HONORIO MANALANG AND FLORENCIO CIRILLO, COMPLAINANTS, VS. ATTY. FRANCISCO F. ANGELES, RESPONDENT.

Manalang versus Angeles

The Case

This is an administrative complaint for disbarment or suspension filed by Honorio Manalang and Florencio Cirillo against their former counsel, Atty. Francisco F. Angeles, charging him with grave misconduct for infidelity in the discharge of his fiduciary obligations. The complainants were poor working men who won a labor case through the respondent's services, only to find that he had compromised their judgment without authority and withheld the proceeds. The case matters because it gathers into one decision the twin duties every lawyer owes his client — fidelity to the cause and the faithful holding of client funds — and shows how the Court polices both through its disciplinary power.

Procedural History

The complaint was filed with the Supreme Court on November 11, 1975. The Court referred the matter to the Office of the Solicitor General for investigation, report, and recommendation. After several hearings, the Solicitor General struck the respondent's testimony from the record and deemed the case submitted for resolution because of his repeated failure to appear despite due notice. The case was later transferred to the Committee on Bar Discipline of the Integrated Bar of the Philippines. Hearings were scheduled, but neither party appeared; the respondent could not be subpoenaed because he had changed address. The Committee then issued an order declaring that the respondent had been given ample opportunity to present his evidence and submitted the case for resolution on the existing record. The Committee recommended a two-year suspension, which the Integrated Bar of the Philippines Board of Governors adopted and approved. The respondent moved for reconsideration, and the Court referred the matter to the Office of the Bar Confidant, which recommended affirmance of the recommended suspension. The case was thus resolved by the Supreme Court in the exercise of its original and exclusive jurisdiction over members of the bar.

Facts

Manalang and Cirillo were the complainants in a case for overtime and separation pay against their employer, the Philippine Racing Club Restaurant, before the National Labor Relations Commission, Region Four Office. The respondent, Atty. Angeles, was their counsel. Judgment was rendered in their favor in the amount of 6,500 pesos, and after the decision became final, a writ of execution issued.

Without authority from his clients, the respondent compromised the award and collected only 5,500 pesos. The complainants made several demands that he turn over the amount collected, less the agreed attorney's fees of thirty percent, but he refused and offered them only 2,650 pesos. They then instituted this administrative case with the assistance of the Citizens Legal Assistance Office.

In his answer, the respondent claimed that the complainants themselves insisted he deduct 2,000 pesos representing the amount discounted by the adverse party's counsel, together with sheriff's fees and other administrative expenses, and that to accept this would leave him uncompensated. He appeared at only three hearings before the Solicitor General and later failed to appear before the Committee on Bar Discipline, which proceeded on the existing evidence.

Issues

• Whether or not the respondent should be suspended from the practice of law for grave misconduct related to his clients' funds.
• Whether or not the respondent validly compromised the judgment without the consent of his clients.
• Whether or not the respondent properly withheld the money due his clients by way of an attorney's lien.

Applicable Provisions

Canon 17 of the Code of Professional Responsibility provides:

A lawyer owes fidelity to the cause of his client and he shall be mindful of the trust and confidence reposed in him.

The respondent violated this canon when he compromised the judgment without his clients' consent, showing a lack of devotion to their interest.

Rule 16.03 of the Code of Professional Responsibility provides:

A lawyer shall deliver the funds and property of his client when due or upon demand. However, he shall have a lien over the funds and may apply so much thereof as may be necessary to satisfy his lawful fees and disbursements, giving notice promptly thereafter to his clients. He shall also have a lien to the same extent on all judgments and executions he has secured for his client as provided for in the Rules of Court.

The respondent breached this rule when he received the money intended for his clients and failed to deliver it upon demand.

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

Attorney's 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, and may apply such funds to the satisfaction thereof. He shall also have a lien to the same extent upon all judgments for the payment of money and executions issued in pursuance of such judgments, which he has secured in a litigation of his client, from and after the time when he shall have caused a statement of his claim of such lien to be entered upon the records of the court rendering such judgment, or issuing such execution, and shall have caused written notice thereof to be delivered to his client and to the adverse party; and he shall have the same right and power over such judgments and executions as his client would have to enforce his lien and secure the payment of his just fees and disbursements.

The respondent failed to comply with this rule, for the records are barren of any statement of his claim of lien or of any written notice to his clients and to the adverse party.

Ruling

On the first issue, the Court held that the respondent should be suspended. Disciplinary proceedings are not meant solely to rule on the lawyer's culpability but also to determine whether he possesses the good moral character that is a condition precedent to the privilege of practicing law. The bar must be exacting in its standards for honesty, integrity, and fair dealing.

On the second issue, the Court held that the compromise was invalid as to the clients. The authority to compromise cannot be lightly presumed and must be supported by evidence, and the respondent failed to show such authority. The Court stressed that money claims due to workers cannot, as a rule, be the object of settlement or compromise effected by counsel without the consent of the workers concerned. By compromising the judgment without his clients' consent, the respondent violated Canon 17.

On the third issue, the Court held that the respondent's withholding of the funds was unjustified. The records clearly showed his receipt of and failure to deliver upon demand the amount of 4,550 pesos intended for his clients, a clear breach of Rule 16.03. His excuse that he should be allowed to deduct sheriff's fees and administrative expenses was unsatisfactory, because he failed to comply with the Rules of Court on attorney's liens. His act of holding on to his clients' money without their acquiescence was conduct indicative of lack of integrity and propriety. Taking into account that this was the first case on record against him, and considering the amount involved, the Court fixed the penalty at six months suspension.

Doctrine

A lawyer owes fidelity to the cause of his client and must be mindful of the trust and confidence reposed in him. The authority to compromise cannot be lightly presumed and must be supported by evidence; money claims due to workers cannot, as a rule, be the object of settlement or compromise effected by counsel without the consent of the workers concerned. A lawyer shall hold in trust all moneys and properties of his client that may come into his possession, and shall deliver them when due or upon demand. He may claim an attorney's lien, but only by complying with the Rules of Court — causing a statement of his claim of lien to be entered upon the records and written notice thereof to be delivered to his client and to the adverse party. Holding on to a client's money without the client's acquiescence is conduct indicative of lack of integrity and propriety.

Disposition

The Court suspended Atty. Francisco F. Angeles from the practice of law for six months, effective immediately upon his receipt of the resolution, and ordered him to pay 2,275 pesos each to Honorio Manalang and Florencio Cirillo, with interest of six percent per annum from the filing of the complaint until fully paid.

Remember This

The single line to memorize: a lawyer holds his client's money in trust and may not compromise the client's judgment or withhold the proceeds without consent and without a lien perfected under the Rules of Court. Examiners use this case on the fiduciary duties of counsel under Canon 16 and Canon 17, on the requisites of an attorney's lien, and on the rule that worker's money claims cannot be compromised by counsel without the worker's consent.