DE GUZMAN vs.

DE DIOS
A.C. No. 4943. January 26, 2001

FACTS:
In 1995, complainant De Guzman engaged the services of respondent De Dios as counsel in
order to form a corporation. Later, in1996, with the assistance of the latter, Suzuki Beach Hotel,
Inc. (SBHI) was registered with the Securities and Exchange Commission. Complainant paid on
respondent a monthly retainer fee of P5,000.00.
In, 1997, the corporation required complainant to pay her unpaid subscribed shares of stock
amounting to P2,235,000.00 or 22,350 shares on or before December 30, 1997. Then in 1998, De
Guzman received notice of the public auction sale of her delinquent shares and a copy of a board
resolution 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 alleged that she relied on the advice of Atty. De Dios and believed that would
help her with the management of the corporation. She pointed out that respondent appeared as
her counsel and signed 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, that the complainant misunderstood her role legal counsel of Suzuki Beach Hotel, Inc.
ISSUE:
W/N there is attorney-client relationship between the parties
W/N there is violation of lawyers oath

HELD:
Yes. Attorney-client relationship existed between the parties. It was the complainant who
retained respondent to form a corporation. She appeared as counsel in behalf of complainant.
Yes, there is violation of lawyers oath. 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. As a lawyer, he 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 lawyers oath is a source of obligations and violation thereof is a ground for
suspension, disbarment, or other disciplinary action.
In this case, there was evidence of collusion between the board of directors and
respondent wherein the complainant was ousted completely from the corporation while the
respondent became the President. It is clear that the acts of respondent Atty. De Dios are clearly
in violation of her solemn oath as a lawyer by representing conflicting interests and engaging in

unlawful, dishonest, immoral or deceitful conduct. Thus, Supreme Court SUSPENDS her from
the practice of law for six (6) months, with warning that a repetition of the charges will be dealth
with more severely.
FIRST DIVISION

[A.C. No. 4943. January 26, 2001]

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

R E SO L U T I O N
PARDO, J.:
The case before the Court is a complaint i[1] 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, Inc. (SBHI) with the Securities and Exchange Commission. ii[2] Complainant paid on
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 before December 30, 1997.
On January 29, 1998,iii[3] complainant received notice of the public auction sale of her
delinquent shares and a copy of a board resolution dated January 6, 1998 authorizing such sale. iv
[4]
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 lifes 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.
Complainant pointed out that respondent appeared as her counsel and signed pleadings in a
case where complainant was one of the parties. v[5] 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 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 lead 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 22, 1999, the Integrated Bar of the Philippines issued a resolution vi[6] finding that
the acts of respondent were not motivated by ill will as she acts 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 complainants
entire subscription. Complainant subscribed to 29,800 shares 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, Agnes Rodriguez as treasurer and Takayuki Sato as director.vii[7] 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 at large, with honesty and integrity in a manner beyond reproach.viii[8]
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.ix[9]

Clearly, respondent violated the prohibition against representing conflicting interests and
engaging in unlawful, dishonest, immoral or deceitful conduct.x[10]
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 lawyers oath is a source of obligations and violation thereof is a ground for
suspension, disbarment,xi[11] or other disciplinary action.xii[12] 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 dealth with more severely.
Let a copy ofthis 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.

i[1] Filed on September 4, 1998.

ii[2] SEC Registration No. AS096-000265, Rollo, p. 4-28.
iii[3] Letter dated January 20, 1998, Rollo, p. 38.
iv[4] Rollo, p. 37.
v[5] Entry of Appearance, Rollo, p. 74.
vi[6] Rollo, pp. 119-125.
vii[7] Rollo, p. 46.
viii[8] Resurreccion v. Sayson, 300 SCRA 129 [1998].
ix[9] Ibid., citing Ex parte Wall, 107 U.S. 265, cited in Malcolm, Legal and Judicial Ethics, p.
214.
x[10] Code of Professional Responsibility, Canon 1, Rule 1.01.
xi[11] Magdaluyo v. Nace, A.C. 3808, February 2, 2000, 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).
xii[12] Magdaluyo v. Nace, A.C., supra, Note 11, citing Reyes v. Gaa, 246 SCRA 64, 67
(1995).