TESTATE ESTATE OF AMADEO MATUTE OLAVE, CELESTINO ALONSO, ADMINISTRATOR, IN RE: INCIDENT ON THE RETAINING LIEN OF ATTY. ANTONIO ENRILE INTON, OPPOSITOR AND APPELLANT, VS. JULIAN …

Testate Estate of Amadeo Matute Olave versus Inton

The Case

This is a probate incident that became a question of professional responsibility. The newly appointed co-administrator of the Testate Estate of Amadeo Matute Olave, Julian Villanueva Matute, asked the probate court to order a lawyer, Atty. Antonio Enrile Inton, to surrender to him the certificates of title, plans, documents, and papers belonging to the Estate that the lawyer held. The lawyer refused, claiming a retaining lien over those papers until his claim for attorneys' fees is settled. The case matters because it fixes the outer boundary of the retaining lien: a lawyer engaged by an executor or administrator personally, without court approval, cannot hold the Estate's papers hostage for his fees, because the Estate was never his client.

Procedural History

The matter arose as an incident in the testate proceeding pending in the Court of First Instance of Manila. On January 3, 1963, the co-administrator filed a motion praying that the lawyer be ordered to surrender and deliver to him all certificates of title, plans, documents, and papers belonging to the Estate in the lawyer's possession, so that they may be kept in the office of the Estate in Davao City and be ready for inspection whenever the management of the properties requires it. The lawyer opposed the motion, asserting that he was counsel for the Estate and for the former administrator, Celestino Alonzo, that he had filed a claim for his lawful fees, and that until that claim is settled he would exercise a retaining lien over the documents.

After the issues were joined, the probate court, by order of January 7, 1963, granted the motion and ordered the lawyer to deliver the nineteen documents listed in the opposition and admitted by him to belong to the Estate. The lawyer appealed directly to the Supreme Court, and the only question presented on appeal was whether he has the right to retain the titles and documents until his claim for attorneys' fees is finally settled.

Facts

Atty. Antonio Enrile Inton rendered legal services for Celestino Alonzo, the former administrator of the Estate. On November 15, 1958, Alonzo executed a certification appointing the lawyer as his sole attorney as administrator in Davao, to represent him in the proceeding and in other litigations concerning the testate estate. That appointment was not made in pursuance of any court order, and it was never approved by the probate court. It was, as the Court put it, an act personal to the administrator.

On October 10, 1962, the lawyer filed with the probate court a claim for payment of his lawful fees from November 26, 1958 to October 26, 1962, at the rate of 1,200 pesos a month, or a total of 72,500 pesos, excluding compensation for handling the defense against various claims filed in the testate proceeding, which he said should be on a quantum meruit basis. That period ended on the date the administrator Alonzo was removed from office by order of the probate court.

In the course of his work the lawyer came into possession of twenty certificates of title, one of which he claimed did not belong to the Estate. When the new co-administrator demanded the papers, the lawyer invoked a retaining lien over them. The probate court ordered delivery of the nineteen documents admittedly belonging to the Estate, and the lawyer appealed.

Issues

• Whether or not a lawyer has a retaining lien upon the funds, documents, and papers of his client that have lawfully come into his possession, until his lawful fees and disbursements are paid.
• Whether or not the lawyer engaged by the administrator of an estate, without court approval of that engagement, thereby makes the Estate itself his client.
• Whether or not the lawyer for the administrator may claim a retaining lien over funds, papers, or documents belonging to the Estate, even if they came into his possession in the course of his work as counsel for the administrator.

Applicable Provisions

Section 37 of Rule 138 of the Revised Rules of Court provides:

Section 37. Attorneys' liens. An attorney shall have a lien upon the funds, documents and papers of his client which have lawfully come into his possession and may retain the same until his lawful fees and disbursements have been paid.

This is the provision that grants the retaining lien, and the whole case turns on the words "of his client" — the lien exists only where the person whose papers are held is in truth the lawyer's client.

Ruling

On the first issue, the Court held that there is no question that a lawyer has a retaining lien upon the funds, documents, and papers of his client that may have come lawfully into his possession, until his lawful fees are duly paid. The lien, however, presupposes a client.

On the second issue, the Court held that the Estate never became the lawyer's client. The certification executed by Alonzo showed that the lawyer was appointed by Alonzo as his lawyer, to represent him in all suits affecting the Estate under his trust. But that appointment was not in pursuance of any court order, nor was it approved by the probate court; it was an act personal to the administrator. The creation of the professional relationship between the lawyer and the administrator did not, therefore, make the Estate also a client of the lawyer.

The Court added that for legal services rendered to the administrator, the estate under administration cannot be directly held liable for the corresponding attorneys' fees. Quoting its earlier ruling in Uy Tioco versus Imperial and Panis:

The services for which fees are claimed are supposed to have been rendered to the executor or administrator to assist him in the execution of his trust. The attorney can therefore not hold the estate directly liable for his fees; such fees are allowed to the executor or administrator and not to the attorney. The liability for the payment rests on the executor or administrator, but if the fees paid are beneficial to the estate and reasonable, he is entitled to reimbursement from the estate.

On the third issue, the Court drew the necessary consequence: the lawyer for the administrator or executor cannot claim to have a retaining lien over any funds, papers, or documents belonging to the Estate, even if these properties may have come into his possession in the course of his work as such counsel for the administrator.

Doctrine

First, under Section 37 of Rule 138, a lawyer has a retaining lien upon the funds, documents, and papers of his client that have lawfully come into his possession, and may retain them until his lawful fees and disbursements are paid. The lien is possessory and is anchored on the existence of the attorney-client relationship over the very property retained.

Second, the lawyer engaged by an executor or administrator to assist him in the execution of his trust is counsel to the executor or administrator personally, not to the estate. Absent a court order or approval by the probate court, that engagement does not make the estate a client of the lawyer.

Third, the estate cannot be held directly liable for attorneys' fees for services rendered to the executor or administrator. The liability rests on the executor or administrator, who may be reimbursed from the estate if the fees paid are beneficial to the estate and reasonable, such payments being included in his accounts and settled upon the prescribed notice.

Fourth, because the estate is not the client, the lawyer for the administrator or executor cannot claim a retaining lien over funds, papers, or documents belonging to the estate, even if they came into his possession in the course of his work as counsel for the administrator.

Disposition

The Supreme Court affirmed the order of the probate court, with costs against the appellant, so the co-administrator won and the lawyer was ordered to deliver the nineteen documents belonging to the Estate.

Remember This

The line worth memorizing is that the retaining lien runs only against the papers of one's client, and the administrator's lawyer is not the Estate's lawyer — so he holds no lien over estate papers. Examiners use this case to test the scope of the attorney's retaining lien under Section 37 of Rule 138 and the rule that the estate is not directly liable for the administrator's attorneys' fees.