PALALAN CARP FARMERS MULTI-PURPOSE COOP, REPRESENTED BY BEVERLY DOMO, COMPLAINANT, VS. ATTY. ELMER A. DELA ROSA, RESPONDENT.

Palalan CARP Farmers Multi-Purpose Cooperative versus Dela Rosa

The Case

This is an administrative case for disbarment. The Palalan CARP Farmers Multi-Purpose Cooperative, represented by Beverly Domo, charged its own retained counsel, Atty. Elmer A. Dela Rosa, with gross misconduct for multiple violations of the Code of Professional Responsibility. The Cooperative alleged that he brokered the sale of its only asset, a large tract of agricultural land, without disclosing the buyer's identity, at a price he himself pressed upon the farmer-beneficiaries, and while he stood to gain from the transaction. The case matters because it is the Supreme Court's clearest recent statement that the prohibition against conflict of interest is the heart of the lawyer-client relationship, and that a lawyer who serves his own purse instead of his client's cause commits grave misconduct warranting the ultimate penalty.

Procedural History

The Cooperative filed its administrative complaint with the Integrated Bar of the Philippines, Misamis Oriental Chapter, which referred it to the Commission on Bar Discipline. Investigating Commissioner Fernandez recommended that the complaint be dismissed without prejudice, on the view that the administrative case should await the outcome of a separate civil action litigating which of two warring groups truly governed the Cooperative. The Integrated Bar's Board of Governors declined that recommendation. It held that the Cooperative Development Authority's records would show which board was registered, and on the merits it found multiple violations and recommended disbarment. The Board denied the respondent's motion for reconsideration. The matter then came before the Supreme Court as an original administrative proceeding, and the Court rendered its decision in August 2019.

Facts

The Cooperative owned over one hundred eleven hectares of prime agricultural land in Barangay Lumbia, Cagayan de Oro City, held under a transfer certificate of title issued pursuant to a Certificate of Land Ownership Award granted by the Department of Agrarian Reform in 1992. As a cooperative, it held legal title on behalf of its members as beneficial owners. In 1995, Philippine Veterans Bank sued the Cooperative to annul its title. In 1997, the Cooperative engaged the respondent and his law office to represent it in that case, under a retainer of a modest monthly fee plus a contingent fee of five percent of any settlement award, sale proceeds, disturbance compensation, or fair market value of the land.

In February 2000, the Cooperative executed a special power of attorney authorizing the respondent to negotiate the sale of the land, execute the documents needed to consummate it, open a bank account in the Cooperative's name, and collect and deposit the sale proceeds. Seven years later, in June 2007, the Cooperative revoked that authority. The respondent countered with a General Assembly Resolution dated March 2008, purportedly reconfirming his authority, adopted by a new set of officers led by Lino D. Sajol, whose leadership the old officers led by Beverly Domo opposed. Meanwhile, in May 2008, the trial court dismissed the bank's case for lack of jurisdiction over the subject matter.

The land was then sold, with the respondent himself brokering the sale. He had booked a buyer as early as February 2008, and the sale was consummated in August 2009 to Diana Biron. The respondent never revealed the circumstances of the sale, nor the buyer's identity, claiming he was bound to keep the buyer confidential. He did not dispute that he processed the sale and paid the farmer-beneficiaries their shares. He had pressed the sale at thirty pesos per square meter, warning the farmers that they had a slim chance of winning the bank's case and would end up with nothing if they refused. The Cooperative then charged him with gross misconduct.

Issues

• Whether or not the respondent violated Section 27, Rule 138 of the Rules of Court and Rules 1.03, 8.01, 12.04, 15.03, and 16.01, and Canons 12, 15, and 17 of the Code of Professional Responsibility.
• Whether or not, if he did, the appropriate penalty is disbarment.

Applicable Provisions

Section 27, Rule 138 of the Rules of Court provides:

Section 27. Disbarment and suspension of attorneys by the Supreme Court; grounds therefor. A member of the bar may be disbarred or suspended from his office as attorney by the Supreme Court for any deceit, malpractice, or other gross misconduct in such office, grossly immoral conduct, or by reason of his conviction for a crime involving moral turpitude, or for any violation of the oath which he is required to take before admission to practice, or for a willful disobedience of any lawful order of a superior court, or for corruptly or willfully appearing as an attorney for a party to a case without authority to do so. The practice of soliciting cases at law for the purpose of gain, either personally or through paid agents or brokers constitute malpractice.

This is the source of the Court's power to disbar for gross misconduct, the very ground on which the respondent was held liable.

Rule 15.03 of the Code of Professional Responsibility provides:

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.

This is the central prohibition the respondent violated, since he acted for his client and for himself and the buyer at once, without any written consent.

Rule 16.01 of the Code of Professional Responsibility provides:

Rule 16.01. A lawyer shall account for all money or property collected or received for or from the client.

The respondent failed this duty, as the sale proceeds flowed through an account to which he alone had access and were never accounted for.

Rule 8.01 of the Code of Professional Responsibility provides:

Rule 8.01. A lawyer shall not, in his professional dealings, use language which is abusive, offensive or otherwise improper.

This covers his verbal abuse of the farmer-beneficiaries who questioned the fairness of the sale.

Ruling

On the first issue, the Court held that the respondent violated several provisions of the Code in relation to Section 27, Rule 138. Misconduct is intentional wrongdoing or a deliberate violation of a rule of law or standard of behavior, and it is grave where corruption, clear intent to violate the law, or flagrant disregard of an established rule is present. At the core of his infractions was his willful, voluntary, and knowing entry into a conflict of interest to serve his own pecuniary interest at all cost. The Court defined conflict of interest as the existence of a substantial risk that a lawyer's loyalty to or representation of a client would be materially and adversely affected by the lawyer's own interest or by duties to another client, a former client, or a third person. The rule allows a lawyer to act despite a conflict only with the written consent of all concerned after full disclosure, and here there was no consent at all. The Court quoted its earlier ruling in Hornilla versus Salunat:

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.

The Court found the respondent disloyal, exploitative, untrustworthy, and a double-dealer. He took instructions from the undisclosed buyer, pressed a quick sale at a low price to earn at once while his client wanted the most profit, sowed fear among the farmers, and sided with the Sajol group to complete the sale of the Cooperative's only asset. His professional judgment was obscured by the singular objective of selling the land to his undisclosed buyer, and his conduct amounted to grave misconduct.

On the second issue, the Court acknowledged that disbarment should never be decreed where a lesser penalty could accomplish the end desired, because it is the most severe form of disciplinary action and its consequences are beyond repair. But the threshold had been passed. This was the second time in a short span that the respondent faced a conflict of interest involving substantial money, having been suspended for three years in an earlier case for borrowing from client-spouses and denying the debt. The Court found the present infractions dwarfed the first in the number of persons affected, the amounts involved, and the audacity of their commission. Disbarment was the appropriate penalty.

Doctrine

A lawyer may not represent conflicting interests except with the written consent of all concerned given after full disclosure of the facts, as Rule 15.03 commands. Conflict of interest exists when there is a substantial risk that the lawyer's loyalty to or representation of a client would be materially and adversely affected by the lawyer's own interest or by duties to another client, a former client, or a third person. The prohibition rests on the fiduciary nature of the lawyer-client relationship, from which flow the duties of loyalty, confidentiality, candor, and commitment to the client's cause. A lawyer must decline a retainer or withdraw from an ongoing matter when a conflict arises, and must examine for conflict not only at the outset but throughout the retainer. Misconduct is grave where corruption, clear intent to violate the law, or flagrant disregard of an established rule is present, and it warrants disbarment under Section 27, Rule 138. Disbarment is a last resort, but repetition of the same breach after a prior suspension passes the threshold.

Disposition

The Court found Atty. Elmer A. Dela Rosa guilty of gross misconduct, disbarred him from the practice of law, and directed that his name be struck from the Roll of Attorneys, effective immediately.

Remember This

Memorize this line: a mistake repeated more than once is a decision, and a lawyer who serves his own purse against his client's cause commits grave misconduct. Examiners use this case to test conflict of interest under Rule 15.03, the fiduciary duty of loyalty, and when the Court will impose disbarment rather than suspension on a repeat offender.