PIERCING THE VEIL RESEARCH-1

PIERCING THE VEIL RESEARCH-1
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SYLLABI/SYNOPSIS

SECOND DIVISION

[G.R. No. 100812. June 25, 1999]

FRANCISCO MOTORS CORPORATION, petitioner, vs. COURT OF APPEALS and SPOUSES GREGORIO and LIBRADA MANUEL, respondents.

D E C I S I O N

QUISUMBING, J.:

This petition for review on certiorari, under Rule 45 of the Rules of Court, seeks to annul the decision[1] of the Court of Appeals in C.A. G.R. CV No. 10014 affirming the decision rendered by Branch 135, Regional Trial Court of Makati, Metro Manila. The procedural antecedents of this petition are as follows:

On January 23, 1985, petitioner filed a complaint[2] against private respondents to recover three thousand four hundred twelve and six centavos (P3,412.06), representing the balance of the jeep body purchased by the Manuels from petitioner; an additional sum of twenty thousand four hundred fifty-four and eighty centavos (P20,454.80) representing the unpaid balance on the cost of repair of the vehicle; and six thousand pesos (P6,000.00) for cost of suit and attorney's fees.[3] To the original balance on the price of jeep body were added the costs of repair.[4] In their answer, private respondents interposed a counterclaim for unpaid legal services by Gregorio Manuel in the amount of fifty thousand pesos (P50,000) which was not paid by the incorporators, directors and officers of the petitioner. The trial court decided the case on June 26, 1985, in favor of petitioner in regard to the petitioner's claim for money, but also allowed the counter-claim of private respondents. Both parties appealed. On April 15, 1991, the Court of Appeals sustained the trial court's decision.[5] Hence, the present petition.

For our review in particular is the propriety of the permissive counterclaim which private respondents filed together with their answer to petitioner's complaint for a sum of money. Private respondent Gregorio Manuel alleged as an affirmative defense that, while he was petitioner's Assistant Legal Officer, he represented members of the Francisco family in the intestate estate proceedings of the late Benita Trinidad. However, even after the termination of the proceedings, his services were not paid. Said family members, he said, were also incorporators, directors and officers of petitioner. Hence to counter petitioner's collection suit, he filed a permissive counterclaim for the unpaid attorney's fees.[6]

For failure of petitioner to answer the counterclaim, the trial court declared petitioner in default on this score, and evidence ex-parte was presented on the counterclaim. The trial court ruled in favor of private respondents and found that Gregorio Manuel indeed rendered legal services to the Francisco family in Special Proceedings Number 7803- "In the Matter of Intestate Estate of Benita Trinidad". Said court also found that his legal services were not compensated despite repeated demands, and thus ordered petitioner to pay him the amount of fifty thousand (P50,000.00) pesos.[7]

Dissatisfied with the trial court's order, petitioner elevated the matter to the Court of Appeals, posing the following issues:

"I.

WHETHER OR NOT THE DECISION RENDERED BY THE LOWER COURT IS NULL AND VOID AS IT NEVER ACQUIRED JURISDICTION OVER THE PERSON OF THE DEFENDANT.

II.

WHETHER OR NOT PLAINTIFF-APPELLANT NOT BEING A REAL PARTY IN THE ALLEGED PERMISSIVE COUNTERCLAIM SHOULD BE HELD LIABLE TO THE CLAIM OF DEFENDANT-APPELLEES.

III.

WHETHER OR NOT THERE IS FAILURE ON THE PART OF PLAINTIFF-APPELLANT TO ANSWER THE ALLEGED PERMISSIVE COUNTERCLAIM."[8]

Petitioner contended that the trial court did not acquire jurisdiction over it because no summons was validly served on it together with the copy of the answer containing the permissive counterclaim. Further, petitioner questions the propriety of its being made party to the case because it was not the real party in interest but the individual members of the Francisco family concerned with the intestate case.

In its assailed decision now before us for review, respondent Court of Appeals held that a counterclaim must be answered in ten (10) days, pursuant to Section 4, Rule 11, of the Rules of Court; and nowhere does it state in the Rules that a party still needed to be summoned anew if a counterclaim was set up against him. Failure to serve summons, said respondent court, did not effectively negate trial court's jurisdiction over petitioner in the matter of the counterclaim. It likewise pointed out that there was no reason for petitioner to be excused from answering the counterclaim. Court records showed that its former counsel, Nicanor G. Alvarez, received the copy of the answer with counterclaim two (2) days prior to his withdrawal as counsel for petitioner. Moreover when petitioner's new counsel, Jose N. Aquino, entered his appearance, three (3) days still remained within the period to file an answer to the counterclaim. Having failed to answer, petitioner was correctly considered in default by the trial court.[9] Even assuming that the trial court acquired no jurisdiction over petitioner, respondent court also said, but having filed a motion for reconsideration seeking relief from the said order of default, petitioner was estopped from further questioning the trial court's jurisdiction.[10]

On the question of its liability for attorney's fees owing to private respondent Gregorio Manuel, petitioner argued that being a corporation, it should not be held liable therefor because these fees were owed by the incorporators, directors and officers of the corporation in their personal capacity as heirs of Benita Trinidad. Petitioner stressed that the personality of the corporation, vis-à-vis the individual persons who hired the services of private respondent, is separate and distinct,[11] hence, the liability of said individuals did not become an obligation chargeable against petitioner.

Nevertheless, on the foregoing issue, the Court of Appeals ruled as follows:

"However, this distinct and separate personality is merely a fiction created by law for convenience and to promote justice. Accordingly, this separate personality of the corporation may be disregarded, or the veil of corporate fiction pierced, in cases where it is used as a cloak or cover for found (sic) illegality, or to work an injustice, or where necessary to achieve equity or when necessary for the protection of creditors. (Sulo ng Bayan, Inc. vs. Araneta, Inc., 72 SCRA 347) Corporations are composed of natural persons and the legal fiction of a separate corporate personality is not a shield for the commission of injustice and inequity. (Chemplex Philippines, Inc. vs. Pamatian, 57 SCRA 408)

"In the instant case, evidence shows that the plaintiff-appellant Francisco Motors Corporation is composed of the heirs of the late Benita Trinidad as directors and incorporators for whom defendant Gregorio Manuel rendered legal services in the intestate estate case of their deceased mother. Considering the aforestated principles and circumstances established in this case, equity and justice demands plaintiff-appellant's veil of corporate identity should be pierced and the defendant be compensated for legal services rendered to the heirs, who are directors of the plaintiff-appellant corporation."[12]

Now before us, petitioner assigns the following errors:

"I.

THE COURT OF APPEALS ERRED IN APPLYING THE DOCTRINE OF PIERCING THE VEIL OF CORPORATE ENTITY.

II.

THE COURT OF APPEALS ERRED IN AFFIRMING THAT THERE WAS JURISDICTION OVER PETITIONER WITH RESPECT TO THE COUNTERCLAIM."[13]

Petitioner submits that respondent court should not have resorted to piercing the veil of corporate fiction because the transaction concerned only respondent Gregorio Manuel and the heirs of the late Benita Trinidad. According to petitioner, there was no cause of action by said respondent against petitioner; personal concerns of the heirs should be distinguished from those involving corporate affairs. Petitioner further contends that the present case does not fall among the instances wherein the courts may look beyond the distinct personality of a corporation. According to petitioner, the services for which respondent Gregorio Manuel seeks to collect fees from petitioner are personal in nature. Hence, it avers the heirs should have been sued in their personal capacity, and not involve the corporation.[14]

With regard to the permissive counterclaim, petitioner also insists that there was no proper service of the answer containing the permissive counterclaim. It claims that the counterclaim is a separate case which can only be properly served upon the opposing party through summons. Further petitioner states that by nature, a permissive counterclaim is one which does not arise out of nor is necessarily connected with the subject of the opposing party's claim. Petitioner avers that since there was no service of summons upon it with regard to the counterclaim, then the court did not acquire jurisdiction over petitioner. Since a counterclaim is considered an action independent from the answer, according to petitioner, then in effect there should be two simultaneous actions between the same parties: each party is at the same time both plaintiff and defendant with respect to the other,[15] requiring in each case separate summonses.

In their Comment, private respondents focus on the two questions raised by petitioner. They defend the propriety of piercing the veil of corporate fiction, but deny the necessity of serving separate summonses on petitioner in regard to their permissive counterclaim contained in the answer.

Private respondents maintain both trial and appellate courts found that respondent Gregorio Manuel was employed as assistant legal officer of petitioner corporation, and that his services were solicited by the incorporators, directors and members to handle and represent them in Special Proceedings No. 7803, concerning the Intestate Estate of the late Benita Trinidad. They assert that the members of petitioner corporation took advantage of their positions by not compensating respondent Gregorio Manuel after the termination of the estate proceedings despite his repeated demands for payment of his services. They cite findings of the appellate court that support piercing the veil of corporate identity in this particular case. They assert that the corporate veil may be disregarded when it is used to defeat public convenience, justify wrong, protect fraud, and defend crime. It may also be pierced, according to them, where the corporate entity is being used as an alter ego, adjunct, or business conduit for the sole benefit of the stockholders or of another corporate entity. In these instances, they aver, the corporation should be treated merely as an association of individual persons.[16]

Private respondents dispute petitioner's claim that its right to due process was violated when respondents' counterclaim was granted due course, although no summons was served upon it. They claim that no provision in the Rules of Court requires service of summons upon a defendant in a counterclaim. Private respondents argue that when the petitioner filed its complaint before the trial court it voluntarily submitted itself to the jurisdiction of the court. As a consequence, the issuance of summons on it was no longer necessary. Private respondents say they served a copy of their answer with affirmative defenses and counterclaim on petitioner's former counsel, Nicanor G. Alvarez. While petitioner would have the Court believe that respondents served said copy upon Alvarez after he had withdrawn his appearance as counsel for the petitioner, private respondents assert that this contention is utterly baseless. Records disclose that the answer was received two (2) days before the former counsel for petitioner withdrew his appearance, according to private respondents. They maintain that the present petition is but a form of dilatory appeal, to set off petitioner's obligations to the respondents by running up more interest it could recover from them. Private respondents therefore claim damages against petitioner.[17]

To resolve the issues in this case, we must first determine the propriety of piercing the veil of corporate fiction.

Basic in corporation law is the principle that a corporation has a separate personality distinct from its stockholders and from other corporations to which it may be connected.[18] However, under the doctrine of piercing the veil of corporate entity, the corporation's separate juridical personality may be disregarded, for example, when the corporate identity is used to defeat public convenience, justify wrong, protect fraud, or defend crime. Also, where the corporation is a mere alter ego or business conduit of a person, or where the corporation is so organized and controlled and its affairs are so conducted as to make it merely an instrumentality, agency, conduit or adjunct of another corporation, then its distinct personality may be ignored.[19] In these circumstances, the courts will treat the corporation as a mere aggrupation of persons and the liability will directly attach to them. The legal fiction of a separate corporate personality in those cited instances, for reasons of public policy and in the interest of justice, will be justifiably set aside.

In our view, however, given the facts and circumstances of this case, the doctrine of piercing the corporate veil has no relevant application here. Respondent court erred in permitting the trial court's resort to this doctrine. The rationale behind piercing a corporation's identity in a given case is to remove the barrier between the corporation from the persons comprising it to thwart the fraudulent and illegal schemes of those who use the corporate personality as a shield for undertaking certain proscribed activities. However, in the case at bar, instead of holding certain individuals or persons responsible for an alleged corporate act, the situation has been reversed. It is the petitioner as a corporation which is being ordered to answer for the personal liability of certain individual directors, officers and incorporators concerned. Hence, it appears to us that the doctrine has been turned upside down because of its erroneous invocation. Note that according to private respondent Gregorio Manuel his services were solicited as counsel for members of the Francisco family to represent them in the intestate proceedings over Benita Trinidad's estate. These estate proceedings did not involve any business of petitioner.

Note also that he sought to collect legal fees not just from certain Francisco family members but also from petitioner corporation on the claims that its management had requested his services and he acceded thereto as an employee of petitioner from whom it could be deduced he was also receiving a salary. His move to recover unpaid legal fees through a counterclaim against Francisco Motors Corporation, to offset the unpaid balance of the purchase and repair of a jeep body could only result from an obvious misapprehension that petitioner's corporate assets could be used to answer for the liabilities of its individual directors, officers, and incorporators. Such result if permitted could easily prejudice the corporation, its own creditors, and even other stockholders; hence, clearly inequitous to petitioner.

Furthermore, considering the nature of the legal services involved, whatever obligation said incorporators, directors and officers of the corporation had incurred, it was incurred in their personal capacity. When directors and officers of a corporation are unable to compensate a party for a personal obligation, it is far-fetched to allege that the corporation is perpetuating fraud or promoting injustice, and be thereby held liable therefor by piercing its corporate veil. While there are no hard and fast rules on disregarding separate corporate identity, we must always be mindful of its function and purpose. A court should be careful in assessing the milieu where the doctrine of piercing the corporate veil may be applied. Otherwise an injustice, although unintended, may result from its erroneous application.

The personality of the corporation and those of its incorporators, directors and officers in their personal capacities ought to be kept separate in this case. The claim for legal fees against the concerned individual incorporators, officers and directors could not be properly directed against the corporation without violating basic principles governing corporations. Moreover, every action —including a counterclaim — must be prosecuted or defended in the name of the real party in interest.[20] It is plainly an error to lay the claim for legal fees of private respondent Gregorio Manuel at the door of petitioner (FMC) rather than individual members of the Francisco family.

However, with regard to the procedural issue raised by petitioner's allegation, that it needed to be summoned anew in order for the court to acquire jurisdiction over it, we agree with respondent court's view to the contrary. Section 4, Rule 11 of the Rules of Court provides that a counterclaim or cross-claim must be answered within ten (10) days from service. Nothing in the Rules of Court says that summons should first be served on the defendant before an answer to counterclaim must be made. The purpose of a summons is to enable the court to acquire jurisdiction over the person of the defendant. Although a counterclaim is treated as an entirely distinct and independent action, the defendant in the counterclaim, being the plaintiff in the original complaint, has already submitted to the jurisdiction of the court. Following Rule 9, Section 3 of the 1997 Rules of Civil Procedure,[21] if a defendant (herein petitioner) fails to answer the counterclaim, then upon motion of plaintiff, the defendant may be declared in default. This is what happened to petitioner in this case, and this Court finds no procedural error in the disposition of the appellate court on this particular issue. Moreover, as noted by the respondent court, when petitioner filed its motion seeking to set aside the order of default, in effect it submitted itself to the jurisdiction of the court. As well said by respondent court:

"Further on the lack of jurisdiction as raised by plaintiff-appellant[,] [t]he records show that upon its request, plaintiff-appellant was granted time to file a motion for reconsideration of the disputed decision. Plaintiff-appellant did file its motion for reconsideration to set aside the order of default and the judgment rendered on the counterclaim.

"Thus, even if the court acquired no jurisdiction over plaintiff-appellant on the counterclaim, as it vigorously insists, plaintiff-appellant is considered to have submitted to the court's jurisdiction when it filed the motion for reconsideration seeking relief from the court. (Soriano vs. Palacio, 12 SCRA 447). A party is estopped from assailing the jurisdiction of a court after voluntarily submitting himself to its jurisdiction. (Tejones vs. Gironella, 159 SCRA 100). Estoppel is a bar against any claims of lack of jurisdiction. (Balais vs. Balais, 159 SCRA 37)."[22]

WHEREFORE, the petition is hereby GRANTED and the assailed decision is hereby REVERSED insofar only as it held Francisco Motors Corporation liable for the legal obligation owing to private respondent Gregorio Manuel; but this decision is without prejudice to his filing the proper suit against the concerned members of the Francisco family in their personal capacity. No pronouncement as to costs.

SO ORDERED.

Bellosillo, (Chairman), Puno, Mendoza, and Buena, JJ., concur.

---

[1] Dated April 15, 1991. Rollo, pp. 31 - 35. Reconsideration thereof was denied on July 1, 1991. Rollo, pp. 28-29.

[2] Civil Case No. 9542. Records, RTC, pp. 1-3.

[3] Rollo, p. 31.

[4] Id. at 9.

[5] Id. at 11.

[6] Supra, note 4.

[7] Supra note 5.

[8] Rollo, pp. 32-33.

[9] Id. at 32.

[10] Id. at 34.

[11] Ibid.

[12] Rollo, pp. 34-35.

[13] Id. at 12.

[14] Id. at 12 - 16.

[15] Id. at 18 - 21; See also Golden Ribbon Lumber Co., Inc. vs. Salvador S. Santos and Rafaela M. Santos, C.A. - G. R. No. 12935 November 15, 1955.

[16] Id. at 47 - 51.

[17] Id. at 52- 60.

[18] Concept Builders's Inc. vs. NLRC 257 SCRA 149, 157 (1996); See also Emilio Cano Enterprises, Inc. vs. CIR, 13 SCRA 290 (1965) and Yutivo Sons Hardware Co. vs. CTA, 1 SCRA 160 (1961).

[19] Indophil Textile Mill Workers Union vs. Calica, 205 SCRA 697, 704 (1992); See also Umali et al vs. C C.A, 189 SCRA 529,542 (1990).

[20] Section 2, Rule 3 of the RULES OF COURT; See also, De Leon vs. Court of Appeals, 277 SCRA 478, 486 (1997).

[21] In the Court of Appeals Decision, Section 3 of Rule 9 was still under Section 1 of Rule 18 of the Rules of Court.

[22] Rollo, p. 34.

-
Antonio L. Buensuceso Jr.

PIERCING THE VEIL

A somewhat related phrase is "piercing the veil," a legal term. The definition, courtesy of nolo.com:

: A judicial doctrine that allows a plaintiff to hold otherwise immune corporate officers and directors personally liable for damages caused by a corporation under their control. The veil is pierced when officers have acted intentionally and illegally, or when their actions exceeded the power given them by the company's articles of incorporation.

--
Antonio L. Buensuceso Jr.

CODE OF PROFESSIONAL RESPONSIBILITY

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CODE OF PROFESSIONAL RESPONSIBILITY
(Promulgated June 21, 1988)

CHAPTER I. THE LAWYER AND SOCIETY

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

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

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

Rule 1.03 - A lawyer shall not, for any corrupt motive or interest, encourage any suit or proceeding or delay any man's cause.

Rule 1.04 - A lawyer shall encourage his clients to avoid, end or settle a controversy if it will admit of a fair settlement.

CANON 2 - A LAWYER SHALL MAKE HIS LEGAL SERVICES AVAILABLE IN AN EFFICIENT AND CONVENIENT MANNER COMPATIBLE WITH THE INDEPENDENCE, INTEGRITY AND EFFECTIVENESS OF THE PROFESSION.

Rule 2.01 - A lawyer shall not reject, except for valid reasons, the cause of the defenseless or the oppressed.

Rule 2.02 - In such cases, even if the lawyer does not accept a case, he shall not refuse to render legal advice to the person concerned if only to the extent necessary to safeguard the latter's rights.

Rule 2.03 - A lawyer shall not do or permit to be done any act designed primarily to solicit legal business.

Rule 2.04 - A lawyer shall not charge rates lower than those customarily prescribed unless the circumstances so warrant.

CANON 3 - A LAWYER IN MAKING KNOWN HIS 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 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 shall withdrawal from the firm and his name shall be dropped from the firm name unless the law allows him to practice law currently.

Rule 3.04 - A lawyer shall not pay or give anything of value to representatives of the mass media in anticipation of, or in return for, publicity to attract legal business.

CANON 4 - A LAWYER SHALL PARTICIPATE IN THE DEVELOPMENT OF THE LEGAL SYSTEM BY INITIATING OR SUPPORTING EFFORTS IN LAW REFORM AND IN THE IMPROVEMENT OF THE ADMINISTRATION OF JUSTICE.

CANON 5 - A LAWYER SHALL KEEP ABREAST OF LEGAL DEVELOPMENTS, PARTICIPATE IN CONTINUING LEGAL EDUCATION PROGRAMS, SUPPORT EFFORTS TO ACHIEVE HIGH STANDARDS IN LAW SCHOOLS AS WELL AS IN THE PRACTICAL TRAINING OF LAW STUDENTS AND ASSIST IN DISSEMINATING THE LAW AND JURISPRUDENCE.

CANON 6 - THESE CANONS SHALL APPLY TO LAWYERS IN GOVERNMENT SERVICES IN THE DISCHARGE OF THEIR TASKS.

Rule 6.01 - The primary duty of a lawyer engaged in public prosecution is not to convict but to see that justice is done. The suppression of facts or the concealment of witnesses capable of establishing the innocence of the accused is highly reprehensible and is cause for disciplinary action.

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.

Rule 6.03 - A lawyer shall not, after leaving government service, accept engagement or employment in connection with any matter in which he had intervened while in said service.

CHAPTER II. THE LAWYER AND THE LEGAL PROFESSION

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

Rule 7.01 - A lawyer shall be answerable for knowingly making a false statement or suppressing a material fact in connection with his application for admission to the bar.

Rule 7.02 - A lawyer shall not support the application for admission to the bar of any person known by him to be unqualified in respect to character, education, or other relevant attribute.

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

CANON 8 - A LAWYER SHALL CONDUCT HIMSELF WITH COURTESY, FAIRNESS AND CANDOR TOWARDS HIS PROFESSIONAL COLLEAGUES, AND SHALL AVOID HARASSING TACTICS AGAINST OPPOSING COUNSEL.

Rule 8.01 - A lawyer shall not, in his professional dealings, use language which is abusive, offensive or otherwise improper.

Rule 8.02 - A lawyer shall not, directly or indirectly, encroach upon the professional employment of another lawyer, however, it is the right of any lawyer, without fear or favor, to give proper advice and assistance to those seeking relief against unfaithful or neglectful counsel.

CANON 9 - A LAWYER SHALL NOT, DIRECTLY OR INDIRECTLY, ASSIST IN THE UNAUTHORIZED PRACTICE OF LAW.

Rule 9.01 - A lawyer shall not delegate to any unqualified person the performance of any task which by law may only be performed by a member of the bar in good standing.

Rule 9.02 - A lawyer shall not divide or stipulate to divide a fee for legal services with persons not licensed to practice law, except:

(a) Where there is a pre-existing agreement with a partner or associate that, upon the latter's death, money shall be paid over a reasonable period of time to his estate or to persons specified in the agreement; or

(b) Where a lawyer undertakes to complete unfinished legal business of a deceased lawyer; or

(c) Where a lawyer or law firm includes non-lawyer employees in a retirement plan even if the plan is based in whole or in part, on a profit sharing agreement.

CHAPTER III. THE LAWYER AND THE COURTS

CANON 10 - A LAWYER OWES CANDOR, FAIRNESS AND GOOD FAITH TO THE COURT.

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.

Rule 10.02 - A lawyer shall not knowingly misquote or misrepresent the contents of a paper, the language or the argument of opposing counsel, or the text of a decision or authority, or knowingly cite as law a provision already rendered inoperative by repeal or amendment, or assert as a fact that which has not been proved.

Rule 10.03 - A lawyer shall observe the rules of procedure and shall not misuse them to defeat the ends of justice.

CANON 11 - A LAWYER SHALL OBSERVE AND MAINTAIN THE RESPECT DUE TO THE COURTS AND TO JUDICIAL OFFICERS AND SHOULD INSIST ON SIMILAR CONDUCT BY OTHERS.

Rule 11.01 - A lawyer shall appear in court properly attired.

Rule 11.02 - A lawyer shall punctually appear at court hearings.

Rule 11.03 - A lawyer shall abstain from scandalous, offensive or menacing language or behavior before the Courts.

Rule 11.04 - A lawyer shall not attribute to a Judge motives not supported by the record or have no materiality to the case.

Rule 11.05 - A lawyer shall submit grievances against a Judge to the proper authorities only.

CANON 12 - A LAWYER SHALL EXERT EVERY EFFORT AND CONSIDER IT HIS DUTY TO ASSIST IN THE SPEEDY AND EFFICIENT ADMINISTRATION OF JUSTICE.

Rule 12.01 - A lawyer shall not appear for trial unless he has adequately prepared himself on the law and the facts of his case, the evidence he will adduce and the order of its proferrence. He should also be ready with the original documents for comparison with the copies.

Rule 12.02 - A lawyer shall not file multiple actions arising from the same cause.

Rule 12.03 - A lawyer shall not, after obtaining extensions of time to file pleadings, memoranda or briefs, let the period lapse without submitting the same or offering an explanation for his failure to do so.

Rule 12.04 - A lawyer shall not unduly delay a case, impede the execution of a judgment or misuse Court processes.

Rule 12.05 - A lawyer shall refrain from talking to his witness during a break or recess in the trial, while the witness is still under examination.

Rule 12.06 - A lawyer shall not knowingly assist a witness to misrepresent himself or to impersonate another.

Rule 12.07 - A lawyer shall not abuse, browbeat or harass a witness nor needlessly inconvenience him.

Rule 12.08 - A lawyer shall avoid testifying in behalf of his client, except:

(a) on formal matters, such as the mailing, authentication or custody of an instrument, and the like; or

(b) on substantial matters, in cases where his testimony is essential to the ends of justice, in which event he must, during his testimony, entrust the trial of the case to another counsel.

CANON 13 - A LAWYER SHALL RELY UPON THE MERITS OF HIS CAUSE AND REFRAIN FROM ANY IMPROPRIETY WHICH TENDS TO INFLUENCE, OR GIVES THE APPEARANCE OF INFLUENCING THE COURT.

Rule 13.01 - A lawyer shall not extend extraordinary attention or hospitality to, nor seek opportunity for cultivating familiarity with Judges.

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.

Rule 13.03 - A lawyer shall not brook or invite interference by another branch or agency of the government in the normal course of judicial proceedings.

CHAPTER IV. THE LAWYER AND THE CLIENT

CANON 14 - A LAWYER SHALL NOT REFUSE HIS SERVICES TO THE NEEDY.

Rule 14.01 - A lawyer shall not decline to represent a person solely on account of the latter's race, sex. creed or status of life, or because of his own opinion regarding the guilt of said person.

Rule 14.02 - A lawyer shall not decline, except for serious and sufficient cause, an appointment as counsel de officio or as amicus curiae, or a request from the Integrated Bar of the Philippines or any of its chapters for rendition of free legal aid.

Rule 14.03 - A lawyer may not refuse to accept representation of an indigent client if:

(a) he is not in a position to carry out the work effectively or competently;

(b) he labors under a conflict of interest between him and the prospective client or between a present client and the prospective client.

Rule 14.04 - A lawyer who accepts the cause of a person unable to pay his professional fees shall observe the same standard of conduct governing his relations with paying clients.

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

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 15.02.- A lawyer shall be bound by the rule on privilege communication in respect of matters disclosed to him by a 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.

Rule 15.04. - A lawyer may, with the written consent of all concerned, act as mediator, conciliator or arbitrator in settling disputes.

Rule 15.05. - A lawyer when advising his client, shall give a candid and honest opinion on the merits and probable results of the client's case, neither overstating nor understating the prospects of the case.

Rule 15.06. - A lawyer shall not state or imply that he is able to influence any public official, tribunal or legislative body.

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

Rule 15.08. - A lawyer who is engaged in another profession or occupation concurrently with the practice of law shall make clear to his client whether he is acting as a lawyer or in another capacity.

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

Rule 16.01 - A lawyer shall account for all money or property collected or received for or from the client.

Rule 16.02 - A lawyer shall keep the funds of each client separate and apart from his own and those of others kept by him.

Rule 16.03 - A lawyer shall deliver the funds and property of his client when due or upon demand. However, he shall have a lien over the funds and may apply so much thereof as may be necessary to satisfy his lawful fees and disbursements, giving notice promptly thereafter to his client. He shall also have a lien to the same extent on all judgments and executions he has secured for his client as provided for in the Rules of Court.

Rule 16.04 - A lawyer shall not borrow money from his client unless the client's interest are fully protected by the nature of the case or by independent advice. Neither shall a lawyer lend money to a client except, when in the interest of justice, he has to advance necessary expenses in a legal matter he is handling for the client.

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.

CANON 18 - A LAWYER SHALL SERVE HIS CLIENT WITH COMPETENCE AND DILIGENCE.

Rules 18.01 - A lawyer shall not undertake a legal service which he knows or should know that he is not qualified to render. However, he may render such service if, with the consent of his client, he can obtain as collaborating counsel a lawyer who is competent on the matter.

Rule 18.02 - A lawyer shall not handle any legal matter without adequate preparation.

Rule 18.03 - A lawyer shall not neglect a legal matter entrusted to him, and his negligence in connection therewith shall render him liable.

Rule 18.04 - A lawyer shall keep the client informed of the status of his case and shall respond within a reasonable time to the client's request for information.

CANON 19 - A LAWYER SHALL REPRESENT HIS CLIENT WITH ZEAL WITHIN THE BOUNDS OF THE LAW.

Rule 19.01 - A lawyer shall employ only fair and honest means to attain the lawful objectives of his client and shall not present, participate in presenting or threaten to present unfounded criminal charges to obtain an improper advantage in any case or proceeding.

Rule 19.02 - A lawyer who has received information that his client has, in the course of the representation, perpetrated a fraud upon a person or tribunal, shall promptly call upon the client to rectify the same, and failing which he shall terminate the relationship with such client in accordance with the Rules of Court.

Rule 19.03 - A lawyer shall not allow his client to dictate the procedure in handling the case.

CANON 20 - A LAWYER SHALL CHARGE ONLY FAIR AND REASONABLE FEES.

Rule 20.01 - A lawyer shall be guided by the following factors in determining his fees:

(a) the time spent and the extent of the service rendered or required;

(b) the novelty and difficulty of the questions involved;

(c) The importance of the subject matter;

(d) The skill demanded;

(e) The probability of losing other employment as a result of acceptance of the proffered case;

(f) The customary charges for similar services and the schedule of fees of the IBP chapter to which he belongs;

(g) The amount involved in the controversy and the benefits resulting to the client from the service;

(h) The contingency or certainty of compensation;

(i) The character of the employment, whether occasional or established; and

(j) The professional standing of the lawyer.

Rule 20.02 - A lawyer shall, in case of referral, with the consent of the client, be entitled to a division of fees in proportion to the work performed and responsibility assumed.

Rule 20.03 - A lawyer shall not, without the full knowledge and consent of the client, accept any fee, reward, costs, commission, interest, rebate or forwarding allowance or other compensation whatsoever related to his professional employment from anyone other than the client.

Rule 20.04 - A lawyer shall avoid controversies with clients concerning his compensation and shall resort to judicial action only to prevent imposition, injustice or fraud.

CANON 21 - A LAWYER SHALL PRESERVE THE CONFIDENCE AND SECRETS OF HIS CLIENT EVEN AFTER THE ATTORNEY-CLIENT RELATION IS TERMINATED.

Rule 21.01 - A lawyer shall not reveal the confidences or secrets of his client except;

(a) When authorized by the client after acquainting him of the consequences of the disclosure;

(b) When required by law;

(c) When necessary to collect his fees or to defend himself, his employees or associates or by judicial action.

Rule 21.02 - A lawyer shall not, to the disadvantage of his client, use information acquired in the course of employment, nor shall he use the same to his own advantage or that of a third person, unless the client with full knowledge of the circumstances consents thereto.

Rule 21.03 - A lawyer shall not, without the written consent of his client, give information from his files to an outside agency seeking such information for auditing, statistical, bookkeeping, accounting, data processing, or any similar purpose.

Rule 21.04 - A lawyer may disclose the affairs of a client of the firm to partners or associates thereof unless prohibited by the client.

Rule 21.05 - A lawyer shall adopt such measures as may be required to prevent those whose services are utilized by him, from disclosing or using confidences or secrets of the clients.

Rule 21.06 - A lawyer shall avoid indiscreet conversation about a client's affairs even with members of his family.

Rule 21.07 - A lawyer shall not reveal that he has been consulted about a particular case except to avoid possible conflict of interest.

CANON 22 - A LAWYER SHALL WITHDRAW HIS SERVICES ONLY FOR GOOD CAUSE AND UPON NOTICE APPROPRIATE IN THE CIRCUMSTANCES.

Rule 22.01 - A lawyer may withdraw his services in any of the following case:

(a) When the client pursues an illegal or immoral course of conduct in connection with the matter he is handling;

(b) When the client insists that the lawyer pursue conduct violative of these canons and rules;

(c) When his inability to work with co-counsel will not promote the best interest of the client;

(d) When the mental or physical condition of the lawyer renders it difficult for him to carry out the employment effectively;

(e) When the client deliberately fails to pay the fees for the services or fails to comply with the retainer agreement;

(f) When the lawyer is elected or appointed to public office; and
(g) Other similar cases.

Rule 22.02 - A lawyer who withdraws or is discharged shall, subject to a retainer lien, immediately turn over all papers and property to which the client is entitled, and shall cooperative with his successor in the orderly transfer of the matter, including all information necessary for the proper handling of the matter.

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ALVAREZ vs. COURT OF FIRST INSTANCE

Alvarez vs. Court of First Instance of Tayabas [GR 45358, 29 January 1937]

First Division, Imperial (J): 4 concur

Facts: On 3 June 1936, the chief of the secret service of the Anti-Usury Board, of the Department of Justice, presented to Judge Eduardo Gutierrez David then presiding over the Court of First Instance of Tayabas, an affidavit alleging that according to reliable information, Narciso Alvarez kept in his house in Infanta, Tayabas, books, documents, receipts, lists, chits and other papers used by him in connection with his activities as a moneylender, charging usurious rates of interest in violation of the law. In his oath at the end of the affidavit, the chief of the secret service stated that his answers to the questions were correct to the best of his knowledge and belief. He did not swear to the truth of his statements upon his own knowledge of the facts but upon the information received by him from a reliable person. Upon the affidavit the judge, on said date, issued the warrant which is the subject matter of the petition, ordering the search of the Alvarez's house at any time of the day or night, the seizure of the books and documents and the immediate delivery thereof to him to be disposed of in accordance with the law. With said warrant, several agents of the Anti-Usury Board entered Alvarez's store and residence at 7:00 p.m. of 4 June 1936, and seized and took possession of the following articles: internal revenue licenses for the years 1933 to 1936, 1 ledger, 2 journals, 2 cashbooks, 9 order books, 4 notebooks, 4 check stubs, 2 memorandums, 3 bankbooks, 2 contracts, 4 stubs, 48 stubs of purchases of copra, 2 inventories, 2 bundles of bills of lading, 1 bundle of credit receipts, 1 bundle of stubs of purchases of copra, 2 packages of correspondence, 1 receipt book belonging to Luis Fernandez, 14 bundles of invoices and other papers, many documents and loan contracts with security and promissory notes, 504 chits, promissory notes and stubs of used checks of the Hongkong & Shanghai Banking Corporation (HSBC). The search for and seizure of said articles were made with the opposition of Alvarez who stated his protest below the inventories on the ground that the agents seized even the originals of the documents. As the articles had not been brought immediately to the judge who issued the search warrant, Alvarez, through his attorney, filed a motion on 8 June 1936, praying that the agent Emilio L. Siongco, or any other agent, be ordered immediately to deposit all the seized articles in the office of the clerk of court and that said agent be declared guilty of contempt for having disobeyed the order of the court. On said date the court issued an order directing Siongco to deposit all the articles seized within 24 hours from the receipt of notice thereof and giving him a period of 5 days within which to show cause why he should not be punished for contempt of court. On 10 June, Attorney Arsenio Rodriguez, representing the Anti-Usury Board, filed a motion praying that the order of the 8th of said month be set aside and that the Anti-Usury Board be authorized to retain the articles seized for a period of 30 days for the necessary investigation. On June 25, the court issued an order requiring agent Siongco forthwith to file the search warrant and the affidavit in the court, together with the proceedings taken by him, and to present an inventory duly verified by oath of all the articles seized. On July 2, the attorney for the petitioner filed a petition alleging that the search warrant issued was illegal and that it had not yet been returned to date together with the proceedings taken in connection therewith, and praying that said warrant be cancelled, that an order be issued directing the return of all the articles seized to Alvarez, that the agent who seized them be declared guilty of contempt of court, and that charges be filed against him for abuse of authority. On September 10, the court issued an order holding: that the search warrant was obtained and issued in accordance with the law, that it had been duly complied with and, consequently, should not be cancelled, and that agent Siongco did not commit any contempt of court and must, therefore, be exonerated, and ordering the chief of the Anti-Usury Board in Manila to show cause, if any, within the unextendible period of 2 days from the date of notice of said order, why all the articles seized appearing in the inventory should not be returned to Alvarez. The assistant chief of the Anti-Usury Board of the Department of Justice filed a motion praying, for the reasons stated therein, that the articles seized be ordered retained for the purpose of conducting an investigation of the violation of the Anti-Usury Law committed by Alvarez. On October 10, said official again filed another motion alleging that he needed 60 days to examine the documents and papers seized, which are designated on pages 1 to 4 of the inventory by Nos. 5, 10, 16, 23, 25-27, 30-31 , 34, 36-43 and 45, and praying that he be granted said period of 60 days. In an order of October 16, the court granted him the period of 60 days to investigate said 19 documents. Alvarez, herein, asks that the search warrant as well as the order authorizing the agents of the Anti-Usury Board to retain the articles seized, be declared illegal and set aside, and prays that all the articles in question be returned to him.

Issue: Whether the search warrant issued by the court is illegal because it has been based upon the affidavit of agent Almeda in whose oath he declared that he had no personal knowledge of the facts which were to serve as a basis for the issuance of the warrant but that he had knowledge thereof through mere information secured from a person whom he considered reliable, and that it is illegal as it was not supported by other affidavits aside from that made by the applicant.

Held: Section 1, paragraph 3, of Article III of the Constitution and Section 97 of General Orders 58 require that there be not only probable cause before the issuance of a search warrant but that the search warrant must be based upon an application supported by oath of the applicant and the witnesses he may produce. In its broadest sense, an oath includes any form of attestation by which a party signifies that he is bound in conscience to perform an act faithfully and truthfully; and it is sometimes defined as an outward pledge given by the person taking it that his attestation or promise is made under an immediate sense of his responsibility to God. The oath required must refer to the truth of the facts within the personal knowledge of the petitioner or his witnesses, because the purpose thereof is to convince the committing magistrate, not the individual making the affidavit and seeking the issuance of the warrant, of the existence of probable cause. The true test of sufficiency of an affidavit to warrant issuance of a search warrant is whether it has been drawn in such a manner that perjury could be charged thereon and affiant be held liable for damages caused. The affidavit, which served as the exclusive basis of the search warrant, is insufficient and fatally defective by reason of the manner in which the oath was made, and therefore, the search warrant and the subsequent seizure of the books, documents and other papers are illegal. Further, it is the practice in this jurisdiction to attach the affidavit of at least the applicant or complainant to the application. It is admitted that the judge who issued the search warrant in this case, relied exclusively upon the affidavit made by agent Almeda and that he did not require nor take the deposition of any other witness. Neither the Constitution nor General Orders 58 provides that it is of imperative necessity to take the depositions of the witnesses to be presented by the applicant or complainant in addition to the affidavit of the latter. The purpose of both in requiring the presentation of depositions is nothing more than to satisfy the committing magistrate of the existence of probable cause. Therefore, if the affidavit of the applicant or complainant is sufficient, the judge may dispense with that of other witnesses. Inasmuch as the affidavit of the agent was insufficient because his knowledge of the facts was not personal but merely hearsay, it is the duty of the judge to require the affidavit of one or more witnesses for the purpose of determining the existence of probable cause to warrant the issuance of the search warrant. When the affidavit of the applicant or complainant contains sufficient facts within his personal and direct knowledge, it is sufficient if the judge is satisfied that there exists probable cause; when the applicant's knowledge of the facts is mere hearsay, the affidavit of one or more witnesses having a personal knowledge of the facts is necessary. Thus the warrant issued is likewise illegal because it was based only on the affidavit of the agent who had no personal knowledge of the facts.

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Antonio L. Buensuceso Jr.

CASE WITH OATH EXPLAINED

Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. L-44328 December 23, 1937

AGATON RODRIGUEZ and JUAN EVAGELISTA, petitioners-appellants,
vs.
VICTOR D. VILLAMIEL and ADOLFO N. FELICIANO, respondents-appellees.

Godofredo Reyes for appellants.
Office of the Solicitor General Hilado for appellees.

IMPERIAL, J.:

This is an appeal taken by the petitioners from the judgment rendered by the Court of First Instance of Tayabas on July 26, 1935, declaring legal two search warrants issued against them and authorizing the agents of the Anti-Usury Board to examine the documents and papers seized, belonging to the petitioners, and to retain those that in their opinion are pertinent and necessary to whatever criminal action they may wish to bring against said petitioners.

The respondent are special agent and assistant chief executive officer, respectively, of the Anti-Usury Board of the Department of Justice.

On March 8, 1935, special agent Victor D. Villamiel made two affidavits subscribed and sworn to before the justice of the peace of the provincial capital of Tayabas, then acting in the absence of the Judge of the Court of First Instance of the province, for the purpose of obtaining search warrants against each of the petitioners. The text of both affidavits is identical and the pertinent part thereof reads as follows: "Victor D. Villamiel, Special Agent, Anti-Usury Board, Dept. of Justice, having taken the oath appears, and states: that he has and there is just and probable cause to believe and he does believe that the book, lists, chits, receipts, documents, and another papers relating to the activities of JUAN EVANGELISTA, as usurer are being kept and concealed in the house of said JUAN EVANGELISTA situated at Lucena, Tayabas, all of which is contrary to the statute of law."

On the 9th of said month the justice of the peace of the provincial capital, acting in the absence of the Judge of the Court of First Instance in the Province of Tayabas, issued and delivered the two respondent the two search warrant aganst the petitioners, couched in the following tenor: "To any officer of the law, whereas in this day proof, by affidavit, having been presented before by VICTOR D. VILLAMIEL, Special Agent, Anti-Usury Board that he has and there is just and probable cause to believe and he does believe that the books, lists, chits, receipts, documents, and other papers relating to his activities of JUAN EVANGELISTA as usurer are being kept and concealed in his house situated at Lucena, Tayabas, Philippine Islands, all of which is contrary to the statute of the law. Therefore, you are hereby commanded during day or night or both to make an immediate search on the person of JUAN EVANGELISTA or in the house of said JUAN EVANGELISTA or in the house of said JUAN EVANGELISTA, situated at Lucena, Tayabas, P. I. for the following property books, lists, chits, receipts, documents, and other papers relating to his activities as usurer, and, if you find the same or any part thereof, to bring it forthwith before me in the Court of First Instance of Lucena, Tayabas. Witness my hand this 9th day of March, 1935. (Sgd.) FEDERICO M. UNSON, Juez de Cabecera, in the absence of the Judge of the Court of First Instance, Lucena, Tayabas, Philippine Islands."

On the afternoon of the same day, Villamiel, accompanied by other agents of the Anti-Usury Board and a constabulary soldier, executed the warrants, went to the residences of the petitioners, searched them seized documents and papers belonging to both petitioners, placing them in two small valises furnished by the petitioners themselves. The special agent issued a receipt to each of the petitioners, without specifying the documents and papers seized by him, which, together with the small valises, were taken by him to his office in Manila, keeping them therein until he was ordered by the Court of First Instance of Tayabas to deposit them in the office of the clerk of court.

On March 21, 1935, the petitioners instituted this proceedings by filing a petition praying that the search warrants be declared null and void and illegal; that the special agent Villamiel be punished for contempt of court for having conducted the searches and for having seized the documents and papers without issuing detailed receipts therefor and for not having turned them over to the court that issued the warrants, and, finally that said documents and papers be ordered returned to the petitioners.lawphil.net

After the special agent had filed his answer, the case was tried, following which the Court of First Instance rendered judgment finding said special agent guilty of contempt of court and sentencing him to pay a fine of P10. In said decision the court declared valid the search warrants and the seizure of the documents and papers but ordered all of them to be deposited with the clerk of court, authorizing the agents of the Anti-Usury Board to examine them and retain those that in their opinion are necessary and material to whatever criminal action they may wish to bring against the petitioners.

In this appeal the attorney for the petitioners contend that the judgment of the court is erroneous: (1) for having declared the search warrants valid; (2) for having sanctioned the seizure to the documents and papers; and (3) for having authorized the agents to examine them and to retain those that may be necessary for use as evidence against the petitioners.

1. A search warrant is an order in writing, issued in the name of the People of the Philippine Islands, signed by a judge or a justice of the peace, and directed to a peace officer, commanding him to search for personal property and bring it before the court (sec. 95 General Orders No. 58, as amended by section 6 of Act No. 2886). Of all the rights of a citizen, few are of greater importance or more essential to his peace and happiness than the right of personal security, and that involves the exemption of his private affair, books and papers from and scrutiny of others (In re Pacific Railway Commission, 32 Fed., 241; Intestate Commerce Comm. vs. Brimson, 38 Law. ed., 1047; Boyd vs. U.S., 29 Law. ed., 746; Carroll vs. U. S., 69 Law. ed., 543, 549). While the power to search and seize is necessary to the public welfare still it must be exercised and the law enforced without transgressing the constitutional rights of citizens, for the enforcement of no statute is of sufficient importance to justify indifference to the basic principles of government (People vs. Elias, 147 N. E., 472). (Alvarez vs. Court of First Instance of Tayabas and Anti-Usury Board, 35 Off. Gaz., 1183.)

2. As the protection of the citizen and the maintenance of his constitutional rights is one of the highest duties and privileges of the court, these constitutional guaranties should be given a liberal construction or a strict construction in favor of the individual, to prevent stealthy encroachment upon, or gradual depreciation of, the rights secured by them (State vs. Custer County, 198 Pac., 362; State vs. McDaniel, 231 Pac; 965 237 Pac., 373). Since the proceeding is a drastic one, it is the general rule that statutes authorizing searches and seizures or search warrants must be strictly construed (Rose vs. St. Clair, 28 Fed. [2d], 189; Leonard vs. U. S., 6 Fed. [2d], 353; Perry vs. U. S., 14 Fed. [2d] 88; Cofer vs. State, 118 So., 613). (Alvarez vs. Court of First Instance of Tayabas and Anti-Usury Board, supra.)

3. The petitioners contend that the search warrants issued by the court are illegal because they have been based on the affidavits of special agent Victor D. Villamiel wherein he affirmed and stated that he had no personal knowledge of the facts that were to serve as basis for the issuance of the search warrants, but merely confined himself to asserting that he believed and there was probable cause to believe that the documents and papers were related to the activities of the petitioners as usurers. As has been seen, the special agent's affirmation in this respect consisted merely in the following: "that he has and there is just and probable cause to believe and he does believe that the books, lists, chits, receipts, documents and other papers relating to the activities of . . . as usurer, are being kept and concealed in the house of said . . . situated at Lucena, Tayabas, all of which is contrary to the statute of law."

Section 1, Paragraph 3, of Article III of the Constitution, relative to the bill of rights, provides that "The right of the people to be secure in their persons, houses, papers, and effects against unreasonable searches and seizures shall not be violated, and no warrants shall issue but upon probable cause, to be determined by the judge after examination under oath or affirmation of the complainant and the witnesses he may produce, and particularly describing the place to be searched, and the persons or things to be seized." Section 97 of General Orders No. 58 provides that "A search warrant shall not issue except for probable cause and upon application supported by oath particularly describing the place to be searched and the person or thing to be seized." It will be noted that both provisions require that there be not only probable cause before the issuance of a search warrant but that the search warrant must be based upon an application supported by oath of the applicant and the witnesses he may produce. In its broadest sense, an oath includes any form of attestation by which a party signifies that he is bound in conscience to perform an act faithfully and truthfully and it is sometimes defined as an outward pledge given by the person taking it that his attestation or promise is under an immediate sense of his responsibility to God (Bouvier's Law Dictionary; State vs. Jackson, 137 N. W., 1034 In re Sage, 24 Oh. Cir. Ct. [N.S.], 7; Pumphrey vs. State, 122 N. W., 19; Priest vs. State, 6 N. W., 468; State vs. Jones, 154 Pac., 378; Atwood vs. State, 111 S., 865). The oath required must refer to truth of the facts within the personal knowledge of the petitioner or his witnesses, because the purpose thereof is to convince the committing magistrate, no the individual making the affidavit and seeking the issuance of the warrant, of the existence of probable cause (U. S. vs. Tureaud, 20 Fed., 621; U. S. vs. Michalski, 265 Fed., 839; U. S. vs. Pitotto, 267 Fed,., 603; Us. Vs. Lai Chew, 298 Fed., 652). The true test of sufficiency of an affidavit to warrant issuance of a search warrant is whether it has been drawn in such a manner that perjury could be charged thereon and affiant be held liable for damages caused (State vs. Roosevelt County, 20th Jud. Dis Ct., 244 Pac., 280; State vs. Quartier, 236 Pac., 746).

It will likewise be noted that section 1, paragraph 3, of Article III of the Constitution prohibits unreasonable searches and seizures. Unreasonable searches and seizures are a menace against which the constitutional guaranties afford full protection. The term "unreasonable search and seizure" is not defined in the Constitution or in General Orders No. 58, and it is said to have no fixed, absolute or unchangeable meaning, although the term has been defined in general language. All illegal searches and seizures unreasonable while lawful ones are reasonable. What constitutes a reasonable or unreasonable search or seizure in any particular case is purely a judicial question, determinable from a consideration of the circumstances involved, including the purpose of the search, the presence or absence of probable cause, the manner in which the search and seizure was made, the place or thing searched, and the character of the articles procured (Go-Bart Importing Co. vs. U. S., 75 Law. ed., 374; Peru vs. U. S., 4 Fed., [2], 881; U. S., vs. Vatune, 292 Fed., 497; Agnello vs. U. S., 70 Law. ed., 145; Lambert vs. U. S., 282 Fed., 413; U. S. vs. Bateman, 278 Fed., 231; Mason vs. Rollins, 16 Fed., Cas. [No. 9252], 2 Biss., 99). (Alvarez vs. Court of First Instance Of Tayabas and Anti-Usury Board, supra.)

In view of the foregoing and in accordance with the above-cited authorities, it appears that the affidavits, which served as the exclusive basis of the search warrants, are insufficient and fatally defective by reason of the manner in which the oaths were made and, therefore, it is hereby held that the search warrants in question and the subsequent seizure of the documents and papers are illegal and do not in any way warrant the deprivation to which the petitioners were subjected.

4. The last ground alleged by the petitioners in support of their claim that the search warrant were obtained illegally, is that the documents and papers were seized in order that the Anti-Usury Board might provide itself with evidence to be used by it in the criminal cases which may be filed against them for violation of the Anti-Usury Law. At the hearing of the case, it was shown that the documents and papers had really been seized to enable the Anti-Usury Board to conduct an investigation and later use all or some of them as evidence against the petitioners in criminal cases that may be brought against them. The seizure of books and documents by means of a search warrant, for the purpose of using them as evidence in a criminal case against the person in whose possession they were found, is unconstitutional because it makes the warrant unreasonable, and it is equivalent to a violation of the constitutional provision prohibiting the compulsion of an accused to testify against himself (Uy Kheytin vs. Villareal, 42, Phil., 886; Alvarez vs. Court of First Instance of Tayabas and Anti-Usury Board, supra; Brady vs. U. S., 266 620; Temperani vs. U. S., 299 Fed., 365; Us. vs. Madden, 297 Fed., 679; Boyd vs. U. S., 116 U. S., 616; Carroll vs. U. S., 267 U. S., 132). Therefore, it appearing that the documents and papers were seized for the purpose of fishing for evidence to be used against the petitioners in the criminal proceedings for violation of the Anti-Usury Law which might be instituted against them, this court holds that the search warrants issued are illegal and that the documents and papers should be returned to them.

For the foregoing reasons, the appealed judgment is reversed and it is ordered that any of the judges presiding over the Court of First Instance of Tayabas, in turn, direct the immediate return of the documents and papers in question to the petitioners, without special pronouncement as to costs. So ordered.

Villa-Real, Abad Santos, Diaz and Concepcion, JJ., concur.

Separate Opinions

LAUREL, J., concurring:

In concurring in the foregoing opinion, I desire to observe that the provision in our Constitution with reference to unreasonable searches and seizures is not the same as that contained in the Jones Law. Under the Constitution, the right guaranteed is declared a popular right. "The right of the people . . .", so runs the precept. The provision also is made more specific and extends to "persons, houses, papers, and effects". The Constitution also specifically requires the determination of probable cause by the judge himself "after examination under oath or affirmation of the complainant and the witnesses he may produce." The incorporation of these requirements is intended to bulwark individual security, home and legitimate possessions. Furthermore, they were intended to curb certain prevalent abuses in the past.

Usury, is admittedly an evil which should be eradicated. While courts should cooperate with the government in an effort to eradicate this evil through proper interpretation and application of the law, it is of greater importance that the fundamental provisions of the Constitution with reference to the protection of individual rights should be upheld and preserved. The prosecution of criminals is bounden duty of government but it should be accomplished by adherence to rather than by relaxation of fundamental constitutional principles. This is said notwithstanding the apparent tendency in other countries to liberalize the application of the constitutional principle in favor of the Government to arrest the advancing tide of crime. In our case, I express the opinion that the more effective enforcement of the Usury Law could be achieved by an improvement of existing legislation, the creation of administrative agencies endowed with greater powers, and the coordination of the activities of the agencies thus created with those of the other instrumentalities of the government.

The Lawphil Project - Arellano Law Foundation

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--
Antonio L. Buensuceso Jr.