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LOZADA VS.

FRIAS
A. C. No. 6656 (formerly CBD-98-591)
December 13, 2005

FACTS:
In the early part of 1990 Atty. Lozada acted as retained counsel and legal adviser of here
in complainant, Frias.
In December 1990, respondent then arranged a meeting with the complainant and
another client of her, Dr. San Diego for the sale of the complainants property and respondent
allegedly acted as broker. They entered into a MOA if ever the sale is aborted after payment of
the selling price, the same property shall be mortgaged in favor of the consideration or amount
given on the prior sale subsequently aborted.
San Diego then paid the complainant P3M as consideration, and complainant gave the
TCT of the subject property.
Respondent collected P1M, P900, 000 of which as her commission, and the remaining
P100 000 for the payment by respondent to another person whom they had transaction with,
prior to this transaction, subject on this case. When complainant protested about the collection
of Atty. Lozadas commission, respondent promised to sign a promissory note later.
San Diego eventually backed out from the sale, and converted the aborted sale into a
mortgage loan at 36% p.a. interest, as provided in the MOA.
Since the transaction between her and San Diego did not materialize, complainant
allegedly tried to recover from respondent the title to the property and other documents.
Complainant recovered the documents placed inside an envelope only. On the same day,
however, the envelope was allegedly stolen from her Pajero. She reported the incident to the
police. She also informed respondent about the incident, and the latter prepared an affidavit of
loss. Complainant later offered this affidavit as evidence in a petition for issuance of a duplicate
copy of the title she filed, in the RTC of Makati.
A perjury case was then filed by San Diego against complainant on the ground that the
title to the property was never really lost but was with San Diego all along. San Diego
maintained that complainant handed it to her on the day they signed the MOA. Complainant
denied these allegations. She instead claimed that the perjury case was filed by San Diego,
with respondent as counsel, to coerce her (complainant) to assign the property to San Diego
and to abandon her claim from respondent.
San Diego also filed a case for the return of the P3M she paid complainant, at 36% p.a.
interest. Complainant claimed that her failure to return the money to San Diego was by reason
of respondents refusal to give back the amount she took as commission. Complainant was thus
constrained to file a civil case against respondent. Despite the favorable decision of the trial
court, which was affirmed by the Court of Appeals, respondent refused to return the money.

In a report and recommendation dated July 25, 2000, the IBP Investigating
Commissioner found respondent guilty of dishonesty and malpractice for concealing the identity
of the person in actual possession of complainants documents and for preparing an affidavit of
loss even if she knew that the documents were in San Diegos custody. A suspension for six
months from the practice of law was accordingly recommended.

RULING:

First, Canon 15.03 of the Code of Professional Responsibility provides:


A lawyer shall not represent conflicting interests except by written consent
of all concerned given after a full disclosure of the facts.
A lawyer may not, without being guilty of professional misconduct, act as counsel for a
person whose interest conflicts with that of his present or former client. He may not also
undertake to discharge conflicting duties any more than he may represent antagonistic
interests. This stern rule is founded on the principles of public policy and good taste. It springs
from the relation of attorney and client which is one of trust and confidence.
The test of conflict of interest is whether the acceptance of a new relation will prevent an
attorney from the full discharge of his duty of undivided fidelity and loyalty to his client or invite
suspicion of unfaithfulness or double-dealing in its performance. The conflict exists if the
acceptance of the new retainer will require the attorney to perform an act which will injuriously
affect his first client in any matter in which he represented him and also whether he will be
called upon in his new relation to use against the first client any knowledge acquired through
their connection.
In this case, respondent not only admitted that she represented both complainant and
San Diego in unrelated actions but also counseled both of them in the sale of the property. As
their lawyer, she was duty-bound to protect both of their interests. She should have therefore
refrained from jumbling their affairs. Yet she introduced complainant to another client of hers as
a buyer of the property. At that early stage, she should have realized that her role as their
lawyer had been seriously compromised. Since buyer and seller had evident antagonistic
interests, she could not give both of them sound legal advice. On top of this, respondents
obvious tendency then was to help complainant get a high selling price since the amount of her
commission was dependent on it. Her active participation in the transaction was obvious and it
clearly displayed an utter disregard of the rule against discharging inconsistent duties to her
clients. The great likelihood was that she would be called upon to use against either the
complainant or San Diego, information acquired through her professional connection with them.
The records further establish that respondent collected her full commission even before
the transaction between complainant and San Diego was completed. This unmasked
respondents greed which she now wants us so badly to ignore. Her integrity was placed in
serious doubt the moment her promised commission started motivating her every move.

Secondly, her act of borrowing money from a client was a violation of Canon 16.04 of
the Code of Professional Responsibility:
A lawyer shall not borrow money from his client unless the clients interests are
fully protected by the nature of the case and by independent advice.
A lawyers act of asking a client for a loan, as what respondent did, is very unethical. It
comes within those acts considered as abuse of clients confidence. The canon presumes that
the client is disadvantaged by the lawyers ability to use all the legal maneuverings to renege on
her obligation.

Finally, a lawyer should, at all times, comply with what the court lawfully requires. Here,
respondent continues to disregard the final order of the Court of Appeals finding her liable for
the P900,000 she received from complainant. We see no justification for her continued delay in
complying with an order that has long become final. Respondent adamantly insists that she and
complainant should simultaneously settle their obligations. As a lawyer, she should have known
that her obligation to complainant was independent of and separate from complainants
obligation to the buyer.