Taken from lawphil for my own use

Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 163512             February 28, 2007
DAISY B. TIU, Petitioner
vs.
PLATINUM PLANS PHIL., INC., Respondent.

D E C I S I O N

QUISUMBING, J.:

For review on certiorari are the Decision¹ dated January 20, 2004 of the Court of Appeals in CA-G.R. CV No. 74972, and its Resolution² dated May 4, 2004 denying reconsideration. The Court of Appeals had affirmed the decision³ dated February 28, 2002 of the Regional Trial Court (RTC) of Pasig City, Branch 261, in an action for damages, ordering petitioner to pay respondent P100,000 as liquidated damages.

The relevant facts are as follows:

Respondent Platinum Plans Philippines, Inc. is a domestic corporation engaged in the pre-need industry. From 1987 to 1989, petitioner Daisy B. Tiu was its Division Marketing Director.

On January 1, 1993, respondent re-hired petitioner as Senior Assistant Vice-President and Territorial Operations Head in charge of its Hongkong and Asean operations. The parties executed a contract of employment valid for five years.⁴

On September 16, 1995, petitioner stopped reporting for work. In November 1995, she became the Vice-President for Sales of Professional Pension Plans, Inc., a corporation engaged also in the pre-need industry.

Consequently, respondent sued petitioner for damages before the RTC of Pasig City, Branch 261. Respondent alleged, among others, that petitioner’s employment with Professional Pension Plans, Inc. violated the non-involvement clause in her contract of employment, to wit:

8. NON INVOLVEMENT PROVISION – The EMPLOYEE further undertakes that during his/her engagement with EMPLOYER and in case of separation from the Company, whether voluntary or for cause, he/she shall not, for the next TWO (2) years thereafter, engage in or be involved with any corporation, association or entity, whether directly or indirectly, engaged in the same business or belonging to the same pre-need industry as the EMPLOYER. Any breach of the foregoing provision shall render the EMPLOYEE liable to the EMPLOYER in the amount of One Hundred Thousand Pesos (P100,000.00) for and as liquidated damages.⁵

Respondent thus prayed for P100,000 as compensatory damages; P200,000 as moral damages; P100,000 as exemplary damages; and 25% of the total amount due plus P1,000 per counsel’s court appearance, as attorney’s fees.

Petitioner countered that the non-involvement clause was unenforceable for being against public order or public policy: First, the restraint imposed was much greater than what was necessary to afford respondent a fair and reasonable protection. Petitioner contended that the transfer to a rival company was an accepted practice in the pre-need industry. Since the products sold by the companies were more or less the same, there was nothing peculiar or unique to protect. Second, respondent did not invest in petitioner’s training or improvement. At the time petitioner was recruited, she already possessed the knowledge and expertise required in the pre-need industry and respondent benefited tremendously from it. Third, a strict application of the non-involvement clause would amount to a deprivation of petitioner’s right to engage in the only work she knew.

In upholding the validity of the non-involvement clause, the trial court ruled that a contract in restraint of trade is valid provided that there is a limitation upon either time or place. In the case of the pre-need industry, the trial court found the two-year restriction to be valid and reasonable. The dispositive portion of the decision reads:

WHEREFORE, judgment is hereby rendered in favor of the plaintiff and against the defendant, ordering the latter to pay the following:

1. the amount of One Hundred Thousand Pesos (P100,000.00) for and as damages, for the breach of the non-involvement provision (Item No. 8) of the contract of employment;

2. costs of suit.

There being no sufficient evidence presented to sustain the grant of attorney’s fees, the Court deems it proper not to award any.

SO ORDERED.⁶

On appeal, the Court of Appeals affirmed the trial court’s ruling. It reasoned that petitioner entered into the contract on her own will and volition. Thus, she bound herself to fulfill not only what was expressly stipulated in the contract, but also all its consequences that were not against good faith, usage, and law. The appellate court also ruled that the stipulation prohibiting non-employment for two years was valid and enforceable considering the nature of respondent’s business.

Petitioner moved for reconsideration but was denied. Hence, this appeal by certiorari where petitioner alleges that the Court of Appeals erred when:

A.

… [IT SUSTAINED] THE VALIDITY OF THE NON-INVOLVEMENT CLAUSE IN PETITIONER’S CONTRACT CONSIDERING THAT THE PERIOD FIXED THEREIN IS VOID FOR BEING OFFENSIVE TO PUBLIC POLICY

B.

… [IT SUSTAINED] THE AWARD OF LIQUIDATED DAMAGES CONSIDERING THAT IT BEING IN THE NATURE OF A PENALTY THE SAME IS EXCESSIVE, INIQUITOUS OR UNCONSCIONABLE⁷

Plainly stated, the core issue is whether the non-involvement clause is valid.

Petitioner avers that the non-involvement clause is offensive to public policy since the restraint imposed is much greater than what is necessary to afford respondent a fair and reasonable protection. She adds that since the products sold in the pre-need industry are more or less the same, the transfer to a rival company is acceptable. Petitioner also points out that respondent did not invest in her training or improvement. At the time she joined respondent, she already had the knowledge and expertise required in the pre-need industry. Finally, petitioner argues that a strict application of the non-involvement clause would deprive her of the right to engage in the only work she knows.

Respondent counters that the validity of a non-involvement clause has been sustained by the Supreme Court in a long line of cases. It contends that the inclusion of the two-year non-involvement clause in petitioner’s contract of employment was reasonable and needed since her job gave her access to the company’s confidential marketing strategies. Respondent adds that the non-involvement clause merely enjoined her from engaging in pre-need business akin to respondent’s within two years from petitioner’s separation from respondent. She had not been prohibited from marketing other service plans.

As early as 1916, we already had the occasion to discuss the validity of a non-involvement clause. In Ferrazzini v. Gsell,⁸ we said that such clause was unreasonable restraint of trade and therefore against public policy. In Ferrazzini, the employee was prohibited from engaging in any business or occupation in the Philippines for a period of five years after the termination of his employment contract and must first get the written permission of his employer if he were to do so. The Court ruled that while the stipulation was indeed limited as to time and space, it was not limited as to trade. Such prohibition, in effect, forces an employee to leave the Philippines to work should his employer refuse to give a written permission.

In G. Martini, Ltd. v. Glaiserman,⁹ we also declared a similar stipulation as void for being an unreasonable restraint of trade. There, the employee was prohibited from engaging in any business similar to that of his employer for a period of one year. Since the employee was employed only in connection with the purchase and export of abaca, among the many businesses of the employer, the Court considered the restraint too broad since it effectively prevented the employee from working in any other business similar to his employer even if his employment was limited only to one of its multifarious business activities.

However, in Del Castillo v. Richmond,¹⁰ we upheld a similar stipulation as legal, reasonable, and not contrary to public policy. In the said case, the employee was restricted from opening, owning or having any connection with any other drugstore within a radius of four miles from the employer’s place of business during the time the employer was operating his drugstore. We said that a contract in restraint of trade is valid provided there is a limitation upon either time or place and the restraint upon one party is not greater than the protection the other party requires.

Finally, in Consulta v. Court of Appeals,¹¹ we considered a non-involvement clause in accordance with Article 1306¹² of the Civil Code. While the complainant in that case was an independent agent and not an employee, she was prohibited for one year from engaging directly or indirectly in activities of other companies that compete with the business of her principal. We noted therein that the restriction did not prohibit the agent from engaging in any other business, or from being connected with any other company, for as long as the business or company did not compete with the principal’s business. Further, the prohibition applied only for one year after the termination of the agent’s contract and was therefore a reasonable restriction designed to prevent acts prejudicial to the employer.

Conformably then with the aforementioned pronouncements, a non-involvement clause is not necessarily void for being in restraint of trade as long as there are reasonable limitations as to time, trade, and place.

In this case, the non-involvement clause has a time limit: two years from the time petitioner’s employment with respondent ends. It is also limited as to trade, since it only prohibits petitioner from engaging in any pre-need business akin to respondent’s.1awphi1.net

More significantly, since petitioner was the Senior Assistant Vice-President and Territorial Operations Head in charge of respondent’s Hongkong and Asean operations, she had been privy to confidential and highly sensitive marketing strategies of respondent’s business. To allow her to engage in a rival business soon after she leaves would make respondent’s trade secrets vulnerable especially in a highly competitive marketing environment. In sum, we find the non-involvement clause not contrary to public welfare and not greater than is necessary to afford a fair and reasonable protection to respondent.¹³

In any event, Article 1306 of the Civil Code provides that parties to a contract may establish such stipulations, clauses, terms and conditions as they may deem convenient, provided they are not contrary to law, morals, good customs, public order, or public policy.

Article 1159¹⁴ of the same Code also provides that obligations arising from contracts have the force of law between the contracting parties and should be complied with in good faith. Courts cannot stipulate for the parties nor amend their agreement where the same does not contravene law, morals, good customs, public order or public policy, for to do so would be to alter the real intent of the parties, and would run contrary to the function of the courts to give force and effect thereto.¹⁵ Not being contrary to public policy, the non-involvement clause, which petitioner and respondent freely agreed upon, has the force of law between them, and thus, should be complied with in good faith.¹⁶

Thus, as held by the trial court and the Court of Appeals, petitioner is bound to pay respondent P100,000 as liquidated damages. While we have equitably reduced liquidated damages in certain cases,¹⁷ we cannot do so in this case, since it appears that even from the start, petitioner had not shown the least intention to fulfill the non-involvement clause in good faith.

WHEREFORE, the petition is DENIED for lack of merit. The Decision dated January 20, 2004, and the Resolution dated May 4, 2004, of the Court of Appeals in CA-G.R. CV No. 74972, are AFFIRMED. Costs against petitioner.

SO ORDERED.
LEONARDO A. QUISUMBING
Associate Justice
WE CONCUR:

ANTONIO T. CARPIO
Associate Justice

CONCHITA CARPIO MORALES Associate Justice

DANTE O. TINGA Asscociate Justice

PRESBITERO J. VELASCO, JR.
Associate Justice

A T T E S T A T I O N

I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.

LEONARDO A. QUISUMBING
Associate Justice
Chairperson

C E R T I F I C A T I O N

Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairperson’s Attestation, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.

REYNATO S. PUNO
Chief Justice

Footnotes

¹ Rollo, pp. 58-64. Penned by Associate Justice Delilah Vidallon-Magtolis, with Associate Justices Jose L. Sabio, Jr. and Hakim S. Abdulwahid concurring.

² Id. at 66.
³ Records, Vol. I, pp. 213-219.
⁴ Id. at 175-178.
⁵ Id. at 176.
⁶ Id. at 219.
⁷ Rollo, p. 44.
⁸ 34 Phil. 697, 714 (1916).
⁹ 39 Phil. 120, 125 (1918).
¹⁰ 45 Phil. 679, 683 (1924).

¹¹ G.R. No. 145443, March 18, 2005, 453 SCRA 732, 745.

¹² Art. 1306. The contracting parties may establish such stipulations, clauses, terms and conditions as they may deem convenient, provided they are not contrary to law, morals, good customs, public order, or public policy.

¹³ See Ollendorff v. Abrahamsom, 38 Phil. 585, 592 (1918).

¹⁴ Art. 1159. Obligations arising from contracts have the force of law between the contracting parties and should be complied with in good faith.

¹⁵ Philippine Communications Satellite Corporation v. Globe Telecom, Inc., G.R. Nos. 147324 & 147334, May 25, 2004, 429 SCRA 153, 164.

¹⁶ Duncan Association of Detailman-PTGWO v. Glaxo Wellcome Philippines, Inc., G.R. No. 162994, September 17, 2004, 438 SCRA 343, 356.

¹⁷ Art. 2226. Liquidated damages are those agreed upon by the parties to a contract, to be paid in case of breach thereof.

Art. 2227. Liquidated damages, whether intended as an indemnity or a penalty, shall be equitably reduced if they are iniquitous or unconscionable.

Tuzon vs Purugganan Nov 26, 2001

FIRST DIVISION

[A.M. No. RTJ-01-1662.  November 26, 2001]

VICTOR TUZON, complainant, vs. JUDGE LORETO CLORIBEL-PURUGGANAN, respondent.

R E S O L U T I O N

PARDO, J.:

The case under consideration is an administrative complaint[1] against Judge Loreto Cloribel-Purugganan, Regional Trial Court, Tuguegarao, Cagayan, Branch 3, for illegal practice of law, gross ignorance of the law, serious misconduct, evident bias and partiality, knowingly rendering unjust judgment, and willful violations of the Code of Judicial Conduct.

On June 25, 1998, Victor G. Tuzon filed with the Court of Appeals a petition for certiorari assailing the order of the Regional Trial Court, Tuguegarao, Cagayan, Branch 3, presided over by respondent Judge Loreto Cloribel-Purugganan in Civil Case No. 4269.[2] The order denied Tuzon’s motion to allow cross-examination of his witness and directed that the case be submitted for resolution.

On July 2, 1998, the Court of Appeals issued a resolution “directing private respondent Raymundo E. Catral to file the comment thereon and to show cause why the prayer for injunctive relief should not be granted both within ten (10) days from notice hereof.”[3]

On July 22, 1998, respondent judge filed the comment for Raymundo Catral and herself, and affixed her name and signature on the comment.[4]

On August 2, 1999, the Court of Appeals dismissed the petition for certiorari for lack of merit.[5]

On February 14, 2000, Tuzon filed with the Supreme Court an administrative complaint against respondent judge deploring the act of filing a comment in the civil case as illegal private practice of law.[6] Tuzon also averred that respondent judge antedated her decision in Civil Case No. 4265, making it appear that the decision was promulgated on June 23, 1999, when in fact it was issued later.

On March 23, 2000, respondent judge filed with the Supreme Court a comment on the administrative complaint of Victor G. Tuzon.[7] She admitted authoring the comment filed with the Court of Appeals in the civil case involving complainant.  She stated that she did so because Atty. Isidro Reyes, counsel for the private respondent Raymundo E. Catral in that civil case, was sick and unable to perform his work.  Respondent judge denied antedating any decision and alleged that complainant failed to present any evidence to support such accusation.

On January 24, 2001, Deputy Court Administrator Bernardo T. Ponferrada submitted to the Court a recommendation that respondent judge be imposed a fine for filing an answer in behalf of the respondent Catral and defending her questioned order.[8]

The Court has reminded judges of the lower courts that a judge whose order is challenged in an appellate court need not file any answer, or take an active part in the proceedings unless expressly directed by order of the Court.[9]

In the case at bar, it is undisputed that respondent judge filed a comment on behalf of the respondent Raymundo E. Catral in the case on review with the Court of Appeals.  Respondent judge signed the pleading herself and submitted it to the court notwithstanding that it was her decision that was the subject of the petition in the said court.

In filing such comment, respondent judge violated the provision in the Revised Rules of Court which provides:

“Unless otherwise specifically directed by the court where the petition is pending, the public respondents shall not appear in or file an answer or comment to the petition or any pleading therein.  If either party elevates the case to a higher court, the public respondents shall be included therein as nominal parties.  However, unless otherwise specifically directed, they shall not appear or participate in the proceedings therein.”[10]

Respondent argues that she filed a comment on behalf of one of the parties to the case because the counsel was suffering from an illness at the time.  However, a judge must maintain a detached attitude from the case and shall not waste his time by taking an active part in a proceeding that relates to official actuations in a case.[11] He is merely a nominal party and has no personal interest or personality therein.

Further, respondent judge, in signing and filing a comment with the court on behalf of one of the parties, engaged in the private practice of law.  The practice of law is not limited to the conduct of cases in court or participation in court proceedings but includes preparation of pleadings or papers in anticipation of litigation.[12]

Under Section 35, Rule 138 of the Revised Rules of Court, and Rule 5.07 of the Code of Judicial Conduct,[13] judges are prohibited from engaging in the private practice of law.[14] This is based on public policy because the rights, duties, privileges and functions of the office of an attorney-at-law are inherently incompatible with the high official functions, duties, powers, discretion and privileges of a judge.[15]

Regarding the other charges of complainant, we find no proof that respondent antedated her decision in Civil Case 4269.  Further, no adequate evidence supports complainant’s charges of gross ignorance of the law, serious misconduct, evident bias and partiality, and knowingly rendering an unjust judgment.  Thus, these charges should be dismissed.

WHEREFORE, the Court hereby finds respondent judge Loreto Cloribel-Purugganan guilty of illegal practice of law, in violation of the Code of Judicial Conduct and the Revised  Rules of  Court.  The Court hereby metes out on her the penalty of suspension from office for a period of three (3) months, without pay, and to pay a fine of ten thousand (P10,000.00) pesos, with a warning that the commission of the same or similar act will be dealt with more severely.

This Resolution is effective immediately.

SO ORDERED.

Davide, Jr., C.J., (Chairman), Puno, Kapunan, and Ynares-Santiago, JJ., concur.

---

[1] Rollo, pp. 6-14.

[2] Complaint, Rollo, pp. 6-14, at p. 7.

[3] Ibid., Annex “A”, Rollo, p. 15.

[4] Ibid., Annex “B”, Rollo, pp. 16-17.

[5] Comment, Annex “1”, Rollo, pp. 42-51.

[6] Rollo, pp. 6-14.

[7] Rollo, pp. 37-41.

[8] Ibid., pp. 1-4.

[9] Turqueza v. Hernando, 97 SCRA 483, 490-491 (1980).

[10] Section 5, Rule 65, 1997 Rules of Civil Procedure, as amended.

[11] Turqueza v. Hernando, supra Note 9.

[12] Dia-Anonuevo v. Bercacio, 68 SCRA 81, 87 (1975).

[13] Rule 5.07:  A judge shall not engage in the private practice of law.  Unless prohibited by the Constitution or law, a judge may engage in the practice of any other profession provided that such practice will not conflict or tend to conflict with judicial functions.

[14] Gozun v. Liangco, 339 SCRA 253, 260 (2000).

[15] Carual v. Brusola, 317 SCRA 54, 66 (1999).

Phil Lawyers Assoc. vs. Agrava 105 Phil 772

Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. L-12426             February 16, 1959
PHILIPPINE LAWYER'S ASSOCIATION, petitioner,
vs.
CELEDONIO AGRAVA, in his capacity as Director of the Philippines Patent Office, respondent.
Arturo A. Alafriz for petitioner.
Office of the Solicitor General Ambrosio Padilla and Solicitor Pacifico P. de Castro for respondent.

MONTEMAYOR, J.:

This is the petition filed by the Philippine Lawyer's Association for prohibition and injunction against Celedonio Agrava, in his capacity as Director of the Philippines Patent Office.

On may 27, 1957, respondent Director issued a circular announcing that he had scheduled for June 27, 1957 an examination for the purpose of determining who are qualified to practice as patent attorneys before the Philippines Patent Office, the said examination to cover patent law and jurisprudence and the rules of practice before said office. According to the circular, members of the Philippine Bar, engineers and other persons with sufficient scientific and technical training are qualified to take the said examination. It would appear that heretofore, respondent Director has been holding similar examinations.

It is the contention of the petitioner Philippine Lawyer's Association that one who has passed the bar examinations and is licensed by the Supreme Court to practice law in the Philippines and who is in good standing, is duly qualified to practice before the Philippines Patent Office, and that consequently, the cat of the respondent Director requiring members of the Philippine Bar in good standing to take and pass an examination given by the Patent Office as a condition precedent to their being allowed to practice before said office, such as representing applicants in the preparation and prosecution of applications for patent, is in excess of his jurisdiction and is in violation of the law.

In his answer, respondent Director, through the Solicitor General, maintains that the prosecution of patent cases "does not involve entirely or purely the practice of law but includes the application of scientific and technical knowledge and training, so much so that, as a matter of actual practice, the prosecution of patent cases may be handled not only by lawyers, but also engineers and other persons with sufficient scientific and technical training who pass the prescribed examinations as given by the Patent Office; . . . that the Rules of Court do not prohibit the Patent Office, or any other quasi-judicial body from requiring further condition or qualification from those who would wish to handle cases before the Patent Office which, as stated in the preceding paragraph, requires more of an application of scientific and technical knowledge than the mere application of provisions of law; . . . that the action taken by the respondent is in accordance with Republic Act No. 165, otherwise known as the Patent Law of the Philippines, which similar to the United States Patent Law, in accordance with which the United States Patent Office has also prescribed a similar examination as that prescribed by respondent. . . .

Respondent further contends that just as the Patent law of the United States of America authorizes the Commissioner of Patents to prescribe examinations to determine as to who practice before the United States Patent Office, the respondent, is similarly authorized to do so by our Patent Law, Republic Act No. 165.

Although as already stated, the Director of Patents, in the past, would appear to have been holding tests or examinations the passing of which was imposed as a required qualification to practice before the Patent Office, to our knowledge, this is the first time that the right of the Director of Patents to do so, specially as regards members of the bar, has been questioned formally, or otherwise put in issue. And we have given it careful thought and consideration.

The Supreme Court has the exclusive and constitutional power with respect to admission to the practice of law in the Philippines¹ and to any member of the Philippine Bar in good standing may practice law anywhere and before any entity, whether judicial or quasi-judicial or administrative, in the Philippines. Naturally, the question arises as to whether or not appearance before the patent Office and the preparation and the prosecution of patent applications, etc., constitutes or is included in the practice of law.

The practice of law is not limited to the conduct of cases or litigation in court; it embraces the preparation of pleadings and other papers incident to actions and social proceedings, the management of such actions and proceedings on behalf of clients before judges and courts, and in addition, conveying. In general, all advice to clients, and all action taken for them in matters connected with the law corporation services, assessment and condemnation services contemplating an appearance before a judicial body, the foreclosure of a mortgage, enforcement of a creditor's claim in bankruptcy and insolvency proceedings, and conducting proceedings in attachment, and in matters of estate and guardianship have been held to constitute law practice as do the preparation and drafting of legal instruments, where the work done involves the determination by the trained legal mind of the legal effect of facts and conditions. (5 Am. Jur. p. 262, 263). (Emphasis supplied).

Practice of law under modern conditions consists in no small part of work performed outside of any court and having no immediate relation to proceedings in court. It embraces conveyancing, the giving of legal advice on a large variety of subjects, and the preparation and execution of legal instruments covering an extensive field of business and trust relations and other affairs. Although these transactions may have no direct connection with court proceedings, they are always subject to become involved in litigation. They require in many aspects a high degree of legal skill, a wide experience with men and affairs, and great capacity for adaptation to difficult and complex situations. These customary functions of an attorney or counselor at law bear an intimate relation to the administration of justice by the courts. No valid distinction, so far as concerns the question set forth in the order, can be drawn between that part which involves advice and drafting of instruments in his office. It is of importance to the welfare of the public that these manifold customary functions be performed by persons possessed of adequate learning and skill, of sound moral character, and acting at all times under the heavy trust obligations to clients which rests upon all attorneys. (Moran, Comments on the Rules of Court, Vol. 3 (1953 ed.), p. 665-666, citing In re Opinion of the Justices (Mass.), 194 N.E. 313, quoted in Rhode Is. Bar Assoc. vs. Automobile Service Assoc. (R. I. ) 179 A. 139, 144). (Emphasis ours).

In our opinion, the practice of law includes such appearance before the Patent Office, the representation of applicants, oppositors, and other persons, and the prosecution of their applications for patent, their oppositions thereto, or the enforcement of their rights in patent cases. In the first place, although the transaction of business in the Patent Office involves the use and application of technical and scientific knowledge and training, still, all such business has to be rendered in accordance with the Patent Law, as well as other laws, including the Rules and Regulations promulgated by the Patent Office in accordance with law. Not only this, but practice before the Patent Office involves the interpretation and application of other laws and legal principles, as well as the existence of facts to be established in accordance with the law of evidence and procedure. For instance: Section 8 of our Patent Law provides that an invention shall not be patentable if it is contrary to public order or morals, or to public health or welfare. Section 9 says that an invention shall not be considered new or patentable if it was known or used by others in the Philippines before the invention thereof by the inventor named in any printed publication in the Philippines or any foreign country more than one year before the application for a patent therefor, or if it had been in public use or on sale in the Philippines for more than one year before the application for the patent therefor. Section 10 provides that the right to patent belongs to the true and actual inventor, his heirs, legal representatives or assigns. Section 25 and 26 refer to connection of any mistake in a patent. Section 28 enumerates the grounds for cancellation of a patent; that although any person may apply for such cancellation, under Section 29, the Solicitor General is authorized to petition for the cancellation of a patent. Section 30 mentions the requirements of a petition for cancellation. Section 31 and 32 provide for a notice of hearing of the petition for cancellation of the patent by the Director of Patents in case the said cancellation is warranted. Under Section 34, at any time after the expiration of three years from the day the patent was granted, any person patent on several grounds, such as, if the patented invention is not being worked in the Philippines on a commercial scale, or if the demand for the patented article in the Philippines on a commercial scale, or if the demand for the patented article in the Philippines is not being met to an adequate extent and reasonable terms, or if by reason of the patentee's refusal to grant a license on reasonable terms or by reason of the condition attached by him to the license, purchase or use of the patented article or working of the patented process or machine of production, the establishment of a new trade or industry in the Philippines is prevented; or if the patent or invention relates to food or medicine or is necessary to public health or public safety. All these things involve the applications of laws, legal principles, practice and procedure. They call for legal knowledge, training and experience for which a member of the bar has been prepared.

In support of the proposition that much of the business and many of the act, orders and decisions of the Patent Director involve questions of law or a reasonable and correct evaluation of facts, the very Patent Law, Republic Act No. 165, Section 61, provides that:

. . . . The applicant for a patent or for the registration of a design, any party to a proceeding to cancel a patent or to obtain a compulsory license, and any party to any other proceeding in the Office may appeal to the Supreme Court from any final order or decision of the director.

In other words, the appeal is taken to this Tribunal. If the transaction of business in the Patent Office and the acts, orders and decisions of the Patent Director involved exclusively or mostly technical and scientific knowledge and training, then logically, the appeal should be taken not to a court or judicial body, but rather to a board of scientists, engineers or technical men, which is not the case.

Another aspect of the question involves the consideration of the nature of the functions and acts of the Head of the Patent Office.

. . . . The Commissioner, in issuing or withholding patents, in reissues, interferences, and extensions, exercises quasi-judicial functions. Patents are public records, and it is the duty of the Commissioner to give authenticated copies to any person, on payment of the legal fees. (40 Am. Jur. 537). (Emphasis supplied).

. . . . The Commissioner has the only original initiatory jurisdiction that exists up to the granting and delivering of a patent, and it is his duty to decide whether the patent is new and whether it is the proper subject of a patent; and his action in awarding or refusing a patent is a judicial function. In passing on an application the commissioner should decide not only questions of law, but also questions of fact, as whether there has been a prior public use or sale of the article invented. . . . (60 C.J.S. 460). (Emphasis supplied).

The Director of Patents, exercising as he does judicial or quasi-judicial functions, it is reasonable to hold that a member of the bar, because of his legal knowledge and training, should be allowed to practice before the Patent Office, without further examination or other qualification. Of course, the Director of Patents, if he deems it advisable or necessary, may require that members of the bar practising before him enlist the assistance of technical men and scientist in the preparation of papers and documents, such as, the drawing or technical description of an invention or machine sought to be patented, in the same way that a lawyer filing an application for the registration of a parcel of land on behalf of his clients, is required to submit a plan and technical description of said land, prepared by a licensed surveyor.

But respondent Director claims that he is expressly authorized by the law to require persons desiring to practice or to do business before him to submit an examination, even if they are already members of the bar. He contends that our Patent Law, Republic Act No. 165, is patterned after the United States Patent Law; and of the United States Patent Office in Patent Cases prescribes an examination similar to that which he (respondent) has prescribed and scheduled. He invites our attention to the following provisions of said Rules of Practice:

Registration of attorneys and agents. — A register of an attorneys and a register agents are kept in the Patent Office on which are entered the names of all persons recognized as entitled to represent applicants before the Patent Office in the preparation and prosecution of applicants for patent. Registration in the Patent Office under the provisions of these rules shall only entitle the person registered to practice before the Patent Office.

(a) Attorney at law. — Any attorney at law in good standing admitted to practice before any United States Court or the highest court of any State or Territory of the United States who fulfills the requirements and complied with the provisions of these rules may be admitted to practice before the Patent Office and have his name entered on the register of attorneys.

x x x           x x x           x x x

(c) Requirement for registration. — No person will be admitted to practice and register unless he shall apply to the Commissioner of Patents in writing on a prescribed form supplied by the Commissioner and furnish all requested information and material; and shall establish to the satisfaction of the Commissioner that he is of good moral character and of good repute and possessed of the legal and scientific and technical qualifications necessary to enable him to render applicants for patent valuable service, and is otherwise competent to advise and assist him in the presentation and prosecution of their application before the Patent Office. In order that the Commissioner may determine whether a person seeking to have his name placed upon either of the registers has the qualifications specified, satisfactory proof of good moral character and repute, and of sufficient basic training in scientific and technical matters must be submitted and an examination which is held from time to time must be taken and passed. The taking of an examination may be waived in the case of any person who has served for three years in the examining corps of the Patent Office.

Respondent states that the promulgation of the Rules of Practice of the United States Patent Office in Patent Cases is authorized by the United States Patent Law itself, which reads as follows:

The Commissioner of Patents, subject to the approval of the Secretary of Commerce may prescribe rules and regulations governing the recognition of agents, attorneys, or other persons representing applicants or other parties before his office, and may require of such persons, agents, or attorneys, before being recognized as representatives of applicants or other persons, that they shall show they are of good moral character and in good repute, are possessed of the necessary qualifications to enable them to render to applicants or other persons valuable service, and are likewise to competent to advise and assist applicants or other persons in the presentation or prosecution of their applications or other business before the Office. The Commissioner of Patents may, after notice and opportunity for a hearing, suspend or exclude, either generally or in any particular case from further practice before his office any person, agent or attorney shown to be incompetent or disreputable, or guilty of gross misconduct, or who refuses to comply with the said rules and regulations, or who shall, with intent to defraud in any matter, deceive, mislead, or threaten any applicant or prospective applicant, or other person having immediate or prospective applicant, or other person having immediate or prospective business before the office, by word, circular, letter, or by advertising. The reasons for any such suspension or exclusion shall be duly recorded. The action of the Commissioner may be reviewed upon the petition of the person so refused recognition or so suspended by the district court of the United States for the District of Columbia under such conditions and upon such proceedings as the said court may by its rules determine. (Emphasis supplied)

Respondent Director concludes that Section 78 of Republic Act No. 165 being similar to the provisions of law just reproduced, then he is authorized to prescribe the rules and regulations requiring that persons desiring to practice before him should submit to and pass an examination. We reproduce said Section 78, Republic Act No. 165, for purposes of comparison:

SEC. 78. Rules and regulations. — The Director subject to the approval of the Secretary of Justice, shall promulgate the necessary rules and regulations, not inconsistent with law, for the conduct of all business in the Patent Office.

The above provisions of Section 78 certainly and by far, are different from the provisions of the United States Patent Law as regards authority to hold examinations to determine the qualifications of those allowed to practice before the Patent Office. While the U.S. Patent Law authorizes the Commissioner of Patents to require attorneys to show that they possess the necessary qualifications and competence to render valuable service to and advise and assist their clients in patent cases, which showing may take the form of a test or examination to be held by the Commissioner, our Patent Law, Section 78, is silent on this important point. Our attention has not been called to any express provision of our Patent Law, giving such authority to determine the qualifications of persons allowed to practice before the Patent Office.

Section 551 of the Revised Administrative Code authorizes every chief of bureau to prescribe forms and make regulations or general orders not inconsistent with law, to secure the harmonious and efficient administration of his branch of the service and to carry into full effect the laws relating to matters within the jurisdiction of his bureau. Section 608 of Republic Act 1937, known as the Tariff and Customs Code of the Philippines, provides that the Commissioner of Customs shall, subject to the approval of the Department Head, makes all rules and regulations necessary to enforce the provisions of said code. Section 338 of the National Internal Revenue Code, Commonwealth Act No. 466 as amended, states that the Secretary of Finance, upon recommendation of the Collector of Internal Revenue, shall promulgate all needful rules and regulations for the effective enforcement of the provisions of the code. We understand that rules and regulations have been promulgated not only for the Bureau of Customs and Internal Revenue, but also for other bureaus of the Government, to govern the transaction of business in and to enforce the law for said bureaus.

Were we to allow the Patent Office, in the absence of an express and clear provision of law giving the necessary sanction, to require lawyers to submit to and pass on examination prescribed by it before they are allowed to practice before said Patent Office, then there would be no reason why other bureaus specially the Bureau of Internal Revenue and Customs, where the business in the same area are more or less complicated, such as the presentation of books of accounts, balance sheets, etc., assessments exemptions, depreciation, these as regards the Bureau of Internal Revenue, and the classification of goods, imposition of customs duties, seizures, confiscation, etc., as regards the Bureau of Customs, may not also require that any lawyer practising before them or otherwise transacting business with them on behalf of clients, shall first pass an examination to qualify.

In conclusion, we hold that under the present law, members of the Philippine Bar authorized by this Tribunal to practice law, and in good standing, may practice their profession before the Patent Office, for the reason that much of the business in said office involves the interpretation and determination of the scope and application of the Patent Law and other laws applicable, as well as the presentation of evidence to establish facts involved; that part of the functions of the Patent director are judicial or quasi-judicial, so much so that appeals from his orders and decisions are, under the law, taken to the Supreme Court.

For the foregoing reasons, the petition for prohibition is granted and the respondent Director is hereby prohibited from requiring members of the Philippine Bar to submit to an examination or tests and pass the same before being permitted to appear and practice before the Patent Office. No costs.

Paras, C.J., Bengzon, Padilla, Reyes, A., Bautista Angelo, Labrador, Concepcion, Reyes, J.B.L. and Endencia, JJ., concur.

Footnotes

¹ In re: Albino Cunanan, 50 Off. Gaz. m, 1617, prom. March 18, 1954.

I do not own this article. I just copied this for my own use.

EN BANC

PETITION FOR LEAVE TO                             B.M. No. 1678

RESUME PRACTICE OF LAW,

BENJAMIN M. DACANAY,

                             Petitioner,

                                                                   Present:

 PUNO, C.J.,

QUISUMBING,*

YNARES-SANTIAGO,

SANDOVAL-GUTIERREZ,

CARPIO,

AUSTRIA-MARTINEZ,

                                                                    CORONA,

CARPIO MORALES,

AZCUNA,

TINGA,

CHICO-NAZARIO,

GARCIA,

                                                                   VELASCO, JR.

                                                                   NACHURA,

                                                                   REYES and

LEONARDO-DE CASTRO, JJ.

                                                                    Promulgated:

                                                                  

December 17, 2007

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

R E S O L U T I O N

CORONA, J.:

This bar matter concerns the petition of petitioner Benjamin M. Dacanay for leave to resume the practice of law.

          Petitioner was admitted to the Philippine bar in March 1960.  He practiced law until he migrated to Canada in December 1998 to seek medical attention for his ailments. He subsequently applied for Canadian citizenship to avail of Canada’s free medical aid program. His application was approved and he became a Canadian citizen in May 2004.

         

On July 14, 2006, pursuant to Republic Act (RA) 9225 (Citizenship Retention and Re-Acquisition Act of 2003), petitioner reacquired his Philippine citizenship.[1] On that day, he took his oath of allegiance as a Filipino citizen before the Philippine Consulate General in Toronto, Canada. Thereafter, he returned to the Philippines and now intends to resume his law practice. There is a question, however, whether petitioner Benjamin M. Dacanay lost his membership in the Philippine bar when he gave up his Philippine citizenship in May 2004.  Thus, this petition.

         

          In a report dated October 16, 2007, the Office of the Bar Confidant     cites Section 2, Rule 138 (Attorneys and Admission to Bar) of the Rules of Court:

SECTION 2. Requirements for all applicants for admission to the bar. – Every applicant for admission as a member of the bar must be a citizen of the Philippines, at least twenty-one years of age, of good moral character, and a resident of the Philippines; and must produce before the Supreme Court satisfactory evidence of good moral character, and that no charges against him, involving moral turpitude, have been filed or are pending in any court in the Philippines.

Applying the provision, the Office of the Bar Confidant opines that, by virtue of his reacquisition of Philippine citizenship, in 2006, petitioner has again met all the qualifications and has none of the disqualifications for membership in the bar. It recommends that he be allowed to resume the practice of law in the Philippines, conditioned on his retaking the lawyer’s oath to remind him of his duties and responsibilities as a member of the Philippine bar.

          We approve the recommendation of the Office of the Bar Confidant with certain modifications.

The practice of law is a privilege burdened with conditions.[2] It is so delicately affected with public interest that it is both a power and a duty of the State (through this Court) to control and regulate it in order to protect and promote the public welfare.[3]

 

Adherence to rigid standards of mental fitness, maintenance of the highest degree of morality, faithful observance of the rules of the legal profession, compliance with the mandatory continuing legal education requirement and payment of membership fees to the Integrated Bar of the Philippines (IBP) are the conditions required for membership in good standing in the bar and for enjoying the privilege to practice law. Any breach by a lawyer of any of these conditions makes him unworthy of the trust and confidence which the courts and clients repose in him for the continued exercise of his professional privilege.[4]

Section 1, Rule 138 of the Rules of Court provides:

SECTION 1. Who may practice law. – Any person heretofore duly admitted as a member of the bar, or thereafter admitted as such in accordance with the provisions of this Rule, and who is in good and regular standing, is entitled to practice law.

Pursuant thereto, any person admitted as a member of the Philippine bar in accordance with the statutory requirements and who is in good and regular standing is entitled to practice law.

Admission to the bar requires certain qualifications. The Rules of Court mandates that an applicant for admission to the bar be a citizen of the Philippines, at least twenty-one years of age, of good moral character and a resident of the Philippines.[5] He must also produce before this Court satisfactory evidence of good moral character and that no charges against him, involving moral turpitude, have been filed or are pending in any court in the Philippines.[6]

Moreover, admission to the bar involves various phases such as furnishing satisfactory proof of educational, moral and other qualifications;[7] passing the bar examinations;[8] taking the lawyer’s oath[9] and signing the roll of attorneys and receiving from the clerk of court of this Court a certificate of the license to practice.[10]

The second requisite for the practice of law ― membership in good standing ― is a continuing requirement. This means continued membership and, concomitantly, payment of annual membership dues in the IBP;[11] payment of the annual professional tax;[12] compliance with the mandatory continuing legal education requirement;[13] faithful observance of the rules and ethics of the legal profession and being continually subject to judicial disciplinary control.[14]

          Given the foregoing, may a lawyer who has lost his Filipino citizenship still practice law in the Philippines? No.

The Constitution provides that the practice of all professions in the Philippines shall be limited to Filipino citizens save in cases prescribed by law.[15] Since Filipino citizenship is a requirement for admission to the bar, loss thereof terminates membership in the Philippine bar and, consequently, the privilege to engage in the practice of law. In other words, the loss of Filipino citizenship ipso jure terminates the privilege to practice law in the Philippines. The practice of law is a privilege denied to foreigners.[16]

The exception is when Filipino citizenship is lost by reason of naturalization as a citizen of another country but subsequently reacquired pursuant to RA 9225. This is because “all Philippine citizens who become citizens of another country shall be deemed not to have lost their Philippine citizenship under the conditions of [RA 9225].”[17] Therefore, a Filipino lawyer who becomes a citizen of another country is deemed never to have lost his Philippine citizenship if he reacquires it in accordance with RA 9225.  Although he is also deemed never to have terminated his membership in the Philippine bar, no automatic right to resume law practice accrues.

Under RA 9225, if a person intends to practice the legal profession in the Philippines and he reacquires his Filipino citizenship pursuant to its provisions “(he) shall apply with the proper authority for a license or permit to engage in such practice.”[18] Stated otherwise, before a lawyer who reacquires Filipino citizenship pursuant to RA 9225 can resume his law practice, he must first secure from this Court the authority to do so, conditioned on:

(a)      the updating and payment in full of the annual membership dues in the IBP;

(b)     the payment of professional tax;

(c)     the completion of at least 36 credit hours of mandatory continuing legal education; this is specially significant to refresh the applicant/petitioner’s knowledge of Philippine laws and update him of legal developments and

(d)     the retaking of the lawyer’s oath which will not only remind him of his duties and responsibilities as a lawyer and as an officer of the Court, but also renew his pledge to maintain allegiance to the Republic of the Philippines.

Compliance with these conditions will restore his good standing as a member of the Philippine bar.  

         

WHEREFORE, the petition of Attorney Benjamin M. Dacanay is hereby GRANTED, subject to compliance with the conditions stated above and submission of proof of such compliance to the Bar Confidant, after which he may retake his oath as a member of the Philippine bar.

          SO ORDERED.

RENATO C. CORONA

Associate Justice

W E   C O N C U R:

REYNATO S. PUNO

Chief Justice

(On Leave) LEONARDO A. QUISUMBING Associate Justice	CONSUELO YNARES-SANTIAGO Associate Justice
ANGELINA SANDOVAL-GUTIERREZ Associate Justice	ANTONIO T. CARPIO Associate Justice
MA. ALICIA M. AUSTRIA-MARTINEZ Associate Justice	CONCHITA CARPIO MORALES Associate Justice
ADOLFO S. AZCUNA Associate Justice	DANTE O. TINGA Associate Justice
MINITA V. CHICO-NAZARIO Associate Justice	PRESBITERO J. VELASCO, JR. Associate Justice
ANTONIO EDUARDO B. NACHURA  Associate Justice	RUBEN T. REYES Associate Justice

TERESITA J. LEONARDO-DE CASTRO

Associate Justice

---

*  On Leave.

[1]               As evidence thereof, he submitted a copy of his Identification Certificate No. 07-16912 duly signed by Immigration Commissioner Marcelino C. Libanan.

[2]               In the Matter of the IBP Membership Dues Deliquency of Atty. Marcial A. Edillon, A.C. No. 1928, 19 December 1980, 101 SCRA 612.

[3]               Heck v. Santos, A.M. No. RTJ-01-1657, 23 February 2004, 423 SCRA 329.

[4]               In re Atty. Marcial Edillon, A.C. No. 1928, 03 August 1978, 84 SCRA 554.

[5]               Section 2, Rule 138, Rules of Court.

[6]               Id.

[7]               Sections 2, 5 and 6, id.

[8]               Sections 8 to 11 and 14, id.

[9]               Section 17, id.

[10]             Sections 18 and 19, id.

[11]              In re Integration of the Bar of the Philippines, 09 January 1973, 49 SCRA 22; In re Atty. Marcial Edillon, supra note 3.

[12]             Section 139, RA 7160.

[13]              Resolution dated August 8, 2000 in Bar Matter No. 850 (Rules on Mandatory Continuing Legal Education for Members of the IBP).

[14]              Philippine Association of Free Labor Unions v. Binalbagan Isabela Sugar Co., G.R. No. L-23959, 29 November 1971, 42 SCRA 302.

[15]             See last paragraph of Section 14, Article XII.

[16]             In re Bosque, 1 Phil. 88 (1902).

[17]             Section 2, RA 9225. Emphasis supplied.

[18]             Section 5(4), id.