In 2008, the Lanao del Norte Electric Cooperative (LANECO), through its board members (Reinario Bihag et al.) engaged the services of Atty. Edgardo Era for purposes of questioning the 1993 Provincial Tax Code (PTC) of Lanao del Norte. Era was introduced to the board by its then GM Engr. Resnol Torres.
Era agreed to take the case. He proposed to file two petitions to question the PTC, namely, a petition for declaratory relief to question the PTC’s collection of franchise tax and a petition for prohibition to question the PTC’s collection of real property tax. Era collected Php300k as acceptance fee for the declaratory relief case and Php700k as acceptance fee for the prohibition case. Era and LANECO agreed for a 10% success fee in both cases to be computed against the assessed taxes.
Era was able to win the cases in the RTC and he demanded that he be paid Php13.5M as success fee. Era explained that the total assessment was Php150M. Several checks were issued to Era as payment for the success fee.
Later however, the board learned that the total assessed tax was only Php31M and may even be reduced to Php28M if negotiated with the provincial government. As a result, the board issued a resolution stopping payment of the success fee to Era.
Era then filed a partial collection suit for Php2M against LANECO in Quezon City. LANECO had no knowledge of the suit as it was Engr. Torres who received the summons. Engr. Torres filed an Answer which admitted all the allegations of Era. Era was able to secure a favorable judgment. Thereafter, the court ordered LANECO’s account to be garnished. This was only the time that LANECO learned of the collection suit filed in the QC-RTC.
The LANECO board demanded Era to provide them a copy of their engagement contract but Era refused as he invoked that the contract was primarily with LANECO through its GM Engr. Torres; that the same is protected by lawyer-client relationship.
Thereafter, Era again filed a partial collection suit against LANECO. LANECO then filed a disbarment case against Era.
ISSUE: Whether or not Atty. Era should be disbarred.
HELD: YES. He engaged in dishonest and deceitful conduct. He abused his superior knowledge of the law to take advantage of the ignorance of his client. He deceived LANECO when he collected success fees yet the cases he filed are not yet terminated as they are on appeal before the Court of Appeals. Era defrauded his clients when he computed his success fee based on an exaggerated amount of Php150M when all that was assessed was Php31M. His computation of the Php150M included speculated amounts such as assessments for years and places not yet covered by the assessments subject of the cases filed.
He also deceived LANECO when he filed two separate cases when in reality, one case would have sufficed. He filed two cases in order to collect more fees from LANECO. The validity of the provisions of the PTC collecting realty and franchise taxes could be questioned in one case.
He also defrauded LANECO when he connived with Engr. Torres in filing the collection case in Quezon City and then putting LANECO in the dark by letting Engr. Torres file an answer who essentially admitted all his allegations. In fact, the QC-RTC decision was annulled by the CA as it found that there was extrinsic fraud due to the connivance of Era and Torres. The fraud perpetrated by Era in attempting to collect success fees from his hapless client undermined, rather than promoted, the administration of justice. He violated his Oath to do no falsehood, nor consent to the doing of any in court, and to exercise fidelity to the courts and his clients.
His action of refusing to provide LANECO copies of his engagement contracts with them while invoking lawyer-client relationship with Torres is likewise tainted with dishonesty. His invocation of the privilege is willfully misplaced. Era knows for a fact that his client is LANECO and not Torres. A corporation like LANECO has a separate and distinct personality from its directors and officers, and can only exercise its corporate powers through its board of directors. Hence, when the board demanded the documents, Era has no excuse as such demand is being made by LANECO itself through the board.
