THIRD
DIVISION
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FRANCISCO
RAYOS, Petitioner, - versus - ATTY.
PONCIANO G. HERNANDEZ, Respondent. |
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G.R. No. 169079 Present: YNARES-SANTIAGO, J., Chairperson, AUSTRIA-MARTINEZ,
CALLEJO, SR., CHICO-NAZARIO, and NACHURA,*
JJ. Promulgated: |
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CHICO-NAZARIO, J.:
This is a Petition for Review[1] of
the Resolution dated
Respondent was the counsel of
petitioner in Civil Case No. SM-951 entitled, “Francisco Rayos v. NAPOCOR,” filed before the Regional Trial Court
(RTC), Malolos, Bulacan. The complaint
alleged, among other things, that the National Power Corporation (NAPOCOR) recklessly, imprudently and negligently
opened the three floodgates of the spillway of Angat Dam at midnight of 26
October 1978 until the early morning hours of 27 October 1978, during the
occurrence of typhoon “Kading” causing
the release of a great volume of stored water, the resultant swelling and
flooding of Angat River, and the consequent loss of lives of some of petitioner’s relatives and
destruction of his family’s properties, for which he sought damages. Of the 10 members of petitioner’s family who
perished, only four bodies were recovered and only petitioner and one of his
sons, German Rayos, survived.
On
On
The case was subsequently appealed to
the Court of Appeals, which reversed the RTC decision and awarded damages in
favor of petitioner, the dispositive portion of which reads:
CONFORMABLY TO THE FOREGOING, the joint decision appealed from is hereby REVERSED and SET ASIDE, and a new one is hereby rendered:
x x x x
2. In Civil Case No. SM-951, ordering defendants-appellees to pay jointly and severally, plaintiff-appellant, with legal interest from the date when this decision shall have become final and executory, the following:
A.
Actual damages of Five Hundred Twenty Thousand Pesos (P520,000.00);
B.
Moral Damages of Five Hundred Thousand Pesos (P500,000.00); and
C.
Litigation Expenses of Ten Thousand Pesos (P10,000.00).
x x x x
In addition, in all the four (4) instant cases, ordering defendants-appellees to pay, jointly and severally, plaintiffs-appellants, attorney’s fees in an amount equivalent to 15% of the total amount awarded.[5]
The case was appealed to this Court,
which affirmed the Court of Appeals Decision.[6] The Decision of the Supreme Court became final
and executory on
Thus,
a Writ of Execution[7] was
issued by the RTC on P1,060,800.00
payable to petitioner. Thereafter, the
check was turned over to respondent as counsel of petitioner. Petitioner demanded the turn over of the
check from respondent, but the latter refused.
On 24 January 1994 , petitioner filed
with the RTC a motion[8] to
direct respondent to deliver to him the check issued by NAPOCOR, corresponding
to the damages awarded by the Court of Appeals. Petitioner sought to recover the check in the
amount of P1,060,800.00 from respondent, claiming that respondent had no
authority to receive the same as he was already dismissed by petitioner as his
counsel on
On
However, on P502,838.79 with Farmers Savings and
Loan Bank, Inc., Norzagaray, Bulacan, in the name of petitioner which was eventually
received by the latter.
Thus, petitioner initiated this
complaint for disbarment for the failure of respondent to return the rest of
the award in the amount of P557,961.21.
In his comment,[10]
respondent alleged that he handled petitioner’s case, in Civil Case No. SM-951,
for 15 years, from the trial court up to the Supreme Court. On
Respondent also averred that petitioner had a
verbal contract for attorney’s fees on a contingent basis and that the said
contract was only reduced in writing on
Respondent further asseverated that
because petitioner dismissed the respondent and refused to settle his
obligation, he deposited the amount of P424,320.00 in a bank in
petitioner’s name under Account No. 381 (representing petitioner’s share of 40%
of the total award) on 10 May 1994[11]; and
the amount of P63,648.00 in petitioner’s name under Account No. 389
(representing petitioner’s share of 40% of the P159,120.00 awarded as attorney’s
fees by the Court of Appeals) on 19 May 1994.[12] Petitioner already received the amount of P502,838.79
in accordance with the RTC Order dated
Respondent contended that the petitioner’s
complaint was without basis and was meant only to harass and put him to shame
before the residents of Norzagaray, Bulacan.
In a Resolution dated
A series of hearings were conducted
by the Commission on Bar Discipline of the IBP at the
On
Thereafter, the IBP issued its Resolution
dated
RESOLVED to ADOPT and APPROVE, as it hereby ADOPTED and APPROVED, the Report and Recommendation of the Investigating Commissioner of the above-entitled case, herein made part of this Resolution as Annex “A”; and, finding the recommendation fully supported by the evidence on record and the applicable laws and rules, and considering that the case lacks merit, the same is hereby DISMISSED.[15]
We do not agree in the recommendation of the IBP.
The threshold issue in this petition is: whether respondent is justified
in retaining the amount awarded to petitioner in Civil Case No. SM-951 to assure
payment of his attorney’s fees.
Moneys collected by an attorney on a
judgment rendered in favor of his client constitute trust funds and must be
immediately paid over to the client.[16] Canon 16 of the Code of Professional Responsibility
provides as follows:
CANON
16 - A lawyer shall hold in trust all moneys and properties of his client that
may come into his possession.
Rule 16.01 – A lawyer shall account for all money or property collected or received for or from the client.
In the case at bar, when respondent
withheld and refused to deliver the NAPOCOR check representing the amount awarded by the court
in Civil Case No. SM-951, which he received on behalf of his client (petitioner
herein), he breached the trust reposed on him. It is only after an Order was issued by the
RTC ordering the delivery of the check to petitioner that the respondent partially
delivered the amount of P502,838.79 to the former, but still retaining
for himself the amount of P557,961.21 as payment for his attorney’s
fees. The claim of the respondent that petitioner
failed to pay his attorney’s fees is not an excuse for respondent’s failure to
deliver the amount to the petitioner. A
lawyer is not entitled to unilaterally appropriate his client’s money for
himself by the mere fact alone that the client owes him attorney’s fees.[17] The failure of an attorney to return the
client’s money upon demand gives rise to the presumption that he has
misappropriated it for his own use to the prejudice and violation of the
general morality, as well as of professional ethics; it also impairs public
confidence in the legal profession and deserves punishment. In short, a
lawyer’s unjustified withholding of money belonging to his client, as in this
case, warrants the imposition of disciplinary action.[18]
It is true that under Canon 16.03 of
the Code of Professional Responsibility, an attorney has the following rights;
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. (Emphases supplied.)
But the fact alone that a lawyer has
a lien for fees on moneys in his hands collected for his client, as above-stated,
does not relieve him of his duty to promptly account for the moneys received;
his failure to do so constitutes professional misconduct.[19] Thus, what respondent should have properly
done in the case at bar was to provide the petitioner with an accounting before
deducting his attorney’s fees and then to turn over the remaining balance of
the award collected to petitioner. The
Court notes that respondent represented petitioner from the time of filing of
the complaint in Civil Case No. SM-951 before what is now the RTC and of the
appeal of the same case to the Court of Appeals and Supreme Court. But respondent was not justified to hold on
the entire amount of award collected by him until his fees had been paid and
received by him.
The relationship of attorney and
client has always been rightly regarded as one of special trust and confidence.
An attorney must exercise the utmost good faith and fairness in all his
relationship vis-à-vis his client.
Respondent fell far short of this standard when he failed to render an
accounting for the amount actually received by him on behalf of his client and
when he refused to turn over any portion of said amount to his client upon the
pretext that his attorney’s fees had not at all been paid. Respondent had, in fact, placed his private
and personal interest above that of his client.
We have held that lawyering is not a
moneymaking venture and lawyers are not merchants.[20] Law advocacy, it has been stressed, is not
capital that yields profits. The returns
it births are simple rewards for a job done or service rendered. It is a calling that, unlike mercantile
pursuits which enjoy a greater deal of freedom from governmental interference,
is impressed with a public interest, for which it is subject to State
regulation.[21]
A lawyer is not merely the defender of his
client’s cause and a trustee of his client’s cause of action and assets; he is
also, and first and foremost, an officer of the court and participates in the
fundamental function of administering justice in society.[22] It follows that a lawyer’s compensation for
professional services rendered is subject to the supervision of the court, not
just to guarantee that the fees he charges and receives remain reasonable and
commensurate with the services rendered, but also to maintain the dignity and
integrity of the legal profession to which he belongs. Upon taking his attorney’s oath as an officer
of the court, a lawyer submits himself to the authority of the courts to
regulate his right to charge professional fees.[23]
There is another aspect to this case
which the Court cannot just gloss over. Respondent
claimed that he charged petitioner, his client, a contingent fee comprising of forty
percent (40%) as attorney’s fees and twenty percent (20%) as litigation
expenses. The agreement provides:
UNAWAIN NG LAHAT
SA PAMAMAGITAN NITO:
Ako,
si Francisco Rayos, Sr., Pilipino, may sapat na gulang at ngayon ay naninirahan
sa Pinagbarilan, Baliwag, Bulacan, sa pamamagitan ng kasulatang ito, ay
nagpapatunay sa mga sumusunod:
Na,
kaugnay sa aking usapin laban sa NPC at Benjamin Chavez (Rayos vs. NPC, et al.)
na ngayon ay nakabinbin sa Court of Appeals, ako ay nakipagkasundo sa aking
abogado, Atty. Ponciano G. Hernandez,
1 Sakaling ipanalo ang aking usapin, ang
ano mang aking makukuha ay hahatiin
2. Kung matalo ako sa kaso ay wala akong
sagutin sa aking abogado.
Sa
katunayan ng lahat, ako ay lumagda sa kasunduang ito dito sa Norzagaray,
Bulacan ngayong ika-6 ng Oktubre 1991.
(SGD)PONCIANO G. HERNANDEZ (SGD)FRANCISCO RAYOS
Abogado May Usapin[24]
A contingent fee arrangement is valid
in this jurisdiction[25] and
is generally recognized as valid and binding but must be laid down in an
express contract.[26] The amount of contingent fee agreed upon by
the parties is subject to the stipulation that counsel will be paid for his
legal services only if the suit or
litigation prospers. A much higher
compensation is allowed as contingent fee in consideration of the risk that the
lawyer may get nothing if the suit fails.[27] Contracts
of this nature are permitted because they redound to the benefit of the poor
client and the lawyer “especially in cases where the client has meritorious
cause of action, but no means with which to pay for legal services unless he
can, with the sanction of law, make a contract for a contingent fee to be paid
out of the proceeds of the litigation. Oftentimes, the contingent fee
arrangement is the only means by which the poor and helpless can seek redress
for injuries sustained and have their rights vindicated.”[28]
Contingent fee contracts are subject
to the supervision and close scrutiny of the court in order that clients may be
protected from unjust charges.[29] Section 13 of the Canons of Professional
Ethics states that “a contract for a contingent fee, where sanctioned by law,
should be reasonable under all the circumstances of the case including the risk
and uncertainty of the compensation, but
should always be subject to the supervision of a court, as to its
reasonableness.” Likewise, Rule 138,
Section 24, of the Rules of Court provides:
SEC. 24. Compensation of attorney’s; agreement as to fees. - An attorney shall be entitled to have and recover from his client no more than a reasonable compensation for his services, with a view to the importance of the subject matter of the controversy, the extent of the services rendered, and the professional standing of the attorney. No court shall be bound by the opinion of attorneys as expert witnesses as to the proper compensation, but may disregard such testimony and base its conclusion on its own professional knowledge. A written contract for services shall control the amount to be paid therefor unless found by the court to be unconscionable or unreasonable. (Underscoring supplied.)
The reduction of unreasonable
attorney’s fees is within the regulatory powers of the courts.[30] When the courts find that the stipulated
amount is excessive or the contract is unreasonable, or found to have been
marred by fraud, mistake, undue influence or suppression of facts on the part
of the attorney, public policy demands that said contract be disregarded to
protect the client from unreasonable exaction.[31]
There is, therefore, now a corollary
issue of whether the stipulated attorney’s fees are unreasonable and
unconscionable under the circumstances of the case as to warrant a reduction
thereof.
Stipulated attorney’s fees are unconscionable
whenever the amount is by far so disproportionate compared to the value of the
services rendered as to amount to fraud perpetrated upon the client. This means to say that the amount of the fee
contracted for, standing alone and unexplained would be sufficient to show that
an unfair advantage had been taken of the client, or that a legal fraud had
been perpetrated on him.[32]
The decree of unconscionability or
unreasonableness of a stipulated amount in a contingent fee contract, will not,
however, preclude recovery. It merely
justifies the fixing by the court of a reasonable compensation for the lawyer’s
services.
Generally, the amount of attorney’s
fees due is that stipulated in the retainer agreement which is conclusive as to
the amount of the lawyer’s compensation. A stipulation on a lawyer’s
compensation in a written contract for professional services ordinarily
controls the amount of fees that the contracting lawyer may be allowed, unless
the court finds such stipulated amount unreasonable or unconscionable.[33] In the absence thereof, the amount of
attorney’s fees is fixed on the basis of quantum
meruit, i.e., the reasonable worth of the attorney’s services. Courts may ascertain also if the attorney’s
fees are found to be excessive, what is reasonable under the circumstances.[34] In no case, however, must a lawyer be allowed
to recover more than what is reasonable, pursuant to Section 24, Rule 138 of
the Rules of Court.
We have identified the circumstances
to be considered in determining the reasonableness of a claim for attorney’s
fees as follows: (1) the amount and character of the service rendered; (2)
labor, time, and trouble involved; (3) the nature and importance of the
litigation or business in which the services were rendered; (4) the
responsibility imposed; (5) the amount of money or the value of the property
affected by the controversy or involved in the employment; (6) the skill and
experience called for in the performance of the services; (7) the professional
character and social standing of the attorney; (8) the results secured; (9)
whether the fee is absolute or contingent, it being recognized that an attorney
may properly charge a much larger fee when it is contingent than when it is not;[35]
and (10) the financial capacity and economic status of the client have to be
taken into account in fixing the reasonableness of the fee.[36]
Rule 20.1, Canon 20 of the Code of
Professional Responsibility enumerates the following factors which should guide
a lawyer in determining his fees:
(a) The time spent and the extent of the services rendered or required;
(b) The novelty and difficulty of the questions involved;
(c) The importance of the subject matter;
(d) The skill demanded;
(e) The probability of losing other employment as a result of acceptance of the proffered case;
(f) The customary charges for similar services and the schedule of fees of the IBP Chapter to which he belongs;
(g) The amount involved in the controversy and the benefits resulting to the client from the service;
(h) The contingency or certainty of compensation;
(i) The character of the employment, whether occasional or established; and
(j) The professional standing of the lawyer.
In the case at bar, respondent
retained the amount of P557,961.21 out of the P1,060,800.00
award for damages paid by NAPOCOR to petitioner. Under the said scheme, respondent actually
collected fifty-three percent (53%) or more than half of the total amount due
the petitioner; indeed, he appropriated for himself more than the amount which he
had already turned over to and actually received by his client.
As adverted to above, we note that petitioner
was unschooled and frustrated and hopeless with the tragic loss of his loved
ones caused by the inundation of the town of
We believe and so hold that the
contingent fee here claimed was, under the facts obtaining in this case, grossly
excessive and unconscionable. Such a fee structure, when considered in
conjunction with the circumstances of this case, also shows that an unfair
advantage was taken of the client and legal fraud and imposition perpetrated
upon him. Lawyers should not be
permitted to get a lion’s share of the benefits due the poor and the helpless.
Contracts for legal services between the helpless and attorney should be
zealously scrutinized to the end that a fair share of the benefits be not
denied to the former. This Court has the
power to guard a client,[37]
especially an aged and necessitous client,[38]
against such a contract.
A survey of existing jurisprudence
regarding attorney’s fees would reveal the following: in the case of Amalgamated Laborers’ Association v. Court
of Industrial Relations,[39]
the rate of attorney’s fees allowed was 25%; in Law Firm of Raymundo A. Armovit v. Court of Appeals,[40]
the rate allowed was 20%; in Polytrade
Corporation v. Blanco,[41]
25%; in Santiago v. Dimayuga,[42]
20%; in Cosmopolitan Insurance Co., Inc.
v. Reyes,[43] 15%; in
Reyes v. Court of Appeals,[44]
15%; and in Social Security Commission v. Almeda,[45]
15%.
In the present case, respondent Atty.
Hernandez, after all, succeeded in obtaining a favorable decision for his
client, the petitioner. At first,
respondent failed to obtain a favorable judgment in the RTC as the case was
dismissed. But on appeal to the Court of
Appeals, the RTC Decision was reversed and petitioner was awarded the amount of
P1,060,800.00 as damages and P159,120.00 as attorney’s fees. Said award was sustained by the Supreme Court.
We also take note respondent’s efforts
in litigating petitioner’s case for a long period of 15 years. Lastly, the respondent took risk in
representing petitioner on a contingent fee basis.
In consideration of the foregoing, a
fee of 35% of the amount awarded to petitioner would be a fair compensation for
respondent’s legal services.
The misconduct of a lawyer, whether
in his professional or private capacity, which shows him to be wanting in moral
character, honesty, probity and good demeanor, renders him unworthy to the
privileges which his license and the law confer upon him, may be sanctioned
with disbarment or suspension.[46]
The court should also exercise a
sound discretion in determining whether a lawyer should be disbarred or merely
suspended. It should bear in mind that
admission to the Bar is obtained only after years of labor and study and the
office acquired often becomes the source of great honor and emolument to its
possessor. To most members of the legal
profession, it is a means of support for themselves and their families. To
deprive one of such an office is often to decree poverty to the lawyer and
destitution to his family.[47] Disbarment, therefore, should never be decreed
where any lesser penalty, such as temporary suspension, would accomplish the
end desired.[48]
In the case of Schulz v. Atty. Flores,[49] a
lawyer was suspended for six months for not returning his client’s money
despite demands, for unjustifiably refusing to return his client’s papers, and for
collecting excessive and unreasonable fees. Also in the case of Tanhueco v. Atty. De Dumo,[50]
a lawyer was suspended for a period of six months for failure to return the
money received by him on behalf of his client and for collecting excessive and unconscionable
fees.
Guided by our rulings in the abovestated
cases, suspension of respondent for six months is justified in the case at bar.
WHEREFORE the Court Resolves that:
1. Respondent is guilty of violation of
the attorney’s oath and of serious professional misconduct and shall be SUSPENDED from the practice of law for
six (6) months and WARNED that
repetition of the same or similar offense will be dealt with more severely;
2. Respondent is entitled to attorney’s
fees in the amount equivalent to thirty-five percent (35%) of the
total amount awarded[51]
to petitioner in Civil Case No. SM-951; and
3. Respondent is to return the amount of Two Hundred Ninety Thousand One Hundred Nine Pesos
and Twenty-One Centavos (P290,109.21),[52]
which he retained in excess of what we herein declared as fair and reasonable attorney’s
fees, plus legal interest from date of finality of this judgment until full
payment thereof.
Let
copies of this Decision be entered in the personal record of respondent as
member of the Bar and furnished the Office of the Bar Confidant, the IBP, and
the Court Administrator for circulation to all courts of the country.
SO ORDERED.
|
|
MINITA V. CHICO-NAZARIO
Associate
Justice |
WE
CONCUR:
CONSUELO YNARES-SANTIAGO
Associate Justice
Chairperson
Associate Justice Associate Justice
On Leave
ANTONIO EDUARDO B. NACHURA
Associate Justice
ATTESTATION
I attest that the conclusions in the above
Decision were reached in consultation before the case was assigned to the
writer of the opinion of the Court’s Division.
CONSUELO YNARES-SANTIAGO
Associate Justice
Chairperson, Third Division
CERTIFICATION
Pursuant to Section 13, Article VIII
of the Constitution, and the Division Chairperson’s Attestation, it is hereby
certified that the conclusions in the above Decision were reached in
consultation before the case was assigned to the writer of the opinion of the
Court’s Division.
REYNATO S.
PUNO
Chief Justice
* On leave.
[1] Rollo, pp. 9-24.
[2] Records, Vol. III, p. 66.
[3]
[4]
[5]
[6] Promulgated
[7] Records, Vol. III, pp. 224-226.
[8]
[9]
[10] Records, Vol. I, pp. 45-49.
[11] Records, Vol. III, p. 233.
[12]
[13] Records, Vol. I, p. 75.
[14] Rollo, pp. 28-34.
[15]
[16] Aya v. Bigornia, 57 Phil. 8, 11 (1932).
[17] Cabigao v. Rodrigo, 57 Phil. 20, 23 (1932).
[18] Sencio v. Atty. Calvadores, 443 Phil. 490, 494 (2003); Reyes v. Maglaya, 313 Phil. 1, 7 (1995).
[19] Tanhueco
v. De Dumo, A.C. No. 1437,
[20] Canon 1, Canons of Professional Ethics.
[21] Metropolitan
Bank & Trust Company v. Court of Appeals, G.R. Nos. 86100-03, 23
January 1990, 181 SCRA 367, 377, citing Canlas
v. Court of Appeals, G.R. No. L-77691,
[22] Pineda
v. Atty. De Jesus, G.R. No. 155224,
[23] Sumaoang v. Judge, RTC, Br. XXXI, Guimba, Nueva Ecija, G.R. No. 78173, 26 October 1992, 215 SCRA 136, 143.
[24] Records, Vol. I, p. 53.
[25] Law Firm of Raymundo A. Armovit v. Court of Appeals, G.R. No. 90983, 27 September 1991, 202 SCRA 16, 24.
[26] Corpus
v. Court of Appeals, G.R. No. L-40424,
[27] Sesbreño v. Court of Appeals, 314 Phil. 884, 893 (1995).
[28] Director
of Lands v. Ababa, G.R. No. L-26096,
[29] Licudan v. Court of Appeals, G.R. No. 91958, 24 January 1991, 193 SCRA 293, 300; Director of Lands v. Ababa, id. at 525.
[30] Radiowealth Finance Co., Inc. v. International Corporate Bank, G.R. Nos. 77042-43, 28 February 1990, 182 SCRA 862, 868.
[31] Felices v. Madrilejos, 51 Phil. 24, 33 (1927); Jayme v. Bualan, 58 Phil. 422, 424 (1933).
[32] Sesbreño v. Court of Appeals, supra note 27 at 894.
[33] Rule 138, Section 24, Revised Rules of Court; Francisco v. Matias, 119 Phil. 351, 358 (1964); Lopez v. Pan American World Airways, 123 Phil. 256, 271 (1966).
[34] Sesbreño v. Court of Appeals, supra note 27 at 894.
[35] Research and Services Realty, Inc. v. Court of Appeals, 334 Phil. 652, 668 (1997).
[36] Taganas
v. National Labor Relations Commission, G.R. No. 118746,
[37] Tanhueco v. De Dumo, supra note 19 at 772.
[38] Article 24, Civil Code of the
[39] 131 Phil. 374, 386 (1968).
[40] Supra note 25 at 25.
[41] G.R. No. L-27033,
[42] 113 Phil. 902, 905 (1961).
[43] 122 Phil. 648, 651 (1965).
[44] 202 Phil. 172, 173 (1982).
[45] G.R. No. L-75428,
[46]
[47] Pineda, Ernesto, Legal and Judicial Ethics (1994 Edition), p. 280.
[48] Lim
v. Montano, A.C. No. 5653,
[49] 462 Phil. 601 (2003).
[50] Supra note 19.
[51] P1060,800.00 as damages and P159,120.00
(15% of P1,060,800.00) as attorney’s fees or a total of P1,219,920.00.
[52] 35% of P1,219,920.00 is P426,972.00. Since respondent retained P557,961.21
and P159,120.00 and 35% of P1,219,920.00
is P 426,972.00, respondent will return the difference of P290,109.21
to petitioner. The amount of P557,961.21 and P159,120.00 retained
by respondent is actually 59% of the amount due to petitioner in Civil Case No.
951.