Morelos v. Samsom

 Morelos v. Samsom

A.C. No. 10505

April 12, 2023


                Version of the Complainants

The late Ramon Sr. was a stockholder of Aries Engineering and Machine Works, Inc. (Aries) and Supreme Engine Rebuilding & Machine Works Specialists, Inc. (Supreme Engine), corporations which are engaged in the repair, assembly, and manufacture of all kinds of machineries, appliances, and engines. On April 26, 2011, Ramon died and was survived by his children, two of whom are complainants herein. On the other hand, respondent is the Corporate Secretary of Aries and Supreme Engine. While collating the properties left by their deceased father, complainants learned, by examining the GIS of Aries and Supreme Engine, that the shares of stock of their father were transferred to existing stockholders of the two corporations. The GIS of Aries dated March 25, 2011 and the GIS of Supreme Engine dated April 29, 2010 showed that Ramon owned 2,500 shares of stock, respectively. However, in the GIS of Aries and Supreme Engine both dated November 23, 2011, Ramon's shares of stock were no longer reflected in either one. Similarly, complainants' aunt, Violeta D. Samson, owned 3,340 and 3,750 shares of stock in Aries and Supreme Engine, respectively, as shown in the 2011 Aries GIS and 2011 Supreme Engine GIS. However, after her death in December 2011, both the 2012 GIS of Aries and Supreme Engine showed that her shares of stock were no longer reflected therein.

Complainants wrote respondent a letter questioning why, as the Corporate Secretary of Aries and Supreme Engine, allegedly made false statements under oath in the subject GIS of said corporations, specifically those dated November 23, 2011 and the year 2012. Despite the absence of actual transfer of shares of stock, respondent falsely stated in the GIS an untruthful distribution of shareholdings in the corporations. However, respondent failed to respond to complainants' letter, as well as to their request for other documents and other records in connection with the transfers. Thus, complainants filed a criminal complaint for four counts of perjury against respondent for his untruthful statements in the GIS of both corporations. The criminal case was docketed as NPS Docket No. III-13-INV-14-A-00058 entitled, "Verna Samson Morelos v. Virgilio Martin P. Samson." The case is pending before the Office of the City Prosecutor of San Fernando, Pampanga City.


Version of the Respondent


Respondent alleged that Aries and Supreme Engine are family corporations owned by the Samson Family composed of four siblings, namely: Violeta, Ramon, Jr., Milagros and Vicente. Complainants are the illegitimate children of Ramon while respondent is the legitimate child of Vicente. After their parents died, Violeta assumed the role of the matriarch of the Samson Family. Respondent, being the lone legal practitioner in the family, assumed the position of Corporate Secretary of both corporations. Respondent alleged that due to the extravagant lifestyle of Ramon and to a stroke he suffered in 1999, he had to dispose of his properties, including his shares of stock in Aries and Supreme Engine, to support himself. He sold his shares in Aries and Supreme Engine for PHP125,000.00 to Violeta on May 4, 2006 when they entered into a Deed of Absolute Sale. However, Ramon requested that the transfer of shares of stock will only be recorded in the stock and transfer book upon his death. When Ramon died, Violeta facilitated the transfer of shares and presented the Deed of Absolute Sale to respondent, informing him that she owned Ramon's shares of stock from then on. Violeta instructed respondent to transfer Ramon's shares of stock to her and their two other siblings. Respondent relied on Violeta's assurances that the proper transfer fees will be paid and the required documentation will be arranged by her accounting firm, including the recording of the entries in the corporations' respective Stock and Transfer Books. Consequently, the said transfers were reflected in the GIS of Aries and Supreme Engine dated November 23, 2011.

As regards Violeta's shares, respondent explained that when Violeta was suffering the final stages of lung cancer, she decided to transfer her remaining shares of stock to the other shareholders and to some other members of the family. Again, she verbally assured respondent of the corresponding transfer fees and required documentation. Thus, respondent reflected the transfers in the subsequent 2012 GIS of Aries and Supreme Engine after Violeta's death in December 2011. Unfortunately, respondent could not produce the Stock and Transfer Books and other documentation when the same were requested by complainants because all were destroyed during typhoons Ondoy and Habagat. To support this, he presented the Certifications of the Punong Barangay of San Nicolas, San Fernando, Pampanga, attesting that the corporations' properties were indeed damaged during the typhoon.


                Whether or not respondent was in violation of the Lawyer’s Oath and the CPR.


                Yes. His filing of the assailed GIS of Aries and Supreme Engine indicating shareholdings of individuals not supported by conveyancing documents and proper payment of taxes and other fees amounts to conduct that can be construed as unlawful or deceitful. Such acts can likewise be taken as conduct adversely reflecting respondent’s fitness to practice law. The transfer of shares without the requisite transfer of documents and consequent non-payment of taxes is deemed violation of various BIR issuances. The filing and submission of the notarized GIS containing “false” entries can likewise be deemed as violation of penal statutes and administrative issuances.

                Respondent is not only a corporate secretary he is also a lawyer who is presumed to know requirements of the law before changes in corporate shareholdings can properly and validly be reflected in GIS submitted to the SEC. In this case, he not only neglected to perform his duties as a corporate secretary of the 2 corporations, he likewise neglected his duties as a lawyer. A lawyer’s neglect of a legal matter entrusted to him constitutes inexcusable negligence for which he must be held administratively liable. It betrays his avowed fidelity and renders him unworthy of the client’s trust and confidence.

Likewise, ingrained in a lawyer's professional duty is the obligation of the lawyer to hold in trust and account all moneys and properties of his or her client that come into his or her possession, including a client's shares or shareholdings. A lawyer's failure to return upon demand the funds held by him or her on behalf of his or her client, or provide proper documentation with regard to its transfers, gives rise to the presumption that he or she has appropriated the money for his or her own. Such act is a gross violation of general morality as well as professional ethics.

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