3/25/2019 A.C. No. 6708 (CBD Case No. 01-874) (Resolution) | Quiambao v.

Bamba

FIRST DIVISION

[A.C. No. 6708. August 25, 2005.]

(CBD Case No. 01-874)

FELICITAS S. QUIAMBAO, complainant, vs. ATTY. NESTOR

A. BAMBA, respondent.

Ang & Associates for complainant.

SYLLABUS
1. LEGAL ETHICS; CODE OF PROFESSIONAL
RESPONSIBILITY; THE LAWYER AND THE CLIENT; RULE AGAINST
CONFLICTING INTERESTS; RATIONALE. — Rule 15.03, Canon 15 of the
Code of Professional Responsibility provides: "A lawyer shall not represent
conflicting interests except by written consent of all concerned given after a
full disclosure of the facts." This prohibition is founded on principles of public
policy and good taste. In the course of a lawyer-client relationship, the lawyer
learns all the facts connected with the client's case, including the weak and
strong points of the case. The nature of that relationship is, therefore, one of
trust and confidence of the highest degree. It behooves lawyers not only to
keep inviolate the client's confidence, but also to avoid the appearance of
treachery and double-dealing for only then can litigants be encouraged to
entrust their secrets to their lawyers, which is of paramount importance in the
administration of justice.
2. ID.; ID.; ID.; ID.; TEST TO DETERMINE INCONSISTENCY OF
INTERESTS; EXPLAINED. — In broad terms, lawyers are deemed to
represent conflicting interests when, in behalf of one client, it is their duty to
contend for that which duty to another client requires them to oppose.
Developments in jurisprudence have particularized various tests to determine
whether a lawyer's conduct lies within this proscription. One test is whether a
lawyer is duty-bound to fight for an issue or claim in behalf of one client and,
at the same time, to oppose that claim for the other client. Thus, if a lawyer's
argument for one client has to be opposed by that same lawyer in arguing for
the other client, there is a violation of the rule. Another test of inconsistency of
interests is whether the acceptance of a new relation would prevent the full
discharge of the lawyer's duty of undivided fidelity and loyalty to the client or
invite suspicion of unfaithfulness or double-dealing in the performance of that
duty. Still another test is whether the lawyer would be called upon in the new
relation to use against a former client any confidential information acquired
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through their connection or previous employment. The proscription against

representation of conflicting interests applies to a situation where the
opposing parties are present clients in the same action or in an unrelated
action. It is of no moment that the lawyer would not be called upon to contend
for one client that which the lawyer has to oppose for the other client, or that
there would be no occasion to use the confidential information acquired from
one to the disadvantage of the other as the two actions are wholly unrelated.
It is enough that the opposing parties in one case, one of whom would lose
the suit, are present clients and the nature or conditions of the lawyer's
respective retainers with each of them would affect the performance of the
duty of undivided fidelity to both clients.
3. ID.; ID.; ID.; ID.; THE CRITERION IS PROBABILITY AND NOT
CERTAINTY OF CONFLICT; APPLICATION IN CASE AT BAR. — While the
complainant lacks personality to question the alleged conflict of interests on
the part of the respondent in serving both security agencies, we cannot just
turn a blind eye to respondent's act. It must be noted that the proscription
against representation of conflicting interests finds application where the
conflicting interests arise with respect to the same general matter however
slight the adverse interest may be. It applies even if the conflict pertains to the
lawyer's private activity or in the performance of a function in a non-
professional capacity. In the process of determining whether there is a conflict
of interest, an important criterion is probability, not certainty, of conflict. Since
the respondent has financial or pecuniary interest in SESSI, which is engaged
in a business competing with his client's, and, more importantly, he occupies
the highest position in SESSI, one cannot help entertaining a doubt on his
loyalty to his client AIB. This kind of situation passes the second test of
conflict of interest, which is whether the acceptance of a new relationship
would prevent the full discharge of the lawyer's duty of undivided fidelity and
loyalty to the client or invite suspicion of unfaithfulness or double-dealing in
the performance of that duty. The close relationship of the majority
stockholders of both companies does not negate the conflict of interest.
Neither does his protestation that his shareholding in SESSI is "a mere pebble
among the sands."
4. ID.; ID.; THE LAWYER AND THE SOCIETY; LAWYERS ARE
MANDATED TO PROMOTE RESPECT FOR THE LAW AND REFRAIN
FROM COUNSELING OR ABETTING ACTIVITIES AIMED AT DEFIANCE OF
THE LAW; VIOLATION IN CASE AT BAR. — It must be noted that Republic
Act No. 5487, otherwise known as the Private Security Agency Law, prohibits
a person from organizing or having an interest in more than one security
agency. From respondent's position paper, it can be culled that Leodegario
Quiambao is the president and managing director of AIB, holding 60% of the
outstanding shares; while his four other siblings who are permanent residents
in the United States own the remaining 40%. This prohibition notwithstanding,
the respondent organized SESSI, with Leodegario's wife and son as majority
stockholders holding about 70% of the outstanding shares and with him (the

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respondent), as well as the rest of the stockholders, holding minimal shares.

In doing so, the respondent virtually allowed Leodegario and the latter's wife
to violate or circumvent the law by having an interest in more than one
security agency. It must be noted that in the affidavit of Leodegario's wife, she
mentioned of their conjugal property. In the absence of evidence to the
contrary, the property relation of Leodegario and his wife can be presumed to
be that of conjugal partnership of gains; hence, the majority shares in AIB and
SESSI are the conjugal property of Leodegario and his wife, thereby placing
themselves in possession of an interest in more than one security agency in
contravention of R.A. No. 5487. Thus, in organizing SESSI, the respondent
violated Rule 1.02, Canon 1 of the Code of Professional Responsibility, which
mandates lawyers to promote respect for the law and refrain from counseling
or abetting activities aimed at defiance of the law.
5. ID.; DISBARMENT AND DISCIPLINE OF ATTORNEYS; BASIS
FOR THE REDUCTION OF PENALTY IMPOSED SHOULD BE PROPERLY
EXPLAINED; VIOLATION IN CASE AT BAR. — As to the recommendation
that the penalty be reduced from a suspension of one year to a stern warning,
we find the same to be without basis. We are disturbed by the reduction made
by the IBP Board of Governors of the penalty recommended by the
investigating commissioner without clearly and distinctly stating the facts and
reasons on which that reduction is based. Section 12 (a), Rule 139-B of the
Rules of Court reads in part as follows: SEC. 12. Review and decision by the
Board of Governors. — (a) Every case heard by an investigator shall be
reviewed by the IBP Board of Governors upon the record and evidence
transmitted to it by the Investigator with his report. The decision of the Board
upon such review shall be in writing and shall clearly and distinctly state the
facts and the reasons on which it is based. We may consider the resolution of
the IBP Board of Governors as a memorandum decision adopting by
reference the report of the investigating commissioner. However, we look with
disfavor the change in the recommended penalty without any explanation
therefor. Again, we remind the IBP Board of Governors of the importance of
the requirement to announce in plain terms its legal reasoning, since the
requirement that its decision in disciplinary proceedings must state the facts
and the reasons on which its decision is based is akin to what is required of
the decisions of courts of record. The reasons for handing down a penalty
occupy no lesser station than any other portion of the ratio. In similar cases
where the respondent was found guilty of representing conflicting interests a
penalty ranging from one to three years' suspension was imposed. In this
case, we find that a suspension from the practice of law for one year is
warranted.

RESOLUTION

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DAVIDE, JR., C.J : p

We are aware of the hapless fact that there are not enough lawyers to
serve an exploding population. This unfortunate state of affairs, however, will
not seize this Court from exercising its disciplinary power over lawyers
culpable of serious indiscretions. The incidence of public force must be
deployed to bear upon the community to eventually forge a legal profession
that provides quality, ethical, accessible, and cost-effective legal service to our
people and whose members are willing and able to answer the call to public
service.
In this administrative case for disbarment, complainant Felicitas S.
Quiambao charges respondent Atty. Nestor A. Bamba with violation of the
Code of Professional Responsibility for representing conflicting interests when
the latter filed a case against her while he was at that time representing her in
another case, and for committing other acts of disloyalty and double-dealing.
From June 2000 to January 2001, the complainant was the president
and managing director of Allied Investigation Bureau, Inc. (AIB), a family-
owned corporation engaged in providing security and investigation services.
She avers that she procured the legal services of the respondent not only for
the corporate affairs of AIB but also for her personal case. Particularly, the
respondent acted as her counsel of record in an ejectment case against
Spouses Santiago and Florita Torroba filed by her on 29 December 2000
before the Metropolitan Trial Court (MeTC) of Parañaque City, which was
docketed as Civil Case No. 11928. She paid attorney's fees for respondent's
legal services in that case. 1 About six months after she resigned as AIB
president, or on 14 June 2001, the respondent filed on behalf of AIB a
complaint for replevin and damages against her before the MeTC of Quezon
City for the purpose of recovering from her the car of AIB assigned to her as a
service vehicle. This he did without withdrawing as counsel of record in the
ejectment case, which was then still pending. 2
Apart from the foregoing litigation matter, the complainant, in her
Position Paper, charges the respondent with acts of disloyalty and double-
dealing. She avers that the respondent proposed to her that she organize her
own security agency and that he would assist her in its organization, causing
her to resign as president of AIB. The respondent indeed assisted her in
December 2000 in the formation of another security agency, Quiambao Risk
Management Specialists, Inc., (QRMSI), which was later registered under
complainant's name, with the respondent as a "silent partner" represented by
his associate Atty. Gerardo P. Hernandez. The respondent was paid attorney's
fees for his legal services in organizing and incorporating QRMSI. He also
planned to "steal" or "pirate" some of the more important clients of AIB. While
serving as legal counsel for AIB and a "silent partner" of QRMSI, he
convinced complainant's brother Leodegario Quiambao to organize another
security agency, San Esteban Security Services, Inc. (SESSI) where he (the
respondent) served as its incorporator, director, and president. The
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respondent and Leodegario then illegally diverted the funds of AIB to fund the
incorporation of SESSI, and likewise planned to eventually close down the
operations of AIB and transfer the business to SESSI. 3
For his part, the respondent admits that he represented the
complainant in the aforementioned ejectment case and later represented AIB
in the replevin case against her. He, however, denies that he was the
"personal lawyer" of the complainant, and avers that he was made to believe
that it was part of his function as counsel for AIB to handle even the "personal
cases" of its officers. Even assuming that the complainant confided to him
privileged information about her legal interests, the ejectment case and the
replevin case are unrelated cases involving different issues and parties and,
therefore, the privileged information which might have been gathered from
one case would have no use in the other. At any rate, it was the complainant
herself who insisted that he stay as her counsel despite the perceived
differences among her, her brother, and AIB over the motor vehicle subject of
the replevin case. The complainant even asked him to assist her in her
monetary claims against AIB. 4
The respondent also denies the charge raised by the complainant in
her position paper that he agreed to be a "silent partner" of QRMSI through
his nominee, Atty. Gerardo P. Hernandez, who was his former law partner. He
declined complainant's offer to assume that role and suggested Atty.
Hernandez in his place; thus, 375 shares of stock were registered in Atty.
Hernandez's name as consideration of his (Atty. Hernandez's) legal services
as corporate secretary and legal counsel of QRMSI. The respondent also
denies that he convinced complainant's brother Leodegario to organize
another security agency and that the funds of AIB were unlawfully diverted to
SESSI. It was to complement the business of AIB, which was then in danger
of collapse, that SESSI was established. Leodegario's wife and her son have
the effective control over SESSI. Respondent's subscribed shareholdings in
SESSI comprise only 800 shares out of 12,500 subscribed shares. He serves
AIB and SESSI in different capacities: as legal counsel of the former and as
president of the latter. 5
In his Report and Recommendation 6 dated 31 August 2004, the
investigating commissioner of the IBP found the respondent guilty of
representing conflicting interests based on the following undisputed facts: first,
the respondent was still complainant's counsel of record in the ejectment case
when he filed, as legal counsel of AIB, the replevin case against her; and
second, the respondent was still the legal counsel of AIB when he advised the
complainant on the incorporation of another security agency, QRMSI, and
recommended his former law partner, Atty. Gerardo Hernandez, to be its
corporate secretary and legal counsel and also when he conferred with
Leodegario to organize another security agency, SESSI, where the
respondent became an incorporator, stockholder, and president. Thus, the
investigating commissioner recommended that the respondent be suspended
from the practice of law for one year. ADEaHT

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The IBP Board of Governors adopted and approved the investigating

commissioner's report and recommendation, but reduced the penalty from
one year to a stern reprimand. 7
The issue in this case is whether the respondent is guilty of
misconduct for representing conflicting interests in contravention of the basic
tenets of the legal profession.
Rule 15.03, Canon 5 of the Code of Professional Responsibility
provides: "A lawyer shall not represent conflicting interests except by written
consent of all concerned given after a full disclosure of the facts." This
prohibition is founded on principles of public policy and good taste. 8 In the
course of a lawyer-client relationship, the lawyer learns all the facts connected
with the client's case, including the weak and strong points of the case. The
nature of that relationship is, therefore, one of trust and confidence of the
highest degree. 9 It behooves lawyers not only to keep inviolate the client's
confidence, but also to avoid the appearance of treachery and double-dealing
for only then can litigants be encouraged to entrust their secrets to their
lawyers, which is of paramount importance in the administration of justice. 10
In broad terms, lawyers are deemed to represent conflicting interests
when, in behalf of one client, it is their duty to contend for that which duty to
another client requires them to oppose. 11 Developments in jurisprudence
have particularized various tests to determine whether a lawyer's conduct lies
within this proscription. One test is whether a lawyer is duty-bound to fight for
an issue or claim in behalf of one client and, at the same time, to oppose that
claim for the other client. 12 Thus, if a lawyer's argument for one client has to
be opposed by that same lawyer in arguing for the other client, there is a
violation of the rule.
Another test of inconsistency of interests is whether the acceptance of
a new relation would prevent the full discharge of the lawyer's duty of
undivided fidelity and loyalty to the client or invite suspicion of unfaithfulness
or double-dealing in the performance of that duty. 13 Still another test is
whether the lawyer would be called upon in the new relation to use against a
former client any confidential information acquired through their connection or
previous employment. 14
The proscription against representation of conflicting interests applies
to a situation where the opposing parties are present clients in the same
action or in an unrelated action. It is of no moment that the lawyer would not
be called upon to contend for one client that which the lawyer has to oppose
for the other client, or that there would be no occasion to use the confidential
information acquired from one to the disadvantage of the other as the two
actions are wholly unrelated. It is enough that the opposing parties in one
case, one of whom would lose the suit, are present clients and the nature or
conditions of the lawyer's respective retainers with each of them would affect
the performance of the duty of undivided fidelity to both clients. 15

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In this case, it is undisputed that at the time the respondent filed the
replevin case on behalf of AIB he was still the counsel of record of the
complainant in the pending ejectment case. We do not sustain respondent's
theory that since the ejectment case and the replevin case are unrelated
cases fraught with different issues, parties, and subject matters, the
prohibition is inapplicable. His representation of opposing clients in both
cases, though unrelated, obviously constitutes conflict of interest or, at the
least, invites suspicion of double-dealing. While the respondent may assert
that the complainant expressly consented to his continued representation in
the ejectment case, the respondent failed to show that he fully disclosed the
facts to both his clients and he failed to present any written consent of the
complainant and AIB as required under Rule 15.03, Canon 15 of the Code of
Professional Responsibility.

Neither can we accept respondent's plea that he was duty-bound to

handle all the cases referred to him by AIB, including the personal cases of its
officers which had no connection to its corporate affairs. That the
representation of conflicting interest is in good faith and with honest intention
on the part of the lawyer does not make the prohibition inoperative. 16
Moreover, lawyers are not obliged to act either as an adviser or advocate for
every person who may wish to become their client. They have the right to
decline such employment, subject, however, to Canon 14 of the Code of
Professional Responsibility. 17 Although there are instances where lawyers
cannot decline representation, 18 they cannot be made to labor under conflict
of interest between a present client and a prospective one. 19
Additionally, in his position paper, the respondent alleges that when
the complainant invited the respondent to join QRMSI, he "vehemently
refused to join them due to his perception of conflicting interest as he was
then (and still is at present) the Legal Counsel" of AIB, which is also a security
agency. 20 To bolster his allegation, he invoked the affidavits of complainant's
witnesses which contained statements of his apprehension of conflict of
interest should he join QRMSI. 21
Surprisingly, despite his apprehension or awareness of a possible
conflict of interest should he join QRMSI, the respondent later allowed himself
to become an incorporator, stockholder, and president of SESSI, which is also
a security agency. He justified his act by claiming that while both AIB and
SESSI are engaged in security agency business, he is serving in different
capacities. As the in-house legal counsel of AIB, he "serves its legal interest
the parameter of which evolves around legal matters" such as protecting the
legal rights and interest of the corporation; conducting an investigation or a
hearing on violations of company rules and regulations of their office
employees and security guards; sending demand letters in collection cases;
and representing the corporation in any litigation for or against it. And as
president of SESSI, he serves the operational aspects of the business such
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as "how does it operate[], how much do they price their services, what kind or
how do they train[] their security guards, how they solicit clients." Thus,
conflict of interest is far-fetched. Moreover, the respondent argues that the
complainant, not being a stockholder of AIB and SESSI, has no right to
question his alleged conflict of interest in serving the two security agencies. 22
While the complainant lacks personality to question the alleged
conflict of interests on the part of the respondent in serving both security
agencies, we cannot just turn a blind eye to respondent's act. It must be noted
that the proscription against representation of conflicting interests finds
application where the conflicting interests arise with respect to the same
general matter however slight the adverse interest may be. It applies even if
the conflict pertains to the lawyer's private activity or in the performance of a
function in a non-professional capacity. 23 In the process of determining
whether there is a conflict of interest, an important criterion is probability, not
certainty, of conflict.
Since the respondent has financial or pecuniary interest in SESSI,
which is engaged in a business competing with his client's, and, more
importantly, he occupies the highest position in SESSI, one cannot help
entertaining a doubt on his loyalty to his client AIB. This kind of situation
passes the second test of conflict of interest, which is whether the acceptance
of a new relationship would prevent the full discharge of the lawyer's duty of
undivided fidelity and loyalty to the client or invite suspicion of unfaithfulness
or double-dealing in the performance of that duty. The close relationship of the
majority stockholders of both companies does not negate the conflict of
interest. Neither does his protestation that his shareholding in SESSI is "a
mere pebble among the sands."
In view of all of the foregoing, we find the respondent guilty of serious
misconduct for representing conflicting interests.
Furthermore, it must be noted that Republic Act No. 5487, otherwise
known as the Private Security Agency Law, prohibits a person from organizing
or having an interest in more than one security agency. From respondent's
position paper, it can be culled that Leodegario Quiambao is the president and
managing director of AIB, holding 60% of the outstanding shares; while his
four other siblings who are permanent residents in the United States own the
remaining 40%. 24 This prohibition notwithstanding, the respondent organized
SESSI, with Leodegario's wife and son as majority stockholders holding about
70% of the outstanding shares and with him (the respondent), as well as the
rest of the stockholders, holding minimal shares. 25 In doing so, the
respondent virtually allowed Leodegario and the latter's wife to violate or
circumvent the law by having an interest in more than one security agency. It
must be noted that in the affidavit 26 of Leodegario's wife, she mentioned of
their conjugal property. In the absence of evidence to the contrary, the
property relation of Leodegario and his wife can be presumed to be that of
conjugal partnership of gains; hence, the majority shares in AIB and SESSI
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are the conjugal property of Leodegario and his wife, thereby placing
themselves in possession of an interest in more than one security agency in
contravention of R.A. No. 5487. Thus, in organizing SESSI, the respondent
violated Rule 1.02, Canon 1 of the Code of Professional Responsibility, which
mandates lawyers to promote respect for the law and refrain from counseling
or abetting activities aimed at defiance of the law.
As to the recommendation that the penalty be reduced from a
suspension of one year to a stern warning, we find the same to be without
basis. We are disturbed by the reduction made by the IBP Board of Governors
of the penalty recommended by the investigating commissioner without clearly
and distinctly stating the facts and reasons on which that reduction is based.
Section 12(a), Rule 139-B of the Rules of Court reads in part as
follows:
SEC. 12. Review and decision by the Board of Governors.
—
(a) Every case heard by an investigator shall be reviewed
by the IBP Board of Governors upon the record and evidence
transmitted to it by the Investigator with his report. The decision of
the Board upon such review shall be in writing and shall clearly and
distinctly state the facts and the reasons on which it is based.
We may consider the resolution of the IBP Board of Governors as a
memorandum decision adopting by reference the report of the investigating
commissioner. However, we look with disfavor the change in the
recommended penalty without any explanation therefor. Again, we remind the
IBP Board of Governors of the importance of the requirement to announce in
plain terms its legal reasoning, since the requirement that its decision in
disciplinary proceedings must state the facts and the reasons on which its
decision is based is akin to what is required of the decisions of courts of
record. 27 The reasons for handing down a penalty occupy no lesser station
than any other portion of the ratio.
In similar cases where the respondent was found guilty of
representing conflicting interests a penalty ranging from one to three years'
suspension was imposed. 28 In this case, we find that a suspension from the
practice of law for one year is warranted.
WHEREFORE, respondent Atty. Nestor A. Bamba is hereby held
GUILTY of violation of Rule 15.03 of Canon 15 and Rule 1.02 of Canon 1 of
the Code of Professional Responsibility. He is SUSPENDED from the practice
of law for a period of ONE (1) YEAR effective from receipt of this Resolution,
with a warning that a similar infraction in the future shall be dealt with more
severely.
Let copies of this Resolution be furnished to the Office of the Bar
Confidant and the Integrated Bar of the Philippines. cADaIH

SO ORDERED.
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Quisumbing, Ynares-Santiago, Carpio and Azcuna, JJ., concur.

Footnotes

1. Rollo, 96-97.
2. Id., 1.
3. Rollo, 99-101.
4. Rollo, 17-18.
5. Id., 225-238.
6. Id., 504-520.
7. Rollo, 503.
8. Hilado v. David, 84 Phil. 569, 579 (1949).
9. Maturan v. Gonzales, A.C. No. 2597, 12 March 1998, 287 SCRA 443.
10. Hilado v. David, supra note 8.
11. Canon 6, par. 2, Canons of Professional Ethics.
12. Hornilla v. Salunat, A.C. No. 5804, 1 July 2003, 405 SCRA 220;
Northwestern University v. Arquillo, G.R. No. 6632, 2 August 2005.
13. Tiania v. Ocampo, A.C. No. 2302, 12 August 1991, 200 SCRA 472,
479.
14. Abaqueta v. Florido, A.C. No. 5948, 22 January 2003, 395 SCRA 569;
Pormento v. Pontevedra, A.C. No. 5128, 31 March 2005.
15. RUBEN E. AGPALO, LEGAL ETHICS 223 (6th ed. 1997), citing
Memphis & Shelby County Bar Ass'n v. Sanderson, 52 Tenn. App. 684; 378
SW2d 173 (1963); B.A. Op. 132 (15 March 1935).
16. Maturan v. Gonzales, supra note 9; Artezuela v. Maderazo, 431 Phil.
135 (2002).
17. Abaqueta v. Florido, A.C. No. 5948, 22 January 2003, 395 SCRA 569,
576.
18. Rules 14.01 and 14.02, Canon 14, Code of Professional Responsibility.
19. Rule 14.03 of Canon 14 and Rule 15.03 of Canon 15, Code of
Professional Responsibility.
20. Rollo, 224 (emphasis supplied).
21. Id. 226.
22. Rollo, 240-241.
23. Nakpil v. Valdes, 350 Phil. 412.
24. Rollo, 219.

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25. Id., 238.

26. Exhibit "49," Rollo, 401-402.
27. Teodosio v. Nava, A.C. No. 4673, 27 April 2001, 357 SCRA 406.
28. Vda. de Alisbo v. Jalandoni, A.C. No. 1311, 18 July 1991, 199 SCRA
321; PNB v. Cedo, A.C. No. 3701, 28 March 1995, 243 SCRA 1; Maturan v.
Gonzales, supra note 9; Northwestern University, Inc. v. Arguillo, A.C. No.
6632, 2 August 2005.

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