A.C. No. 6632.

August 2, 2005

NORTHWESTERN UNIVERSITY, INC., and BEN A. NICOLAS, Complainant,

DECISION

PANGANIBAN,  J.:

Representing conflicting interests is prohibited by the Code of Professional Responsibility. Unless all the
affected clients’ written consent is given after a full disclosure of all relevant facts, attorneys guilty of
representing conflicting interests shall as a rule be sanctioned with suspension from the practice of law.

The Case and the Facts

This administrative case stems from a sworn Letter-Complaint1 filed with the Integrated Bar of the
Philippines-Commission on Bar Discipline (IBP-CBD) by Ben A. Nicolas, acting for himself and on behalf of
Northwestern University, Inc. In that Letter-Complaint, Atty. Macario D. Arquillo was charged with
deceit, malpractice, gross misconduct and/or violation of his oath as attorney by representing conflicting
interests. The material averments of the Complaint are summarized by the IBP-CBD as follows:

"Herein [c]omplainants, Northwestern University, Inc. and Mr. Ben A. Nicolas, accuses (sic) herein
[r]espondent, Atty. Macario D. Arquillo, of engaging in conflicting interest in a case before the National
Labor Relations Commission, Regional Arbitration Branch No. 1, San Fernando, La Union.

"Complainant alleges that in a consolidated case, herein [r]espondent appeared and acted as counsels
for both complainants (eight out of the eighteen complainants therein) and respondent (one out of the
ten respondents therein).

"In a consolidation of NLRC Cases [Nos.] 1-05-1086-97, 1-05-1087-97, 1-05-1088-97, 1-05-1091-97, 1-05-
1092-97, 1-05-1097-97, 1-05-1109-97, 1-05-1096-97 ("consolidated cases"), herein [r]espondent
appeared as counsel for complainants therein, Teresita A. Velasco, Gervacio A. Velasco, Mariel S.
Hernando, Virginio C. Rasos, Bonifacio S. Blas, Ronald A. Daoang, Luzviminda T. Urcio and Araceli
Quimoyog. In the very same consolidated case, [r]espondent was also the counsel of one of the
respondents therein, Jose G. Castro.

"Complainants, as their evidence, submitted the Motion to Dismiss dated August 12, 1997 filed by Jose
G. Castro, represented by his counsel, herein [r]espondent filed before the NLRC of San Fernando, La
Union. Sixteen (16) days later or on August 28, 1997, [r]espondent filed a Complainant’s Consolidated
Position Paper,  this time representing some of the complainants in the very same consolidated
case."2 (Citations omitted)

Respondent failed to file his Answer to the Complaint despite a June 24 1998 Order3 of the IBP-CBD
directing him to do so. Even after receiving five notices, he failed to appear in any of the scheduled
hearings. Consequently, he was deemed to have waived his right to participate in the proceedings.
Thereafter, the complainants were ordered to submit their verified position paper with supporting
documents, after which the case was to be deemed submitted for decision.4 In their
Manifestation5 dated August 30, 2004, they said that they would no longer file a position paper. They
agreed to submit the case for decision on the basis of their Letter-Affidavit dated March 16, 1998,
together with all the accompanying documents.

Report and Recommendation of the IBP

In his Report,6 Commissioner Dennis B. Funa found respondent guilty of violating the conflict-of-interests
rule under the Code of Professional Responsibility. Thus, the former recommended the latter’s
suspension from the practice of law for a period of six (6) months.

In Resolution No. XVI-2004-415 dated October 7, 2004, the Board of Governors of the IBP adopted the
Report and Recommendation of Commissioner Funa, with the modification that the period of
suspension was increased to two (2) years.

On December 12, 2004, the Resolution and the records of the case were transmitted to this Court for
final action, pursuant to Section 12(b) of Rule 139-B of the Rules of Court. On January 20, 2005,
respondent filed a Motion for Reconsideration to set aside Resolution No. XVI-2004-415. The IBP denied
the Motion.

The Court’s Ruling

We agree with the findings of the IBP Board of Governors, but reduce the recommended period of
suspension to one year.

Administrative Liability of Respondent

The Code of Professional Responsibility requires lawyers to observe candor, fairness and loyalty in all
their dealings and transactions with their clients.7 Corollary to this duty, lawyers shall not represent
conflicting interests, except with all the concerned clients’ written consent, given after a full disclosure
of the facts.8

When a lawyer represents two or more opposing parties, there is a conflict of interests, the existence of
which is determined by three separate tests: (1) when, in representation of one client, a lawyer is
required to fight for an issue or claim, but is also duty-bound to oppose it for another client; (2) when
the acceptance of the new retainer will require an attorney to perform an act that may injuriously affect
the first client or, when called upon in a new relation, to use against the first one any knowledge
acquired through their professional connection; or (3) when the acceptance of a new relation would
prevent the full discharge of an attorney’s duty to give undivided fidelity and loyalty to the client or
would invite suspicion of unfaithfulness or double dealing in the performance of that duty.9

In the present case, Atty. Macario D. Arquillo, as counsel for Respondent Jose C. Castro in NLRC Case
Nos. I-05-1083-97 to I-05-1109-97, filed a Motion to Dismiss those cases. Shortly thereafter, a position
paper was filed by Atty. Arquillo as counsel for several complainants in consolidated NLRC Case Nos. I-
05-1087-97, I-05-1088-97, I-05-1091-97, I-05-1092-97, I-05-1096-97, I-05-1097-97, and I-05-1109-97. All
the cases in the second set were included in the first one, for which he had filed the subject Motion to
Dismiss. Furthermore, in his position paper for the complainants, Atty. Arquillo protected his other
client, Respondent Jose C. Castro, in these words:

"3. More than lack of valid cause for the dismissal of complainants, respondents, except Atty. Jose C.
Castro and Atty. Ernesto B. Asuncion, should be made accountable for not according complainants their
right to due process."10

In his two-page Motion for Reconsideration, Atty. Arquillo claims that there was no conflict of interest in
his representation of both the respondent and the complainants in the same consolidated cases,
because all of them were allegedly on the same side. Attaching to the Motion the Decision of Labor
Arbiter Norma C. Olegario on the consolidated NLRC cases, Atty. Arquillo theorizes that her judgment
absolved Castro of personal liability for the illegal dismissal of the complainants; this fact allegedly
showed that there was no conflict in the interests of all the parties concerned.

This Court does not agree. Atty. Arquillo’s acts cannot be justified by the fact that, in the end, Castro was
proven to be not personally liable for the claims of the dismissed employees. Having agreed to represent
one of the opposing parties first, the lawyer should have known that there was an obvious conflict of
interests, regardless of his alleged belief that they were all on the same side. It cannot be denied that
the dismissed employees were the complainants in the same cases in which Castro was one of the
respondents. Indeed, Commissioner Funa correctly enounced:

"As counsel for complainants, [r]espondent had the duty to oppose the Motion to Dismiss  filed by Jose
G. Castro. But under the circumstance, it would be impossible since [r]espondent is also the counsel of
Jose G. Castro. And it appears that it was [r]espondent who prepared the Motion to Dismiss,  which he
should be opposing [a]s counsel of Jose G. Castro, Respondent had the duty to prove the Complaint
wrong. But Respondent cannot do this because he is the counsel for the complainants. Here lies the
inconsistency. The inconsistency  of interests is very clear.

"Thus it has been noted

‘The attorney in that situation will not be able to pursue, with vigor and zeal, the client’s claim against
the other and to properly represent the latter in the unrelated action, or, if he can do so, he cannot
avoid being suspected by the defeated client of disloyalty or partiality in favor of the successful client.
The foregoing considerations will strongly tend to deprive the relation of attorney and client of those
special elements which make it one of trust and confidence[.]’ (Legal Ethics, Agpalo, p. 230, 4th ed.; In
re De la Rosa, 21 Phil. 258)"11

An attorney cannot represent adverse interests. It is a hornbook doctrine grounded on public policy that
a lawyer’s representation of both sides of an issue is highly improper. The proscription applies when the
conflicting interests arise with respect to the same general matter, however slight such conflict may be.
It applies even when the attorney acts from honest intentions or in good faith.12
The IBP Board of Governors recommended that respondent be suspended from the practice of law for
two years. Considering, however, prior rulings in cases also involving attorneys representing conflicting
interests, we reduce the suspension to one (1) year.13

WHEREFORE, Atty. Macario D. Arquillo is found GUILTY  of misconduct and is hereby SUSPENDED from

SO ORDERED.

Davide, Jr., C.J., Puno, Quisumbing, Ynares-Santiago, Sandoval-Gutierrez, Carpio, Austria-Martinez,

Corona, J., on official leave.