Legal Ethics Full Text Cases For 2011

[A.C. No. 6492.
November 18, 2004
MELANIO L. ZORETA, complainant, vs. ATTY. HEHERSON ALNOR G.

SIMPLICIANO, Respondent.
DECISION
CHICO-NAZARIO, J.:
This is a complaint for disbarment filed against Atty. Heherson Alnor G. Simpliciano for allegedly
notarizing several documents during the year 2002 after his commission as notary public had
expired.
Complainant Melanio L. Zoreta alleged that on 02 August 2001, he filed before Branch 4 of the
Regional Trial Court of Antipolo City, a complaint for Breach of Contract and Damages against
Security Pacific Assurance Corporation (SPAC) dated 22 June 2001 due to the latters failure to
honor SPACs Commercial Vehicle Policy No. 94286, where respondent Atty. Heherson Alnor G.
Simpliciano was the latters counsel. In said cases, respondent who was not a duly commissioned
Notary Public in 2002 per Certifications[1] issued by the Clerk of Court of Quezon City Mercedes
S. Gatmaytan, performed acts of notarization, as evidenced by the following documents, viz:
1. Verification[2] executed by Aurora C. Galvez, President of defendant SPAC, subscribed and

sworn to before Atty. Heherson Alnor G. Simpliciano on February 18, 2002 as alleged notary
public, in Quezon City and attached to defendants Very Urgent Motion (1) To Lift the Order of
Default; and (2) To defer Plaintiffs Presentation of Evidence Ex-Parte dated February 18, 2002;
2. Affidavits of Merit[3] signed by Aurora Galvez attached to the pleading mentioned in par. 1
hereof, likewise notarized by Atty. Heherson Alnor G. Simpliciano as alleged Notary Public in
Quezon City, on February 18, 2002;
3. The Affidavit of Service[4] signed by a certain Renee L. Ramos, a Legal Assistant in

Simpliciano and Capela Law Office, and subscribed and sworn to before Atty. Heherson Alnor G.
Simpliciano on February 19, 2002 as alleged Notary Public in Quezon City. Said Affidavit of
Service was attached to the pleading mentioned in Par. 1 hereof;
4. The Affidavit of Service[5] of one Nestor Abayon, another Legal Assistant of Simpliciano and
Capela Law Office, subscribed and sworn to before Atty. Heherson Alnor G. Simpliciano on 01
April 2002 at Quezon City, as Notary Public. This Affidavit of Service was attached to defendants
Motion (1) For Reconsideration of the Order dated 05 March 2002; and (2) To allow defendants
to Present Defensive Evidence dated 27 March 2002.
5. The Verification and Certification Against Forum Shopping[6] signed this time by a certain
Celso N. Sarto, as affiant, notarized on 16 August 2002 by Atty. Heherson Alnor G. Simpliciano.
This Verification and Certification Against Forum Shopping was attached to defendants Motion
For Extension of Time To File Petition Under Rule 65 before the Court of Appeals;
6. The Affidavit of Service[7] signed by a certain Joseph B. Aganan, another Legal Assistant in
Simpliciano and Capela Law Office subscribed and sworn to before Atty. Heherson Alnor G.
Simpliciano as Notary Public on 16 August 2002. This Affidavit of Service signed by Aganan was
also attached to that Motion For Extension of Time To File Petition under Rule 65 before the
Court of Appeals;
7. Verification and Certification Against Forum Shopping[8] executed by one Celso N. Sarto,
alleged Executive Vice President and Claims Manager of defendant SPAC and notarized by Atty.
Heherson Alnor G. Simpliciano on 19 August 2002, attached to the Petition for Certiorari and
Prohibition, etc., filed before the Court of Appeals; and
8. Affidavit of Service[9] signed by a certain Joseph B. Aganan, Legal Assistant of Simpliciano

and Capela Law Office, subscribed and sworn to before Atty. Heherson Alnor G. Simpliciano on
19 August 2002, as alleged Notary Public for Quezon City with notarized commission to expire by
December 31, 2002.
On 23 April 2003, the Integrated Bar of the Philippines (IBP) of Pasig required respondent Atty.
Simpliciano to submit his answer within fifteen (15) days from receipt of the Order.[10]
On 26 May 2003, counsel of respondent filed an ex-parte motion[11] for extension of time to file
answer.
On 30 June 2003, petitioner filed a motion[12] to resolve the complaint after the extension
requested by respondent ended on 30 May 2003, and almost a month had lapsed from 30 May
2003, with no comment or pleading filed by respondent.
On 17 July 2003, Commissioner Lydia A. Navarro issued an order,[13] giving respondent a last
chance to file his answer, otherwise the case shall be deemed submitted for resolution.
Respondent failed to do so.
Commissioner Lydia A. Navarro submitted her report and recommendation[14] dated 12

February 2004, pertinent portions of which read:
A careful examination and evaluation of the evidence submitted by the petitioner showed that
respondent notarized up to Document No. 590, Page 118, Book No. II, Series of 2002 and his
commission expires December 31, 2002 which referred to the Affidavit of Service signed and
executed by Joseph B. Aganan Legal Assistant of Simpliciano and Capela Law Office subscribed
and sworn to before Notary Public Heherson Alnor G. Simpliciano whose commission expires
December 31, 2002.
All the other documents aforementioned were entered in Book II of respondents alleged notarial
book which reflected that his commission expires on December 31, 2002 as notary public.
However, the Clerk of Court of Quezon City in her certification dated October 4, 2002 stated that
as per records on file with their office respondent was not duly commissioned notary public for
and in Quezon City for the year 2002.
Another certification issued by the Clerk of Court of RTC Quezon City dated April 15, 2003
showed that as per records on file with their office respondent was commissioned notary public
for and in Quezon City from January 14, 2000 to December 31, 2001 and for the year 2002 and
2003 he did not apply for notarial commission for Quezon City.
It is evident from the foregoing that when respondent notarized the aforementioned documents,
he was not commissioned as notary public, which was in violation of the Notarial Law; for having
notarized the 590 documents after the expiration of his commission as notary public without
having renewed said commission amounting to gross misconduct as a member of the legal
profession.
Wherefore, in view of the foregoing the Undersigned respectfully recommends the revocation of
respondents commission as notary public permanently if he is commissioned as such at present
and his suspension from the practice of law for a period of three (3) months from receipt hereof
furnishing the IBP Chapter where he is a registered member a copy hereof for implementation
should this recommendation be approved by the Honorable members of the Board of Governors.
[15]
Per Resolution No. XVI-2004-236 dated 16 April 2004, the Board of Governors modified the
report and recommendation of Commissioner Navarro of suspension of three (3) months to a
suspension of six (6) months.[16]
We concur in the finding of the Investigating Commissioner that respondent Atty. Simpliciano did
not have a commission as notary public in 2002 when he notarized the assailed documents as
evidenced by the two (2) certifications issued by the Clerk of Court of the Regional Trial Court of
Quezon City dated 04 October 2002.[17] Records also show, and as confirmed by IBP
Commissioner Navarro, that as of 02 August 2002, respondent had already notarized a total of
590 documents.[18] The evidence presented by complainant conclusively establishes the
misconduct imputed to respondent.
The eight (8) notarized documents for the year 2002 submitted by complainant, consisting of
affidavits of merit, certifications and verifications against non-forum shopping, and affidavits of
service, were used and presented in the Regional Trial Court of Antipolo City, Branch 74, in Civil
Case No. 01-6240, and in respondents petition for certiorari filed in the Court of Appeals.
Against the evidence presented by complainant, respondent did not even attempt to present any
evidence. His counsel filed anex-parte motion for extension to file answer, which was granted,
but no answer was forthcoming. Still, Hearing Commissioner Lydia A. Navarro gave respondent a
last chance to file his answer; which was again unheeded. Thus, respondent was unable to rebut
complainants evidence that he was not so commissioned for the year in question. His lack of
interest and indifference in presenting his defense to the charge and the evidence against him
can only mean he has no strong and valid defense to offer. Conclusively, respondent Atty.
Simpliciano is not a duly commissioned Notary Public for and in Quezon City for the year 2002.
At the threshold, it is worth stressing that the practice of law is not a right but a privilege
bestowed by the State on those who show that they possess, and continue to possess, the
qualifications required by law for the conferment of such privilege.[19]Membership in the bar is
a privilege burdened with conditions. A lawyer has the privilege and right to practice law only
during good behavior and can only be deprived of it for misconduct ascertained and declared by
judgment of the court after opportunity to be heard has been afforded him. Without invading
any constitutional privilege or right, an attorneys right to practice law may be resolved by a
proceeding to suspend him, based on conduct rendering him unfit to hold a license or to exercise
the duties and responsibilities of an attorney. It must be understood that the purpose of
suspending or disbarring him as an attorney is to remove from the profession a person whose
misconduct has proved him unfit to be entrusted with the duties and responsibilities belonging to
an office of attorney, and thus to protect the public and those charged with the administration of
justice, rather than to punish an attorney.[20] Elaborating on this, we said in Maligsa v.
Cabanting[21] that [t]he bar should maintain a high standard of legal proficiency as well as of
honesty and fair dealing. A lawyer brings honor to the legal profession by faithfully performing
his duties to society, to the bar, to the courts and to his clients. To this end a member of the
legal fraternity should refrain from doing any act which might lessen in any degree the
confidence and trust reposed by the public in the fidelity, honesty and integrity of the legal
profession.[22] Towards this end, an attorney may be disbarred, or suspended for any violation
of his oath or of his duties as an attorney and counselor, which include statutory grounds
enumerated in Section 27, Rule 138 of the Rules of Court, all of these being broad enough to
cover practically any misconduct of a lawyer in his professional or private capacity.[23]
Apropos to the case at bar, it has been emphatically stressed that notarization is not an empty,
meaningless, routinary act. It is invested with substantive public interest, such that only those
who are qualified or authorized may act as notaries public. The protection of that interest
necessarily requires that those not qualified or authorized to act must be prevented from
imposing upon the public, the courts, and the administrative offices in general. It must be
underscored that the notarization by a notary public converts a private document into a public
document making that document admissible in evidence without further proof of authenticity. A
notarial document is by law entitled to full faith and credit upon its face. For this reason, notaries
public must observe with utmost care the basic requirements in the performance of their duties.
[24]
The requirements for the issuance of a commission as notary public must not be treated as a
mere casual formality. The Court has characterized a lawyers act of notarizing documents
without the requisite commission therefore as reprehensible, constituting as it does not only
malpractice but also x x x the crime of falsification of public documents.[25] For such
reprehensible conduct, the Court has sanctioned erring lawyers by suspension from the practice
of law, revocation of the notarial commission and disqualification from acting as such, and even
disbarment.[26]
In the case of Nunga v. Viray,[27] the Court had occasion to state that where the notarization of
a document is done by a member of the Philippine Bar at a time when he has no authorization or
commission to do so, the offender may be subjected to disciplinary action. For one, performing a
notarial without such commission is a violation of the lawyers oath to obey the laws, more
specifically, the Notarial Law. Then, too, by making it appear that he is duly commissioned when
he is not, he is, for all legal intents and purposes, indulging in deliberate falsehood, which the
lawyers oath similarly proscribes. These violations fall squarely within the prohibition of Rule
1.01 of Canon 1 of the Code of Professional Responsibility, which provides: A lawyer shall not
engage in unlawful, dishonest, immoral or deceitful conduct.
By such misconduct as a notary public, the lawyer likewise violates Canon 7 of the same Code,
which directs every lawyer to uphold at all times the integrity and dignity of the legal profession.
On different occasions, this Court had disbarred or suspended lawyers for notarizing documents
with an expired commission:
1. In Flores v. Lozada,[28] the court disbarred a lawyer who notarized six documents such
as the extrajudicial partition of an estate, deed of sale with right of repurchase, and
four (4) deeds of absolute sale - all involving unregistered lands, after his commission
as Notary Public expired;
2. In Joson v. Baltazar,[29] the court suspended the lawyer for three (3) months since only
one (1) instance of unauthorized notarization of a deed of sale was involved.
3. In Nunga v. Viray,[30] the court suspended the lawyer for three (3) years when he
notarized an absolute deed of sale of the buyer minor, who was his son and, at the
same time, he was a stockholder and legal counsel of the vendor bank, and when he
entered in his notarial registry an annotation of the cancellation of the loan in favor of
a certain bank, at a time when he was not commissioned as a Notary Public. What
aggravated respondents unlawful notarization was the fact that the transaction
involved was in favor of his son, who was then only eighteen years old and, therefore,
a minor.
4. In Buensuceso v. Barrera,[31] the lawyer was suspended for one (1) year when he
notarized five (5) documents such as a complaint for ejectment, affidavit,
supplemental affidavit, a deed of sale and a contract to sell, after his commission as
Notary Public expired.
Needless to state, respondent cannot escape from disciplinary action in his capacity as a notary
public and as a member of the Philippine Bar. However, the penalty recommended by the Board
of Governors of the IBP must be increased. Respondent must be barred from being
commissioned as a notary public permanently and suspended from the practice of law for two
(2) years.
WHEREFORE, this Court hereby adopts the findings of Investigating Commissioner Lydia A.
Navarro, which the Board of Governors of the Integrated Bar of the Philippines adopted and
approved, but hereby MODIFIES the penalty recommended by the Board of Governors. As
modified, respondent ATTY. HEHERSON ALNOR G. SIMPLICIANO is hereby BARRED
PERMANENTLY from being commissioned as Notary Public. He is furthermore SUSPENDED from
the practice of law for two (2) years, effective upon receipt of a copy of this Decision.
Let copies of this Decision be furnished all the courts of the land through the Court Administrator
as well as the Integrated Bar of the Philippines, the Office of the Bar Confidant, and recorded in
the personal files of respondent himself.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
CBD Case No. 176 January 20, 1995
SALLY D. BONGALONTA, complainant,

vs.
ATTY. PABLITO M. CASTILLO and ALFONSO M. MARTIJA, respondents.
RESOLUTION
MELO, J.:
In a sworn letter-complaint dated February 15, 1995, addressed to the Commission on Bar
Discipline, National Grievance Investigation Office, Integrated Bar of the Philippines,
complainant Sally Bongalonta charged Pablito M. Castillo and Alfonso M. Martija, members of
the Philippine Bar, with unjust and unethical conduct, to wit: representing conflicting interests
and abetting a scheme to frustrate the execution or satisfaction of a judgment which
complainant might obtain.
The letter-complaint stated that complainant filed with the Regional Trial Court of Pasig,
Criminal Case No. 7635-55, for estafa, against the Sps. Luisa and Solomer Abuel. She also
filed, a separate civil action Civil Case No. 56934, where she was able to obtain a writ of
preliminary attachment and by virtue thereof, a piece of real property situated in Pasig, Rizal
and registered in the name of the Sps. Abuel under TCT No. 38374 was attached. Atty.
Pablito Castillo was the counsel of the Sps. Abuel in the aforesaid criminal and civil cases.
During the pendency of these cases, one Gregorio Lantin filed civil Case No. 58650 for
collection of a sum of money based on a promissory note, also with the Pasig Regional Trial
Court, against the Sps. Abuel. In the said case Gregorio Lantin was represented by Atty.
Alfonso Martija. In this case, the Sps. Abuel were declared in default for their failure to file the
necessary responsive pleading and evidence ex-parte was received against them followed by
a judgment by default rendered in favor of Gregorio Lantin. A writ of execution was, in due
time, issued and the same property previously attached by complainant was levied upon.
It is further alleged that in all the pleadings filed in these three (3) aforementioned cases, Atty.
Pablito Castillo and Atty. Alfonso Martija placed the same address, the same PTR and the
same IBP receipt number to wit" Permanent Light Center, No. 7, 21st Avenue, Cubao,
Quezon City, PTR No. 629411 dated 11-5-89 IBP No. 246722 dated 1-12-88.
Thus, complainant concluded that civil Case No. 58650 filed by Gregorio Lantin was merely a
part of the scheme of the Sps. Abuel to frustrate the satisfaction of the money judgment which
complainant might obtain in Civil Case No. 56934.
After hearing, the IBP Board of Governors issued it Resolution with the following findings and
recommendations:
Among the several documentary exhibits submitted by Bongalonta and attached

to the records is a xerox copy of TCT No. 38374, which Bongalonta and the
respondents admitted to be a faithful reproduction of the original. And it clearly
appears under the Memorandum of Encumbrances on aid TCT that the Notice of
Levy in favor of Bongalonta and her husband was registered and annotated in
said title of February 7, 1989, whereas, that in favor of Gregorio Lantin, on
October 18, 1989. Needless to state, the notice of levy in favor of Bongalonta
and her husband is a superior lien on the said registered property of the Abuel
spouses over that of Gregorio Lantin.
Consequently, the charge against the two respondents (i.e. representing

conflicting interests and abetting a scheme to frustrate the execution or
satisfaction of a judgment which Bongalonta and her husband might obtain
against the Abuel spouses) has no leg to stand on.
However, as to the fact that indeed the two respondents placed in their
appearances and in their pleadings the same IBP No. "246722 dated
1-12-88", respondent Atty. Pablito M. Castillo deserves to be SUSPENDED for
using, apparently thru his negligence, the IBP official receipt number of
respondent Atty. Alfonso M. Martija. According to the records of the IBP National
Office, Atty. Castillo paid P1,040.00 as his delinquent and current membership
dues, on February 20, 1990, under IBP O.R. No. 2900538, after Bongalonta filed
her complaint with the IBP Committee on Bar Discipline.
The explanation of Atty. Castillo's Cashier-Secretary by the name of Ester

Fraginal who alleged in her affidavit dated March 4, 1993, that it was all her fault
in placing the IBP official receipt number pertaining to Atty. Alfonso M. Martija in
the appearance and pleadings Atty. Castillo and in failing to pay in due time the
IBP membership dues of her employer, deserves scant consideration, for it is the
bounded duty and obligation of every lawyer to see to it that he pays his IBP
membership dues on time, especially when he practices before the courts, as
required by the Supreme Court.
WHEREFORE, it is respectfully recommended that Atty. Pablito M. Castillo be

SUSPENDED from the practice of law for a period of six (6) months for using the
IBP Official Receipt No. of his co-respondent Atty. Alfonso M. Martija.
The complaint against Atty. Martija is hereby DISMISSED for lack of evidence.
(pp. 2-4, Resolution)
The Court agrees with the foregoing findings and recommendations. It is well to stress again
that the practice of law is not a right but a privilege bestowed by the State on those who show
that they possess, and continue to possess, the qualifications required by law for the
conferment of such privilege. One of these requirements is the observance of honesty and
candor. Courts are entitled to expect only complete candor and honesty from the lawyers
appearing and pleading before them. A lawyer, on the other hand, has the fundamental duty
to satisfy that expectation. for this reason, he is required to swear to do no falsehood, nor
consent to the doing of any in court.
WHEREFORE, finding respondent Atty. Pablito M. Castillo guilty committing a falsehood in

violation of his lawyer's oath and of the Code of Professional Responsibility, the Court
Resolved to SUSPEND him from the practice of law for a period of six (6) months, with a
warning that commission of the same or similar offense in the future will result in the
imposition of a more severe penalty. A copy of the Resolution shall be spread on the personal
record of respondent in the Office of the Bar Confidant.
SO ORDERED.
SUPREME COURT
Manila
EN BANC
G.R. No. L-51813-14 November 29, 1983
ROMULO CANTIMBUHAN, NELSON B. MALANA, and ROBERT V. LUCILA, petitioners,

vs.
HON. NICANOR J. CRUZ, JR., Presiding Judge of the Municipal Court of Parañaque,
Metro Manila, and FISCAL LEODEGARIO C. QUILATAN, respondents.
Froilan M. Bacungan and Alfredo F. Tadiar for petitioners.
The Solicitor General for respondents.
RELOVA, J.: ñé+.£ªwph!1
Appeal from the Order, dated August 16, 1979, of respondent Judge Nicanor J. Cruz, Jr., of
the then Municipal Court of Parañaque, Metro Manila, disallowing the appearances of
petitioners Nelson B. Malana and Robert V. Lucila as private prosecutors in Criminal Cases
Nos. 58549 and 58550, both for less serious physical injuries, filed against Pat. Danilo San
Antonio and Pat. Rodolfo Diaz, respectively, as well as the Order, dated September 4, 1979,
denying the motion for reconsideration holding, among others, that "the fiscal's claim that
appearances of friends of party-litigants should be allowed only in places where there is a
scarcity of legal practitioner, to be well founded. For, if we are to allow non-members of the
bar to appear in court and prosecute cases or defend litigants in the guise of being friends of
the litigants, then the requirement of membership in the Integrated Bar of the Philippines and
the additional requirement of paying professional taxes for a lawyer to appear in court, would
be put to naught. " (p. 25, Rollo)
Records show that on April 6, 1979, petitioner Romulo Cantimbuhan filed separate criminal
complaints against Patrolmen Danilo San Antonio and Rodolfo Diaz for less serious physical
injuries, respectively, and were docketed as Criminal Cases Nos. 58549 and 58550 in the
then Municipal Court of Parañaque, Metro Manila.
Petitioners Nelson B. Malana and Robert V. Lucila, in 1979, were senior law students of the
U.P.assistance to the needy clients in the Office of the Legal Aid. Thus, in August 1979,
petitioners Malana and Lucila filed their separate appearances, as friends of complainant-
petitioner Cantimbuhan. Herein respondent Fiscal Leodegario C. Quilatan opposed the
appearances of said petitioners, and respondent judge, in an Order dated August 16, 1979,
sustained the respondent fiscal and disallowed the appearances of petitioners Malana and
Lucila, as private prosecutors in said criminal cases. Likewise, on September 4, 1979,
respondent Judge issued an order denying petitioners' motion for reconsideration.
Hence, this petition for certiorari, mandamus and prohibition with prayers, among others, that
the Orders of respondent judge, dated August 16, 1979 and September 4, 1979, be set aside
as they are in plain violation of Section 34, Rule 138 of the Rules of Court and/or were issued
with grave abuse of discretion amounting to lack of jurisdiction. Upon motion, the Court, on
November 8, 1979, issued a temporary restraining order "enjoining respondent judge and all
persons acting for and in his behalf from conducting any proceedings in Criminal Cases Nos.
58549 (People of the Philippines vs. Danilo San Antonio) and 58559 (People of the
Philippines vs. Rodolfo Diaz) of the Municipal Court of Parañaque, Metro Manila on
November 15, 1979 as scheduled or on any such dates as may be fixed by said respondent
judge.
Basis of this petition is Section 34, Rule 138 of the Rules of Court which states: têñ.£îhqwâ£
SEC. 34. By whom litigation conducted. — In the court of a justice of the peace a
party may conduct his litigation in person, with the aid of an agent or friend
appointed by him for that purpose, or with the aid of an attorney. In any other
court, a party may conduct his litigation personally or by aid of an attorney, and
his appearance must be either personal or by a duly authorized member of the
bar.
Thus, a non-member of the Philippine Bar — a party to an action is authorized to appear in

court and conduct his own case; and, in the inferior courts, the litigant may be aided by a
friend or agent or by an attorney. However, in the Courts of First Instance, now Regional Trial
Courts, he can be aided only by an attorney.
On the other hand, it is the submission of the respondents that pursuant to Sections 4 and 15,
Rule 110 of the Rules of Court, it is the fiscal who is empowered to determine who shall be
the private prosecutor as was done by respondent fiscal when he objected to the
appearances of petitioners Malana and Lucila. Sections 4 and 15, Rule 110 of the Rules of
Court provide: têñ.£îhqwâ£
SEC. 4. Who must prosecute criminal actions. — All criminal actions either
commenced by complaint or by information shall be prosecuted under the
direction and control of the fiscal.
xxx xxx xxx
SEC. 15. Intervention of the offended party in criminal action. — Unless the
offended party has waived the civil action or expressly reserved the right to
institute it separately from the criminal action, and subject to the provisions of
section 4 hereof, he may intervene, personally or by attorney, in the prosecution
of the offense.
And, they contend that the exercise by the offended party to intervene is subject to the
direction and control of the fiscal and that his appearance, no less than his active conduct of
the case later on, requires the prior approval of the fiscal.
We find merit in the petition. Section 34, Rule 138 of the Rules of Court, clearly provides that
in the municipal court a party may conduct his litigation in person with the aid of an agent
appointed by him for the purpose. Thus, in the case of Laput vs. Bernabe, 55 Phil. 621, a law
student was allowed to represent the accused in a case pending before the then Municipal
Court, the City Court of Manila, who was charged for damages to property through reckless
imprudence. "It is accordingly our view that error was committed in the municipal court in not
allowing Crispiniano V. Laput to act as an agent or friend of Catalino Salas to aid the latter in
conducting his defense." The permission of the fiscal is not necessary for one to enter his
appearance as private prosecutor. In the first place, the law does not impose this condition.
What the fiscal can do, if he wants to handle the case personally is to disallow the private
prosecutor's participation, whether he be a lawyer or not, in the trial of the case. On the other
hand, if the fiscal desires the active participation of the private prosecutor, he can just
manifest to the court that the private prosecutor, with its approval, will conduct the prosecution
of the case under his supervision and control. Further, We may add that if a non-lawyer can
appear as defense counsel or as friend of the accused in a case before the municipal trial
court, with more reason should he be allowed to appear as private prosecutor under the
supervision and control of the trial fiscal.
In the two criminal cases filed before the Municipal Court of Parañaque, petitioner
Cantimbuhan, as the offended party, did not expressly waive the civil action nor reserve his
right to institute it separately and, therefore, the civil action is deemed impliedly instituted in
said criminal cases. Thus, said complainant Romulo Cantimbuhan has personal interest in the
success of the civil action and, in the prosecution of the same, he cannot be deprived of his
right to be assisted by a friend who is not a lawyer.
WHEREFORE, the Orders issued by respondent judge dated August 16, 1979 and
September 4, 1979 which disallowed the appearances of petitioners Nelson B. Malana and
Robert V. Lucila as friends of party-litigant petitioner Romulo Cantimbuhan. are hereby SET
ASIDE and respondent judge is hereby ordered to ALLOW the appearance and intervention
of petitioners Malana and Lucila as friends of Romulo Cantimbuhan. Accordingly, the
temporary restraining order issued on November 8, 1979 is LIFTED.
SO ORDERED. 1äwphï1.ñët
Fernando, C.J., Makasiar, Concepcion Jr., Guerrero, Abad Santos, Plana, Escolin and
Gutierrez, Jr., JJ., concur.
Separate Opinions
AQUINO, J., dissenting:
Senior law students should study their lessons anti prepare for the bar. They have no
business appearing in court.
MELENCIO-HERRERA, J., dissenting:
Section 34, Rule 138 of the Rules of Court specifically provides that it is "a party" who may
conduct his litigation in person, with the aid of an agent or friend appointed by him for that
purpose in the Court of a Justice of the Peace. Romulo Cantimbuhan, as the complaining
witness in Criminal Cases Nos. 58549 and 58550 of the then Municipal Court of Parañaque,
Metro Manila, is not a "party" within the meaning of the said Rule. The parties in a criminal
case are the accused and the People. A complaining witness or an offended party only
intervene in a criminal action in respect of the civil liability. The case of Laput and Salas vs.
Bernabe, 55 Phil. 621, is authority only in respect of the accused, as a "party", in a criminal
case.
Sections 4 and 15, Rule 110 of the Rules of Court, being the more specific provisions in
respect of criminal cases, should take precedence over Section 34, Rule 138 and should be
controlling (Bagatsing vs. Hon. Ramirez, 74 SCRA 306 [1976]). Section 4 provides
that all criminal actions shall be prosecuted under the direction and control of the Fiscal, while
Section 15 specifically provides that the offended party may intervene, personally or by
attorney, in the prosecution of the offense.
I vote, therefore, to uphold the Order of respondent Municipal Judge, dated August 16, 1979,
disallowing the appearances of petitioners as private prosecutors in the abovementioned
criminal cases. Orders set aside.
Fernando, C.J., Makasiar, Concepcion, Jr., Guerrero, Abad Santos, Plana, Escolin and
Gutierrez, Jr., JJ., concur.
Separate Opinions
case.
criminal cases. Orders set aside.
De Castro, Teehankee, JJ., concur
Separate Opinions
case.
criminal cases.
SUPREME COURT
Manila
SECOND DIVISION
[G.R. No. 126625. September 23, 1997]
KANLAON CONSTRUCTION ENTERPRISES CO., INC., Petitioner, vs.

NATIONAL LABOR RELATIONS COMMISSION, 5TH DIVISION, and
BENJAMIN RELUYA, JR., EDGARDO GENAYAS, ERNESTO CANETE,
PROTACIO ROSALES, NESTOR BENOYA, RODOLFO GONGOB, DARIO
BINOYA, BENJAMIN BASMAYOR, ABELARDO SACURA, FLORENCIO
SACURA, ISABELO MIRA, NEMESIO LACAR, JOSEPH CABIGKIS, RODRIGO
CILLON, VIRGILIO QUIZON, GUARINO EVANGELISTA, ALEJANDRO GATA,
BENEDICTO CALAGO, NILO GATA, DIONISIO PERMACIO, JUANITO
SALUD, ADOR RIMPO, FELIPE ORAEZ, JULIETO TEJADA, TEOTIMO LACIO,
ONOFRE QUIZON, RUDY ALVAREZ, CRESENCIO FLORES, ALFREDO
PERMACIO, CRESENCIO ALVIAR, HERNANI SURILA, DIOSDADO SOLON,
CENON ALBURO, ZACARIAS ORTIZ, EUSEBIO BUSTILLO, GREGORIO
BAGO, JERRY VARGAS, EDUARDO BUENO, PASCUAL HUDAYA, ROGELIO
NIETES, and REYNALDO NIETES, Respondents.
DECISION
PUNO, J.:
In this petition for certiorari, petitioner Kanlaon Construction Enterprises Co., Inc.
seeks to annul the decision of respondent National Labor Relations Commission,
Fifth Division and remand the cases to the Arbitration Branch for a retrial on the
merits.
Petitioner is a domestic corporation engaged in the construction business

nationwide with principal office at No. 11 Yakan St., La Vista Subdivision, Quezon
City. In 1988, petitioner was contracted by the National Steel Corporation to
construct residential houses for its plant employees in Steeltown, Sta. Elena,
Iligan City. Private respondents were hired by petitioner as laborers in the project
and worked under the supervision of Engineers Paulino Estacio and Mario Dulatre.
In 1989, the project neared its completion and petitioner started terminating the
services of private respondents and its other employees.
In 1990, private respondents filed separate complaints against petitioner before

Sub-Regional Arbitration Branch XII, Iligan City. Numbering forty-one (41) in all,
they claimed that petitioner paid them wages below the minimum and sought
payment of their salary differentials and thirteenth-month pay. Engineers Estacio
and Dulatre were named co-respondents.
Some of the cases were assigned to Labor Arbiter Guardson A. Siao while the
others were assigned to Labor Arbiter Nicodemus G. Palangan. Summonses and
notices of preliminary conference were issued and served on the two engineers
and petitioner through Engineer Estacio. The preliminary conferences before the
labor arbiters were attended by Engineers Estacio and Dulatre and private
respondents. At the conference of June 11, 1990 before Arbiter Siao, Engineer
Estacio admitted petitioner's liability to private respondents and agreed to pay
their wage differentials and thirteenth-month pay on June 19, 1990. As a result of
this agreement, Engineer Estacio allegedly waived petitioner's right to file its
position paper. [1] Private respondents declared that they, too, were dispensing
with their position papers and were adopting their complaints as their position
paper. [2]
On June 19, 1990, Engineer Estacio appeared but requested for another week to
settle the claims. Labor Arbiter Siao denied this request. On June 21, 1990,
Arbiter Siao issued an order granting the complaint and directing petitioner to pay
private respondents' claims. Arbiter Siao held:
"x x x
"Considering the length of time that has elapsed since these cases were filed, and
what the complainants might think as to how this branch operates and/or
conducts its proceedings as they are now restless, this Arbiter has no other
alternative or recourse but to order the respondent to pay the claims of the
complainants, subject of course to the computation of the Fiscal Examiner II of
this Branch pursuant to the oral manifestation of respondent. The Supreme Court
ruled: 'Contracts though orally made are binding on the parties.' (Lao Sok v.
Sabaysabay, 138 SCRA 134).
"Similarly, this Branch would present in passing that 'a court cannot decide a case
without facts either admitted or agreed upon by the parties or proved by
evidence.' (Yu Chin Piao v. Lim Tuaco, 33 Phil. 92; Benedicto v. Yulo, 26 Phil.
160).
"WHEREFORE, premises considered, the respondent is hereby ordered to pay the

individual claims of the above-named complainants representing their wage
differentials within ten (10) days from receipt of this Order.
"The Fiscal Examiner II of this Branch is likewise hereby ordered to compute the
individual claims of the herein complainants.
"SO ORDERED." [3]
On June 29, 1990, Arbiter Palangan issued a similar order, thus:
"When the above-entitled cases were called for hearing on June 19, 1990 at
10:00 a.m. respondent thru their representative manifested that they were
willing to pay the claims of the complainants and promised to pay the same on
June 28, 1990 at 10:30 a.m.
"However, when these cases were called purposely to materialize the promise of
the respondent, the latter failed to appear without any valid reason.
"Considering therefore that the respondent has already admitted the claims of the
complainants, we believe that the issues raised herein have become moot and
academic.
"WHEREFORE, premises considered, the above-entitled cases are hereby ordered

Closed and Terminated, however, the respondent is hereby ordered to pay the
complainants their differential pay and 13th-month pay within a period of ten
(10) days from receipt hereof based on the employment record on file with the
respondent.
"SO ORDERED." [4]
Petitioner appealed to respondent National Labor Relations Commission. It alleged

that it was denied due process and that Engineers Estacio and Dulatre had no
authority to represent and bind petitioner. Petitioner's appeal was filed by one
Atty. Arthur Abundiente.
In a decision dated April 27, 1992, respondent Commission affirmed the orders of
the Arbiters.
Petitioner interposed this petition alleging that the decision of respondent

Commission was rendered without jurisdiction and in grave abuse of discretion.
Petitioner claims that:
"Iy"THE QUESTIONED DECISION RENDERED BY THE HONORABLE COMMISSION

IS A NULLITY, IT HAVING BEEN ISSUED WITHOUT JURISDICTION;
IIy"PUBLIC RESPONDENT NATIONAL LABOR RELATIONS COMMISSION GRAVELY

ABUSED ITS DISCRETION IN ARBITRARILY, CAPRICIOUSLY AND WHIMSICALLY
MAKING THE FOLLOWING CONCLUSIONS BASED NOT ON FACTS AND EVIDENCE
BUT ON SPECULATION, SURMISE AND CONJECTURE:
A. Petitioner was deprived of the constitutional right to due process of law when it
was adjudged by the NLRC liable without trial on the merits and without its
knowledge;
B. The NLRC erroneously, patently and unreasonably interpreted the principle

that the NLRC and its Arbitration Branch are not strictly bound by the rules of
evidence;
C. There is no legal nor actual basis in the NLRC's ruling that petitioner is already
in estoppel to disclaim the authority of its alleged representatives.
D. The NLRC committed manifest error in relying merely on private respondents

unsubstantiated complaints to hold petitioner liable for damages." [5]
In brief, petitioner alleges that the decisions of the labor arbiters and respondent
Commission are void for the following reasons: (1) there was no valid service of
summons; (2) Engineers Estacio and Dulatre and Atty. Abundiente had no
authority to appear and represent petitioner at the hearings before the arbiters
and on appeal to respondent Commission; (3) the decisions of the arbiters and
respondent Commission are based on unsubstantiated and self-serving evidence
and were rendered in violation of petitioner's right to due process.
Service of summons in cases filed before the labor arbiters is governed by

Sections 4 and 5 of Rule IV of the New Rules of Procedure of the NLRC. They
provide:
"Section 4. Service of Notices and Resolutions.-- (a) Notices or summons and

copies of orders, resolutions or decisions shall be served on the parties to the
case personally by the bailiff or duly authorized public officer within three (3)
days from receipt thereof or by registered mail; Provided that where a party is
represented by counsel or authorized representative, service shall be made on
such counsel or authorized representative; provided further that in cases of
decision and final awards, copies thereof shall be served on both the parties and
their counsel; provided finally, that in case where the parties are so numerous,
service shall be made on counsel and upon such number of complainants as may
be practicable, which shall be considered substantial compliance with Article 224
(a) of the Labor Code, as amended.
"x x x
"Section 5. Proof and completeness of service.-- The return is prima facie proof of
the facts indicated therein. Service by registered mail is complete upon receipt by
the addressee or his agent. x x x."
Under the NLRC Rules of Procedure, summons on the respondent shall be served
personally or by registered mail on the party himself. If the party is represented
by counsel or any other authorized representative or agent, summons shall be
served on such person.
It has been established that petitioner is a private domestic corporation with

principal address in Quezon City. The complaints against petitioner were filed in
Iligan City and summonses therefore served on Engineer Estacio in Iligan City.
The question now is whether Engineer Estacio was an agent and authorized
representative of petitioner.
To determine the scope or meaning of the term "authorized representative" or

"agent" of parties on whom summons may be served, the provisions of the
Revised Rules of Court may be resorted to. [6]
Under the Revised Rules of Court, [7] service upon a private domestic corporation
or partnership must be made upon its officers, such as the president, manager,
secretary, cashier, agent, or any of its directors. These persons are deemed so
integrated with the corporation that they know their responsibilities and
immediately discern what to do with any legal papers served on them.[8]
In the case at bar, Engineer Estacio, assisted by Engineer Dulatre, managed and
supervised the construction project. [9]According to the Solicitor General and
private respondents, Engineer Estacio attended to the project in Iligan City and
supervised the work of the employees thereat. As manager, he had sufficient
responsibility and discretion to realize the importance of the legal papers served
on him and to relay the same to the president or other responsible officer of
petitioner. Summons for petitioner was therefore validly served on him.
Engineer Estacio's appearance before the labor arbiters and his promise to settle
the claims of private respondents is another matter.
The general rule is that only lawyers are allowed to appear before the labor
arbiter and respondent Commission in cases before them. The Labor Code and
the New Rules of Procedure of the NLRC, nonetheless, lists three (3) exceptions
to the rule, viz:
"Section 6. Appearances.-- x x x.
"A non-lawyer may appear before the Commission or any Labor Arbiter only if:
"(a) he represents himself as party to the case;
"(b) he represents the organization or its members, provided that he shall be

made to present written proof that he is properly authorized; or
"(c) he is a duly-accredited member of any legal aid office duly recognized by the
Department of Justice or the Integrated Bar of the Philippines in cases referred
thereto by the latter. x x x." [10]
A non-lawyer may appear before the labor arbiters and the NLRC only if: (a) he
represents himself as a party to the case; (b) he represents an organization or its
members, with written authorization from them; or (c) he is a duly accredited
member of any legal aid office duly recognized by the Department of Justice or
the Integrated Bar of the Philippines in cases referred to by the latter. [11]
Engineers Estacio and Dulatre were not lawyers. Neither were they duly-
accredited members of a legal aid office. Their appearance before the labor
arbiters in their capacity as parties to the cases was authorized under the first
exception to the rule. However, their appearance on behalf of petitioner required
written proof of authorization. It was incumbent upon the arbiters to ascertain
this authority especially since both engineers were named co-respondents in the
cases before the arbiters. Absent this authority, whatever statements and
declarations Engineer Estacio made before the arbiters could not bind petitioner.
The appearance of Atty. Arthur Abundiente in the cases appealed to respondent

Commission did not cure Engineer Estacio's representation. Atty. Abundiente, in
the first place, had no authority to appear before the respondent Commission.
The appellants' brief he filed was verified by him, not by
petitioner. [12] Moreover, respondent Commission did not delve into the merits of
Atty. Abundiente's appeal and determine whether Engineer Estacio was duly
authorized to make such promise. It dismissed the appeal on the ground that
notices were served on petitioner and that the latter was estopped from denying
its promise to pay.
Nevertheless, even assuming that Engineer Estacio and Atty. Abundiente were
authorized to appear as representatives of petitioner, they could bind the latter
only in procedural matters before the arbiters and respondent Commission.
Petitioner's liability arose from Engineer Estacio's alleged promise to pay. A
promise to pay amounts to an offer to compromise and requires a special power
of attorney or the express consent of petitioner. The authority to compromise
cannot be lightly presumed and should be duly established by evidence. [13] This
is explicit from Section 7 of Rule III of the NLRC Rules of Procedure, viz:
"Section 7. Authority to bind party.-- Attorneys and other representatives of

parties shall have authority to bind their clients in all matters of procedure; but
they cannot, without a special power of attorney or express consent, enter into a
compromise agreement with the opposing party in full or partial discharge of a
client's claim."
The promise to pay allegedly made by Engineer Estacio was made at the
preliminary conference and constituted an offer to settle the case amicably. The
promise to pay could not be presumed to be a single unilateral act, contrary to
the claim of the Solicitor General. [14] A defendant's promise to pay and settle
the plaintiff's claims ordinarily requires a reciprocal obligation from the plaintiff to
withdraw the complaint and discharge the defendant from liability. [15] In effect,
the offer to pay was an offer to compromise the cases.
In civil cases, an offer to compromise is not an admission of any liability, and is

not admissible in evidence against the offeror.[16] If this rule were otherwise, no
attempt to settle litigation could safely be made. [17] Settlement of disputes by
way of compromise is an accepted and desirable practice in courts of law and
administrative tribunals. [18] In fact, the Labor Code mandates the labor arbiter
to exert all efforts to enable the parties to arrive at an amicable settlement of the
dispute within his jurisdiction on or before the first hearing. [19]
Clearly, respondent Commission gravely abused its discretion in affirming the

decisions of the labor arbiters which were not only based on unauthorized
representations, but were also made in violation of petitioner's right to due
process.
Section 3 of Rule V of the NLRC Rules of Procedure provides:
"Section 3. Submission of Position Papers/Memorandum.-- Should the parties fail

to agree upon an amicable settlement, in whole or in part, during the
conferences, the Labor Arbiter shall issue an order stating therein the matters
taken up and agreed upon during the conferences and directing the parties to
simultaneously file their respective verified position papers.
"x x x."
After petitioner's alleged representative failed to pay the workers' claims as

promised, Labor Arbiters Siao and Palangan did not order the parties to file their
respective position papers. The arbiters forthwith rendered a decision on the
merits without at least requiring private respondents to substantiate their
complaints. The parties may have earlier waived their right to file position papers
but petitioner's waiver was made by Engineer Estacio on the premise that
petitioner shall have paid and settled the claims of private respondents at the
scheduled conference. Since petitioner reneged on its "promise," there was a
failure to settle the case amicably. This should have prompted the arbiters to
order the parties to file their position papers.
Article 221 of the Labor Code mandates that in cases before labor arbiters and
respondent Commission, they "shall use every and all reasonable means to
ascertain the facts in each case speedily and objectively and without regard to
technicalities of law or procedure, all in the interest of due process." The rule that
respondent Commission and the Labor Arbiters are not bound by technical rules
of evidence and procedure should not be interpreted so as to dispense with the
fundamental and essential right of due process. [20] And this right is satisfied, at
the very least, ' when the parties are given the opportunity to submit position
papers. [21] Labor Arbiters Siao and Palangan erred in dispensing with this
requirement.
Indeed, the labor arbiters and the NLRC must not, at the expense of due process,
be the first to arbitrarily disregard specific provisions of the Rules which are
precisely intended to assist the parties in obtaining the just, expeditious and
inexpensive settlement of labor disputes. [22]
IN VIEW WHEREOF, the petition for certiorari is granted. The decision of the
National Labor Relations Commission, Fifth Division, is annulled and set aside and
the case is remanded to the Regional Arbitration Branch, Iligan City for further
proceedings.
SO ORDERED
SUPREME COURT
Manila
SECOND DIVISION
ADM. CASE NO. 5737 October 25, 2004
FERDINAND A. CRUZ, complainant,

vs.
ATTY. STANLEY CABRERA, respondent.
RESOLUTION
AUSTRIA-MARTINEZ, J.:
In an administrative complaint dated July 7, 2002, Ferdinand A. Cruz charges Atty. Stanley
Cabrera with misconduct in violation of the Code of Professional Responsibility.
Complainant alleges that he is a fourth year law student; since the latter part of 2001, he
instituted several actions against his neighbors; he appeared for and in his behalf in his own
cases; he met respondent who acted as the counsel of his neighbors; during a hearing on
January 14, 2002, in one case before the Regional Trial Court, Branch 112, Pasay City,
presided by Judge Caridad Cuerdo, the following exchange transpired:
xxx xxx So, may we know your honor, if he is a lawyer or not?
The Court having been inhibited by the respondent from hearing the case, replied:
You are asking for my inhibition and yet you want me to rule on his appearance
xxx xxx.
Thereafter, the respondent said:
Because your honor, he (pertaining to the complainant) is misrepresenting

himself to be a lawyer!
To this the complainant remarked:
"Your Honor, I’m not xxx xxx."
Respondent, this time engulfed with anger in a raising voice said:
Appear ka ng appear, pumasa ka muna; x x x.
Respondent’s imputations were uncalled for and the latter’s act of compelling the court to ask
complainant whether he is a lawyer or not was intended to malign him before the public,
inasmuch as respondent knew that complainant is not a lawyer, having appeared for and in
his behalf as a party litigant in prior cases; respondent’s imputations of complainant’s
misrepresentation as a lawyer was patently with malice to discredit his honor, with the
intention to threaten him not to appear anymore in cases respondent was handling; the
manner, substance, tone of voice and how the words "appear ka ng appear, pumasa ka
muna!" were uttered were totally with the intention to annoy, vex and humiliate, malign,
ridicule, incriminate and discredit complainant before the public.
Complainant claims that respondent’s display of improper attitude, arrogance, misbehavior,

misconduct in the performance of his duties both as a lawyer and officer of the court, before
the public and the court, was a patent transgression of the very ethics that lawyers are sworn
to uphold in their dealings with society and corresponding appropriate penalty or sanctions for
the said administrative violations should be imposed on the respondent.
In his Comment, respondent contends that the complaint filed against him is a vicious scheme
to dissuade him from appearing as counsel for the Mina family against whom complainant
had filed several civil and criminal cases including him to further complainant’s illegal practice
of law; complainant’s complaint occurred during a judicial proceeding wherein complainant
was able to represent himself considering that he was appearing in barong tagalog thus the
presiding judge was misled when she issued an order stating "[i]n today’s hearing both
lawyers appeared;" because of which, respondent stated: "Your honor I would like to manifest
that this counsel (referring to complainant) who represents the plaintiff in this case is not a
lawyer," to which complainant replied: "The counsel very well know that I am not yet a
lawyer;" the reason he informed the court that complainant is not a lawyer was because the
presiding judge did not know that complainant is not a lawyer and complainant did not inform
the presiding judge that he is not a lawyer when he stated: "for the plaintiff your honor;" he
stated "pumasa ka muna" out of indignation because of complainant’s temerity in
misrepresenting himself as lawyer; it is surprising that the City Prosecutor of Pasay City filed
a complaint for oral defamation against him considering that in a precedent case the Supreme
Court stated: "It is a settled principle in this jurisdiction that statements made in the course of
judicial proceedings are absolutely privileged (Navarrete vs. Court of Appeals, 325 SCRA
540);" in another malicious prosecution being perpetuated by the complainant against the
Mina family pending before Judge Priscilla Mijares of RTC Branch 108, Pasay City, they were
able to prohibit the appearance of complainant as counsel for himself as authenticated by an
Order of Judge Priscilla Mijares which allegedly stated among other; to wit:
In connection with Ferdinand A. Cruz’s motion to appear as counsel, the motion is

likewise denied, movant not having satisfied the requirements and conditions under
Rule 138-A, Sections 1 and 2.
Respondent alleges that when complainant filed an administrative case against Judge
Priscilla Mijares when said Judge stated in Tagalog in open court "Hay naku masama yung
marunong pa sa Huwes! OK?" the same was dismissed by the Honorable Court’s Third
Division which stated among others: "That the questioned remarks of respondent were
uttered more out of frustration and in reaction to complainant’s actuations and taking into
account that complainant is not yet a lawyer but was already lecturing the court on a matter
which is not even a point of discussion was sheer arrogance on the part of the complainant."
Respondent prays that the complaint against him be dismissed for lack of merit.
The administrative case was referred to the Integrated Bar of the Philippines (IBP) for
investigation, report and recommendation.
In a report, dated March 4, 2004, IBP Commissioner Lydia A. Navarro recommended

respondent’s suspension from the practice of law for a period of three months for violating
Rule 8.01 of the Code of Professional Responsibility which provides:
A lawyer shall not, in his professional dealings, use language which is abusive,
offensive or otherwise improper.
In her report, Commissioner Navarro stated:
After going over the evidence submitted by the parties, the undersigned noted that
respondent’s averment that the utterances he made in open court is (sic) privileged
communication does not hold water for the same was (sic) not relevant to the issue of
the case in question under trial before the said court.
Respondent did not refute the fact that the same utterances he made in open court against
the complainant had been the basis for his indictment of Oral Defamation and later Unjust
Vexation under Criminal Cases Nos. 02-1031 and No. 02-2136 respectively, pending trial
before MTC Branch 45, Pasay City.
Likewise respondent did not refute complainant’s allegation that in 1979 he was held in
contempt and was not allowed to practice law for seven years by the Supreme Court in the
administrative case filed against him by Emilia E. Andres on December 14, 1979 docketed as
A.M. L-585 for his fondness in using contumacious language in his dealing with others.
From the facts obtaining, it is apparent that the utterance hurled by the respondent in the
manner, substance and tone of his voice which was not refuted by him "that appear ka ng
appear, pumasa ka muna" in whatever manner it was uttered are in itself not only abusive but
insulting specially on the part of law students who have not yet taken nor passed the bar
examination required of them.
Respondent should have been more discreet and cautious in informing the court if it was his
purpose relative to complainant’s appearance in court; although the latter appeared only in his
behalf but not for others if he had complied with the requirements of Rule 138 (Sections 1 and
3) of the Rules of Court.
Respondent should have been more temperate in making utterances in his professional
dealings so as not to offend the sensitivities of the other party as in this case.
On April 16, 2004, the IBP Board of Governors passed a Resolution to annul and set aside
the recommendation of the investigating commissioner and to approve the dismissal of the
case for lack of merit.
Prefatorily, we note that the IBP Board of Governors failed to observe the procedural
requirements of Sec. 12 of Rule 139-B of the Rules of Court on review and decision by the
Board of Governors which states:
SEC. 12. Review and decision by the Board of Governors. – (a) Every case heard by
an investigator shall be reviewed by the IBP Board of Governors upon the record and
evidence transmitted to it by the Investigator with his report. The decision of the Board
upon such review shall be in writing and shall clearly and distinctly state the facts and
the reasons on which it is based. It shall be promulgated within a period not exceeding
thirty (30) days from the next meeting of the Board following the submittal of the
Investigator’s report. (Emphasis supplied)
In Teodosio vs. Nava,1 the Court stressed the important function of the requirement that the
decision of the Board of Governors state the facts and the reasons on which it is based, which
is akin to what is required of the decisions of courts of record, thus:
For aside from informing the parties the reason for the decision to enable them to point
out to the appellate court the findings with which they are not in agreement, in case any
of them decides to appeal the decision, it is also an assurance that the judge, or the
Board of Governors in this case, reached his judgment through the process of legal
reasoning.2
In this case, the Board of Governors’ resolution absolving respondent of any misconduct does
not contain any findings of facts or law upon which it based its ruling. Ordinarily, non-
compliance with the rule would result in the remand of the case. Nonetheless, where the
controversy has been pending resolution for quite sometime and the issues involved could be
resolved on the basis of the records on appeal, the Court has opted to resolve the case in the
interest of justice and speedy disposition of cases.3 This case falls within the exception.
We hold that respondent’s outburst of "appear ka ng appear, pumasa ka muna" does not
amount to a violation of Rule 8.01 of the Code of Professional Responsibility.
Based on the facts of this case, such outburst came about when respondent pointed out to
the trial court that complainant is not a lawyer to correct the judge’s impression of
complainant’s appearance, inasmuch as the judge, in her Order of January 14, 2002, noted
that complainant is a lawyer.4 Such single outburst, though uncalled for, is not of such
magnitude as to warrant respondent’s suspension or reproof. It is but a product of
impulsiveness or the heat of the moment in the course of an argument between them. It has
been said that lawyers should not be held to too strict an account for words said in the heat of
the moment, because of chagrin at losing cases, and that the big way is for the court to
condone even contemptuous language.5
Nonetheless, we remind respondent that complainant is not precluded from litigating

personally his cases. A party’s right to conduct litigation personally is recognized by Section
34 of Rule 138 of the Rules of Court:
SEC. 34. By whom litigation conducted. -- In the court of a justice of the peace a party
may conduct his litigation in person, with the aid of an agent or friend appointed by him
for that purpose, or with the aid of an attorney. In any other court, a party may conduct
his litigation personally or by aid of an attorney, and his appearance must be either
personal or by a duly authorized member of the bar.
In Maderada vs. Mediodea,6 this Court expounded on the foregoing provision, thus:
This provision means that in a litigation, parties may personally do everything during its
progress -- from its commencement to its termination. When they, however, act as their
own attorneys, they are restricted to the same rules of evidence and procedure as
those qualified to practice law; otherwise, ignorance would be unjustifiably rewarded.
Individuals have long been permitted to manage, prosecute and defend their own
actions; and when they do so, they are not considered to be in the practice of law. "One
does not practice law by acting for himself any more than he practices medicine by
rendering first aid to himself."
The practice of law, though impossible to define exactly, involves the exercise of a profession
or vocation usually for gain, mainly as attorney by acting in a representative capacity and as
counsel by rendering legal advise to others. Private practice has been defined by this Court
as follows:
x x x. Practice is more than an isolated appearance, for it consists in frequent or

customary action, a succession of acts of the same kind. In other words, it is frequent
habitual exercise. Practice of law to fall within the prohibition of statute [referring to the
prohibition for judges and other officials or employees of the superior courts or of the
Office of the Solicitor General from engaging in private practice] has been interpreted
as customarily or habitually holding one's self out to the public, as a lawyer and
demanding payment for such services. x x x.
Clearly, in appearing for herself, complainant was not customarily or habitually holding
herself out to the public as a lawyer. Neither was she demanding payment for such
services. Hence, she cannot be said to be in the practice of law.7
On the other hand, all lawyers should take heed that lawyers are licensed officers of the
courts who are empowered to appear, prosecute and defend; and upon whom peculiar duties,
responsibilities and liabilities are devolved by law as a consequence. Membership in the bar
imposes upon them certain obligations. Mandated to maintain the dignity of the legal
profession, they must conduct themselves honorably and fairly.8 Though a lawyer’s language
may be forceful and emphatic, it should always be dignified and respectful, befitting the
dignity of the legal profession. The use of intemperate language and unkind ascriptions has
no place in the dignity of judicial forum.9
WHEREFORE, the complaint against respondent Atty. Stanley Cabrera for misconduct in
violation of the Code of Professional Responsibility is DISMISSED for lack of merit. He is,
however, admonished to be more circumspect in the performance of his duties as an officer
of the court.
SO ORDERED.
SUPREME COURT
Manila
EN BANC
A.C. No. 4585 November 12, 2004
MICHAEL P. BARRIOS, complainant,

vs.
ATTY. FRANCISCO P. MARTINEZ, respondent.
DECISION
PER CURIAM:
This is a verified petition1 for disbarment filed against Atty. Francisco Martinez for
having been convicted by final judgment in Criminal Case No. 6608 of a crime involving
moral turpitude by Branch 8 of the Regional Trial Court (RTC) of Tacloban City.2
The dispositive portion of the same states:
WHEREFORE, this Court finds the accused Francisco Martinez guilty beyond
reasonable doubt of the crime for (sic) violation of Batas Pambansa Blg. 22
charged in the Information. He is imposed a penalty of one (1) year imprisonment
and fine double the amount of the check which is EIGHT THOUSAND (8,000.00)
PESOS, plus payment of the tax pursuant to Section 205 of the Internal Revenue
Code and costs against the accused.3
Complainant further submitted our Resolution dated 13 March 1996 and the Entry of
Judgment from this Court dated 20 March 1996.
On 03 July 1996, we required4 respondent to comment on said petition within ten (10)
days from notice. On 17 February 1997, we issued a second resolution5 requiring him
to show cause why no disciplinary action should be imposed on him for failure to
comply with our earlier Resolution, and to submit said Comment. On 07 July 1997, we
imposed a fine of P1,000 for respondent's failure to file said Comment and required
him to comply with our previous resolution within ten days.6 On 27 April 1998, we fined
respondent an additional P2,000 and required him to comply with the resolution
requiring his comment within ten days under pain of imprisonment and arrest for a
period of five (5) days or until his compliance.7 Finally, on 03 February 1999, or almost
three years later, we declared respondent Martinez guilty of Contempt under Rule 71,
Sec. 3[b] of the 1997 Rules of Civil Procedure and ordered his imprisonment until he
complied with the aforesaid resolutions.8
On 05 April 1999, the National Bureau of Investigation reported9 that respondent was
arrested in Tacloban City on 26 March 1999, but was subsequently released after
having shown proof of compliance with the resolutions of 17 February 1997 and 27
April 1998 by remitting the amount of P2,000 and submitting his long overdue
Comment.
In the said Comment10 dated 16 March 1999, respondent stated that:

1. He failed to respond to our Resolution dated 17 February 1997 as he was at
that time undergoing medical treatment at Camp Ruperto Kangleon in Palo,
Leyte;
2. Complainant Michael Barrios passed away sometime in June 1997; and
3. Said administrative complaint is an offshoot of a civil case which was decided

in respondent's favor (as plaintiff in the said case). Respondent avers that as a
result of his moving for the execution of judgment in his favor and the eviction of
the family of herein complainant Michael Barrios, the latter filed the present
administrative case.
In the meantime, on 11 September 1997, a certain Robert Visbal of the Provincial

Prosecution Office of Tacloban City submitted a letter11 to the First Division Clerk of
Court alleging that respondent Martinez also stood charged in another estafa case
before the Regional Trial Court of Tacloban City, Branch 9, as well as a civil case
involving the victims of the Doña Paz tragedy in 1987, for which the Regional Trial
Court of Basey, Samar, Branch 30 rendered a decision against him, his appeal thereto
having been dismissed by the Court of Appeals.
In the said Decision of Branch 30 of the Regional Trial Court of Basey, Samar,12 it
appears that herein respondent Atty. Martinez offered his legal services to the victims
of the Doña Paz tragedy for free. However, when the plaintiff in the said civil case was
issued a check for P90,000 by Sulpicio Lines representing compensation for the
deaths of his wife and two daughters, Atty. Martinez asked plaintiff to endorse said
check, which was then deposited in the account of Dr. Martinez, Atty. Martinez's wife.
When plaintiff asked for his money, he was only able to recover a total of P30,000.
Atty. Martinez claimed the remaining P60,000 as his attorney's fees. Holding that it was
"absurd and totally ridiculous that for a simple legal service … he would collect 2/3 of
the money claim," the trial court ordered Atty. Martinez to pay the plaintiff therein the
amount of P60,000 with interest, P5,000 for moral and exemplary damages, and the
costs of the suit.
Said trial court also made particular mention of Martinez's dilatory tactics during the
trial, citing fourteen (14) specific instances thereof. Martinez's appeal from the above
judgment was dismissed by the Court of Appeals for his failure to file his brief, despite
having been granted three thirty (30)-day extensions to do so.13
On 16 June 1999, we referred14 the present case to the Integrated Bar of the
Philippines (IBP) for investigation, report, and recommendation.
The report15 of IBP Investigating Commissioner Winston D. Abuyuan stated in part that:
Several dates for the hearing of the case were scheduled but none of the parties
appeared before the Commission, until finally it was considered submitted for
resolution last 27 June 2002. On the same date respondent filed a motion for the
dismissal of the case on the ground that the complainant died sometime in June
1997 and that dismissal is warranted because "the case filed by him does not
survive due to his demise; as a matter of fact, it is extinguished upon his death."
We disagree with respondent's contention.
Pursuant to Section 1, Rule 139-B of the Revised Rules of Court, the Honorable
Supreme Court or the IBP may motu proprio initiate the proceedings when they
perceive acts of lawyers which deserve sanctions or when their attention is called
by any one and a probable cause exists that an act has been perpetrated by a
lawyer which requires disciplinary sanctions.
As earlier cited, respondent lawyer's propensity to disregard or ignore orders of
the Honorable Supreme Court for which he was fined twice, arrested and
imprisoned reflects an utter lack of good moral character.
Respondent's conviction of a crime involving moral turpitude (estafa and/or

violation of BP Blg. 22) clearly shows his unfitness to protect the administration of
justice and therefore justifies the imposition of sanctions against him (see In re:
Abesamis, 102 Phil. 1182; In re: Jaramillo, 101 Phil. 323; In re: Vinzon, 19 SCRA
815; Medina vs. Bautista, 12 SCRA 1, People vs. Tuanda, Adm. Case No. 3360,
30 Jan. 1990).
WHEREFORE, premises considered, it is respectfully recommended that

respondent Atty. Francisco P. Martinez be disbarred and his name stricken out
from the Roll of Attorneys immediately.
On 27 September 2003, the IBP Board of Governors passed a Resolution16 adopting

and approving the report and recommendation of its Investigating Commissioner.
On 03 December 2003, respondent Martinez filed a Motion for Reconsideration and/or

Reinvestigation,17 in the instant case alleging that:
1. The Report and Recommendation of the IBP Investigating Commissioner is

tantamount to a deprivation of property without due process of law, although
admittedly the practice of law is a privilege;
2. If respondent is given another chance to have his day in court and allowed to
adduce evidence, the result/outcome would be entirely different from that arrived
at by the Investigating Commissioner; and
3. Respondent is now 71 years of age, and has served the judiciary in various
capacities (from acting city judge to Municipal Judges League Leyte Chapter
President) for almost 17 years prior to resuming his law practice.
On 14 January 2004, we required18 complainant to file a comment within ten days. On

16 February 2004, we received a Manifestation and Motion19 from complainant's
daughter, Diane Francis Barrios Latoja, alleging that they had not been furnished with
a copy of respondent's Motion, notwithstanding the fact that respondent ostensibly
lives next door to complainant's family. Required to Comment on 17 May 2004,
respondent has until now failed to do so.
The records show that respondent, indeed, failed to furnish a copy of said Motion to
herein complainant. The records also show that respondent was given several
opportunities to present evidence by this Court20 as well as by the IBP.21 Indeed, he
only has himself to blame, for he has failed to present his case despite several
occasions to do so. It is now too late in the day for respondent to ask this court to
receive his evidence.
This court, moreover, is unwilling to exercise the same patience that it did when it
waited for his comment on the original petition. At any rate, after a careful
consideration of the records of the instant case, we find the evidence on record
sufficient to support the IBP's findings.
Under Sec. 27, Rule 138 of the Rules of Court, a member of the Bar may be disbarred
or suspended from his office as attorney by the Supreme Court for any deceit,
malpractice, or other gross misconduct in such office, grossly immoral conduct, or by
reason of his conviction of a crime involving moral turpitude, or for any violation of the
oath which he is required to take before admission to practice, or for a willful
disobedience of any lawful order of a superior court, or for corruptly or willfully
appearing as an attorney for a party to a case without authority to do so.
In the present case, respondent has been found guilty and convicted by final judgment
for violation of B.P. Blg. 22 for issuing a worthless check in the amount of P8,000. The
issue with which we are now concerned is whether or not the said crime is one
involving moral turpitude. 22
Moral turpitude "includes everything which is done contrary to justice, honesty,

modesty, or good morals."23 It involves "an act of baseness, vileness, or depravity in
the private duties which a man owes his fellow men, or to society in general, contrary
to the accepted and customary rule of right and duty between man and woman, or
conduct contrary to justice, honesty, modesty, or good morals."24
In People of the Philippines v. Atty. Fe Tuanda,25 where the erring lawyer was
indefinitely suspended for having been convicted of three counts of violation of B.P.
Blg. 22, we held that conviction by final judgment of violation of B.P. Blg. 22 involves
moral turpitude and stated:
We should add that the crimes of which respondent was convicted also import
deceit and violation of her attorney's oath and the Code of Professional
Responsibility under both of which she was bound to "obey the laws of the
land." Conviction of a crime involving moral turpitude might not (as in the instant
case, violation of B.P. Blg. 22 does not) relate to the exercise of the profession of
a lawyer; however, it certainly relates to and affects the good moral character of
a person convicted of such offense…26(emphasis supplied)
Over ten years later, we reiterated the above ruling in Villaber v. Commission on
Elections27 and disqualified a congressional candidate for having been sentenced by
final judgment for three counts of violation of B.P. Blg. 22 in accordance with Sec. 12 of
the Omnibus Election Code, which states:
SEC. 12. Disqualifications. — Any person who has been declared by competent
authority insane or incompetent, or has been sentenced by final judgment for
subversion, insurrection, rebellion, or for any offense for which he has been
sentenced to a penalty of more than eighteen months, or for a crime involving
moral turpitude, shall be disqualified to be a candidate and to hold any office,
unless he has been given plenary pardon or granted amnesty. (emphasis
supplied)
Enumerating the elements of that crime, we held that the act of a person in issuing a
check knowing at the time of the issuance that he or she does not have sufficient funds
in, or credit with, the drawee bank for the check in full upon its presentment, is a
manifestation of moral turpitude. Notwithstanding therein petitioner's averment that he
was not a lawyer, we nevertheless applied our ruling in People v. Tuanda, to the effect
that
(A) conviction for violation of B.P. Blg. 22, "imports deceit" and "certainly relates
to and affects the good moral character of a person." [Indeed] the effects of the
issuance of a worthless check, as we held in the landmark case of Lozano v.
Martinez, through Justice Pedro L. Yap, "transcends the private interests of the
parties directly involved in the transaction and touches the interests of the
community at large. The mischief it creates is not only a wrong to the payee or
holder, but also an injury to the public" since the circulation of valueless
commercial papers "can very well pollute the channels of trade and commerce,
injure the banking system and eventually hurt the welfare of society and the
public interest." Thus, paraphrasing Black's definition, a drawer who issues an
unfunded check deliberately reneges on his private duties he owes his fellow
men or society in a manner contrary to accepted and customary rule of right and
duty, justice, honesty or good morals.28 (emphasis supplied)
In the recent case of Barrientos v. Libiran-Meteoro,29 we stated that:

(T)he issuance of checks which were later dishonored for having been drawn
against a closed account indicates a lawyer's unfitness for the trust and
confidence reposed on her. It shows a lack of personal honesty and good moral
character as to render her unworthy of public confidence. [Cuizon v. Macalino,
A.C. No. 4334, 07 July 2004] The issuance of a series of worthless checks also
shows the remorseless attitude of respondent, unmindful to the deleterious
effects of such act to the public interest and public order. [Lao v. Medel, 405
SCRA 227] It also manifests a lawyer's low regard for her commitment to the
oath she has taken when she joined her peers, seriously and irreparably
tarnishing the image of the profession she should hold in high esteem. [Sanchez
v. Somoso, A.C. No. 6061, 03 October 2003]
Clearly, therefore, the act of a lawyer in issuing a check without sufficient funds to
cover the same constitutes such willful dishonesty and immoral conduct as to
undermine the public confidence in law and lawyers. And while "the general rule is that
a lawyer may not be suspended or disbarred, and the court may not ordinarily assume
jurisdiction to discipline him for misconduct in his non-professional or private capacity,
where, however, the misconduct outside of the lawyer's professional dealings is so
gross a character as to show him morally unfit for the office and unworthy of the
privilege which his licenses and the law confer on him, the court may be justified in
suspending or removing him from the office of attorney."30
The argument of respondent that to disbar him now is tantamount to a deprivation of

property without due process of law is also untenable. As respondent himself admits,
the practice of law is a privilege. The purpose of a proceeding for disbarment is "to
protect the administration of justice by requiring that those who exercise this important
function shall be competent, honorable and reliable; men in whom courts and clients
may repose confidence."31 "A proceeding for suspension or disbarment is not in any
sense a civil action where the complainant is 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, and for the purpose of preserving courts of justice from the official
ministrations of persons unfit to practice them."32 "Verily, lawyers must at all times
faithfully perform their duties to society, to the bar, to the courts and to their clients.
Their conduct must always reflect the values and norms of the legal profession as
embodied in the Code of Professional Responsibility. On these considerations, the
Court may disbar or suspend lawyers for any professional or private misconduct
showing them to be wanting in moral character, honesty, probity and good demeanor
— or to be unworthy to continue as officers of the Court."33
Nor are we inclined to look with favor upon respondent's plea that if "given another
chance to have his day in court and to adduce evidence, the result/outcome would be
entirely different from that arrived at." We note with displeasure the inordinate length of
time respondent took in responding to our requirement to submit his Comment on the
original petition to disbar him. These acts constitute a willful disobedience of the lawful
orders of this Court, which under Sec. 27, Rule 138 of the Rules of Court is in itself a
cause sufficient for suspension or disbarment. Thus, from the time we issued our first
Resolution on 03 July 1996 requiring him to submit his Comment, until 16 March 1999,
when he submitted said Comment to secure his release from arrest, almost three years
had elapsed.
It is revealing that despite the unwarranted length of time it took respondent to comply,
his Comment consists of all of two pages, a copy of which, it appears, he neglected to
furnish complainant.34 And while he claims to have been confined while undergoing
medical treatment at the time our Resolution of 17 February 1997 was issued, he
merely reserved the submission of a certification to that effect. Nor, indeed, was he
able to offer any explanation for his failure to submit his Comment from the time we
issued our first Resolution of 03 July 1996 until 16 March 1999. In fact, said Comment
alleged, merely, that the complainant, Michael Barrios, passed away sometime in June
1997, and imputed upon the latter unsupported ill-motives for instituting the said
Petition against him, which argument has already been resolved squarely in the
abovementioned IBP report.
Moreover, the IBP report cited the failure of both parties to appear before the
Commission as the main reason for the long delay, until the same was finally submitted
for Resolution on 27 June 2002. Respondent, therefore, squandered away seven years
to "have his day in court and adduce evidence" in his behalf, which inaction also unduly
delayed the court's prompt disposition of this petition.
In Pajares v. Abad Santos,35 we reminded attorneys that "there must be more faithful
adherence to Rule 7, Section 5 of the Rules of Court [now Rule 7, Section 3] which
provides that the signature of an attorney constitutes a certificate by him that he has
read the pleading and that to the best of his knowledge, information and belief, there is
good ground to support it; and that it is not interposed for delay, and expressly
admonishes that for a willful violation of this rule an attorney may be subjected to
disciplinary action.36 It is noteworthy that in the past, the Court has disciplined lawyers
and judges for willful disregard of its orders to file comments or appellant's briefs, as a
penalty for disobedience thereof. 37
For the same reasons, we are disinclined to take respondent's old age and the fact that
he served in the judiciary in various capacities in his favor. If at all, we hold respondent
to a higher standard for it, for a judge should be the embodiment of competence,
integrity, and independence,38 and his conduct should be above reproach.39 The fact
that respondent has chosen to engage in private practice does not mean he is now
free to conduct himself in less honorable – or indeed in a less than honorable –
manner.
We stress that membership in the legal profession is a privilege,40 demanding a high

degree of good moral character, not only as a condition precedent to admission, but
also as a continuing requirement for the practice of law.41 Sadly, herein respondent falls
short of the exacting standards expected of him as a vanguard of the legal profession.
The IBP Board of Governors recommended that respondent be disbarred from the
practice of law. We agree.
We come now to the matter of the penalty imposable in this case. In Co v.

Bernardino and Lao v. Medel, we upheld the imposition of one year's suspension for
non-payment of debt and issuance of worthless checks, or a suspension of six months
upon partial payment of the obligation.42 However, in these cases, for various reasons,
none of the issuances resulted in a conviction by the erring lawyers for either estafa or
B.P. Blg. 22. Thus, we held therein that the issuance of worthless checks constitutes
gross misconduct, for which a lawyer may be sanctioned with suspension from the
practice of law.
In the instant case, however, herein respondent has been found guilty and stands
convicted by final judgment of a crime involving moral turpitude. In People v. Tuanda,
which is similar to this case in that both respondents were convicted for violation of
B.P. Blg. 22 which we have held to be such a crime, we affirmed the order of
suspension from the practice of law imposed by the Court of Appeals, until further
orders.
However, in a long line of cases, some of which were decided after Tuanda, we have
held disbarment to be the appropriate penalty for conviction by final judgment for a
crime involving moral turpitude. Thus:
1. In In The Matter of Disbarment Proceedings v. Narciso N. Jaramillo,43 we
disbarred a lawyer convicted of estafa without discussing the circumstances
behind his conviction. We held that:
There is no question that the crime of estafa involves moral turpitude. The
review of respondent's conviction no longer rests upon us. The judgment
not only has become final but has been executed. No elaborate argument
is necessary to hold the respondent unworthy of the privilege bestowed on
him as a member of the bar. Suffice it to say that, by his conviction, the
respondent has proved himself unfit to protect the administration of
justice.44
2. In In Re: Dalmacio De Los Angeles,45 a lawyer was convicted of the crime of

attempted bribery in a final decision rendered by the Court of Appeals. "And
since bribery is admittedly a felony involving moral turpitude (7 C.J.S., p. 736; 5
Am. Jur. p. 428), this Court, much as it sympathizes with the plight of respondent,
is constrained to decree his disbarment as ordained by Section 25 of Rule 127."46
3. In Ledesma De Jesus-Paras v. Quinciano Vailoces,47 the erring lawyer

acknowledged the execution of a document purporting to be a last will and
testament, which later turned out to be a forgery. He was found guilty beyond
reasonable doubt of the crime of falsification of public document, which the Court
held to be a crime involving moral turpitude, said act being contrary to justice,
honesty and good morals, and was subsequently disbarred.
4. In In Re: Disbarment Proceedings Against Atty. Diosdado Q. Gutierrez,48 Atty.

Gutierrez was convicted for murder. After serving a portion of the sentence, he
was granted a conditional pardon by the President. Holding that the pardon was
not absolute and thus did not reach the offense itself but merely remitted the
unexecuted portion of his term, the court nevertheless disbarred him.
5. In In Re: Atty. Isidro P. Vinzon,49 Atty. Vinzon was convicted of the crime of
estafa for misappropriating the amount of P7,000.00, and was subsequently
disbarred. We held thus:
Upon the other hand, and dealing now with the merits of the case, there
can be no question that the term "moral turpitude" includes everything
which is done contrary to justice, honesty, or good morals. In essence and
in all respects, estafa, no doubt, is a crime involving moral turpitude
because the act is unquestionably against justice, honesty and good
morals (In re Gutierrez, Adm. Case No. 263, July 31, 1962; Bouvier's Law
Dictionary; In re Basa, 41 Phil. 275-76). As respondent's guilt cannot now
be questioned, his disbarment is inevitable. (emphasis supplied)50
6. In In Re: Attorney Jose Avanceña,51 the conditional pardon extended to the

erring lawyer by the Chief Executive also failed to relieve him of the penalty of
disbarment imposed by this court.
7. In In Re Disbarment of Rodolfo Pajo,52 a lawyer was charged and found guilty

of the crime of falsification of public document for having prepared and notarized
a deed of sale of a parcel of land knowing that the supposed affiant was an
impostor and that the vendor had been dead for almost eight years. We ruled
that disbarment follows as a consequence of a lawyer's conviction by final
judgment of a crime involving moral turpitude, and since the crime of falsification
of public document involves moral turpitude, we ordered respondent's name
stricken off the roll of attorneys.
8. In Adelina T. Villanueva v. Atty. Teresita Sta. Ana,53 we upheld the

recommendation of the IBP Board of Governors to disbar a lawyer who had been
convicted of estafa through falsification of public documents, because she was
"totally unfit to be a member of the legal profession."54
9. In Victoriano P. Resurreccion v. Atty. Ciriaco C. Sayson,55 a lawyer was

disbarred for having been convicted of estafa by final judgment for
misappropriating the funds of his client.
In this case as well, we find disbarment to be the appropriate penalty. "Of all classes
and professions, the lawyer is most sacredly bound to uphold the laws. He is their
sworn servant; and for him, of all men in the world, to repudiate and override the laws,
to trample them underfoot and to ignore the very bands of society, argues recreancy to
his position and office and sets a pernicious example to the insubordinate and
dangerous elements of the body politic."56
WHEREFORE, respondent Atty. Francisco P. Martinez is hereby dISBARRED and his

name is ORDERED STRICKEN from the Roll of Attorneys. Let a copy of this Decision
be entered in the respondent's record as a member of the Bar, and notice of the same
be served on the Integrated Bar of the Philippines, and on the Office of the Court
Administrator for circulation to all courts in the country.
SO ORDERED.
EN BANC
[A.C. No. 2797. October 4, 2002]
ROSAURA P. CORDON, complainant, vs. JESUS BALICANTA, Respondent.
RESOLUTION
PER CURIAM:
On August 21, 1985, herein complainant Rosaura Cordon filed with this Court a
complaint for disbarment, docketed as Administrative Case No. 2797, against Atty. Jesus
Balicanta. After respondents comment to the complaint and complainants reply thereto,
this Court, on March 29, 1995 referred the matter to the Integrated Bar of the
Philippines (IBP, for brevity) for investigation, report and recommendation within 90
days from notice. Commissioner George Briones of the IBP Commission on Bar Discipline
was initially tasked to investigate the case. Commissioner Briones was later on replaced
by Commissioner Renato Cunanan. Complainant filed a supplemental complaint which
was duly admitted and, as agreed upon, the parties filed their respective position
papers.
Based on her complaint, supplemental complaint, reply and position paper, the
complainant alleged the following facts:
When her husband Felixberto C. Jaldon died, herein complainant Rosaura Cordon and
her daughter Rosemarie inherited the properties left by the said decedent. All in all,
complainant and her daughter inherited 21 parcels of land located in Zamboanga City.
The lawyer who helped her settle the estate of her late husband was respondent Jesus
Balicanta.
Sometime in the early part of 1981, respondent enticed complainant and her daughter
to organize a corporation that would develop the said real properties into a high-scale
commercial complex with a beautiful penthouse for complainant. Relying on these
apparently sincere proposals, complainant and her daughter assigned 19 parcels of land
to Rosaura Enterprises, Incorporated, a newly-formed and duly registered corporation in
which they assumed majority ownership. The subject parcels of land were then
registered in the name of the corporation.
Thereafter, respondent single-handedly ran the affairs of the corporation in his capacity
as Chairman of the Board, President, General Manager and Treasurer. The respondent
also made complainant sign a document which turned out to be a voting trust
agreement. Respondent likewise succeeded in making complainant sign a special power
of attorney to sell and mortgage some of the parcels of land she inherited from her
deceased husband. She later discovered that respondent transferred the titles of the
properties to a certain Tion Suy Ong who became the new registered owner thereof.
Respondent never accounted for the proceeds of said transfers.
In 1981, respondent, using a spurious board resolution, contracted a loan from the Land
Bank of the Philippines (LBP, for brevity) in the amount of Two Million Two Hundred
Twenty Pesos (P2,220,000) using as collateral 9 of the real properties that the
complainant and her daughter contributed to the corporation. The respondent ostensibly
intended to use the money to construct the Baliwasan Commercial Center (BCC, for
brevity). Complainant later on found out that the structure was made of poor materials
such as sawali, coco lumber and bamboo which could not have cost the corporation
anything close to the amount of the loan secured.
For four years from the time the debt was contracted, respondent failed to pay even a
single installment. As a result, the LBP, in a letter dated May 22, 1985, informed
respondent that the past due amortizations and interest had already accumulated to
Seven Hundred Twenty-nine Thousand Five Hundred Three Pesos and Twenty-five
Centavos (P729,503.25). The LBP made a demand on respondent for payment for the
tenth time. Meanwhile, when the BCC commenced its operations, respondent started to
earn revenues from the rentals of BCCs tenants. On October 28, 1987, the LBP
foreclosed on the 9 mortgaged properties due to non-payment of the loan.
Respondent did not exert any effort to redeem the foreclosed properties. Worse, he sold
the corporations right to redeem the mortgaged properties to a certain Hadji Mahmud
Jammang through a fake board resolution dated January 14, 1989 which clothed himself
with the authority to do so. Complainant and her daughter, the majority stockholders,
were never informed of the alleged meeting held on that date. Again, respondent never
accounted for the proceeds of the sale of the right to redeem. Respondent also sold to
Jammang a parcel of land belonging to complainant and her daughter which was
contiguous to the foreclosed properties and evidenced by Transfer Certificate of Title No.
62807. He never accounted for the proceeds of the sale.
Sometime in 1983, complainants daughter, Rosemarie, discovered that their ancestral

home had been demolished and that her mother, herein complainant, was being
detained in a small nipa shack in a place called Culianan. Through the help of Atty. Linda
Lim, Rosemarie was able to locate her mother. Rosemarie later learned that respondent
took complainant away from her house on the pretext that said ancestral home was
going to be remodeled and painted. But respondent demolished the ancestral home and
sold the lot to Tion Suy Ong, using another spurious board resolution designated as
Board Resolution No. 1, series of 1992. The resolution contained the minutes of an
alleged organizational meeting of the directors of the corporation and was signed by
Alexander Wee, Angel Fernando, Erwin Fernando and Gabriel Solivar. Complainant and
her daughter did not know how these persons became stockholders and directors of the
corporation. Respondent again did not account for the proceeds of the sale.
Complainant and her daughter made several demands on respondent for the delivery of
the real properties they allegedly assigned to the corporation, for an accounting of the
proceeds of the LBP loan and as well as the properties sold, and for the rentals earned
by BCC. But the demands remained unheeded. Hence, complainant and her daughter, in
a letter dated June 4, 1985, terminated the services of respondent as their lawyer and
repeated their demands for accounting and turn-over of the corporate funds, and the
return of the 19 titles that respondent transferred to the corporation. They also
threatened him with legal action in a letter dated August 3, 1985.
Soon after, complainant found out from the Securities and Exchange Commission (SEC,
for brevity) that Rosaura Enterprises, Inc., due to respondents refusal and neglect, failed
to submit the corporations annual financial statements for 1981, 1982 and 1983; SEC
General Information Sheets for 1982, 1983 and 1984; Minutes of Annual Meetings for
1982, 1983 and 1984; and Minutes of Annual Meetings of Directors for 1982, 1983 and
1984.
Complainant also discovered that respondent collected rental payments from the tenants
of BCC and issued handwritten receipts which he signed, not as an officer of the
corporation but as the attorney-at-law of complainant. Respondent also used the tennis
court of BCC to dry his palay and did not keep the buildings in a satisfactory state, so
much so that the divisions were losing plywood and other materials to thieves.
Complainant likewise accused respondent of circulating rumors among her friends and
relatives that she had become insane to prevent them from believing whatever
complainant said. According to complainant, respondent proposed that she legally
separate from her present husband so that the latter would not inherit from her and that
respondent be adopted as her son.
For his defense, respondent, in his comment and position paper, denied employing
deceit and machination in convincing complainant and her daughter to assign their real
properties to the corporation; that they freely and voluntary executed the deeds of
assignment and the voting trust agreement that they signed; that he did not single-
handedly manage the corporation as evidenced by certifications of the officers and
directors of the corporation; that he did not use spurious board resolutions authorizing
him to contract a loan or sell the properties assigned by the complainant and her
daughter; that complainant and her daughter should be the ones who should render an
accounting of the records and revenues inasmuch as, since 1984 up to the present, the
part-time corporate book-keeper, with the connivance of the complainant and her
daughter, had custody of the corporate records; that complainant and her daughter
sabotaged the operation of BCC when they illegally took control of it in 1986; that he
never pocketed any of the proceeds of the properties contributed by the complainant
and her daughter; that the demolition of the ancestral home followed legal procedures;
that complainant was never detained in Culianan but she freely and voluntarily lived with
the family of P03 Joel Constantino as evidenced by complainants own letter denying she
was kidnapped; and that the instant disbarment case should be dismissed for being
premature, considering the pendency of cases before the SEC and the Regional Trial
Court of Zamboanga involving him and complainant.
Based on the pleadings and position papers submitted by the parties, Commissioner
Renato Cunanan, in his report[1] dated July 1, 1999, recommended respondents
disbarment based on the following findings:
A. The complainant, Rosaura Jaldon-Cordon and her daughter, Rosemarie were

stockholders of a corporation, together with respondent, named Rosaura Enterprises,
Inc.
Per the Articles of Incorporation marked as Annex A of Complainants Position Paper,

complainants subscription consists of 55% of the outstanding capital stock while her
daughters consists of 18%, giving them a total of 73%. Respondents holdings consist of
24% while three other incorporators, Rosauro L. Alvarez, Vicente T. Maalac and Darhan
S. Graciano each held 1% of the capital stock of the corporation.
B. On April 5, 1981, complainant and her daughter Rosemarie Jaldon executed two
Deeds of Transfer and Assignment conveying and transferring to the corporation 19
parcels of land in exchange for shares of stock in the corporation.
xxx xxx xxx
C. Both Deeds of Assignment particularly page 3 thereof indicate that respondent

accepted said assignment of properties and titles in behalf of the corporation as
Treasurer. The deeds were signed on April 5, 1981.
xxx xxx xxx
Together, therefore, complainant and her daughter owned 1,711 shares of the 1,750
shares comprising the authorized capital stock of the corporation of 97% thereof.
No increase in capitalization was applied for by the corporation.
F. Respondent claims in his Comment, his Answer and his Position Paper that on April 4,
1981 he was elected as Chairman and Director and on April 5, 1981 he was elected
President of the corporation. Respondents own Annexes marked as G and G-1 of his
Comment show that on April 4, 1981 he was not only elected as Chairman and Director
as he claims but as Director, Board Chairman and President. The purported minutes was
only signed by respondent and an acting Secretary by the name of Vicente Maalac.
Said Annex does not show who was elected Treasurer.
Respondents Annex H and H-1 shows that in the alleged organizational meeting of the
directors on April 5, 1981 a certain Farnacio Bucoy was elected Treasurer. Bucoys name
does not appear as an incorporator nor a stockholder anywhere in the documents
submitted.
The purported minutes of the organizational meeting of the directors was signed only by
respondent Balicanta and a Secretary named Verisimo Martin.
G. Since respondent was elected as Director, Chairman and President on April 4, 1981
as respondents own Annexes G to G-1 would show, then complainants claim that
respondent was likewise acting as Treasurer of two corporations bear truth and credence
as respondent signed and accepted the titles to 19 parcels of land ceded by the
complainant and her daughter, as Treasurer on April 5, 1981 after he was already
purportedly elected as Chairman, President and Director.
H. Respondent misleads the Commission into believing that all the directors signed the
minutes marked as Exhibit H to H-1 by stating that the same was duly signed by all the
Board of Directors when the document itself shows that only he and one Verisimo Martin
signed the same.
He also claims that all the stockholders signed the minutes of organizational meeting
marked as Annexes G and G-1 of his Comment yet the same shows that only the acting
Chairman and acting Secretary signed.
I. Respondent claims that the Board or its representative was authorized by the
stockholders comprising 2/3 of the outstanding capital stock, as required by law, to
mortgage the parcels of land belonging to the corporation, which were all assigned to
the corporation by complainant and her daughter, by virtue of Annex I and I-1: attached
to his Comment.
The subject attachment however reveals that only the following persons signed their
conformity to the said resolution: respondent Balicanta who owned 109 shares, Vicente
Maalac (1 share), Daihan Graciano (1 share).
Complainants who collectively held a total of 1,711 shares out of the 1,750 outstanding
capital stock of the corporation were not represented in the purported stockholders
meeting authorizing the mortgage of the subject properties.
The 2/3 vote required by law was therefore not complied with yet respondent proceeded
to mortgage the subject 9 parcels of land by the corporation.
J. Respondent further relies on Annex J of his Comment, purportedly the minutes of a

special meeting of the Board of Directors authorizing him to obtain a loan and mortgage
the properties of the corporation dated August 29, 1981. This claim is baseless. The
required ratification of 2/3 by the stockholders of records was not met. Again,
respondent attempts to mislead the Commission and Court.
K. Further, the constitution of the Board is dubious. The alleged minutes of the
organizational meeting of the stockholders electing the members of the Board, have not
been duly signed by the stockholders as shown in respondents annex G which was
purportedly the organizational meeting of the stockholders.
L. Also, Annex J of respondents Comment which purportedly authorized him to obtain a

loan and to mortgage the 9 parcels of land was only signed by himself and a secretary.
M. In said Annex 'J' of respondents Comment he stated that complainant Rosaura

Cordon was on leave by virtue of a voting trust agreement allegedly executed by
complainant in his favor covering all her shares of stock. The claim is baseless. The
voting trust referred to by respondent (annex D of his Comment), even if it were
assumed to be valid, covered only 266 shares of complainants yet she owned a total of
1,039 shares after she and her daughter ceded in favor of the corporation 19 parcels of
land.
Being a former lawyer to complainant, respondent should have ensured that her interest
was safeguarded. Yet, complainant was apparently and deliberately left our (sic) on the
pretext that, she had executed a voting trust agreement in favor of respondent.
It is suspicious that complainant was made to sign a voting trust agreement on 21

August 1981 and immediately thereafter, the resolutions authorizing respondent to
obtain a loan and to mortgage the 9 parcels of land were passed and approved.
N. It is also highly irregular for respondent who is a lawyer, to allow a situation to

happen where, with the exclusion of complainant as director the result was that there
remained only 4 members of the Board,.
O. Respondents own pleadings submitted to the Commission contradict each

other.
1. For instance, while in his Comment respondent DENIES that he employed deceit and
machination in convincing the complainant and her daughter to sign the articles of
incorporation of Rosaura Enterprises and in ceding to the corporation 19 parcels of land
in Zamboanga City, because they freely, intelligently and voluntarily signed the same,
yet, in his Position Paper, respondent took another stance.
In paragraphs 1.1 and 1.2 of his Position Paper which was submitted 12 years later,
respondent claimed that it was actually the idea of Atty. Rosaura L. Alvarez that a
corporation be put up to incorporate the estate of the late Felixberto D. Jaldon.
2. Likewise, respondent claimed that complainant and her daughter were not directors,
hence they were not notified of meetings, in paragraph 2-6 (c) of his Comment he
blamed the other stockholders and directors for the corporations inability to comply with
the Land Banks demands saying that they have consistently failed since 1982 to
convene (1.) for the annual stockholders meetings and (i.i) for the monthly board
meeting.
His own pleadings claim that he had been the Chairman/President since 1981 to the
present. If (sic) so, it was his duty to convene the stockholders and the directors for
meetings.
Respondent appeared able to convene the stockholders and directors when he needed to
make a loan of p2.2 million; when he sold the corporations right of redemption over the
foreclosed properties of the corporation to Jammang, when he sold one parcel of land
covered by TCT 62,807 to Jammang in addition to the 9 parcels of land which were
foreclosed, and when he sold the complainants ancestral home covered by TCT No.
72,004.
It is thus strange why respondent claims that the corporation could not do anything to
save the corporations properties from being foreclosed because the stockholders and
directors did not convene.
This assertion of respondent is clearly evident of dishonest, deceitful and immoral

conduct especially because, in all his acts constituting conveyances of corporate
property, respondent used minutes of stockholders and directors meetings signed only
by him and a secretary or signed by him and persons who were not incorporators much
less stockholders.
It is worthy of note that in respondents Exhibits 15, 16, 17 and 18 of his position paper,
there were 7 new stockholders and complainant appeared to have only 266 shares to
her name while her daughter Rosemarie had no shares at all. Respondent did not
present any proof of conveyance of shares by complainant and her daughter.
It is further worth noting that complainants voting trust (annex D of respondents

Comment) where she allegedly entrusted 266 shares to respondent on August 21, 1981
had only a validity of 5 years. Thus, she should have had her entire holdings of 1,283
shares back in her name in August 1986.
Respondents purported minutes of stockholders meeting (Exhs. 15 and 17) do not

reflect this.
There was no explanation whatsoever from respondent on how complainant and her
daughter lost their 97% control holding in the corporation.
3. As a further contradiction in respondents pleadings, we note that in paragraph 2.7.C

of his Comment he said that only recently, this year, 1985, the complainant and her
aforenamed daughter examined said voluminous supporting receipts/documents which
had previously been examined by the Land Bank for loan releases, during which
occasion respondent suggested to them that the corporation will have to hire a full-time
book-keeper to put in order said voluminous supporting receipts/documents, to which
they adversely reacted due to lack of corporate money to pay for said book-keeper. But
in respondents Position Paper par. 6.3 he stated that:
Anyway, it is not the respondent but rather the complainant who should render
a detailed accounting to the corporation of the corporate records as well as
corporate revenues/income precisely because since 1994 to the present:
(a). The corporate part-time book-keeper Edilberto Benedicto, with the

indispensable connivance and instigation of the complainant and her daughter,
among others, has custody of the corporate records, xxx
4. In other contradictory stance, respondent claims in par. 7.3 of his position paper that
complainant and her daughter sabotaged the BCC operations of the corporation by
illegally taking over actual control and supervision thereof sometime in 1986, xxx
Yet respondents own exhibits in his position paper particularly Exhibit 15 and 16 where
the subject of the foreclosed properties of the corporation comprising the Baliwasan
Commercial Center (BCC) was taken up, complainant and her daughter were not even
present nor were they the subject of the discussion, belying respondents claim that the
complainant and her daughter illegally took actual control of BCC.
5. On the matter of the receipts issued by respondent evidencing payment to him of

rentals by lessees of the corporation, attached to the complaint as Annexes H to H-17,
respondent claims that the receipts are temporary in nature and that subsequently
regular corporate receipts were issued. On their face however the receipts clearly appear
to be official receipts, printed and numbered duly signed by the respondent bearing his
printed name.
It is difficult to believe that a lawyer of respondent stature would issue official receipts to
lessees if he only meant to issue temporary ones.
6. With regard to respondents claim that the complainant consented to the sale of her
ancestral home, covered by TCT No. T-72,004 to one Tion Suy Ong for which he
attached as Exhibit 22 to his Position Paper the minutes of an annual meeting of the
stockholders, it behooves this Commission why complainants signature had to be
accompanied by her thumb mark. Furthermore, complainants signature appears
unstable and shaky. This Office is thus persuaded to believe complainants allegation in
paragraph 3b of her position paper that since September 1992 up to March 1993 she
was being detained by one PO# (sic) Joel Constantino and his wife under
instructions from respondent Balicanta.
This conclusion is supported by a letter from respondent dated March 1993, Annex H of
complainants position paper, where respondent ordered Police Officer Constantino to
allow Atty. Linda Lim and Rosemarie Jaldon to talk to Tita Rosing.
The complainants thumb mark together with her visibly unstable shaky signature lends
credence to her claim that she was detained in the far flung barrio of Culianan under
instructions of respondent while her ancestral home was demolished and the lot sold to
one Tion Suy Ong.
It appears that respondent felt compelled to over-ensure complainants consent by

getting her to affix her thumb mark in addition to her signature.
7. Respondent likewise denies that he also acted as Corporate Secretary in addition to

being the Chairman, President and Treasurer of the corporation. Yet, respondent
submitted to this commission documents which are supported to be in the possession of
the Corporate Secretary such as the stock and transfer book and minutes of meetings.
The foregoing findings of this Commission are virtual smoking guns that prove on no
uncertain terms that respondent, who was the legal counsel of complainant in the latter
part of the settlement of the estate of her deceased husband, committed unlawful,
immoral and deceitful conduct proscribed by Rule 1.01 of the code of professional
responsibility.
Likewise, respondent clearly committed a violation of Canon 15 of the same code which
provides that A lawyer should observe candor fairness and loyalty in all his dealings and
transactions with his client.
Respondents acts gravely diminish the publics respect for the integrity of the profession
of law for which this Commission recommends that he be meted the penalty of
disbarment.
The pendency of the cases at the SEC and the Regional Trial Court of Zamboanga filed
by complainant against respondent does not preclude a determination of respondents
culpability as a lawyer.
This Commission cannot further delay the resolution of this complaint filed in 1985 by
complainant, and old widow who deserves to find hope and recover her confidence in the
judicial system.
The findings of this office, predominantly based on documents adduced by both parties
lead to only one rather unpalatable conclusion. That respondent Atty. Jesus F. Balicanta,
in his professional relations with herein complainant did in fact employ unlawful,
dishonest, and immoral conduct proscribed in no uncertain terms by Rule 1.01 of the
Code of Professional Responsibility. In addition, respondents actions clearly violated
Canon 15 to 16 of the same Code.
It is therefore our unpleasant duty to recommend that respondent, having committed

acts in violation of the Canons of Professional Responsibility, thereby causing a great
disservice to the profession, be meted the ultimate sanction of disbarment.[2]
On September 30, 1999, while Commissioner Cunanans recommendation for

respondents disbarment was pending review before Executive Vice-President and
Northern Luzon Governor Teofilo Pilando, respondent filed a motion requesting for a full-
blown investigation and for invalidation of the entire proceedings and/or remedial action
under Section 11, Rule 139-B, Revised Rules of Court, alleging that he had evidence that
Commissioner Cunanans report was drafted by the lawyers of complainant, Attys.
Antonio Cope and Rita Linda Jimeno. He presented two unsigned anonymous letters
allegedly coming from a disgruntled employee of Attys. Cope and Jimeno. He claimed to
have received these letters in his mailbox.[3]
Respondents motion alleging that Attys. Antonio Cope and Rita Linda Jimeno drafted
Commissioner Cunanans report was accompanied by a complaint praying for the
disbarment of said lawyers including Commissioner Cunanan. The complaint was
docketed as CBD Case No. 99-658. After Attys. Cope and Jimeno and Commissioner
Cunanan filed their answers, a hearing was conducted by the Investigating Committee of
the IBP Board of Governors.
On May 26, 2001, the IBP Board of Governors issued a resolution[4] dismissing for lack
of merit the complaint for disbarment against Attys. Cope and Jimeno and Commissioner
Cunanan. And in Adm. Case No. 2797, the Board adopted and approved the report and
recommendation of Commissioner Cunanan, and meted against herein respondent
Balicanta the penalty of suspension from the practice of law for 5 years for commission
of acts of misconduct and disloyalty by taking undue and unfair advantage of his legal
knowledge as a lawyer to gain material benefit for himself at the expense of complainant
Rosaura P. Jaldon-Cordon and caused serious damage to the complainant.[5]
To support its decision, the Board uncovered respondents fraudulent acts in the very
same documents he presented to exonerate himself. It also took note of respondents
contradictory and irreconcilable statements in the pleadings and position papers he
submitted. However, it regarded the penalty of disbarment as too severe for
respondents misdeeds, considering that the same were his first offense.[6]
Pursuant to Section 12 (b), Rule 139-B of the Rules of Court,[7] the said resolution in
Administrative Case No. 2797 imposing the penalty of suspension for 5 years on
respondent was automatically elevated to this Court for final action. On the other hand,
the dismissal of the complaint for disbarment against Attys. Cope and Jimeno and
Commissioner Cunanan, docketed as CBD Case No. 99-658, became final in the absence
of any petition for review.
This Court confirms the duly supported findings of the IBP Board that respondent
committed condemnable acts of deceit against his client. The fraudulent acts he carried
out against his client followed a well thought of plan to misappropriate the corporate
properties and funds entrusted to him. At the very outset, he embarked on his devious
scheme by making himself the President, Chairman of the Board, Director and Treasurer
of the corporation, although he knew he was prohibited from assuming the position of
President and Treasurer at the same time.[8] As Treasurer, he accepted in behalf of the
corporation the 19 titles that complainant and her daughter co-owned. The other
treasurer appointed, Farnacio Bucoy, did not appear to be a stockholder or director in
the corporate records. The minutes of the meetings supposedly electing him and Bucoy
as officers of the corporation actually bore the signatures of respondent and the
secretary only, contrary to his claim that they were signed by the directors and
stockholders.
He likewise misled the IBP investigating commission in claiming that the mortgage of 9
of the properties of the corporation previously belonging to complainant and her
daughter was ratified by the stockholders owning two-thirds or 67% of the outstanding
capital stock when in fact only three stockholders owning 111 out of 1,750 outstanding
shares or 6.3% assented thereto. The alleged authorization granting him the power to
contract the LBP loan for Two Million Two Hundred Twenty Pesos (P2,220,000) was also
not approved by the required minimum of two-thirds of the outstanding capital stock
despite respondents claim to the contrary. In all these transactions, complainant and her
daughter who both owned 1,711 out of the 1,750 outstanding shares of the corporation
or 97.7% never had any participation. Neither were they informed thereof.
Clearly, there was no quorum for a valid meeting for the discussion and approval of
these transactions.
Respondent cannot take refuge in the contested voting trust agreement supposedly
executed by complainant and her daughter for the reason that it authorized respondent
to represent complainant for only 266 shares.
Aside from the dishonest transactions he entered into under the cloak of sham
resolutions, he failed to explain several discrepancies in his version of the facts. We
hereby reiterate some of these statements noted by Commissioner Cunanan in his
findings.
First, respondent blamed the directors and the stockholders who failed to convene for
the required annual meetings since 1982. However, respondent appeared able to
convene the stockholders and directors when he contracted the LBP debt, when he sold
to Jammang the corporations right of redemption over the foreclosed properties of the
corporation, when he sold one parcel of land covered by TCT No. 62807 to Jammang,
when he mortgaged the 9 parcels of land to LBP which later foreclosed on said
mortgage, and when he sold the complainants ancestral home covered by TCT No.
72004.
Second, the factual findings of the investigating commission, affirmed by the IBP Board,
disclosed that complainant and her daughter own 1,711 out of 1,750 shares of the
outstanding capital stock of the corporation, based on the Articles of Incorporation and
deeds of transfer of the properties. But respondents evidence showed that complainant
had only 266 shares of stock in the corporation while her daughter had none,
notwithstanding the fact that there was nothing to indicate that complainant and her
daughter ever conveyed their shares to others.
Respondent likewise did not explain why he did not return the certificates representing
the 266 shares after the lapse of 5 years from the time the voting trust certificate was
executed in 1981.[9]
The records show that up to now, the complainant and her daughter own 97% of the
outstanding shares but respondent never bothered to explain why they were never
asked to participate in or why they were never informed of important corporate
decisions.
Third, respondent, in his comment, alleged that due to the objection of complainant and
her daughter to his proposal to hire an accountant, the corporation had no formal
accounting of its revenues and income. However, respondents position paper maintained
that there was no accounting because the part-time bookkeeper of the corporation
connived with complainant and her daughter in keeping the corporate records.
Fourth, respondents claim that complainant and her daughter took control of the
operations of the corporation in 1986 is belied by the fact that complainant and her
daughter were not even present in the alleged meeting of the board (which took place
after 1986) to discuss the foreclosure of the mortgaged properties. The truth is that he
never informed them of such meeting and he never gave control of the corporation to
them.
Fifth, Commissioner Cunanan found that:
5. on the matter of the receipts issued by respondent evidencing payment to him of

rentals by lessees of the corporation, attached to the complaint as Annexes H to H-17,
respondent claims that the receipts are temporary in nature and that subsequently
regular corporate receipts were issued. On their face however the receipts clearly appear
to be official receipts, printed and numbered duly signed by the respondent bearing his
printed name.
It is difficult to believe that a lawyer of respondents stature would issue official receipts
to lessees if he only meant to issue temporary ones.[10]
Sixth, respondent denies that he acted as Corporate Secretary aside from being the
Chairman, President and Treasurer of the corporation. Yet respondent submitted to the
investigating commission documents which were supposed to be in the official
possession of the Corporate Secretary alone such as the stock and transfer book and
minutes of meetings.
Seventh, he alleged in his comment that he was the one who proposed the
establishment of the corporation that would invest the properties of the complainant but,
in his position paper, he said that it was a certain Atty. Rosauro Alvarez who made the
proposal to put up the corporation.
After a thorough review of the records, we find that respondent committed grave and
serious misconduct that casts dishonor on the legal profession. His misdemeanors reveal
a deceitful scheme to use the corporation as a means to convert for his own personal
benefit properties left to him in trust by complainant and her daughter.
Not even his deviousness could cover up the wrongdoings he committed. The documents
he thought could exculpate him were the very same documents that revealed his
immoral and shameless ways. These documents were extremely revealing in that they
unmasked a man who knew the law and abused it for his personal gain without any
qualms of conscience. They painted an intricate web of lies, deceit and opportunism
beneath a carefully crafted smokescreen of corporate maneuvers.
The Code of Professional Responsibility mandates upon each lawyer, as his duty to
society, the obligation to obey the laws of the land and promote respect for law and
legal processes. Specifically, he is forbidden to engage in unlawful, dishonest, immoral
or deceitful conduct.[11] If the practice of law is to remain an honorable profession and
attain its basic ideal, those enrolled in its ranks should not only master its tenets and
principles but should also, in their lives, accord continuing fidelity to them.[12] Thus, the
requirement of good moral character is of much greater import, as far as the general
public is concerned, than the possession of legal learning.[13] Lawyers are expected to
abide by the tenets of morality, not only upon admission to the Bar but also throughout
their legal career, in order to maintain ones good standing in that exclusive and honored
fraternity.[14]Good moral character is more than just the absence of bad character.
Such character expresses itself in the will to do the unpleasant thing if it is right and the
resolve not to do the pleasant thing if it is wrong.[15] This must be so because vast
interests are committed to his care; he is the recipient of unbounded trust and
confidence; he deals with his clients property, reputation, his life, his all.[16]
Indeed, the words of former Presiding Justice of the Court of Appeals Pompeyo Diaz
cannot find a more relevant application than in this case:
There are men in any society who are so self-serving that they try to make law serve
their selfish ends. In this group of men, the most dangerous is the man of the law who
has no conscience. He has, in the arsenal of his knowledge, the very tools by which he
can poison and disrupt society and bring it to an ignoble end.[17]
Good moral standing is manifested in the duty of the lawyer to hold in trust all moneys
and properties of his client that may come into his possession.[18] He is bound to
account for all money or property collected or received for or from the client.[19]The
relation between an attorney and his client is highly fiduciary in nature. Thus, 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.[20]
This Court holds that respondent cannot invoke the separate personality of the
corporation to absolve him from exercising these duties over the properties turned over
to him by complainant. He blatantly used the corporate veil to defeat his fiduciary
obligation to his client, the complainant. Toleration of such fraudulent conduct was never
the reason for the creation of said corporate fiction.
The massive fraud perpetrated by respondent on the complainant leaves us no choice

but to set aside the veil of corporate entity. For purposes of this action therefore, the
properties registered in the name of the corporation should still be considered as
properties of complainant and her daughter. The respondent merely held them in trust
for complainant (now an ailing 83-year-old) and her daughter. The properties conveyed
fraudulently and/or without the requisite authority should be deemed as never to have
been transferred, sold or mortgaged at all. Respondent shall be liable, in his personal
capacity, to third parties who may have contracted with him in good faith.
Based on the aforementioned findings, this Court believes that the gravity of
respondents offenses cannot be adequately matched by mere suspension as
recommended by the IBP. Instead, his wrongdoings deserve the severe penalty of
disbarment, without prejudice to his criminal and civil liabilities for his dishonest acts.
WHEREFORE, respondent Attorney Jesus T. Balicanta is hereby DISBARRED. The Clerk

of Court is directed to strike out his name from the Roll of Attorneys.
SO ORDERED.
SUPREME COURT
Manila EN BANC
A.C. No. 5438 March 10, 2004
DAN JOEL V. LIM* and RICHARD C. TAN, complainants, vs. ATTY. EDILBERTO
BARCELONA, respondent.
RESOLUTION
PER CURIAM: On May 9, 2001, Dan Joel V. Lim and Richard C. Tan,1 both businessmen, filed a
complaint for alleged robbery or extortion and violation of the Anti-Graft and Corrupt Practices
Act against Atty. Edilberto Barcelona, a lawyer formerly employed with the National Labor Relations
Commission (NLRC). The complaint was simultaneously filed with this Court and the Integrated Bar
of the Philippines.2
Complainant Lim alleged that on the first week of August 2000, respondent phoned him and
introduced himself as a lawyer and chief of the Public Assistance Center, NLRC. Respondent
informed him that his employees filed a labor complaint against him in his office and it was necessary
for him to see and talk with respondent. From then on respondent would often call him. Respondent
visited him in his office and told him to settle the case or else his business, Top Gun Billiards, would
be shut down. Lim recalled that on August 14, 2000, at around 7:30 p.m., respondent again visited his
establishment and told him to settle the case for P20,000.00.
In support of his allegations, Lim submitted a written complaint of Arnel E. Ditan and Pilipino Ubante;
an endorsement letter dated August 2, 2000 of Atty. Jonathan F. Baligod of the Presidential Action
Center; handwritten calling cards of the respondent; and an affidavit of desistance executed by Ditan
and Ubante.
In their joint affidavit, Ditan and Ubante confirmed the filing of their complaint against their employer,
Lim, and that after some dialogue, the aforenamed employees executed an affidavit dated August 8,
2000 withdrawing their complaint. According to Ditan and Ubante, they met the respondent in Top
Gun Billiards where the latter often played billiards. One day, respondent gave them a letter and
asked them to sign it. Since they were busy at that time, they signed it without reading and
understanding its contents. Their employer, Lim, asked what it was about and they told him that they
were just made to sign a document without their understanding it. They added, they did not have any
complaint against their employer. Despite such withdrawal, respondent still called Lim threatening the
latter that he would pursue the case, have his establishment closed and he would be jailed if he did
not come up with P20,000.00 as settlement. In the evening of August 14, 2000, respondent reiterated
his demand for P20,000.00, again with the threat of closure of the billiard center and putting Lim in
jail.
Complainant Lim said that after his meeting with respondent, he agreed to give the amount but did
not fix any date when payment would be made, whereupon, respondent gave notice that he would
drop in at around 7:00 in the evening, on August 16, 2000, to pick up the money.
Aurora Cruz y Libunao, owner of the carinderia adjacent to Top Gun Billiards, stated in her sworn
statement as well as court testimony that she met respondent when he ate in her carinderia. She
recalled that the respondent told her that he would shut down the billiard business if the owner would
not talk to him. She also recounted that on August 14, 2000, at around 8:30 p.m., she saw on the
second floor of the pool house, the respondent and Lim talking. After a while, the respondent came
down and passed by her carinderia. The respondent then informed her that he and Lim talked about
the P20,000.00 which respondent would give to his alleged boss in Malacañang. During the hearing,
she also recalled seeing Lim hand money to respondent who in turn put the cash in his attaché case
and immediately thereafter, she saw three men arrest respondent.3
Notably, almost nine months before the filing of his complaint, or on August 14, 2000, complainant
Lim personally submitted a letter to the NBI requesting the NBI to investigate respondent Atty.
Edilberto Barcelona.4 According to the NBI report, after due investigation, it decided to conduct an
entrapment operation. On August 15, 2000, Special Investigator Marvin de Jemil, sent nine five
hundred peso bills and five one hundred peso bills for fluorescent powder dusting to the NBI Forensic
Chemistry Division. Further, the NBI reported that thru the NBI Identification and Records Division, it
found no record of such person named Edilberto Barcelona.
The NBI report also stated that on August 16, 2000, Lim informed the NBI operatives that at around
7:00 p.m. respondent would drop by his pool house to collect the money. At around 6:30 p.m., the
operatives went to the pool house and strategically positioned themselves and posed as pool players.
At about 7:20 p.m., respondent arrived, sat on a plastic chair and talked to complainant Lim. At
around 7:30 p.m., Lim handed the marked money to the respondent who, in turn, received it. While
respondent was counting the money and about to place it inside his bag, he was immediately
arrested. The respondent initially resisted and tried to create scandal but was later pacified.
The NBI averred that the respondent was informed of his constitutional rights and was brought to the
NBI office where he was booked and fingerprinted. In his fingerprint chart, the respondent indicated
that he was a government lawyer and assigned at the office of the Chief, Public Assistance Center,
NLRC, Banawe, Quezon City. He showed his identification card. Later he was brought to the Forensic
Chemistry Division for ultraviolet examination. The certification issued by Forensic Chemist Loren G.
Janobas stated that there were "yellow fluorescent specks and smudges" on the back and palm of the
left and right hand of the respondent. On August 17, 2000, the NBI turned over respondent to the City
Prosecutor of Manila who eventually indicted him for robbery/extortion.5
Complainant Richard Tan, owner of Tai Hing Glass Supply, a co-signee in the herein complaint,
executed a sworn statement dated August 16, 2000. In it he alleged that he went to the Criminal
Intelligence Division, Intelligence Service of the NBI to complain about respondent Barcelona. He said
that sometime during the last week of July, respondent called him, introduced himself and informed
him that one of his employees filed an illegal dismissal case against him. He remembered that before
respondent's call, he had suspended an employee, Bryan Tellen, for leaving his workplace without
permission. Tellen received several warning letters from him regarding his misdemeanors. Tan
remembered that Tellen once hinted that he knew someone in the Department of Labor, who turned
out to be herein respondent, Atty. Barcelona. Before Tan sent his accountant, Ditas Guitierrez, to
respondent's office to represent him, he told her to bring a copy of Tellen's suspension letter and to
inform respondent that Tellen had not been dismissed. When Guitierrez returned, she told him that
respondent wanted him to pay his employee. She added that respondent did not give her any copy of
a formal complaint on the alleged illegal dismissal. After two days, according to Tan, respondent went
to his office, showed him an identification card and gave him a handwritten calling card. Respondent
told him to pay his employee P20,000.00 to P30,000.00, otherwise respondent would go on with the
filing of the illegal dismissal case. When he said he did not have that kind of money, respondent
lowered the amount to P15,000.00. Complainant Tan added that when he gave respondent the
money, the latter promised to take care of the illegal dismissal complaint. On July 29, 2000, according
to Tan, respondent came to see him again. Respondent appeared drunk and told Tan to go to the
respondent's office because a problem regarding the case arose. Tan stated that before respondent
left, respondent invited his employees to a game of billiards. Tan said he did not consent to the
employees playing because they had work. On July 31, 2000, respondent went to him a third time
and asked for an additional P10,000.00 allegedly for his employee, Tellen, since the P15,000.00 Tan
gave earlier was for respondent only. After a few more visits by respondent, Tan finally told the
respondent to show him the formal complaint and he would just get himself a lawyer.6
The Joint Affidavit of Arrest, signed on August 17, 2000 by Agent Don R. Hernandez, SI Felix O.
Senora and SI Marvin de Jemil, cited complainant Tan's allegations.7
Respondent Atty. Barcelona filed his Comment8 on December 10, 2001, praying for the dismissal of
the complaint against him. Respondent, in his defense, alleges that he normally played billiards at the
Top Gun Billiard Center where he would drop by from his office before going to his residence; that
when certain employees of the billiard center learned that he was a lawyer and Chief of the Public
Assistance Center of the NLRC, they confided in him their grievance against their employer, Lim, for
alleged violation of labor laws, there respondent gave them assistance; that with the proper complaint
and required documentation accomplished, respondent's office scheduled the case for a dialogue-
conference between the complaining workers and their employer; that on instigation and coercion of
complainant Lim, respondent became a victim of theft, billiard hustling, swindling and syndicated
gambling on August 9, 2000; that on or about August 9, 2000, respondent filed a complaint for theft of
cellphone and pack of cigarettes, billiard hustling, syndicated gambling, and swindling against Lim
and his three workers, eventually docketed as I.S. No. 38251 to 53.9
Respondent's Comment narrated his version on how the money allegedly was given to him.
According to the respondent, on August 16, 2000, at about 3 p.m., he received a phone call from
complainant Lim informing him that Ian Gonvan,10 one of the accused in I.S. No. 38251, admitted
taking his cellphone and was willing and ready to return it at around 7 p.m., at the Top Gun Billiard
Center. It was the birthday of his daughter that was why he took the day off from office. At about 7:30
p.m., he arrived at the billiard hall and there found Lim with one of his complaining workers, fixing the
lamp of one of the billiard tables. He did not see Gonvan within the premises so he sat and watched
the billiard games going on while he waited. After about 15 minutes Lim sat beside him and told him
that Gonvan could no longer return the cellphone and instead Gonvan entrusted Lim with the
equivalent value in cash. According to respondent, Lim persistently whispered to him to accept and
count the wad of paper money Lim pulled out. According to respondent, he consistently refused to
touch the money and he insisted, "Gusto ko munang makaharap ang sinasabi mong si
Gumban,"11 continuously refusing to accept, much less count, the offered wad of money. Respondent
added that when Lim realized that he could not be prevailed upon to accept it, he placed and inserted
the wad of money in the open side pocket of respondent's shoulder bag that respondent normally
carried, again pleading to respondent that he should count the money. Respondent added that Lim's
behavior was rude and intimidating so much so that respondent protested such rudeness. But
respondent said while he was trying to retrieve the wad of money to throw it back to Lim, about five or
seven burly men accosted respondent and handcuffed him over his vehement protestations.12
On Tan's complaint, respondent declared that he never demanded nor received money from Tan, and
Tan's accusations are but a product of the former's fertile imagination as leverage because he
actively assisted a complaining worker of Tan.13 Respondent added that a formal labor complaint has
been filed against Tan.14
Eventually, we referred the complaint against Atty. Barcelona to the Integrated Bar of the Philippines
(IBP) for investigation, report and recommendation. Its report with recommendation is now before us.
We shall now proceed to the merits of the complaint.
Respondent's version seeks to discredit the NBI report to the effect that respondent accepted the
marked money which Lim handed to him. His version, however, fails to explain why he was found
positive for yellow fluorescent specks and smudges in his dorsal and palmar aspects of the left and
right hands by the Forensic Department of the NBI.
Respondent claims that he continuously refused to accept, much less count, the offered wad of
money. Because of such refusal, according to respondent, Lim inserted the wad of money in
respondent's shoulder bag's open pocket while complainant Lim was still pleading to count the wad of
money.
Respondent alleges that the alleged bribery or extortion is a mere concoction of complainant and as
leverage for the cases against Lim and Tan.
Based on the NBI report, this case appears to be an entrapment operation. Notably, Atty. Don
Hernandez and his team of arresting officers confirm the entrapment operation against respondent on
the basis of complainant Lim's call for NBI assistance.
While respondent alleges that complainant Lim merely concocted a charge of extortion against him in
retaliation to a complaint for theft which he had filed, it may be noted that the complaint for theft was
not directed against Lim but only against his workers who were accused by respondent. Hence, there
appears to be no strong reason for Lim to resort to a counter-charge for extortion against respondent.
The Commission on Bar Discipline of the IBP concluded that it is highly improbable that the NBI could
be misled by complainant Lim into conducting an entrapment operation against respondent, if there
was no merit to his complaint against respondent. From a reading of the NBI Report as well as the
documents attached to said report, it is evident that the NBI considered the merits of Lim's complaint
of extortion against respondent. Finding it worth pursuing, the NBI conducted an entrapment
operation against respondent. On the basis of the entrapment operation conducted by the NBI,
respondent was caught in the act, so to speak, of attempted extortion. Respondent was brought to
the City Prosecutor of Manila for inquest and the appropriate complaint for Robbery/Extortion was
filed against respondent.15
Based on its own evaluation and the NBI Report, the Investigating Commissioner of the Commission
on Bar Discipline recommended the suspension of respondent from the practice of law for a period of
two years.16
In the final resolution dated September 27, 2003, the Board of Governors of the IBP imposed the
penalty of disbarment for the reason that respondent in fact attempted to extort money as Chief of the
Public Assistance Center of the NLRC to threaten/coerce Lim and that no less than the NBI caught
him in the act of receiving and counting the money extorted from Lim.17
The grounds for disbarment or suspension of an attorney are: (1) deceit; (2) malpractice or other
gross misconduct in office; (3) grossly immoral conduct; (4) conviction of a crime involving moral
turpitude; (5) violation of the lawyer's oath; (6) willful disobedience of any lawful order of a superior
court; and (7) willfully appearing as an attorney for a party without authority.18
The NBI found that respondent's hands had yellow fluorescent specks and smudges with which the
money used for the entrapment of the respondent had been powdered. We find no reason to doubt
the NBI report. Also, we see no basis to overturn the presumption that the NBI had done its duty
regularly.
Respondent would make us believe that the specks and smudges of yellow fluorescent were in his
hands because Lim offered him what was allegedly the payment for the stolen cellphone by a certain
Gonvan. Regrettably, there is no corroboration from Gonvan nor anyone else on this matter. Thus,
respondent's story appears to us entirely self-serving.
We had held previously that if a lawyer's misconduct in the discharge of his official duties as
government official is of such a character as to affect his qualification as a lawyer or to show moral
delinquency, he may be disciplined as a member of the Bar on such ground.19 More significantly,
lawyers in government service in the discharge of their official tasks have more restrictions than
lawyers in private practice. Want of moral integrity is to be more severely condemned in a lawyer who
holds a responsible public office. 20 Rule 1.02 of the Code of Professional Responsibility provides that
a lawyer shall not counsel or abet activities aimed at defiance of the law or at lessening confidence in
the legal system. Extortion by a government lawyer, an outright violation of the law, calls for the
corresponding grave sanctions. With the aforesaid rule a high standard of integrity is demanded of a
government lawyer as compared to a private practitioner because the delinquency of a government
lawyer erodes the people's trust and confidence in the government.
Needless to say, lawyers owe it to the court and to society not to stir up litigations. Employees of the
billiards hall, Ditan and Ubante, swore that respondent public officer encouraged complainant Lim's
workers to file a case against the latter. Rule 1.03 of the same Code states that a lawyer shall not, for
any corrupt motive or interest, encourage any suit or proceeding or delay any man's cause.
Noteworthy, as an Attorney IV and Chief of the Public Assistance Center of the NLRC, respondent
failed to observe prudence by hanging out and playing in the billiard hall. By so doing, he exposed
himself unnecessarily to certain elements and situations which could compromise his official position
and his status as a lawyer.
Time and again, we have declared that the practice of law is a noble profession. It is a special
privilege bestowed only upon those who are competent intellectually, academically and morally. A
lawyer must at all times conduct himself, especially in his dealings with his clients and the public at
large, with honesty and integrity in a manner beyond reproach. He must faithfully perform his duties to
society, to the bar, to the courts and to his clients. A violation of the high standards of the legal
profession subjects the lawyer to administrative sanctions which includes suspension and
disbarment.21 More importantly, possession of good moral character must be continuous as a
requirement to the enjoyment of the privilege of law practice; otherwise, the loss thereof is a ground
for the revocation of such privilege.22
Indeed, the primary objective of administrative cases against lawyers is not only to punish and
discipline the erring individual lawyers, but also to safeguard the administration of justice by
protecting the courts and the public from the misconduct of lawyers and to remove from the legal
profession persons whose utter disregard of the lawyer's oath has proven them unfit to continue
discharging the trust reposed in them as members of the bar.23 These pronouncements gain practical
significance in this case, considering that respondent is a senior lawyer of the NLRC. It bears
stressing also that government lawyers who are public servants owe fidelity to the public service, a
public trust. As such, government lawyers should be more sensitive to their professional obligations
as their disreputable conduct is more likely to be magnified in the public eye.24
As a lawyer, who was also a public officer, respondent miserably failed to cope with the strict
demands and high standards of the legal profession.
In Montano v. IBP,25 this Court said that only in a clear case of misconduct that seriously affects the
standing and character of the lawyer may disbarment be imposed as a penalty. In the instant case,
the Court is convinced that the evidence against respondent is clear and convincing. He is
administratively liable for corrupt activity, deceit, and gross misconduct. As correctly held by the
Board of Governors of the Integrated Bar of the Philippines, he should not only be suspended from
the practice of law but disbarred.
WHEREFORE, respondent Atty. Edilberto Barcelona is found administratively guilty of corrupt

activity, deceit, and gross misconduct and is hereby ordered DISBARRED. Let his name be stricken
from the Roll of Attorneys effective immediately, and this resolution spread in his record in this Court
and circulated to all courts in the Philippines.
SO ORDERED.

SUPREME COURT
Manila
FIRST DIVISION
[A.C. No. 6183 : March 23, 2004
EDISON G. CHENG, complainant, v. ATTY. ALEXANDER M. AGRAVANTE, Respondent.
DECISION
YNARES-SANTIAGO, J.:
This is an administrative case for disbarment filed with the Integrated Bar of Philippines
(IBP) Commission on Bar Discipline.
The following facts have been established by the evidence.
Respondent Atty. Alexander M. Agravante served as counsel for The Rogemson Co., Inc.
(hereinafter, Rogemson) in a case filed against it before the National Labor Relations
Commissions (NLRC) Regional Arbitration Branch No. XI in Davao City by its former
employee, a certain Beaver Martin B. Barril. On June 18, 1998, Labor Arbiter Newton R.
Sancho rendered a decision in favor of the complainant, and ordered Rogemson to pay
Barril separation pay and backwages.[1] A copy of said decision was received by
respondents law office on September 8, 1998. However, respondent filed a
Memorandum of Appeal with the NLRC only on September 22, 1998. Consequently, the
NLRC dismissed Rogemsons appeal in a Resolution dated May 27, 1999, and made the
following incisive observation:
In the case at bar, respondents through counsel were duly served with a copy of the
decision (Vol. 1, pp. 67-70) of Labor Arbiter Newton R. Sancho, dated 18 June 1998,
declaring complainant illegally dismissed from employment and awarding him with
separation pay and backwages in the total sum of P130,000.00 on September 8, 1998,
Tuesday, said date being indicated in the mailed decisions registry return receipt which
is attached to the records (Vol. 1, p. 75). Consequently, respondents had ten (10)
calendar days but not later than September 18, 1998, Friday to perfect their appeal
therefrom. However, the records similarly bear that this present appeal was filed
belatedly by way of mail on 22 September 1998. It is necessary to state these facts
candidly given the inaccurate certification by respondents counsel that he received the
decision being assailed on September 10, 1998. (Vol. 2, p. 7)
The complainants terminated the services of Atty. Agravante. Through their new
lawyers, complainants wrote Atty. Agravante, demanding that they be compensated for
the pecuniary damages they had suffered as a result of his negligence.[2]
When it appeared that Atty. Agravante had no intention of responding to their letter,
Edison G. Cheng, General Manager of Rogemson, filed an affidavit-complaint with the
IBP Commission on Bar Discipline.[3] The case was then assigned to Commissioner
Caesar R. Dulay for investigation.
Allan P. Abelgas, Rogemsons Regional Sales Manager for Cebu, testified that he only
learned of the decision of the Labor Arbiter when a secretary of Atty. Agravante
informed him that a bond was required in filing an appeal to the NLRC. Abelgas was then
about to take an emergency leave of absence, so he delegated the task of securing the
bond to his sister Sheila A. Balandra, another Rogemson employee.[4]
Balandra testified that on September 18, 1998, she called up Cheng in Manila by phone,
who then authorized her to procure the bond. Balandra then called the office of Atty.
Agravante to ask if she can submit the bond on Monday, September 21, 1998. She was
told to stay on the line while the secretary consulted with one of the other lawyers in the
office. When the secretary came back, she informed Balandra that she could submit the
bond on Monday, September 21, 1998 as long as it reached the law office before 5:00
p.m.[5]
On September 21, 1998, Balandra arrived at the office of Atty. Agravante with the bond
at 4:00 p.m. She learned that Atty. Agravante had just returned from out of town and
had just opened the envelope containing the adverse decision.[6]
Not surprisingly, Agravante tells a different story. He neither admitted nor denied
receiving the decision of the Labor Arbiter on September 8, 1998.Instead, he alleges
that he was out of town on said date and only returned to his office on September 10,
1998. Upon arriving at the office, his secretary handed to him all the correspondence
addressed to him, including the envelope containing the Labor Arbiters decision. He
alleges that there were several markings on this particular envelope, one of which was
the date September 10, 1998, and he allegedly assumed that this was the date of
receipt by his office.[7] He then informed Abelgas of the result of the case and the
period within which to file a Memorandum of Appeal.[8] The instruction for Rogemson to
proceed with the appeal came a full six (6) days later. He offered the services of his law
office for procuring the appeal bond, but he was informed that Rogemson would take
care of it. He alleges that Rogemson furnished them with the bond only in the morning
of September 22, 1998, although the bond documents were notarized on September 21,
1998.[9]
On July 23, 2003, Commissioner Dulay submitted his Report recommending that
respondent be suspended from the practice of law for two (2) months with an
admonition that a similar offense would be dealt with more severely.[10]
On August 30, 2003, the Board of Governors of the IBP passed Resolution No. XVI-
2003-97, approving the Report and Recommendation of the Investigating Commissioner.
The investigating commissioner found that Balandras testimony that she furnished
Agravantes law office with the appeal bond on September 21, 1998 and not on
September 22, 1998, was not sufficiently rebutted by Agravante, who did not even
cross-examine her. More importantly, the fact that the Memorandum of Appeal was filed
four (4) days beyond the reglementary period for filing the same, which resulted in its
dismissal by the NLRC, shows that Agravante was guilty of negligence.[11]
With regard to the date of receipt of the Labor Arbiters decision, the registry return card
indicated that respondent received the same on September 8, 1998.[12] Thus,
Commissioner Dulay concluded that Agravante misled the NLRC when he certified in his
Memorandum of Appeal that he received the adverse decision of the Labor Arbiter on
September 10, 1998.[13]
Before lawyers are admitted to the bar, they must first solemnly swear to do no
falsehood nor consent to the doing of any in court.[14] This oath, to which all lawyers
subscribe in solemn agreement to dedicate themselves to the pursuit of justice, is not a
mere ceremony or formality for practicing law to be forgotten afterwards, nor is it mere
words, drift and hollow, but a sacred trust that every lawyer must uphold and keep
inviolable at all times.[15] This duty is expressed in general terms in the Code of
Professional Responsibility, thus:
CANON 10--- A lawyer owes candor, fairness and good faith to the court.
It is codified further in the following rule of the Code of Professional Responsibility:
Rule 10.01 ---A lawyer shall not do any falsehood, nor consent to the doing of any in
court; nor shall he mislead or allow the court to be misled by any artifice.
In the case at bar, Agravante lied when he said he received the Labor Arbiters decision
on September 10, 1998 in order to make it appear that his Memorandum of Appeal was
filed on time.
It cannot be stressed enough how important it is for a lawyer as an officer of the court
to observe honesty at all times, especially before the courts.[16] A lawyer must be a
disciple of truth,[17] and Agravante has clearly failed to live up to this duty.
Moreover, the Code of Professional Responsibility states that:
CANON 18 --- A lawyer shall serve his client with competence and diligence.
x x xx x xx x x
Rule 18.03 --- A lawyer shall not neglect a legal matter entrusted to him and his
negligence in connection therewith shall render him liable.
A lawyer owes entire devotion in protecting the interest of his client, warmth and zeal in
the defense of his rights.He must use all his learning and ability to the end that nothing
can be taken or withheld from his client except in accordance with the law. He must
present every remedy or defense within the authority of the law in support of his clients
cause, regardless of his own personal views. In the full discharge of his duties to his
client, the lawyer should not be afraid of the possibility that he may displease the judge
or the general public.[18]
In this case, respondents filing of the Memorandum of Appeal four (4) days after the
deadline proves that his efforts fell short of the diligence required of a lawyer. His failure
to perfect an appeal within the prescribed period constitutes negligence and malpractice
proscribed by the Code of Professional Responsibility, which provide that a lawyer shall
not neglect a legal matter entrusted to him and his negligence in connection therewith
shall render him liable.[19]
Agravantes insistence that it was not his place to file an appeal without express
instructions from his client to do so is not persuasive. He could easily withdraw the
appeal if his client should later decide not to pursue the same.[20]
Furthermore, the belated filing of the Memorandum of Appeal cannot in any way
mitigate respondents liability; on the contrary, it shows ignorance on his part. As a
lawyer, he ought to know that his Memorandum of Appeal, having been filed beyond the
reglementary period, would surely be struck down for late filing.[21]
In sum, respondent utterly failed to perform his duties and responsibilities faithfully and
well as to protect the rights and interests of his client.[22]
A word regarding the imposable penalty.In the case of Perea v. Almadro,[23] the
respondent therein was similarly punished for negligence in the discharge of his duty as
well as misrepresentation committed before the court. In said case, the respondent
lawyer failed to file a demurrer to the evidence after asking for leave to file the same.
He compounded this transgression by spinning concocting stories about the loss of the
file of his draft, which somehow led him to believe that the pleading had already been
filed. Finding him guilty of serious neglect of his duties as a lawyer and of open
disrespect for the court and the authority it represents, as embodied in Canon 18, Rules
18.03 and 18.04 and Canon 10, Rule 10.01 of the Code of Professional Responsibility,
the Court suspended the respondent therein from the practice of law for one (1) year
and imposed a fine in the amount of Ten Thousand (P10,000.00) Pesos, with warning
that any similar acts of dishonesty would be dealt with more severely.[24] Evidently,
this case seems to be on all fours with the case at bar, so we are thus constrained to
increase the penalty recommended by the IBP.
WHEREFORE, in view of the foregoing, respondent Atty. Alexander M. Agravante is

SUSPENDED from the practice of law for a period of one (1) year and is FINED in the
amount of Ten Thousand Pesos (P10,000.00).He is STERNLY WARNED that a repetition
of the same or similar offense will be dealt with more severely.
No costs.
SO ORDERED.
FIRST DIVISION
[A.C. No. 5131.September 22, 2004
JOSE E. ORIA, complainant, vs. ATTY. ANTONIO K. TUPAZ, Respondent.
DECISION
In a Letter-Complaint[1] dated September 1, 1999, respondent Atty. Antonio K. Tupaz was

charged with negligence in the performance of his duties as counsel to complainant Jose E. Oria.
Complainant Oria avers that his wife, Viola Luna Oria authorized him to institute legal action to
recover her unirrigated ricelands located at Barangay Banuyo, Gasan, Marinduque, with an area
of 1.2121 hectares, which were transferred, by virtue of the Operation Land Transfer of the
Agrarian Reform Program, to the alleged tenants in connivance with Lourdes Argosino and Linda
Rey, field personnel of the Marinduque Agrarian Office (MARO).
Sometime in 1988, complainant went to the MARO and informed the Chief of the Complaints
Section of the illegal transfer.Subsequently, the spouses Oria discovered that Emancipation
Patents were issued to the so-called tenants.
Mr. Oria sought the assistance of then Agrarian Reform Secretary Miriam Defensor Santiago,
who ordered Legal Officer Pablo F. Reyes to investigate the matter.The latter recommended that
the Emancipation Patents be cancelled and the property returned to Mrs. Oria.
On May 6, 1991, the Provincial Agrarian Reform Officer (PARO), Herminiano C. Echiverri, Jr.,
sent Mrs. Oria a notice that her children were eligible for Retention.However, she did not file an
application for Retention because she was awaiting the Investigation Report of Legal Officer
Reyes.
On April 21, 1993, the Chief of the Legal Division, Ibra D. Omar Al Haj sent a letter to
complainants wife stating that the case had been forwarded to respondent Atty. Antonio K.
Tupaz, Chief of the Litigation Division of the Bureau of Agrarian Legal Assistance (BALA) in
Quezon City.
Thereafter, complainant consulted the respondent regarding the case and he gave the amount of
P5,000.00 to the latter, promising a bigger amount after the termination of the case.He also
assured the respondent that a fixed amount of P1,000.00 as traveling expenses would be given
every time the latter will go to Marinduque.Complainant kept on reminding respondent to follow
up the case but the latter was always unavailable.Finally, complainants wife visited respondents
office and she was told that additional money was needed for expenses.Hence, Mrs. Oria made a
bank-to-bank deposit of P5,000.00 to the account of respondent.She later learned that he had
already retired and was engaged in private practice.
Complainant further alleged that when he went to the Litigation Division of the DAR on August
31, 1999, he was told by Atty. Ibra D. Omar Al Haj, that the files of the agrarian case of his wife
were missing from the office.Thus, he filed the instant complaint.
In his Comment,[2] respondent avers that he met complainant during his tenure as Chief of the
Litigation Division of the DAR, in relation to a dispute over the ownership of an agricultural
riceland in Marinduque that was covered by the Operation Land Transfer of the Agrarian Reform
Program.He also alleged that due to the volume of work and pending cases handled by the legal
officers in the office, he did the evaluation and secured the necessary documents to support the
first endorsement.It was only sometime in October 1993 when his office received the partial
records of the case and a copy of the Investigation Report dated November 14, 1993,
recommending the cancellation of the Emancipation Patents issued in favor of the tenant-
farmers.Finally, in 1994, he was able to secure the documents relevant to the case, including
copies of the Emancipation Patents, by going to Boac, Marinduque on two occasions.
Respondent further alleged that he caused the preparation of a possible petition for the
cancellation of the Emancipation Patents and recommended its filing to the Office of the BALA,
DAR Central Office.Thereafter, he was informed that the matter was referred to the Office of the
Assistant Secretary of Legal Affairs because one of the party-defendants would be the Secretary
of Agrarian Reform.
Respondent avers that he had no discretion over the matter since the filing of the case has to be
approved not only by the Director of BALA but also by the Assistant Secretary for Legal Affairs of
the DAR.His duty was only to evaluate the legal remedy to be availed of which the BALA then
endorses for official action to the department.He further alleged that he informed complainant of
these incidents and the action taken regarding the case pending before the DAR.
Finally, respondent denies that he received P5,000.00 from complainant during his tenure as
Chief of the Litigation Division.He avers that he engaged in private practice upon his retirement
and that sometime in December 1997, he was requested by complainant to handle the agrarian
case, and they agreed on the amount of P25,000.00 as attorneys fees and P5,000.00 as
appearance fee including roundtrip tickets from Manila to Marinduque per hearing.He admits
receiving the said amount only in January 1998, which was sent to his account as partial
payment of the agreed attorneys fees.
Respondent states that he should not be penalized for merely doing his job as a foot soldier of
the government and that he should not be blamed for something that was already a fait
accompli as a result of governments desire to implement social legislation.He promised to help
complainant regardless of monetary consideration with the filing of the case for the cancellation
of the Emancipation Patents issued to the latters tenants.[3]
Based on the Report and Recommendation of Commissioner Rebecca Villanueva-Maala, the

Board of Governors of the Integrated Bar of the Philippines issued Resolution No. XV-2003-349
dated June 21, 2003 which reads:
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 the applicable laws and rules, and considering that the Commission
finds respondent negligent in his duties to his client-complainant, Atty. Antonio K. Tupaz is
hereby SUSPENDED from the practice of law for six (6) months.
On August 12, 2003, respondent filed a motion for reconsideration reiterating the arguments in
his comment.
We agree with the recommendation of the IBP.
There is no dispute that a lawyer-client relationship existed between the parties.After respondent
retired from the government service, he agreed to represent complainant as private counsel.He
charged the amount of P25,000.00 as acceptance fee and received P5,000.00 as partial
payment.
Respondent cannot justify his failure to help complainant by stating that after receipt of part of
the acceptance fee he did not hear anymore from complainant or his wife.The persistence
displayed by the latter in prosecuting this complaint belies the lack of enthusiasm alleged by
respondent.Records show that complainant exhausted all available remedies to recover his
property.It was, in fact, the loss of the latters file in the Office of the Litigation Division and the
Legal Division of the DAR that prompted him to file this instant petition.
As ruled in the case of Rabanal v. Tugade:[4]
Once he agrees to take up the cause of a client, the lawyer owes fidelity to such cause and must
always be mindful of the trust and confidence reposed in him.He must serve the client with
competence and diligence, and champion the latters cause with wholehearted fidelity, care, and
devotion.Elsewise stated, he owes entire devotion to the interest of the client, warm zeal in the
maintenance and defense of his clients rights, and the exertion of his utmost learning and ability
to the end that nothing be taken or withheld from his client, save by the rules of law, legally
applied.This simply means that his 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.If much is demanded from an attorney, it is because the entrusted
privilege to practice law carries with it the correlative duties not only to the client but also to the
court, to the bar, and to the public.A lawyer who performs his duty with diligence and candor not
only protects the interest of his client; he also serves the ends of justice, does honor to the bar,
and helps maintain the respect of the community to the legal profession.
The records show that respondent handled complainants case since 1993 and there has been no
progress in the case since then.Respondent not only deceived his client, but also failed to
perform the undertaking to help complainant in filing the case for cancellation of the
Emancipation Patents.He pledged to assist complainant in filing a petition for cancellation of the
Emancipation Patents even without monetary consideration; yet to this day, complainant has not
recovered his property nor was any petition filed by respondent.
Respondent is required by his oath to conduct himself as a lawyer according to the best of his
knowledge and discretion with all good fidelity to the courts as well as to his clients.The lawyers
oath is a source of obligations and violation thereof is a ground for suspension, disbarment, or
other disciplinary action.[5] Any departure from the path which a lawyer must follow as
demanded by the virtues of his profession shall not be tolerated by this Court as the disciplining
authority.[6]
WHEREFORE, Resolution No. XV-2003-349 of the Board of Governors of the Integrated Bar of
the Philippines finding respondent negligent in his duties to his client is AFFIRMED.Atty. Antonio
K. Tupaz is SUSPENDED from the practice of law for six (6) months.He is further warned that a
repetition of this or similar acts will be dealt with more severely.
SO ORDERED.
SUPREME COURT
Manila
FIRST DIVISION
A.C. No. 6210 December 9, 2004
FEDERICO N. RAMOS, complainant,

vs.
ATTY. PATRICIO A. NGASEO, respondent.
DECISION
This is a complaint for suspension of respondent Atty. Patricio A. Ngaseo for violation of the
Code of Professional Responsibility and Article 1491 of the Civil Code by demanding from his
client, complainant Federico N. Ramos, the delivery of 1,000 square meters of land, a litigated
property, as payment for his appearance fees.
The facts as narrated by the complainant are as follows:
Sometime in 1998, complainant Federico Ramos went to respondent Atty. Patricio Ngaseo's
Makati office to engage his services as counsel in a case1 involving a piece of land in San
Carlos, Pangasinan. Respondent agreed to handle the case for an acceptance fee of
P20,000.00, appearance fee of P1,000.00 per hearing and the cost of meals, transportation
and other incidental expenses. Complainant alleges that he did not promise to pay the
respondent 1,000 sq. m. of land as appearance fees.2
On September 16, 1999, complainant went to the respondent's office to inquire about the
status of the case. Respondent informed him that the decision was adverse to them because
a congressman exerted pressure upon the trial judge. Respondent however assured him that
they could still appeal the adverse judgment and asked for the additional amount of
P3,850.00 and another P2,000.00 on September 26, 2000 as allowance for research made.3
Although an appeal was filed, complainant however charges the respondent of purposely
failing to submit a copy of the summons and copy of the assailed decision. Subsequently,
complainant learned that the respondent filed the notice of appeal 3 days after the lapse of
the reglementary period.
On January 29, 2003, complainant received a demand-letter from the respondent asking for
the delivery of the 1,000 sq. m. piece of land which he allegedly promised as payment for
respondent's appearance fee. In the same letter, respondent also threatened to file a case in
court if the complainant would not confer with him and settle the matter within 30 days.
Respondent alleged that sometime in the late 1997, a former client, Federico Ramos and his
brother, Dionisio, went to his Makati office to engage his professional services in connection
with a 2-hectare parcel of land situated in San Carlos, Pangasinan which the complainant's
family lost 7 years earlier through an execution sale in favor of one Alfredo T. Castro.
Complainant, who was deaf and could only speak conversational Tagalog haltingly, was
assisted by his brother Dionisio. They came all the way from Pangasinan because no lawyer
in San Carlos City was willing to handle the case. Complainant, through Dionisio, avers that
he has consulted 2 local lawyers but did not engage their services because they were
demanding exorbitant fees. One local lawyer was willing to handle the case for at least one-
half of the land involved as his attorney's fee, plus cash expenses, while the other asked for
¼ of the land in addition to a large sum of money. Respondent agreed to handle the case for
an acceptance fee of P60,000.00 plus an appearance fee of P3,000.00 per hearing.
Complainant told him that he would consult his siblings on the matter.
Six months later, i.e., in April 1998, complainant, assisted by one Jose Castillo, went to
respondent's office to discuss the legal fees. Complainant, through Castillo, told respondent
that he was willing to pay an acceptance fee of P40,000.00, P20,000.00 of which shall be
paid upon engagement and the remaining P20,000.00 to be paid after their treasure hunt
operations in Nueva Viscaya were terminated. Further, complainant offered, in lieu of
P3,000.00 per appearance, 1,000 sq. m. of land from the land subject matter of the case, if
they win, or from another piece of property, if they lose. In addition, complainant also offered
to defray the expenses for transportation, meals and other incidental expenses. Respondent
accepted the complainant's offer.
Respondent claims that after the trial court dismissed Civil Case No. SCC 2128, he filed a
timely notice of appeal and thereafter moved to be discharged as counsel because he had
colon cancer. Complainant, now assisted by one Johnny Ramos, implored respondent to
continue handling the case, with an offer to double the 1,000 sq. m. piece of land earlier
promised and the remaining balance of P20,000.00 acceptance fee. Johnny Ramos made a
written commitment and gave respondent's secretary P2,000.00 of the P3,850.00 expenses
for the preparation of the appellant's brief.
On July 18, 2001, the Court of Appeals rendered a favorable decision ordering the return of
the disputed 2-hectare land to the complainant and his siblings. The said decision became
final and executory on January 18, 2002. Since then complainant allegedly failed to contact
respondent, which compelled him to send a demand letter on January 29, 2003.
On February 14, 2003, complainant filed a complaint before the IBP charging his former
counsel, respondent Atty. Ngaseo, of violation of the Code of Professional Responsibility for
demanding the delivery of 1,000 sq. m. parcel of land which was the subject of litigation.
In a report dated July 18, 2003, IBP Commissioner Rebecca Villanueva-Maala found the
respondent guilty of grave misconduct and conduct unbecoming of a lawyer in violation of the
Code of Professional Responsibility and recommended that he be suspended from the
practice of law for 1 year.4
On August 30, 2003, the IBP Board of Governors passed Resolution No. XVI-2003-47 the full
text of which reads:5
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 the applicable laws
and rules, with modification, and considering that respondent have violated the Code of
Professional Responsibility for grave misconduct and conduct unbecoming of a lawyer
Atty. Patricio A. Ngaseo is hereby SUSPENDED from the practice of law for six (6)
months.
On December 11, 2003, respondent filed a petition for review assailing IBP Resolution No.
XVI-2003-47 for having been issued without or in excess of jurisdiction.6
Respondent argues that he did not violate Article 1491 of the Civil Code because when he
demanded the delivery of the 1,000 sq. m. of land which was offered and promised to him in
lieu of the appearance fees, the case has been terminated, when the appellate court ordered
the return of the 2-hectare parcel of land to the family of the complainant.
Respondent further contends that he can collect the unpaid appearance fee even without a
written contract on the basis of the principle of quantum meruit. He claims that his acceptance
and appearance fees are reasonable because a Makati based legal practitioner, would not
handle a case for an acceptance fee of only P20,000.00 and P1,000.00 per court
appearance.
Under Article 1491(5) of the Civil Code, lawyers are prohibited from acquiring either by
purchase or assignment the property or rights involved which are the object of the litigation in
which they intervene by virtue of their profession.7 The prohibition on purchase is all
embracing to include not only sales to private individuals but also public or judicial sales. The
rationale advanced for the prohibition is that public policy disallows the transactions in view of
the fiduciary relationship involved, i.e., the relation of trust and confidence and the peculiar
control exercised by these persons.8 It is founded on public policy because, by virtue of his
office, an attorney may easily take advantage of the credulity and ignorance of his client and
unduly enrich himself at the expense of his client.9 However, the said prohibition applies only
if the sale or assignment of the property takes place during the pendency of the litigation
involving the client's property. Consequently, where the property is acquired after the
termination of the case, no violation of paragraph 5, Article 1491 of the Civil Code attaches.
Invariably, in all cases where Article 1491 was violated, the illegal transaction was
consummated with the actual transfer of the litigated property either by purchase or
assignment in favor of the prohibited individual. In Biascan v. Lopez, respondent was found
guilty of serious misconduct and suspended for 6 months from the practice of law when he
registered a deed of assignment in his favor and caused the transfer of title over the part of
the estate despite pendency of Special Proceedings No. 98037 involving the subject
property.10 In the consolidated administrative cases of Valencia v. Cabanting,11 the Court
suspended respondent Atty. Arsenio Fer Cabanting for six (6) months from the practice of law
when he purchased his client's property which was still the subject of a
pending certiorari proceeding.
In the instant case, there was no actual acquisition of the property in litigation since the
respondent only made a written demand for its delivery which the complainant refused to
comply. Mere demand for delivery of the litigated property does not cause the transfer of
ownership, hence, not a prohibited transaction within the contemplation of Article 1491. Even
assuming arguendo that such demand for delivery is unethical, respondent's act does not fall
within the purview of Article 1491. The letter of demand dated January 29, 2003 was made
long after the judgment in Civil Case No. SCC-2128 became final and executory on January
18, 2002.
We note that the report of the IBP Commissioner, as adopted by the IBP Board of Governors
in its Resolution No. XVI-2003-47, does not clearly specify which acts of the respondent
constitute gross misconduct or what provisions of the Code of Professional Responsibility
have been violated. We find the recommended penalty of suspension for 6 months too harsh
and not proportionate to the offense committed by the respondent. The power to disbar or
suspend must be exercised with great caution. Only in a clear case of misconduct that
seriously affects the standing and character of the lawyer as an officer of the Court and
member of the bar will disbarment or suspension be imposed as a penalty.12 All considered, a
reprimand is deemed sufficient and reasonable.
WHEREFORE, in view of the foregoing, respondent Atty. Patricio A. Ngaseo is found guilty of
conduct unbecoming a member of the legal profession in violation of Rule 20.04 of Canon 20
of the Code of Professional Responsibility. He is REPRIMANDED with a warning that
repetition of the same act will be dealt with more severely.
SO ORDERED.
THIRD DIVISION
NEW SAMPAGUITA BUILDERS G.R. No. 148753
CONSTRUCTION, INC. (NSBCI)
and Spouses EDUARDO R. DEE Present:
and ARCELITA M. DEE,
Petitioners, Panganiban, J,
Chairman,
Sandoval-Gutierrez,
Corona,* and
- versus - Carpio Morales, JJ
PHILIPPINE NATIONAL BANK, Promulgated:
Respondent.
July 30, 2004
x -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- x
DECISION
PANGANIBAN, J.:
Courts have the authority to strike down or to modify provisions in promissory

notes that grant the lenders unrestrained power to increase interest rates,
penalties and other charges at the latter’s sole discretion and without giving
prior notice to and securing the consent of the borrowers. This unilateral
__________________
* On leave.
authority is anathema to the mutuality of contracts and enable lenders to take

undue advantage of borrowers. Although the Usury Law has been effectively
repealed, courts may still reduce iniquitous or unconscionable rates charged for
the use of money. Furthermore, excessive interests, penalties and other charges
not revealed in disclosure statements issued by banks, even if stipulated in the
promissory notes, cannot be given effect under the Truth in Lending Act.
The Case
Before us is a Petition for Review[1] under Rule 45 of the Rules of Court, seeking
to nullify the June 20, 2001 Decision[2] of the Court of Appeals[3] (CA) in CA-GR CV
No. 55231. The decretal portion of the assailed Decision reads as follows:
“WHEREFORE, the decision of the Regional Trial Court of Dagupan City, Branch 40
dated December 28, 1995 is REVERSED and SET ASIDE. The foreclosure
proceedings of the mortgaged properties of defendants-appellees[4] and the
February 26, 1992 auction sale are declared legal and valid and said defendants-
appellees are ordered to pay plaintiff-appellant PNB,[5] jointly and severally[,] the
amount of deficiency that will be computed by the trial court based on the original
penalty of 6% per annum as explicitly stated in the loan documents and to pay
attorney’s fees in an amount equivalent to x x x 1% of the total amount due and
the costs of suit and expenses of litigation.”[6]
The Facts
The facts are narrated by the CA as follows:
“On February 11, 1989, Board Resolution No. 05, Series of 1989 was approved by
[Petitioner] NSBCI [1)] authorizing the company to x x x apply for or secure a
commercial loan with the PNB in an aggregate amount of P8.0M, under such
terms agreed by the Bank and the NSBCI, using or mortgaging the real estate
properties registered in the name of its President and Chairman of the Board
[Petitioner] Eduardo R. Dee as collateral; [and] 2) authorizing [petitioner-spouses]
to secure the loan and to sign any [and all] documents which may be required by
[Respondent] PNB[,] and that [petitioner-spouses] shall act as sureties or co-
obligors who shall be jointly and severally liable with [Petitioner] NSBCI for the
payment of any [and all] obligations.
“On August 15, 1989, Resolution No. 77 was approved by granting the request of
[Respondent] PNB thru its Board NSBCI for an P8 Million loan broken down into a
revolving credit line of P7.7M and an unadvised line of P0.3M for additional
operating and working capital[7] to mobilize its various construction projects,
namely:
‘1) MWSS Watermain;
2) NEA-Liberty farm;
3) Olongapo City Pag-Asa Public Market;
4) Renovation of COA-NCR Buildings 1, 2 and 9;
5) Dupels, Inc., Extensive prawn farm development project;
6) Banawe Hotel Phase II;
7) Clark Air Base -- Barracks and Buildings; and
8) Others: EDSA Lighting, Roxas Blvd. Painting NEA Sapang Palay and
Angeles City.’
“The loan of [Petitioner] NSBCI was secured by a first mortgage on the following:
a) three (3) parcels of residential land located at Mangaldan, Pangasinan with
total land area of 1,214 square meters[,] including improvements thereon and
registered under TCT Nos. 128449, 126071, and 126072 of the Registry of Deeds
of Pangasinan; b) six (6) parcels of residential land situated at San Fabian,
Pangasinan with total area of 1,767 square meters[,] including improvements
thereon and covered by TCT Nos. 144006, 144005, 120458, 120890, 144161[,]
and 121127 of the Registry of Deeds of Pangasinan; and c) a residential lot and
improvements thereon located at Mangaldan, Pangasinan with an area of 4,437
square meters and covered by TCT No. 140378 of the Registry of Deeds of
Pangasinan.
“The loan was further secured by the joint and several signatures of [Petitioners]
Eduardo Dee and Arcelita Marquez Dee, who signed as accommodation-
mortgagors since all the collaterals were owned by them and registered in their
names.
Moreover [Petitioner] NSBCI executed the following documents, viz: a)

promissory note dated June 29, 1989 in the amount of P5,000,000.00 with due
date on October 27, 1989; [b)] promissory note dated September 1, 1989 in the
amount of P2,700,000.00 with due date on December 30, 1989; and c) promissory
note dated September 6, 1989 in the amount of P300,000.00 with maturity date
on January 4, 1990.
“In addition, [petitioner] corporation also signed the Credit Agreement dated
August 31, 1989 relating to the ‘revolving credit line’ of P7.7 Million x x x and the
Credit Agreement dated September 5, 1989 to support the ‘unadvised line’
of P300,000.00.
“On August 31, 1989, [petitioner-spouses] executed a ‘Joint and Solidary

Agreement’ (JSA) in favor of [Respondent] PNB ‘unconditionally and irrevocably
binding themselves to be jointly and severally liable with the borrower for the
payment of all sums due and payable to the Bank under the Credit Document.’
“Later on, [Petitioner] NSBCI failed to comply with its obligations under the
promissory notes.
“On June 18, 1991, [Petitioner] Eduardo R. Dee on behalf of [Petitioner] NSBCI
sent a letter to the Branch Manager of the PNB Dagupan Branch requesting for a
90-day extension for the payment of interests and restructuring of its loan for
another term.
“Subsequently, NSBCI tendered payment to [Respondent] PNB [of] three (3)

checks aggregating P1,000,000.00, namely 1) check no. 316004 dated August 8,
1991 in the amount of P200,000.00; 2) check no. 03499997 dated August 8, 1991
in the amount of P650,000.00; and 3) check no. 03499998 dated August 15, 1991
in the amount of P150,000.00.[8]
“In a meeting held on August 12, 1991, [Respondent] PNB’s representative[,] Mr.
Rolly Cruzabra, was informed by [Petitioner] Eduardo Dee of his intention to remit
to [Respondent] PNB post-dated checks covering interests, penalties and part of
the loan principals of his due account.
“On August 22, 1991, [Respondent] bank’s Crispin Carcamo wrote [Petitioner]
Eduardo Dee[,] informing him that [Petitioner] NSBCI’s proposal [was]
acceptable[,] provided the total payment should be P4,128,968.29 that [would]
cover the amount of P1,019,231.33 as principal, P3,056,058.03 as interests and
penalties[,] and P53,678.93 for insurance[,] with the issuance of post-dated
checks to be dated not later than November 29, 1991.
“On September 6, 1991, [Petitioner] Eduardo Dee wrote the PNB Branch Manager
reiterating his proposals for the settlement of [Petitioner] NSBCI’s past due loan
account amounting to P7,019,231.33.
“[Petitioner] Eduardo Dee later tendered four (4) post-dated Interbank checks
aggregating P1,111,306.67 in favor of [Respondent] PNB, viz:
‘Check No. Date Amount
03500087 Sept. 29, 1991 P277,826.70
03500088 Oct. 29, 1991 P277,826.70
03500089 Nov. 29, 1991 P277,826.70
03500090 Dec. 20, 1991 P277,826.57’
“Upon presentment[,] however, x x x check nos. 03500087 and 03500088 dated

September 29 and October 29, 1991 were dishonored by the drawee bank and
returned due [to] a ‘stop payment’ order from [petitioners].
“On November 12, 1991, PNB’s Mr. Carcamo wrote [Petitioner] Eduardo Dee
informing him that unless the dishonored checks [were] made good, said PNB
branch ‘shall recall its recommendation to the Head Office for the restructuring of
the loan account and refer the matter to its legal counsel for legal action.
[’] [Petitioners] did not heed [respondent’s] warning and as a result[,] the PNB
Dagupan Branch sent demand letters to [Petitioner] NSBCI at its office address at
1611 ERDC Building, E. Rodriguez Sr. Avenue, Quezon City[,] asking it to settle its
past due loan account.
“[Petitioners] nevertheless failed to pay their loan obligations within the

[timeframe] given them and as a result, [Respondent]
PNB filed with the Provincial Sheriff of Pangasinan at Lingayen a Petition for
Sale under Act 3135, as amended[,] and Presidential Decree No. 385 dated
January 30, 1992.
“The notice of extra-judicial sale of the mortgaged properties relating to said

PNB’s [P]etition for [S]ale was published in the February 8, 15 and 22, 1992 issues
of the Weekly Guardian, allegedly a newspaper of general circulation in the
Province of Pangasinan, including the cities of Dagupan and San Carlos. In
addition[,] copies of the notice were posted in three (3) public places[,] and copies
thereof furnished [Petitioner] NSBCI at 1611 [ERDC Building,] E. Rodriguez Sr.
Avenue, Quezon City, [and at] 555 Shaw Blvd., Mandaluyong[, Metro Manila;] and
[Petitioner] Sps. Eduardo and Arcelita Dee at 213 Wilson St., San Juan, Metro
Manila.
“On February 26, 1992, the Provincial Deputy Sheriff Cresencio F. Ferrer of
Lingayen, Pangasinan foreclosed the real estate mortgage and sold at public
auction the mortgaged properties of [petitioner-spouses,] with [Respondent] PNB
being declared the highest bidder for the amount of P10,334,000.00.
“On March 2, 1992, copies of the Sheriff’s Certificate of Sale were sent by
registered mail to [petitioner] corporation’s address at 1611 [ERDC Building,] E.
Rodriguez Sr. Avenue, Quezon City and [petitioner-spouses’] address at 213
Wilson St., San Juan, Metro Manila.
“On April 6, 1992, the PNB Dagupan Branch Manager sent a letter to [petitioners]
at their address at 1611 [ERDC Building,] E. Rodriguez Sr. Avenue, Quezon City[,]
informing them that the properties securing their loan account [had] been sold at
public auction, that the Sheriff’s Certificate of Sale had been registered with the
Registry of Deeds of Pangasinan on March 13, 1992[,] and that a period of one (1)
year therefrom [was] granted to them within which to redeem their properties.
“[Petitioners] failed to redeem their properties within the one-year redemption

period[,] and so [Respondent] PNB executed a [D]eed of [A]bsolute [S]ale
consolidating title to the properties in its name. TCT Nos. 189935 to 189944 were
later issued to [Petitioner] PNB by the Registry of Deeds of Pangasinan.
“On August 4, 1992, [Respondent] PNB informed [Petitioner] NSBCI that the
proceeds of the sale conducted on February 26, 1992 were not sufficient to cover
its total claim amounting to P12,506,476.43[,] and thus demanded from the latter
the deficiency of P2,172,476.43 plus interest and other charges[,] until the
amount [was] fully paid.
“[Petitioners] refused to pay the above deficiency claim which compelled

[Respondent] PNB to institute the instant [C]omplaint for the collection of its
deficiency claim.
“Finding that the PNB debt relief package automatically [granted] to [Petitioner]
NSBCI the benefits under the program, the court a quo ruled in favor of
[petitioners] in its Decision dated December 28, 1995, the fallo of which reads:
‘In view of the foregoing, the Court believes and so holds that the [respondent]
has no cause of action against the [petitioners].
‘WHEREFORE, the case is hereby DISMISSED, without costs.’”[9]
On appeal, respondent assailed the trial court’s Decision dismissing its

deficiency claim on the mortgage debt. It also challenged the ruling of the lower
court that Petitioner NSBCI’s loan account was bloated, and that the inadequacy
of the bid price was sufficient to set aside the auction sale.
Ruling of the Court of Appeals
Reversing the trial court, the CA held that Petitioner NSBCI did not avail itself of
respondent’s debt relief package (DRP) or take steps to comply with the
conditions for qualifying under the program. The appellate court also ruled that
entitlement to the program was not a matter of right, because such entitlement
was still subject to the approval of higher bank authorities, based on their
assessment of the borrower’s repayment capability and satisfaction of other
requirements.
As to the misapplication of loan payments, the CA held that the subsidiary

ledgers of NSBCI’s loan accounts with respondent reflected all the loan proceeds
as well as the partial payments that had been applied either to the principal or to
the interests, penalties and other charges. Having been made in the ordinary and
usual course of the banking business of respondent, its entries were presumed
accurate, regular and fair under Section 5(q) of Rule 131 of the Rules of
Court. Petitioners failed to rebut this presumption.
The increases in the interest rates on NSBCI’s loan were also held to be
authorized by law and the Monetary Board and -- like the increases in penalty
rates -- voluntarily and freely agreed upon by the parties in the Credit Agreements
they executed. Thus, these increases were binding upon petitioners.
However, after considering that two to three of Petitioner NSBCI’s projects

covered by the loan were affected by the economic slowdown in the areas near
the military bases in the cities of Angeles and Olongapo, the appellate court
annulled and deleted the adjustment in penalty from 6 percent to 36 percent per
annum. Not only did respondent fail to demonstrate the existence of market
forces and economic conditions that would justify such increases; it could also
have treated petitioners’ request for restructuring as a request for availment of
the DRP. Consequently, the original penalty rate of 6 percent per annum was
used to compute the deficiency claim.
The auction sale could not be set aside on the basis of the inadequacy of the
auction price, because in sales made at public auction, the owner is given the
right to redeem the mortgaged properties; the lower the bid price, the easier it is
to effect redemption or to sell such right. The bid price ofP10,334,000.00 vis-à-vis
respondent’s claim of P12,506,476.43 was found to be neither shocking nor
unconscionable.
The attorney’s fees were also reduced by the appellate court from 10 percent to
1 percent of the total indebtedness. First, there was no extreme difficulty in an
extrajudicial foreclosure of a real estate mortgage, as this proceeding was merely
administrative in nature and did not involve a court litigation contesting the
proceedings prior to the auction sale. Second, the attorney’s fees were exclusive
of all stipulated costs and fees. Third, such fees were in the nature of liquidated
damages that did not inure to respondent’s salaried counsel.
Respondent was also declared to have the unquestioned right to foreclose the
Real Estate Mortgage. It was allowed to recover any deficiency in the mortgage
account not realized in the foreclosure sale, since petitioner-spouses had agreed
to be solidarily liable for all sums due and payable to respondent.
Finally, the appellate court concluded that the extrajudicial foreclosure

proceedings and auction sale were valid for the following reasons: (1) personal
notice to the mortgagors, although unnecessary, was actually made; (2) the
notice of extrajudicial sale was duly published and posted; (3) the extrajudicial
sale was conducted through the deputy sheriff, under the direction of the clerk of
court who was concurrently the ex-oficio provincial sheriff and acting as agent of
respondent; (4) the sale was conducted within the province where the mortgaged
properties were located; and (5) such sale was not shown to have been attended
by fraud.
Hence this Petition.[10]
Issues
Petitioners submit the following issues for our consideration:
“I Whether or not the Honorable Court of Appeals correctly ruled that petitioners
did not avail of PNB’s debt relief package and were not entitled thereto as a
matter of right.
“II Whether or not petitioners have adduced sufficient and convincing evidence to
overthrow the presumption of regularity and correctness of the PNB entries in the
subsidiary ledgers of the loan accounts of petitioners.
“III Whether or not the Honorable Court of Appeals seriously erred in not holding
that the Respondent PNB bloated the loan account of petitioner corporation by
imposing interests, penalties and attorney’s fees without legal, valid and
equitable justification.
“IV Whether or not the auction price at which the mortgaged properties was sold
was disproportionate to their actual fair mortgage value.
“V Whether or not Respondent PNB is not entitled to recover the deficiency in the
mortgage account not realized in the foreclosure sale, considering that:
A. Petitioners are merely guarantors of the mortgage debt of petitioner

corporation which has a separate personality from the [petitioner-spouses].
B. The joint and solidary agreement executed by [petitioner- spouses] are

contracts of adhesion not binding on them;
C. The NSBCI Board Resolution is not valid and binding on [petitioner-spouses]

because they were compelled to execute the said Resolution[;] otherwise[,]
Respondent PNB would not grant petitioner corporation the loan;
D. The Respondent PNB had already in its possession the properties of the
[petitioner-spouses] which served as a collateral to the loan obligation of
petitioner corporation[,] and to still allow Respondent PNB to recover the
deficiency claim amounting to a very substantial amount of P2.1 million would
constitute unjust enrichment on the part of Respondent PNB.
“VI Whether or not the extrajudicial foreclosure proceedings and auction sale,
including all subsequent proceedings[,] are null and void for non-compliance with
jurisdictional and other mandatory requirements; whether or not the petition for
extrajudicial foreclosure of mortgage was filed prematurely; and whether or not
the finding of fraud by the trial court is amply supported by the evidence on
record.”[11]
The foregoing may be summed up into two main issues: first, whether the
loan accounts are bloated; and second, whether the extrajudicial foreclosure and
subsequent claim for deficiency are valid and proper.
The Court’s Ruling
The Petition is partly meritorious.
First Main Issue:
Bloated Loan Accounts
At the outset, it must be stressed that only questions of law[12] may be

raised in a petition for review on certiorari under Rule 45 of the Rules of Court. As
a rule, questions of fact cannot be the subject of this mode of appeal,[13] for “[t]he
Supreme Court is not a trier of facts.”[14] As exceptions to this rule, however,
factual findings of the CA may be reviewed on appeal[15] when, inter alia, the
factual inferences are manifestly mistaken;[16] the judgment is based on a
misapprehension of facts;[17] or the CA manifestly overlooked certain relevant and
undisputed facts that, if properly considered, would justify a different legal
conclusion.[18] In the present case, these exceptions exist in various instances,
thus prompting us to take cognizance of factual issues and to decide upon them
in the interest of justice and in the exercise of our sound discretion.[19]
Indeed, Petitioner NSBCI’s loan accounts with respondent appear to be bloated

with some iniquitous imposition of interests, penalties, other charges and
attorney’s fees. To demonstrate this point, the Court shall take up one by one the
promissory notes, the credit agreements and the disclosure statements.
Increases in Interest Baseless
Promissory Notes. In each drawdown, the Promissory Notes specified the

interest rate to be charged: 19.5 percent in the first, and 21.5 percent in the
second and again in the third. However, a uniform clause therein permitted
respondent to increase the rate “within the limits allowed by law at any time
depending on whatever policy it may adopt in the future x x x,”[20] without even
giving prior notice to petitioners. The Court holds that petitioners’ accessory duty
to pay interest[21] did not give respondent unrestrained freedom to charge any
rate other than that which was agreed upon. No interest shall be due, unless
expressly stipulated in writing.[22] It would be the zenith of farcicality to specify
and agree upon rates that could be subsequently upgraded at whim by only one
party to the agreement.
The “unilateral determination and imposition”[23] of increased rates is

“violative of the principle of mutuality of contracts ordained in Article 1308[24] of
the Civil Code.”[25] One-sided impositions do not have the force of law between
the parties, because such impositions are not based on the parties’ essential
equality.
Although escalation clauses[26] are valid in maintaining fiscal stability and

retaining the value of money on long-term contracts,[27] giving respondent an
unbridled right to adjust the interest independently and upwardly would
completely take away from petitioners the “right to assent to an important
modification in their agreement”[28] and would also negate the element of
mutuality in their contracts. The clause cited earlier made the fulfillment of the
contracts “dependent exclusively upon the uncontrolled will”[29] of respondent and
was therefore void. Besides, the pro forma promissory notes have the character
of a contract d’adhésion,[30] “where the parties do not bargain on equal footing,
the weaker party’s [the debtor’s] participation being reduced to the alternative ‘to
take it or leave it.’”[31]
“While the Usury Law[32] ceiling on interest rates was lifted by [Central
Bank] Circular No. 905,[33] nothing in the said Circular grants lenderscarte
blanche authority to raise interest rates to levels which will either enslave their
borrowers or lead to a hemorrhaging of their assets.”[34] In fact, we have declared
nearly ten years ago that neither this Circular nor PD 1684, which further
amended the Usury Law, “authorized either party to unilaterally raise the interest
rate without the other’s consent.”[35]
Moreover, a similar case eight years ago pointed out to the same respondent
(PNB) that borrowing signified a capital transfusion from lending institutions to
businesses and industries and was done for the purpose of stimulating their
growth; yet respondent’s continued “unilateral and lopsided policy”[36] of
increasing interest rates “without the prior assent”[37] of the borrower not only
defeats this purpose, but also deviates from this pronouncement. Although such
increases are not usurious, since the “Usury Law is now legally inexistent”[38] -- the
interest ranging from 26 percent to 35 percent in the statements of account[39] --
“must be equitably reduced for being iniquitous, unconscionable and
exorbitant.”[40] Rates found to be iniquitous or unconscionable are void, as if it
there were no express contract thereon.[41] Above all, it is undoubtedly against
public policy to charge excessively for the use of money.[42]
It cannot be argued that assent to the increases can be implied either from
the June 18, 1991 request of petitioners for loan restructuring or from their lack of
response to the statements of account sent by respondent. Such request does
not indicate any agreement to an interest increase; there can be no implied
waiver of a right when there is no clear, unequivocal and decisive act showing
such purpose.[43] Besides, the statements were not letters of information sent to
secure their conformity; and even if we were to presume these as an offer, there
was no acceptance. No one receiving a proposal to modify a loan contract,
especially interest -- a vital component -- is “obliged to answer the proposal.”[44]
Furthermore, respondent did not follow the stipulation in the Promissory

Notes providing for the automatic conversion of the portion that remained unpaid
after 730 days -- or two years from date of original release -- into a medium-term
loan, subject to the applicable interest rate to be applied from the dates of
original release.[45]
In the first,[46] second[47] and third[48] Promissory Notes, the amount that
remained unpaid as of October 27, 1989, December 1989 and January 4, 1990 --
their respective due dates -- should have been automatically converted by
respondent into medium-term loans on June 30, 1991, September 2, 1991, and
September 7, 1991, respectively. And on this unpaid amount should have been
imposed the same interest rate charged by respondent on other medium-term
loans; and the rate applied from June 29, 1989, September 1, 1989 and
September 6, 1989 -- their respective original release -- until paid. But these
steps were not taken. Aside from sending demand letters, respondent did not at
all exercise its option to enforce collection as of these Notes’ due dates. Neither
did it renew or extend the account.
In these three Promissory Notes, evidently, no complaint for collection was

filed with the courts. It was not until January 30, 1992 that a Petition for Sale of
the mortgaged properties was filed -- with the provincial sheriff, instead.
[49]
Moreover, respondent did not supply the interest rate to be charged on
medium-term loans granted by automatic conversion. Because of this deficiency,
we shall use the legal rate of 12 percent per annum on loans and forbearance of
money, as provided for by CB Circular 416.[50]
Credit Agreements. Aside from the promissory notes, another main

document involved in the principal obligation is the set of credit agreements
executed and their annexes.
The first Credit Agreement[51] dated June 19, 1989 -- although offered and
admitted in evidence, and even referred to in the first Promissory Note -- cannot
be given weight.
First, it was not signed by respondent through its branch manager.

[52]
Apparently it was surreptitiously acknowledged before respondent’s counsel,
who unflinchingly declared that it had been signed by the parties on every page,
although respondent’s signature does not appear thereon.[53]
Second, it was objected to by petitioners,[54] contrary to the trial court’s

findings.[55] However, it was not the Agreement, but the revolving credit
line[56] of P5,000,000, that expired one year from the Agreement’s date of
implementation.[57]
Third, there was no attached annex that contained the General Conditions.
[58]
Even the Acknowledgment did not allude to its existence.[59] Thus, no terms or
conditions could be added to the Agreement other than those already stated
therein.
Since the first Credit Agreement cannot be given weight, the interest rate
on the first availment pegged at 3 percent over and above respondent’s prime
rate[60] on the date of such availment[61] has no bearing at all on the loan. After
the first Note’s due date, the rate of 19 percent agreed upon should continue to
be applied on the availment, until its automatic conversion to a medium-term
loan.
The second Credit Agreement[62] dated August 31, 1989, provided for
interest -- respondent’s prime rate, plus the applicable spread[63] in effect as of the
date of each availment,[64] on a revolving credit line of P7,700,000[65] -- but did not
state any provision on its increase or decrease.[66] Consequently, petitioners could
not be made to bear interest more than such prime rate plus spread. The Court
gives weight to this second Credit Agreement for the following reasons.
First, this document submitted by respondent was admitted by petitioners.

[67]
Again, contrary to their assertion, it was not the Agreement -- but the credit
line -- that expired one year from the Agreement’s date of implementation.
[68]
Thus, the terms and conditions continued to apply, even if drawdowns could
no longer be made.
Second, there was no 7-page annex[69] offered in evidence that contained

the General Conditions,[70] notwithstanding the Acknowledgment of its existence
by respondent’s counsel. Thus, no terms or conditions could be appended to the
Agreement other than those specified therein.
Third, the 12-page General Conditions[71] offered and admitted in evidence

had no probative value. There was no reference to it in the Acknowledgment of
the Agreement; neither was respondent’s signature on any of the pages
thereof. Thus, the General Conditions’ stipulations on interest adjustment,
[72]
whether on a fixed or a floating scheme, had no effect whatsoever on the
Agreement. Contrary to the trial court’s findings,[73]the General Condition were
correctly objected to by petitioners.[74] The rate of 21.5 percent agreed upon in
the second Note thus continued to apply to the second availment, until its
automatic conversion into a medium-term loan.
The third Credit Agreement[75] dated September 5, 1989, provided for the
same rate of interest as that in the second Agreement. This rate was to be
applied to availments of an unadvised line of P300,000. Since there was no
mention in the third Agreement, either, of any stipulation on increases or
decreases[76] in interest, there would be no basis for imposing amounts higher
than the prime rate plus spread. Again, the 21.5 percent rate agreed upon would
continue to apply to the third availment indicated in the third Note, until such
amount was automatically converted into a medium-term loan.
The Court also finds that, first, although this document was admitted by
petitioners,[77] it was the credit line that expired one year from the implementation
of the Agreement.[78] The terms and conditions therein continued to apply, even if
availments could no longer be drawn after expiry.
Second, there was again no 7-page annex[79] offered that contained the
General Conditions,[80] regardless of the Acknowledgment by the same
respondent’s counsel affirming its existence. Thus, the terms and conditions in
this Agreement relating to interest cannot be expanded beyond that which was
already laid down by the parties.
Disclosure Statements. In the present case, the Disclosure

Statements[81] furnished by respondent set forth the same interest rates as those
respectively indicated in the Promissory Notes. Although no method of
computation was provided showing how such rates were arrived at, we will
nevertheless take up the Statements seriatim in order to determine the applicable
rates clearly.
As to the first Disclosure Statement on Loan/Credit Transaction[82] dated

June 13, 1989, we hold that the 19.5 percent effective interest rate per
annum[83] would indeed apply to the first availment or drawdown evidenced by the
first Promissory Note. Not only was this Statement issued prior to the
consummation of such availment or drawdown, but the rate shown therein can
also be considered equivalent to 3 percent over and above respondent’s prime
rate in effect. Besides, respondent mentioned no other rate that it considered to
be the prime rate chargeable to petitioners. Even if we disregarded the related
Credit Agreement, we assume that this private transaction between the parties
was fair and regular,[84] and that the ordinary course of business was followed.[85]
As to the second Disclosure Statement on Loan/Credit Transaction[86] dated

September 2, 1989, we hold that the 21.5 percent effective interest rate per
annum[87] would definitely apply to the second availment or drawdown evidenced
by the second Promissory Note. Incidentally, this Statement was issued only after
the consummation of its related availment or drawdown, yet such rate can be
deemed equivalent to the prime rate plus spread, as stipulated in the
corresponding Credit Agreement. Again, we presume that this private transaction
was fair and regular, and that the ordinary course of business was followed. That
the related Promissory Note was pre-signed would also bolster petitioners’ claim
although, under cross-examination Efren Pozon -- Assistant Department Manager
I[88] of PNB, Dagupan Branch -- testified that the Disclosure Statements were the
basis for preparing the Notes.[89]
As to the third Disclosure Statement on Loan/Credit Transaction[90] dated

September 6, 1989, we hold that the same 21.5 percent effective interest rate per
annum[91] would apply to the third availment or drawdown evidenced by the third
Promissory Note. This Statement was made available to petitioner-spouses, only
after the related Credit Agreement had been executed, but simultaneously with
the consummation of the Statement’s related availment or
drawdown. Nonetheless, the rate herein should still be regarded as equivalent to
the prime rate plus spread, under the similar presumption that this private
transaction was fair and regular and that the ordinary course of business was
followed.
In sum, the three disclosure statements, as well as the two credit

agreements considered by this Court, did not provide for any increase in the
specified interest rates. Thus, none would now be permitted. When cross-
examined, Julia Ang-Lopez, Finance Account Analyst II of PNB, Dagupan Branch,
even testified that the bases for computing such rates were those sent by the
head office from time to time, and not those indicated in the notes or disclosure
statements.[92]
In addition to the preceding discussion, it is then useless to labor the point that
the increase in rates violates the impairment[93] clause of the Constitution,
[94]
because the sole purpose of this provision is to safeguard the integrity of valid
contractual agreements against unwarranted interference by the State[95] in the
form of laws. Private individuals’ intrusions on interest rates is governed by
statutory enactments like the Civil Code.
Penalty, or Increases
Thereof, Unjustified
No penalty charges or increases thereof appear either in the Disclosure

Statements[96] or in any of the clauses in the second and the third Credit
Agreements[97] earlier discussed. While a standard penalty charge of 6 percent
per annum has been imposed on the amounts stated in all three Promissory Notes
still remaining unpaid or unrenewed when they fell due,[98] there is no stipulation
therein that would justify any increase in that charges. The effect, therefore,
when the borrower is not clearly informed of the Disclosure Statements -- prior to
the consummation of the availment or drawdown -- is that the lender will have no
right to collect upon such charge[99] or increases thereof, even if stipulated in the
Notes. The time is now ripe to give teeth to the often ignored forty-one-year old
“Truth in Lending Act”[100] and thus transform it from a snivelling paper tiger to a
growling financial watchdog of hapless borrowers.
Besides, we have earlier said that the Notes are contracts of adhesion;
although not invalid per se, any apparent ambiguity in the loan contracts -- taken
as a whole -- shall be strictly construed against respondent who caused it.
[101]
Worse, in the statements of account, the penalty rate has again been
unilaterally increased by respondent to 36 percent without petitioners’
consent. As a result of its move, such liquidated damages intended as a penalty
shall be equitably reduced by the Court to zilch[102] for being iniquitous or
unconscionable.[103]
Although the first Disclosure Statement was furnished Petitioner NSBCI

prior to the execution of the transaction, it is not a contract that can be modified
by the related Promissory Note, but a mere statement in writing that reflects the
true and effective cost of loans from respondent. Novation can never be
presumed,[104] and the animus novandi “must appear by express agreement of the
parties, or by their acts that are too clear and unequivocal to be mistaken.”[105] To
allow novation will surely flout the “policy of the State to protect its citizens from
a lack of awareness of the true cost of credit.”[106]
With greater reason should such penalty charges be indicated in the second
and third Disclosure Statements, yet none can be found therein. While the
charges are issued after the respective availment or drawdown, the disclosure
statements are given simultaneously therewith. Obviously, novation still does not
apply.
Other Charges Unwarranted

In like manner, the other charges imposed by respondent are not
warranted. No particular values or rates of service charge are indicated in the
Promissory Notes or Credit Agreements, and no total value or even the breakdown
figures of such non-finance charge are specified in the Disclosure
Statements. Moreover, the provision in the Mortgage that requires the payment
of insurance and other charges is neither made part of nor reflected in such
Notes, Agreements, or Statements.[107]
Attorney’s Fees Equitably Reduced
We affirm the equitable reduction in attorney’s fees.[108] These are not an

integral part of the cost of borrowing, but arise only when collecting upon the
Notes becomes necessary. The purpose of these fees is not to give respondent a
larger compensation for the loan than the law already allows, but to protect it
against any future loss or damage by being compelled to retain counsel – in-house
or not -- to institute judicial proceedings for the collection of its credit.[109] Courts
have has the power[110] to determine their reasonableness[111] based on quantum
meruit[112] and to reduce[113] the amount thereof if excessive.[114]
In addition, the disqualification argument in the Affidavit of Publication

raised by petitioners no longer holds water, inasmuch as Act 496[115]has repealed
the Spanish Notarial Law.[116] In the same vein, their engagement of their counsel
in another capacity concurrent with the practice of law is not prohibited, so long
as the roles being assumed by such counsel is made clear to the client.[117] The
only reason for this clarification requirement is that certain ethical considerations
operative in one profession may not be so in the other.[118]
Debt Relief Package
Not Availed Of
We also affirm the CA’s disquisition on the debt relief package (DRP).
Respondent’s Circular is not an outright grant of assistance or extension of

payment,[119] but a mere offer subject to specific terms and conditions.
Petitioner NSBCI failed to establish satisfactorily that it had been seriously

and directly affected by the economic slowdown in the peripheral areas of the
then US military bases. Its allegations, devoid of any verification, cannot lead to a
supportable conclusion. In fact, for short-term loans, there is still a need to
conduct a thorough review of the borrower’s repayment possibilities.[120]
Neither has Petitioner NSBCI shown enough margin of equity,[121] based on

the latest loan value of hard collaterals,[122] to be eligible for the
package. Additional accommodations on an unsecured basis may be granted only
when regular payment amortizations have been established, or when the merits
of the credit application would so justify.[123]
The branch manager’s recommendation to restructure or extend a total

outstanding loan not exceeding P8,000,000 is not final, but subject to the
approval of respondent’s Branches Department Credit Committee, chaired by its
executive vice-president.[124] Aside from being further conditioned on other
pertinent policies of respondent,[125] such approval nevertheless needs to be
reported to its Board of Directors for confirmation.[126] In fact, under the General
Banking Law of 2000,[127] banks shall grant loans and other credit
accommodations only in amounts and for periods of time essential to the effective
completion of operations to be financed, “consistent with safe and sound banking
practices.”[128] The Monetary Board -- then and now -- still prescribes, by
regulation, the conditions and limitations under which banks may grant
extensions or renewals of their loans and other credit accommodations.[129]
Entries in Subsidiary Ledgers
Regular and Correct
Contrary to petitioners’ assertions, the subsidiary ledgers of respondent

properly reflected all entries pertaining to Petitioner NSBCI’s loan accounts. In
accordance with the Generally Accepted Accounting Principles (GAAP) for the
Banking Industry,[130] all interests accrued or earned on such loans, except those
that were restructured and non-accruing,[131] have been periodically taken into
income.[132] Without a doubt, the subsidiary ledgers in a manual accounting
system are mere private documents[133] that support and are controlled by the
general ledger.[134] Such ledgers are neither foolproof nor standard in format, but
are periodically subject to audit. Besides, we go by the presumption that the
recording of private transactions has been fair and regular, and that the ordinary
course of business has been followed.
Second Main Issue:
Extrajudicial Foreclosure Valid, But
Deficiency Claims Excessive
Respondent aptly exercised its option to “foreclose the mortgage,”[135] after

petitioners had failed to pay all the Notes in full when they fell due.[136] The
extrajudicial sale and subsequent proceedings are therefore valid, but the alleged
deficiency claim cannot be recovered.
Auction Price Adequate
In the accessory contract[137] of real mortgage,[138] in which immovable

property or real rights thereto are used as security[139] for the fulfillment of the
principal loan obligation,[140] the bid price may be lower than the property’s fair
market value.[141] In fact, the loan value itself is only 70 percent of the appraised
value.[142] As correctly emphasized by the appellate court, a low bid price will
make it easier[143] for the owner to effect redemption[144] by subsequently
reacquiring the property or by selling the right to redeem and thus recover
alleged losses. Besides, the public auction sale has been regularly and fairly
conducted,[145] there has been ample authority to effect the sale,[146] and the
Certificates of Title can be relied upon. No personal notice[147] is even required,
[148]
because an extrajudicial foreclosure is an action in rem, requiring only notice
by publication and posting, in order to bind parties interested in the foreclosed
property.[149]
As no redemption[150] was exercised within one year after the date of

registration of the Certificate of Sale with the Registry of Deeds,[151]respondent --
being the highest bidder -- has the right to a writ of possession, the final process
that will consummate the extrajudicial foreclosure. On the other hand, petitioner-
spouses, who are mortgagors herein, shall lose all their rights to the property.[152]
No Deficiency Claim Receivable
After the foreclosure and sale of the mortgaged property, the Real Estate
Mortgage is extinguished. Although the mortgagors, being third persons, are not
liable for any deficiency in the absence of a contrary stipulation,[153] the action for
recovery of such amount -- being clearly sureties to the principal obligation -- may
still be directed against them.[154] However, respondent may impose only the
stipulated interest rates of 19.5 percent and 21.5 percent on the respective
availments -- subject to the 12 percent legal rate revision upon automatic
conversion into medium-term loans -- plus 1 percent attorney’s fees, without
additional charges on penalty, insurance or any increases thereof.
Accordingly, the excessive interest rates in the Statements of Account sent to

petitioners are reduced to 19.5 percent and 21.5 percent, as stipulated in the
Promissory Notes; upon loan conversion, these rates are further reduced to the
legal rate of 12 percent. Payments made by petitioners are pro-rated, the
charges on penalty and insurance eliminated, and the resulting total unpaid
principal and interest of P6,582,077.70 as of the date of public auction is then
subjected to 1 percent attorney’s fees. The total outstanding obligation is
compared to the bid price. On the basis of these rates and the comparison made,
the deficiency claim receivable amounting to P2,172,476.43 in fact
vanishes. Instead, there is an overpayment by more thanP3 million, as shown in
the following Schedules:
5,000,000.
SCHEDULE 1: PN (1) drawdown amount on 6/29/89 P 00
Less: Interest deducted in advance (per 6/13/89 Disclosure 305,165.0

Statement) 0
4,694,835.
Net proceeds 00
5,000,000.
Principal 00
Add:
Interest at 19.5% p.a.
10/28/89-12/31/89 (5,000,000 x 19.5% x 173,630.

[65/365]) 14
1/1/90-1/5/90 (5,000,000 x 19.5% 13,356.1 186,986.3 186,986.3

x [5/365]) 6 0 0
5,186,986.
Amount due as of 1/5/90 30
543,807.6 543,807.6
Less: Payment on 1/5/90 (pro-rated upon interest) 1 1
(356,821. 4,643,178.
Balance 30) 70
Add:
1/6/90-3/30/90 ([5,000,000-356,821.30] x 208,370.5 208,370.5

19.5% x [84/365]) 9 9
4,851,549.
163,182.8 163,182.8
4,688,366.
Balance 45,187.75 44
Add:

3/31/90-5/31/90 ([5,000,000-356,821.30] x 153,797.3 153,797.3
19.5% x [62/365]) 4 4
198,985.0 4,842,163.
Amount due as of 5/31/90 9 79
199,806.4 199,806.4
4,642,357.
Balance (821.33) 36
Add:
6/1/90-6/29/90 ([5,000,000-
(356,821.30+821.33)] x 19.5% x [29/365]) 71,924.74 71,924.74
4,714,282.
839,012.6 839,012.6
(767,087. 3,875,269.
Balance 92) 44
Add:
6/30/90-12/31/90 ([5,000,000- 383,014.

(356,821.30+821.33+767,087.92)] x 19.5% x [185/365]) 64
1/1/91-6/29/91 ([5,000,000-
(356,821.30+821.33+767,087.92)] x 19.5% x 372,662.
[180/365]) 90
Interest at 12% p.a. upon automatic

conversion
6/30/91-8/8/91 ([5,000,000- 50,962.4 806,639. 806,639.9

(356,821.30+821.33+767,087.92)] x 12% x [40/365]) 5 99 9
4,681,909
Amount due as of 8/8/91 .43
Less: Payment on 8/8/91 (pro-rated upon 493,906. 493,906.3

interest) 31 1
312,733. 4,188,003
Balance 68 .13
Add:
Interest at 12% p.a.
8/9/91-8/15/91 ([5,000,000-
(356,821.30+821.33+767,087.92)] x 12% x [7/365]) 8,918.43 8,918.43
321,652. 4,196,921
Amount due as of 8/15/91 11 .55
Less: Payment on 8/15/91 (pro-rated upon 86,593.3

interest) 7 86,593.37
235,058. 4,110,328
Balance 74 .18
Add:
8/16/91-11/29/91 ([5,000,000- 135,050. 135,050.4

(356,821.30+821.33+767,087.92)] x 12% x [106/365]) 49 9
Amount due as of 11/29/91 370,109. 4,245,378

22 .67

interest) 81 1
209,012. 4,084,281
Balance 41 .86
Add:
11/30/91-12/20/91 ([5,000,000- 26,755.2

(356,821.30+821.33+767,087.92)] x 12% x [21/365]) 8 26,755.28
235,767. 4,111,037

interest) 78 8
73,651.9 3,948,921
Balance 2 .37
Add:
12/21/91-12/31/91 ([5,000,000- 14,281.0

(356,821.30+821.33+767,087.92)] x 12% x [11/365]) 3
1/1/92-2/26/92 ([5,000,000- 74,001.7 88,282.7

(356,821.30+821.33+767,087.92)] x 12% x [57/365]) 0 4 88,282.74
161,934. 4,037,204
Amount due on PN (1) as of 2/26/92 66 P .10
2,700,000
SCHEDULE 2: PN (2) drawdown amount on 9/1/89 P .00

Statement) 8
2,519,440
Net proceeds .12
2,700,000
Principal .00
Add:
1,590.4
12/31/89 (2,700,000 x 21.5% x [1/365]) 1
1/1/90-1/5/90 (2,700,000 x 21.5% x 7,952.0

[5/365]) 5 9,542.47 9,542.47
2,709,542
Less: Payment on 1/5/90 (pro-rated upon interest) 27,752.12 27,752.12
(18,209.6 2,681,790
Balance 5) .35
Add:
1/6/90-3/30/90 ([2,700,000-18,209.65] x 132,693.5 132,693.5

21.5% x [84/365]) 2 2
2,814,483
103,917.2 103,917.2
2,710,566
Balance 28,776.23 .58
Add:
3/31/90-5/31/90 ([2,700,000-18,209.65] x
21.5% x [62/365]) 97,940.45 97,940.45
126,716.6 2,808,507
127,239.7 127,239.7
2,681,267
Balance (523.04) .31
Add:
6/1/90-6/29/90 ([2,700,000-
(18,209.65+523.04)] x 21.5% x [29/365]) 45,801.92 45,801.92
2,727,069
534,286.1 534,286.1
(488,484. 2,192,783
Balance 22) .10
Add:
6/30/90-12/31/90 ([2,700,000- 238,953.2

(18,209.65+523.04+488,484.22)] x 21.5% x [185/365]) 8
1/1/91-8/8/91 ([2,700,000-
(18,209.65+523.04+488,484.22)] x 21.5% x 284,160.6 523,113.9 523,11
[220/365]) 6 4 3.94
2,715,8
Amount due as of 8/8/91 97.04
Less: Payment on 8/8/91 (pro-rated upon 320,303.0 320,30

interest) 8 3.08
Balanc 202,810.8 2,395,5

e 6 93.95
Add:
8/9/91-8/15/91 ([2,700,000-
(18,209.65+523.04+488,484.22)] x 21.5% x 9,041.4
[7/365]) 9,041.48 8
211,852.3 2,404,6
Amount due as of 8/15/91 3 35.43
Less: Payment on 8/15/91 (pro-rated 57,033.

upon interest) 57,033.69 69
Balanc 154,818.6 2,347,6

e 4 01.74
Add:

8/16/91-9/1/91 ([2,700,000-
(18,209.65+523.04+488,484.22)] x 21.5% x
[17/365]) 21,957.87
Interest at 12% p.a. upon automatic

conversion
9/2/91-11/29/91 ([2,700,000-
(18,209.65+523.04+488,484.22)] x 12% x 86,119.
[89/365]) 64,161.43 86,119.30 30
240,937.9 2,433,7
Amount due as of 11/29/91 4 21.04
Less: Payment on 11/29/91 (pro-rated 104,872.6 104,87

upon interest) 5 2.65
Balanc 136,065.3 2,328,8

e 0 48.39
Add:
11/30/91-12/20/91 ([2,700,000-
(18,209.65+523.04+488,484.22)] x 12% x 15,139.
[21/365]) 15,139.21 21
151,204.5 2,343,9
Amount due as of 12/20/91 1 87.61
Less: Payment on 12/20/91 (pro-rated 103,969.4 103,96

upon interest) 5 9.45
Balanc 2,240,0
e 47,235.07 18.16
Add:
12/21/91-12/31/91 ([2,700,000-
(18,209.65+523.04+488,484.22)] x 12% x
[11/365]) 7,930.06
1/1/92-2/26/92 ([2,700,000-
(18,209.65+523.04+488,484.22)] x 12% x 49,022.
[57/365]) 41,092.15 49,022.22 22
2,289,0
Amount due on PN (2) as of 2/26/92 96,257.28 P 40.38
300,000.
SCHEDULE 3: PN (3) drawdown amount on 9/6/89 P 00

Statement) 1
279,937.
Net proceeds 79
300,000.
Principal 00
Add:
1/5/90 (300,000 x 21.5% x

[1/365]) 176.71 176.71
300,176.
Less: Payment on 1/5/90 (pro-rated upon interest) 513.93 513.93
(337.22 299,662.
Balance ) 78
Add:
1/6/90-3/30/90 ([300,000-337.22] x 14,827. 14,827.1

21.5% x [84/365]) 15 5
314,489.
11,611. 11,611.7
3,215.4 302,878.
Balance 5 24
Add:
3/31/90-5/31/90 ([300,000-337.22] 10,943. 10,943.8

x 21.5% x [62/365]) 85 5
14,159. 313,822.
14,217. 14,217.7
299,604.
Balance (58.44) 34
Add:
6/1/90-6/29/90 ([300,000-
(337.22+58.44)] x 21.5% x 5,117.9
[29/365]) 0 5,117.90
304,722.
59,701. 59,701.0
(54,583. 245,021.
Balance 14) 20
Add:
6/30/90-12/31/90 ([300,000-(337.22+58.44+54,583.14)] x 26,700.6

21.5% x [185/365]) 0
1/1/91-8/8/91 ([300,000-(337.22+58.44+54,583.14)]] x 31,752.0 58,452.6

21.5% x [220/365]) 6 6 58,452.66
303,473.8
35,790.6
Less: Payment on 8/8/91 (pro-rated upon interest) 1 35,790.61
22,662.0 267,683.2
Balance 5 5
Add:
8/9/91-8/15/91 ([300,000-(337.22+58.44+54,583.14)]] x 1,010.29 1,010.29

21.5% x [7/365])
23,672.3 268,693.5
Less: Payment on 8/15/91 (pro-rated upon

interest) 6,372.93 6,372.93
17,299.4 262,320.6
Balance 1 1
Add:
8/16/91-9/6/91 ([300,000-(337.22+58.44+54,583.14)]] x
21.5% x [22/365]) 3,175.21
Interest at 12% p.a. upon automatic conversion
9/7/91-11/29/91 ([300,000-(337.22+58.44+54,583.14)]] x
12% x [84/365]) 6,766.61 9,941.82 9,941.82
27,241.2 272,262.4

interest) 4 11,857.24
15,383.9 260,405.1
Balance 8 8
Add:
11/30/91-12/20/91 ([300,000-(337.22+58.44+54,583.14)]]
x 12% x [21/365]) 1,691.65 1,691.65
17,075.6 262,096.8

interest) 5 11,741.35
250,355.4
Balance 5,334.29 9
Add:
12/21/91-12/31/91 ([300,000-(337.22+58.44+54,583.14)]]
x 12% x [11/365]) 886.10
1/1/92-2/26/92 ([300,000-(337.22+58.44+54,583.14)]] x
12% x [57/365]) 4,591.63 5,477.73 5,477.73
10,812.0 255,833.2
Amount due on PN (3) as of 2/26/92 3 P 2
SCHEDULE 4: Application of Payments Upon

Interest
Date Interest
Payable Pro-rated
1/5/90 PN (1) P 186,986.30 P 543,807.61
PN (2) 9,542.47 27,752.12

PN (3) 176.71 513.93
196,705.48 572,073.65
3/30/90 PN (1) 208,370.59 163,182.85
PN (2) 132,693.52 103,917.28
PN (3) 14,827.15 11,611.70
355,891.26 278,711.83
5/31/90 PN (1) 198,985.09 199,806.42
PN (2) 126,716.69 127,239.72
PN (3) 14,159.30 14,217.74
339,861.08 341,263.89
6/29/90 PN (1) 71,924.74 839,012.66
PN (2) 45,801.92 534,286.14
PN (3) 5,117.90 59,701.04
122,844.56 1,432,999.84
8/8/91 PN (1) 806,639.99 493,906.31
PN (2) 523,113.94 320,303.08
PN (3) 58,452.66 35,790.61
1,388,206.59 850,000.00
8/15/91 PN (1) 321,652.11 86,593.37
PN (2) 211,852.33 57,033.69
PN (3) 23,672.34 6,372.93
557,176.79 150,000.00
11/29/91 PN (1) 370,109.22 161,096.81
PN (2) 240,937.94 104,872.65
PN (3) 27,241.23 11,857.24
638,288.39 277,826.70
12/20/91 PN (1) 235,767.70 162,115.78
PN (2) 151,204.51 103,969.45
PN (3) 17,075.64 11,741.35
P 404,047.85 P 277,826.57
In the preparation of the above-mentioned schedules, these basic legal principles

were followed:
First, the payments were applied to debts that were already due.[155] Thus, when
the first payment was made and applied on January 5, 1990, all Promissory Notes
were already due.
Second, payments of the principal were not made until the interests had been
covered.[156] For instance, the first payment on January 15, 1990 had initially been
applied to all interests due on the notes, before deductions were made from their
respective principal amounts. The resulting decrease in interest balances served
as the bases for subsequent pro-ratings.
Third, payments were proportionately applied to all interests that were due and
of the same nature and burden.[157] This legal principle was the rationale for the
pro-rated computations shown on Schedule 4.
Fourth, since there was no stipulation on capitalization, no interests due and

unpaid were added to the principal; hence, such interests did not earn any
additional interest.[158] The simple -- not compounded -- method of interest
calculation[159] was used on all Notes until the date of public auction.
In fine, under solutio indebiti[160] or payment by mistake,[161] there is no

deficiency receivable in favor of PNB, but rather an excess claim or
surplus[162] payable by respondent; this excess should immediately be returned to
petitioner-spouses or their assigns -- not to mention the buildings and
improvements[163] on and the fruits of the property -- to the end that no one may
be unjustly enriched or benefited at the expense of another.[164] Such surplus is in
the amount of P3,686,101.52, computed as follows:
Total unpaid principal and interest on the
promissory notes as of February 26, 1992:
Drawdown on June 29, 1989
(Schedule 1) P 4,037,204.10
Drawdown on September 1, 1989
(Schedule 2) 2,289,040.38
Drawdown on September 6, 1989
(Schedule 3) 255,833.22
6,582,077.70
Add: 1% attorney’s fees 65,820.78
Total outstanding obligation 6,647,898.48
Less: Bid price 10,334,000.00
Excess P 3,686,101.52
Joint and Solidary Agreement. Contrary to the contention of the petitioner-

spouses, their Joint and Solidary Agreement (JSA)[165] was indubitably a surety, not
a guaranty.[166] They consented to be jointly and severally liable with Petitioner
NSBCI -- the borrower -- not only for the payment of all sums due and payable in
favor of respondent, but also for the faithful and prompt performance of all the
terms and conditions thereof.[167] Additionally, the corporate secretary of
Petitioner NSBCI certified as early as February 23, 1989, that the spouses should
act as such surety.[168] But, their solidary liability should be carefully studied, not
sweepingly assumed to cover all availments instantly.
First, the JSA was executed on August 31, 1989. As correctly adverted to
by petitioners,[169] it covered only the Promissory Notes of P2,700,000
and P300,000 made after that date. The terms of a contract of suretyship
undeniably determine the surety’s liability[170] and cannot extend beyond what is
stipulated therein.[171] Yet, the total amount petitioner-spouses agreed to be held
liable for was P7,700,000; by the time the JSA was executed, the first Promissory
Note was still unpaid and was thus brought within the JSA’s ambit.[172]
Second, while the JSA included all costs, charges and expenses that
respondent might incur or sustain in connection with the credit documents,
[173]
only the interest was imposed under the pertinent Credit
Agreements. Moreover, the relevant Promissory Notes had to be resorted to for
proper valuation of the interests charged.
Third, although the JSA, as a contract of adhesion, should be taken contra

proferentum against the party who may have caused any ambiguity therein, no
such ambiguity was found. Petitioner-spouses, who agreed to be accommodation
mortgagors,[174] can no longer be held individually liable for the entire onerous
obligation[175] because, as it turned out, it was respondent that still owed them.
To summarize, to give full force to the Truth in Lending Act, only the
interest rates of 19.5 percent and 21.5 percent stipulated in the Promissory Notes
may be imposed by respondent on the respective availments. After 730 days, the
portions remaining unpaid are automatically converted into medium-term loans at
the legal rate of 12 percent. In all instances, the simple method of interest
computation is followed. Payments made by petitioners are applied and pro-rated
according to basic legal principles. Charges on penalty and insurance are
eliminated, and 1 percent attorney’s fees imposed upon the total unpaid balance
of the principal and interest as of the date of public auction. The P2 million
deficiency claim therefore vanishes, and a refund of P3,686,101.52 arises.
WHEREFORE, this Petition is hereby PARTLY GRANTED. The Decision of the Court
of Appeals is AFFIRMED, with theMODIFICATION that PNB is ORDERED to refund
the sum of P3,686,101.52 representing the overcollection computed above, plus
interest thereon at the legal rate of six percent (6%) per annum from the filing of
the Complaint until the finality of this Decision. After this Decision becomes final
and executory, the applicable rate shall be twelve percent (12%) per annum until
its satisfaction. No costs.
SO ORDERED.

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[A.C. No. 6492.

November 18, 2004

MELANIO L. ZORETA, complainant, vs. ATTY. HEHERSON ALNOR G.

1. Verification[2] executed by Aurora C. Galvez, President of defendant SPAC, subscribed and

3. The Affidavit of Service[4] signed by a certain Renee L. Ramos, a Legal Assistant in

8. Affidavit of Service[9] signed by a certain Joseph B. Aganan, Legal Assistant of Simpliciano

Commissioner Lydia A. Navarro submitted her report and recommendation[14] dated 12

CBD Case No. 176 January 20, 1995

SALLY D. BONGALONTA, complainant,

Among the several documentary exhibits submitted by Bongalonta and attached

Consequently, the charge against the two respondents (i.e. representing

The explanation of Atty. Castillo's Cashier-Secretary by the name of Ester

WHEREFORE, it is respectfully recommended that Atty. Pablito M. Castillo be

WHEREFORE, finding respondent Atty. Pablito M. Castillo guilty committing a falsehood in

G.R. No. L-51813-14 November 29, 1983

ROMULO CANTIMBUHAN, NELSON B. MALANA, and ROBERT V. LUCILA, petitioners,

Froilan M. Bacungan and Alfredo F. Tadiar for petitioners.

The Solicitor General for respondents.

RELOVA, J.: ñé+.£ªwph!1

Thus, a non-member of the Philippine Bar — a party to an action is authorized to appear in

xxx xxx xxx

AQUINO, J., dissenting:

MELENCIO-HERRERA, J., dissenting:

AQUINO, J., dissenting:

MELENCIO-HERRERA, J., dissenting:

De Castro, Teehankee, JJ., concur

AQUINO, J., dissenting:

MELENCIO-HERRERA, J., dissenting:

[G.R. No. 126625. September 23, 1997]

KANLAON CONSTRUCTION ENTERPRISES CO., INC., Petitioner, vs.

Petitioner is a domestic corporation engaged in the construction business

In 1990, private respondents filed separate complaints against petitioner before

"WHEREFORE, premises considered, the respondent is hereby ordered to pay the

"SO ORDERED." [3]

On June 29, 1990, Arbiter Palangan issued a similar order, thus:

"WHEREFORE, premises considered, the above-entitled cases are hereby ordered

"SO ORDERED." [4]

Petitioner appealed to respondent National Labor Relations Commission. It alleged

Petitioner interposed this petition alleging that the decision of respondent

"Iy"THE QUESTIONED DECISION RENDERED BY THE HONORABLE COMMISSION

IIy"PUBLIC RESPONDENT NATIONAL LABOR RELATIONS COMMISSION GRAVELY

B. The NLRC erroneously, patently and unreasonably interpreted the principle

D. The NLRC committed manifest error in relying merely on private respondents

Service of summons in cases filed before the labor arbiters is governed by

"Section 4. Service of Notices and Resolutions.-- (a) Notices or summons and

It has been established that petitioner is a private domestic corporation with

To determine the scope or meaning of the term "authorized representative" or

"(a) he represents himself as party to the case;

"(b) he represents the organization or its members, provided that he shall be

The appearance of Atty. Arthur Abundiente in the cases appealed to respondent

"Section 7. Authority to bind party.-- Attorneys and other representatives of

In civil cases, an offer to compromise is not an admission of any liability, and is

Clearly, respondent Commission gravely abused its discretion in affirming the

Section 3 of Rule V of the NLRC Rules of Procedure provides:

"Section 3. Submission of Position Papers/Memorandum.-- Should the parties fail

After petitioner's alleged representative failed to pay the workers' claims as

ADM. CASE NO. 5737 October 25, 2004

FERDINAND A. CRUZ, complainant,

xxx xxx So, may we know your honor, if he is a lawyer or not?

Thereafter, the respondent said:

Because your honor, he (pertaining to the complainant) is misrepresenting

To this the complainant remarked: