FIRST DIVISION
[A.C. No. 11231. January 16, 2023.][Formerly CBD Case No. 19-5976]
ENRICO L. DURAL, complainant, vs.ATTY. CARLO "BONG" A. CARAG, respondent.
NOTICE
Sirs/Mesdames :
Please take notice that the Court, First Division, issued a Resolution datedJanuary 16, 2023which reads as follows: HTcADC
"A.C. No. 11231 [Formerly CBD Case No. 19-5976] (Enrico L. Dural v. Atty. Carlo "Bong" A. Carag). — This resolves the administrative complaint 1 filed by complainant Enrico L. Dural (Dural) against respondent Atty. Carlo "Bong" A. Carag, for alleged violation of the Code of Professional Responsibility (CPR), the Lawyer's Oath, the Constitution, and pertinent laws.
Antecedents
On March 15, 2016, Dural filed a complaint-affidavit for disbarment against respondent before the Supreme Court-Office of the Bar Confidant, which was referred to the Integrated Bar of the Philippines (IBP) through a Resolution dated February 20, 2019.
Dural alleged that, in 2010, respondent was appointed as an Undersecretary of the Department of Finance (DOF) Revenue Operations and Legal Affairs Group (ROLAG). He supervised, among others, the One-Stop Shop Inter-Agency Tax Credit and Duty Drawback Center (OSS Center) which has an inter-agency Executive Committee (EXCOM), composed of respondent as Chairman, and representatives from the Bureau of Customs (BOC), and Bureau of Internal Revenue (BIR), as members. 2
Sometime in June 2014, Atty. Sheila N. Castaloni, then the Officer-in-Charge (OIC) of the OSS Center, confirmed to Dural that respondent is the "Carag" in Carag Jamora Somera and Villareal Law Offices. 3 Dural learned that respondent was a founding partner, and until August 26, 2010, a managing partner of the said law firm. 4
Moreover, in the last quarter of 2014, Dural was informed by Herminia M. Medina (Medina), the representative of Indo Phil Group of Companies, a group of companies with pending claims for tax credits at the OSS Center, that their corporate secretary is Atty. Elpidio Jamora (Atty. Jamora) of Carag Jamora Somera and Villareal Law Offices; and that the companies' billings in connection with the services of Atty. Jamora are issued in the name of the said law firm. 5
In view of these, Dural sent a January 14, 2016 Memorandum to the then Department of Finance Secretary (DOF), Cesar V. Purisima, asking that respondent recuse himself from the deliberations of the DOF Performance Management Committee (PMC) considering that three Indo Phil companies are tax credits claimants at the OSS Center. 6
Dural then learned that respondent inhibited himself from the PMC meeting as well as from the EXCOM meeting where the latter stated as reason for inhibition the fact that "Indo Phil Group of Companies is one of the clients of [his] former law firm, Carag Jamora Somera and Villareal Law Offices, which was dissolved by [his] resignation when [he] assumed office as Undersecretary in the [DOF]." 7 Dural was surprised by the sudden but belated inhibition of respondent considering that there have been eight previous EXCOM meetings during his tenure for which he did not express intention to inhibit. 8
For Dural, respondent's claim that his law firm was dissolved when he resigned is not credible considering that during the February 3, 2016 congressional investigation by the Committee on Ways and Means, respondent's existing conflict of interest, as well as Atty. Jamora's continued engagement as corporate secretary of the Indo Phil Group of Companies, were tackled upon. 9 Likewise, respondent's name had not been dropped from the law firm which continues to exist and do legal business long after his assumption of public office in August of 2010. 10 Respondent, while holding public office, also continued using the email [email protected] Meanwhile, his Statement of Assets, Liabilities and Net Worth (SALNs) for the years 2010, 2012, 2013, 2014, and 2015, show that there are investments and accounts receivable from the law firm. 11
Aside from these, Dural alleged that based on a Commission on Audit (COA) Report on Salaries and Allowances from 2010 to 2014, respondent accepted "additional compensation" from the Philippine Ports Authority (PPA) in the form of allowances, bonuses, incentives, and other benefits, in the total amount of PHP875,150.17. 12 Thus, Dural charged respondent with the following acts:
a. failure, neglect, or refusal to divest himself of business interest in Carag Jamora Somera and Villareal Law Offices in violation of Sections 7 (b) (2) 13 and 9 14 of Republic Act No. 6713, 15 and Sec. 3 (h) 16 of Republic Act No. 3019; 17
b. refusal to withdraw and drop his name from the law firm Carag Jamora Somera and Villareal Law Offices even after his acceptance of public office in violation of Rule 3.03 18 of Canon 3 of the CPR;
c. use of his public position to create a tax credit processing system that favors his law firm's clients in violation of Rule 6.02 19 of Canon 6 of the CPR;
d. acceptance of additional compensation from the PPA in violation of Sec. 7 (a) 20 of Executive Order No. 24 21 and Sec. 19 22 of Republic Act No. 10149; 23
e. conflict of interest in violation of Sec. 13, Article VII of the 1987 Philippine Constitution; 24 and
f. violation of Rule 1.01 of Canon 1, and Rule 7.03 25 of Canon 7 of the CPR, and the Lawyer's Oath.
In his Comment, 26 respondent stated that he was appointed as the new Undersecretary of the DOF for ROLAG on August 16, 2010. He took his oath and assumed position on August 27, 2010. He then formally withdrew from Carag Jamora Somera and Villareal Law Offices on September 8, 2010. On September 9, 2010, the Executive Committee of the law firm approved and accepted his withdrawal from the partnership. However, the remaining partners from the law firm requested respondent to allow them to retain and continue using his surname as part of the firm name to which he consented. Respondent considered this as a special gesture in recognition and appreciation for all the hard work, devotion, and dedication that he has put in as partner in the past years. 27
On October 27, 2010, the Securities and Exchange Commission (SEC) noted the letter of withdrawal of respondent from the partnership dated September 8, 2010 and the Executive Committee Resolution dated October 13, 2010. 28
Respondent was then reappointed as Undersecretary of the DOF on March 8, 2016, this time, as co-terminus with the appointing authority. 29 He was redesignated to head the same ROLAG by virtue of Department Order No. 14-2016 dated March 15, 2016. 30 As of the filing of his Comment, respondent is no longer part of government service as his stint as Undersecretary ended on June 30, 2016; neither did he rejoin the firm. 31
Respondent argued that as Undersecretary of the DOF, he was the Ex-Officio Chairman of the OSS Center's Inter-Agency EXCOM. The EXCOM is the highest policy-making body of the OSS Center and is not involved in the latter's day-to-day operations. Nevertheless, on January 15, 2016, and in view of the Memorandum dated January 14, 2016 of Dural requesting him to recuse, respondent inhibited himself from the deliberations in the EXCOM on the claims for issuance and utilization of tax credit certificates which were then pending with the OSS Center, "to avoid any perception of partiality or bias toward any private party." 32 Meanwhile, with respect to the alleged "additional compensations" which he received from PPA, the same were reimbursable expenses which are allowed and prescribed under Executive Order No. 24. 33
Report and Recommendation of the
In the Report and Recommendation dated June 30, 2020, 34 Investigating Commissioner Gilbert L. Macatangay recommended the dismissal of the complaint for lack of merit. The Commissioner found that respondent's SALNs reflect equity and advances that the law firm returned and paid to respondent, and that whatever amount he received from the PPA are reimbursable expenses allowed under the law. Likewise, the Commissioner held that the material allegations in the complaint are purely hearsay, and Dural was not able to substantiate his allegations by the quantum of proof required in disbarment cases.
The IBP Board of Governors, through Assistant National Secretary Jose Angel B. Guidote, Jr., issued Resolution No. CBD-XXV-2021-10-08 35 on October 16, 2021, which reversed the report and recommendation of the Investigating Commissioner, and found respondent guilty of violating Rule 3.03, Canon 3 of the CPR, in relation to Sec. 7 of Republic Act No. 6713, and recommended the imposition upon respondent of the penalty of reprimand. This was reiterated and explained in an Extended Resolution 36 issued by the Commission on Bar Discipline dated January 21, 2022.
Our Ruling
Upon Our careful review of the records of the case, the Court finds that the recommendation of the IBP Board of Governors is in accord with the pertinent rules and jurisprudence on bar discipline. Verily, We are inclined to adopt the said recommendation.
While it is true that respondent had withdrawn from his law firm as early as September 8, 2010 and has divested any interest therefrom upon his assumption to public office, the continued use of his surname in Carag Jamora Somera and Villareal Law Offices while he was Undersecretary of the DOF violated Rules 3.01, 3.02, and 3.03, Canon 3 of the CPR which provide:
CANON 3 — A LAWYER IN MAKING KNOWN HIS [OR HER] LEGAL SERVICES SHALL USE ONLY TRUE, HONEST, FAIR, DIGNIFIED AND OBJECTIVE INFORMATION OR STATEMENT OF FACTS.
Rule 3.01 — A lawyer shall not use or permit the use of any false, fraudulent, misleading, deceptive, undignified, self-laudatory or unfair statement or claim regarding his [or her] qualifications or legal services.
Rule 3.02 — In the choice of a firm name, no false, misleading or assumed name shall be used. The continued use of the name of a deceased partner is permissible provided that the firm indicates in all its communications that said partner is deceased.
Rule 3.03 — Where a partner accepts public office, he [or she] shall withdraw from the firm and his [or her] name shall be dropped from the firm name unless the law allows him [or her] to practice law concurrently. 37
Respondent argues that the remaining partners of the said law firm requested to retain his surname to preserve and maintain the goodwill it has generated and that in fact, "this practice is not new and appears to be tolerated." 38 For respondent, the practice of retaining the name of a partner of a law office who has withdrawn therefrom by reason of his or her appointment or election in the government is a way to preserve the goodwill the firm has produced through time; its treatment is akin to a business name. 39 We are not persuaded.
Rule 3.01 is explicit that no lawyer shall permit the use of any misleading claim regarding his or her qualifications or legal services. Verily, respondent's consent in the continued use of his surname in the law firm while he was holding public office gives the false impression that he was still part of the said law firm, or that he was simultaneously holding a public position while engaging in private practice. The fact that respondent has already withdrawn from the firm, and that he was not in truth and in fact, engaged in the private practice of law, is of no moment. What is relevant is the misconception or false impression that could be created in the minds of the public or persons transacting with him or the firm, or even with the DOF. This is especially true since his surname appears in the firm's website, business cards, pleadings, letters, or publications which tend to mislead, intentionally or otherwise, that he is rendering legal services as part of the firm. Indeed, respondent has permitted the use of a misleading claim regarding his qualifications or the type of legal services he renders when he allowed the continued use of his surname in the law firm while he was the Undersecretary of the DOF.
Rules 3.02 and 3.03 are likewise clear that no false or misleading name shall be used in a law firm, and that the name of a partner who has been appointed to a public position shall be dropped. Clearly, respondent's surname appearing in the law firm is false and misleading since he was a public officer not permitted by any law to engage in private practice. The use of the word "shall" in the said Rules show that this is not optional or discretionary. Thus, the practice of retaining the name of a partner appointed to a public position clearly violates the CPR, contrary to respondent's contentions. 40 The rationale behind the prohibition is to avoid instances where the law firm uses the name of such partner for their own benefit as in attracting legal businesses, and to prevent suspicion of undue influences.
Further, in Samonte v. Atty. Gatdula, 41 the Court declared that the inclusion of respondent Branch Clerk of Court's name in the business card of the law firm gives the impression that he is part of the said firm, and thus, constitutes an act of solicitation which violates Sec. 7 (b) (2) of Republic Act No. 6713. The said law declares it unlawful for public officials or employees to, among others, "engage in the private practice of their profession unless authorized by the Constitution or law."
Consistent with jurisprudence, the retention of respondent's name in Carag Jamora Somera and Villareal Law Offices with his express consent and permission, while he was serving as an Undersecretary of the DOF ROLAG from 2010 to 2016, falsely gives the impression that he is still part of the said law firm and is considered an act of solicitation under the provisions of Republic Act No. 6713. Considering, however, that respondent is no longer a public officer as of this writing, the evils which the Canons sought to prevent are no longer present. Thus, the penalty of reprimand would be apt and reasonable under the circumstances.
Anent the other allegations thrown by complainant against respondent, it is consistently held that in disbarment proceedings, the quantum of proof is substantial evidence, and the burden of proof is on the complainant to prove the allegations in his or her complaint. 42 Substantial evidence is "that amount of relevant evidence which a reasonable mind might accept as adequate to justify a conclusion," 43 while burden of proof is defined as "the duty of a party to present evidence on the facts in issue necessary to establish his or her claim or defense by the amount of evidence required by law." 44 The basic rule is that reliance on mere allegations, conjectures and suppositions will leave an administrative complaint with no leg to stand on. 45 Charges based on mere suspicion and speculation cannot be given credence. 46 Thus, failure on the part of complainant to discharge his burden of proof by substantial evidence requires no other conclusion than that which stays the hand of the Court from meting out a disbarment order. 47
Given the foregoing guidelines, the Court finds that complainant failed to discharge his burden of proof since he merely relied on communications relayed to him and on speculations and conclusions that are unfounded and unsubstantiated. As respondent has established, EXCOM is a policy-making body and is not involved in the day to day operations of the OSS Center; hence, it has no control over tax credit applications pending therein. Nonetheless, to avoid the appearance of bias or partiality, respondent inhibited himself from the deliberations by the DOF PMC. Meanwhile, complainant failed to prove, by the standards required in disbarment proceedings, his allegations that respondent had participation in the tax credit applications of Indo Phil Group of Companies, or that the latter used, in any way, his public position to affect the outcome thereof, and that he received any amount from the law firm in relation to such application.
As the Court emphasized in Munar v. Atty. Bautista, 48 disbarment is the most severe form of disciplinary sanction and, as such, the power to disbar must always be exercised with great caution, and only for the most imperative reasons and in clear cases of misconduct affecting the standing and moral character of the lawyer as an officer of the court and member of the bar. 49 This Court will thus only wield Our power to disbar when substantial evidence would prove the lack of fitness to engage in the practice of law.
WHEREFORE, We ADOPT and APPROVE the findings and the recommendation of the Integrated Bar of the Philippines to REPRIMAND respondent Atty. Carlo "Bong" A. Carag, with a WARNING that a repetition of the same infraction will merit a heavier penalty.
Let a copy of this Resolution be furnished the Office of the Bar Confidant to be entered to respondent's personal record. Copies shall likewise be served the Integrated Bar of the Philippines and the Office of the Court Administrator for circulation to all courts concerned.
The Notice of Resolution No. CBD-XXV-2021-10-08 dated October 16, 2021 of the Integrated Bar of the Philippines' Board of Governors and the Extended Resolution dated January 21, 2022 of the Integrated Bar of the Philippines' Board of Governors, are both NOTED.
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, pp. 1-17 (sans annexes).
2. Id. at 1.
3. Id. at 2.
4. Id.
5. Id.
6. Id.
7. Id. at 3.
8. Id.
9. Id. at 4.
10. Id. at 5.
11. Id. at 7.
12. Id. at 12.
13. Section 7. Prohibited Acts and Transactions. — In addition to acts and omissions of public officials and employees now prescribed in the Constitution and existing laws, the following shall constitute prohibited acts and transactions of any public official and employee and are hereby declared to be unlawful:
xxx xxx xxx
b) Outside employment and other activities related thereto. — Public officials and employees during their incumbency shall not:
xxx xxx xxx
(2) Engage in the private practice of their profession unless authorized by the Constitution or law, provided, that such practice will not conflict or tend to conflict with their official functions;
xxx xxx xxx
14. Section 9. Divestment. — A public official or employee shall avoid conflicts of interest at all times. When a conflict of interest arises, he shall resign from his position in any private business enterprise within thirty (30) days from his assumption of office and/or divest himself of his shareholdings or interest within sixty (60) days from such assumption.
The same rule shall apply where the public official or employee is a partner in a partnership.
The requirement of divestment shall not apply to those who serve the Government in an honorary capacity nor to laborers and casual or temporary workers.
15. Entitled "AN ACT ESTABLISHING A CODE OF CONDUCT AND ETHICAL STANDARDS FOR PUBLIC OFFICIALS AND EMPLOYEES, TO UPHOLD THE TIME-HONORED PRINCIPLE OF PUBLIC OFFICE BEING A PUBLIC TRUST, GRANTING INCENTIVES AND REWARDS FOR EXEMPLARY SERVICE, ENUMERATING PROHIBITED ACTS AND TRANSACTIONS AND PROVIDING PENALTIES FOR VIOLATIONS THEREOF AND FOR OTHER PURPOSES." Approved: February 20, 1989.
16. Section 3. Corrupt practices of public officers. — In addition to acts or omissions of public officers already penalized by existing law, the following shall constitute corrupt practices of any public officer and are hereby declared to be unlawful:
xxx xxx xxx
(h) Directly or indirectly having financial or pecuniary interest in any business, contract or transaction in connection with which he intervenes or takes part in his official capacity, or in which he is prohibited by the Constitution or by any law from having any interest.
xxx xxx xxx
17. Entitled "ANTI-GRAFT AND CORRUPT PRACTICES ACT." Approved: August 17, 1960.
18. Rule 3.03 — Where a partner accepts public office, he shall withdrawal from the firm and his name shall be dropped from the firm name unless the law allows him to practice law currently.
19. Rule 6.02 — A lawyer in the government service shall not use his public position to promote or advance his private interests, nor allow the latter to interfere with his public duties.
20. SECTION 7. Compensation of Members of the Board of Directors/Trustees. — The compensation of members of the Board of Directors/Trustees shall be in accordance with the following rules:
a) Department Secretaries, Undersecretaries, Assistant Secretaries and other government officials, who are Ex-Officio Board Members, including their Authorized Alternates/Representatives, shall not be entitled to any additional compensation for their services as such.
21. Entitled "PRESCRIBING RULES TO GOVERN THE COMPENSATION OF MEMBERS OF THE BOARD OF DIRECTORS/TRUSTEES IN GOVERNMENT-OWNED OR -CONTROLLED CORPORATIONS INCLUDING GOVERNMENT FINANCIAL INSTITUTIONS." Signed: February 10, 2011.
22. SEC. 19. Fiduciary Duties of the Board and Officers. — As fiduciaries of the State, members of the Board of Directors/Trustees and the Officers of GOCCs have the legal obligation and duty to always act in the best interest of the GOCC, with utmost good faith in all its dealings with the property and monies of the GOCC.
23. Entitled "AN ACT TO PROMOTE FINANCIAL VIABILITY AND FISCAL DISCIPLINE IN GOVERNMENT-OWNED OR -CONTROLLED CORPORATIONS AND TO STRENGTHEN THE ROLE OF THE STATE IN ITS GOVERNANCE AND MANAGEMENT TO MAKE THEM MORE RESPONSIVE TO THE NEEDS OF PUBLIC INTEREST AND FOR OTHER PURPOSES." Approved: June 6, 2011.
24. Section 13. The President, Vice-President, the Members of the Cabinet, and their deputies or assistants shall not, unless otherwise provided in this Constitution, hold any other office or employment during their tenure. They shall not, during said tenure, directly or indirectly, practice any other profession, participate in any business, or be financially interested in any contract with, or in any franchise, or special privilege granted by the Government or any subdivision, agency, or instrumentality thereof, including government-owned or controlled corporations or their subsidiaries. They shall strictly avoid conflict of interest in the conduct of their office.
The spouse and relatives by consanguinity or affinity within the fourth civil degree of the President shall not, during his tenure, be appointed as Members of the Constitutional Commissions, or the Office of the Ombudsman, or as Secretaries, Undersecretaries, chairmen or heads of bureaus or offices, including government-owned or controlled corporations and their subsidiaries.
25. Rule 1.01 — A lawyer shall not engage in unlawful, dishonest, immoral or deceitful conduct; Rule 7.03 — A lawyer shall not engage in conduct that adversely reflects on his fitness to practice law, nor shall he whether in public or private life, behave in a scandalous manner to the discredit of the legal profession.
26. Rollo, pp. 72-98 (sans annexes).
27. Id. at 73, 80.
28. Id. at 73, 81.
29. Id.
30. Id. at 74.
31. Id.
32. Id. at 75.
33. Id. at 90-93.
34. Id.; unpaginated.
35. Id., unpaginated. Signed by Assistant National Secretary Jose Angel B. Guidote, Jr.
36. Id.; unpaginated. Penned by Deputy Director Hilarion B. Buban.
37. Emphasis supplied.
38. Rollo, p. 89.
39. Id.
40. Id.
41. 363 Phil. 369, 376 (1999).
42. Tan v. Atty. Alvarico, A.C. No. 10933, November 03, 2020, citing BSA Tower Condominium Corporation v. Atty. Reyes, 833 Phil. 588, 589 (2018).
43. Id., citing REVISED RULES ON EVIDENCE, Rule 133, Sec. 6.
44. Id., citing REVISED RULES ON EVIDENCE, Rule 133, Sec. 1.
45. Id., citing Zara v. Atty. Joyas, A.C. No. 10994, June 10, 2019.
46. Id.
47. Id.
48. 805 Phil. 384 (2017).
49. Id. at 398.