Vera Law (Del Rosario Bagamasbad & Raboca) vs. Hechanova

A lawyer who, while still a partner, clandestinely recruits colleagues from the firm to join a competing venture commits simple misconduct in violation of the duty to act with courtesy, civility, fairness, and candor toward fellow members of the bar. Furthermore, a lawyer intentionally violates the rule against conflict of interests by representing a new client in a matter materially adverse to a former client's interests, regardless of whether confidential information was disclosed.

Respondent Atty. Editha R. Hechanova was a partner and head of the Intellectual Property (IP) Department at the law firm VERA LAW (Del Rosario Bagamasbad & Raboca). Prior to her expulsion from the partnership in December 2005, she undertook several preparatory acts for her departure, including registering a competing company, "Hechanova & Co., Inc.," with the Securities and Exchange Commission and leasing office space. Following her departure, VERA LAW filed a disbarment complaint, alleging she used firm resources to promote herself, poached clients, made disparaging statements, and represented conflicting interests.

• Nature of the Action: This is an administrative complaint for disbarment filed by the law firm VERA LAW against its former partner, Atty. Editha R. Hechanova, for alleged violations of the Code of Professional Responsibility (CPR), now the Code of Professional Responsibility and Accountability (CPRA).
• Hechanova's Preparatory Acts: While still a partner at VERA LAW and head of its IP Department, Hechanova registered "Hechanova & Co., Inc." with the SEC (August 2005) and her name as a service mark for legal services with the IPO (February 2005). She also leased office space (September 2005).
• Departure and Alleged Poaching: Following an administrative investigation by VERA LAW in December 2005, Hechanova was expelled. VERA LAW alleged that prior to her expulsion, she recruited two senior IP lawyers, Attys. Fajelagutan and Tocjayao, to join her new firm. Hechanova admitted asking them if they wanted to join her but denied it was an improper offer.
• Alleged Misconduct: VERA LAW accused Hechanova of taking client files, changing the template of Special Powers of Attorney (SPA) to make herself the exclusive attorney-in-fact, and maligning the firm to clients. The SPAs presented in evidence, however, authorized Hechanova "or its partners or associate attorneys."
• Conflict of Interest Allegations: VERA LAW cited two instances: (1) Hechanova, after leaving, opposed Gourdo's Inc.'s application for the Calphalon mark, despite having previously been Gourdo's counsel and resident agent; and (2) she represented Newell et al. against AMSPEC, a former client of VERA LAW which she had advised while at the firm.
• Hechanova's Defenses: She claimed her expulsion was illegal, denied poaching clients or making false statements, asserted the competing company was formed only after her expulsion, and argued her representation of Gourdo's was limited to specific marks listed in the SPAs. She denied an attorney-client relationship with AMSPEC, characterizing her work as "perfunctory."

• Defective Complaint: Hechanova argued the complaint was filed by a non-existent entity (the partnership had been dissolved) and was verified by a person without proper authority, rendering it fatally defective.
• Motion to Dismiss: Hechanova contended that VERA LAW's subsequent Motion to Dismiss should be granted, terminating the proceedings.
• No Violation of Canons 3 & 8: Hechanova maintained she did not make false statements, poach clients, or misuse firm resources. She argued client choice, not her actions, led to clients transferring their business.
• No Conflict of Interest: Regarding Gourdo's, she argued her representation was limited to the specific marks in the SPAs. Regarding AMSPEC, she denied a personal attorney-client relationship existed, stating she only performed perfunctory tasks for the firm's client.

• Public Interest in Discipline: VERA LAW argued that disbarment proceedings are sui generis and imbued with public interest; thus, a complainant's desistance or a defective verification does not divest the Court of jurisdiction to investigate a lawyer's fitness.
• Prohibited Pleading: VERA LAW itself had previously argued that a motion to dismiss is a prohibited pleading in IBP disbarment proceedings.
• Breach of Fiduciary Duty: VERA LAW asserted Hechanova's acts of registering a competing firm and recruiting colleagues while still a partner constituted a betrayal of trust and violated ethical canons on dignified conduct and fairness to colleagues.
• Clear Conflict of Interest: VERA LAW contended that representing interests adverse to former clients Gourdo's and AMSPEC, regardless of the scope of the prior engagement, violated the strict prohibition against conflicting representations.

• Procedural Validity: Whether the complaint should be dismissed due to defects in its filing and verification, or due to the complainant's subsequent motion to dismiss.
• Misconduct: Whether Hechanova violated Canons 3 and 8 of the CPR (now Canon II, Section 2 of the CPRA) by making false statements, poaching clients, and using firm resources to promote herself.
• Conflict of Interest: Whether Hechanova violated Canon 15, Rule 15.03 of the CPR (now Canon III, Sections 13 and 18 of the CPRA) by representing interests adverse to her former clients, Gourdo's, Inc. and AMSPEC.

• Procedural Validity: The complaint was validly instituted. A disbarment proceeding may be commenced by any person. The defect in the verification was deemed formal, not fatal. A motion to dismiss is a prohibited pleading in such proceedings, and a complainant's desistance does not divest the Court of jurisdiction to investigate a lawyer's fitness to practice.
• Misconduct: Hechanova was found liable for simple misconduct only for the act of clandestinely recruiting Attys. Fajelagutan and Tocjayao while still a partner, which violated the duty of courtesy, civility, fairness, and candor toward colleagues. The other allegations (false statements, poaching clients, misuse of SPAs) were dismissed for lack of substantial evidence.
• Conflict of Interest: Hechanova was found to have intentionally violated the rule against conflicting interests. Her opposition to Gourdo's Inc.'s trademark application was materially adverse to a former client's interests. Her representation of Newell et al. against AMSPEC was also adverse to a former client, as an attorney-client relationship was established when she advised AMSPEC while at VERA LAW. The rule applies even if no confidential information was imparted.

• Sui Generis Nature of Disbarment Proceedings — Disbarment proceedings are investigations by the Court into the conduct of its officers and are not ordinary civil actions. They are imbued with public interest, and the complainant is merely a witness. Consequently, the withdrawal of charges or a motion to dismiss by the complainant does not automatically terminate the proceedings.
• Test for Conflict of Interest — There is conflict of interest when a lawyer represents inconsistent or opposing interests of two or more persons. The test is whether, in behalf of one client, it is the lawyer's duty to fight for an issue or claim, but which is his or her duty to oppose for the other client. This prohibition extends to former clients and applies even in the absence of actual disclosure of confidential information.

• "A lawyer is forbidden from representing a subsequent client against a former client when the subject matter of the present controversy is related, directly or indirectly, to the subject matter of the previous litigation in which he appeared for the former client."
• "The rule on conflict of interests 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."
• "Her act of recruiting two senior lawyers from VERA LAW's IP department... to join her new firm even while she was still a partner at VERA LAW... proves that the offer was made clandestinely and in utter disregard of her duty to her colleagues at VERA LAW."

• Hornilla v. Salunat, 453 Phil. 108 (2003) — Cited to articulate the classic test for determining the existence of a conflict of interest.
• Pormento, Sr. v. Pontevedra, 494 Phil. 164 (2005) — Applied for the principle that a lawyer is prohibited from representing a new client against a former client in a related matter.
• Yumul-Espina v. Tabaquero, 795 Phil. 653 (2016) — Cited to support the sui generis nature of disbarment proceedings and the irrelevance of a complainant's desistance.

• Canon 15, Rule 15.03, Code of Professional Responsibility (CPR) — Prohibited a lawyer from representing conflicting interests except by written consent of all concerned given after a full disclosure of the facts.
• Canon II, Section 2, Code of Professional Responsibility and Accountability (CPRA) — Mandates that a lawyer shall act with courtesy, civility, fairness, and candor towards fellow members of the bar.
• Canon III, Sections 13 & 18, CPRA — The current provisions defining and prohibiting conflict-of-interest representation, including with respect to former clients.
• Rule 139-B, Section 5, Rules of Court — Provides that no investigation shall be interrupted or terminated by reason of the desistance or withdrawal of charges by the complainant.

Justice Henri Jean Paul B. Inting (Ponente), Justice Alfredo Benjamin S. Caguioa (Chairperson), Justice Japar B. Dimaampao, and Justice Maria Filomena D. Singh.

N/A. The decision was unanimous.