A.C. No.

8242

October 2, 2009

REBECCA J. PALM, Complainant, vs. ATTY. FELIPE ILEDAN, JR., Respondent. The C !e The case before the Court is a disbarment proceeding filed by Rebecca J. Palm (complainant) against Atty. elipe !ledan, Jr. (respondent) for revealing information obtained in the course of an attorney"client relationship and for representing an interest #hich conflicted #ith that of his former client, Comtech $orld#ide %olutions Philippines, !nc. (Comtech). The A"tece#e"t F ct! Complainant is the President of Comtech, a corporation engaged in the business of computer soft#are development. rom ebruary &''( to )ovember &''(, respondent served as Comtech*s retained corporate counsel for the amount of P+,''' per month as retainer fee. rom %eptember to ,ctober &''(, complainant personally met #ith respondent to revie# corporate matters, including potential amendments to the corporate by"la#s. !n a meeting held on - ,ctober &''(, respondent suggested that Comtech amend its corporate by"la#s to allo# participation during board meetings, through teleconference, of members of the .oard of /irectors #ho #ere outside the Philippines. Prior to the completion of the amendments of the corporate by"la#s, complainant became uncomfortable #ith the close relationship bet#een respondent and 0lda %oledad (%oledad), a former officer and director of Comtech, #ho resigned and #ho #as suspected of releasing unauthori1ed disbursements of corporate funds. Thus, Comtech decided to terminate its retainer agreement #ith respondent effective )ovember &''(. !n a stoc2holders* meeting held on -' January &''3, respondent attended as pro4y for 5ary 6arrison (6arrison). %teven C. Palm (%teven) and /eanna 7. Palm, members of the .oard of /irectors, #ere present through teleconference. $hen the meeting #as called to order, respondent ob8ected to the meeting for lac2 of 9uorum. Respondent asserted that %teven and /eanna Palm could not participate in the meeting because the corporate by" la#s had not yet been amended to allo# teleconferencing. ,n &3 :arch &''3, Comtech*s ne# counsel sent a demand letter to %oledad to return or account for the amount of P;',3++.-' representing her unauthori1ed disbursements #hen she #as the Corporate Treasurer of Comtech. ,n && April &''3, Comtech received %oledad*s reply, signed by respondent. !n July &''3, due to %oledad*s failure to comply #ith Comtech<s #ritten demands, Comtech filed a complaint for 0stafa against %oledad

before the :a2ati Prosecutor*s ,ffice. !n the proceedings before the City Prosecution ,ffice of :a2ati, respondent appeared as %oledad*s counsel. ,n &+ January &''=, complainant filed a Complaint- for disbarment against respondent before the !ntegrated .ar of the Philippines (!.P). !n his Ans#er,& respondent alleged that in January &''&, %oledad consulted him on process and procedure in ac9uiring property. !n April &''&, %oledad again consulted him about the legal re9uirements of putting up a domestic corporation. !n ebruary &''(, %oledad engaged his services as consultant for Comtech. Respondent alleged that from ebruary to ,ctober &''(, neither %oledad nor Palm consulted him on confidential or privileged matter concerning the operations of the corporation. Respondent further alleged that he had no access to any record of Comtech. Respondent admitted that during the months of %eptember and ,ctober &''(, complainant met #ith him regarding the procedure in amending the corporate by"la#s to allo# board members outside the Philippines to participate in board meetings. Respondent further alleged that 6arrison, then Comtech President, appointed him as pro4y during the -' January &''3 meeting. Respondent alleged that 6arrison instructed him to observe the conduct of the meeting. Respondent admitted that he ob8ected to the participation of %teven and /eanna Palm because the corporate by"la#s had not yet been properly amended to allo# the participation of board members by teleconferencing. Respondent alleged that there #as no conflict of interest #hen he represented %oledad in the case for 0stafa filed by Comtech. 6e alleged that %oledad #as already a client before he became a consultant for Comtech. 6e alleged that the criminal case #as not related to or connected #ith the limited procedural 9ueries he handled #ith Comtech. The IBP$! Re%ort "# Reco&&e"# t'o" !n a Report and Recommendation dated &> :arch &''+,( the !.P Commission on .ar /iscipline (!.P"C./) found respondent guilty of violation of Canon &- of the Code of Professional Responsibility and of representing interest in conflict #ith that of Comtech as his former client. The !.P"C./ ruled that there #as no doubt that respondent #as Comtech*s retained counsel from ebruary &''( to )ovember &''(. The !.P"C./ found that in the course of the meetings for the intended amendments of Comtech*s corporate by"la#s, respondent obtained 2no#ledge about the intended amendment to allo# members of the .oard of /irectors #ho #ere outside the Philippines to participate in board meetings through teleconferencing. The !.P"C./ noted that respondent 2ne# that the corporate by"la#s have not yet been amended to allo# the teleconferencing. 6ence, #hen respondent, as representative of 6arrison, ob8ected to the

participation of %teven and /eanna Palm through teleconferencing on the ground that the corporate by"la#s did not allo# the participation, he made use of a privileged information he obtained #hile he #as Comtech*s retained counsel. The !.P"C./ li2e#ise found that in representing %oledad in a case filed by Comtech, respondent represented an interest in conflict #ith that of a former client. The !.P"C./ ruled that the fact that respondent represented %oledad after the termination of his professional relationship #ith Comtech #as not an e4cuse. The !.P"C./ recommended that respondent be suspended from the practice of la# for one year, thus? $60R0 ,R0, premises considered, it is most respectfully recommended that herein respondent be found guilty of the charges preferred against him and be suspended from the practice of la# for one (-) year.3 !n Resolution )o. @A!!"&''+"=>(= passed on -= /ecember &''+, the !.P .oard of 5overnors adopted and approved the recommendation of the !nvestigating Commissioner #ith modification by suspending respondent from the practice of la# for t#o years. Respondent filed a motion for reconsideration.+ !n an undated Recommendation, the !.P .oard of 5overnors irst /ivision found that respondent*s motion for reconsideration did not raise any ne# issue and #as 8ust a rehash of his previous arguments. 6o#ever, the !.P .oard of 5overnors irst /ivision recommended that respondent be suspended from the practice of la# for only one year. !n Resolution )o. @A!!!"&''>"B'( passed on -- /ecember &''>, the !.P .oard of 5overnors adopted and approved the recommendation of the !.P .oard of 5overnors irst /ivision. The !.P .oard of 5overnors denied respondent*s motion for reconsideration but reduced his suspension from t#o years to one year. The !.P .oard of 5overnors for#arded the present case to this Court as provided under %ection -&(b), Rule -(;".B of the Rules of Court. The R()'"* o+ th'! Co(rt $e cannot sustain the findings and recommendation of the !.P. Violation of the Confidentiality of Lawyer-Client Relationship Canon &- of the Code of Professional Responsibility provides?

Canon &-. A la#yer shall preserve the co"+'#e"ce "# !ecret! of his client even after the attorney"client relationship is terminated. (0mphasis supplied) $e agree #ith the !.P that in the course of complainant*s consultations, respondent obtained the information about the need to amend the corporate by"la#s to allo# board members outside the Philippines to participate in board meetings through teleconferencing. Respondent himself admitted this in his Ans#er. 6o#ever, #hat transpired on -' January &''3 #as not a board meeting but a stoc2holders* meeting. Respondent attended the meeting as pro4y for 6arrison. The physical presence of a stoc2holder is not necessary in a stoc2holders* meeting because a member may vote by pro4y unless other#ise provided in the articles of incorporation or by"la#s.> 6ence, there #as no need for %teven and /eanna Palm to participate through teleconferencing as they could 8ust have sent their pro4ies to the meeting. !n addition, although the information about the necessity to amend the corporate by"la#s may have been given to respondent, it could not be considered a confidential information. The amendment, repeal or adoption of ne# by"la#s may be effected by Cthe board of directors or trustees, by a ma8ority vote thereof, and the o#ners of at least a ma8ority of the outstanding capital stoc2, or at least a ma8ority of members of a non"stoc2 corporation.C; !t means the stoc2holders are a#are of the proposed amendments to the by"la#s. $hile the po#er may be delegated to the board of directors or trustees, there is nothing in the records to sho# that a delegation #as made in the present case. urther, #henever any amendment or adoption of ne# by"la#s is made, copies of the amendments or the ne# by"la#s are filed #ith the %ecurities and 04change Commission (%0C) and attached to the original articles of incorporation and by"la#s.-' The #oc(&e"t! re %(b)'c recor#! "# co()# "ot be co"!'#ere# co"+'#e"t' ).1avvphi1 !t is settled that the mere relation of attorney and client does not raise a presumption of confidentiality.-- The client must intend the communication to be confidential.-& ,'"ce the %ro%o!e# &e"#&e"t! &(!t be %%ro-e# b. t )e !t & /or't. o+ the !toc0ho)#er!, "# co%'e! o+ the &e"#e# b.1 ) 2! &(!t be +')e# 2'th the ,EC, the '"+or& t'o" co()# "ot h -e bee" '"te"#e# to be co"+'#e"t' ). Thus, the disclosure made by respondent during the stoc2holders* meeting could not be considered a violation of his client*s secrets and confidence #ithin the contemplation of Canon &- of the Code of Professional Responsibility. Representing Interest in Conflict With the Interest of a Former Client The !.P found respondent guilty of representing an interest in conflict #ith that of a former client, in violation of Rule -=.'(, Canon -= of the Code of Professional Responsibility #hich provides?

Rule -=.'( " A la#yer shall not represent conflicting interest e4cept by #ritten consent of all concerned given after a full disclosure of the facts. $e do not agree #ith the !.P. !n Duiambao v. .amba,-( the Court enumerated various tests to determine conflict of interests. ,ne test of inconsistency of interests is #hether the la#yer #ill be as2ed to use against his former client any confidential information ac9uired through their connection or previous employment.-3 The Court has ruled that #hat a la#yer o#es his former client is to maintain inviolate the client*s confidence or to refrain from doing anything #hich #ill in8uriously affect him in any matter in #hich he previously represented him.-= $e find no conflict of interest #hen respondent represented %oledad in a case filed by Comtech. The case #here respondent represents %oledad is an 0stafa case filed by Comtech against its former officer. There 2 ! "oth'"* '" the recor#! th t 2o()# !ho2 th t re!%o"#e"t (!e# * '"!t Co&tech ". co"+'#e"t' ) '"+or& t'o" c3('re# 2h')e he 2 ! !t')) Co&tech$! ret '"e# co("!e). urther, respondent made the representation after the termination of his retainer agreement #ith Comtech. A la#yer*s immutable duty to a former client does not cover transactions that occurred beyond the la#yer*s employment #ith the client.-+ The intent of the la# is to impose upon the la#yer the duty to protect the client*s interests only on matters that he previously handled for the former client and not for matters that arose after the la#yer"client relationship has terminated.-B 45EREFORE, #e DI,MI,, the complaint against Atty. elipe !ledan, Jr. for lac2 of merit. ,O ORDERED.