Camacho vs. Pangulayan, et al.

A lawyer violates Canon 9 of the Code of Professional Ethics when he negotiates and executes compromise or re-admission agreements directly with parties who are represented by counsel, without the knowledge or consent of their counsel. The violation is inexcusable where the lawyer knows of the adverse counsel’s representation and fails at the very least to communicate with that counsel; the claim that the agreement concerns only an administrative matter does not excuse the conduct where the agreement is used to terminate pending civil proceedings.

Complainant Atty. Manuel N. Camacho was retained counsel for expelled students of AMA Computer College (AMACC) who had filed Civil Case No. Q-97-30549, while respondent lawyers of Pangulayan and Associates Law Offices represented AMACC in that case. The administrative complaint invoked Canon 9 of the Code of Professional Ethics, which governs a lawyer’s communications with a party represented by counsel and requires that dealings be with that party’s counsel. The controversy therefore concerns the ethical limits on a lawyer’s direct settlement negotiations with an opposing party known to be represented by counsel.

Atty. Manuel N. Camacho was the hired counsel of expelled students from AMA Computer College (AMACC) in an action for the Issuance of a Writ of Preliminary Mandatory Injunction and for Damages, docketed Civil Case No. Q-97-30549 of the Regional Trial Court, Branch 78, Quezon City. The defendants in that case were represented by the Pangulayan and Associates Law Offices, namely Attys. Luis Meinrado C. Pangulayan, Regina D. Balmores, Catherine V. Laurel, and Hubert Joaquin P. Bustos. The civil case arose from the expulsion of nine students who were all members of the Editorial Board of DATALINE: Ian Dexter Marquez, Almira O. Basalo, Neil Jason R. Salcedo, Melissa F. Domondon, Melyda B. De Leon, Leila D. Joven, Signorelli A. Santiago, Michael Ejercito, and Cleo B. Villareiz. The students had apparently caused to be published some objectionable features or articles in the paper. A 3-member Student Disciplinary Tribunal was convened, and after a series of hearings, it found the students guilty of the use of indecent language and unauthorized use of the student publication funds. The body recommended the penalty of expulsion against the erring students. The denial of the appeal made by the students to Dr. Amable R. Aguiluz V, AMACC President, gave rise to the commencement of Civil Case No. Q-97-30549 on 14 March 1997 before the Regional Trial Court, Branch 78, of Quezon City.

While the civil case was still pending, letters of apology and Re-Admission Agreements were separately executed by and/or in behalf of some of the expelled students with the AMACC President. Neil Jason Salcedo, assisted by his mother, executed a letter of apology dated 27 May 1997 and a Re-Admission Agreement dated 22 June 1997. Mrs. Veronica B. De Leon executed a letter of apology dated 31 March 1997 for her daughter Melyda B. De Leon, with a Re-Admission Agreement dated 09 May 1997. Leila Joven, assisted by her mother, executed a letter of apology dated 22 May 1997 and a Re-Admission Agreement dated 22 May 1997. Cleo Villareiz executed a letter of apology dated 22 September 1997 and a Re-Admission Agreement dated 10 October 1997. Michael Ejercito, assisted by his parents, executed a letter of apology dated 20 January 1997 and a Re-Admission Agreement dated 23 January 1997.

Following the execution of the letters of apology and Re-Admission Agreements, a Manifestation dated 06 June 1997 was filed with the trial court where the civil case was pending by Attorney Regina D. Balmores of the Pangulayan and Associates Law Offices for defendant AMACC. A copy of the Manifestation was furnished complainant. The Manifestation stated that among the nine signatories to the complaint, four, assisted by their parents or guardian, had already executed a Re-Admission Agreement with AMACC President Amable R. Aguiluz V acknowledging guilt for violating the AMA Computer College Manual for Disciplinary Actions and agreeing to terminate all civil, criminal, and administrative proceedings which they may have against AMACC arising from their previous dismissal. It further stated that an Urgent Motion to Withdraw from Civil Case No. Q-97-30549 would be filed. In a Resolution dated 14 June 1997, Judge Lopez of the Quezon City Regional Trial Court dismissed Civil Case No. Q-97-30549.

The IBP Investigating Commissioner and the IBP Board of Governors found that when the individual letters of apology and Re-Admission Agreements were formalized, complainant was already the retained counsel for the plaintiff students in the civil case and that respondent Pangulayan had full knowledge of this fact. The Board found Pangulayan remiss in his duty, while the other respondents did not take part in the negotiation.

• Direct Negotiation with Represented Parties: Complainant charged that respondents, then counsel for the defendants, procured and effected on separate occasions, without his knowledge, compromise agreements or Re-Admission Agreements with four of his clients in Civil Case No. Q-97-30549.
• Waiver and Termination of Claims: Complainant averred that the Re-Admission Agreements required his clients to waive all kinds of claims they might have had against AMACC and to terminate all civil, criminal, and administrative proceedings filed against it.
• Unbecoming Conduct and Penalty: Complainant argued that such conduct was unbecoming of any member of the legal profession and warranted either disbarment or suspension from the practice of law.

• Non-Participation of Co-Respondents: Attorney Pangulayan acknowledged that not one of his co-respondents had taken part in the negotiation, discussion, formulation, or execution of the various Re-Admission Agreements complained of and were, in fact, no longer connected at the time with the Pangulayan and Associates Law Offices.
• Purpose of the Re-Admission Agreements: Pangulayan claimed that the Re-Admission Agreements had nothing to do with the dismissal of Civil Case No. Q-97-30549 and were executed for the sole purpose of effecting the settlement of an administrative case involving nine students of AMACC who were expelled upon the recommendation of the Student Disciplinary Tribunal.

• Violation of Canon 9: Whether Atty. Pangulayan violated Canon 9 of the Code of Professional Ethics by negotiating and executing Re-Admission Agreements with complainant’s clients without the knowledge or consent of their counsel.
• Liability of Co-Respondents: Whether the other respondent lawyers should be held administratively liable for the Re-Admission Agreements.
• Penalty: Whether the recommended six-month suspension is the appropriate penalty.

• Violation of Canon 9: Yes. Pangulayan violated Canon 9 by dealing directly with parties known to be represented by counsel, without communicating with their counsel; the agreements also stipulated the termination of civil, criminal, and administrative proceedings.
• Liability of Co-Respondents: No. The case against the other respondents was dismissed for insufficiency of evidence, as they did not take part in the negotiation.
• Penalty: Three months, not six. The recommended six-month suspension was too harsh given the circumstances and respondent’s explanation; the suspension was reduced to three months.

• Violation of Canon 9: When the individual letters of apology and Re-Admission Agreements were formalized, complainant was already the retained counsel for the plaintiff students in Civil Case No. Q-97-30549. Respondent Pangulayan had full knowledge of this fact. Although aware that the students were represented by counsel, Pangulayan proceeded to negotiate with them and their parents without at the very least communicating the matter to their lawyer, complainant, who was counsel of record. This failure, whether by design or because of oversight, was an inexcusable violation of the canons of professional ethics and in utter disregard of a duty owing to a colleague. Pangulayan fell short of the demands required of him as a lawyer and as a member of the Bar. The claim that the Re-Admission Agreements centered only on the administrative aspect of the controversy was belied by the Manifestation, which stated that four signatories acknowledged guilt and agreed to terminate all civil, criminal, and administrative proceedings and that an Urgent Motion to Withdraw from Civil Case No. Q-97-30549 would be filed.
• Liability of Co-Respondents: Pangulayan acknowledged that none of his co-respondents took part in the negotiation, discussion, formulation, or execution of the Re-Admission Agreements and were no longer connected with the firm at the time. The IBP Board of Governors dismissed the case against them for not taking part in the negotiation, and the Supreme Court dismissed the case against them for insufficiency of evidence.
• Penalty: The Supreme Court concurred with the findings of the IBP Investigating Commission and the IBP Board of Governors. Nevertheless, the recommended six-month suspension appeared to be somewhat too harsh a penalty given the circumstances and the explanation of respondent. The suspension was therefore reduced to three months.

• Canon 9, Code of Professional Ethics — A lawyer should not in any way communicate upon the subject of controversy with a party represented by counsel, much less should he undertake to negotiate or compromise the matter with him, but should only deal with his counsel. It is incumbent upon the lawyer most particularly to avoid everything that may tend to mislead a party not represented by counsel, and he should not undertake to advise him as to law. In this case, Pangulayan negotiated with and secured Re-Admission Agreements from students who were represented by complainant, without communicating with complainant, and the agreements included the termination of civil, criminal, and administrative proceedings.
• Duty owing to a colleague — A lawyer owes a duty to opposing counsel not to disregard the latter’s representation of a client by dealing directly with that client on the subject of the controversy. The Court found Pangulayan’s failure to communicate with complainant, counsel of record, to be an inexcusable violation of professional ethics and utter disregard of this duty.

• "A lawyer should not in any way communicate upon the subject of controversy with a party represented by counsel, much less should he undertake to negotiate or compromise the matter with him, but should only deal with his counsel. It is incumbent upon the lawyer most particularly to avoid everything that may tend to mislead a party not represented by counsel and he should not undertake to advise him as to law." — This is the Canon 9 rule quoted by the Court; it defines the ethical prohibition violated by Pangulayan.
• "Although aware that the students were represented by counsel, respondent attorney proceeded, nonetheless, to negotiate with them and their parents without at the very least communicating the matter to their lawyer, herein complainant, who was counsel of record in Civil Case No. Q-97-30549." — This is the core factual finding establishing the Canon 9 violation.
• "This failure of respondent, whether by design or because of oversight, is an inexcusable violation of the canons of professional ethics and in utter disregard of a duty owing to a colleague." — This states the ratio decidendi on why the direct negotiation was inexcusable.
• "The allegation that the context of the Re-Admission Agreements centers only on the administrative aspect of the controversy is belied by the Manifestation" — This rejects Pangulayan’s claim that the agreements concerned only the administrative case, because the Manifestation tied them to termination of the civil proceedings.

• Canon 9, Code of Professional Ethics — A lawyer should not in any way communicate upon the subject of controversy with a party represented by counsel, much less negotiate or compromise the matter with him, but should only deal with his counsel. The provision was applied against Pangulayan, who negotiated and executed Re-Admission Agreements with complainant’s clients despite knowing that they were represented by complainant as counsel of record.

Justice Melo, Justice Panganiban, Justice Purisima, and Justice Gonzaga-Reyes concurred.