Development Bank of the Philippines v. Badilla, Jr.

FIRST DIVISION

[A.C. No. 10931. September 29, 2021.][Formerly CBD Case No. 17-5337]

DEVELOPMENT BANK OF THE PHILIPPINES, represented by JOSE A. NUÑEZ, JR. and GIL A. BUENAVENTURA, petitioners,vs. ATTY. FRANCIS ROMULO I. BADILLA, JR., respondent.

NOTICE

Sirs/Mesdames :

Please take notice that the Court, First Division, issued a Resolution datedSeptember 29, 2021which reads as follows:

"A.C. No. 10931 [Formerly CBD Case No. 17-5337] (Development Bank of the Philippines, represented by Jose A. Nuñez, Jr. and Gil A. Buenaventura v. Atty. Francis Romulo I. Badilla, Jr.)

By Joint Complaint 1 dated August 26, 2015, the Development Bank of the Philippines (DBP) represented by its Chairman and President Jose A. Nuñez, Jr. and Gil A. Buenaventura, respectively, charged respondent Atty. Francis Romulo I. Badilla, Jr. with violation of the Lawyer's Oath and Canons 15, 17, and 19 of the Code of Professional Responsibility (CPR).

DBP averred that on January 28, 2015, respondent as President of the Association of DBP Career Officials (ADCO), along with the Development Bank of the Philippines Employees Union (DBP-EU), issued a Joint Resolution imploring the DBP Board of Directors to increase to Four Thousand Pesos (P4,000.00) the Personal Economic Relief Assistance (PERA) of all DBP employees pursuant to the 2015 General Appropriations Act (GAA). 2 Another Joint Resolution was signed by respondent, this time demanding the payment of Performance-Based Bonus (PBB) for all qualified DBP employees who failed to receive the same. 3

On May 29, 2015, respondent, as President of ADCO, along with Rudelito L. Tirado, Jr., President of DBP-EU filed the following cases before the Office of the Ombudsman (OMB), Criminal and Administrative Complaints, thus:

1. OMB-C-C-15-0161 for violation of Republic Act No. 3019 (RA 3019), 4 Republic Act No. 8799 (RA 8799), 5 Article 244 of The Revised Penal Code, Republic Act No. 10149, 6 and the Administrative Code of 1987 against members of the DBP Board of Directors and its senior officers. It was anchored on the Audit Observation Memorandum No. 2014-Tro-01 (AOM) of the Commission on Audit (COA) which sought justification of the alleged wash sale of government securities in the amount of 14.3 billion pesos; 7 and

2. OMB-C-C-15-0162 for Plunder also against the Senior Officials of DBP, President, Chairman and Members of the Board of Directors, as well as the Commissioners and Officials of Governance Commission for GOCCs and GFIs (GCG) in the matter of the grant in 2014 of Performance-Based Bonus (PBB) to DBP Top Management and other employees in the amount of P312,077,186.64 as approved by GCG. 8

According to the DBP, respondent is guilty of conflict of interest under Canon 15, Rule 15.03 of the Code of Professional Responsibility (CPR) when he signed the resolutions and letter requests of ADCO and DBP-EU for the DBP Board of Directors to increase the PERA of the DBP employees and grant additional benefits. In so doing, he in effect, took a position adverse to DBP while acting as its legal officer. If DBP does not grant the requested benefits, cases may be filed against it and respondent, as DBP legal officer, would be required to defend DBP's action. 9

Respondent further violated not only the Lawyer's Oath but also Canon 17 of the CPR when he filed the criminal cases before the OMB since he failed to show loyalty and fidelity to his client DBP.

Too, when interviewed by media on the graft and plunder charges against DBP executives, respondent issued public statements10which were only intended to sway public opinion against complainants in violation of Rule 13.02, Canon 13 of the CPR. 11

Another. He committed dishonesty when he claimed to be the President of ADCO in his sworn statement in the Complaint-Affidavit he filed before the OMB. Records show that ADCO's president is not him, but Eddie Geñosa. 12

In his Comment 13 dated May 11, 2016, respondent riposted that there is no conflict of interest when he filed complaints before the OMB against Senior Officers of DBP, the President, Chairman, and members of the Board of Directors for violation of RA 3019 and Plunder, among others. In so doing, he simply acted to protect the best interest of DBP as he called the attention of the DBP management to comply with the provisions of the 2015 GAA regarding the grant of PERA to its employees and the grant of PBB to qualified employees. 14 His act was actually for the best interest of DBP since to follow the law on the grant of employee benefits would avoid future litigation. 15

Pursuant to the DBP Manual of Corporate Governance, he, as a public servant must ensure that DBP faithfully uphold the Constitution and timely comply with all applicable legal provisions, rules and regulations, and corporate governance standards. 16

His membership in ADCO was made pursuant to his right to join and form associations guaranteed in Section 8, Article III of the Constitution. 17

DBP Senior Officials are duty bound to protect public funds and when they engaged in corrupt practices, they have placed themselves in a contrary position with DBP and they themselves harbor conflict of interest. DBP Senior Officials have no right to use DBP resources to get back at those who are acting in behalf of DBP, such as himself. 18

The public statements he made before the media did not cause any damage to DBP since it was simply intended to inform that the case was filed and the reasons why it was filed. 19

Whatever damage and prejudice the Senior Officials may have experienced was well deserved. These Senior Officials, by virtue of their positions in government, were tasked to protect and preserve public funds and yet they stole from the public coffers, hence, it is his right, nay, moral obligation to expose the scandal committed by Senior Officers of DBP in plundering the government's coffers, to the damage and prejudice of the Filipino people. 20

Assuming there was reputational damage caused to DBP, this was due entirely to the greed and avarice of the senior officials who were exposed and being made accountable. 21

While he works for DBP as an in-house counsel, he, however, was not the counsel for DBP-ADCO; hence, the rule on conflict of interest under the CPR does not apply to him. Complainants failed to show that respondent signed any pleading or made any legal representation in favor of ADCO and DBP-EU. 22

The present complaint is one of the many harassment suits filed by DBP officials against him. 23

The Report and Recommendation of the IBP Investigating Commissioner

Per Report and Recommendation 24 dated May 21, 2019, Investigating IBP Commissioner Roland B. Beltran held respondent guilty of conflict of interest, use of intemperate language, accusation of a crime without regard to the constitutional presumption of innocence, all in violation of the Lawyer's Oath and Code of Professional Responsibility, viz.:

WHEREFORE, it is hereby recommended that Atty. Francis Romulo I. Badilla, Jr. be suspended from the practice of law for six (6) months for conduct unbecoming of a lawyer, violation of lawyer's oath, the Code of Professional Responsibility, with warning that any repetition of the same or similar offense will be dealt with severely. 25

Commissioner Beltran noted that respondent is the in-house counsel of DBP. As such, an attorney-client relationship exists between DBP and respondent. 26

On the other hand, as ADCO, respondent represented causes adverse to his client, DBP. 27 The cases filed by respondent are suits against his own client DBP and not only against DBP's officers who notably were sued in their official capacity. 28

He violated Canon 1729 and Rule 15.03, Canon 1530 of the CPR when he filed the administrative and criminal cases in question since he is DBP's in-house counsel. 31

He used intemperate language in his Comment dated May 11, 2016 where he accused the Senior Officers of DBP of having "stolen from the public coffers," and branded them as "thieves and scoundrels," who had "greed and avarice." Such an unfair and reckless statement coming from one who is a disciple of the law and who has taken the lawyer's oath, should not be countenanced. 32

The AOM issued by COA sought an explanation of the action being assailed therein, hence, the AOM is far from being final. It is not even a Notice of Disallowance so it is premature to conclude that the Senior Officers of DBP are corrupt officials who give themselves additional bonuses apart from their regular salaries. There was no cause of action to file the cases before the OMB on the basis of an AOM and respondent ought to know that. 33

As a lawyer, respondent's actions failed to conform with the ethical rules and standards of the lawyer's oath and the CPR. 34

The Report and Recommendation of the IBP Board of Governors

By Resolution 35 dated December 15, 2019, the IBP Board of Governors reversed, thus:

RESOLVED to REVERSE, as it is REVERSED and SET ASIDE, the Report and Recommendation of the Investigating Commissioner in the above-entitled case, herein made part of this Resolution as Annex "A," and considering that there was no conflict of interest on the part of the Respondent, the case is hereby DISMISSED for lack of merit.

RESOLVED FURTHER, that the Commission prepare an extended resolution explaining the Board action. 36

Per Extended Resolution 37 dated September 14, 2020, the IBP Board of Governors held that there was no conflict of interest when respondent filed the criminal and administrative cases against the DBP officers. DBP never posited that respondent's act of filing criminal and administrative cases against its board members and several senior officers conflicted with his interest as DBP in-house counsel. At any rate, there could not have been any conflict of interest DBP's since the criminal and administrative charges were filed against said directors and officers and not against DBP itself.

Too, it noted that DBP is in-house counsel, when respondent issued demands and claims against the DBP management, respondent acts as President of ADCO and not its legal counsel, hence, in the absence of lawyer-client relationship, there could be no conflict of interest to speak of. 38

In another vein, respondent's public statements before the media did not intend to tarnish the reputation of DBP. To repeat, the administrative and criminal charges respondent filed were against senior officials of DBP in their personal capacities. 39

Finally, since ADCO's Secretary Certificate specifically states that through ADCO Board Resolution No. 004-2015 dated March 11, 2015, the Board of Trustees resolved to name and appoint respondent as its President, respondent did not lie when he claimed to be ADCO's President in his complaint-affidavit. 40

Issues

1. Is respondent guilty of conflict of interest in violation of Rules 15.01 and 15.03 of the CPR?

2. Did respondent violate Rule 13.02 of the CPR when he made public statements in the media regarding the criminal and administrative cases he filed against DBP officials before the Office of the Ombudsman?

3. Did respondent violate Rule 10.01 of the CPR and the Lawyer's Oath when he allegedly lied about being the President of ADCO?

Ruling

We affirm the Resolution of the IBP Board of Governors and dismiss the complaint.

Respondent is NOT guilty of

The prohibition against Conflict of Interest is enshrined under Rules 15.01 and 15.03 of the Code of Professional Responsibility (CPR), to wit:

Rule 15.01. — A lawyer, in conferring with a prospective client, shall ascertain as soon as practicable whether the matter would involve a conflict with another client or his own interest, and if so, shall forthwith inform the prospective client.

Rule 15.03. — A lawyer shall not represent conflicting interests except by written consent of all concerned given after a full disclosure of the facts.

The test of conflict of interest is "whether or not in behalf of one client, it is the lawyer's duty to fight for an issue or claim, but it is his/her duty to oppose it for the other client. In brief, if he/she argues for one client, this argument will be opposed by him/her when he/she argues for the other client." 41Another test of the inconsistency of interests is whether the acceptance of a new relation will prevent attorneys from the full discharge of their duty of undivided fidelity and loyalty to their clients or invite suspicion of unfaithfulness or double-dealing in the performance of said duty. 42 It prohibits a lawyer from representing new clients whose interests oppose those of a former client in any manner, whether or not they are parties in the same action or on totally unrelated cases. 43

This rule covers not only cases in which confidential communications have been confided, but also those in which no confidence has been bestowed or will be used. 44 It applies regardless of the degree of adverse interests. 45 Conflict of interest already exists when there is a substantial risk that a lawyer's loyalty to or representation of a client would be materially or adversely affected by the lawyer's own interest or the lawyer's duties to another client, a former client or a third person. The rule addresses the risk of impairment rather than actual impairment. The level of risk contemplated by the rule is substantial. That is, the risk must be significant and plausible. It must be more than a mere possibility; there must be a genuine, serious risk to the duty of loyalty or to client representation. But the risk need not be likely or probable.

The prohibition against conflict of interest seeks to assure clients that their lawyers will represent them with undivided loyalty. The prohibition further strives to enhance the effectiveness of legal representation. To the extent that a conflict of interest undermines the independence of the lawyer's professional judgment or inhibits a lawyer from working with appropriate vigor in the client's behalf, the client's expectation of effective representation could be compromised. 46

The Court in Tan v. Atty. Alvarico47 held that the absence of a formal engagement would not preclude the finding of an attorney-client relationship, and the absence of such relationship would not preclude the finding of a violation of the rule on conflict of interests. Also, the prohibition against representation of conflicting interests applies even if the conflict pertains to the lawyer's private activity or in the performance of a function in a nonprofessional capacity. 48

Respondent was not involved in a conflict of interest situation when he signed the resolutions pertaining to the demand for payment of PERA and PBB from the DBP and when he filed the administrative and criminal actions before the OMB against officials of DBP.

We stress that his client was not only DBP but also public interest, which means adherence to the rule of law. These are no ordinary clients and respondent is no ordinary lawyer. His retainer is a public appointment paper and is paid by public funds. Hence, in a situation where the government agency which the government lawyer works for is attempting to act in violation of the rule of law, the government lawyer is not simply required to resign or advise the government agency of the wrongfulness of its intended action, but must pursue a course of conduct consistent with the norms of conduct for public officers under the Code of Conduct and Ethical Standards for Public Officials and Employees. After all, a government lawyer's conduct consistent with these norms can never be against the best interests of the client government agency.

Here, the claim for PERA and PBB, if truly provided by law as claimed by respondent, would redound to the best interests of DBP and the public interest as this would mean adherence to the rule of law. The same is true with his act of filing complaints for the criminal acts allegedly committed by some of the DBP officials. Again, if this is true, he would have contributed to the public policy that no one is above the law. Besides, these officials are not his clients. They are the agents of one of respondent's clients-DBP — but he is not answerable to them for the duties owed to a client.

Respondent's actions are consistent with, if not going to promote the best interests of his clients DBP and public interest. As such, the same cannot be illustrative of conflict of interest. If his allegations turn out to be false and done in bad faith, the proper cause of action is not conflict of interest but some other remedy, if at all, available to the sued DBP officials or DBP itself.

It may be suggested that the rejection by DBP of the Joint Resolutions would result in a case and respondent would then be defending conflicting positions. In the first place, while conflict of interest addresses the mere risk of it, the risk must be substantial and not speculative. In any event, given the conflicting legal positions of DBP and respondent's idea of what the state of the law is, he is neither obliged to resign as DBP's legal officer nor dutybound to represent DBP in this future legal case. This is not a case of disobedience because it is based on bona fide differences of legal opinions.

Respondent's public statements in

Rule 13.02 of the CPR reads:

Rule 13.02 — A lawyer shall not make public statements in the media regarding a pending case tending to arouse public opinion for or against a party.

In relation to this foregoing provision, it is essential to discuss the concept of the sub judice rule vis-à-vis the complaint against respondent.

Sub Judice is a Latin term which refers to matters under or before a judge or court; or matters under judicial consideration. In essence, the sub judice rule restricts comments and disclosures pertaining to pending judicial proceedings in order to avoid prejudging the issue, influencing the court, or obstructing the administration of justice. 49 The restriction applies to litigants and witnesses, the public in general, and most especially to members of the Bar and the Bench. 50

A violation of this rule may render one liable for indirect contempt under Sec. 3 (d), Rule 71 51 of the Rules of Court.

For a comment to be considered as indirect contempt of court, "it must really appear" that such does impede, interfere with and embarrass the administration of justice. What is, thus, sought to be protected is the all-important duty of the court to administer justice in the decision of a pending case. The specific rationale for the sub judice rule is that courts, in the decision of issues of fact and law should be immune from every extraneous influence; that facts should be decided upon evidence produced in court; and that the determination of such facts should be uninfluenced by bias, prejudice, or sympathies. 52

Actions in violation of the sub judice rule may be dealt with not only through contempt proceedings but also through administrative actions. This is because a lawyer speech is subject to greater regulation for two (2) significant reasons: one, because of the lawyer's relationship to the judicial process; and two, the significant dangers that a lawyer's speech poses to the trial process. 53 Hence, in Republic v. Sereno, 54 the Court resolved to treat the matter of respondent's public utterances in a separate administrative action. Indeed, this Court has the plenary power to discipline erring lawyers through this kind of proceeding, aimed to purge the law profession of unworthy members of the Bar and to preserve the nobility and honor of the legal profession.

In P/Supt. Marantan v. Atty. Diokno, et al., 55 the Court held that the utterances of respondent-counsels relative to a pending homicide case are not violative of the sub judice rule and Rule 13.02 of the CPR in that the comments were mere reiterations of respondent-counsels' position in the criminal case which calls for the Court to upgrade the charges from homicide to murder. Further, respondent-counsels' comments simply stated that the Court has yet to resolve their petition. The mere restatement of their argument in their petition cannot actually, or does not even tend to, influence the Court.

Here, on May 29, 2015, Inquirer.Net released an article relative to the graft complaint which respondent and DBP-EU President Rudelito Tirado Jr. filed against DBP officials. The article quoted respondent's statement before the media after filing the complaint before the Office of the Ombudsman, thus:

We have a reason to believe that merong kumita. Hindi lang namin ma-establish right now. Logic will show that kapag may perang nawala, may napuntahan ang pera. Obviously, may nakinabang (We have reason to believe someone profited. We just couldn't establish who right now. Logs will show that if money got lost, it must have gone to someone). 56

As correctly held by the IBP Board of Governors, respondent did not violate Rule 13.02 of the CPR when he uttered the foregoing statement since it merely informed the public of the reason why the criminal and administrative cases against DBP officials were filed before the OMB. It does not in any way pose a serious and imminent threat to the administration of justice. Too, there was no intent to impede, obstruct, or degrade the administration of justice which may be inferred from respondent's statement.

Respondent did NOT violate Rule

Rule 10.01 of the CPR ordains, thus:

Rule 10.01. — A lawyer shall not do any falsehood, nor consent to the doing of any in Court; nor shall he mislead, or allow the Court to be misled by any artifice.

Spouses Umaguing v. De Vera57 emphasized that the oath taken by every lawyer in relation to Rule 10.01 of the CPR promises obedience to the laws of the land and desistance from doing any falsehood:

The Lawyer's Oath enjoins every lawyer not only to obey the laws of the land but also to refrain from doing any falsehood in or out of court or from consenting to the doing of any in court, and to conduct himself according to the best of his knowledge and discretion with all good fidelity to the courts as well as to his clients. Every lawyer is a servant of the law, and has to observe and maintain the rule of law as well as be an exemplar worthy of emulation by others. It is by no means a coincidence, therefore, that the core values of honesty, integrity, and trustworthiness are emphatically reiterated by the Code of Professional Responsibility. In this light, Rule 10.01, Canon 10 of the Code of Professional Responsibility provides that "[a] lawyer shall not do any falsehood, nor consent to the doing of any in Court; nor shall he mislead, or allow the Court to be misled by any artifice."

As found by the IBP Board of Governors, respondent did not commit any falsehood when he identified himself as the President of ADCO in the Complaint-Affidavit he filed before the OMB because ADCO's Secretary Certificate specifically stated that through ADCO Board Resolution No. 0042015 dated March 11, 2015, the Board of Trustees resolved to name and appoint him as its President. Hence, respondent did not violate the Lawyer's Oath and Rule 10.01 of the CPR since he did not lie when he claimed to be ADCO's President.

ACCORDINGLY, the Resolution dated December 15, 2019 of the Integrated Bar of the Philippines Board of Governors is AFFIRMED. The complaint against respondent Atty. Francis Romulo Badilla Jr. is DISMISSED for lack of merit.

SO ORDERED."

By authority of the Court:

(SGD.) LIBRADA C. BUENADivision Clerk of Court

By:

MARIA TERESA B. SIBULODeputy Division Clerk of Court

 

Footnotes

1.Rollo, (Vol. 1), pp. 6-26.

2.Id. at 8.

3.Id.

4. Otherwise known as Anti-Graft and Corrupt Practices Act.

5. The Securities Regulation Code.

6. The GOCC Governance Act of 2011.

7.Rollo, (Vol. 1), p. 9.

8.Id. at 10.

9.Id. at 11-13.

10. https://business.inquirer.net/192716/14-dbp-execs-face-graft-complaint-over-p717m-wash-sale; https://business.inquirer.net/195326; https://news.abs-cbn.com/nation/07/15/15/dbp-execs-face-plunder-over-allegedly-excessive-bonuses; https://www.gmanetwork.com/news/money/companies/557801/plunderraps-filed-vs-dbp-president-4-other-officials/story/.

11.Rollo, (Vol. 1), p. 10.

12.Id. at 20.

13.Id. at 434-445.

14.Id. at 435.

15.Id. at 436.

16.Id. at 436.

17.Id. at 435-438.

18.Id. at 438.

19.Id. at 441-442.

20.Id. at 441.

21.Id.

22.Id. at 438-440.

23.Id. at 438.

24. IBP Investigating Commissioner's Report and Recommendation dated May 21, 2019.

25. IBP Investigating Commissioner's Report and Recommendation dated May 21, 2019, p. 8.

26.Id. at 4.

27.Id.

28.Id.

29.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.

30.Rule 15.03. — A lawyer shall not represent conflicting interests except by written consent of all concerned given after a full disclosure of the facts.

31. IBP Investigating Commissioner's Report and Recommendation dated May 21, 2019, p. 5.

32.Id.

33.Id.

34.Id. at 5-8.

35. Resolution dated December 15, 2019.

36.Id. at 1.

37. Penned by Deputy Director for Bar Discipline Dominic C. M. Solis, Extended Resolution dated September 14, 2020.

38.Id. at 4-5.

39.Id. at 8.

40.Id. at 9.

41.Hornilla v. Salunat, 453 Phil. 108, 111-112 (2003).

42.Paces Industrial Corp. v. Atty. Salandanan, 814 Phil. 93, 98-99 (2017).

43.Buena Vista Properties v. Atty. Amado B. Deloria, 838 Phil. 583, 595 (2018).

44.Orola v. Atty. Ramos, 717 Phil. 536, 544-545 (2013).

45.Nakpil v. Atty. Valdes, 350 Phil. 412, 427 (1998).

46.Samson v. Atty. Era, 714 Phil. 101, 110-111 (2013).

47. A.C. No. 10933, November 03, 2020.

48.Quiambao v. Bamba, 505 Phil. 126, 137 (2005).

49.Re: Show Cause Order in the Decision Dated May 11, 2018 in G.R. No. 237428 (Republic of the Philippines, Represented by Solicitor General Jose C. Calida v. Maria Lourdes P.A. Sereno), 836 Phil. 166, 177-178 (2018).

50.Id.

51.Section 3.Indirect contempt to be punished after charge and hearing. — After a charge in writing has been filed, and an opportunity given to the respondent to comment thereon within such period as may be fixed by the court and to be heard by himself or counsel, a person guilty of any of the following acts may be punished for indirect contempt; x x x

(d) Any improper conduct tending, directly or indirectly, to impede, obstruct, or degrade the administration of justice;

xxx xxx xxx

52.P/Supt. Marantan v. Atty. Diokno, 726 Phil. 642, 648-649 (2014).

53.Republic v. Sereno, 833 Phil. 449 (2018).

54.Id.

55.Supra note 52.

56. https://business.inquirer.net/192716/14-dbp-execs-face-graft-complaint-over-p717m-washsale#ixzz7368klkzT

57. 759 Phil. 11, 19 (2018).