SECOND DIVISION

[A.C. No. 11774. March 21, 2018.]

(Formerly CBD Case No. 14-4186)

READY FORM, INCORPORATED, complainant , vs. ATTY.

EGMEDIO J. CASTILLON, JR., respondent.

DECISION

CAGUIOA, J : p

Before this Court is an administrative complaint 1 filed with the

Commission on Bar Discipline of the Integrated Bar of the Philippines (CBD-
IBP) by Complainant Ready Form, Inc. (Ready Form) against Respondent
Atty. Egmedio J. Castillon, Jr. (Atty. Castillon), for his alleged violation of
Rules 1.01, 1.02, and 1.03 of Canon 1 of the Code of Professional
Responsibility when he allegedly used Ready Form's Income Tax Return (ITR)
in filing a Petition for Suspension and Blacklisting 2 (Petition for Blacklisting)
against Ready Form before the National Printing Office (NPO).

The Factual Antecedents

Ready Form was one of the companies who participated in a public

bidding conducted by the NPO on October 17, 2008. Thereafter, the NPO
Bids and Awards Committee (NPO-BAC) required all bidders to re-submit
their eligibility documents, which includes the bidders' past ITRs and
financial documents stamp received by the Bureau of Internal Revenue (BIR).
3 After reviewing these submissions, the NPO-BAC imposed a suspension of
one (1) year against Ready Form effective from December 22, 2008 to
December 21, 2009 4 due to the supposed misrepresentation and
misdeclaration it committed when it submitted alleged false ITRs and
financial statements for the calendar year 2007.
Subsequently, on September 18, 2009, Eastland Printink Corporation
(Eastland) filed a Petition for Blacklisting with the NPO against Ready Form,
wherein Eastland alleged that Ready Form had committed other violations,
such as (1) misrepresentation, when it also filed with the NPO false ITRs for
the year 2006, (2) unlawfully soliciting printing jobs and services from
various local government offices or agencies, and (3) undermining the
authority and jurisdiction of the NPO by disseminating letters which
suggested that the NPO no longer has exclusive jurisdiction over printing
services. 5 As Eastland's counsel, Atty. Castillon signed the Petition on behalf
of his client.
The NPO then asked both parties to file position papers in relation to
the Petition for Blacklisting. Eastland filed a position paper 6 which stated
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 that:
The figures declared by respondent in its financial statement
submitted to the Securities and Exchange Commission indicate that
(sic) a total net sale of P78,639,134.73, but respondent net sales with
NPO alone yielded P80,063.932, (sic) or a discrepancy of
P1,424,797.27. The figures speak for themselves where false
statements and/or information were clearly resorted to by the
respondent. These documents are material for eligibility requirements
which bespeak of respondent's deliberate act of misrepresentation.
The respondent has intentionally and consciously falsified its
Financial Statement and Income Tax Return for 2006 by stating and
declaring the reduced and wrong amount of annual net sales to
gainfully reduce payment of taxes due the government.
It has been a pattern of respondent in reporting the reduced
and incorrect net sales for two (2) years in a row. It did in 2006 and
2007. In fact, it was duly reflected in its 2006 and 2007 falsified
Financial Statements submitted before the Securities and Exchange
Commission. 7
On December 1, 2009, the NPO issued a Resolution 8 suspending and
blacklisting Ready Form for a period of five (5) years after finding, among
others, that:
Respondent (sic) 2006 Financial Statement contains false
information; hence, it is a falsified document. As part of its eligibility
requirements, respondent submitted to NPO its 2006 Financial
Statement (earlier submitted to the Securities and Exchange
Commission in compliance with its reportorial requirements) which
contains false information. Evidently, the same is (sic) fictitious, false
and falsified document.
Respondent intentionally reported the reduced amount of its
net sales for 2006 in its Financial Statement by declaring only
Seventy Eight Million Six Hundred Thirty Nine Thousand One
Hundred Thirty Four and Seventy Three Centavos
(P78,639,134.73). However, its net sales alone in NPO reached
Eighty Million Sixty Three Thousand Nine Hundred Thirty Two
and Twenty Nine Centavos (P80,063,932.29) . The under
declaration was not only conscious and deliberate but also it was
purposely done by respondent two (2) years in a row solely intended
to evade payment of correct taxes due to government.
I t s (sic) worth recalling that in 2007, respondent also under
declared its nets (sic) sales by stating in its 2007 Financial Statement
the amount of Seventy Four Million Three Hundred Seventy
Seven Thousand Five Hundred Ninety Three Pesos and
Twenty Three Centavos (P74,377,593.23) . But in truth and in
fact, its net sales for NPO alone hit One Hundred Seven Million
Three Hundred One Thousand Twelve Pesos and Ninety Four
Centavos (P107,301,012.94). In fact, the respondent was
suspended for one (1) year from 22 December 2008 up to 22
December 2009 for that reason. An appeal was filed by respondent to
the Office of the Press Secretary. However, the appeal was dismissed
and the imposition of administrative sanction of one (1) year was
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 affirmed. The same has already become final and executory since
respondent neither filed a motion for reconsideration nor a Petition
for Review to the Court of Appeals timely filed. 9 (Emphasis and
underscoring in the original)
On April 4, 2014, Ready Form filed a Complaint-Affidavit (Complaint)
before the CBD-IBP praying that Atty. Castillon be disbarred due to allegedly
violating Rules 1.01, 1.02, and 1.03 of Canon 1 of the Code of Professional
Responsibility, alleging as a ground therefor Atty. Castillon's supposed
unlawful use of Ready Form's ITRs. Complainant alleges that this is in
violation of Sections 4 and 278 of Republic Act No. 8424, 10 otherwise known
as the National Internal Revenue Code (NIRC), which state that:
SEC. 4. Power of the Commissioner to Interpret Tax
Laws and to Decide Tax Cases . — The power to interpret the
provisions of this Code and other tax laws shall be under the
exclusive and original jurisdiction of the Commissioner, subject to
review by the Secretary of Finance.
The power to decide disputed assessments, refunds of internal
revenue taxes, fees or other charges, penalties imposed in relation
thereto, or other matters arising under this Code or other laws or
portions thereof administered by the Bureau of Internal Revenue is
vested in the Commissioner, subject to the exclusive appellate
jurisdiction of the Court of Tax Appeals.
xxx xxx xxx
SEC. 278. Procuring Unlawful Divulgence of Trade
Secrets. — Any person who causes or procures an officer or
employee of the Bureau of Internal Revenue to divulge any
confidential information regarding the business, income or
inheritance of any taxpayer, knowledge of which was acquired by him
in the discharge of his official duties, and which it is unlawful for him
to reveal, and any person who publishes or prints in any manner
whatever, not provided by law, any income, profit, loss or expenditure
appearing in any income tax return, shall be punished by a fine of not
more than Two thousand pesos (P2,000), or suffer imprisonment of
not less than six (6) months nor more than five (5) years, or both.
(Emphasis and italics in the original)
Complainant further alleges that Atty. Castillon's supposed act was in
violation of Section 30.1 of the Implementing Rules and Regulations of
Republic Act No. 9184 11 or the Government Procurement Reform Act which
mandates that the Bids and Awards Committee concerned shall use a non-
discretionary "pass/fail" criterion in determining the eligibility of bidding
documents submitted to it. The said section states that:
30.1. The BAC shall open the first bid envelopes in public to determine
each bidder's compliance with the documents required to be
submitted for eligibility and for the technical requirements, as
prescribed in this IRR. For this purpose, the BAC shall check the
submitted documents of each bidder against a checklist of
required documents to ascertain if they are all present, using a
non-discretionary "pass/fail" criterion, as stated in the
Instructions to Bidders. If a bidder submits the required
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 document, it shall be rated "passed" for that particular
requirement. In this regard, bids that fail to include any
requirement or are incomplete or patently insufficient shall be
considered as "failed." Otherwise, the BAC shall rate the said first
bid envelope as "passed."
During the mandatory conference of the case before the CBD-IBP, the
parties agreed to limit the issue on whether or not Atty. Castillon's act of
attaching Ready Form's audited financial statements in the Petition for
Blacklisting he filed with the NPO constitutes a violation of Sections 4 and
238 of the NIRC. 12 Consequently, the answer to the said question also
determines whether Atty. Castillon violated Rules 1.01, 1.02, and 1.03 of
Canon 1 of the Code of Professional Responsibility.
Atty. Castillon, in his position paper submitted to the CBD-IBP, stressed
that what was submitted in support of the Petition for Blacklisting with the
NPO was Ready Form's audited financial statements which were acquired
from the Securities and Exchange Commission (SEC). Atty. Castillon
categorically denied that he acquired, much less attached, an ITR of
complainant Ready Form. 13
After due proceedings, Commissioner Maria Editha A. Go-Biñas
(Commissioner Go-Biñas) rendered a Report and Recommendation 14 on July
21, 2016, absolving Atty. Castillon from the charges filed by Ready Form.
Commissioner Go-Biñas found that Ready Form's claims were unfounded, as
there is no proof that Atty. Castillon procured Ready Form's ITR, or that he
used it in the Petition for Blacklisting. The dispositive portion of
Commissioner Go-Biñas' Report and Recommendation reads as follows:
WHEREFORE, IN VIEW OF THE FOREGOING, it is most
respectfully recommended that the instant case be dismissed for
utter lack of merit. 15
On September 23, 2016, the IBP Board of Governors passed a
Resolution adopting the findings of fact and recommendation of
Commissioner Go-Biñas and resolved to dismiss the complaint, thus:
RESOLVED to ADOPT the findings of fact and recommendation
of the Investigating Commissioner dismissing the complaint. 16

The Court's Ruling

After a judicious examination of the records and submission of the

parties, the Court finds no compelling reason to diverge from the factual
findings of Commissioner Go-Biñas as adopted by IBP Board of Governors.
Ready Form's central issue against Atty. Castillon is that he allegedly
violated the law, particularly the NIRC, when he supposedly attached a copy
of its ITR for 2006 when he filed the Petition for Blacklisting. A perusal of the
records will reveal, however, that what Atty. Castillon attached in the
Petition for Blacklisting is Ready Form's audited financial statement for the
year 2006 and not the latter's ITR. Ready Form harps on the fact that the
following paragraphs, which mentions Ready Form's ITR, were in the Petition
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 for Blacklisting signed by Atty. Castillon: 17

4. The aforecited suspension was brought about by the

misrepresentation and misdeclaration committed by herein
respondent on its Income Tax Return and Financial Statement and
other documents submitted before this Office covering the period
2007;
5. Previous to the said violation, respondent had committed
acts of similar nature in their Income Tax Returns and Financial
Statements and other documents submitted before this office
covering the year 2006, among other things, which underscores a
deliberate scheme of submitting false declarations. A photocopy of
the 2006 Financial Statement is hereto attached and marked as
Annex "B" and made integral part hereof. 18
Ready Form repeatedly made an issue out of the fact that its ITR was
mentioned in the Petition for Blacklisting, and later on in the Position Paper
filed by Eastland, both signed by Atty. Castillon. They did not, however, offer
proof to substantiate its claims that its ITR was attached to the Petition for
Blacklisting despite the clear and express statement therein that only its
audited financial statement, which is available to the public through the SEC,
was attached thereto. During the mandatory conference, it was clear that
only an audited financial statement was attached by Atty. Castillon. Ready
Form only wants the IBP, and consequently this Court, to hold that Atty.
Castillon used confidential information by doing such act:
ATTY. MISON [counsel for Ready Form]:
  This is Annex "G" to the complaint. Also paragraph 5 if I may
mention, previous to this a photocopy of the 2006 Financial
Statement is hereto attached and marked as Annex "B" so that is
admitted?
ATTY. CASTILLON:
  That Financial Statement no ITR as mentioned previously.
ATTY. MISON:
  But the premise of the paragraph it made mentioned (sic) of that.
ATTY. CASTILLON:
  There is that phrase, Your Honor, but meaning attaching ITR
there really was none, Your Honor.
xxx xxx xxx
COMM. BINAS:
  If any of these pleadings that you have there and the cases, I'm
sure you have the files, right?
ATTY. MISON:
  Yes.

COMM. BINAS:
  Did you notice any attachment about the ITR as submitted by the
respondent? Because I'm sure it should have been an annexed
(sic) there or . . .
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 ATTY. MISON:
  Well, Your Honor, if the Commission should take somehow
judicial notice that the financial statement is attached to the ITR,
the ITR merely contains the summary, the total amount but the
details of the total amount appearing in the Income Tax Return,
they are all reflected in the Financial Statement. Meaning, the
Financial Statements contains the details while the ITR itself is
just a summary. So, you cannot say, o (sic) I just filed the
financial statement I did not file the ITR. But all the information
appearing on the Financial Statement necessarily appears in the
ITR.
xxx xxx xxx
COMM. BINAS:
  So, as of now the complainant is pounding on the fact that there
was this use of confidential data.
ATTY. MISON:
  Yes, Your Honor.
COMM. BINAS:
  That is the meat of the complaint.
ATTY. MISON:
  Yes, Your Honor. Violation and not only that, Section 4, Your
Honor, where no person has the power to interpret even to make
allegations that base (sic) on financial statements falsified, they
have usurp (sic) the power exclusively vested to the BIR and the
Court of Tax Appeals, Section 4 of R.A. 8424 and Section 278 of
R.A. 8424.
COMM. BINAS:
  So, insofar as the complainant is concerned the act of using the
confidential tax data emanated from the fact that he submitted
the financial statement.
ATTY. MISON:
  Yes, Your Honor. And we contend, Your Honor, that the financial
statement contains a more detailed figures vis-à-vis the income
tax return. 19
Clearly, therefore, the complainant wants this Court to penalize the
respondent for using a publicly-available document to support allegations in
a pleading signed by him. This, the Court refuses to do.
The Court takes judicial notice 20 of the fact that audited financial
statements submitted by corporations, as required by Section 141 of the
Corporation Code, are made available to the public by the SEC. Hence, the
Court fails to see how Atty. Castillon violated any law when he attached a
copy of Ready Form's audited financial statements in the Petition for
Blacklisting he filed with the NPO.
Thus, the Court agrees with Commissioner Go-Biñas when she correctly
said:
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 He who alleges should prove his case in a very clear and
convincing manner.
An individual should not be allowed to claim relief just
because a lawyer is aiding or was hired by an opponent. To do
so would create more injustice and lead to an even more erroneous
practice.
"While courts will not hesitate to mete out proper disciplinary
punishment upon lawyers who fail to live up to their sworn duties,
they will on the other hand, protect them from the unjust accusations
of dissatisfied litigants. The success of a lawyer in his profession
depends most entirely on his reputation. Anything which will harm his
good name is to be deplored. Private persons and particularly
disgruntled opponents, may not, therefore, be permitted to
use the courts as vehicles through which to vent their rancor
on members of the Bar" (Santos vs. Dichoso, Adm. Case No. 1825,
August 22, 1978). 21 (Emphasis in the original)
All told, the Court finds that the evidence adduced is wholly insufficient
to support the allegations against Atty. Castillon. As such, the Court fails to
see how Atty. Castillon had violated Rules 1.01, 1.02, and 1.03 of Canon 1 of
the Code of Professional Responsibility. Hence, the Court affirms the IBP's
recommendation to dismiss the Complaint.
WHEREFORE, premises considered, the Complaint filed by Ready
Form, Inc. against Atty. Egmedio J. Castillon, Jr. is hereby DISMISSED for
lack of merit.
SO ORDERED.
Carpio, * Peralta, Perlas-Bernabe and Reyes, Jr., JJ., concur.

Footnotes
* Acting Chief Justice per Special Order No. 2539 dated February 28, 2018.

1. Rollo , pp. 2-26.

2. Id. at 46-52.
3. Id. at 5.
4. Id. at 6.

5. Id. at 47-49.
6. Id. at 53-64.
7. Id. at 59.
8. Id. at 80-89.
9. Id. at 84-85.

10. Id. at 9.
11. Id. at 8.
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 12. Id. at 184-185.
13. Id. at 206-207.

14. Id. at 224-227.

15. Id. at 227.
16. Id. at 222.
17. Id. at 59.
18. Id. at 47.

19. TSN, October 14, 2014, pp. 7-13, id . at 164-170.

20. RULES OF COURT, Rule 129, Sec. 1.
21. Rollo , pp. 226-227.

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