Guillen vs. Arnado

FREDDIE A. GUILLEN v. ATTY.
AUDIE ARNADO
AC No. 10547, November 8, 2017
DOCTRINE:
The Court has repeatedly emphasized that the practice of law is imbued with public interest and
that a lawyer owes substantial duties, not only to his client, but also to his brethren in the
profession, to the courts, and to the public, and takes part in the administration of justice, one of
the most important functions of the State, as an officer of the court. Accordingly, lawyers are
bound to maintain, not only a high standard of legal proficiency, but also of morality, honesty,
integrity, and fair dealing. Here, Arnado has certainly fallen short of the high standard of
morality, honesty, integrity, and fair dealing required of him. On the contrary, he employed his
knowledge and skill of the law as well as took advantage of Guillen to secure undue gains for
himself and to inflict serious damage on others.
FACTS:
Complainant is the registered owner of the City Grill Restaurant. He then invited respondent and a certain
Cedric Ebo to join the restaurant business. Each of them had to shell out P200,000.00 to cover the total
capital of P600,000.00. A MOA was therefore executed and the business was formally launched in May
2003. At first, everything went smoothly, until respondent’s sister-in-law and Ebo's son participated in the
management, causing complications in the business operations, which later forced complainant and his
wife to step down as general manager and operations manager, respectively. Because of the
disagreements among the parties, complainant offered that he would waive his claims for profits,
provided that respondent would return the P200,000.00 that he paid as capital. Respondent however,
allegedly claimed that said refund would still be subject to the billings of the Arnado and Associate
Law Firm. Thereafter, complainant was surprised to find out that respondent had already caused the
incorporation of the restaurant with the SEC, which was approved on February 16, 2004 and he was
likewise excluded from the business without the aforementioned refund of his capital. He was further
charged with Estafa before the Office of the City Prosecutor of Cebu. Thus, Guillen initiated the present
administrative case.
Arnado admitted the existence and the contents of the MOA. He also admitted that he caused the
incorporation of City Grill-Sutukil Food Corporation. However, he insisted that the same was done in
accordance with the requirements under the law. Guillen could not validly claim for a refund, and if he
was really entitled, he should simply file an action to that effect. Arnado likewise contended that Guillen's
refund would still be subject to the legal compensation claim of his law firm.
the Commission on Bar Discipline of the (IBP) recommended the censure of Arnado for his deceitful and
dishonest act in violation of Rule 1.01 of the Code or Professional Responsibility which provides that - A
lawyer shall not engage in an unlawful, dishonest, immoral and deceitful conduct.
IBP Board of Governors passed Resolution which adopted and approved the aforementioned
recommendation
Arnado moved for reconsideration of said Resolution. the IBP Board of Governors passed another
resolution, which denied said motion for reconsideration and approved its 2013 Resolution, with
modification, the penalty imposed on Atty. Audie Arnado is increased from Censure to SUSPENSION
from the practice of law for three (3) months.
ISSUE:
Whether or not respondent should be administratively liable for violation of Rule 1.01 of the Code or
Professional Responsibility which prohibits a lawyer from engaging in unlawful, dishonest, immoral, or
deceitful conduct.
HELD:
Yes. The Supreme Court affirmed the recommendation of IBP Board. According to the Supreme Court
respondent is guilty of taking advantage of his knowledge of the law and of surreptitiously easing
out Guillen from their restaurant business partnership by registering a corporation under a
different but similar name and style, in the same line of business, and using the same trade secrets.
it must be pointed out that the business name City Grill Restaurant registered under Guillen's name was
never dissolved in accordance with the law. Even Arnado failed to prove that the City Grill Restaurant
business had already been terminated. Although said business name was only used for a short period of
time, the same had already acquired goodwill among the residents and customers in the locality.
City Grill-Sutukil Food Corporation was registered with the SEC. Although Arnado and Ebo were not
included as incorporators, those persons reflected in the articles of incorporation as the company's
incorporators were their relatives.
It is clear that when Arnado caused the incorporation of City Grill-Sutukil Food Corporation, he was fully
aware that City Grill Restaurant was still registered in Guillen's name. Obviously, he did the same to
take advantage of the goodwill earned by the name of City Grill Restaurant. Arnado was likewise the
one who actually notarized some of City Grill-Sutukil Food Corporation's legal documents such as the
Treasurer's Affidavit and a letter addressed to the SEC
Further, although respondent was not reflected as one of the incorporators of City Grill-Sutukil Food
Corporation, has deceived the public into believing that City Grill Restaurant and City Grill-Sutukil
Food Corporation are one and the same, clearly violating Rule 1.01 of the CPR, which prohibits a
lawyer from engaging in unlawful, dishonest, immoral, or deceitful conduct.
Here, said respondent has certainly fallen short of the high standard of morality, honesty, integrity, and
fair dealing required of him. On the contrary, he employed his knowledge and skill of the law as well as
took advantage of Guillen to secure undue gains for himself and to inflict serious damage on others.
The Court ordered the SUSPENSION of Atty. Audie Arnado from the practice of law for a period of one
(1) year and WARNS him that a repetition of the same or similar offense shall be dealt with more
severely.

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FREDDIE A. GUILLEN v. ATTY.

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