G.R. No. 10547 , November 8, 2017
Freddie A. Guillen, Complainant vs. Atty. Audie Arnado, Respondent

FACTS

Complainant Freddie Guillen, the registered owner of City Grill Restaurant, entered into a partnership with respondent Atty. Audie Arnado and Cedric Ebo, with each contributing ₱200,000. A Memorandum of Agreement was executed in May 2003. Due to managerial disagreements, Guillen offered to waive profit claims if Arnado refunded his capital. Arnado allegedly conditioned the refund on the billings of his law firm. Guillen later discovered that Arnado had caused the incorporation of “City Grill-Sutukil Food Corporation” with the SEC on February 16, 2004, effectively excluding Guillen from the business without refunding his capital. Guillen was also charged with estafa.
Arnado admitted executing the MOA and incorporating the new corporation but defended his actions as lawful. He contended Guillen’s refund claim was subject to legal compensation and should be pursued in a separate civil action. The IBP Commission on Bar Discipline initially recommended censure, which the IBP Board of Governors later modified to a three-month suspension.

ISSUE

Whether respondent Atty. Audie Arnado violated the Code of Professional Responsibility.

RULING

Yes, the Supreme Court affirmed the IBP’s finding of violation but increased the penalty. The legal logic centers on Arnado’s breach of Rule 1.01, which prohibits lawyers from engaging in dishonest or deceitful conduct. The Court found that the original City Grill Restaurant, registered in Guillen’s name, was never legally dissolved and had acquired goodwill. By incorporating City Grill-Sutukil Food Corporation—whose incorporators were relatives of Arnado and Ebo—while the original business remained active under Guillen, Arnado surreptitiously eased out his partner to exploit the established business name and trade secrets. His act of notarizing documents for the new corporation further demonstrated his direct involvement in this scheme.
The practice of law is a privilege burdened with public interest, requiring lawyers to uphold high standards of morality, honesty, and fair dealing. Arnado used his legal knowledge to orchestrate a deceitful corporate maneuver for personal gain, causing prejudice to Guillen. This conduct fell grossly short of the ethical standards demanded of a member of the Bar. Consequently, the Court suspended Atty. Arnado from the practice of law for one year, with a warning for future offenses.