A.C. No. 4863 - Urban Bank, Inc. vs. Pena

Urban Bank, Inc. (Complainant) purchased a parcel of land along Roxas Boulevard from the Isabela Sugar Company (ISC).
A condition of the sale required ISC to evict all occupants of the property, a condition incorporated in both the Contract to Sell and the subsequent Deed of Absolute Sale executed on November 15 and November 29, 1994, respectively.

ISC engaged Atty. Magdaleno M. PeAa (Respondent) to effectuate the eviction of the occupants.
The engagement was communicated by ISC through a memorandum dated November 20, 1994, which was further relayed to Urban Bank in a letter dated December 19, 1994.
Although Urban Bank clarified in writing (through Atty. Corazon M. Bejasa and Mr. Arturo E. Manuel Jr.) that it was ISC which contracted the services, Urban Bank issued a letter of authority dated December 15, 1994, to satisfy a procedural request.

Initially, a letter of authority was issued by Urban Bank with the express understanding that ISC was the contracting party, not Urban Bank directly.
Respondent later requested a modification by providing a draft with different wording, including a new date (December 19, 1994).
To expedite matters, Urban Bank reissued the letter of authority on December 19, 1994, incorporating some of Respondent’s suggestions.

The eviction of the occupants was successfully carried out by Respondent.
After a lapse of over thirteen months, Respondent filed a collection suit against Urban Bank and its senior officers for recovery of agent’s compensation, expenses, damages, and attorney’s fees based on the December 19 letter of authority.
The complaint alleged that Respondent’s actions, specifically using the letter of authority both to supervise the eviction and later to demand compensation, amounted to deceit, malpractice, and gross misconduct under Section 27, Rule 138 of the Revised Rules of Court.

Urban Bank initiated disbarment proceedings against Respondent, alleging misconduct in the practice of law.
Respondent submitted his Comment, refuting the charges by arguing that:

The complaint involved issues of forum shopping and a pending civil case involving the same parties.
The letter of authority was merely a formality to confirm an already existing oral agreement for his services.
Urban Bank had benefited from his legal services during the eviction process.

The matter was referred to the Integrated Bar of the Philippines (IBP) for investigation, where both parties presented evidence and respective memoranda before the Commission on Bar Discipline.

There was no evidence that Urban Bank intentionally induced Respondent to commit any deceitful act, as Urban Bank’s officers had already approved the eviction actions.
Urban Bank did not oppose the actions taken during the eviction and benefited from them.
The proper remedy for non-payment of legal fees was to pursue a civil action, rather than subjecting Respondent to disbarment proceedings.

The IBP Board of Governors eventually passed a resolution dismissing the disbarment complaint based on Commissioner Navarro’s Report and Recommendation.
An appeal was later filed by Urban Bank (now represented by Corazon M. Bejasa) seeking a more comprehensive determination, but the request was ultimately rejected.

Whether Atty. Magdaleno M. PeAa committed deceit, malpractice, and gross misconduct in the course of his legal practice, which would warrant his disbarment.

Whether the issuance and subsequent modification of the letter of authority involved deceptive practices amounting to misconduct.
Whether Urban Bank, by engaging Respondent’s services and later challenging the method of securing his compensation, contributed to the alleged misconduct.
Whether the actions taken by Respondent—specifically using the letter of authority to both execute the eviction and later seek compensation—fell within the scope of his lawful duties as an attorney.
The appropriateness of initiating disbarment proceedings when the dispute over compensation could be addressed in civil court.