Lawyering in the context of corporate practice
POINT OF LAW - Francis Lim () - December 31, 2002 - 12:00am
Is acting as a nominee-stockholder or officer in a corporation formed or acquired for a client part of legitimate lawyering?

The question is a recurring one: It usually crops up when a lawyer of consequence is considered for appointment to a government post. I know of two instances – one involving my former law professor, Justice Adolfo Azcuna, and the other, my partner, Atty. Rogelio Vinluan. Both were nominated to the Supreme Court. When confronted with the question, both of them said that they acted as nominees in the course of their legal practice. In short, they invoked legitimate lawyering.

The defense of legitimate lawyering in the corporate context is not something new. Modesty aside, I used it to successfully defend my partners in ACCRALAW in a civil case filed by the PCGG regarding the coconut industry. I am referring to the case of Regala vs. Sandiganbayan (262 SCRA 122 [1996]), involving several laywers of ACCRALAW who were impleaded as co-defendants in an ill-gotten case filed by the PCGG against Mr. Eduardo M. Cojuangco Jr. – the principal target. The ACCRA lawyers were charged with having conspired in setting up, through the use of the coconut levy funds, the financial and corporate framework and structures that led to the establishment of several coconut levy funded corporations in an attempt to monopolize the coconut industry. Specifically, the ACCRA lawyers acted as incorporating or acquiring stockholders and in some cases, directors and officers of these companies. The ACCRA lawyers claimed good faith and raised, as a defense, that their "participation in the acts with which their co-defendants are charged, was in furtherance of legitimate lawyering." The lawyers executed affidavits to this effect, pointing out that they did not have any pecuniary interest in the shares of stock registered in their names. For its part, the PCGG knew exactly that the shares were still there and, in fact, voted them. The Supreme Court found that the ACCRA lawyers were "being prosecuted solely on the basis of activities and services performed in the course of their duties as lawyers." The High Court ordered their exclusion from the complaint because "PCGG has no valid cause of action against [them]."

The Supreme Court reiterated the Regala doctrine in Castillo vs. Sandiganbayan (G.R. 138231, Feb. 21, 2002) where, for the same reason, the Supreme Court "ordered the exclusion of lawyer Gregorio R. Castillo as party-defendant to the case."

The Regala and Castillo decisions were rendered in the context of a civil case. Quite recently, the High Court extended the defense to a criminal case, which is one of the companion cases to the civil case earlier decided by the Supreme Court in favor of the ACCRA lawyers (Republic vs. Desierto, G.R. No. 131966, Sept. 23, 2002). In this case, some ACCRA lawyers, together with other respondents, were criminally charged before the Ombudsman for their legal services for the coconut industry. The principal respondents were accused of having misappropriated a portion of the coconut levy funds to acquire coconut oil mills, only to mothball them in order to establish a monopoly for their personal benefit and advantage. The High Court ordered the exclusion of the ACCRA lawyers from the criminal complaint basically because they merely acted as lawyers. In ordering the exclusion of the lawyers, the Supreme Court reiterated its ruling in Regala and Castillo recognizing the lawyers’ "constitutional right against self-incrimination and their fundamental right to maintain inviolate the privilege of attorney-client confidentiality."

There is a far-reaching dimension in the Regala doctrine. The doctrine will find relevance every time a lawyer is considered for appointment to a government post, whether in the judiciary or other branches of the government. Consider, for example, the credentials of Justice Azcuna: A cum laude graduate from the Ateneo Law School, fourth placer in the 1962 bar examinations, law professor in the Ateneo, delegate to the 1971 Constitutional Convention, presidential legal counsel, presidential spokesperson and press secretary. If Justice Azcuna could not be appointed to the Supreme Court only because he acted, once upon a time, as an incorporator and officer for a company formed by his law firm for a client, the country would have been deprived of a magistrate who could bring not only competence and integrity but also prestige and stature, to the Supreme Court.

Fortunately, the Supreme Court has judiciously ruled on the issue. By so doing, the court has removed a barrier to the entry of highly qualified lawyers to government service. There are, indeed, well-meaning lawyers of the caliber of Justice Azcuna and Atty. Vinluan who are willing to give up their lucrative private practice and serve our people.

(The author is a senior partner of ACCRALAW and a law professor in the Ateneo Law School. He may be contacted at 830-8000.)

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