Likong vs. Lim

A lawyer violates Canon 9 of the Code of Professional Ethics and Rule 8.02 of the Code of Professional Responsibility when he negotiates and executes a compromise agreement directly with an opposing party who is represented by counsel, without notice to that counsel; the violation is aggravated where the compromise is grossly prejudicial to the opposing party, and it warrants suspension from the practice of law.

Cerina B. Likong, a widow receiving United States government pension checks, obtained a loan from Geesnell L. Yap. Atty. Alexander H. Lim, Yap's counsel, apparently prepared and notarized the promissory note, deed of assignment of the pension checks, and special power of attorney that secured the loan. The loan documents made the assignment irrevocable until full payment and authorized Yap to collect the pension checks from the Tagbilaran City post office. The ethical dispute is governed by Canon 9 of the Code of Professional Ethics and Rules 1.01, 8.02, and 15.03 of the Code of Professional Responsibility.

Sometime in September 1984, Cerina B. Likong obtained a loan of P92,100.00 from Geesnell L. Yap. She executed a promissory note in Yap's favor and a deed of assignment assigning to Yap pension checks which she regularly received from the United States government as a widow of a US pensioner. The deed of assignment stated that it was irrevocable until the loan was fully paid. Likong also executed a special power of attorney authorizing Yap to get, demand, collect, and receive her pension checks from the post office at Tagbilaran City. The documents were apparently prepared and notarized by respondent Atty. Alexander H. Lim, Yap's counsel.

On 11 December 1984, about three months after the execution of the special power of attorney, Likong informed the Tagbilaran City post office that she was revoking the special power of attorney. As a consequence, Yap filed a complaint for injunction with damages against Likong. Respondent Atty. Lim appeared as counsel for Yap, while Attys. Roland B. Inting and Erico B. Aumentado appeared for Likong. A writ of preliminary injunction was issued by the trial court on 23 January 1985, preventing Likong from getting her pension checks from the Tagbilaran City post office. Yap later filed an urgent omnibus motion to cite Likong in contempt of court for attempting to circumvent the preliminary injunction by changing her address to Mandaue City. Upon motion by Yap, the court issued an order dated 21 May 1985 expanding the scope of the preliminary injunction to prevent all post offices in the Philippines from releasing pension checks to Likong.

On 26 July 1985, Likong and Yap filed a joint motion to allow Yap to withdraw the pension checks. This motion did not bear the signatures of Likong's counsel of record but only the signatures of both parties, "assisted by" respondent Atty. Alexander H. Lim. On 2 August 1985, Likong and Yap entered into a compromise agreement, again without the participation of Likong's counsel. In the compromise agreement, Likong admitted an obligation to Yap of P150,000.00. It was likewise stated therein that Likong and Yap agreed that the amount would be paid in monthly installments over a period of 54 months at an interest of 40% per annum discounted every six months. The compromise agreement was approved by the trial court on 15 August 1985.

Likong's original obligation was P92,100.00, payable within one year from 4 October 1984. There was no provision in the promissory note signed by her with respect to any interest to be paid. The only additional amount which Yap could collect based on the promissory note was 25% of the principal as attorney's fees in case a lawyer was hired by him to collect the loan. In the compromise agreement prepared by respondent, dated 2 August 1985, Likong's debt to Yap was increased to P150,000.00 from P92,100.00 after the lapse of only ten months, which the Court noted translated to an interest in excess of 75% per annum. In addition, the compromise agreement provided that the P150,000.00 debt would be payable in 54 monthly installments at an interest of 40% per annum.

On 24 November 1987, Likong filed the present complaint for disbarment against Atty. Lim, alleging malpractice and grave misconduct. She alleged that in all the motions she was prevented from seeking the assistance, advice, and signature of her two lawyers; that no copies were furnished to either of them or to her despite her pleas; that respondent advised her it was unnecessary to consult her lawyers because it could jeopardize the settlement, would incur enormous expense, and because he was assisting her and had taken care of everything; that she was prevented from fully exhibiting her case through fraud, deception, and mendacity; and that respondent fraudulently or without authority assumed to represent her and connived in her defeat. Respondent answered that Atty. Roland B. Inting had abandoned his client, that Atty. Enrico Aumentado did not actively participate in the case, and that it was upon the request of complainant and another debtor of Yap, Crispina Acuna, that he made the compromise agreement. He also stated that he first instructed complainant to notify her lawyers but was informed that her lawyer had abandoned her since she could not pay his attorney's fees. Likong replied, denying that she had been abandoned by her lawyers and stating that respondent never furnished her lawyers with copies of the compromise agreement and a motion to withdraw the injunction cash bond deposited by Yap.

• Malpractice and Grave Misconduct: Petitioner sought respondent's disbarment for alleged malpractice and grave misconduct.
• Prevention from Consulting Counsel: Petitioner alleged that in all the motions she was prevented from seeking the assistance, advice, and signature of her two lawyers, and that no copies were furnished to either of them or to her despite her pleas.
• Improper Advice: Petitioner alleged that respondent advised her it was unnecessary to consult her lawyers because it could jeopardize the settlement, would incur enormous expense, and because he was assisting her and had taken care of everything.
• Fraud and Unauthorized Representation: Petitioner alleged that she was prevented from fully exhibiting her case through fraud, deception, and mendacity, and that respondent fraudulently or without authority assumed to represent her and connived in her defeat.
• Non-furnishing of Documents: Petitioner stated in her reply that respondent never furnished her lawyers with copies of the compromise agreement and a motion to withdraw the injunction cash bond deposited by Yap.
• Denial of Abandonment: Petitioner denied that she had been abandoned by her lawyers.

• Abandonment by Counsel: Respondent stated that Atty. Roland B. Inting had abandoned complainant.
• Inactive Counsel: Respondent stated that Atty. Enrico Aumentado did not actively participate in the case.
• Request to Prepare Compromise: Respondent stated that it was upon the request of complainant and another debtor of Yap, Crispina Acuna, that he made the compromise agreement.
• Notice to Complainant: Respondent stated that he first instructed complainant to notify her lawyers but was informed that her lawyer had abandoned her since she could not pay his attorney's fees.

• Direct Negotiation with Represented Party: Whether respondent violated Canon 9 of the Code of Professional Ethics and Rule 8.02 of the Code of Professional Responsibility by negotiating and executing a compromise agreement directly with complainant despite her being represented by counsel, without notice to her counsel.
• Grossly Prejudicial Compromise: Whether the compromise agreement prepared by respondent, which increased complainant's debt from P92,100.00 to P150,000.00 and imposed 40% annual interest, constituted malpractice and grave misconduct.
• Abandonment Defense: Whether the alleged abandonment of complainant by her counsel excused respondent from dealing only with complainant's counsel.
• Violation of Professional Conduct Rules: Whether respondent's conduct violated Rule 1.01 and Rule 15.03 of the Code of Professional Responsibility.
• Proper Sanction: Whether respondent's conduct warrants disbarment or suspension from the practice of law.

• Direct Negotiation with Represented Party: Yes. Canon 9 prohibits a lawyer from communicating upon the subject of controversy with a party represented by counsel and from negotiating or compromising with that party; respondent should have dealt only with complainant's counsel.
• Grossly Prejudicial Compromise: Yes. The compromise prepared by respondent increased the debt from P92,100.00 to P150,000.00 after ten months and imposed 40% annual interest, terms grossly and patently disadvantageous to complainant, evidencing malpractice and grave misconduct.
• Abandonment Defense: No. Even assuming complainant was abandoned by her counsel, respondent could not take advantage of the situation; he neither notified opposing counsel nor informed the trial court of the alleged abandonment.
• Violation of Professional Conduct Rules: Yes. The Court cited Rule 1.01, Rule 8.02, and Rule 15.03 of the Code of Professional Responsibility as violated, in addition to Canon 9 of the Code of Professional Ethics.
• Proper Sanction: Suspension for one year. Respondent's acts constitute malpractice and grave misconduct warranting suspension from the practice of law for one year.

• Direct Negotiation with Represented Party: Canon 9 states that a lawyer should not in any way communicate upon the subject of controversy with a party represented by counsel; much less should he undertake to negotiate or compromise the matter with him, but should deal only with his counsel. Complainant was represented by two lawyers, Attys. Inting and Aumentado. Respondent, Yap's counsel, filed a joint motion and a compromise agreement with complainant, "assisted by" him, without the signatures of her counsel. There was no showing that respondent even tried to inform opposing counsel of the compromise agreement or that he informed the trial court of the alleged abandonment. The rule required respondent to deal only with complainant's counsel and to avoid misleading a party not represented by counsel. His conduct violated Canon 9.
• Grossly Prejudicial Compromise: Complainant's original obligation was P92,100.00, payable within one year from 4 October 1984. The promissory note contained no provision for interest; the only additional amount Yap could collect based on it was 25% of the principal as attorney's fees if a lawyer was hired to collect the loan. In the compromise agreement prepared by respondent, dated 2 August 1985, complainant's debt was increased to P150,000.00 after only ten months, which translated to an interest in excess of 75% per annum. The compromise also imposed 40% per annum on the P150,000.00 debt payable in 54 monthly installments. The Court found the terms grossly and patently disadvantageous and prejudicial to complainant, and this supported the finding of malpractice and grave misconduct.
• Abandonment Defense: Even assuming that complainant was really abandoned by her counsel, respondent saw an opportunity to take advantage of the situation, and the result was the execution of the compromise agreement which was grossly and patently disadvantageous and prejudicial to complainant. There was no showing that respondent informed opposing counsel or the trial court of the alleged abandonment. Rule 8.02 allows a lawyer to give proper advice and assistance to those seeking relief against unfaithful or neglectful counsel, but it does not authorize direct negotiation and compromise with a represented opposing party. The abandonment defense did not excuse respondent's conduct.
• Violation of Professional Conduct Rules: The Court quoted Rule 1.01, which prohibits a lawyer from engaging in unlawful, dishonest, immoral, or deceitful conduct; Rule 8.02, which prohibits encroaching upon the professional employment of another lawyer; and Rule 15.03, which prohibits representing conflicting interests except by written consent after full disclosure. The Court concluded that violation of these rules warranted the imposition of the proper sanction. Its discussion centered on respondent's direct dealings with complainant and the grossly prejudicial compromise agreement.
• Proper Sanction: Such acts constituting malpractice and grave misconduct cannot be left unpunished, for not only do they erode confidence and trust in the legal profession, they likewise prevent justice from being attained. The Court imposed the penalty of suspension from the practice of law for one year, effective immediately upon respondent's receipt of the decision, and ordered that a copy be entered in his personal record and furnished to the Bar Confidant, the Integrated Bar of the Philippines, and the Court Administrator.

• Prohibition on Communication or Negotiation with a Represented Opposing Party — Under Canon 9 of the Code of Professional Ethics, a lawyer should not in any way communicate upon the subject of controversy with a party represented by counsel; much less should he undertake to negotiate or compromise the matter with him, but should deal only with his counsel. The lawyer must avoid everything that may tend to mislead a party not represented by counsel and should not undertake to advise him as to the law. The Court applied this to respondent, who negotiated and executed a compromise agreement directly with complainant despite her being represented by two lawyers, without notifying them.
• Duty Not to Encroach on Another Lawyer's Employment — Rule 8.02 of the Code of Professional Responsibility prohibits a lawyer from directly or indirectly encroaching upon the professional employment of another lawyer, except that any lawyer may, without fear or favor, give proper advice and assistance to those seeking relief against unfaithful or neglectful counsel. The Court held that the alleged abandonment of complainant by her counsel did not excuse respondent's direct compromise; he neither notified opposing counsel nor informed the trial court of the alleged abandonment and instead took advantage of the situation.
• Malpractice and Grave Misconduct Warranting Suspension — A lawyer's conduct that violates the Code of Professional Ethics and Code of Professional Responsibility, including direct negotiation with a represented opposing party and procurement of a grossly prejudicial compromise, constitutes malpractice and grave misconduct. Such acts cannot be left unpunished because they erode confidence and trust in the legal profession and prevent justice from being attained. The Court imposed a one-year suspension.
• Grossly Prejudicial Compromise as Evidence of Misconduct — Where a lawyer prepares a compromise agreement that is grossly and patently disadvantageous to the opposing party, the terms may be considered in assessing the lawyer's conduct. The Court noted that complainant's original P92,100.00 debt, with no interest and only a 25% attorney's fees clause, was increased to P150,000.00 after ten months, translating to an interest in excess of 75% per annum, and was made payable over 54 months at 40% per annum.
• Conflict of Interest — Rule 15.03 of the Code of Professional Responsibility provides that a lawyer shall not represent conflicting interests except by written consent of all concerned given after a full disclosure of the facts. The Court cited this rule among those violated by respondent.

• "A lawyer should not in any way communicate upon the subject of controversy with a party represented by counsel; much less should he undertake to negotiate or compromise the matter with him, but should deal only with his counsel. It is incumbent upon the lawyer most particularly to avoid everything that may tend to mislead a party not represented by counsel and he should not undertake to advise him as to the law." — This is Canon 9, the controlling ethical prohibition the Court found respondent violated.
• "Instead, even assuming that complainant was really abandoned by her counsel, respondent saw an opportunity to take advantage of the situation, and the result was the execution of the compromise agreement which, as previously discussed, is grossly and patently disadvantageous and prejudicial to complainant." — The passage rejects the abandonment defense and characterizes respondent's conduct as taking advantage of the complainant.
• "Such acts constituting malpractice and grave misconduct cannot be left unpunished for not only do they erode confidence and trust in the legal profession, they likewise prevent justice from being attained." — This states the rationale for imposing a disciplinary sanction.
• "In the compromise agreement prepared by respondent, dated 2 August 1985, complainant's debt to Yap was increased to P150,000.00 (from 92,100.00) after the lapse of only ten (10) months. This translates to an interest in excess of seventy-five percent (75%) per annum." — This quantifies the gross prejudice of the compromise agreement prepared by respondent.

• Canon 9, Code of Professional Ethics — Provides that a lawyer should not communicate upon the subject of controversy with a party represented by counsel, much less negotiate or compromise with him, but should deal only with his counsel; the lawyer must avoid misleading an unrepresented party and should not advise him as to the law. Applied: respondent violated this by negotiating and executing the compromise agreement directly with complainant despite her counsel.
• Rule 1.01, Code of Professional Responsibility — A lawyer shall not engage in unlawful, dishonest, immoral, or deceitful conduct. Applied: the Court cited this rule among those violated by respondent's conduct.
• Rule 8.02, Code of Professional Responsibility — A lawyer shall not, directly or indirectly, encroach upon the professional employment of another lawyer; however, any lawyer may give proper advice and assistance to those seeking relief against unfaithful or neglectful counsel. Applied: respondent's direct compromise with complainant, without notice to her counsel, violated this rule; the alleged abandonment did not justify his conduct.
• Rule 15.03, Code of Professional Responsibility — A lawyer shall not represent conflicting interests except by written consent of all concerned given after a full disclosure of the facts. Applied: the Court cited this rule among those violated by respondent.

Narvasa, C.J.; Regalado, J.; Puno, J.; Mendoza, J.