FELICISIMO M. MONTANO, COMPLAINANT, VS. INTEGRATED BAR OF THE PHILIPPINES AND ATTY. JUAN S. DEALCA, RESPONDENTS.

Montano versus Integrated Bar of the Philippines and Dealca

The Case

This is an administrative complaint for misconduct filed by a client, Felicisimo Montano, against his own lawyer, Attorney Juan Dealca, before the Supreme Court. The complainant asks that the respondent be sternly dealt with administratively, and later asks for the maximum penalty of disbarment, because the lawyer withdrew his appearance and returned the case folder with an insulting note after the client failed to pay the last 3,500 pesos of the agreed attorney's fees. The case matters because it is the Supreme Court's teaching case on the ethics of withdrawal of services and on the collection of attorney's fees: it fixes the line between a client who deliberately refuses to pay and a client who honestly tries but falls short, and it reminds the bar that the power to disbar is exercised with great caution.

Procedural History

The complainant filed a verified complaint before the Supreme Court on March 9, 1994. In its resolution of August 1, 1994, the Court referred the case to the Integrated Bar of the Philippines for investigation, report, and recommendation. The Investigating Commissioner found the respondent guilty of unprofessional conduct and recommended that he be severely reprimanded. The Board of Governors, however, amended the penalty to three months suspension from the practice of law, for misconduct that eroded public confidence in his duty as a lawyer.

The respondent sought reconsideration. The Board denied it in a resolution dated October 25, 1997, and pointed out that the proper remedy was to file the appropriate pleading with the Supreme Court within fifteen days. Meanwhile, several pleadings reached the Court, and in its resolution of December 10, 1997 the Court noted them and referred the same to the Integrated Bar for evaluation and report. Unknown to the Court, the Board's resolution denying reconsideration had not yet reached it, so the Board read the referral as a grant of reconsideration and conducted a re-evaluation. On February 23, 1999 the Board approved the Investigating Commissioner's recommendation and imposed the penalty of reprimand. The complainant's motion for reconsideration was denied, so on April 10, 2000 he filed with the Supreme Court a petition for review on certiorari, alleging grave abuse of discretion and arguing that the earlier resolution had already become final and executory.

Facts

On November 14, 1992, the complainant engaged the services of Attorney Dealca, in collaboration with Attorney Ronando Gerona, in a case pending before the Court of Appeals in which the complainant was the plaintiff-appellant. The parties agreed on attorney's fees of 15,000 pesos, one half payable upon acceptance of the case and the balance upon termination. The complainant paid 7,500 pesos upon acceptance. Even before the appellant's brief was prepared, the respondent demanded more, and the complainant paid 4,000 pesos.

Before the brief was filed, the respondent again demanded the remaining 3,500 pesos. When the complainant could not pay, the respondent withdrew his appearance without the complainant's prior knowledge or conformity and returned the case folder with a note dated February 28, 1993, which read, in substance, that for breaking his promise the client was being left to lawyer for himself, and that here were his papers.

The respondent's version is that he was engaged only to prepare and submit the appellant's brief, that he finished it ahead of the deadline, that the complainant repeatedly promised to pay the balance on a later date but never did, and that even without full payment he filed the brief on time. He sent the note and the folder hoping the complainant would come and settle the matter, but instead the complainant filed this case. The respondent then withdrew his appearance before the Court of Appeals, and the withdrawal was granted.

Issues

• Whether or not the Integrated Bar of the Philippines acted with grave abuse of discretion, and whether or not its earlier resolution had become final and executory, when it re-evaluated the case and imposed reprimand instead of suspension.
• Whether or not Attorney Dealca's withdrawal of his services and his note to the complainant constituted misconduct unbecoming of a member of the legal profession.
• Whether or not the maximum penalty of disbarment should be imposed on the respondent.

Applicable Provisions

Canon 22 of the Code of Professional Responsibility provides:

A lawyer shall withdraw his services only for good cause and upon notice appropriate in the circumstances.

This is the standard against which the respondent's unilateral withdrawal is measured.

Rule 22.01 of Canon 22, cited by the Court, provides:

A lawyer may withdraw his services in any of the following cases: x x x (e) When the client deliberately fails to pay the fees for the services or fails to comply with the retainer agreement.

The Court relies on this exception but holds that it does not apply, because the client's failure to pay was not deliberate.

Rule 20.4 of Canon 20 provides:

A lawyer shall avoid controversies with clients concerning his compensation and shall resort to judicial action only to prevent imposition, injustice or fraud.

This rule governs how a lawyer should pursue unpaid fees, and the respondent failed to observe it.

Ruling

On the first issue, the Court held that there was no grave abuse of discretion and that the procedural infirmity arose from a mere oversight attributable to neither party. When the Court issued its resolution of December 10, 1997, the Board's resolution denying reconsideration had not yet reached it; the only resolution on record was the one amending the penalty to suspension. The Board therefore misconstrued the referral as a grant of reconsideration and re-evaluated the case. The error is not attributable to the Integrated Bar.

On the merits, the Court affirmed the finding that the engagement was only for the preparation and submission of the appellant's brief, with fees payable upon completion and submission, not upon termination of the case. There was sufficient evidence of the complainant's willingness to pay: he paid half upon acceptance, and although the balance was not yet due, he delivered 4,000 pesos upon demand. His failure to pay the last 3,500 pesos did not appear deliberate. The respondent's conduct was therefore unbecoming of a member of the legal profession. The Court quoted the governing standard:

A lawyer shall withdraw his services only for good cause and upon notice appropriate in the circumstances.

Although a lawyer may withdraw when the client deliberately fails to pay, here the withdrawal was unjustified because the client did not deliberately fail to pay and in fact exerted honest efforts to fulfill his obligation. The respondent's contemptuous conduct did not speak well of a member of the bar, considering that the amount owing was only 3,500 pesos. The Court also invoked the rule that a lawyer shall avoid controversies with clients concerning his compensation and shall resort to judicial action only to prevent imposition, injustice or fraud. For so small a sum, the respondent failed to act in accordance with the demands of the Code.

On the third issue, the Court refused to impose disbarment. The power to disbar must be exercised with great caution, and only in a clear case of misconduct that seriously affects the standing and character of the lawyer as an officer of the Court and member of the bar. It should never be decreed where a lesser penalty, such as temporary suspension, would accomplish the end desired. In this case, reprimand was deemed sufficient.

Doctrine

A lawyer may withdraw his services only for good cause and upon notice appropriate in the circumstances. The deliberate failure of the client to pay fees is good cause, but the failure must be deliberate; a client who honestly tries to pay but falls short does not justify withdrawal.

A lawyer shall avoid controversies with clients concerning his compensation and shall resort to judicial action only to prevent imposition, injustice or fraud. He may not resort to insulting notes or abandon the client over a small unpaid balance.

The power to disbar is exercised with great caution. It is imposed only for clear misconduct that seriously affects the standing and character of the lawyer as an officer of the Court and member of the bar, and never where a lesser penalty such as suspension or reprimand would accomplish the end desired.

Disposition

The Supreme Court reprimanded Attorney Juan Dealca, with a warning that repetition of the same act would be dealt with more severely, and did not impose disbarment.

Remember This

Memorize the line: a lawyer shall withdraw his services only for good cause and upon notice appropriate in the circumstances, and a client's failure to pay justifies withdrawal only when it is deliberate. Examiners use this case in legal ethics on withdrawal of services, on avoiding controversies with clients over compensation, and on the cautious exercise of the power to disbar.