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DIANA D. DE GUZMAN v. ATTY. LOURDES I. DE DIOS

FACTS:

The complaint for disbarment against Atty. Lourdes I. De Dios alleges that she violated the Code of Professional Responsibility and the Civil Code. Complainant engaged Atty. De Dios's services in 1995 to form a corporation for a hotel and restaurant business. With Atty. De Dios's assistance, complainant registered Suzuki Beach Hotel, Inc. (SBHI) with the Securities and Exchange Commission. Complainant paid a monthly retainer fee to Atty. De Dios. In 1997, the corporation required complainant to pay her unpaid subscribed shares of stock amounting to P2,235,000.00. Complainant received a notice of public auction regarding her delinquent shares and discovered that her shares had been acquired by one of the incorporators of SBHI. While respondent rose to be president of the corporation, complainant lost her life's savings invested therein. Complainant alleged that she relied on Atty. De Dios for advice and believed that she would help manage the corporation. Respondent claimed that she only appeared as counsel in a case involving SBHI's property and that complainant misunderstood her role as legal counsel. Respondent alleged that the land where the resort was established belonged to the Japanese incorporators and that the relationship between complainant and the Japanese investors turned sour due to complainant's misappropriation of funds and property. Respondent advised all concerned stockholders to call for the payment of unpaid subscriptions and subsequent sale of the delinquent shares. The Integrated Bar of the Philippines (IBP) issued a resolution finding that respondent's acts were done in the best interest of her client, SBHI. However, the Court found merit in the complaint, expressing doubt on the declaration of delinquent shares and sale of complainant's subscription. The Court found evidence of collusion between the board of directors and respondent and concluded that respondent's acts violated professional ethics. The Court suspended respondent from the practice of law for six months.

ISSUES:

  1. Whether or not there was an attorney-client relationship between the complainant and the respondent.

  2. Whether or not the respondent violated the prohibition against representing conflicting interests and engaging in unlawful, dishonest, immoral or deceitful conduct.

RULING:

  1. The Court held that there was indeed an attorney-client relationship between the complainant and the respondent. The complainant retained the services of the respondent to form a corporation and the respondent appeared as counsel in behalf of the complainant. Thus, the claim of the respondent that there was no attorney-client relationship between them has no merit.

  2. The Court found the respondent guilty of violating Canon 15, Rule 15.03 of the Code of Professional Responsibility for representing conflicting interests and Article 1491 of the Civil Code for acquiring property in litigation. The respondent colluded with the board of directors and acquired the complainant's shares of stock through a public auction, resulting in the complainant's complete ouster from the corporation. This constituted a clear case of conflict of interest. The Court emphasized that lawyers must conduct themselves with honesty and integrity in a manner beyond reproach. The respondent's actions were considered as deceitful conduct in violation of her solemn oath as a lawyer.

PRINCIPLES:

  • Lawyers must uphold and respect the law. They are sacredly bound to uphold the law and must live by it.

  • Lawyers must conduct themselves with honesty and integrity in a manner beyond reproach. Engaging in deceitful conduct is a violation of a lawyer's oath and is grounds for suspension, disbarment, or other disciplinary action.

  • Lawyers are prohibited from representing conflicting interests and engaging in unlawful, dishonest, immoral, or deceitful conduct.