[ADM. CASE NO.

6708 August 25, 2005]

(CBD Case No. 01-874)

FELICITAS S. QUIAMBAO, Complainant, v. ATTY. NESTOR A. BAMBA, Respondent.

RESOLUTION

DAVIDE, JR., C.J.:

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 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.

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

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 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 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 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 shallclearly 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.

SO ORDERED.

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