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JERRY M. PALENCIA v. ATTY. PEDRO L. LINSANGAN

FACTS:

The complainant, Jerry Palencia, was a seafarer who was seriously injured while working on the vessel M/T "Panos G" in Singapore. After receiving initial treatment, Palencia was flown back to the Philippines for further medical treatment and rehabilitation. While confined at the Manila Doctors Hospital, paralegals from the law office of Attys. Pedro L. Linsangan, Gerard M. Linsangan, and Glenda Linsangan-Binoya approached Palencia and convinced him to engage their services in filing a lawsuit against his employers. Palencia then signed an Attorney-Client Contract and a Special Power of Attorney, agreeing to pay attorney's fees of 35% of any recovery or settlement obtained. Through the efforts of the respondents, Palencia received indemnity and a settlement amounting to US$95,000. However, respondents deducted attorney's fees and expenses from the settlement, leaving Palencia with a net amount of US$18,132.43. Palencia contested the deductions, leading to civil actions between him and the respondents. Furthermore, Palencia filed a complaint with the Integrated Bar of the Philippines (IBP) Commission on Bar Discipline, accusing the respondents of refusing to remit the full settlement amount, depositing his money into their own account, and engaging in ambulance chasing. The IBP-CBD found the respondents guilty of violating the Code of Professional Responsibility (CPR) and recommended their suspension from the practice of law. The IBP Board of Governors modified the penalty and increased the respondents' suspension to two years, with a directive to return a portion of the assessed attorney's fees to Palencia.

ISSUES:

  1. Whether the respondents engaged in malpractice by indirectly soliciting legal business and encouraging the filing of a lawsuit.

  2. Whether the respondents failed to promptly account for and return the money due to their client.

  3. Whether the respondents improperly deducted separate attorney's fees from their client's recovery.

  4. Whether the respondents improperly kept their client's money in their personal safe deposit vault.

  5. Whether respondents violated the Code of Professional Responsibility (CPR).

  6. Whether respondent Atty. Glenda Linsangan-Binoya should be held liable for the unethical activities of the other respondents.

  7. What is the appropriate penalty for the violations committed by respondents.

  8. Whether Atty. Veronica Africa Yambot (Yambot) is administratively liable for her involvement in the procurement of falsified documents and misrepresentation.

  9. Whether Atty. Rene Villa (Villa) is administratively liable for his involvement in the procurement of falsified documents and misrepresentation.

  10. Whether Atty. Eugenio A. Sanchez (Sanchez) is administratively liable for his involvement in the procurement of falsified documents and misrepresentation.

  11. Whether Atty. Gerard Linsangan (Linsangan) and Atty. Glenda M. Linsangan-Binoya (Linsangan-Binoya) are administratively liable for their involvement in the procurement of falsified documents and misrepresentation.

RULING:

  1. Yes. The respondents' actions in repeatedly convincing the complainant to hire their services and employing paralegals to encourage the filing of a lawsuit constitute malpractice.

  2. Yes. The respondents failed in their duties to give accurate accounting of the amounts due to the complainant and to promptly return the money due upon demand.

  3. Yes. The respondents deducted separate attorney's fees in addition to the fees already deducted by their collaborating Singapore counsel, without moving for judicial determination and collection of their fees.

  4. Yes. The respondents improperly kept their client's money in their personal safe deposit vault, instead of depositing it in a separate trust account in a bank or trust company.

  5. The Court finds respondents Attys. Pedro Linsangan and Gerard Linsangan to have violated Rule 1.03, Rule 2.03, Canon 3, Canon 16, Rule 16.01, and Rule 16.03 of the CPR. However, there is no evidence to support the participation of respondent Atty. Glenda Linsangan-Binoya in their unethical activities.

  6. The case against Atty. Glenda Linsangan-Binoya is dismissed.

  7. For the violation of ambulance chasing, the penalty of suspension for one year is imposed. For the violation of Canon 16, the penalty ranges from suspension for six months to disbarment. Considering the severity of the misconduct and the fact that this is their first offense, a one-year suspension is deemed sufficient.

  8. Yes, Atty. Yambot is found administratively liable for her involvement in the procurement of falsified documents and misrepresentation. She is suspended from the practice of law for two years.

  9. Yes, Atty. Villa is found administratively liable for his involvement in the procurement of falsified documents and misrepresentation. He is suspended from the practice of law for two years.

  10. Yes, Atty. Sanchez is found administratively liable for his involvement in the procurement of falsified documents and misrepresentation. He is suspended from the practice of law for two years.

  11. Yes, Atty. Linsangan and Atty. Linsangan-Binoya are found administratively liable for their involvement in the procurement of falsified documents and misrepresentation. Atty. Linsangan is suspended from the practice of law for two years, while the complaint against Atty. Linsangan-Binoya is dismissed.

PRINCIPLES:

  • The relationship between a lawyer and his client is highly fiduciary, requiring fidelity and good faith in handling the client's money or property.

  • Money collected by a lawyer on a judgment in favor of his client constitutes trust funds and must be immediately paid over to the client.

  • A lawyer must promptly report and account for money collected and received for or from his client and give a full, detailed, and accurate account of all money and property received and handled.

  • A lawyer should not use his client's funds for personal purposes without the client's consent and should not commingle it with his private property.

  • When claiming attorney's fees, a lawyer should move for the judicial determination and collection of fees instead of unilaterally deducting the fees from the client's recovery.

  • Funds belonging to the client should be deposited in a separate trust account in a bank or trust company for safekeeping.

  • The practice of law is a profession based on public trust and good moral character. Violation of the lawyer's oath and breach of the ethics of the legal profession embodied in the CPR may result in suspension or disbarment.

  • Violations of the CPR, such as dishonesty, breach of fiduciary duty, and failure to account for and return client's money or property, may constitute gross misconduct.

  • The penalty for violation of ambulance chasing is suspension for one year.

  • The penalty for violation of Canon 16 ranges from suspension for six months to disbarment, depending on the severity of the misconduct and the amount involved.

  • First-time offenders may still be subjected to the maximum penalty allowed for their violations.

  • The fiduciary duty of lawyers includes proper safekeeping of client's money by depositing it in a separate trust account in a reputable bank or trust company.

  • Judgments that have attained finality should not be modified or further discussed unless necessary.

  • Lawyers are held to high ethical standards and must conduct themselves with integrity, honesty, and fairness.

  • Procuring falsified documents and engaging in misrepresentation are serious ethical infractions that may lead to administrative liability for lawyers.

  • The Supreme Court has the authority to discipline lawyers and impose appropriate penalties for violations of the Code of Professional Responsibility.