Buenavista Properties, Inc. vs. Atty. Deloria

A lawyer who represents conflicting interests without the written consent of all parties after full disclosure, commits forum shopping by filing multiple actions arising from the same cause, and neglects legal matters entrusted to him while failing to keep his client informed, is administratively liable and may be suspended from the practice of law.

Buenavista Properties, Inc. (BPI) is a corporation that entered into a Joint Venture Agreement with La Savoie Development Corporation (LSDC) for the development and sale of subdivided lots. Atty. Amado B. Deloria represented LSDC in that venture and had previously served as a Commissioner of the Housing and Land Use Regulatory Board (HLURB), the very agency to which LSDC's subdivision plans were submitted for evaluation. The relationship between BPI and LSDC deteriorated when LSDC sold lots at very low prices and misrepresented itself as owner of the lots, prompting BPI to seek termination of the contract and leading to multiple proceedings before the RTC and the HLURB involving the same parties and subject matter.

On May 7, 1992, Buenavista Properties, Inc. (BPI) entered into a Joint Venture Agreement (JVA) with La Savoie Development Corporation (LSDC), represented by Atty. Amado B. Deloria, for the development of a parcel of land into a mixed-use commercial and residential subdivision and for the sale of the subdivided lots. The plans, applications, and other documents of LSDC were submitted to, processed, and evaluated by the HLURB at a time when Atty. Deloria was one of its Commissioners. LSDC thereafter sold the subdivided lots, albeit at very low prices, and misrepresented itself as the owner of the lots, prompting BPI to demand that LSDC refrain from further selling them. LSDC disregarded BPI's demands, leading BPI to file a complaint before the RTC of Quezon City for termination of contract, recovery of property, and damages, with a prayer for the issuance of a temporary restraining order and writ of preliminary mandatory injunction.

With Atty. Deloria as counsel, LSDC filed an answer with counterclaim and a prayer for a writ of preliminary mandatory injunction to direct BPI to execute the deeds of absolute sale and release the corresponding titles to the lot buyers. The RTC denied LSDC's application for injunctive relief. Thereafter, the lot buyers demanded that LSDC release the titles to their purchased lots; LSDC in turn demanded the same from BPI, but BPI refused, contending it was not a party to the transactions between LSDC and the lot buyers and that LSDC had sold the lots despite its objections. Subsequently, LSDC, through Atty. Deloria, filed a complaint before the HLURB to compel BPI to execute the deeds of absolute sale and deliver the titles — the same reliefs prayed for in LSDC's answer with counterclaim in the civil case before the RTC. The HLURB eventually dismissed the complaint on the ground of litis pendentia.

In March 2004, lot buyer Corazon Flores, through her attorney-in-fact, filed a criminal case for estafa against LSDC President Jeanne G. Menguito, premised on the latter's misrepresentation that she was the owner of the lot Corazon purchased. An Information was filed before the Metropolitan Trial Court of Makati City. Thereafter, Atty. Deloria filed several complaints for delivery of title against BPI before the HLURB on behalf of the lot buyers, including Corazon Flores, while simultaneously representing LSDC as third-party respondent in the same proceedings. He even filed a Position Paper on behalf of both the complainants and LSDC.

On September 6, 2005, Corazon executed a Sinumpaang Salaysay stating that she was induced by a "fixer" to engage Atty. Deloria's services to file a case against BPI before the HLURB. She attested that although Atty. Deloria represented her, he neglected his duties as counsel by refusing to communicate with her and failing to file the required pleadings. BPI further alleged that Atty. Deloria made it appear that a certain Madelyn Hesola was the secretary of BPI's President and had received the HLURB's Notice of Decision, by reason of which he moved for the issuance of a writ of execution, though BPI denied Hesola was its employee. BPI filed a verified complaint before the IBP on March 4, 2005, praying for Atty. Deloria's suspension or disbarment for multiple violations of the CPR.

• Conflict of Interest: BPI argued that Atty. Deloria violated Rules 15.01 and 15.03 by acting as counsel for LSDC and the lot buyers at the same time, without securing the written consent of all concerned parties after full disclosure.
• Forum Shopping: BPI contended that Atty. Deloria violated Rule 12.02 by filing two cases involving the same parties, issues, facts, and reliefs — one before the RTC and another before the HLURB.
• Neglect of Client's Cause: BPI asserted that Atty. Deloria violated Canon 17 and Rules 18.03 and 18.04 for failing to file the necessary pleadings on behalf of Corazon in the HLURB case and for failing to communicate with her.
• Encouragement of Suits: BPI charged that Atty. Deloria violated Rule 1.03 by encouraging the lot buyers to file cases against BPI to deflect charges against LSDC.
• Solicitation and Encroachment: BPI alleged violations of Rules 2.03 and 8.02 for convincing the Spouses Flores to withdraw the estafa case against Menguito and to appoint him as lawyer to file a case against BPI instead.
• Dishonesty and Misquotation: BPI charged violations of Rules 1.01 and 10.02 for resorting to lies regarding the employment of Hesola and for misquoting the JVA in his pleadings.
• Post-Government Employment: BPI alleged a violation of Rule 6.03 for acting as counsel for LSDC after leaving government service as HLURB Commissioner.

• Limited Role at HLURB: Atty. Deloria argued that he wielded no influence to approve LSDC's subdivision plans because evaluation and approval were vested with the Commissioner for Planning, and as one of four commissioners in a collegial body, he had very limited functions.
• Good Faith in Representing Lot Buyers: He denied resorting to machinations or "hoodwinking" the lot buyers into engaging him as counsel, explaining that he only wanted to help the fully-paid lot buyers obtain their titles.
• Hesola Incident: He claimed it was the staff of LSDC who served the HLURB's Notice of Decision to Hesola, denying personal involvement in any wrongful designation.
• Post-Government Employment Bar Inapplicable: He asserted that Section 7(b) of RA No. 6713, which proscribed his appearance before the HLURB within one year from separation from public office, no longer applied since he had retired as HLURB Commissioner thirteen years prior to becoming LSDC's counsel.
• BPI's Lack of Standing: He averred that BPI, being an artificial person incapable of experiencing physical suffering or mental anguish, cannot institute the action; alternatively, no Board resolution authorized the filing of the complaint.
• LSDC's Authority to Sell: He maintained that LSDC had authority under the JVA to sell lots in the subdivision project, and that the right of a fully-paid buyer to title delivery cannot be affected by any misunderstanding between the JVA parties.
• Bad Faith of BPI: He contended the complaint was tainted with bad faith, as BPI's President had informed him of an imminent disbarment case two days before filing should he fail to cause the withdrawal of the lot buyers' complaints against BPI.

• Conflict of Interest: Whether Atty. Deloria violated Rules 15.01 and 15.03, Canon 15 of the CPR by representing conflicting interests without the written consent of all concerned parties.
• Forum Shopping: Whether Atty. Deloria violated Rule 12.02, Canon 12 of the CPR by filing multiple actions arising from the same cause before different fora.
• Neglect of Client's Cause: Whether Atty. Deloria violated Canon 17 and Rules 18.03 and 18.04, Canon 18 of the CPR for failing to file necessary pleadings and to communicate with his client.
• Post-Government Employment: Whether Atty. Deloria violated Rule 6.03 of the CPR by acting as counsel for LSDC after leaving government service as HLURB Commissioner.
• Other Alleged Violations: Whether Atty. Deloria violated Rules 1.03, 2.03, 8.02, 1.01, and 10.02 of the CPR as charged by BPI.
• Standing to Sue: Whether BPI, as a corporate entity, has standing to institute disbarment proceedings against Atty. Deloria.

• Conflict of Interest: Yes. Atty. Deloria represented Menguito (LSDC President) in the estafa case and simultaneously represented Corazon (the complainant in that estafa case) before the HLURB, and also represented both the lot buyers and LSDC as third-party respondent in the same HLURB case, all without written consent after full disclosure.
• Forum Shopping: Yes. Atty. Deloria filed a complaint before the HLURB praying for the same relief as in the RTC answer with counterclaim — to compel BPI to execute deeds of absolute sale and deliver titles — satisfying the elements of litis pendentia.
• Neglect of Client's Cause: Yes. Atty. Deloria failed to communicate with Corazon, failed to file the required position paper and draft decision before the HLURB, thereby neglecting the legal matters entrusted to him.
• Post-Government Employment: No. The one-year prohibition under Section 7(b) of RA No. 6713 no longer applied, as Atty. Deloria had retired thirteen years prior to becoming LSDC's counsel, and BPI failed to prove he intervened in any LSDC transaction during his HLURB stint.
• Other Alleged Violations: No. The IBP found insufficient evidence for violations of Rules 1.03, 2.03, 8.02, 1.01, and 10.02, and the Court concurred.
• Standing to Sue: Yes. A corporate entity may institute disbarment proceedings, as in this case.

• Conflict of Interest: The test for conflict of interest, as articulated in Hornilla vs. Salunat, is whether a lawyer's duty to fight for an issue on behalf of one client requires him to oppose the same issue for another client. Atty. Deloria represented Menguito (LSDC's President) in the estafa case filed by Corazon, and then subsequently represented Corazon herself before the HLURB in a complaint for delivery of title. Corazon's estafa case against Menguito was premised on Menguito's and LSDC's misrepresentation of ownership and failure to deliver title — the very same obligation LSDC owed Corazon under their Contract to Sell. He also represented several lot buyers as complainants in HLURB Case No. REM-C-03-8-1171 while simultaneously representing LSDC as third-party respondent, even filing a Position Paper on behalf of both. Rule 15.03 requires written consent of all concerned parties after full disclosure; Atty. Deloria failed to obtain such consent, warranting disciplinary action.

• Forum Shopping: Forum shopping exists when the elements of litis pendentia are present: (a) identity of parties; (b) identity of rights or causes of action; and (c) identity of relief sought. In the civil case before the RTC, Atty. Deloria, on behalf of LSDC, prayed for a writ of preliminary mandatory injunction to direct BPI to execute deeds of absolute sale and release titles. After the RTC denied the injunction application on August 11, 1998, and while the main case remained pending, Atty. Deloria filed a complaint before the HLURB praying for the identical relief. All three elements of litis pendentia were present: the same parties (BPI and LSDC), the same rights arising from the JVA, and the same reliefs. The HLURB itself dismissed the complaint on this ground.

• Neglect of Client's Cause: Corazon attested in her Sinumpaang Salaysay that Atty. Deloria failed to communicate with her and inform her about her complaint against BPI before the HLURB. He also failed to file the required position paper and draft decision. Canon 17 requires a lawyer to owe fidelity to his client's cause and be mindful of the trust reposed in him; Rule 18.03 prohibits neglect of a legal matter entrusted to a lawyer; and Rule 18.04 requires keeping the client informed of the status of the case. Atty. Deloria's omissions violated all three provisions.

• Post-Government Employment: Section 7(b) of RA No. 6713 prohibits a former public officer from engaging in certain transactions for a period of one year after resignation, retirement, or separation from office. Since Atty. Deloria was engaged as LSDC's counsel thirteen years after his retirement from the HLURB, the prohibition no longer applied. Moreover, BPI failed to prove that Atty. Deloria intervened in any transaction involving LSDC during his tenure as HLURB Commissioner, which is a requisite for a Rule 6.03 violation.

• Other Alleged Violations: The IBP Investigating Commissioner found insufficient evidence for violations of Rules 1.03, 2.03, and 8.02. Likewise, BPI failed to show that Atty. Deloria had a role in the wrongful designation of Hesola or that he knowingly misquoted the JVA in his position paper, negating violations of Rules 1.01 and 10.02. The Court concurred with these findings.

• Standing to Sue: The Investigating Commissioner noted that a corporate entity may institute disbarment proceedings, and the Court upheld this view, finding BPI's complaint properly filed.

• Conflict of Interest Test — There is conflict of interest when a lawyer represents inconsistent interests of two or more opposing parties. The test is whether, in behalf of one client, it is the lawyer's duty to fight for an issue or claim, but it is his duty to oppose it for the other client. The rule covers not only cases involving confidential communications but also those where no confidence has been bestowed. There is also conflict of interest if acceptance of a new retainer will injuriously affect the first client or require the lawyer to use against the first client any knowledge acquired through their connection. Another test is whether the new relation will prevent the full discharge of undivided fidelity and loyalty or invite suspicion of unfaithfulness or double-dealing. In this case, Atty. Deloria's simultaneous representation of Menguito and Corazon, and of the lot buyers and LSDC in the same HLURB case, satisfied this test.

• Rule on Written Consent for Conflicting Representation — Under 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. Failure to secure such written consent subjects the lawyer to disciplinary action. Atty. Deloria failed to obtain the written consent of Menguito, Corazon, LSDC, or the lot buyers before undertaking his dual representations.

• Forum Shopping via Litis Pendentia — Forum shopping exists when the elements of litis pendentia are present or where a final judgment in one case will amount to res judicata in another. The elements are: (a) identity of parties, or at least such parties representing the same interests; (b) identity of rights or causes of action; and (c) identity of relief sought. All three elements were present when Atty. Deloria filed the HLURB complaint seeking the same relief previously prayed for in the RTC answer with counterclaim.

• Lawyer's Duty of Fidelity, Competence, and Diligence — Canon 17 requires fidelity to the client's cause; Canon 18 requires competent and diligent service; Rule 18.03 prohibits neglect of entrusted legal matters; and Rule 18.04 requires keeping the client informed of case status and responding to requests for information. Atty. Deloria's failure to file pleadings and to communicate with Corazon violated all these provisions.

• One-Year Post-Separation Prohibition — Under Section 7(b) of RA No. 6713, the prohibition on a former public officer from appearing before the office he used to be with applies only for one year after resignation, retirement, or separation. Atty. Deloria's engagement as LSDC's counsel thirteen years after retirement rendered the prohibition inapplicable.

• "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 lawyer's 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 passage articulates the canonical test for conflict of interest, drawn from Hornilla vs. Salunat, and forms the ratio decidendi for the Court's finding that Atty. Deloria violated Rules 15.01 and 15.03.

• "The rule against conflict of interest also 'prohibits a lawyer from representing new clients whose interests oppose those of a former client in any manner, whether or not they are parties in the same action or on totally unrelated cases,' since the representation of opposing clients, even in unrelated cases, 'is tantamount to representing conflicting interests or, at the very least, invites suspicion of double-dealing which the Court cannot allow.'" — This passage broadens the scope of the conflict-of-interest prohibition beyond the same action, underscoring that even representation of opposing clients in unrelated cases invites suspicion of double-dealing.

• "Forum shopping exists when, as a result of an adverse decision in one forum, or in anticipation thereof, a party seeks a favorable opinion in another forum through means other than appeal or certiorari." — This is the operative definition of forum shopping applied to hold Atty. Deloria liable under Rule 12.02, anchoring the finding on the presence of litis pendentia elements.

• "A lawyer shall not neglect a legal matter entrusted to him, and his negligence in connection therewith shall render him liable." — This is the text of Rule 18.03, applied to Atty. Deloria's failure to file the required position paper and draft decision, establishing administrative liability for neglect of a client's cause.

• Hornilla vs. Salunat, 453 Phil. 108 (2003) — Controlling authority for the test to determine conflict of interest; the Court applied its formulation to find that Atty. Deloria's simultaneous representation of Menguito and Corazon, and of the lot buyers and LSDC, constituted conflicting interests.
• Romero vs. Evangelista, Jr., A.C. No. 11829, February 26, 2018 — Cited for the proposition that the rule against conflict of interest prohibits representation of new clients whose interests oppose those of a former client, even in unrelated cases.
• Palacios vs. Amara, Jr., A.C. No. 11504, August 1, 2017 — Followed for the requirement that a lawyer must secure the written consent of all concerned parties after full disclosure under Rule 15.03.
• Quiambao vs. Bamba, 505 Phil. 126 (2005) — Cited for the penalty range of one to three years' suspension for representation of conflicting interests, guiding the Court's imposition of a two-year suspension.
• Williams vs. Enriquez, 769 Phil. 666 (2015) — Cited for the penalty of six months' suspension for forum shopping, providing a baseline for the penalty calculus.
• Pilapil vs. Carillo, 443 Phil. 193 (2003) — Cited for the penalty of six months' suspension for a lawyer's failure to file a petition despite the client's repeated follow-ups, relevant to the neglect-of-cause charge.
• Quiachon vs. Ramos, 735 Phil. 1 (2014) — Cited for the penalty of suspension for failure to keep the client informed and to promote the client's cause.
• Teodoro III vs. Gonzales, 702 Phil. 422 (2013) — Cited for the definition of forum shopping and the elements of litis pendentia.

• Rules 15.01 and 15.03, Canon 15, Code of Professional Responsibility — Rule 15.01 requires a lawyer to ascertain whether a prospective matter involves a conflict and to inform the prospective client; Rule 15.03 prohibits representing conflicting interests except by written consent of all concerned after full disclosure. Atty. Deloria violated both by simultaneously representing Menguito and Corazon, and the lot buyers and LSDC, without written consent.
• Rule 12.02, Canon 12, Code of Professional Responsibility — Prohibits a lawyer from filing multiple actions arising from the same cause. Atty. Deloria violated this by filing the HLURB complaint seeking the same relief previously prayed for in the RTC answer with counterclaim.
• Canon 17, Code of Professional Responsibility — Requires a lawyer to owe fidelity to the cause of his client and to be mindful of the trust and confidence reposed in him. Atty. Deloria violated this by neglecting Corazon's case.
• Rules 18.03 and 18.04, Canon 18, Code of Professional Responsibility — Rule 18.03 prohibits neglect of a legal matter entrusted to a lawyer; Rule 18.04 requires keeping the client informed of case status. Atty. Deloria violated both by failing to file pleadings and to communicate with Corazon.
• Section 7(b), Republic Act No. 6713 (Code of Conduct and Ethical Standards for Public Officials and Employees) — Prohibits a former public officer from practicing the profession in connection with any matter before the office he used to be with for one year after separation. The Court found this inapplicable because Atty. Deloria retired thirteen years prior to his engagement as LSDC's counsel.
• Rule 6.03, Code of Professional Responsibility — Prohibits a lawyer, after leaving government service, from accepting engagement in connection with any matter in which he had intervened while in said service. No violation was found because BPI failed to prove Atty. Deloria intervened in any LSDC transaction during his HLURB tenure.

Carpio, Senior Associate Justice (per Section 12, Republic Act No. 296); Leonardo-De Castro, Peralta, Bersamin, Del Castillo, Leonen, Jardeleza, Caguioa, Tijam, Reyes, Jr., Gesmundo, and Reyes, Jr. — all concurred. No separate concurring opinions were noted.