Cases Set 1

Republic of the PhilippinesSUPREME COURT

Manila

THIRD DIVISION

A.M. No. SDC-97-2-P February 24, 1997

SOPHIA ALAWI, complainant, vs.ASHARY M. ALAUYA, Clerk of Court VI, Shari'a District Court, Marawi City, respondent.

NARVASA, C.J.:

Sophia Alawi was (and presumably still is) a sales representative (or coordinator) of E.B. Villarosa & Partners Co., Ltd. of Davao City, a real estate and housing company. Ashari M. Alauya is the incumbent executive clerk of court of the 4th Judicial Shari'a District in Marawi City, They were classmates, and used to be friends.

It appears that through Alawi's agency, a contract was executed for the purchase on installments by Alauya of one of the housing units belonging to the above mentioned firm (hereafter, simply Villarosa & Co.); and in connection therewith, a housing loan was also granted to Alauya by the National Home Mortgage Finance Corporation (NHMFC).

Not long afterwards, or more precisely on December 15, 1995, Alauya addressed a letter to the President of Villarosa & Co. advising of the termination of his contract with the company. He wrote:

. . I am formally and officially withdrawing from and notifying you of my intent to terminate the Contract/Agreement entered into between me and your company, as represented by your Sales Agent/Coordinator, SOPHIA ALAWI, of your company's branch office here in Cagayan de Oro City, on the grounds that my consent was vitiated by gross misrepresentation, deceit, fraud, dishonesty and abuse of confidence by the aforesaid sales agent which made said contract void ab initio. Said sales agent acting in bad faith perpetrated such illegal and unauthorized acts which made said contract an Onerous Contract prejudicial to my rights and interests. He then proceeded to expound in considerable detail and quite acerbic language on the "grounds which could evidence the bad faith. deceit, fraud, misrepresentation, dishonesty and abuse of confidence by the unscrupulous sales agent . . .;" and closed with the plea that Villarosa & Co. "agree for the mutual rescission of our contract, even as I inform you that I categorically state on record that I am terminating the contract . . . I hope I do not have to resort to any legal action before said onerous and manipulated contract against my interest be annulled. I was actually fooled by your sales agent, hence the need to annul the controversial contract."

Alauya sent a copy of the letter to the Vice-President of Villarosa & Co. at San Pedro, Gusa, Cagayan de Oro City. The envelope containing it, and which actually went through the post, bore no stamps. Instead at the right hand corner above the description of the addressee, the words, "Free Postage - PD 26," had been typed.

On the same date, December 15, 1995, Alauya also wrote to Mr. Fermin T. Arzaga, Vice-President, Credit & Collection Group of the National Home Mortgage Finance Corporation (NHMFC) at Salcedo Village, Makati City, repudiating as fraudulent and void his contract with Villarosa & Co.; and asking for cancellation of his housing loan in connection therewith, which was payable from salary deductions at the rate of P4,338.00 a month. Among other things, he said:

. . . (T)hrough this written notice, I am terminating, as I hereby annul, cancel, rescind and voided, the "manipulated contract" entered into between me and the E.B. Villarosa & Partner Co., Ltd., as represented by its sales agent/coordinator, SOPHIA ALAWI, who maliciously and fraudulently manipulated said contract and unlawfully secured and pursued the housing loan without my authority and against my will. Thus, the contract itself is deemed to be void ab initio in view of the attending circumstances, that my consent was vitiated by misrepresentation, fraud, deceit, dishonesty, and abuse of confidence; and that there was no meeting of the minds between me and the swindling sales agent who concealed the real facts from me.

And, as in his letter to Villarosa & Co., he narrated in some detail what he took to be the anomalous actuations of Sophia Alawi.

Alauya wrote three other letters to Mr. Arzaga of the NHMFC, dated February 21, 1996, April 15, 1996, and May 3, 1996, in all of which, for the same reasons already cited, he insisted on the cancellation of his housing loan and discontinuance of deductions from his salary on account thereof.  He also wrote on January 18, 1996 to Ms. Corazon M. Ordoñez, Head of the Fiscal Management & Budget Office, and to the Chief, Finance Division, both of this Court, to stop deductions from his salary in relation to the loan in question, again asserting the anomalous manner by which he was allegedly duped into entering into the contracts by "the scheming sales agent." b

The upshot was that in May, 1996, the NHMFC wrote to the Supreme Court requesting it to stop deductions on Alauya's UHLP loan "effective May 1996." and began negotiating with Villarosa & Co. " for the buy-back of . . . (Alauya's) mortgage. and . . the refund of . . (his) payments." c

On learning of Alauya's letter to Villarosa & Co. of December 15, 1995, Sophia Alawi filed with this Court a verified complaint dated January 25, 1996 — to which she appended a copy of the letter, and of the above mentioned envelope bearing the typewritten words, "Free Postage - PD 26." 1 In that complaint, she accused Alauya of:

1. "Imputation of malicious and libelous charges with no solid grounds through manifest ignorance and evident bad faith;"

2. "Causing undue injury to, and blemishing her honor and established reputation;"

3. "Unauthorized enjoyment of the privilege of free postage . . .;" and

4. Usurpation of the title of "attorney," which only regular members of the Philippine Bar may properly use.

She deplored Alauya's references to her as "unscrupulous swindler, forger, manipulator, etc." without "even a bit of evidence to cloth (sic) his allegations with the essence of truth," denouncing his imputations as irresponsible, "all concoctions, lies, baseless and coupled with manifest ignorance and evident bad faith," and asserting that all her dealings with Alauya had been regular and completely transparent. She closed with the plea that Alauya "be dismissed from the senice, or be appropriately desciplined (sic) . . ."

The Court resolved to order Alauya to comment on the complaint, Conformably with established usage thatnotices of resolutions emanate from the corresponding Office of the Clerk of Court, the notice of resolution  in this case was signed by Atty. Alfredo P. Marasigan, Assistant Division Clerk of Court. 2

Alauya first submitted a "Preliminary Comment" 3 in which he questioned the authority of Atty. Marasigan to require an explanation of him, this power pertaining, according to him, not to "a mere Asst. Div. Clerk of Court investigating an Executive Clerk of Court." but only to the District Judge, the Court Administrator or the Chief Justice, and voiced the suspicion that the Resolution was the result of a "strong link" between Ms. Alawi and Atty. Marasigan's office. He also averred that the complaint had no factual basis; Alawi was envious of him for being not only "the Executive Clerk of Court and ex-officio Provincial Sheriff and District Registrar." but also "a scion of a Royal Family  . . ." 4

In a subsequent letter to Atty. Marasigan, but this time in much less aggressive, even obsequious tones,  5 Alauya requested the former to give him a copy of the complaint in order that he might comment thereon.  6 He stated that his acts as clerk of court were done in good faith and within the confines of the law; and that Sophia Alawi, as sales agent of Villarosa & Co. had, by falsifying his signature, fraudulently bound him to a housing loan contract entailing monthly deductions of P4,333.10 from his salary.

And in his comment thereafter submitted under date of June 5, 1996, Alauya contended that it was he who had suffered "undue injury, mental anguish, sleepless nights, wounded feelings and untold financial suffering," considering that in six months, a total of P26,028.60 had been deducted from his salary.  7 He declared that there was no basis for the complaint; in communicating with Villarosa & Co. he had merely acted in defense of his rights. He denied any abuse of the franking privilege, saying that he gave P20.00 plus transportation fare to a subordinate whom he entrusted with the mailing of certain letters; that the words: "Free Postage - PD 26," were typewritten on the envelope by some other person, an averment corroborated by the affidavit of Absamen C. Domocao, Clerk IV (subscribed and sworn to before respondent himself, and attached to the comment as Annex J);  8 and as far as he knew, his subordinate mailed the letters with the use of the money he had given for postage, and if those letters were indeed mixed with the official mail of the court, this had occurred inadvertently and because of an honest mistake. 9

Alauya justified his use of the title, "attorney," by the assertion that it is "lexically synonymous" with "Counsellors-at-law." a title to which Shari'a lawyers have a rightful claim, adding that he prefers the title of "attorney" because "counsellor" is often mistaken for "councilor," "konsehal" or the Maranao term "consial," connoting a local legislator beholden to the mayor. Withal, he does not consider himself a lawyer.

He pleads for the Court's compassion, alleging that what he did "is expected of any man unduly prejudiced and injured." 10 He claims he was manipulated into reposing his trust in Alawi, a classmate and friend. 11 He was induced to sign a blank contract on Alawi's assurance that she would show the completed document to him later for correction, but she had since avoided him; despite "numerous letters and follow-ups" he still does not know where the property — subject of his supposed agreement with Alawi's principal, Villarosa & Co. — is situated; 12 He says Alawi somehow got his GSIS policy from his wife, and although she promised to return it the next day, she did not do so until after several months. He

also claims that in connection with his contract with Villarosa & Co., Alawi forged his signature on such pertinent documents as those regarding the down payment, clearance, lay-out, receipt of the key of the house, salary deduction, none of which he ever saw. 13

Averring in fine that his acts in question were done without malice, Alauya prays for the dismissal of the complaint for lack of merit, it consisting of "fallacious, malicious and baseless allegations." and complainant Alawi having come to the Court with unclean hands, her complicity in the fraudulent housing loan being apparent and demonstrable.

It may be mentioned that in contrast to his two (2) letters to Assistant Clerk of Court Marasigan (dated April 19, 1996 and April 22, 1996), and his two (2) earlier letters both dated December 15, 1996 — all of which he signed as "Atty. Ashary M. Alauya" — in his Comment of June 5, 1996, he does not use the title but refers to himself as "DATU ASHARY M. ALAUYA."

The Court referred the case to the Office of the Court Administrator for evaluation, report and recommendation.14

The first accusation against Alauya is that in his aforesaid letters, he made "malicious and libelous charges (against Alawi) with no solid grounds through manifest ignorance and evident bad faith, resulting in "undue injury to (her) and blemishing her honor and established reputation." In those letters, Alauya had written inter alia that:

1) Alawi obtained his consent to the contracts in question "by gross misrepresentation, deceit, fraud, dishonesty and abuse of confidence;"

2) Alawi acted in bad faith and perpetrated . . . illegal and unauthorized acts . . . prejudicial to . . (his) rights and interests;"

3) Alawi was an "unscrupulous (and "swindling") sales agent" who had fooled him by "deceit, fraud, misrepresentation, dishonesty and abuse of confidence;" and

4) Alawi had maliciously and fraudulently manipulated the contract with Villarosa & Co., and unlawfully secured and pursued the housing loan without . . (his) authority and against . . (his) will," and "concealed the real facts . . ."

Alauya's defense essentially is that in making these statements, he was merely acting in defense of his rights, and doing only what "is expected of any man unduly prejudiced and injured," who had suffered "mental anguish, sleepless nights, wounded feelings and untold financial suffering, considering that in six months, a total of P26,028.60 had been deducted from his salary. 15

The Code of Conduct and Ethical Standards for Public Officials and Employees (RA 6713) inter alia enunciates the State policy of promoting a high standard of ethics and utmost responsibility in the public service. 16 Section 4 of the Code commands that "(p)ublic officials and employees . . at all times respect the rights of others, and . . refrain from doing acts contrary to law, good morals, good customs, public policy, public order, public safety and public interest." 17More than once has this Court emphasized that "the conduct and behavior of every official and employee of an agency involved in the administration of justice, from the presiding judge to the most junior clerk, should be circumscribed with the heavy burden of responsibility. Their conduct must at all times be characterized by, among others, strict propriety and decorum so as to earn and keep the respect of the public for the judiciary." 18

Now, it does not appear to the Court consistent with good morals, good customs or public policy, or respect for the rights of others, to couch denunciations of acts believed — however sincerely — to be deceitful, fraudulent or malicious, in excessively intemperate, insulting or virulent language. Alauya is evidently convinced that he has a right of action against Sophia Alawi. The law requires that he exercise that right with propriety, without malice or vindictiveness, or undue harm to anyone; in a manner consistent with good morals, good customs, public policy, public order, supra; or otherwise stated, that he "act with justice, give everyone his due, and observe honesty and goodfaith." 19 Righteous indignation, or vindication of right cannot justify resort to vituperative language, or downright name-calling. As a member of the Shari'a Bar and an officer of a Court, Alawi is subject to a standard of conduct more stringent than for most other government workers. As a man of the law, he may not use language which is abusive, offensive, scandalous, menacing, or otherwise improper. 20 As a judicial employee, it is expected that he accord respect for the person and the rights of others at all times, and that his every act and word should be characterized by prudence, restraint, courtesy, dignity. His radical deviation from these salutary norms might perhaps be mitigated, but cannot be excused, by his strongly held conviction that he had been grievously wronged.

As regards Alauya's use of the title of "Attorney," this Court has already had occasion to declare that persons who pass the Shari'a Bar are not full-fledged members of the Philippine Bar, hence may only practice law before Shari'a courts. 21 While one who has been admitted to the Shari'a Bar, and one who has been admitted to the Philippine Bar, may both be considered "counsellors," in the sense that they give counsel or advice in a professional capacity, only the latter is an "attorney." The title of "attorney" is reserved to those who, having obtained the necessary degree in the study of law and successfully taken the Bar Examinations, have been admitted to the Integrated Bar of the Philippines and remain members thereof in good standing; and it is they only who are authorized to practice law in this jurisdiction.

Alauya says he does not wish to use the title, "counsellor" or "counsellor-at-law, " because in his region, there are pejorative connotations to the term, or it is confusingly similar to that given to local legislators. The ratiocination,

valid or not, is of no moment. His disinclination to use the title of "counsellor" does not warrant his use of the title of attorney.

Finally, respecting Alauya's alleged unauthorized use of the franking privilege, 22 the record contains no evidence adequately establishing the accusation.

WHEREFORE, respondent Ashari M. Alauya is hereby REPRIMANDED for the use of excessively intemperate, insulting or virulent language, i.e., language unbecoming a judicial officer, and for usurping the title of attorney; and he is warned that any similar or other impropriety or misconduct in the future will be dealt with more severely.

SO ORDERED.

Davide, Jr., Melo, Francisco and Panganiban, Jr., JJ., concur.

Republic of the PhilippinesSUPREME COURT

Manila

SECOND DIVISION

A.M. No. P-06-2177             June 27, 2006(Formerly A.M. No. 06-4-268-RTC)

RE: REPORT ON THE FINANCIAL AUDIT CONDUCTED ON THE BOOKS OF ACCOUNTS OF ATTY. RAQUEL G. KHO, CLERK OF COURT IV, REGIONAL TRIAL COURT, ORAS, EASTERN SAMAR .

R E S O L U T I O N

CORONA, J.:

This administrative case is a result of the audit conducted by the Office of the Court Administrator (OCA) of the books of accounts of Atty. Raquel G. Kho, former clerk of court of the Regional Trial Court, Branch 5, Oras, Eastern Samar. The audit covered the period March 1985 to October 31, 2005.

The OCA, in its memorandum dated April 18, 2006, had the following findings: (1) there was a shortage ofP545.00 in remittances to the General Fund; (2) a cash shortage of P24.00 in the Sheriff’s General Fund; and (3) Atty. Kho did not deposit on time in the authorized depository bank the collections for the Fiduciary Fund (P60,000) and Special Allowance for the Judiciary Fund (P5,000). It also noted that Atty. Kho had already restituted the P545.00 and P24.00 cash shortages.

Regarding the delayed remittance of the amount of P60,000 representing the amount of a confiscated cash bond, Kho explained that the Land Bank of the Philippines (the authorized depository bank) had no branch in their locality. The nearest Land Bank branch was approximately 95 kilometers away so it was his practice to keep his collections in the court’s safety vault.

On the other hand, the amount of P5,000 was collected as filing fee for an election protest. According to Kho, this was collected under Rule 40 of the Commission on Elections (COMELEC) Rules of Procedure. In defense, he presented a letter addressed to Senior Deputy Court Administrator Zenaida N. Elepaño inquiring where to remit said amount. The OCA, through Deputy Court Administrator Jose P. Perez, responded that pending official instructions on how to manage the money collected under Rule 40 of the COMELEC Rules, it was to be treated as trust deposits and temporarily deposited in the Fiduciary Fund.1 However, Kho failed to do this.

Consequently, the audit team advised him to deposit the P5,000 in the Special Allowance for the Judiciary Fund as provided under Sec. 21 (g) of the amended Administrative Circular No. 35-2004.2 He was also advised to deposit the confiscated P60,000 cash bond in the Judicial Development Fund account. He complied with both directives on November 15, 2005.

On January 26, 2006, the OCA received a letter-complaint with the information that Kho, along with his alleged common-law-wife, stenographer Riza Amor L. Libanan, was engaged in lending out to court employees money in his possession as clerk of court, personally deriving profit from the interest earned.

The OCA found Kho liable for violating OCA Circular No. 8A-933 dated April 21, 1993 when he kept the funds in a safety vault for more than a year. All clerks of lower courts are supposed to deposit all collections from bail bonds, rental deposits and other fiduciary collections with the Land Bank upon receipt thereof. Thus, it recommended that (1) the audit report be docketed as a regular administrative complaint against Kho and (2) a fine in the amount of P10,000 be imposed on him.

We agree with the OCA’s recommendations.

Public office is a public trust.4 Those charged with the dispensation of justice, from the justices and judges to the lowliest clerks, should be circumscribed with the heavy burden of responsibility.5 Not only must their conduct at all times be characterized by propriety and decorum but, above all else, it must be beyond suspicion.6

A clerk of court, aside from being the custodian of the court’s funds, revenues, property and premises, is also entrusted with the primary responsibility of correctly and effectively implementing regulations regarding fiduciary funds.7 Safekeeping of funds and collections is essential to an orderly administration of justice and no protestation of good faith can override the mandatory nature of the circulars designed to promote full accountability for government funds.8 Clerks of court have always been reminded of their duty to immediately deposit the various funds received by them to the authorized government depositories for they are not supposed to keep funds in their custody.9

Kho failed to make a timely turn-over of cash deposited with him. This was inexcusable because he could have purchased postal money orders from the local post office payable to the chief accountant, Accounting Division,

FMO-OCA. The money could have earned interest had he not kept them in the vault for over a year.10 As found by the OCA, although Kho had restituted all his cash accountabilities, he was nevertheless liable for failing to immediately deposit the collections for the judiciary funds.

The failure to remit the funds in due time constitutes gross dishonesty and gross misconduct. It diminishes the faith of the people in the Judiciary.11 Dishonesty, being in the nature of a grave offense, carries the extreme penalty of dismissal from the service even if committed for the first time. However, Kho showed remorse by immediately restituting the cash shortages and complying with the directives of the audit team. And considering that this is his first offense, we find that the penalty of P10,000 fine is sufficient.

We note that Kho has already transferred to the Department of Justice. However, it neither renders this matter moot nor frees him from liability.

Moreover, his misconduct reflects on his fitness as a member of the bar. His malfeasance prima faciecontravenes Canon 1,12 Rule 1.0113 of the Code of Professional Responsibility. Hence, he should explain why no further disciplinary sanction should be imposed on him.

WHEREFORE, Atty. Raquel G. Kho is hereby found GUILTY of gross misconduct for his failure to make timely remittance of judiciary funds in his custody. He is ordered to pay a FINE of P10,000 within ten (10) days from receipt of this resolution.

Atty. Kho is further ordered to SHOW CAUSE within the same period why he should not be disciplined for such misconduct as a lawyer and as an officer of the Court.

SO ORDERED.

Republic of the PhilippinesSUPREME COURT

Manila

EN BANC

A.C. No. 4904             August 12, 2004

ANA A. CHUA and MARCELINA HSIA, complainants, vs.ATTY. SIMEON M. MESINA, JR., respondent.

D E C I S I O N

PER CURIAM:

By a verified complaint1 received by the Office of the Bar Confidant on May 5, 1998,2 Ana Alvaran Chua and Marcelina Hsia administratively charged Atty. Simeon M. Mesina, Jr., for breach of professional ethics, gross professional misconduct, and culpable malpractice.

As related by complainants, the following facts gave rise to the filing of the complaint.

Respondent was, for years, Ana Alvaran Chua and her now deceased husband Chua Yap An’s legal counsel and adviser upon whom they reposed trust and confidence. They were in fact lessees of a building situated at Burgos Street, Cabanatuan City (Burgos property) owned by respondent’s family, and another property containing an area of 854 sq. m., situated at Melencio Street, Cabanatuan City (Melencio property), also owned by respondent’s family whereon they (spouses Chua) constructed their house. These two properties were mortgaged by the registered owner, respondent’s mother Felicisima Melencio vda. de Mesina (Mrs. Mesina), in favor of the Planters Development Bank to secure a loan she obtained.

As Mrs. Mesina failed to meet her obligation to the bank, respondent convinced complainant Ana Chua and her husband to help Mrs. Mesina by way of settling her obligation in consideration for which the Melencio property would be sold to them at P850.00/sq. m.

Accommodating respondent’s request, the spouses Chua and their business partner, herein co-complainant Marcelina Hsia, settled Mrs. Mesina’s bank obligation in the amount of P983,125.40.

A Deed of Absolute Sale dated January 19, 19853 conveying the Melencio property for P85,400.00 was thereafter executed by Mrs. Mesina, whose name appears therein as "Felicisima M. Melencio," in favor of complainants.

As complainants were later apprised of the amount of capital gains tax they were to pay, they consulted respondent about it. Respondent thus suggested to them that another Deed of Absolute Sale should be executed, antedated to 1979 before the effectivity of the law mandating the payment of capital gains tax. As suggested by respondent, another Deed of Absolute Sale antedated February 9, 19794 was executed by Mrs. Mesina, whose name again appears therein as "Felicisima M. Melencio," in favor of complainants wherein the purchase price was also indicated to be P85,400.00.

After liquidating the advances made by the Chua spouses "in the redemption of the MESINA properties," Mrs. Mesina was found to have "an existing balance" due the spouses in the amount of P400,000.00, on account of which they advised respondent about it. Respondent, by Affidavit of February 18, 1986, "acknowledged such obligation" to be his and undertook to settle it within two years.

Complainants were subsequently issued on January 21, 1986 a title over the Melencio property.

Not long after the execution of the February 9, 1979 Deed of Absolute Sale or in February 1986, one Juanito Tecson (Tecson) filed an Affidavit5 dated February 20, 1986 before the Cabanatuan City Prosecutor’s Office charging respondent’s mother, the spouses Chua, Marcelina Hsia and the two witnesses to the said Deed of Absolute Sale, for Falsification of Public Document and violation of the Internal Revenue Code. In his complaint affidavit, Tecson alleged that he was also a lessee of the Melencio property and was, along with the Chua spouses, supposed to purchase it but that contrary to their agreement, the property was sold only to complainant and her co-complainant, to his exclusion. Tecson went on to relate that the February 9, 1979 Deed of Absolute Sale did not reflect the true value of the Melencio property and was antedated "to evade payment of capital gains tax."

Tecson submitted documents showing that indeed the July 9, 1979 Deed of Absolute Sale was antedated.

Respondent thereupon hatched a plan to dodge the falsification charge against Mrs. Mesina et al. He proposed to complainants that they would simulate a deed of sale of the Melencio property wherein complainants would resell it to Mrs. Mesina.

Heeding the proposal of respondent, complainants executed a Deed of Absolute Sale dated April 1, 19866conveying to "Felicisima M. Melencio" the Melencio property for P85,400.00.

A new title was accordingly issued on April 4, 1986 in the name of "Felicisima M. Melencio," the owner’s copy of which was entrusted to complainants.

Tecson subsequently filed before the Cabanatuan City Prosecutor’s Office an Affidavit of Desistance dated September 5, 19867 alleging that his filing of the criminal complaint "arose out of mere misunderstanding and difference" with herein complainants and their co-respondents and he had no sufficient evidence against them.

Some years later or on May 2, 1990, respondent approached complainants and told them that he would borrow the owner’s copy of Mrs. Mesina’s title with the undertaking that he would, in four months, let Mrs. Mesina execute a deed of sale over the Melencio property in complainants’ favor. In fact, respondent gave complainants a written undertaking8 dated May 2, 1990 reading:

Received the owner’s duplicate copy of TCT No. 4383 issued by the Register of Deeds, Cabanatuan City registered in the name of Felicisima Mesina, widow, consisting of about 854 square meters more or less located at calle Melencio, Cabanatuan City from Mrs. Ana Chua and Marcelina Hsia.

I promise to and undertake to have the Deed of Sale of the above-mentioned property in favor of Ana Chua and Marcelina Hsia to be signed by Mrs. Felicisima Mesina, within four (4) months from date hereof so that the above-mentioned property and title maybe transferred in the name of Ana Chua and Macelina Hsia. (Underscoring supplied)

In the meantime, Mrs. Mesina died "in the early part of 1991."

Despite respondent’s repeated promises "to effect" the transfer of title in complainants’ name, he failed to do so. Complainants were later informed that the Melencio property was being offered for sale to the public.

The spouses Chua and complainant Marcelina Hsia thus filed on August 24, 1992 a Complaint9 against respondent and his two siblings before the Regional Trial Court (RTC) of Nueva Ecija in Cabanatuan City, for "Declaration of Nullity of Sale and Reconveyance of Real Property."

As of the time of the filing of the present administrative complaint in 1998, the civil case against the Mesina siblings was still pending.

This Court, by Resolution of July 13, 1998,10 directed respondent to file Comment on the complaint within ten days.

By Resolution of December 2, 1998,11 this Court, noting that the copy of the Resolution of July 13, 1998 requiring respondent to comment on the complaint sent to him at his office address at S. M. Mesina Law Office, 30 Jupiter St., Paseo de Roxas, Bel-Air Subd., Makati City was returned unserved with the notation "Moved," considered the Resolution of July 13, 1998 served on respondent by substituted service pursuant to Rule 13, Section 8 of the 1997 Rules of Civil Procedure. Respondent was accordingly deemed to have waived the filing of the required comment.

By the same Resolution of December 2, 1998, the case was referred to the Integrated Bar of the Philippines (IBP) for investigation, report and recommendation within ninety days.

The IBP, acting on the complaint, issued a notice of hearing on September 14, 2001,12 copy of which was sent to respondent at his office address via registered mail, covered by Registry Receipt No. 2605 of the Meralco Post Office.13 On the scheduled date of hearing, complainants personally appeared with their counsel. Respondent failed to show up.

Given the length of time that the case remained pending from its filing, the IBP Commission on Bar Discipline, by Order of October 12, 2001,14 directed complainants to just file their position paper with affidavits and supporting documents in lieu of actual presentation of witnesses and to serve a copy thereof to respondent at his last known address.

In compliance with the IBP Order, complainants filed on April 1, 2002 their position paper,15 annexed to which were photocopies of: 1) a May 5, 1993 Certification16 issued by the Metrobank Cabanatuan Branch certifying that "it issued the demand drafts to the payees enumerated below, which were debited from the account of Mr. Chua Yap An under Savings Account No. 760:

D/D No. Payee Amount Date of Issue

214597 Planters Dev. Bank P 805,299.54 12-19-85

214760 Planters Dev. Bank 100,000.00 01-14-86

214761 Atty. Simeon Mesina, Jr. 77,826.10 01-14-86";

2) Affidavit dated February 18, 198617 of respondent acknowledging a debt of P400,000.00 to complainant Ana Alvaran Chua and promising to pay interest thereon within 2 years to commence upon the signing thereof [February 16, 1998] and, in the event no partial or full payment of the principal is made within 2 years, Ana Alvaran Chua "is under no obligation to pay any lease rentals over the lot situated in Burgos Avenue, Cabanatuan City where the Oceanic Hardware Bldg. is erected;" 3) Deed of Absolute Sale dated January 19, 198518 and 4) Deed of Absolute Sale dated July 9, 1979,19 both executed by "Felicisima M. Melencio" in favor of complainant; 5) TCT No. T-4811420 issued by the Cabanatuan City in the name of complainants on January 21, 1986; 6) Affidavit of Juanito C. Tecson21 dated January 20, 1986 charging complainants et al. for Falsification of Public Documents; 7) Deed of Absolute Sale dated April 1, 1986 executed by complainants in favor of Mrs. Mesina;22 and 8) TCT No. T-48383issued on April 4, 1986 in the name of "Felicisima M. Melencio;"23 and 9) Complaint of spouses Chua Yap An and Ana Alvaran Chua and Marcelina Hsia, for Declaration of Nullity of Deed of Sale and Reconveyance of Real Property against respondent and his two siblings.24

A copy of complainant’s position paper was sent on March 18, 2002 to respondent at his office address by registered mail covered by Registry Receipt No. 5278.25 There is no showing if respondent received this mail matter.

The IBP once more scheduled, by notice of December 13, 2002,26 a hearing of the administrative case to January 15, 2003, copy of which notice was sent to respondent at his office address by registered mail covered by Registry Receipt No. 2953 issued by the Meralco Post Office.27

On the scheduled hearing on January 15, 2003, the IBP Investigating Commissioner, by Order of even date,28noted the presence of complainants, and the absence of respondent, copy of the notice of hearing to whom was returned unserved with the notation "RTS-Moved." The case was thereupon deemed submitted for report and recommendation.

On June 21, 2003, the IBP passed Resolution No. XV-2003-34229 adopting and approving the report and recommendation of Atty. Rebecca Villanueva-Maala, the Investigating Commissioner of the case.

In her March 3, 2003 Report and Recommendation,30 Investigation Commissioner Maala observed as follows:

A lawyer should not engage or participate on any unlawful, dishonest, immoral or deceitful conduct. The moral character he displayed when he applied for admission at the Bar must be maintained incessantly. Otherwise, his privilege to practice the legal profession may be withdrawn from him (Rule 1.01, Code of Professional Responsibility). On the basis of the uncontroverted facts and evidence presented, respondent Atty. Simeon M. Mesina has committed gross misconduct which shows him to be unfit for the office and unworthy of the privilege which his license and law confer upon him,

and recommended that respondent be suspended for a period of One (1) Year.

This Court finds that indeed, respondent is guilty of gross misconduct.

First, by advising complainants to execute another Deed of Absolute Sale antedated to 1979 to evade payment of capital gains taxes, he violated his duty to promote respect for law and legal processes,31 and not to abet activities aimed at defiance of the law;32 That respondent intended to, as he did defraud not a private party but the government is aggravating.33

Second, when respondent convinced complainants to execute another document, a simulated Deed of Absolute Sale wherein they made it appear that complainants reconveyed the Melencio property to his mother, he committed dishonesty.34

Third, when on May 2, 1990 respondent inveigled his own clients, the Chua spouses, into turning over to him the owner’s copy of his mother’s title upon the misrepresentation that he would, in four months, have a deed of sale executed by his mother in favor of complainants, he likewise committed dishonesty.

That the signature of "Felicisima M. Melencio" in the 1985 document35 and that in the 1979 document36 are markedly different is in fact is a badge of falsification of either the 1979 or the 1985 document or even both.

A propos is this Court’s following pronouncement in Nakpil v. Valdez37

As a rule, a lawyer is not barred from dealing with his client but the business transaction must be characterized with utmost honesty and good faith. The measure of good faith which an attorney is required to exercise in his dealings with his client is a much higher standard that is required in business dealings where the parties trade at "arms length." Business transactions between an attorney and his client are disfavored and discouraged by the policy of the law. Hence, courts carefully watch these transactions to assure that no advantage is taken by a lawyer over his client. This rule is founded on public policy for, by virtue of his office, an attorney is in an easy position to take advantage of the credulity and ignorance of his client. Thus, no presumption of innocence or improbability of wrongdoing is considered in an attorney’s favor.38 (Underscoring supplied)

Respondent having welched on his promise to cause the reconveyance of the Melencio property to complainants, consideration of whether he should be ordered to honor such promise should be taken up in the civil case filed for the purpose, the issue there being one of ownership while that in the case at bar is moral fitness.39

In fine, respondent violated his oath of office and, more specifically, the following canons of the Code of Professional Responsibility:

CANON 1. A LAWYER SHALL UPHOLD THE CONSTITUTION, OBEY THE LAWS OF THE LAND AND PROMOTE RESPECT FOR LAW AND LEGAL PROCESSES.

Rule 1.01. - A lawyer shall not engage in unlawful, dishonest, immoral or deceitful conduct.

Rule 1.02. - A lawyer shall not counsel or abet activities aimed at defiance of the law or at lessening confidence in the legal system.

CANON 7. A LAWYER SHALL AT ALL TIMES UPHOLD THE INTEGRITY AND DIGNITY OF THE LEGAL PROFESSION AND SUPPORT THE ACTIVITIES OF THE INTEGRATED BAR.

Rule 7.03. - A lawyer shall not engage in conduct that adversely reflects on his fitness to practice law, nor shall he, whether in public or private life, behave in a scandalous manner to the discredit of the legal profession.

CANON 15. A LAWYER SHALL OBSERVE CANDOR, FAIRNESS AND LOYALTY IN ALL HIS DEALINGS AND TRANSACTIONS WITH HIS CLIENTS.

Rule 15.07. - A lawyer shall impress upon his client compliance with the laws and the principles of fairness.

CANON 17. A LAWYER OWES FIDELITY TO THE CAUSE OF HIS CLIENT AND HE SHALL BE MINDFUL OF THE TRUST AND CONFIDENCE REPOSED IN HIM.

WHEREFORE, respondent ATTY. SIMEON M. MESINA, JR. is, for gross misconduct, hereby DISBARRED.

Let copies of this Decision be furnished all courts, the Integrated Bar of the Philippines, and the Office of the Bar Confidant.

SO ORDERED.

Republic of the PhilippinesSUPREME COURT

Manila

EN BANC

A.C. No. 8010               June 16, 2009

KELD STEMMERIK, represented by ATTYS. HERMINIO A. LIWANAG and WINSTON P.L. ESGUERRA,Complainant, vs.ATTY. LEONUEL N. MAS, Respondent.

R E S O L U T I O N

Per Curiam:

Complainant Keld Stemmerik is a citizen and resident of Denmark. In one of his trips to the Philippines, he was introduced to respondent Atty. Leonuel N. Mas. That was his misfortune.

In one visit to the Philippines, complainant marveled at the beauty of the country and expressed his interest in acquiring real property in the Philippines. He consulted respondent who advised him that he could legally acquire and own real property in the Philippines. Respondent even suggested an 86,998 sq.m. property in Quarry, Agusuin, Cawag, Subic, Zambales with the assurance that the property was alienable.

Trusting respondent, complainant agreed to purchase the property through respondent as his representative or attorney-in-fact. Complainant also engaged the services of respondent for the preparation of the necessary documents. For this purpose, respondent demanded and received a P400,000 fee.

Confident that respondent would faithfully carry out his task, complainant returned to Denmark, entrusting the processing of the necessary paperwork to respondent.

Thereafter, respondent prepared a contract to sell the property between complainant, represented by respondent, and a certain Bonifacio de Mesa, the purported owner of the property.1 Subsequently, respondent prepared and notarized a deed of sale in which de Mesa sold and conveyed the property to a certain Ailyn Gonzales for P3.8 million.2 Respondent also drafted and notarized an agreement between complainant and Gonzales stating that it was complainant who provided the funds for the purchase of the property.3 Complainant then gave respondent the full amount of the purchase price (P3.8 million) for which respondent issued an acknowledgment receipt.4

After the various contracts and agreements were executed, complainant tried to get in touch with respondent to inquire about when the property could be registered in his name. However, respondent suddenly became scarce and refused to answer complainant’s calls and e-mail messages.

When complainant visited the Philippines again in January 2005, he engaged the services of the Jimenez Gonzales Liwanag Bello Valdez Caluya & Fernandez Law Office to ascertain the status of the property he supposedly bought. He was devastated to learn that aliens could not own land under Philippine laws. Moreover, verification at the Community Environment & Natural Resources Office (CENRO) of the Department of Environment and Natural Resources in Olongapo City revealed that the property was inalienable as it was situated within the former US Military Reservation.5 The CENRO also stated that the property was not subject to disposition or acquisition under Republic Act No. 141.6

Thereafter, complainant, through his attorneys-in-fact,7 exerted diligent efforts to locate respondent for purposes of holding him accountable for his fraudulent acts. Inquiry with the Olongapo Chapter of the Integrated Bar of the Philippines (IBP) disclosed that respondent was in arrears in his annual dues and that he had already abandoned his law office in Olongapo City.8 Search of court records of cases handled by respondent only yielded his abandoned office address in Olongapo City. 1avvphi1

Complainant filed a complaint for disbarment against respondent in the Commission on Bar Discipline (CBD) of the IBP.9 He deplored respondent’s acts of serious misconduct. In particular, he sought the expulsion of respondent from the legal profession for gravely misrepresenting that a foreigner could legally acquire land in the Philippines and for maliciously absconding with complainant’s P3.8 million.10

Respondent failed to file his answer and position paper despite service of notice at his last known address. Neither did he appear in the scheduled mandatory conference. In this connection, the CBD found that respondent abandoned his law practice in Olongapo City after his transaction with complainant and that he did not see it fit to contest the charges against him.11

The CBD ruled that respondent used his position as a lawyer to mislead complainant on the matter of land ownership by a foreigner.12 He even went through the motion of preparing falsified and fictitious contracts, deeds and agreements. And for all these shameless acts, he collected P400,000 from complainant. Worse, he pocketed the P3.8 million and absconded with it.13

The CBD found respondent to be "nothing more than an embezzler" who misused his professional status as an attorney as a tool for deceiving complainant and absconding with complainant’s money.14 Respondent was dishonest and deceitful. He abused the trust and confidence reposed by complainant in him. The CBD recommended the disbarment of respondent.15

The Board of Governors of the IBP adopted the findings and recommendation of the CBD with the modification that respondent was further required to return the amount of P4.2 million to respondent.16

We agree with the IBP.

Sufficiency Of Notice OfThe Disbarment Proceedings

We shall first address a threshold issue: was respondent properly given notice of the disbarment proceedings against him? Yes.

The respondent did not file any answer or position paper, nor did he appear during the scheduled mandatory conference. Respondent in fact abandoned his last known address, his law office in Olongapo City, after he committed the embezzlement.

Respondent should not be allowed to benefit from his disappearing act. He can neither defeat this Court’s jurisdiction over him as a member of the bar nor evade administrative liability by the mere ruse of concealing his whereabouts. Thus, service of the complaint and other orders and processes on respondent’s office was sufficient notice to him.

Indeed, since he himself rendered the service of notice on him impossible, the notice requirement cannot apply to him and he is thus considered to have waived it. The law does not require that the impossible be done. Nemo tenetur ad impossibile.17 The law obliges no one to perform an impossibility. Laws and rules must be interpreted in a way that they are in accordance with logic, common sense, reason and practicality.18

In this connection, lawyers must update their records with the IBP by informing the IBP National Office or their respective chapters19 of any change in office or residential address and other contact details.20 In case such change is not duly updated, service of notice on the office or residential address appearing in the records of the IBP National Office shall constitute sufficient notice to a lawyer for purposes of administrative proceedings against him.

Respondent’s Administrative InfractionsAnd His Liability Therefor

Lawyers, as members of a noble profession, have the duty to promote respect for the law and uphold the integrity of the bar. As men and women entrusted with the law, they must ensure that the law functions to protect liberty and not as an instrument of oppression or deception.

Respondent has been weighed by the exacting standards of the legal profession and has been found wanting.

Respondent committed a serious breach of his oath as a lawyer. He is also guilty of culpable violation of the Code of Professional Responsibility, the code of ethics of the legal profession.

All lawyers take an oath to support the Constitution, to obey the laws and to do no falsehood.21 That oath is neither mere formal ceremony nor hollow words. It is a sacred trust that should be upheld and kept inviolable at all times.22

Lawyers are servants of the law23 and the law is their master. They should not simply obey the laws, they should also inspire respect for and obedience thereto by serving as exemplars worthy of emulation. Indeed, that is the first precept of the Code of Professional Responsibility:

CANON 1 – A LAWYER SHALL UPHOLD THE CONSTITUTION, OBEY THE LAWS OF THE LAND AND PROMOTE RESPECT FOR LAW AND LEGAL PROCESSES.

Section 7, Article XII of the Constitution provides:

SEC. 7. Save in cases of hereditary succession, no private lands shall be transferred or conveyed except to individuals, corporations, or associations qualified to acquire or hold lands of the public domain.

This Court has interpreted this provision, as early as the 1947 case Krivenko v. Register of Deeds,24 to mean that "under the Constitution, aliens may not acquire private or agricultural lands, including residential lands." The provision is a declaration of imperative constitutional policy.25

Respondent, in giving advice that directly contradicted a fundamental constitutional policy, showed disrespect for the Constitution and gross ignorance of basic law. Worse, he prepared spurious documents that he knew were void and illegal.

By making it appear that de Mesa undertook to sell the property to complainant and that de Mesa thereafter sold the property to Gonzales who made the purchase for and in behalf of complainant, he falsified public documents and knowingly violated the Anti-Dummy Law.26

Respondent’s misconduct did not end there. By advising complainant that a foreigner could legally and validly acquire real estate in the Philippines and by assuring complainant that the property was alienable, respondent deliberately foisted a falsehood on his client. He did not give due regard to the trust and confidence reposed in him by complainant. Instead, he deceived complainant and misled him into parting with P400,000 for services that were both illegal and unprofessional. Moreover, by pocketing and misappropriating the P3.8 million given by complainant for the purchase of the property, respondent committed a fraudulent act that was criminal in nature. 1avvphi1

Respondent spun an intricate web of lies. In the process, he committed unethical act after unethical act, wantonly violating laws and professional standards.

For all this, respondent violated not only the lawyer’s oath and Canon 1 of the Code of Professional Responsibility. He also transgressed the following provisions of the Code of Professional Responsibility:

Rule 1.01. – A lawyer shall not engage in unlawful, dishonest, immoral or deceitful conduct.

Rule 1.02. – A lawyer shall not counsel or abet activities aimed at defiance of the law or at lessening confidence in the legal system.

CANON 7 – A LAWYER SHALL AT ALL TIMES UPHOLD THE INTEGRITY AND DIGNITY OF THE LEGAL PROFESSION AND SUPPORT THE ACTIVITIES OF THE INTEGRATED BAR.

CANON 15 – A LAWYER SHALL OBSERVE CANDOR, FAIRNESS AND LOYALTY IN ALL HIS DEALINGS AND TRANSACTIONS WITH HIS CLIENT.

CANON 16 – A LAWYER SHALL HOLD IN TRUST ALL MONEYS AND PROPERTIES OF HIS CLIENT THAT MAY COME INTO HIS POSSESSION.

CANON 17 – A LAWYER OWES FIDELITY TO THE CAUSE OF HIS CLIENT AND HE SHALL BE MINDFUL OF THE TRUST AND CONFIDENCE REPOSED IN HIM. (emphasis supplied)

A lawyer who resorts to nefarious schemes to circumvent the law and uses his legal knowledge to further his selfish ends to the great prejudice of others, poses a clear and present danger to the rule of law and to the legal system. He does not only tarnish the image of the bar and degrade the integrity and dignity of the legal profession, he also betrays everything that the legal profession stands for.

It is respondent and his kind that give lawyering a bad name and make laymen support Dick the Butcher’s call, "Kill all lawyers!"27 A disgrace to their professional brethren, they must be purged from the bar.

WHEREFORE, respondent Atty. Leonuel N. Mas is hereby DISBARRED. The Clerk of Court is directed to immediately strike out the name of respondent from the Roll of Attorneys.

Respondent is hereby ORDERED to return to complainant Keld Stemmerik the total amount of P4.2 million with interest at 12% per annum from the date of promulgation of this resolution until full payment. Respondent is further DIRECTED to submit to the Court proof of payment of the amount within ten days from payment.

The National Bureau of Investigation (NBI) is ORDERED to locate Atty. Mas and file the appropriate criminal charges against him. The NBI is further DIRECTED to regularly report the progress of its action in this case to this Court through the Bar Confidant.

Let copies of this resolution be furnished the Bar Confidant who shall forthwith record it in the personal file of respondent, the Court Administrator who shall inform all courts of the Philippines, the Integrated Bar of the Philippines which shall disseminate copies to all its chapters and members and all administrative and quasi-judicial agencies of the Republic of the Philippines.

SO ORDERED.

Republic of the PhilippinesSUPREME COURT

Manila

SECOND DIVISION

G.R. No. 104599 March 11, 1994

JON DE YSASI III, petitioner, vs.NATIONAL LABOR RELATIONS COMMISSION (FOURTH DIVISION), CEBU CITY, and JON DE YSASI,respondents.

F.B. Santiago, Nalus & Associates for petitioner.

Ismael A. Serfino for private respondent.

REGALADO, J.:

The adage that blood is thicker than water obviously stood for naught in this case, notwithstanding the vinculum of paternity and filiation between the parties. It would indeed have been the better part of reason if herein petitioner and private respondent had reconciled their differences in an extrajudicial atmosphere of familial amity and with the grace of reciprocal concessions. Father and son opted instead for judicial intervention despite the inevitable acrimony and negative publicity. Albeit with distaste, the Court cannot proceed elsewise but to resolve their dispute with the same reasoned detachment accorded any judicial proceeding before it.

The records of this case reveal that petitioner was employed by his father, herein private respondent, as farm administrator of Hacienda Manucao in Hinigaran, Negros Occidental sometime in April, 1980. Prior thereto, he was successively employed as sales manager of Triumph International (Phil.), Inc. and later as operations manager of Top Form Manufacturing (Phil.), Inc. His employment as farm administrator was on a fixed salary, with other allowances covering housing, food, light, power, telephone, gasoline, medical and dental expenses.

As farm administrator, petitioner was responsible for the supervision of daily activities and operations of the sugarcane farm such as land preparation, planting, weeding, fertilizing, harvesting, dealing with third persons in all matters relating to the hacienda and attending to such other tasks as may be assigned to him by private respondent. For this purpose, he lived on the farm, occupying the upper floor of the house there.

Following his marriage on June 6, 1982, petitioner moved to Bacolod City with his wife and commuted to work daily. He suffered various ailments and was hospitalized on two separate occasions in June and August, 1982. In November, 1982, he underwent fistulectomy, or the surgical removal of the fistula, a deep sinuous ulcer. During his recuperation which lasted over four months, he was under the care of Dr. Patricio Tan. In June, 1983, he was confined for acute gastroenteritis and, thereafter, for infectious hepatitis from December, 1983 to January, 1984.

During the entire periods of petitioner's illnesses, private respondent took care of his medical expenses and petitioner continued to receive compensation. However, in April, 1984, without due notice, private respondent ceased to pay the latter's salary. Petitioner made oral and written demands for an explanation for the sudden withholding of his salary from Atty. Apolonio Sumbingco, private respondent's auditor and legal adviser, as well as for the remittance of his salary. Both demands, however, were not acted upon.

Petitioner then filed an action with the National Labor Relations Commission (NLRC, for brevity), Regional Arbitration Branch No. VI, Bacolod City, on October 17, 1984, docketed therein as RAB Case No. 0452-84, against private respondent for illegal dismissal with prayer for reinstatement without loss of seniority rights and payment of full back wages, thirteenth month pay for 1983, consequential, moral and exemplary damages, as well as attorney's fees.

On July 31, 1991, said complaint for illegal dismissal was dismissed by the NLRC,  1 holding that petitioner abandoned his work and that the termination of his employment was for a valid cause, but ordering private respondent to pay petitioner the amount of P5,000.00 as penalty for his failure to serve notice of said termination of employment to the Department of Labor and Employment as required by Batas Pambansa Blg. 130 and consonant with this Court's ruling

in Wenphil Corporation vs. National Labor Relations Commission, et al. 2 On appeal to the Fourth Division of the NLRC, Cebu City, said decision was affirmed in toto. 3

His motion for reconsideration 4 of said decision having been denied for lack of merit, 5 petitioner filed this petition presenting the following issues for resolution: (1) whether or not the petitioner was illegally dismissed; (2) whether or not he is entitled to reinstatement, payment of back wages, thirteenth month pay and other benefits; and (3) whether or not he is entitled to payment of moral and exemplary damages and attorney's fees because of illegal dismissal. The discussion of these issues will necessarily subsume the corollary questions presented by private respondent, such as the exact date when petitioner ceased to function as farm administrator, the character of the pecuniary amounts received by petitioner from private respondent, that is, whether the same are in the nature of salaries or pensions, and whether or not there was abandonment by petitioner of his functions as farm administrator.

In his manifestation dated September 14, 1992, the Solicitor General recommended a modification of the decision of herein public respondent sustaining the findings and conclusions of the Executive Labor Arbiter in RAB Case No. 0452-84, 6 for which reason the NLRC was required to submit its own comment on the petition. In compliance with the Court's resolution of November 16, 1992, 7 NLRC filed its comment on February 12, 1992 largely reiterating its earlier position in support of the findings of the Executive Labor Arbiter. 8

Before proceeding with a discussion of the issues, the observation of the labor arbiter is worth noting:

This case is truly unique. What makes this case unique is the fact that because of the special relationship of the parties and the nature of the action involved, this case could very well go down (in) the annals of the Commission as perhaps the first of its kind. For this case is an action filed by an only son, his father's namesake, the only child and therefore the only heir against his own father.  9

Additionally, the Solicitor General remarked:

. . . After an exhaustive reading of the records, two (2) observations were noted that may justify why this labor case deserves special considerations. First, most of the complaints that petitioner and private respondent had with each other, were personal matters affecting father and son relationship. And secondly, if any of the complaints pertain to their work, they allow their personal relationship to come in the way. 10

I. Petitioner maintains that his dismissal from employment was illegal because of want of just cause therefor and non-observance of the requirements of due process. He also charges the NLRC with grave abuse of discretion in relying upon the findings of the executive labor arbiter who decided the case but did not conduct the hearings thereof.

Private respondent, in refutation, avers that there was abandonment by petitioner of his functions as farm administrator, thereby arming private respondent with a ground to terminate his employment at Hacienda Manucao. It is also contended that it is wrong for petitioner to question the factual findings of the executive labor arbiter and the NLRC as only questions of law may be appealed for resolution by this Court. Furthermore, in seeking the dismissal of the instant petition, private respondent faults herein petitioner for failure to refer to the corresponding pages of the transcripts of stenographic notes, erroneously citing Sections 15(d) and 16(d), Rule 44 (should be Section 16[c] and [d], Rule 46 and Section 1[g], Rule 50) of the Rules of Court, which provide that want of page references to the records is a ground for dismissal of an appeal.

Prefatorily, we take advertence of the provisions of Article 221 of the Labor Code that technical rules of evidence prevailing in courts of law and equity shall not be controlling, and that every and all reasonable means to speedily and objectively ascertain the facts in each case shall be availed of, without regard to technicalities of law or procedure in the interest of due process.

It is settled that it is not procedurally objectionable for the decision in a case to be rendered by a judge, or a labor arbiter for that matter, other than the one who conducted the hearing. The fact that the judge who heard the case was not the judge who penned the decision does not impair the validity of the judgment,  11 provided that he draws up his decision and resolution with due care and makes certain that they truly and accurately reflect conclusions and final dispositions on the bases of the facts of and evidence submitted in the case. 12

Thus, the mere fact that the case was initially assigned to Labor Arbiter Ricardo T. Octavio, who conducted the hearings therein from December 5, 1984 to July 11, 1985, and was later transferred to Executive Labor Arbiter Oscar S. Uy, who eventually decided the case, presents no procedural infirmity, especially considering that there is a presumption of regularity in the performance of a public officer's functions,  13 which petitioner has not successfully rebutted.

We are constrained to heed the underlying policy in the Labor Code relaxing the application of technical rules of procedure in labor cases in the interest of due process, ever mindful of the long-standing legal precept that rules of procedure must be interpreted to help secure, not defeat, justice. For this reason, we cannot indulge private respondent in his tendency to nitpick on trivial technicalities to boost his arguments. The strength of one's position cannot be hinged on mere procedural niceties but on solid bases in law and jurisprudence.

The fundamental guarantees of security of tenure and due process dictate that no worker shall be dismissed except for just and authorized cause provided by law and after due process. 14 Article 282 of the Labor Code enumerates the causes for which an employer may validly terminate an employment, to wit: (a) serious misconduct or willful disobedience by the employee of the lawful orders of his employer or representative in connection with his work; (b) gross and habitual neglect by the employee of his duties; (c) fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized representative; (d) commission of a crime or offense by the employee against the person of his employer or any immediate member of his family or his duly authorized representative; and (e) other causes analogous to the foregoing.

The employer may also terminate the services of any employee due to the installation of labor saving devices, redundancy, retrenchment to prevent losses or the closing or cessation of operation of the establishment or undertaking, unless the closing is for the purpose of circumventing the pertinent provisions of the Labor Code, by serving a written notice on the workers and the Department of Labor and Employment at least one (1) month before the intended date thereof, with due entitlement to the corresponding separation pay rates provided by law.15 Suffering from a disease by reason whereof the continued employment of the employee is prohibited by law or is prejudicial to his and his co-employee's health, is also a ground for termination of his services provided he receives the prescribed separation pay. 16 On the other hand, it is well-settled that abandonment by an employee of his work authorizes the employer to effect the former's dismissal from employment. 17

After a careful review of the records of this case, we find that public respondent gravely erred in affirming the decision of the executive labor arbiter holding that petitioner abandoned his employment and was not illegally dismissed from such employment. For want of substantial bases, in fact or in law, we cannot give the stamp of finality and conclusiveness normally accorded to the factual findings of an administrative agency, such as herein public respondent NLRC, 18 as even decisions of administrative agencies which are declared "final" by law are not exempt from judicial review when so warranted. 19

The following perceptive disquisitions of the Solicitor General on this point deserve acceptance:

It is submitted that the absences of petitioner in his work from October 1982 to December 1982, cannot be construed as abandonment of work because he has a justifiable excuse. Petitioner was suffering from perennial abscess in the peri-anal around the anus and fistula under the medical attention of Dr. Patricio Tan of Riverside Medical Center, Inc., Bacolod City (Tsn, Vol. III, Dr. Tan, February 19, 1986 at 20-44).

This fact (was) duly communicated to private respondent by medical bills sent to Hacienda Manucao (Tsn, Vol. III, Dr. Tan, January 22, 1987 at 49-50).

During the period of his illness and recovery, petitioner stayed in Bacolod City upon the instruction(s) of private respondent to recuperate thereat and to handle only administrative matters of the hacienda in that city. As a manager, petitioner is not really obliged to live and stay 24 hours a day inside Hacienda Manucao.

xxx xxx xxx

After evaluating the evidence within the context of the special circumstances involved and basic human experience, petitioner's illness and strained family relation with respondent Jon de Ysasi II may be considered as justifiable reason for petitioner Jon de Ysasi III's absence from work during the period of October 1982 to December 1982. In any event, such absence does not warrant outright dismissal without notice and hearing.

xxx xxx xxx

The elements of abandonment as a ground for dismissal of an employee are as follows:

(1) failure to report for work or absence without valid or justifiable reason; and (2) clear intention to sever the employer-employee tie (Samson Alcantara, Reviewer in Labor and Social Legislation, 1989 edition, p. 133).

This Honorable Court, in several cases, illustrates what constitute abandonment. In Dagupan Bus Company v. NLRC (191 SCRA 328), the Court rules that for abandonment to arise, there must be a concurrence of the intention to abandon and some overt act from which it may be inferred that the employee has no more interest to work. Similarly, in Nueva Ecija I Electric Cooperative, Inc. v. NLRC(184 SCRA 25), for abandonment to constitute a valid cause for termination of employment, there must be a deliberate, unjustified refusal of the employee to resume his employment. . . Mere absence is not sufficient; it must be accompanied by overt acts unerringly pointing to the fact that the employee simply does not want to work anymore.

There are significant indications in this case, that there is no abandonment. First, petitioner's absence and his decision to leave his residence inside Hacienda Manucao, is justified by his illness

and strained family relations. Second he has some medical certificates to show his frail health. Third, once able to work, petitioner wrote a letter (Annex "J") informing private respondent of his intention to assume again his employment. Last, but not the least, he at once instituted a complaint for illegal dismissal when he realized he was unjustly dismissed. All these are indications that petitioner had no intention to abandon his employment. 20

The records show that the parties herein do not dispute the fact of petitioner's confinement in the hospital for his various afflictions which required medical treatment. Neither can it be denied that private respondent was well aware of petitioner's state of health as the former admittedly shouldered part of the medical and hospital bills and even advised the latter to stay in Bacolod City until he was fit to work again. The disagreement as to whether or not petitioner's ailments were so serious as to necessitate hospitalization and corresponding periods for recuperation is beside the point. The fact remains that on account of said illnesses, the details of which were amply substantiated by the attending physician, 21 and as the records are bereft of any suggestion of malingering on the part of petitioner, there was justifiable cause for petitioner's absence from work. We repeat, it is clear, deliberate and unjustified refusal to resume employment and not mere absence that is required to constitute abandonment as a valid ground for termination of employment. 22

With his position as farm administrator of Hacienda Manucao, petitioner unmistakably may be classified as a managerial employee 23 to whom the law grants an amount of discretion in the discharge of his duties. This is why when petitioner stated that "I assigned myself where I want to go," 24 he was simply being candid about what he could do within the sphere of his authority. His duties as farm administrator did not strictly require him to keep regular hours or to be at the office premises at all times, or to be subjected to specific control from his employer in every aspect of his work. What is essential only is that he runs the farm as efficiently and effectively as possible and, while petitioner may definitely not qualify as a model employee, in this regard he proved to be quite successful, as there was at least a showing of increased production during the time that petitioner was in charge of farm operations.

If, as private respondent contends, he had no control over petitioner during the years 1983 to 1984, this is because that was the period when petitioner was recuperating from illness and on account of which his attendance and direct involvement in farm operations were irregular and minimal, hence the supervision and control exercisable by private respondent as employer was necessarily limited. It goes without saying that the control contemplated refers only to matters relating to his functions as farm administrator and could not extend to petitioner's personal affairs and activities.

While it was taken for granted that for purposes of discharging his duties as farm administrator, petitioner would be staying at the house in the farm, there really was no explicit contractual stipulation (as there was no formal employment contract to begin with) requiring him to stay therein for the duration of his employment or that any transfer of residence would justify the termination of his employment. That petitioner changed his residence should not be taken against him, as this is undeniably among his basic rights, nor can such fact of transfer of residence per se be a valid ground to terminate an employer-employee relationship.

Private respondent, in his pleadings, asserted that as he was yet uncertain of his son's intention of returning to work after his confinement in the hospital, he kept petitioner on the payroll, reported him as an employee of thehacienda for social security purposes, and paid his salaries and benefits with the mandated deductions therefrom until the end of December, 1982. It was only in January, 1983 when he became convinced that petitioner would no longer return to work that he considered the latter to have abandoned his work and, for this reason, no longer listed him as an employee. According to private respondent, whatever amount of money was given to petitioner from that time until April, 1984 was in the nature of a pension or an allowance or mere gratuitous doles from a father to a son, and not salaries as, in fact, none of the usual deductions were made therefrom. It was only in April, 1984 that private respondent completely stopped giving said pension or allowance when he was angered by what he heard petitioner had been saying about sending him to jail.

Private respondent capitalizes on the testimony of one Manolo Gomez taken on oral deposition regarding petitioner's alleged statement to him, "(h)e quemado los (p)ue(n)tes de Manucao" ("I have burned my bridges with Manucao") as expressive of petitioner's intention to abandon his job. In addition to insinuations of sinister motives on the part of petitioner in working at the farm and thereafter abandoning the job upon accomplishment of his objectives, private respondent takes the novel position that the agreement to support his son after the latter abandoned the administration of the farm legally converts the initial abandonment to implied voluntary resignation.  25

As earlier mentioned, petitioner ripostes that private respondent undoubtedly knew about petitioner's illness and even paid for his hospital and other medical bills. The assertion regarding abandonment of work, petitioner argues, is further belied by his continued performance of various services related to the operations of the farm from May to the last quarter of 1983, his persistent inquiries from his father's accountant and legal adviser about the reason why his pension or allowance was discontinued since April, 1984, and his indication of having recovered and his willingness and capability to resume his work at the farm as expressed in a letter dated September 14, 1984.  26 With these, petitioner contends that it is immaterial how the monthly pecuniary amounts are designated, whether as salary, pension or allowance, with or without deductions, as he was entitled thereto in view of his continued service as farm administrator. 27

To stress what was earlier mentioned, in order that a finding of abandonment may justly be made there must be a concurrence of two elements, viz.: (1) the failure to report for work or absence without valid or justifiable reason, and (2) a clear intention to sever the employer-employee relationship, with the second element as the more determinative factor and being manifested by some overt acts. Such intent we find dismally wanting in this case.

It will be recalled that private respondent himself admitted being unsure of his son's plans of returning to work. The absence of petitioner from work since mid-1982, prolonged though it may have been, was not without valid causes of which private respondent had full knowledge. As to what convinced or led him to believe that petitioner was no longer returning to work, private respondent neither explains nor substantiates by any reasonable basis how he arrived at such a conclusion.

Moreover, private respondent's claim of abandonment cannot be given credence as even after January, 1983, when private respondent supposedly "became convinced" that petitioner would no longer work at the farm, the latter continued to perform services directly required by his position as farm administrator. These are duly and correspondingly evidenced by such acts as picking up some farm machinery/equipment from G.A. Machineries, Inc., 28 claiming and paying for additional farm equipment and machinery shipped by said firm from Manila to Bacolod through Zip Forwarders, 29 getting the payment of the additional cash advances for molasses for crop year 1983-1984 from Agrotex Commodities, Inc., 30 and remitting to private respondent through Atty. Sumbingco the sums collected along with receipts for medicine and oil. 31

It will be observed that all of these chores, which petitioner took care of, relate to the normal activities and operations of the farm. True, it is a father's prerogative to request or even command his child to run errands for him. In the present case, however, considering the nature of these transactions, as well as the property values and monetary sums involved, it is unlikely that private respondent would leave the matter to just anyone. Prudence dictates that these matters be handled by someone who can be trusted or at least be held accountable therefor, and who is familiar with the terms, specifications and other details relative thereto, such as an employee. If indeed petitioner had abandoned his job or was considered to have done so by private respondent, it would be awkward, or even out of place, to expect or to oblige petitioner to concern himself with matters relating to or expected of him with respect to what would then be his past and terminated employment. It is hard to imagine what further authority an employer can have over a dismissed employee so as to compel him to continue to perform work-related tasks:

It is also significant that the special power of attorney 32 executed by private respondent on June 26, 1980 in favor of petitioner, specifically stating —

xxx xxx xxx

That I, JON de YSASI, Filipino, of legal age, married, and a resident of Hda. Manucao, hereinafter called and referred to as PRINCIPAL, am a sugarcane planter, BISCOM Mill District, and a duly accredited planter-member of the BINALBAGAN-ISABELA PLANTERS' ASSOCIATION, INC.;

That as such planter-member of BIPA, I have check/checks with BIPA representing payment for all checks and papers to which I am entitled to (sic) as such planter-member;

That I have named, appointed and constituted as by these presents I HEREBY NAME, APPOINT AND CONSTITUTE as my true and lawful ATTORNEY-IN-FACT

JON de YSASI III

whose specimen signature is hereunder affixed, TO GET FOR ME and in my name, place and stead, my check/checks aforementioned, said ATTORNEY-IN-FACT being herein given the power and authority to sign for me and in my name, place and stead, the receipt or receipts or payroll for the said check/checks. PROVIDED, HOWEVER, that my said ATTORNEY-IN-FACT cannot cash the said check/checks, but to turn the same over to me for my proper disposition.

That I HEREBY RATIFY AND CONFIRM the acts of my Attorney-in-Fact in getting the said check/checks and signing the receipts therefor.

That I further request that my said check/checks be made a "CROSSED CHECK".

xxx xxx xxx

remained in force even after petitioner's employment was supposed to have been terminated by reason of abandonment. Furthermore, petitioner's numerous requests for an explanation regarding the stoppage of his salaries and benefits, 33 the issuance of withholding tax reports, 34 as well as correspondence reporting his full recovery and readiness to go back to work, 35 and, specifically, his filing of the complaint for illegal dismissal are hardly the acts of one who has abandoned his work.

We are likewise not impressed by the deposition of Manolo Gomez, as witness for private respondent, ascribing statements to petitioner supposedly indicative of the latter's intention to abandon his work. We perceive the

irregularity in the taking of such deposition without the presence of petitioner's counsel, and the failure of private respondent to serve reasonably advance notice of its taking to said counsel, thereby foreclosing his opportunity tocross-examine the deponent. Private respondent also failed to serve notice thereof on the Regional Arbitration Branch No. VI of the NLRC, as certified to by Administrative Assistant Celestina G. Ovejera of said office.  36 Fair play dictates that at such an important stage of the proceedings, which involves the taking of testimony, both parties must be afforded equal opportunity to examine and cross-examine a witness.

As to the monthly monetary amounts given to petitioner, whether denominated as salary, pension, allowance orex gratia handout, there is no question as to petitioner's entitlement thereto inasmuch as he continued to perform services in his capacity as farm administrator. The change in description of said amounts contained in the pay slips or in the receipts prepared by private respondent cannot be deemed to be determinative of petitioner's employment status in view of the peculiar circumstances above set out. Besides, if such amounts were truly in the nature of allowances given by a parent out of concern for his child's welfare, it is rather unusual that receipts therefor  37 should be necessary and required as if they were ordinary business expenditures.

Neither can we subscribe to private respondent's theory that petitioner's alleged abandonment was converted into an implied voluntary resignation on account of the father's agreement to support his son after the latter abandoned his work. As we have determined that no abandonment took place in this case, the monthly sums received by petitioner, regardless of designation, were in consideration for services rendered emanating from an employer-employee relationship and were not of a character that can qualify them as mere civil support given out of parental duty and solicitude. We are also hard put to imagine how abandonment can be impliedly converted into a voluntary resignation without any positive act on the part of the employee conveying a desire to terminate his employment. The very concept of resignation as a ground for termination by the employee of his employment38 does not square with the elements constitutive of abandonment.

On procedural considerations, petitioner posits that there was a violation by private respondent of the due process requirements under the Labor Code for want of notice and hearing. 39 Private respondent, in opposition, argues that Section 2, Rule XIV, Book V of the Omnibus Rules Implementing the Labor Code applies only to cases where the employer seeks to terminate the services of an employee on any of the grounds enumerated under Article 282 of the Labor Code, but not to the situation obtaining in this case where private respondent did not dismiss petitioner on any ground since it was petitioner who allegedly abandoned his employment. 40

The due process requirements of notice and hearing applicable to labor cases are set out in Rule XIV, Book V of the Omnibus Rules Implementing the Labor Code in this wise:

Sec. 2. Notice of Dismissal. — Any employer who seeks to dismiss a worker shall furnish him a written notice stating the particular acts or omission(s) constituting the grounds for his dismissal. In cases of abandonment of work, notice shall be served at the worker's last known address.

xxx xxx xxx

Sec. 5. Answer and hearing. — The worker may answer the allegations as stated against him in the notice of dismissal within a reasonable period from receipt of such notice. The employer shall afford the worker ample opportunity to be heard and to defend himself with the assistance of his representative, if he so desires.

Sec. 6. Decision to dismiss. — The employer shall immediately notify a worker in writing of a decision to dismiss him stating clearly the reasons therefor.

Sec. 7. Right to contest dismissal. — Any decision taken by the employer shall be without prejudice to the right of the worker to contest the validity or legality of his dismissal by filing a complaint with the Regional Branch of the Commission.

xxx xxx xxx

Sec. 11. Report of dismissal. — The employer shall submit a monthly report to the Regional Office having jurisdiction over the place of work at all dismissals effected by him during the month, specifying therein the names of the dismissed workers, the reasons for their dismissal, the dates of commencement and termination of employment, the positions last held by them and such other information as may be required by the Ministry for policy guidance and statistical purposes.

Private respondent's argument is without merit as there can be no question that petitioner was denied his right to due process since he was never given any notice about his impending dismissal and the grounds therefor, much less a chance to be heard. Even as private respondent controverts the applicability of the mandatory twin requirements of procedural due process in this particular case, he in effect admits that no notice was served by him on petitioner. This fact is corroborated by the certification issued on September 5, 1984 by the Regional Director for Region VI of the Department of Labor that no notice of termination of the employment of petitioner was submitted thereto. 41

Granting arguendo that there was abandonment in this case, it nonetheless cannot be denied that notice still had to be served upon the employee sought to be dismissed, as the second sentence of Section 2 of the pertinent implementing rules explicitly requires service thereof at the employee's last known address, by way of substantial compliance. While it is conceded that it is the employer's prerogative to terminate an employee, especially when there is just cause therefor, the requirements of due process cannot be lightly taken. The law does not countenance the arbitrary exercise of such a power or prerogative when it has the effect of undermining the fundamental guarantee of security of tenure in favor of the employee. 42

On the executive labor arbiter's misplaced reliance on the Wenphil case, the Solicitor General rejoins as follows:

The Labor Arbiter held thus:

While we are in full agreement with the respondent as to his defense of implied resignation and/or abandonment, records somehow showed that he failed to notify the Department of Labor and Employment for his sons' (sic)/complainants' (sic) aba(n)donment as required by BP 130. And for this failure, the other requisite for a valid termination by an employer was not complied with. This however, would not work to invalidate the otherwise (sic) existence of a valid cause for dismissal. The validity of the cause of dismissal must be upheld at all times provided however that sanctions must be imposed on the respondent for his failure to observe the notice on due process requirement. (Wenphil Corp. v. NLRC, G.R. No. 80587). (Decision Labor Arbiter, at 11-12, Annex "C" Petition), . . .

This is thus a very different case from Wenphil Corporation v. NLRC, 170 SCRA 69. In Wenphil, the rule applied to the facts is: once an employee is dismissed for just cause, he must not be rewarded re-employment and backwages for failure of his employer to observe procedural due process. The public policy behind this is that, it may encourage the employee to do even worse and render a mockery of the rules of discipline required to be observed. However, the employer must be penalized for his infraction of due process. In the present case, however, not only was petitioner dismissed without due process, but his dismissal is without just cause. Petitioner did not abandon his employment because he has a justifiable excuse. 43

II. Petitioner avers that the executive labor arbiter erred in disregarding the mandatory provisions of Article 279 of the Labor Code which entitles an illegally dismissed employee to reinstatement and back wages and, instead, affirmed the imposition of the penalty of P5,000.00 on private respondent for violation of the due process requirements. Private respondent, for his part, maintains that there was error in imposing the fine because that penalty contemplates the failure to submit the employer's report on dismissed employees to the DOLE regional office, as required under Section 5 (now, Section 11), Rule XIV of the implementing rules, and not the failure to serve notice upon the employee sought to be dismissed by the employer.

Both the Constitution and the Labor Code enunciate in no uncertain terms the right of every worker to security of tenure. 44 To give teeth to this constitutional and statutory mandates, the Labor Code spells out the relief available to an employee in case of its denial:

Art. 279. Security of Tenure. — In cases of regular employment, the employer shall not terminate the services of an employee except for a just cause or when authorized by this Title. An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages, inclusive of allowances, and to his other benefits of their monetary equivalent computed from the time his compensation was withheld from him up to the time of actual reinstatement.

Clearly, therefore, an employee is entitled to reinstatement with full back wages in the absence of just cause for dismissal. 45 The Court, however, on numerous occasions has tempered the rigid application of said provision of the Labor Code, recognizing that in some cases certain events may have transpired as would militate against the practicability of granting the relief thereunder provided, and declares that where there are strained relations between the employer and the employee, payment of back wages and severance pay may be awarded instead of reinstatement,  46 and more particularly when managerial employees are concerned. 47 Thus, where reinstatement is no longer possible, it is therefore appropriate that the dismissed employee be given his fair and just share of what the law accords him.  48

We note with favor and give our imprimatur to the Solicitor General's ratiocination, to wit:

As a general rule, an employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and to his backwages computed from the time his compensation was withheld up to the time of his reinstatement. (Morales vs. NLRC, 188 SCRA 295). But in Pacific Cement Company, Inc. vs. NLRC, 173 SCRA 192, this Honorable Court held that when it comes to reinstatement, differences should be made between managers and the ordinary workingmen. The Court concluded that a company which no longer trusts its managers cannot operate freely in a competitive and profitable manner. The NLRC should know the difference between managers and ordinary workingmen. It cannot imprudently order the reinstatement of

managers with the same ease and liberality as that of rank and file workers who had been terminated. Similarly, a reinstatement may not be appropriate or feasible in case of antipathy or antagonism between the parties (Morales, vs. NLRC, 188 SCRA 295).

In the present case, it is submitted that petitioner should not be reinstated as farm administrator of Hacienda Manucao. The present relationship of petitioner and private respondent (is) so strained that a harmonious and peaceful employee-employer relationship is hardly possible.  49

III. Finally, petitioner insists on an award of moral damages, arguing that his dismissal from employment was attended by bad faith or fraud, or constituted oppression, or was contrary to morals, good customs or public policy. He further prays for exemplary damages to serve as a deterrent against similar acts of unjust dismissal by other employers.

Moral damages, under Article 2217 of the Civil Code, may be awarded to compensate one for diverse injuries such as mental anguish, besmirched reputation, wounded feelings, and social humiliation, provided that such injuries spring from a wrongful act or omission of the defendant which was the proximate cause thereof.  50Exemplary damages, under Article 2229, are imposed by way of example or correction for the public good, in addition to moral, temperate, liquidated or compensatory damages. They are not recoverable as a matter of right, it being left to the court to decide whether or not they should be adjudicated. 51

We are well aware of the Court's rulings in a number of cases in the past allowing recovery of moral damages where the dismissal of the employee was attended by bad faith or fraud, or constituted an act oppressive to labor, or was done in a manner contrary to morals, good customs or public policy, 52 and of exemplary damages if the dismissal was effected in a wanton, oppressive or malevolent manner. 53 We do not feel, however, that an award of the damages prayed for in this petition would be proper even if, seemingly, the facts of the case justify their allowance. In the aforestated cases of illegal dismissal where moral and exemplary damages were awarded, the dismissed employees were genuinely without fault and were undoubtedly victims of the erring employers' capricious exercise of power.

In the present case, we find that both petitioner and private respondent can equally be faulted for fanning the flames which gave rise to and ultimately aggravated this controversy, instead of sincerely negotiating a peaceful settlement of their disparate claims. The records reveal how their actuations seethed with mutual antagonism and the undeniable enmity between them negates the likelihood that either of them acted in good faith. It is apparent that each one has a cause for damages against the other. For this reason, we hold that no moral or exemplary damages can rightfully be awarded to petitioner.

On this score, we are once again persuaded by the validity of the following recommendation of the Solicitor General:

The Labor Arbiter's decision in RAB Case No. 0452-84 should be modified. There was no voluntary abandonment in this case because petitioner has a justifiable excuse for his absence, or such absence does not warrant outright dismissal without notice and hearing. Private respondent, therefore, is guilty of illegal dismissal. He should be ordered to pay backwages for a period not exceeding three years from date of dismissal. And in lieu of reinstatement, petitioner may be paid separation pay equivalent to one (1) month('s) salary for every year of service, a fraction of six months being considered as one (1) year in accordance with recent jurisprudence (Tan, Jr. vs. NLRC, 183 SCRA 651). But all claims for damages should be dismissed, for both parties are equally at fault. 54

The conduct of the respective counsel of the parties, as revealed by the records, sorely disappoints the Court and invites reproof. Both counsel may well be reminded that their ethical duty as lawyers to represent their clients with zeal 55 goes beyond merely presenting their clients' respective causes in court. It is just as much their responsibility, if not more importantly, to exert all reasonable efforts to smooth over legal conflicts, preferably out of court and especially in consideration of the direct and immediate consanguineous ties between their clients. Once again, we reiterate that the useful function of a lawyer is not only to conduct litigation but to avoid it whenever possible by advising settlement or withholding suit. He is often called upon less for dramatic forensic exploits than for wise counsel in every phase of life. He should be a mediator for concord and a conciliator for compromise, rather than a virtuoso of technicality in the conduct of litigation. 56

Rule 1.04 of the Code of Professional Responsibility explicitly provides that "(a) lawyer shall encourage his client to avoid, end or settle the controversy if it will admit of a fair settlement." On this point, we find that both counsel herein fell short of what was expected of them, despite their avowed duties as officers of the court. The records do not show that they took pains to initiate steps geared toward effecting a rapprochement between their clients. On the contrary, their acerbic and protracted exchanges could not but have exacerbated the situation even as they may have found favor in the equally hostile eyes of their respective clients.

In the same manner, we find that the labor arbiter who handled this regrettable case has been less than faithful to the letter and spirit of the Labor Code mandating that a labor arbiter "shall exert all efforts towards the amicable settlement of a labor dispute within his jurisdiction." 57 If he ever did so, or at least entertained the thought, the copious records of the proceedings in this controversy are barren of any reflection of the same.

One final word. This is one decision we do not particularly relish having been obliged to make. The task of resolving cases involving disputes among members of a family leaves a bad taste in the mouth and an aversion in the mind, for no truly meaningful and enduring resolution is really achieved in such situations. While we are convinced that we have adjudicated the legal issues herein squarely on the bases of law and jurisprudence, sanssentimentality, we are saddened by the thought that we may have failed to bring about the reconciliation of the father and son who figured as parties to this dispute, and that our adherence here to law and duty may unwittingly contribute to the breaking, instead of the strengthening, of familial bonds. In fine, neither of the parties herein actually emerges victorious. It is the Court's earnest hope, therefore, that with the impartial exposition and extended explanation of their respective rights in this decision, the parties may eventually see their way clear to an ultimate resolution of their differences on more convivial terms.

WHEREFORE, the decision of respondent National Labor Relations Commission is hereby SET ASIDE. Private respondent is ORDERED to pay petitioner back wages for a period not exceeding three (3) years, without qualification or deduction, 58 and, in lieu of reinstatement, separation pay equivalent to one (1) month for every year of service, a fraction of six (6) months being considered as one (1) whole year.

SO ORDERED.

Republic of the PhilippinesSUPREME COURT

Manila

EN BANC

A.C. No. 2797             October 4, 2002

ROSAURA P. CORDON, complainant, vs.JESUS BALICANTA, respondent.

R E S O L U T I O N

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 respondent’s comment to the complaint and complainant’s 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 BCC’s 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 corporation’s 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, complainant’s 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 respondent’s refusal and neglect, failed to submit the corporation’s 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 complainant’s 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 report1 dated July 1, 1999, recommended respondent’s 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 Complainant’s Position Paper, complainant’s subscription consists of 55% of the outstanding capital stock while her daughter’s consists of 18%, giving them a total of 73%. Respondent’s holdings consist of 24% while three other incorporators, Rosauro L. Alvarez, Vicente T. Mañalac 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.

"x x x           x x x           x x x

"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.

"x x x           x x x           x x x

"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. Respondent’s 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 Mañalac.

"Said Annex does not show who was elected Treasurer.

"Respondent’s 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. Bucoy’s 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 respondent’s own Annexes ‘G’ to ‘G-1’ would show, then complainant’s 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 Mañalac (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 respondent’s annex ‘G’ which was purportedly the organizational meeting of the stockholders.

"L. Also, Annex ‘J’ of respondent’s 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 respondent’s 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. Respondent’s 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 corporation’s inability to comply with the Land Bank’s 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 corporation’s 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 complainant’s 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 corporation’s 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 respondent’s 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 complainant’s voting trust (annex ‘D’ of respondent’s 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.

"Respondent’s 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 respondent’s 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 respondent’s 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 becausesince 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 respondent’s 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 respondent’s 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 respondent’s 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 complainant’s signature had to be accompanied by her thumb mark. Furthermore, complainant’s signature appears unstable and shaky. This Office is thus persuaded to believe complainant’s 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 complainant’s position paper, where respondent ordered Police Officer Constantino ‘to allow Atty. Linda Lim and Rosemarie Jaldon to talk to Tita Rosing.’

"The complainant’s 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 complainant’s 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.’

"Respondent’s acts gravely diminish the public’s 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 respondent’s 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, respondent’s 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 Cunanan’s recommendation for respondent’s 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 Cunanan’s 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

Respondent’s motion alleging that Attys. Antonio Cope and Rita Linda Jimeno drafted Commissioner Cunanan’s 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 resolution4 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 respondent’s fraudulent acts in the very same documents he presented to exonerate himself. It also took note of respondent’s contradictory and irreconcilable statements in the pleadings and position papers he submitted. However, it regarded the penalty of disbarment as too severe for respondent’s 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 respondent’s 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 corporation’s 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 complainant’s 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 respondent’s 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, respondent’s 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, respondent’s 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 respondent’s 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 one’s 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 client’s 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 respondent’s 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.