The Supreme Court ruled that Atty. Rogelio P. Terrado was guilty of violating the Code of Professional Responsibility by neglecting his client’s interests and engaging in dishonest conduct. Specifically, the Court found that he misled his client into an unfavorable compromise agreement, charged unreasonable fees, and improperly divided legal fees with non-lawyers. This decision reinforces the high ethical standards expected of lawyers and underscores the importance of upholding client interests with competence, diligence, and honesty. It serves as a crucial reminder that lawyers must prioritize their clients’ well-being and adhere to the ethical norms of the legal profession, ensuring public trust and confidence in the justice system.

The Case of the Misled Client: When Legal Counsel Fails Ethical Standards

In 2004, Luzviminda C. Lijauco filed an administrative complaint against Atty. Rogelio P. Terrado, alleging gross misconduct, malpractice, and conduct unbecoming of an officer of the court. The core of the complaint stemmed from Atty. Terrado’s handling of two key legal matters for Lijauco: recovering her deposit with Planters Development Bank and preventing the loss of her foreclosed property. Lijauco claimed that despite paying attorney’s fees, Atty. Terrado failed to adequately protect her interests, particularly concerning a writ of possession pending before the Regional Trial Court of Binan, Laguna. This case highlights the critical importance of a lawyer’s duty to provide competent and diligent representation, and the consequences when that duty is breached.

The complainant, Luzviminda C. Lijauco, alleged that she engaged Atty. Terrado’s services in January 2001 for P70,000.00. This fee was purportedly to assist in two matters: the recovery of her P180,000.00 deposit with Planters Development Bank and the release of her foreclosed property in Calamba, Laguna. The property was the subject of a petition for the issuance of a writ of possession, which was pending before the Regional Trial Court of Binan, Laguna, Branch 24, docketed as LRC Case No. B-2610. Lijauco claimed that Atty. Terrado failed to appear at the hearing for the issuance of the Writ of Possession and did not protect her interests during the subsequent Compromise Agreement, which she entered into to resolve LRC Case No. B-2610. Atty. Terrado, however, denied these accusations, stating that the P70,000.00 was solely for the recovery of the bank deposit and did not include the LRC Case No. B-2610.

The Integrated Bar of the Philippines (IBP) was tasked with investigating the complaint. The Investigating Commissioner found Atty. Terrado guilty of violating Rules 1.01 and 9.02 of the Code of Professional Responsibility. These rules state:

Rule 1.01 – A lawyer shall not engage in unlawful, dishonest, immoral or deceitful conduct.

Rule 9.02 – A lawyer shall not divide or stipulate to divide a fee for legal services with persons not licensed to practice law, except:

a) Where there is a pre-existing agreement with a partner or associate that, upon the latter’s death, money shall be paid over a reasonable period of time to his estate or to the persons specified in the agreement; or

b) Where a lawyer undertakes to complete unfinished legal business of a deceased lawyer; or

c) Where a lawyer or law firm includes non-lawyer employees in a retirement plan, even if the plan is based in whole or in part, on a profit-sharing arrangement.

The Investigating Commissioner highlighted several key points to support his finding of guilt. First, he noted that a legal fee of P70,000.00 for the recovery of a P180,000.00 savings deposit appeared excessively high. Second, he pointed out that Atty. Terrado actively participated as Lijauco’s lawyer in facilitating the compromise agreement. Furthermore, Atty. Terrado admitted to dividing the P70,000.00 with other individuals as commission or referral fees. The Commissioner concluded that Atty. Terrado also violated Rule 1.01 by misleading Lijauco into a compromise agreement with false assurances that she could recover her foreclosed property after three years. The IBP Board of Governors adopted the Investigating Commissioner’s recommendation.

The Supreme Court agreed with the IBP’s findings. It emphasized that the practice of law is a privilege granted to those who demonstrate and maintain the necessary legal qualifications. Lawyers must uphold high standards of legal proficiency and morality, including honesty, integrity, and fair dealing. They have a fourfold duty to society, the legal profession, the courts, and their clients, all of which must be performed in accordance with the Code of Professional Responsibility. This includes the duty to serve clients with competence and diligence and to avoid unlawful, dishonest, immoral, or deceitful conduct. This mandate is enshrined in the Code of Professional Responsibility, providing a clear framework for ethical conduct.

The Court found Atty. Terrado’s claim that the attorney’s fee only pertained to the recovery of the savings deposit unsustainable. The records indicated that he acted as Lijauco’s counsel in drafting the compromise agreement with the bank regarding LRC Case No. B-2610. Atty. Terrado admitted to explaining the contents of the agreement to Lijauco before she signed it. Additionally, the Court agreed with the Investigating Commissioner that a fee of P70,000.00 for recovering a deposit of P180,000.00 was unreasonable, as lawyers must charge only fair and reasonable fees, as mandated by Canon 20 of the Code of Professional Responsibility.

Atty. Terrado’s disregard for his client’s interests was evident in the compromise agreement’s stipulations. These stipulations included Lijauco conceding the validity of the foreclosure, acknowledging the expiration of the redemption period, and releasing her claims against the bank. The Investigating Commissioner found that Lijauco agreed to these concessions because Atty. Terrado misled her into believing she could still redeem the property after three years. The Supreme Court reiterated that a lawyer’s duty to safeguard a client’s interests begins from the moment of retainer and continues until discharge from the case or final disposition of the litigation. Accepting money from a client establishes an attorney-client relationship, creating a duty of fidelity. Lawyers must undertake their tasks with zeal, care, and utmost devotion.

The Court also addressed Atty. Terrado’s admission that he divided the legal fees with others as referral fees. This admission did not absolve him of liability. Rule 9.02 of the Code of Professional Responsibility explicitly prohibits lawyers from dividing fees for legal services with non-licensed individuals, except under specific circumstances not applicable in this case. The Supreme Court cited several cases, including Santos v. Lazaro and Dalisay v. Mauricio, Jr., to underscore the importance of diligence and attention to a client’s case. Rule 18.03 of the Code of Professional Responsibility, which emphasizes the duty to exercise due diligence in protecting a client’s rights, is a basic postulate in legal ethics.

The Supreme Court highlighted the essential standards of care required of lawyers. A lawyer must provide adequate attention, care, and time to a client’s case. Once a lawyer agrees to handle a case, they must undertake the task with dedication and care. Failure to meet these duties constitutes a breach of the lawyer’s oath. A lawyer should only accept as many cases as they can efficiently handle, ensuring they can sufficiently protect their clients’ interests. Possessing the qualifications to handle a legal matter is insufficient; the lawyer must also give adequate attention to the legal work. Utmost fidelity is demanded once counsel agrees to take the cudgels for a client’s cause. These standards reinforce the lawyer’s role as a protector of client interests and an upholder of justice.

FAQs

What was the key issue in this case?	The key issue was whether Atty. Terrado violated the Code of Professional Responsibility by neglecting his client’s interests, misleading her into an unfavorable compromise agreement, and improperly dividing legal fees.
What specific rules did Atty. Terrado violate?	Atty. Terrado was found guilty of violating Rules 1.01 and 9.02 of the Code of Professional Responsibility, which prohibit dishonest conduct and the division of legal fees with non-lawyers, respectively. He also violated Rules 18.02 and 20.01, regarding negligence and charging unreasonable fees.
What was the basis of the complainant’s claim?	The complainant, Luzviminda C. Lijauco, claimed that Atty. Terrado failed to protect her interests in recovering her bank deposit and preventing the loss of her foreclosed property, despite receiving attorney’s fees.
What did Atty. Terrado claim in his defense?	Atty. Terrado argued that the P70,000.00 he received was solely for the recovery of the bank deposit and did not include the case involving the foreclosed property.
What was the IBP’s recommendation?	The IBP recommended that Atty. Terrado be suspended for six months due to his violations of the Code of Professional Responsibility.
What was the Supreme Court’s ruling?	The Supreme Court agreed with the IBP’s findings, suspending Atty. Terrado from the practice of law for six months and ordering him to return the P70,000.00 in legal fees to the complainant.
Why was dividing the legal fees considered a violation?	Dividing legal fees with individuals not licensed to practice law violates Rule 9.02 of the Code of Professional Responsibility, which aims to prevent unauthorized practice and ensure ethical standards are maintained.
What is a lawyer’s duty to the client?	A lawyer has a duty to serve clients with competence, diligence, and honesty, safeguarding their interests from the moment of retainer until the case’s final disposition. This includes providing adequate attention and care to the client’s legal matter.

In conclusion, this case underscores the importance of ethical conduct and diligence in the legal profession. The Supreme Court’s decision serves as a stern reminder to lawyers to uphold their duties to clients and adhere to the Code of Professional Responsibility. By prioritizing client interests and maintaining high ethical standards, lawyers can foster trust and confidence in the legal system.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: Luzviminda C. Lijauco v. Atty. Rogelio P. Terrado, A.C. NO. 6317, August 31, 2006