Tuesday, October 8, 2013

Conflict of interest

BILDNER vs. Lokin, et. al., A.C. No. 6554, Dec. 14, 2005.

           "x x x.

Segueing to the merits of the petition, respondent admits that his firm represented Ilusorio in Sandiganbayan Case No. 009[8]and that he represented Manuel Nieto, Jr. and Lourdes Africa in SEC Case No. 09-98-6086.[9] The Court notes, however, that besides Nieto and Africa, respondent represented Salvador Hizon as well, as indicated in his Memorandum submitted to the SEC[10] and as found by the Committee on Professional Responsibility, Discipline and Disbarment of the IBP.[11]    

          Notwithstanding his acknowledged involvement in both the Sandiganbayan and SEC cases, respondent denies that he was guilty of representing conflicting interests, he proffering that, in the first place, the case of Ilusorio in the Sandiganbayan “has been the personal account of Atty. Raval, separate and apart from the accounts of the law partnership.”   Not only is this claim unsubstantiated, however.  It is contradicted by respondent’s own evidence and statements. 

          Thus, respondent attached to his Comment to the present petition documentary evidence consisting of, among other things, two letters to the PCGG, in one of which he signed on behalf of his firm, and in the other his name appeared as counsel on behalf of his firm.[12]   The subject of both letters was the then pending negotiations between the PCGG and Ilusorio who was therein identified as the client of respondent’s firm.  In connection with these letters, respondent claims: “If by chance the signature of the Respondent appears on some correspondences, it is only because Respondent, in good faith, accommodated Atty. Raval upon the latter’s request who, as then Deputy Secretary of the Senate of the Philippines, is not authorized to engage in the private practice.”[13]  Besides being a flimsy excuse by itself, this claim of respondent, being an acknowledgment that he signed correspondences with the PCGG pertaining to the Ilusorio case, only shows that both he and Atty. Raval collaborated on said case. 

          Furthermore, as earlier noted, respondent has stated that Ilusorio was represented by his firm in the Sandiganbayan case.[14]       In light thereof, respondent was personally barred by the rules of ethics from representing an interest contrary to that earlier espoused by his firm.  So this Court held in Hilado v. David:[15]

x x x If this letter was written under the circumstances explained by Attorney Franciso and he was unaware of its contents, the fact remains that his firm did give Mrs. Hilado a formal professional advice from which, as heretofore demonstrated, emerged the relation of attorney and client.  This letter binds and estops him in the same manner and to the same degree as if he personally had written it.  An information obtained from a client by a member or assistant of a law firm is information imparted to the firm.  This is not a mere fiction or an arbitrary rule; for such member or assistant, as in our case, not only acts in the name and interest of the firm, but his information, by the nature of his connection with the firm is available to his associates or employers. x x x (Emphasis and underscoring supplied)

          Respondent denies, however, representing conflicting interests on the ground that SB Case No. 009 and SEC Case No. 09-98-6086 are totally distinct from each other.  He attempts to distinguish them as follows:

36. SB Case No. 009, initiated by the PCGG before the Sandiganbayan is totally distinct and separate, and has no relation at all to SEC Case No. 09-98-6086.  Said cases involve different parties and causes of action.

37. In Sandiganbayan Case No. 009, the opposing parties are the Presidential Commission on Good Government (PCGG) as plaintiff; Atty. Potenciano Ilusorio, as Defendant and Third party Plaintiff; and Independent Realty Corporation (IRC) and Mid-Pasig Land Development Corp. (MLDC).

38.  The subject matter in SB Case No. 009 are shares owned by the National Government, through IRC and MLDC, in the Philippine Overseas Telecommunications Corporation (POTC).

39.  SEC Case No. 09-98-6086 involves a dispute regarding the PHILCOMSAT election of its Board of Directors and corporate officers.[16]

          The foregoing explanation fails to mention, however, that Ilusorio, a defendant in the Sandiganbayan case, was one of the petitioners in the SEC case, and that among the grounds Ilusorio relied upon in his petition in the SEC was the existence of the Compromise Agreement in the Sandiganbayan, which vested in him ownership and voting rights corresponding to 673 POTC shares.[17] 

           Nowhere is the conflict of interest clearer than in respondent’s Memorandum dated September 28, 1998 filed with the SEC wherein he argued in behalf of Nieto, et al. as follows:

            A continued exercise of jurisdiction and a subsequent disposition of the instant Petition by this Honorable Commission would pre-empt the resolution by the Sandiganbayan of the disputed shares.  It would in fact affirm the ownership by the Petitioners of the said shares subject of the Sandiganbayan caseThis Petition is a premature action to enforce the Compromise Agreement entered into by Mr. Ilusorio.  Clearly, this is beyond the jurisdiction of this Honorable Commission.  Any right to be derived from the Compromise Agreement is clearly inchoate at this point in time.[18]  (Emphasis and underscoring supplied)

          Plainly, when respondent represented Nieto, et al. in the SEC, he was advocating an interest hostile to the implementation of the same Compromise Agreement that he had priorly negotiated for Ilusorio.  

          The Board thus erred when, while acknowledging that Ilusorio was represented by respondent’s firm in his negotiations with the PCGG, it nonetheless maintained that there was no conflict of interest upon a finding that the subsequent SEC case “did not in any way involve the validity of the compromise agreement forged with the PCGG.”[19]  

X x x."