THIRD DIVISION
[A.C. No. 12204. January 14, 2019.]
NENITA G. FERGUSON, complainant, vs. ATTY. REY ANTHONY T. LAPUZ, respondent.
NOTICE
Sirs/Mesdames :
Please take notice that the Court, Third Division, issued a Resolution datedJanuary 14, 2019, which reads as follows:
"A.C. No. 12204: (NENITA G. FERGUSON, complainant, v. ATTY. REY ANTHONY T. LAPUZ, respondent). — Lawyers hold in trust documents reposed to them by their clients. They should return these documents to their clients as soon as their engagements end or are terminated. 1
Nenita De Guzman Ferguson (Ferguson) is a Filipino citizen and a resident of 3652 Lake Timberlane Dr., Gretna, Louisiana, United States of America. On August 27, 2013, she filed a Complaint-Affidavit 2 against Atty. Rey Anthony T. Lapuz (Atty. Lapuz). The Complaint-Affidavit, sent to the Philippines from the United States of America, was not consularized, though it was notarized by the State of Louisiana notary public. Ferguson stated that it was costly for her to travel from Louisiana to Chicago, where the nearest Philippine Consulate was located. Ferguson is a lawyer in the United States of America. 3
In her Complaint-Affidavit, Ferguson stated that she hired Atty. Lapuz and paid him P70,000.00 to represent her in a case seeking the cancellation of Certificate of Land Ownership Award titles and payment of damages. 4
Atty. Lapuz procured all the documents for the case, such as: (1) the disputed Certificate of Land Ownership Award titles; (2) documents issued by the Department of Agrarian Reform; (3) the Deed of Sale; and (4) tax declarations over the property. In January 2010, the case was filed before the Department of Agrarian Reform. 5
Before it could be resolved, the case was withdrawn from the Department of Agrarian Reform as there was no agrarian dispute, since the properties were residential lots. The case was filed before the Regional Trial Court instead. 6 SDAaTC
Ferguson stated that she prepared all the pleadings and paid the fees before the Regional Trial Court and the Court of Appeals. The Regional Trial Court dismissed the case for lack of jurisdiction, and the Court of Appeals affirmed its Decision. 7
On July 19, 2013, Ferguson, through electronic mail, 8 asked Atty. Lapuz to return the Certificate of Land Ownership Award titles and Deed of Sale, so she may refile the case before the Department of Agrarian Reform. 9
Atty. Lapuz replied that he did not have copies of the documents because they "were not secured from the [Registry of Deeds] but from the [Department of Agrarian Reform]." 10 Since she could not get the documents, Ferguson failed to refile her case.
On July 29, 2013, Ferguson sent a Written Demand 11 requiring Atty. Lapuz, until August 16, 2013, to refund half of the attorney's fees she paid him, in the amount of P35,000.00, for his failure to return the documents. In the same letter, she also terminated his engagement as her attorney.
Ferguson alleged that Atty. Lapuz violated Canon 16, Rule 16.01, and Rule 16.03 of the Code of Professional Responsibility. 12
Atty. Lapuz filed his Answer 13 on July 10, 2014, arguing that Ferguson paid him P60,000.00 as acceptance fee and P10,000.00 as deposit for out-of-pocket expenses. This was evidenced by his Engagement Letter 14 sent to Ferguson, which states:
Legal Fees
We will charge an amount of Sixty Thousand Pesos (P60,000.00), as acceptance fee for the case abovementioned.
xxx xxx xxx
Out-of-pocket Expenses
Out-of-pocket expenses such as filing fees, telephone and cellular phone charges, photocopying, mailing costs and transportation incurred in undertaking the work, as well as expenses which you may authorize us to incur, shall be for your account. We shall therefore require a deposit of Ten Thousand Pesos (P10,000.00). Expenses charged to this deposit will be accounted for and any balance at the end of the engagement shall be remitted to you or applied to any outstanding legal fees. 15 (Emphasis in the original)
Atty. Lapuz also argued that he "faithfully and diligently performed the obligations" 16 contained in the Engagement Letter: acEHCD
Scope of Services
Our services will cover preparation and filing of the above mentioned petition and any other pleadings that may be deemed necessary in the case above mentioned, review of important or significant documents, attendance at hearings, preparation and presentation of witnesses[,] and consultation relative to the legal issues presented by the referred matter.
Other unrelated proceedings shall be subject to a separate engagement agreement. 17
Atty. Lapuz's engagement was limited only to "proceedings before the Regional Agrarian Reform Adjudicator (RARAD). Any appeal or petition for review that may be commenced by reason of the proceedings before the RARAD shall be subject to a separate engagement." 18
Atty. Lapuz argued that he prepared and filed the Petition before the Department of Agrarian Reform, as agreed. It was Ferguson who decided to withdraw the case then refile it before another court, which was not covered in the Engagement Letter. He said that he should not suffer for Ferguson's indecision. 19
Atty. Lapuz further denied receiving documents from Ferguson. He claimed that he failed to procure copies of the documents due to the Registry of Deeds' data migration. 20 Once it was completed, he said that he easily got a copy of the Transfer Certificate of Title, 21 which meant Ferguson could have easily done the same if she wanted to. He argued that the Complaint against him was a harassment suit. 22
In her Reply, 23 Ferguson attached copies of her electronic mail exchanges 24 with Atty. Lapuz, where the latter admitted to have "all the certified true copies of the titles[.]" 25
In the October 22, 2014 mandatory hearing, only Atty. Lapuz was present. 26
In the February 18, 2015 clarificatory hearing, again, only Atty. Lapuz was present. 27
On September 10, 2015, the Investigating Commissioner recommended the Complaint's dismissal for Ferguson's failure to prove the charges by "clear, convincing[,] and satisfactory evidence[.]" 28 SDHTEC
However, in its April 29, 2016 Resolution No. XXII-2016-256, 29 the Integrated Bar of the Philippines Board of Governors admonished Atty. Lapuz and ordered Commission on Bar Discipline Director Ramon S. Esguerra (Director Esguerra) to prepare an extended resolution.
In his Extended Resolution, 30 Director Esguerra explained that Atty. Lapuz had possession of the documents, which he annexed in Ferguson's Petition before the Department of Agrarian Reform. The payment of attorney's fees covered the request for certified true copies of the documents. His failure to take care of, account for, and return these documents violated Canon 16, and Rules 16.01, 16.02, and 16.03 of the Code of Professional Responsibility. 31
For this Court's resolution are two (2) issues:
First, whether or not respondent Atty. Rey Anthony T. Lapuz violated the Code of Professional Responsibility when he failed to return the documents to complainant Nenita G. Ferguson; and
Second, whether or not respondent should refund the fees complainant paid him.
Based on the Code of Professional Responsibility and prevailing jurisprudence, respondent should be reprimanded for failing to return complainant's documents and the P10,000.00 deposit for out-of-pocket expenses. However, he does not need to refund the P60,000.00 acceptance fee.
On the first issue, Canon 16, Rules 16.01, 16.02, and 16.03 of the Code of Professional Responsibility state:
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.
RULE 16.02. A lawyer shall keep the funds of each client separate and apart from his own and those of others kept by him.
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.
Complainant claims that respondent admitted in the electronic mails that he had the documents in his possession. 32 On the other hand, respondent alleges that he failed to procure copies of the documents because the Registry of Deeds was undergoing data migration. 33 AScHCD
This Court is not convinced that respondent never acquired the documents. The documents did not come from complainant, but were instead obtained by respondent for the Department of Agrarian Reform case. If not for his engagement, respondent would not have had any reason to request copies of these documents. He annexed them to the Petition filed before the Department of Agrarian Reform. Hence, the only conclusion is that he had the documents in his possession.
Assuming further that he filed the original duplicates, he still should have their receiving copies which, at the very least, must be turned over to the complainant. It behooves respondent to request the authenticated copies from the Department of Agrarian Reform, as he was given money for out-of-pocket expenses.
The documents entrusted by clients to their lawyers are considered properties that lawyers should hold in trust for them. 34 As part of his duty, respondent should have returned the documents to complainant right after the case's withdrawal from the Department of Agrarian Reform.
In Villanueva v. Atty. Gonzales, 35 a lawyer was suspended for two (2) years after he failed to file any case on behalf of his client and refused to return the transfer certificate of title and other documents entrusted to him.
Here, however, reprimand alone is proper since respondent prepared and filed the Petition before the Department of Agrarian Reform, as agreed upon in the Engagement Letter.
On the second issue, the money paid by complainant must first be determined as either acceptance fee or attorney's fee.
Complainant claims that the P70,000.00 she paid was for attorney's fees. She alleges that she was entitled to its refund because respondent failed to return the Certificate of Land Ownership Award titles and Deed of Sale to her. On the other hand, respondent claims that the money was his acceptance fee; hence, he cannot be compelled to return it, as it was payment for him to take on the case.
According to the charges enumerated in the Engagement Letter, the sum of P60,000.00 was an acceptance fee and the sum of P10,000.00 was a deposit for out-of-pocket expenses:
Legal Fees
We will charge an amount of Sixty Thousand Pesos (P60,000.00), as acceptance fee for the case abovementioned.
xxx xxx xxx
Out-of-pocket Expenses
Out-of-pocket expenses such as filing fees, telephone and cellular phone charges, photocopying, mailing costs and transportation incurred in undertaking the work, as well as expenses which you may authorize us to incur, shall be for your account. We shall therefore require a deposit of Ten Thousand Pesos (P10,000.00). Expenses charged to this deposit will be accounted for and any balance at the end of the engagement shall be remitted to you or applied to any outstanding legal fees. 36 (Emphasis in the original)
Ignacio v. Alviar37 differentiated an attorney's fee from an acceptance fee:
On one hand, attorney's fee is understood both in its ordinary and extraordinary concept. In its ordinary concept, attorney's fee refers to the reasonable compensation paid to a lawyer by his client for legal services rendered. While, in its extraordinary concept, attorney's fee is awarded by the court to the successful litigant to be paid by the losing party as indemnity for damages. . . .
On the other hand, acceptance fee refers to the charge imposed by the lawyer for mere acceptance of the case. The rationale for the fee is because once the lawyer agrees to represent a client, he is precluded from handling cases of the opposing party based on the prohibition on conflict of interest. The opportunity cost of mere acceptance is thus indemnified by the payment of acceptance fee. However, since acceptance fee compensates the lawyer only for lost opportunity, the same is not measured by the nature and extent of the legal services rendered. 38 (Citations omitted) AcICHD
The acceptance fee was compensation to respondent for taking on complainant's case, and for his foregone opportunity to take on other cases. An acceptance fee is distinct from an attorney's fee, which refers to the payment given to lawyers for services rendered to their clients. Hence, complainant cannot demand the refund of P60,000.00, or any portion of it.
The Engagement Letter, however, provided that the out-of-pocket expenses "will be accounted for and any balance at the end of the engagement shall be remitted to you or applied to any outstanding legal fees." 39 It is only proper that respondent be compelled to account for the P10,000.00 deposit, and to refund any excess.
When lawyers accept cases, they are expected to serve their clients "with competence and diligence." 40 This Court has ordered lawyers to return acceptance fees when they failed to file a case and assist their clients. 41 In Ignacio, 42 this Court ordered the return of P97,000 of the P100,000.00 acceptance fee paid by the client to his lawyer. It ruled that the lawyer must be compensated based on quantum meruit because he forgot about his client, failed to attend his arraignment, and only met with him once, for about 20 minutes during his engagement.
Here, however, Ignacio does not apply. Records reveal that respondent fulfilled his duties under the scope of services he undertook:
Scope of Services
Our services will cover preparation and filing of the above mentioned petition and any other pleadings that may be deemed necessary in the case above mentioned, review of important or significant documents, attendance at hearings, preparation and presentation of witnesses[,] and consultation relative to the legal issues presented by the referred matter.
Other unrelated proceedings shall be subject to a separate engagement agreement. 43
Respondent prepared and filed a Petition before the Department of Agrarian Reform. It was complainant who decided to withdraw the case and file it before the Regional Trial Court instead. Respondent must not be made to suffer because of complainant's decision.
WHEREFORE, Atty. Rey Anthony T. Lapuz is REPRIMANDED for failing to return the documents entrusted to him by his client, with a STERN WARNING that a repetition of the same or similar offense shall be dealt with more severely. Additionally, he is ordered to ACCOUNT for the Ten Thousand Pesos (P10,000.00) deposit for out-of-pocket expenses and to return the excess, if any.
SO ORDERED." TAIaHE
Very truly yours,
(SGD.) WILFREDO V. LAPITANDivision Clerk of Court
Footnotes
1.Villanueva v. Atty. Gonzales, 568 Phil. 379 (2008) [Per J. Carpio, En Banc].
2.Rollo, pp. 4-6.
3.Id. at 2-3 and 53-54.
4.Id. at 4.
5.Id.
6. Id. at 4.
7.Id.
8.Id. at 7.
9.Id. at 5.
10.Id.
11.Id. at 8-9.
12.Id. at 5.
13.Id. at 12-19.
14.Id. at 20-21.
15.Id. at 20-21.
16.Id. at 16.
17.Id. at 20.
18.Id. at 21.
19.Id. at 17.
20.Id. at 13.
21.Id. at 22-23.
22.Id. at 15.
23.Id. at 26-27.
24.Id. 28.
25.Id. at 41.
26.Id. at 65.
27.Id. at 68.
28. Id. at 101.
29. Id. at 92-93.
30. Id. at 102-109.
31. Id. at 106-108.
32. Id. at 41.
33. Id. at 13.
34. See Villanueva v. Atty. Gonzales, 568 Phil. 379 (2008) [Per J. Carpio, En Banc].
35. 568 Phil. 379 (2008) [Per J. Carpio, En Banc].
36. Rollo, pp. 20-21.
37. A.C. No. 11482, July 17, 2017, 831 SCRA 166 [Per J. Tijam, Third Division].
38. Id. at 176-177.
39. Rollo, p. 21.
40. CODE OF PROFESSIONAL RESPONSIBILITY, Canon 18.
41. Macarilay v. Seriña, 497 Phil. 348 (2005) [Per J. Panganiban, Third Division]; Voluntad-Ramirez v. Atty. Bautista, 697 Phil. 1 (2012) [Per J. Carpio, Second Division]; Del Mundo v. Atty. Capistrano, 685 Phil. 687 (2012) [Per J. Perlas Bernabe, Third Division]; Ignacio v. Alviar, A.C. No. 11482, July 17, 2017, <http://sc.judiciary.gov.ph/pdf/web/viewer.html?file=/jurisprudence/2017/july2017/11482.pdf> [Per J. Tijam, Third Division].
42. A.C. No. 11482, July 17, 2017, <http://sc.judiciary.gov.ph/pdf/web/viewer.html?file=/jurisprudence/2017/july2017/11482.pdf> [Per J. Tijam, Third Division].
43. Rollo, p. 20.