MILAGROS N. ALDOVINO, VIRGILIO NICODEMUS, ANGELA N. DELA CRUZ, JULITA N. SOCO, MAGDALENA N. TALENS AND TEODORO S. NICODEMUS, COMPLAINANTS, VS. ATTY. PEDRO C. PUJALTE, JR., RESPO…

Aldovino versus Pujalte

The Case

This is a complaint for disbarment and disciplinary action filed by Milagros Nicodemus-Aldovino and her five brothers and sisters against their former counsel, Atty. Pedro C. Pujalte, Jr., for violation of Canon 16 of the Code of Professional Responsibility. The complainants are the heirs of Arcadia Nicodemus, and they had hired the respondent as their lawyer in a suit to compel their sister to deliver their shares in their mother's estate. The case matters because it is a clean illustration of a lawyer's fiduciary duty over client funds — the trust obligation, the lawyer's lien, and the rule that a lawyer may never unilaterally appropriate his client's money as attorney's fees.

Procedural History

The complainants filed their complaint for disbarment on June 1999 with the Office of the Bar Confidant of the Supreme Court. The Court referred the matter for investigation, report, and recommendation to the Commission on Bar Discipline of the Integrated Bar of the Philippines in Pasig City. The investigating commissioner, Rebecca Villanueva-Maala, submitted her report in March 2003, finding the respondent to have violated Canon 16 and Rule 16.03 and recommending a one-year suspension. The Board of Governors of the Integrated Bar of the Philippines adopted and approved that report in June 2003. The case then came before the Supreme Court, which sustained the findings and the recommended penalty.

Facts

In March 1995, the complainants hired the respondent as their counsel in a civil case for specific performance with damages, filed with the Regional Trial Court of Lucena City, to compel their sister Loreto Nicodemus Pulumbarit to deliver to them their shares in the estate of their deceased mother. In November 1998, the trial court decided in favor of the sister and dismissed the case, but ordered the branch clerk of court, upon finality of the decision, to withdraw funds from a Philippine National Bank savings account and deliver the proceeds to all the heirs of Arcadia Nicodemus, with both counsels directed to oversee the distribution.

In December 1998, the branch clerk of court withdrew the sum of 1,335,109 pesos and 68 centavos and divided it into eight shares of 166,888 pesos and 71 centavos each. He gave the defendant sister two shares, and handed the remaining 1,001,332 pesos and 26 centavos, corresponding to six shares, to the respondent upon his representation that he was authorized to receive the money and to oversee its distribution to the complainants. The complainants, however, never received their shares despite repeated demands. They engaged another lawyer, Atty. Francisco I. Chavez, who demanded in writing that the respondent turn over the amount entrusted to him. The respondent wired back that he would deliver the shares the following morning.

What the respondent actually delivered was only 751,332 pesos and 26 centavos, because he deducted 250,000 pesos as his attorney's fees, claiming a verbal agreement with the complainants' representative. The complainants insisted that they had already paid him 86,000 pesos, that a further 14,000 pesos would complete a total of 100,000 pesos, and that no agreement ever authorized 250,000 pesos. The respondent failed to return the balance of 236,000 pesos. In his comment, he admitted receiving the money, claimed the verbal agreement, and said he had waited for some of the complainants to give them the money but they did not come. The investigating commissioner found that he had not turned over the settlement promptly, that he returned the balance only after being threatened with an estafa charge, and that he had unilaterally appropriated the 250,000 pesos without the conformity of his clients.

Issues

• Whether or not the respondent violated Canon 16 of the Code of Professional Responsibility in holding on to and deducting from the funds of his clients.
• Whether or not the respondent could validly retain 250,000 pesos as attorney's fees by unilateral deduction, without the agreement and conformity of the complainants.
• Whether or not the respondent is liable for disciplinary action, and if so, what penalty should be imposed.

Applicable Provisions

Canon 16 of the Code of Professional Responsibility provides:

Canon 16 — A lawyer shall hold in trust all moneys and properties of his client that may come into his possession.

This is the fiduciary duty at the heart of the case, and the respondent's admitted receipt of his clients' shares placed him squarely within it.

Rule 16.03 of the Code of Professional Responsibility provides:

Rule 16.03 — 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 defines both the duty to deliver upon demand and the limited scope of the lawyer's lien, which the respondent invoked but misused.

Ruling

On the first issue, the Court sustained the finding that the respondent violated Canon 16. When the complainants demanded that the 1,001,332 pesos and 26 centavos be delivered, he should have heeded promptly. Had they not hired a lawyer and charged him with estafa, he would not have turned over the money. The Court held that his failure to return the money upon demand gave rise to the presumption that he misappropriated it in violation of the trust reposed in him, and that his act of holding on to their money without their acquiescence was conduct indicative of lack of integrity and propriety.

On the second issue, the Court held that the respondent had no right to retain or appropriate the 250,000 pesos unilaterally as a lawyer's lien. As the investigating commissioner found, there was no agreement that he could retain that amount, and he adduced no proof of any such agreement. His mere allegation or claim is not proof. While it may be true that he had a lien over the funds, he should have notified the complainants about it in due time.

On the third issue, the Court stressed that it has been exacting in its demand for integrity and good moral character of members of the Bar, who are expected at all times to uphold the integrity and dignity of the legal profession. Membership in the legal profession is a privilege, and when an attorney is no longer worthy of the trust and confidence of the public, it becomes not only the right but the duty of the Court to withdraw that privilege. By his conduct, the respondent blemished not only his own integrity but also that of the legal profession.

Doctrine

A lawyer holds the money and property of his client in trust, and must deliver them when due or upon demand. The lawyer's lien over client funds is not a license to self-help: he may apply only so much as may be necessary to satisfy his lawful fees and disbursements, and he must give the client prompt notice. A lawyer may never unilaterally appropriate his client's money as attorney's fees; any claim to fees must rest on an agreement proved by evidence, because a mere allegation or claim is not proof. Failure to return client funds upon demand raises the presumption of misappropriation and is conduct indicative of lack of integrity and propriety, warranting disciplinary action.

Disposition

The Court declared the respondent guilty of violating Canon 16 of the Code of Professional Responsibility, suspended him from the practice of law for one year effective immediately, and ordered him to return the sum of 236,000 pesos to the complainants within five days from notice.

Remember This

The single line worth memorizing: a lawyer's lien is not a license to unilaterally appropriate client funds — he must apply only what is necessary for lawful fees and give prompt notice. Examiners use this case to test the trust obligation under Canon 16 and Rule 16.03, and the rule that a lawyer's bare claim of a fee agreement is not proof.