 paid by NPC
considering that the Province is only entitled to a portion thereof and that the balance
was merely being held in trust for the other beneficiaries.

As a public officer, respondent Azaña (and the other respondents as well) has a duty
to protect the interests not only of the Province but also of the municipalities of Tiwi
and Daraga and even the national government. When the passage of an illegal or
unlawful ordinance by the Sangguniang Panlalawigan is imminent, the presiding
officer has a duty to act accordingly, but actively opposing the same by temporarily
relinquishing his chair and participating in the deliberations. If his colleagues insist on
its passage, he should make known his opposition thereto by placing the same on
record. No evidence or any sort was shown in this regard by respondent Azaña.

Clearly, all the respondents have, whether by act or omission, denied the other
beneficiaries of their rightful shares in the tax delinquency payments made by the
NPC and caused the illegal forfeiture, appropriation and disbursement of funds not
belonging to the Province, through the passage and approval of Ordinance No. 09-92
and Resolution Nos. 178-92 and 204-92.

The foregoing factual setting shows a wanton disregard of law on the part of the
respondents tantamount to abuse of authority. Moreover, the illegal disbursements
made can qualify as technical malversation.

This Committee, thus, finds all the respondents guilty of abuse of authority, and
acccordingly, recommends the imposition of the following penalties of suspension
without pay:

a. Respondent Salalima — five (5)

months; and

b. All the other

respondents — four (4)

months each.

II. OP Case No. 5469

This refers to the administrative complaint filed against Albay Governor Romeo
Salalima, Vice-Governor Danilo Azaña, Albay Sangguniang Panlalawigan Members
Juan Victoria, Lorenzo Reyeg, Jesus Marcellana, Arturo Osia, Clenio Cabredo,
Ramon Fernandez, Jr., Masikap Fontanilla, Vicente Go, Sr., and Nemesio Baclao
relative to the retainer contract for legal services entered into between the Province
of Albay, on the one hand, and Atty. Jesus R. Cornago and the Cortes & Reyna Law
Firm, on the other, and the disbursement of public fund in payment thereof. The
complaint was docketed as OP Case No. 5469.

The antecedent facts are as follows.

Because of the refusal by the National Power Corporation ("NPC") to pay real
property taxes assessed by the Province of Albay ("the Province") covering the
period from 11 June 1984 up to 10 March 1987 amounting to P214,845,184.76, the
Province sold at public auction the properties of NPC consisting of geothermal power
plants, buildings, machinery and other improvements located at Tiwi and Daraga,
Albay. The Province was the sole and winning bidder at the auction sale.

As NPC failed to redeem its properties sold at the auction, the Province petitioned
the Regional Trial Court in Tabaco, Albay to issue a writ of possession over the
same.
Sometime in 1989, NPC filed a petition with the Supreme Court, which was docketed
as G.R. No. 87479, questioning the validity of the auction sale conducted by the
Province. NPC claims, inter alia, that its properties are not subject to real property
tax.

On 17 May 1989, the Province, through Atty. Romulo Ricafort, the legal officer of the
Province, filed it; comment on the NPC petition with the Supreme Court.

On 2 June 1989, the Albay Sangguniang Panlalawigan adopted Resolution No. 129-
89 (Exhs. B to B-1) authorizing respondent Governor to engage the services of a
Manila-based law firm to handle the case against NPC.

On 25 August 1989, Atty. Jesus R. Cornago entered his appearance with the
Supreme Court as collaborating counsel for the Province in G.R. No. 87479. The
entry of appearance of Atty. Cornago bore the conformity of respondent Governor.

On 14 November 1989, Atty. Antonio Jose F. Cortes of the Cortes & Reyna Law Firm
sent respondent Governor a letter (Exhs. D to D-1) informing him that Atty. Jesus R.
Cornago, as collaborating counsel for the Province, has filed a memorandum with the
Supreme Court, suggesting that a retainer agreement be signed between the
Province, on the one hand, and Atty. Cornago and Cortes & Reyna Law Firm, on the
other hand, and setting forth the conditions of the retainer agreement, thus:

As collaborating counsels for the respondents in the aforementioned

case, our law firm and that of Atty. Jesus R. Cornago request that you
pay us an Acceptance Fee of FIFTY THOUSAND (P50,000.00)
PESOS, while the aforementioned case is pending in the Supreme
Court. Thereafter, we will charge you a contingent fee equivalent to
eighteen percent (18%) of the value of the property subject matter of
the case which is P214 million, payable to us in the event that we
obtain a favorable judgment for you from the Supreme Court in the
case. Xerox expenses for copies of motions, memorandum and other
matters to be filed with the Supreme Court in the case, together with
xerox copies of documentary evidence, as well as mailing expenses,
will be for your account also.

On 8 January 1990, the Albay Sangguniang Panlalawigan passed Resolution No. 01-
90 (Exhs. C to C-1) authorizing respondent Governor to sign and confirm the retainer
contract with the Cortes & Reyna Law Firm.

Respondent Salalima signed the retainer agreement.

On 4 June 1990, the Supreme Court issued a decision dismissing the NPC petition
and upholding the validity of the auction sale conducted by the province to answer for
NPC's tax liabilities.

Subsequently, the following payments amounting to P7,380,410.31 (Exhs. E to N-1)

were made by the Province to Atty. Antonio Jose Cortes and Atty. Jesus R. Cornago:

Particulars Claimant/Payee Amount

Disbursement Cortes & Reyna P 60,508.75

Voucher (DV No. 4,

Jan. 8, 1990 Check No.
931019

DV No. 1889 Atty. Antonio Jose Cortes P 1,421,040.00

Aug. 13, 1992;

Check No. 236063-S

DV No. 1890 Atty. Jesus R. Cornago P 1,736,300.00

Aug. 13, 1992;

Check No. 236064-S

DV No. 2151 Atty. Antonio Jose Cortes P 838,851.44

Sept. 28, 1992;

Check No. 238174-S

DV No. 2226 Atty. Antonio Jose Cortes P 886,662.40

Oct. 8, 1992;
Check No. 239528-S

DV No. 2227 Atty. Jesus R. Cornago P 341,024.00

Oct. 8, 1992;
Check No. 239529-S

DV No. 2474 Atty. Jesus R. Cornago P 287,018.40

Nov. 6, 1992;
Check No. 250933

DV No. 2475 Atty. Antonio Jose Cortes P 746,247.83

Dec. 9, 1992;
Check No. 253163

DV No. 2751 Atty. Antonio Jose Cortes P 747,247.84

Dec. 9, 1992;
Check No. 253163

DV No. 2752 Atty. Jesus R. Cornago P 267,018.40

Dec. 9, 1992;
Check No. 253164
——————

TOTAL P 7,380,410.31

Disbursement Voucher Nos. 2474 and 2475 were approved by respondent Azaña.
The rest were approved by respondent Governor.

In a letter dated 31 May 1993 (Exh. O) and certificate of settlement and balances
dated 17 May 1993 (Exh. P), the Provincial Auditor of Albay informed respondent
Governor that payments made by the Province as attorney's fees amounting to
P7,380,410.31 have been disallowed by the Commission on Audit (COA) with the
following notation:

The disbursement vouchers detailed hereunder represent payments

for attorney's fees of Cortes & Reyna Law Office for Legal services
rendered re: G.R. No. 87479 "NAPOCOR, Petitioner vs. The
Province of Albay, et al., Respondent," Supreme Court, en banc.
Total payments of P7,380,410.31 are disallowed for lack of the
requisite "prior written conformity and acquiescence of the Solicitor
General . . . as well as the written concurrence of the Commission on
Audit" as provided for and required under COA Circular No. 86-255
dated April 2, 1986, re: "Inhibition against employment by
government: agencies and instrumentalities . . . of private lawyers to
handle their legal cases," viz.

The complaint alleges that by entering into the retainer agreement with private
lawyers and paying P7,380,410.31 to the said private lawyers, respondents violated
several provisions of law which warrants the imposition of administrative penalties
against them. It is to be noted that respondents Victoria, Reyeg, Cabredo,
Marcellana and Osia were not yet members of the Sangguniang Panlalawigan when
Resolution No. 129 was passed. However, the complaint alleges that these
respondents were named in the complaint because they approved the supplemental
budget/appropriation ordinances providing for the payment of the attorney's fees.

The sole issue in this case is whether or not respondents have incurred
administrative liability in entering into the retainer agreement with Atty. Cornago and
the Cortes & Reyna Law Firm and in making payments pursuant to said agreement
for purposes of the case filed by NPC with the Supreme Court against the province.

We find merit in the complaint and hold that under the circumstances surrounding the
transaction in question, the respondents abused their authority.

Sec. 481 of the Local Government Code (RA. No. 7160) requires the appointment of
a legal officer for the province whose functions include the following:

Represent the local government unit in all civil actions and special
proceedings wherein the local government unit or any official thereof,
in his official capacity is a party; Provided, That, in actions or
proceeding where a component city or municipality is a party adverse
to the provincial government or to another component city or
municipality, a special legal officer may be employed to represent the
adverse party.
The Supreme Court has ruled in Municipality of Bocaue, et al. v. Manotok, 93 Phil
173 (1953), that local governments [sic] units cannot be represented by private
lawyers and it is solely the Provincial Fiscal who can rightfully represent them, thus:

Under the law, the Provincial Fiscal of Bulacan and his assistants are
charged with the duty to represent the province and any municipality
thereof in all civil actions . . .

It would seem clear that the Provincial Fiscal is the only counsel who
can rightfully represent the plaintiffs and therefore, Attys. Alvir and
Macapagal [the private lawyers hired by the Province of Bulacan]
have no standing in the case. The appeal herein interposed in behalf
of the plaintiffs cannot therefore be maintained.

This ruling applies squarely to the case at hand because Sec. 481 of the Local
Government Code is based on Sec. 1681 of the Revised Administrative Code which
was the subject of interpretation in the abovecited case of Municipality of Bocaue, et
al. v. Manotok.

In hiring private lawyers to represent the Province of Albay, respondents exceeded

their authority and violated the abovequoted section of the Local Government Code
and the doctrine laid down by the Supreme Court.

Moreover, the entire transaction was attended by irregularities. First, the

disbursements to the lawyers amounting to P7,380,410.31 were disallowed by the
Provincial Auditor on the ground that these were made without the prior written
conformity of the Solicitor General and the written concurrence of the Commission on
Audit (COA) as required by COA Circular No. 86-255 dated 2 April 1986.

The respondents attempted to dispute this finding by presenting the Solicitor

General's conformity dated 15 July 3993. This conformity was, however obtained
after the disbursements were already made in 1990 and 1992. What is required by
COA Circular No. 85-255 is a prior written conformity and acquiescence of the
Solicitor General.

Another irregularity in the transaction concerns the lawyers. Resolution No. 01-90
authorized the respondent Governor to sign and confirm a retainer contract for legal
services with the Cortes & Reyna Law Firm at 202 E. Rodriguez Sr. Blvd., Quezon
City. The retainer contract signed by respondent Governor was, however, not only
with the Cortes & Reyna Law Firm but also with Atty. Jesus R. Cornago of Jamecca
Building, 280 Tomas Morato Avenue, Quezon City. That Atty. Jesus R. Cornago and
the Cortes & Reyna Law Firm are two separate entities is evident from the retainer
contract itself:

As collaborating counsels for the respondents in the aforementioned

case, our law firm and that of Atty. Jesus R. Cornago request that you
pay us an Acceptance Fee of FIFTY THOUSAND (P50,000.00)
PESOS, while the aforementioned case is pending in the Supreme
Court. Thereafter, we will charge you a contingent fee equivalent to
eighteen percent (18%) of the value of the property subject matter of
the case which is P214 Million, payable to us in the event we obtain a
favorable judgment for you from the Supreme Court in the case.
 Xerox expenses for copies of motions, memorandum and other
matters to be filed with the Supreme Court in the case, together with
xerox copies of documentary evidence, as well as mailing expenses,
will be for your account also.

xxx xxx xxx

Very
truly
yours,

CORT
ES &
REYN
A

LAW
FIRM

-and-

Atty.
JESUS
R.
CORN
AGO

Jamec
ca
Buildin
g

280
Tomas
Morato
Avenue

by:

(Sgd.)
ANTO
NIO
JOSE
F.
CORT
ES

With my conformity:

(Sgd) GOV. ROMEO R. SALALIMA

Province of Albay

(emphasis supplied.)

In entering into a retainer agreement not only with the Cortes & Reyna Law Firm but
also with Atty. Jose R. Cornago, respondent Governor exceeded his authority under
Resolution No. 01-90.

Complicating further the web of deception surrounding the transaction is the fact that
it was only Atty. Cornago who appeared as collaborating counsel of record of the
Province in the Supreme Court case (G R. No. 87479). We quote the entry of
appearance of Atty. Cornago in full in said case:

APPEARANCE

COMES NOW, the undersigned counsel, and to this Honorable

Supreme Court, respectfully enters his appearance as counsel for the
respondents in the above-entitled case, in collaboration with Atty.
Romulo L. Ricafort, counsel of record for the respondents. This
appearance bears the conformity of the respondent Gov. Romeo R.
Salalima, as shown by his signature appearing at the space indicated
below. In this connection, it is respectfully requested that, henceforth,
the undersigned counsel be furnished with a copy of all notices,
orders, resolutions and other matters that may be issued in this case
at its office address indicated below.

Quezon City, for Manila, August 24, 1989.

(Sgd.)
JESUS
R.
CORN
AGO

Couns
el for
Respo
ndents

280
Tomas
Morato
Avenue

Quezo
n City

PTR
No.
561005
-'89
 Mandal
uyong

IBP
No.
279351
-'89
Pasig,
MM

With my conformity:

(Sgd) ROMEO R. SALALIMA

Respondent

Office of the Governor of Albay

Legaspi City

Even the Solicitor General, in his letter to respondent Governor dated 15 July 1993,
noted that the Province is represented in the Supreme Court by Attys. Ricafort
Cornago and Glenn Manahan but not by the Cortes & Reyna Law Firm, thus:

Incidentally, a check with our office records of the case G.R. No.
87479 reveals that the Province of Albay and its officials named
respondents therein were represented in the Supreme Court by Atty.
Romulo Ricafort the Province's Legal Officer II, and Attys. Jesus R.
Cornago and Glenn Manahan of JAMECCA Building, 280 Tomas
Morato Avenue, Quezon City; no appearance was entered therein by
the Cortes & Reyna Law Firm. (Emphasis supplied.)

Furthermore, the memorandum with the Supreme Court filed for the Province was
signed by Atty. Cornago and not by the Cortes & Reyna Law Firm. Consequently, the
Cortes & Reyna Law Firm was not counsel of record of the Province in G.R. No.
87479. And yet, six of the ten checks paid by the Province and amounting to more
than P3.6 million were issued in favor of the Cortes & Reyna Law Firm through Atty.
Antonio Jose Cortes. In other words, respondents disbursed money to the Cortes &
Reyna Law Firm although the latter did not appear as counsel for the Province in the
Supreme Court in G.R. No. 87479.

Finally, the attorney's fees agreed upon by respondent Salalima and confirmed by
the other respondents are not only unreasonable but also unconscionable. The
contingent fee of 18% of the "P214 million" claim of the Province against NPC
amounts to P38.5 million. The word "unconscionable", as applied to attorney's fee,
"means nothing more than that the fee contracted for, standing alone and
unexplained would be sufficient to show that an unfair advantage had been taken of
the client, or that a legal fraud had been taken of the client, or that a legal fraud had
been perpetrated on him." (Moran, Comments on the Rules of Court, Vol. 6, p. 236.)
The Province has a legal officer, Atty. Ricafort, who had already filed a comment on
NPC's petition against the Province. The comment filed by Atty. Ricafort already
covers the basic issues raised in the petition. When Atty. Cornago filed an
appearance and subsequently a memorandum for the Province, the petition was
already been given due course by the Supreme Court and the only pleading to be
filed by the parties before the Court would issue its decision was a memorandum.
Surely, one memorandum could not be worth P38.5 million.

Furthermore, the professional character and social standing of Atty. Cornago are not
such as would merit a P38.5 million fee for the legal services rendered for the
Province. During the hearing, respondent Governor admitted that he had hired Atty.
Cornago because they were schoolmates at San Beda College, thus:

SECRETARY CORONA:

May I ask a question Governor, what was your basis for choosing this
particular law office? Why not ACCRA, why not Sycip Salazar, why
not Carpio Villaraza, why this particular Law office? Frankly, I never
heard of this law office. Who recommended it?

GOVERNOR SALALIMA:

Atty. Cornago was then a graduate of San Beda and I am a graduate

of San Beda.

SECRETARY CORONA:

Were you classmates?

GOVERNOR SALALIMA:

No.

SECRETARY CORONA:

How many years apart were you?

GOVERNOR SALALIMA:

Two (2) years.

SECRETARY CORONA:

So, you knew each other from the law school?

GOVERNOR SALALIMA:

Yes.

SECRETARY CORONA:
 Were you members of the same fraternity in San Beda?

GOVERNOR SALALIMA:

Yes.

(TSN, 12 July 1992, pp. 27-29.)

It is evident that respondent Governor hired Atty. Cornago not on the basis of his
competency and standing in the legal community but purely for personal reasons.
Likewise, the standing of the Cortes & Reyna Law Firm is not such as would merit
P38.5 million for one memorandum, which, in this case, it had not even filed because
it was not the counsel of record. Hence, considering the labor and time involved, the
skill and experience called for in the performance of the services and the
professional character and social standing of the lawyers, the attorney's fee of P38.5
million is unconscionable. By allowing such scandalously exorbitant attorney's fees
which is patently disadvantageous to the government, respondents betrayed a
personal bias to the lawyers involved and committed abuse of authority.

Parenthetically, the retainer contract containing such exorbitant attorney's fees may
also be violative of the following: (a) COA Circular No. 85-55-A (8 September 1985)
prohibiting irregular, unnecessary, excessive or extravagant expenditures or uses of
funds; and (b) Sec. 3 (e) and (g) of RA No. 3019, otherwise known as the Anti-Graft
and Corrupt Practices Act.

Finally, the Committee again applies in this case, as was applied in OP Case No.
5470, the rule of joint responsibility as enunciated under Sec. 305 (1) of the Local
Government Code.

In view of the foregoing, the Committee holds that respondents committed abuse of
authority under Sec. 60(e) of the Local Government Code for the following:

1. Hiring private lawyers, in violation of Sec. 481 of the Local

Government Code, to handle the case of the Province of Albay before
the Supreme Court in G.R. No. 87479;

2. Disbursing public money in violation of COA rules and regulations;

3. Paying the Cortes & Reyna Law Firm public money although it was
only Atty. Cornago who was the counsel of record of the Province of
Albay in the Supreme Court case;

4. Authorizing an unconscionable and grossly disadvantageous

attorney's fees of P38.5 million; and

5. Additionally, as to respondent Governor, entering into a retainer

agreement not only with the Cortes & Reyna Law Firm but also with
Atty. Cornago, thus exceeding his authority under Resolution No. 01-
90 passed by the Sangguniang Panlalawigan.
After taking all the attendant circumstances into consideration, the Committee
recommends that the following penalties of suspensions without pay be meted out:

a. Respondent Salalima — six (6) months;

and Azaña each; and

b. All the other

respondents — four (4) months

each.

III. OP Case No. 5471

This refers to the administrative complaint filed by the Tiwi Mayor Naomi Corral
against Albay Governor Romeo Salalima, Albay Sangguniang Panlalawigan
Members Juan Victoria, Lorenzo Reyeg, Arturo Osia, Jesus Marcellana, Nemesio
Baclao, Ramon Fernandez, Jr., Masikap Fontanilla, Vicente Go, Sr., Wilbor Rontas
and Clenio Cabredo, and Tiwi Vice-Mayor Rodolfo Benibe for "abuse of authority and
oppression" under Sec. 60 (c) and (e) of RA No. 7160.

The antecedent facts are as follows:

On 20 October 1992, Mayor Corral and seven (7) Kagawads of the Tiwi
Sangguniang Bayan charged herein respondent Governor Salalima and Vice-
Governor Azaña for abuse of authority, misconduct in office and oppression. This
administrative complaint, initially docketed as OP Case No. 4982 (DILG Adm. Case
No. P-8-93), arose from the refusal of said respondents to remit Tiwi's share in the
P40,724,471.74 tax delinquency payments made by NPC. This case was
subsequently substituted by OP Case No. 5470 filed on 25 January 1993 which now
included as respondents Albay Sangguniang Panlalawigan Members Victoria,
Reyeg, Osia, Cabredo, Go, Marcellana, Fernandez, Fontanilla, and Rontas.

Subsequently, Mayor Corral became the subject of several administrative and

criminal complaints filed by certain individuals with the following offices:

a. Achilles Berces v. Mayor Naomi Corral

(1) Albay Sangguniang Panlalawigan, Adm. Case No. 02-92

(2) Albay Sangguniang Panlalawigan, Adm. Case No. 05-92

(3) Office of the Ombudsman, OMB Adm. Case No. 1930163

(4) Office of the Ombudsman, OMB Case No. 0930682

(5) Office of the Ombudsman, OMB-092-3008

b. Muriel Cortezano v. Mayor Naomi Corral

(6) Albay Sangguniang Panlalawigan, Adm. Case No. 10-93

(7) Office of the Ombudsman, OMB-0-92-3000

c. Amelia Catorce v. Mayor Naomi Corral

(8) Albay Sangguniang Panlalawigan, Adm. Case No. 09-93

d. Aida Marfil v. Mayor Naomi Corral

(9) Albay Sangguniang Panlalawigan, Adm. Case No. 07-93

(10) Office of the Ombudsman, OMB Case No. 5-93-0110

e. Rodolfo Belbis v. Mayor Naomi Corral

(11) Albay Sangguniang Panlalawigan, Adm. Case No. 06-93

(12) Office of the Ombudsman, OMB Case No. 0-93-0098

f. Kin. Juan Victoria, et al. v. Mayor Naomi Corral

(13) Office of the Prosecutor, I.S. No. 93-046 (for Libel), Legaspi City

g. Governor Romeo Salalima, et al. v. Mayor Naomi Corral

(14) Office of the Prosecutor, I.S. No. 93-044 (for Libel and Perjury), Legaspi City

(15) Office of the Prosecutor, I.S. No. 93-045 (for Libel and Perjury), Legaspi City

or a total of fifteen (15) cases.

On 7 January 1993, the respondent-members of the Sangguniang Panlalawigan

passed Omnibus Resolution No. 2 recommending that Mayor Corral be placed under
preventive suspension for sixty (60) days pending the resolution of Adm. Case No.
05-92 (Exh. 18).

On 11 January 1993, respondent Salalima approved said resolution and, on the

same date, officially directed herein respondent Tiwi Vice-Mayor Benibe to assume
the office and discharge the functions of Tiwi Mayor (Exh. 18).

On 21 January 1993, Department of the Interior and Local Government (DILG)

Secretary Rafael Alunan III directed the lifting of the 11 January 1993 suspension
order issued by respondent Salalima. In his letter to Mayor Corral (Exh. C), he
stated, thus:

Considering that the preventive suspension imposed upon you by

Governor Romeo R. Salalima of that province, was issued after the
latter's refusal to accept your answer, therefore, the issuance of
 subject order of preventive suspension is premature, the issues
having not been joined.

In view thereof, the Order of Preventive Suspension dated 11

January 1993, issued by Governor Salalima, is hereby lifted.

On 26 January 1993, the Office of the President (OP), acting in OP Case No. 4982,
after finding that "the evidence of guilt is strong, and given the gravity of the offense
and the great probability that the continuance in office of respondent Governor
Romeo R. Salalima would influence the witnesses or pose a threat to the safety and
integrity of the records and other evidence," placed respondent Salalima under
preventive suspension for sixty (60) days (Exhs. D to D-2).

Respondent Salalima subsequently sought the reversal of the OP Order dated 26

January 1993 but the same was dismissed by the Supreme Court on 26 May 1993 in
the case entitled "Salalima v. the Hon. Executive Secretary," G.R. No. 108585 (Exh.
E).

On 2 February 1993, Mayor Corral filed a motion to inhibit the respondents from
hearing the six cases filed against her with the Sangguniang Panlalawigan (Adm.
Case Nos. 02-92, 05-92, 06-93, 07-93, 09-93 and 10-93) asserting her constitutional
right to due process of law. This motion was however denied with the respondent-
members of the Sangguniang Panlalawigan assuming jurisdiction over the cases.

After conducting marathon hearings, respondent-members of the Sangguniang

Panlalawigan rendered judgments against Mayor Corral and imposing, among
others, the following penalties of suspension:

1. In Adm. Case No. 02-92 — suspension for two (2) months (see Decision dated 1
July 1993, [Exhs. F to F-2]);

2. In Adm Case No. 05-92 — suspension for three (3) months (see Resolution dated
5 July 1993, [Exhs. G to 6-2]);

3. In Adm Case No. 06-93 and 07-93 — suspension for one (1) month (see
Resolution dated 8 July 1993, [Exhs. H to H-3]); and

4. In Adm Case No. 10-93 — suspension for the period of unexpired term (see
Resolution dated 9 July 1993, [Exhs. I to I-21).

On 22 July 1993, respondent Salalima issued a directive addressed to the Provincial

Treasurer, Provincial Auditor, PNP Provincial Director, Provincial Assessor,
Provincial Accountant, Provincial Budget Officer, Provincial DILG Officer, the
Sangguniang Panlalawigan and Provincial Prosecutor enjoining them to assist in the
implementation of the decisions suspending Mayor Corral "by decreeing directives to
your subordinate officials in Tiwi, Albay to strictly adhere thereto."

Subsequently, Mayor Corral interposed appeals from the decisions of respondent-

members of the Sangguniang Panlalawigan suspending her from office to the OP
(docketed as OP Case Nos. 5337 and 5345) with a prayer that the implementation of
said decisions be stayed.
On 28 July 1993, the OP ordered the suspension/stay of execution of the decisions
in Adm. Case Nos. 02-92 and 05-92 (Exhs. J to 5-2).

Similarly, on 3 August 1993, the OP ordered the suspension/stay of execution of the

decisions in Adm. Case Nos. 06-93, 07-93 and 10-93 (Exhs. K to K-1).

Also, with respect to Adm. Case Nos. 6-93 and 7-93, the Civil Service Commission
(CSC) issued Resolution Nos. 93-005 (dated 5 January 1993) and 92-817 (dated 4
March 1993), which provided the bases and justifications for the acts of Mayor Corral
complained of in these two (2) cases. The Supreme Court subsequently affirmed
said CSC resolutions (Exhs. L to L-2).

In the multiple charges for libel and perjury against Mayor Corral, arising from her
complaint in OP Case No. 5470, filed with the Regional Trial Court of Legaspi City,
the Supreme Court ordered the lower court to cease and desist from proceeding with
the case in a resolution dated 16 September 1993 (Exhs. Q to Q-2).

In determining whether respondents are guilty of the charges levelled against them,
the following issue has to be resolved, i.e., whether the conduct of the proceedings in
the administrative cases filed and the series of suspension orders imposed by the
respondent-members of the Sangguniang Panlalawigan on Mayor Corral constitute
oppression and abuse of authority?

Oppression" has been defined as an "act of cruelty, severity, unlawful exaction,

domination or excessive use of authority." (Ochate v. Ty Deling, L-13298, March 30,
1959, 105 Phil. 384, 390.).

"Abuse" means "to make excessive or improper use of a thing, or to employ it in a

manner contrary to the natural or legal rules for its use. To make an extravagant or
excessive use, as to abuse one's authority" (Black's Law Dictionary <5th Ed.>, 11). It
includes "misuse" (City of Baltimore v. Cornellsville & S.P. Ry, Co. 6 Phils. 190, 191,
3 Pitt 20, 23).

Moreover, Section 63(d) of RA No. 7160 expressly states that, "[a]ny abuse of the
exercise of the powers of preventive suspension shall be penalized as abuse of
authority."

Now, does the above narration of facts show commission by respondents of the
administrative offenses complained of?

A review of the proceedings reveal that the same were marked by haste and
arbitrariness. This was evident from the start when Mayor Corral was preventively
suspended (in Adm. Case No. 05-92) even before she could file her answer. In the
other cases, respondent-members of Sangguniang Panlalawigan ruled that Mayor
Corral had waived her right to adduce evidence in her defense.

Consequently, respondents did not also fully evaluate the evidences presented to
support the charges made. As such, all the decisions of respondents suspending
Mayor Corral were ordered lifted suspended by the DILG and OP. Thus, even the
cases filed with the Office of the Ombudsman, which were based on the same
incidents complained of in the said administrative cases, were subsequently
dismissed.
Respondents should have inhibited themselves from assuming jurisdiction over said
cases (Adm Case Nos. 02-92, O6-92, 06-93, 07-93, 09-93, and 10-93) as timely
moved by Mayor Corral considering that they were the respondents in various
administrative complaints she earlier filed with the OP and with the DILG starting with
OP Case No. 4892. However, despite the violation of due process resulting from their
collective acts, respondents, in their determination and eagerness to suspend and
harass Mayor Corral, proceeded to hear and decide said cases.

The OP has no jurisdiction over administrative complaints filed against elective

municipal officials. Under Sec. 61(b) of RA No. 7160, "[a] complaint against any
elective official of a municipality shall be filed before the Sangguniang Panlalawigan
whose decision may be appealed to the Office of the President."

WHEREFORE, the charges against Vice Mayor Benibe are dismissed. However, all
the other respondents herein are found guilty of oppression and abuse of authority
under Section 60 (c) and (e) of RA No. 7160. Accordingly, it is recommended that
each of them be meted the penalty of four (4) months suspension without pay.

IV. OP Case No. 5450.

This refers to the administrative charges filed by Tabaco Mayor Antonio Demetriou
against Governor Romeo Salalima for violation of — Section 60, pars. (c) and (d) of
the Local Government Code, Section 3, par. (g) of Republic Act No. 3019, and the
provisions of PD No. 1594, as amended.

This case was filed with the Office of the President (OP) on 18 October 1993 and
docketed as OP Case No. 5450.

The facts as found by this Committee are as follows:

On 27 September 1989 the Tabaco Public Market was destroyed by fire (Exh. A, par.
1).

On 26 September 1990, the OP advised Mayor Demetriou and respondent Salalima

that the P12.0 Million in Budgetary Assistance to Local (Government Units (BALGU)
funds earlier remitted by the national government to the Province, should be used for
the rehabilitation of the Tabaco Public Market, and that the project should be
implemented by the Provincial Governor in consultation with the Mayor of Tabaco
(Exh.. 37).

On 8 May 1991, a public bidding was conducted by the Albay Provincial Government
for the repair and rehabilitation of the Tabaco Public Market (Exh. A, par. 1)

On 29 May 1991, the Province represented by respondent Salalima and RYU

Construction entered into a contract for P6,783,737.59 for said repair and
rehabilitation (Exh. H). Among others, the contract stipulated that the contracted work
should be completed in 150 days.

The contractor started the project on 1 July 1991 and completed the same on 2 June
1992 (Exh. 41).
On 6 March 1992, the Province represented by respondent Salalima entered into
another contract (Exh. I) for P4,304,474.00 with RYU Construction for additional
repair and rehabilitation works for the Tabaco Public Market. The terms and
conditions of this contract are the same as those stipulated in the 29 May 1991
contract except for the construction period which is only for 90 days.

Construction of the second project commenced on 27 March 1992 and was

completed on 2 June 1992 (Exh. 42).

In his complaint, Mayor Demetriou alleged that despite the delay in the completion of
work under the first contract, liquidated damages were not imposed on, nor collected
from, RYU Construction by the Province. Moreover, he claims that the second
contract with RYU Construction was entered into in violation of PD No. 1594 as RYU
incurred delay with respect to the first contract.

We find merit in the complaint:

Pars. 1 and 2 of item CI 8, par. 1 of item CI 11, and par. 10.4.2 of item IB of the
Implementing Rules and Regulations (IRR) of PD No. 1594, as amended, read:

CI 3 — LIQUIDATED DAMAGES.

1. Where the contractor refuses or fails to satisfactorily complete the work within the
specified contract time, plus any time extension duly granted and is hereby in default
under the contract, the contractor shall pay the Government for Liquidated damages,
and not by way of penalty, an amount to be determined in accordance with the
following formula for each calendar day of delay, until the work is completed and
accepted or taken over by the Government:

xxx xxx xxx

2. To be entitled to such Liquidated, damages, the Government does not have to

prove that it has incurred actual damages. Such amount shall be deducted from any
money due or which may become due the contractor under the contract and/or
collect such Liquidated damages from the retention money or other securities posted
the contractor whichever is convenient to the Government.

CI — Extension of Contract time.

1. Should the amount of additional work of any kind or other special circumstances of
any kind whatsoever occur such as to fairly entitle the contractor to an extension of
contract time, the Government shall determine the amount of such extension;
provided that the Government is not bound to take into account any claim for an
extension of time unless the contractor has prior to the expiration of the contract time
and within thirty (30) calendar days after such work has been commenced or after
the circumstances leading to such claim have arisen, delivered to the Government
notices in order that it could have investigated them at that time. Failure to provide
such notice shall constitute a waiver by the contractor of any claim. Upon receipt of
full and detailed particulars, the Government shall examine the facts and extend of
the delay and shall extend the contract title for completing the contract work when, in
the Government's opinion, the finding of facts justify an extension.
 xxx xxx xxx

IB 10.4.2 — By Negotiated Contract

1. Negotiated contract may be entered into only where any of the exists and the
implementing following conditions office/agency/corporation is not capable of
undertaking the project by administration:

xxx xxx xxx

c Where the subject project is adjacent or contiguous to an ongoing project and it

could be economical prosecuted by the same contractor, in which case, direct
negotiation may be undertaken with the said contractor at the same unit prices
adjusted to price levels prevailing at the time of negotiation using parametric
formulae herein prescribed without the 5% deduction and contract conditions, less
mobilization cost, provided that he has no negative slippage and has demonstrated a
satisfactory performance. (Emphasis supplied).

xxx xxx xxx

A reading of items CI 8 and CI 11 above shows that the collection of liquidated

damages is mandatory in cases of delay unless there are valid orders of extension of
contract work given by the Government.

Under the 29 May 1991 contract, the repair works should have been completed on
26 December 1991 since the project was started on 1 July. But then the project was
finished only on 2 June 1992.

This is confirmed by the COA through CAO Report No. 93-11 (Exh. N), thus —

. . . The project was completed only on June 2, 1992 or a delay of

132 working days, as shown in the following tabulation:

Billing As of Days Lapsed % Accomplished

First Dec. 2, 1991 130 26.48

Second Jan. 8, 1992 187 53.19

Third Feb. 10, 1992 100 75.23

Final June 2, 1992 202 100.00.

In view of the delays in project completion the Team requested from

the Provincial Engineer any copy of the order suspending and
resuming the work (suspension and resume order) since the same
was not, attached to the claims of the contractor or paid vouchers.
Unfortunately the Provincial Engineer could not provide said
document at the Engineering Office had not issued any. In effect.
there was no basis for the extension of contract time and the
contractor should have been considered as behind schedule in the
 performance of the contract. Despite its deficiency, no liquidated
damages was ever imposed against the contractor. (pp. 25-26)
[emphasis supplied]

Respondent Salalima failed to submit an evidence concerning any order issued by

the Provincial Government extending RYU Construction's contract.

The law requires that requests for contract extension as well as the orders granting
the same must be made and given prior to the expiration of the contract. The
rationale for this requirement is obviously to prevent a contractor from justifying any
"delay" after the contract expires.

Before signing the 6 March 1992 contract, which was entered into on a negotiated
basis and not through bidding, respondent Salalima should have inquired whether or
not RYU Construction incurred negative slippage. Had he done so, the matter of
imposing and collecting liquidated damages would have been given appropriate
attention. This is aggravated by the fact that respondent knew that RYU Construction
was the contractor for the original rehabilitation and repair work for the Tabaco Public
market being the signatory to the first contract.

Clearly, therefore, there was a failure on the part of the Province to impose and
collect liquidated damages from the erring contractor, RYU Construction.

Going to the second charge, we find that respondent Salalima unmistakably violated
the provision of PD No. 1594, as amended.

Fundamental is the rule that government contracts especially infrastructure contracts

are awarded only through bidding. As explicitly ordained by Sec. 4 of PD No. 1594,
construction projects shall generally be undertaken by contract after "competitive
bidding". By its very nature and characteristic, a competitive public bidding aims to
protect the public interest by giving the public the best possible advantages through
open competition. At the same time, bidding seeks to prevent or curtail favoritism,
fraud and corruption in the award of the contract which otherwise might prevail were
the government official concerned is vested with the full or absolute authority to
select the prospective contractor (Fernandez, Treatise on Government Contracts
Under Philippine Law, 1991 Ed. citing Caltex Phil., Inc. v. Delgado Bros. 96 Phil. 368;
San Diego v. Municipality of Naujan, 107 Phil. 118; and Matute v. Hernandez, 66
Phil. 68).

This is precisely the reason why negotiated contracts can be resorted to only in a few
instances such as that provided under par. 1 (c) of item IB 10.4.2 of the IRR' of PD
No. 1594, supra. However, said proviso requires that the contractor had not incurred
negative slippage and has demonstrated a satisfactory performance.

And since RYU Construction incurred negative slippage with respect to the repair
works under the 29 May 1991 contract as found by COA, it was anomalous for the
Province through respondent Salalima to enter into a negotiated contract with said
contractor for additional repair and rehabilitation work; for the Tabaco public market.
Failing to comply with the requirements of law, the 6 March 1992 contract is clearly
irregular, if not illegal.
 Finally, said contract may also be violative of the following: (a) COA Circular No. 85-
55-A (dated 8 September 1985) prohibiting irregular expenditures or uses of funds;
and (b) Sec. 3 (e) and (g) of RA No. 3019, otherwise known as the Anti-Graft and
Corrupt Practices Act.

Premises considered, this Committee finds the respondent guilty of abuse of

authority and gross negligence. Accordingly, it is recommended that the penalty of
suspension without pay be meted out on respondents Salalima for five (5) months.
(pp. 2-35).

The President then concluded and disposed as follows:

After a careful review of the cases, I agree with and adopt the findings and
recommendations of the Ad-Hoc Committee, supported as they are by the evidence
on record.

WHEREFORE, the following penalties are meted out on each of the respondents, to
wit:

In OP Case No. 5470 —

a. Governor Romeo Salalima — suspension without pay for five (5) months;

b. Vice-Governor Danilo Azana, Albay Sangguniang Panlalawigan members Juan

Victoria, Lorenzo Reyeg, Arturo Osia, CLenio Cabredo, Vicente Go, Sr., Jesus
Marcellana, Ramon Fernandez, Jr., Masikap Fontanilla, and Wilbor Rontas —
suspension without pay for four (4) months.

In OP Case No. 5469 —

a. Governor Romeo Salalima and Vice-Governor Danilo Azaña — suspension

without pay for six (6) months; and

b. Albay Sangguniang members Juan Victoria, Lorenzo Reyeg, Jesus Marcellana,

Arturo Osia, Clenio Cabredo, Ramon Fernandez, Jr., Masikap Fontilla, Vicente Go,
Sr., and Nemesio Baclao — suspension without pay for four (4) months;

In OP Case No. 5471 —

a. Governor Romeo Salalima and Albay Sangguniang members Juan Victoria,

Lorenzo Reyeg, Jesus Marcellana, Arturo Osia, Wilbor Rontas, Clenio Cabredo,
Ramon Fernandez, Jr., Masikap Fontilla, Vicente Go, Sr., and Nemesio Baclao —
suspension without pay for four (4) months;.

In OP Case No. 5450 —

a. Governor Romeo Salalima — suspension without pay for five (5) months.

The suspension imposed on respondents shall be served successively but shall not
exceed their respective unexpired terms, in accordance with the limitation imposed
under Section 66 (b) of the Local Government Code.
It must at once be pointed out that insofar as O.P. Case No. 5471 is concerned, nothing of its
substantive aspect is challenged in this petition. The petitioners mentioned it only in their claim of
prematurity of Administrative Order No. 153 in view of their appeal from Special Audit Office (SAO)
Report No. 93-11 to the COA en banc. O. P. Case No. 5471 is the administrative complaint, filed by
Tiwi Mayor Corral against the petitioners for abuse of authority and oppression in connection with
their conduct in the several administrative cases filed by certain individuals against Mayor Corral. It
has no logical nexus to the appeal. The decision then in O.P. Case No. 5471 stands unchallenged in
this petition.

As to O.P. Cases Nos. 5450, 5469, and 5470, the issues presented by the petitioners may be
reformulated in this wise:

I. Did the Office of the President act with grave abuse of discretion amounting to lack
or excess of jurisdiction in suspending the petitioners for periods ranging from twelve
to twenty months?

II. Did the Office of the President commit grave abuse of discretion in deciding O.P.
cases Nos. 5450, 5469, and 5470 despite the pendency of the petitioners' appeal to
the COA en banc from Special Audit Office (SAO) Report No. 93-11 and the
Certificate of Settlement and Balances (CSB)?

III. Did the Office of the President commit grave abuse of discretion in holding the
petitioners guilty of abuse of authority in denying the Municipality of Tiwi of its rightful
shore in the P40,724,471.74 which the Province of Albay had received from the NPC
under the Memorandum of Agreement?

IV. Did the Office of the President commit grave abuse of discretion in suspending in
O.P. Cases Nos. 5469 and 5450 petitioner Salalima, who was reelected on 11 May
1992, for an alleged administrative offense committed during his first term; and in
suspending in O.P. Case No. 5469 the other petitioners, some of whom were elected
and others reelected on 11 May 1992, for an alleged administrative offense
committed in 1989?

V. Did the Office of the President commit grave abuse of discretion in holding the
petitioners in O.P. Case No. 5469 guilty of grave abuse of authority under Section 60
(e) of the Local Government Code of 1991 although they were charged under
Section 3(g) of R.A. No. 3019, as amended, and Section 60(d) of the Local
Government? Code of 1991, thereby depriving them of due process of law?

We shall take up these issues in the order they are presented.

Anent the first issue, the petitioners contend that the challenged administrative order deprived them
of their respective offices without procedural and substantive due process. Their suspensions
ranging from twelve months to twenty months or for the entire duration of their unexpired term, which
was then only seven months, constituted permanent disenfranchisement or removal from office in
clear violation of Section 60 of R.A. No. 7160 which mandates that an elective local official may be
removed from office by order of the court.

The Comment of the Solicitor General is silent on this issue. However, respondents Mayor Corral
and newly appointed provincial officials maintain that the suspension imposed upon the petitioners in
each of the four cases was within the limits provided for in Section 66(b) of R.A. No. 7160 and that
the Aggregate thereof ranging from twelve months to twenty months, but not to exceed the
unexpired portion of the petitioners term of office, did not change its nature as to amount to removal.

Section 66(b, of R.A. No. 7160 expressly provides:

Sec. 66. Form and Notice of Decision. — . . .

(b) The penalty of suspension shall not exceed the unexpired term of the respondent
or a period of six (6) months for every administrative offense, nor shall said penalty
be a bar to the candidacy of the respondent so suspended as long as he meet the
qualifications for the office.

This provision sets the limits to the penalty of suspension , viz., it should not exceed six
months or the unexpired portion of the term of office of the respondent for every
administrative offense. An administrative offense means every act or conduct or omission
which amounts to, or constitutes, every of the grounds or disciplinary action. The offenses for
which suspension may be imposed are enumerated in Section 60 of the Code, which reads:

Sec. 60. Grounds for Disciplinary Action. — An elective local official may be
disciplined, suspended, or removed from office on any of the following grounds:

(a) Disloyalty to the Republic of the Philippines;

(b) Culpable violation of the Constitution;

(c) Dishonesty, oppression, misconduct in office, gross negligence, or dereliction of

duty;

(d) Commission of any offense involving moral turpitude or an offense punishable by

at Least prision mayor;

(e) Abuse of authority;

(f) Unauthorized absence for fifteen (15) consecutive working days, except in the
case of members of the sangguniang panlalawigan, sangguniang panlungsod,
sangguniang bayan, and sangguniang barangay;

g) Acquisition for, or acquisition of, foreign citizenship or residence or the status ,e an

immigrant of another country; and

(h) Such other grounds as may be provided in this Code and other laws.

An elective local official may be removed from office on the grounds enumerated
above by order of the proper court

Assuming then that the findings and conclusions of the Office of the President in each of the subject
four administrative cases are correct, it committed no grave abuse of discretion in imposing the
penalty of suspension, although the aggregate thereof exceeded six months and the unexpired
portion of the petitioners' term of office. The fact remains that the suspension imposed for each
administrative offense did not exceed six months and there was an express provision that the
successive service of the suspension should not exceed the unexpired portion of the term of office of
the petitioners. Their term of office expired at noon of 30 June 1995.2 And this Court is not prepared
to rule that the suspension to the petitioners' removal office.3

II

Petitioners contend that the decisions in O.P. Cases Nos. 5450, 5470, and 5471 are predicated on
SAO Report No. 93-11 of the COA Audit Team, while that in O.P. Case No. 5469 is based on the
CSB issued by the Provincial Auditor of Albay. Since the Report and the CSB are on appeal with,
and pending resolution by, the Commission on Audit En Banc, they are not yet final, conclusive, and
executory as admitted by the team leader of the COA Audit Team that submitted the SAO Report
and by the Provincial Auditor who issued the CSB. The petitioners also point out that the COA
Chairman had already reversed the recommendation in the SAO Report No. 93-11 that the
Provincial Government of Albay should share with the Municipality of Tiwi the P40,724,471.74
representing payments of the NPC as of December 1992. They then submit that Administrative
Order No. 153 suspending all the petitioners is premature in view of the pendency of the appeal to
the COA en banc from SAO Report No. 93-11 and the CSB.

This issue of prematurity was raised before the Ad Hoc Committee. In rejecting it, the Committee
explained as follows:

It is important to stress that the exceptions (Exhs. 50-B, 50-I, & 50-J) raised by the
respondents to COA merely involve questions of law, i.e., as to whether the Province
alone should be entitled to the payments made by NPC under the MOA, and whether
the shares of Tiwi and Daraga, the concerned barangays, and the national
government, should be held in trust for said beneficiaries.

Considering that the factual findings under SAO Report 93-11 are not disputed, this
Committee has treated said factual findings as final or, as the very least, as
corroborative evidence.

Respondents' contention that COA's factual finding, as contained in SAO Report No.
93-11 cannot be considered in this investigation is untenable. For no administrative
and criminal investigation can proceed, if a respondent is allowed to argue that a
particular COA finding is still the subject of an appeal and move that the resolution of
such administrative or criminal case be held it abeyance. This will inevitably cause
unnecessary delays in the investigation of administrative and criminal cases since an
appeal from a COA finding may be brought all the way up to the Supreme Court.

Besides, the matters raised by the respondents on appeal involve only

conclusions/interpretation, of law. Surely, investigative bodies, such as COA, the
Ombudsman and even this Committee, are empowered to make their own
conclusions of law based on a given set of facts.

Finally, sufficient evidence has been adduced in this case apart from the factual
findings contained in SAO Report No. 93-11 to enable this Committee to evaluate the
merits of the instant complaint.

The alleged appeal from the CSB is unclear From the records, and in light of the foregoing statement
of the Ad Hoc Committee it is obvious that such appeal was not raised.
We agree with the Ad Hoc Committee that the pendency of the appeal was no obstacle to the
investigation and resolution of their administrative cases.

It may be further stressed that a special audit has a different purpose in line with the constitutional
power, authority, and duty of the COA under Section 2, Subdivision D, Article IX of the Constitution
"to examine, audit, and settle all accounts pertaining to the revenue and receipts of, and
expenditures or uses of funds and property, owned or held intrust by, or pertaining to, the
Government, or any of its subdivisions, agencies, or instrumentalities, including government-owned
or controlled corporations with original charters" and its "exclusive authority . . . to define the scope
of its audit and examination, establish the techniques and methods required therefor, and
promulgate accounting aid auditing rules and regulations, including those for the prevention and
disallowance of irregular, unnecessary, excessive, extravagant, or unconscionable expenditures, or
uses of government funds and properties."4

III

As to the third issue, the petitioners aver that the P40,724,471.74 received by the Province of Albay
from the NPC represents part of the price paid for properties owned by the province in a corporate
capacity and repurchased by the former owner. It constitutes payment of a debt and net of a tax,
which debt "arose from. and was a consequence of the Memorandum of agreement dated May 29,
1992." They further contend that the Memorandum of Agreement (MOA) partakes of a deed of sale.
And nowhere in the Real Property Tax Code (P.D. No. 464)5 is there any provision requiring
provinces to share with the municipalities the proceeds of a private sale. What are required to be
shared are only the collections of real property taxes and Special Education Fund (SBF); proceeds
of delinquent taxes and penalties, or of the sale of delinquent real property, or of the redemption
thereof; and income realized from the use, lease, or disposition of real property seized by the
province.

It must be recalled that in August 1992, Governor Salalima and NPC President; Pablo Malixi, were
already agreed that the basic tax due from the NPC was P207,375,774.72.6 But later, Malixi informed
the former that upon recomputation of the real property tax payable to the Province of Albay at the
minimum of one-fourth of one percent pursuant to Section 39(1) of the Real Property Tax Code, the
NPC came up with an adjusted figure of P129,609,859.20.7 Governor Salalima then explained that
one percent was applied in the computation for the reconciled figure of P207,375,774.72 because
the one-half percent imposed by the respective ordinances of the municipalities where the
delinquent properties are located was added to the one-half percent imposed by the tax ordinance of
the Province. His reply reads as follows:

S
e
p
t
e
m
b
e
r

9
,

1
 9
9
2

Hon Pablo V. Malixi

President, National Power
Corporation
Diliman, Quezon City.

Dear President Malixi:

As suggested in your letter of August 31, 1992, we are very pleased to furnish you
herewith the certified true copies of the local tax ordinances which served as our
basis in imposing the rate of 1% of the reconciled figure of P207,375,774.72, to wit:

(a) Resolution No. 30, series of 1974 of the Provincial Board of Albay, enacting
Provincial Tax Ordinance No. 4, whose Section I, provides:

"There shall be levied, assessed and collected as annual ad

valorem tax on real properties including improvements thereon
equivalent to one half of one percent, of the assessed value of real
property."

(b) Ordinance No. 25, series of 1974, of the Sangguniang Bayan of Tiwi, Albay,
whose Section 2 provides:

"That the tax rate of real property shall be one-half of one percent of
the assessed value of real property."

(c) Ordinance No. 27, series of 1980, of the Sangguniang Bayan of Daraga, Albay,
whose Section 3 provides:

"Rates of Levy — The tax herein levied is hereby fixed at one-half of

one percent (1/2 of 1%) of the assessed value of the real property.

These tax ordinances were in pursuance to Sec. 39 (1) (3) of PD 464, the applicable
law during the period 1984 to 1987. By adding the one half percent imposed in the
tax Ordinance of Tiwi to the one half percent also imposed in the Provincial Tax
Ordinance, we have a total of one percent which we used as the rate of levy in
computing the basic tax due on the real properties in Tiwi.

On the real properties in Daraga, we also added the one-half percent imposed by the
Daraga Tax Ordinance to the one-half percent of the Provincial Tax Ordinance.

The additional tax of one percent for the Special Educational Fund (SEF) was
imposed pursuant to Section 41 of PD 464, which provides as follows:

"There is hereby imposed annual tax of one percent on real property

to accrue to the Special Educational Fund created under Republic Act
No. 5447, which shall be in addition to the basic real property tax
 which local governments are authorized to levy, assess and collect
under this Code; . . . "

We hope that the foregoing clarification will settle whatever doubt there is on why we
applied 1% for basic tax and another 1% for SEF in arriving at
P207,375,774.72.8 (emphasis supplied).

The petitioners even emphasized in the instant petition that "Governor Salalima specifically
included the amounts due to the Municipalities of Tiwi and Daraga in asking Napocor to
settle its obligations." In other words, the original claim of P214,845,184.76 or the reconciled
figure of P207,375,774.72 representing real property taxes from 11 June 1984 to 10 March
1987 already covered the real property taxes payable to the municipalities concerned.

Hence, when the Province sold at public auction the delinquent properties consisting of
buildings, machines, and similar improvements, it was acting not only in its own behalf but
also in behalf of the municipalities concerned. And rightly so, because under Section 60 of
P.D. No. 477, the Province, thru the Provincial Treasurer, is duty bound collect taxes
throughout the province, including the national, provincial, and municipal taxes and other
revenues authorized by law. Moreover, under Section 73 of the Real Property Tax Code, the
provincial or city treasurer is the one authorized to advertise the sale at public auction of the
entire delinquent real property, except real property mentioned in Subsection (a) of Section
40, to satisfy all the taxes and penalties due and costs of sale. He is also authorized to buy
the delinquent real property in the name of the province if there is no bidder or if the highest
bid is for an amount not sufficient to pay the taxes, penalties, and costs of sale.9

Since in this case, there was no bidder, the provincial treasurer could buy, as he did, the
delinquent properties in the name of the province for the amount of taxes, penalties due
thereon, and the costs of sale, which included the amounts of taxes due the municipalities
concerned. It is therefore wrong for the petitioners to say that the subject NPC properties are
exclusively owned by the Province. The Municipalities of Tiwi and Daraga may be
considered co-owners thereof to the extent of their respective shares in the real property
taxes and the penalties thereon.

It must further be noted that it is the provincial treasurer who has charge of the delinquent
real property acquired by the province. 10 He is also the one whom the delinquent taxpayer or
any person holding a lien or claim to the property deal with in case the latter wishes to
redeem the property. 11 He is also the one authorized to effect the resale at public auction of
the delinquent property. 12 Thus, the municipalities concerned had to depend on him for the
effective collection of real property taxes payable to them. Accordingly, when the Province
entered into the Memorandum of Agreement with the NPC, it was also acting in behalf of the
municipalities concerned. And whatever benefits that might spring from that agreement
should also be shared with the latter.

The MOA, contrary to the position of the petitioners, is not an ordinary contract of sale.
Hereinbelow is the pertinent portion of that agreement:

WHEREAS, the Supreme Court ruled in the NATIONAL POWER CORPORATION

VS. THE PROVINCE OF ALBAY, et al., G.R. No. 87479 that NAPOCOR is liable to
pay Realty Tax for its properties in the municipalities of Tiwi and Daraga, Albay for
the period June 11, 1984 to March 10, 1987;
 WHEREAS, NAPOCOR is willing to settle its realty tax liability in favor of the
PROVINCE OF ALBAY;

WHEREAS, there is a need to further validate/reconcile the computation of

the realty tax in the total amount of P214,845,184.76;

NOW, THEREFORE, in view of the foregoing premises and for and in consideration
of the mutual covenant and stipulations hereinafter provided, the parties hereto have
agreed as follows:

1. NAPOCOR will make an initial payment of P17,783,000.00 receipt

of which is hereby/acknowledged.

2. The balance of the validated/reconciled amount of the real

estate taxes will be paid in 24 equal monthly installments, payable
within the first five (5) working days of the month. The first monthly
installment will commence in September 1992.

3. Should NAPOCOR default in any monthly installment, the balance

will immediately become due and demandable.

4. NAPOCOR will pay such other taxes and charges, such as the
franchise tax as provided for in the Local Government Code of 1991.

5. In consideration of settlement of NAPOCOR's tax Liability, the

PROVINCE OF ALBAY hereby waives its claim of ownership over
NAPOCOR' properties subject in G.R. No. 87479 upon full payment
of the balance due to the PROVINCE OF ALBAY. 13 (emphasis
supplied).

The tenor of the abovequoted agreement shows that the intention of the parties was for the
redemption of the subject properties in that the Province would waive ownership over the
properties "in consideration of settlement of Napocor's tax liability.

Under Section 78 of the Real Property Tax Code, the delinquent real property sold at public
auction may be redeemed by paying the total amount of taxes and penalties due up to the
date of redemption, costs of sale, and the interest at 20% of the purchase price.

The petitioners are estopped from claiming that the amounts received by the Province from
the NPC constitute payments of a debt under the MOA or of contract price in a private sale.
They constitute redemption price or payments of NPC's tax liabilities. This is evident from the
MOA as well as the entry in the receipt issued by the Province, thru the Provincial Treasurer,
which reads:

Date: July 29, 1992

Received from National Power Corp.
Manila.

In the amount of Seventeen Million Seven Hundred Sixty-Three Thousand Pesos

Philippine Currency P17,763,030.00
In payment of the following:

For Partial Payment = P17,763,000.00

of Realty Tax Delinquency of Case No. 87479, NPC vs. Province of Albay.

Total P17,763,000.00.

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Also worth noting is Provincial Ordinance No. 09-92 adopted by the petitioners which
provides: "That the installments paid by said corporation for the months of September to
December 1992, representing partial payments of the principal tax due are declared forfeited
in favor of the Provincial Government of Albay."

Moreover, in Resolution No. 197-92, the petitioners referred as "tax benefits" the shares of
certain municipalities and barangays from the amount paid by the NPC under the MOA. The
resolution reads in part as follows:

WHEREAS, by virtue of the Memorandum agreement, signed by the petitioner,

Province of Albay and respondent-oppositor, National Power Corporation (NPC), the
latter have agreed and paid an initial payment to the Province of Albay;

WHEREAS, the sharing based on the Local Government Code of 1991, the
municipalities of Malinao and Ligao are entitled to their shares of P1,435.00 and
P4,416.82 respectively and the barangays Bay in Lingao to P319.00 and Tagoytoy in
Malinao to P981.00,

WHEREAS, these tax benefits due them are not enough to pursue a worthwhile
project in said municipalities and barangays considering the present economic
situation. 15 (emphasis supplied).

As pointed out by the respondents, if the MOA was merely for the repurchase by NPC of its
properties from Albay, what could have been executed was a simple deed of absolute sale in
favor of NPC at an agreed price not necessarily P214 million which was the total amount of
the realty tax in arrears. Additionally, there would have been no need for the parties "to
further validate/reconcile the tax computation of the realty tax in the total amount of
P214,845,184,76."

Clearly, the P40,724,471.74 paid by the NPC to the Province pursuant to the MOA was part
of the redemption price or of the realty taxes in arrears.

It is conceded that under Section 78 of the Real Property Tax Code, redemption of
delinquency property must be made within one year from the date of registration of sale of
the property. The auction sale of the NPC properties was held on 30 March 1989 and
declared valid by this Court in its 4 June 1990 decision. It was only on 29 July 1992 that the
NPC offered to repurchase its former properties by paying its tax liabilities. When the
Province accepted the offer, it virtually waived the one-year redemption period. And having
thus allowed the MPC to redeem the subject properties and having received part of the
redemption price, the Province should have shared with the municipalities concerned those
amounts paid by the NPC in the same manner and proportion as if the taxes had been paid
in, regular course conformably with Section 87(c) of the Real Property Tax Code, which
provides:

(c) the proceeds of all delinquent taxes and penalties, as well as the income realized
from the use, lease or other disposition of real property acquired by the province or
city at a public auction in accordance with the provisions of this Code, and the
 proceeds of the sale of the delinquent real property or of the redemption thereof shall
accrue to the province, city or municipality in the same proportion as if the tax or
taxes had been paid in regular course.

As early as 3 August 1992, respondent Mayor Corral had already made a written demand for
payment or remittance of the shares accruing to the Municipality of Tiwi. Petitioner Governor
Salalima refused saying that the initial check of P17,763,000.00 was merely an "earnest
money." Yet, on 22 October 1992, the petitioners passed the aforequoted Resolution No.
197-92 giving some local government units, where smaller portions of the delinquent
properties are situated, shares from the payments made by the NPC under the MOA..

The petitioners cannot claim to have acted in good faith in refusing to give the municipalities
of Tiwi and Daraga their share. As pointed out by the Office of the Solicitor General, the
petitioners were aware of the local tax ordinances passed by the respective Sangguniang
Bayan of Tiwi and Daraga relative to the realty tax to be imposed on properties located in
their respective localities. Petitioner Salalima had even quoted the said ordinances in his
letter to Mr. Pablo Malixi and attached copies thereof to that letter. Significantly, the
petitioners averred in the instant petition that "Governor Salalima specifically included the
amounts due to the municipalities of Tiwi and Daraga in asking NPC to settle its obligations."

When doubt arose as to whether the municipalities concerned are entitled to share in the
amounts paid by the NPC, the province filed on 20 November 1992 a petition for declaratory
relief, which the Regional Trial Court of Albay decided only on 12 May 1994. Yet, as of 31
December 1992, the province had already disbursed or spent a large part of the NPC
payments. As found by COA, "of the P40,724,471.74 actually paid by the NPC and lodged in
the province's general fund, P35,803,118.300 was disbursed or spent by the Province."

If petitioners were really in good faith, they should have held the shares of Tiwi and
Daraga in trust 16 pursuant to Section 309 (b) of the Local Government Code of 1991, which
provides:

Trust funds shall consist of private and public monies which have officially come into
the possession of the local government or of a local government official as trustee,
agent or administrator . . . A trust fund shall only be used for the specific purpose for
which it came into the possession of the local government unit.

As pointed out by the Ad Hoc Committee in its report, which was adopted by the Office of the
President:

It is unmistakable from the foregoing provisions that the shares of Tiwi, Daraga, the
concerned barangays and the national government in the payments made by NPC
under the MOA, should be, as they are in fact, trust funds. As such, the Province
should have, upon receipt of said payments, segregated and lodged in special
accounts, the respective shares of Tiwi, Daraga, the concerned barangays and the
national government for eventual remittance to said beneficiaries. Said shares
cannot be lodged in, nor remain part of, the Province's general fund. Moreover, the
Province cannot utilize said amounts for its own benefit or account (see also Sec. 86,
PD No. 464, as amended).

Therefore, the balance of P26,979,962.52 representing the collective shares of Tiwi

and Daraga, the concerned barangays and the national government, cannot be
 appropriated nor disbursed by the Province for the payment of its own expenditures
or contractual obligations.

However, in total disregard of the law, the Province treated the P40,724,471.74 NPC
payments as "surplus adjustment" (Account 7-92-419) and lodged the same in its
general fund. No trust liability accounts were created in favor of the rightful
beneficiaries thereof as required by law.

We cannot therefore fault the public respondents with grave abuse of discretion in holding
the petitioners guilty of abuse of authority for failure to share with the municipalities of Tiwi
and Daraga the amount of P40,724,471.74 paid by the NPC.

IV

We agree with the petitioners that Governor Salalima could no longer be held
administratively liable in C.P. Case No. 5450 in connection with the negotiated contract
entered into on 6 March 1992 with RYU Construction for additional rehabilitation work at the
Tabaco Public Market. Nor could the petitioners be held administratively liable in O.P. Case
No. 5469 for the execution in November 1989 of the retainer contract with Atty. Jesus
Cornago and the Corte's and Reyna Law Firm. This is so because public officials cannot be
subject to disciplinary action for administrative misconduct committed during a prior term, as
held in Pascual vs. Provincial Board of Nueva Ecija 17 and Aguinaldo
vs. Santos. 18 In Pascual, this Court ruled:

We now come to one main issue of the controversy — the legality of disciplining an
elective municipal official for a wrongful act committed by him during his immediately
preceding term of office.

In the absence of any precedent in this jurisdiction, we have resorted to American

authorities. We found that cases on the matter are conflicting due in part, probably, to
differences in statutes and constitutional provisions, and also, in part, to a divergence
of views with respect to the question of whether the subsequent election or
appointment condones the prior misconduct. The weight of authority, however,
seems to incline to the rule denying the right to remove one from office because of
misconduct during a prior term, to which we fully subscribe.

Offenses committed, or acts done, during previous term are generally

held not to furnish cause for removal and this is especially true where
the constitution provides that the penalty in proceedings for removal
shall not extend beyond the removal from office, and disqualification
from holding office for the term for which the office was elected or
appointed. (67 C.J.S. p. 248, citing Rice vs. State, 161 S.W. 2d. 401;
Montgomery vs. Nowell, 40 S W. 2d 418; People ex rel. Bagshaw vs.
Thompson, 130 P. 2d 237; Board of Com'rs of Kingfisher County vs.
Shutler, 281 P. 222; State vs. Blake, 280 P. 388; In re Fudula, 147 A.
67; State vs. Ward, 43 S.V. 2d. 217).

The underlying theory is that each term is separate from other terms, and that the
reelection to office operates as a condonation of the officer's previous misconduct to
the extent of cutting off the right to remove him therefor (43 Am. Jur. p.
45, citing Atty. Gen. vs. Hasty, 184 Ala. 121, 63 So. 559, 50 L.R.A.. (NS) 553. As
 held on Conant vs. Brogan (1887) 6 N.Y.S.R. 332, cited in 17 A.I.R. 281, 63 So. 559,
50 LRA (NS) 553 —

The Court should never remove a public officer for acts done prior to
his present term of office. To do otherwise would be to deprive the
people of their right to elect their officers. When the people have
elected a man to office, it must be assumed that they did this with
knowledge of his life and character, and that they disregarded or
forgave his faults or misconduct, if he had been guilty of any. It is not
for the court, by reason of such faults or misconduct to practically
overrule the will of the people.

This Court reiterated this rule in Aguinaldo and explicitly stated therein:

Clearly then, the rule is that a public official can not be removed for administrative
misconduct committed during a prior term, since his re-election to office operates a
condonation of the officer's previous misconduct to the extent of cutting off the right
to remove him therefor. The foregoing rule, however, finds no application to criminal
cases pending against petitioners for acts he may have committed during the failed
coup.

However, the Office of the Solicitor General maintains that Aguinaldo does not apply
because the case against the official therein was already pending when he filed his
certificate of candidacy for his reelection bid. It is of the view that an official's reelection
renders moot and academic an administrative complaint against him for acts done during his
previous term only if the complaint was filed before his reelection. The fine distinction does
not impress us. The rule makes no distinction. As a matter of fact, in Pascual the
administrative complaint against Pascual for acts committed during his first term as Mayor of
San Jose, Nueva Ecija, was filed only a year after he was reelected.

The rule adopted in Pascual, qualified in Aguinaldo insofar as criminal cases are concerned,
is still a good law. Such a rule is not only founded on the theory that an official's reelection
expresses the sovereign will of the electorate to forgive or condone any act or omission
constituting a ground for administrative discipline which was committed during his previous
term. We may add that sound public policy dictates it. To rule otherwise would open the
floodgates to exacerbating endless partisan contests between the reelected official and his
political enemies, who may not stop to hound the former during his new term with
administrative cases for acts alleged to have been committed during his previous term. His
second term may thus be devoted to defending himself in the said cases to the detriment of
public service. This doctrine of forgiveness or condonation cannot, however, apply to criminal
acts which the reelected official may have committed during his previous term.

We thus rule that any administrative liability which petitioner Salalima might have incurred in
the execution of the retainer contract in O.P. Case No. 5469 and the incidents related
therewith and in the execution on 6 March 1992 of a contract for additional repair and
rehabilitation works for the Tabaco Public Market in O.P. Case No. 5450 are deemed
extinguished by his reelection in the 11 May 1992 synchronized elections. So are the
liabilities, if any, of petitioner members of the Sangguniang Panlalawigan ng Albay, who
signed Resolution No. 129 authorizing petitioner Salalima to enter into the retainer contract
in question and who were reelected in the 1992 elections. This is, however, without prejudice
to the institution of appropriate civil and criminal cases as may be warranted by the attendant
circumstances. As to petitioners Victoria, Marcellana, Reyeg, Osia, and Cabredo who
 became members of the Sangguniang Panlalawigan only after their election in 1992, they
could not beheld administratively liable in O.P. case No. 5469, for they had nothing to do with
the said resolution which was adopted in April 1989 yet.

Having thus held that the petitioners could no longer be administratively liable in O.P. Case
No. 5469, we find it unnecessary to delve into, and pass upon, the fifth issue.

WHEREFORE, the instant special action for certiorari is hereby partly GRANTED. That part
of the challenged Administrative Order No. 153 imposing the penalty of suspension on
petitioner Governor Romeo Salalima in O.P. Cases Nos. 5450 and 5469 and on petitioners
Vice Governor Danilo Azaña and Sangguniang Panlalawigan Members Juan Victoria,
Lorenzo Reyeg, Arturo Osia, Wilbor Rontas, Clenio Cabredo, Ramon Fernandez, Jr.,
Masikap Fontanilla, Vicente Go, Sr., and Nemesio Baclao in O.P. Case No. 5469 are hereby
ANNULLED and SET ASIDE, without prejudice to the filing of appropriate civil or criminal
actions against them if warranted by the attendant circumstances.

No pronouncement as to costs.

SO ORDERED.

Retaining liens apply to property belonging to the client but in the

possession of the attorney, charging liens address amounts that the client
will obtain as the result of a judgment or settlement.

A champertous contract is an agreement by a lawyer to conduct the

litigation on his own account, to pay the expenses thereof or to save his
client therefrom and to receive, as his fee, a portion of the proceeds of a
judgment + it is obnoxious to the law.

Nocom vs Camerino, GR No 182984, February 10, 2009

This is a petition for review on certiorari seeking to reverse and set aside
the Decision dated February 14, 2008 of the Court of Appeals (CA) which
affirmed the Joint Order dated June 9, 2005 and Summary Judgment dated
June 15, 2006 of the Regional Trial Court (RTC) of Muntinlupa City, Branch
203 and dismissed petitioner‟s appeal under Rule 41 of the Rules of Court
for lack of jurisdiction and its Resolution dated May 23, 2008 which denied
petitioner‟s motion for reconsideration.

The present case is an offshoot of the prior case, G.R. No. 161029, entitled
"Springsun Management Systems Corporation v. Oscar Camerino, Efren
Camerino, Cornelio Mantile, Nolasco Del Rosario, and Domingo Enriquez,"
which was promulgated on January 19, 2005 (449 SCRA 65) and became
final and executory on May 4, 2005 as recorded in the Book of Entries of
Judgment.

The factual antecedents are as follows:

G.R. No. 161029:

Respondent Oscar Camerino and respondents-intervenors Efren

Camerino, Cornelio Mantile, the deceased Nolasco Del Rosario,
represented by Mildred Del Rosario, and Domingo Enriquez were the
tenants who were tilling on the parcels of land planted to rice and corn
previously owned by Victoria Homes, Inc. covered by Transfer Certificate
of Title (TCT) Nos. 289237, now S-6135 (109,451 square meters); S-72244
(73,849 square meters); and 289236, now S-35855 (109,452 square
meters). On February 9, 1983, without notifying the respondents, Victoria
Homes, Inc. sold the said lots to Springsun Management Systems
Corporation (SMSC) for ₱9,790,612. The three deeds of sale were duly
registered with the Registry of Deeds of Rizal and new titles were issued
in the name of SMSC.

Subsequently, SMSC mortgaged to Banco Filipino (BF) the said lots as

collaterals for its loans amounting to ₱11,545,000. As SMSC failed to pay
the loans due, BF extrajudicially foreclosed the mortgage and, later, was
adjudged the highest bidder. On May 10, 2000, SMSC redeemed the lots
from BF. Earlier, on March 7, 1995, respondents filed a complaint against
SMSC and BF for "Prohibition/Certiorari, Reconveyance/Redemption,
Damages, Injunction with Preliminary Injunction and Temporary
Restraining Order," docketed as Civil Case No. 95-020, with the RTC of
Muntinlupa City, Branch 256.

On January 25, 2002, the RTC of Muntinlupa City, Branch 256, found
respondents to be tenants who have been tilling on the subject land
planted to rice and corn since 1967 and, thus, authorized them to redeem
the subject lots. The dispositive portion of the decision states:

WHEREFORE, judgment is hereby as follows:

1. Declaring that plaintiffs are entitled (sic) to redeem, and ordering

the defendant Springsun Management Systems Corporation (now
petitioner) to allow plaintiffs to redeem the landholdings in question
within 180 days from finality of this decision at the total price of
₱9,790,612.00; upon full payment of the redemption price, the
defendant Springsun Management Systems Corporation is ordered
to deliver plaintiffs the titles and the corresponding Deed of
Redemption so that the titles to the properties in litigation can be
transferred in the name of the plaintiffs;

2. Declaring plaintiffs entitled to possession, and ordering the

defendant Springsun Management Systems Corporation and all
persons claiming under it to vacate the lands in question and to
surrender the same to the plaintiffs;

3. Dismissing the case against Banco Filipino Savings and Mortgage

Bank;

4. Ordering the defendant Springsun Management Systems

Corporation to pay plaintiffs the sum of ₱200,000.00 as attorney‟s
fees, plus costs.

SO ORDERED.1

On September 23, 2003, the CA, in CA-G.R. SP No. 72475, affirmed with
modification the RTC by declaring the respondents to be tenants or
agricultural lessees on the disputed lots and, thus, entitled to exercise
their right of redemption, but deleted the award of ₱200,000 attorney‟s
fees for lack of legal basis.

On January 19, 2005, this Court, in G.R. No. 161029, affirmed the CA and
reiterated that being agricultural tenants of Victoria Homes, Inc. that had
sold the lots to SMSC without notifying them, respondents had the right to
redeem the subject properties from SMSC.
This Court denied SMSC‟s motions for reconsideration and for leave to file
a second motion for reconsideration and, on May 4, 2005, an Entry of
Judgment was made.

The present G.R. No. 182984:

On December 3, 2003, petitioner Mariano Nocom gave the respondents

several Philtrust Bank Manager‟s Checks amounting to ₱500,000 each,
which the latter encashed, representing the price of their "inchoate and
contingent rights" over the subject lots which they sold to him.

On December 18, 2003, respondents, with the marital consent of their

wives, executed an "Irrevocable Power of Attorney" which was notarized
by their counsel Atty. Arturo S. Santos. Thus,

IRREVOCABLE POWER OF ATTORNEY2

KNOW ALL MEN BY THESE PRESENTS:

WE, OSCAR CAMERINO, of legal age, Filipino, married to Teresita L.

Magbanua: EFREN CAMERINO, of legal age, Filipino, married to Susana
Camerino, CORNELIO MANTILE, of legal age, Filipino, married to Maria Fe
Alon, NOLASCO DEL ROSARIO, of legal age, Filipino, married to Mildred
Joplo, and DOMINGO ENRIQUEZ, of legal age, Filipino, married to Dionicia
Enriquez whose residences are stated under our respective names,
hereby APPOINT, NAME, and CONSTITUTE MARIANO NOCOM, of legal age,
Filipino, married to Anacoreta Nocom and with office at No. 2315 Aurora
Blvd, Pasay City, in an irrevocable manner, coupled with interest, for us
and in our stead, to do all or any of the following acts and deeds:

1. To sell, assign, transfer, dispose of, mortgage and alienate the

properties described in TCT Nos. 120542, 120541 and 123872 of the
Register of Deeds of Muntinlupa City, currently in the name of
Springsun Management Systems Corporation, consisting of 292,752
square meters subject matter of Civil Case No. 95-020 of the
Regional Trial Court of Muntinlupa City, Branch 256. The said court, in
its decision dated January 25, 2002 which was affirmed with
modification of the Court of Appeals in its decision dated September
24, 2003 in CA-G.R. SP No. 72475, adjudged that we are legally
 entitled to redeem the lands from Springsun Management Systems
Corporation;

2. To comply with the said decision by paying the redemption price to

Springsun Management Systems Corporation and/or to the court,
and upon such payment, to secure execution of the judgment so that
the titles can be issued in the name of our attorney-in-fact;

3. To accept and receive for his exclusive benefit all the proceeds
which may be derived from the sale, mortgage, transfer or
deposition thereof;

4. To sign and execute all the necessary papers, deed and

documents that may be necessary or the accomplishment of
purposes of the Deed of Assignment, and to issue receipts and
proper discharges therefor;

5. To negotiate, deal and transact with all the persons and entities
involved in Civil Case No. 95-020, RTC, Muntinlupa City, Branch 256,
with full power and authority to compromise with them;

6. To procure all documents and papers in government agencies

relative to the said properties and case in court; and

7. To procure the necessary transfer certificate of titles in his name

as the absolute owner of said properties.

GIVING AND GRANTING full power and authority to our said attorney-in-
fact to do all things requisite and necessary with legal effects as if done by
us when present.

IN WITNESS WHEREOF, We have hereunto affixed [our] signatures this

18th day of December, 2003.

(Sgd.) OSCAR CAMERINO (Sgd.) EFREN CAMERINO

Principal Principal
Sparrow St., Diamond Park San Antonio, San Pedro
Victoria Homes, Tunasan Laguna
Muntinlupa City

(Sgd.) CORNELIO MANTILE (Sgd.) NOLASCO DEL ROSARIO

Principal Principal
Victoria Ave., Tunasan Esmido St., Diamond Park
Muntinlupa City Victoria Homes, Muntinlupa City

(Sgd.) DOMINGO ENRIQUEZ

Principal
Tunasan Proper, Arandia
Tunasan, Muntinlupa City

WITH OUR MARITAL CONSENT:

(Sgd.) TERESITA MAGBANUA (Sgd.) SUSANA CAMERINO

Wife of Oscar Camerino Wife of Efren Camerino

(Sgd.) MARIA FE ALON ALON (Sgd.) MILDRED JOPLO

Wife of Cornelio Mantile Wife of Nolasco del Rosario

(Sgd.) DIONICIA ENRIQUEZ

Wife of Domingo Enriquez

CONFORME:

(Sgd.) MARIANO NOCOM

 Attorney-in-Fact

Meanwhile, on July 21, 2005, the respondents, in Civil Case No. 95-020 of
the RTC of Muntinlupa City, Branch 256, filed a Motion for Execution with
Prayer to Order the Register of Deeds of Muntinlupa City to divest SMSC of
title to the subject lots and have the same vested on them. As SMSC
refused to accept the redemption amount of ₱9,790,612 plus ₱147,059.18 as
commission given by the petitioner, the respondents deposited, on August
4, 2005, the amounts of ₱9,790,612, ₱73,529.59, and ₱73,529.59, duly
evidenced by official receipts, with the RTC of Muntinlupa City, Branch 256.
The RTC of Muntinlupa City, Branch 256 granted respondents‟ motion for
execution and, consequently, TCT Nos. 120542, 120541 and 123872 in the
name of SMSC were cancelled and TCT Nos. 15895, 15896 and 15897 were
issued in the names of the respondents. It also ordered that the
"Irrevocable Power of Attorney," executed on December 18, 2003 by
respondents in favor of petitioner, be annotated in the memorandum of
encumbrances of TCT Nos. 15895, 15896, and 15897.

On October 24, 2005, respondent Oscar Camerino filed a complaint against

petitioner, captioned as "Petition to Revoke Power of Attorney," docketed
as Civil Case No. 05-172, in the RTC of Muntinlupa City, Branch 203,
seeking to annul the "Irrevocable Power of Attorney" dated December 18,
2003, the turnover of the titles to the properties in his favor, and the
payment of attorney‟s fees and other legal fees.

Respondent Oscar Camerino‟s complaint alleged that he and co-

respondents were asked by their counsel, Atty. Arturo S. Santos, to sign a
document with the representation that it was urgently needed in the legal
proceedings against SMSC; that the contents of the said document were
not explained to him; that in the first week of September 2005, he learned
that TCT Nos. 15895, 15896 and 15897 were issued in their favor by the
Register of Deeds; that he discovered that the annotation of the
"Irrevocable Power of Attorney" on the said titles was pursuant to the
Order of the RTC of Muntinlupa City, Branch 256 dated August 31, 2005;
that the "Irrevocable Power of Attorney" turned out to be the same
document which Atty. Santos required him and the other respondents to
sign on December 18, 2003; that despite repeated demands, petitioner
refused to surrender the owner‟s duplicate copies of the said titles; that
petitioner had retained ownership over the subject lots; that he had no
intention of naming, appointing, or constituting anyone, including
petitioner, to sell, assign, dispose, or encumber the subject parcels of
land; and that he executed an Affidavit of Adverse Claim which was
annotated on the titles involving the subject lots.

In his Answer with Counterclaim, petitioner countered that on September

3, 2003, Atty. Santos informed him of the desire of his clients, herein
respondents, to sell and assign to him their "inchoate and contingent
rights and interests" over the subject lots because they were in dire need
of money and could no longer wait until the termination of the proceedings
as SMSC would probably appeal the CA‟s Decision to this Court; that they
did not have the amount of ₱9,790,612 needed to redeem the subject lots;
that on December 18, 2003, he decided to buy the contingent rights of the
respondents and paid each of them ₱500,000 or a total of ₱2,500,000 as
evidenced by Philtrust Bank Manager‟s Check Nos. MV 0002060 (for
respondent Oscar Camerino), MV 0002061 (for respondent Efren
Camerino), MV 0002062 (for respondent Cornelio Mantile), MV 0002063
(for Nolasco Del Rosario), and MV 0002064 (for Domingo Enriquez) which
they personally encashed on December 19, 2003; that on August 4, 2005,
he also paid the amount of ₱147,059.18 as commission; that simultaneous
with the aforesaid payment, respondents and their spouses voluntarily
signed the "Irrevocable Power of Attorney" dated December 18, 2003; that
being coupled with interest, the "Irrevocable Power of Attorney" cannot be
revoked or cancelled at will by any of the parties; and that having received
just and reasonable compensation for their contingent rights, respondents
had no cause of action or legal right over the subject lots. Petitioner
prayed for the dismissal of the complaint and the payment of ₱1,000,000
moral damages, ₱500,000 exemplary damages, and ₱500,000 attorney‟s
fees plus costs.

On January 17, 2006, petitioner filed a Motion for Preliminary Hearing on

his special and/or affirmative defense that respondent Oscar Camerino
had no cause of action or legal right over the subject lots because the
latter and his wife received the proceeds of the Philtrust Bank Manager‟s
check in the sum of ₱500,000 which they personally encashed on
December 19, 2003 and that being coupled with interest, the "Irrevocable
Power of Attorney" cannot be revoked or cancelled at will by any of the
parties.

On January 26, 2006, respondents Efren Camerino, Cornelio Mantile and

Mildred Del Rosario, in her capacity as legal heir and representative of
Nolasco Del Rosario, filed a Motion for Leave of Court to Admit the
Complaint-in-Intervention with the attached Complaint-in-Intervention,
dated January 26, 2006, seeking the nullification of the "Irrevocable Power
of Attorney" for being contrary to law and public policy and the annotation
of the "Irrevocable Power of Attorney" on the titles of the subject lots with
prayer that petitioner be ordered to deliver to them the copies of the
owner‟s duplicate certificate of TCT Nos. 15895, 15896, and 15897. Their
Complaint-in-Intervention alleged that they had a legal interest in the
subject matter of the controversy and would either be directly injured or
benefited by the judgment in Civil Case No. 05-172; that they were co-
signatories or co-grantors of respondent Oscar Camerino in the
"Irrevocable Power of Attorney" they executed in favor of the petitioner;
that their consent was vitiated by fraud, misrepresentation, machination,
mistake and undue influence perpetrated by their own counsel, Atty.
Santos, and petitioner; that sometime in December 2003, Atty. Santos
called for a meeting which was attended by petitioner and one Judge
Alberto Lerma where petitioner gave them checks in the amount of
₱500,000 each as "Christmas gifts"; and that the "Irrevocable Power of
Attorney" was void ab initio as the same was contrary to law and public
policy and for being a champertous contract.

On January 30, 2006, respondent Oscar Camerino filed a Motion for

Summary Judgment alleging that since the existence of the "Irrevocable
Power of Attorney" was admitted by petitioner, the only issue to be
resolved was whether the said document was coupled with interest and
whether it was revocable in contemplation of law and jurisprudence; that
Summary Judgment was proper because petitioner did not raise any issue
relevant to the contents of the "Irrevocable Power of Attorney"; and that in
an Affidavit dated January 23, 2005, he admitted receipt of a check
amounting to ₱500,000.00 which was given to him by petitioner as
financial assistance.
On February 3, 2006, petitioner opposed respondent Oscar Camerino‟s
motion on the ground that there were factual issues that required the
presentation of evidence.

On February 14, 2006, petitioner filed a Motion to Dismiss the complaint on

the ground that the petition for the cancellation of the "Irrevocable Power
of Attorney" was actually an action to recover the titles and ownership
over the properties; that since respondent Oscar Camerino alleged in
paragraph 29 of his Motion for Summary Judgment that the assessed
value of the subject lots amounted to ₱600,000,000, the case partook of
the nature of a real action and, thus, the docket fees of ₱3,929 was
insufficient; and that due to insufficient docket fee, his complaint should be
dismissed as the RTC was not vested with jurisdiction over the subject
matter of the complaint.

On February 22, 2006, respondent Oscar Camerino opposed petitioner‟s

motion for preliminary hearing of special and/or affirmative defenses
alleging that it was dilatory and that he had a cause of action.

On March 9, 2006, respondent Oscar Camerino filed his Reply to

petitioner‟s Opposition to the Motion for Summary Judgment claiming that
the determinative issue of whether or not the amount of ₱500,000 given to
him by petitioner rendered the power of attorney irrevocable can be
determined from the allegations in the pleadings and affidavits on record
without the need of introduction of evidence.

On May 5, 2006, respondent Oscar Camerino filed an Opposition to

petitioner‟s Motion to Dismiss stating that the instant case was a personal
action for the revocation of the "Irrevocable Power of Attorney" and not
for the recovery of real property and, thus, the correct docket fees were
paid.

On June 9, 2006, the RTC of Muntinlupa City, Branch 203 admitted the
Complaint-in-Intervention because the movants-intervenors ([herein
respondents] Efren Camerino, Cornelio Mantile, and Mildred Del Rosario
as legal heir of Nolasco Del Rosario) "have legal interest in the subject
properties in litigation and in the success of the petitioner [herein
respondent Oscar Camerino], who was precisely their co-plaintiff in Civil
Case No. 95-020, entitled „Oscar Camerino, et al. v. Springsun Management
Systems Corporation et al.,‟ where they are the prevailing parties against
the defendant therein [SMSC], with respect to the same properties, subject
of this case, in a decision rendered by Branch 256 of this Court." The RTC,
Branch 203, also granted the Motion for Summary Judgment because "a
meticulous scrutiny of the material facts admitted in the pleadings of the
parties reveals that there is really no genuine issue of fact presented
therein that needs to be tried to enable the court to arrive at a judicious
resolution of a matter of law if the issues presented by the pleadings are
not genuine issues as to any material fact but are patently unsubstantial
issues that do not require a hearing on the merits." Thus,

The instant Motion to Dismiss by the respondent is therefore DENIED,

PROVIDED, the petitioner should pay the balance of the docket fees
remaining unpaid, if any, pursuant to Rule 141, Section 7 of the Rules of
Court, as amended by A.M. No. 04-2-04-SC within the applicable
prescriptive or reglementary period.

The "Motion for Intervention" timely filed by intervenors Efren Camerino,

Cornelio Mantile and Mildred Del Rosario, in her capacity as legal heir of
Nolasco Del Rosario, as opposed by the respondent, is hereby GRANTED.

xxx

Petitioner‟s Motion for Summary Judgment is therefore GRANTED.

Consequently, respondent‟s Motion for Preliminary Hearing on his Special

and Affirmative Defenses is deemed moot and academic.

SO ORDERED.3

On June 15, 2006, the RTC of Muntinlupa City, Branch 203 rendered a
Summary Judgment annulling the "Irrevocable Power of Attorney" for
being contrary to law and public policy. The pertinent portions of the trial
court‟s decision state that:

Irrespective of whether the Power of Attorney in question is coupled with

interest, or not, the same can be revoked or annulled, firstly, because it is
contrary to law and secondly it is against public policy.
As aptly pointed out by the intervenors, the assailed Special Power of
Attorney which under its ultimate paragraph among others, authorizes the
respondent (Nocom) „to procure the necessary Transfer Certificate of Title
in his name, as the absolute owner of the said properties is a disguised
conveyance or assignment of the signatories‟ statutory rights of
redemption and therefore prohibited under the provisions of Republic Act
No. 3844, Sec. 62 which provides:

Sec. 62. Limitation on Land Rights.

Except in case of heredity succession by one heir, landholdings acquired

under this Code may not be resold, mortgaged, encumbered, or
transferred until after the lapse of ten years from the date of full payment
and acquisition and after such ten year period, any transfer, sale or
disposition may be made only in favor of persons qualified to acquire
economic family-size farm units in accordance with the provisions of this
Code xxx. (underlining supplied)

The assailed "power of attorney" which was executed on December 18,

2003 is void ab initio for being contrary to the express prohibition or spirit
of the aforesaid law or the declared state and public policy on the
qualification of the beneficiaries of the agrarian reform program. It bears
stressing that the redemption price of the subject lots was paid only on
August 4, 2005 or 1 year, 8 months and 14 days after the execution of the
assailed power of attorney.

If pursuant to the spirit of the Agrarian Reform Law, the tenant cannot
even sell or dispose of his landholding within ten (10) years after he
already acquired the same or even thereafter to persons not qualified to
acquire economic size farm units in accordance with the provisions of the
Agrarian Reform Code, with more reason should the tenant not be allowed
to alienate or sell his landholding before he actually acquires the same.

The right of redemption of the petitioner and his co-plaintiffs in Civil Case
No. 95-020 as upheld by the Court of Appeals and the Supreme Court is
founded on a piece of social legislation known as Agrarian Reform Code.

Enunciated in the case of Association of Small Landowners in the

Philippines, et al., vs. Hon. Secretary of Agrarian Reform (G.R. No. 78742,
July 14, 1989) is the policy of the State on agrarian reform legislation. Said
State policy emphasizes the "Land for the Landless" slogan that
underscores the acute imbalance in the distribution of land among the
people.

Furthermore, the assailed Special Power of Attorney is a champertous

contract and therefore void for being against public policy. The pleadings
of the parties show that the same special power of attorney was executed
by the petitioner, et al. through the intercession of Atty. Arturo Santos and
at the behest of the respondent. In his own answer to the instant petition
which he is estopped to deny, the respondent alleges that the actual
agreement was for the respondent to pay the expenses of the proceedings
to enforce the rights of the petitioner and his co-plaintiffs in Civil Case No.
95-020 without any provision for reimbursement. In other words, the
respondents, through the intercession of Atty. Santos, petitioner‟s
attorney, had agreed to carry on with the action for the petitioner et al. at
his own expense in consideration of procuring for himself the title to the
lots in question as the absolute owner thereof, with the respondent paying
the redemption price of said lots, as well as separate amounts of Five
Hundred Thousand (₱500,000.00) to each of the five (5) co-plaintiffs in
Civil Case No. 95-020, including herein petitioner, or a total sum of Two
Million Five Hundred Thousand Pesos (₱2,500,000.00).

Under the premises, the aforesaid contract brokered by Atty. Arturo

Santos has all really the earmarks of a champertous contract which is
against public policy as it violates the fiduciary relations between the
lawyer and his client, whose weakness or disadvantage is being exploited
by the former. In other words, the situation created under the given
premises is a clear circumvention of the prohibition against the execution
of champertous contracts between a lawyer and a client.

A champertous contract is defined as a contract between a stranger and a

party to a lawsuit, whereby the stranger pursues the party‟s claim in
consideration of receiving part or any of the proceeds recovered under the
judgment; a bargain by a stranger with a party to a suit, by which such
third person undertakes to carry on the litigation at his own cost and risk,
in consideration of receiving, if successful, a part of the proceeds or
subject sought to be recovered. (Blacks Dictionary; Schnabel v. Taft
Broadcasting Co., Inc. Mo. App. 525 S.W. 2d 819, 823). An Agreement
whereby the attorney agrees to pay expenses of proceedings to enforce
the client‟s rights is champertous. [JBP Holding Corporation v. U.S. 166 F.
Supp. 324 (1958)]. Such agreements are against public policy especially
where as in this case, the attorney has agreed to carry on the action at its
own expense in consideration of some bargain to have part of the thing in
dispute. [See Sampliner v. Motion Pictures Patents Co., et al., 225 F. 242
(1918). The execution of these contracts violates the fiduciary relationship
between the lawyer and his client, for which the former must incur
administrative sanction.

The intention of the law in prohibiting this kind of contract is to prevent a

lawyer from acquiring an interest in the subject of the litigation and to
avoid a conflict of interest between him and his client.

In the instant case, it seems that Atty. Santos and the respondent colluded
and conspired to circumvent these prohibitions. Considering therefore that
Atty. Santos, then petitioner‟s counsel, brokered the alleged deal between
petitioners et al. and the respondent with respect to the lands subject of
litigation in Civil Case No. 95-020, the deal contracted is illegal for being a
champertous agreement and therefore it cannot be enforced.

Be that as it may, granting the agency established in the assailed Power of

Attorney is coupled with interest, the petitioner and his co-plaintiffs in
Civil Case No. 95-020, who are the present intervenors, are not revoking
the Power of Attorney at will but have precisely gone to court and filed the
instant petition for its cancellation or revocation. What is prohibited by law
and jurisprudence is the arbitrary and whimsical revocation of a power of
attorney or agency coupled with interest, at will by a party, without court
declaration.

WHEREFORE, judgment is hereby rendered as follows:

(1) Nullifying the "Irrevocable Power of Attorney" in question dated

December 18, 2003, signed by the petitioner [herein respondent
Oscar Camerino] and his co-plaintiffs [herein respondents who were
the movant-intervenors] in Civil Case No. 95-020 in favor of the
respondent [herein petitioner];
 (2) Ordering the respondent to turnover the Certificates of Title Nos.
15895, 15896 and 15897 covering the lots, the subject of this case, to
the petitioner and the intervenors;

(3) Ordering the respondent to pay the petitioner attorney‟s fees and
all other legal fees incurred by the latter in connection with this
case;

(4) Ordering the petitioner and the intervenors to return to the

respondent the amount of ₱7,790,612 paid by the latter as
redemption price of the lots in question plus commission of
₱147,049.18; and

(5) Ordering the petitioner Oscar Camerino and the intervenors

Efren Camerino, Cornelio Mantile, Nolasco Del Rosario or his heirs
and Domingo Enriquez, who are petitioner‟s co-plaintiffs in Civil
Case No. 95-020, to return to the respondent the total amount of
₱2,500,000.00 or ₱500,000.00 from each of them paid by the
respondent to them under Philtrust Bank Check Nos. MV 0002060,
MV 0002061, MV 0002062, MV 0002063, and MV 0002064 which
checks were encashed by them with the drawee bank.

SO ORDERED.4

On July 3, 2006 petitioner filed an Omnibus Motion for Reconsideration

seeking to set aside the trial court‟s Joint Order dated June 9, 2005 and
Summary Judgment dated June 15, 2006 which was opposed by the
respondents.

On July 4, 2006, respondents filed a Motion for Execution Pending Final

Decision/Appeal which was opposed by petitioner.

On August 14, 2006, the trial court issued an order denying petitioner‟s
Omnibus Motion for Reconsideration. Within the reglementary period,
petitioner filed a Notice of Appeal and paid the corresponding appeal
docket fees.

On February 14, 2008, the CA affirmed the trial court‟s Joint Order dated
June 9, 2006 and Summary Judgment dated June 15, 2006 and dismissed
the petitioner‟s appeal for lack of jurisdiction. The CA ruled that as the RTC
rendered the assailed Summary Judgment based on the pleadings and
documents on record, without any trial or reception of evidence, the same
did not involve factual matters. The CA found the issues raised by the
petitioner in his appeal to be questions of law, to wit: (a) whether
Summary Judgment was proper under the admitted facts and
circumstances obtaining in the present case; (b) whether undue haste
attended the rendition of the Summary Judgment; (c) whether the
Summary Judgment was valid for failure of the RTC to implead an
indispensable party; (d) whether the RTC erred in allowing the intervention
of respondents Efren Camerino, Cornelio Mantile, and Mildred Del Rosario;
and (e) whether the RTC erred in taking cognizance of the case despite
nonpayment of the required docket fees. The CA concluded that since the
issues involved questions of law, the proper mode of appeal should have
been through a petition for review on certiorari under Rule 45 of the Rules
of Court directly to this Court and not through an ordinary appeal under
Rule 41 thereof and, thus, petitioner‟s appeal to the CA should be
dismissed outright pursuant to this Court‟s Circular No. 2-90, dated March
9, 1990, mandating the dismissal of appeals involving pure questions of
law erroneously brought to the CA.

In its Resolution of May 23, 2008, the CA denied petitioner‟s Motion for
Reconsideration dated February 26, 2008.

Hence, this present petition.

Petitioner raises the following issues:

WHETHER OR NOT THE HONORABLE COURT OF APPEALS COMMITTED AN

ERROR IN DISMISSING PETITIONER‟S APPEAL.

II

WHETHER OR NOT THE COURT OF APPEALS ERRED IN UPHOLDING THE

SUMMARY JUDGMENT OF THE TRIAL COURT DESPITE THE GENUINE ISSUE
OF FACT RAISED IN PETITIONER‟S ANSWER.
III

WHETHER OR NOT THE COURT OF APPEALS IS CORRECT IN NOT VOIDING

THE ASSAILED SUMMARY JUDGMENT FOR FAILURE OF RESPONDENTS TO
IMPLEAD AN INDISPENSABLE PARTY.

IV

WHETHER OR NOT THE COURT OF APPEALS ERRED IN NOT DISMISSING

CIVIL CASE NO. 05-172 FOR NON-PAYMENT OF THE CORRECT DOCKET
FEES.

Petitioner contends that the CA erred in dismissing his appeal as the case
involves questions of fact; that summary judgment was not proper as
there were genuine issues of fact raised in his Answer; that respondents
failed to implead their lawyer, Atty. Arturo S. Santos, as an indispensable
party-defendant, who, according to them, allegedly connived with him in
making them sign the "Irrevocable Power of Attorney" in his favor; and
that since the case partakes of the nature of an action to recover
ownership and titles to the properties, respondents‟ complaint should be
dismissed for failure to pay the correct docket fees.

Respondent Oscar Camerino argues that the sole issue to be resolved

pertains to the legal issue of whether the Special Power of Attorney (SPA)
denominated as irrevocable may be revoked; that three material facts
have been established, i.e., that the SPA was executed, that Atty. Santos
facilitated the signing and execution of the SPA, and that petitioner paid
₱500,000 to each of the respondents in consideration for the signing of the
SPA and, thus, summary judgment was proper; and that pure questions of
law are not proper in an ordinary appeal under Rule 41 of the Rules.

Respondents Efren Camerino, Cornelio Mantile, and Mildred Del Rosario,

in her capacity as legal heir of Nolasco Del Rosario, aver that petitioner‟s
petition is insufficient in form, i.e., due to defective verification as the word
"personal" was not stated when referring to "personal knowledge," and in
substance, i.e., there is no genuine issue to be resolved as the factual
allegations of the petitioner are unsubstantial and that Atty. Santos is not
an indispensable party to the case.
The petition has merit.

In dismissing petitioner‟s appeal, the CA erroneously relied on the

rationale that the petitioner‟s appeal raised questions of law and,
therefore, it had no recourse but to dismiss the same for lack of
jurisdiction. The summary judgment rendered by the trial court has the
effect of an adjudication on the merits and, thus, the petitioner, being the
aggrieved party, correctly appealed the adverse decision of the RTC to the
CA by filing a notice of appeal coupled with the appellant‟s brief under
Rule 41 of the Rules.

Contrary to the findings of the RTC and the CA, the present case involves
certain factual issues which remove it from the coverage of a summary
judgment.

Under Section 1, Rule 35 of the Rules of Court, a party seeking to recover

upon a claim, counterclaim, or cross-claim or to obtain a declaratory
relief may, at any time after the pleading in answer thereto has been
served, move with supporting affidavits, depositions or admissions for a
summary judgment in his favor upon all or any part thereof.

Summary judgment is a procedural device resorted to in order to avoid

long drawn out litigations and useless delays. When the pleadings on file
show that there are no genuine issues of fact to be tried, the Rules allow a
party to obtain immediate relief by way of summary judgment, that is,
when the facts are not in dispute, the court is allowed to decide the case
summarily by applying the law to the material facts. Conversely, where
the pleadings tender a genuine issue, summary judgment is not proper. A
“genuine issue” is such issue of fact which requires the presentation of
evidence as distinguished from a sham, fictitious, contrived or false claim.
Section 3 of the said rule provides two (2) requisites for summary
judgment to be proper: (1) there must be no genuine issue as to any
material fact, except for the amount of damages; and (2) the party
presenting the motion for summary judgment must be entitled to a
judgment as a matter of law.5 A summary judgment is permitted only if
there is no genuine issue as to any material fact and a moving party is
entitled to a judgment as a matter of law. A summary judgment is proper
if, while the pleadings on their face appear to raise issues, the affidavits,
depositions, and admissions presented by the moving party show that
such issues are not genuine.6

The present case should not be decided via a summary judgment.

Summary judgment is not warranted when there are genuine issues which
call for a full blown trial. The party who moves for summary judgment has
the burden of demonstrating clearly the absence of any genuine issue of
fact, or that the issue posed in the complaint is patently unsubstantial so
as not to constitute a genuine issue for trial. Trial courts have limited
authority to render summary judgments and may do so only when there is
clearly no genuine issue as to any material fact. When the facts as pleaded
by the parties are disputed or contested, proceedings for summary
judgment cannot take the place of trial.7

Summary judgment is generally based on the facts proven summarily by

affidavits, depositions, pleadings, or admissions of the parties. In this
present case, while both parties acknowledge or admit the existence of
the "Irrevocable Power of Attorney," the variance in the allegations in the
pleadings of the petitioner vis-à-vis that of the respondents require the
presentation of evidence on the issue of the validity of the "Irrevocable
Power of Attorney" to determine whether its execution was attended by
the vices of consent and whether the respondents and their spouses did
not freely and voluntarily execute the same. In his Answer with
Counterclaim, petitioner denied the material allegations of respondent
Oscar Camerino‟s complaint for being false and baseless as respondents
were informed that the document they signed was the "Irrevocable Power
of Attorney" in his favor and that they had received the full consideration
of the transaction and, thus, had no legal right over the three parcels of
land. Indeed, the presentation of evidence is necessary to determine the
validity and legality of the "Irrevocable Power of Attorney," dated
December 18, 2003, executed by the respondents in favor of the petitioner.
From said main factual issue, other relevant issues spring therefrom, to
wit: whether the said "Irrevocable Power of Attorney" was coupled with
interest; whether it had been obtained through fraud, deceit, and
misrepresentation or other vices of consent; whether the five (5) Philtrust
Bank Manager‟s checks given by petitioner to the respondents amounting
to ₱500,000 each were in consideration of the "inchoate and contingent
rights" of the respondents in favor of the petitioner; whether Atty. Santos
connived with petitioner in causing the preparation of the said document
and, therefore, should be impleaded as party-defendant together with the
petitioner; whether respondents deposited the amount of ₱9,790,612.00
plus ₱147,059.18 with the RTC of Muntinlupa City, Branch 256; and whether
the sale of respondents‟ inchoate and contingent rights amounted to a
champertous contract.

The incongruence and disparity in the material allegations of both parties

have been evident. Respondent Oscar Camerino alleged in his complaint
that he and his co-respondents were required by their counsel, Atty.
Santos, to sign a document on the representation that it was urgently
needed in the legal proceedings against SMSC which turned out to be the
"Irrevocable Power of Attorney"; but petitioner disproved the vitiated
consent on the part of the respondents as they knew fully well that the
document they signed, voluntarily and intelligently, on December 18, 2003,
was the said "Irrevocable Power of Attorney." Respondent Oscar
Camerino alleged in his complaint that he has no intention of naming,
appointing or constituting anyone, including the petitioner, to sell, assign,
dispose or encumber the lots in question; but petitioner maintained that
respondent Oscar Camerino agreed to sell and assign to him his "inchoate
and contingent rights and interests" over the subject lot for and in
consideration of the sum of ₱500,000, plus the redemption price of
₱9,790,612. Respondents claimed that the amount they received was
grossly disproportionate to the value of the subject land; but petitioner
countered that the respondents did not have the amount of ₱9,790,612
needed to redeem the subject lots, so he decided to buy their contingent
rights and paid each of them ₱500,000 or a total of ₱2,500,000 as
evidenced by five (5) Philtrust Bank Manager‟s Check which they
personally encashed on December 19, 2003, that he also paid the amount
of ₱147,059.18 as commission on August 4, 2005, that simultaneous with
the aforesaid payment, respondents and their spouses voluntarily signed
the "Irrevocable Power of Attorney" dated December 18, 2003, and that
being coupled with interest, the "Irrevocable Power of Attorney" cannot be
revoked at will by any of the parties.

Respondents maintain that they were deceived into executing the

"Irrevocable Power of Attorney" in favor of the petitioner which was done
through the maneuverings of their own lawyer, Atty. Santos, who,
according to them, had connived with petitioner in order to effect the
fraudulent transaction. In this regard, respondents should have impleaded
Atty. Santos as an indispensable party-defendant early on when the case
was still with the RTC, but they failed to do so. However, their procedural
lapse did not constitute a sufficient ground for the dismissal of Civil Case
No. 05-172.

In Domingo v. Scheer,8 the Court explained that the non-joinder of an

indispensable party is not a ground for the dismissal of an action. Section
7, Rule 3 of the Rules, as amended, requires indispensable parties to be
joined as plaintiffs or defendants. The joinder of indispensable parties is
mandatory. Without the presence of indispensable parties to the suit, the
judgment of the court cannot attain real finality. Strangers to a case are
not bound by the judgment rendered by the court. The absence of an
indispensable party renders all subsequent actions of the court null and
void. There is lack of authority to act not only of the absent party but also
as to those present. The responsibility of impleading all the indispensable
parties rests on the petitioner or plaintiff. However, the non-joinder of
indispensable parties is not a ground for the dismissal of an action.
Parties may be added by order of the court on motion of the party or on its
own initiative at any stage of the action and/or such times as are just. If
the petitioner or plaintiff refuses to implead an indispensable party despite
the order of the court, the latter may dismiss the complaint or petition for
the petitioner or plaintiff‟s failure to comply therefor. The remedy is to
implead the non-party claimed to be indispensable. In the present case,
the RTC and the CA did not require the respondents to implead Atty.
Santos as party-defendant or respondent in the case. The operative act
that would lead to the dismissal of Civil Case No. 05-172 would be the
refusal of respondents to comply with the directive of the court for the
joinder of an indispensable party to the case.

In his petition, petitioner prays for the reversal of the Decision dated
February 14, 2008 of the CA which affirmed the Joint Order dated June 9,
2005 and Summary Judgment dated June 15, 2006 of the RTC of
Muntinlupa City, Branch 203 and dismissed petitioner‟s appeal under Rule
41 of the Rules for lack of jurisdiction and its Resolution dated May 23,
2008 which denied petitioner‟s motion for reconsideration; the annulment
of the RTC‟s Summary Judgment rendered on June 15, 2006; and the
dismissal of Civil Case No. 05-172 filed with the RTC on the ground that
respondents failed to pay the correct docket fees as the action actually
sought the recovery of ownership over the subject properties.

The record shows that Civil Case No. 05-172 is a complaint filed by
respondent Oscar Camerino against petitioner, denominated as "Petition
to Revoke Power of Attorney," that seeks to nullify the "Irrevocable Power
of Attorney" coupled with interest dated December 18, 2003; that petitioner
be ordered to turn over TCT No. 15898, 15896, and 15897 to him; and that
petitioner be ordered to pay the attorney‟s fees and other legal fees as a
consequence of the suit. This case is therefore not an action to recover the
titles and ownership over the subject properties. For now, the nature of
the suit remains that of personal action and not a real action in
contemplation of Rule 4 of the Rules. Hence, the docket fees paid by the
respondents were in order. Should the complaint be amended to seek
recovery of ownership of the land, then the proper docket fees should be
paid and collected.

While the RTC erred in rendering the summary judgment, Civil Case No.
05-172 should not perforce be dismissed. Instead, this present case should
be remanded to the RTC for further proceedings and proper disposition
according to the rudiments of a regular trial on the merits and not through
an abbreviated termination of the case by summary judgment.

WHEREFORE, the petition is PARTLY GRANTED. The Decision of the Court

of Appeals dated February 14, 2008 which affirmed the Joint Order dated
June 9, 2005 and Summary Judgment dated June 15, 2006 of the Regional
Trial Court of Muntinlupa City, Branch 203 and dismissed petitioner‟s
appeal under Rule 41 of the Rules of Court on the ground of lack of
jurisdiction and the Resolution of the Court of Appeals dated May 23, 2008
which denied petitioner‟s motion for reconsideration in CA-G.R. CV No.
87656 are REVERSED and SET ASIDE. The case is REMANDED to the
Regional Trial Court of Muntinlupa City, Branch 203, for further
proceedings in accordance with this Decision.

No costs.

SO ORDERED.
Cruz vs CIR, GR No L-18277, August 31, 1963

After the Court of Industrial Relations rendered a decision in CIR Case No.
802-V, ordering the Manila Railroad Company to reinstate with back
wages dismissed employees Pedro Vergara, Rafael Barbante, and Vicente
Viñas, the matter of fees due the lawyers who assisted said claimants in
the prosecution of their case, was brought to the attention of the trial
court. As a consequence thereof, Judge Emiliano Tabigne issued an order
on May 11, 1960, finding their fees as follows: Atty. Gualberto Cruz, the total
sum of P16,088.28;1 Atty. Vicente A. Rafael, the total sum of P6,340.172 and
Atty. Nicolas B. Flores, the sum of P134.10.3

On May 19, 1960, Gualberto Cruz filed a motion for partial reconsideration
of the aforesaid order, objecting to the award of attorney's fees to Attys.
Rafael and Flores, and to the consequent reduction of the fees allegedly
due him under the contract of services between him and the employees. It
was alleged that under the aforementioned contract of services, he was to
receive 50% of the total amount recoverable by the latter and not only 50%
of that amount corresponding to the period when he actually took charge
of the case.

Before this motion could be resolved, Cruz filed another motion dated
September 12, 1960, questioning the jurisdiction of the trial judge to modify
the agreement between him and his clients.

On September 20, 1960, the court en banc issued a resolution, signed by

two judges, reducing Cruz's fees to only 10%. On September 26, 1960 one
judge filed his own resolution (decision) fixing the attorney's fees at 30%.
On November 17, two other judges signed dissenting opinion reiterating
that Atty. Cruz was entitled to 50%.

In view of this divergence of opinion among the five judges of the court,
Gualberto Cruz filed on November 29, 1960 a motion for reconsideration of
the resolution, alleging that Atty. Rafael rendered professional services in
CIR Case No. 802-V not for the individual claimants but for the union of
which they were members, and as a member of the law firm Cid, Villaluz
and Rafael which had a retainer contract with said union,4 that the law
firm of Cid, Villaluz and Rafael "abandoned" claimant's case in December,
1954; that the supposed manifestation of claimants-employees dated
December 20, 1956, re-employing Atty. Rafael was filed actually on
February 28, 1957 after the court's decision on the merits ordering the
employees' reinstatement with back wages was promulgated on February
23, 1957. In the meantime, or on December 7, 1960, Cruz filed a petition
for certiorari in this Court,5 premised among others on the same
allegation that Atty. Rafael not being a lawyer for the individual claimants
but for the union, should not have been awarded attorney's fees from the
amount recoverable by the said claimant; and that the Industrial Court had
no jurisdiction to reduce the attorney's fees due him under the contract of
services with the claimants in the absence of a showing that said contract
was not entered into voluntarily and that the amount agreed upon is
champertous. By resolution of this Court of December 25, 1960, this
petition was dismissed for being factual and for lack of merit. However,
upon a motion for reconsideration filed by petitioner Cruz, this Court of
February 8, 1961 in effect reconsidered its former resolution by dismissing
the petition upon another ground, viz, "there being a motion for
reconsideration pending in the Court of Industrial Relations which has not
yet been resolved".

On February 10, 1961, pursuant to this resolution of the Supreme Court,

Cruz filed with the Court of Industrial Relations another petition to resolve
the motion for reconsideration. As the said motion remained unrated upon,
Cruz filed on April 3, 1961, the present petition for mandamus, prohibition
and certiorari, seeking to compel the respondent Court of Industrial
Relations to resolve his motion for reconsideration (of the resolution of
the court supposedly in banc) as well as his other motion of September 12,
1960; and to restrain execution of the same resolution insofar as the
award of attorney's fees to Attys. Rafael and Flores was concerned.

In their answer in the present case, respondents tried to justify the

Industrial Court's inaction on the various pleadings filed by petitioner Cruz,
specifically the motion for reconsideration dated November 29, 1960, by
contending that under Commonwealth Act 103, as amended, only a
decision or award or order of the trial judge shall be subject to
reconsideration by the court in banc; that under Section 7 of the same Act,
the court may "refrain from hearing further or from determining the
dispute or part thereof, where it is trivial or where further proceedings by
the Court are not necessary or desirable"; and that in view of petitioner's
failure to appeal therefrom in due time, such resolution became final 10
days thereafter.1äwphï1.ñët

It does not appear from the records when petitioner Gualberto Cruz was
served copy of the so-called resolution of the court en banc, together with
the concurring and dissenting opinions. At any rate, the fact remains that
on November 29, 1960, he filed a motion for reconsideration thereof which
was not acted upon by the respondent court notwithstanding our
resolution in the certiorari case instituted by Cruz (G.R. No. L-17736). The
lower court can not void its duty to settle this matter of attorney's fees by
saying that only a decision or order or award of a trial judge is subject to
motion for reconsideration. A motion for reconsideration of the resolution
of the court en banc is a proper matter for consideration by the court and
should be acted upon one way or another, specially where, as in this case,
the resolution is not supported by a majority and the motion is not trivial
and in fact requires further proceedings.

Although as heretofore stated, this is an action for mandamus, prohibition

and certiorari, primarily to compel the respondent court to act on
petitioner's motion for reconsideration of November 29, 1960,
nevertheless, in view of the inaction of the court, notwithstanding the
repeated petitions to pass upon the motions in question which could be
interpreted as an insistence on or adherence to the judges' respective
previous rulings and, therefore, a denial of the motion for reconsideration,
and considering that we have here already before us all the records of the
case, it is believed that the interest of justice would be better subserved if
the present petition would be treated as one for review.

Going over the evidence presented in this case, we find reason to sustain
the finding of the trial judge that petitioner Cruz bore the brunt of the
prosecution of the employees' claim to its successful end. It was petitioner
who attended the daily hearings, presented witnesses, filed the various
pleadings and conducted the appeal to this Court of the original case. It is
true that in the so-called manifestation dated December 20, 1956, the
employees supposedly appointed Atty. Rafael their "exclusive" counsel,
yet it appears that said pleading was actually filed in the Industrial Court
only on February 28, 1957, or after the favorable decision to the employees
was made known. It is not difficult to see that it was more of a devise to
deprive petitioner Cruz of what would be due him as attorney's fees.

Petitioner's claim to 50% of the amount recoverable by the employees can

not, however, be sustained. Written contract of services between a lawyer
and his client, may be modified by the court where the stipulated fee
would be found unreasonable considering the nature of the
services.6 Taking into account the fact that one judge of the respondent
Court voted to give 30%, which is the ordinary percentage awarded by said
court in previous cases, and two voted to give petitioner 50%, and
considering the nature of the case and the length of time said petitioner
handled the same, an award of attorney's fees to petitioner Cruz,
computed at 30% is deemed reasonable.

As above modified, the resolution of September 20, 1960, is hereby

affirmed, without costs. So ordered.

Lizardo Sr vs Montano GR No. 138882, May 12, 2000

The case before the Court is an appeal from a decision of the Court of
Appeals dismissing the petition instituted by petitioner for annulment of an
order of execution requiring him to pay respondent attorney‟s fees of 25%
on the property and/or to direct the Register of Deeds of Marikina to
annotate the attorney‟s lien on the title, notwithstanding the obvious merit
of the petition invoking the ground that the lower court had lost
jurisdiction over the case as the judgment had become final and indeed,
had been executed more than ten years prior to the order to pay attorney‟s
fees and such order was a substantial variation of the final judgment.

On April 08, 1983, the Regional Trial Court, Kalookan City, Branch 125 in
Civil Case No. C-9009, instituted by petitioner Jose S. Lizardo, Sr. against
one Eddie H. Mirano, for collection of a sum of money, rendered decision
in favor of petitioner, the dispositive portion of which reads as
follows:chanroblesvirtual|awlibrary

"WHEREFORE, premises considered and pursuant to Sec. 1, Rule 19 of the

Rules of Court, judgment is hereby rendered on the pleading and the
defendant is ordered to pay the plaintiff as follows:jgc:chanrobles.com.ph

"(a) the sum of P19,893.95 as principal obligation plus 12% interest per
annum from August 25, 1980 the date the obligation became due and
demandable until fully paid;

"(b) the sum equivalent to 25% of the amount payable under paragraph (a)
as attorney‟s fees; and

"(c) costs of suit." (Emphasis supplied)

No appeal from the judgment was interposed in the case, and in time, the
decision became final and executory.

On October 24, 1985, the trial court issued a writ of execution of the
judgment. In due course, the Deputy Sheriff of Kalookan City levied on a
parcel of land, with an area of ten thousand square meters, registered in
the names of spouses Edgardo H. Mirano and Adelina C. Ponce, situated in
the municipality of Antipolo, province of Rizal, covered by Transfer
Certificate of Title No. 357965. In the consequent execution sale at public
auction of the property, the sheriff sold the land to petitioner Lizardo as
the highest bidder. His bid was in the amount of P442,392.47, the full
amount of the judgment debt of Eddie H. Mirano. 1

On March 14, 1986, the trial court ordered the Register of Deeds of
Marikina to consolidate the title to the property in petitioner‟s name, and
on September 9, 1986, the Register of Deeds issued TCT No. 122925 in
petitioner Lizardo‟s name. 2
On January 5, 1996, thirteen (13) years after the case had been decided,
and more than ten years after the judgment was fully satisfied,
respondent Atty. Carmelito A. Montano who was the lawyer for petitioner,
filed with the trial court an omnibus motion for payment of his attorney‟s
fees. Without hearing petitioner, on January 29, 1996, the trial court, at this
time presided over by Judge Geronimo S. Mangay issued an order
directing petitioner to pay respondent attorney "the agreed attorney‟s fees
of 25% on the property and/or direct the Register of Deeds of Marikina to
annotate the attorney‟s lien of 25% on TCT No. 122925 if plaintiff (herein
petitioner) fails to pay the equivalent value to which Atty. Carmelito A.
Montano is entitled to." 3

On July 30, 1997, petitioner elevated the case to the Court of Appeals, filing
an action to nullify the lower court‟s order directing petitioner to pay
attorney‟s fees of Respondent. 4

On October 20, 1998, the Court of Appeals promulgated its decision

dismissing the petition. 5

Hence, this appeal via petition for review on certiorari. 6

The basic issue raised is whether the Court of Appeals erred, as a matter
of law, in ruling that the trial court still had jurisdiction over the case in
1996, when the respondent judge ordered petitioner to pay attorney‟s fees
to respondent which was even at variance with the terms of the final
judgment.chanrobles.com : virtual law library

We resolve the issue in favor of petitioner. The lower court no longer had
jurisdiction over the case when it issued its order of January 29, 1996.

Rewinding the facts, we note that:chanrob1es virtual 1aw library

On April 08, 1983, the trial court rendered decision on, the decretal portion
of which is quoted earlier in this decision.

There was no appeal interposed by the parties. The decision became final
and executory in 1983. In fact, it was executed and fully satisfied in 1985.

On January 5, 1996 respondent Montano who was counsel for petitioner in

the case below filed with the trial court an omnibus motion for payment of
his attorney‟s fees. Without hearing, on January 29, 1996, the trial court,
presided over by respondent Judge Mangay issued an order directing
petitioner Lizardo to pay respondent Atty. Carmelito A. Montano "the
agreed attorney‟s fees of 25% on the property and/or direct the Register of
Deeds of Marikina Branch to annotate the attorney‟s lien of 25% on TCT No.
122925 if plaintiff fails to pay the equivalent value to which Atty. Carmelito
A. Montano is entitled to." chanrobles.com : chanrobles.com.ph

When respondent filed with the trial court an omnibus motion for payment
of attorney‟s fees on January 5, 1996, the trial court no longer had
jurisdiction over the case. More than thirteen (13) years had lapsed after
finality of the judgment. It was even fully satisfied. Consequently, the case
was long terminated and could no longer be revived. The decision has
become stale. The order dated January 26, 1996 is void.

The basic rule is that once a court acquires jurisdiction over a case, it
retains such jurisdiction until the final termination of the case. 7

The court loses jurisdiction upon the finality of the decision, except to
order execution within its lifetime. 8 A decision becomes final upon the
expiration of the period to appeal, 9 which is uniformly fixed at fifteen (15)
days from notice to the parties, 10 and no appeal is taken therefrom. 11

What is more, an equally fundamental precept is that a final decision

cannot be amended or corrected except for clerical errors, mistakes or
misprisions. 12

In this case, the trial court favorably acted on respondent‟s motion filed in
1996, long after the court had lost its jurisdiction. The order even varied
the terms of the judgment.

The judgment ordered defendant Mirano to pay plaintiff the sum of

P19,893.95 as principal plus 12% interest per annum from August 25, 1980
until fully paid and the sum equivalent to 25% of the amount payable as
attorney‟s fees. Clearly, it was defendant Mirano who was sentenced to
pay attorney‟s fees to petitioner. In the questioned order of January 29,
1996, the trial court ordered petitioner to pay attorney‟s fees to his
counsel, respondent Montano. That is not decreed in the judgment. Such
variance with the terms of the judgment rendered the order void. 13 If
petitioner failed to pay his counsel attorney‟s fees, the lawyer may file an
independent action against petitioner for collection. He cannot enforce his
attorney‟s lien in the case terminated long ago.

WHEREFORE, the Court GRANTS the petition for review on certiorari, and
REVERSES the decision in CA-G. R. SP No. 44817 of the Court of Appeals.
The Court declares void the order dated January 29, 1996 in Civil Case No.
C-9009 of the trial court.

No costs.

SO ORDERED.chanrobles virtual lawlibrary

Canon 21

A LAWYER SHALL PRESERVE THE CONFIDENCE AND SECRETS OF HIS

CLIENT EVEN AFTER THE ATTORNEY-CLIENT RELATION IS TERMINATED.

Rule 21.01 - A lawyer shall not reveal the confidences or secrets of his
client except;
(a) When authorized by the client after acquainting him of the
consequences of the disclosure;
(b) When required by law;
(c) When necessary to collect his fees or to defend himself, his employees
or associates or by judicial action.

Rule 21.02 - A lawyer shall not, to the disadvantage of his client, use
information acquired in the course of employment, nor shall he use the
same to his own advantage or that of a third person, unless the client with
full knowledge of the circumstances consents thereto.

Rule 21.03 - A lawyer shall not, without the written consent of his client,
give information from his files to an outside agency seeking such
information for auditing, statistical, bookkeeping, accounting, data
processing, or any similar purpose.

Rule 21.04 - A lawyer may disclose the affairs of a client of the firm to
partners or associates thereof unless prohibited by the client.

Rule 21.05 - A lawyer shall adopt such measures as may be required to

prevent those whose services are utilized by him, from disclosing or using
confidences or secrets of the clients.

Rule 21.06 - A lawyer shall avoid indiscreet conversation about a client's

affairs even with members of his family.

Rule 21.07 - A lawyer shall not reveal that he has been consulted about a
particular case except to avoid possible conflict of interest.
Canon 22

A LAWYER SHALL WITHDRAW HIS SERVICES ONLY FOR GOOD CAUSE

AND UPON NOTICE APPROPRIATE IN THE CIRCUMSTANCES.

Rule 22.01 - A lawyer may withdraw his services in any of the following
case:chanroblesvirtuallawlibrary
(a) When the client pursues an illegal or immoral course of conduct in
connection with the matter he is handling;
(b) When the client insists that the lawyer pursue conduct violative of
these canons and rules;
(c) When his inability to work with co-counsel will not promote the best
interest of the client;
(d) When the mental or physical condition of the lawyer renders it difficult
for him to carry out the employment effectively;
(e) When the client deliberately fails to pay the fees for the services or
fails to comply with the retainer agreement;
(f) When the lawyer is elected or appointed to public office; and
(g) Other similar cases.

Rule 22.02 - A lawyer who withdraws or is discharged shall, subject to a

retainer lien, immediately turn over all papers and property to which the
client is entitled, and shall cooperative with his successor in the orderly
transfer of the matter, including all information necessary for the proper
handling of the matter.
Orcino vs Gaspar, AC No. 3373, September 24, 1997

On June 14, 1992, complainant Angelita C. Orcino filed with this Court a
letter-complaint dated December 10, 1991 against respondent Atty. Josue
Gaspar, her former counsel. Complainant prayed that this Court impose
disciplinary sanctions on respondent for abandoning his duties and for
failing to return the legal fees she fully paid for his services.

The complaint arose from the following facts: Complainant engaged the
services of respondent to prosecute a criminal case she intended to file
against several suspects in the slaying of her husband. In consideration
thereof, complainant bound herself to pay respondent legal fees
of P20,000.00 -- P10,000.00 to be paid upon signing of the contract and the
balance to be paid on or before the conclusion of the case. Complainant
was also to pay P500.00 per appearance of respondent before the court
and fiscal. This agreement was embodied in a contract executed on
February 22, 1991.1chanroblesvirtuallawlibrary

In accordance with the contract, complainant paid respondent the sum

of P5,000.00 on February 25, 1991,2 another P5,000.00 on March 31,
1991,3 and P10,000.00 on May 21, 1991,4 for a total of P20,000.00.

Forthwith, respondent entered into his duties. He interviewed witnesses

and gathered evidence to build a case against the suspects. He drew up
the necessary sworn statements and dutifully attended the preliminary
investigation. The case was thereafter filed with the Regional Trial Court,
Branch 37, Baloc, Sto. Domingo, Nueva Ecija.5chanroblesvirtuallawlibrary

As private prosecutor, respondent religiously attended the bail hearings

for the accused although these hearings were postponed on motion of the
accused's counsel. Respondent however failed to attend the hearing
scheduled in August 1991. It was at this hearing that the court, over
complainant's objections, granted bail to all the accused. After the hearing,
complainant immediately went to respondent's residence and confronted
him with his absence.6 Respondent explained that he did not receive
formal notice of the hearing.7 Complainant became belligerent and started
accusing him of jeopardizing the case by his absence. Respondent said
that her suspicions were based on rumors and intrigues fed to her by her
relatives.8 Complainant, however, continued accusing him belligerently.
She asked for the records of the case saying that she could refer them to
another lawyer. Stung by her words, respondent gave her the
records.9chanroblesvirtuallawlibrary

Complainant never returned the records nor did she see respondent. On
September 18, 1991, respondent filed before the trial court a "Motion to
Withdraw as Counsel."10 The motion did not bear the consent of
complainant.

On October 23, 1991, the court issued an order directing respondent to

secure complainant's consent to the motion "and his appearance as
private prosecutor shall continue until he has secured this
consent."11chanroblesvirtuallawlibrary

Complainant refused to sign her conformity to respondent's

withdrawal.12 Meanwhile, the hearings in the criminal case continued.
Respondent did not appear at the hearings nor did he contact complainant.
Complainant was thus compelled to engage the services of another
lawyer. Hence, the letter-complaint.

We referred the letter-complaint to the Integrated Bar of the Philippines,

Commission on Bar Discipline, for investigation, report and
recommendation.

The rule in this jurisdiction is that a client has the absolute right to
terminate the attorney-client relation at any time with or without
cause.13 The right of an attorney to withdraw or terminate the relation
other than for sufficient cause is, however, considerably
restricted.14 Among the fundamental rules of ethics is the principle that an
attorney who undertakes to conduct an action impliedly stipulates to carry
it to its conclusion.15 He is not at liberty to abandon it without reasonable
cause.16 A lawyer's right to withdraw from a case before its final
adjudication arises only from the client's written consent or from a good
cause.17chanroblesvirtuallawlibrary

Section 26 of Rule 138 of the Revised Rules of Court provides:

"Sec. 26. Change of attorneys -- An attorney may retire at any time

from any action or special proceeding, by the written consent of his
 client filed in court. He may also retire at any time from an action or
special proceeding, without the consent of his client, should the
court, on notice to the client and attorney, and on hearing,
determine that he ought to be allowed to retire. In case of
substitution, the name of the attorney newly employed shall be
entered on the docket of the court in place of the former one, and
written notice of the change shall be given to the adverse party.

x x x."

A lawyer may retire at any time from any action or special proceeding with
the written consent of his client filed in court and copy thereof served
upon the adverse party. Should the client refuse to give his consent, the
lawyer must file an application with the court. The court, on notice to the
client and adverse party, shall determine whether he ought to be allowed
to retire. The application for withdrawal must be based on a good
cause.18chanroblesvirtuallawlibrary

In the instant case, complainant did not give her written consent to
respondent's withdrawal. The court thus ordered respondent to secure
this consent. Respondent allegedly informed the court that complainant
had become hostile and refused to sign his motion.19 He, however, did not
file an application with the court for it to determine whether he should be
allowed to withdraw.

Granting that respondent's motion without complainant's consent was an

application for withdrawal with the court, we find that this reason is
insufficient to justify his withdrawal from the case. Respondent's
withdrawal was made on the ground that "there no longer exist[ed] the
xxx confidence" between them and that there had been "serious
diffferences between them relating to the manner of private
prosecution."20chanroblesvirtuallawlibrary

Rule 22.01 of Canon 22 of the Code of Professional Responsibility provides:

"CANON 22 -- A LAWYER SHALL WITHDRAW HIS SERVICES ONLY FOR

GOOD CAUSE AND UPON NOTICE APPROPRIATE IN THE CIRCUMSTANCES.
Rule 22.01-- A lawyer may withdraw his services in any of the following
cases:

a) When the client pursues an illegal or immoral course of conduct in

connection with the matter he is handling;

b) When the client insists that the lawyer pursue conduct violative of these
canons and rules;

c) When his inability to work with co-counsel will not promote the best
interest of the client;

d) When the mental or physical condition of the lawyer renders it difficult

for him to carry out the employment effectively;

e) When the client deliberately fails to pay the fees for the services or fails
to comply with the retainer agreement;

f) When the lawyer is elected or appointed to public office; and

g) Other similar cases."

A lawyer may withdraw his services from his client only in the following
instances: (a) when a client insists upon an unjust or immoral conduct of
his case; (b) when the client insists that the lawyer pursue conduct
violative of the Code of Professional Responsibility; (c) when the client has
two or more retained lawyers and the lawyers could not get along to the
detriment of the case; (d) when the mental or physical condition of the
lawyer makes him incapable of handling the case effectively; (e) when the
client deliberately fails to pay the attorney's fees agreed upon; (f) when
the lawyer is elected or appointed to public office; (g) other similar cases.

The instant case does not fall under any of the grounds mentioned. Neither
can this be considered analogous to the grounds enumerated. As found by
the Commission on Bar Discipline, this case arose from a simple
misunderstanding between complainant and respondent. Complainant was
upset by respondent's absence at the hearing where bail was granted to
the suspected killers of her husband. She vehemently opposed the grant
of bail. It was thus a spontaneous and natural reaction for her to confront
respondent with his absence. Her belligerence arose from her
overzealousness, nothing more. Complainant's words and actions may
have hurt respondent's feelings considering the work he had put into the
case. But her words were uttered in a burst of passion. And even at that
moment, complainant did not expressly terminate respondent's services.
She made this clear when she refused to sign his "Motion to Withdraw as
Counsel."

Assuming, nevertheless, that respondent was justified in terminating his

services, he, however, cannot just do so and leave complainant in the cold
unprotected. The lawyer has no right to presume that his petition for
withdrawal will be granted by the court.21 Until his withdrawal shall have
been approved, the lawyer remains counsel of record who is expected by
his client as well as by the court to do what the interests of his client
require.22 He must still appear on the date of hearing23 for the attorney-
client relation does not terminate formally until there is a withdrawal of
record.24chanroblesvirtuallawlibrary

Respondent expressly bound himself under the contract to bring the

criminal case to its termination. He was in fact paid in full for his services.
Respondent failed to comply with his undertaking, hence, it is but fair that
he return to complainant half of the amount paid him. The peculiar
circumstances of the case have rendered it impossible for respondent and
complainant to continue their relation under the contract.

IN VIEW WHEREOF, respondent is admonished to exercise more prudence

and judiciousness in dealing with his clients. He is also ordered to return
to complainant within fifteen (15) days from notice the amount of ten
thousand pesos (P10,000.00) representing a portion of his legal fees
received from the latter with a warning that failure on his part to do so
will result in the imposition of stiffer disciplinary action.

SO ORDERED.