Philippine Supreme Court Jurisprudence > Year 2010 > July 2010 Decisions > [A.C. No. 8096 : July 05, 2010] REY J. VARGAS AND EDUARDO A. PANES, JR., COMPLAINANTS, VS. ATTY. MICHAEL A. IGNES, ATTY. LEONARD BUENTIPO MANN, ATTY. RODOLFO U. VIAJAR, JR., AND ATTY. JOHN RANGAL D. NADUA, RESPONDENTS. :

Before the Court is a petition for review of Resolution No. XVIII-2008-335^[1] passed on July 17, 2008 by the Board of Governors of the Integrated Bar of the Philippines (IBP) in CBD Case No. 07-1953.  The IBP Board of Governors dismissed the disbarment case filed by the complainants against the respondents.

The facts and proceedings antecedent to this case are as follows:

Koronadal Water District (KWD), a government-owned and controlled corporation (GOCC), hired respondent Atty. Michael A. Ignes as private legal counsel for one (1) year effective April 17, 2006.^[2] The Office of the Government Corporate Counsel (OGCC) and the Commission on Audit (COA) gave their consent to the employment of Atty. Ignes.^[3] However, controversy later erupted when two (2) different groups, herein referred to as the Dela Peña board and Yaphockun board, laid claim as the legitimate Board of Directors of KWD.

On December 28, 2006, the members of the Dela Peña board filed Civil Case No. 1793^[4] for Injunction and Damages, seeking to annul the appointment of two (2) directors, Joselito T. Reyes and Carlito Y. Uy, who will allegedly connive with Director Allan D. Yaphockun whose hostility to the "present" Board of Directors, the Dela Peña board, is supposedly of public knowledge.

On January 18, 2007, the Dela Peña board also adopted Resolution No. 009^[5] appointing respondents Atty. Rodolfo U. Viajar, Jr. and Atty. Leonard Buentipo Mann as private collaborating counsels for all cases of KWD and its Board of Directors, under the direct supervision and control of Atty. Ignes.

Subsequently, on February 9, 2007, Attys. Ignes, Viajar, Jr. and Mann filed SCA Case No. 50-24 for Indirect Contempt of Court^[6] entitled Koronadal Water District (KWD), represented herein by its General Manager, Eleanor Pimentel-Gomba v. Efren V. Cabucay, et al.  On February 19, 2007, they also filed Civil Case No. 1799 for Injunction and Damages^[7] entitled Koronadal Water District (KWD), represented herein by its General Manager, & Eleanor Pimentel-Gomba v. Rey J. Vargas.  On March 9, 2007, KWD and Eleanor Pimentel-Gomba filed a supplemental complaint^[8] in Civil Case No. 1799.

Meanwhile, in Contract Review No. 079^[9] dated February 16, 2007, the OGCC had approved the retainership contract of Atty. Benjamin B. Cuanan as new legal counsel of KWD and stated that the retainership contract of Atty. Ignes had expired on January 14, 2007.

In its letter^[10] dated March 2, 2007, the OGCC also addressed Eleanor P. Gomba's insistence that the retainership contract of Atty. Ignes will expire on April 17, 2007.  The OGCC stated that as stipulated, the KWD or OGCC may terminate the contract anytime without need of judicial action; that OGCC's grant of authority to private counsels is a privilege withdrawable under justifiable circumstances; and that the termination of Atty. Ignes's contract was justified by the fact that the Local Water Utilities Administration had confirmed the Yaphockun board as the new Board of Directors of KWD and that said board had terminated Atty. Ignes's services and requested to hire another counsel.

Alleging that respondents acted as counsel for KWD without legal authority, complainants filed a disbarment complaint^[11] against the respondents before the IBP Commission on Bar Discipline (CBD), docketed as CBD Case No. 07-1953.  Complainants alleged that respondents filed SCA Case No. 50-24 and Civil Case No. 1799 as counsels of KWD without legal authority. They likewise stated in their position paper^[12] that Atty. Ignes continued representing KWD even after the OGCC had confirmed the expiration of Atty. Ignes's contract in its April 4, 2007 manifestation/motion^[13] in Civil Case No. 1796-25 entitled Koronadal Water District (KWD), represented herein by its General Manager, Eleanor Pimentel Gomba v. Supreme Investigative and Security Agency, represented by its Manager Efren Y. Cabucay.

In his defense,^[14] Atty. Mann stated that he and his fellow respondents can validly represent KWD until April 17, 2007 since Atty. Ignes was not notified of his contract's pre-termination.  Atty. Mann also stated that he stopped representing KWD after April 17, 2007 in deference to the OGCC's stand.  Attys. Ignes, Viajar, Jr. and Nadua echoed Atty. Mann's defense.^[15]

On March 10, 2008, complainants filed a manifestation^[16] before the IBP with the following attachments: (1) the transcript of stenographic notes taken on January 28, 2008 in Civil Case No. 1799, and (2) the notice of appeal dated February 28, 2008 of the January 7, 2008 Order dismissing Civil Case No. 1799.  Aforesaid transcript showed that Atty. Ignes appeared as counsel of KWD and Ms. Gomba.  He also signed the notice of appeal.

In his report and recommendation,^[17] the Investigating Commissioner recommended that the charge against Atty. Ignes be dismissed for lack of merit.  The Investigating Commissioner held that Atty. Ignes had valid authority as counsel of KWD for one (1) year, from April 2006 to April 2007, and he was unaware of the pre-termination of his contract when he filed pleadings in SCA Case No. 50-24 and Civil Case No. 1799 in February and March 2007.

As to Attys. Viajar, Jr., Mann and Nadua, the Investigating Commissioner recommended that they be fined P5,000 each for appearing as attorneys for a party without authority to do so, per Santayana v. Alampay.^[18]  The Investigating Commissioner found that they failed to secure the conformity of the OGCC and COA to their engagement as collaborating counsels for KWD.

As aforesaid, the IBP Board of Governors reversed the recommendation of the Investigating Commissioner and dismissed the case for lack of merit.

Hence, the present petition.

Complainants contend that the IBP Board of Governors erred in dismissing the case because respondents had no authority from the OGCC to file the complaints and appear as counsels of KWD in Civil Case No. 1799, SCA Case No. 50-24 and Civil Case No. 1796-25. Complainants point out that the retainership contract of Atty. Ignes had expired on January 14, 2007; that the "Notice of Appeal filed by Atty. Ignes, et al." in Civil Case No. 1799 was denied per Order dated April 8, 2008 of the Regional Trial Court (RTC) "for being filed by one not duly authorized by law;" and that the authority of Attys. Viajar, Jr. and Mann as collaborating counsels is infirm since Resolution No. 009 of the Dela Peña board lacks the conformity of the OGCC.  As a consequence, according to complainants, respondents are liable for willfully appearing as attorneys for a party to a case without authority to do so.

In his comment, Atty. Ignes admits that their authority to represent KWD had expired on April 17, 2007, but he and his fellow respondents stopped representing KWD after that date.  He submits that they are not guilty of appearing as counsels without authority. In their comment, Attys. Viajar, Jr. and Nadua propound similar arguments.  They also say that their fees were paid from private funds of the members of the Dela Peña board and KWD personnel who might need legal representation, not from the public coffers of KWD.  In his own comment, Atty. Mann submits similar arguments.

After a careful study of the case and the parties' submissions, we find respondents administratively liable.

At the outset, we note that the parties do not dispute the need for OGCC and COA conformity if a GOCC hires private lawyers.  Nonetheless, we shall briefly recall the legal basis of this rule. Under Section 10, Chapter 3, Title III, Book IV of the Administrative Code of 1987, it is the OGCC which shall act as the principal law office of all GOCCs.  And Section 3 of Memorandum Circular No. 9,^[19] issued by President Estrada on August 27, 1998, enjoins GOCCs to refrain from hiring private lawyers or law firms to handle their cases and legal matters.  But the same Section 3 provides that in exceptional cases, the written conformity and acquiescence of the Solicitor General or the Government Corporate Counsel, as the case may be, and the written concurrence of the COA shall first be secured before the hiring or employment of a private lawyer or law firm. In Phividec Industrial Authority v. Capitol Steel Corporation,^[20] we listed three (3) indispensable conditions before a GOCC can hire a private lawyer: (1) private counsel can only be hired in exceptional cases; (2) the GOCC must first secure the written conformity and acquiescence of the Solicitor General or the Government Corporate Counsel, as the case may be; and (3) the written concurrence of the COA must also be secured.

In the case of respondents, do they have valid authority to appear as counsels of KWD?

We find that Attys. Nadua, Viajar, Jr. and Mann had no valid authority to appear as collaborating counsels of KWD in SCA Case No. 50-24 and Civil Case No. 1799. Nothing in the records shows that Atty. Nadua was engaged by KWD as collaborating counsel.  While the 4^th Whereas Clause of Resolution No. 009 partly states that he and Atty. Ignes "presently stand as KWD legal counsels," there is no proof that the OGCC and COA approved Atty. Nadua's engagement as legal counsel or collaborating counsel.  Insofar as Attys. Viajar, Jr. and Mann are concerned, their appointment as collaborating counsels of KWD under Resolution No. 009 has no approval from the OGCC and COA.

Attys. Nadua, Viajar, Jr. and Mann are in the same situation as the private counsel of Phividec Industrial Authority in Phividec.  In that case, we also ruled that said private counsel of Phividec Industrial Authority, a GOCC, had no authority to file the expropriation case in Phividec's behalf considering that the requirements set by Memorandum Circular No. 9 were not complied with.^[21] Thus, Resolution No. 009 did not grant authority to Attys. Nadua, Viajar, Jr. and Mann to act as collaborating counsels of KWD.  That Atty. Ignes was not notified of the pre-termination of his own retainership contract cannot validate an inexistent authority of Attys. Nadua, Viajar, Jr. and Mann as collaborating counsels.

In the case of Atty. Ignes, he also appeared as counsel of KWD without authority, after his authority as its counsel had expired.  True, the OGCC and COA approved his retainership contract for one (1) year effective April 17, 2006.  But even if we assume as true that he was not notified of the pre-termination of his contract, the records still disprove his claim that he stopped representing KWD after April 17, 2007.

Atty. Ignes offered no rebuttal to the verified manifestation of complainants filed with the IBP on March 10, 2008.  Attached therein was the transcript of stenographic notes^[22] in Civil Case No. 1799 taken on January 28, 2008 when Atty. Ignes argued the extremely urgent motion for the immediate return of the facilities of the KWD to the KWD Arellano Office.  The RTC was compelled to ask him why he seeks the return of KWD properties if he filed the motion as counsel of Ms. Gomba.  When the RTC noted that KWD does not appear to be a party to the motion, Atty. Ignes said that KWD is represented by Ms. Gomba per the caption of the case.  Atty. Ignes also manifested that they will file a motion for reconsideration of the orders dismissing Civil Case No. 1799 and Civil Case No. 1793. The RTC ruled that it will not accept any motion for reconsideration in behalf of KWD unless he is authorized by the OGCC, but Atty. Ignes later filed a notice of appeal^[23] dated February 28, 2008, in Civil Case No. 1799.  As the notice of appeal signed by Atty. Ignes was filed by one (1) not duly authorized by law, the RTC, in its Order^[24] dated April 8, 2008, denied due course to said notice of appeal.

As we see it, Atty. Ignes portrayed that his appearance on January 28, 2008 was merely as counsel of Ms. Gomba.  He indicted himself, however, when he said that Ms. Gomba represents KWD per the case title.  In fact, the extremely urgent motion sought the return of the facilities of KWD to its Arellano Office.  Clearly, Atty. Ignes filed and argued a motion with the interest of KWD in mind. The notice of appeal in Civil Case No. 1799 further validates that Atty. Ignes still appeared as counsel of KWD after his authority as counsel had expired.  This fact was not lost on the RTC in denying due course to the notice of appeal.

Now did respondents willfully appear as counsels of KWD without authority?

The following circumstances convince us that, indeed, respondents willfully and deliberately appeared as counsels of KWD without authority.  One, respondents have admitted the existence of Memorandum Circular No. 9 and professed that they are aware of our ruling in Phividec.^[25] Thus, we entertain no doubt that they have full grasp of our ruling therein that there are indispensable conditions before a GOCC can hire private counsel and that for non-compliance with the requirements set by Memorandum Circular No. 9, the private counsel would have no authority to file a case in behalf of a GOCC.  Still, respondents acted as counsels of KWD without complying with what the rule requires. They signed pleadings as counsels of KWD.  They presented themselves voluntarily, on their own volition, as counsels of KWD even if they had no valid authority to do so.

Two, despite the question on respondents' authority as counsels of KWD which question was actually raised earlier in Civil Case No. 1799 by virtue of an urgent motion to disqualify KWD's counsels^[26] dated February 21, 2007 and during the hearing on February 23, 2007^[27] respondents still filed the supplemental complaint in the case on March 9, 2007.  And despite the pendency of this case before the IBP, Atty. Ignes had to be reminded by the RTC that he needs OGCC authority to file an intended motion for reconsideration in behalf of KWD.

With the grain of evidence before us, we do not believe that respondents are innocent of the charge even if they insist that the professional fees of Attys. Nadua, Viajar, Jr. and Mann, as collaborating counsels, were paid not from the public coffers of KWD.  To be sure, the facts were clear that they appeared as counsels of KWD without authority, and not merely as counsels of the members of the Dela Peña board and KWD personnel in their private suits.

Consequently, for respondents' willful appearance as counsels of KWD without authority to do so, there is a valid ground to impose disciplinary action against them.  Under Section 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.

Disbarment, however, is the most severe form of disciplinary sanction, and, as such, the power to disbar must always be exercised with great caution, and should be imposed only for the most imperative reasons and in clear cases of misconduct affecting the standing and moral character of the lawyer as an officer of the court and member of the bar.  Accordingly, disbarment should not be decreed where any punishment less severe such as a reprimand, suspension or fine, would accomplish the end desired.^[28] In Santayana,^[29] we imposed a fine of P5,000 on the respondent for willfully appearing as an attorney for a party to a case without authority to do so.  The respondent therein also appeared as private counsel of the National Electrification Administration, a GOCC, without any approval from the OGCC and COA.

Conformably with Santayana, we impose a fine of P5,000 on each respondent.

On another matter, we note that respondents stopped short of fully narrating what had happened after the RTC issued four (4) orders on March 24, 2007 and on April 13, 2007 in Civil Case No. 1799.^[30] As willingly revealed by complainants, all four (4) orders were nullified by the Court of Appeals.^[31] We are compelled to issue a reminder that our Code of Professional Responsibility requires lawyers, like respondents, to always show candor and good faith to the courts.^[32] 

WHEREFORE, the petition is GRANTED.  The assailed Resolution No. XVIII-2008-335 passed on July 17, 2008 by the IBP Board of Governors in CBD Case No. 07-1953 is REVERSED and SET ASIDE.

Respondents Attys. Michael A. Ignes, Leonard Buentipo Mann, Rodolfo U. Viajar, Jr., and John Rangal D. Nadua are found GUILTY of willfully appearing as attorneys for a party to a case without authority to do so and FINED P5,000 each, payable to this Court within ten (10) days from notice of this Resolution.  They are STERNLY WARNED that a similar offense in the future will be dealt with more severely.

Let a copy of this Resolution be attached to respondents' personal records in the Office of the Bar Confidant.

SO ORDERED.

Carpio Morales, (Chairperson), Brion, Bersamin, and Abad,^* JJ. , concur.

Endnotes:

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^* Additional member per Special Order No. 843.

^[1] Rollo, p. 662.

^[2]  Id. at 133.

^[3] Id. at 129-132.

^[4] Id. at 404-420.  Civil Case No. 1793 was later redocketed as Civil Case No. 1793-25.

^[5] Id. at 136-137.

^[6] Id. at 732-742.

^[7] Id. at 715-731.  Civil Case No. 1799 was later redocketed as Civil Case No. 1799-24, then 1799-(24)25.

^[8] Id. at 36-62.

^[9] Id. at 709-710.

^[10]  Id. at 711-712.

^[11]  Id. at 2-7.

^[12]  Id. at 346-376.

^[13]  Id. at 787-788.

^[14]  Id. at 297.

^[15] Id. at 329-330.

^[16]  Id. at 468-471.

^[17]  Id. at 664-671.

^[18]  A.C. No. 5878, March 21, 2005, 454 SCRA 1.

^[19]  PROHIBITING GOVERNMENT-OWNED OR CONTROLLED CORPORATIONS (GOCCs) FROM REFERRING THEIR CASES AND LEGAL MATTERS TO THE OFFICE OF THE SOLICITOR GENERAL, PRIVATE LEGAL COUNSEL OR LAW FIRMS AND DIRECTING THE GOCCs TO REFER THEIR CASES AND LEGAL MATTERS TO THE OFFICE OF THE GOVERNMENT CORPORATE COUNSEL, UNLESS OTHERWISE AUTHORIZED UNDER CERTAIN EXCEPTIONAL CIRCUMSTANCES.

^[20]  G.R. No. 155692, October 23, 2003, 414 SCRA 327, 334.

^[21]  Id. at 335-336.

^[22]  Rollo, pp. 506-514.

^[23]  Id. at 482.

^[24]  Id. at 837-838.

^[25]  Id. at 73-74, 77.

^[26]  Id. at 812-825.

^[27]  Id. at 826-836.

^[28]  Kara-an v. Pineda, A.C. No. 4306, March 28, 2007, 519 SCRA 143, 146; Briones v. Jimenez, A.C. No. 6691, April 27, 2007, 522 SCRA 236, 243-244.

^[29]  Supra note 18 at 8-9.

^[30] Rollo, pp. 172-173, 176-180.

^[31]  Id. at 1047, 1069.

^[32]  Canon 10, Code of Professional Responsibility.