Republic of the Philippines

SUPREME COURT

Manila

 

THIRD DIVISION

 

 

SPOUSES ANTONIO F. ALGURA G.R. No. 150135

and LORENCITA S.J. ALGURA,

Petitioners,

Present:

- versus - QUISUMBING, J., Chairperson,

CARPIO,

CARPIO MORALES,

THE LOCAL GOVERNMENT TINGA, and

UNIT OF THE CITY OF NAGA, VELASCO, JR., JJ.

ATTY. MANUEL TEOXON,

ENGR. LEON PALMIANO,

NATHAN SERGIO and Promulgated:

BENJAMIN NAVARRO, SR.,

Respondents. October 30, 2006

 

x-----------------------------------------------------------------------------------------x

 

 

D E C I S I O N

VELASCO, JR., J.:

 

Anyone who has ever struggled with poverty

knows how extremely expensive it is to be poor.

 

–– James Baldwin

 

The Constitution affords litigants—moneyed or poor—equal access to the

courts; moreover, it specifically provides that poverty shall not bar any person

from having access to the courts.1[1] Accordingly, laws and rules must be

formulated, interpreted, and implemented pursuant to the intent and spirit of this

constitutional provision. As such, filing fees, though one of the essential elements

in court procedures, should not be an obstacle to poor litigants’ opportunity to seek

redress for their grievances before the courts.

The Case

1

 

This Petition for Review on Certiorari seeks the annulment of the September

11, 2001 Order of the Regional Trial Court (RTC) of Naga City, Branch 27, in

Civil Case No. 99-4403 entitled Spouses Antonio F. Algura and Lorencita S.J.

Algura v. The Local Government Unit of the City of Naga, et al., dismissing the

case for failure of petitioners Algura spouses to pay the required filing fees.2[2]

Since the instant petition involves only a question of law based on facts established

from the pleadings and documents submitted by the parties,3[3] the Court gives due

course to the instant petition sanctioned under Section 2(c) of Rule 41 on Appeal

from the RTCs, and governed by Rule 45 of the 1997 Rules of Civil Procedure.

 

The Facts

 

On September 1, 1999, spouses Antonio F. Algura and Lorencita S.J. Algura

filed a Verified Complaint dated August 30, 19994[4] for damages against the Naga

City Government and its officers, arising from the alleged illegal demolition of

their residence and boarding house and for payment of lost income derived from

fees paid by their boarders amounting to PhP 7,000.00 monthly.

 

2

3

4

Simultaneously, petitioners filed an Ex-Parte Motion to Litigate as Indigent

Litigants,5[5] to which petitioner Antonio Algura’s Pay Slip No. 2457360 (Annex

“A” of motion) was appended, showing a gross monthly income of Ten Thousand

Four Hundred Seventy Four Pesos (PhP 10,474.00) and a net pay of Three

Thousand Six Hundred Sixteen Pesos and Ninety Nine Centavos (PhP 3,616.99)

for [the month of] July 1999.6[6] Also attached as Annex “B” to the motion was a

July 14, 1999 Certification7[7] issued by the Office of the City Assessor of Naga

City, which stated that petitioners had no property declared in their name for

taxation purposes.

 

Finding that petitioners’ motion to litigate as indigent litigants was

meritorious, Executive Judge Jose T. Atienza of the Naga City RTC, in the

September 1, 1999 Order,8[8] granted petitioners’ plea for exemption from filing

fees.

 

Meanwhile, as a result of respondent Naga City Government’s demolition of

a portion of petitioners’ house, the Alguras allegedly lost a monthly income of PhP

7,000.00 from their boarders’ rentals. With the loss of the rentals, the meager

income from Lorencita Algura’s sari-sari store and Antonio Algura’s small take

home pay became insufficient for the expenses of the Algura spouses and their six

5

6

7

8

(6) children for their basic needs including food, bills, clothes, and schooling,

among others.

 

On October 13, 1999, respondents filed an Answer with Counterclaim dated

October 10, 1999,9[9] arguing that the defenses of the petitioners in the complaint

had no cause of action, the spouses’ boarding house blocked the road right of way,

and said structure was a nuisance per se.

 

Praying that the counterclaim of defendants (respondents) be dismissed,

petitioners then filed their Reply with Ex-Parte Request for a Pre-Trial

Setting10[10] before the Naga City RTC on October 19, 1999. On February 3,

2000, a pre-trial was held wherein respondents asked for five (5) days within

which to file a Motion to Disqualify Petitioners as Indigent Litigants.

On March 13, 2000, respondents filed a Motion to Disqualify the Plaintiffs

for Non-Payment of Filing Fees dated March 10, 2000.11[11] They asserted that in

addition to the more than PhP 3,000.00 net income of petitioner Antonio Algura,

who is a member of the Philippine National Police, spouse Lorencita Algura also

had a mini-store and a computer shop on the ground floor of their residence along

Bayawas St., Sta. Cruz, Naga City. Also, respondents claimed that petitioners’

second floor was used as their residence and as a boarding house, from which they

earned more than PhP 3,000.00 a month. In addition, it was claimed that

9

10

11

petitioners derived additional income from their computer shop patronized by

students and from several boarders who paid rentals to them. Hence, respondents

concluded that petitioners were not indigent litigants.

 

On March 28, 2000, petitioners subsequently interposed their Opposition to

the Motion12[12] to respondents’ motion to disqualify them for non-payment of

filing fees.

 

On April 14, 2000, the Naga City RTC issued an Order disqualifying

petitioners as indigent litigants on the ground that they failed to substantiate their

claim for exemption from payment of legal fees and to comply with the third

paragraph of Rule 141, Section 18 of the Revised Rules of Court—directing them

to pay the requisite filing fees.13[13]

 

On April 28, 2000, petitioners filed a Motion for Reconsideration of the

April 14, 2000 Order. On May 8, 2000, respondents then filed their

Comment/Objections to petitioner’s Motion for Reconsideration.

 

12

13

On May 5, 2000, the trial court issued an Order14[14] giving petitioners the

opportunity to comply with the requisites laid down in Section 18, Rule 141, for

them to qualify as indigent litigants.

 

On May 13, 2000, petitioners submitted their Compliance15[15] attaching the

affidavits of petitioner Lorencita Algura16[16] and Erlinda Bangate,17[17] to

comply with the requirements of then Rule 141, Section 18 of the Rules of Court

and in support of their claim to be declared as indigent litigants.

 

In her May 13, 2000 Affidavit, petitioner Lorencita Algura claimed that the

demolition of their small dwelling deprived her of a monthly income amounting to

PhP 7,000.00. She, her husband, and their six (6) minor children had to rely

mainly on her husband’s salary as a policeman which provided them a monthly

amount of PhP 3,500.00, more or less. Also, they did not own any real property as

certified by the assessor’s office of Naga City. More so, according to her, the

meager net income from her small sari-sari store and the rentals of some boarders,

plus the salary of her husband, were not enough to pay the family’s basic

necessities.

 

14

15

16

17

To buttress their position as qualified indigent litigants, petitioners also

submitted the affidavit of Erlinda Bangate, who attested under oath, that she

personally knew spouses Antonio Algura and Lorencita Algura, who were her

neighbors; that they derived substantial income from their boarders; that they lost

said income from their boarders’ rentals when the Local Government Unit of the

City of Naga, through its officers, demolished part of their house because from that

time, only a few boarders could be accommodated; that the income from the small

store, the boarders, and the meager salary of Antonio Algura were insufficient for

their basic necessities like food and clothing, considering that the Algura spouses

had six (6) children; and that she knew that petitioners did not own any real

property.

 

Thereafter, Naga City RTC Acting Presiding Judge Andres B. Barsaga, Jr.

issued his July 17, 200018[18] Order denying the petitioners’ Motion for

Reconsideration.

 

Judge Barsaga ratiocinated that the pay slip of Antonio F. Algura showed

that the “GROSS INCOME or TOTAL EARNINGS of plaintiff Algura [was]

₧10,474.00 which amount [was] over and above the amount mentioned in the

first paragraph of Rule 141, Section 18 for pauper litigants residing outside Metro

Manila.”19[19] Said rule provides that the gross income of the litigant should not

exceed PhP 3,000.00 a month and shall not own real estate with an assessed value

of PhP 50,000.00. The trial court found that, in Lorencita S.J. Algura’s May 13, 18

19

2000 Affidavit, nowhere was it stated that she and her immediate family did not

earn a gross income of PhP 3,000.00.

The Issue

 

Unconvinced of the said ruling, the Alguras instituted the instant petition

raising a solitary issue for the consideration of the Court: whether petitioners

should be considered as indigent litigants who qualify for exemption from paying

filing fees.

 

The Ruling of the Court

 

The petition is meritorious.

 

A review of the history of the Rules of Court on suits in forma pauperis

(pauper litigant) is necessary before the Court rules on the issue of the Algura

spouses’ claim to exemption from paying filing fees.

 

When the Rules of Court took effect on January 1, 1964, the rule on pauper

litigants was found in Rule 3, Section 22 which provided that:

 

SECTION 22. Pauper litigant.—Any court may authorize a litigant to prosecute his action or defense as a pauper upon a proper showing that he has no means to that effect by affidavits, certificate of the corresponding provincial, city or municipal treasurer, or otherwise. Such authority[,] once given[,] shall include an exemption from payment of legal fees and from filing appeal bond, printed record and printed brief. The legal fees shall be a lien to any judgment rendered in the case [favorable] to the pauper, unless the court otherwise provides.  

From the same Rules of Court, Rule 141 on Legal Fees, on the other hand,

did not contain any provision on pauper litigants.

 

On July 19, 1984, the Court, in Administrative Matter No. 83-6-389-0

(formerly G.R. No. 64274), approved the recommendation of the Committee on the

Revision of Rates and Charges of Court Fees, through its Chairman, then Justice

Felix V. Makasiar, to revise the fees in Rule 141 of the Rules of Court to generate

funds to effectively cover administrative costs for services rendered by the courts.20

[20] A provision on pauper litigants was inserted which reads:

 

SECTION 16. Pauper-litigants exempt from payment of court fees.—Pauper-litigants include wage earners whose gross income do not exceed P2,000.00 a month or P24,000.00 a year for those residing in Metro Manila, and P1,500.00 a month or P18,000.00 a year for those residing outside Metro Manila, or those who do not own real property with an assessed value of not more than P24,000.00, or not more than P18,000.00 as the case may be.

20

Such exemption shall include exemption from payment of fees for filing appeal bond, printed record and printed brief. 

The legal fees shall be a lien on the monetary or property judgment rendered in favor of the pauper-litigant. 

To be entitled to the exemption herein provided, the pauper-litigant shall execute an affidavit that he does not earn the gross income abovementioned, nor own any real property with the assessed value afore-mentioned [sic], supported by a certification to that effect by the provincial, city or town assessor or treasurer. 

 

When the Rules of Court on Civil Procedure were amended by the 1997

Rules of Civil Procedure (inclusive of Rules 1 to 71) in Supreme Court Resolution

in Bar Matter No. 803 dated April 8, 1997, which became effective on July 1,

1997, Rule 3, Section 22 of the Revised Rules of Court was superseded by Rule 3,

Section 21 of said 1997 Rules of Civil Procedure, as follows:

 SECTION 21. Indigent party.—A party may be authorized to litigate

his action, claim or defense as an indigent if the court, upon an ex parte application and hearing, is satisfied that the party is one who has no money or property sufficient and available for food, shelter and basic necessities for himself and his family. 

Such authority shall include an exemption from payment of docket and other lawful fees, and of transcripts of stenographic notes which the court may order to be furnished him. The amount of the docket and other lawful fees which the indigent was exempted from paying shall be a lien on any judgment rendered in the case favorable to the indigent, unless the court otherwise provides. 

Any adverse party may contest the grant of such authority at any time before judgment is rendered by the trial court. If the court should determine after hearing that the party declared as an indigent is in fact a person with sufficient income or property, the proper docket and other lawful fees shall be assessed and collected by the clerk of court. If payment is not made within the time fixed by the court, execution shall issue for the payment thereof, without prejudice to such other sanctions as the court may impose.

  

At the time the Rules on Civil Procedure were amended by the Court in Bar

Matter No. 803, however, there was no amendment made on Rule 141, Section 16

on pauper litigants.

On March 1, 2000, Rule 141 on Legal Fees was amended by the Court in

A.M. No. 00-2-01-SC, whereby certain fees were increased or adjusted. In this

Resolution, the Court amended Section 16 of Rule 141, making it Section 18,

which now reads:

 

SECTION 18. Pauper-litigants exempt from payment of legal fees.—Pauper litigants (a) whose gross income and that of their immediate family do not exceed four thousand (P4,000.00) pesos a month if residing in Metro Manila, and three thousand (P3,000.00) pesos a month if residing outside Metro Manila, and (b) who do not own real property with an assessed value of more than fifty thousand (P50,000.00) pesos shall be exempt from the payment of legal fees. 

The legal fees shall be a lien on any judgment rendered in the case favorably to the pauper litigant, unless the court otherwise provides. 

To be entitled to the exemption herein provided, the litigant shall execute an affidavit that he and his immediate family do not earn the gross income abovementioned, nor do they own any real property with the assessed value aforementioned, supported by an affidavit of a disinterested person attesting to the truth of the litigant’s affidavit. 

Any falsity in the affidavit of a litigant or disinterested person shall be sufficient cause to strike out the pleading of that party, without prejudice to whatever criminal liability may have been incurred. 

 

It can be readily seen that the rule on pauper litigants was inserted in Rule

141 without revoking or amending Section 21 of Rule 3, which provides for the

exemption of pauper litigants from payment of filing fees. Thus, on March 1, 2000,

there were two existing rules on pauper litigants; namely, Rule 3, Section 21

and Rule 141, Section 18.

 

On August 16, 2004, Section 18 of Rule 141 was further amended in

Administrative Matter No. 04-2-04-SC, which became effective on the same date.

It then became Section 19 of Rule 141, to wit:

 

  

SEC. 19. Indigent litigants exempt from payment of legal fees.–INDIGENT LITIGANTS (A) WHOSE GROSS INCOME AND THAT OF THEIR IMMEDIATE FAMILY DO NOT EXCEED AN AMOUNT DOUBLE THE MONTHLY MINIMUM WAGE OF AN EMPLOYEE AND (B) WHO DO NOT OWN REAL PROPERTY WITH A FAIR MARKET VALUE AS STATED IN THE CURRENT TAX DECLARATION OF MORE THAN THREE HUNDRED THOUSAND (P300,000.00) PESOS SHALL BE EXEMPT FROM PAYMENT OF LEGAL FEES. 

The legal fees shall be a lien on any judgment rendered in the case favorable to the indigent litigant unless the court otherwise provides. 

To be entitled to the exemption herein provided, the litigant shall execute an affidavit that he and his immediate family do not earn a gross income abovementioned, and they do not own any real property with the fair value aforementioned, supported by an affidavit of a disinterested person attesting to the truth of the litigant’s affidavit. The current tax declaration, if any, shall be attached to the litigant’s affidavit. 

Any falsity in the affidavit of litigant or disinterested person shall be sufficient cause to dismiss the complaint or action or to strike out the

pleading of that party, without prejudice to whatever criminal liability may have been incurred. (Emphasis supplied.)  

Amendments to Rule 141 (including the amendment to Rule 141, Section

18) were made to implement RA 9227 which brought about new increases in filing

fees. Specifically, in the August 16, 2004 amendment, the ceiling for the gross

income of litigants applying for exemption and that of their immediate family was

increased from PhP 4,000.00 a month in Metro Manila and PhP 3,000.00 a month

outside Metro Manila, to double the monthly minimum wage of an employee; and

the maximum value of the property owned by the applicant was increased from an

assessed value of PhP 50,000.00 to a maximum market value of PhP 300,000.00,

to be able to accommodate more indigent litigants and promote easier access to

justice by the poor and the marginalized in the wake of these new increases in

filing fees.

 

Even if there was an amendment to Rule 141 on August 16, 2004, there was

still no amendment or recall of Rule 3, Section 21 on indigent litigants.

 

With this historical backdrop, let us now move on to the sole issue—whether

petitioners are exempt from the payment of filing fees.

 

It is undisputed that the Complaint (Civil Case No. 99-4403) was filed on

September 1, 1999. However, the Naga City RTC, in its April 14, 2000 and July

17, 2000 Orders, incorrectly applied Rule 141, Section 18 on Legal Fees when

the applicable rules at that time were Rule 3, Section 21 on Indigent Party which

took effect on July 1, 1997 and Rule 141, Section 16 on Pauper Litigants which

became effective on July 19, 1984 up to February 28, 2000.

 

The old Section 16, Rule 141 requires applicants to file an ex-parte motion

to litigate as a pauper litigant by submitting an affidavit that they do not have a

gross income of PhP 2,000.00 a month or PhP 24,000.00 a year for those residing

in Metro Manila and PhP 1,500.00 a month or PhP 18,000.00 a year for those

residing outside Metro Manila or those who do not own real property with an

assessed value of not more than PhP 24,000.00 or not more than PhP 18,000.00 as

the case may be. Thus, there are two requirements: a) income requirement—the

applicants should not have a gross monthly income of more than PhP 1,500.00, and

b) property requirement––they should not own property with an assessed value of

not more than PhP 18,000.00.

 

In the case at bar, petitioners Alguras submitted the Affidavits of petitioner

Lorencita Algura and neighbor Erlinda Bangate, the pay slip of petitioner Antonio

F. Algura showing a gross monthly income of PhP 10,474.00,21[21] and a

Certification of the Naga City assessor stating that petitioners do not have property

declared in their names for taxation.22[22] Undoubtedly, petitioners do not own

real property as shown by the Certification of the Naga City assessor and so the

property requirement is met. However with respect to the income requirement, it is 21

22

clear that the gross monthly income of PhP 10,474.00 of petitioner Antonio F.

Algura and the PhP 3,000.00 income of Lorencita Algura when combined, were

above the PhP 1,500.00 monthly income threshold prescribed by then Rule 141,

Section 16 and therefore, the income requirement was not satisfied. The trial court

was therefore correct in disqualifying petitioners Alguras as indigent litigants

although the court should have applied Rule 141, Section 16 which was in effect at

the time of the filing of the application on September 1, 1999. Even if Rule 141,

Section 18 (which superseded Rule 141, Section 16 on March 1, 2000) were

applied, still the application could not have been granted as the combined PhP

13,474.00 income of petitioners was beyond the PhP 3,000.00 monthly income

threshold.

 

Unrelenting, petitioners however argue in their Motion for Reconsideration

of the April 14, 2000 Order disqualifying them as indigent litigants23[23] that the

rules have been relaxed by relying on Rule 3, Section 21 of the 1997 Rules of Civil

procedure which authorizes parties to litigate their action as indigents if the court is

satisfied that the party is “one who has no money or property sufficient and

available for food, shelter and basic necessities for himself and his family.” The

trial court did not give credence to this view of petitioners and simply applied Rule

141 but ignored Rule 3, Section 21 on Indigent Party.

 

The position of petitioners on the need to use Rule 3, Section 21 on their

application to litigate as indigent litigants brings to the fore the issue on whether a

trial court has to apply both Rule 141, Section 16 and Rule 3, Section 21 on such 23

applications or should the court apply only Rule 141, Section 16 and discard Rule

3, Section 21 as having been superseded by Rule 141, Section 16 on Legal Fees.

 

The Court rules that Rule 3, Section 21 and Rule 141, Section 16 (later

amended as Rule 141, Section 18 on March 1, 2000 and subsequently amended by

Rule 141, Section 19 on August 16, 2003, which is now the present rule) are still

valid and enforceable rules on indigent litigants.

 

For one, the history of the two seemingly conflicting rules readily reveals

that it was not the intent of the Court to consider the old Section 22 of Rule 3,

which took effect on January 1, 1994 to have been amended and superseded by

Rule 141, Section 16, which took effect on July 19, 1984 through A.M. No. 83-6-

389-0. If that is the case, then the Supreme Court, upon the recommendation of the

Committee on the Revision on Rules, could have already deleted Section 22 from

Rule 3 when it amended Rules 1 to 71 and approved the 1997 Rules of Civil

Procedure, which took effect on July 1, 1997. The fact that Section 22 which

became Rule 3, Section 21 on indigent litigant was retained in the rules of

procedure, even elaborating on the meaning of an indigent party, and was also

strengthened by the addition of a third paragraph on the right to contest the grant of

authority to litigate only goes to show that there was no intent at all to consider

said rule as expunged from the 1997 Rules of Civil Procedure.

 

Furthermore, Rule 141 on indigent litigants was amended twice: first on

March 1, 2000 and the second on August 16, 2004; and yet, despite these two

amendments, there was no attempt to delete Section 21 from said Rule 3. This

clearly evinces the desire of the Court to maintain the two (2) rules on indigent

litigants to cover applications to litigate as an indigent litigant.

 

It may be argued that Rule 3, Section 21 has been impliedly repealed by the

recent 2000 and 2004 amendments to Rule 141 on legal fees. This position is

bereft of merit. Implied repeals are frowned upon unless the intent of the framers

of the rules is unequivocal. It has been consistently ruled that:

 

(r)epeals by implication are not favored, and will not be decreed, unless it is manifest that the legislature so intended. As laws are presumed to be passed with deliberation and with full knowledge of all existing ones on the subject, it is but reasonable to conclude that in passing a statute[,] it was not intended to interfere with or abrogate any former law relating to same matter, unless the repugnancy between the two is not only irreconcilable, but also clear and convincing, and flowing necessarily from the language used, unless the later act fully embraces the subject matter of the earlier, or unless the reason for the earlier act is beyond peradventure removed. Hence, every effort must be used to make all acts stand and if, by any reasonable construction they can be reconciled, the later act will not operate as a repeal of the earlier.24[24] (Emphasis supplied). 

 

Instead of declaring that Rule 3, Section 21 has been superseded and

impliedly amended by Section 18 and later Section 19 of Rule 141, the Court finds

that the two rules can and should be harmonized.

24

 

The Court opts to reconcile Rule 3, Section 21 and Rule 141, Section 19

because it is a settled principle that when conflicts are seen between two

provisions, all efforts must be made to harmonize them. Hence, “every statute [or

rule] must be so construed and harmonized with other statutes [or rules] as to form

a uniform system of jurisprudence.”25[25]

 

In Manila Jockey Club, Inc. v. Court of Appeals, this Court enunciated that

in the interpretation of seemingly conflicting laws, efforts must be made to first

harmonize them. This Court thus ruled:

 

Consequently, every statute should be construed in such a way that will harmonize it with existing laws. This principle is expressed in the legal maxim ‘interpretare et concordare leges legibus est optimus interpretandi,’ that is, to interpret and to do it in such a way as to harmonize laws with laws is the best method of interpretation.26[26] 

 

In the light of the foregoing considerations, therefore, the two (2) rules can

stand together and are compatible with each other. When an application to litigate

as an indigent litigant is filed, the court shall scrutinize the affidavits and

supporting documents submitted by the applicant to determine if the applicant

complies with the income and property standards prescribed in the present Section

25

26

19 of Rule 141—that is, the applicant’s gross income and that of the applicant’s

immediate family do not exceed an amount double the monthly minimum wage of

an employee; and the applicant does not own real property with a fair market value

of more than Three Hundred Thousand Pesos (PhP 300,000.00). If the trial court

finds that the applicant meets the income and property requirements, the authority

to litigate as indigent litigant is automatically granted and the grant is a matter of

right.

 

However, if the trial court finds that one or both requirements have not been

met, then it would set a hearing to enable the applicant to prove that the applicant

has “no money or property sufficient and available for food, shelter and basic

necessities for himself and his family.” In that hearing, the adverse party may

adduce countervailing evidence to disprove the evidence presented by the

applicant; after which the trial court will rule on the application depending on the

evidence adduced. In addition, Section 21 of Rule 3 also provides that the adverse

party may later still contest the grant of such authority at any time before judgment

is rendered by the trial court, possibly based on newly discovered evidence not

obtained at the time the application was heard. If the court determines after

hearing, that the party declared as an indigent is in fact a person with sufficient

income or property, the proper docket and other lawful fees shall be assessed and

collected by the clerk of court. If payment is not made within the time fixed by the

court, execution shall issue or the payment of prescribed fees shall be made,

without prejudice to such other sanctions as the court may impose.

The Court concedes that Rule 141, Section 19 provides specific standards

while Rule 3, Section 21 does not clearly draw the limits of the entitlement to the

exemption. Knowing that the litigants may abuse the grant of authority, the trial

court must use sound discretion and scrutinize evidence strictly in granting

exemptions, aware that the applicant has not hurdled the precise standards under

Rule 141. The trial court must also guard against abuse and misuse of the privilege

to litigate as an indigent litigant to prevent the filing of exorbitant claims which

would otherwise be regulated by a legal fee requirement.

 

Thus, the trial court should have applied Rule 3, Section 21 to the

application of the Alguras after their affidavits and supporting documents showed

that petitioners did not satisfy the twin requirements on gross monthly income and

ownership of real property under Rule 141. Instead of disqualifying the Alguras as

indigent litigants, the trial court should have called a hearing as required by Rule 3,

Section 21 to enable the petitioners to adduce evidence to show that they didn’t

have property and money sufficient and available for food, shelter, and basic

necessities for them and their family.27[27] In that hearing, the respondents would

have had the right to also present evidence to refute the allegations and evidence in

support of the application of the petitioners to litigate as indigent litigants. Since

this Court is not a trier of facts, it will have to remand the case to the trial court to

determine whether petitioners can be considered as indigent litigants using the

standards set in Rule 3, Section 21.

 

27

Recapitulating the rules on indigent litigants, therefore, if the applicant for

exemption meets the salary and property requirements under Section 19 of Rule

141, then the grant of the application is mandatory. On the other hand, when the

application does not satisfy one or both requirements, then the application should

not be denied outright; instead, the court should apply the “indigency test” under

Section 21 of Rule 3 and use its sound discretion in determining the merits of the

prayer for exemption.

 

Access to justice by the impoverished is held sacrosanct under Article III,

Section 11 of the 1987 Constitution. The Action Program for Judicial Reforms

(APJR) itself, initiated by former Chief Justice Hilario G. Davide, Jr., placed prime

importance on ‘easy access to justice by the poor’ as one of its six major

components. Likewise, the judicial philosophy of Liberty and Prosperity of Chief

Justice Artemio V. Panganiban makes it imperative that the courts shall not only

safeguard but also enhance the rights of individuals—which are considered sacred

under the 1987 Constitution. Without doubt, one of the most precious rights which

must be shielded and secured is the unhampered access to the justice system by the

poor, the underprivileged, and the marginalized.

WHEREFORE, the petition is GRANTED and the April 14, 2000 Order

granting the disqualification of petitioners, the July 17, 2000 Order denying

petitioners’ Motion for Reconsideration, and the September 11, 2001 Order

dismissing the case in Civil Case No. RTC-99-4403 before the Naga City RTC,

Branch 27 are ANNULLED and SET ASIDE. Furthermore, the Naga City RTC

is ordered to set the “Ex-Parte Motion to Litigate as Indigent Litigants” for hearing

and apply Rule 3, Section 21 of the 1997 Rules of Civil Procedure to determine

whether petitioners can qualify as indigent litigants.

 

No costs.

SO ORDERED.

G.R. No. 22783, People v. Sleeper, 46 Phil. 625

Republic of the PhilippinesSUPREME COURT

ManilaEN BANC

December 3, 1924

G.R. No. 22783THE PEOPLE OF THE PHILIPPINE ISLANDS, plaintiff-appellee, vs.CHARLES H. SLEEPER, defendant-appellant.Thomas Cary Welch & James G. Lawrence for appellant. Attorney-General Villa-Real & Assistant Attorney-General Buenaventura for appellee.

STATEMENTThe following information was filed against the defendant in the Court of First Instance of Manila:

That on, during and between the 17th day of October, 1922, and the 16th day of April, 1923, both dates inclusive, in the City of Manila, Philippine Islands, the said accused was then and there appointed, qualified and acting secretary-treasurer of the Manila Building and Loan Association, a corporation duly organized and existing under the laws of the Philippine Islands with principal office in said city; that during said period the A. L. Ammen Transportation Co., Inc., deposited with said Manila Building and Loan Association the sum of P30,000 with interest at the rate of 7 per cent per annum with the condition that said sum could be withdrawn from said Association after 15 day's notice, and said accused, one in possession of said sum which he received in said City of Manila and in his aforementioned capacity instead of applying the said sum for the purposes intended therefore by the Manila Building and Loan Association and of rendering proper accounting of the

disbursements made thereof, as it was his duty so to do, did then and there willfully, unlawfully, feloniously, and fraudulently fail to comply with his said obligation, but on the contrary, misapply, misappropriate, and convert said sum to his own personal use and benefit, to the damage and prejudice of said Manila Building and Loan Association in said sum of P30,000, equivalent to 150,000 pesetas.Contrary to law.

Upon which the defendant was tried, found guilty of estafa as provided in article 535, section 5, as it relates to article 534, section 3, of the Penal Code, and sentenced to two years, eleven months and eleven days of presidio correccional, from which the defendant appeals, contending that the court erred in the admission of the evidence of the witnesses Fisher and Haussermann, in admitting Exhibit M, and in finding the defendant guilty as charged.At the inception of the trial, Fred, C. Fisher, of the Manila Bar, was called to identify a paper known in the record as Exhibit M, to which the defense objected "on the ground that in the preparation of that paper the witness had acted as attorney for the defendant who claimed the privilege arising from that relation." After an examination of the exhibit, the court sustained the objection. Mr. Haussermann, whose name appears on the exhibit as a witness, was then called, sworn and allowed to identify the exhibit over the defendant's objection, and later Mr. Fisher was recalled, and the court then reversed its decision, and he was allowed to testify, and Exhibit M was then introduced as evidence over the strenuous objection and exception of the defendant.

JOHNS, J.:Exhibit M is as follows:

Manila, P. I. 

September 24, 1923.In consideration of the assumption by a ground of American citizens, residents of Manila, of my obligation to the Manila. Building & Loan Association, approximating P127,146.90, arising from the unauthorized conversation of funds of that corporation for which I was responsible in a fiduciary capacity, I agree that I will leave the Philippine Island permanently as soon as possible; that I will at once resign from the positions held by me, including membership on boards of directors; that I will execute my demand note to F. C. Fisher, trustee, for the benefit of said contributors, for the full amount which may be paid on my account to the Manila Building & Loan Association; that I will, upon demand, transfer to F. C. Fisher, as trustee for the contributors above mentioned, all property now owned by me, other than personal effect, and particularly any and all interest in mining claims and mining companies, with authority of dispose of the same and apply the proceeds to the payment of said note.

(Sgd.) C. H. SLEEPER

Witness:

(Sgd.) JOHN W. HAUSSERMANN

We agree with counsel for the defendant that, in the absence of Exhibit M, the conviction could not be sustained. If appears that a short time before it was executed, Mr. Fisher was called to the office of the late Mr. McCoy, who was then the president of the Manila Building and Loan Association, and who held that position for a number of years along with the defendant as treasurer. At this conference it developed that the defendant was short in his accounts for a very large amount, and it was suggested that, to protect the honor and good name of the Americans in the

community, an effort should be made to cover the shortage, and steps were taken along that line in which Mr. Fisher took more or less of an active part. It is conceded that he drafted Exhibit M in his own office in which the amount and the name of the association was left blank, and that later the blanks were filled in his own handwriting.

With all due respect to counsel for the defendant, there is no evidence which shows or tends to show that in the preparing of this document or the raising of the funds, Mr. Fisher was acting as attorney for the defendant, or that he represented him in any manner. After the full amount of the shortage was obtained and the money with which to make it good was raised, Exhibit M was submitted to the defendant for his signature, and it was then signed by him in the presence of Fisher and of Haussermann, the latter of whom subscribed his name as a witness. At the time this was done, no other persons were present. There is no evidence with shows or tends to show that at or prior to his signing any question were asked by the defendant, or that any statements or representation were made to him of any kind by anyone. Neither is there any evidence that Fisher claimed or represented that he was the attorney for the defendant in the transaction or that the defendant relied upon either of them as his attorney, or that the relation of attorney and client existed between the defendant and Fisher or Haussermann or either or them. It is true that the record shows that they had been lifelong personal friends, but there is no evidence that in preparing the document or presenting it for signature, or that in any other manner, Mr. Fisher was acting for or representing the defendant. It may be true that at the time the defendant signed the writing, and as a result of the shortage having been made good, the defendant expected to leave the country and avoid prosecution. Be that as it may, the record shows that when it was prepared, the defendant read the instrument and signed it voluntarily without asking any

questions from anyone, and there is no evidence that any one promised him immunity from prosecution or that defendant relied on any such promise. The question as to whether or not Fisher was acting as attorney for the defendant was a fact to be determined by competent evidence like any other fact. Upon that point Mr. Fisher was the only witness, and he testified positively that he was not attorney for the defendant and was not acting for him in the transaction. Opposed to his positive testimony there is nothing but conjectures and inferences. Upon that question the burden of proof was upon the defendant, and there was a failure of proof. It follows that the relation of attorney and client did not exist between Mr. Fisher and the defendant and that Exhibit M was not a privileged communication, and hence it was competent evidence.

It is conceded that the checks in question of the Ammen Transportation Company to the amount of P30,000 were drawn in favor of the Manila Building and Loan Association and delivered to the defendant as its treasurer, and that the identical checks were deposited in the bank to the credit of the association, and that its overdraft in the bank was reduced in that amount. Relying upon such facts, defendant's counsel vigorously and ably contend that he cannot be convicted of the crime charged in the information. That is the real question in this case.

In a well-written opinion, the trial court overruled that contention and points out that during the trial, through his counsel, the defendant admitted that P20,000 was received from the Transportation Company between the 17th and 24th days of October, 1922, and the remaining P10,000 between the 9th and 16th days of April, 1923, for which the three certificates of deposit Nos. 1198, 1199, and 1303, Exhibits G, H, and L, were issued by the defendant. Also, that no entries were made in the books of the association of such amounts until about September 24, 1923, which

is the date of Exhibit M, at which time the whole amount of the shortage was made good. In Exhibit M the defendant says that "in consideration of my obligation to the Building and Loan Association approximating P127,146.90, arising from the unauthorized conversion of funds of that corporation for which I was responsible in a fiduciary capacity, etc."

Notwithstanding the large overdraft of the association in the bank, it appears from the corporation books that about P10,000 in cash was supposed to be kept in the company's safe, and that when previous examinations were made by the auditor, the required amount of money was found to be in the safe in the share of $500 bills. It also appears that at the time the discovery of the shortage was made, the accountant appeared at the office of the company about 8 a.m. to investigate the corporate records. Mr. Sleeper then stated that he did not have the key to the safe, went away and returned about 10 a. m., and then opened the safe and the money was found to be intact. It was pointed out by the trial court that in opening the same upon his return, the defendant had his back to the clerk and accountant, and that they could not see what he did. It is also pointed out that at the time the money was deposited by the Transaction Company, no corresponding slips or debits were made of the transaction, and for such reason, it was not entered in the books, and hence could not be detected by the accountant whose duty it was to examine the records of the company.Upon that point, Manuel Peña, a bookkeeper for the Loan Association, testified:

Q. In what books of the Manila Building & Loan Association should the receipt of the P30,000 mentioned in the complaint appear? — A. In the cash book and in the ledger, and also in the book of interest payable.

Q. Should a credit slip be made for that amount? — A. Yes, sir, so that it might be entered in the cash book and in the ledger.

Q. Why was it not entered in those books? — A. Because there was no cash slip.

xxx xxx xxx

Q. What did the defendant tell you when you asked him for the cash credit slips for the three amount of P10,000 each? — A. He told me that he would see the auditor about it."

Among others counsel for the defendant at the trial made the following admission:

That the funds in question described in the complaint do not appear upon the books of the Manila Building and Loan Association until on or after the 24th day of September, 1923, at which time the check, Exhibit O, was deposited to the credit of that association, and that this amount covered by the complaint was paid by Exhibit O, it being understood by this admission that the deposits mentioned in the complaint appear in the stub account of `Bills Payable' dated October 24, 1922, numbered 1198 and 1199, respectively, and dated April 16, 1923, numbered 1303, those being the only entries in the books of the corporation of the three sums mentioned.

In an argument between counsel, when C. B. Moore was testifying as a witness for the defense, the force and effect of this admission was pointed out, and the attorney for the defendant made the following statement to the court:

I did not admit, I could not admit, because I did not know that it covered the specific amount charged in the complaint. I do not know

that, and I ask that that admission be corrected on the record accordingly.

Based upon which the court made an order striking out the following portion of the admission:

And that this amount covered by the complaint was paid by Exhibit O," on condition that the prosecution would have the right to prove that fact by other evidence, and it later called Rafael Fernandez, who testified that he had been a bank examiner since August 5, 1921, and that he had examined the books of the Loan Association several times in 1921, 1922, and 1923, and the last time on May 4, 1923. His attention was called to Exhibit G in which the association promised and agreed to pay the Ammen Transportation Company P10,000 fifteen days after written demand, with interest at the rate of 7 per centum, and Exhibit H which is also for another P10,000, both dated October 24, 1922, and asked whether these two bills payable had been entered in the books of the association.

A. I would have seen them because I examined all the books of the Association.

Q. Did anything attract your attention while examining the cash of the Manila Building & Loan Association at that time? — A. There were two things that came to my attention; the first being the big amount of the notes on hand — they were all P500 bills — and, second, that there was too much cash for such an association as the Manila Building & Loan Association kept in the vaults of that Association.

Q. Up to what date were the transaction of the Manila Building & Loan Association entered in the books of the Manila Building & Loan Association at the time you made your examination on May 4, 1923? — A. February 28, 1923.

He also testified to the same thing about Exhibit L, which is for another P10,000, executed on April 16, 1923.

Q. So that you did not consider this transaction when you made your report to the Insular Treasurer? — A. No, sir, I did not.

Q. Had you considered the P30,000, which is the amount of the transaction appearing in Exhibits G, H, and L, what would have been the effect in the balance that you found? — A. The balance would have been increased by the P30,000.

Walter Brooks, as a witness for the prosecution, testified that he was a public accountant in the employ of Fleming, Percy, Smith & Seth who were the auditors for the Building Association, and that he examined its books in the year 1923 for the first time in June, "and other nine or ten occasions between then and September." That it was his duty to examined the cash on hand, and that in June, 1923, he went to the office of the association for that purpose, but found that Sleeper was absent, the safe was locked, and that no one present has access to it. He then testified:

Q. Did you, on behalf of the firm of Fleming, Percy, Smith & Seth, examine the books of the Manila Building and Loan Association in June, 1923? — A. Yes, sir.

Q. In the course of that examination, did you find the account and books in order? — A. No, sir.

Q. Please inform the court what you did not find in order in the books of the Manila Building & Loan Association. — A. I found three bills payable missing from the books.

Q. Showing you these three bills payable, marked as Exhibits G, H, and L, please inform the court whether these three exhibits have

any connection with the three bills payable referred to by you in your previous answer, as missing. — A. These are the three bills which were missing from the books of the Association.

Q. How did you happen to notice that these three bills payable, marked as Exhibits G, H, and L, were missing and did not appear in the books of the Manila Building and Loan Association? — A. I found that they were missing by checking the consecutive numbers of bills payable issued. These three number did not appear.

Q. What steps did you take on finding that these three bills payable were unrecorded in the books of the Association? — A. I asked the bookkeeper, the only person present, for an explanation. His answer was: "A" (Cont.) And he answered that he would refer my request for information to Captain Sleeper.

Q. Did Captain Sleeper give you the desire explanation? — A. No, sir.

Q. Did you ascertain the amount involved in those three bills payable, marked as Exhibits G, H, and L? — A. Yes, sir.

Q. How did you ascertain the amount involved? — A. By reference to the stubs of the bills payable issued.

Q. Please explain to the court what should have been the correct procedure to properly record in the books of the Manila Building & Loan Association these transactions. — A. On receipt of the money or checks, a receipts would be given as a bill payable. The entry into the books would have been to the debit of cash and from there posted to the credit of bills payable.

Q. What would have been the effect of such entries? — A. It would have charged cash with the amount received and added a like

amount to the indebtedness of the Association under the heading of the `Bills Payable.'

Q. And how could that cash so charged be cleared? — A. It could be cleared in two ways — by deposits into the bank or by cash disbursements.

Q. Considering that the defendant received the checks, Exhibits C, D, and J, from the A. L. Ammen Transportation Company, Inc., and that the receipt of these checks was not entered in the books of the association, and considering also that these checks were deposited at the International Banking Corporation, had the accused any means of appropriating the amount as represented by these checks? — A. The effect of a payment into the bank account of a check which has not been charged to the cash is to substitute actual cash on hand by this check deposited in the bank.

Q. Assuming that a large amount of about P100,000 appeared to have been carried as cash on hand, could that substitution of the amount involved in these three checks be made? — A. Yes, sir.

Q. Showing you this check marked as Exhibit O, drawn in the amount of P127,145.90, against the Hongkong & Shanghai Banking Corporation, by Mr. Fisher, do you know whether the amount involved in this check was paid to the Manila Building & Loan Association, and, if so, when? — A. Yes, sir, it was in September, 1923.

Q. Do you know whether the P30,000 represented by the checks, Exhibits C, D, and J, were included in this check, Exhibit O? — A. Yes, sir, they were included.

Q. How do you know it? — A. I made a statement of receipts and disbursement by which the amount of the check was determined,

and I included the three bills payable not recorded in the books in that amount.

Q. Showing you this Exhibit Q, I ask you whether you recognize this document? — A. Yes, sir, I do.

Q. Why do you recognize it? — A. It contains my signature.

Q. To whom did you deliver this letter, Exhibit Q? — A. To Mr. Fisher.

Q. Do you know whether this letter has any connection with the check, Exhibit O? — A. The letter you have just exhibited was given on the same date as the check, and I can only assume that there is a connection between that and the check.

Q. What connection is that? — A. The connection between the letter and the check is that the letter was given to Judge Fisher at his request after ascertaining what the cash balance of the Manila Building and Loan Association should be.

Q. Before or after including this P30,000? — A. After including the P30.000.

Q. Do you know to how much did it amount, or it should amount, the cash on hand of the Manila Building and Loan Association, in June, 1923, when you examined the books of that Association here for the first time, according to the books of the corporation? — A. The balance appearing in the books at the time was short the amount of the three bills payable not entered.

The record shows that the witness Brooks is an experienced accountant, that he knows his business, and his testimony is clear and convincing and not dispute. He testified as a fact that the P30,000 in question was included in and is a part of the gross

amount of P127,146.90, which the defendant over his own signature admits was an "unauthorized conversation of funds of that corporation for which I was responsible in a fiduciary capacity." He also testifies that "the balance appearing in the books at that time was short the amount of the three bills payable not entered," the three bills payable about which he testifies being for the P30,000 here in question.

Upon all of such matter, there is no dispute or conflict in the evidence. The defendant having admitted in writing that he misappropriated the P127,146.90, and the testimony being undisputed that the P30,000 in question was a part of the P127,146,90, the proof upon that point is conclusive.

Assuming that to be true, the defendant contends that there is a fatal variance between the proof and the crime charged in the information. That point is not tenable.

The information alleged in substance that the defendant once in possession of the P30,000 "instead of applying the said sum for the purpose intended therefor by the Manila Building and Loan Association and of rending proper accounting of the disbursements made thereof, as it was his duty so to do, did then and there willfully, unlawfully, feloniously, and fraudulently fail to comply with his said obligation, but on the contrary, misapply, misappropriate and convert said sum to his own personal use and benefit, etc." The defendant was not misled or deceived by the information. In legal effect it charged him with taking the amount of the P30,000 evidence by those checks, which was the property of the association, and wrongfully converting that amount of the funds of the association to his own use. In other words, that upon the receipt of the checks he took that amount of the funds of the association and converted it to his own use. Of course, he could not appropriate

the checks, but the proof is conclusive that he did take the amount evidence by the checks and converted it to his own use. He is not charged with estafa of the checks, but with estafa of the amount of money evidenced by the checks.It is fair to say that defendant's counsel have made a very vigorous, able, and adroit defense. But in the final analysis, the stubborn fact remains that the defendant over his own signature admits the appropriation of the P127,146.90 and the proof is conclusive that the P30,000 in question enters into and is a part of that gross amount.

The judgment of the lower court is affirmed, with costs. So ordered.

Malcolm, Avanceña, Villamor and Ostrand, JJ., concur.Separate Opinions

JOHNSON, J., dissenting:I fully agree with the reasoning and conclusions of Justices Street and Romualdez in their dissenting opinion. I cannot give my assent to a procedure which will permit a complaint for one crime and a conviction for another, as has been done in the present case, even though the accused is guilty of the other. Before that can be done, a new complaint or an amended complaint must be presented.

STREET, J., dissenting:It is plain enough that the appellant in this case was short in the funds of the Manila Building and Loan Association, on September 24, 1923, to the extent of P127,146.90; and if the information had charged the embezzlement of funds of the association to that amount, or less, without specifying what particular money was embezzled, the Government would have had a clear case. The fiscal, however, in drawing the information, saw fit to charge the appellant with the appropriation of the specific sum of P30,000, which had been deposited on two occasions with the association by the A. L.

Ammen Transportation Co., Inc.; and unfortunately for the prosecution we know precisely what became of the money after the checks drawn by the Ammen Company reached the hands of the appellant, which is, that said checks were deposited by the appellant to the credit of the association in its proper account in a bank. This fact is admitted; and it seems to me that this must be the end of the charge of embezzling that money. The prosecuting officer simply made the mistake of being a little too particular in his accusation and his upon transactions that were in fact straight.

But it is said that the P30,000, proceeds of the Ammen money, is merely part of the large sum of P127,146,90, representing the appellant's shortage in the general funds of the association; and, as proving this, reliance is placed upon certain irregularities shown in the association's books with respect to the Ammen deposits, namely, that the amount received had not been debited to "Cash" in the cash-book and had not been credited to "Bills Payable" in the ledger, as should have been done. These irregularities show that the appellant was attempting to conceal a defalcation, but they do not prove that the appellant had appropriated the proceeds of the Ammen checks.

Walter Brooks, a public accountant, was introduced as a witness with a view to showing that the P30,000 in question formed a part of the larger amount for which the appellant is shown to have been short. This witness stated that when the proper entries in the cash-book and ledger were made, it resulted that the appellant's shortage was greater by P30,000 than it would have been if those irregularities had been disregarded. It was only in this sense that the witness meant to say, as I understand him, that the Ammen deposits were included in the large amount; and this is far from showing that the appellant had embezzled those particular deposits.

In my opinion the appellant's offense did not consist in the misappropriation of the funds mentioned in the information, and hence he is entitled to an acquittal on the charged brought against him.

ROMUALDEZ, J., dissenting:With due respect to the majority, I dissent from its decision in the instant case. I believe that the accused is entitled to an acquittal on the ground that the crime alleged in the complaint was not proven.

He is accused of having misappropriated, to the damage of the Manila Building and Loan Association, of which he was secretary-treasurer, the sum of P30,000 received by him from the A. L. Ammen Transportation Company during the period between October 17, 1922, and April 16, 1923. This sum is represented by the check C, D, and J. The decision of the majority cannot but admit the following with regard to these checks and their amount:

It is conceded that the checks in question of the Ammen Transportation Company to the amount of P30,000 were drawn in favor of the Manila Building and Loan Association and delivered to the defendant as its treasurer, and that the identical checks were deposited in the bank to the credit of the association, and that its overdraft in the bank was reduced in that amount. Relying upon such facts, defendant's counsel vigorously and ably contend that he cannot be convicted of the crime charged in the information. That is that real question in this case. (Emphasis are ours. See majority decision, folio 5.)

If the accused deposited, as he is fact did deposit, in the International Banking Corporation in the name and to the benefit, of the Manila Building and Loan Association the P30,000 paid by A. L. Ammen Transportation Company, Inc., there resulting from such an

operation a reduction by an equal amount of the overdraft that then the aforesaid Manila Building and Loan Association had with said bank, it is clear that the accused did not misappropriate said P30.000.

But Exhibit M signed by the accused was introduced as evidence, wherein there is an admission of the fact of the sum of P127,146.90 having been misappropriated, and it is asserted that the P30,000, which is the subject-matter of the complaint, is a part of this amount.

The evidence, however, does not show, in my opinion, that the accused has ever understood that the P30,000 in question was included in the sum stated in Exhibit M.

It must be taken into account that it is not the accused who prepared Exhibited M, but Mr. Fisher, who also did not know the precise amount that was to be stated in said document Exhibit M, and for this reason the space for the proper figures was left in blank. It was only a few minutes before the accused was caused to sign said Exhibit M on the morning of September 24, 1923, that Mr. Fisher filled out the space in blank, by writing the said sum of P127,146.90, which he copied from the letter Exhibit Q, which had just then been delivered to him by Mr. Brooks.

And this amount of P127,146.90, appearing on the letter Exhibit Q of Mr. Brooks addressed to Mr. Fisher, was obtained by an examination of the books of the company made by Mr. Brooks in the said month of September, 1923, which books did not contain complete data, for the last entry made thereon was of February 28, 1923, the operations made by the company from said date up to September 24th of the same year not appearing, therefore, in said books.

Mr. Brooks took only those deficient books as his guide, and did not examine the contents of the safe in making his examination, as he expressly states in said letter Exhibit Q. He took into account against the accused the P30,000 that was the value of the checks C, D, and J, for the reason that the bills payable corresponding to said checks had not been entered on the books of the company. It must be noted that the very fact of the accused having issued said bills payable, which are Exhibits G, H, and L submitted for the signature of, and signed by, the president-manager of the Manila Building and Loan Association, removes all suspicion of concealment from said company by the accused of the receipt of said amount and could prevent the accused from taking from the safe of the company a sum equivalent to that represented by said bills payable, the corresponding stubs of which, Exhibits 2, 2-a, and 2-b, existed among the books of the company and were presented as evidence.The fact that said bills payable were not opportunely entered on the books of the company really constitutes an irregularity, tending to show negligence on the part of said accused who kept said books, but under the facts in this case it does not necessarily imply bad faith, much less an intention to cheat, when there positively appear the legitimate and regular whereabouts of the sum of P30,000, the subject-matter of this action, deposited by the accused in the bank in the name and to the benefit of the Manila Building and Loan Association.

The evidence of record shows that the P127,146.90 stated in Exhibit M does not represent the true status of the account of the Manila Building and Loan Association on the 24th day of September, 1923, when said exhibit was signed. It also appears from the records that before signing Exhibit M, the accused did not have sufficient opportunity to verify the sum therein written, or to ascertain whether or not the sum of P30,000, the value of the checks C, D, and J, now the subject-matter of the instant case, was included

therein. It was not, therefore, sufficiently shown that the accused understood the P30,000, which is the subject-matter of the complaint, to have been included in his confession in Exhibit M, nor that said sum must in justice be included in the amount written on said Exhibit M. Any sum of money that the appellant desired to confess in Exhibit M having misappropriated does not, and cannot, include the P30,000 mentioned in the complaint.

From this it follows that Exhibit M does not show the facts alleged in the herein complaint; and if said document is any proof at all of any crime, such crime is not alleged nor included in the complaint filed in this case.

EN BANC

[A.C. No. 1526.  January 31, 2005]

NAZARIA S. HERNANDEZ (DECEASED), SUBSTITUTED BY LUCIANO S. HERNANDEZ, JR., complainant, vs. ATTY. JOSE C. GO, respondent.

D E C I S I O NPER CURIAM:

For our resolution is the verified letter-complaint [1] for disbarment against Atty. Jose C. Go dated June 23, 1975 filed by Nazaria S. Hernandez (now deceased).  Both parties are from Zamboanga City.

The allegations in the letter-complaint are:

Sometime in 1961, complainant’s husband abandoned her and her son, Luciano S. Hernandez, Jr.  Shortly thereafter, her husband’s numerous creditors demanded payments of his loans.  Fearful that the various mortgage contracts involving her properties will be foreclosed and aware of impending suits for sums of money against her, complainant engaged the legal services of Atty. Jose C. Go, herein respondent.

Respondent instilled in complainant a feeling of helplessness, fear, embarrassment, and social humiliation.  He advised her to give him her land titles covering Lots 848-A, 849-Q, and 849-P at Zamboanga City so he could sell them to enable her to pay her creditors.  He then persuaded her to execute deeds of sale in his favor without any monetary or valuable consideration. Complainant agreed on condition that he would sell the lots and from the proceeds pay her creditors.

Complainant also owned Lots 2118, 2139, and 1141-A, likewise located in Zamboanga City, which were mortgaged to her creditors.  When the mortgages fell due, respondent redeemed the lots.  Again, he convinced her to execute deeds of sale involving those lots in his favor.  As a result, respondent became the registered owner of all the lots belonging to complainant.

Sometime in 1974, complainant came to know that respondent did not sell her lots as agreed upon.  Instead, he paid her creditors with his own funds and had her land titles registered in his name, depriving her of her real properties worth millions.

In our Resolution dated September 24, 1975, respondent was required to file his comment on the complaint.

Instead of filing his comment, respondent submitted a motion to dismiss on the ground that the complaint is premature since there is pending before the then Court of First Instance of Zamboanga City Civil Case No. 1781 [2] for recovery of ownership and declaration of nullity of deeds of sale filed by complainant against him involving the subject lots.

On November 14, 1975, we issued a Resolution denying respondent’s motion and requiring him to submit his answer.

In his answer dated December 19, 1975, respondent denied the allegations in the instant complaint.  He averred that he sold, in good faith, complainant’s lots to various buyers, including himself, for valuable consideration.  On several occasions, he extended financial assistance to complainant and even invited her to live with his family.  His children used to call her “Lola” due to her frequent visits to his residence.  He prayed that the complaint be dismissed for failure to state a cause of action.

On January 17, 1977, we referred the case to the Office of the Solicitor General (OSG) for investigation, report, and recommendation.

It was only on March 13, 1990 or after 13 years, 1 month and 26 days that the OSG filed a motion to refer the instant case to the IBP for the retaking of the testimonies of complainant’s witnesses and the submission of its report and recommendation.

On April 4, 1990, we issued a Resolution referring the case to the IBP for investigation, report, and recommendation.

The Report and Recommendation dated June 15, 2004 of Atty. Lydia A. Navarro, Commissioner of the IBP Commission on Bar Discipline, is quoted as follows:

“A careful examination and evaluation of the evidence submitted by the parties showed that all the properties of the complainant are presently owned by the respondent by virtue of several deeds of sale executed by the complainant in favor of the respondent without monetary consideration except Lot 849-D situated in Tomas Claudio which was returned by the respondent to the complainant on September 5, 1974.

It is evident from the records that respondent was the one who notarized the documents involving the said properties redeemed or repurchased by the complainant from her creditors which ended up in respondent’s name like in the deed of sale

executed by Victoriano Dejerano in favor of Nazaria Hernandez over Lots 1141-A-3-A and 1141-A-3-B; deed of sale executed by Antonio Masrahon on September 3, 1961regarding Lot No. 1141-A; deed of absolute sale executed by Francisco Esperat over the Curuan properties on November 9, 1971 and the cancellation of the mortgage executed by Alfonso Enriquez on July 18, 1964 over the Tomas Claudio properties.

The foregoing legal activities and operations of the respondent in addition to his having discussed, advised and gave solutions to complainant’s legal problems and liabilities to her creditors and even requested her creditors for extension of time to pay complainant’s accounts constitute practice of law as legal counsel for consultation aside from representing complainant in other cases; a mute proof of a lawyer-client relations between them, a fact also admitted by the respondent.

It is incumbent upon the respondent to have rendered a detailed report to the complainant on how he paid complainant’s creditors without selling her properties.  Instead of selling to buyers at higher price, he paid them out of his own funds; then later on admitted that he was one of the purchasers of complainant’s properties in utter disregard of their agreement and no evidence was submitted by the respondent concerning the value of the said sale of complainant’s properties.

As such, respondent did not adhere faithfully and honestly in his obligation and duty as complainant’s legal adviser and counsel when he took advantage of the trust and confidence reposed in him by the complainant in ultimately putting complainant’s properties in his name and possession in violation of Canon 17 of the Code of Professional Responsibility.

WHEREFORE, in view of the foregoing, the undersigned respectfully recommends that respondent Atty. Jose C. Go be suspended from the practice of law for a period of six (6) months from receipt hereof and the IBP Chapter where he is a registered member be furnished a copy of the same for implementation hereof, subject to the approval of the Honorable Members of the Board of Governors.”

On July 30, 2004, the IBP Board of Governors passed Resolution No. XVI-2004-39 adopting and approving the Report of Commissioner Navarro with modification in the sense that the recommended penalty of suspension from the practice of law was increased from six (6) months to three (3) years.

We sustain the Resolution of the IBP Board of Governors finding that respondent violated the Code of Professional Responsibility.  However, we have to modify its recommended penalty.

Canon 16 of the Code of Professional Responsibility, the principal source of ethical rules for lawyers in this jurisdiction, provides:

“A lawyer shall hold in trust all moneys and properties of his client that may come into his possession.”

Respondent breached this Canon.  His acts of acquiring for himself complainant’s lots entrusted to him are, by any standard, acts constituting gross misconduct, a grievous wrong, a forbidden act, a dereliction in duty, willful in character, and implies a wrongful intent and not mere error in judgment.[3]  Such conduct on the part of respondent degrades not only himself but also the name and honor of the legal profession.  He violated this Court’s mandate that lawyers must at all times conduct themselves, especially in their dealing with their clients and the public at large, with honesty and integrity in a manner beyond reproach.[4]

Canon 17 of the same Code states:

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

The records show that complainant reposed such high degree of trust and confidence in herein respondent, that when she engaged his services, she entrusted to him her land titles and allowed him to sell her lots, believing that the proceeds thereof would be used to pay her creditors.  Respondent, however, abused her trust and confidence when he did not sell her properties to others but to himself and spent his own money to pay her obligations.  As correctly observed by Investigating IBP Commissioner Lydia Navarro, respondent is duty-bound to render a detailed report to the complainant on how much he sold the latter’s lots and the amounts paid to her creditors.  Obviously, had he sold the lots to other buyers, complainant could have earned more.  Records show that she did not receive any amount from respondent.  Clearly, respondent did not adhere faithfully and honestly in his duty as complainant’s counsel.

Undoubtedly, respondent’s conduct has made him unfit to remain in the legal profession.  He has definitely fallen below the moral bar when he engaged in deceitful, dishonest, unlawful and grossly immoral acts.  We have been exacting in our demand for integrity and good moral character of members of the Bar.  They are expected at all times to uphold the integrity and dignity of the legal profession[5] and refrain from any act or omission which might lessen the trust and confidence reposed by the public in the fidelity, honesty, and integrity of the legal profession. [6] Membership in the legal profession is a privilege.[7] And whenever it is made to appear that an attorney is no longer worthy of the trust and confidence of his clients and the public, it becomes not only the right but also the duty of this Court, which made him

one of its officers and gave him the privilege of ministering within its Bar, to withdraw the privilege.[8]Respondent, by his conduct, blemished not only his integrity as a member of the Bar, but also the legal profession.

Public interest requires that an attorney should exert his best efforts and ability to protect the interests of his clients.  A lawyer who performs that duty with diligence and candor not only protects his client’s cause; he also serves the ends of justice and does honor to the bar and helps maintain the respect of the community to the legal profession.

It is a time-honored rule that good moral character is not only a condition precedent to admission to the practice of law.  Its continued possession is also essential for remaining in the legal profession.[9]

Section 27, Rule 138 of the Revised Rules of Court mandates that a lawyer may be disbarred or suspended by this Court for any of the following acts: (1) deceit; (2) malpractice; (3)gross misconduct in office; (4) grossly immoral conduct; (5) conviction of a crime involving moral turpitude; (6) violation of the lawyer’s oath; (7) willful disobedience of any lawful order of a superior court; and (8) willfully appearing as an attorney for a party without authority to do so.[10]

In Rayos-Ombac vs. Rayos,[11] we ordered the disbarment of lawyer when he deceived his 85-year old aunt into entrusting him with all her money and later refused to return the same despite demand.  In Navarro vs. Meneses   III ,[12] we disbarred a member of the Bar for his refusal or failure to account for the P50,000.00 he received from a client to settle  a case.  InDocena vs. Limson,[13] we expelled from the brotherhood of lawyers, an attorney who extorted money from his client through deceit and misrepresentation.  In Busiños vs. Ricafort,[14] an attorney was stripped of his license to practice law for misappropriating his client’s money.

Considering the depravity of respondent’s offense, we find the penalty recommended by the IBP too light.  It bears reiterating that a lawyer who takes advantage of his client’s financial plight to acquire the latter’s properties for his own benefit is destructive of the confidence of the public in the fidelity, honesty, and integrity of the legal profession.  Thus, for violation of Canon 16 and Canon 17 of the Code of Professional Responsibility, which constitutes gross misconduct, and consistent with the need to maintain the high standards of the Bar and thus preserve the faith of the public in the legal profession, respondent deserves the ultimate penalty, that of expulsion from the esteemed brotherhood of lawyers.

WHEREFORE, respondent JOSE S. GO is found guilty of gross misconduct and is DISBARRED from the practice of law.  His name is ordered STRICKEN from the Roll of Attorneys EFFECTIVE IMMEDIATELY.

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

SO ORDERED.