G.R. No. A.C. No. 13229. June 21, 2023
SPOUSES WILLIAM THOMAS AND MARIFE YUKOT NILES, COMPLAINANTS, VS. ATTY. CASIANO S. RETARDO, JR., RESPONDENT.

FACTS

Complainants, spouses William Thomas Niles (an American citizen) and Marife Yukot Niles, sought the legal assistance of respondent Atty. Casiano S. Retardo, Jr. to prepare documents for a loan they were extending to spouses Teodora and Jose Quirante. On April 25, 2011, the parties appeared at respondent’s office. Respondent prepared and notarized an Acknowledgment Receipt containing a stipulation that, in case of the borrowers’ default, the mortgaged real property would be considered as payment for the loan under the concept of dacion en pago, and a pre-signed Deed of Absolute Sale over the property would become effective. This stipulation constitutes a pactum commissorium, which is prohibited under Article 2088 of the Civil Code. Respondent later prepared and notarized a Courtesy Letter and a Final Demand Letter for complainants, both reiterating the pactum commissorium stipulation. When the borrowers defaulted, respondent notarized the pre-signed Deed of Absolute Sale and instructed complainants on processing it. The borrowers subsequently filed a civil case to nullify the deed. When complainants sought to engage respondent as counsel in that case, he declined, citing a “potential conflict of interest,” and later filed a manifestation in court stating he could not assist complainants as it might violate the attorney-client relationship, noting his prior professional and personal connections to the borrowers. The Regional Trial Court nullified the loan agreement and the deed for being a pactum commissorium. Complainants then filed this administrative case, alleging respondent violated the Code of Professional Responsibility by preparing void documents and representing conflicting interests.

ISSUE

Whether respondent should be held administratively liable for failing to apprise the parties of the legal consequences of a pactum commissorium provision and for representing conflicting interests.

RULING

Yes, respondent is administratively liable. The Court concurred with the Integrated Bar of the Philippines Board of Governors’ findings but modified the penalty.
1. On Violation of Professional Duties (CPR/CPRA): Respondent breached his duties as a lawyer. By preparing and notarizing documents containing a void pactum commissorium stipulation without explaining its illegality to his clients, he failed to uphold the law and serve his clients’ interests with competence and diligence (Canon 1, Rule 1.01 and Canon 18, Rule 18.03 of the CPR; Sections 1 and 3, Canon 3 of the CPRA). His actions directly caused his clients’ loss in the civil case.
2. On Conflict of Interest: Respondent represented conflicting interests. He performed notarial acts and gave legal advice to complainants regarding the loan and the enforcement of the void stipulation against the borrowers. He later refused to represent complainants in the ensuing litigation, citing his prior attorney-client relationship with the borrowers and personal ties to their family. A lawyer’s duty of loyalty is undivided and forbids representing conflicting interests without full disclosure and consent (Canon 15, Rule 15.03 of the CPR; Section 3, Canon 3 of the CPRA). Respondent’s prior dealings with the borrowers should have prompted him to decline representing complainants from the outset.
3. On Violation of Notarial Rules: Respondent violated the 2004 Rules on Notarial Practice. A notary public must not notarize a document containing a stipulation that is illegal or against public policy. By notarizing the documents with the prohibited pactum commissorium, he failed in his duty as a notary to guard against illegal arrangements.
PENALTY: Considering the violations of the CPR (now repealed by the CPRA), the Notarial Rules, and the application of the CPRA, the Court SUSPENDED respondent Atty. Casiano S. Retardo, Jr. from the practice of law for ONE (1) YEAR. His notarial commission, if existing, was also REVOKED, and he was PERPETUALLY DISQUALIFIED from being commissioned as a notary public. He was further STERNLY WARNED that a repetition of the same or similar offense would be dealt with more severely.