TERESITA T. BAYONLA, COMPLAINANT, VS. ATTY. PURITA A. REYES, RESPONDENT.

Bayonla versus Reyes

The Case

This is an administrative case for disbarment, styled as a complaint for gross dishonesty, deceit, conversion, and breach of trust, filed by Teresita T. Bayonla against her own lawyer, Atty. Purita A. Reyes. Bayonla had engaged the respondent to collect her share in an expropriation compensation paid by the Air Transportation Office, and she now claims that the lawyer withheld a portion of what was collected. The case matters because it is a clean illustration of the fiduciary heart of the lawyer-client relationship: money collected for a client is trust money, and the failure to account for and deliver it upon demand is not a mere civil debt but gross misconduct that warrants suspension from the practice of law.

Procedural History

The complaint was filed with the Supreme Court, which referred it to the Integrated Bar of the Philippines for investigation, report, and recommendation. Commissioner Lydia A. Navarro conducted the formal investigation and rendered a report finding against the respondent and recommending that she render an accounting and remit the shortage, and that she be suspended until she complied. The Integrated Bar of the Philippines Board of Governors adopted and approved the Commissioner's report, denied the respondent's motion for reconsideration, and later denied her motion for reinvestigation for lack of jurisdiction, the matter having already been endorsed to the Court. The Court then directed the Board of Governors to report whether the respondent had already accounted for and remitted the amount, and the Board informed the Court that she had not. After the Office of the Bar Confidant recommended final resolution, the Court resolved the case in its decision of November 2011.

Facts

Two sisters, Petra Durban and Paz Durban, had jointly owned a parcel of land in Butuan City. They died without leaving a will. Their land was expropriated in connection with the construction of the Bancasi Airport, and an expropriation compensation of 2,453,429 pesos was to be paid to their heirs. Bayonla and her uncle, Alfredo Tabada, were the compulsory heirs of Paz, being respectively Paz's granddaughter and son.

In October 1993, Bayonla and Alfredo engaged the legal services of Atty. Reyes to collect their share in the expropriation compensation from the Air Transportation Office in Cagayan de Oro City. Bayonla alleged that they agreed to an attorney's fee of ten percent of whatever amount would be collected. In November 1993, the lawyer collected one million pesos from the office. Bayonla claimed that her share, after deducting the attorney's fees, would be 75,000 pesos, but that the lawyer delivered to her only 23,000 pesos and failed to deliver the balance of 52,000 pesos despite repeated demands. In June 1995, the lawyer collected a further 121,119 pesos and eleven centavos. Bayonla claimed that her share, after deducting fees, would be 109,007 pesos and twenty centavos, but that the lawyer handed her only 56,500 pesos, leaving a balance of 52,507 pesos and twenty centavos.

In her comment, the respondent admitted that she had been engaged to collect the share, but insisted that the agreed consideration was a forty percent contingent fee, that she had given Bayonla more than what was due her, that Alfredo had received the check for the second release and had gotten more than Bayonla out of it, and that she had received out of the second release only her forty percent contingent fee. The Commissioner found that Bayonla was entitled to 205,971 pesos and eleven centavos in all from the two releases, that the forty percent fee was supported by evidence while the ten percent claim was not, leaving a net share of 123,582 pesos and sixty-six centavos, and that since Bayonla actually received only 79,000 pesos, the respondent still had to remit 44,582 pesos and sixty-six centavos.

Issues

• Whether or not the findings and recommendations of the Integrated Bar of the Philippines Board of Governors were proper.
• Whether or not the pendency of the perjury charge filed by the respondent against the complainant and of the estafa charge filed by the complainant against the respondent could halt or excuse the administrative proceeding and the duty to account.
• Whether or not the respondent was denied due process because the Board of Governors did not permit her to personally confront the complainant.
• Whether or not the penalty of suspension for two years, with restitution and interest, was the proper sanction.

Applicable Provisions

Rule 16.01 of Canon 16 of the Code of Professional Responsibility provides:

A lawyer shall account for all money or property collected or received for or from the client.

This rule is the core duty the respondent breached, because she never rendered a breakdown or accounting of what she collected for her client.

Rule 16.03 of Canon 16 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 client. 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.

This rule fixes the duty to deliver upon demand, subject only to the lawyer's lien for lawful fees, and the respondent's unjustified withholding violated it.

Section 27 of Rule 138 of the Rules of Court provides:

Section 27. Disbarment or suspension of attorneys by Supreme Court, grounds therefor. A member of the bar may be disbarred or suspended from his office as attorney by the Supreme Court for any deceit, malpractice, or other gross misconduct in such office, grossly immoral conduct, or by reason of his conviction of a crime involving moral turpitude, or for any violation of the oath which he is required to take before admission to practice, or for a wilful disobedience appearing as an attorney for a party to a case without authority so to do. The practice of soliciting cases at law for the purpose of gain, either personally or through paid agents or brokers, constitutes malpractice.

This provision supplies the ground and the penalty, because the respondent's failure to account and deliver amounted to deceit and gross misconduct in her office.

Ruling

On the first issue, the Court affirmed the findings of the Board of Governors as supported by the records, but modified the sanctions. The relationship between a lawyer and her client is highly fiduciary and prescribes a great degree of fidelity and good faith. The money collected by a lawyer for her client properly belongs to the client, and the lawyer is obliged to render an accounting of all property and money collected, including the prompt reporting and accounting of money collected by reason of a favorable judgment. The Court computed that Bayonla's total share from the two releases was 205,971 pesos and eleven centavos, that the forty percent fee of 82,388 pesos and forty-four centavos left a net share of 123,582 pesos and sixty-seven centavos, and that since only 79,000 pesos was delivered, the shortage was 44,582 pesos and sixty-seven centavos. By not delivering the share despite demand, the respondent violated the canons. The unjustified withholding of money belonging to the client warranted disciplinary sanctions, and the failure to account and deliver upon demand was deceit, signifying conversion of the money to her own use and constituting gross misconduct.

On the second issue, the Court held that the pendency of the perjury and estafa charges could not halt or excuse the duty to account and remit, nor inhibit the administrative matter from proceeding. Criminal and civil cases are different from administrative matters, and the disposition in the first two will not inevitably govern the third. Disciplinary proceedings are sui generis, meaning of their own kind, neither purely civil nor purely criminal; they are investigations by the Court into the conduct of one of its officers, with public interest as their primary objective.

On the third issue, the Court held that there was no denial of due process. The respondent participated in all stages of the proceedings. A lawyer shall not be disbarred or suspended until she has had full opportunity upon reasonable notice to answer the charges, to produce witnesses, and to be heard by herself or counsel, but the imperative need of notice and hearing does not always mean an adversarial trial-type proceeding. Due process is satisfied when the parties are afforded the reasonable opportunity to be heard and to submit evidence. The Board was under no legal obligation to conduct a trial-type proceeding at which she could personally confront the complainant.

On the fourth issue, the Court noted that the penalty for gross misconduct consisting in the failure or refusal despite demand of a lawyer to account for and return money belonging to a client has been suspension for two years, as in the cited cases involving lawyers who withheld client funds. Finding the respondent's offense strikingly similar, the Court imposed suspension for two years, with a warning that a similar offense will be dealt with more severely. The Court also ordered restitution of 44,582 pesos and sixty-seven centavos, with interest of twelve percent per annum from June 22, 1997, the date she was formally charged, because no victim of gross ethical misconduct concerning client funds should be required to litigate in another proceeding what the administrative proceeding has already established.

Doctrine

A lawyer holds the money and property of her client in trust and must account for all money collected for or from the client under Rule 16.01 of Canon 16. Under Rule 16.03, she must deliver the funds when due or upon demand, subject only to her lien for lawful fees and disbursements, with prompt notice to the client. The unjustified withholding of client money upon demand is deceit and gross misconduct under Section 27 of Rule 138, punishable by suspension. Disciplinary proceedings are sui generis, so the pendency of criminal or civil cases between lawyer and client neither excuses the duty to account nor bars the administrative case. Due process in disbarment proceedings requires notice and a reasonable opportunity to be heard, not a trial-type confrontation. Restitution of the shortage, with legal interest, may be ordered as a concomitant relief in the administrative case itself.

Disposition

The Court found Atty. Purita A. Reyes guilty of violating Rule 16.01 and Rule 16.03 of Canon 16, suspended her from the practice of law for two years, and ordered her to pay Bayonla 44,582 pesos and sixty-seven centavos with twelve percent interest per annum from June 22, 1997, and to render a complete written accounting and inventory within thirty days.

Remember This

Memorize the line that client money is trust money: the lawyer must account for it and deliver it upon demand, and withholding it is deceit and gross misconduct. Examiners use this case for the fiduciary duty under Canon 16, the two-year suspension standard for misappropriating client funds, and the rule that disciplinary proceedings are sui generis and unaffected by pending criminal or civil cases.