Lijauco vs. Terrado

A lawyer who neglects his duties to a client, charges unreasonable fees, splits fees with non-lawyers, and engages in deceitful conduct by misleading a client into waiving valid claims and conceding the validity of a foreclosure warrants suspension from the practice of law and restitution of fees received.

• In January 2001, complainant Luzviminda C. Lijauco engaged the services of respondent Atty. Rogelio P. Terrado for a fee of P70,000.00 to assist in recovering her deposit of P180,000.00 with Planters Development Bank, Buendia, Makati branch, and to secure the release of her foreclosed house and lot located in Calamba, Laguna.
• The foreclosed property, identified as Lot No. 408-C-2 and registered under TCT No. T-402119 in the name of Planters Development Bank, was the subject of a petition for the issuance of a writ of possession pending before the Regional Trial Court of Binan, Laguna, Branch 24, docketed as LRC Case No. B-2610.
• Complainant alleged that respondent failed to appear before the trial court during the hearing for the issuance of the Writ of Possession.
• Complainant further alleged that respondent failed to protect her interests in the Compromise Agreement which she subsequently entered into to terminate LRC Case No. B-2610, resulting in her conceding the validity of the foreclosure and releasing her claims against the bank.
• Respondent admitted that he explained the contents of the compromise agreement to complainant before she signed it.
• The Investigating Commissioner found that the P70,000.00 fee for recovering a P180,000.00 savings deposit was unreasonable and excessive.
• Respondent admitted that he divided the P70,000.00 legal fee with two other individuals as commission or referral fees.
• The compromise agreement contained iniquitous stipulations where complainant conceded the validity of the foreclosure, acknowledged that the redemption period had expired, and released all claims against the bank, which she signed based on respondent's misleading assurance that she could still redeem the property after three years from the foreclosure.

• Respondent neglected the legal matter entrusted to him despite receipt of P70,000.00 in attorney's fees.
• Respondent failed to appear before the trial court in the hearing for the issuance of the Writ of Possession in LRC Case No. B-2610.
• Respondent failed to protect complainant's interests in the Compromise Agreement, allowing her to enter into disadvantageous terms.
• Respondent violated Rule 1.01 (unlawful, dishonest, immoral or deceitful conduct) and Rule 9.02 (division of fees with non-lawyers) of the Code of Professional Responsibility.

• The P70,000.00 received from complainant was payment solely for legal services for the recovery of the deposit with Planters Development Bank and did not include representation in LRC Case No. B-2610 pending before the Regional Trial Court of Biñan, Laguna.
• Denied the accusations of neglect and misconduct regarding the foreclosure case.

• Procedural Issues:
  • N/A
• Substantive Issues:
  • Whether respondent neglected his duties to the complainant in violation of Canon 18 of the Code of Professional Responsibility.
  • Whether respondent engaged in dishonest or deceitful conduct by misleading complainant regarding the redemption period for her foreclosed property in violation of Rule 1.01.
  • Whether respondent violated Rule 9.02 by dividing legal fees with persons not licensed to practice law.
  • Whether the attorney's fees charged by respondent were reasonable and fair under Canon 20.

• Procedural:
  • N/A
• Substantive:
  • The Supreme Court found respondent guilty of violating Rules 1.01, 9.02, 18.02, and 20.01 of the Code of Professional Responsibility.
  • The Court held that respondent's claim that the attorney's fees pertained only to the recovery of the savings deposit could not be sustained, as records showed he acted as complainant's counsel in drafting the compromise agreement relative to LRC Case No. B-2610.
  • The Court ruled that the P70,000.00 fee for recovering a P180,000.00 deposit was unreasonable and excessive, violating the mandate that lawyers shall charge only fair and reasonable fees.
  • The Court found that respondent disregarded his client's interests by allowing iniquitous stipulations in the compromise agreement where complainant conceded the validity of the foreclosure and released her claims, which she agreed to because respondent misled her into believing she could still redeem the property after three years.
  • The Court held that acceptance of money from a client establishes an attorney-client relationship and gives rise to the duty of fidelity to the client's cause, which commences from retainer until final disposition.
  • The Court ruled that respondent's admission that he divided the legal fees with two other people as referral fees constituted a violation of Rule 9.02, which prohibits dividing fees with non-lawyers.
  • The Court suspended respondent from the practice of law for six months effective from notice, sternly warned him that similar infractions would be dealt with more severely, and ordered him to return the P70,000.00 attorney's fees to complainant within thirty days from notice.

• Practice of Law as a Privilege — The practice of law is a privilege bestowed only upon those who possess and continue to possess the legal qualifications for it, requiring lawyers to maintain high standards of legal proficiency and morality. In this case, the Court emphasized that respondent failed to meet these standards through his negligent and deceitful conduct.
• Fourfold Duty of Lawyers — Lawyers owe a fourfold duty to society, the legal profession, the courts, and their clients, which must be performed in accordance with the values and norms embodied in the Code of Professional Responsibility. The Court applied this doctrine to hold respondent accountable for breaching his duties to his client and the profession.
• Duty of Fidelity and Zeal — The duty of a lawyer to safeguard his client's interests commences from his retainer until his discharge from the case or final disposition of the subject matter, requiring utmost devotion and adequate attention. The Court applied this to find respondent liable for neglecting his client's cause and misleading her into entering a disadvantageous compromise.
• Attorney-Client Relationship — Acceptance of money from a client establishes an attorney-client relationship that gives rise to the duty of fidelity to the client's cause. The Court used this doctrine to reject respondent's claim that he was not representing complainant in the foreclosure case, as his acceptance of fees and actions in explaining the compromise agreement created the relationship.
• Reasonable Fees — A lawyer shall charge only fair and reasonable fees, considering the value of the service rendered. The Court applied this to find the P70,000.00 fee for recovering P180,000.00 excessive and unreasonable.

• "The practice of law is a privilege bestowed on those who show that they possessed and continue to possess the legal qualifications for it."
• "Lawyers are expected to maintain at all times a high standard of legal proficiency and morality, including honesty, integrity and fair dealing."
• "The duty of a lawyer to safeguard his client's interests commences from his retainer until his discharge from the case or the final disposition of the subject matter of litigation."
• "Acceptance of money from a client establishes an attorney-client relationship and gives rise to the duty of fidelity to the client's cause."
• "The canons of the legal profession require that once an attorney agrees to handle a case, he should undertake the task with zeal, care and utmost devotion."
• "A lawyer should accept only as much cases as he can efficiently handle in order to sufficiently protect his clients' interests."

• Garcia v. Bala — Cited for the principle that the practice of law is a privilege requiring high standards of morality and proficiency, and for the propriety of ordering restitution of attorney's fees in cases of lawyer misconduct.
• Santos v. Lazaro — Cited for the principle that Rule 18.03 of the Code of Professional Responsibility is a basic postulate in legal ethics, and that failure to exercise due diligence makes a lawyer unworthy of the trust reposed in him.
• Dalisay v. Mauricio, Jr. — Cited alongside Santos v. Lazaro for the duty of lawyers to exercise due diligence in protecting client rights, and for the rule that lawyers must give adequate attention, care and time to their client's cases.
• Emiliano Court Townhouses Homeowners Association v. Dioneda — Cited for the principle that the duty of a lawyer to safeguard client interests commences from retainer until final disposition, and that lawyers must handle cases with zeal, care and utmost devotion.
• Abiero v. Juanino — Cited for the principle that lawyers should accept only as many cases as they can efficiently handle to protect client interests, and that utmost fidelity is demanded once counsel agrees to represent a client.
• Ferrer v. Tebelin — Cited for the propriety of ordering restitution of attorney's fees as part of the penalty for professional misconduct.
• Macarilay v. Seriña — Cited for the same principle regarding restitution of attorney's fees in disciplinary cases.

• Rule 1.01, Code of Professional Responsibility — Prohibits lawyers from engaging in unlawful, dishonest, immoral or deceitful conduct. The Court found respondent violated this by misleading complainant about the redemption period.
• Rule 9.02, Code of Professional Responsibility — Prohibits lawyers from dividing or stipulating to divide fees with persons not licensed to practice law, except in specific enumerated instances. The Court found respondent violated this by admitting he split the P70,000.00 fee with two non-lawyers as referral fees.
• Rule 18.02 and Rule 18.03, Code of Professional Responsibility — Mandate that lawyers shall not neglect a legal matter entrusted to them and shall serve clients with competence and diligence. The Court found respondent violated these by failing to appear in court and failing to protect complainant's interests.
• Canon 20, Code of Professional Responsibility — Requires lawyers to charge only fair and reasonable fees. The Court found the P70,000.00 fee for recovering P180,000.00 unreasonable.
• Section 27, Rule 138, Rules of Court — Enumerates grounds for disbarment or suspension, including deceit, malpractice, gross misconduct, and violation of the lawyer's oath. The Court cited this as the basis for its disciplinary authority.

• Panganiban, C.J., Austria-Martinez, Callejo, Sr., and Chico-Nazario, JJ. — Concur in the decision without filing separate opinions.