320 SUPREME COURT REPORTS ANNOTATED

De Guzman vs. De Dios

*
Adm. Case No. 4943. January 26, 2001.

DIANA D. DE GUZMAN, complainant, vs. ATTY. LOURDES I.

DE DIOS, respondent.

Legal Ethics; Attorneys; Conflict of Interests; Where a lawyer was

retained by a person to form a corporation and appeared as counsel in
behalf of said person but said lawyer was subsequently shown to be in
collusion with the board of directors of the corporation against the said
client, there

__________________

19 Petition, p. 10; rollo, p. 14.

20 Respondent’s Memorandum, pp. 7-8; rollo, pp. 175-176.

* FIRST DIVISION.

321

VOL. 350, JANUARY 26, 20013 21

De Guzman vs. De Dios

is a clear case of conflict of interest.—Respondent claims that there was no

attorney-client relationship between her and complainant. The claim has no
merit. It was complainant who retained respondent to form a corporation.
She appeared as counsel in behalf of complainant. There was evidence of
collusion between the board of directors and respondent. Indeed, the board
of directors now included respondent as the president, Ramon del Rosario as
secretary, Hikoi Suzuki as chairman, Agnes Rodriguez as treasurer and
Takayuki Sato as director. The present situation shows a clear case of
conflict of interest of the respondent.
Same; Same; Same; Lawyers must conduct themselves, especially in
their dealings with their clients and the public at large, with honesty and
integrity in a manner beyond reproach.—Lawyers must conduct
themselves, especially in their dealings with their clients and the public at
large, with honesty and integrity in a manner beyond reproach. We said: “To
say that lawyers must at all times uphold and respect the law is to state the
obvious, but such statement can never be overemphasized. Considering that,
‘of all classes and professions, [lawyers are] most sacredly bound to uphold
the law,’ it is imperative that they live by the law. Accordingly, lawyers who
violate their oath and engage in deceitful conduct have no place in the legal
profession.”
Same; Same; Lawyer’s Oath; The lawyer’s oath is a source of
obligations and violation thereof is a ground for suspension, disbarment, or
other disciplinary action.—As a lawyer, respondent is bound by her oath to
do no falsehood or consent to its commission and to conduct herself as a
lawyer according to the best of her knowledge and discretion. The lawyer’s
oath is a source of obligations and violation thereof is a ground for
suspension, disbarment, or other disciplinary action. The acts of respondent
Atty, de Dios are clearly in violation of her solemn oath as a lawyer that this
Court will not tolerate.

ADMINISTRATIVE MATTER in the Supreme Court. Disbarment.

The facts are stated in the resolution of the Court.

Homobono Adaza for complainant.

322

322 SUPREME COURT REPORTS ANNOTATED

De Guzman vs. De Dios

RESOLUTION

PARDO, J.:
1
The case before the Court is a complaint for disbarment against
Atty. Lourdes I. De Dios on the ground of violation of Canon 15,
Rule 15.03 of the Code of Professional Responsibility, for
representing conflicting interests, and of Article 1491 Civil Code,
for acquiring property in litigation.
In 1995, complainant engaged the services of respondent as
counsel in order to form a corporation, which would engage in hotel
and restaurant business in Olongapo City.
On January 10, 1996, with the assistance of Atty, de Dios,
complainant registered Suzuki Beach Hotel,2 Inc. (SBHI) with the
Securities and Exchange Commission. Complainant paid
respondent a monthly retainer fee of P5,000.00.
 On December 15, 1997, the corporation required complainant to
pay her unpaid subscribed shares of stock amounting to two million
two hundred and thirty five thousand pesos (P2,235,000.00) or
22,350 shares, on or before3
December 30, 1997.
On January 29, 1998, complainant received notice of the public
auction sale of her delinquent shares and a copy of a board4
resolution dated January 6, 1998 authorizing such sale.
Complainant soon learned that her shares had been acquired by
Ramon del Rosario, one of the incorporators of SBHI. The sale
ousted complainant from the corporation completely. While
respondent rose to be president of the corporation, complainant lost
all her life’s savings invested therein.
Complainant alleged that she relied on the advice of Atty, de
Dios and believed that as the majority stockholder, Atty, de Dios
would help her with the management of the corporation.

__________________

1 Filed on September 4, 1998.

2 SEC Registration No. AS096-000265, Rollo, pp. 4-28.
3 Letter dated January 20, 1998, Rollo, p. 38.
4 Rollo, p. 37.

323

VOL. 350, JANUARY 26, 2001 323

De Guzman vs. De Dios

Complainant pointed out that respondent appeared as her counsel

and signed
5
pleadings in a case where complainant was one of the
parties. Respondent, however, explained that she only appeared
because the property involved belonged to SBHI. Respondent
alleged that complainant misunderstood the role of respondent as
legal counsel of Suzuki Beach Hotel, Inc. Respondent manifested
that her appearance as counsel for complainant Diana de Guzman
was to protect the rights and interest of SBHI since the latter was the
real owner of the land in controversy.
Respondent further said that the land on which the resort was
established belonged to the Japanese incorporators, not to
complainant. The relationship of the complainant and the Japanese
investors turned sour because complainant misappropriated the
funds and property of the corporation. To save the corporation from
bankruptcy, respondent advised all concerned stockholders that it
was proper to call for the payment of unpaid subscriptions and
subsequent sale of the delinquent shares. These led to the auction of
the unpaid shares of complainant and hence, the ouster of
complainant from the corporation.
 Meantime, Mr. del Rosario transferred one hundred (100) shares
to respondent in payment of legal services as evidenced by a Deed
of Waiver and Transfer of Corporate Shares of Stock.
On October
6
22, 1999, the Integrated Bar of the Philippines issued
a resolution finding that the acts of respondent were not motivated
by ill will as she acted in the best interest of her client, SBHI. The
IBP found that complainant failed to present convincing proof of her
attorney-client relationship with respondent other than the pleadings
respondent filed in the trial court where complainant was one of the
parties.
We disagree.
We find merit in the complaint. There are certain facts presented
before us that created doubt on the propriety of the declaration of
delinquent shares and subsequent sale of complainant’s entire
subscription. Complainant subscribed to 29,800 shares

__________________

5 Entry of Appearance, Rollo, p. 74.

6 Rollo, pp. 119-125.

324

324 SUPREME COURT REPORTS ANNOTATED

De Guzman vs. De Dios

equivalent to two million nine hundred and eighty thousand pesos

(P2,980,000.00). She was the majority stockholder. Out of the
subscribed shares, she paid up seven hundred forty-five thousand
pesos (P745,000.00) during the stage of incorporation.
How complainant got ousted from the corporation considering
the amount she had invested in it is beyond us. Granting that the sale
of her delinquent shares was valid, what happened to her original
shares? This, at least, should have been explained.
Respondent claims that there was no attorney-client relationship
between her and complainant. The claim has no merit. It was
complainant who retained respondent to form a corporation. She
appeared as counsel in behalf of complainant.
There was evidence of collusion between the board of directors
and respondent. Indeed, the board of directors now included
respondent as the president, Ramon del Rosario as secretary, Hikoi
Suzuki as chairman,
7
Agnes Rodriguez as treasurer and Takayuki
Sato as director. The present situation shows a clear case of conflict
of interest of the respondent.
Lawyers must conduct themselves, especially in their dealings
with their clients and the public
8
at large, with honesty and integrity
in a manner beyond reproach.
We said:
To say that lawyers must at all times uphold and respect the law is to state
the obvious, but such statement can never be overemphasized. Considering
that, ‘of all classes and professions, [lawyers are] most sacredly bound to
uphold the law,’ it is imperative that they live by the law. Accordingly,
lawyers who violate their oath 9
and engage in deceitful conduct have no
place in the legal profession.”

Clearly, respondent violated the prohibition against representing

conflicting interests
10
and engaging in unlawful, dishonest, immoral or
deceitful conduct.

_________________

7 Rollo, p. 46.
8 Resurreccion v. Sayson, 300 SCRA 129 [1998].
9 Ibid., citing Ex parte Wall, 107 U.S. 265, cited in Malcolm, Legal and Judicial
Ethics, p. 214.
10 Code of Professional Responsibility, Canon 1, Rule 1.01.

325

VOL. 350, JANUARY 26, 2001 325

De Guzman vs. De Dios

As a lawyer, respondent is bound by her oath to do no falsehood or

consent to its commission and to conduct herself as a lawyer
according to the best of her knowledge and discretion. The lawyer’s
oath is a source of obligations
11
and violation thereof is12a ground for
suspension, disbarment, or other disciplinary action. The acts of
respondent Atty, de Dios are clearly in violation of her solemn oath
as a lawyer that this Court will not tolerate.
WHEREFORE, the Court finds respondent Atty. Lourdes I. de
Dios remiss in her sworn duty to her client, and to the bar. The Court
hereby SUSPENDS her from the practice of law for six (6) months,
with warning that a repetition of the charges will be dealt with more
severely.
Let a copy of this decision be, entered in the personal records of
respondent as an attorney and as a member of the Bar, and furnish
the Bar Confidant, the Integrated Bar of the Philippines, and the
Court Administrator for circulation to all courts in the country.
SO ORDERED.

Davide, Jr. (C.J., Chairman), Puno, Kapunan and Ynares-

Santiago, JJ., concur.

Respondent suspended from the practice of law for six (6)

months, with warning against repetition of similar acts.
 Notes.—No judge or judicial officer shall sit in any case in which
he has been counsel for a party without the written consent of all
parties in interest, signed by them and entered upon the record. (Re:
Inhibition of Judge Eddie R. Rojas, RTCBr. 39, Polomolok, South
Cotabato, 298 SCRA 306 [1998])
A lawyer who has agreed to represent a defendant and later on
agree to represent the plaintiff in the same case can no longer serve
either of his clients faithfully, as his duty to the plaintiff

________________

11 Magdaluyo v. Nace, A.C. 3808, February 2, 2000, 324 SCRA 384 citing Adez
Realty, Inc. v. CA, 215 SCRA 301 (1992); Richards v. Asoy, 152 SCRA 45, 50
(1987); Diaz v. Gerong, 141 SCRA 46, 49 (1986).
12 Magdaluyo v. Nace, supra, Note 11, citing Reyes v. Gaa, 246 SCRA 64, 67
(1995).

326

326 SUPREME COURT REPORTS ANNOTATED

Office of the Court Administrator vs. Ladaga

necessarily conflicts with his duty to the defendant. (Sibulo vs.

Cabrera, 336 SCRA 237 [2000])

——o0o——

© Copyright 2018 Central Book Supply, Inc. All rights reserved.