JESUS E. SANTAYANA, COMPLAINANT, VS. ATTY. ELISEO B. ALAMPAY, RESPONDENT.

Santayana versus Alampay

The Case

This is an administrative case for disbarment. Jesus E. Santayana filed a verified complaint against Atty. Eliseo B. Alampay for malpractice and for violation of the Attorney's Oath. The complaint arose from the respondent's appearance, through his private law firm, as counsel for the National Electrification Administration in a civil suit, when the law designates other counsel to represent that government-owned corporation. The case matters because it fixes the rule on who may lawfully appear for a government-owned or controlled corporation, and it illustrates the disciplinary ground of corruptly and willfully appearing as an attorney for a party without authority to do so.

Procedural History

In the civil case for specific performance, injunction, and damages filed by Nerwin Industries Corporation against the National Electrification Administration before the Regional Trial Court of Manila, Branch 36, the respondent's law firm entered its appearance as counsel for the Administration. Nerwin moved to disqualify the firm. The trial court granted the motion in its Order dated December 10, 2001, discontinued and terminated the firm's appearance, and directed the Chief of the Legal Division of the Administration to enter his appearance unless the Administration chose to avail of the services of the Office of the Government Corporate Counsel or the Office of the Solicitor General. The trial court denied the respondent's motion for reconsideration in its Order dated February 15, 2002.

The respondent then filed a petition for certiorari with the Court of Appeals, assailing both orders. On September 24, 2002, the Court of Appeals dismissed the petition, holding that in the absence of a written conformity from the duly mandated government lawyers appointed by law, and a written concurrence from the Commission on Audit, there was no legal basis for the law office to represent the petitioners.

The disbarment complaint followed. The Supreme Court, by Resolution dated April 21, 2003, referred the case to the Integrated Bar of the Philippines for investigation, report, and recommendation. IBP Commissioner Milagros V. San Juan found that the respondent violated Canon 1 and Rule 1.02 of the Code of Professional Responsibility and recommended reprimand with warning. The IBP Board of Governors adopted and approved that recommendation. The case thus reached the Supreme Court as an original administrative matter, resolved on the Commissioner's report and the Board's resolution.

Facts

The respondent was a member of the Board of Administrators of the National Electrification Administration, a government-owned and controlled corporation. The Administration was implementing the government's foreign-funded Rural Electrification Program, one component of which, the IPB 80 Project, required the purchase through public bidding of sixty thousand pieces of wooden poles and twenty thousand pieces of cross arms. In 1999 the Administration conducted the public bidding. In December 2000, Nerwin Industries Corporation was declared the lowest bidder, and the Board of Administrators passed Resolution No. 32 approving the award to Nerwin of fifty percent of the project requirements.

The Administration then disqualified Nerwin and granted the award instead to a losing bidder. Seeking a legal justification, the Administration twice asked the opinion of the Office of the Government Corporate Counsel, and in both instances that Office pointed out that the Administration's action violated the law. Despite this, the respondent's law firm, Alampay, Gatchalian, Mawis and Alampay, rendered a legal opinion adverse to that of the Government Corporate Counsel. The Administration nullified the award to Nerwin, prompting Nerwin to sue for specific performance, injunction, and damages.

The respondent's law firm entered its appearance as counsel for the Administration in that civil case. Nerwin moved to disqualify the firm, the respondent opposed, and the trial court disqualified the firm. The respondent relied on Resolution No. 38 dated October 11, 2001 of the Board of Administrators, which authorized his firm to represent the Administration without attorney's fees, and argued that because the Government Corporate Counsel took a stance adverse to the Administration, other counsel could be engaged, and that the charter did not prohibit it.

Issues

• Whether or not the respondent's law firm could lawfully appear as counsel for the National Electrification Administration in the civil case without the written conformity of the Solicitor General or the Government Corporate Counsel and the written concurrence of the Commission on Audit.
• Whether or not the respondent is administratively liable for malpractice and for violation of the Attorney's Oath, and of Section 27 of Rule 138, for willfully appearing as an attorney for a party without authority to do so.
• Whether or not the penalty recommended by the Integrated Bar of the Philippines should be sustained.

Applicable Provisions

Section 10, Chapter 3, Title III, Book IV of the Administrative Code of 1987 provides:

SEC. 10. Office of the Government Corporate Counsel. – The Office of the Government Corporate Counsel (OGCC) shall act as the principal law office of all government-owned or controlled corporations, their subsidiaries, other corporate offspring and government acquired asset corporations and shall exercise control and supervision over all legal departments or divisions maintained separately and such powers and functions as are now or may hereafter be provided by law. In the exercise of such control and supervision, the Government Corporate Counsel shall promulgate rules and regulations to effectively implement the objectives of this Office.

This fixes the Government Corporate Counsel as the principal law office of government-owned or controlled corporations, subject only to what their special charters provide.

Section 61 of Presidential Decree No. 269, the charter of the National Electrification Administration, provides:

SEC. 61. NEA Counsel. – The Chief of the legal division or any other lawyer of the NEA shall represent the same in all judicial proceedings. It shall be the duty of the Solicitor General to represent NEA in any judicial proceedings if, for special reasons, the administrators shall request his intervention.

The Court treats this as a special provision that prevails over the general rule of the Administrative Code.

Memorandum Circular No. 9 issued by the Office of the President on August 27, 1998 provides:

SEC. 3. GOCCs are likewise enjoined to refrain from hiring private lawyers or law firms to handle their cases and legal matters. But in exceptional cases, the written conformity and acquiescence of the Solicitor General or the Government Corporate Counsel, as the case may be, and the written concurrence of the Commission on Audit shall first be secured before the hiring or employment of a private lawyer or law firm.

This supplies the two conditions that the respondent failed to meet.

Section 27, Rule 138 of the Revised Rules of Court provides:

SEC. 27. Disbarment or suspension of attorneys by Supreme Court, grounds therefore. – A member of the bar may be disbarred or suspended from his office as attorney by the Supreme Court for any deceit, malpractice, or other gross misconduct in such office, grossly immoral conduct, or by reason of his conviction of a crime involving moral turpitude, or for any violation of the oath which is he is required to take before admission to practice, for a willful disobedience of any lawful order of a superior court or for corruptly and willfully appearing as an attorney for a party to a case without authority to do so. The practice of soliciting cases at law for the purpose of gain, either personally or through paid agents or brokers, constitutes malpractice.

This is the disciplinary ground on which the respondent was held liable.

Ruling

On the first issue, the Court held that in all judicial proceedings the National Electrification Administration must be represented by the Chief or any attorney of its Legal Division; that for special reasons, upon written request of the Board of Administrators, the Solicitor General shall represent it; and that it may hire a private lawyer or law firm only in exceptional cases, with the written conformity and acquiescence of the Solicitor General or the Government Corporate Counsel, and with the written concurrence of the Commission on Audit. Examining Resolution No. 38, the Court found nothing indicating that the written conformity of either office had been obtained, nor any written concurrence by the Commission on Audit. The resolution was therefore legally infirm, and the firm, including the respondent, willfully appeared as counsel without authority to do so.

On the second issue, the Court sustained the finding of the Integrated Bar of the Philippines that the respondent violated Canon 1 and Rule 1.02 of the Code of Professional Responsibility, and held him liable under Section 27 of Rule 138 for appearing as an attorney for a party without authority. The Court noted, however, that there was no indication in the records that the respondent acted in bad faith, and that his firm's services were rendered for free.

On the third issue, the Court sustained the resolution of the IBP Board of Governors, but imposed a fine rather than the recommended reprimand, calibrated to the absence of bad faith.

Doctrine

• A government-owned or controlled corporation is represented in judicial proceedings by the counsel designated in its charter; where the charter specially names the chief or a lawyer of its legal division, that special provision prevails over the general rule that the Office of the Government Corporate Counsel is the principal law office of such corporations.
• A private lawyer or law firm may be engaged by a government-owned or controlled corporation only in exceptional cases, and only upon two conditions: the written conformity and acquiescence of the Solicitor General or the Government Corporate Counsel, and the written concurrence of the Commission on Audit. Absent either, the engagement is legally infirm.
• Appearing as counsel for a party without authority to do so, when willful, is a ground for disciplinary action under Section 27, Rule 138 of the Revised Rules of Court, and violates Canon 1 and Rule 1.02 of the Code of Professional Responsibility.
• Good faith and the rendering of services without fee do not erase the violation, but they mitigate the penalty.

Disposition

The Supreme Court found the respondent liable and fined him five thousand pesos for appearing as an attorney for a party to a case without authority to do so, with a warning that a repetition of the infraction would be dealt with more severely.

Remember This

Memorize the two-condition rule: a private law firm may represent a government-owned or controlled corporation only with the written conformity of the Solicitor General or the Government Corporate Counsel and the written concurrence of the Commission on Audit. Examiners use this case to test the special charter as an exception to the general rule, and to test willful appearance without authority as a ground for discipline under Section 27 of Rule 138.