[G.R. No. 105938.  September 20, 1996]

TEODORO R. REGALA, EDGARDO J. ANGARA, AVELINO V. CRUZ, JOSE C. CONCEPCION, ROGELIO A. VINLUAN, VICTOR P. LAZATIN, and EDUARDO U. ESCUETA, petitioners, vs. THE HONORABLE SANDIGANBAYAN, First Division, REPUBLIC OF THE PHILIPPINES, ACTING THROUGH THE PRESIDENTIAL COMMISSION ON GOOD GOVERNMENT, and RAUL S. ROCO, respondents.

[G.R. No. 108113.  September 20, 1996]

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

D E C I S I O N

KAPUNAN, J.:

These cases touch the very cornerstone of every State's judicial system, upon which the workings of the contentious and adversarial system in the Philippine legal process are based - the sanctity of fiduciary duty in the client-lawyer relationship.  The fiduciary duty of a counsel and advocate is also what makes the law profession a unique position of trust and confidence, which distinguishes it from any other calling.  In this instance, we have no recourse but to uphold and strengthen the mantle of protection accorded to the confidentiality that proceeds from the performance of the lawyer's duty to his client.

The facts of the case are undisputed.

The matters raised herein are an offshoot of the institution of the Complaint on July 31, 1987 before the Sandiganbayan by the Republic of the Philippines, through the Presidential Commission on Good Government against Eduardo M. Cojuangco, Jr., as one of the principal defendants, for the recovery of alleged ill-gotten wealth, which includes shares of stocks in the named corporations in PCGG Case No. 33 (Civil Case No. 0033), entitled "Republic of the Philippines versus Eduardo Cojuangco, et al."[1]

Among the defendants named in the case are herein petitioners Teodoro Regala, Edgardo J. Angara, Avelino V. Cruz, Jose C. Concepcion, Rogelio A. Vinluan, Victor P. Lazatin, Eduardo U. Escueta and Paraja G. Hayudini, and herein private respondent Raul S. Roco, who all were then partners of the law firm Angara, Abello, Concepcion, Regala and Cruz Law Offices (hereinafter referred to as the ACCRA Law Firm).  ACCRA Law Firm performed  legal services for its clients, which  included, among others, the organization and acquisition of business associations and/or organizations, with the correlative and incidental services where its members acted as incorporators, or simply, as stockholders.  More specifically, in the performance of these services, the members of the law firm delivered to its client documents which substantiate the client's equity holdings, i.e., stock certificates endorsed in blank representing the shares registered in the client's name, and a blank deed of trust or assignment covering said shares.  In the course of their dealings with their clients, the members of the law firm acquire information relative to the assets of clients as well as their personal and business circumstances.   As members of the ACCRA Law Firm, petitioners and private respondent Raul Roco admit that they assisted in the organization and acquisition of the companies included in Civil Case No. 0033, and in keeping with the office practice, ACCRA lawyers acted as nominees-stockholders of the said corporations involved in sequestration proceedings.[2]

On August 20, 1991, respondent Presidential Commission on Good Government (hereinafter referred to as respondent PCGG) filed a "Motion to Admit Third Amended Complaint" and "Third Amended Complaint" which excluded  private respondent Raul S. Roco  from  the  complaint in PCGG Case No. 33 as party-defendant.[3] Respondent PCGG based its exclusion of private respondent Roco as party-defendant on his undertaking that he will reveal the identity of the principal/s for whom he acted as nominee/stockholder in the companies involved in PCGG Case No. 33.[4]

Petitioners were included in the Third Amended Complaint on the strength of the following allegations:

14.            Defendants Eduardo Cojuangco, Jr., Edgardo J. Angara, Jose C. Concepcion, Teodoro Regala, Avelino V. Cruz, Rogelio A. Vinluan, Eduardo U. Escueta, Paraja G. Hayudini and Raul Roco of the Angara Concepcion Cruz Regala and Abello law offices (ACCRA) plotted, devised, schemed.  conspired and confederated with each other in setting up, through the use of the coconut levy funds, the financial and corporate framework and structures that led to the establishment of UCPB, UNICOM, COCOLIFE, COCOMARK, CIC, and more than twenty other coconut levy funded corporations, including the acquisition of San Miguel Corporation shares and its institutionalization through presidential directives of the coconut monopoly.  Through insidious means and machinations, ACCRA, being the wholly-owned investment arm, ACCRA Investments Corporation, became the holder of approximately fifteen million shares representing roughly 3.3% of the total outstanding capital stock of UCPB as of 31 March 1987.  This ranks ACCRA Investments Corporation number 44 among the top 100 biggest stockholders of UCPB which has approximately 1,400,000 shareholders.  On the other hand, corporate books show the name Edgardo J. Angara as holding approximately 3,744 shares as of February, 1984.[5]

In their answer to the Expanded Amended Complaint, petitioners ACCRA lawyers alleged that:

4.4.  Defendants-ACCRA lawyers’ participation in the acts with which their co-defendants are charged, was in furtherance of legitimate lawyering.

4.4.1.  In the course of rendering professional and legal services to clients, defendants-ACCRA lawyers, Jose C. Concepcion, Teodoro D. Regala, Rogelio A. Vinluan and Eduardo U. Escueta, became holders of shares of stock in the corporations listed under their respective names in Annex ‘A’ of the expanded Amended Complaint as incorporating or acquiring stockholders only and, as such, they do not claim any proprietary interest in the said shares of stock.

4.5.  Defendant ACCRA-lawyer Avelino V. Cruz was one of the incorporators in 1976 of Mermaid Marketing Corporation, which was organized for legitimate business purposes not related to the allegations of the expanded Amended Complaint.  However, he has long ago transferred any material interest therein and therefore denies that the ‘shares’ appearing in his name in Annex ‘A’ of the expanded Amended Complaint are his assets.[6]

Petitioner Paraja Hayudini, who had separated from ACCRA law firm, filed a separate answer denying the allegations in the complaint implicating him in the alleged ill-gotten wealth.[7]

Petitioners ACCRA lawyers subsequently filed their "COMMENT AND/OR OPPOSITION" dated October 8, 1991 with Counter-Motion that respondent PCGG similarly grant the same treatment to them (exclusion as parties-defendants) as accorded private respondent Roco. [8] The Counter-

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Motion for dropping petitioners from the complaint was duly set for hearing on October 18, 1991 in accordance with the requirements of Rule 15 of the Rules of Court.

In its "Comment," respondent PCGG set the following conditions precedent for the exclusion of petitioners, namely:  (a) the disclosure of the identity of its clients; (b) submission of documents substantiating the lawyer-client relationship; and (c) the submission of the deeds of assignments petitioners executed in favor of its clients covering their respective shareholdings.[9]

Consequently, respondent PCGG presented supposed proof to substantiate compliance by private respondent Roco of the conditions precedent to warrant the latter's exclusion as party-defendant in PCGG Case No. 33, to wit: (a) Letter to respondent PCGG of the counsel of respondent Roco dated May 24, 1989 reiterating a previous request for reinvestigation by the PCGG  in PCGG Case No. 33; (b) Affidavit dated March 8, 1989 executed by private respondent Roco as Attachment to the letter aforestated in (a); and (c) Letter of the Roco, Bunag, and Kapunan Law Offices dated September 21, 1988 to the respondent PCGG in behalf of private respondent Roco originally requesting the reinvestigation and/or re-examination of the evidence of the PCGG against Roco in its  Complaint in PCGG Case No. 33.[10]

It is noteworthy that during said proceedings, private respondent Roco did not refute petitioners' contention that he did actually not reveal the identity of the client involved in PCGG Case No. 33, nor had he undertaken to reveal the identity of the client for whom he acted as nominee-stockholder.[11]

On March 18, 1992, respondent Sandiganbayan promulgated the Resolution, herein questioned, denying the exclusion of petitioners in PCGG Case No. 33, for their refusal to comply with the conditions required by respondent PCGG.  It held:

x x x.

ACCRA lawyers may take the heroic stance of not revealing the identity of the client for whom they have acted, i.e. their principal, and that will be their choice.  But until they do identify their clients, considerations of whether or not the privilege  claimed  by  the  ACCRA  lawyers  exists cannot even begin to be debated.  The ACCRA lawyers cannot excuse themselves from the  consequences  of their acts until they have begun to establish the basis for recognizing the privilege; the existenceand identity of the client.

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

5.  The PCGG is satisfied that defendant Roco has demonstrated his agency and that Roco has apparently identified his principal, which revelation could show the lack of cause  against him.  This in turn has allowed the PCGG to exercise its power both under the rules of Agency and under Section 5 of E.O. No. 14-A in relation to the Supreme Court's ruling in Republic v. Sandiganbayan (173 SCRA 72).

The PCGG has apparently offered to the ACCRA lawyers the same conditions availed of by Roco; full disclosure in exchange for exclusion from these proceedings (par. 7, PCGG's COMMENT dated November 4, 1991).  The ACCRA lawyers have preferred not to make the disclosures required by the PCGG.

The ACCRA lawyers cannot, therefore, begrudge the PCGG for keeping them as party defendants.  In the same vein, they cannot compel the PCGG to be accorded the same treatment accorded to Roco.

Neither can this Court.

WHEREFORE, the Counter Motion dated October 8, 1991 filed by the ACCRA lawyers and joined in by Atty. Paraja G. Hayudini for the same treatment by the PCGG as accorded to Raul S. Roco is DENIED for lack of merit.[12]

ACCRA lawyers moved for a reconsideration of the above resolution but the same was denied by the respondent Sandiganbayan.  Hence, the ACCRA lawyers filed the petition for certiorari, docketed as G.R. No. 105938, invoking the following grounds:

I

The Honorable Sandiganbayan gravely abused its discretion in subjecting petitioners ACCRA lawyers who undisputably acted as lawyers in serving as nominee-stockholders, to the strict application of the law of agency.

II

The Honorable Sandiganbayan committed grave abuse of discretion  in not considering petitioners ACCRA lawyers and Mr. Roco as similarly situated and, therefore, deserving of equal treatment.

1.  There is absolutely no evidence that Mr. Roco had revealed, or had undertaken to reveal, the identities of the client(s) for whom he acted as nominee-stockholder.

2.  Even assuming that Mr. Roco had revealed, or had undertaken to reveal, the identities of the client(s), the disclosure does not constitute a substantial distinction as would make the classification reasonable under the equal protection clause.

3.  Respondent Sandiganbayan sanctioned favoritism and undue preference in favor of Mr. Roco in violation of the equal protection clause.

III

The Honorable Sandiganbayan committed grave abuse of discretion in not holding that, under the facts of this case, the attorney-client privilege prohibits petitioners ACCRA lawyers from revealing the identity of their client(s) and the other information requested by the PCGG.

1.  Under the peculiar facts of this case, the attorney-client privilege includes the identity of the client(s).

2.  The factual disclosures required by the PCGG are not limited to the identity of petitioners ACCRA lawyers' alleged client(s) but extend to other privileged matters.

IV

The Honorable Sandiganbayan committed grave abuse of discretion in not requiring that the dropping of party-defendants by the PCGG must be based on reasonable and just grounds and with due consideration to the constitutional right of petitioners ACCRA lawyers to the equal protection of the law.

Petitioner Paraja G. Hayudini, likewise, filed his own motion for reconsideration of the March 18, 1991 resolution which was denied by respondent Sandiganbayan.  Thus, he filed a separate petition for certiorari, docketed as G.R. No. 108113, assailing respondent Sandiganbayan's resolution on essentially the same grounds averred by petitioners in G.R. No. 105938.

Petitioners contend that the exclusion of respondent Roco as party-defendant in PCGG Case No. 33 grants him a favorable treatment, on the pretext of his alleged undertaking to

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divulge the identity of his client, giving him an advantage over them who are in the same footing as partners in the ACCRA law firm.  Petitioners further argue that even granting that such an undertaking has been assumed by private respondent Roco, they are prohibited from revealing the identity of their principal under their sworn mandate and fiduciary duty as lawyers to uphold at all times the confidentiality of information obtained during such lawyer-client relationship.

Respondent PCGG, through its counsel, refutes petitioners' contention, alleging that the revelation of the identity of the client is not within the ambit of the lawyer-client confidentiality privilege, nor are the documents it required (deeds of assignment) protected, because they are evidence of nominee status.[13]

In his comment, respondent Roco asseverates that respondent PCGG acted correctly in excluding him as party-defendant because he "(Roco) has not filed an Answer.     PCGG had therefore the right to dismiss Civil Case No. 0033 as to Roco `without an order of court by filing a notice of dismissal,'"[14] and he has undertaken to identify his principal.[15]

Petitioners' contentions are impressed with merit.

I

It is quite apparent that petitioners were impleaded by the PCGG as co-defendants to force them to disclose the identity of their clients.  Clearly, respondent PCGG is not after petitioners but the “bigger fish” as they say in street parlance.  This ploy is quite clear from the PCGG’s willingness to cut a deal with petitioners -- the names of their clients in exchange for exclusion from the complaint.  The statement of the Sandiganbayan in its questioned resolution dated March 18, 1992 is explicit:

ACCRA lawyers may take the heroic stance of not revealing the identity of the client for whom they have acted, i.e., their principal, and that will be their choice.  But until they do identify their clients, considerations of whether or not the privilege claimed by the ACCRA lawyers exists cannot even begin to be debated.  The ACCRA lawyers cannot excuse themselves from the consequences of their acts until they have begun to establish the basis for recognizing the privilege; the existence and identity of the client.

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

In a closely related case, Civil Case No. 0110 of the Sandiganbayan, Third Division, entitled “Primavera Farms, Inc., et al. vs. Presidential Commission on Good Government” respondent PCGG, through counsel Mario Ongkiko, manifested at the hearing on December 5, 1991 that the PCGG wanted to establish through the ACCRA that their “so called client is Mr. Eduardo Cojuangco”; that “it was Mr. Eduardo Cojuangco who furnished all the monies to those subscription payments in corporations included in Annex “A” of the Third Amended Complaint; that the ACCRA lawyers executed deeds of trust and deeds of assignment, some in the name of particular persons, some in blank.

We quote Atty. Ongkiko:

ATTY. ONGKIKO:

With the permission of this Hon. Court.  I propose to establish through these ACCRA lawyers that, one, their so-called client is Mr. Eduardo Cojuangco.  Second, it was Mr. Eduardo Cojuangco who furnished all the monies to these subscription payments of these corporations who are now the petitioners in this case.  Third, that these lawyers executed deeds of trust, some in the name of a particular person, some in blank.  Now, these blank deeds are important to our claim that some of the shares are actually being held by the nominees for the late President Marcos.  Fourth, they also executed deeds of assignment and some of these assignments have also blank assignees.  Again, this is important to our claim that some of the shares are for Mr.

Cojuangco and some are for Mr. Marcos.  Fifth, that most of these corporations are really just paper corporations.  Why do we say that?  One:  There are no really fixed sets of officers, no fixed sets of directors at the time of incorporation and even up to 1986, which is the crucial year.  And not only that, they have no permits from the municipal authorities in Makati.  Next, actually all their addresses now are care of Villareal Law Office.  They really have no address on records.  These are some of the principal things that we would ask of these nominees stockholders, as they called themselves.[16]

It would seem that petitioners are merely standing in for their clients as defendants in the complaint.  Petitioners are being prosecuted solely on the basis of activities and services performed in the course of their duties as lawyers.  Quite obviously, petitioners’ inclusion as co-defendants in the complaint is merely being used as leverage to compel them to name their clients and consequently to enable the PCGG to nail these clients.  Such being the case, respondent PCGG has no valid cause of action as against petitioners and should exclude them from the Third Amended Complaint.

II

The nature of lawyer-client relationship is premised on the Roman Law concepts of locatio conductio operarum (contract of lease of services) where one person lets his services and another hires them without reference to the object of which the services are to be performed, wherein lawyers' services may be compensated by honorarium or for hire,[17] and mandato (contract of agency) wherein a friend on whom reliance could be placed makes a contract in his name, but gives up all that he gained by the contract to the person who requested him.[18] But the lawyer-client relationship is more than that of the principal-agent and lessor-lessee.

In modern day perception of the lawyer-client relationship, an attorney is more than a mere agent or servant, because he possesses special powers of trust and confidence reposed on him by his client.[19] A lawyer is also as independent as the judge of the court, thus his powers are entirely different from and superior to those of an ordinary agent. [20] Moreover, an attorney also occupies what may be considered as a "quasi-judicial office" since he is in fact an officer of the Court[21] and exercises his judgment in the choice of courses of action to be taken favorable to his client.

Thus, in the creation of lawyer-client relationship, there are rules, ethical conduct and duties that breathe life into it, among those, the fiduciary duty to his client which is of a very delicate, exacting and confidential character, requiring a very high degree of fidelity and good faith,[22] that is required by reason of necessity and public interest [23] based on the hypothesis that abstinence from seeking legal advice in a good cause is an evil which is fatal to the administration of justice.[24]

It is also the strict sense of fidelity of a lawyer to his client that distinguishes him from any other professional in society.  This conception is entrenched and embodies centuries of established and stable tradition.[25] In Stockton v. Ford,[26] the U.S. Supreme Court held:

There are few of the business relations of life involving a higher trust and confidence than that of attorney and client, or generally speaking, one more honorably and faithfully discharged; few more anxiously guarded by the law, or governed by the sterner principles of morality and justice; and it is the duty of the court to administer them in a corresponding spirit, and to be watchful and industrious, to see that confidence thus reposed shall not be used to the detriment or prejudice of the rights of the party bestowing it.[27]

In our jurisdiction, this privilege takes off from the old Code of Civil Procedure enacted by the Philippine Commission on August 7, 1901.  Section 383 of the Code specifically “forbids counsel, without authority of his client to reveal any communication made by the client to him or his advice given thereon in the course of professional employment.” [28] Passed on into various provisions of the Rules of Court, the attorney-client privilege, as currently worded provides:

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Sec. 24.  Disqualification by reason of privileged communication. - The following persons cannot testify as to matters learned in confidence in the following cases:

x x x

An attorney cannot, without the consent of his client, be examined as to any communication made by the client to him, or his advice given thereon in the course of, or with a view to, professional employment, can an attorney’s secretary, stenographer, or clerk be examined, without the consent of the client and his employer, concerning any fact the knowledge of which has been acquired in such capacity.[29]

Further, Rule 138 of the Rules of Court states:

Sec. 20.  It is the duty of an attorney:

(e) to maintain inviolate the confidence, and at every peril to himself, to preserve the secrets of his client, and to accept no compensation in connection with his client’s business except from him or with his knowledge and approval.

This duty is explicitly mandated in Canon 17 of the Code of Professional Responsibility which provides that:

Canon 17.  A lawyer owes fidelity to the cause of his client  and he shall be mindful of the trust and confidence reposed in him.

Canon 15 of the Canons of Professional Ethics also demands a lawyer's fidelity to client:

The lawyer owes "entire devotion to the interest of the client, warm zeal in the maintenance and defense of his rights and the exertion of his utmost learning and ability," to the end that nothing be taken or be withheld from him, save by the rules of law, legally applied.  No fear of judicial disfavor or public popularity should restrain him from the full discharge of his duty.  In the judicial forum the client is entitled to the benefit of any and every remedy and defense that is authorized by the law of the land, and he may expect his lawyer to assert every such remedy or defense.  But it is steadfastly to be borne in mind that the great trust of the lawyer is to be performed within and not without the bounds of the law.  The office of attorney does not permit, much less does it demand of him for any client, violation of law or any manner of fraud or chicanery.  He must obey his own conscience and not that of his client.

Considerations favoring confidentiality in lawyer-client relationships are many and serve several constitutional and policy concerns.  In the constitutional sphere, the privilege gives flesh to one of the most sacrosanct rights available to the accused, the right to counsel.   If a client were made to choose between legal representation without effective communication and disclosure and legal representation with all his secrets revealed then he might be compelled, in some instances, to either opt to stay away from the judicial system or to lose the right to counsel.  If the price of disclosure is too high, or if it amounts to self incrimination, then the flow of information would be curtailed thereby rendering the right practically nugatory.  The threat this represents against another sacrosanct individual right, the right to be presumed innocent is at once self-evident.

Encouraging full disclosure to a lawyer by one seeking legal services opens the door to a whole spectrum of legal options which would otherwise be circumscribed by limited information engendered by a fear of disclosure.  An effective lawyer-client relationship is largely dependent upon the degree of confidence which exists between lawyer and client which in turn requires a situation which encourages a dynamic and fruitful exchange and flow of information.  It necessarily follows that in order to attain effective representation, the lawyer must invoke the privilege not as a matter of option but as a matter of duty and professional responsibility.

The question now arises whether or not this duty may be asserted in refusing to disclose the name of petitioners' client(s) in the case at bar.  Under the facts and circumstances obtaining in the instant case, the answer must be in the affirmative.

As a matter of public policy, a client’s identity should not be shrouded in mystery.[30] Under this premise, the general rule in our jurisdiction as well as in the United States is that a lawyer may not invoke the privilege and refuse to divulge the name or identity of his client.[31]

The reasons advanced for the general rule are well established.

First, the court has a right to know that the client whose privileged information is sought to be protected is flesh and blood.

Second, the privilege begins to exist only after the attorney-client relationship has been established.  The attorney-client privilege does not attach until there is a client.

Third, the privilege generally pertains to the subject matter of the relationship.

Finally, due process considerations require that the opposing party should, as a general rule, know his adversary.  “A party suing or sued is entitled to know who his opponent is.” [32] He cannot be obliged to grope in the dark against unknown forces.[33]

Notwithstanding these considerations, the general rule is however qualified by some important exceptions.

1)  Client identity is privileged where a strong probability exists that revealing the client’s name would implicate that client in the very activity for which he sought the lawyer’s advice.

In Ex-Parte Enzor,[34] a state supreme court reversed a lower court order requiring a lawyer to divulge the name of her client on the ground that the subject matter of the relationship was so closely related to the issue of the client’s identity that the privilege actually attached to both.    In Enzor, the unidentified client, an election official, informed his attorney in confidence that he had been offered a bribe to violate election laws or that he had accepted a bribe to that end.  In her testimony, the attorney revealed that she had advised her client to count the votes correctly, but averred that she could not remember whether her client had been, in fact, bribed.  The lawyer was cited for contempt for her refusal to reveal his client’s identity before a grand jury.  Reversing the lower court’s contempt orders, the state supreme court held that under the circumstances of the case, and under the exceptions described above, even the name of the client was privileged.

U.S. v. Hodge and Zweig,[35] involved the same exception, i.e. that client identity is privileged in those instances where a strong probability exists that the disclosure of the client's identity would implicate the client in the very criminal activity for which the lawyer’s legal advice was obtained.

The Hodge case involved federal grand jury proceedings inquiring into the activities of the “Sandino Gang,” a gang involved in the illegal importation of drugs in the United States.  The respondents, law partners, represented key witnesses and suspects including the leader of the gang, Joe Sandino.

In  connection with a tax investigation in November of 1973, the IRS issued summons to Hodge and Zweig, requiring them to produce documents and information regarding payment received by Sandino on behalf of any other person, and vice versa.  The lawyers refused to divulge the names.  The Ninth Circuit of the United States Court of Appeals, upholding non-disclosure under the facts and circumstances of the case,  held:

A client’s identity and the nature of that client’s fee arrangements may be privileged where the person invoking the privilege can show that a strong probability exists that disclosure of such information would implicate that client in the very criminal activity for which legal advice was sought Baird v. Koerner, 279 F.2d at 680.  While in Baird Owe enunciated this rule as a

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matter of California law, the rule also reflects federal law.  Appellants contend that the Baird exception applies to this case.

The Baird exception is entirely consonant with the principal policy behind the attorney-client privilege.  “In order to promote freedom of consultation of legal advisors by clients, the apprehension of compelled disclosure from the legal advisors must be removed; hence, the law must prohibit such disclosure except on the client’s consent.”  8 J. Wigmore, supra  sec. 2291, at 545.  In furtherance of this policy, the client’s identity and the nature of his fee arrangements are, in exceptional cases, protected as confidential communications.[36]

2) Where disclosure would open the client to civil liability, his identity is privileged.  For instance, the peculiar facts and circumstances of Neugass v. Terminal Cab Corporation,[37] prompted the New York Supreme Court to  allow a  lawyer’s  claim  to  the  effect  that he could not reveal the name of his client because this would expose the latter to civil litigation.

In the said case, Neugass, the plaintiff, suffered injury when the taxicab she was riding, owned by respondent corporation, collided with a second taxicab, whose owner was unknown.  Plaintiff brought action both against defendant corporation and the owner of the second cab, identified in the information only as John Doe.  It turned out that when the attorney of defendant corporation appeared on preliminary examination, the fact was somehow revealed that the lawyer came to know the name of the owner of the second cab when a man, a client of the insurance company, prior to the institution of legal action, came to him and reported that he was involved in a car accident.  It was apparent under the circumstances that the man was the owner of the second cab.  The state supreme court held that the reports were clearly made to the lawyer in his professional capacity.  The court said:

That his employment came about through the fact that the insurance company had hired him to defend its policyholders seems immaterial.  The attorney in such cases is clearly the attorney for the policyholder when the policyholder goes to him to report an occurrence contemplating that it would be used in an action or claim against him.[38]

x x x                                       xxx                                  xxx.

All communications made by a client to his counsel, for the purpose of professional advice or assistance, are privileged, whether they relate to a suit pending or contemplated, or to any other matter proper for such advice or aid; x x x And whenever the communication made, relates to a matter so connected with the employment as attorney or counsel as to afford presumption that it was the ground of the address by the client, then it is privileged from disclosure.  xxx.

It appears... that the name and address of the owner of the second cab came to the attorney in this case as a confidential communication.  His client is not seeking to use the courts, and his address cannot be disclosed on that theory, nor is the present action pending against him as service of the summons on him has not been effected.  The objections on which the court reserved decision are sustained.[39]

In the case of Matter of Shawmut Mining Company,[40] the lawyer involved was required by a lower court to disclose whether he represented certain clients in a certain transaction.  The purpose of the court’s request was to determine whether the unnamed persons as interested parties were connected with the purchase of properties involved in the action.  The lawyer refused and brought the question to the State Supreme Court.  Upholding the lawyer’s refusal to divulge the names of his clients the court held:

If it can compel the witness to state, as directed by the order appealed from, that he represented certain persons in the purchase or sale of these mines, it has made progress in establishing by such evidence their version of the litigation.  As already suggested, such testimony by the witness would compel him to disclose not only that he was attorney for certain people, but that, as the result of communications made to him in the course of such employment as such attorney, he knew that they were interested in certain transactions.  We feel sure that under such conditions no case has ever gone to the length of compelling an attorney, at the

instance of a hostile litigant, to disclose not only his retainer, but the nature of the transactions to which it related, when such information could be made the basis of a suit against his client. [41]

3) Where the government’s lawyers have no case against an attorney’s client unless, by revealing the client’s name, the said name would furnish the only link that would form the chain of testimony necessary to convict an individual of a crime, the client’s name is privileged.

In Baird vs Korner,[42] a lawyer was consulted by the accountants and the lawyer of certain undisclosed taxpayers regarding steps to be taken to place the undisclosed taxpayers in a favorable position in case criminal charges were brought against them by the U.S. Internal Revenue Service (IRS).

It appeared that the taxpayers’ returns of previous years were probably incorrect and the taxes understated.  The clients themselves were unsure about whether or not they violated tax laws and sought advice from Baird on the hypothetical possibility that they had.  No investigation was then being undertaken by the IRS of the taxpayers.  Subsequently, the attorney of the taxpayers delivered to Baird the sum of $12,706.85, which had been previously assessed as the tax due, and another amount of money representing his fee for the advice given.  Baird then sent a check for $12,706.85 to the IRS in Baltimore, Maryland, with a note explaining the payment, but without naming his clients.  The IRS demanded that Baird identify the lawyers, accountants, and other clients involved.  Baird refused on the ground that he did not know their names, and declined to name the attorney and accountants because this constituted privileged communication.  A petition was filed for the enforcement of the IRS summons.  For Baird’s repeated refusal to name his clients he was found guilty of civil contempt.  The Ninth Circuit Court of Appeals held that, a lawyer could not be forced to reveal the names of clients who employed him to pay sums of money to the government voluntarily in settlement of undetermined income taxes, unsued on, and with no government audit or investigation into that client’s income tax liability pending.  The court emphasized the exception that a client’s name is privileged when so much has been revealed concerning the legal services rendered that the disclosure of the client’s identity exposes him to possible investigation and sanction by government agencies.  The Court held:

The facts of the instant case bring it squarely within that exception to the general rule.  Here  money  was received by the government, paid by persons who  thereby admitted they had not paid a sufficient amount in income taxes some one  or more years in the past.  The names of the clients are useful to the government for but one purpose - to ascertain which taxpayers think they were delinquent, so that it may check the records for that one year or several years.  The voluntary nature of the payment indicates a belief by the taxpayers that more taxes or interest or penalties are due than the sum previously paid, if any.   It indicates a feeling of guilt for nonpayment of taxes, though whether it is criminal guilt is undisclosed.  But it may well be the link that could form the chain of testimony necessary to convict an individual of a federal crime.  Certainly the payment and  the feeling of guilt are the reasons the attorney here involved was employed - to advise his clients what, under the circumstances, should be done.[43]

Apart from these principal exceptions, there exist other situations which could qualify as exceptions to the general rule.

For example, the content of any client communication to a lawyer lies within the privilege if it is relevant to the subject matter of the legal problem on which the client seeks legal assistance.[44] Moreover, where the nature of the attorney-client relationship has been previously disclosed and it is theidentity which is intended to be confidential, the identity of the client has been held to be privileged, since such revelation would otherwise result in disclosure of the entire transaction.[45]

Summarizing these exceptions, information relating to the identity of a client may fall within the ambit of the privilege when the client’s name itself has an independent significance, such that disclosure would then reveal client confidences.[46]

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The circumstances involving the engagement of lawyers in the case at bench, therefore, clearly reveal that the instant case falls under at least two exceptions to the general rule.   First, disclosure of the alleged client's name would lead to establish said client's connection with the very fact in issue of the case, which is privileged information, because the privilege, as stated earlier, protects the subject matter or the substance (without which there would be no attorney-client relationship).

The link between the alleged criminal offense and the legal advice or legal service sought was duly established in the case at bar, by no less than the PCGG itself.   The key lies in the three specific conditions laid down by the PCGG which constitutes petitioners’ ticket to non-prosecution should they accede thereto:

(a)  the disclosure of the identity of its clients;

(b)  submission of documents substantiating the lawyer-client relationship; and

(c)  the submission of the deeds of assignment petitioners executed in favor of their clients covering their respective shareholdings.

From these conditions, particularly the third, we can readily deduce that the clients indeed consulted the petitioners, in their capacity as lawyers, regarding the financial and corporate structure, framework and set-up of the corporations in question.  In turn, petitioners gave their professional advice in the form of, among others, the aforementioned deeds of assignment covering their clients’ shareholdings.

There is no question that the preparation of the aforestated documents was part and parcel of petitioners’ legal service to their clients.  More important, it constituted an integral part of their duties as lawyers.  Petitioners, therefore, have a legitimate fear that identifying their clients would implicate them in the very activity for which legal advice had been sought, i.e., the alleged accumulation of ill-gotten wealth in the aforementioned corporations.

Furthermore, under the third main exception, revelation of the client's name would obviously provide the necessary link for the prosecution to build its case, where none otherwise exists.  It is the link, in the words of Baird, “that would inevitably form the chain of testimony necessary to convict the (client) of a... crime."[47]

An important distinction must be made between a case where a client takes on the services of an attorney for illicit purposes, seeking advice about how to go around the law for the purpose of committing illegal activities and a case where a client thinks he might have previously committed something illegal and consults his attorney about it.  The first case clearly does not fall within the privilege because the same cannot be invoked for purposes illegal.   The second case falls within the exception because whether or not the act for which the advice turns out to be illegal, his name cannot be used or disclosed if the disclosure leads to evidence, not yet in the hands of the prosecution, which might lead to possible  action against him.

These cases may be readily distinguished, because the privilege cannot be invoked or used as a shield for an illegal act, as in the first example; while the prosecution may not have a case against the client in the second example and cannot use the attorney client relationship to build up a case against the latter.  The reason for the first rule is that it is not within the professional character of a lawyer to give advice on the commission of a crime. [48] The reason for the second has been stated in the cases above discussed and are founded on the same policy grounds for which the attorney-client privilege, in general, exists.

In Matter of Shawmut Mining Co., supra, the appellate court therein stated that "under such conditions no case has ever yet gone to the length of compelling an attorney, at the instance of a hostile litigant, to disclose not only his retainer, but the nature of the transactions to which it related, when such information could be made the basis of a suit against his client.”[49] "Communications made to an attorney in the course of any personal employment, relating to the subject thereof, and which may be supposed to be drawn out in consequence of

the relation in which the parties stand to each other, are under the seal of confidence and entitled to protection as privileged communications."[50] Where the communicated information, which clearly falls within the privilege, would suggest possible criminal activity but there would be not much in the information known to the prosecution which would sustain a charge except that revealing the name of the client would open up other privileged information which would substantiate the prosecution’s suspicions, then the client’s identity is so inextricably linked to the subject matter itself that it falls within the protection.  The Bairdexception, applicable to the instant case, is consonant with the principal policy behind the privilege, i.e., that for the purpose of promoting freedom of consultation of legal advisors by clients, apprehension of compelled disclosure from attorneys must be eliminated.  This exception has likewise been sustained in In re Grand Jury Proceedings[51] and Tillotson v. Boughner.[52] What these cases unanimously seek to avoid is the exploitation of the general rule in what may amount to a fishing expedition by the prosecution.

There are, after all, alternative sources of information available to the prosecutor which do not depend on utilizing a defendant's counsel as a convenient and readily available source of information in the building of a case against the latter.  Compelling disclosure of the client's name in circumstances such as the one which exists in the case at bench amounts to sanctioning fishing expeditions by lazy prosecutors and litigants which we cannot and will not countenance.  When the nature of the transaction would be revealed by disclosure of an attorney's retainer, such retainer is obviously protected by the privilege. [53] It follows that petitioner attorneys in the instant case owe their client(s) a duty and an obligation not to disclose the latter's identity which in turn requires them to invoke the privilege.

In fine, the crux of petitioners' objections ultimately hinges on their expectation that if the prosecution has a case against their clients, the latter's case should be built upon evidence painstakingly gathered by them from their own sources and not from compelled testimony requiring them to reveal the name of their clients, information which unavoidably reveals much about the nature of the transaction which may or may not be illegal.  The logical nexus between name and nature of transaction is so intimate in this case that it would be difficult to simply dissociate one from the other.  In this sense, the name is as much "communication" as information revealed directly about the transaction in question itself, a communication which is clearly and distinctly privileged.  A lawyer cannot reveal such communication without exposing himself to charges of violating a principle which forms the bulwark of the entire attorney-client relationship.

The uberrimei fidei relationship between a lawyer and his client therefore imposes a strict liability for negligence on the former.  The ethical duties owing to the client, including confidentiality, loyalty, competence, diligence as well as the responsibility to keep clients informed and protect their rights to make decisions have been zealously sustained.  In Milbank, Tweed, Hadley and McCloy v. Boon,[54] the US Second District Court rejected the plea of the petitioner law firm that it breached its fiduciary duty to its client by helping the latter's former agent in closing a deal for the agent's benefit only after its client hesitated in proceeding with the transaction, thus causing no harm to its client.  The Court instead ruled that breaches of a fiduciary relationship in any context comprise a special breed of cases that often loosen normally stringent requirements of causation and damages, and found in favor of the client.

To the same effect is the ruling in Searcy, Denney, Scarola, Barnhart, and Shipley P.A. v. Scheller[55] requiring strict obligation of lawyers vis-a-visclients.  In this case, a contingent fee lawyer was fired shortly before the end of completion of his work, and sought payment quantum meruit of work done.  The court, however, found that the lawyer was fired for cause after he sought to pressure his client into signing a new fee agreement while settlement negotiations were at a critical stage.  While the client found a new lawyer during the interregnum, events forced the client to settle for less than what was originally offered.  Reiterating the principle  of fiduciary duty of lawyers to clients in Meinhard v. Salmon[56] famously attributed to Justice Benjamin Cardozo that "Not honesty alone, but the punctilio of an honor the most sensitive, is then the standard of behavior," the US Court found that the lawyer involved was fired for cause, thus deserved no attorney's fees at all.

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The utmost zeal given by Courts to the protection of the lawyer-client confidentiality privilege and lawyer's loyalty to his client is evident in the duration of the protection, which exists not only during the relationship, but extends even after the termination of the relationship.[57]

Such are the unrelenting duties required of lawyers vis-a-vis their clients because the law, which the lawyers are sworn to uphold, in the words of Oliver Wendell Holmes, [58] "xxx is an exacting goddess, demanding of her votaries in intellectual and moral discipline."  The Court, no less, is not prepared to accept respondents’ position without denigrating the noble profession that is lawyering, so extolled by Justice Holmes in this wise:

Every calling is great when greatly pursued.  But what other gives such scope to realize the spontaneous energy of one's soul?  In what other does one plunge so deep in the stream of life - so share its passions its battles, its despair, its triumphs, both as witness and actor?  x x x  But that is not all.  What a subject is this in which we are united - this abstraction called the Law, wherein as in a magic mirror, we see reflected, not only in our lives, but the lives of all men that have been.  When I think on this majestic theme my eyes dazzle.  If we are to speak of the law as our mistress, we who are here know that she is a mistress only to be won with sustained and lonely passion - only to be won by straining all the faculties by which man is likened to God.

We have no choice but to uphold petitioners' right not to reveal the identity of their clients under pain of the breach of fiduciary duty owing to their clients, because the facts of the instant case clearly fall within recognized exceptions to the rule that the client’s name is not privileged information.

If we were to sustain respondent PCGG that the lawyer-client confidential privilege under the circumstances obtaining here does not cover the identity of the client, then it would expose the lawyers themselves to possible litigation by their clients in view of the strict fiduciary responsibility imposed on them in the exercise of their duties.

The complaint in Civil Case No. 0033 alleged that the defendants therein, including herein petitioners and Eduardo Cojuangco, Jr. conspired with each other in setting up through the use of coconut levy funds the financial and corporate framework and structures that led to the establishment of UCPB, UNICOM and others and that through insidious means and machinations, ACCRA, using its wholly-owned investment arm, ACCRA Investments Corporation, became the holder of approximately fifteen million shares representing roughly 3.3% of the total capital stock of UCPB as of 31 March 1987.  The PCGG wanted to establish through the ACCRA lawyers that Mr. Cojuangco is their client and it was Cojuangco who furnished all the monies to the subscription payment; hence, petitioners acted as dummies, nominees and/or agents by allowing themselves, among others, to be used as instrument in accumulating ill-gotten wealth through government concessions, etc., which acts constitute gross abuse of official position and authority, flagrant breach of public trust, unjust enrichment, violation of the Constitution and laws of  the Republic of the Philippines.

By compelling petitioners, not only to reveal the identity of their clients, but worse, to submit to the PCGG documents substantiating the client-lawyer relationship, as well as deeds of assignment petitioners executed in favor of its clients covering their respective shareholdings, the PCGG would exact from petitioners a link “that would inevitably form the chain of testimony necessary to convict the (client) of a crime.”

III

In response to petitioners' last assignment of error, respondents allege that the private respondent was dropped as party defendant not only because of his admission that he acted merely as a nominee but also because of his undertaking to testify to such facts and circumstances "as the interest of truth may require, which includes... the identity of the principal."[59]

First, as to the bare statement that private respondent merely acted as a lawyer and nominee, a statement made in his out-of-court settlement with the PCGG, it is sufficient to state

that petitioners have likewise made the same claim not merely out-of- court but also in their Answer to plaintiff's Expanded Amended Complaint, signed by counsel, claiming that their acts were made in furtherance of "legitimate lawyering.”[60] Being "similarly situated" in this regard, public respondents must show that there exist other conditions and circumstances which would warrant their treating the private respondent differently from petitioners in the case at bench in order to evade a violation of the equal protection clause of the Constitution.

To this end, public respondents contend that the primary consideration behind their decision to sustain the PCGG's dropping of private respondent as a defendant was his promise to disclose the identities of the clients in question.  However, respondents failed to show - and absolutely nothing exists in the records of the case at bar - that private respondent actually revealed the identity of his client(s) to the PCGG.  Since the undertaking happens to be the leitmotif of the entire arrangement between Mr. Roco and the PCGG, an undertaking which is so material as to have justified PCGG's special treatment exempting the private respondent from prosecution, respondent Sandiganbayan should have required proof of the undertaking more substantial than a "bare assertion" that private respondent did indeed comply with the undertaking.  Instead, as manifested by the PCGG, only three documents were submitted for the purpose, two of which were mere requests for re-investigation and one simply disclosed certain clients which petitioners (ACCRA lawyers) were themselves willing to reveal.  These were clients to whom both petitioners and private respondent rendered legal services while all of them were partners at ACCRA, and were not the clients which the PCGG wanted disclosed for the alleged questioned transactions.[61]

To justify the dropping of the private respondent from the case or the filing of the suit in the respondent court without him, therefore, the PCGG should conclusively show that Mr. Roco was treated as a species apart from the rest of the ACCRA lawyers on the basis of a classification which made substantial distinctions based on real differences.  No such substantial distinctions exist from the records of the case at bench, in violation of the equal protection clause.

The equal protection clause is a guarantee which provides a wall of protection against uneven application of statutes and regulations.  In the broader sense, the guarantee operates against uneven application of legal norms so that all persons under similar circumstances would be accorded the same treatment.[62] Those who fall within a particular class ought to be treated alike not only as to privileges granted but also as to the liabilities imposed.

x x x.  What is required under this constitutional guarantee is the uniform operation of legal norms so that all persons under similar circumstances would be accorded the same treatment both in the privileges conferred and the liabilities imposed.  As was noted in a recent decision:  ‘Favoritism and undue preference cannot be allowed. For the principle is that equal protection and security shall be given to every person under circumstances, which if not identical are analogous.  If law be looked upon in terms of burden or charges, those that  fall within a class should be treated in the same fashion, whatever restrictions cast on some in the group equally binding the rest.[63]

We find that the condition precedent required by the respondent PCGG of the petitioners for their exclusion as parties-defendants in PCGG Case No. 33 violates the lawyer-client confidentiality privilege.  The condition also constitutes a transgression by respondents Sandiganbayan and PCGG of the equal protection clause of the Constitution.[64] It is grossly unfair to exempt one similarly situated litigant from prosecution without allowing the same exemption to the others.  Moreover, the PCGG’s demand not only touches upon the question of the identity of their clients but also on documents related to the suspected transactions, not only in violation of the attorney-client privilege but also of the constitutional right against self-incrimination. Whichever way one looks at it, this is a fishing expedition, a free ride at the expense of such rights.

An argument is advanced that the invocation by petitioners of the privilege of attorney-client confidentiality at this stage of the proceedings is premature and that they should wait until they are called to testify and examine as witnesses as to matters learned in confidence before they can raise their objections.  But petitioners are not mere witnesses.  They are co-principals in the case for recovery of alleged ill-gotten wealth.  They have made their position clear from the

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very beginning that they are not willing to testify and they cannot be compelled to testify in view of their constitutional right against self-incrimination and of their fundamental legal right to maintain inviolate the privilege of attorney-client confidentiality.

It is clear then that the case against petitioners should never be allowed to take its full course in the Sandiganbayan.  Petitioners should not be made to suffer the effects of further litigation when it is obvious that their inclusion in the complaint arose from a privileged attorney-client relationship and as a means of coercing them to disclose the identities of their clients.  To allow the case to continue with respect to them when this Court could nip the problem in the bud at this early opportunity would be to sanction an unjust situation which we should not here countenance.  The case hangs as a real and palpable threat, a proverbial Sword of Damocles over petitioners' heads.  It should not be allowed to continue a day longer.

While we are aware of respondent PCGG’s legal mandate to recover ill-gotten wealth, we will not sanction acts which violate the equal protection guarantee and the right against self-incrimination and subvert the lawyer-client confidentiality privilege.

WHEREFORE, IN VIEW OF THE FOREGOING, the Resolutions of respondent Sandiganbayan (First Division) promulgated on March 18, 1992 and May 21, 1992 are hereby ANNULLED and SET ASIDE.  Respondent Sandiganbayan is further ordered to exclude petitioners Teodoro D. Regala, Edgardo J. Angara, Avelino V. Cruz, Jose C. Concepcion, *Rogelio A. Vinluan, Victor P. Lazatin, Eduardo U. Escueta and Paraja G. Hayuduni as parties-defendants in SB Civil Case No. 0033 entitled "Republic of the Philippines v. Eduardo Cojuangco, Jr., et al.".

SO ORDERED.Regala v Sandiganbayan   GR. No. 105938  9.20.96

F: Corporation clients of petitioner consulted them regarding corporate structure and financial matters upon which legal advice were given by petitioners. Said corporation is subject to investigation by the PCGG involving ill gotten wealth. Petitioner refuses to provide information on fear that it may implicate them in the very activity from which legal advice was sought from them and it may breach the fiduciary relationship of the petitioner with their client.

I: WON fiduciary duty may be asserted by petitioner on refusal to disclose names of their clients (privilege information)

R: SC upheld the right of petitioners to refuse disclosure of names of their clients under the pain of breach of fiduciary relationship with their client.

As a general rule, a lawyer MAY NOT INVOKE THE PRIVILEGE BECAUSE:

1. The court has the right to know that the client whose privilege is sought to be protected is flesh and blood.

2. Privilege begins to exist only after the atty-client relationship has been established.3. Privilege generally pertains to be the subject matter of the relationship.4. With due process consideration, the opposing party should know his adversary.

EXCEPTION: LAWYERS MAY INVOKE THE PRIVILEGE WHEN:

1. Strong probability exists that revealing the client’s name would implicate the client in the very activity for which he sought the lawyer’s advice.

2. Disclosure would open to civil liability of client. (present in this case)3. Government lawyers have no case against the lawyer’s client unless by revealing the

client’s name it would provide them the only link that would form the chain of testimony necessary to convict an individual of a crime. (present in this case)

4. Relevant to the subject matter of the legal problem on which client seeks legal assistance. (present in this case)

5. Nature of atty-client relationship has been previously disclosed and it is the identity which is intended to be confidential.

Old Code of Civil Procedure enacted by the Philippine Commission on August 7, 1901:Section 383 of the Code specifically "forbids counsel, without authority of his client to reveal any communication made by the client to him or his advice given thereon in the course of professional employment." 28 Passed on into various provisions of the Rules of Court, the attorney-client privilege, as currently worded provides:Sec. 24. Disqualification by reason of privileged communication. — The following persons cannot testify as to matters learned in confidence in the following cases:An attorney cannot, without the consent of his client, be examined as to any communication made by the client to him, or his advice given thereon in the course of, or with a view to, professional employment, can an attorney's secretary, stenographer, or clerk be examined, without the consent of the client and his employer, concerning any fact the knowledge of which has been acquired in such capacity.  29Further, Rule 138 of the Rules of Court states:Sec. 20. It is the duty of an attorney: (e) to maintain inviolate the confidence, and at every peril to himself, to preserve the secrets of his client, and to accept no compensation in connection with his client's business except from him or with his knowledge and approval.This duty is explicitly mandated in Canon 17 of the Code of Professional Responsibility which provides that:Canon 17. A lawyer owes fidelity to the cause of his client and he shall be mindful of the trust and confidence reposed in him.Canon 15 of the Canons of Professional Ethics also demands a lawyer's fidelity to client:The lawyers owes "entire devotion to the interest of the client, warm zeal in the maintenance and defense of his rights and the exertion of his utmost learning and ability," to the end that nothing be taken or be withheld from him, save by the rules of law, legally applied. No fear of judicial disfavor or public popularity should restrain him from the full discharge of his duty. In the judicial forum the client is entitled to the benefit of any and every remedy and defense that is authorized by the law of the land, and he may expect his lawyer to assert every such remedy or defense. But it is steadfastly to be borne in mind that the great trust of the lawyer is to be performed within and not without the bounds of the law. The office of attorney does not permit, much less does it demand of him for any client, violation of law or any manner of fraud or chicanery. He must obey his own conscience and not that of his client.

FERMINA LEGASPI DAROY, LYDIA LEGASPI and AGRIPINO LEGASPI, complainants, vs.ATTORNEY RAMON CHAVES LEGASPI, respondent.

 

AQUINO, J.:

Fermina Legazpi-Daroy, Lydia Legaspi-Acha and Agripino Legaspi of Iligan City, in a verified complaint dated March 10, 1970, charged Attorney Ramon Chaves Legaspi of Cagayan de Oro City with malpractice for having misappropriated the sum of four thousand pesos which he had collected for them. They prayed that the respondent be disbarred.  1 (He was 59 years old in 1974. He passed the 1954 bar examinations with a rating of 75.75%).

The evidence shows that the complainants hired the respondent in May, 1962 to represent them in the intestate proceeding for the settlement of the estate of the spouses Aquilino Gonzaga and Paz Velez-Gonzaga. The complainants, together with their brother, Vivencio, who was abroad, were adjudged as one of the six groups of heirs of the late Gonzaga spouses, their deceased mother, Consuelo Gonzaga-Legaspi, being a daughter of the spouses. The heirs in a joint petition dated April 11, 1969, which the respondent signed as counsel for the complainants, agreed that the coconut land left by the decedents would be divided into six equal parts, that the administrator be authorized to sell the land, and that, after payment of the obligations of the estate, the net proceeds would be distributed among the six groups of heirs. The probate court

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approved that agreement in its order of April 29, 1969 (Spec. Proc. Nop. 640 of the Misamis Oriental CFI, Exh. A).

The land was sold. Fermina Legaspi-Daroy came to know of the sale only when the respondent wrote a note dated November 28, 1969 to her father, Teofilo Legaspi, wherein he stated "that the money we have deposited may be withdrawn on December 8, 1969 at 9:00 o'clock". The respondent advised Teofilo Legaspito see him on that date so that the money could be withdrawn (Exh. B).

The complainants were not able to get the money on December 8 because the respondent on December 7 sent to Mrs. Daroy a telegram countermanding his prior advice and directing here to go to Cagayan de Oro City on December 10, a Wednesday, to receive the money (Exh. C). On December 9, a certain Atty. Sugamo sent a handwritten note to Mrs. Daroy advising her not to go to Cagayan de Oro City on December 10 because according to the respondent "his postdated checks can be paid and/or collected either Thursday or Friday yet" (Exh. D).

In the afternoon of that same day, December 9, Mrs. Daroy received another note, this time from the respondent himself, "Cousin Ramon". The note contained the disturbing intelligence that Mrs. Daroy's "Cousin Ramon" had withdrawn the money amounting to P4,000 and had spent it. The letter, a sort of extrajudicial confession or mea culpa on respondent's part, reads as follows (Exh. E):

Dear Fermina,

I wrote this letter with the hope that you will understand me. I have received P4,000.00 our share in the case filed and is now in my custody.

Previous (sic) I have a case wherein I was forced to use our money to solve my problem.

Now to pay the amount I have used, I sold my jeep to Mr. Ricarte Gorospe, an Employee of the BIR here in Cag. But I am not paid as yet. So, I am waiting as he will pay at 3:00 p.m. today and it's close as I have promised to give it on the 10th, I mean our money.

Kindly help me, defer the giving you of the sum or at least until Thursday or Friday, I bring it to you.

I know, my responsibility on this matter.

Thanks

CousinRamon

It turned out that on October 20, 1969 the respondent, as to "counsel for Fermina Daroy et al.", received from Deputy Provincial Sheriff Jose V. Yasay the said sum of P4,000 as "one (1) share in participation of my clients Fermina Daroy et al. in connection with (the) order of Judge B. K. Gorospe" in the aforementioned intestate proceeding. The respondent signed a receipt for that amount (Exh. L-1). The sheriff paid to Attorneys Angel Quimpo, Leovigildo Tandog, Jr. and Teogenes Velez, Jr. the respective shares of the other groups of heirs also in the sum of P4,000

for each group. Those lawyers turned over the amounts withdrawn to their respective clients (Exh. L).

It is evident that the respondent, in writing on November 28, 1969 to Teofilo Legaspi that the money deposited could be withdrawn on December 8, 1969, acted in bad faith. He had already withdrawn the money before that date. He concealed that fact from the complainants.

Before the disbarment complaint was filed several demands were made upon the respondent to pay to the complainants the amount which he had misappropriated. He repeatedly broke his promises to make payment. As complainants' patience was already exhausted, they filed their complaint for disbarment on March 13, 1970. 2

Atty. Alfredo R. Busico, the lawyer for the complainants, in a letter to this Court's Clerk of Court dated May 26, 1970, expressed the hope that preferential attention would be given to the case. He said that he had "reliable information from Cagayan de Oro City" that the respondent "has been bragging that nothing will happen to this case" (p. 20, Rollo).1äwphï1.ñët

The case was referred to the Solicitor General for investigation, report and recommendation. In 1973 he requested the City Fiscal of Iligan City to conduct the investigation. 3 After the investigation was finished, the case was set for hearing. The respondent did not appear at the hearing.

Respondent Legaspi in his testimony admitted that he received the said sum of P4,000 as shown in the receipt, Exhibit D dated October 20, 1969. He said that after receiving it he immediately wired Teofilo Legaspi at Iligan City to see him (the respondent) in his office at Cagayan de Oro City so that Teofilo Legaspi could tell him "the proper disposal" of that amount.

Teofilo Legaspi supposedly went to see him on October 21, 1969 and at their conference they supposedly agreed that the sum of P700 would be deducted from the P4,000 to cover the expenses which he (Legaspi) described as "expenses involved from the parties litigants, expenses seeking evidence and other expenses relevant to the case" and "major expenses" in the case (sic); that his attorney's fees would be equivalent "to a share of the petitioners", an agreement which was later placed in formal form (referring to 1968 extrajudicial settlement attached to his answer); that the balance of P3,300 would be divided into six equal parts (six because of the four Legaspi children, the father Teofilo Legaspi and the lawyer Ramon C. Legaspi); that under such division each participant would receive P412 each (P3,300 divided by six gives a quotient of P550 not P412), and that he gave Teofilo the sum of P412. The respondent did not present any receipt to prove that alleged payment.

He said that at first Teofilo Legaspi told him to keep the share of Vivencio Legaspi, who was abroad, but at the end of October or the first week of November, 1969 Teofilo got from him (the respondent) Vivencio's share. Again, the respondent did not ask Teofilo to sign a receipt for Vivencio's share. After paying the shares of Teofilo and Vivencio, the balance of the amount left in respondent's possession amounted to P2,476.

According to respondent's version, the complainants "refused consistently to receive" the said balance from him because they wanted the full amount of P4,000. He said that he had already paid to them the sum of P2,000 and that only the sum of P476 was left in his custody. He did not present any receipt to prove the alleged payment of P2,000. He said that he could deliver that amount of P476 to the complainants.

Mrs. Daroy, in rebuttal, denied that her father, Teofilo Legaspi, received the sum of P412 from the respondent. She said that her father never went to Cagayan de Oro City to confer with the respondent. She said that there was no agreement that the respondent would participate like an

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heir in the partition of the sum of P4,000. She denied that the respondent offered to pay her and her brother and sister the sum of P2,746. She denied that the respondent paid to the complainants P2,000.

After a careful examination of the evidence, we find that respondent's testimony cannot be given any credence. In his memorandum he stated that after he received from the sheriff "on October 29, 1969" the sum of P4,000, he "immediately wired" his kinsman, Teofilo Legaspi, to come to Cagayan de Oro City and that Teofilo "came onOctober 21, 1969". Respondent meant October 20, 1969, the date of the receipt, Exhibit L-1.

The truth is that he did not send any such wire. The statement of the sheriff and respondent's office clerk in their affidavits of March 18, 1975 that such a wire was sent is false. What he sent to Teofilo Legaspi was a handwritten note dated November 28, 1969 (Exh. B) wherein the respondent made it appear that the said sum of P4,000 was going to be withdrawn on "December 8, 1969 at nine o'clock". That the respondent in his testimony and memorandum forgot that note, which is Annex C of the complaint for disbarment and which he admitted in paragraph 4 of his answer, is an indication that he does not know the facts of his own case and that he had no scruples in trying to mislead and deceive this Court.

That note of respondent to Teofilo Legaspi, his telegram and his letter (already quoted) to Mrs. Daroy dated December 7 and 9, 1969, respectively (Exh. B, C and E) overwhelmingly belie his fabricated theory that he conferred with Teofilo Legaspi at the end of October or in the first week of November, 1969. He was tempted to concoct a story as to his alleged payments to Teofilo Legaspi because the latter is dead and could not refute him. However, complainants' documentary evidence refutes his prevarications, distortions and fabrications.

He attached to his memorandum (of which he did not furnish complainants a copy) his Exhibit 2, a supposed typewritten claim against him which totalled P10,406.05. Exhibit 2 does not bear any signature. The respondent wants to imply that the complainants were trying to blackmail him. No probative value can be given to Exhibit 2.

The flimsiness and incredible character of respondent's defense are discernible in his Exhibit 1, which he attached to his answer to the original complaint.

Exhibit 1 as a carbon copy of a supposed extrajudicial partition executed in 1968 by the four children of Consuelo Gonzaga, by her surviving husband, Teofilo Legaspi and by the respondent, Atty. Legaspi, all the six being described in the document as "the legitimate children and sole heirs of Consuelo Gonzaga, who died on March 12. 1941". Why the respondent was an heir of Consuelo Gonzaga was not explained.

In that curious instrument, the spaces for the day and month when it was signed and acknowledged before a notary, the spaces for the description of the fourth parcel of land, the spaces for the shares adjudicated to the heirs, the spaces for the instrumental witnesses and the spaces for the numbers of the residence certificates and the dates and places of issue were left blank. Yet the instrument was signed by the above six persons and duly notarized by a notary whose signature is illegible.

In that extrajudicial partition Consuelo Gonzaga was alleged to have left four parcels of land located at Barrio Maputi, Initao, Misamis Oriental which she inherited from her father Aquilino Gonzaga. However, in the order of the Court of First Instance of Misamis Oriental dated April 29, 1969 Consuelo Gonzaga inherited only a one-sixth share in a parcel of land located at Maputi, Initao, Misamis Oriental.

How Vivencio Legaspi, who, according to the instrument, was a resident of Alameda, California, was able to sign it and to appear before a notary was not explained.

The incomplete document, far from being of any help to respondent Legaspi, casts a reflection on his competency and integrity as a lawyer and on the competency and integrity of the notary before whom it was acknowledged. As already noted, it was made to appear herein that respondent Legaspi was an heir of Consuelo Gonzaga when, obviously, he did not possess that status. The document does not even mention whether the deceased died intestate.

That document has no connection with the P4,000 and does not justify the misappropriation or breach of trust committed by the respondent.

A lawyer, under his oath, pledges himself not to delay any man for money or malice and is bound to conduct himself with all good fidelity to his clients. He is obligated to report promptly the money of his clients that has come into his possession. He should not commingle it with his private property or use it for his personal purposes without his client's consent. He should maintain a reputation for honesty and fidelity to private trust (Pars. 11 and 32, Canons of Legal Ethics).

Money collected by a lawyer in pursuance of a judgment in favor of his clients is held in trust and must be immediately turned over to them (Aya vs. Bigornia, 57 Phil. 8, 11).1äwphï1.ñët

Section 25, Rule 138 of the Rules of Court provides that when an attorney unjustly retains in his hands money of his client after it has been demanded, he may be punished for contempt as an officer of the court who has misbehaved in his official transactions and he is liable to a criminal prosecution.

A lawyer may be disbarred for any deceit, malpractice or other gross misconduct in his office as attorney or for any violation of the lawyer's oath (Ibid, sec. 27).

"The relation between an attorney and his client is highly fiduciary in its nature and of a very delicate, exacting and confidential character, requiring a high degree of fidelity and good faith" (7 Am. Jur. 2d 105). In view of that special relationship, "lawyers are bound to promptly account for money or property received by them on behalf of their clients and failure to do so constitutes professional misconduct. The fact that a lawyer has a lien for fees on money in his hands collected for his clients does not relieve him from the duty of promptly accounting for the funds received." (Syllabus, In re Bamberger, 49 Phil. 962).

The conversion of funds entrusted to an attorney is a gross violation of general morality as well as professional ethics. It impairs public confidence in the legal profession, "It deserves severe punishment" (Sturr vs. State Bar of California, 52 Cal. 2d 125, 338 Pac. 2d 897).1äwphï1.ñët

A member of the bar who converts the money of his client to his own benefit through false pretenses is guilty of deceit, malpractice and gross misconduct in his office of lawyer. The attorney, who violates his oath of office, betrays the confidence reposed in him by a client and practices deceit cannot be permitted to continue as a law practitioner. Not alone has he degraded himself but as an unfaithful lawyer he has besmirched the fair name of an honorable profession (In re Paraiso, 41 Phil. 24, 25; In re David, 84 Phil. 627; Manaloto vs. Reyes, Adm. Case No. 503, October 29, 1965, 15 SCRA 131; See Cabigao and Yzquierdo vs. Fernando Rodrigo, 57 Phil. 20).

We find respondent Legaspi guilty of deceit, malpractice and professional misconduct for having misappropriated the funds of his clients. His manufactured defenses, his lack of candor and his

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repeated failure to appear at the investigation conducted by the City Fiscal of Iligan and at the hearings scheduled by this Court, thus causing this proceeding to drag on for a long time, demonstrate his unworthiness to remain as a member of the noble profession of law. (See Capulong vs. Aliño, Adm. Case No. 381, February 10, 1968, 22 SCRA 491).

Taking into account the environmental circumstances of the case, we hold that the proper disciplinary action against the respondent is disbarment. Its salutary purpose is to protect the court and the public from the misconduct of an officer of the court. It is premised on the assumption that a member of the bar should be competent, honorable and reliable, a person in whom courts and clients may repose confidence (In re MacDougall, 3 Phil. 70, 78).

Its objectives are to compel the lawyer to deal fairly and honestly with his client and to remove from the profession a person whose misconduct has proven him unfit for the duties and responsibilities belonging to the office of an attorney (6 Moran's Comments on the Rules of Court, 1970 Ed., p. 242).1äwphï1.ñët

The prayer of the complainants that the respondent be ordered to pay them the said amount of P4,000 plus attorney's fees and miscellaneous expenses incurred in the prosecution of this case amounting to more than P1,000 cannot be granted in this disbarment proceeding. That amount should be recovered in an ordinary action.

WHEREFORE, the respondent is disbarred. The Clerk of Court is directed to strike out his name from the Roll of Attorneys.

SO ORDERED.DAROY VS. LEGASPIFacts:♦Fermina Daroy, Lydia Legaspi and Agripino Legaspi hired the RamonLegaspi in May, 1962 to represent them in the intestate proceeding for thesettlement of the estate of the spouses Aquilino Gonzaga and Paz Velez-Gonzaga. The complainants, together with their brother, Vivencio, who wasabroad, were adjudged as one of the six groups of heirs of the lateGonzaga spouses, their deceased mother, Consuelo Gonzaga-Legaspi,being a daughter of the spouses.♦April 11, 1969 – in a joint petition dated which Atty. Legaspi signed ascounsel for the complainants, agreed that the coconut land left by thedecedents would be divided into six equal parts, that the administrator beauthorized to sell the land, and that, after payment of the obligations of theestate, the net proceeds would be distributed among the six groups of heirs.♦The land was sold. Fermina Daroy came to know of the sale only when theAtty. Legaspi wrote a note dated November 28, 1969 to her father, TeofiloLegaspi, wherein he stated "that the money we have deposited may bewithdrawn on December 8, 1969 at 9:00 o'clock". Atty. Legaspi advisedTeofilo Legaspito see him on that date so that the money could bewithdrawn. Complainants were not able to withdraw the money.♦December 9, 1969 – Mrs. Daroy received a note wherein Atty. Legaspiinformed them that he used their money to solve his problems and that hewould pay the, as soon as he receives the proceeds of his jeep.♦Complainants made several demands for payment buy Atty. Legaspirepeatedly broke his promise and as such a complaint for his disbarmentwas filed.♦Version of Legaspi:oTeofilo Legaspi supposedly went to see him on October 21, 1969 andat their conference they supposedly agreed that the sum of P700 wouldbe deducted from the P4,000 to cover the

expenses which hedescribed as "expenses involved from the parties litigants, expensesseeking evidence and other expenses relevant to the case" and "major expenses" in the case and that his attorney's fees would be equivalent"to a share of the petitioners", and that the balance of P3,300 would bedivided into six equal parts (six because of the four Legaspi children,the father Teofilo Legaspi and the lawyer Ramon C. Legaspi); thatunder such division each participant would receive P412 each (P3,300divided by six gives a quotient of P550 not P412), and that he gaveTeofilo the sum of P412. No receipt was presented.oFirst week of November 1969 Teofilo got from him the share of Vivencio. Money left with him amounted to P2,476.oAccording to Atty. Legaspi the complainants "refused consistently toreceive" the said balance from him because they wanted the fullamount of P4,000. He said that he had already paid to them the sum of P2,000 and that only the sum of P476 was left in his custody. He didnot present any receipt to prove the alleged payment of P2,000. Hesaid that he could deliver that amount of P476 to the complainants.♦Mrs. Daroy stated that there was no agreement that Atty. Legaspi wouldparticipate like an heir in the partition.WON Atty. Legaspi paid the money to Teofilo Legaspi? NONote of Atty. Legaspi to Mrs. Daroy dated December 9, 1969, overwhelminglybelie his fabricated theory that he conferred with Teofilo Legaspi at the end of October or in the first week of November, 1969. He was tempted to concoct astory as to his alleged payments to Teofilo Legaspi because the latter is deadand could not refute him. However, complainants' documentary evidence refuteshis prevarications, distortions and fabrications.WON Atty. Legaspi is guilty of malpractice? YES♦Carbon copy of a supposed extrajudicial partition executed in 1968 by thefour children of Consuelo Gonzaga, by her surviving husband, TeofiloLegaspi and by the respondent, Atty. Legaspi, all the six being described inthe document as "the legitimate children and sole heirs of ConsueloGonzaga, who died on March 12. 1941". Atty. Legaspi is not a legitimateheir and he did not explain why he is referred to as one. The documentcasts a reflection on his competency and integrity as a lawyer and on thecompetency and integrity of the notary before whom it was acknowledged.It was made to appear herein that respondent Legaspi was an heir of Consuelo Gonzaga when, obviously, he did not possess that status.♦A lawyer, under his oath, pledges himself not to delay any man for money or malice and is bound to conduct himself with all good fidelity to his clients.He is obligated to report promptly the money of his clients that has comeinto his possession. He should not commingle it with his private property or use it for his personal purposes without his client's consent. He shouldmaintain a reputation for honesty and fidelity to private trust.♦Money collected by a lawyer in pursuance of a judgment in favor of hisclients is held in trust and must be immediately turned over to them♦Section 25, Rule 138 of the Rules of Court provides that when an attorneyunjustly retains in his hands money of his client after it has been demanded,he may be punished for contempt as an officer of the court who hasmisbehaved in his official transactions and he is liable to a criminalprosecution.♦A member of the bar who converts the money of his client to his own benefitthrough false pretenses is guilty of deceit, malpractice and grossmisconduct in his office of lawyer. The attorney, who violates his oath of office, betrays the confidence reposed in him by a client and practicesdeceit cannot be permitted to continue as a law practitioner. Not alone hashe degraded himself but as an unfaithful lawyer he has besmirched the fair name of an honorable profession♦Sturr vs. State Bar of California: The conversion of funds entrusted to anattorney is a gross violation of general morality as well as professionalethics. It impairs public confidence in the legal profession, "It deservessevere punishment"Holding: Atty. Legaspi is disbarred.

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BLANDINA GAMBOA HILADO, petitioner, vs.JOSE GUTIERREZ DAVID, VICENTE J. FRANCISCO, JACOB ASSAD and SELIM JACOB ASSAD, respondents.

Delgado, Dizon and Flores for petitioner.Vicente J. Francisco for respondents.

TUASON, J.:

It appears that on April 23, 1945, Blandina Gamboa Hilado brought an action against Selim Jacob Assad to annul the sale of several houses and lot executed during the Japanese occupation by Mrs. Hilado's now deceased husband.

On May 14, Attorneys Ohnick, Velilla and Balonkita filed an answer on behalf of the defendant; and on June 15, Attorneys Delgado, Dizon, Flores and Rodrigo registered their appearance as counsel for the plaintiff. On October 5, these attorneys filed an amended complaint by including Jacob Assad as party defendant.

On January 28, 1946, Attorney Francisco entered his appearance as attorney of record for the defendant in substitution for Attorney Ohnick, Velilla and Balonkita who had withdrawn from the case.

On May 29, Attorney Dizon, in the name of his firm, wrote Attorney Francisco urging him to discontinue representing the defendants on the ground that their client had consulted with him about her case, on which occasion, it was alleged, "she turned over the papers" to Attorney Francisco, and the latter sent her a written opinion. Not receiving any answer to this suggestion, Attorney Delgado, Dizon, Flores and Rodrigo on June 3, 1946, filed a formal motion with the court, wherein the case was and is pending, to disqualify Attorney Francisco.

Attorney Francisco's letter to plaintiff, mentioned above and identified as Exhibit A, is in full as follows:

VICENTE J. FRANCISCOAttorney-at-Law 1462 Estrada, Manila

July 13, 1945.

Mrs. Blandina Gamboa HiladoManila, Philippines

My dear Mrs. Hilado:

From the papers you submitted to me in connection with civil case No. 70075 of the Court of First Instance of Manila, entitled "Blandina Gamboa Hilado vs. S. J. Assad," I find that the basic facts which brought about the controversy between you and the defendant therein are as follows:

(a) That you were the equitable owner of the property described in the complaint, as the same was purchased and/or built with funds exclusively belonging to you, that is to say, the houses and lot pertained to your paraphernal estate;

(b) That on May 3, 1943, the legal title to the property was with your husband, Mr. Serafin P. Hilado; and

(c) That the property was sold by Mr. Hilado without your knowledge on the aforesaid date of May 3, 1943.

Upon the foregoing facts, I am of the opinion that your action against Mr. Assad will not ordinarily prosper. Mr. Assad had the right to presume that your husband had the legal right to dispose of the property as the transfer certificate of title was in his name. Moreover, the price of P110,000 in Japanese military notes, as of May 3, 1943, does not quite strike me as so grossly inadequate as to warrant the annulment of the sale. I believe, lastly, that the transaction cannot be avoided merely because it was made during the Japanese occupation, nor on the simple allegation that the real purchaser was not a citizen of the Philippines. On his last point, furthermore, I expect that you will have great difficulty in proving that the real purchaser was other than Mr. Assad, considering that death has already sealed your husband's lips and he cannot now testify as to the circumstances of the sale.

For the foregoing reasons, I regret to advise you that I cannot appear in the proceedings in your behalf. The records of the case you loaned to me are herewith returned.

Yours very truly,

(Sgd.) VICENTE J. FRANCISCO

VJF/Rag.

In his answer to plaintiff's attorneys' complaint, Attorney Francisco alleged that about May, 1945, a real estate broker came to his office in connection with the legal separation of a woman who had been deserted by her husband, and also told him (Francisco) that there was a pending suit brought by Mrs. Hilado against a certain Syrian to annul the sale of a real estate which the deceased Serafin Hilado had made to the Syrian during the Japanese occupation; that this woman asked him if he was willing to accept the case if the Syrian should give it to him; that he told the woman that the sales of real property during the Japanese regime were valid even though it was paid for in Japanese military notes; that this being his opinion, he told his visitor he would have no objection to defending the Syrian;

That one month afterwards, Mrs. Hilado came to see him about a suit she had instituted against a certain Syrian to annul the conveyance of a real estate which her husband had made; that according to her the case was in the hands of Attorneys Delgado and Dizon, but she wanted to take it away from them; that as he had known the plaintiff's deceased husband he did not hesitate to tell her frankly that hers was a lost case for the same reason he had told the broker; that Mrs. Hilado retorted that the basis of her action was not that the money paid her husband was Japanese military notes, but that the premises were her private and exclusive property; that she requested him to read the complaint to be convinced that this was the theory of her suit; that he then asked Mrs. Hilado if there was a Torrens title to the property and she answered yes, in the name of her husband; that he told Mrs. Hilado that if the property was registered in her husband's favor, her case would not prosper either;

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That some days afterward, upon arrival at his law office on Estrada street, he was informed by Attorney Federico Agrava, his assistant, that Mrs. Hilado had dropped in looking for him and that when he, Agrava, learned that Mrs. Hilado's visit concerned legal matters he attended to her and requested her to leave the "expediente" which she was carrying, and she did; that he told Attorney Agrava that the firm should not handle Mrs. Hilado's case and he should return the papers, calling Agrava's attention to what he (Francisco) already had said to Mrs. Hilado;

That several days later, the stenographer in his law office, Teofilo Ragodon, showed him a letter which had been dictated in English by Mr. Agrava, returning the "expedients" to Mrs. Hilado; that Ragodon told him (Attorney Francisco) upon Attorney Agrava's request that Agrava thought it more proper to explain to Mrs. Hilado the reasons why her case was rejected; that he forthwith signed the letter without reading it and without keeping it for a minute in his possession; that he never saw Mrs. Hilado since their last meeting until she talked to him at the Manila Hotel about a proposed extrajudicial settlement of the case;

That in January, 1946, Assad was in his office to request him to handle his case stating that his American lawyer had gone to the States and left the case in the hands of other attorneys; that he accepted the retainer and on January 28, 1946, entered his appearance.

Attorney Francisco filed an affidavit of stenographer Ragodon in corroboration of his answer.

The judge trying the case, Honorable Jose Gutierrez David, later promoted to the Court of Appeals, dismissed the complaint. His Honor believed that no information other than that already alleged in plaintiff's complaint in the main cause was conveyed to Attorney Francisco, and concluded that the intercourse between the plaintiff and the respondent did not attain the point of creating the relation of attorney and client.

Stripped of disputed details and collateral matters, this much is undoubted: That Attorney Francisco's law firm mailed to the plaintiff a written opinion over his signature on the merits of her case; that this opinion was reached on the basis of papers she had submitted at his office; that Mrs. Hilado's purpose in submitting those papers was to secure Attorney Francisco's professional services. Granting the facts to be no more than these, we agree with petitioner's counsel that the relation of attorney and client between Attorney Francisco and Mrs. Hilado ensued. The following rules accord with the ethics of the legal profession and meet with our approval:

In order to constitute the relation (of attorney and client) a professional one and not merely one of principal and agent, the attorneys must be employed either to give advice upon a legal point, to prosecute or defend an action in court of justice, or to prepare and draft, in legal form such papers as deeds, bills, contracts and the like. (Atkinson vs. Howlett, 11 Ky. Law Rep. (abstract), 364; cited in Vol. 88, A. L. R., p. 6.)

To constitute professional employment it is not essential that the client should have employed the attorney professionally on any previous occasion. . . . It is not necessary that any retainer should have been paid, promised, or charged for; neither is it material that the attorney consulted did not afterward undertake the case about which the consultation was had. If a person, in respect to his business affairs or troubles of any kind, consults with his attorney in his professional capacity with the view to obtaining professional advice or assistance, and the attorney voluntarily permits or acquiesces in such consultation, then the professional employment must be regarded as established. . . . (5 Jones Commentaries on Evidence, pp. 4118-4119.)

An attorney is employed-that is, he is engaged in his professional capacity as a lawyer or counselor-when he is listening to his client's preliminary statement of his case, or when he is giving advice thereon, just as truly as when he is drawing his client's

pleadings, or advocating his client's cause in open court. (Denver Tramway Co. vs. Owens, 20 Colo., 107; 36 P., 848.)

Formality is not an essential element of the employment of an attorney. The contract may be express or implied and it is sufficient that the advice and assistance of the attorney is sought and received, in matters pertinent to his profession. An acceptance of the relation is implied on the part of the attorney from his acting in behalf of his client in pursuance of a request by the latter. (7 C. J. S., 848-849; see Hirach Bros. and Co. vs. R. E. Kennington Co., 88 A. L. R., 1.)

Section 26 (e), Rule 123 of the Rules of Court provides that "an attorney cannot, without the consent of his client, be examined as to any communication made by the client to him, or his advice given thereon in the course of professional employment;" and section 19 (e) of Rule 127 imposes upon an attorney the duty "to maintain inviolate the confidence, and at every peril to himself, to preserve the secrets of his client." There is no law or provision in the Rules of Court prohibiting attorneys in express terms from acting on behalf of both parties to a controversy whose interests are opposed to each other, but such prohibition is necessarily implied in the injunctions above quoted. (In re De la Rosa, 27 Phil., 258.) In fact the prohibition derives validity from sources higher than written laws and rules. As has been aptly said in In re Merron, 22 N. M., 252, L.R.A., 1917B, 378, "information so received is sacred to the employment to which it pertains," and "to permit it to be used in the interest of another, or, worse still, in the interest of the adverse party, is to strike at the element of confidence which lies at the basis of, and affords the essential security in, the relation of attorney and client."

That only copies of pleadings already filed in court were furnished to Attorney Agrava and that, this being so, no secret communication was transmitted to him by the plaintiff, would not vary the situation even if we should discard Mrs. Hilado's statement that other papers, personal and private in character, were turned in by her. Precedents are at hand to support the doctrine that the mere relation of attorney and client ought to preclude the attorney from accepting the opposite party's retainer in the same litigation regardless of what information was received by him from his first client.

The principle which forbids an attorney who has been engaged to represent a client from thereafter appearing on behalf of the client's opponent applies equally even though during the continuance of the employment nothing of a confidential nature was revealed to the attorney by the client. (Christian vs. Waialua Agricultural Co., 30 Hawaii, 553, Footnote 7, C. J. S., 828.)

Where it appeared that an attorney, representing one party in litigation, had formerly represented the adverse party with respect to the same matter involved in the litigation, the court need not inquire as to how much knowledge the attorney acquired from his former during that relationship, before refusing to permit the attorney to represent the adverse party. (Brown vs. Miller, 52 App. D. C. 330; 286, F. 994.)

In order that a court may prevent an attorney from appearing against a former client, it is unnecessary that the ascertain in detail the extent to which the former client's affairs might have a bearing on the matters involved in the subsequent litigation on the attorney's knowledge thereof. (Boyd vs. Second Judicial Dist. Court, 274 P., 7; 51 Nev., 264.)

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This rule has been so strictly that it has been held an attorney, on terminating his employment, cannot thereafter 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. (Pierce vs. Palmer [1910], 31 R. I., 432; 77 Atl., 201, Ann. Cas., 1912S, 181.)

Communications between attorney and client are, in a great number of litigations, a complicated affair, consisting of entangled relevant and irrelevant, secret and well known facts. In the complexity of what is said in the course of the dealings between an attorney and a client, inquiry of the nature suggested would lead to the revelation, in advance of the trial, of other matters that might only further prejudice the complainant's cause. And the theory would be productive of other un salutary results. To make the passing of confidential communication a condition precedent; i.e., to make the employment conditioned on the scope and character of the knowledge acquired by an attorney in determining his right to change sides, would not enhance the freedom of litigants, which is to be sedulously fostered, to consult with lawyers upon what they believe are their rights in litigation. The condition would of necessity call for an investigation of what information the attorney has received and in what way it is or it is not in conflict with his new position. Litigants would in consequence be wary in going to an attorney, lest by an unfortunate turn of the proceedings, if an investigation be held, the court should accept the attorney's inaccurate version of the facts that came to him. "Now the abstinence from seeking legal advice in a good cause is by hypothesis an evil which is fatal to the administration of justice." (John H. Wigmore's Evidence, 1923, Section 2285, 2290, 2291.)

Hence the necessity of setting down the existence of the bare relationship of attorney and client as the yardstick for testing incompatibility of interests. This stern rule is designed not alone to prevent the dishonest practitioner from fraudulent conduct, but as well to protect the honest lawyer from unfounded suspicion of unprofessional practice. (Strong vs. Int. Bldg., etc.; Ass'n, 183 Ill., 97; 47 L.R.A., 792.) It is founded on principles of public policy, on good taste. As has been said in another case, the question is not necessarily one of the rights of the parties, but as to whether the attorney has adhered to proper professional standard. With these thoughts in mind, it behooves attorneys, like Caesar's wife, not only to keep inviolate the client's confidence, but also to avoid the appearance of treachery and double-dealing. Only thus can litigants be encouraged to entrust their secrets to their attorneys which is of paramount importance in the administration of justice.

So without impugning respondent's good faith, we nevertheless can not sanction his taking up the cause of the adversary of the party who had sought and obtained legal advice from his firm; this, not necessarily to prevent any injustice to the plaintiff but to keep above reproach the honor and integrity of the courts and of the bar. Without condemning the respondents conduct as dishonest, corrupt, or fraudulent, we do believe that upon the admitted facts it is highly in expedient. It had the tendency to bring the profession, of which he is a distinguished member, "into public disrepute and suspicion and undermine the integrity of justice."

There is in legal practice what called "retaining fee," the purpose of which stems from the realization that the attorney is disabled from acting as counsel for the other side after he has given professional advice to the opposite party, even if he should decline to perform the contemplated services on behalf of the latter. It is to prevent undue hardship on the attorney resulting from the rigid observance of the rule that a separate and independent fee for consultation and advice was conceived and authorized. "A retaining fee is a preliminary fee given to an attorney or counsel to insure and secure his future services, and induce him to act for the client. It is intended to remunerate counsel for being deprived, by being retained by one party, of the opportunity of rendering services to the other and of receiving pay from him, and the payment of such fee, in the absence of an express understanding to the contrary, is neither made nor received in payment of the services contemplated; its payment has no relation to the obligation of the client to pay his attorney for the services which he has retained him to perform." (7 C.J.S., 1019.)

The defense that Attorney Agrava wrote the letter Exhibit A and that Attorney Francisco did not take the trouble of reading it, would not take the case out of the interdiction. If this letter was written under the circumstances explained by Attorney Francisco and he was unaware of its contents, the fact remains that his firm did give Mrs. Hilado a formal professional advice from which, as heretofore demonstrated, emerged the relation of attorney and client. This letter binds and estop him in the same manner and to the same degree as if he personally had written it. An information obtained from a client by a member or assistant of a law firm is information imparted to the firm. (6 C. J., 628; 7 C. J. S., 986.) This is not a mere fiction or an arbitrary rule; for such member or assistant, as in our case, not only acts in the name and interest of the firm, but his information, by the nature of his connection with the firm is available to his associates or employers. The rule is all the more to be adhered to where, as in the present instance, the opinion was actually signed by the head of the firm and carries his initials intended to convey the impression that it was dictated by him personally. No progress could be hoped for in "the public policy that the client in consulting his legal adviser ought to be free from apprehension of disclosure of his confidence," if the prohibition were not extended to the attorney's partners, employers or assistants.

The fact that petitioner did not object until after four months had passed from the date Attorney Francisco first appeared for the defendants does not operate as a waiver of her right to ask for his disqualification. In one case, objection to the appearance of an attorney was allowed even on appeal as a ground for reversal of the judgment. In that case, in which throughout the conduct of the cause in the court below the attorney had been suffered so to act without objection, the court said: "We are all of the one mind, that the right of the appellee to make his objection has not lapsed by reason of failure to make it sooner; that professional confidence once reposed can never be divested by expiration of professional employment." (Nickels vs. Griffin, 1 Wash. Terr., 374, 321 A. L. R. 1316.)

The complaint that petitioner's remedy is by appeal and not by certiorari deserves scant attention. The courts have summary jurisdiction to protect the rights of the parties and the public from any conduct of attorneys prejudicial to the administration of the justice. The summary jurisdiction of the courts over attorneys is not confined to requiring them to pay over money collected by them but embraces authority to compel them to do whatever specific acts may be incumbent upon them in their capacity of attorneys to perform. The courts from the general principles of equity and policy, will always look into the dealings between attorneys and clients and guard the latter from any undue consequences resulting from a situation in which they may stand unequal. The courts acts on the same principles whether the undertaking is to appear, or, for that matter, not to appear, to answer declaration, etc. (6 C.J., 718 C.J.S., 1005.) This summary remedy against attorneys flows from the facts that they are officers of the court where they practice, forming a part of the machinery of the law for the administration of justice and as such subject to the disciplinary authority of the courts and to its orders and directions with respect to their relations to the court as well as to their clients. (Charest vs. Bishop, 137 Minn., 102; 162, N.W., 1062, Note 26, 7 C. J. S., 1007.) Attorney stand on the same footing as sheriffs and other court officers in respect of matters just mentioned.

We conclude therefore that the motion for disqualification should be allowed. It is so ordered, without costs.BLANDINA GAMBOA HILADO, petitioner, vs.JOSE GUTIERREZ DAVID, VICENTE J. FRANCISCO, JACOB ASSAD and SELIM JACOB ASSAD, respondents.

Petitioner alleged that she and the counsel for the defendant had an attorney-client relationship with her when, before the trial of the case, she went to defendant’s counsel, gave him the papers of the case and other information relevant thereto, although she was not able to pay him legal fees. “That respondent’s law firm mailed to the plaintiff a written opinion over his signature on the merits of her case; that this opinion was reached on the basis of papers she had submitted at his office; that Mrs. Hilado's purpose in submitting those papers was to secure Attorney Francisco's professional services.” Atty. Francisco appeared as counsel for defendant

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and plaintiff did not object to it until (4) months after. Then, plaintiff moved to dismiss the case between her and defendant.

Issue: Was there an attorney-client relationship between plaintiff and Atty. Francisco?

Held: YES. In order to constitute the relation a professional one and not merely one of principal and agent, the attorneys must be employed either to give advice upon a legal point, to prosecute or defend an action in court of justice, or to prepare and draft, in legal form such papers as deeds, bills, contracts and the like.

To constitute professional employment it is not essential that the client should have employed the attorney professionally on any previous occasion. It is not necessary that any retainer should have been paid, promised, or charged for; neither is it material that the attorney consulted did not afterward undertake the case about which the consultation was had. If a person, in respect to his business affairs or troubles of any kind, consults with his attorney in his professional capacity with the view to obtaining professional advice or assistance, and the attorney voluntarily permits or acquiesces in such consultation, then the professional employment must be regarded as established.

“An attorney is employed-that is, he is engaged in his professional capacity as a lawyer or counselor-when he is listening to his client's preliminary statement of his case, or when he is giving advice thereon, just as truly as when he is drawing his client's pleadings, or advocating his client's cause in open court. An acceptance of the relation is implied on the part of the attorney from his acting in behalf of his client in pursuance of a request by the latter.”

That only copies of pleadings already filed in court were furnished to Attorney Agrava and that, this being so, no secret communication was transmitted to him by the plaintiff, would not vary the situation even if we should discard Mrs. Hilado's statement that other papers, personal and private in character, were turned in by her. Precedents are at hand to support the doctrine that the mere relation of attorney and client ought to preclude the attorney from accepting the opposite party's retainer in the same litigation regardless of what information was received by him from his first client.

An attorney, on terminating his employment, cannot thereafter 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"A retaining fee is a preliminary fee given to an attorney or counsel to insure and secure his future services, and induce him to act for the client. It is intended to remunerate counsel for being deprived, by being retained by one party, of the opportunity of rendering services to the other and of receiving pay from him, and the payment of such fee, in the absence of an express understanding to the contrary, is neither made nor received in payment of the services contemplated; its payment has no relation to the obligation of the client to pay his attorney for the services which he has retained him to perform."

MA. LUISA HADJULA, complainant, vs.ATTY. ROCELES F. MADIANDA, respondent.

D E C I S I O N

GARCIA, J.:

Under consideration is Resolution No. XVI-2004-472 of the Board of Governors, Integrated Bar of the Philippines (IBP), relative to the complaint for disbarment filed by herein complainant Ma. Luisa Hadjula against respondent Atty. Roceles F. Madianda.

The case started when, in an AFFIDAVIT-COMPLAINT1 bearing date September 7, 2002 and filed with the IBP Commission on Bar Discipline, complainant charged Atty. Roceles F. Madianda with violation of Article 2092 of the Revised Penal Code and Canon Nos. 15.02 and 21.02 of the Code of Professional Responsibility.

In said affidavit-complaint, complainant alleged that she and respondent used to be friends as they both worked at the Bureau of Fire Protection (BFP) whereat respondent was the Chief Legal Officer while she was the Chief Nurse of the Medical, Dental and Nursing Services. Complainant claimed that, sometime in 1998, she approached respondent for some legal advice. Complainant further alleged that, in the course of their conversation which was supposed to be kept confidential, she disclosed personal secrets and produced copies of a marriage contract, a birth certificate and a baptismal certificate, only to be informed later by the respondent that she (respondent) would refer the matter to a lawyer friend. It was malicious, so complainant states, of respondent to have refused handling her case only after she had already heard her secrets.

Continuing, complainant averred that her friendship with respondent soured after her filing, in the later part of 2000, of criminal and disciplinary actions against the latter. What, per complainant's account, precipitated the filing was when respondent, then a member of the BFP promotion board, demanded a cellular phone in exchange for the complainant's promotion.

According to complainant, respondent, in retaliation to the filing of the aforesaid actions, filed a COUNTER COMPLAINT3 with the Ombudsman charging her (complainant) with violation of Section 3(a) of Republic Act No. 3019,4 falsification of public documents and immorality, the last two charges being based on the disclosures complainant earlier made to respondent. And also on the basis of the same disclosures, complainant further stated, a disciplinary case was also instituted against her before the Professional Regulation Commission.

Complainant seeks the suspension and/or disbarment of respondent for the latter's act of disclosing personal secrets and confidential information she revealed in the course of seeking respondent's legal advice.

In an order dated October 2, 2002, the IBP Commission on Bar Discipline required respondent to file her answer to the complaint.

In her answer, styled as COUNTER-AFFIDAVIT,5 respondent denied giving legal advice to the complainant and dismissed any suggestion about the existence of a lawyer-client relationship between them. Respondent also stated the observation that the supposed confidential data and sensitive documents adverted to are in fact matters of common knowledge in the BFP. The relevant portions of the answer read:

5. I specifically deny the allegation of F/SUPT. MA. LUISA C. HADJULA in paragraph 4 of her AFFIDAVIT-COMPLAINT for reason that she never WAS MY CLIENT nor we ever had any LAWYER-CLIENT RELATIONSHIP that ever existed ever since and that never obtained any legal advice from me regarding her PERSONAL PROBLEMS or PERSONAL SECRETS. She likewise never delivered to me legal documents much more told me some confidential information or secrets. That is because I never entertain LEGAL QUERIES or CONSULTATION regarding PERSONAL MATTERS since I know as a LAWYER of the Bureau of Fire Protection that I am not allowed to privately practice law and it might also result to CONFLICT OF INTEREST. As a matter of fact, whenever there will be PERSONAL MATTERS referred to me, I just referred them to private law practitioners and never entertain the same, NOR listen to their stories or examine or accept any document.

9. I specifically deny the allegation of F/SUPT. MA. LUISA C. HADJULA in paragraph 8 of her AFFIDAVIT-COMPLAINT, the truth of the matter is that her ILLICIT RELATIONSHIP

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and her illegal and unlawful activities are known in the Bureau of Fire Protection since she also filed CHILD SUPPORT case against her lover … where she has a child ….

Moreover, the alleged DOCUMENTS she purportedly have shown to me sometime in 1998, are all part of public records ….

Furthermore, F/SUPT. MA. LUISA C. HADJULA, is filing the instant case just to get even with me or to force me to settle and withdraw the CASES I FILED AGAINST HER since she knows that she will certainly be DISMISSED FROM SERVICE, REMOVED FROM THE PRC ROLL and CRIMINALLY CONVICTED of her ILLICIT, IMMORAL, ILLEGAL and UNLAWFUL ACTS.

On October 7, 2004, the Investigating Commissioner of the IBP Commission on Bar Discipline came out with aReport and Recommendation, stating that the information related by complainant to the respondent is "protected under the attorney-client privilege communication." Prescinding from this postulate, the Investigating Commissioner found the respondent to have violated legal ethics when she "[revealed] information given to her during a legal consultation," and accordingly recommended that respondent be reprimanded therefor, thus:

WHEREFORE, premises considered, it is respectfully recommended that respondent Atty. Roceles Madianda be reprimanded for revealing the secrets of the complainant.

On November 4, 2004, the IBP Board of Governors issued Resolution No. XVI-2004-472 reading as follows:

RESOLVED to ADOPT and APPROVE, as it is hereby ADOPTED and APPROVED, the Report and Recommendation of the Investigating Commissioner of the above-entitled case, herein made part of this Resolution as Annex "A"; and , finding the recommendation fully supported by the evidence on record and the applicable laws and rules, and considering the actuation of revealing information given to respondent during a legal consultation, Atty. Roceles Madianda is hereby REPRIMANDED.

We AGREE with the recommendation and the premises holding it together.

As it were, complainant went to respondent, a lawyer who incidentally was also then a friend, to bare what she considered personal secrets and sensitive documents for the purpose of obtaining legal advice and assistance. The moment complainant approached the then receptive respondent to seek legal advice, a veritable lawyer-client relationship evolved between the two. Such relationship imposes upon the lawyer certain restrictions circumscribed by the ethics of the profession. Among the burdens of the relationship is that which enjoins the lawyer, respondent in this instance, to keep inviolate confidential information acquired or revealed during legal consultations. The fact that one is, at the end of the day, not inclined to handle the client's case is hardly of consequence. Of little moment, too, is the fact that no formal professional engagement follows the consultation. Nor will it make any difference that no contract whatsoever was executed by the parties to memorialize the relationship. As we said in Burbe v. Magulta,6 -

A lawyer-client relationship was established from the very first moment complainant asked respondent for legal advise regarding the former's business. To constitute professional employment, it is not essential that the client employed the attorney professionally on any previous occasion.

It is not necessary that any retainer be paid, promised, or charged; neither is it material that the attorney consulted did not afterward handle the case for which his service had been sought.

It a person, in respect to business affairs or troubles of any kind, consults a lawyer with a view to obtaining professional advice or assistance, and the attorney voluntarily permits or acquiesces with the consultation, then the professional employments is established.

Likewise, a lawyer-client relationship exists notwithstanding the close personal relationship between the lawyer and the complainant or the non-payment of the former's fees.

Dean Wigmore lists the essential factors to establish the existence of the attorney-client privilege communication, viz:

(1) Where legal advice of any kind is sought (2) from a professional legal adviser in his capacity as such, (3) the communications relating to that purpose, (4) made in confidence (5) by the client, (6) are at his instance permanently protected (7) from disclosure by himself or by the legal advisor, (8) except the protection be waived.7

With the view we take of this case, respondent indeed breached his duty of preserving the confidence of a client. As found by the IBP Investigating Commissioner, the documents shown and the information revealed in confidence to the respondent in the course of the legal consultation in question, were used as bases in the criminal and administrative complaints lodged against the complainant.

The purpose of the rule of confidentiality is actually to protect the client from possible breach of confidence as a result of a consultation with a lawyer.

The seriousness of the respondent's offense notwithstanding, the Court feels that there is room for compassion, absent compelling evidence that the respondent acted with ill-will. Without meaning to condone the error of respondent's ways, what at bottom is before the Court is two former friends becoming bitter enemies and filing charges and counter-charges against each other using whatever convenient tools and data were readily available. Unfortunately, the personal information respondent gathered from her conversation with complainant became handy in her quest to even the score. At the end of the day, it appears clear to us that respondent was actuated by the urge to retaliate without perhaps realizing that, in the process of giving vent to a negative sentiment, she was violating the rule on confidentiality.

IN VIEW WHEREOF, respondent Atty. Roceles F. Madianda is hereby REPRIMANDED and admonished to be circumspect in her handling of information acquired as a result of a lawyer-client relationship. She is also STERNLY WARNED against a repetition of the same or similar act complained of.

SO ORDERED.

WILLIAM S. UY, complainant, vs. ATTY. FERMIN L. GONZALES, respondent.

R E S O L U T I O N

AUSTRIA-MARTINEZ, J.:

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William S. Uy filed before this Court an administrative case against Atty. Fermin L. Gonzales for violation of the confidentiality of their lawyer-client relationship.  The complainant alleges:

Sometime in April 1999, he engaged the services of respondent lawyer to prepare and file a petition for the issuance of a new certificate of title. After confiding with respondent the circumstances surrounding the lost title and discussing the fees and costs, respondent prepared, finalized and submitted to him a petition to be filed before the Regional Trial Court of Tayug, Pangasinan. When the petition was about to be filed, respondent went to his (complainant’s) office at Virra Mall, Greenhills and demanded a certain amount from him other than what they had previously agreed upon. Respondent left his office after reasoning with him. Expecting that said petition would be filed, he was shocked to find out later that instead of filing the petition for the issuance of a new certificate of title, respondent filed a letter-complaint dated July 26, 1999 against him with the Office of the Provincial Prosecutor of Tayug, Pangasinan for “Falsification of Public Documents.”[1] The letter-complaint contained facts and circumstances pertaining to the transfer certificate of title that was the subject matter of the petition which respondent was supposed to have filed.  Portions of said letter-complaint read:

The undersigned complainant accuses WILLIAM S. UY, of legal age, Filipino, married and a resident of 132-A Gilmore Street corner 9th Street, New Manila, Quezon City, Michael Angelo T. UY, CRISTINA EARL T. UY, minors and residents of the aforesaid address, Luviminda G. Tomagos, of legal age, married, Filipino and a resident of Carmay East, Rosales, Pangasinan, and F. Madayag, with office address at A12, 2/F Vira Mall Shopping Complex, Greenhills, San Juan, Metro Manila, for ESTAFA THRU FALSIFICATION OF PUBLIC DOCUMENTS, committed as follows:

That on March 15, 1996, William S. Uy acquired by purchase a parcel of land consisting of 4.001 ha. for the amount of P100,000.00, Philippine Currency, situated at Brgy. Gonzales, Umingan, Pangasinan, from FERMIN C. GONZALES, as evidenced by a Deed of Sale executed by the latter in favor of the former…; that in the said date, William S. Uy received the Transfer Certificate of Title No. T-33122, covering the said land;

That instead of registering said Deed of Sale and Transfer Certificate of Title (TCT) No. T-33122, in the Register of Deeds for the purpose of transferring the same in his name, William S. Uy executed a Deed of Voluntary Land Transfer of the aforesaid land in favor of his children, namely, Michael Angelo T. Uy and Cristina Earl T. Uy, wherein William S. Uy made it appear that his said children are of legal age, and residents of Brgy. Gonzales, Umingan, Pangasinan, when in fact and in truth, they are minors and residents of Metro Manila, to qualify them as farmers/beneficiaries, thus placing the said property within the coverage of the Land Reform Program;

That the above-named accused, conspiring together and helping one another procured the falsified documents which they used as supporting papers so that they can secure from the Office of the Register of Deeds of Tayug, Pangasinan, TCT No. T-5165 (Certificate of Land Ownership Award No. 004 32930) in favor of his above-named children.  Some of these Falsified documents are purported Affidavit of Seller/Transferor and Affidavit of Non-Tenancy, both dated August 20, 1996, without the signature of affiant, Fermin C. Gonzales, and that on that said date, Fermin C. Gonzales was already dead… ;

That on December 17, 1998, William S. Uy with deceit and evident intent to defraud undersigned, still accepted the amount of P340,000.00, from Atty. Fermin L. Gonzales, P300,000.00, in PNB Check No. 0000606, and P40,000.00, in cash, as full payment of the redemption of TCT No. 33122…knowing fully well that at that time the said TCT cannot be redeemed anymore because the same was already transferred in the name of his children;

That William S. Uy has appropriated the amount covered by the aforesaid check, as evidenced by the said check which was encashed by him…;

That inspite of repeated demands, both oral and in writing, William S. Uy refused and continue to refuse to deliver to him a TCT in the name of the undersigned or to return and repay the said P340,000.00, to the damage and prejudice of the undersigned.[2]

With the execution of the letter-complaint, respondent violated his oath as a lawyer and grossly disregarded his duty to preserve the secrets of his client.  Respondent unceremoniously turned against him just because he refused to grant respondent’s request for additional compensation. Respondent’s act tarnished his reputation and social standing.[3]

In compliance with this Court’s Resolution dated July 31, 2000, [4] respondent filed his Comment narrating his version, as follows:

On December 17, 1998, he offered to redeem from complainant a 4.9 hectare-property situated in Brgy. Gonzales, Umingan, Pangasinan covered by TCT No. T-33122 which the latter acquired by purchase from his (respondent’s) son, the late Fermin C. Gonzales, Jr..  On the same date, he paid complainant P340,000.00 and demanded the delivery of TCT No. T-33122 as well as the execution of the Deed of Redemption.  Upon request, he gave complainant additional time to locate said title or until after Christmas to deliver the same and execute the Deed of Redemption.  After the said period, he went to complainant’s office and demanded the delivery of the title and the execution of the Deed of Redemption.  Instead, complainant gave him photocopies of TCT No. T-33122 and TCT No. T-5165.  Complainant explained that he had already transferred the title of the property, covered by TCT No.T-5165 to his children Michael and Cristina Uy and that TCT No. T-5165 was misplaced and cannot be located despite efforts to locate it.  Wanting to protect his interest over the property coupled with his desire to get hold of TCT No. T-5165 the earliest possible time, he offered his assistance pro bono to prepare a petition for lost title provided that all necessary expenses incident thereto including expenses for transportation and others, estimated at P20,000.00, will be shouldered by complainant.  To these, complainant agreed.

On April 9, 1999, he submitted to complainant a draft of the petition for the lost title ready for signing and notarization.  On April 14, 1999, he went to complainant’s office informing him that the petition is ready for filing and needs funds for expenses.  Complainant who was with a client asked him to wait at the anteroom where he waited for almost two hours until he found out that complainant had already left without leaving any instructions nor funds for the filing of the petition.  Complainant’s conduct infuriated him which prompted him to give a handwritten letter telling complainant that he is withdrawing the petition he prepared and that complainant should get another lawyer to file the petition.

Respondent maintains that the lawyer-client relationship between him and complainant was terminated when he gave the handwritten letter to complainant; that there was no longer any professional relationship between the two of them when he filed the letter-complaint for falsification of public document; that the facts and allegations contained in the letter-complaint for falsification were culled from public documents procured from the Office of the Register of Deeds in Tayug, Pangasinan.[5]

In a Resolution dated October 18, 2000, the Court referred the case to the Integrated Bar of the Philippines (IBP) for investigation, report and recommendation.[6]

Commissioner Rebecca Villanueva-Maala ordered both parties to appear on April 2, 2003 before the IBP.[7] On said date, complainant did not appear despite due notice. There was no showing that respondent received the notice for that day’s hearing and so the hearing was reset to May 28, 2003.[8]

On April 29, 2003, Commissioner Villanueva-Maala received a letter from one Atty. Augusto M. Macam dated April 24, 2003, stating that his client, William S. Uy, had lost interest in pursuing the complaint he filed against Atty. Gonzales and requesting that the case against Atty. Gonzales be dismissed.[9]

On June 2, 2003, Commissioner Villanueva-Maala submitted her report and recommendation, portions of which read as follows:

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The facts and evidence presented show that when respondent agreed to handle the filing of the Verified Petition for the loss of TCT No. T-5165, complainant had confided to respondent the fact of the loss and the circumstances attendant thereto.  When respondent filed the Letter-Complaint to the Office of the Special Prosecutor in Tayug, Pangasinan, he violated Canon 21 of the Code of Professional Responsibility which expressly provides that “A lawyer shall preserve the confidences and secrets of his client even after the attorney-client relation is terminated.”  Respondent cannot argue that there was no lawyer-client relationship between them when he filed the Letter-Complaint on 26 July 1999 considering that as early as 14 April 1999, or three (3) months after, respondent had already terminated complainant’s perceived lawyer-client relationship between them.  The duty to maintain inviolate the client’s confidences and secrets is not temporary but permanent.  It is in effect perpetual for “it outlasts the lawyer’s employment” (Canon 37, Code of Professional Responsibility) which means even after the relationship has been terminated, the duty to preserve the client’s confidences and secrets remains effective.  Likewise Rule 21.02, Canon 21 of the Rules of Professional Responsibility provides that “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 the full knowledge of the circumstances consents thereto.”

On 29 April 2003, the Commission received a letter dated 24 April 2003 from Atty. Augusto M. Macam, who claims to represent complainant, William S. Uy, alleging that complainant is no longer interested in pursuing this case and requested that the same be dismissed.  The aforesaid letter hardly deserves consideration as proceedings of this nature cannot be “interrupted by reason of desistance, settlement, compromise, restitution, withdrawal of the charges, or failure of the complainant to prosecute the same.  (Section 5, Rule 139-B, Rules of Court).  Moreover, in Boliver vs. Simbol, 16 SCRA 623, the Court ruled that “any person may bring to this Court’s attention the misconduct of any lawyer, and action will usually be taken regardless of the interest or lack of interest of the complainant, if the facts proven so warrant.”

IN VIEW OF THE FOREGOING, we find respondent Atty. Fermin L. Gonzales to have violated the Code of Professional Responsibility and it is hereby recommended that he be SUSPENDED for a period of SIX (6) MONTHS from receipt hereof, from the practice of his profession as a lawyer and member of the Bar.[10]

On June 21, 2003, the Board of Governors of the Integrated Bar of the Philippines issued Resolution No. XV-2003-365, thus:

RESOLVED to ADOPT and APPROVE, as it is hereby ADOPTED and APPROVED, the Report and Recommendation of the Investigating Commissioner of the above-entitled case, herein made part of this Resolution/Decision as Annex “A”; and finding the recommendation fully supported by the evidence on record and applicable laws and rules, and considering that respondent violated Rule 21.02, Canon 21 of the Canons of Professional Responsibility, Atty. Fermin L. Gonzales is herebySUSPENDED from the practice of law for six (6) months.[11]

Preliminarily, we agree with Commissioner Villanueva-Maala that the manifestation of complainant Uy expressing his desire to dismiss the administrative complaint he filed against respondent, has no persuasive bearing in the present case.

Sec. 5, Rule 139-B of the Rules of Court states that:

….

No investigation shall be interrupted or terminated by reason of the desistance, settlement, compromise, restitution, withdrawal of the charges, or failure of the complainant to prosecute the same.

This is because:

A proceeding for suspension or disbarment is not in any sense a civil action where the complainant is a plaintiff and the respondent lawyer is a defendant.  Disciplinary proceedings involve no private interest and afford no redress for private grievance.  They are undertaken and prosecuted solely for the public welfare.  They are undertaken for the purpose of preserving courts of justice from the official ministration of persons unfit to practice in them.  The attorney is called to answer to the court for his conduct as an officer of the court.   The complainant or the person who called the attention of the court to the attorney's alleged misconduct is in no sense a party, and has generally no interest in the outcome except as all good citizens may have in the proper administration of justice. Hence, if the evidence on record warrants, the respondent may be suspended or disbarred despite the desistance of complainant or his withdrawal of the charges.[12]

Now to the merits of the complaint against the respondent.

Practice of law embraces any activity, in or out of court, which requires the application of law, as well as legal principles, practice or procedure and calls for legal knowledge, training and experience.[13] While it is true that a lawyer may be disbarred or suspended for any misconduct, whether in his professional or private capacity, which shows him to be wanting in moral character, in honesty, probity and good demeanor or unworthy to continue as an officer of the court,[14] complainant failed to prove any of the circumstances enumerated above that would warrant the disbarment or suspension of herein respondent.

Notwithstanding respondent’s own perception on the matter, a scrutiny of the records reveals that the relationship between complainant and respondent stemmed from a personal transaction or dealings between them rather than the practice of law by respondent.  Respondent dealt with complainant only because he redeemed a property which complainant had earlier purchased from his (complainant’s) son.  It is not refuted that respondent paid complainant P340,000.00 and gave him ample time to produce its title and execute the Deed of Redemption.  However, despite the period given to him, complainant failed to fulfill his end of the bargain because of the alleged loss of the title which he had admitted to respondent as having prematurely transferred to his children, thus prompting respondent to offer his assistance so as to secure the issuance of a new title to the property, in lieu of the lost one, with complainant assuming the expenses therefor.

As a rule, an attorney-client relationship is said to exist when a lawyer voluntarily permits or acquiesces with the consultation of a person, who in respect to a business or trouble of any kind, consults a lawyer with a view of obtaining professional advice or assistance.   It is not essential that the client should have employed the attorney on any previous occasion or that any retainer should have been paid, promised or charged for, neither is it material that the attorney consulted did not afterward undertake the case about which the consultation was had, for as long as the advice and assistance of the attorney is sought and received, in matters pertinent to his profession.[15]

Considering the attendant peculiar circumstances, said rule cannot apply to the present case.  Evidently, the facts alleged in the complaint for “Estafa Through Falsification of Public Documents” filed by respondent against complainant were obtained by respondent due to his personal dealings with complainant. Respondent volunteered his service to hasten the issuance of the certificate of title of the land he has redeemed from complainant. Respondent’s immediate objective was to secure the title of the property that complainant had earlier bought from his son.  Clearly, there was no attorney-client relationship between respondent and complainant.  The preparation and the proposed filing of the petition was only incidental to their personal transaction.

Canon 21 of the Code of Professional Responsibility reads:

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:

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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.

The alleged “secrets” of complainant were not specified by him in his affidavit-complaint. Whatever facts alleged by respondent against complainant were not obtained by respondent in his professional capacity but as a redemptioner of a property originally owned by his deceased son and therefore, when respondent filed the complaint for estafa against herein complainant, which necessarily involved alleging facts that would constitute estafa, respondent was not, in any way, violating Canon 21.  There is no way we can equate the filing of the affidavit-complaint against herein complainant to a misconduct that is wanting in moral character, in honesty, probity and good demeanor or that renders him unworthy to continue as an officer of the court.  To hold otherwise would be precluding any lawyer from instituting a case against anyone to protect his personal or proprietary interests.

WHEREFORE, Resolution No. XV-2003-365 dated June 21, 2003 of the Integrated Bar of the Philippines is REVERSED and SET ASIDE and the administrative case filed against Atty. Fermin L. Gonzales, docketed as A.C. No. 5280, is DISMISSED for lack of merit.

SO ORDERED.WILLIAM S. UY vs. ATTY. FERMIN L. GONZALESA.C. No. 5280 : March 30, 2004FACTS:Complainant engaged the services of respondent lawyer to prepare and file a petition for the issuance of a new certificate of title. After confiding with respondent the circumstances surrounding the lost title and discussing the fees and costs, respondent prepared, finalized and submitted to him a petition to be filed before the Regional Trial Court.When the petition was about to be filed, respondent went to complainant’s office demanding a certain amount other than what was previously agreed upon. Respondent left his office after reasoning with him. Expecting that said petition would be filed, he was shocked to find out later that instead of filing the petition for the issuance of a new certificate of title, respondent filed a letter-complaint against him with the Office of the Provincial Prosecutor for Falsification of Public Documents. The letter-complaint contained facts and circumstances pertaining to the transfer certificate of title that was the subject matter of the petition which respondent was supposed to have filed.Respondent claims that he gave complainant a handwritten letter telling complainant that he is withdrawing the petition he prepared and that complainant should get another lawyer to file the petition thereby terminating the lawyer-client relationship between him and complainant; that there was no longer any professional relationship between the two of them when he filed the letter-complaint for falsification of public document; that the facts and allegations contained in the letter-complaint for falsification were culled from public documents procured from the Office of the Register of Deeds.The IBP found him guilty of violating Rule 21.02, Canon 21 of the Canons of Professional Responsibility and recommended for his suspension for 6 months.ISSUE:  Whether or not respondent violated Canon 21 of the CPR?HELD:No. Evidently, the facts alleged in the complaint for Estafa Through Falsification of Public Documents filed by respondent against complainant were obtained by respondent due to his personal dealings with complainant. Respondent volunteered his service to hasten the issuance of the certificate of title of the land he has redeemed from complainant.  Clearly, there was no attorney-client relationship between respondent and complainant. The preparation and the proposed filing of the petition was only incidental to their personal transaction.Whatever facts alleged by respondent against complainant were not obtained by respondent in his professional capacity but as a redemptioner of a property originally owned by his deceased son and therefore, when respondent filed the complaint for estafa against herein complainant,

which necessarily involved alleging facts that would constitute estafa, respondent was not, in any way, violating Canon 21. There is no way we can equate the filing of the affidavit-complaint against herein complainant to a misconduct that is wanting in moral character, in honesty, probity and good demeanor or that renders him unworthy to continue as an officer of the court. To hold otherwise would be precluding any lawyer from instituting a case against anyone to protect his personal or proprietary interests.PETITION DISMISSED for lack of merit.IN RE: LUIS B. TAGORDA 53 PHIL 37 3/23/29- MALPRACTICEFACTS:The respondent Atty. Luis Tagorda, a member of the provincial board of Isabela, admits that in the last general elections he made use of a card written in Spanish and Ilocano, which in translation, read as follows:“LUIS B. TAGORDA” Attoney; Notary Public; CANDIDATE FOR BOARD MEMBER, Province of Isabela. (NOTE.- as notaty public, he can execute for a deed of sale for the purchase of land as required by the cadastral office, can renew lost documents of your animals; can make your application and final requisites for your homestead; and can execute any kind of affidavit.   As a lawyer he can help you collect your loans although long overdue, as well as any complaint for or against you.  Come or write to him in his town Echague, Isabela.  He offers free consultation, and is willing to help and serve the poor.)The respondent further admits that he is the author of a letter addressed to a lieutenant of barrio in his home municipality written in Ilocano, which letter reads as follow:“ I would like you all to be informed of this matter for the reason that some people are in the belief that my residence as member of the Board will be in Iligan and that I would then be disqualified to exercise my profession as lawyer and as notary public.   Such is not the case and I would make it clear that I am free to exercise my profession as formerly and that I will have my residence here in Echague,  I would request your kind favor to transmit this information to your barrio people in any of your meeting or social gatherings so that they may be informed of my desire to live and to serve with you in my capacity as lawyer and notary public.  If the people in your locality have not as yet contracted the services of other lawyers in connection with the registration of their land titles, I would be willing to handle the work in court and would charge only three pesos for every registration.”

HELD:Application is give to se. 21 of the Code of Civil Procedure, as amended by Act NO. 2828, providing “ The practice of soliciting cases at law for the purpose of gain, either personally or through paid agents or brokets, constitutes malpractice, “ and to Canon 27 and 28 of the Code of Ethics adopted by the American Bar Association in 1908 and by the Philippines Bar Association in 1917, to the case of the respondent lawyer.  The law is a profession and not a business.  The solicitation of employment by an attorney is a ground for disbarment or suspension.1. Respondent Tagorda is suspended from the practice of law for 1 month.2. For advertising his services in the Sunday Tribune respondent attorney is

reprimanded.

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