[G.R. No. 104908.June 19, 2001]
OF THE PHILIPPINES vs. SANDIGANBAYAN,
Quoted hereunder, for your information, is a
resolution of this Court dated JUN
G.R. No. 104908 (Republic of the
Philippines vs. Sandiganbayan and Benjamin Romualdez, et al.)
This is a petition for certiorari
under Rule 65 of the Rules of Court filed by the petitioner Republic of the
Philippines, represented by the Presidential Commission on Good Government
(PCGG), to annul and set aside two (2) Resolutions of public respondent
Sandiganbayan (Second Division), dated November 12, 1991 and March 31, 1992, in
Civil Case No. 0035.The impugned
Resolutions approved the payment of attorney's fees to private respondent ATTY.
CLEOFE VILLAR-VERZOLA in the amount of
P5,440,000.00 from the funds of
private respondents PALM AVENUE REALTY AND DEVELOPMENT CORPORATION and PALM
AVENUE HOLDINGS CO., INC. (Palm corporations, for short).These funds are sequestered and held under custodia legis by the PCGG pending determination of the real ownership of
It appears that the Palm
corporations owned more than 16 million Benguet common shares of stock.On April 5, 1986, the PCGG sequestered the
funds and assets of the Palm corporations on the suspicion that their
beneficial owner is Benjamin "Kokoy" Romuladez and the corporations are part of
his ill-gotten wealth.
In September 1986, Atty.
Verzola represented the Palm corporations in negotiating with Benguet
Corporation for the sale of some pledged Benguet shares owned by Palm
corporations.The Palm corporations
wanted to sell their shares to Benguet Corporation to pay their bank debts
secured by such shares.It was also the
intent of Benguet Corporation to purchase the said shares for distribution to
its employees.As a result of the
negotiation, Atty. Verzola, on behalf of the Palm corporations entered into a
Contract of Purchase and Sale with Benguet Corporation involving 9.5M Benguet
contract was submitted to the PCGG for approval.Initially, the PCGG disapproved the contract on the ground that
the price was too low.Consequently,
Atty. Verzola rescinded the contract of sale and notified the PCGG and Benguet
Corporation exerted efforts for reconsideration of the disapproved sale and
negotiated directly with the PCGG.Eventually, the PCGG approved the contract at the selling price of P29/share.
On October 18, 1896, the Palm
corporations executed a Special Power of Attorney in favor of Atty. Verzola
authorizing her to act as their counsel and attorney-in-fact in relation to its
Contract to Purchase and Sell with Benguet Corporations and to defend the Palm
corporations in all proceedings in which they are named defendants.
On October 20, 1986, each
of the Palm corporations issued a Board Resolution providing for Atty.
Verzola's fees as follows: (1) a fixed fee of
P2M for each case
where she represented the interest of Palm Avenue Holdings Co., Inc.; (2) P1M
fixed fee for each case where she represented Palm Avenue Realty and
Development Corporation; (3) a monthly retainer of P20,000 per
corporation effective October 1986; and (4) an amount not more than 5% of
whatever benefit/advantage which inured to the corporations by reason of such
or her representation, in the form of shares or financial advantage
gained.The Palm corporations then
executed the correspondent retainer contracts in favor of Atty. Verzola.
On November 3, 1986, Atty. Verzola, on behalf of the Palm
corporations, filed a petition for certiorari (G.R. No. 76296) 1 Palm Avenue Realty Development Corporation
vs. Presidential Commission on Good Government et al., 153 SCRA 579 (1987).
with this Court against the
PCGG, Benguet Corporation, et al., assailing the validity of the aforementioned
sales contract involving the shares of stocks owned by Palm corporations in
Benguet entered into by the PCGG and Benguet Corporation.Atty.
Verzola questioned the sale on the ground that the purchase price was grossly
unfair for, as of said date, the price of the said stock had already risen to
- P58 per share.The
petition did not succeed for on August 31, 1987, this Court upheld the contract
In January 1988,
petitioner Republic filed Civil Case No.
0035 2 Annex
"H" of Petition, Rollo, pp. 143-202. with public respondent
Sandiganbayan (Second Division) entitled: "Republic of the Philippines vs.
Benjamin "Kokoy" Romualdez, et al.," for Reconveyance, Reversion, Accounting,
Restitution and Damages, to recover the defendants' alleged ill-gotten
wealth.Private respondent Atty.
Verzola was named one of the defendants in the case.The complaint alleged that Atty. Verzola is one of the dummies of
Romualdez when he acquired the controlling shares in Benguet Corporation using
a behest loan from the PNB.The shares
are registered in the name of private respondents Palm corporations and
allegedly Romualdez is the beneficial owner of said corporations.The complaint also alleged that Atty.
Verzola allowed herself to be used by Romualdez by becoming one of the members
of the corporation held by Romualdez in a scheme to conceal the true ownership
and prevent recovery of the assets he illegally obtained.
On September 4, 1991,
private respondent Atty. Verzola filed a motion
3 Rollo, pp. 103-104. in Civil Case No. 0035 for public respondent Sandiganbayan to allow
her clients, the Palm corporations, to draw from their funds held by the PCGG
the amount of over
P5M to answer for her attorney's fees for the
services she rendered in the negotiation for the sale of their Benguet shares
and in filing the petition for certiorari in G.R No. 76296.Atty. Verzola justified the payment of
her attorney's fees as per her retainer contracts with the Palm corporations.
Public respondent Sandiganbayan granted Atty. Verzola's motion and
upheld the validity of her retainer contract with the Palm corporations.It approved
the payment of her fees in the amount of
P5,440,000.00 based upon the
amount agreed upon in the retainer contract, less the contingent fees.It held that payment of the fees is
legal irrespective of whether or not the government benefited from the services
rendered as pending the determination of the real ownership of the sequestered
corporations, the Palm corporations are still their recognized owners.
Hence, this petition for certiorari
under Rule 65, where the following issues are raised:
The respondent Sandiganbayan erred in finding Atty.
Verzola is entitled to attorney's fees pursuant to her purported contract with
the two Palm Avenue companies considering that she is one of the co-defendants
of Benjamin "Kokoy" Romualdez in civil case no. 0035 being one of the latter's
dummies/nominees/agents or fronts in acquiring and concealing ill-gotten wealth
which included the two Palm Avenue companies as shown by Annex "A" of civil
case no. 0035.
Sandiganbyan erred in finding that the amount of attorney's fees agreed upon
between Atty. Verzola and the two Palm Avenue companies is reasonable,
specially if we consider the fact that such a contract is a mere subterfuge or
clever scheme among Benjamin Romualdez and his lawyers and agents/dummies in
his front corporations to release for themselves by the millions part of their
ill-gotten wealth in violation of E.O. No. 2, in the guise of attorney's fees
purportedly pursuant of a contract, thus dissipating the sequestered assets of
the Palm companies.
Sandiganbayan failed to see the fact that the officers of the two Palm Avenue
companies are mere dummies of Benjamin "Kokoy" Romualdez and hence, the payment
for Atty. Vezola's attorney's fees must come from their own pockets for the
account of Benjamin Romualdez and not from the funds that the PCGG must
conserve pending the final outcome of the cases filed against them.
Sandiganbayan erred in finding that Atty. Verzola's legal services redounded to
the benefit of the petitioner because what Atty. Verzola did was to protect the
interest of Benjamin Romualdez and his front corporations to the prejudice of
the government which incurred heavy expenses in resisting Atty. Verzola's legal
We find no merit in the
Prefatorily, we note that
the petitioner failed to send proper notice to the private respondent of its
motion for reconsideration of the Sandiganbayan's Resolution approving the
payment of attorney's fees.The
petition at bar can be dismissed outright based on this procedural laps.However, for the guidance of the Bench and
the Bar, the Court deems it best to resolve the merits of this case.
Again, we stress the rule
that the sequestration of a corporation
does not divest it of its life and the right to continue with the legitimate
operation of its business.Sequestration does not deprive a corporation of its incidental power to
sue and, pursuant thereto, to hire the services of a lawyer to represent its
interests.The PCGG is a mere
conservator, not owner, of the sequestered funds and assets of a
corporation.Its acts are limited to
acts of administration. 4 Bataan
Shipyard and Engineering Co., Inc. vs. Presidential Commission on Good
Government, 150 SCRA 181 (1987); Republic vs. Sandiganbayan, 221 SCRA 189
(1993).It should not unduly
interfere in the operations of the sequestered company except upon a clear
showing that the disbursement of funds, payment of debts or the management of
its business concerns is for an unlawful or fraudulent purpose that will result
in the dissipation of its assets.
In the case at bar, the
issue is whether or not Atty. Verzola is entitled to be paid attorney's fees in
connection with the legal services she rendered to the Palm corporations.Petitioner contends that respondent Atty.
Verzola is one of the dummies of Romualdez and a co-defendants in civil case no.
0035 pending before the Sandiganbayan.Hence, it is urged that she should not be paid attorney's fees in
representing the Palm corporations as she did so to protect her interest and
that of her co-defendants.Petitioner
adds that if the civil case for recovery of ill-gotten wealth is decided in
favor of the petitioner and the Sandiganbayan finds that defendants Romualdez
and company are the beneficial owners of the Palm corporations, the defendants
should be the ones to pay Atty. Verzola's fees.
We agree with the Sandiganbayan that private respondent Atty. Verzola
is entitled to the payment of her fees.
contract between the Palm corporations and private respondent Atty. Verzola is
valid.Atty. Verzola diligently performed her part of the contract by
negotiating for the sale of the Benguet shares of her clients and by filing a
petition for certiorari with this Court impugning the subsequent sales contract
between the PCGG and Benguet Corporation involving the same shares on the ground
of their low valuation.
Second.The fact that Atty.
Verzola is one of the defendants in the civil case filed against Romualdez for
the recovery of the latter's ill-gotten wealth has no bearing on her right to
collect the legal fees due her.The
possible civil obligation of Atty. Verzola, as a defendant, for damages and
attorney's fees in the pending case for recovery of ill-gotten wealth is
separate and distinct from her right to recover the fees for the legal services
she rendered in another case.Petitioner's
allegation that the retainer contract is a mere scheme devised by the Palm
corporations, Atty. Verzola, and by Romualdez and company to dissipate the
funds of the corporations has not been substantiated.Without this substantiation, we cannot bar Atty. Verzola from
recovering the fees for the legal services she rendered pursuant to a valid
contract between her and the Palm corporations as that would have the effect of
denying a sequestered corporations the right to engage the service of a counsel
to represent its interests.
Third.As to the issued of
reasonableness of the fees claimed, the following criteria should be
considered: (1) the professional standing of the lawyer; (2) the extent of the
services rendered, and (3) the importance of the litigation or business where
the services were rendered. 5 Rilloraza,
Africa, De Ocampo and Africa vs. Eastern Telecommunications Phils., Inc., 309
SCRA 566 (1999).In granting
Atty. Verzola's attorney fees, the Sandiganbayan properly considered her professional standing, her long experience as a legal practitioner and
the nature of the legal services she
rendered.She negotiated for the sale of 16 million shares of stock of one of the
top corporations in the country, the Benguet Corporation.She filed
a petition for certiorari with this Court assailing the approval of the sale of
these stocks by the PCGG.Although
her petition was eventually dismissed, it cannot be said that she had
absolutely no basis to impugn the sale.For while we ruled in said case that the PCGG did not act with grave
abuse of discretion in approving the questioned sale, this Court also
acknowledged that "(t)he possibility that (the PCGG) erred (in eventually
approving the contract of sale of said price) cannot, to be sure, be completely
diminished.x x x it is entirely
possible that a better bargain may have been struck (by the PCGG) with someone
else.x x x" The Court, however, held
that based on the prevailing circumstances then, the sale was necessary to
prevent the auction of the shares which would fetched a lower price therefor.
However, insofar as the extent of services she rendered to the
two Palm corporations is concerned, we find that Atty. Verzola's fixed fee of
two million pesos with Palm Avenue Holdings Co., Inc. should be reduced.First, we note that Atty. Verzola's contracts with the Palm
corporations included a monthly retainer
P20,000.00 for each corporation.Second, she represented the two Palm corporations in the same action, involving the same subject matter.It does not appear from the records that the
services she rendered to both companies are substantially dissimilar.Third, she was unable to secure a favorable decision in her petition with this
Court.Hence, we find no rational
basis for granting her a higher fixed
fee of two million pesos for the services she rendered to Palm Avenue Holdings
Co., Inc.We thus find it equitable to reduce the said amount to one million
pesos, the same amount of fixed fee that she charged the other Palm corporation.
IN VIEW WHEREOF, the impugned Resolutions of the Sandiganbyan are
AFFIRMED, with the MODIFICATION that the Presidential Commission on Good
Government (PCGG) is directed to pay private respondent Atty. Cleofe
Villar-Verzola attorney's fees in the total amount of
the funds of the Palm Avenue Realty and Development Corporation and the Palm
Avenue Holdings Co., Inc. which are under the custody of the PCGG.No costs.
LUZVIMINDA D. PUNO
Clerk of Court
(Sgd.) MA. LUISA D. VILLARAMA
Clerk of Court