When a Lawyer Exceeds Authority: Suspension for Unauthorized Sale of Client’s Property

A lawyer's authority to act for a client has clear limits, and crossing those limits can end a career. In Cerilla v. Atty. Lezama (A.C. No. 11483, October 3, 2017), the Supreme Court suspended a lawyer for two years after he sold his client's property through a compromise agreement without her consent or a special power to sell. The case reminds every practitioner that a general authority to represent a client does not include the power to dispose of the client's property.

The Facts of the Case

Complainant Luzviminda S. Cerilla engaged Atty. Samuel SM. Lezama to file an unlawful detainer case against Carmelita S. Garlito over a property in Sibulan, Negros Oriental. Because Cerilla worked in Quezon City, she executed a Special Power of Attorney (SPA) authorizing Lezama to represent her in the ejectment case and to appear during the preliminary conference, including making stipulations and pursuing amicable settlement "if necessary."

During the preliminary conference, Lezama entered into a compromise agreement with the defendant. Paragraph 2 of that agreement stated that Cerilla was willing to sell the property for P350,000.00. The MTC approved the agreement, and when Cerilla refused to execute a Deed of Sale, the court issued a writ of execution.

Cerilla filed an administrative complaint for gross misconduct, insisting she never authorized the sale. She claimed the property was worth at least P1,500,000.00 and that Lezama's act caused her and her co-owners actual loss.

The Issue

The central question was whether Atty. Lezama, acting under an SPA that allowed him to appear and settle the case, had the authority to bind his client to sell the property for P350,000.00.

The Ruling

The Supreme Court held that Lezama acted beyond the scope of his authority. The SPA authorized him to represent Cerilla and to make stipulations for the early resolution of the case, including amicable settlement. Nowhere did it authorize him to sell the property or to compromise on its sale.

During the IBP investigation, Lezama admitted he had no instruction from Cerilla to sell the property. When asked what prompted him to state that she was willing to sell, he answered: "Because that is the same amount that she paid [for] the property. It is an amicable settlement in meeting halfway." He further admitted it was his "own belief" that led him to act.

The Court found that Lezama violated Canon 5 (duty to keep abreast of legal developments and be conversant with basic legal principles), Canon 15 (candor, fairness, and loyalty to the client), and Canon 17 (fidelity to the client's cause) of the Code of Professional Responsibility.

His defense — that he acted on an honest belief and in line with the policy favoring amicable settlements — did not persuade the Court. That "honest belief" prejudiced his client, who had to file further cases to recover property sold without her consent.

Key Principles from the Decision

A special power of attorney is strictly construed. General authority to represent a client in litigation or to settle a case does not include the power to sell real property. A lawyer must have specific authority for such a disposition.

A lawyer's judgment calls have limits. While courts encourage amicable settlements, a lawyer cannot substitute personal judgment for the client's explicit instructions, especially when the consequence is the loss of property.

Ignorance or "honest belief" is not a defense. Lawyers are expected to know basic legal principles, including the scope of their authority under an SPA. Acting beyond that scope, even in good faith, is professional misconduct.

Practical Takeaways

• Read the SPA carefully. A lawyer must verify the exact scope of authority before entering any settlement, especially one involving the sale or disposition of a client's property.
• Get specific written authority. If a settlement may involve selling property, obtain a separate, express authorization from the client.
• Never rely on assumptions. The fact that a client paid a certain price for a property does not mean the client is willing to sell it at that price.
• When in doubt, ask the client. If instructions are unclear or the client cannot be reached, request a resetting rather than proceeding on personal belief.
• Acting beyond authority is professional misconduct. Even without malice, exceeding the scope of an SPA can result in suspension or disbarment.

This article is general information and not legal advice. For your specific situation, consult a lawyer or ask ASG Legal AI.