Thursday, March 08, 2012

Hornilla vs. Salunat

Facts: Hornilla filed a complaint against Atty. Salunat with the IBP Commission on Bar Discipline for unethical practice regarding conflict of interests. Said counsel is a member of the ASSA Law Office and acted as the lawyer for the Philippine Public School Teacher’s Association. 

In a squabble between the PPSTA and some of its board members pending SEC resolution for unlawful spending and undervalued sale of real properties, Atty. Salunat appeared as counsel for said board members. 

Respondent says he only appeared in behalf of ASSA since he was a partner. Moreover, he only filed a Manifestation for extreme urgency. 

Issue: Whether or not Salunat is guilty of unethical behavior as a member of the IBP. 

Held: Yes. Respondent Atty. Ernesto Salunat is found GUILTY of representing conflicting interests and is ADMONISHED to observe a higher degree of fidelity in the practice of his profession. He is further WARNED that a repetition of the same or similar acts will be dealt with more severely. 

RULE 15.03. A lawyer shall not represent conflicting interests except by written consent of all concerned given after a full disclosure of the facts. 

There is conflict of interest when a lawyer represents inconsistent interests of two or more opposing parties. The test is whether or not in behalf of one client, it is the lawyers duty to fight for an issue or claim, but it is his duty to oppose it for the other client. In brief, if he argues for one client, this argument will be opposed by him when he argues for the other client. This rule covers not only cases in which confidential communications have been confided, but also those in which no confidence has been bestowed or will be used. Also, there is conflict of interests if the acceptance of the new retainer will require the attorney to perform an act which will injuriously affect his first client in any matter in which he represents him and also whether he will be called upon in his new relation to use against his first client any knowledge acquired through their connection.Another test of the inconsistency of interests is whether the acceptance of a new relation will prevent an attorney from the full discharge of his duty of undivided fidelity and loyalty to his client or invite suspicion of unfaithfulness or double dealing in the performance thereof.

Where corporate directors have committed a breach of trust either by their frauds, ultra vires acts, or negligence, and the corporation is unable or unwilling to institute suit to remedy the wrong, a stockholder may sue on behalf of himself and other stockholders and for the benefit of the corporation, to bring about a redress of the wrong done directly to the corporation and indirectly to the stockholders. This is what is known as a derivative suit, and settled is the doctrine that in a derivative suit, the corporation is the real party in interest while the stockholder filing suit for the corporations behalf is only nominal party. The corporation should be included as a party in the suit. 

In the case at bar, the records show that SEC Case No. 05-97-5657, entitled Philippine Public School Teachers Assn., Inc., et al. v. 1992-1995 Board of Directors of the Philippine Public School Teachers Assn. (PPSTA), et al., was filed by the PPSTA against its own Board of Directors. Respondent admits that the ASSA Law Firm, of which he is the Managing Partner, was the retained counsel of PPSTA. Yet, he appeared as counsel of record for the respondent Board of Directors in the said case. Clearly, respondent was guilty of conflict of interest when he represented the parties against whom his other client, the PPSTA, filed suit.

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