050 Zalamea v. De Guzman(Cristelle) Rodolfo P. de Guzman, Jr.

, for acquiring their property by virtue of their

November 3, 2016 |Peralta, J. | can’t acquire a client’s property under litigation lawyer-client relationship, in violation of the Lawyer's Oath and the Code of
PETITIONER: MANUEL ENRIQUE L. ZALAMEA, AND MANUEL JOSE L. Professional Responsibility.
ZALAMEA 2. Manuel Enrique Zalamea and Manuel Jose Zalamea (the Zalamea brothers)
RESPONDENTS: ATTY. RODOLFO P. DE GUZMAN, JR. AND PERLAS DE sought respondent Atty. Rodolfo P. de Guzman, Jr.'s advice on the
GUZMAN, ANTONIO, VENTURANZA, QUIZON-VENTURANZA, AND properties of their ailing mother, Merlinda L. Zalamea, who had a property
HERROSA LAW FIRM situated at Scout Limbaga, Quezon City under her name. When Merlinda
SUMMARY: The Manuel Enrique & Manuel Jose(Zalamea brothers) sought De passed away, De Guzman then prepared a letter for a possible tax-free
Guzman’s advice on the properties of their ailing mother. When Merlinda Zalamea transfer of the Scout Limbaga property to the Merlinda Holding
(Mother) passed away, De Guzman then prepared a letter for a possible tax-free Corporation which was sought to be incorporated to handle Merlinda's
transfer of the Scout Limbaga property to the Merlinda Holding Corporation which estate, and notarized the incorporation papers of said corporation.
was sought to be incorporated to handle Merlinda's estate, and notarized the 3. The Zalameas put up EMZEE FOODS INC., (EMZEE) a corporation
incorporation papers of said corporation. The Zalameas put up EMZEE FOODS INC., engaged in lechon business, with De Guzman providing the capital and
(EMZEE) a corporation engaged in lechon business, with De Guzman providing the operational funds. Sometime in 2002, Manuel Enrique informed De
capital and operational funds. Manuel Enrique informed De Guzman about the Guzman about the property located at Speaker Perez St. (Speaker Perez
property located at Speaker Perez St. (Speaker Perez property) which was then under property) which was then under the name of Elarfoods, Inc. (Elarfoods), a
the name of Elarfoods, Inc. (Elarfoods), a corporation owned and run by the Zalamea corporation owned and run by the Zalamea brothers' aunts and uncles. Since
brothers' aunts and uncles. Since said property had been mortgaged to Banco de Oro said property had been mortgaged to Banco de Oro (BDO), the bank
(BDO), the bank foreclosed it when Elarfoods failed to pay the loan. Elarfoods foreclosed it when Elarfoods failed to pay the loan. Elarfoods likewise
likewise failed to redeem the property, resulting in the consolidation of the ownership failed to redeem the property, resulting in the consolidation of the
over the property in BDO's name. Manuel Enrique approached De Guzman and ownership over the property in BDO's name.
convinced him to help in the reacquisition of the Speaker Perez property from BDO. 4. Manuel Enrique approached De Guzman and convinced him to help in the
De Guzman thus negotiated with BDO and was able to secure a deal over the property reacquisition of the Speaker Perez property from BDO. De Guzman thus
for P20 Million. CONFLICT! The relationship, between the Zalamea brothers and the negotiated with BDO and was able to secure a deal over the property for
Spouses De Guzman turned sour. The Spouses De Guzman wanted reimbursement of P20 Million. The bank required 10% down payment of the total price or P2
the amounts which they had advanced for the corporation, while the Zalamea brothers Million, to be paid in thirty-six (36) monthly installments, without interest.
claimed sole ownership over the Speaker Perez property. Hence, the brothers filed a Due to lack of funds on Manuel Enrique's part, De Guzman's wife, Angel,
disbarment case against De Guzman for allegedly buying a client's property which agreed to shoulder the P2 Million down payment in order not to lose the
was subject of litigation. good opportunity, but under the condition that the Speaker Perez property
Whether or not De Guzman should be disbarred? No, the prohibition which the would later be transferred in the name of a new corporation they had agreed
Zalameas invoke does not apply where the property purchased was not involved in to form, the EMZALDEK Venture Corporation, a combination of the names
litigation. De Guzman clearly never acquired any of his client's properties or interests EMZEE Foods, Zalamea, and Dek de Guzman. By this time, EMZEE had
involved in litigation in which he may take part by virtue of his profession. There also relocated to Speaker Perez.
exists not even an iota of proof indicating that said property has ever been involved in 5. Subsequently, Angel was forced to pay the monthly installments and
any litigation in which De Guzman took part by virtue of his profession. Clearly, the the additional 20% required for EMZEE to be able to transfer its office
relationship between the Spouses De Guzman and the Zalamea brothers is actually to the Speaker Perez property, since Manuel Enrique still could not
one of business partners rather than that of a lawyer and client. Atty. De Guzman's produce sufficient funds and EMZEE continued to incur losses. All in
acquisition of the Speaker Perez property was a valid consequence of a business deal, all, Angel paid P13,082,500.00.
not by reason of a lawyer-client relationship, for which he could not be penalized by 6. CONFLICT! The relationship, between the Zalamea brothers and the
the Court. Spouses De Guzman turned sour. The Spouses De Guzman wanted
DOCTRINE: Article 1491 of the Civil Code, lawyers are prohibited to acquire by reimbursement of the amounts which they had advanced for the corporation,
purchase, even at a public or judicial auction, either in person or through the while the Zalamea brothers claimed sole ownership over the Speaker Perez
mediation of another, their client's property and rights in litigation property. Hence, the brothers filed a disbarment case against De
FACTS: Guzman for allegedly buying a client's property which was subject of
1. This is a Petition for Disbarment which petitioners Manuel Enrique L. litigation.
Zalamea and Manuel Jose L. Zalamea filed against their lawyer, Atty.
 7. IBP’S recommendation: Dismissal of the complaint against De Guzman a. Canon 17 states that a lawyer owes fidelity to the cause of his
for lack of merit. client and he shall be mindful of the trust and confidence reposed
ISSUES: Whether or not De Guzman should be disbarred? No, the prohibition in him
which the Zalameas invoke does not apply where the property purchased was not b. Canon 16 provides that "a lawyer shall hold in trust all moneys
involved in litigation. De Guzman clearly never acquired any of his client's and properties of his client that may come into his possession."
properties or interests involved in litigation in which he may take part by virtue of c. Further, Section 3, Rule 138 of the Revised Rules of Court
his profession. There exists not even an iota of proof indicating that said property has requires every lawyer to take an oath to obey the laws as well as
ever been involved in any litigation in which De Guzman took part by virtue of his the legal orders of the duly constituted authorities. And for any
profession. violation of this oath, a lawyer may be suspended or disbarred by
the Court.
RULING: The Court finds no cogent reason to depart from the findings and d. All of these underscores the role of the lawyer as the vanguard of
recommendations of the IBP. WHEREFORE, PREMISES CONSIDERED, the Court our legal system. The transgression of any provision of law by a
DISMISSES the Petition for Disbarment against Atty. Rodolfo P. de Guzman, Jr. for lawyer is a repulsive and reprehensible act which the Court will
utter lack of merit. never countenance.
5. Here, the accusation against De Guzman stemmed from his wife's purchase
RATIO: of the Speaker Perez property from BDO when Manuel Enrique did not
1. An attorney may be disbarred or suspended for any violation of his oath or have the means to buy it. The Zalameas claim that De Guzman, as their
of his duties as an attorney and counselor, which include statutory grounds counsel, could not acquire the property, either personally or through his
enumerated in Section 27,3 Rule 138 of the Rules of Court. wife, without violating his ethical duties. De Guzman therefore has
2. Under Article 1491 of the Civil Code, lawyers are prohibited to acquire by breached the same when his wife purchased the subject property.
purchase, even at a public or judicial auction, either in person or through the 6. However, the prohibition which the Zalameas invoke does not apply where
mediation of another, their client's property and rights in litigation, hence: the property purchased was not involved in litigation. De Guzman clearly
a. ART. 1491. The following persons cannot acquire by purchase, never acquired any of his client's properties or interests involved in
even at a public or judicial auction, either in person or through the litigation in which he may take part by virtue of his profession.
mediation of another: (5.)Justices, judges, prosecuting attorneys, 7. There exists not even an iota of proof indicating that said property has
clerks of superior and inferior courts, and other officers and ever been involved in any litigation in which De Guzman took part by
employees connected with the administration of justice, the virtue of his profession. True, they had previously sought legal advice
property and rights in litigation or levied upon an execution before from De Guzman but only on how to handle their mother's estate,
the court within whose jurisdiction or territory they exercise their which likewise did not involve the contested property. Neither was it
respective functions; this prohibition includes the act of shown that De Guzman's law firm had taken part in any litigation
acquiring by assignment and shall apply to lawyers, with involving the Speaker Perez property.
respect to the property and rights which may be the object of 8. The prohibition which rests on considerations of public policy and interests
any litigation in which they may take part by virtue of their is intended to curtail any undue influence of the lawyer upon his client on
profession. (6.) Any others specially disqualified by law. account of his fiduciary and confidential relationship with him. De Guzman
3. The purchase by a lawyer of his client's property or interest in litigation is a could not have possibly exerted such undue influence, as a lawyer, upon the
breach of professional ethics and constitutes malpractice. The persons Zalameas, as his clients.
mentioned in Article 1491 are prohibited from purchasing said 9. In fact, it was Manuel Enrique who approached the Spouses De Guzman
property because of an existing trust relationship. A lawyer is and asked them if they would be willing to become business partners in a
disqualified from acquiring by purchase the property and rights in lechon business. It was also Manuel Enrique who turned to De Guzman for
litigation because of his fiduciary relationship with such property and help in order to reacquire the already foreclosed Speaker Perez property.
rights, as well as with the client. They had agreed that De Guzman would simply pay the required down
4. The very first Canon of the Code of Professional Responsibility provides payment to BDO and EMZEE would pay the remaining balance in
that "a lawyer shall uphold the Constitution, obey the laws of the land and installment. And when EMZEE continued suffering losses, Angel took care
promote respect for law and legal process." of the monthly amortizations so as not to lose the property.
10. Clearly, the relationship between the Spouses De Guzman and the
Zalamea brothers is actually one of business partners rather than that
of a lawyer and client. Atty. De Guzman's acquisition of the Speaker
Perez property was a valid consequence of a business deal, not by
reason of a lawyer-client relationship, for which he could not be
penalized by the Court. De Guzman and his wife are very well allowed by
law to enter into such a transaction and their conduct in this regard was not
borne out to have been attended by any undue influence, deceit, or
misrepresentation.