JOSEPH SAMALA, COMPLAINANT, VS. ATTY. ANTONUITTI K. PALAÑA, RESPONDENT.

Samala versus Palaña

The Case

This is an administrative complaint for disbarment or disciplinary action filed by Joseph Samala against Attorney Antonuitti K. Palaña, a member of the Philippine Bar. The complainant alleges that the respondent, acting as legal officer of a corporation called First Imperial Resources, Incorporated, made fraudulent representations that induced him to invest his dollar savings, and that these acts violate the Code of Professional Responsibility. The case matters because it shows how the Supreme Court treats a lawyer's dishonest assurances made in the course of his professional dealings — not as a private business quarrel, but as a failure to uphold the integrity and dignity of the legal profession, which is a ground for suspension from the practice of law.

Procedural History

The complainant filed his complaint with the Integrated Bar of the Philippines and asked for a thorough investigation of the respondent as a member of the bar. The Director for Bar Discipline required the respondent to submit an Answer within fifteen days, but despite receipt of the order, the respondent never filed one. The case was referred to Commissioner Lydia A. Navarro of the Commission on Bar Discipline. The respondent again failed to appear at the scheduled hearing despite due notice, so he was declared in default and the case was heard ex parte. Commissioner Navarro submitted a report finding that the respondent violated Rule 7.03 of Canon 7 of the Code of Professional Responsibility and recommended a suspension of six months. The Board of Governors of the Integrated Bar of the Philippines, in its Resolution dated July 30, 2004, adopted and approved the report and recommendation but modified the penalty to a suspension of three years. The matter then came before the Supreme Court, which agreed with the Board of Governors.

Facts

Sometime in February 2001, Joseph Samala was looking for a company where he could invest his dollar savings. He met Raymond Taino, a trader-employee of First Imperial Resources, Incorporated, a company in Legaspi Village, Makati City. Taino introduced him to Manager Jun Agustin, Chief Trader Diosdado Bernal, and Legal Officer Antonuitti K. Palaña, the respondent. The complainant told the three officers that he had been warned of numerous fraudulent businesses in the Philippines. The respondent assured him that through the company he would be directly placing his investment with Eastern Vanguard Forex Limited, a reputable company based in the Virgin Islands that had been in the foreign exchange business for thirteen years. The officers showed him their company profile and documents purporting to establish their relationship with that foreign company. Convinced by these personal representations and assurances, the complainant invested his dollar savings on March 9, 2001.

Later, the complainant decided to pull out his investment. On April 5, 2001, he sent a letter requesting the withdrawal of his investment amounting to ten thousand US dollars and giving the company ten days to prepare the money. On April 15, 2001, he asked Agustin when his money would be returned and was told that the request had been sent to Thomas Yiu of Eastern Vanguard at Ortigas Center. When the complainant went to see Yiu, Yiu was surprised upon seeing the documents involving the investment and phoned Agustin, demanding to know where the money was. Agustin said he would return the investment at the company's office in Makati. On that same day, in the presence of the respondent, Agustin delivered to the complainant a check for 574,045.09 pesos as the peso equivalent of his investment. On May 2, 2001, the check was dishonored because it was drawn against insufficient funds.

The complainant informed the respondent of the dishonor, and the respondent assured him that the check would be replaced. On June 1, 2001, the respondent, as legal officer, gave the complainant 250,000 pesos in cash and a check for 329,045.09 pesos. The respondent told him that the check was signed by company President Paul Desiderio in the respondent's presence and assured him that the check would be funded. But on June 28, 2001, that check too was dishonored for insufficient funds. The complainant then charged Paul Desiderio with estafa and a violation of Batas Pambansa Bilang 22, and a warrant of arrest was issued. When the complainant joined police officers in serving the warrant, they discovered that although there was a street named Damascus in the subdivision, there was no residence numbered 10, and no resident named Paul Desiderio lived there. Investigation also showed that the by-laws of the company prohibited it from engaging in investment or foreign exchange business.

Issues

• Whether or not the respondent's representations as legal officer of the company, which induced the complainant to invest and later caused him material damage, constitute conduct that adversely reflects on his fitness to practice law in violation of Rule 7.03 of Canon 7 of the Code of Professional Responsibility.
• Whether or not the respondent should be suspended from the practice of law, and for how long.

Applicable Provisions

Canon 7 of the Code of Professional Responsibility provides:

A lawyer shall at all times uphold the integrity and dignity of the legal profession.

This is the general standard the respondent failed to meet when he lent his standing as a lawyer to assurances that turned out to be false.

Rule 7.03 of Canon 7 of the Code of Professional Responsibility provides:

A lawyer shall not engage in conduct that adversely reflects on his fitness to practice law, nor shall he, whether in public or private life, behave in a scandalous manner to the discredit of the legal profession.

This is the specific rule the respondent was found guilty of violating, because his misrepresentations as legal officer caused material damage to the complainant.

Ruling

On the first issue, the Court held that the respondent's representations as legal officer of the company caused material damage to the complainant. The respondent had assured the complainant that his investment was in a stable company, even though the company's by-laws prohibited it from engaging in investment or foreign exchange business and its primary purpose was only to act as a consultant providing professional expertise and reliable data analysis. When the complainant sought to withdraw, the first check bounced. The respondent then personally delivered cash and a second check, assuring the complainant that it was a good check signed by the company president in his presence. That check also bounced, and the alleged president could not be located because his identity was unknown and his address did not exist. In so doing, the Court said, the respondent failed to uphold the integrity and dignity of the legal profession and lessened the confidence of the public in its honesty and integrity. The Court quoted the Canon:

A lawyer shall at all times uphold the integrity and dignity of the legal profession.

On the second issue, the Court agreed with the Board of Governors that the penalty should be suspension for three years, not the six months recommended by the investigating commissioner, with a warning that a repetition of the same or similar acts would be dealt with more severely.

Doctrine

A lawyer must at all times uphold the integrity and dignity of the legal profession, and nothing should be done by any member of the legal fraternity which might tend to lessen in any degree the confidence of the public in the fidelity, honesty and integrity of the profession. Under Rule 7.03 of Canon 7, a lawyer shall not engage in conduct that adversely reflects on his fitness to practice law, whether in public or private life. A lawyer who uses his title and standing as legal officer to lend credibility to false assurances that induce another to part with his money, and who causes material damage thereby, violates this rule and may be suspended from the practice of law. The duty is not confined to the courtroom; it reaches the lawyer's business dealings, because the public's trust in the profession is at stake.

Disposition

The Court found Attorney Antonuitti K. Palaña guilty of violating Rule 7.03 of the Code of Professional Responsibility and suspended him from the practice of law for three years effective upon receipt of the resolution, with a warning that a repetition of the same or similar acts would be dealt with more severely.

Remember This

The single line to memorize: a lawyer's dishonest assurances in his business dealings violate Rule 7.03 of Canon 7 because they erode public confidence in the honesty and integrity of the profession. Examiners use this case to test the scope of a lawyer's duty of integrity outside the courtroom and the penalty of suspension for conduct that adversely reflects on fitness to practice law.